UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549 
________________
 
FORM 8-K
 
CURRENT REPORT
 Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 3, 2011
 
THE CLOROX COMPANY
 (Exact name of registrant as specified in its charter)
________________
 
Delaware	1-07151	31-0595760	
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer	
incorporation)	 	Identification No.)	

1221 Broadway, Oakland, California 94612-1888
 (Address of principal executive offices)   (Zip code)
 
(510) 271-7000
 (Registrant's telephone number, including area code)
 
Not applicable
 (Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[ ] Written communications pursuant to Rule 425 Under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02 Results of Operations and Financial Condition
 
     On August 3, 2011, The Clorox Company (the “Company”) issued a press release announcing its financial results for its fourth quarter and fiscal year ended June 30, 2011. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
     This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
Item 7.01 Regulation FD Disclosure
 
     Attached hereto as Exhibit 99.2 and incorporated herein by reference is supplemental financial information.
 
Item 9.01 Financial Statements and Exhibits
 
 	(d)	Exhibits	
     	 	
 	Exhibit	     	Description	 	
 	99.1	Press Release dated August 3, 2011 of The Clorox Company	
 	99.2	Supplemental information regarding financial results	

 

SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	     	 	  	THE CLOROX COMPANY	

Date: August 3, 2011	 	By:  	 	/s/ Laura Stein	
 	 	 	 	       Senior Vice President –	
 	 	 	 	       General Counsel	

 

THE CLOROX COMPANY
 
FORM 8-K
 
INDEX TO EXHIBITS
 
Exhibit	Description	
99.1	Press Release dated August 3, 2011 of The Clorox Company	
99.2	Supplemental Information	

PRESS RELEASE		

Clorox Reports Strong 4% Sales and 20% EPS Growth in Q4; Updates Fiscal Year 2012 Outlook
 
OAKLAND, Calif., Aug. 3, 2011 – The Clorox Company (NYSE: CLX) today announced results for its fourth quarter and fiscal year 2011, which ended June 30. Clorox reported strong fourth-quarter results with 4 percent sales growth and 20 percent growth in diluted earnings per share from continuing operations. For fiscal year 2011, excluding the second-quarter noncash goodwill impairment charge related to the Burt’s Bees ® business, Clorox reported $3.93 diluted earnings per share (EPS), an increase of 7 percent versus the prior year.
 
“I’m really pleased with our strong finish to fiscal year 2011,” said Chairman and CEO Don Knauss. “Despite the ongoing effects of the recession, we delivered very good results in the second half of the fiscal year, much as we’d been expecting, with sales increasing 3 percent, net earnings from continuing operations growing 6 percent, and diluted EPS from continuing operations up 11 percent. This solid performance was led by our portfolio of leading brands, which achieved its highest ever all-retail outlet market share of 27.9 percent, up 1.4 share points since fiscal 2008, the strongest performance of any branded player or private label in our categories. This performance was driven by our strong ‘3D’ demand creation model. We’ve also now met or exceeded our annual innovation target of 2 percentage points of incremental sales growth from new products for the ninth consecutive year.”
 
Knauss continued, “Building on this attractive top-line performance, our returns to stockholders have been enhanced by our cost-saving initiatives, which resulted in close to $110 million of savings this year, as well as our fiscal year 2011 distribution of nearly $1 billion to our stockholders through dividends and share repurchases. We have the right people, brands and capabilities to successfully execute our Centennial Strategy. We've consistently achieved growth in earnings per share, increased market shares, delivered strong cash flow performance and returned excess cash to stockholders."
 
All results in this press release are on a continuing operations basis unless otherwise stated, and some results are reported on a non-GAAP basis. See “Non-GAAP Financial Information” below and the tables toward the end of this press release for more information and a reconciliation of key fourth-quarter and fiscal year 2011 results.
 
Fiscal Fourth-Quarter Results
 
Following is a summary of key fourth-quarter results. All comparisons are with the fourth quarter of fiscal year 2010, unless otherwise stated.
·	$1.26 diluted earnings per share (20% growth) 
·	2% volume growth 
·	4% sales growth
Clorox reported fourth-quarter net earnings from continuing operations of $169 million, or $1.26 diluted EPS. This compares with the year-ago quarter when the company reported net earnings from continuing operations of $150 million, or $1.05 diluted EPS. The increase in diluted EPS was primarily due to higher sales, a lower tax rate and share repurchases. Total company pretax earnings from continuing operations increased 5 percent. Segment earnings decreased in the quarter due to the escalation in commodity costs, the choice to increase advertising investment behind new products and brand building, and the decision to invest in certain strategic infrastructure improvements. The earnings decrease in the segments was more than offset at the total company level by lower incentive compensation expense, lower interest expense and other lower corporate expenses.
 
Volume for the fourth quarter of fiscal 2011 grew 2 percent, with the largest gains from the Cleaning and Household segments. Sales grew 4 percent, with increases in all four of the company’s segments.
 
As anticipated, gross margin decreased 80 basis points to 43.5 percent from 44.3 percent in the year-ago quarter. The decrease in the current quarter gross margin was primarily driven by higher commodity costs, partially offset by strong cost savings and the benefit of price increases.

 

“As expected, we did see a decrease in our gross margins during the fourth quarter and fiscal year due to increased commodity costs and other inflationary pressures," said Executive Vice President and Chief Financial Officer Dan Heinrich. "We were able to limit the impact by delivering strong cost savings and increasing prices in certain businesses. In fiscal 2012, we anticipate substantially higher commodity cost increases and other inflationary pressures than we saw in fiscal 2011. As a result, we will be taking broad price increases across our global portfolio. The anticipated net benefit from these pricing actions, combined with expected strong cost savings in fiscal 2012, should help us limit the impact of commodity cost increases and inflationary pressures on our margins.”
 
Advertising and sales-promotion spending increased to 9.6 percent of sales, in support of new product innovation and core business growth.
 
“We delivered strong fourth-quarter sales growth across all four segments, reflecting increased investment in advertising and demand building as evidenced by record high all-outlet retail market shares,” said Executive Vice President and Chief Operating Officer Larry Peiros. “Our market shares have increased more over the past three years than any branded competitor or private label in our categories.”
 
The effective tax rate for the fourth quarter decreased 450 basis points to 33.6 percent, primarily due to higher taxes on foreign earnings in the year-ago quarter. The company’s normal effective tax rate is in the range of 33 percent to 34 percent.
 
Cash provided by continuing operations was $303 million, or 20 percent of sales, for the quarter. Free cash flow, which the company defines as cash provided by continuing operations less capital expenditures, was $234 million, or 16 percent of sales, for the quarter.
 
During the fourth quarter, Clorox repurchased 2.7 million shares of the company’s common stock at a cost of $183 million using proceeds from the sale of the Auto Care businesses. As of June 30, 2011, approximately $159 million remained from the proceeds of the sale. For the full fiscal year, Clorox repurchased 9.8 million shares of the company’s common stock at a cost of $655 million.
 
Key Segment Results
 
Following is a summary of key fourth-quarter results by segment. All comparisons are with the fourth quarter of fiscal year 2010, unless otherwise stated.
 
Cleaning
 
(Laundry, home care, away from home)
·	4% volume growth 
·	4% sales growth  
·	4% pretax earnings decrease
The segment’s volume growth was primarily driven by higher shipments in the Home Care and Away From Home businesses. Home Care grew shipments behind strong merchandising on Clorox ® disinfecting wipes and several new product launches across the rest of the portfolio. The Away From Home business had gains in the hospital channel driven by new products and new distribution points. These results were partially offset by lower shipments in the Laundry business due to category softness. Pretax earnings reflected unfavorable commodity costs and product mix, substantially offset by higher sales and the benefit of cost savings.
 
Household
 
(Bags & wraps, charcoal, cat litter)
·	2% volume growth  
·	1% sales growth  
·	7% pretax earnings decrease
Page 2 of 14

 

Volume growth reflected gains in Cat Litter and Bags & Wraps. These factors were partially offset by lower shipments of Kingsford ® charcoal due to a high level of shipments in the year-ago quarter resulting from elevated merchandising activity. The variance between volume and sales growth was primarily due to unfavorable product mix and the impact of incremental customer pick-up allowances, partially offset by the benefit of price increases. Pretax earnings reflected higher commodity costs, partially offset by the benefit of cost savings.
 
