| The Clorox Company |  |
Earnings Before Interest and Taxes (EBIT) and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)(1)
Reconciliation schedule of earnings before income taxes to earnings before interest and taxes, and earnings before interest, taxes, depreciation and amortization
Dollars in millions and percentages based on rounded numbers
| Three Months Ended | ||||||||
| 9/30/08 | 9/30/07 | |||||||
| Earnings before income taxes | $ | 186 | $ | 174 | ||||
| Interest income | (2 | ) | (3 | ) | ||||
| Interest expense | 42 | 33 | ||||||
| EBIT(2) | 226 | 204 | ||||||
| EBIT margin(2) | 16.3 | % | 16.5 | % | ||||
| Depreciation and amortization | 47 | 48 | ||||||
| EBITDA(3) | $ | 273 | $ | 252 | ||||
| EBITDA margin(3) | 19.7 | % | 20.3 | % | ||||
| Net sales | $ | 1,384 | $ | 1,239 | ||||
| (1) | In accordance with SEC's Regulation G, this schedule provides the definition of certain non-GAAP measures and the reconciliation to the most closely related GAAP measure. | |
| Management believes the presentation of EBIT, EBIT margin, EBITDA and EBITDA margin provides additional useful information to investors about current trends in the business. | ||
| (2) | EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income and expense, as reported above. EBIT margin is a measure of EBIT as a percentage of net sales. | |
| (3) | EBITDA (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income, interest expense, depreciation and amortization, as reported above. EBITDA margin is a measure of EBITDA as a percentage of net sales. | |
The Clorox Company
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Supplemental Information – Balance Sheet
(Unaudited)
As of September 30, 2008
Working Capital Update | �� | |||||||
| Q1 | ||||||||
| FY 2009 | FY 2008 | Change | Days(5) | Days(5) | ||||
| ($ millions) | ($ millions) | ($ millions) | FY 2009 | FY 2008 | Change | |||
| Receivables, net | $455 | $408 | $47 | 31 | 32 | -1 days | ||
| Inventories, net | $421 | $332 | $89 | 44 | 41 | 3 days | ||
| Accounts payable(1) | $392 | $318 | $74 | 42 | 40 | 2 days | ||
| Accrued liabilities | $367 | $347 | $20 | |||||
| Total WC(2) | $148 | $74 | $74 | |||||
| Total WC % net sales(3) | 2.7 | % | 1.5 | % | ||||
| Average WC(2) | $139 | $36 | $103 | |||||
| Average WC % net sales(4) | 2.5 | % | 0.7 | % | ||||
Receivables increased primarily as a result of the acquisition of Burt’s Bees and higher sales.
Inventories increased primarily as a result of the acquisition of Burt’s Bees, higher commodity costs, and inventory build for restructuring of the supply chain.
Accounts payable increased mainly due to the acquisition of Burt’s Bees and increased commodity and transportation costs.
Accrued liabilities increased primarily due to higher accruals related to the acquisition of Burt’s Bees and interest expense.
Supplemental Information – Cash Flow
(Unaudited)
For the quarter and year ended September 30, 2008
Capital expenditures for the first quarter were $39 million
Depreciation and amortization for the first quarter was $47 million
Cash provided by operations
Net cash provided by operations in the first quarter was $93 million, compared with $163 million in the year-ago quarter. The decrease was primarily due to higher working capital. Working capital reflected the impact of the Burt’s Bees acquisition and higher inventory levels resulting from increased commodity costs and inventory builds to support both new product launches and the manufacturing network consolidation. Also contributing to the decline in cash flow were higher incentive compensation and interest payments versus the year-ago quarter.
