UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-07151
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THE CLOROX COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 31-0595760
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification number)
1221 Broadway - Oakland, California 94612 - 1888
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(Address of principal executive offices)
Registrant's telephone number, (510)-271-7000
(including area code) --------------
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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As of September 30, 1995 there were 52,275,671 shares outstanding
of the registrant's common stock (par-value - $1.00), the
registrant's only outstanding class of stock.
Total pages 9
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THE CLOROX COMPANY
PART 1. Financial Information Page No.
---------
Item 1. Financial Statements
Condensed Statements of 3
Consolidated Earnings
Three Ended September 30, 1995 and 1994
Condensed Consolidated Balance Sheets 4
March 31, 1995 and June 30, 1994
September 30, 1995 and June 30, 1995
Condensed Statements of Consolidated 5
Cash Flows
Nine Months Ended March 31, 1995 and 1994
Three Months Ended September 30, 1995
and 1994
Notes to Condensed Consolidated 6
Financial Statements
Item 2. Management's Discussion and Analysis 7-8
of Results of Operations and
Financial Condition
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Condensed Statements of Consolidated Earnings
(In thousands, except per-share amounts)
Three Months Ended
------------------------------
9/30/95 9/30/94
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Net Sales $ 518,486 $ 476,367
Costs and Expenses
Cost of products sold 231,333 210,134
Selling, delivery and administration 98,656 89,471
Advertising 72,482 70,967
Research and development 10,202 10,100
Interest expense 7,772 4,926
Other (income) expense, net (567) 362
---------- ---------
Total costs and expenses 419,878 385,960
---------- ---------
Earnings before income taxes 98,608 90,407
Income Taxes 39,829 37,226
---------- ---------
Net Earnings $ 58,779 $ 53,181
========== =========
Earnings per Common Share $ 1.12 $ 1.00
Dividends per Share $ 0.53 $ 0.48
Weighted Average Shares Outstanding 52,354 53,408
See Notes to Condensed Consolidated Financial Statements.
3
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PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
9/30/95 6/30/95
------------ ------------
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ASSETS
Current Assets
Cash and short-term investments $ 127,846 $ 137,330
Accounts receivable, less allowance 218,338 311,868
Inventories 128,450 121,095
Deferred income taxes 11,575 11,495
Prepaid expenses 17,091 18,543
------------ ------------
Total current assets 503,300 600,331
Property, Plant and Equipment - Net 533,187 524,972
Brands, Trademarks, Patents and Other Intangibles 604,575 592,792
Investments in Affiliates 97,228 96,385
Other Assets 119,053 92,192
------------ ------------
Total $ 1,857,343 $ 1,906,672
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 99,187 $ 122,763
Accrued liabilities 212,451 234,595
Income taxes payable 37,964 6,283
Commercial paper and short-term borrowings 76,422 115,303
Current maturities of long-term debt 305 379
------------ ------------
Total current liabilities 426,329 479,323
Long-term Debt 253,418 253,079
Other Obligations 79,611 85,129
Deferred Income Taxes 141,058 145,228
Stockholders' Equity
Common Stock 55,422 55,422
Additional paid-in capital 108,812 108,347
Retained earnings 1,001,044 971,380
Treasury shares, at cost (179,201) (168,217)
Cumulative translation adjustments and other (29,150) (23,019)
Stockholders' Equity 956,927 943,913
------------ ------------
Total $ 1,857,343 $ 1,906,672
See Notes to Condensed Consolidated Financial Statements.
4
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PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Condensed Statements of Consolidated Cash Flows
(In thousands)
Three Months Ended
------------------------------
9/30/95 9/30/94
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<S> <C> <C>
Operations:
Net earnings $ 58,779 $ 53,181
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 26,478 25,305
Deferred income taxes 3,300 3,900
Other 4,628 1,060
Effects of changes in:
Accounts receivable 93,933 59,187
Inventories (3,884) (7,163)
Prepaid expenses 1,372 3,235
Accounts payable (22,603) (9,904)
Accrued liabilities (18,065) (34,015)
Income taxes payable 24,211 26,599
--------- ---------
Net cash provided by operations 168,149 121,385
Investing Activities:
Property, plant and equipment (12,162) (11,217)
Disposal of property, plant and equipment 2,369 124
Businesses purchased (60,427) (18,095)
Other (15,736) (9,081)
--------- ---------
Net cash used for investment (85,956) (38,269)
Financing Activities:
Short-term borrowings - (3,000)
Long-term borrowings - 154
Long-term debt and other obligations repayments (8,789) -
Commercial paper, net (38,881) (21,934)
Cash dividends (27,804) (25,615)
Treasury stock purchased (18,819) -
Employee stock plan issuances 2,616 3,271
--------- ---------
Net cash used for financing (91,677) (47,124)
Net (Decrease) Increase in Cash
and Short-Term Investments (9,484) 35,992
Cash and Short-Term Investments:
Beginning of period 137,330 115,922
--------- ---------
End of period $ 127,846 $ 151,914
See Notes to Condensed Financial Statements
5
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PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(1) The condensed consolidated financial statements for the
three months ended September 30, 1995 and 1994 has not
been audited, but in the opinion of management, all
adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results
of operations, financial position, and cash flows of The
Clorox Company and subsidiaries (the Company) have been
made. The results of the three months ended September 30,
1995 should not be considered as necessarily indicative
of the results for the entire year.
