UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q



                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period                           Commission file number 1-9076
ended March 31, 2003

                              FORTUNE BRANDS, INC.
   ---------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



           DELAWARE                                            13-3295276
-------------------------------                            -------------------
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                            Identification No.)


              300 Tower Parkway, Lincolnshire, Illinois 60069-3640
   ---------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)



Registrant's telephone number, including area code:  (847) 484-4400
                                                     --------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes (X) No ( )

The number of shares outstanding of the Registrant's common stock, par value
$3.125 per share, at April 30, 2003 was 145,319,288 shares.





                          PART I. FINANCIAL INFORMATION


Item 1.  FINANCIAL STATEMENTS.
------   --------------------

                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                     ---------------------------------------
                                  (In millions)
                                   (Unaudited)




                                          March 31,   December 31,
                                            2003          2002
                                          ---------   ------------
                                                 
Assets
  Current assets
   Cash and cash equivalents              $  103.7     $   15.4
   Accounts receivable, net                  899.0        845.1

   Inventories
    Bulk whiskey                             208.5        200.5
    Other raw materials, supplies and
     work in process                         247.6        247.0
    Finished products                        404.8        388.3
                                          --------     --------
                                             860.9        835.8

  Other current assets                       228.9        206.8
                                          --------     --------
    Total current assets                   2,092.5      1,903.1

  Property, plant and equipment, net       1,173.1      1,189.6
  Goodwill resulting from business
   acquisitions, net                       1,448.8      1,443.6
  Other intangibles assets resulting
   from business acquisitions, net           885.2        889.1
  Other assets                               393.9        396.8
                                          --------     --------
   Total assets                           $5,993.5     $5,822.2
                                          ========     ========



            See Notes to Condensed Consolidated Financial Statements.


                                       2


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                     ---------------------------------------
                     (In millions, except per share amounts)
                                   (Unaudited)




                                                     March 31,    December 31,
                                                       2003          2002
                                                     --------     -----------
                                                            
Liabilities and stockholders' equity

 Current liabilities
  Notes payable to banks                             $   51.0      $   37.8
  Commercial paper                                      326.4         123.5
  Current portion of long-term debt                     132.6         132.9
  Accounts payable                                      275.2         268.2
  Accrued taxes                                         381.8         316.7
  Accrued customer programs                             120.9         152.8
  Accrued salaries, wages and other compensation         87.2         141.3
  Accrued expenses and other liabilities                311.0         341.5
                                                     --------      --------
   Total current liabilities                          1,686.1       1,514.7

Long-term debt                                          841.7         841.7
Deferred income                                         193.5         200.2
Postretirement and other liabilities                    560.1         553.5
                                                     --------      --------
   Total liabilities                                  3,281.4       3,110.1
                                                     --------      --------

Minority interest in consolidated subsidiaries          398.9         398.9

Stockholders' equity
 $2.67 Convertible Preferred stock -
  redeemable at Company's option                          7.8           7.9
 Common stock, par value $3.125 per
  share, 229.6 million shares issued                    717.4         717.4
Paid-in capital                                         115.2         116.0
Accumulated other
 comprehensive loss                                    (158.0)       (177.6)
Retained earnings                                     4,589.7       4,529.9
Treasury stock, at cost                              (2,958.9)     (2,880.4)
                                                     --------      --------
   Total stockholders' equity                         2,313.2       2,313.2
                                                     --------      --------

    Total liabilities and
      stockholders' equity                           $5,993.5      $5,822.2
                                                     ========      ========



            See Notes to Condensed Consolidated Financial Statements.


                                       3




                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENT OF INCOME
               for the Three Months Ended March 31, 2003 and 2002
              -----------------------------------------------------
                     (In millions, except per share amounts)
                                   (Unaudited)




                                                         2003           2002
                                                      ---------      ---------
                                                               
Net sales                                             $ 1,392.1      $ 1,270.4

 Cost of products sold                                    770.7          698.2
 Excise taxes on spirits and wine                          70.5           74.7
 Advertising, selling, general and
  administrative expenses                                 371.4          343.4
 Amortization of intangibles                                4.8            3.3
 Restructuring charges                                      2.1            1.8
                                                      ---------      ---------
Operating income                                          172.6          149.0
 Interest and related expenses                             18.2           16.8
 Other income, net                                         (8.9)          (6.4)
                                                      ---------      ---------
Income before income taxes and minority interests         163.3          138.6

  Income taxes                                             59.5           50.7
  Minority interests                                        4.3            3.9
                                                      ---------      ---------
Net income                                            $    99.5      $    84.0
                                                      =========      =========

Earnings per common share
 Basic                                                $    0.68      $    0.57
                                                      =========      =========
 Diluted                                              $    0.66      $    0.55
                                                      =========      =========
 Dividends paid per common share                      $    0.27      $    0.25
                                                      =========      =========

Average number of common shares outstanding
 Basic                                                    146.2          148.8
                                                      =========      =========
 Diluted                                                  149.9          153.5
                                                      =========      =========



           See Notes to Condensed Consolidated Financial Statements.


                                       4




                     FORTUNE BRANDS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
               for the Three Months Ended March 31, 2003 and 2002
             -----------------------------------------------------
                                 (In millions)
                                  (Unaudited)




                                                                      2003         2002
                                                                    -------      -------
                                                                           
Operating activities
 Net income                                                         $  99.5      $  84.0
 Restructuring charges                                                  1.7          0.4
 Depreciation and amortization                                         46.0         41.6
 Deferred income taxes                                                 36.4         13.3
 Increase in accounts receivable                                      (46.1)       (32.6)
 (Increase) decrease in inventories                                   (17.4)        59.3
 Decrease in accounts payable, accrued
  expenses and other liabilities                                      (83.1)      (130.3)
 Increase in accrued taxes                                             27.5         24.0
 Tax benefit on exercise of stock options                               0.6         --
 Other operating activities, net                                      (16.3)         2.6
                                                                    -------      -------
  Net cash provided from operating activities                          48.8         62.3
                                                                    -------      -------
Investing activities
 Additions to property, plant and equipment                           (31.3)       (31.4)
 Proceeds from the disposition of property, plant and equipment         2.9          1.1
                                                                    -------      -------
  Net cash used by investing activities                               (28.4)       (30.3)
                                                                    -------      -------

Financing activities
 Increase in short-term debt, net                                     215.2         20.1
 Dividends paid to stockholders                                       (39.7)       (37.4)
 Cash purchases of common stock for treasury                          (90.3)       (52.1)
 Proceeds received from exercise of stock options                       5.7         80.6
 Other financing activities, net                                      (24.9)        (0.5)
                                                                    -------      -------
  Net cash provided by financing activities                            66.0         10.7
                                                                    -------      -------
Effect of foreign exchange rate changes on cash                         1.9          0.4
                                                                    -------      -------
  Net increase in cash and cash equivalents                            88.3         43.1

Cash and cash equivalents at beginning of period                    $  15.4      $  48.7
                                                                    -------      -------
Cash and cash equivalents at end of period                          $ 103.7      $  91.8
                                                                    =======      =======



            See Notes to Condensed Consolidated Financial Statements.



