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

Exhibit 99.2

 

The Clorox Company   LOGO

Supplemental Information – Volume Growth

 

      % Change vs. Prior Year      

Business Segment

   FY07     FY08    

Major Drivers of Change

     Q1     Q2     Q3     Q4     FY     Q1     Q2     YTD      

North America (1)

   -1 %   -3 %   8 %   0 %   1 %   5 %   6 %   6 %   Q2 increase primarily driven by strong results in Home Care due to gains on disinfecting wipes, Pine-Sol cleaners, and new products; continued growth in cat litter; and acquisition of Burt’s Bees and a bleach business in Canada. These were partially offset by declines in Glad products due to category softness.

International

   1 %   10 %   13 %   12 %   9 %   11 %   6 %   8 %   Q2 increase primarily driven by strong results in Latin America from the bleach business acquisition and category growth.

Total Company

   -1 %   -1 %   8 %   2 %   2 %   6 %   6 %   6 %  

Supplemental Information – Sales Growth

 

      % Change vs. Prior Year      

Business Segment

   FY07     FY08    

Major Drivers of Change

     Q1     Q2     Q3     Q4     FY     Q1     Q2     YTD      

North America (1)

   5 %   3 %   6 %   -1 %   3 %   5 %   6 %   5 %   Q2 growth primarily driven by increased shipments across the segment and favorable Canadian currency offset by high levels of trade spending in response to competitive activity.

International

   4 %   9 %   16 %   21 %   12 %   18 %   17 %   18 %   Q2 growth primarily driven by increased shipments, favorable currency, the benefit of price increases, and favorable mix.

Total Company

   5 %   3 %   7 %   2 %   4 %   7 %   8 %   7 %  

 

(1)

North America includes U.S. and Canadian results and the worldwide Burt’s Bees business.


The Clorox Company   LOGO

 

Earnings Before Interest and Taxes (Unaudited) (1)

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

Dollars in millions and percentages based on rounded numbers

 

     Three months ended     Six months ended  
     12/31/07     12/31/06     12/31/07     12/31/06  

Earnings from continuing operations before income taxes

   $ 128     $ 136     $ 302     $ 311  

Interest income

     (4 )     (3 )     (7 )     (5 )

Interest expense

     46       29       79       58  
                                

EBIT (2)

     170       162       374       364  
                                

EBIT margin (2)

     14.3 %     14.7 %     15.4 %     16.1 %

Net sales

   $ 1,186     $ 1,101     $ 2,425     $ 2,262  
                                

 

(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 from continuing operations 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   LOGO

 

Supplemental Information – Balance Sheet

(Unaudited)

As of December 31, 2007

Working Capital Update

 

     Q2                     
     FY 2008
($ millions)
    FY 2007
($ millions)
    Change
($ millions)
   Days (5)
FY 2008
   Days (5)
FY 2007
   Change

Receivables, net

   $ 397     $ 393     $ 4    31    31    0 days

Inventories

   $ 421     $ 340     $ 81    48    47    +1 day

Accounts payable (1)

   $ 312     $ 283     $ 29    36    40    -4 days

Accrued liabilities

   $ 389     $ 435     -$ 46         

Total WC (2)

   $ 144     $ 58     $ 86         

Total WC % net sales (3)

     3.0 %     1.3 %           

Average WC (2)

   $ 109     $ 42     $ 67         

Average WC % net sales (4)

     2.3 %     1.0 %           

 

   

Inventories increased primarily as a result of the acquisition of Burt’s Bees, higher resin costs, and pre-build for Q3 merchandising events and new product launches, including Green Works.

 

   

Accounts payable increased mainly due to the acquisition of Burt’s Bees, increased commodity costs and timing of payments.

 

   

Accrued liabilities decreased primarily due to the adoption of FASB Financial Interpretation No. 48 which resulted in income tax contingency accruals being reclassified from accrued liabilities to income taxes payable and long-term liabilities. This was partially offset by higher accruals related to the acquisition of Burt’s Bees, increased trade and marketing spending levels, and the May 2007 increase in the quarterly dividend rate.

Supplemental Information – Cash Flow

(Unaudited)

As of December 31, 2007

Capital expenditures were $45 million

Depreciation and amortization was $50 million

Cash provided by operations

Net cash provided by operations was $148 million, compared with $122 million provided by operations in the year-ago quarter. The year-over-year increase was mainly due to collection of receivables offset by increased inventories.

 

(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.

 

Driver

   Change vs. Prior Year (basis points)
   FY07    FY08
   Q1    Q2    Q3    Q4    FY    Q1    Q2

Cost savings

   +190 bp    +240 bp    +280 bp    +200 bp    +230 bp    +180 bp    +170 bp

Pricing changes

   +210 bp    +160 bp    +140 bp    +80 bp    +150 bp    +50 bp    +40 bp

Market movement (commodities)

   -280 bp    -190 bp    +40 bp    -40 bp    -110 bp    -120 bp    -170 bp

Manufacturing & logistics (1)

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

All other (2)

   +40 bp    0 bp    -160 bp    -120 bp    -80 bp    0 bp    -130 bp

Gross margin change vs prior year

   +70 bp    +100 bp    +180 bp    +50 bp    +90 bp    -30 bp    -160 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, 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.


The Clorox Company   LOGO

 

Updated: 2-4-08

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® disposable 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

Armor All® and STP® auto-care products

   5 –7 %   January 2008

Glad® trash bags and GladWare® disposable containers

   7 %   February 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.