UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
X SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998 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
THE CLOROX COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 31-0595760
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
1221 Broadway - Oakland, California 94612 - 1888
(Address of principal executive offices)
Registrant's telephone number, (510)-271-7000
(including area code)
(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
As of September 30, 1998 there were 103,525,444 shares outstanding
of the registrant's common stock (par value - $1.00), the
registrant's only outstanding class of stock.
Total pages 15 1
THE CLOROX COMPANY
PART 1. Financial Information Page No.
--------------------- ---------
Item 1. Financial Statements
Condensed Statements of Consolidated
Earnings
Three Months Ended September 30, 1998
and 1997 3
Consolidated Statements of Comprehensive
Income
Three Months Ended September 30, 1998
and 1997 4
Condensed Consolidated Balance Sheets
September 30, 1998 and June 30, 1998 5
Condensed Statements of Consolidated
Cash Flows
Three Months Ended September 30, 1998
and 1997 6
Notes to Condensed Consolidated
Financial Statements 7-9
Item 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 10-13
Item 6. Other Exhibits 14
2
<PAGE>
<TABLE>
<CAPTION>
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
------------------------------------
9/30/98 9/30/97
------------- -------------
<S> <C> <C>
Net Sales $ 685,883 $ 649,284
Costs and Expenses
Cost of products sold 288,551 279,694
Selling, delivery and administration 142,618 130,399
Advertising 91,592 91,544
Research and development 12,949 11,606
Interest expense 18,796 15,494
Other income (3,150) (1,359)
------------- -------------
Total costs and expenses 551,356 527,378
------------- -------------
Earnings before Income Taxes 134,527 121,906
Income Taxes 49,105 47,543
------------- -------------
Net Earnings $ 85,422 $ 74,363
============= =============
Earnings per Common Share
Basic $ 0.82 $ 0.72
Diluted 0.81 0.71
Weighted Average Shares Outstanding
Basic 103,604 103,217
Diluted 105,637 105,184
Dividends per Share $ 0.36 $ 0.32
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)
Three Months Ended
----------------------------------
9/30/98 9/30/97
------------ ------------
Net Earnings $ 85,422 $ 74,363
------------ ------------
Other comprehensive
income (loss):
Foreign currency
translation
adjustments (17,015) (4,900)
------------ -------------
Comprehensive Income $ 68,407 $ 69,463
============ =============
4
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
9/30/98 6/30/98
------------- -------------
<S> <C> <C>
ASSETS
- ------
Current Assets
Cash and short-term investments $ 109,156 $ 89,681
Accounts receivable, less allowance 347,342 411,868
Inventories 214,701 211,913
Prepaid expenses and other 45,598 45,354
Deferred income taxes 21,668 23,242
------------- -------------
Total current assets 738,465 782,058
Property, Plant and Equipment - Net 598,402 596,293
Brands, Trademarks, Patents and Other Intangibles 1,248,899 1,240,532
Investments in Affiliates 89,478 84,449
Other Assets 334,738 310,018
------------- -------------
Total $ 3,009,982 $ 3,013,350
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 127,363 $ 154,348
Accrued liabilities 192,671 268,583
Short-term debt 666,485 768,616
Income taxes payable 56,437 15,370
Current maturities of long-term debt 1,461 1,517
------------- -------------
Total current liabilities 1,044,417 1,208,434
Long-term Debt 466,294 316,260
Other Obligations 209,404 203,000
Deferred Income Taxes 188,266 200,421
Stockholders' Equity
Common stock 110,844 110,844
Additional paid-in capital 87,776 84,124
Retained earnings 1,432,152 1,382,943
Treasury shares, at cost (415,221) (391,864)
Accumulated other comprehensive income (106,876) (89,861)
Other (7,074) (10,951)
------------- -------------
Stockholders' Equity 1,101,601 1,085,235
------------- -------------
Total $ 3,009,982 $ 3,013,350
============= =============
See Notes to Condensed Consolidated Financial Statements.
5
</TABLE>
<TABLE>
<CAPTION>
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
------------------------------------
9/30/98 9/30/97
------------- -------------
<S> <C> <C>
Operations:
Net earnings $ 85,422 $ 74,363
Adjustments to reconcile to net cash provided
by operating activities:
Depreciation and amortization 34,926 36,680
Deferred income taxes 2,919 2,216
Other (3,384) (9,555)
Effects of changes in:
Accounts receivable 64,526 16,621
Inventories (1,508) (16,272)
Prepaid expenses (244) 5,870
Accounts payable (28,506) 1,524
Accrued liabilities (70,662) (97,749)
Income taxes payable 38,484 36,007
------------- -------------
Net cash provided by operations 121,973 49,705
Investing Activities:
Property, plant and equipment (20,898) (18,375)
Disposal of property, plant and equipment 128 1,123
Businesses purchased (38,652) (37,910)
Other (31,984) (34,915)
------------- -------------
Net cash used for investment (91,406) (90,077)
Financing Activities:
Short-term debt borrowings - 13,407
Short-term debt repayments (374) (148,312)
Long-term debt and other obligations borrowings 149,223 193,287
Long-term debt and other obligations repayments (2,276) (5,434)
Commercial paper, net (101,745) 2,821
Cash dividends (37,315) (32,918)
Treasury stock purchased (28,109) (4,820)
Issuance of common stock under employee stock plans 9,504 8,666
------------- -------------
Net cash provided by (used for) financing (11,092) 26,697
------------- -------------
Net (Decrease) Increase in Cash and Short-Term Investments 19,475 (13,675)
Cash and Short-Term Investments:
Beginning of period 89,681 101,046
------------- -------------
End of period $ 109,156 $ 87,371
See Notes to Condensed Financial Statements.
6
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(1) The summarized consolidated financial information for the
three months ended September 30, 1998 and 1997 has not been audited,
but in the opinion of management, includes all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of the consolidated results of operations, financial
position, and cash flows of The Clorox Company and its subsidiaries
(the "Company"). The results for the three months ended September 30,
1998 should not be considered as necessarily indicative of the results
for the respective year.
(2) Inventories at September 30, 1998 and at June 30, 1998
consisted of (in thousands):
9/30/98 6/30/98
---------- ----------
Finished goods and work in process $ 135,831 $ 130,185
Raw materials and supplies 78,870 81,728
---------- ----------
Total $ 214,701 $ 211,913
(3) Businesses purchased totalling $38,652,000 and $37,910,000
during the quarters ended September 30, 1998 and 1997,
respectively, were funded using a combination of cash and
long-term borrowings and were accounted for as purchases.
These acquisitions included Mistolin bleach and cleaners
business in Venezuela and the Gumption cleaning brand business in
Australia.
(4) In July 1998, the Company refinanced $150,000,000 of
commercial paper by entering into a Deutsche Mark denominated
financing arrangement with private investors. The private
investors exercised an option to finance an additional $50,000,000
under the same terms of this financing arrangement in October 1998.
The Company entered into a series of swaps with notional amounts
totalling $200,000,000 to eliminate foreign currency exposure risk
generated by this Deutsche Mark denominated obligation. The swaps
effectively convert the Company's 2.876% fixed Deutsche Mark
obligation to a floating U.S. dollar rate of 90 day LIBOR less 278
basis points or an effective rate of 2.91%.
7
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(5) In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 128
("SFAS 128"), Earnings per Share. SFAS 128 requires dual
presentation of basic EPS and diluted EPS on the face of all
earnings statements issued after December 15, 1997 for all
entities with complex capital structures. Basic earnings per
share is computed by dividing net earnings by the weighted average
number of common shares outstanding each period. Diluted
earnings per share are computed by dividing net earnings by
the diluted weighted average number of common shares outstanding
during the period. Diluted EPS reflects the potential dilution
that could occur from common shares issuable through stock
options, restricted stock, warrants and other convertible
securities. The weighted average number of shares outstanding
(denominator) used to calculate basic earnings per share is
reconciled to those used in calculating diluted earnings per
share as follows:
Weighted Average Number
of Shares Outstanding
-----------------------
Three Months Ended
-----------------------
9/30/98 9/30/97
------- -------
Basic 103,604 103,217
Stock options 1,952 1,935
Other 81 32
------- -------
Diluted 105,637 105,184
======= =======
(6) Effective July 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130 (FAS 130), Reporting of
Comprehensive Income. Comprehensive income includes net income
and other revenues, expenses, gains and losses that are excluded
from net income but included as a component of stockholders'
equity. This Statement establishes standards for reporting and
displaying comprehensive income and its components in the financial
statements. It requires that the Company classify items of
other comprehensive income, as defined by FAS 130, by their
nature in the financial statements and display accumulated other
comprehensive income separately in the equity section of the
balance sheet. The financial statements for earlier periods were
reclassified for comparative purposes, as required by FAS 130.
