Clorox Posts Record Third-Quarter Volume, Sales and Operating Cash Flow; Company to Eliminate Jobs in Latin America.Business Editors OAKLAND Oakland, city (1990 pop. 372,242), seat of Alameda co., W Calif., on the eastern side of San Francisco Bay; inc. 1852. Together with San Francisco and San Jose, the city comprises the fourth largest metropolitan area in the United States. , Calif.--(BUSINESS WIRE)--May 2, 2002 The Clorox Clorox commercial name for a sodium hypochlorite preparation marketed as household bleach, but also used for disinfection. Company (NYSE NYSE See: New York Stock Exchange :CLX (library, graphics) CLX - The Common Lisp library providing a low-level interface to the X Window System, equivalent to Xlib. Graphics toolkits can be built on top of CLX, e.g. McCLIM, Garnet, CLUE and CLIO. ) (PSE PSE 1. pale soft exudative pork. 2. portosystemic encephalopathy. :CLX) today announced that record volume and sales, together with gross margin growth, contributed solidly to the company's results for its fiscal third quarter ended March, 31, 2002. Clorox also posted record third-quarter operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , achieving nearly a 100-percent increase over the year-ago quarter. These positive trends were partially offset by the ongoing impact of economic conditions in South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. . "We're we're Contraction of we are. we're we are very pleased with the results we delivered this quarter, despite the challenges we're facing in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. ," said Clorox Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Craig Sullivan Craig Sullivan, American Known for being an Exceptional EMS Director Currently operating a successful EMS in Boone NC]. born and raised in Ashe County NC. Currently living in Zionville NC with wife and 3 kids External links
An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and payables Payables Related: Accounts payable ." Third-Quarter Overall Results A summary of key results for the third quarter follows. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). results are reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . Pro-forma earnings Pro-Forma Earnings Projected earnings based on a set of assumptions and often used to present a business plan (in Latin pro forma means "for the sake of form"). It also refers to earnings which exclude non-recurring items. Pro-forma earnings are not derived by standard GAAP methods. in fiscal 2002 exclude a $33 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern gain on divestitures and the previously announced $100 million pretax Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. asset-impairment charge. Pro-forma earnings in fiscal 2001 exclude $46 million pretax in special charges related to inventory and asset write-downs and for projects related to improving margins and asset utilization.
Quarter Ended
March 31
GAAP Results
------------------------------------------
FY '02 FY '01 Change
-------------- ------------ ----------
Volume +5%
Sales $1.033 billion $962 million +7%
Earnings before taxes $96 million $103 million -6%
Earnings after taxes(1) $46 million $79 million -42%
Earnings per diluted
share after taxes 20 cents 33 cents -13 cents
Pro-Forma Results
------------------------------------------
FY '02 FY '01 Change
-------------- ------------ ----------
Volume +5%
Sales $1.033 billion $962 million +7%
Earnings before taxes $164 million $149 million +10%
Earnings after taxes(1) $105 million $109 million -3%
Earnings per diluted
share after taxes 45 cents 45 cents 0 cents
(1) Fiscal 2002 after-tax earnings reflect effective tax rates of
51.9% (GAAP) and 35.5% (pro-forma). The fiscal 2002 GAAP tax rate
reflects the tax treatment of the company's write down of its
business in Argentina. Fiscal 2001 after-tax earnings reflect
effective tax rates of 22.9% (GAAP) and 26.7% (pro-forma),
resulting from the release of tax reserves due to the company's
improved ability to utilize foreign tax credits.