(2) Inventories at September 30, 1995 and at June 30, 1995
consisted of (in thousands):
9/30/95 6/30/95
Finished goods and work in process $ 74,897 $ 71,102
Raw materials and supplies 53,553 49,993
-------- --------
Total $128,450 $121,095
(3) Stock Repurchases
The Company's Board of Directors in July 1995, authorized a
$100,000,000 share repurchase program which is planned for
completion during fiscal year 1996. The shares will be
purchased on the open market. Shares reacquired will be
held as treasury shares and are available for reissuance
for corporate uses. During the quarter, 278,600 shares
were repurchased at a cost of $18,819,000.
(4) Acquisitions of $60,427,000 during the quarter were funded from
cash and included the Black Flag line of insecticides acquired
in September 1995, the acquisition of the remaining minority
interest of the business in Argentina, and other business
interests in Mexico. These acquisitions were accounted
for as purchases.
6
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PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations
Comparison of the Three Months Ended September 30, 1995
with the Three Months Ended September 30, 1994
Earnings per share increased 12 percent to $1.12 from $1.00, and
net earnings increased 11 percent to $58,779,000 from
$53,181,000 a year ago principally due to a 9 percent increase
in net sales driven by a 7 percent increase in volume. Record
shipments were recorded for our home cleaning business
unit which includes Formula 409, Soft Scrub, Pine-Sol and
Clorox toilet bowl cleaners. This business unit achieved its
eleventh consecutive quarterly increase in shipments. Combat
insecticides and Kingsford charcoal shipments were also first
quarter records. Brita water filtration systems shipped
record quarterly volumes reflecting strong growth in all
trade channels and the acquisition in January 1995 of the
Brita business in Canada. Our international business growth
during the quarter was principally due to volume from businesses
acquired in fiscal 1995. Net sales for the quarter which
benefited from price increases taken in fiscal 1995 for Clorox
liquid bleach and Liquid-Plumr accounted for less than seven
percent of the total increase.
Cost of products sold as a percentage of net sales was 44
percent in both the current and year ago quarters. Gross
margins are anticipated to remain at approximately 56 percent
for the remainder of the fiscal year.
Research and development expense was about even with the year
ago period. Selling, delivery, and administration expense
increased 10 percent over the year ago period principally due
to continued investment in international infrastructure, and
costs implementing our customer interface project.
Advertising expenses increased 2 percent over the year ago
period, and are anticipated to increase at the same rate as
sales.
Interest expense increased $2,846,000 over the year ago period
due to higher borrowing levels during the quarter and rates on
commercial paper, and additional indebtedness related to the
Brita Canada acquisition of January 1995.
7
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PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
Liquidity and Capital Resources
The Company's financial position and liquidity remain strong due
to cash provided by operations which increased $46,764,000 over
the year ago period, principally due to the collection of June 30,
1995 receivables including those with seasonal dating terms for
payment this period. Cash provided by operations was used to fund
acquisitions of $60,427,000 during the quarter. Decreases in
accounts receivable and accounts payable balances from June 30,
1995 reflect normal seasonal variation, due to the charcoal and
insecticides businesses. Inventories are higher than June 30, 1995
principally due to international acquisitions. We expect
inventories to increase during the next two fiscal quarters to
support the seasonal charcoal and insecticides businesses.
In July 1995, the Board of Directors approved a $100,000,000
share repurchase program which is planned for completion
during this fiscal year, subject to market conditions and
business opportunities which may arise. During the quarter
278,600 shares at a cost of $18,819,000 were reacquired.
The Company has approved the use of interest rate derivative
instruments such as interest rate swaps in order to manage
the impact of interest rate movements on interest expense.
These instruments have the effect of converting fixed rate
interest to floating, or floating to fixed. The conditions
under which derivatives can be used are set forth in a Company
Policy Statement and include a restriction on the amount of
such activity to a designated portion of existing debt, a
limit on the term of any derivative transaction, and a specific
prohibition on the use of any leveraged derivatives.
Management believes the Company has access to additional capital
through existing lines of credit and from public and private
sources should the need arise.
8
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S I G N A T U R E
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 thereunto duly authorized.
THE CLOROX COMPANY
(Registrant)
DATE November 14, 1994 BY /s/ HENRY J. SALVO, JR.
-----------------------
Henry J. Salvo, Jr.
Vice-President - Controller
9
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL QUARTER ENDED SEPTEMBER 30,
1995, AS PRESENTED IN THE CLOROX COMPANY'S FORM 10-Q FILED FOR SUCH PERIOD, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
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<INVENTORY> 128450
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