Comprehensive income for the quarters ended September 30, 1998
and 1997, was $68,407,000 and $69,463,000 respectively. Comprehensive
income for the Company includes net income and foreign currency
translation adjustments that are excluded from net income but
included as a component of total stockholders' equity.
(7) Certain reclassifications of prior periods' amounts
relating to accounts receivable and accrued liabilities have been
made to conform with the current period presentation.
8
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(8) Subsequent Event - First Brands Corporation Pending
Acquisition
On October 18, 1998, the Company entered into a definitive agreement
with First Brands Corporation ("First Brands") pursuant to which
the Company will acquire First Brands in a merger transaction
(the "Merger") valued at approximately $2 billion. First Brands
develops, manufactures, markets and sells consumer products under
the Glad, Scoop Away, and STP brands, among others. The acquisition
is structured to be treated as a pooling of interests for accounting
purposes and as a non-taxable transaction to First Brands'
stockholders. The transaction is subject to certain conditions,
including the approval of First Brands' stockholders and customary
regulatory approvals. Although the Company hopes to consummate the
acquisition in the quarter ending March 31, 1999, no assurances can
be given as to when, or whether, the acquisition will be completed.
Under the terms of the merger agreement, which has been approved by
the boards of both companies, First Brands' stockholders, in exchange
for their shares of First Brands' common stock, will receive the right
to receive shares of the Company's common stock. The exchange ratio
will depend upon the average closing price of the Company's common
stock on the New York Stock Exchange over the ten trading days
preceding the fifth trading day before the effective date of the
Merger (the "Average Closing Price"). If the Average Closing Price
is more than $80 but less than or equal to $115, the exchange ratio
will be $39 divided by the Average Closing Price (i.e., First Brands'
stockholders will receive $39 in the Company's common stock, based
on the Average Closing Price, for each share of First Brands'
common stock). If the Average Closing Price is less than or equal
to $80, the exchange ratio will be 0.4875 shares of the Company's
common stock for each share of First Brands' common stock. If
the Average Closing Price is greater than $115, the exchange ratio
will be 0.3391 shares of the Company's common stock for each share
of First Brands' common stock. Cash will be paid in lieu of
fractional shares. As a result of the acquisition, Clorox will
also assume approximately $440 million of First Brands' debt.
See also the discussion in "Management's Discussion and Analysis"
under "Subsequent Event - First Brands Corporation Pending Acquisition".
9
<PAGE>
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, 1998
with the Three Months Ended September 30, 1997
Diluted earnings per share increased 14% to 81 cents from 71 cents
a year ago and net earnings grew 15% to $85,422,000 from $74,363,000
a year ago.
Net sales increased 6 percent to $685,883,000 due primarily to
volume growth. This volume growth was fueled by several factors
such as the introduction of new products during the second half
of fiscal year 1998; a strong performance from domestic brands
including Clorox toilet bowl cleanser and automatic toilet bowl
cleaner, Hidden Valley bottled dressings, and Fresh Step Scoop
scoopable cat litter; and increased volumes experienced by our
Brita, Armor All, and professional products businesses. Products
introduced during the second half of fiscal year 1998 that
contributed to this volume growth were Tilex Fresh Shower daily
shower cleaner, Lemon Fresh Pine-Sol cleaner and antibacterial
spray, and Rain Clean Pine-Sol dilutable cleaner. These volume
increases were partially offset by volume decreases in our sales
of Clorox liquid bleach and insecticides, and a weakened volume
performance experienced by our Asian businesses due to an economic
downturn in Asian economies.
Gross margins as a percent of sales improved a percentage point
from the preceding year primarily due to the successful
integration of the Armor All business and on-going cost savings
programs mostly implemented in the prior year such as the
reformulation of certain household products, re-negotiation of
freight rates, reduction of packaging costs, and a switch to
in-house production from the use of outside co-packers for
certain household products.
Selling, delivery, and administration expenses increased
approximately 9% from a year ago primarily due to continued
growth and expenditures related to investment in international
infrastructure.
Interest expense increased approximately $3,300,000 versus the
year ago period primarily due to the issuance of new debt
required to fund business growth.
Income tax expense as a percent of pretax earnings declined from
39% to 36.5% principally due to international investment activities
and international operations.
10
<PAGE>
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 during the quarter.
Accounts receivable, accounts payable, and accrued liabilities
decreased from June 30, 1998 primarily due to normal seasonality
of the charcoal, insecticide, and automotive appearance businesses.
In September 1996, the Board of Directors authorized a share
repurchase program to offset the dilutive effect of employee stock
option exercises. During the three month period ended September 30,
1998, 280,000 shares were acquired at a cost of $28,109,000. The
Company currently plans to discontinue such share repurchase program
in connection with the First Brands Corporation pending acquisition
described below. As a result, the issuance of shares pursuant to the
Company's stock incentive plans may have a potential dilutive effect.
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 that includes a specific prohibition on the use of
any leveraged derivatives. In July 1998, the Company refinanced
$150,000,000 of commercial paper by entering into a Deutsche
Mark denominated financing arrangement with private investors.
The private investors exercised an option to finance an
additional $50,000,000 under the same terms of this financing
arrangement in October 1998. The Company entered into a series
of swaps with notional amounts totalling $200,000,000 to
eliminate foreign currency exposure risk generated by this
Deutsche Mark denominated obligation. The swaps effectively
convert the Company's 2.876% fixed Deutsche Mark obligation to
a floating U.S. dollar rate of 90 day LIBOR less 278 basis
points or an effective rate of 2.91%.
Management believes the Company has access to additional capital
through existing lines of credit and from public and private
sources should the need arise.
Year 2000
Many financial information and operations systems used today may
be unable to interpret dates after December 31, 1999 because
these systems allow only two digits to indicate the year in a date.
Consequently, these systems are unable to distinguish January 1,
2000 from January 1, 1900, which could have adverse consequences
on the operations of an entity and the integrity of information
processing. This potential problem is referred to as the "Year
2000" or "Y2K" issue.
In 1997, the Company established a corporate-wide program to
address Y2K issues. This effort is comprehensive and encompasses
software, hardware, electronic data interchange, networks, PC's,
manufacturing and other facilities, embedded chips, century
certification, supplier and customer readiness, contingency
planning, and domestic and international operations. The Company
is currently on schedule and is more than 60% complete as of
September 30, 1998. The Company has replaced or upgraded most of
its critical business applications and systems and has begun the
century testing phase for these critical technology systems.
The target date to repair or replace the remaining critical
business information systems is March 31, 1999. The Company is
assessing its plant floor systems and equipment and the target
date to complete manufacturing plant floor and facilities
efforts is September 30, 1999. The Company has prioritized
its third-party relationships as
11
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
critical, severe or sustainable, has completed the assessment
phase for third parties (except for assessment of its
key customers which is scheduled to be complete in March 1999),
has requested a Y2K contract warranty in many new key contracts
and is developing contingency plans for critical third parties,
including key customers, suppliers and other service providers.
If necessary modifications and conversions by the Company are
not made on a timely basis, or if key third parties are not
Y2K ready, Y2K problems could have a material adverse effect
on the Company's operations. The Company's most reasonably
likely worst case scenario is a regional utility failure that
would interrupt manufacturing operations and distribution
centers in the affected region. To mitigate this risk, and
to address the possible uncertainty of whether the Company
will be able to solve all potential Y2K issues, the Company
has begun contingency planning for its critical operations,
including key third-party relationships, and will require
written contingency plans for these areas. The Company
expects to complete all of its contingency planning by
June 30, 1999.