                                       5



                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
               for the Three Months Ended March 31, 2003 and 2002
          -------------------------------------------------------------
                                  (In millions)
                                   (Unaudited)






                                           $2.67                            Accumulated
                                     Convertible                                  other                  Treasury
                                       Preferred     Common     Paid-in   comprehensive     Retained       stock,
                                           Stock      stock     capital            loss     earnings      at cost         Total
===============================================================================================================================
                                                                                                  
Balance at December 31, 2001           $    8.6    $  717.4    $  113.2       $ (131.7)    $4,157.7     $(2,762.5)     $2,102.7

Comprehensive income
   Net income                              --          --          --             --           84.0            --          84.0
   Changes during the period               --          --          --             (2.1)        --              --          (2.1)
                                       --------    --------    --------       --------     --------     ---------      --------
Total Comprehensive (loss) income          --          --          --             (2.1)        84.0            --          81.9
                                       --------    --------    --------       --------     --------     ---------      --------
Dividends                                  --          --          --             --          (37.4)           --         (37.4)
Purchases                                  --          --          --             --           --           (52.1)        (52.1)
Tax benefit on exercise of stock
   options                                 --          --          --             --           --              --          --
Conversion of preferred stock,
   delivery of stock plan shares and
   sale of stock in subsidiary             (0.3)       --         (16.1)          --           --            94.4          78.0
                                       --------    --------    --------       --------     --------     ---------      --------
Balance at March 31, 2002              $    8.3    $  717.4    $   97.1       $ (133.8)    $4,204.3     $(2,720.2)     $2,173.1
                                       ========    ========    ========       ========     ========     =========      ========


Balance at December 31, 2002           $    7.9    $  717.4    $  116.0       $ (177.6)    $4,529.9     $(2,880.4)     $2,313.2

Comprehensive income
   Net income                              --          --          --             --           99.5            --          99.5
   Changes during the period               --          --          --             19.6         --              --          19.6
                                       --------    --------    --------       --------     --------     ---------      --------
Total Comprehensive income                 --          --          --             19.6         99.5            --         119.1
                                       --------    --------    --------       --------     --------     ---------      --------
Dividends                                  --          --          --             --          (39.7)           --         (39.7)
Purchases                                  --          --          --             --           --           (86.6)        (86.6)
Tax benefit on exercise of stock
   options                                 --          --           0.6           --           --              --           0.6
Conversion of preferred stock and
   delivery of stock plan shares           (0.1)       --          (1.4)          --           --             8.1           6.6
                                       --------    --------    --------       --------     --------     ---------      --------
Balance at March 31, 2003              $    7.8    $  717.4    $  115.2       $ (158.0)    $4,589.7     $(2,958.9)     $2,313.2
                                       ========    ========    ========       ========     ========     =========      ========




            See Notes to Condensed Consolidated Financial Statements.


                                       6



                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   Principles of Consolidation

          The condensed consolidated balance sheet as of March 31, 2003, the
     related condensed consolidated statements of income for the three month
     periods ended March 31, 2003 and 2002, and the related condensed
     consolidated statements of cash flows and stockholders' equity for the
     three month periods ended March 31, 2003 and 2002 are unaudited. In the
     opinion of management, all adjustments necessary for a fair presentation of
     such financial statements have been included. Such adjustments included
     restructuring and restructuring-related charges in 2003 and 2002. Interim
     results may not be indicative of results for a full year.

          The condensed consolidated financial statements and notes are
     presented as permitted by Form 10-Q and do not contain certain information
     included in the Company's annual consolidated financial statements and
     notes. The year-end condensed consolidated balance sheet was derived from
     the Company's audited financial statements, but does not include all
     disclosures required by generally accepted accounting principles. This Form
     10-Q should be read in conjunction with the Company's consolidated
     financial statements and notes incorporated by reference in its 2002 Annual
     Report on Form 10-K.

2.   Accounting Changes

     Costs Associated with Exit or Disposal Activities
     -------------------------------------------------

          In July 2002, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standard No. 146 (SFAS 146), "Accounting
     for Costs Associated with Exit or Disposal Activities." SFAS 146 requires
     companies to initially recognize and measure costs associated with exit or
     disposal activities at fair value only when the liability is incurred
     rather than at the date of a commitment to an exit or disposal plan.
     Examples of costs covered by SFAS 146 include lease termination costs and
     certain employee severance costs that are associated with a restructuring,
     discontinued operation, plant closing or other exit or disposal activity.
     SFAS 146 also supercedes, in its entirety, previous accounting guidance
     that was provided by Emerging Issues Task Force Issue No. 94-3 (EITF 94-3),
     "Liability Recognition for Certain Employee Termination Benefits and Other
     Costs to Exit an Activity (including Certain Costs Incurred in a
     Restructuring)." SFAS 146 is effective for exit or disposal activities
     initiated after December 31, 2002. The adoption of SFAS 146 did not have a
     material impact for the three months ended March 31, 2003 on the Company's
     operating results or financial position.




                                       7


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2.   Accounting Changes (Concluded)

     Costs Associated with Exit or Disposal Activities (Concluded)
     -------------------------------------------------

          See Note 10 to the Condensed Consolidated Financial Statements for
     further discussion.

     Consolidation of Variable Interest Entities
     -------------------------------------------

          In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
     "Consolidation of Variable Interest Entities." The objective of FIN 46 is
     to improve financial reporting by companies with transactions involving
     variable interest entities. Prior to FIN 46, companies generally included
     another entity in its consolidated financial statements only if it
     controlled the entity through voting interests. FIN 46 changes that by
     requiring a variable interest entity to be consolidated by a company if
     that company is subject to a majority of the risk or loss from the variable
     interest entity's activities or entitled to receive a majority of the
     entity's residual returns or both. Consolidation by a primary beneficiary
     of the assets, liabilities and results of activities of variable interest
     entities will provide more complete information about the resources,
     obligations, risks and opportunities of the consolidated company. FIN 46 is
     effective for newly created variable interest entities as of January 31,
     2003 and will be effective for existing variable interest entities as of
     July 1, 2003. The adoption of FIN 46 will not have an impact on the
     Company's results or financial position.


3.   Guarantees and Commitments

          Financial Accounting Standards Board Interpretation No. 45 (FIN 45),
     "Guarantor's Accounting and Disclosure Requirements for Guarantees,
     Including Indirect Guarantee's of Indebtedness of Others," was issued in
     November 2002. FIN 45 requires that upon issuance of a guarantee, the
     guarantor must disclose and recognize a liability for the fair value of the
     obligation it assumes under that guarantee. The initial recognition and
     measurement requirement of FIN 45 is effective for guarantees issued or
     modified after December 31, 2002. The Company has not issued or modified
     any guarantees since December 31, 2002.


