Fortune Brands Inc. (FO) reported third quarter earnings of 82 cents per share. Although earnings were well above the Zacks Consensus Estimate of 63 cents, they were down 59.8% year-over-year.

Net sales for the quarter declined 10.6% year-over-year to $1.72 billion, primarily due to flat sales for the company’s spirits business and comparatively moderate revenue declines in the golf and home products brands.

The Spirits segment revenues were flat during the quarter, as higher sales of Jim Beam bourbon and Canadian Club whisky, the Cruzan acquisition and strong growth in emerging markets was almost fully offset by soft results in other international markets. In addition, a benefit from the company’s route-to-market initiatives was largely offset by unfavorable foreign exchange.

There are signs that the U.S. housing downturn is decelerating, which coupled with the company’s share-gain initiatives across all product categories helped moderate the sales decline in the home products business compared to the prior two quarters.

In the golf segment, the company outperformed the industry with successful new products and double-digit constant-currency sales gains in Europe and Korea which were partially offset by a double-digit decrease in the U.S.

Cash flow from operations at the end of the quarter was $382.3 million and the company had a debt-to-capitalization ratio of 47%.

Based on the results year-to-date, management raised the low end of the earnings target. The company now expects annual earnings in the range of $2.10 to $2.30 compared to the previous target of $2.00-2.30. Although, the moderate declines in the home and golf product categories are encouraging, management expects consumers to remain cautious in the months ahead.

Also, the overall home products market — particularly big-ticket remodeling purchases — are expected to be challenging in 2010. The company reaffirmed its free cash flow guidance of $400 million.

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