Lifestyle
 
(Dressings & sauces, water filtration, global natural personal care)
·	3% volume growth  
·	5% sales growth  
·	16% pretax earnings decrease
The segment’s volume growth was driven primarily by new flavor launches in Dressings & Sauces and higher shipments in Water Filtration due to the new Brita ® on-the-go bottle launch. Also contributing to volume growth were increased shipments of Burt’s Bees ® natural personal care products in U.S. and International markets. The variance between changes in volume and sales was primarily due to lower trade-promotion spending. Pretax earnings reflected a 45 percent increase in advertising spending in support of product innovation, as well as unfavorable commodity costs, partially offset by higher sales and cost savings.
 
International
 
(Sales in all countries outside of the U.S., excluding natural personal care)
·	Flat volume  
·	9% sales growth  
·	13% pretax earnings decrease
Strong sales growth in the segment exceeded flat volume due to the benefit of favorable foreign currency exchange rates and the impact of price increases. Pretax earnings reflected higher manufacturing and logistics costs, commodity costs and selling and administrative expenses associated with investments in information systems infrastructure. These factors were partially offset by stronger sales.
 
Fiscal Year 2011 Results
 
Following is a summary of key fiscal year 2011 results. All comparisons are with fiscal year 2010, and results exclude the second-quarter noncash goodwill impairment charge related to the Burt’s Bees ® business, unless otherwise stated.
·	$3.93 diluted earnings per share (7% growth)  
·	Flat volume 
·	Flat sales
For fiscal year 2011, excluding the noncash goodwill impairment charge, Clorox reported net earnings from continuing operations of $545 million, or $3.93 diluted EPS, versus $526 million, or $3.69 diluted earnings per share (EPS), in fiscal 2010. The increase in diluted EPS was primarily due to lower incentive compensation, lower interest expense, a lower tax rate and share repurchases. Earnings for the current year were impacted by foreign currency losses of $24 million, or 11 cents diluted EPS, related to the Venezuela currency devaluation. This compares with foreign currency losses of $53 million, or 24 cents diluted EPS, related to the Venezuela currency devaluation, in fiscal year 2010.
 
Page 3 of 14

 

Volume was flat, as gains from Burt’s Bees ® natural personal care products, the Away From Home institutional business and Home Care were offset by lower shipments of Glad ® food storage products and laundry additives due to category softness.
 
Sales were flat at $5.2 billion, with the benefit of price increases offset by unfavorable product mix and the impact of incremental customer pick-up allowances. 
 
Gross margin decreased 80 basis points to 43.5 percent from 44.3 percent in fiscal year 2010. The year-over-year decrease was primarily driven by higher commodity costs, higher manufacturing and logistics costs, and unfavorable product mix, partially offset by strong cost savings and the benefit of price increases.
 
Cash provided by continuing operations was $690 million, or 13 percent of sales. Free cash flow was $462 million, or 9 percent of sales for the fiscal year, below the company’s targeted range of 10 percent to 12 percent of sales due to changes in working capital and higher capital expenditures for investments in global information technology systems and research and development facilities.
 
Clorox Updates Its Fiscal 2012 Financial Outlook
 
Clorox also updated its previous financial outlook for fiscal year 2012 continuing operations:
·	1-3 percent sales growth  
·	Gross margin about flat  
·	Diluted EPS in the range of $4.00-$4.10, including incremental IT systems and facility investments in the range of 18-20 cents diluted EPS
For fiscal year 2012, Clorox now anticipates year-over-year commodity cost increases in the range of $140 million to $150 million, down from the company’s previous outlook of $160 million to $170 million. The company anticipates that about $85 million to $90 million of these increases will occur in the first half of the fiscal year. Clorox continues to anticipate $40 million to $50 million of inflationary pressures in manufacturing and logistics expenses for the fiscal year. The company anticipates it will substantially mitigate the margin impact for the full year with strong cost savings in the range of $90 million to $100 million, occurring about evenly across quarters. Clorox anticipates that broad price increases planned for fiscal 2012 will be partially offset by volume losses in the first half of the fiscal year, with more pricing benefit in the second half. Based on the expected timing of cost increases, cost savings and the benefit of price increases, the company anticipates a decline in the range of 150 basis points to 175 basis points in first quarter gross margin.
 
Clorox continues to anticipate investing $36 million to $40 million, primarily reflected in selling and administrative expense and more heavily weighted to the first half of the fiscal year, for the investments in global information technology systems and research and development facilities, and to expand the Burt’s Bees international network. The company continues to anticipate incremental capital spending in the range of $55 million to $60 million for the information technology and facilities initiatives. The company anticipates total capital spending in the range of $240 million to $250 million in fiscal 2012, compared with $228 million in fiscal 2011.
 
Given the seasonality of Clorox’s business and the company’s outlook for a greater first-half impact from commodity cost increases, the company anticipates that about 60 percent to 65 percent of diluted EPS from continuing operations will occur in the second half of the fiscal year.
 
Page 4 of 14

 

For More Detailed Financial Information
 
Visit the Investors: Financial Results section of the company’s website at www.TheCloroxCompany.com for the following:
·	Supplemental volume and sales growth information  
·	Supplemental gross margin driver information  
·	Reconciliation of certain non-GAAP financial information, including earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation and amortization (EBITDA)  
·	Economic profit reconciliation information  
·	Supplemental balance sheet and cash flow information  
·	Supplemental price-change information  
·	Return on invested capital (ROIC) reconciliation information
Note: Percentage and basis-point changes noted in this news release are calculated based on rounded numbers. Supplemental materials are available in the Investors: Financial Results section of the company’s website at www.TheCloroxCompany.com .
 
Today’s Webcast
 
Today at 10:30 a.m. Pacific time (1:30 p.m. Eastern time), Clorox will host a live audio webcast of a discussion with the investment community regarding the company’s fourth-quarter and fiscal year 2011 results. The webcast can be accessed at http://investors.thecloroxcompany.com . Following a live discussion, a replay of the webcast will be archived for one week on the company’s website.
 
The Clorox Company
 
The Clorox Company is a leading manufacturer and marketer of consumer products with 8,100 employees and fiscal year 2011 revenues of $5.2 billion. Clorox markets some of consumers' most trusted and recognized brand names, including its namesake bleach and cleaning products, Green Works ® naturally derived home care products, Pine-Sol ® cleaners, Poett ® home care products, Fresh Step ® cat litter, Kingsford ® charcoal, Hidden Valley ® and K C Masterpiece ® dressings and sauces, Brita ® water-filtration products, Glad ® bags, wraps and containers, and Burt’s Bees ® natural personal care products. Nearly 90 percent of Clorox Company brands hold the No. 1 or No. 2 market share positions in their categories. The company’s products are manufactured in more than two dozen countries and sold in more than 100 countries. Clorox is committed to making a positive difference in the communities where its employees work and live. Founded in 1980, The Clorox Company Foundation has awarded cash grants totaling more than $84 million to nonprofit organizations, schools and colleges. In fiscal year 2011 alone, the foundation awarded $4 million in cash grants, and Clorox made product donations valued at $13 million. For more information about Clorox, visit www.TheCloroxCompany.com .
 