                                       8

                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


3.   Guarantees and Commitments (Concluded)

          Guarantees and Commitments: As of March 31, 2003, the Company had
     third-party guarantees totaling approximately $70 million. These represent
     guarantees of Maxxium Worldwide B.V. debt. The Company is required to
     perform under these guarantees in the event that the guaranteed party fails
     to make contractual payments.

          The Company has provided certain indemnities pursuant to which it may
     be required to make payments to an indemnified party in connection with
     certain divestitures. These indemnities relate to various representations
     typically included in divestitures such as environmental, tax, product
     liability, employee liability and other contingencies, depending on the
     transactions. In several of these divestitures, a maximum obligation for
     certain contingencies is not specified, which is not atypical for such
     transactions. Accordingly, pursuant to FIN 45, payments under these
     divestiture-related indemnity obligations cannot be reasonably estimated.
     The duration of the indemnities varies, and in some cases is indefinite. We
     have not recorded any liability for these indemnities in the consolidated
     financial statements.

          The Company has not made any payments related to indemnity obligations
     that were material to the company's financial position or results of
     operations for any quarter. Furthermore, the Company does not expect that
     any sums it may have to pay in connection with any of these indemnity
     obligations would have a material adverse effect on our consolidated
     financial position for fiscal 2003 or in subsequent periods.

          The Company has not recorded a liability for these guarantees and
     indemnities as they have been excluded from the initial recognition and
     measurement provisions pursuant to FIN 45.


4.   Acquisitions

          In April 2002, the home and hardware business acquired Omega Holdings,
     Inc. (Omega), a U.S.-based manufacturer of custom and semi-custom
     cabinetry. This acquisition broadens our cabinet product line and is
     providing additional selling opportunities across customers, while
     producing purchasing and manufacturing efficiencies.

          If Omega had been included in our results of operations during the
     three months ended March 31, 2002, the Company's unaudited pro forma net
     sales for the quarter would have been 7% higher and net income and diluted
     earnings per share would each have been 10% higher.



                                       9




                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


5.   Goodwill and Other Identifiable Intangibles

          The Company carries finite-lived identifiable intangibles, principally
     tradenames, that are subject to amortization over their estimated useful
     life, either 15 or 30 years. The gross carrying value and accumulated
     amortization of the Company's amortizable intangible assets were $586.9
     million and $183.8 million, respectively, as of March 31, 2003.

          The Company's intangible amortization was $4.8 million and $3.3
     million, respectively, for the three months ended March 31, 2003 and 2002.
     The Company expects to record intangible amortization of approximately
     $19.0 million for each of the next five fiscal years ending December 31,
     2003 through December 31, 2007.

          In addition to these amortizable intangibles, the Company also had
     goodwill of approximately $1.5 billion as of March 31, 2003 and
     indefinite-lived intangibles, principally tradenames, of $482.1 million as
     of March 31, 2003. The change in goodwill during the three months ended
     March 31, 2003 of $5.2 million was attributable to Omega purchase
     accounting adjustments and foreign currency fluctuations.


                                       10

                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


6.   Information on Business Segments

          Net sales and operating income for the three months ended March 31,
     2003 and 2002 by segment are as follows:





                                              Net Sales
                                     --------------------------
                                       2003              2002
                                     --------          --------
                                          (In millions)
                                                 
          Home and hardware          $  620.6          $  520.3
          Spirits and wine              239.2             234.7
          Golf                          282.4             266.0
          Office                        249.9             249.4
                                     --------          --------
                                     $1,392.1          $1,270.4
                                     ========          ========





                                          Operating Income
                                     --------------------------
                                       2003              2002
                                     --------          --------
                                          (In millions)
                                                 
          Home and hardware          $   88.3          $   70.0
          Spirits and wine               57.9              56.3
          Golf                           32.7              30.9
          Office                          8.0               3.9
                                     --------          --------
          Less:
            Corporate expenses           14.3              12.1
                                     --------          --------
          Operating income           $  172.6            $149.0
                                     ========          ========



                                       11



                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


7.   Earnings Per Share

          The computation of basic and diluted earnings per common share for
     "Net income" is as follows:




                                         Three Months Ended
                                              March 31,
                                         ------------------
                                          2003        2002
                                         -------     -------
                                            (In millions,
                                             except per
                                            share amounts)
                                               
Net income                               $  99.5     $  84.0
    Less:  Preferred stock dividends         0.2         0.2
                                         -------     -------
Income available to common
    stockholders - basic                    99.3        83.8
Convertible Preferred stock
    dividend requirements                    0.2         0.2
                                         -------     -------
Income available to common
    stockholders - diluted               $  99.5     $  84.0
                                         =======     =======

Weighted average number of common
    shares outstanding - basic             146.2       148.8
Conversion of Convertible
    Preferred stock                          1.6         1.8
Exercise of stock options                    2.1         2.9
                                         -------     -------
Weighted average number of common
     shares outstanding - diluted          149.9       153.5
                                         =======     =======
Earnings per common share
     Basic                               $  0.68     $  0.57
                                         =======     =======
     Diluted                             $  0.66     $  0.55
                                         =======     =======


8.   Stock Plans

          The 1999 Long-Term Incentive Plan authorizes the granting to key
     employees of the Company and its subsidiaries of incentive and nonqualified
     stock options, stock appreciation rights, restricted stock, performance
     awards and other stock-based awards, any of which may be granted alone or
     in combination with other types of awards or dividend equivalents. Such
     grants may be made on or before December 31, 2004 for up to 12 million
     shares of common stock, but no more than two million shares may be granted
     to any one individual. Stock options, stock appreciation rights, restricted
     stock, performance awards and other stock-based awards may no longer be
     granted under the Company's 1990 Long-Term Incentive Plan, as amended.



                                       12


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


8.    Stock Plans (Continued)

          Outstanding awards under the 1990 Long-Term Incentive Plan may
     continue to be exercised or paid pursuant to their terms.

          Stock options under the Plans have exercise prices equal to fair
     market values at dates of grant. Options generally may not be exercised
     prior to one year or more than ten years from the date of grant. Options
     granted since November 1998 generally vest one-third each year over a
     three-year period after the date of grant. Stock appreciation rights, which
     may be granted in conjunction with option grants, permit the optionees to
     receive shares of common stock, cash or a combination of shares and cash
     measured by the difference between the option exercise price and the fair
     market value of the common stock at the time of exercise of such right.

