Clorox Reports 76 Cents EPS in Third Quarter; Updates Fiscal Year 2005 Outlook and Provides Initial Outlook for Fiscal 2006.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. -- 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. ) (PCX (1) A bitmapped graphics file format that handles monochrome, 2-bit, 4-bit, 8-bit and 24-bit color and uses RLE to achieve compression ratios of approximately 1.1:1 to 1.5:1. Images with large blocks of solid colors compress best under the RLE method. See PC Paintbrush. :CLX) today reported that higher sales, new products and strong cost savings contributed to solid results for the company's fiscal third quarter, which ended March 31, 2005. "We're we're Contraction of we are. we're we are pleased with our 3 percent sales growth for the quarter following strong first-half sales growth of 6 percent," said 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. Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. Johnston Johnston, town (1990 pop. 26,542), Providence co., N central R.I., a suburb of Providence; inc. 1759. Among its manufactures are jewelry, textiles, and fabricated metals. Johnston is the home of several insurance companies. . "We continue to have intense commodity price pressure, and we are taking steps to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. these
costs. Overall, we feel good about the fundamental health of our brands
and businesses."
Third-Quarter Highlights 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 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. (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), Clorox reported third-quarter net earnings of $118 million, or 76 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, based on weighted average shares outstanding of about 156 million. This compares with net earnings in the year-ago period of $126 million, or 59 cents per diluted share, based on weighted average shares outstanding of about 214 million, for an increase of 17 cents per diluted share, or 29 percent. As previously reported, Clorox has reached an agreement with the Internal Revenue Service related to the company's investment in a limited partnership fund. Separately, Clorox expects to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. some foreign earnings under the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act of 2004. These two activities had a combined benefit of $14 million in net earnings, or 9 cents diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. , in the current quarter. Included in diluted EPS for the current quarter are 2 cents of costs related to a number of items, including performance unit accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. and certain tax adjustments, that previously had not been projected in the company's outlook. Third-quarter sales grew 3 percent to $1.09 billion, compared with $1.05 billion in the year-ago period. Volume growth of 3 percent was driven by increased shipments across all segments, notably in the 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. , home care, 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. and Glad(R) products businesses, offset by somewhat weaker-than-expected shipments of seasonally affected businesses like 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 , auto-care products and salad dressings. On a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, sales grew 5 percent to $3.13 billion, compared with $2.98 billion in the year-ago period. Gross margin in the third quarter declined 260 basis points versus the year-ago period to 41.8 percent, primarily due to increased raw-material costs, partially offset by cost savings. Third-quarter gross margin reflects accelerating commodity costs throughout the year. Year-to-date gross margin declined 50 basis points versus the year-ago period to 42.8 percent. Clorox generated $58 million of cash provided by operations in the third quarter, compared with $203 million in the year-ago period. The year-over-year decrease was primarily due to a tax payment in the current quarter related to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. agreement. For the fiscal year to date, the company generated $463 million of cash provided by operations, compared with $531 million in the year-ago period. Third-Quarter Results by Business Segment Following is a summary of key third-quarter results by business segment. Effective the third quarter, segments were realigned and renamed as disclosed in the company's second-quarter Form 10-Q Form 10-Q See 10-Q. . All comparisons are with the third quarter of fiscal year 2004. Household Group -- 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. includes U.S. 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. , cleaning, water-filtration and professional products; the auto-care business; and all products marketed in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . Compared with the year-ago period, the segment had flat sales, 1 percent volume growth and 2 percent pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings decline. Sales results reflected increased shipments and lower consumer-promotion spending, offset by unfavorable product mix and higher trade-promotion spending. Notably, the home-care business delivered all-time record shipments of Clorox(R) disinfecting wipes and strong shipments of the new Clorox(R) ToiletWand(TM) disposable disposable Nursing adjective Referring to that which is discarded or disposed of noun An item used in health care-related Pt contact which is discarded after use–eg masks, gloves, gowns, needles, paper products, syringes, wipes. See Biohazardous waste. toilet-cleaning system. The company reported decreased shipments of Clorox(R) ReadyMop(R) mopping system due to category decline and Brita(R) water-filtration products primarily due to a shift in the timing of promotional activities. The pretax earnings decline reflected increased raw-material costs and unfavorable product mix, partially offset by the benefit of cost savings. Specialty Group includes the plastic bags, wraps and containers categories marketed in the United States, and charcoal, cat litter and food products. Compared with the year-ago period, the segment had 5 percent sales growth, 2 percent volume growth and 4 percent pretax earnings decline. The strong sales results were driven by increased shipments of Glad(R) trash bags and cat litter. Clorox delivered year-over-year volume growth for Glad(R) trash bags behind the continued strength of Glad(R) ForceFlex(TM) trash bags, and increased shipments of GladWare(R) containers. The company also delivered volume growth for Scoop Away(R) cat litters and record year-over-year shipments of Fresh Step(R) cat litters. These positive results were partially offset by decreased shipments of Glad(R) Press 'n Seal(TM) wrap compared to the year-ago period when the company completed the product launch, and Kingsford(R) charcoal primarily due to poor weather. Sales growth outpaced volume growth due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix and the benefit of price increases, partially offset by higher trade-promotion spending. The pretax earnings decline reflected increased raw-material costs and $5 million in charges, primarily associated with the previously announced closing of a Glad(R) products manufacturing facility, partially offset by cost savings. International includes operations outside the United States and Canada. Compared with the year-ago period, the segment had 8 percent sales growth, 9 percent volume growth and 19 percent pretax earnings decline. The strong sales growth was driven by increased shipments of laundry Laundry can be:
