Clorox Announces Strong Sales Growth

The Clorox Company announced strong sales growth and cost savings that contributed to thecompany’s results for the fiscal first quarter ended Sept. 30, 2004. “Clorox people around theworld delivered another strong quarter,” said Jerry Johnston, president and chief executive officer.”We’re extremely pleased with our results, which demonstrate the organization’s focus on growth,innovation, margin expansion and cost savings.”

For the first quarter, net earnings were $123 million, compared to $129 million in the year-ago period.Net earnings reflected $30 million of pretax restructuring and asset-impairment charges, due primarilyto the restructuring of the company’s Glad U.S. manufacturing operations as part of a strategy tostreamline manufacturing processes and improve margins.

Sales in the first quarter increased 4% to $1.09 billion. Volume growth of 4% was driven by newproducts and all-time record shipments of Clorox disinfecting wipes, according to company executives.

The company generated $216 million cash from operations during the quarter compared to 4140million a year ago. The company cited higher pretax earnings in the current period before restructuringand asset-impairment charges on the Glad business, and a $37 million pension plan contribution inthe year-ago period, as contributing factors.

By segment, Household Products-North America experienced 6% sales growth, 8% volume growthand a 2% pretax earnings decline. Specialty Products had a 1% sales decline, a 2% volume declineand 1% pretax earnings growth. Internationally the company reported 6% sales growth, 6% volumegrowth and a 3% pretax earnings decline.

Clorox has reached a definitive agreement with Henkel KGaA under which Clorox will exchange fullownership interest in a subsidiary for Henkel’s approximately 61.4 million shares of Clorox commonstock. The subsidiary will contain Clorox’s ownership interest in its insecticides and Soft Scrubcleanser businesses, its 20% interest in the Henkel Iberica, S.A., joint venture, and cash. Thetransaction is expected to close no later than Dec. 1, 2004. For clarity, the company provided anoutlook including and excluding the impact of the transaction. Excluding the impact of the transaction,Clorox continues to anticipate sales growth of 3-5% and earnings a diluted share in the range of$0.48-0.52 for the second quarter. For fiscal year 2005, also excluding the impact of the transaction,Clorox continues to expect sales growth of 3-5% and earnings a diluted share in the range of$2.58-$2.66. Although first-quarter earnings benefited from higher-than-expected gross margin growthbehind strong cost savings, Clorox maintains its earnings forecast for the rest of the year due toanticipated increases in commodity costs.

The transaction is not expected to have a material impact on second-quarter outlook; however, it willimpact the company’s full-year expectations. Including the impact of the transaction, Clorox expectslow-single-digit sales growth on an as-reported basis for fiscal 2005. The company anticipates thatthe transaction will increase earnings a diluted share in the range of $0.07-$0.10, excluding the bookgain to be recognized on the transaction. Upon closing, Clorox anticipates recognizing a gain on thetransaction in the range of $3.00-$3.15 a diluted share.

Playtex Completes Sale of WoolitePlaytex Products, Inc. has consummated the sale of its Woolite rug and upholstery cleaningbusiness to Bissel Homecare, Inc., for approximately $62 million in cash, subject to adjustments.This follows the signing of the definitive agreement of the sale, which was announced in September.