The Clorox Company (CLX) 10-Q 3 Nov 09 2010 Q1 Quarterly report Financial data

Condensed Consolidated Statemen

Condensed Consolidated Statements of Earnings (USD $)
In Millions, except Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008
Net sales	$1,372	$1,384
Cost of products sold	753	822
Gross profit	619	562
Selling and administrative expenses	175	184
Advertising costs	127	119
Research and development costs	27	27
Restructuring costs	2	1
Interest expense	36	42
Other expense, net	8	3
Earnings before income taxes	244	186
Income taxes	87	58
Net earnings	$157	$128
Earnings per share
Basic	1.12	0.91
Diluted	1.11	0.9
Weighted average shares outstanding (in thousands)
Basic	139,743	138,457
Diluted	140,861	139,860
Dividend declared per share	0.5	0.46

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (USD $)
In Millions	Sep. 30, 2009	Jun. 30, 2009
Assets
Cash and cash equivalents	$237	$206
Receivables, net	458	486
Inventories, net	392	366
Other current assets	114	122
Total current assets	1,201	1,180
Property, plant and equipment, net	947	955
Goodwill	1,640	1,630
Trademarks, net	558	557
Other intangible assets, net	101	105
Other assets	151	149
Total assets	4,598	4,576
Liabilities and Stockholders' Deficit
Notes and loans payable	457	421
Current maturities of long-term debt	575	577
Accounts payable	330	381
Accrued liabilities	405	472
Income taxes payable	99	86
Total current liabilities	1,866	1,937
Long-term debt	2,137	2,151
Other liabilities	617	640
Deferred income taxes	25	23
Total liabilities	4,645	4,751
Stockholders' deficit
Common stock: $1.00 par value; 750,000,000 shares authorized;158,741,461 shares issued at September 30, 2009 and June 30, 2009; and 139,808,056 and 139,157,976 shares outstanding at September 30, 2009 and June 30, 2009, respectively	159	159
Additional paid-in capital	564	579
Retained earnings	720	640
Treasury shares, at cost: 18,933,405 and 19,583,485 shares at September 30, 2009 and June 30, 2009, respectively	(1,169)	(1,206)
Accumulated other comprehensive net losses	(321)	(347)
Stockholders' deficit	(47)	(175)
Total liabilities and stockholders' deficit	$4,598	$4,576

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets [Parentheticals] (USD $)
	Sep. 30, 2009	Jun. 30, 2009
Condensed Consolidated Balance Sheets [Parentheticals]
Common Stock, Par or Stated Value Per Share	1	1
Common Stock, Shares Authorized	750,000,000	750,000,000
Common Stock, Shares, Issued	158,741,461	158,741,461
Common Stock, Shares, Outstanding	139,808,056	139,157,976
Treasury Stock, Shares	18,933,405	19,583,485

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (USD $)
In Millions	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008
Operating activities:
Net earnings	$157	$128
Adjustments to reconcile earnings from operations:
Depreciation and amortization	48	47
Share-based compensation	13	12
Deferred income taxes	2	(3)
Other	(27)	10
Changes in:
Receivables, net	35	41
Inventories, net	(21)	(45)
Accounts payable and accrued liabilities	(131)	(99)
Income taxes payable	18	2
Net cash provided by operations	94	93
Investing activities:
Capital expenditures	(34)	(39)
Other	1	(1)
Net cash used for investing activities	(33)	(40)
Financing activities:
Notes and loans payable	35	(27)
Long-term debt repayments	(15)	0
Cash dividends paid	(70)	(64)
Issuance of common stock for employee stock plans and other	15	16
Net cash used for financing activities	(35)	(75)
Effect of exchange rate changes on cash and cash equivalents	5	(8)
Net increase (decrease) in cash and cash equivalents	31	(30)
Cash and cash equivalents:
Beginning of year	206	214
End of year	$237	$184

