UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-07151
THE CLOROX COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 31-0595760
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification number
1221 Broadway - Oakland, California 94612 - 1888
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(Address of principal executive offices)
Registrant's telephone number, (510) 271-7000
(including area code)
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(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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As of December 31, 2000 there were 236,275,132 shares outstanding of
the registrant's common stock (par value - $1.00), the registrant's
only outstanding class of stock.
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THE CLOROX COMPANY
PART I. Financial Information Page No.
--------------------- --------
Item 1. Financial Statements
Condensed Consolidated Statements
of Earnings
Three Months and Six Months Ended
December 31, 2000 and 1999 3
Condensed Consolidated Balance Sheets
December 31, 2000 and June 30, 2000 4
Condensed Consolidated Statements of
Cash Flows
Six Months Ended December 31, 2000
and 1999 5
Notes to Condensed Consolidated
Financial Statements 6 - 10
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial
Condition 11 - 13
PART II. Other Information
-----------------
Item 4. Submission of Matters to a Vote of
Security Holders 14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Condensed Consolidated Statements of Earnings
- -------------------------------------------------
(In millions, except share and per-share amounts)
Three Months Ended Six Months Ended
---------------------- --------------------
12/31/00 12/31/99 12/31/00 12/31/99
----------- ---------- ---------- ---------
Net Sales $899 $954 $1,884 $1,896
Cost and Expenses
Cost of products sold (Note 2) 525 535 1,074 1,052
Selling and administration 128 135 251 262
Advertising 100 110 210 226
Research and development 17 15 31 29
Restructuring and asset impairment 4 6 4 8
Interest expense 23 23 49 46
Other expense, net 3 10 11 16
----------- ---------- ---------- ---------
Total costs and expenses 800 834 1,630 1,639
----------- ---------- ---------- ---------
Earnings before income taxes and cumulative effect
of change in accounting principle 99 120 254 257
Income taxes 35 44 90 94
----------- ---------- ---------- ---------
Earnings before cumulative effect 64 76 164 163
of change in accounting principle
Cumulative effect of change in accounting
principle (Note 5) - - (2) -
----------- ---------- ---------- ---------
Net Earnings $64 $76 $162 $163
=========== ========== ========== =========
Earnings per Common Share
Basic
Earnings before cumulative effect $0.27 $0.32 $0.70 $0.69
of change in accounting principle
Cumulative effect of change in accounting
principle - - (0.01) -
----------- ---------- ---------- ---------
Net earnings $0.27 $0.32 $0.69 $0.69
=========== ========== ========== =========
Diluted
Earnings before cumulative effect $0.27 $0.32 $0.69 $0.68
of change in accounting principle
Cumulative effect of change in accounting
principle - - (0.01) -
----------- ---------- ---------- ---------
Net earnings $0.27 $0.32 $0.68 $0.68
=========== ========== ========== =========
Weighted Average Shares Outstanding (in thousands)
Basic 236,069 236,475 235,796 236,747
Diluted 239,093 239,737 238,956 240,211
Dividends per Share $0.21 $0.20 $0.42 $0.40
See Notes to Condensed Consolidated Financial Statements.
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Condensed Consolidated Balance Sheets
- -------------------------------------
(In millions)
12/31/00 6/30/00
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ASSETS
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Current Assets
Cash and short-term investments $ 196 $ 254
Receivables - net 486 624
Inventories 379 376
Prepaid expenses and other 172 175
Deferred income taxes 23 25
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Total current assets 1,256 1,454
Property, Plant and Equipment - Net 1,058 1,079
Brands, Trademarks, Patents and Other Intangibles - Net 1,605 1,536
Investments in Affiliates 101 110
Other Assets 178 174
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Total $ 4,198 $ 4,353
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 193 $ 319
Accrued liabilities 358 397
Accrued merger and restructuring 8 16
Commercial paper and other short-term debt 718 768
Income taxes payable 60 36
Current maturities of long-term debt 208 5
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Total current liabilities 1,545 1,541
Long-Term Debt 389 590
Other Obligations 193 204
Deferred Income Taxes 209 224
Share Repurchase Contracts and Option Agreements 241 -
Stockholders' Equity
Common stock 250 250
Additional paid-in capital 132 127
Retained earnings 2,139 2,068
Treasury shares, at cost (684) (451)
Accumulated other comprehensive net losses (201) (183)
Other (15) (17)
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Stockholders' equity 1,621 1,794
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Total $ 4,198 $ 4,353
========== =========
See Notes to Condensed Consolidated Financial Statements.