Y2K costs are expensed as incurred and funded through
operating cash flows. Through September 30, 1998, the Company
has expensed incremental remediation costs of $17,117,000
with remaining incremental remediation costs estimated at
$13,761,000. In addition, through September 30, 1998, the
Company has expensed accelerated strategic upgrade costs of
$9,609,000 with anticipated remaining accelerated strategic
upgrade costs of $6,399,000. The Company has spent
approximately 17% of its 1998 fiscal year information
technology budget, and expects to spend approximately 12%
of its 1999 fiscal year information technology budget, on
Y2K remediation issues. The Company has not deferred any
critical information technology projects because of its
Year 2000 program efforts, which are primarily being
addressed through a dedicated team within the Company's
information technology group. Time and cost estimates are
based on currently available information and could be
affected by the ability to correct all relevant computer
codes and equipment, and the Y2K readiness of the Company's
business partners, among other factors. Also, the Company's
pending acquisition of First Brands Corporation remains
subject to certain closing conditions and is not included
in this assessment.
Subsequent Event - First Brands Corporation Pending Acquisition
On October 18, 1998, the Company entered into a definitive
agreement with First Brands Corporation ("First Brands")
pursuant to which the Company will acquire First Brands in
a merger transaction (the "Merger") valued at approximately
$2 billion. First Brands develops, manufactures, markets
and sells consumer products under the Glad, Scoop Away, and
STP brands, among others. The acquisition is structured to
be treated as a pooling of interests for accounting purposes
and as a non-taxable transaction to First Brands' stockholders.
The transaction is subject to certain conditions, including
the approval of First Brands' stockholders and customary
regulatory approvals. Although the Company hopes to consummate
the acquisition in the quarter ending March 31, 1999, no
assurances can be given as to when, or whether, the acquisition
will be completed.
Under the terms of the merger agreement, which has been
approved by the boards of both companies, First Brands'
stockholders, in exchange for their shares of First Brands'
common stock, will receive the right to receive shares of
the Company's common stock. The exchange ratio will depend
upon the average closing price of the Company's common stock
on the New York Stock Exchange over the ten trading days
preceding the fifth trading day before the effective date of
the Merger (the "Average Closing Price"). If the Average
Closing Price is more than $80 but less than or equal to
$115, the exchange ratio will be $39 divided by the Average
Closing Price (i.e., First Brands' stockholders will receive
$39 in the Company's common stock, based on the Average
Closing Price, for each share of First Brands' common stock).
If the Average Closing Price is less than or equal to $80, the
12
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
exchange ratio will be 0.4875 shares of the Company's common
stock for each share of First Brands' common stock. If the
Average Closing Price is greater than $115, the exchange ratio
will be 0.3391 shares of the Company's common stock for each
share of First Brands' common stock. Cash will be paid in
lieu of fractional shares. As a result of the acquisition,
Clorox will also assume approximately $440 million of First
Brands' debt.
In connection with pooling of interests accounting treatment
for the Merger, the Company plans to discontinue its previously
announced share repurchase program and may be required to
issue additional shares of its common stock to third parties.
Any such share issuance may have a dilutive effect.
Consummation of the Merger is conditioned upon receipt by
each of the Company and First Brands of a letter from their
respective independent accountants stating that, in their
respective opinions, they concur with the conclusions of the
management of the Company and First Brands that the criteria
for pooling of interests accounting, which can be assessed at
that time, have been met. If after consummation of the
merger, events occur that cause the acquisition to no longer
qualify for pooling of interests treatment, the purchase
method of accounting would be applied, which could have a
material adverse effect on the reported operating results of
the combined company because of the charges to the Company's
earnings from amortization of goodwill required by purchase
accounting.
As is generally the case with acquisitions, there can be no
assurance that the Company will be able to complete the
acquisition, successfully integrate or profitably manage
the First Brands' businesses. In addition, there can be no
assurance that, following the transaction, the First Brands'
businesses will achieve sales levels, profitability, cost
savings or synergies that justify the investment made or
that the acquisition will be accretive to earnings in any
future period.
The Company expects to incur significant costs (in excess of
$100 million) in connection with the Merger to reflect
transaction-related expenses as well as expenses relating to
the integration of First Brands. This amount is a preliminary
estimate only and is therefore subject to change. In
addition, there can be no assurance that the Company will
not incur additional costs associated with the Merger.
Cautionary Statement
Except for historical information, matters discussed in this
Form 10-Q, including statements about future growth or the
likelihood of the consummation or the realization of benefits
from the First Brands' transaction, are forward-looking
statements based on management's estimates, assumptions and
projections. In addition to the factors discussed in this
Form 10-Q, 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 of Financial Condition
and Results of Operation" in the Company's SEC Form 10-K for
the year ending June 30, 1998, as updated from time to time
in the Company's SEC filings. Those factors include, but are
not limited to, marketplace conditions and events, the
Company's costs, risks inherent in international operations,
the success of new products, integration of acquisitions, and
environmental, regulatory and intellectual property matters,
and with respect to the First Brands' transaction, risks
related to the conditions necessary to consummate the Merger
and subsequent successful management of the acquired businesses.
The acquisition of First Brands can be expected to present
challenges to management, including the integration of the
operations, technologies and personnel of the companies, and
special risks, including unanticipated liabilities and
contingencies, and diversion of management attention.
13
<PAGE>
PART II - OTHER INFORMATION
Item 6. Other Exhibits
Exhibit (10) (viii) Supplemental Executive Retirement
Plan restated July 17, 1991, and further amended in May 1994
and January 1996, follows page 14 of this Form 10-Q.
Exhibit (10) (xii) Non-Qualified Deferred Compensation
Plan, as amended and restated in March 1997, follows thereafter.
14
<PAGE>
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 10, 1998 BY /s/ HENRY J. SALVO, JR.
------------------- ---------------------------
Henry J. Salvo, Jr.