Interim Financial Statements

Interim Financial Statements
	3 Months Ended Sep. 30, 2009 USD / shares
Interim Financial Statements [Abstract]
Interim Financial Statements [Text Block]	NOTE 1. INTERIM FINANCIAL STATEMENTS Basis of Presentation The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2009 and 2008, in the opinion of management, reflect all adjustments (consisting 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) for the periods presented. Certain prior period amounts have been reclassified in the condensed consolidated financial statements to conform to the current period presentation. The results for the interim period ended September 30, 2009, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2010, or for any future period. The Companys condensed consolidated financial statements were evaluated for subsequent events after the balance sheet date through November 3, 2009, the date the consolidated financial statements were issued. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). The information in this report should be read in conjunction with the Companys Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2009, which includes a complete set of footnote disclosures, including the Companys significant accounting policies. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ materially from estimates and assumptions made. New Accounting Pronouncements Recently adopted pronouncements On July 1, 2009, the Company adopted a new accounting standard which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities that must be included in the computation of earnings per share pursuant to the two-class method. These payment awards were previously not considered participating securities. Accordingly, the Companys unvested performance units, restricted stock awards and restricted stock units that provide such nonforfeitable rights are now considered participating securities in the calculation of net earnings per share (EPS). The Companys share-based payment awards granted in fiscal year 2010 are not participating securities. The new standard requires the retrospective adjustment of the Companys earnings per share data. The retrospective adoption of the new accounting standard resulted in a $0.01 decrease in the previously reported basic and diluted EPS for the three months ended September 30, 2008, and a $0.04 and $0.02 decrease in the previously reported basic and diluted EPS, respectively, for the fiscal year 2009. The calculation of EPS unde

Restructuring

Restructuring
	3 Months Ended Sep. 30, 2009 USD / shares
Restructuring [Abstract]
Restructuring [Text Block]	NOTE 2. RESTRUCTURING In fiscal year 2008, the Company began a restructuring plan that involves simplifying its supply chain and other restructuring activities (Supply Chain and Other restructuring plan), which was subsequently expanded to include additional costs, primarily severance, associated with the Companys plan to reduce certain staffing levels. The Supply Chain restructuring involves closing certain domestic and international manufacturing facilities. The Company is redistributing production from these facilities between the Companys remaining facilities and third-party producers to optimize available capacity and reduce operating costs. The Company anticipates the Supply Chain restructuring will be completed in fiscal year 2012. During the three months ended September 30, 2009, the Company recognized $2 of restructuring costs in Corporate. Additionally, the Company recognized restructuring-related costs associated with the Supply Chain and Other restructuring plan of $1 and $3, included in selling and administrative expenses and cost of products sold, respectively. Of these amounts, $2, $1 and $1 were related to the Cleaning and Household segments and Corporate, respectively. During the three months ended September 30, 2008, the Company recognized $1 of restructuring costs in the Cleaning segment. In addition, the Company recognized in cost of products sold restructuring-related costs associated with the Supply Chain and Other restructuring plan of $5. Of these amounts, $1, $3 and $1 were related to the Cleaning, Household and International segments, respectively. Total costs associated with the Supply Chain and Other restructuring plan since inception through September 30, 2009, were $104, of which $31, $41, $12 and $20 related to the Cleaning, Household, International segments and Corporate, respectively. The Company anticipates incurring approximately $18 to $25 of Supply Chain and Other restructuring-related charges in fiscal year 2010, of which approximately $2 are expected to be noncash related. The Company anticipates approximately $5 to $8 of the fiscal year 2010 charges to be in Corporate and $9 to $11 to be in the Cleaning segment, of which approximately $7 to $9 are expected to be recognized as cost of products sold charges. The remaining estimated charges of $4 to $6 are expected to be recognized as cost of products sold in the Household segment. The total anticipated charges related to the Supply Chain and Other restructuring plan for the fiscal years 2011 and 2012 are estimated to be approximately $10 to $12. Total restructuring cash payments for the three months ended September 30, 2009 were $3 and the total accrued restructuring liability as of September 30, 2009, was $14. The total accrued restructuring liability as of June 30, 2009, was $15. The Company may, from time to time, decide to pursue additional restructuring-related initiatives that involve charges in future periods.

