SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report
(Date of earliest event reported): December 31, 1996
THE CLOROX COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-07151 31-0595760
(Commission File Number) (I.R.S. Employer Identification No.)
1221 Broadway, Oakland, California 94612
(Address of Principal Executive Offices) (Zip Code)
510/271-7000
(Registrant's Telephone Number, Including Area Code)
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Item 2. Acquisition or Disposition of Assets.
On December 31, 1996, Shield Acquisition Corporation, a
Delaware corporation and then wholly owned subsidiary of
the registrant (the "Offeror"), acquired 98.8% of the
total outstanding shares of common stock (the "Shares")
of Armor All Products Corporation, a Delaware corporation
involved in the manufacture and marketing of automotive
cleaning products and protectants ("Armor All"). The
acquisition was completed pursuant to the terms of an
Agreement and Plan of Merger (the "Merger Agreement")
dated November 26, 1996 among the registrant, the Offeror
and Armor All providing for a tender offer (the "Offer")
by the Offeror for any or all of the Shares, as amended
by the First Amendment to the Agreement and Plan of Merger
dated December 1, 1996 (the "First Amendment to Merger
Agreement"). In addition, the acquisition was completed
pursuant to the terms of a Stockholder Agreement (the
"Stockholder Agreement") dated November 26, 1996 among
the registrant, the Offeror and McKesson Corporation, a
stockholder of Armor All then owning approximately 54%
of the Shares. The Merger Agreement, the First Amendment
to Merger Agreement, and the Stockholder Agreement were
filed with the Securities and Exchange Commission by the
registrant and the Offeror on December 2, 1996 as
exhibits to a Tender Offer Statement on Schedule 14D-1 in
connection with the Offer.
Pursuant to the terms of the Merger Agreement, as amended,
Armor All stockholders who tendered Shares received
$19.09 from the Offeror for each Share tendered. The
Shares not tendered pursuant to the Offer were converted
into the right to receive $19.09 for each Share pursuant
to a short-form merger of Armor All with and into the
Offeror (the "Merger") consummated on January 2, 1997,
with Armor All as the surviving corporation. The
aggregate cost to the Offeror to acquire the Shares and
the fees and expenses related to the Offer and the
Merger will be approximately US$412,000,000. All funds
needed for the Offer and the Merger were obtained
through a capital contribution by the registrant to the
Offeror. For such capital contribution, the registrant
used funds it had available in its cash accounts and
funds generated from its commercial paper program, for
which J.P. Morgan Securities and Lehman Brothers Inc.
act as dealers. Such commercial paper program is
expected to bear interest at prevailing market rates
for such instruments at the time of issuance and to
have maturities not exceeding 270 days. The registrant
plans to service its additional borrowings with cash
generated from seasonal changes in the composition of
its working capital and cash flow from operations and
believes that, if its lenders do not roll over any
amounts outstanding with respect to such commercial
paper at maturity, the registrant will have available
sufficient alternative sources of financing, including
bank credit facilities, to repay such additional borrowing.
Item 5. Other Events.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS.
From time to time, the registrant may publish
forward-looking statements relating to such matters
as anticipated financial performance, business
prospects, new products, research and development
activities, plans for international expansion, and
similar matters. The Private Securities Litigation
Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with
the terms of the safe harbor, the registrant notes
that a variety of factors could cause the registrant's
actual results and experience to differ materially
from the anticipated results or other expectations
expressed in the registrant's forward-looking statements.
The risks and uncertainties that may affect operations,
performance, product development, and results of the
registrant's business include the following:
Fluctuations in Quarterly Operating Results and Stock Price.
Although the registrant's recent historical operating
results have improved when compared with the same quarter
in the previous fiscal year, there can be no assurance that
such quarter-to-quarter comparisons will continue to
improve, or that if any improvement is shown, the degree
of improvement will meet investors' expectations. In
addition, sales volume growth, whether due to acquisitions
or to internal growth, can place burdens on the registrant's
management resources and financial controls which, in turn,
can have a negative impact on operating results. The
registrant's quarterly operating results will be influenced
by a host of factors which include the following: the
seasonality of its brands; the extent of competition;
the degree of market acceptance of new products and line
extensions; the mix of products sold in a given quarter;
changes in pricing policies by the registrant and by its
competitors; acquisition costs and restructuring and
other charges associated with acquisitions; the ability of
the registrant to develop, introduce, and market successful
new products and line extensions; the ability of the
registrant to control its internal costs and the costs of
its raw materials and packaging materials; the
registrant's success in expanding its international
operations; changes in the registrant's strategy;
personnel changes; and general economic conditions.
To a certain extent, the registrant bases its expense
levels in anticipation of future revenues. If
revenue levels come in below such expectations, operating
results are likely to be adversely affected. Because of
all of these factors, the registrant believes that
quarter-to-quarter comparisons of its results of operations
should not be relied upon as indications of future performance.
Future announcements concerning the registrant or its
competitors, quarterly variations in operating results,
the introduction of new products and line extensions or
changes in product pricing policies by the registrant or
its competitors, changes in earning estimates by analysts,
and changes in accounting policies, among other factors,
could cause the market price of the registrant's common
stock to fluctuate substantially and have an adverse
effect on the price of the registrant's common stock.