Vice-President - Controller
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL QUARTER ENDED SEPTEMBER 30,
1998, 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>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 70974
<SECURITIES> 38182
<RECEIVABLES> 348863
<ALLOWANCES> 1521
<INVENTORY> 214701
<CURRENT-ASSETS> 738465
<PP&E> 1149303
<DEPRECIATION> 550901
<TOTAL-ASSETS> 3009982
<CURRENT-LIABILITIES> 1044417
<BONDS> 209404
0
0
<COMMON> 110844
<OTHER-SE> 990757
<TOTAL-LIABILITY-AND-EQUITY> 3009982
<SALES> 685883
<TOTAL-REVENUES> 685883
<CGS> 288551
<TOTAL-COSTS> 535710
<OTHER-EXPENSES> (3150)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18796
<INCOME-PRETAX> 134527
<INCOME-TAX> 49105
<INCOME-CONTINUING> 85422
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85422
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0.81
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL QUARTER ENDED SEPTEMBER 30,
1997, AS PRESENTED IN THE CLOROX COMPANY'S FORM 10-Q FOR SUCH PERIOD AND AS
RESTATED HEREIN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 48096
<SECURITIES> 39275
<RECEIVABLES> 320251
<ALLOWANCES> 1521
<INVENTORY> 186612
<CURRENT-ASSETS> 630910
<PP&E> 1066303
<DEPRECIATION> 492667
<TOTAL-ASSETS> 2792338
<CURRENT-LIABILITIES> 680573
<BONDS> 756299
0
0
<COMMON> 110845
<OTHER-SE> 964075
<TOTAL-LIABILITY-AND-EQUITY> 2792338
<SALES> 649284
<TOTAL-REVENUES> 649284
<CGS> 279694
<TOTAL-COSTS> 513243
<OTHER-EXPENSES> (1359)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15494
<INCOME-PRETAX> 121905
<INCOME-TAX> 47543
<INCOME-CONTINUING> 74363
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74363
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.71
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL YEAR ENDED JUNE 30, 1998, AS
PRESENTED IN THE CLOROX COMPANY'S FORM 10-K FOR SUCH PERIOD AND RESTATED HEREIN,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 84135
<SECURITIES> 5546
<RECEIVABLES> 413389
<ALLOWANCES> 1521
<INVENTORY> 211913
<CURRENT-ASSETS> 782058
<PP&E> 1122667
<DEPRECIATION> 526374
<TOTAL-ASSETS> 3013350
<CURRENT-LIABILITIES> 1208434
<BONDS> 316260
0
0
<COMMON> 110844
<OTHER-SE> 974391
<TOTAL-LIABILITY-AND-EQUITY> 3013350
<SALES> 2741270
<TOTAL-REVENUES> 2741270
<CGS> 1192534
<TOTAL-COSTS> 2203189
<OTHER-EXPENSES> (3546)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69702
<INCOME-PRETAX> 471925
<INCOME-TAX> 173965
<INCOME-CONTINUING> 297960
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 297960
<EPS-PRIMARY> 2.88
<EPS-DILUTED> 2.82
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY, FOR THE FISCAL YEAR ENDED JUNE 30, 1997, AS
PRESENTED IN THE CLOROX COMPANY'S FORM 10-K FOR SUCH PERIOD AND RESTATED HEREIN,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 62579
<SECURITIES> 38467
<RECEIVABLES> 343417
<ALLOWANCES> 1521
<INVENTORY> 170340
<CURRENT-ASSETS> 658397
<PP&E> 1045407
<DEPRECIATION> 474762
<TOTAL-ASSETS> 2762852
<CURRENT-LIABILITIES> 877618
<BONDS> 565926
0
0
<COMMON> 110844
<OTHER-SE> 925202
<TOTAL-LIABILITY-AND-EQUITY> 2762852
<SALES> 2532651
<TOTAL-REVENUES> 2532651
<CGS> 1123459
<TOTAL-COSTS> 2066273
<OTHER-EXPENSES> (5260)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55623
<INCOME-PRETAX> 416015
<INCOME-TAX> 166573
<INCOME-CONTINUING> 249442
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 249442
<EPS-PRIMARY> 2.41
<EPS-DILUTED> 2.37
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FROM THE FINACIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL QUARTER ENDED MARCH 31, 1998,
AS PRESENTED IN THE CLOROX COMPANY'S FORM 10-Q FOR SUCH PERIOD AND AS RESTATED
HEREIN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 51199
<SECURITIES> 24300
<RECEIVABLES> 434914
<ALLOWANCES> 1521
<INVENTORY> 237182
<CURRENT-ASSETS> 805244
<PP&E> 1082272
<DEPRECIATION> 511996
<TOTAL-ASSETS> 2962881
<CURRENT-LIABILITIES> 868522
<BONDS> 703586
0
0
<COMMON> 110845
<OTHER-SE> 934575
<TOTAL-LIABILITY-AND-EQUITY> 2962881
<SALES> 1921619
<TOTAL-REVENUES> 1921619
<CGS> 828092
<TOTAL-COSTS> 1547652
<OTHER-EXPENSES> (3797)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50346
<INCOME-PRETAX> 327418
<INCOME-TAX> 127623
<INCOME-CONTINUING> 199795
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 199795
<EPS-PRIMARY> 1.93
<EPS-DILUTED> 1.89
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL QUARTER ENDED DECEMBER 31, 1997,
AS PRESENTED IN THE CLOROX COMPANY'S FORM 10-Q FOR SUCH PERIOD AND AS RESTATED
HEREIN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 36003
<SECURITIES> 14895
<RECEIVABLES> 329653
<ALLOWANCES> 1521
<INVENTORY> 219711
<CURRENT-ASSETS> 662784
<PP&E> 1071040
<DEPRECIATION> 500229
<TOTAL-ASSETS> 2814417
<CURRENT-LIABILITIES> 783609
<BONDS> 702185
0
0
<COMMON> 110845
<OTHER-SE> 885553
<TOTAL-LIABILITY-AND-EQUITY> 2814417
<SALES> 1241079
<TOTAL-REVENUES> 1241079
<CGS> 537883
<TOTAL-COSTS> 1007636
<OTHER-EXPENSES> (4490)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34908
<INCOME-PRETAX> 203025
<INCOME-TAX> 79179
<INCOME-CONTINUING> 123846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123846
<EPS-PRIMARY> 1.2
<EPS-DILUTED> 1.17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL QUARTER ENDED MARCH 31, 1997, AS
PRESENTED IN THE CLOROX COMPANY'S FORM 10-Q FILED FOR SUCH PERIOD AND AS
RESTATED HEREIN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 67804
<SECURITIES> 45928
<RECEIVABLES> 389996
<ALLOWANCES> 1521
<INVENTORY> 210220
<CURRENT-ASSETS> 747811
<PP&E> 1048322
<DEPRECIATION> 473900
<TOTAL-ASSETS> 2871644
<CURRENT-LIABILITIES> 671665
<BONDS> 907570
0
0
<COMMON> 55422
<OTHER-SE> 969444
<TOTAL-LIABILITY-AND-EQUITY> 2871644
<SALES> 1770197
<TOTAL-REVENUES> 1770197
<CGS> 780849
<TOTAL-COSTS> 1441729
<OTHER-EXPENSES> (2356)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39247
<INCOME-PRETAX> 291577
<INCOME-TAX> 116532
<INCOME-CONTINUING> 175045
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 175045
<EPS-PRIMARY> 3.39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL QUARTER ENDED DECEMBER 31, 1996,
AS PRESENTED IN THE CLOROX COMPANY'S FORM 10-Q FILED FOR SUCH PERIOD AND AS
RESTATED HEREIN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 80911
<SECURITIES> 0
<RECEIVABLES> 292414
<ALLOWANCES> 1521
<INVENTORY> 189853
<CURRENT-ASSETS> 611129
<PP&E> 1017559
<DEPRECIATION> 448373
<TOTAL-ASSETS> 2699979
<CURRENT-LIABILITIES> 637752
<BONDS> 793350
0
0
<COMMON> 55422
<OTHER-SE> 943427
<TOTAL-LIABILITY-AND-EQUITY> 2699979
<SALES> 1120988
<TOTAL-REVENUES> 1120988
<CGS> 492987
<TOTAL-COSTS> 921934
<OTHER-EXPENSES> (4959)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22242
<INCOME-PRETAX> 181771
<INCOME-TAX> 72346
<INCOME-CONTINUING> 109425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 109425
<EPS-PRIMARY> 2.12
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE CLOROX COMPANY FOR THE FISCAL QUARTER ENDED SEPTEMBER 30,
1996, AS PRESENTED IN THE CLOROX COMPANY'S FORM 10-Q FILED FOR SUCH PERIOD AND
AS RESTATED HEREIN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 66256
<SECURITIES> 50495
<RECEIVABLES> 263197
<ALLOWANCES> 1521
<INVENTORY> 147421
<CURRENT-ASSETS> 557905
<PP&E> 989047
<DEPRECIATION> 431593
<TOTAL-ASSETS> 2211660
<CURRENT-LIABILITIES> 615771
<BONDS> 355575
0
0
<COMMON> 55422
<OTHER-SE> 920487
<TOTAL-LIABILITY-AND-EQUITY> 2211660
<SALES> 590773
<TOTAL-REVENUES> 590773
<CGS> 257361
<TOTAL-COSTS> 473427
<OTHER-EXPENSES> (1973)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10497
<INCOME-PRETAX> 108822
<INCOME-TAX> 43312
<INCOME-CONTINUING> 65510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65510
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 0
</TABLE>
THE CLOROX COMPANY
SUPPLEMENTAL
EXECUTIVE
RETIREMENT PLAN
RESTATED
JULY 17, 1991
AMENDED
MAY 18, 1994
and
JANUARY 17, 1996
PURPOSE OF THE PLAN
The purpose of The Clorox Company Supplemental Executive Retirement
Plan (the "Plan") is to provide retirement benefits for certain
executives of The Clorox Company (the "Company") in addition to
the retirement benefits provided generally to all Company salaried
employees. These supplemental benefits are intended to provide
greater retirement security for those executives and to aid in
attracting and retaining future executives.
July 17, 1991
ARTICLE I
DEFINITIONS
The following words and phrases as used herein shall have the
following meanings, unless a different meaning is plainly required
by the context.