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
- ------------------------------------------------
(In millions)
Six Months Ended
----------------------
12/31/00 12/31/99
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Operations:
Net earnings $ 162 $ 163
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization 110 98
Deferred income taxes (3) 9
Other 29 10
Changes in (excluding effects of business acquired):
Accounts receivable 142 36
Inventories (8) (38)
Prepaid expenses and other 3 6
Accounts payable (127) 8
Accrued liabilities (38) (23)
Accrued merger and restructuring (8) (11)
Income taxes payable 23 (12)
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Net cash provided by operations 285 246
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Investing Activities:
Purchases of property, plant and equipment (46) (67)
Businesses acquired net of cash acquired (117) (31)
Proceeds from disposals of property, plant and equipment 5 3
Other (41) (27)
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Net cash used for investing (199) (122)
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Financing Activities:
Commercial paper and other short-term debt repayments, net (49) (37)
Long-term debt borrowings 2 14
Long-term debt repayments (4) (12)
Cash dividends (99) (95)
Treasury stock purchased and related premiums (7) (45)
Settlement of share repurchase and option contracts - 76
Issuance of common stock for employee stock plans and other 15 1
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Net cash used for financing (142) (98)
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Effect on cash of exchange rate changes (2) 1
Net increase (decrease) in cash and short-term investments (58) 27
Cash and short-term investments:
Beginning of period 254 132
-------- --------
End of period $ 196 $ 159
======== ========
See Notes to Condensed Consolidated Financial Statements.
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
- ----------------------------------------------------
(In millions, except share and per-share amounts)
1) The condensed consolidated financial statements for the three and
six month periods ended December 31, 2000 and 1999 have not been
audited but, in the opinion of management, include 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").
2) Inventories at December 31, 2000 and at June 30, 2000 consisted of:
12/31/00 6/30/00
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Finished goods and work in process $ 257 $ 250
Raw materials and supplies 122 126
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Total $ 379 $ 376
======== =======
Inventories totaling $14 million and $1 million were written off
during the three month periods ended December 31, 2000 and 1999,
respectively and $17 million and $3 million for the six month
periods ended December 31, 2000 and 1999, respectively. Inventory
write-offs of $14 recognized in the second quarter of fiscal
2001 included $12 million of write-offs for paper towel size
disinfecting wipes, Black Flag Gold and certain Brita inventories.
3) In November 2000, the Company acquired for $122 million from Brita
GmbH the rights to the Brita trademark and other intellectual
property in North and South America and certain other net assets.
The Company also increased its ownership in Brita Limited and
Brita South America from 50% to 100%. (These investments were
previously accounted for under the equity method of accounting
and are now fully consolidated.) The acquisition was accounted
for as a purchase and was funded using a combination of cash
and debt.
In January 2001, the Company signed an agreement to purchase 50%
of Bombril S.A., a Brazilian household cleaning products business.
Under the terms of the share sale and purchase agreement dated
January 23, 2001, the Company will acquire 50% of the business
and its assets for approximately $200 million. This acquisition
is expected to close in the fourth quarter of this fiscal year
and management expects to account for the transaction as a
purchase.
4) The Company's 8.8% non-callable notes due August 2001, totaling
$200 million, are included in current maturities of long-term
debt as of December 31, 2000. Such amounts were included in
long-term debt as of June 30, 2000. In February 2001, the Company
issued $300 million of 6.125% unsecured senior unsubordinated notes
due in February 2011, with interest payable semi-annually in
February and August. The notes are for general corporate purposes,
including refinancing existing debt and funding future acquisitions,
capital expenditures and working capital requirements. In
connection with the notes, the Company agreed to certain restrictive
covenants and limitations including a restriction on the Company's
right to engage in certain sale and leaseback transactions. The
Company also entered into an interest rate swap agreement that
converts $100 million of the 6.125% note from a fixed to a floating
rate.