          The Company applies APB Opinion No. 25, "Accounting for Stock Issued
     to Employees" and related interpretations in accounting for its stock plans
     as allowed under Statement of Financial Accounting Standards No. 148 (SFAS
     148), "Accounting for Stock-Based Compensation - Transition and
     Disclosure." Had compensation cost for the fixed stock options been
     determined in accordance with SFAS 148, pro forma net income and earnings
     per common share for the three months ended March 31, 2003 and 2002 would
     have been as follows:




         (In millions, except per share amounts)                  2003       2002
         -------------------------------------------------------------------------
                                                                      
Net income - as reported                                         $ 99.5     $ 84.0
Deduct: Total stock-based employee compensation
determined under the fair-value based method for all awards,
net of tax                                                          5.4        3.0
                                                                 ------     ------
Pro forma net income                                             $ 94.1     $ 81.0

Earnings per Common share
     Basic - as reported                                         $ 0.68     $ 0.57
     Basic - pro forma                                           $ 0.64     $ 0.54

     Diluted - as reported                                       $ 0.66     $ 0.55
     Diluted - pro forma                                         $ 0.63     $ 0.53





                                       13

                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8.   Stock Plans (Concluded)

          The weighted-average fair values of options granted during 2003 and
     2002 were $10.08 and $11.63, respectively. The fair value of each option
     grant is estimated on the date of grant using the Black-Scholes
     option-pricing model with the following weighted-average assumptions used
     for grants in 2003 and 2002:


                                        2003         2002
         ----------------------------------------------------
                                             
          Expected dividend yield      2.5%          2.3%
          Expected volatility         31.2%         30.6%
          Risk-free interest rate      2.7%          2.7%
          Expected term               4.5 Years     4.5 Years



9.   Product Warranties

          The Company records warranty expense at the time of sale. The Company
     offers its customers various warranty terms based upon the type of product
     that is sold. In addition, the Company does not offer extended warranty
     terms on any of the products it sells.

          The following table summarizes the activity related to the Company's
     product warranty liability during the three month period ended March 31,
     2003:


(In millions)


                                                              
Balance as of January 1, 2003                                    $ 9.2
Accruals for warranties issued during 2003                         7.8
Settlements made (in cash or in kind) during 2003                 (5.6)
Balance as of March 31, 2003                                     $11.4




                                       14

                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.  Restructuring and Restructuring-Related Charges

     RESTRUCTURING AND RESTRUCTURING-RELATED CHARGES PROGRAM - 2001

          In April 2001, the Company announced that as a result of its
     evaluation of strategic options for its office products business, it would
     immediately begin implementing a plan designed to improve both financial
     results and the long-term value of the business.

          In conjunction with this restructuring program, the Company's office
     products business recorded charges associated with consolidation of
     manufacturing facilities and employee termination during the three months
     ended March 31, 2003 and 2002, as follows:




                                      Restructuring Charges
                             --------------------------------------------
                             Three Months Ended        Three Months Ended
                               March 31, 2003            March 31, 2002
                             ------------------        ------------------
                                           (In millions)
                                                 
                Office             $2.1                        $ 1.8



          The charges principally related to asset write-offs and employee
     termination costs.




                                       15



                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


10.  Restructuring and Restructuring-Related Charges (Continued)

          Pursuant to the provisions of SFAS 146, the following tables represent
     the reconciliation of the restructuring charges and supplemental
     information for actions initiated after December 31, 2002.




                                       2003           Cash           Non-Cash                         Balance at
                                     Provision     Expenditures     Write-offs      Adjustments        3/31/03
                                     ---------     ------------     ----------      ----------        ----------
                                                                                       
Rationalization of operations
     Employment termination costs     $0.1             $(0.1)          $ --              --               $--
     Other                             0.3              (0.1)           (0.1)            --                0.1
Loss on disposal of assets             1.7              (0.1)           (1.6)            --                --
                                      ----             -----            ----            ----              ----
                                      $2.1             $(0.3)          $(1.7)          $ --               $0.1
                                      ====             =====            ====            ====              ====



          The Company expects that substantially all remaining payments will be
     made within the next twelve months.

          The Company expects to record additional after-tax charges of $20 to
     $25 million ($30 to $40 million pre tax) to complete our remaining
     restructuring program.

          During the three-month period ended March 31, 2003, the Company
     recorded pre-tax restructuring-related charges as follows:




                                               Restructuring-related Charges
                         ------------------------------------------------------------------------
                                 Three Months Ended                     Three Months Ended
                                   March 31, 2003                         March 31, 2002
                         -----------------------------------      -------------------------------
                                     (In millions)
                         Cost of                                   Cost of
                          Sales          SG&A                       Sales         SG&A
                         Charges        Charges       Total        Charges       Charges    Total
                         -------        -------       -----        -------       -------    -----
                                                                           
          Office         $ 4.3          $ 0.1         $ 4.4         $ 0.7        $ 0.7       $ 1.4


          These restructuring-related charges include the relocation of
     manufacturing and distribution facilities and inventory write-offs
     associated with the discontinuance of certain unprofitable product lines.



                                       16

                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


10.  Restructuring and Restructuring-Related Charges (Concluded)


          The following table represents the reconciliation of the restructuring
     liability, as of March 31, 2003, for restructuring charges recognized
     pursuant to EITF 94-3:




                                            Balance at       Cash              Non-Cash     Balance at
                                             12/31/02    Expenditures         Write-offs     3/31/03
                                            ----------   ------------         ----------    ----------
                                                                  (In millions)
                                                                                
Rationalization of operations
     Employment termination costs (1),(2)     $11.3        $(2.9)              $(1.0)(2)       $ 7.4
International distribution
  and lease agreements                          4.2         (0.3)                 --             3.9
Loss on disposal of assets                      0.8         (0.4)               (0.2)            0.2
                                              -----        -----               -----           -----
                                              $16.3        $(3.6)              $(1.2)          $11.5
                                              =====        =====               =====           =====




     (1)  Of the planned downsizing of 2,072 positions, 1,851 reductions had
          been implemented as of March 31, 2003. The employee groups affected by
          these restructuring actions were in the office products business and
          include plant and administrative hourly and salaried employees.

     (2)  The $1.0 million included in non-cash write-offs represents a
          reclassification of employment termination costs to accrued pension.

          The Company expects that all remaining payments will be made within
     the next twelve months.




                                       17



                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


11.  Comprehensive Loss

          The components of accumulated other comprehensive loss are as follows:




                                          Foreign            Minimum                Accumulated
                                         currency       pension liability       other comprehensive
                                        adjustments        adjustment                  loss
                                       ------------     -----------------       -------------------
                                                          (In millions)
                                                                       
Balance at December 31, 2001             $(113.6)           $ (18.1)                  $(131.7)
Changes in three months                     (2.0)              (0.1)                     (2.1)
                                         -------            -------                   -------
Balance at March 31, 2002                $(115.6)           $ (18.2)                  $(133.8)
                                         =======            =======                   =======

Balance at December 31, 2002             $ (92.5)           $ (85.1)                  $(177.6)
Changes in three months                     19.6                  -                      19.6
                                         -------            -------                   -------
Balance at March 31, 2003                $ (72.9)           $ (85.1)                  $(158.0)
                                         =======            =======                   =======




          Included in the foreign currency adjustments balance at March 31, 2003
     is total deferred derivative loss of $0.7 million.


12.  Subsequent Event

          On April 16, 2003, the home and hardware business acquired American
     Lock Company, a U.S.-based manufacturer of security and safety hardware for
     $31.5 million.

          This operation will be included in consolidated results from the date
     of acquisition.