(1) | Days of accounts payable is calculated as follows: average accounts payable / [(cost of products sold + change in inventory) / 90]. |
(2) | Working capital (WC) is defined in this context as current assets minus current liabilities excluding cash and short-term debt, based on end of period balances. Average working capital represents a two-point average of working capital. |
(3) | Represents working capital at the end of the period divided by annualized net sales(current quarter net sales x 4). |
(4) | Represents a two-point average of working capital divided by annualized net sales(current quarter net sales x 4). |
(5) | Days calculations based on a two-point average. |
The Clorox Company
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SupplementalInformation –GrossMarginDrivers
The table belowprovides details on the drivers of grossmarginchange versus the prior year.
| Change vs. Prior Year (basis points) | ||||||
| Driver | FY08 | FY09 | ||||
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | |
| Cost savings | +180 bp | +170 bp | +150 bp | +180 bp | +170 bp | +200 bp |
| Pricing changes | +50 bp | +40 bp | +80 bp | +150 bp | +80 bp | +230 bp |
| Market movement (commodities) | -120 bp | -170 bp | -350 bp | -370 bp | -270 bp | -460 bp |
| Manufacturing & logistics(1) | -140 bp | -70 bp | -120 bp | -170 bp | -110 bp | -250bp |
| All other(2) | 0 bp | -130 bp | -110 bp | 0 bp | -60 bp | +80 bp |
| Gross margin change vs prior year | -30 bp | -160 bp | -350 bp | -210 bp | -190 bp | -200 bp |
(1) | “Manufacturing & logistics” includes the change in the cost of diesel fuel. |
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(2) | “All other” includes all other drivers of gross margin change, which are usually insignificant in nature. Examples of drivers included: volume change, trade and consumer spending, restructuring and acquisition-related costs, foreign currency, etc. If a driver included in all other is deemed to be significant in a given period, it will be disclosed as part of the company’s earnings release. |
The Clorox Company Updated: 10-31-08 | |
U.S. Price Increases from CY2005 - CY2009
| Brand / Product | Average Increase | Effective Date | ||
| Home Care | ||||
| Clorox Clean-Up®cleaners | 5 | % | July 2005 | |
| Clorox Clean-Up®and Tilex®cleaners | 8 | % | January 2006 | |
| Pine-Sol®cleaners | 13 | % | May 2008 | |
| Clorox Clean-Up®cleaners | 8 | % | August 2008 | |
| Formula 409®, Tilex®, and Clorox®Disinfecting Bathroom cleaners | 12 | % | August 2008 | |
| Liquid-Plumr®products | 9 | % | August 2008 | |
| Clorox®Toilet Bowl Cleaner and Clorox®ToiletWandTMproducts | 8 – 13 | % | August 2008 | |
| Laundry | ||||
| Clorox 2®bleach for colors | 5 | % | July 2005 | |
| Clorox®liquid bleach | 9 | % | July 2005 | |
| Clorox®liquid bleach | 8 | % | January 2006 | |
| Clorox®liquid bleach | 10 | % | August 2008 | |
| Glad | ||||
| Glad®trash bags | 13 | % | February 2005 | |
| GladWare®disposable containers | 12 | % | February 2005 | |
| Glad®food bags | 7 | % | August 2005 | |
| GladWare®disposable containers | 9 | % | January 2006 | |
| Glad®trash bags | 15 | % | February 2006 | |
| Glad®trash bags and GladWare®disposable containers | 7 | % | February 2008 | |
| Glad®trash bags | 10 | % | October 2008 | |
| Litter | ||||
| Cat litter | 5 | % | October 2005 | |
| Cat litter | 6 | % | June 2006 | |
| Cat litter | 7 – 8 | % | August 2008 | |
| Food | ||||
| Hidden Valley Ranch®salad dressing | 6 | % | October 2007 | |
| Hidden Valley Ranch®salad dressing | 7 | % | August 2008 | |
| Charcoal | ||||
| Match Light®charcoal | 6 | % | January 2006 | |
| Kingsford®lighter fluid | 10 | % | January 2006 | |
| Charcoal and lighter fluid | 4 – 8 | % | January 2007 | |
| Charcoal | 6 | % | January 2008 | |
| Charcoal and lighter fluid | 7 – 16 | % | January 2009 | |
| Brita | ||||
| Brita®pour-through filters | 7 | % | January 2006 | |
| Brita®pitchers | 5 | % | January 2006 | |
| Auto | ||||
| Armor All®and STP®auto-care products | 9 | % | January 2006 | |
| STP®functional fuel products | 17 | % | October 2006 | |
| Armor All®and STP®auto-care products | 5 – 7 | % | January 2008 | |
Notes:
Average % increase reflects brand averages rounded to the whole percent. Individual SKUs vary versus the average.
This communication reflects pricing actions on primary items.