EX-99.2 3 dex992.htm SUPPLEMENTAL INFORMATION REGARDING FINANCIAL RESULTS Supplemental information regarding financial results

Exhibit 99.2

 

The Clorox Company

 

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Supplemental Information – Volume Growth

 

      % Change vs. Prior Year      
     FY07     FY08      

Business Segment

   Q1     Q2     Q3     Q4     FY     Q1     YTD    

Major Drivers of Change

North America (1)

   -1 %   -3 %   8 %   0 %   1 %   5 %   5 %   Q1 increase primarily driven by strong results in Home Care behind gains on disinfecting wipes and other Clorox branded products, bleach business acquisition in Canada, increased merchandising on Hidden Valley salad dressing, continued growth in cat litter behind activated carbon product improvement, and strong results in the Brita business primarily driven by merchandising and category growth.
                                            

International

   1 %   10 %   13 %   12 %   9 %   11 %   11 %   Q1 increase primarily driven by strong results in Latin America behind the bleach business acquisition and category growth.
                                            

Total Company

   -1 %   -1 %   8 %   2 %   2 %   6 %   6 %  
                                            
Supplemental Information – Sales Growth
      % Change vs. Prior Year      
     FY07     FY08      

Business Segment

   Q1     Q2     Q3     Q4     FY     Q1     YTD    

Major Drivers of Change

North America (1)

   5 %   3 %   6 %   -1 %   3 %   5 %   5 %   Q1 growth primarily driven by increased shipments across the segment and the benefit of pricing partially offset by high levels of trade spending in response to competitive activity.
                                            

International

   4 %   9 %   16 %   21 %   12 %   18 %   18 %   Q1 growth primarily driven by strong shipments, favorable currency and the benefit of price increases.
                                            

Total Company

   5 %   3 %   7 %   2 %   4 %   7 %   7 %  
                                            

(1)

North America includes U.S. and Canadian results.


The Clorox Company

 

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Earnings Before Interest and Taxes (Unaudited) (1)

Reconciliation schedule of earnings before income taxes to earnings before interest and taxes (EBIT)

Dollars in millions and percentages based on rounded numbers

 

     Three months ended  
     9/30/07     9/30/06  

Earnings before income taxes

   $ 174     $ 175  

Interest income

     (3 )     (2 )

Interest expense

     33       29  
                

EBIT (2)

     204       202  
                

EBIT Margin (2)

     16.5 %     17.4 %

Net sales

   $ 1,239     $ 1,161  
                

(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 EBIT and EBIT margin provides additional useful information to investors about current trends in the business.

 

(2) EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income and expense, as reported above. EBIT margin is a measure of EBIT as a percentage of net sales.


The Clorox Company

 

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Supplemental Information – Balance Sheet

(Unaudited)

As of September 30, 2007

Working Capital Update

 

     Q1    

Change
($ millions)

  

Days (5)

FY 2008

  

Days (5)

FY 2007

  

Change

     FY 2008
($ millions)
    FY 2007
($ millions)
            

Receivables, net

   $ 408     $ 374     $ 34    32    31    1 day

Inventories

   $ 332     $ 325     $ 7    41    42    -1 day

Accounts payable (1)

   $ 318     $ 299     $ 19    40    41    -1 day

Accrued liabilities

   $ 347     $ 415     $ -68         

Total WC (2)

   $ 74     $ 26     $ 48         

Total WC % net sales (3)

     1.5 %     0.6 %           

Average WC (2)

   $ 36     $ 10     $ 26         

Average WC % net sales (4)

     0.7 %     0.2 %           

 

 

Receivables increased primarily as a result of higher sales and the impact of favorable foreign exchange rates. Increase in days of receivables is primarily due to growth in International receivables which generally have longer collection times.

 

 

Accounts payable increased mainly due to timing of payments.

 

 

Accrued liabilities decreased primarily due to the adoption of FASB Financial Interpretation No. 48 which resulted in income tax liabilities being reclassified from accrued liabilities to income taxes payable and long-term liabilities. These were partially offset by higher accruals related to increased trade and marketing spending levels and an increase in the quarterly dividend rate.

Supplemental Information – Cash Flow

(Unaudited)

As of September 30, 2007

Capital expenditures were $26 million

Depreciation and amortization was $48 million

Cash provided by operations

Net cash provided by operations was $163 million, compared with $133 million provided by operations in the year-ago quarter. The year-over-year increase was mainly due to higher earnings, excluding non-cash restructuring charges.


(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 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.


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Supplemental Information – Gross Margin Drivers

The table below provides details on the drivers of gross margin change versus the prior year.

 

     Change vs. Prior Year (basis points)
     FY07    FY08

Driver

   Q1    Q2    Q3    Q4    FY    Q1

Cost savings

   +190 bp    +240 bp    +280 bp    +200 bp    +230 bp    +180 bp

Pricing changes

   +210 bp    +160 bp    +140 bp    +80 bp    +150 bp    +50 bp

Market movement (commodities)

   -280 bp    -190 bp    +40 bp    -40 bp    -110 bp    -120 bp

Manufacturing & logistics (1)

   -90 bp    -110 bp    -120 bp    -70 bp    -100 bp    -140 bp

All other (2)

   +40 bp    0 bp    -160 bp    -120 bp    -80 bp    0 bp
Gross margin change vs prior year    +70 bp    +100 bp    +180 bp    +50 bp    +90 bp    -30 bp

(1) Manufacturing & Logistics includes the change in the cost of diesel fuel.
(2) All other includes all other drivers of gross margin change which are usually of an immaterial nature. Examples of drivers included: volume change, trade and consumer spending, 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.


The Clorox Company

 

Updated: 10-31-07

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U.S. Price Increases From CY2003 - CY2005

 

Brand / Product

  

Average

Increase

    Effective Date

Glad® trash bags

   6 %   October 2003

Charcoal

   5 %   December 2003

Cat litter

   4 %   May 2004

Glad® trash bags

   13 %   February 2005

GladWare disposable containers

   12 %   February 2005

Clorox® liquid bleach

   9 %   July 2005

Clorox 2® bleach for colors, Clorox Clean-Up® cleaner

   5 %   July 2005

Glad® food bags

   7 %   August 2005

Cat litter

   5 %   October 2005

U.S. Price Increases From CY2006 - CY2008

 

Brand / Product

  

Average

Increase

    Effective Date

Clorox® liquid bleach, Clorox Clean-Up® and Tilex® cleaners

   8 %   January 2006

Match Light® charcoal

   6 %   January 2006

Kingsford® lighter fluid

   10 %   January 2006

Armor All® auto-care products

   9 %   January 2006

STP® functional fuel products

   9 %   January 2006

Brita® pour-through filters

   7 %   January 2006

Brita® pitchers

   5 %   January 2006

GladWare® food-storage containers

   9 %   January 2006

Glad® trash bags

   15 %   February 2006

Cat litter

   6 %   June 2006

STP® functional fuel products

   17 %   October 2006

Charcoal and lighter fluid

   4 -8 %   January 2007

Hidden Valley Ranch® salad dressing

   6 %   October 2007

Charcoal

   6 %   January 2008

Notes:

 

 

Average % increase reflects brand averages rounded to the whole percent. Individual SKUs vary versus the average.

 

 

This communication reflects pricing actions on primary items.