1.1 "Accrued Benefit" means the benefit of a Participant
calculated under Article II at the time of the Participant's
termination, or for Participants who have not terminated
employment, at the time of their assumed termination. In the
latter case, the benefit will be based upon the following as of
their assumed termination: (a) Compensation, (b) total years
and completed months of service, (c) any vested accrued benefit
from a Company sponsored Defined Benefits Plan, (d) the monthly
benefit which could be provided based on the actuarially
determined annuity value of the Participant's vested Company
contributions account under any Company sponsored Defined
Contribution Plan, and (e) any monthly primary insurance benefit
to which the Participant may be entitled under the Social
Security Act.
1.2 "Board of Directors" means the board of directors of
the Company as from time to time constituted.
1.3 "Committee" means the Employee Benefits and
Management Compensation Committee of the Board of Directors.
May 18, 1994
I-1
1.4 "Company" means The Clorox Company.
1.5 "Compensation" means the total of annual base salary
plus the Management Incentive Compensation awarded to a
Participant and in each case includes amounts the receipt of
which the Participant has elected to defer or to take in the
form of restricted stock or a stock option. For purposes of
the calculation of benefits in Sections 2.3 and 2.5, the
total of the Participant's three highest Management Incentive
Compensation awards will be apportioned evenly over the 36
consecutive months of highest base salary.
1.6 "Defined Benefit Plan" means a plan, fund or program
under which an employer undertakes systematically for the
payment of definitely determinable benefits to its employees
over a period of years after retirement. The benefit an employee
will receive upon retirement can be determined from a formula
defined in the plan instrument.
1.7 "Defined Contribution Plan" means a plan which provides
for an individual account for each participant and for benefits
based solely on the amount contributed to the participant's
account, and any income, expenses, gains and losses and any
forfeitures of accounts of other participants which may be
allocated to such participant's account. Beginning July 1, 1994
"Defined Contribution Plan" shall include NonQualified Deferred
Compensation Plans which a) restore amounts for a Participant's
benefit which cannot be contributed to a defined benefit or
contribution plan deemed qualified under the Internal Revenue
Code, or b) account for annual distributions, whether deferred
or received in cash, made from a Defined Contribution Plan
rather than credited to the Participant's account in such plan.
1.8 "Effective Date" means July 1, 1981.
January 17, 1996 I-2
1.9 "Married Participant" means a Participant who is
lawfully married on the date Retirement Benefits become payable
pursuant to Article II (Retirement Benefits).
1.10 "Officer" means an officer of the Company with a
rank of Vice President or above.
1.11 "Participant" means any employee who becomes a
Participant pursuant to Section 2.1 (Participation), or a
former employee who has become entitled to a Normal or
Early Retirement Benefit pursuant to the Plan.
1.12 "Retirement Benefit" means the retirement income
provided to Participants and their joint annuitants in
accordance with the applicable provisions of Article II
(Retirement Benefits).
Words importing males shall be construed to include females
wherever appropriate.
July 17, 1991 I-3
ARTICLE II
RETIREMENT BENEFITS
2.1 Participation
The employees of the Company named in Exhibit A are the
Participants currently accruing benefits or who have vested
deferred benefits and have not begun to receive such benefits.
From time to time, the Committee may designate additional
employees as Plan Participants. A Participant who is an
Officer of the Company and who is removed from office or is
not reelected as an Officer, or who is not an Officer and
who terminates his employment or has his employment terminated,
will thereupon cease to be a Participant and will have no
vested interest in the Plan unless he is entitled to a Normal
or Early Retirement Benefit pursuant to this Article II.
July 17, 1991 II-1
2.2 Normal Retirement Date
A Participant who terminates his employment on or after age
sixty-five with ten or more years of employment with the Company
will receive a Normal Retirement Benefit beginning on the first
day of the month following his termination of employment. Such
date will be the Participant's Normal Retirement Date.
2.3 Normal Retirement Benefits
The Normal Retirement Benefit payable to a Participant will be
equal to 3-2/3% of the monthly average of the Participant's
compensation during the thirty-six (36) consecutive months of
employment producing the highest such average, times the
Participant's total years and completed months of employment
with the Company as of his termination of employment, to a
maximum of 15 years, offset by:
(a) the monthly benefit payable under a 50% joint and survivor
annuity form for a Married Participant or an annuity payable
for the life of a single Participant, which would be provided
to the Participant on his Normal Retirement Date (i) by Company
contributions under any Company sponsored Defined Benefit Plan
plus (ii) the monthly benefit which could be provided based on
the actuarially determined annuity value of his vested Company
contributions account under any Company sponsored Defined
Contribution Plan, plus
(b) the monthly primary insurance benefit to which the
Participant may be entitled under the Social Security Act as
of his Normal Retirement Date.
For purposes of this Section, Company contributions shall not
include voluntary reductions of compensation under the provisions
of a Company sponsored Defined Contribution Plan. Company
matching contributions under such a plan shall be considered
Company contributions.
May 18, 1994 II-2
2.4 Early Retirement Date
A Participant who terminates his employment on or after age
fifty-five with ten or more years of employment with the
Company will receive an Early Retirement Benefit beginning
on the first day of the month following his termination of
employment. The date of the commencement of the Early
Retirement Benefit will be the Participant's Early Retirement
Date.
2.5 Early Retirement Benefit
The Early Retirement Benefit payable to a Participant on
his Early Retirement Date will be calculated in the same
manner as the Normal Retirement Benefit in Section 2.3 except
that:
(a) Before deducting the offsets provided in Section 2.3, (a)
and (b), the benefit derived by the calculation in the first
paragraph of Section 2.3 shall be reduced to reflect the
Participant's retirement before his Normal Retirement Date.
This reduction will be one quarter of one percent (0.25%) for
each month that the Participant's Early Retirement Date
precedes his Normal Retirement Date.
May 18, 1994 ARTICLE II-3
(b) In calculating the offset described in Section 2.3, (a)
and (b), the reference to "Normal Retirement Date" shall be
changed to "Early Retirement Date." If the Early Retirement
Date is prior to the Participant's attainment of age 62, then
the monthly primary insurance benefit payable at age 62 shall
be multiplied by the appropriate factor from the table below:
Age at Early
Retirement Date Factor
62 1.00
61 .90
60 .81
59 .73
58 .66
57 .60
56 .54
55 .49
If the Participant's Age on the Early Retirement Date is not
an integral age, the factors above shall be interpolated to
reflect the age in years and months. If the Participant is
62 or older on his/her Early Retirement Date, the offset shall
be the actual monthly primary insurance benefit to which the
Participant is entitled under the Social Security Act as of that date.
May 18, 1994 II-3a
2.6 Form of Payment
A Participant's Normal or Early Retirement Benefit, will be
paid to him monthly beginning on his Normal or Early Retirement
Date and ending with the payment due for the month in which
his death occurs. If the spouse of a Participant who is
receiving a Retirement Benefit survives the Participant,
monthly payments equal to 50% of the monthly amount payable
to the Participant will continue to such spouse ending with
the payment due for the month in which such spouse's death occurs.
2.7 Termination other than Early or Normal Retirement
A Participant who terminates employment or whose employment is
terminated by the Company and who does not meet the requirements
for an Early or Normal Retirement Benefit will be not be entitled
to a benefit under the Plan.
2.8 Pre-Retirement Death Benefit
The surviving spouse of a Participant with ten or more years of
employment with the Company who dies before he has begun receiving
a Normal or Early Retirement Benefit shall be entitled to receive
a Pre-Retirement Death Benefit. The Pre-Retirement Death Benefit
shall be one-half of a 50% joint and survivor annuity form of the
Early or Normal Retirement Benefit the Participant would have
received had he elected to begin receiving a Retirement Benefit
on the first day of the month following his death. If the
Participant's death occurs before he has attained the age at which
he could elect to receive an Early Retirement Benefit, the
Pre-Retirement Death Benefit will commence on the first day of the
month following the date upon which the Participant would have
attained that age had he survived; provided, however, that if the
surviving spouse dies before that date, there shall be no
Pre-Retirement Death Benefit available to any survivors of the
Participant or his spouse.
July 17, 1991 II-4
2.9 Disability
A Participant who becomes disabled as determined by The Clorox
Company Pension Plan will continue to participate in this Plan
on the same basis as he continues to participate in said
Pension Plan.