13.  Pending Litigation

     Tobacco Litigation and Indemnification

          On December 22, 1994, the Company sold The American Tobacco Company
     (ATCO) subsidiary to Brown & Williamson Tobacco Corporation (B&W), a
     wholly-owned subsidiary of B.A.T Industries p.l.c. In connection with
     the sale, B&W and ATCO, which has since merged into B&W


                                       18


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


13.  Pending Litigation (Continued)

     (the "Indemnitor"), agreed to indemnify the Company against claims
     including legal expenses arising from smoking and health and fire safe
     cigarette matters relating to the tobacco business of ATCO. The Indemnitor
     has complied with the terms of the indemnification agreement since 1994 and
     the Company is not aware of any inability on the part of the Indemnitor to
     satisfy its indemnity obligations.

          The Company is a defendant in numerous actions based upon allegations
     that human ailments have resulted from tobacco use. It is not possible to
     predict the outcome of the pending litigation, and, as with any litigation,
     it is possible that some of these actions could be decided unfavorably.
     Management is unable to make a meaningful estimate of the amount or range
     of loss that could result from an unfavorable outcome of the pending
     litigation. However, management believes that there are a number of
     meritorious defenses to the pending actions, including the fact that the
     Company never made or sold tobacco, and these actions are being vigorously
     contested by the Indemnitor. Management believes that the pending actions
     will not have a material adverse effect upon the results of operations,
     cash flows or financial condition of the Company because it believes it has
     meritorious defenses and the Company is indemnified under the previously
     mentioned indemnification agreement.

     Other Litigation

          There is an increasing volume of asbestos-related personal injury
     litigation in the United States generally. A subsidiary of the Company,
     Moen Incorporated, has been named as a defendant in approximately 165 cases
     claiming personal injury from asbestos. All of these suits name multiple
     defendants and, in most cases, in excess of 75 defendants are named in
     addition to Moen. It is not possible to predict the outcome of the pending
     litigation, and, as with any litigation, it is possible that some of these
     actions could be decided unfavorably. Management believes it has
     meritorious defenses to these actions and that these actions will not have
     a material adverse effect upon the results of operations, cash flows or
     financial condition of the Company. These actions are being vigorously
     contested.

          In addition to the lawsuits described above, the Company and its
     subsidiaries are defendants in lawsuits associated with their business and
     operations. It is not possible to predict the outcome of the


                                       19


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)

13.  Pending Litigation (Concluded)

     pending actions, and, as with any litigation, it is possible that some of
     these actions could be decided unfavorably. Management believes that there
     are meritorious defenses to these actions and that these actions will not
     have a material adverse effect upon the results of operations, cash flows
     or financial condition of the Company. These actions are being vigorously
     contested.

14.  Environmental

          The Company is subject to laws and regulations relating to the
     protection of the environment. While it is not possible to quantify with
     certainty the potential impact of actions regarding environmental matters,
     particularly remediation and other compliance efforts that the Company's
     subsidiaries may undertake in the future, in the opinion of management,
     compliance with the present environmental protection laws, before taking
     into account estimated recoveries from third parties, will not have a
     material adverse effect upon the results of operations, cash flows or
     financial condition of the Company.




                                       20



                        REPORT OF INDEPENDENT ACCOUNTANTS
                        ---------------------------------

To the Board of Directors and Shareholders of Fortune Brands, Inc.:

We have reviewed the accompanying condensed consolidated balance sheet of
Fortune Brands, Inc. and Subsidiaries as of March 31, 2003, and the related
condensed consolidated statements of income and the condensed consolidated
statements of cash flows and stockholders' equity for the three-month periods
ended March 31, 2003 and March 31, 2002. These interim financial statements are
the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated interim financial statements
for them to be in conformity with accounting principles generally accepted in
the United States of America.

We previously audited in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet as of December
31, 2002, and the related consolidated statements of income, cash flows and
stockholders' equity for the year then ended (not presented herein), and in our
report dated January 21, 2003, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 2002,
is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.



PricewaterhouseCoopers LLP



Chicago, Illinois 60606
April 15, 2003



                                       21



Item 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
------            FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ----------------------------------------------


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     --------------------------------------

         Results of Operations for the Three Months Ended March 31, 2003
              as Compared to the Three Months Ended March 31, 2002
--------------------------------------------------------------------------------




                                                    Net Sales
                                             ----------------------
                                                2003         2002
                                             ---------     --------
                                                 (In millions)
                                                      
                Home and hardware             $   620.6     $  520.3
                Spirits and wine                  239.2        234.7
                Golf                              282.4        266.0
                Office                            249.9        249.4
                                              ---------     --------
                                              $ 1,392.1     $1,270.4
                                              =========     ========





                                                Operating Income
                                             ---------------------
                                               2003          2002
                                             -------        ------
                                                  (In millions)
                                                      
                   Home and hardware          $ 88.3        $ 70.0
                   Spirits and wine             57.9          56.3
                   Golf                         32.7          30.9
                   Office                        8.0           3.9
                 Less:
                   Corporate expenses           14.3          12.1
                                              ------        ------
                Operating Income              $172.6        $149.0
                                              ======        ======



                                       22


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
            ---------------------------------------------------------

Fortune Brands, Inc. is a holding company with subsidiaries that manufacture or
produce and sell leading consumer branded products in the following industries:
home and hardware, spirits and wine, golf equipment and office products. It
earns cash and profits by building its consumer brands to grow sales, including
the development of innovative new products and effective marketing campaigns,
and improving its productivity and cost structure. It strives to enhance
shareholder value by strategically positioning its businesses to achieve higher
growth and higher returns, including through acquisitions, dispositions and
joint ventures, and through other shareholder value initiatives such as using
its financial resources to repurchase shares and pay attractive dividends.

The Company's net income increased 18% during the three months ended March 31,
2003 as compared to the same period in 2002. The increase was due primarily to
the benefit of the acquisition and growth of the Omega Group cabinet company,
cost savings and strong operating performance, particularly in our office, home
and hardware and golf businesses. In 2003, the Company faces overall economic
uncertainty and the impact of increased industry-wide expenses for pension,
post-retirement benefit plans and insurance. The Company's operating units will
also face challenges and opportunities unique to each of their industries, as
discussed in this report.

FIRST QUARTER 2003 COMPARED TO 2002

Net sales
---------

Net sales increased $121.7 million, or 10%, to $1.4 billion. Sales benefited
principally from the acquisition of Omega Holdings, Inc., a U.S.-based
manufacturer of custom and semi-custom cabinetry, increased volumes associated
with line extensions and the introduction of new products, principally in the
golf and home and hardware businesses, as well as favorable foreign exchange.
These benefits were offset, in part, by lower volumes in certain existing
product lines, principally in the golf, home and hardware and office businesses,
and the sale by the home and hardware business in November 2002 of its plumbing
parts business.

Cost of products sold
---------------------
Cost of products sold increased $72.5 million, or 10%, on the higher sales.

Excise taxes on spirits and wine
--------------------------------
Excise taxes on spirits and wine decreased $4.2 million, or 6%, due to a product
mix shift during the period.