Page 5 of 14

 

Forward-Looking Statements
 
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and such forward-looking statements involve risks and uncertainties. Except for historical information, matters discussed above, including statements about future volume, sales, costs, cost savings, earnings, cash flows, plans, objectives, expectations, growth, or profitability, are forward-looking statements based on management’s estimates, assumptions and projections. Words such as “will,” “could,” “may,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations on such words, and similar expressions, are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed above. Important factors that could affect performance and cause results to differ materially from management’s expectations are described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report on Form 10-K for the year ended June 30, 2010, as updated from time to time in the company’s SEC filings. These factors include, but are not limited to: the company’s costs, including volatility and increases in commodity costs such as resin, diesel, chlor-alkali, sodium hypochlorite, agricultural commodities and other raw materials; increases in energy costs; the ability of the company to implement and generate expected savings from its programs to reduce costs, including its supply chain restructuring and other restructuring plans; supply disruptions or any future supply constraints that may affect key commodities or product inputs; risks inherent in relationships with suppliers, including sole-source or single-source suppliers; risks related to the handling and/or transportation of hazardous substances, including, but not limited to, chlorine; the success of the company’s strategies; the ability to manage and realize the benefits of joint ventures and other cooperative relationships, including the company’s joint venture regarding the company’s Glad ® plastic bags, wraps and containers business, and the agreements relating to the provision of information technology, procure to pay and other key services by third parties; risks relating to acquisitions, mergers and divestitures, including the company’s ability to achieve the updated strategic and financial benefits from the Burt’s Bees ® acquisition or the company’s ability to successfully implement changes resulting from divestitures, including the sale of the global Auto Care businesses, and the costs associated therewith; risks inherent in maintaining an effective system of internal controls, including the potential impact of acquisitions or the use of third-party service providers, and the need to refine controls to adjust for accounting, financial reporting and other organizational changes or business conditions; the ability of the company to successfully manage tax, regulatory, product liability, intellectual property, environmental and other legal matters, including the risk resulting from joint and several liability for environmental contingencies and risks inherent in litigation, including class action litigation; risks related to maintaining and updating the company’s information systems, including potential disruptions, costs and the ability of the company to implement adequate information systems in order to support the current business and to support the company’s potential growth; the success of new products and the ability of the company to develop products that delight the consumer; consumer and customer reaction to price increases; competitive actions; risks related to customer concentration; customer-specific ordering patterns and trends; risks arising out of natural disasters; the impact of disease outbreaks, epidemics or pandemics on the company’s, suppliers’ or customers’ operations; changes in the company’s tax rate; continuing unfavorable worldwide general economic and marketplace conditions and events, including consumer confidence and consumer spending levels, the rate of economic growth, the rate of inflation or deflation, and the financial condition of the company’s customers, suppliers and service providers; foreign currency exchange rate and interest rate fluctuations; unfavorable political conditions in international markets and risks relating to international operations; the impact of the volatility of the debt markets on the company’s cost of borrowing and access to funds, including commercial paper and its credit facility; risks relating to changes in the company’s capital structure, including risks related to the company’s ability to execute on share repurchase plans and the impact thereof on the company’s capital structure and earnings per share; the need for any unanticipated restructuring or asset-impairment charges; risks arising from decreases in cash flow, whether resulting from declining sales, higher cost levels, tax payments, debt payments, share repurchases, interest cost increases greater than management’s expectations, or increases in debt or changes in credit ratings, or otherwise; business disruptions, costs and future events related to the unsolicited, conditional proposal made by Icahn Enterprises L.P.; and the company’s ability to maintain its business reputation and the reputation of its brands.
 
Page 6 of 14

 

The company’s forward-looking statements in this press release are based on management’s current views and assumptions regarding future events and speak only as of their dates. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws.
 
Non-GAAP Financial Information
 
This press release contains non-GAAP financial information relating to diluted EPS, sales growth and gross margin. Included below is a reconciliation of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the U.S. (GAAP).
 
The company has disclosed information related to diluted EPS, sales and gross margin on a non-GAAP basis to supplement its condensed consolidated statements of earnings presented in accordance with GAAP. These non-GAAP financial measures exclude certain items that are included in the company’s EPS, sales and gross margin reported in accordance with GAAP, including:
·	Charges associated with simplification of the company’s supply chain and other restructuring-related charges.  
·	The impact of foreign exchange and foreign currency transactions.  
·	The noncash goodwill impairment charge.
Management believes that these non-GAAP financial measures provide useful additional information to investors about current trends in the company’s operations and are useful for period over period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should only be read in connection with the company’s condensed consolidated statements of earnings presented in accordance with GAAP.
 
See Below for These Unaudited Fourth-Quarter and Fiscal 2011 Results:
·	Condensed Consolidated Statements of Earnings, Reportable Segment Information and Condensed Consolidated Balance Sheets 
·	Reconciliation of Fourth-Quarter and Fiscal 2011 Sales Growth, Gross Margin and Diluted EPS
Media Relations
Dan Staublin 510-271-1622, dan.staublin@clorox.com
Kathryn Caulfield 510-271-7209, kathryn.caulfield@clorox.com
 
Investor Relations
Li-Mei Johnson 510-271-3396, li-mei.johnson@clorox.com
Steve Austenfeld 510-271-2270, steve.austenfeld@clorox.com
 
For recent presentations made by company management and other investor materials, visit http://investors.thecloroxcompany.com/events.cfm .
 
Page 7 of 14

 

The Clorox Company		

Condensed Consolidated Statements of Earnings (Unaudited)
 Dollars in millions, except per share amounts
 
 	 	Three Months Ended	 	Twelve Months Ended	
 	     	6/30/2011	     	6/30/2010	     	6/30/2011	     	6/30/2010	
Net sales	 	$    	1,482	 	 	$    	1,429	 	$    	5,231	 	 	$    	5,234	
Cost of products sold	 	 	837	 	 	 	796	 	 	2,958	 	 	 	2,915	
Gross profit	 	 	645	 	 	 	633	 	 	2,273	 	 	 	2,319	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling and administrative expenses	 	 	192	 	 	 	199	 	 	735	 	 	 	734	
Advertising costs	 	 	142	 	 	 	127	 	 	502	 	 	 	494	
Research and development costs	 	 	29	 	 	 	33	 	 	115	 	 	 	118	
Restructuring and asset impairment costs	 	 	-	 	 	 	-	 	 	4	 	 	 	4	
Goodwill impairment	 	 	-	 	 	 	-	 	 	258	 	 	 	-	
Interest expense	 	 	29	 	 	 	32	 	 	123	 	 	 	139	
Other (income) expense, net	 	 	(1	)	 	 	-	 	 	(27	)	 	 	25	
Earnings from continuing operations before income taxes	 	 	254	 	 	 	242	 	 	563	 	 	 	805	
Income taxes on continuing operations	 	 	85	 	 	 	92	 	 	276	 	 	 	279	
Earnings from continuing operations	 	 	169	 	 	 	150	 	 	287	 	 	 	526	
Discontinued operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
       Earnings from Auto businesses, net of tax	 	 	-	 	 	 	21	 	 	23	 	 	 	77	
       Gain on sale of Auto businesses, net of tax	 	 	-	 	 	 	-	 	 	247	 	 	 	-	
Earnings from discontinued operations	 	 	-	 	 	 	21	 	 	270	 	 	 	77	
Net earnings	 	$	169	 	 	$	171	 	$	557	 	 	$	603	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
       Basic	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
              Continuing operations	 	$	1.27	 	 	$	1.06	 	$	2.09	 	 	$	3.73	
              Discontinued operations	 	 	-	 	 	 	0.15	 	 	1.97	 	 	 	0.55	
       Basic net earnings per share	 	$	1.27	 	 	$	1.21	 	$	4.06	 	 	$	4.28	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
       Diluted	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
              Continuing operations	 	$	1.26	 	 	$	1.05	 	$	2.07	 	 	$	3.69	
              Discontinued operations	 	 	-	 	 	 	0.15	 	 	1.95	 	 	 	0.55	
       Diluted net earnings per share	 	$	1.26	 	 	$	1.20	 	$	4.02	 	 	$	4.24	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding (in thousands)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
       Basic	 	 	132,279	 	 	 	140,280	 	 	136,699	 	 	 	140,272	
       Diluted	 	 	133,667	 	 	 	141,651	 	 	138,101	 	 	 	141,534	

Page 8 of 14

 