July 17, 1991 II-5
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Plan Administration
The Committee shall have the power and the duty to take all
action and to make all decisions necessary and proper to carry
out the Plan. Without limiting the generality of the foregoing,
the Committee hereby designates the Employee Benefits Committee
of the Company to control and manage the operation and
administration of the Plan. The Committee shall have the
authority to allocate among themselves or to the Employee
Benefits Committee or to delegate to any other person, any
fiduciary responsibility with respect to the Plan.
3.2 Amendment and Plan Termination
(a) Except by the written consent of 75% of Plan Participants
actually or potentially affected thereby and the approval of the
Board of Directors, the Plan may not be terminated or amended in
any way which would reduce the benefits payable hereunder or
reduce or eliminate the funding provided for in Article IV until
the first regularly scheduled meeting of the Board of Directors
held after June 30, 2011.
May 18, 1994 III-1
(b) The Board of Directors, without the consent of the
Plan Participants, may amend the Plan to improve or increase
the benefits payable hereunder at any time.
(c) If the Plan is terminated, all Participants, including
beneficiaries receiving benefits, will be entitled to their
Accrued Benefits under the Plan. In such event the Board of
Directors may, at its sole discretion, elect any one or more of
the following alternatives to satisfy the Company's obligations
to such Participants or beneficiaries, provided that the method
so elected shall be applied uniformly to all Participants or
beneficiaries:
(i) Provide benefit payments in accordance with the terms
of the Plan, at the times specified in the Plan.
(ii) Purchase immediate or deferred annuities.
(iii) Make lump sum payments equal to the present value of
accrued benefits for amounts less than $25,000 adjusted annually
beginning July 1, 1995, for changes in the Consumer Price Index.
May 18, 1994 III-2
3.3 Assignment of Benefits
A Participant may not, either voluntarily or involuntarily,
assign, anticipate, alienate, commute, pledge or encumber any
benefits to which he is or may become entitled to under the Plan
nor may the same be subject to attachment or garnishment by any
creditor of a Participant.
3.4 Not An Employment Agreement
Nothing in the establishment of the Plan is to be construed as
giving any Participant the right to be retained in the employ
of the Company.
3.5 Merger, Consolidation or Transfer
In the event that the Company shall, pursuant to action by its
Board of Directors, at any time propose to merge into, consolidate
with or sell or otherwise transfer all or substantially all of
its assets to another corporation and provision is not made
pursuant to the terms of such transaction for the continuation
of this Plan by the surviving, resulting or acquiring corporation
or for the substitution of a comparable plan hereto, the provisions
of this Plan shall remain in effect.
July 17, 1991 III-3
ARTICLE IV
FUNDING
4.1 Establishment of Irrevocable Trust
The Company shall establish an irrevocable trust of which the
Company is the owner for federal income tax purposes (within the
meaning of Sections 671 through 677 of the Internal Revenue Code
of 1986) (the "Trust") and fund the Trust as hereinafter provided
in order to provide a source from which to satisfy the Company's
obligations to Participants under this Plan.
4.2 Amount of Funding
The Company shall make such contributions to the Trust as the
Board of Directors from time to time determines appropriate.
4.3 Actuarial Assumptions and Method
The Plan's actuary shall use the following assumptions and
methods when advising the Board of Directors with regard to
contributions to the Trust:
(a) Mortality:
1983 Group Annuity Mortality Table for periods after benefits
have commenced, or are assumed to have commenced. No mortality
will be assumed prior to the assumed retirement age for benefits
not yet in payment status.
May 18, 1994 IV-1
(b) Return on Investment:
Assets are assumed to earn, the liabilities are discounted
at, eight percent (8%) per year.
(c) Assumed Retirement Age:
For Participants whose benefits are not in payment status as
of July 1 of each year, the Assumed Retirement Age will be age
60, or their current age if older. For beneficiaries, the Assumed
Retirement Age is the beneficiary's age on the date their deceased
spouse would have reached 60, or their current age if their
spouse would have already been older than age 60.
(d) Annual Pay Increases:
Eight percent (8%) per year.
(e) Employee Turnover:
None.
May 18, 1994 IV-2
(f) Social Security Increases:
Social security benefits are assumed to increase 5% per year.
(g) IRC Limits:
The Internal Revenue Code (IRC) section 415 and section 401(a)(17)
limits are assumed to increase 5% per year.
(h) Defined Contribution Plan Offset:
Annuity equivalent of projected account balance assuming an
annual earnings rate of 8.0%; Profit Sharing Plan contributions
of 8.0% of pay; annual TRIP contributions of $500 (no inflation);
and assuming no further PAYSOP contributions are made.
(i) Actuarial Cost Method:
The Entry Age Normal Cost Method will be used. The unfunded
actuarial liability as of each July 1 will be amortized over
ten years.
May 18, 1994 IV-3
THE CLOROX COMPANY
NONQUALIFIED DEFERRED COMPENSATION PLAN
(January 1, 1996)
Amended and Restated through March 3, 1997
ARTICLE I.
PURPOSE
This Plan is designed to restore to selected employees
of The Clorox Company and its affiliates certain benefits
that cannot be provided under The Clorox Company's tax-qualified
retirement plans. In addition, this Plan permits selected
employees to defer bonuses and regular pay.
This Plan is intended to be a plan that is unfunded and
that is maintained by The Clorox Company primarily for the
purpose of providing deferred compensation for a select group
of management or highly compensated employees within the
meaning of the Employee Retirement Income Security Act.
ARTICLE II.
DEFINITIONS
In this Plan, the following terms have the meanings
indicated below.
2.01 "Account" means a bookkeeping entry used to
record deferrals and contributions made on a Participant's
behalf under Article III of the Plan and gains and losses
credited to these deferrals and contributions under Article IV
of the Plan.
2.02 "Affiliate" means an entity other than the
Company whose employees participate in the Value Sharing Plan
and/or the Pension Plan.
2.03 "Beneficiary" means the person or persons,
natural or otherwise, designated in writing, to receive a
Participant's vested Account if the Participant dies before
distribution of his or her entire vested Account. A Participant
may designate one or more primary Beneficiaries and one or
more secondary Beneficiaries. A Participant's Beneficiary
designation will be made pursuant to such procedures as the
Committee may establish, and delivered to the Committee before
the Participant's death. The Participant may revoke or change
this designation at any time before his or her death by
following such procedures as the Committee may establish.
If the Committee has not received a Participant's Beneficiary
designation before the Participant's death or if the Participant
does not otherwise have an effective Beneficiary designation
on file when he or she dies, the Participant's vested Account
will be distributed to the Participant's spouse if surviving
at the Participant's death, or if there is no such spouse,
the Participant's estate.
2.04 "Bonus" means one or more cash bonuses
designated from time to time by the Committee as eligible
for deferral under this Plan. As of January 1, 1996, the
term Bonus includes the following bonuses payable (but for
any deferral election) after July 1, 1996: Cash-or-Deferred
Value Sharing Bonus, and/or an award under The Clorox
Management Incentive Compensation Plan and/or a Sales Added
Compensation Bonus and/or a Mid Level Incentive Bonus.
2.05 "Committee" means the Company's Employee
Benefits Committee or another group appointed by the Employee
Benefits and Management Compensation Committee of the Company's
Board of Directors. The Committee has full discretionary
authority to administer and interpret the Plan, to determine
eligibility for Plan benefits, to select employees for Plan
participation, and to correct errors. The Committee may
delegate its duties and responsibilities and, unless the
Committee expressly provides to the contrary, any such
delegation will carry with it the Committee's full discretionary
authority to accomplish the delegation. Decisions of the
Committee and its delegate will be final and binding on all
persons.
2.06 "Company" means The Clorox Company.