                                       23


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
            ---------------------------------------------------------


CONSOLIDATED (Continued)
------------

Advertising, selling, general and administrative expenses
---------------------------------------------------------
Advertising, selling, general and administrative expenses increased $28.0
million, or 8%, on higher advertising and marketing expenditures, pension
expense and general insurance costs, partially offset by cost savings achieved
as a result of our restructuring actions and other cost containment initiatives
across all of our operations, particularly in our office products business.

Amortization of intangibles
---------------------------
Amortization of intangibles increased $1.5 million to $4.8 million due to the
amortization of certain finite-lived intangibles acquired as part of the Omega
cabinets acquisition.

Restructuring charges
---------------------
For the three months ended March 31, 2003, we recorded pre-tax restructuring
charges of $2.1 million ($1.4 million after tax). The charges principally
related to asset write-offs and employee termination costs in the office
products business.

For the three months ended March 31, 2002, we recorded pre-tax restructuring
charges of $1.8 million ($1.2 million after tax). The charges principally
related to employee termination costs, asset write-offs and costs associated
with a consolidation of manufacturing facilities.

Interest and related expenses
-----------------------------
Interest and related expenses increased $1.4 million, or 8%. This increase
reflected higher average borrowings to finance working capital requirements,
share repurchases and the Omega cabinets acquisition.

Other income, net
-----------------
Other income, net increased $2.5 million to $8.9 million as a result of the
favorable impact of exchange rates on our overseas transactions.



                                       24


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
            ---------------------------------------------------------


CONSOLIDATED (Continued)
------------

Income taxes
------------
Income taxes increased $8.8 million, or 17%. The reported effective income tax
rates for the three-months ended March 31, 2003 and 2002 were 36.4% and 36.6%,
respectively.

Minority interests
------------------
Minority interests increased $0.4 million to $4.3 million, due to the higher
operating income in our office products business.

Net income
----------
Net income of $99.5 million, or 68 cents basic and 66 cents diluted per share,
for the three months ended March 31, 2003 compared with net income of $84.0
million, or 57 cents basic and 55 cents diluted per share, for the three months
ended March 31, 2002. The increase in net income of $15.5 million was
principally due to higher net sales (resulting in part from the Omega
acquisition) and cost savings resulting from our restructuring actions and other
cost containment initiatives across all of our operations. These increases were
partly offset by higher advertising and marketing expenditures, pension expense,
general insurance costs and income taxes.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), "Consolidation
of Variable Interest Entities." The objective of FIN 46 is to improve financial
reporting by companies with transactions involving variable interest entities.
Prior to FIN 46, companies generally included another entity in its consolidated
financial statements only if it controlled the entity through voting interests.
FIN 46 changes that by requiring a variable interest entity to be consolidated
by a company if that company is subject to a majority of the risk or loss from
the variable interest entity's activities or entitled to receive a majority of
the entity's residual returns or both. Consolidation by a primary beneficiary of
the assets, liabilities and results of activities of variable interest entities
will provide more complete information about the resources, obligations, risks
and opportunities of the consolidated company. FIN 46 is effective for newly
created variable interest entities as of January 31, 2003 and will be effective
for existing variable interest entities as of July 1, 2003. The adoption of FIN
46 will not have an impact on the Company's results or financial position.




                                       25



                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
            ---------------------------------------------------------

CONSOLIDATED (Concluded)
------------

On an annual basis, we evaluate the assumptions used in determining our pension
liabilities and assets as well as pension expense based upon historical returns
on plan assets and current economic conditions at the time the assumptions are
set.

The December 2001 review led to a reduction in both our weighted-average
discount rate from 7.2% to 7.0% and weighted-average expected rate of return
from 9.6% to 8.3%. These revisions led to an increase in pension expense of
approximately $15 million to $21.9 million in 2002. Our December 2002 review led
to a reduction of our weighted-average discount rate from 7.0% to 6.6% for 2003.
Our weighted-average expected return on plan assets remained unchanged at 8.3%.
Management believes that these assumptions are appropriate. The 2002 revisions
will result in an increase to our pension expense of approximately $10 to $15
million in 2003.

In addition, we expect to provide cash contributions in 2003 of approximately
$40 million to fund existing pension liabilities for our qualified
defined-benefit plans. A significant portion of these contributions will be made
in the third quarter of 2003. Additional cash contributions in 2003 will be
required as benefits are paid under our various supplemental defined-benefit
plans. In 2002, our total defined-benefit plan cash contribution was $16.4
million.



                                       26



                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
            ---------------------------------------------------------


Home and Hardware
-----------------

Net sales increased $100.3 million, or 19%, to $620.6 million. The increase was
attributable to the acquisition and growth of Omega Holdings, Inc. and
successful line extensions and new product introductions, principally faucets
and cabinets. The sales growth was partially offset by the absence of the
plumbing parts business and soft retail volume in our tool storage business.
Operating income increased $18.3 million, or 26%, to $88.3 million on the higher
sales and productivity gains partially offset by higher operating expenses.

Management expects that our home and hardware business will benefit from strong
demographic trends supporting the home repair and remodeling and new home
construction markets, particularly for kitchen and bath products.

The continued consolidation of the customer base in the home and hardware
industry and increased price competition will continue to present challenges to
us and our competitors. Customer consolidation will also present opportunities
for the most innovative and efficient manufacturers.

Our home and hardware business may be impacted by the continued uncertain U.S.
economic outlook and its potential impact on the U.S. housing and remodeling
markets.


Spirits and Wine
----------------

Net sales increased $4.5 million, or 2%, to $239.2 million principally on
favorable foreign exchange, growth in ready-to-drink Jim Beam and Cola in
Australia, a price increase for Jim Beam bourbon and higher sales of DeKuyper
cordials and super-premium products in the U.S. These benefits were partly
offset by lower excise taxes associated with a mix shift in the U.S. during the
period and lower volumes for the Jim Beam brand in the U.S.

Operating income increased $1.6 million, or 3%, to $57.9 million on the higher
sales partly offset by increased operating expenses. The higher operating
expenses reflect increased brand investment expenses and general and
administrative costs.



                                       27


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
            ---------------------------------------------------------


Spirits and Wine (Concluded)
----------------

Management expects that our spirits and wine business will benefit from growth
in the premium and super-premium spirits market, and has focused its product
development and marketing activities on those segments. Factors that could
adversely affect results include: the possibility of excise tax increases;
increased regulation; and continued softness in the restaurant and bar channel.
In addition, the spirits and wine industry could be impacted by the continued
trend towards consolidation of the supplier, distributor and retailer tiers.

Golf
----

Net sales increased $16.4 million, or 6%, to $282.4 million. The increase was
led by significant share gains in golf clubs, line extensions and the
introduction of new products in golf balls and golf clubs and favorable foreign
exchange. These benefits were partly offset by the discontinuance of certain
golf ball models and a change in product mix to lower-priced golf shoes as well
as the effect of lower rounds of play resulting from weak economic and adverse
weather conditions. Operating income increased $1.8 million, or 6%, to $32.7
million on the higher sales partly offset by higher operating expenses.