The Clorox Company		

Reportable Segment Information
(Unaudited)
 Dollars in millions
 
Fourth Quarter	 	Net Sales	 	Earnings/(Losses) from Continuing Operations
Before Income Taxes	
 	 	Three Months Ended	 	 	 	 	Three Months Ended	 	 	 	
 	      	6/30/11	      	6/30/10 (2)	      	% Change (1)	      	6/30/11	      	6/30/10 (2)	      	% Change (1)	
Cleaning Segment	 	$     	409	 	$     	395	 	              4	%	 	$      	82	 	 	$      	85	 	 	-4	%	
Household Segment	 	 	543	 	 	540	 	1	%	 	 	127	 	 	 	136	 	 	-7	%	
Lifestyle Segment	 	 	237	 	 	226	 	5	%	 	 	65	 	 	 	77	 	 	-16	%	
International Segment	 	 	293	 	 	268	 	9	%	 	 	27	 	 	 	31	 	 	-13	%	
Corporate (4)	 	 	-	 	 	-	 	0	%	 	 	(47	)	 	 	(87	)	 	-46	%	
Total Company	 	$	1,482	 	$	1,429	 	4	%	 	$	254	 	 	$	242	 	 	              5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	Earnings/(Losses) from Continuing Operations	
Year-to-Date	 	Net Sales	 	Before Income Taxes	
 	 	Twelve Months Ended	 	 	 	 	Twelve Months Ended	 	 	 	
 	 	6/30/11	 	6/30/10 (2)	 	% Change (1)	 	6/30/11	 	6/30/10 (2)	 	% Change (1)	
Cleaning Segment	 	$	1,619	 	$	1,624	 	0	%	 	$	356	 	 	$	368	 	 	-3	%	
Household Segment	 	 	1,611	 	 	1,663	 	-3	%	 	 	278	 	 	 	290	 	 	-4	%	
Lifestyle Segment (3)	 	 	883	 	 	864	 	2	%	 	 	(1	)	 	 	303	 	 	-100	%	
International Segment	 	 	1,118	 	 	1,083	 	3	%	 	 	147	 	 	 	144	 	 	2	%	
Corporate (5)	 	 	-	 	 	-	 	0	%	 	 	(217	)	 	 	(300	)	 	-28	%	
Total Company	 	$	5,231	 	$	5,234	 	0	%	 	$	563	 	 	$	805	 	 	-30	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1)	 	Percentages based on rounded numbers.	
(2)	 	As a result of the Auto Businesses' results being included in discontinued operations in the three months ended June 30, 2011 and fiscal year ended June 30, 2011, the prior comparative period(s) have been reclassified to conform with the current period presentation.	
(3)	 	  The earnings/(losses) from continuing operations before income taxes for the fiscal year ended June 30, 2011 for the Lifestyle segment includes a $258 noncash goodwill impairment charge recognized in the fiscal 2011 second quarter for the Burt's Bees business.	
(4)	 	  The decrease in corporate losses for the three months ended June 30, 2011, as compared to the three months ended June 30, 2010, is primarily due to lower benefit and employee compensation costs, lower insurance expense, lower interest expense, primarily due to a decline in average debt balances, and income from transition services related to the sale of the global auto care businesses.	
(5)	 	The decrease in corporate losses for the fiscal year ended June 30, 2011, as compared to the fiscal year ended June 30, 2010, is primarily due to lower benefit and employee compensation costs, lower interest expense, primarily due to a decline in average debt balances, gains on asset sales, income from transition services related to the sale of the global auto care businesses and lower insurance expense.	
 
Page 9 of 14

 

The Clorox Company		

Condensed Consolidated Balance Sheets (Unaudited)
 Dollars in millions
 
 	     	6/30/2011	     	6/30/2010	
ASSETS	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	
       Cash and cash equivalents	 	$     	259	 	 	$     	87	 	
       Receivables, net	 	 	525	 	 	 	540	 	
       Inventories, net	 	 	382	 	 	 	332	 	
       Assets held for sale, net	 	 	-	 	 	 	405	 	
       Other current assets	 	 	113	 	 	 	125	 	
 	 	 	 	 	 	 	 	 	
              Total current assets	 	 	1,279	 	 	 	1,489	 	
 	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	1,039	 	 	 	966	 	
Goodwill	 	 	1,070	 	 	 	1,303	 	
Trademarks, net	 	 	550	 	 	 	550	 	
Other intangible assets, net	 	 	83	 	 	 	96	 	
Other assets	 	 	142	 	 	 	144	 	
 	 	 	 	 	 	 	 	 	
Total assets	 	$	4,163	 	 	$	4,548	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	
       Notes and loans payable	 	$	459	 	 	$	371	 	
       Current maturities of long-term debt	 	 	-	 	 	 	300	 	
       Accounts payable	 	 	423	 	 	 	409	 	
       Accrued liabilities	 	 	442	 	 	 	491	 	
       Income taxes payable	 	 	41	 	 	 	74	 	
 	 	 	 	 	 	 	 	 	
              Total current liabilities	 	 	1,365	 	 	 	1,645	 	
Long-term debt	 	 	2,125	 	 	 	2,124	 	
Other liabilities	 	 	619	 	 	 	677	 	
Deferred income taxes	 	 	140	 	 	 	19	 	
 	 	 	 	 	 	 	 	 	
              Total liabilities	 	 	4,249	 	 	 	4,465	 	
 	 	 	 	 	 	 	 	 	
Comiitments and contingencies	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Stockholders’ (deficit) equity	 	 	 	 	 	 	 	 	
       Common stock	 	 	159	 	 	 	159	 	
       Additional paid-in capital	 	 	632	 	 	 	617	 	
       Retained earnings	 	 	1,143	 	 	 	920	 	
       Treasury shares	 	 	(1,770	)	 	 	(1,242	)	
       Accumulated other comprehensive net losses	 	 	(250	)	 	 	(371	)	
 	 	 	 	 	 	 	 	 	
Stockholders’ (deficit) equity	 	 	(86	)	 	 	83	 	
  	 	 	 	 	 	 	 	 	
Total liabilities and stockholders’ (deficit) equity	 	$	4,163	 	 	$	4,548	 	
 	 	 	 	 	 	 	 	 	
Page 10 of 14

 

The Clorox Company		

The tables below present the reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures and other supplemental information. See “Non-GAAP Financial Information” above for further information regarding the company’s use of non-GAAP financial measures.
 
Fourth-Quarter Sales Growth Reconciliation
 
Note: Q4 FY10 sales growth has been adjusted to reflect the reporting of the Auto Care businesses in discontinued operations beginning in Q1 FY11.
 
 	     	Fiscal	     	Fiscal	
 	 	2011	 	2010	
Base sales growth	 	          3.2	%	 	          1.5	%	
Foreign exchange – Venezuela	 	0.3	 	 	-2.3	 	
Foreign exchange – All other	 	1.0	 	 	1.2	 	
Incremental customer pick-up allowances	 	-0.8	 	 	--	 	
Total sales growth	 	3.7	%	 	0.4	%	
 	 	 	 	 	 	 	
Fourth-Quarter Gross Margin Reconciliation
 
Note: Q4 FY10 gross margin drivers have not been adjusted to reflect the reporting of the Auto Care businesses in discontinued operations beginning in Q1 FY11.
 
Q4 fiscal 2010 gross margin	 	 	     	Q4 fiscal 2009 gross margin (as	 	 	
(adjusted for discontinued	          44.3	%	 	previously reported)	          45.8	%	
operations)	 	 	 	 	 	 	
 	 	 	 	 	 	 	
Commodities	-1.7	 	 	Commodities	-2.6	 	
Cost savings	1.1	 	 	Cost savings	2.2	 	
Pricing	0.7	 	 	Pricing	0.6	 	
Logistics and manufacturing	-0.8	 	 	Logistics and manufacturing	-0.3	 	
Incremental customer pick-up	 	 	 	Incremental customer pick-up	 	 	
allowances	0.4	 	 	allowances	--	 	
Other *	-0.4	 	 	Other *	-1.1	 	
 	 	 	 	 	 	 	
Q4 fiscal 2011 adjusted gross margin	 	 	 	Q4 fiscal 2010 adjusted gross margin	 	 	
before impact of charges	43.6	 	 	before impact of charges	44.6	 	
 	 	 	 	 	 	 	
Restructuring-related charges	-0.1	 	 	Restructuring-related charges	0.2	 	
Impact of Auto Care businesses	 	 	 	Impact of Auto Care businesses	 	 	
divestiture	--	 	 	divestiture	-0.5	 	
 	 	 	 	 	 	 	
Q4 fiscal 2011 adjusted gross margin	43.5	%	 	Q4 fiscal 2010 adjusted gross margin	44.3	%	
 	 	 	 	 	 	 	
*	    	“Other” includes all other drivers of gross margin change, such as trade-promotion spending, product mix, and foreign currency translation and transaction impacts.	
 