Financial Instruments and Fair

Financial Instruments and Fair Value Measurements
	3 Months Ended Sep. 30, 2009 USD / shares
Financial Instruments and Fair Value Measurements
Financial Instruments and Fair Value Measurements [Text Block]	NOTE 3. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS The Company is exposed to certain commodity and foreign currency risks relating to its ongoing business operations. The Company uses commodity futures and fixed price swap contracts to fix the price of a portion of its forecasted raw material requirements. Contract maturities, which are generally no longer than 18 months, are matched to the length of the raw material purchase contracts. The Company also enters into certain foreign currency related derivative contracts to manage a portion of the Companys foreign exchange risk associated with the purchase of inventory. These foreign currency contracts generally have durations no longer than 12 months. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as a hedge, and on the type of the hedging relationship. For those derivative instruments designated and qualifying as hedging instruments, the Company must designate the hedging instrument as a fair value hedge or a cash flow hedge. The Company designates as cash flow hedges, commodity forward and future contracts of forecasted purchases for raw materials and foreign currency forward contracts of forecasted purchases of inventory. For derivative instruments designated and qualifying as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (OCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The estimated amount of the existing net losses at the reporting date expected to be reclassified into earnings within the next 12 months is $8. Gains and losses on the derivative instruments representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. During the three months ended September 30, 2009, the hedge ineffectiveness was not material. The Companys derivative financial instruments designated as hedging instruments are recorded at fair value in the condensed consolidated balance sheet as follows: Fair value Balance Sheet location 9/30/2009 6/30/2009 Assets Commodity purchase contracts Other current assets $ 4 $ 6 Liabilities Foreign exchange contracts Accrued liabilities $ 2 $ - Commodity purchase contracts Accrued liabilities 12 21 $ 14 $ 21 The effects of derivative instruments on OCI and on the statement of earnings for the three months ended September 30, 2009, were as follows: Cash flow hedges Gain (Loss) recognized in OCI Loss reclassified from OCI and recognized in earnings Commodity purchase contracts $ 7 $ (10) Foreign exchange contracts (2) (1) Total $ 5 $ (11) The loss reclassified from OCI and recognized in earnings during

Inventories, Net

Inventories, Net
	3 Months Ended Sep. 30, 2009 USD / shares
Inventories, Net
Inventories, Net [Text Block]	NOTE 4. INVENTORIES, NET Inventories, net, consisted of the following at: 9/30/2009 6/30/2009 Finished goods $ 326 $ 304 Raw materials and packaging 104 99 Work in process 4 4 LIFO allowances (31) (31) Allowances for obsolescence (11) (10) Total $ 392 $ 366

Other Liabilities

Other Liabilities
	3 Months Ended Sep. 30, 2009 USD / shares
Other Liabilities [Abstract]
Other Liabilities [Text Block]	NOTE 5. OTHER LIABILITIES Other liabilities consisted of the following at: 9/30/2009 6/30/2009 Venture agreement net terminal obligation $ 270 $ 269 Employee benefit obligations 242 266 Taxes 67 65 Other 38 40 Total $ 617 $ 640

Net Earnings Per Share

Net Earnings Per Share
	3 Months Ended Sep. 30, 2009 USD / shares
Net Earnings Per Share [Text Block]	NOTE 6. NET EARNINGS PER SHARE The Company computes EPS using the two-class method (See Note 1), which is an earnings allocation formula that determines EPS for common stock and participating securities. EPS for common stock is computed by dividing net earnings applicable to common stock by the weighted average number of common shares outstanding each period on an unrounded basis. Net earnings applicable to common stock includes dividends paid to common shareholders during the period plus a proportionate share of undistributed net earnings which is based on the weighted average number of shares of common stock and participating securities outstanding during the period. Diluted EPS for common stock reflects the earnings dilution that could occur from common shares that may be issued through stock options, restricted stock awards, performance units and restricted stock units, that are not participating securities. Excluded from this calculation are amounts allocated to participating securities. The following are reconciliations of net earnings to net earnings allocable to common stock, and the number of common shares outstanding (in thousands) used to calculate basic EPS to those used to calculate diluted EPS: Three Months Ended 9/30/2009 9/30/2008 Net earnings $ 157 $ 128 Less: Earnings allocated to participating securities (1) (2) Net earnings applicable to common stock $ 156 $ 126 Weighted Average Number of Shares Outstanding for the Three Months Ended 9/30/2009 9/30/2008 Basic 139,743 138,457 Dilutive effect of stock options and other (excludes participating securities) 1,118 1,403 Diluted 140,861 139,860 At September 30, 2009 and 2008, the Company did not include stock options to purchase 4,254 thousand and 4,559 thousand shares, respectively, of the Companys common stock, in the calculations of diluted EPS because their inclusion would be anti-dilutive. During the three months ended September 30, 2009 and 2008, the Company issued 862 thousand and 855 thousand shares, respectively, of the Companys common stock. The Company did not repurchase any shares during the three months ended September 30, 2009 and 2008.