Management believes our golf products business will benefit over the long term
by the increasing attraction of golf to maturing baby boomers and potential
growth in international markets.

As competitors with significant brand awareness have entered the category, the
golf ball industry has experienced increased price competition. Largely as a
result of the introduction of the new Titleist Pro V1, Pro V1x, NXT and DT SoLo
golf ball models, as well as the Pinnacle Power Core golf ball model, our golf
ball business has gained U.S. market share in the past year. These market share
gains have tempered the effects of price competition and lower rounds of play.

The ability of the Company's golf business to maintain and increase revenues
will depend upon continued strong innovation and marketing across



                                       28


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
            ---------------------------------------------------------


Golf (Concluded)
-----

product categories, including the promotion of its products by professional
golfers.

The United States Golf Association (USGA) and the Royal and Ancient Golf Club
(R&A) establish standards for golf equipment used in the United States and
outside the United States, respectively. Each of the USGA and the R&A has
proposed new rules addressing the overall distance standard for golf balls, golf
club head size and golf club shaft length. Until more details regarding such
potential rule changes become available, we cannot determine whether they would
have a material effect on our golf products business and/or the golf products
industry.


Office
------

Net sales of $249.9 million were flat versus the same three-month period last
year. The benefits of favorable foreign exchange and successful line extensions
were offset by lower volumes in certain existing product lines due to weak
economic growth, particularly in white-collar employment, and the continued
growth of private-label products. While inventories at North American retailers
are roughly half the level they were two years ago, industry-wide inventory
reductions are abating.

Operating income increased $4.1 million, or 105%, to $8.0 million as a result of
the business's ongoing repositioning, including successful cost and asset
reduction initiatives as well as favorable foreign exchange. The profit recovery
in the business was broad-based, with particularly strong gains in our key
international markets, Europe and Australia.

The office products industry is increasingly concentrated in a small number of
major customers, principally office products superstores, large retailers,
wholesalers and contract stationers. Customer consolidation and growth of
private label products continue to increase pricing pressures, presenting
challenges to our office products group and its competitors.


                                       29


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
     ----------------------------------------------------------------------


Office (Concluded)
------

Since 2001, we have been repositioning and restructuring the office products
business to improve both financial results and the long-term value of the
business. Under this plan, our office products group is realigning and
streamlining its worldwide operations, intensifying its focus on growing
profitable core product categories, divesting or discontinuing non-strategic and
low-return product categories and reducing overhead expenses and excess
capacity. As a result of this plan, during the three-months ended March 31,
2003, we recorded total after-tax restructuring and restructuring-related
charges of $4.2 million ($6.5 million pre tax) as part of the final phase of our
office products repositioning. Once completed, this restructuring action will
have reduced the business' manufacturing and distribution square footage by
approximately one-third, providing significant cost savings. These actions have
already generated significant working capital improvements. We expect to record
additional after-tax charges of $20 to $25 million ($30 to $40 million pre tax)
to complete this final phase. The overall office products repositioning program
will continue to be self-funding within the office products business.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Net cash provided from operating activities of $48.8 million for the three
months ended March 31, 2003 compared with $62.3 million for the same three-month
period last year. The higher cash flow in 2002 reflects the benefit of
inventory reduction efforts in the office products business.

Net cash used by investing activities for the three months ended March 31, 2003
was $28.4 million, compared with $30.3 million in the same three-month period
last year.

Net cash provided by financing activities for the three months ended March 31,
2003 was $66.0 million, compared with $10.7 million in the same three-month
period last year. During the three months ended March 31, 2003, purchases of our
common stock amounted to $90.3 million (2,000,000 shares repurchased) and
proceeds received from the exercise of stock options ($5.7 million) decreased as
options exercises were lower than in the same three-month period last year.




                                       30


                      FORTUNE BRANDS, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Concluded)
      ---------------------------------------------------------------------


LIQUIDITY AND CAPITAL RESOURCES (Concluded)
-------------------------------

Total debt increased $215.8 million during the three-month period ended March
31, 2003. This increase reflected higher average borrowings to finance working
capital requirements and share repurchases. The ratio of total debt to total
capital increased to 33.3% at March 31, 2003 from 29.5% at December 31, 2002.

We believe that our internally generated funds, together with access to global
credit markets, are adequate to meet our capital needs.

Guarantees and Commitments:

Third-party guarantees executed in connection with the formation of two spirits
and wine distribution joint ventures total approximately $70 million as of March
31, 2003. We are required to perform under these guarantees in the event that
the guaranteed party fails to make contractual payments. We do not carry a
liability for these guarantees as they have been excluded from the initial
recognition and measurement provisions of FASB Financial Interpretation No. 45
(FIN 45), "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others."

Indemnification Contracts:

We have provided certain indemnities pursuant to which we may be required to
make payments to an indemnified party in connection with certain divestitures.
These indemnities relate to various representations typically included in
divestitures such as environmental, tax, product liability, employee liability
and other contingencies depending on the transaction. In several of these
divestitures, a maximum obligation for certain contingencies is not specified,
which is not atypical for such transactions. Accordingly, pursuant to FIN 45,
payments under these divestiture-related indemnity obligations cannot be
reasonably estimated. The duration of the indemnities varies, and in some cases
is indefinite. We have not recorded any liability for these indemnities in the
consolidated financial statements.

We have not made any payments related to indemnity obligations that were
material to the company's financial position or results of operations for any
quarter. Furthermore, we do not expect that any sums we may have to pay in
connection with any of these indemnity obligations would have a material adverse
effect on our consolidated financial position for fiscal 2003 or in subsequent
periods.

In addition, we are contingently liable for surety bonds of $20.2 million.

In total, the guarantees identified above do not have and are not expected to
have a significant impact on our liquidity.


                                       31


CAUTIONARY STATEMENT
--------------------

This Quarterly Report on Form 10-Q contains statements relating to future
results. They are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Readers are cautioned that
these forward-looking statements speak only as of the date hereof. Actual
results may differ materially from those projected as a result of certain risks
and uncertainties, including but not limited to changes in general economic
conditions, foreign exchange rate fluctuations, changes in interest rates,
returns on pension assets, competitive product and pricing pressures, trade
consolidations, the impact of excise tax increases with respect to distilled
spirits, regulatory developments, the uncertainties of litigation, changes in
golf equipment regulatory standards, the impact of weather, particularly on the
home and hardware and golf products businesses, expenses and disruptions related
to shifts in manufacturing to different locations and sources, the impact of
weak conditions in the leisure travel industry on our golf and spirits and wine
businesses as well as other risks and uncertainties detailed from time to time
in the Company's Securities and Exchange Commission filings.



                                       32


Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------   --------------------------------------------------------

          There are no material changes in the information provided in Item 7A
          of the Company's Form 10-K for the fiscal year ended December 31,
          2002.