Page 11 of 14

 

The Clorox Company		

Fourth-Quarter Diluted EPS Reconciliation
 
Note: The following table reflects the reclassification of the Auto Care businesses to discontinued operations beginning in Q1 FY11.
 
 	 	Q4 Fiscal	 	 	 	 	 	 	
 	 	2011	 	Q4 Fiscal 2010	
 	 	 	 	 	As
previously
reported	 	Adjusted for
discontinued
operations	
Diluted EPS – non-GAAP	     	$       	1.29	     	$       	1.27	     	$       	1.12	
Foreign exchange impact – Venezuela	 	 	0.01	 	 	-0.05	 	 	-0.05	
Restructuring and restructuring-related charges *	 	 	-0.04	 	 	-0.02	 	 	-0.02	
Diluted EPS – continuing operations (excl. impairment)	 	 	1.26	 	 	1.20	 	 	1.05	
Impact of goodwill impairment	 	 	--	 	 	--	 	 	--	
Diluted EPS – continuing operations	 	 	1.26	 	 	1.20	 	 	1.05	
Earnings from Auto Care businesses, net of tax	 	 	--	 	 	--	 	 	0.15	
Diluted EPS – GAAP	 	$	1.26	 	$	1.20	 	$	1.20	
 	 	 	 	 	 	 	 	 	 	
*	    	Restructuring and restructuring-related charges were $9 million and $3 million in fiscal years 2011 and 2010, respectively. In fiscal 2011, nearly all of the charges were evenly split between cost of products sold and selling and administrative expenses. In fiscal 2010, nearly all of the charges were reflected in cost of products sold.	
 
Page 12 of 14

 

The Clorox Company		

Fiscal Year Sales Growth Reconciliation
 
Note: FY10 sales growth has been adjusted to reflect the reporting of the Auto Care businesses in discontinued operations beginning in Q1 FY11.
 
 	     	Fiscal	     	Fiscal	
 	 	2011	 	2010	
Base sales growth	 	          0.8	%	 	          2.0	%	
Foreign exchange – Venezuela	 	-1.1	 	 	-1.2	 	
Foreign exchange – All other	 	0.8	 	 	0.8	 	
Incremental customer pick-up allowances	 	-0.6	 	 	--	 	
Exit from private label business	 	--	 	 	-0.1	 	
Total sales growth	 	-0.1	%	 	1.5	%	
 	 	 	 	 	 	 	
Fiscal Year Gross Margin Reconciliation
 
Note: FY10 gross margin drivers have not been adjusted to reflect the reporting of the Auto Care businesses in discontinued operations beginning in Q1 FY11.
 
Fiscal 2010 gross margin (adjusted	     	 	 	     	Fiscal 2009 gross margin (adjusted	     	 	 	
for discontinued operations)	 	          44.3	%	 	for discontinued operations)	 	          43.0	%	
 	 	 	 	 	 	 	 	 	
Commodities	 	-1.6	 	 	Commodities	 	0.3	 	
Cost savings	 	1.7	 	 	Cost savings	 	1.8	 	
Pricing	 	0.8	 	 	Pricing	 	0.9	 	
Logistics and manufacturing	 	-0.6	 	 	Logistics and manufacturing	 	-0.3	 	
Incremental customer pick-up	 	 	 	 	Incremental customer pick-up	 	 	 	
allowances	 	0.3	 	 	allowances	 	--	 	
Other *	 	-1.4	 	 	Other *	 	-1.0	 	
 	 	 	 	 	 	 	 	 	
Fiscal 2011 adjusted gross margin	 	 	 	 	Fiscal 2010 adjusted gross margin	 	 	 	
before impact of charges	 	43.5	 	 	before impact of charges	 	44.7	 	
 	 	 	 	 	 	 	 	 	
Restructuring-related charges	 	--	 	 	Restructuring-related charges	 	0.1	 	
Impact of Auto Care businesses	 	 	 	 	Impact of Auto Care businesses	 	 	 	
divestiture	 	--	 	 	divestiture	 	-0.5	 	
 	 	 	 	 	 	 	 	 	
Fiscal 2011 adjusted gross margin	 	43.5	%	 	Fiscal 2010 adjusted gross margin	 	44.3	%	
 	 	 	 	 	 	 	 	 	
*	    	“Other” includes all other drivers of gross margin change, such as trade-promotion spending, product mix, and foreign currency translation and transaction impacts.	
 
Page 13 of 14

 

The Clorox Company		

Fiscal Year Diluted EPS Reconciliation
 
Note: The following table reflects the reclassification of the Auto Care businesses to discontinued operations beginning in Q1 FY11.
 
 	 	Fiscal	 	Fiscal 2010	 	 	 	
 	 	2011	 	 	 	 	 	 	
 	     	 	 	     	As
previously
reported	     	Adjusted for
discontinued
operations	
Diluted EPS – non-GAAP	 	$	4.16	 	$	4.57	 	$	4.02	
Foreign exchange impact – Venezuela *	 	 	-0.11	 	 	-0.24	 	 	-0.24	
Foreign exchange impact – Other	 	 	--	 	 	-0.01	 	 	-0.01	
Restructuring and restructuring-related charges **	 	 	-0.12	 	 	-0.08	 	 	-0.08	
Diluted EPS – continuing operations, excl. impairment	 	 	 	 	 	 	 	 	 	
(non-GAAP) ***	 	 	3.93	 	 	4.24	 	 	3.69	
Impact of goodwill impairment	 	 	-1.86	 	 	--	 	 	--	
Diluted EPS – continuing operations	 	 	2.07	 	 	4.24	 	 	3.69	
Earnings from Auto Care businesses, net of tax	 	 	0.16	 	 	--	 	 	0.55	
Gain on sale of Auto Care businesses, net of tax	 	 	1.79	 	 	--	 	 	--	
Diluted EPS – GAAP	 	$	       4.02	 	$	4.24	 	$	4.24	

*	FY10 includes the impact of remeasuring certain assets and liabilities in Venezuela using the Venezuelan Bolivar parallel market exchange rate (-$0.04); the transaction costs of exchanging Bolivars to U.S. dollars to pay for U.S.- denominated inventory purchases (-$0.12); and losses from translating the income statement from Bolivars to U.S. dollars (-$0.08).	
**	Restructuring and restructuring-related charges were $24 million and $17 million in fiscal years 2011 and 2010, respectively. In fiscal 2011, nearly all of the charges were evenly split between cost of products sold and selling and administrative expenses. In fiscal 2010, about two-thirds of the charges were reflected in cost of products sold.	
***      	Earnings from continuing operations before income taxes were $563 million for fiscal year 2011. Excluding the second-quarter noncash goodwill impairment charge, earnings from continuing operations before income taxes for the fiscal year was $821 million. The diluted impact of the goodwill impairment charge was $1.86 diluted EPS from continuing operations. Excluding the goodwill impairment charge, diluted EPS from continuing operations for the fiscal year was $3.93.	
 