2.07 "Eligible Employee" means an employee of the
Company or of an Affiliate who has been selected by the
Committee for Plan participation and who, except as provided
in Section 3.01(c), has confirmed his or her participation
in writing with the Committee before the calendar year in
which deferrals and/or restoration contributions under this
Plan are made on that employee's behalf.
o An individual will cease to be an Eligible Employee
on the earliest of (i) the date the individual ceases to be
employed by the Company and all Affiliates, (ii) the date
the Plan is terminated, or (iii) the date the individual is
notified by the Committee that he or she is no longer an
Eligible Employee.
o For purposes of the restoration contributions described
in Section 3.02 of this Plan, an employee who terminates
employment with the Company and all Affiliates before July 1,
1996 will not be an Eligible Employee, unless and until he or
she is rehired by the Company or an Affiliate and designated
by the Committee as an Eligible Employee.
o For purposes of the deferrals described in Section 3.01
of this Plan, an employee who terminates employment with the
Company and all Affiliates before January 1, 1996 will not be
an Eligible Employee, unless and until he or she is rehired by
the Company or an Affiliate and redesignated by the Committee
as an Eligible Employee.
2.08 "Mid-Year Entrant" means an individual (i) who
has never been a Participant and (ii) who is first notified that
he or she has been selected for Plan participation during the
calendar year in which his or her Plan participation will begin.
2.09 "$150,000 Limit" means the $150,000 (indexed)
limit of Internal Revenue Code Section 401(a)(17), which limits
the compensation that can be taken into account when determining
benefits under a tax-qualified retirement plan.
2.10 "Participant" means a current or former Eligible
Employee who retains an Account.
2.11 "Pension Plan" means The Clorox Company Pension
Plan, as amended from time to time. "Pension Plan Year" means
the plan year defined in the Pension Plan and "Cash Balance
Contribution" means a cash balance contribution as defined in
the Pension Plan.
2.12 "Plan" means The Clorox Company Nonqualified Deferred
Compensation Plan, as amended from time to time.
2.13 "Regular Pay" means the pre-tax amount of an
Eligible Employee's base salary. Regular Pay is determined on
a "paycheck by paycheck" basis and does not include amounts
paid before January 1, 1997.
2.14 "Termination of Employment" means termination of
employment with the Company and all Affiliates, other than by
reason of death.
2.15 "Value Sharing Plan" means The Clorox Company
Value Sharing Plan, as amended from time to time. "Value Sharing
Plan Year" means the plan year defined in the Value Sharing
Plan and "Value Sharing Contribution" means a Value Sharing
Contribution (including forfeitures) as described in the Value
Sharing Plan. Before June 30, 1996, The Clorox Company Value
Sharing Plan was called The Clorox Company Profit Sharing Plan,
Value Sharing Contributions were called Profit Sharing
Contributions, and the Value Sharing Plan Year was known as
the Profit Sharing Plan Year.
ARTICLE III.
DEFERRALS AND CONTRIBUTIONS
3.01 Deferrals. An Eligible Employee may defer up to 50%
of his or her Regular Pay and up to 100% of each Bonus for which
he or she is eligible by submitting a written election to the
Committee that satisfies such requirements, including such minimum
deferral amounts, as the Committee may determine. Participants
will be 100% vested in these deferrals.
(a) Elections. For each calendar year, an Eligible
Employee may make three separate deferral elections: an election
to defer Regular Pay, an election to defer his or her
Cash-or-Deferred Value Sharing Bonus (if any), and an election to
defer all other types of Bonus (if any). Each such election must
be made before the calendar year in which the Regular Pay and/or
Bonus is scheduled to be paid and, with respect to a Bonus, no
less than 6 months before scheduled payment of the Bonus.
Elections will remain in effect for one calendar year.
(b) Late Election. If an Eligible Employee does not
make a timely election for an upcoming calendar year, no deferral
will be made on behalf of that Eligible Employee with regard to
that election for that upcoming calendar year.
(c) Initial Election. Notwithstanding the timing
provisions in paragraphs (a) and (b) above, within 30 days after
the date that a Mid-Year Entrant is first notified that he or
she is eligible to participate in the Plan or within 30 days
after the initial effective date of the Plan, a Mid-Year Entrant
may elect to defer (i) Regular Pay for services to be performed
subsequent to the election and (ii) any Bonus that is scheduled
to be paid at least 6 months after the date of the election.
These elections will remain in effect until the end of the
calendar year for which they were made.
3.02 Restoration Contributions. Subject to paragraphs (d),
(e), and (f) below, Accounts will be credited with restoration
contributions as described below.
(a) Value Sharing. The amount of an Eligible Employee's
value sharing restoration contribution for a Value Sharing or
Profit Sharing Plan Year beginning on or after July 1, 1995
will be equal to the amount by which that Eligible Employee's
Value Sharing or Profit Sharing Contribution (including any
Cash-or-Deferred Value Sharing) for that Value Sharing or
Profit Sharing Plan Year was reduced due to (i) the $150,000
Limit and (ii) amounts (excluding any Cash-or-Deferred Value
Sharing) voluntarily deferred under this Plan.
(b) Pension. The amount of an Eligible Employee's
pension restoration contribution for a Pension Plan Year
beginning on or after July 1, 1995 will be equal to the amount
by which the Eligible Employee's Cash Balance Contribution for
that Pension Plan Year was reduced due to (i) the $150,000
Limit and (ii) amounts voluntarily deferred under this Plan.
(c) Special Restoration Contributions. Accounts of
individuals who are Eligible Employees on July 1, 1996 will be
credited with the following special restoration contributions:
(i) 1994-95 Profit Sharing Plan Contribution.
A special contribution equal to the amount by which the Eligible
Employee's Profit Sharing Contribution for the Profit Sharing
Plan Year beginning July 1, 1994 was actually reduced due to the
$150,000 Limit.
(ii) 1994-95 Pension Plan Accrual. A special
contribution, which is the lump sum equivalent of the amount by
which the Eligible Employee's Pension Plan accrual for the
Pension Plan year beginning July 1, 1994 was actually reduced
due to the $150,000 Limit. This lump sum equivalent amount will
be the lump sum present value, as of June 30, 1996, of the
pension accrual described in the preceding sentence (expressed as
a single life annuity commencing as of the later of: the
Eligible Employee's age, as of June 30, 1996 or age 65), where
the present value is determined using: the annual rate of
interest on 30-year Treasury securities for January, 1996, the
applicable mortality table that is specified for use in January
1996 in accordance with Section 417(e)(3)(A)(ii)(I) of the
Internal Revenue Code, and the Eligible Employee's age as of
June 30, 1996, rounded to years and completed months.
(d) Crediting. Restoration contributions will be
credited to Eligible Employees' Accounts as of the date that
the Value Sharing Contributions or the Cash Balance Contributions
to which the restoration contributions relate are credited to
the Value Sharing Plan or the Pension Plan, as the case may be.
Notwithstanding the foregoing, the special restoration
contributions described in the preceding paragraph (c) will be
credited as of July 1, 1996.
(e) Vesting. Participants will vest in their
restoration contributions at the same percentage rate that they
vest in the Value Sharing Contributions or the Pension Plan
allocations to which the restoration contributions relate.
(f) Restrictions.
(i) Participation. If an Eligible Employee is
not credited with an actual Pension Plan accrual for a given
calendar quarter during a Pension Plan Year, that Eligible
Employee will not receive a pension restoration contribution
under this Plan for that calendar quarter. Similarly, if an
Eligible Employee does not receive an actual Value Sharing
Contribution for a given Value Sharing Plan Year, that Eligible
Employee will not receive a value sharing restoration contribution
under this Plan for that year.
(ii) Eligible Employee. In order to receive a
restoration contribution under this Plan with respect to a
given Value Sharing Year or calendar quarter of a Pension Plan
Year, an individual must have been an Eligible Employee during
that Value Sharing Year or during the calendar quarter of the
Pension Plan Year, as the case may be, but the individual need
not be an Eligible Employee on the date the restoration
contribution is actually made. Notwithstanding the foregoing,
the requirements of this Section 3.02(f)(ii) will be satisfied
with respect to the special restoration contributions described
in (c) above if an individual is an Eligible Employee on July 1,
1996.
ARTICLE IV.
EARNINGS
4.01 Elections. The Committee may permit Participants to
request that earnings on their Accounts be credited as though the
Accounts were invested in one or more investments approved by
the Committee.
