The company's forward-looking statements in this press release are based on management's current views and assumptions regarding future events and speak only as of their dates. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws.
Non-GAAP Financial Information
This press release contains non-GAAP financial information relating to free cash flow, EBIT margin and sales growth. The company has included reconciliations of non-GAAP financial information related to sales growth and EBIT margin to the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the U.S. (GAAP). See the end of this press release for these reconciliations.
The company has disclosed information related to free cash flow, EBIT margin and sales growth on a non-GAAP basis to supplement its condensed consolidated statements of earnings presented in accordance with GAAP. These non-GAAP financial measures exclude certain items that are included in the company's results reported in accordance with GAAP, including interest income, interest expense, the impact of foreign currency exchange transactions and acquisitions.
Management believes that these non-GAAP financial measures provide useful additional information to investors about current trends in the company's operations and are useful for period-over-period comparisons. Management uses free cash flow to help assess the cash generation ability of the business and funds available for investing activities, such as acquisitions, investing in the business to drive growth, and financing activities, including debt payments, dividend payments and share repurchases. Free cash flow does not represent cash available only for discretionary expenditures, since the Company has mandatory debt service requirements and other contractual and non-discretionary expenditures. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should only be read in connection with the company's condensed consolidated statements of earnings presented in accordance with GAAP.
See Below for These Unaudited Second-Quarter Results:
•Condensed Consolidated Statements of Earnings, Reportable Segment Information and Condensed Consolidated Balance Sheets •Reconciliation of Second-Quarter 2013 Sales Growth and Fiscal Year 2012 EBIT margin
For recent presentations made by company management and other investor materials, visit http://investors.thecloroxcompany.com/events.cfm.
Condensed Consolidated Statements of Earnings (Unaudited)Dollars in millions, except share and per share amounts Three Months Ended Six Months Ended ----------------------- ----------------------- 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ----------- -----------Net sales $ 1,325 $ 1,221 $ 2,663 $ 2,526Cost of products sold 762 714 1,526 1,473 ----------- ----------- ----------- -----------Gross profit 563 507 1,137 1,053Selling and administrative expenses 204 184 399 374Advertising costs 116 115 238 233Research and development costs 31 29 61 57Interest expense 33 30 66 59Other income, net (9) (6) (9) (12) ----------- ----------- ----------- -----------Earnings before income taxes 188 155 382 342Income taxes 65 50 126 107 ----------- ----------- ----------- -----------Net earnings $ 123 $ 105 $ 256 $ 235 =========== =========== =========== ===========Earnings per share Basic $ 0.94 $ 0.79 $ 1.96 $ 1.78 Diluted 0.93 0.79 1.94 1.76Weighted average shares outstanding (in thousands) Basic 130,991 131,112 130,630 131,540 Diluted 132,444 132,358 132,120 133,022Reportable Segment Information(Unaudited)Dollars in millions Earnings (Losses) BeforeSecond Quarter Net Sales Income Taxes ---------------------------- ---------------------------- Three Months Ended Three Months Ended --------------------- --------------------- % % Change Change 12/31/12 12/31/11 (1) 12/31/12 12/31/11 (1) ---------- ---------- ------ ---------- ---------- ------Cleaning Segment $ 425 $ 370 15% $ 100 $ 78 28%Household Segment 357 334 7% 56 34 65%Lifestyle Segment 237 219 8% 70 69 1%International Segment 306 298 3% 25 33 -24%Corporate - - - (63) (59) 7% ---------- ---------- ------ ---------- ---------- ------Total Company $ 1,325 $ 1,221 9% $ 188 $ 155 21% ========== ========== ====== ========== ========== ======Year-to-Date Earnings (Losses) Before Net Sales Income Taxes ---------------------------- ---------------------------- Six Months Ended Six Months Ended --------------------- --------------------- % % Change Change 12/31/12 12/31/11 (1) 12/31/12 12/31/11 (1) ---------- ---------- ------ ---------- ---------- ------Cleaning Segment $ 897 $ 809 11% $ 220 $ 186 18%Household Segment 712 700 2% 106 76 39%Lifestyle Segment 445 425 5% 126 124 2%International Segment 609 592 3% 53 73 -27%Corporate - - - (123) (117) 5% ---------- ---------- ------ ---------- ---------- ------Total Company $ 2,663 $ 2,526 5% $ 382 $ 342 12% ========== ========== ====== ========== ========== ======(1) Percentages based on rounded numbers.Condensed Consolidated Balance SheetsDollars in millions 12/31/2012 6/30/2012 12/31/2011 ----------- ----------- ----------- (Unaudited) (Unaudited)ASSETSCurrent assets Cash and cash equivalents $ 445 $ 267 $ 297 Receivables, net 511 576 489 Inventories, net 444 384 451 Other current assets 152 149 111 ----------- ----------- ----------- Total current assets 1,552 1,376 1,348Property, plant and equipment, net 1,051 1,081 1,041Goodwill 1,119 1,112 1,093Trademarks, net 556 556 566Other intangible assets, net 79 86 103Other assets 145 144 139 ----------- ----------- -----------Total assets $ 4,502 $ 4,355 $ 4,290 =========== =========== ===========LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilities Notes and loans payable $ 5 $ 300 $ 476 Current maturities of long-term debt 500 850 350 Accounts payable 365 412 345 Accrued liabilities 493 494 438 Income taxes payable 10 5 28 ----------- ----------- ----------- Total current liabilities 1,373 2,061 1,637Long-term debt 2,169 1,571 2,070Other liabilities 788 739 641Deferred income taxes 116 119 141 ----------- ----------- ----------- Total liabilities 4,446 4,490 4,489 ----------- ----------- -----------ContingenciesStockholders' equity (deficit)Preferred stock - - -Common stock 159 159 159Additional paid-in capital 644 633 616Retained earnings 1,430 1,350 1,210Treasury shares (1,801) (1,881) (1,861)Accumulated other comprehensive net losses (376) (396) (323) ----------- ----------- -----------Stockholders' equity (deficit) 56 (135) (199) ----------- ----------- -----------Total liabilities and stockholders' equity (deficit) $ 4,502 $ 4,355 $ 4,290 =========== =========== ===========
The tables below present the reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures and other supplemental information. See "Non-GAAP Financial Information" above for further information regarding the company's use of non-GAAP financial measures.
Second-Quarter Sales Growth Reconciliation
Fiscal Fiscal 2013 2012 -------- --------Base sales growth - non-GAAP 7.1% 4.0%Foreign exchange -0.1 -0.5Acquisitions 1.5 -- -------- --------Total sales growth - GAAP 8.5% 3.5% ======== ========
Fiscal Year 2012 EBIT(1) Margin Reconciliation
Fiscal 2012 --------Earnings from continuing operations before income taxes - GAAP $ 791Less: Interest income -3Add: Interest expense 125 --------EBIT (1) - non-GAAP $ 913 ========EBIT margin(2) - non-GAAP 16.7%Net Sales $ 5,468(1) EBIT represents Earnings from Continuing Operations Before Interest and Taxes(2) EBIT margin is a measure of EBIT as a percentage of net sales.
For Gross Margin Drivers, please refer to the Supplemental Information: Gross Margin Driver page in the Financial Results section of the company's website TheCloroxCompany.com.
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