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
- ----------------------------------------------------
(In millions, except share and per-share amounts
5) Effective July 1, 2000, the Company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities,"
as amended by SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities." The transition
adjustment recognized to implement this new standard on
July 1, 2000, which is presented as a cumulative effect of
change in accounting principle, reduced earnings by $2 million
(net of tax of $1 million) and increased other comprehensive
income by $10 million (net of tax of $7 million).
At December 31, 2000 and July 1, 2000, the Company's derivative
instruments are recorded in the condensed consolidated
financial statement as follows:
12/31/00 7/1/00
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Prepaid Expenses and Other - Foreign exchange contracts $ 1 -
Other Assets - Commodity purchase contracts $ 8 $ 17
Current Liabilities:
Commodity purchase contracts $ 1 -
Foreign exchange contracts $ 1 -
Long-Term Debt:
Interest rate swaps $ 12 -
Foreign exchange contracts $ (11) -
Other Long-Term Obligations:
Commodity purchase contract $ 3 $ 3
Most interest rate swaps, commodity purchase and foreign exchange
contracts are designated as fair value or cash flow hedges of fixed
and variable rate debt obligations, raw material purchase
obligations or foreign currency denominated debt instruments. One
commodity purchase contract with a fair value of $3 million does
not qualify for hedge accounting treatment. Fluctuations in its
fair value impacts current earnings and earnings per share.
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
- ----------------------------------------------------
(In millions, except share and per-share amounts
6) Basic earnings per share (EPS) is computed by dividing net earnings
by the weighted average number of common shares outstanding each
period. Diluted EPS is computed by dividing net earnings by the
diluted weighted average number of common shares outstanding
during each 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 EPS is reconciled to those
shares used in calculating diluted EPS as follows (in thousands):
Weighted Average Number of Shares Outstanding
-------------------------------------------------
Three Months Ended Six Months Ended
-------------------------- ----------------------
12/31/00 12/31/99 12/31/00 12/31/99
----------- -------------- ----------- ----------
Basic 236,069 236,475 235,796 236,747
Stock options 2,581 3,225 2,561 3,428
Share repurchase and hedging contracts 354 - 508 -
Other 89 37 91 36
----------- -------------- ----------- ----------
Diluted 239,093 239,737 238,956 240,211
=========== ============== =========== ==========
7) Comprehensive income for the Company includes net earnings,
foreign currency translation adjustments and derivative gains or
losses that are excluded from net earnings but included as a
separate component of total stockholders' equity. Comprehensive
income for the three and six month periods ended December 31,
2000 and 1999 is as follows:
Three Months Ended Six Months Ended
-------------------------- ----------------------
12/31/00 12/31/99 12/31/00 12/31/99
----------- -------------- ----------- ----------
Net Earnings $ 64 $ 76 $ 162 $ 163
Other comprehensive income(loss)
Foreign currency translation adjustments (2) 4 (24) (1)
Cumulative effect of change in accounting
principle - - 10 -
Net derivative gain (loss) 5 - (4) -
----------- -------------- ----------- ----------
Total comprehensive income $ 67 $ 80 $ 144 $ 162
=========== ============== =========== ==========
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
- ----------------------------------------------------
(In millions, except share and per-share amounts)
8) The Company's operating segments are as follows:
U. S. Household Products and Canada: Includes cleaning, bleach
and other home care products, and water filtration products
marketed in the United States and all products marketed in Canada.
U. S. Specialty Products: Includes charcoal, automotive
care, cat litter, insecticides, food products, professional
products and the food storage and disposal categories.
International Operations: Includes operations outside
the United States and Canada.
Corporate, Interest and Other: Includes certain unallocated
administrative costs, goodwill amortization, interest
income, interest expense, and other income and expense.
Each segment is individually managed with separate operating
results that are reviewed regularly by the chief operating
decision maker. The following table shows operating
segment information.