Key contributors to top-line growth in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. included: strong results from the introduction of Clorox ReadyMop along with solid results from Kingsford and Match Light charcoal charcoal, substance obtained by partial burning or carbonization (destructive distillation) of organic material. It is largely pure carbon. The entry of air during the carbonization process is controlled so that the organic material does not turn to ash, as in a , Glad trash bags and wrap, Clorox 2 color-safe bleach bleach Solid or liquid chemical compound used to whiten or remove the natural colour of fibres, yarns, paper, and textile fabrics. Sunlight was the chief bleaching agent up to the discovery of chlorine in 1774 by Karl Wilhelm Scheele (b. 1742—d. , Clorox disinfecting wipes, Armor All wipes and Hidden Valley salad dressings. These results were partially offset by the negative impact from Kmart's financial difficulties and economic crises in Latin America, including currency devaluations Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. . Excluding divestitures, third-quarter volume grew 6 percent and sales grew 8 percent compared to the year-ago quarter. Excluding divestitures and foreign currency effects Foreign Currency Effects The extent to which the changes in a foreign currency affects the return on a foreign investment. Notes: Foreign investments are complicated by the currency fluctuation and conversion between countries. , sales grew 10 percent versus the prior-year period. "The results Clorox delivered this quarter and the fiscal-year-to-date improvement in our business speak to the dedication and focus Clorox people have applied to the four top priorities we established for fiscal 2002," Sullivan said. "We're making progress to 'restore growth' on many businesses in the portfolio as we focus on core brands and increase our investments in advertising to drive top-line growth and build brand equity. Our initiative to 'cut costs everywhere' is delivering significant gross margin improvements on a number of businesses. 'Project Delta,' our process- and systems-infrastructure initiative, is moving ahead and we recently implemented the SAP enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. system in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. . We're continuing to reduce complexity and costs by eliminating under-performing product items, which is helping to 'get the gunk out' of our business." Latin America Division Eliminates Jobs to Improve Cost Structure Improving the company's return on investment in Latin America, a key priority for fiscal 2002, has been increasingly difficult due to eroding economic conditions, particularly in Argentina and Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. . To improve the Latin America division's cost structure, Clorox is eliminating about 150 positions, primarily from the division's administrative infrastructure, Argentina and manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. . This reduction represents about 6 percent of the division's workforce. Employees are being offered severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and benefits packages consistent with company policies and local laws and practices. Third-Quarter Segment Results A summary of key results by business segment follows. Unless otherwise noted, comparisons are with the third quarter of fiscal year 2001. In all segments, pro-forma earnings exclude the impact from the sale of divested businesses made in fiscal 2002 and special charges taken in fiscal 2001. Pro-forma earnings in Household Products-Latin America/Other also exclude the $100 million pretax impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge for Argentina. Household Products -- North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. -- 1% decline in volume -- 6% growth in sales -- 51% growth in pretax earnings (GAAP) 11% growth in pretax earnings (pro-forma) Volume and sales growth in this segment were primarily driven by Clorox ReadyMop, which was introduced this quarter, as well as improved trends across many core brands. The home care business saw improved volume and share trends in a number of brands, including double-digit volume increases in Formula 409, Clorox Clean-Up and Clorox toilet bowl cleaners as well as Clorox disinfecting wipes. The Glad bags and wraps business continued to grow volumes and shares, and delivered its highest gross margins in the five years on record. In laundry Laundry can be:
Before industrialization additives, volume growth and a fourth consecutive quarter of combined market share growth for Clorox bleach and Clorox 2 color-safe bleach were partially offset by volume losses from discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: products. Brita volumes were down, partly driven by Kmart's financial difficulties. Household Products -- Latin American and Other -- 1% decline in volume -- 6% growth in sales -- 51% growth in pretax earnings (GAAP) 11% growth in pretax earnings (pro-forma) Results in this segment continue to be driven by economic crises and political turmoil in South America, including the effect of currency devaluations. Excluding the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of Maxforce professional insecticides insecticides, chemical, biological, or other agents used to destroy insect pests; the term commonly refers to chemical agents only. Chemical Insecticides , sold in several Asia-Pacific countries, volume in this segment grew 1 percent. Sales declined 2 percent, excluding foreign currency effects. Volume and gross margin growth in Mexico, Central America Central America, narrow, southernmost region (c.202,200 sq mi/523,698 sq km) of North America, linked to South America at Colombia. It separates the Caribbean from the Pacific. and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. were more than offset by declines in Argentina, Brazil, Colombia and Venezuela. Clorox has taken a number of steps to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the impact of the economic conditions, including price