Page 14 of 14

The Clorox Company		

Supplemental Information – Volume Growth
 
 	% Change vs. Prior Year	 	
Reportable Segments	FY10 (2)	FY11 (2)	Major Drivers of Change	
 	Q1	Q2	Q3	Q4	FY	Q1	Q2	Q3	Q4	FY	 	
Cleaning	6%	9%	3%	-2%	4%	1%	-6%	4%	4%	1%	Q4 increase primarily due to increased shipments of Clorox ® disinfecting products to retail and institutional customers.	
Household	-7%	0%	4%	1%	-1%	-9%	-1%	-3%	2%	-2%	Q4 increase mainly due to increased shipments of Cat Litter, offset by lower shipments of Kingsford ® charcoal due to high merchandising in the year-ago quarter.	
Lifestyle (1)	4%	12%	8%	10%	8%	1%	3%	3%	3%	3%	Q4 increase primarily due to new flavor launches in Dressings & Sauces, higher shipments of the new Brita ® on-the-go bottle, and increased shipments of Burt’s Bees ® natural personal care products. 	
International (1)	3%	1%	1%	0%	1%	-2%	3%	0%	0%	0%	No significant changes versus the year-ago quarter.	
Total Company	1%	5%	3%	1%	3%	-2%	-2%	1%	2%	0%	 	

Supplemental Information – Sales Growth
 
 	% Change vs. Prior Year	 	
Reportable Segments	FY10 (2)	FY11 (2)	Major Drivers of Change	
 	Q1	Q2	Q3	Q4	FY	Q1	Q2	Q3	Q4	FY	 	
Cleaning	5%	3%	-2%	-4%	0%	-1%	-6%	3%	4%	0%	Q4 sales growth is consistent with increase in volume.	
Household	-11%	-6%	0%	0%	-4%	-7%	-4%	-3%	1%	-3%	Q4 variance between changes in volume and sales was primarily driven by unfavorable product mix and higher customer pickup allowances, offset by the benefit of price increases .	
Lifestyle (1)	3%	10%	5%	7%	6%	1%	3%	0%	5%	2%	Q4 variance between changes in volume and sales was due to lower trade-promotion spending.	
International (1)	4%	22%	7%	2%	9%	-2%	-1%	8%	9%	3%	Q4 variance between changes in volume and sales was due to the impact of favorable foreign currency exchange rates and the benefit of price increases, partially offset by unfavorable product mix and higher trade-promotion spending.	
Total Company	-1%	5%	1%	0%	1%	-3%	-3%	1%	4%	0%	 	
 
(1)	    	Lifestyle includes results of the worldwide Burt’s Bees business. International includes Canadian results.	
(2)	 	Volume growth and sale growth percentage changes for the Cleaning and International reportable segments and Total Company reflect the reclassification of the Auto Care businesses to discontinued operations in Q1 fiscal 2011 for sales through November 4 th of fiscal year 2011.	

 

The Clorox Company		

Earnings (Losses) From Continuing Operations Before Interest and Taxes (EBIT), Earnings (Losses) From Continuing Operations Before Interest, Taxes, Depreciation and Amortization (EBITDA) (1)
 
Reconciliation of earnings (losses) from continuing operations before income taxes to EBIT and EBITDA
 
Dollars in millions and percentages based on rounded numbers
 
 	 	FY 2010	 	 	FY 2011	 	
 	 	Q1	 	Q2	 	Q3	 	Q4	 	FY	 	 	Q1	 	Q2	 	Q3	 	Q4	 	FY	 	
 	    	9/30/09	    	12/31/09	    	3/31/10	    	6/30/10	    	6/30/10	  	  	9/30/10	    	12/31/10	    	3/31/2011	    	6/30/11	    	6/30/11	 	
Earnings (losses) from continuing	 	$	217	 	 	$	137	 	 	$	209	 	 	$	242	 	 	  $	805	 	 	 	  $	202	 	 	$	(112	)	 	$	219	 	 	$	254	 	 	$	563	 	 	
operations before income taxes	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Goodwill impairment (2)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	 	-	 	 	 	258	 	 	 	-	 	 	 	-	 	 	 	258	 	 	
Interest income	 	 	(1	)	 	 	(1	)	 	 	-	 	 	 	(1	)	 	 	(3	)	 	 	 	(1	)	 	 	(1	)	 	 	-	 	 	 	(1	)	 	 	(3	)	 	
 	 	 	36	 	 	 	37	 	 	 	34	 	 	 	32	 	 	 	139	 	 	 	 	32	 	 	 	33	 	 	 	29	 	 	 	29	 	 	 	123	 	 	
Interest expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBIT (3)	 	 	252	 	 	 	173	 	 	 	243	 	 	 	273	 	 	 	941	 	 	 	 	233	 	 	 	178	 	 	 	248	 	 	 	282	 	 	 	941	 	 	
EBIT margin (3)	 	 	19.3	%	 	 	14.2	%	 	 	18.9	%	 	 	19.1	%	 	 	18.0	%	 	 	 	18.4	%	 	 	15.1	%	 	 	19.0	%	 	 	19.0	%	 	 	18.0	%	 	
Depreciation and amortization	 	 	48	 	 	 	46	 	 	 	44	 	 	 	45	 	 	 	183	 	 	 	 	45	 	 	 	43	 	 	 	42	 	 	 	43	 	 	 	173	 	 	
EBITDA (4)	 	$	300	 	 	$	219	 	 	$	287	 	 	$	318	 	 	$	1,124	 	 	 	$	278	 	 	$	221	 	 	$	290	 	 	$	325	 	 	$	1,114	 	 	
EBITDA margin (4)	 	 	23.0	%	 	 	18.0	%	 	 	22.3	%	 	 	22.3	%	 	 	21.5	%	 	 	 	22.0	%	 	 	18.7	%	 	 	22.2	%	 	 	21.9	%	 	 	21.3	%	 	
Net sales	 	$	1,303	 	 	$	1,215	 	 	$	1,287	 	 	$	1,429	 	 	$	5,234	 	 	 	$	1,266	 	 	$	1,179	 	 	$	1,304	 	 	$	1,482	 	 	$	5,231	 	 	
Debt to EBITDA (5)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2.5	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2.3	 	 	
Total debt (6)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	2,795	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	2,584	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1)	     	In accordance with SEC's Regulation G, this schedule provides the definition of certain non-GAAP measures and the reconciliation to the most closely related GAAP measure. Management believes the presentation of EBIT, EBIT margin, EBITDA and EBITDA margin provides additional useful information to investors about current trends in the business.	
 	 	Note: The Company calculates EBITDA for compliance with its debt covenants using net earnings.	
(2)	 	The goodwill impairment represents a $258 million noncash charge recognized in Q2 fiscal 2011 to adjust the carrying value of the goodwill related to the acquisition of Burt’s Bees to estimated fair value.	
(3)	 	EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income and interest expense, as reported above. EBIT margin is a measure of EBIT as a percentage of net sales.	
(4)	 	EBITDA (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income, interest expense, depreciation and amortization, as reported above. EBITDA margin is a measure of EBITDA as a percentage of net sales.	
(5)	 	Debt to EBITDA (a non-GAAP measure) represents total debt divided by EBITDA.	
(6)	 	Total debt represents the sum of notes and loans payable, current maturities of long-term debt, and long-term debt.	

 

The Clorox Company		

Supplemental Information – Balance Sheet
 (Unaudited)
 As of June 30, 2011
 
Working Capital Update
 
Note: As a result of the Auto Businesses’ related assets (primarily inventory) being classified to assets held for sale in Q1 FY11, fiscal 2010 assets have been reclassified to assets held for sale.
 
 	Q4	 	 	 	 	
 	FY 2011	FY 2010	Change	Days (5)	Days (5)	 	
 	($ millions)	($ millions)	($ millions)	FY 2011	FY 2010	  Change	
  Receivables, net	$525	 	$540	 	-$15	31	34	-3 days	
  Inventories, net	$382	 	$332	 	+$50	44	41	+3 days	
  Accounts payable (1)	$423	 	$409	 	+$14	45	46	-1 day	
  Accrued liabilities	$442	 	$491	 	-$49	 	 	 	
  Total WC (2)	$114	 	$23	 	+$91	 	 	 	
  Total WC % net sales (3)	1.9	%	0.4	%	 	 	 	 	
  Average WC (2)	$138	 	$99	 	+$39	 	 	 	
  Average WC % net sales (4)	2.3	%	1.7	%	 	 	 	 	
·	Receivables decreased primarily due to the sale of the Auto Businesses in Q2 FY11.
·	Inventories increased primarily due to inventory builds for new product launches and the impact of increases in certain commodity costs, primarily resin.
·	Accrued liabilities decreased mainly due to lower incentive compensation and trade promotion spending accruals.
Supplemental Information – Cash Flow
 (Unaudited)
 For the quarter and fiscal year ended June 30, 2011
 
Capital expenditures for the fourth quarter were $69 million versus $92 million in the year-ago quarter (full year = $228). The decrease was primarily due to higher capital investment in the year-ago quarter to support new product launches.
 
Depreciation and amortization for the fourth quarter was $44 million versus $45 million in the year-ago quarter (full year = $173)
 
Cash provided by continuing operations
 
Cash provided by continuing operations was $303 million, or 20 percent of sales.
 
