Attached files
| file | filename |
|---|---|
| 10-K - FY17 CLX 10-K - CLOROX CO /DE/ | fy17clx10k.htm |
| EX-99.2 - EXHIBIT 99.2 - CLOROX CO /DE/ | fy17clxex99210k.htm |
| EX-99.1 - EXHIBIT 99.1 - CLOROX CO /DE/ | fy17clxex99110k.htm |
| EX-32 - EXHIBIT 32 - CLOROX CO /DE/ | fy17clxex32.htm |
| EX-31.2 - EXHIBIT 31.2 - CLOROX CO /DE/ | fy17clxex312.htm |
| EX-31.1 - EXHIBIT 31.1 - CLOROX CO /DE/ | fy17clxex311.htm |
| EX-23 - EXHIBIT 23 - CLOROX CO /DE/ | fy17clxex23.htm |
| EX-21 - EXHIBIT 21 - CLOROX CO /DE/ | fy17clxex21.htm |
Exhibit 99.3
THE CLOROX COMPANY
RECONCILIATION OF ECONOMIC PROFIT (UNAUDITED) (1)
Dollars in millions | FY17 | FY16 | FY15 | |||||||||
Earnings from continuing operations before income taxes | $ | 1,033 | $ | 983 | $ | 921 | ||||||
Add back: | ||||||||||||
Non-cash U.S. GAAP restructuring and intangible asset impairment charges | 4 | 9 | 1 | |||||||||
Interest expense | 88 | 88 | 100 | |||||||||
Earnings from continuing operations before income taxes, non-cash U.S. GAAP restructuring and intangible asset impairment charges, and interest expense | $ | 1,125 | $ | 1,080 | $ | 1,022 | ||||||
Less: Income taxes on earnings from continuing operations before income taxes, non-cash U.S. GAAP restructuring and intangible asset impairment charges and interest expense (2) | 359 | 368 | 350 | |||||||||
Adjusted after tax profit | 766 | 712 | 672 | |||||||||
Average capital employed (3) | 2,680 | 2,463 | 2,385 | |||||||||
Less: Capital charge (4) | 241 | 222 | 214 | |||||||||
Economic profit (1) (Adjusted after tax profit less capital charge) | $ | 525 | $ | 490 | $ | 458 | ||||||
(1) Economic profit (EP) is defined by the Company as earnings from continuing operations before income taxes, excluding non-cash U.S. GAAP restructuring and intangible asset impairment charges, and interest expense; less income taxes (calculated utilizing the Company's effective tax rate), and less a capital charge (calculated as average capital employed multiplied by a cost of capital rate). EP is a key financial metric that the Company’s management uses to evaluate business performance and allocate resources, and is a component in determining employee incentive compensation. The Company’s management believes EP provides additional perspective to investors about financial returns generated by the business and represents profit generated over and above the cost of capital used by the business to generate that profit.
(2) The tax rate applied is the effective tax rate on earnings from continuing operations, which was 31.9%, 34.1% and 34.2% in fiscal years 2017, 2016 and 2015, respectively.
(3) Total capital employed represents total assets less non-interest bearing liabilities. Adjusted capital employed represents total capital employed adjusted to add back current year after tax noncash U.S. GAAP restructuring and intangible asset impairment charges. Average capital employed is the average of adjusted capital employed for the current year and total capital employed for the prior year, based on year-end balances. See below for details of the average capital employed calculation:
(4) Capital charge represents average capital employed multiplied by a cost of capital, which was 9% for all fiscal years presented. The calculation of capital charge includes the impact of rounding numbers.
Dollars in millions | FY17 | FY16 | FY15 | |||||||||
Total assets (5) | $ | 4,573 | $ | 4,510 | $ | 4,154 | ||||||
Less: | ||||||||||||
Accounts payable and accrued liabilities (6) | 1,002 | 1,032 | 976 | |||||||||
Income taxes payable | — | — | 31 | |||||||||
Other liabilities (6) | 770 | 784 | 745 | |||||||||
Deferred income taxes | 61 | 82 | 95 | |||||||||
Non-interest bearing liabilities | 1,833 | 1,898 | 1,847 | |||||||||
Total capital employed | 2,740 | 2,612 | 2,307 | |||||||||
After tax non-cash U.S. GAAP restructuring and intangible asset impairment charges | 2 | 6 | 1 | |||||||||
Adjusted capital employed | $ | 2,742 | $ | 2,618 | $ | 2,308 | ||||||
Average capital employed | $ | 2,680 | $ | 2,463 | $ | 2,385 | ||||||
(5) Prior year amounts have been retrospectively adjusted to conform to the current year presentation of debt issuance costs required by ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." Refer to the Notes to Consolidated Financial Statements for further details.
(6) Accounts payable and accrued liabilities were combined into one financial statement line as of June 30, 2016. The change has been retrospectively applied to all periods presented. Accounts payable and accrued liabilities and Other Liabilities are adjusted to exclude interest-bearing liabilities.
1