Before industrialization and cleaning products in Latin America. The pretax earnings decline reflected higher commodity costs in the current quarter, and earnings and royalties in the year-ago quarter from the company's former investment in the Henkel Iberica joint venture. These factors were partially offset by the benefit of higher volume and price increases in the current quarter. Fiscal 2005 Outlook For the fourth quarter, Clorox has raised its outlook for sales growth to the range of 4-6 percent. The company continues to anticipate fourth-quarter earnings per diluted share in the range of 91-97 cents. For the full fiscal year, Clorox now anticipates higher sales growth in the range of 4-6 percent. The company's outlook is for earnings per diluted share in the range of $6.02 to $6.08, and earnings per diluted share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the in the range of $2.80 to $2.86. This diluted EPS range includes the nonrecurring earnings, royalties and gain from the exchange of the Henkel Iberica joint venture investment of 14 cents, including the reversal of related deferred taxes. The company's fiscal year 2005 outlook assumes full-year weighted average shares outstanding of about 180 million. Initial Fiscal 2006 Outlook For fiscal year 2006, Clorox anticipates sales growth within its previously communicated long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. target of 3-5 percent. The company anticipates earnings per diluted share in the range of $3.00-$3.11. These estimates include the impact of expensing stock options, which is effective with the new fiscal year. The company estimates the impact of options expensing to be about 11-13 cents diluted EPS. To help offset commodity price pressures, the company will increase prices on selected items of Clorox(R) liquid bleach Noun 1. liquid bleach - a solution containing bleaching agents; used for laundry solution - a homogeneous mixture of two or more substances; frequently (but not necessarily) a liquid solution; "he used a solution of peroxide and water" by an average of 9 percent, effective mid-July. At the same time, the company will also increase prices on Clorox(R) 2 color-safe bleach and Clorox(R) Clean-Up(R) cleaner. The combined effect of commodity cost pressure, price increases and cost savings is expected to result in lower gross margin in the first half of the year, but overall higher gross margin for the full year. For the first quarter of fiscal year 2006, Clorox anticipates sales growth of 3-5 percent and diluted EPS in the range of 65-72 cents. Note: Percentage and basis-point changes noted in this news release are calculated based on rounded numbers. For additional information about the company's results, including definitions of financial terms used in this earnings release and on today's conference call with the investment community (details below), visit the Financial Results area within the Investors section of the company's Web site 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 third-quarter results. The webcast can be accessed at www.TheCloroxCompany.com/investors/index.html. Following a live discussion, a replay of the webcast will be archived for one week on the company's Web site. The Clorox Company The Clorox Company is a leading manufacturer and marketer of consumer products with fiscal year 2004 revenues of $4.2 billion. Clorox markets some of consumers' most trusted and recognized brand names, including its namesake name·sake n. One that is named after another. [From the phrase for the name's sake.] namesake Noun bleach and cleaning products, Armor All(R) and STP STP or standard temperature and pressure, standard conditions for measurement of the properties of matter. The standard temperature is the freezing point of pure water, 0°C; or 273.15°K;. (R) auto care products, Fresh Step(R) and Scoop Away(R) cat litters, Kingsford(R) charcoal briquets, Hidden Valley(R) and K C Masterpiece(R) dressings and sauces, Brita(R) water-filtration systems, and Glad(R) bags, wraps and containers. With 8,600 employees worldwide, the company manufactures products in 25 countries and markets them 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 $58.3 million to nonprofit organizations Nonprofit Organization An association that is given tax-free status. Donations to a non-profit organization are often tax deductible as well. Notes: Examples of non-profit organizations are charities, hospitals and schools. , schools and colleges; and in fiscal 2004 alone made product donations valued at $5 million. For more information about Clorox, visit www.TheCloroxCompany.com. 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. 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 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 & Analysis" 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 ended June 30, 2004, 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; competitors' actions; the company's costs, including changes in exposure to commodity costs such as resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing ; the company's actual cost performance; 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 ability to manage and realize the benefits of joint ventures and other cooperative relationships, including the company's joint venture with Procter & Gamble regarding the company's Glad plastic bags, wraps and containers business; the success of new products; the integration of acquisitions and mergers; 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 non-strategic businesses; and environmental, regulatory and intellectual property matters. In addition, the company's future performance is subject to risks following the share exchange transaction with Henkel, including the sustainability of cash flows and the actual level of debt costs. Declines in cash flow, whether resulting from tax payments, debt payments, share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. or otherwise, or interest cost increases greater than management expects, could adversely affect the company's earnings. The company's forward-looking statements are and will be based on management's then 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.