(1)	     	Days of accounts payable is calculated as follows: average accounts payable / [(cost of products sold + change in inventory) / 90].	
(2)	 	Working capital (WC) is defined in this context as current assets minus current liabilities excluding cash, assets held for sale, and short-term debt, based on end of period balances. Average working capital represents a two-point average of working capital .	
(3)	 	Represents working capital at the end of the period divided by annualized net sales (current quarter net sales x 4).	
(4)	 	Represents a two-point average of working capital divided by annualized net sales (current quarter net sales x 4).	
(5)	 	Days calculations based on a two-point average.	

 

The Clorox Company		

Supplemental Information – Gross Margin Drivers
 
The table below provides details on the drivers of gross margin change versus the prior year.
 
Driver	Gross Margin Change vs. Prior Year (basis points)	
	FY10	FY11	
	Q1	Q2	Q3	Q4	FY	Q1	Q2	Q3	Q4	FY	
Cost Savings	+170	+160	+170	+220	+180	+200	+180	+180	+110	+170	
Price Changes	+170	+80	+60	+60	+90	+80	+100	+60	+70	+80	
Market Movement (commodities)	+240	+300	-120	-260	+30	-180	-150	-150	-170	-160	
Manufacturing & Logistics (1)	-40	-80	0	-30	-30	0	-80	-100	-80	-60	
Customer pick-up allowance	0	0	0	0	0	+20	+20	+30	+40	+30	
All other (2)	-90	-70	-120	-90	-90	-160	-250	-70	-50	-140	
Impact of Auto Businesses sale adjustment (3)	-40	-40	-60	-50	-50	--	--	--	--	--	
 	 	 	 	 	 	 	 	 	 	 	
Change vs prior year	+410	+350	-70	-150	+130	-40	-180	-50	-80	-80	
Gross Margin (%)	44.7%	43.5%	44.6%	44.3%	44.3%	44.3%	41.7%	44.1%	43.5%	43.5%	

(1)	    	“Manufacturing & logistics” includes the change in the cost of diesel fuel.	
(2)	 	“All other” includes all other drivers of gross margin change. Examples of drivers included: volume change, product mix, trade and consumer spending, restructuring and acquisition-related costs, foreign currency, etc. If a driver included in all other is deemed to be material in a given period, it will be disclosed as part of the company’s earnings release.	
(3)	 	Fiscal 2010 gross margin changes reflect the reclassification of the Auto Businesses to discontinued operations in Q1 Fiscal 2011. Fiscal 2009 gross margins have not been adjusted for the sale of the Auto Businesses. Fiscal 2010 gross margin drivers have not changed and any differences to gross margin based on this reclassification are reflected here.	

 

The Clorox Company		

Economic Profit (Unaudited)   (1)
 
Reconciliation of earnings from continuing operations before income taxes to economic profit (EP)
 
 	 	 	 	 	 	 	 	 	 	 	Includes the	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Adjusted for discontinued	 	 	 	results of the	 	 	 	 	 	 	 	 	 	 	 	 	
Dollars in millions and all calculations on a rounded basis	 	operations	 	 	 	Auto businesses	 	As previously reported	
 	  	FY11	  	FY10	  	  	FY11 (2)	  	FY10	  	FY09	  	FY08	
Earnings from continuing operations before income taxes	 	    $	563	   	 	    $	805	   	 	 	    $	677	   	 	    $	925	   	 	    $	811	   	 	    $	693	   	
Noncash restructuring-related and asset impairment costs (3)	 	 	264	 	 	 	4	 	 	 	 	264	 	 	 	4	 	 	 	10	 	 	 	48	 	
Interest expense (4)	 	 	123	 	 	 	139	 	 	 	 	123	 	 	 	139	 	 	 	161	 	 	 	168	 	
Earnings from continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
before income taxes, noncash restructuring-related	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
and asset impairment costs, and interest expense	 	$	950	 	 	$	948	 	 	 	$	1,064	 	 	$	1,068	 	 	$	982	 	 	$	909	 	
Adjusted after tax profit (5)	 	$	629	 	 	$	619	 	 	 	$	704	 	 	$	697	 	 	$	650	 	 	$	604	 	
Average capital employed (6)	 	$	2,618	 	 	$	2,525	 	 	 	$	3,037	 	 	$	2,928	 	 	$	3,045	 	 	$	2,680	 	
Capital charge (7)	 	 	236	 	 	 	227	 	 	 	 	273	 	 	 	264	 	 	 	274	 	 	 	241	 	
Economic profit  (8)  (Adjusted after tax profit less capital charge)	 	$	393	 	 	$	392	 	 	 	$	431	 	 	$	433	 	 	$	376	 	 	$	363	 	
     % change over prior year	 	 	    +0.3	%	 	 	    +12.6	%	 	 	 	    -0.5	%	 	 	    +15.2	%	 	 	    +3.6	%	 	 	    -4.2	%	

(1)	In accordance with SEC's Regulation G, this schedule provides the definition of a non-GAAP measure and the reconciliation to the most closely related GAAP measure. Management believes the presentation of economic profit (EP) provides additional information to investors about current trends in the business. EP is used by management to evaluate business performance and was taken into account in determining management’s incentive compensation and the Company’s contribution to employee profit sharing plans in fiscal year 2011. EP represents profit generated over and above the cost of paying for assets used by the business to generate that profit.	
(2)	Economic profit to calculate fiscal year 2011 short-term incentive compensation includes the results of the Auto businesses (but excludes the net gain on sale), which were reclassified to discontinued operations in Q1 fiscal year 2011. The earnings from continuing operations before income taxes and total capital employed are adjusted accordingly.	
(3)      	Noncash restructuring-related and asset impairment costs, which includes the noncash goodwill impairment charge of $258 million recognized in Q2 fiscal 2011 to adjust the carrying value of the goodwill related to the acquisition of Burt’s Bees to estimated fair value, are added back to earnings and adjusted capital employed to more closely reflect cash earnings and the total capital investment used to generate those earnings.	
(4)	Interest expense is added back to earnings because it is included as a component of the capital charge.	
(5)	Adjusted after tax profit represents earnings from continuing operations before income taxes, non-cash restructuring-related and asset impairment costs and interest expense, after tax. The tax rate applied is the effective tax rate on continuing operations which was 33.8%, 34.7% (34.8% as previously reported), 33.8%, and 33.6% in fiscal years 2011, 2010, 2009, and 2008, respectively.	

 

(6)      	Total capital employed represents total assets less assets held for sale and non-interest bearing liabilities. Adjusted capital employed represents total capital employed adjusted to add back current year noncash restructuring-related and asset impairment. Average capital employed represents a two-point average of adjusted capital employed for the current year and total capital employed for the prior year, based on year-end balances. See below for details of the average capital employed calculation:	

 	 	 	Adjusted for discontinued	 	 	Includes the results of	 	 	 	 	 	 	 	 	 	
 	 	 	operations	 	 	the Auto businesses	 	As previously reported	
 	 	     	FY11	     	FY10	   	   	FY11 (2)	     	FY10	     	FY09	     	FY08	
 	Total assets	 	$	4,163	 	$	4,548	 	 	 	$	4,163	 	$	4,555	 	$	4,576	 	$	4,712	
 	Adjustments related to Auto businesses	 	 	-	 	 	(405	)	 	 	 	434	 	 	-	 	 	-	 	 	-	
 	Total assets adjusted for Auto businesses	 	 	4,163	 	 	4,143	 	 	 	 	4,597	 	 	4,555	 	 	4,576	 	 	4,712	
          	Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	       Accounts payable	 	 	423	 	 	409	 	 	 	 	423	 	 	410	 	 	381	 	 	418	
 	       Accrued liabilities	 	 	442	 	 	491	 	 	 	 	442	 	 	492	 	 	472	 	 	440	
 	       Income taxes payable	 	 	41	 	 	74	 	 	 	 	41	 	 	74	 	 	86	 	 	52	
 	       Other liabilities	 	 	619	 	 	677	 	 	 	 	619	 	 	677	 	 	640	 	 	632	
 	       Deferred income taxes	 	 	140	 	 	19	 	 	 	 	140	 	 	24	 	 	23	 	 	65	
 	              Non-interest bearing liabilities	 	 	1,665	 	 	1,670	 	 	 	 	1,665	 	 	1,677	 	 	1,602	 	 	1,607	
 	Total capital employed	 	 	2,498	 	 	2,473	 	 	 	 	2,932	 	 	2,878	 	 	2,974	 	 	3,105	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Non-cash restructuring-related and asset impairment costs	 	 	264	 	 	4	 	 	 	 	264	 	 	4	 	 	10	 	 	48	
 	Adjusted capital employed	 	$	2,762	 	$	2,477	 	 	 	$	3,196	 	$	2,882	 	$	2,984	 	$	3,153	
 	Average capital employed	 	$	     2,618	 	$	     2,525	 	 	 	$	3,037	 	$	     2,928	 	$	     3,045	 	$	     2,680	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(7)      	Capital charge represents average capital employed multiplied by the weighted-average cost of capital. The weighted-average cost of capital used to calculate capital charge was 9% for all fiscal years presented.	
(8)	EP represents earnings from continuing operations before income taxes, noncash restructuring-related and asset impairment costs, and interest expense, after tax, less a capital charge (as defined above).	