Item 4.   CONTROLS AND PROCEDURES.
-------   ------------------------

          (a) Evaluation of Disclosure Controls and Procedures

          The Company's Chief Executive Officer and Chief Financial Officer have
reviewed and evaluated the effectiveness of the Company's disclosure controls
and procedures (as defined in the Exchange Act) within the past ninety days.
Based on that evaluation, the Chief Executive Officer and the Chief Financial
Officer have concluded that the Company's current disclosure controls and
procedures are effective in providing them on a timely basis with material
information relating to the Company required to be disclosed in the reports the
Company files or submits under the Exchange Act.

          (b) Changes in Internal Controls.

          There have not been any significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation. There were no significant
deficiencies or material weaknesses and therefore no corrective actions were
taken.

                           PART II. OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS.
---------------------------

          (a) Smoking and Health Proceedings

Indemnification Agreement

          On December 22, 1994, Registrant sold The American Tobacco Company
("ATCO") to Brown & Williamson Tobacco Corporation ("B&W"), at the time a
wholly-owned subsidiary of B.A.T Industries p.l.c. In connection with the sale,
B&W and ATCO, which has since merged into B&W (the "Indemnitor"), agreed to
indemnify Registrant against claims including legal expenses arising from
smoking and health and fire safe cigarette matters relating to the tobacco
business of ATCO.

Individual Cases

          On May 1, 2003, there were approximately 34 smoking and health cases
pending on behalf of individual plaintiffs in which Registrant has been named as
one of the defendants, compared with approximately 34 such cases as of February
24, 2003 as reported by Registrant in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2002.




                                       33

Class Actions

          As of May 1, 2003, there were approximately nine purported smoking and
health class actions pending in which Registrant has been named as one of the
defendants, compared with approximately nine such cases on February 24, 2003, as
reported by Registrant in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2002.

Health Care Cost Recovery Actions

          As of May 1, 2003, there were approximately four health care cost
recovery actions pending in which Registrant had been named as one of the
defendants, compared with approximately four such cases as of February 24, 2003,
as reported by Registrant in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2002.

List of Pending Cases

          See Exhibit 99.1 to this Form 10-Q for a list of additional
proceedings involving the smoking and health controversy in which Registrant has
been named as a defendant and not previously reported.

List of Terminated Cases

          See Exhibit 99.1 to this Form 10-Q for a list of smoking and health
proceedings, in which Registrant has been named as a defendant, which have been
terminated and have not previously been reported as such.

Conclusion

          It is not possible to predict the outcome of the pending litigation,
and it is possible that some of these actions could be decided unfavorably.
Management is unable to make a meaningful estimate of the amount or range of
loss that could result from an unfavorable outcome of the pending litigation.
However, management believes that there are a number of meritorious defenses to
the pending actions, including the fact that the Company never made or sold
tobacco, and these actions are being vigorously contested by the Indemnitor.
Management believes that the pending actions will not have a material adverse
effect upon the results of operations, cash flows or financial condition of the
Registrant because it believes it has meritorious defenses and the Registrant is
indemnified under the previously mentioned indemnification agreement.

          Reference is made to Note 13, "Pending Litigation" in the Notes to
          Condensed Consolidated Financial Statements set forth in Part I, Item
          1 of this Quarterly Report on Form 10-Q.


                                       34


Item 6.   EXHIBITS AND REPORTS ON FORM 8-K.
-------   ---------------------------------

   (a)    Exhibits

 10a1.    Amendment effective as of February 3, 2003 to the Agreement between
          Norman M. Wesley and the Company constituting Exhibit 10m1 of our
          Form 10-K for the fiscal year ended December 31, 2001.*

 10a2.    Amendment dated February 3, 2003 to the Severance and Retirement
          Agreement between Norman H. Wesley and the Company constituting
          Exhibit 10c1 to our Quarterly Report on Form 10-Q dated May 12,
          2000.*

 12.      Statement re computation of ratio of earnings to fixed charges.

 15.      Letter from PricewaterhouseCoopers LLP dated May 14, 2003 re unaudited
          financial information.

 99.1     List of Pending/Terminated Cases.

 99.2     Joint CEO/CFO Certificate Required Under Section 906 of the
          Sarbanes-Oxley Act of 2002.

* Indicates that exhibit is a management contract or compensatory plan or
  arrangement.

          In lieu of filing certain instruments with respect to long-term debt
of the kind described in Item 601(b)(4) of Regulation S-K, Registrant agrees to
furnish a copy of such instruments to the Securities and Exchange Commission
upon request.

   (b)    Reports on Form 8-K

Registrant filed a Current Report on Form 8-K, dated January 23, 2003, in
respect of Registrant's press release dated January 22, 2003 announcing
Registrant's financial results for the fiscal year ended December 31, 2002
(Items 5 and 7(c)).

Registrant furnished a Current Report on Form 8-K, dated February 18, 2003, in
respect of distribution of Registration's revised investor brochure that was
first distributed on February 18, 2002 and Registrant's press release dated
February 18, 2003 regarding the Company's first quarter 2003 performance (Item
7(c) and 9).



                                       35



                                    SIGNATURE
                                    ---------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.


                                             FORTUNE BRANDS, INC.
                                             --------------------
                                                 (Registrant)



Date:  May 15, 2003                          By /s/ C. P. Omtvedt
     -------------------                       ---------------------------------
                                             C. P. Omtvedt
                                             Senior Vice President
                                             and Chief Financial Officer



                                       36



                                  CERTIFICATION


         I, Norman H. Wesley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fortune Brands, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

          c) presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):


          a) all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

          b) any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls; and


6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:    May 15, 2003

                                                       /s/ Norman H. Wesley
                                                       -------------------------
                                                       Norman H. Wesley
                                                       Chairman and
                                                       Chief Executive Officer



                                       37


                                  CERTIFICATION

          I, C.P. Omtvedt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fortune Brands, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

          c) presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

          a) all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

          b) any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date:   May 15, 2003                                   /s/ C.P. Omtvedt
                                                       -------------------------
                                                       C.P. Omtvedt
                                                       Senior Vice President and
                                                       Chief Financial Officer



                                       38



                                  EXHIBIT INDEX
                                  -------------


                                                                  Sequentially
Exhibit                                                           Numbered Page
-------                                                           -------------

   10a1.    Amendment effective as of February 3, 2003 to the Agreement between
            Norman M. Wesley and the Company constituting Exhibit 10m1 of our
            Form 10-K for the fiscal year ended December 31, 2001.*

   10a2.    Amendment dated February 3, 2003 to the Severance and Retirement
            Agreement between Norman H. Wesley and the Company constituting
            Exhibit 10c1 to our Quarterly Report on Form 10-Q dated May 12,
            2000.*

   12.      Statement re computation of ratio of earnings to fixed charges.

   15.      Letter from PricewaterhouseCoopers LLP dated May 14, 2003 re
            unaudited financial information.

   99.1     List of Pending/Terminated Cases.

   99.2     Joint CEO/CFO Certificate Required Under Section 906 of the
            Sarbanes-Oxley Act of 2002.

* Indicates that exhibit is a management contract or compensatory plan or
  arrangement.



                                       39