increases and aggressive management of working capital.Specialty Products -- 1% decline in volume -- 6% growth in sales -- 51% growth in pretax earnings (GAAP) 11% growth in pretax earnings (pro-forma) Excluding divestitures, segment volume rose 2 percent, reflecting solid shipment gains in charcoal, insecticides and food products, which were partially offset by declines in fuel additives and cat litter Cat litter (often called kitty litter) is one of any of a number of materials used in litter boxes to absorb moisture from cat feces and urine, which reduces foul odors such as ammonia and renders them more tolerable within the home. . Kingsford charcoal achieved record quarterly volume for the fourth consecutive quarter as a result of improved distribution, private-label price increases and unseasonably warm weather. Increased advertising and promotions of Hidden Valley dressings drove mid-single-digit volume increases in the food products business. The cat litter business experienced mixed results as record volumes of Fresh Step regular and silica-gel crystals cat litters were more than offset by volume declines of Scoop Away and minor brands. Despite record shipments of Armor All wipes, depressed demand for fuel additives and Kmart's financial difficulties contributed to volume declines in the overall auto care business. Outlook Looking ahead to next quarter, Sullivan said: "We're highly encouraged by the improvements in our North America business, notably our top-line and gross margin growth, balance sheet improvements and progress on cost-savings initiatives. And, while it's still very early, we're pleased with initial shipment and consumption rates of Clorox ReadyMop. For the fourth quarter, we expect volume and sales growth in the low- to mid-single digits and pro-forma earnings of 60 cents to 62 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . We now expect full-year results to be in the range of $1.89 to $1.91 per share, reflecting our stronger than anticipated third-quarter results." While the above fourth-quarter and full-year estimates take into account the net cost of the Latin America workforce reductions, they exclude special charges taken in calendar year 2001 and the impact of divestitures. Full-year earnings-per-share estimates also exclude impairment charges. Accounting rules require prorating prorating (prōrā´ting), n a clause in a contract with participating dental professionals wherein they agree to accept a percentage reduction in their billings to offset the amount by which the total cost of the tax effect of the Argentina asset-impairment charge over the third and fourth quarters of fiscal year 2002. Therefore, as previously announced, this charge is expected to negatively impact GAAP after-tax earnings per share in the fourth quarter by about 6 cents. Effective March 31, 2002, Clorox sold the Himolene industrial trash-can-liner business to Heritage Bag Company. This business will no longer be reflected in the company's results, beginning in the fourth quarter of fiscal 2002. Sullivan to Speak at May 8 Goldman, Sachs Conference Craig Sullivan will speak at 7:40 a.m. Pacific time (10:40 a.m. Eastern time) on May 8, 2002, at the Goldman, Sachs & Co. Global Consumer Products Conference. For more details, including how to access a webcast of Sullivan's remarks, please see the announcement posted on www.clorox.com. Today's Webcast Today, Clorox will host a live audio webcast of a discussion with the investment community regarding the company's third-quarter results and its outlook going forward. The webcast, which can be accessed at www.clorox.com/investors, will begin at 10:30 a.m. Pacific time (1:30 p.m. Eastern time). A replay of the webcast will be archived for one week on the company's Web site. About Clorox The Clorox Company is a $3.9 billion multinational manufacturer and marketer of household products and products for institutional markets. Except for historical information, matters discussed above, including statements about future volume, sales and earnings growth, profitability, costs, cost savings or expectations, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on management's estimates, assumptions and projections. Important factors that could cause results to differ materially from management's expectations are described in "Forward-Looking Statements and Risk Factors" and "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operation" in the company's SEC Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ending June 30, 2001, as updated from time to time in the company's SEC filings. Those factors include, but are not limited to, general economic and marketplace conditions and events, the company's costs, disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. associated with staff reductions, risks inherent in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , the success of new products, integration of acquisitions, and environmental, regulatory and intellectual property matters.
The Clorox Company Condensed Consolidated Statements of Earnings
(unaudited)
Third Quarter Ended March 31, 2002
In millions, except earnings per-share amounts
GAAP
------------------------------------------------
Three Months Ended Nine Months Ended
----------------------- -----------------------