In addition, stock markets have experienced price and
volume volatility and such volatility in the future could
have an adverse impact on the registrant's market price.
International Operations. The registrant believes that
its international sales, which were 14% of net sales in
fiscal year 1996, are likely to comprise an increasing
percentage of its total sales. As a result, the registrant
will be increasingly subject to the risks associated with
foreign operations including economic or political
instability in its overseas markets, shipping delays and
fluctuations in foreign currency exchange rates that may
make its products more expensive in its foreign markets,
all of which could have a significant impact on the
registrant's ability to sell its products on a timely and
competitive basis in foreign markets and may have a
materially adverse effect on the registrant's results of
operations or financial position. The registrant seeks to
limit foreign currency exchange risks through the use of
foreign currency forward contracts when practical, but
there can be no assurance that this strategy will be
successful. In addition, the registrant's international
operations are subject to the risk of new and different
legal and regulatory requirements in local jurisdictions,
potential difficulties in staffing and managing local
operations, credit risk of local customers and distributors,
and potentially adverse tax consequences.
Importance of New Products and Line Extensions. In most
categories in which the registrant competes, there are
frequent introductions of new products and line extensions.
Accordingly, an important factor in the registrant's future
performance will be its ability to identify emerging consumer
and technological trends and to maintain and improve the
competitiveness of its products. However, there can be no
assurance that the registrant will successfully achieve
those goals. Continued product development and marketing
efforts are subject to all the risks inherent in the
development of new products and line extensions, including
development delays, the failure of new products and line
extensions to achieve anticipated levels of market acceptance,
as well as the cost of failed product introductions.
Integration of Acquisitions. One of the registrant's strategies
is to increase its revenues and the markets it serves through
the acquisition of other businesses both in the United
States and overseas. There can be no assurance that the
registrant will be able to identify, acquire, or profitably
manage additional companies or operations or successfully
integrate recent or future acquisitions into its operations.
In addition, there can be no assurance that companies or
operations acquired will be profitable at the time of
their acquisition or will achieve sales levels and
profitability that justify the investment made. In particular,
in December 1996 the registrant completed the acquisition
of Armor All and this acquisition is expected to have a
dilutive impact on the registrant's 1997 fiscal year earnings.
The factors described above could increase or decrease the
expected dilution.
Environmental Matters. The registrant is subject to various
environmental laws and regulations in the jurisdictions in
which it operates, including those relating to air emissions,
water discharges, the handling and disposal of solid and
hazardous wastes, and the remediation of contamination
associated with the use and disposal of hazardous substances.
The registrant has incurred, and will continue to incur,
capital and operating expenditures and other costs in
complying with such laws and regulations in both the United
States and abroad. The registrant is currently involved
in or has potential liability with respect to the remediation
of past contamination in the operation of certain of its
present and formerly owned and leased facilities. In addition,
certain of the registrant's present and former facilities have
been or had been in operation for many years, and over such
time, some of these facilities may have used substances or
generated and disposed of wastes that are or may be considered
hazardous. It is possible that such sites, as well as disposal
sites owned by third parties to which the registrant has sent
waste, may in the future be identified and become the
subject of remediation. Accordingly, although the registrant
believes that it is currently in substantial compliance with
applicable environmental requirements, it is possible the
registrant could become subject to additional environmental
liabilities in the future which could result in a material
adverse effect on the registrant's results of operations or
financial condition.
Intellectual Property. The registrant relies on trademark,
trade secret, patent, and copyright law to protect its
intellectual property. There can be no assurance that
such intellectual property rights can be successfully
asserted in the future or will not be invalidated,
circumvented, or challenged. In addition, laws of
certain foreign countries in which the registrant's
products are or may be sold do not protect the registrant's
intellectual property rights to the same extent as the
laws of the United States. The failure of the registrant
to protect its proprietary information and any successful
intellectual property challenges or infringement proceedings
against the registrant could have a material adverse
effect on the registrant's business, operating results,
and financial condition.
Government Regulation. The manufacture, packaging, storage,
distribution, and labeling of the registrant's products
are all subject to extensive federal, state, and foreign
laws and regulations. For example, in the United States,
many of the registrant's products are subject to
regulation by the Environmental Protection Agency, the
Food and Drug Administration, and the Consumer Product
Safety Commission. Most states have agencies which
regulate in parallel to these federal agencies. The
failure to comply with applicable laws and regulations
could subject the registrant to civil remedies, including
fines, injunctions, recalls or seizures, as well as
potential criminal sanctions, any of which could have a
material adverse effect on the registrant. Loss of or
failure to obtain necessary permits and registrations
could delay or prevent the registrant from introducing
new products, building new facilities, or acquiring new
businesses and could adversely effect operating results.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Form of press release of the registrant issued
on December 31, 1996 regarding the completion of
the acquisition of Armor All.
SIGNATURES
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 hereunto
duly authorized.
THE CLOROX COMPANY
Date: January 9, 1997 By: /S/ E.A. CUTTER
E.A. Cutter
Senior Vice President -
General Counsel and Secretary