Net Sales
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Three Months Ended Six Months Ended
------------------------- -----------------------
12/31/00 12/31/99 12/31/00 12/31/99
------------ ------------ ------------ ----------
U.S. Household Products and Canada $ 365 $ 388 $ 789 $ 789
U.S. Specialty Products 378 400 797 804
International 156 166 298 303
------------ ------------ ------------ ----------
Total Company $ 899 $ 954 $ 1,884 $ 1,896
============ ============ ============ ==========
Earnings Before Income Taxes
and Cumulative Effect of Change in Accounting Principle
-------------------------------------------------------
Three Months Ended Six Months Ended
------------------------- -----------------------
12/31/00 12/31/99 12/31/00 12/31/99
------------ ------------ ------------ ----------
U.S. Household Products and Canada $ 95 $ 120 $ 234 $ 252
U.S. Specialty Products 81 93 183 190
International 32 26 50 39
Corporate, Interest and Other (109) (119) (213) (224)
------------ ------------ ------------ ----------
Total Company $ 99 $ 120 $ 254 $ 257
============ ============ ============ ==========
PART I - FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements
The Clorox Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
- ----------------------------------------------------
(In millions, except share and per-share amounts)
9) As of December 31, 2000, the Company adopted the accounting
and financial reporting standards in Emerging Issues Task Force
Issue (EITF) Issue No. 00-19, "Determination of Whether
Share Settlement is within the Control of the Company for
Purposes of Applying EITF Issue No. 96-13, 'Accounting for
Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock'". EITF Issue No.00-19
requires that share repurchase agreements and option agreements
where investors have the ability to require cash settlement be
classified as temporary equity (not a part of stockholders'
equity). Accordingly, $241 million of such share repurchase
contracts and option agreements, previously classified in
treasury shares, have been reclassified above stockholders'
equity as of December 31, 2000.
InJuly 2000 the Financial Accounting Standards Board ("FASB")
reached consensus and issued EITF Issue No. 00-14, "Accounting
for Coupons, Rebates, and Discounts," which requires implementation
no later than the fourth fiscal quarter of fiscal years beginning
after December 15, 1999. EITF Issue No. 00-14 specifies the
accounting and income statement classification for the cost of
coupons, rebates and discounts related to customer sales. The
Company plans to adopt EITF Issue No. 00-14 in the fourth
quarter of this year. As a result, coupon costs, currently
included as advertising expense, of approximately $20 million
and $21 million for the three month periods ended December 31,
2000 and 1999, respectively, and $39 million and $43 million
for the six month periods ended December 31, 2000 and 1999,
respectively will be reclassified as a deduction from net sales.
10) Certain reclassifications have been made to prior-period
amounts to conform to the current period presentation.
PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
- ---------------------------------------------
Results of Operations
- ---------------------
Diluted earnings per share decreased 16% to 27 cents for
the three months ended December 31, 2000 principally due
to lower volumes, unfavorable product mix, and inventory
write-offs of $14 million and asset impairment charges of
$4 million recognized in the second quarter of fiscal 2001.
Diluted earnings per share of 68 cents for the six months
ended December 31, 2000 reflects lower advertising and
selling and administrative expenses offset by inventory
write-offs, asset impairments and unfavorable product
assortment.
Net sales for the second quarter of fiscal 2001 decreased
6% to $899 million due to volume decreases of 2%, an
unfavorable product mix and foreign currency weaknesses.
The U.S. Household Products and Canada segment's net sales
decrease of 6% was attributable to an unfavorable product
mix resulting from a shift away from higher-priced products
and towards larger sizes, and a volume decrease of 2%.
Despite increased shipments from the launches of Clorox
Disinfecting Wipes and Meadow Fresh Pine-Sol cleaner (both
introduced in the prior year), the segment's volumes
decreased primarily due to lower shipments of Brita
pour-through systems and filters, dilutable cleaners and
disinfecting sprays. The U.S. Specialty Products segment's
net sales decreased 6% mostly due to a volume decrease of 5%.
Both the Glad's bags and wraps and STP businesses experienced
lower volumes mostly due to the elimination of low-margin
non-strategic items. The decline in Glad's bag and wraps
volumes was also driven by intense competition in lower-priced
trash bags. These volume decreases were somewhat mitigated
by higher volumes generated from the prior year launch of
new products, Glad Odor Shield trash bags, Gladware containers
and Glad Stand & Zip food bags. International's net sales
decrease of 6% reflected currency weakesses in Australia
and New Zealand and the restructuring of the Asian businesses,
which was partially offset by the higher volumes resulting
from the acquisition of Bon Bril in certain Latin American
countries and by new product introductions in Latin America.