 

The Clorox Company		

Return on Invested Capital (Unaudited) (1)
 
Reconciliation of earnings from continuing operations before income taxes to return on invested capital (ROIC)
 
Dollars in millions and all calculations on a rounded basis
 
 	 	 	 	 	 	Adjusted for	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	discontinued	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	operations	 	 	As previously reported	
 	     	FY11	     	FY10	   	   	FY10	     	FY09	     	FY08	
Earnings from continuing operations before income taxes	 	     $	563	    	 	      	$	805	      	 	 	     $	925	    	 	     $	811	    	 	     $	693	    	
Restructuring and asset impairment costs (2)	 	 	262	 	 	 	 	4	 	 	 	 	4	 	 	 	20	 	 	 	36	 	
Interest expense (3)	 	 	123	 	 	 	 	139	 	 	 	 	139	 	 	 	161	 	 	 	168	 	
Earnings from continuing operations before income taxes,	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
restructuring and asset impairment costs, and interest expense	 	$	948	 	 	 	$	948	 	 	 	$	1,068	 	 	$	992	 	 	$	897	 	
Adjusted after tax profit (4)	 	$	628	 	 	 	$	619	 	 	 	$	696	 	 	$	657	 	 	$	596	 	
Adjusted average invested capital (5)	 	$	2,632	 	 	 	$	2,645	 	 	 	$	3,049	 	 	$	3,019	 	 	$	2,805	 	
Return on invested capital (6)	 	 	23.9%	 	 	 	 	23.4%	 	 	 	 	22.8%	 	 	 	21.8%	 	 	 	21.2%	 	
 	
(1)	In accordance with SEC's Regulation G, this schedule provides the definition of a non-GAAP measure and the reconciliation to the most closely related GAAP measure. Management believes the presentation of return on invested capital (ROIC) provides additional information to investors about current trends in the business. ROIC is a measure of how effectively the company allocates capital. Beginning with fiscal year 2008, the company adopted a simplified ROIC calculation (see definition below).	
(2)	Noncash restructuring and asset impairment costs, which includes the noncash goodwill impairment charge of $258 million recognized in Q2 fiscal 2011 to adjust the carrying value of the goodwill related to the acquisition of Burt’s Bees to estimated fair value, are added back to earnings and average invested capital to more closely reflect operating results.	
(3)      	Interest expense is added back to earnings because it is factored in debt, a component of average invested capital (as defined below).	
(4)	Adjusted after tax profit represents earnings from continuing operations before income taxes, restructuring and asset impairment costs, and interest expense; after tax. The tax rate applied is the effective tax rate on continuing operations, which was 33.8%, 34.7% (34.8% as previously reported), 33.8%, and 33.6% in fiscal years 2011, 2010, 2009, and 2008, respectively.	
(5)	Average invested capital represents a five quarter average of total assets less non-interest bearing liabilities and assets held for sale. Adjusted average invested capital represents average invested capital adjusted to add back a five quarter average of cumulative, current-year after-tax restructuring and asset impairment costs. See below for details of the adjusted average invested capital calculation:	
 
          	 	 	 	 	 	 	Adjusted for	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	discontinued	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	operations	 	 	As previously reported	
 	(amounts shown below are five quarter averages)	     	FY11	     	FY10	   	   	FY10	     	FY09	     	FY08	
 	Total Assets	 	$	4,343	 	 	$	4,585	 	 	 	$	4,592	 	 	$	4,548	 	 	$	4,315	 	
 	Less: non-interest bearing liabilities	 	 	(1,638	)	 	 	(1,538	)	 	 	 	(1,545	)	 	 	(1,534	)	 	 	(1,526	)	
 	Less: assets held for sale	 	 	(175	)	 	 	(404	)	 	 	 	-	 	 	 	-	 	 	 	-	 	
 	Average invested capital	 	 	2,530	 	 	 	2,643	 	 	 	 	3,047	 	 	 	3,014	 	 	 	2,789	 	
 	Cumulative after-tax restructuring and asset impairment costs	 	 	102	 	 	 	2	 	 	 	 	2	 	 	 	5	 	 	 	16	 	
 	Adjusted average invested capital	 	$	       2,632	 	 	$	       2,645	 	 	 	$	       3,049	 	 	$	       3,019	 	 	$	       2,805	 	
 	
(6)      	ROIC is calculated as earnings from continuing operations before income taxes, excluding restructuring and asset impairment costs and interest expense, computed on an after-tax basis as a percentage of adjusted average invested capital (as defined above).	

 

The Clorox Company
Updated: 8-3-11		

U.S. Pricing Actions from CY2008 - CY2011
 
Brand / Product	     	Average Price Change	     	Effective Date	
Home Care	 	 	 	 	 	
Pine-Sol ® cleaners	 	+13%	 	 	May 2008	
Clorox Clean-Up ® cleaners	 	+8%	 	 	August 2008	
Formula 409 ® , Tilex ® , and Clorox ® Disinfecting Bathroom cleaners	 	+12%	 	 	August 2008	
Liquid-Plumr ® products	 	+9%	 	 	August 2008	
Clorox ® Toilet Bowl Cleaner and Clorox ® ToiletWand TM products	 	+8 to +13%	 	 	August 2008	
Green Works ® cleaners	 	-7 to -21%	 	 	May 2010	
Formula 409 ®	 	+6%	 	 	August 2011	
Clorox Clean-Up ® cleaners	 	+8%	 	 	August 2011	
Clorox ® Toilet Bowl Cleaner	 	+5%	 	 	August 2011	
Laundry	 	 	 	 	 	
Clorox ® liquid bleach	 	+10%	 	 	August 2008	
Green Works ® liquid detergent	 	approx. -30%	 	 	May 2010	
Clorox ® liquid bleach	 	+12%	 	 	August 2011	
Clorox 2 ® stain fighter and color booster	 	+5%	 	 	August 2011	
Glad	 	 	 	 	 	
Glad ® trash bags	 	+7%	 	 	February 2008	
GladWare ® disposable containers	 	+7%	 	 	February 2008	
Glad ® trash bags	 	+10%	 	 	October 2008	
Glad ® trash bags	 	-10%	 	 	December 2008	
GladWare ® disposable containers	 	-7%	 	 	April 2009	
Glad ® trash bags	 	-7%	 	 	May 2009	
Glad ® trash bags	 	+5%	 	 	August 2010	
Glad ® trash bags	 	+10%	 	 	May 2011	
Glad ® wraps	 	+7%	 	 	August 2011	
Litter	 	 	 	 	 	
Cat litter	 	+7 to +8%	 	 	August 2008	
Cat litter	 	-8 to -9%	 	 	March 2010	
Food	 	 	 	 	 	
Hidden Valley Ranch ® salad dressing	 	+7%	 	 	August 2008	
Hidden Valley Ranch ® salad dressing	 	+7%	 	 	August 2011	
Charcoal	 	 	 	 	 	
Charcoal	 	+6%	 	 	January 2008	
Charcoal and lighter fluid	 	+7 to +16%	 	 	January 2009	

Notes:
 
·	Individual SKUs vary within the range.
·	This communication reflects pricing actions on primary items.