3/31/02 3/31/01 Var(a) 3/31/02 3/31/01 Var(a)
------- ------- ------- ------- ------- -------
Net sales $ 1,033 $ 962 7% $ 2,925 $ 2,801 4%
Cost of products
sold 597 584 2% 1,676 1,657 1%
Gross profit 436 378 15% 1,249 1,144 9%
Selling and
administrative
expenses 142 113 26% 413 364 13%
Advertising costs 105 91 17% 283 256 10%
Research and
development
costs 15 16 47 47
Operating profit
Restructuring and
asset impairment
costs 100 23 206 27
Interest expense 7 22 31 71
Other (income)
expense, net (29) 10 (33) 22
Earnings before
income taxes and
cumulative effect
of change in
accounting
principle 96 103 -6% 302 357 -15%
Income Taxes 50 24 125 114
Earnings before
cumulative effect
of change in
accounting
principle 46 79 -42% 177 243 -27%
Cumulative effect
of change in
accounting
principle (net of
tax benefit) 0 0 0 (2)
Net Earnings $ 46 $ 79 -42% $ 177 $ 241 -27%
Effective Income
Tax Rate 51.9% 22.9% 41.6% 31.8%
Basic Net Earnings
per Common Share $ 0.20 $ 0.33 -$0.13 $ 0.76 $ 1.02 -$0.26
Diluted Net
Earnings per
Common Share $ 0.20 $ 0.33 -$0.13 $ 0.75 $ 1.01 -$0.26
Weighted Average
Common Shares
Outstanding (in
thousands)
Basic 231,508 236,406 233,084 235,999
Diluted 234,625 239,764 236,311 239,179
Pro-Forma
Excludes Special Charges, Argentina Asset
Impairment and Gain on Divestitures
-----------------------------------------
Three Months Ended(b) Nine Months Ended(c)
----------------------- -----------------------
3/31/02 3/31/01 Var(a) 3/31/02 3/31/01 Var(a)
------- ------- ------- ------- ------- -------
Net sales $ 1,033 $ 962 7% $ 2,925 $ 2,801 4%
Cost of products
sold 597 561 7% 1,680 1,622 4%
Gross profit 436 401 9% 1,245 1,179 6%
Selling and
administrative
expenses 142 113 26% 413 364 13%
Advertising costs 105 91 17% 283 256 10%
Research and
development
costs 15 16 47 47
Operating profit 174 181 -5% 502 512 -2%
Restructuring and
asset impairment
costs 0 0 0 0
Interest expense 7 22 31 71
Other (income)
expense, net 3 10 (1) 22
Earnings before
income taxes and
cumulative effect
of change in
accounting
principle 164 149 10% 472 419 13%
Income Taxes 59 40 166 136
Earnings before
cumulative effect
of change in
accounting
principle 105 109 -3% 306 283 8%
Cumulative effect
of change in
accounting
principle (net of
tax benefit) 0 0 0 (2)
Net Earnings $ 105 $ 109 -3% $ 306 $ 281 9%
Effective Income
Tax Rate 35.5% 26.7% 35.2% 32.4%
Basic Net Earnings
per Common Share $ 0.46 $ 0.46 $ 0.00 $ 1.31 $ 1.19 $ 0.12
Diluted Net
Earnings per
Common Share $ 0.45 $ 0.45 $ 0.00 $ 1.29 $ 1.17 $ 0.12
Weighted Average
Common Shares
Outstanding (in
thousands)
Basic 231,508 236,406 233,084 235,999
Diluted 234,625 239,764 236,311 239,179
Ratios as % of Net
Sales var bps var bps
------------------ ------- -------
Gross profit 42.2% 41.8% 50 42.6% 42.1% 50
Selling and
administrative
expenses 13.8% 11.7% 200 14.1% 13.0% 110
Advertising costs 10.2% 9.4% 80 9.7% 9.1% 50
Research and
development
costs 1.4% 1.7% (30) 1.6% 1.7% (10)
Operating profit 16.8% 19.0% (210) 17.2% 18.3% (110)
Earnings before
income taxes 15.8% 15.4% 40 16.1% 14.9% 120
(a) Percentages based on unrounded numbers.
(b) Argentina asset impairment for the three months ended March 31,
2002, is $100 million (pretax) or $82 million (after-tax). Gain on
divestitures for the three months ended March 31, 2002, is $33
million (pretax) or $23 million (after-tax). Special charges for
the three months ended March 31, 2001, are $46 million (pretax) or
$30 million (after-tax).
(c) Argentina asset impairment for the nine months ended March 31,
2002, is $100 million (pretax) or $82 million (after-tax). Gain on
divestitures for the nine months ended March 31, 2002, is $33
million (pretax) or $23 million (after-tax). Special charges for
the nine months ended March 31, 2002, and March 31, 2001, are $102
million (pretax) or $70 million (after-tax) and $62 million
(pretax) or $40 million (after-tax), respectively.
The Clorox Company Segment Information(1)
Third Quarter Ended March 31, 2002
In millions
Net Sales
-----------------------------------
Three Months Ended
---------------------- %
3/31/2002 3/31/2001 Change(2)
--------- --------- ---------
Household Products:
North America $ 578 $ 505 14%
Latin America/Other 131 150 -13%
Specialty Products 324 307 6%
Corporate -- -- --
--------- --------- ---------
Total $ 1,033 $ 962 7%
========= ========= =========
Earnings Before Income Taxes
-----------------------------------
Three Months Ended
---------------------- %
3/31/2002 3/31/2001 Change(2)
--------- --------- ---------
Household Products:
North America $ 127 $ 85 49%
Latin America/Other (77) 22 -450%
Specialty Products 153 101 51%
Corporate (107) (105) -2%
--------- --------- ---------
Total $ 96 $ 103 -6%
========= ========= =========
Earnings Before Income Taxes,
Special Charges, Argentina Asset
Impairment and Impact from Divestitures
---------------------------------------
Three Months Ended
---------------------- %
3/31/2002 3/31/2001 Change(2)
--------- --------- ---------
Household Products:
North America $ 131 $ 124 6%
Latin America/Other 23 25 -8%
Specialty Products 117 105 11%
Corporate (107) (105) -2%
--------- --------- ---------
Total $ 164 $ 149 10%
========= ========= =========
(1) Starting in 2002, the Glad business unit, previously reported
under the Specialty Products segment, is now reported under the
Household Products-North America segment and the European
automotive care businesses, previously under the Household
Products-Latin America/Other segment, is now reported under the
Specialty Products segment. Operating segment information above
reflects the company's current organization structure, including
this change.
(2) Percentages based on unrounded numbers.
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