Net sales for the six-month period ended December 31, 2000
decreased 1% to $1,884 million. This decrease was due to
an unfavorable product mix and currency weaknesses, partly
offset by an increase in volumes of 2%. The U.S. Household
Products and Canada segment's net sales remained unchanged
from the prior year as volume growth achieved from the
launch of Clorox Disinfecting Wipes introduced in the prior
year was mostly offset by lower shipments of Brita pour-through
systems and filters and an unfavorable product mix. The U.S.
Specialty Products segment's net sales and volumes both
decreased approximately 1%. The decline in volumes is driven
by a decrease in the Glad's bags and wraps and STP volumes
mostly due to the elimination of low-margin non-strategic items.
These volume decreases are partly offset by higher shipments
of Kingsford and Match Light Charcoal resulting from favorable
weather conditions experienced earlier in the year and greater
shipments of Scoop Away cat litter achieved from the successful
repositioning of this line. International's net sales decrease
of 2% reflects currency weaknesses offset partly by higher
volumes resulting from the acquisition of Bon Bril in certain
Latin American countries and by new product introductions in
Latin America.
Cost of products sold as a percentage of sales increased to 58%
from 56% for the quarter ended December 31, 2000 and increased to
57% from 55% for the six month period ended December 31, 2000
due to an unfavorable assortment mix resulting from the launch
of new products and higher packaging costs. In addition,
inventory write-offs of approximately $14 million recognized
in the second quarter for fiscal 2001 included $12 million of
write-offs for paper towel size disinfecting wipes, Black
Flag Gold and certain Brita inventories. These increases were
partially offset by cost savings generated from manufacturing
initiatives and shifting auto and litter manufacturing in-house
from co-packers.
Selling and administrative expenses decreased 5% to $128 million
and decreased 4% to $251 million for the three and six months
ended December 31, 2000, respectively, due to lower market
research spending and restructuring the Company's Asia operations
during the fourth quarter of the prior year.
Advertising expense decreased 9% for the quarter and 7% for
the year due to higher advertising costs in the year ago
periods to support the STP business and the launch of new
products in the food and laundry businesses, and lower promotional
activities in the charcoal business. These increases were
partly offset by higher expenditures to support the litter
business and the launch of new Glad products during the current
year.
Interest expense increased to $49 million from $46 million
for the six months ended December 31, 2000 due mostly to
higher interest rates this year.
PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
- ---------------------------------------------
The cumulative effect of change in accounting principle of
$2 million (net of tax of $1 million) was recognized as a
transition adjustment due to the implementation of
SFAS No. 133, "Accounting for Derivative Investments and
Hedging Activities" as amended by SFAS No. 138, "Accounting
for Certain Derivative Instruments and Certain Hedging
Activities." The Company adopted SFAS No. 133, as amended,
effective July 1, 2000.
As announced in December 2000, the Company is currently
undergoing a review of its operations. As a result of
the Company's initial review, inventory write-offs and asset
impairment charges related to certain U.S. Specialty
Products segment intangible assets and certain Brita assets
were recognized in the second quarter of fiscal 2001. The
Company will continue this on-going review over the calendar
year 2001 and anticipates incurring restructuring, asset
impairment and other charges of approximately $150 to
$200 million.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
The Company's financial position and liquidity remains
strong due to continuing cash flow provided by operations
during the past fiscal year and for the quarter ended
December 31, 2000. The decrease in receivables corresponds
principally with lower sales in the second quarter as
compared with the fourth quarter of the prior year and
reflects the seasonal nature of charcoal and certain
international businesses. Inventories reflect an inventory
build in the U.S. Specialty Products segment of approximately
$14 million and the addition of $6 million of inventories
during the quarter due to the Brita acquisition, which are
partly offset by inventory write-offs of approximately
$14 million recognized in the second quarter of fiscal 2001.