4.02 Interest. To the extent that earnings are not credited
as described in Section 4.01 above, the Committee will credit
interest to each Account. Interest will be credited quarterly
in accordance with procedures approved by the Committee. The
interest rate used will be the annual rate of interest on 30-year
Treasury securities, as determined in accordance with Section
417(e)(3)(A)(ii)(II) of the Internal Revenue Code, for the second
month preceding the Company's fiscal year for which the interest
is credited. The first quarter for which interest will be
credited is the calendar quarter beginning July 1, 1996. Effective
January 1, 1997, the interest rate used will be the interest rate
then in effect for crediting interest to a Participant's
"account" under the Pension Plan.
ARTICLE V.
DISTRIBUTIONS
5.01 Distribution Elections. Eligible Employees will elect
the manner in which their vested Accounts will be paid out upon
Termination of Employment by following the procedures described
below, and by satisfying such additional requirements as the
Committee may determine.
(a) Initial Election. Effective November 15, 1996,
when an Eligible Employee confirms his or her initial
participation in the Plan, as provided in Section 2.07 of the
Plan, the Eligible Employee will elect, in writing, which of
the distribution options described in Section 5.02 of the
Plan will govern payment of the Eligible Employee's entire
vested Account upon the Eligible Employee's Termination of
Employment.
(b) Subsequent Elections. Effective November 15, 1996,
a Participant may change a distribution election with respect to
his or her entire vested Account by submitting the change to the
Committee, in writing, at least two calendar years before the
Participant has a Termination of Employment. If such a subsequent
election is not valid because, for example, it is not made in a
timely manner, the Participant's most recent effective
distribution election under this Section 5.01 will govern payment
of the Participant's entire vested Account upon the Participant's
Termination of Employment.
5.02 Termination of Employment. The vested portion of a
Participant's Account will be distributed to the Participant,
following the Participant's Termination of Employment, in
whichever of the following forms has been properly elected by
the Participant, or pursuant to the Plan's default provision if
there is no such election:
(a) Lump Sum. Payment in one lump sum, as soon as
administratively practicable (as determined by the Committee)
and subject to the timing requirements outlined in paragraph (c),
below.
(b) Installments. Payment in annual installments,
not in excess of 10, to begin as soon as administratively
practicable (as determined by the Committee) and subject to the
timing requirements outlined in paragraph (c), below.
(c) Timing. Effective November 15, 1996, payments
under paragraph (a) or paragraph (b) above, will not be made
earlier than 60 days or later than 90 days ("60/90 Day Rule")
after whichever of the following dates has been properly elected
by the Participant: (i) the date of the Participant's Termination
of Employment or (ii) January 1 of the calendar year immediately
following the Participant's Termination of Employment.
Notwithstanding the foregoing, if a Participant who has selected
option (ii) in the preceding sentence has a Termination of
Employment on or after January 1 and before November 1, the
60/90 Day Rule will not apply, and the distribution will begin
on January 1 of the calendar year immediately following the
Participant's Termination of Employment, or as soon as
administratively practicable thereafter.
(d) Default. If, upon a Participant's Termination of
Employment, the Committee does not have a proper distribution
election on file for that Participant, the vested portion of
that Participant's Account will be distributed to the Participant,
following the Participant's Termination of Employment, in one lump
sum, as soon as administratively practicable (as determined by the
Committee), but in no event earlier than 60 days or later than 90
days after the Participant's Termination of Employment.
(e) Rehire. If a Participant's entire Account has not
been distributed and/or the Participant was not 100% vested in his
or her Account upon Termination of Employment and the Participant
again becomes an Eligible Employee, distributions to the Participant
will cease, amounts forfeited (if any) from the Participant's
Account will be restored to the extent required to satisfy Section
3.02(e) of the Plan, and the Participant's distribution election
under Section 5.01 will remain in effect as though the Participant
had not had a Termination of Employment. If a former Participant's
entire Account has been distributed and the former Participant was
100% vested in his or her Account upon Termination of Employment,
the former Participant will make a new distribution election under
Section 5.01(a), and may make subsequent distribution elections
under Section 5.01(b), if the former Participant again becomes an
Eligible Employee.
(f) Subsequent Credits. Amounts, if any, that become
payable to a Participant's Account after distributions have begun
from that Account, and before the Participant is rehired or dies,
will be paid out pursuant to the distribution election in effect for
that Participant upon his or her Termination of Employment.
5.03 Death. If a Participant dies with a vested amount in his
or her Account, whether or not the Participant was receiving payouts
from that Account at the time of his or her death, the Participant's
Beneficiary will receive the entire vested amount in the
Participant's Account as soon as administratively practicable (as
determined by the Committee) but in no event earlier than 60 days
or later than 90 days after the Committee learns of the
Participant's death. Amounts, if any, that become payable to a
Participant's Account after that Account has been distributed
pursuant to this Section 5.03 will be paid to the Participant's
Beneficiary as soon as administratively practicable.
5.04 Withholding. The Company will deduct from Plan payouts,
or from other compensation payable to a Participant or Beneficiary,
amounts required by law to be withheld for taxes with respect to
benefits under this Plan. The Company reserves the right to
reduce any deferral or contribution that would otherwise be made
to this Plan on behalf of a Participant by a reasonable amount,
and to use all or a portion of this reduction to satisfy the
Participant's tax liabilities under this Section 5.04.
ARTICLE VI.
MISCELLANEOUS
6.01 Limitation of Rights. Participation in this Plan
does not give any individual the right to be retained in the
service of the Company or of any related entity.
6.02 Satisfaction of Claims. Payments to a Participant,
the Participant's legal representative, or Beneficiary in accordance
with the terms of this Plan will, to the extent thereof, be in full
satisfaction of all claims that person may have hereunder against
the Committee, the Company, and all Affiliates, any of which may
require, as a condition to payment, that the recipient execute a
receipt and release in a form determined by the Committee, the
Company, or an Affiliate.
6.03 Indemnification. The Company and the Affiliates will
indemnify the Committee, the Company's Board of Directors, and
employees of the Company and the Affiliates to whom responsibilities
have been delegated under the Plan for all liabilities and expenses
arising from an act or omission in the management of the Plan if the
person to be indemnified did not act dishonestly or otherwise in
willful violation of the law under which the liability or expense
arises.
6.04 Assignment. To the fullest extent permitted by law, rights
to benefits under the Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of a Participant
or a Beneficiary.
6.05 Lost Recipients. If the Committee cannot locate a
person entitled to payment of a Plan benefit after a reasonable
search, the Committee may at any time thereafter treat that
person's Account as forfeited and amounts credited to that
Account will revert to the Company. If the lost person
subsequently presents the Committee with a valid claim for
the forfeited benefit amount, the Company will pay that person
the amount forfeited.
6.06 Amendment and Termination. The Company's Board of
Directors may, at any time, amend the Plan in writing or
terminate the Plan. In addition, the Committee may amend the
Plan (other than this Section 6.06) in writing, provided that
the amendment will not cause any substantial increase in cost
to the Company or to any Affiliate. No amendment may, without
the consent of an affected Participant (or, if the Participant
is deceased, the Participant's Beneficiary), adversely affect
the Participant's or the Beneficiary's rights and obligations
under the Plan with respect to amounts already credited to a
Participant's Account. Notwithstanding the foregoing, if the Plan
is terminated, the Company's Board of Directors may determine that
all Accounts will be paid out.
6.07 Applicable Law. To the extent not governed by Federal
law, the Plan is governed by the laws of the State of California
without choice of law rules. If any provision of the Plan is held
to be invalid or unenforceable, the remaining provisions of the
Plan will continue to be fully effective.
6.08 No Funding. The Plan constitutes a mere promise by
the Company and the Affiliates to make payments in the future in
accordance with the terms of the Plan. Participants and Beneficiaries
have the status of general unsecured creditors of the Company and
the Affiliates. Plan benefits will be paid from the general assets
of the Company and the Affiliates and nothing in the Plan will be
construed to give any Participant or any other person rights to any
specific assets of the Company or the Affiliates. In all events,
it is the intention of the Company, all Affiliates and all
Participants that the Plan be treated as unfunded for tax purposes
and for purposes of Title I of the Employee Retirement Income
Security Act.
IN WITNESS WHEREOF, The Clorox Company has caused this Plan to
be executed by its duly authorized representative on the date
indicated below.
- -------------------------- ----------------------
DATE