Comprehensive Income

Comprehensive Income
	3 Months Ended Sep. 30, 2009 USD / shares
Comprehensive Income
Comprehensive Income [Text Block]	NOTE 7. COMPREHENSIVE INCOME Comprehensive income includes net earnings and certain adjustments that are excluded from net earnings, but included as a separate component of stockholders deficit, net of tax. Comprehensive income was as follows: Three Months Ended 9/30/2009 9/30/2008 Net earnings $ 157 $ 128 Other comprehensive gains (losses), net of tax: Foreign currency translation 22 (47) Net derivative adjustments 3 (32) Pension and postretirement benefit adjustment 1 - Total comprehensive income $ 183 $ 49

Income Taxes

Income Taxes
	3 Months Ended Sep. 30, 2009 USD / shares
Income Taxes
Income Taxes [Text Block]	NOTE 8. INCOME TAXES In determining its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. As of September 30, 2009 and June 30, 2009, the total amount of unrecognized tax benefits was $85 and $98, respectively, of which $85 and $91, respectively, would reduce income tax expense and the effective tax rate if recognized. The Companyrecognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of September 30, 2009 and June 30, 2009, the total balance of accrued interest and penalties related to uncertain tax positions was $18 and $17, respectively. Interest and penalties included in income tax expense were $3 and $2 for the three months ended September 30, 2009 and 2008, respectively. The Company files income tax returns in the U.S. federal and various state, local and foreign jurisdictions. Certain issues relating to 2003, 2004 and 2006 are under review by the IRS Appeals Division. The Company made payments of tax and interest to the IRS related to fiscal years 2004 and 2006 in the first quarter of fiscal year 2010 of $8. No tax benefits had previously been recognized for these payments. Various income tax returns in state and foreign jurisdictions are currently in the process of examination. In the twelve months succeeding September 30, 2009, audit resolutions could potentially reduce total unrecognized tax benefits by up to $26, primarily as a result of cash settlement payments. Audit outcomes and the timing of audit settlements are subject to significant uncertainty.

Retirement Income and Health Ca

Retirement Income and Health Care Benefit Plans
	3 Months Ended Sep. 30, 2009 USD / shares
Retirement Income and Health Care Benefit Plans
Retirement Income and Health Care Benefit Plans [Text Block]	NOTE 9. RETIREMENT INCOME AND HEALTH CARE BENEFIT PLANS The following table summarizes the components of net periodic benefit cost for the Companys retirement income plans: Three Months Ended 9/30/2009 9/30/2008 Components of net periodic benefit cost (income): Service cost $ 3 $ 3 Interest cost 8 7 Expected return on plan assets (8) (7) Amortization of unrecognized items 2 1 Total net periodic benefit cost $ 5 $ 4 The net periodic benefit cost for the Companys retirement health care plans was $1 for the three month periods ended September 30, 2009 and 2008. During the three months ended September 30, 2009, the Company made a $33 discretionary contribution to the U.S. pension plan. Based on current pension funding rules, the Company is not required to make any contributions in fiscal year 2010.