Inventory write-offs of $14 million included $12 million of
write-offs for paper towel size disinfecting wipes, Black
Flag Gold and certain Brita inventories. Decrease in both
payables and accrued liabilities reflect lower media and
promotional spending, higher seasonal expenditures accrued
in the fourth quarter as compared to the second quarter for
the Company's charcoal business, lower resin purchases and
other raw material purchases.
The Company's 8.8% non-callable notes due August 2001,
totaling $200 million, are included in current maturities
of long-term debt as of December 31, 2000. Such amounts
were included in long-term debt as of June 30, 2000. In
February 2001, the Company issued $300 million of 6.125%
unsecured senior unsubordinated notes due in February 2011
with interest payable semi-annually in February and August.
The notes are for general corporate purposes, including
refinancing existing debt and funding future acquisitions,
capital expenditures and working capital requirements. In
connection with the notes, the Company agreed to certain
restrictive covenants and limitations including a restriction
on the Company's right to engage in certain sale and
leaseback transactions. The Company also entered into an
interest rate swap agreement that converts $100 million of
the 6.125% note from a fixed to a floating rate.
In November 2000, the Company acquired for $122 million from
Brita GmbH the rights to the Brita trademark and other
intellectual property in North and South America and certain
other net assets. The Company also increased its ownership
in Brita Limited and Brita South America from 50% to 100%.
(The investments were previously accounted for under the
equity method of accounting and are now fully consolidated.)
The acquisition was accounted for as a purchase and was
funded using a combination of cash and debt.
In January 2001, the Company signed an agreement to purchase
50% of Bombril S.A., a Brazilian household cleaning products
business. Under the terms of the share sale and purchase
agreement dated January 23, 2001, the Company will acquire
50% of the business and its assets for approximately $200
million. This acquitision is expected to close in the
fourth quarter of this fiscal year and management expects
to account for the transaction as a purchase.
The Company will be implementing a new enterprise resource
planning system and a new customer relationship management
system over the next three calendar years anticipated to
incrementally cost approximately $150 million.
Management believes the Company has access to sufficient
capital through existing lines of credit and, should the
need arise, from other public and private sources.
PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
- ---------------------------------------------
Cautionary Statement
- --------------------
Except for historical information, matters discussed above
and in the financial statements and footnotes, including
statements about future growth, profitability, costs,
expectations, plans or objectives, are forward-looking
statements based on management's estimates, assumptions
and projections. These forward-looking statements are
subject to risks and uncertainties, and actual results
could differ materially from those discussed above and in
the financial statements and footnotes. Important factors
that could affect performance and cause results to differ
materially from management's expectations are described in
"Forward-Looking Statements and Risk Factors" in the Company's
Annual Report on Form 10-K for the year ending June 30, 2000,
and in the Company's subsequent SEC filings. Those factors
include, but are not limited to, marketplace conditions and
events, competitors' actions, the Company's costs, risks
inherent in litigation and international operations, the
success of new products, the integration of acquisitions and
mergers, and environmental, regulatory and intellectual
property matters.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's 2000 Annual Meeting of Stockholders held
on November 15, 2000, the following actions were taken:
1) The following directors were elected:
Votes for Votes Withhold
--------------- ------------------
Daniel Boggan, Jr. 203,415,214 1,214,599
Elaine Chao 203,406,443 1,223,470
Tully Friedman 203,432,003 1,197,910
Christoph Henkel 202,637,758 1,992,154
Jurgen Manchot 203,385,216 1,244,697
Robert W. Matschullat 203,463,988 1,165,925
Dean O. Morton 203,398,348 1,231,565
Klaus Morwind 203,373,608 1,256,305
Lary R. Scott 203,425,927 1,203,986
G. Craig Sullivan 203,393,551 1,236,362
C. Al Wolfe 203,386,724 1,243,189
2) A proposal by the Board of Directors to ratify the appointment
of Deloitte & Touche LLP as the Company's independent auditors
to conduct the annual audit of the financial statements of the
Company and its subsidiaries for the fiscal year ending June 30,
2001, was approved by the stockholders. The stockholders cast
203,837,324 votes in favor of this proposal and 205,284 votes
against. There were 587,305 abstentions.
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: February 13, 2001 BY: /S/ GREGORY S. FRANK
------------------- ----------------------
Gregory S. Frank
Vice-President - Controller