Condensed Consolidated Statements of Earnings (Unaudited)
In millions, except share and per-share amounts
Three Months Ended Nine Months Ended
-------------------- --------------------
3/31/2005 3/31/2004 3/31/2005 3/31/2004
--------- --------- --------- ---------
Net sales $1,086 $1,051 $3,134 $2,977
Cost of products sold 632 584 1,792 1,688
--------- --------- --------- ---------
Gross profit 454 467 1,342 1,289
--------- --------- --------- ---------
Selling and administrative
expenses 139 162 403 408
Advertising costs 106 105 303 296
Research and development
costs 22 22 64 61
Restructuring and asset
impairment costs 5 - 37 -
Interest expense 27 8 52 21
Other (income) expense:
Equity earnings and
gain on exchange of
Henkel Iberica, S.A. - (3) (25) (8)
Other, net 18 (3) 10 3
--------- --------- --------- ---------
Earnings from continuing
operations before income
taxes 137 176 498 508
Income taxes on continuing
operations 21 61 139 177
Reversal of deferred taxes
from equity investment in
Henkel Iberica, S.A. - - (2) -
--------- --------- --------- ---------
Earnings from continuing
operations 116 115 361 331
Discontinued operations:
Gain on exchange - - 550 -
Earnings from exchanged
businesses 3 19 36 58
Reversal of deferred
taxes from exchanged
businesses - - 6 -
Losses from Brazil
operations - (1) - (6)
Income tax expense on
discontinued
operations (1) (7) (13) (19)
--------- --------- --------- ---------
Earnings from discontinued
operations 2 11 579 33
Net earnings $118 $126 $940 $364
========= ========= ========= =========
Earnings per common share:
Basic
Continuing operations $0.76 $0.55 $1.96 $1.56
Discontinued operations 0.01 0.05 3.13 0.16
--------- --------- --------- ---------
Basic net earnings
per common share $0.77 $0.60 $5.09 $1.72
========= ========= ========= =========
Diluted
Continuing
operations $0.75 $0.54 $1.93 $1.54
Discontinued
operations 0.01 0.05 3.09 0.16
--------- --------- --------- ---------
Diluted net
earnings per
common share $0.76 $0.59 $5.02 $1.70
========= ========= ========= =========
Weighted average common
shares outstanding (in
thousands)
Basic 153,502 211,213 184,572 211,456
Diluted 156,104 213,606 187,170 214,052
Segment Information (Unaudited)
In millions
Third Quarter
------------- Earnings from Continuing
Operations Before Income
Net Sales Taxes.
----------------- -----------------
Three Months Three Months
Ended Ended
----------------- -----------------
3/31 3/31 % 3/31 3/31 %
2005 2004 Change(1) 2005 2004 Change(1)
-------- -------- --------- -------- -------- ---------
Household Group
-- North
America $517 $515 0% $162 $165 -2%
Specialty Group 426 404 5% 96 100 -4%
International 143 132 8% 26 32 -19%
Corporate - - - (147) (121) -21%
-------- -------- --------- -------- -------- ---------
Total Company $1,086 $1,051 3% $137 $176 -22%
======== ======== ========= ======== ======== =========
Year To Date
------------ Earnings from Continuing
Operations Before Income
Net Sales Taxes.
----------------- -----------------
Nine Months Nine Months
Ended Ended
----------------- -----------------
3/31 3/31 % 3/31 3/31 %
2005 2004 Change(1) 2005 2004 Change(1)
-------- -------- --------- -------- -------- ---------
Household Group
-- North
America $1,501 $1,457 3% $485 $464 5%
Specialty Group 1,219 1,143 7% 261 263 -1%
International 414 377 10% 91 93 -2%
Corporate - - - (339) (312) -9%
-------- -------- --------- -------- -------- ---------
Total Company $3,134 $2,977 5% $498 $508 -2%
======== ======== ========= ======== ======== =========
(1) Percentages based on rounded numbers.
Condensed Consolidated Balance Sheet (Unaudited)
In millions
3/31/2005 6/30/2004
--------- ---------
Assets
Current assets
Cash and cash equivalents $293 $232
Receivables, net 401 460
Inventories 374 301
Other current assets 60 50
--------- ---------
Total current assets 1,128 1,043
Property, plant and equipment, net 979 1,052
Goodwill, net 744 742
Trademarks and other intangible assets, net 601 633
Other assets, net 304 364
--------- ---------
Total assets $3,756 $3,834
========= =========
Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Notes and loans payable $407 $289
Current maturities of long-term debt 3 2
Accounts payable 312 310
Accrued liabilities 531 643
Income taxes payable 33 24
--------- ---------
Total current liabilities 1,286 1,268
Long-term debt 2,123 475
Other liabilities 531 377
Deferred income taxes 162 174
Stockholders' (deficit) equity
Common stock 250 250
Additional paid-in capital 325 301
Retained earnings 3,614 2,846
Treasury shares (4,313) (1,570)
Accumulated other comprehensive net losses (206) (274)
Unearned compensation (16) (13)
--------- ---------
Stockholders' (deficit) equity (346) 1,540
--------- ---------
Total liabilities and stockholders' (deficit)
equity $3,756 $3,834
========= =========
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