Contingencies

Contingencies
	3 Months Ended Sep. 30, 2009 USD / shares
Contingencies
Contingencies [Text Block]	NOTE 10. CONTINGENCIES The Company is involved in certain environmental matters, including Superfund and other response actions at various locations. The Company recorded a liability of $19 at both September 30, 2009 and June 30, 2009, for its share of the related aggregate future remediation cost. One matter in Dickinson County, Michigan, for which the Company is jointly and severally liable, accounts for a substantial majority of the recorded liability at both September 30, 2009 and June 30, 2009. The Company is subject to a cost-sharing arrangement with Ford Motor Co. (Ford) for this matter, under which the Company has agreed to be liable for 24.3% of the aggregate remediation and associated costs, other than legal fees, as the Company and Ford are each responsible for their own such fees. If Ford is unable to pay its share of the response and remediation obligations, the Company would likely be responsible for such obligations. In October 2004, the Company and Ford agreed to a consent judgment with the Michigan Department of Environmental Quality, which sets forth certain remediation goals and monitoring activities. Based on the current status of this matter, and with the assistance of environmental consultants, the Company maintains an undiscounted liability representing its best estimate of its share of costs associated with the capital expenditures, maintenance and other costs to be incurred over an estimated 30-year remediation period. The most significant components of the liability relate to the estimated costs associated with the remediation of groundwater contamination and excess levels of subterranean methane deposits. The Company made payments of less than $1 during each of the three months ended September 30, 2009 and 2008, towards remediation efforts. Currently, the Company cannot accurately predict the timing of the payments that will likely be made under this estimated obligation. In addition, the Companys estimated loss exposure is sensitive to a variety of uncertain factors, including the efficacy of remediation efforts, changes in remediation requirements and the timing, varying costs and alternative clean-up technologies that may become available in the future. Although it is possible that the Companys exposure may exceed the amount recorded, any amount of such additional exposures, or range of exposures, is not estimable at this time. The Company is subject to various other lawsuits and claims relating to issues such as contract disputes, product liability, patents and trademarks, advertising, employee and other matters. Although the results of claims and litigation cannot be predicted with certainty, it is the opinion of management that the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on the Companys consolidated financial statements taken as a whole.

Segment Results

Segment Results
	3 Months Ended Sep. 30, 2009 USD / shares
Segment Results
Segment Results [Text Block]	NOTE 11. SEGMENT RESULTS The Company operates through strategic business units which are aggregated into four reportable segments: Cleaning, Household, Lifestyle and International. The four reportable segments consist of the following: Cleaning consists of laundry, home-care, professional products and auto-care products marketed and sold in the United States. Products within this segment include laundry additives, including bleaches, under the Clorox and Clorox 2 brands; home-care products, primarily under the Clorox , Formula 409 , Liquid-Plumr , Pine-Sol , S.O.S and Tilex brands; natural cleaning and laundry products under the Green Works brand; and auto-care products primarily under the Armor All and STP brands. Household consists of charcoal, cat litter and plastic bags, wraps and container products marketed and sold in the United States. Products within this segment include plastic bags, wraps and containers, under the Glad brand; cat litter products, under the Fresh Step , Scoop Away and Ever Clean brands; and charcoal products under the Kingsford and Match Light brands. Lifestyle consists of food products and water-filtration systems and filters marketed and sold in the United States and all natural personal care products. Products within this segment include dressings and sauces, primarily under the Hidden Valley and K C Masterpiece brands; water-filtration systems and filters under the Brita brand; and all natural personal care products under the Burts Bees brand. International consists of products sold outside the United States. Corporate includes certain nonallocated administrative costs, interest income, interest expense and certain other nonoperating income and expenses. Corporate assets include cash and cash equivalents, the Companys headquarters and research and development facilities, information systems hardware and software, pension balances, and other investments. The table below presentsreportable segment information and a reconciliation of the segment information to the Companys net sales and earnings before income taxes, with amounts that are not allocated to the operating segments shown as Corporate. Earnings (Losses) Net Sales Before Income Taxes Three Months Ended Three Months Ended 9/30/2009 9/30/2008 9/30/2009 9/30/2008 Cleaning $ 503 $ 487 $ 137 $ 115 Household 381 426 55 62 Lifestyle 200 194 66 56 International 288 277 47 34 Corporate - - (61) (81) Total Company $ 1,372 $ 1,384 $ 244 $ 186 All intersegment sales are eliminated and are not included in the Companys reportable segments net sales. During the three months ended September 30, 2009 and 2008, earnings before income taxes included restructuring and asset impairment costs together with restructuring-related charges included in selling and administrative expenses and cost of products sold (Note 2) of $2 and $2

Document Information

Document Information
	3 Months Ended Sep. 30, 2009 USD / shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-09-30

Entity Information

Entity Information (USD $)
	3 Months Ended Sep. 30, 2009
Entity Information [Line Items]
Entity Registrant Name	Clorox Co /DE/
Entity Central Index Key	0000021076
Current Fiscal Year End Date	--06-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	139,808,056