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					S E C O N D   Q U A R T E R   2 0 1 2




               happens.
                   when fun and flirty
                 fragrances go natural

                                        PRICING IN A 3D WORLD
                                        HOW CLOROX TACKLES THE CHALLENGE

                                        THE CLAIM GAME
                                        OUR PRODUCTS TELL THE TRUTH

                                        ALL IN THE FAMILY
                                        SC JOHNSON
S E C O N D            Q U A R T E R                      2 0 1 2
                                                                                                             A Note From the CEO




                                                                    How Low
                                                                    Can We Go?
                                                                    Fellow Employees:
     Totally cool! Consumers love
     small steps they can take to                                   In our company, where people are driven to
                                                                    succeed, we’re always setting higher and higher
     help the environment.                                          goals for ourselves. Our Tampa, Florida bleach
     Go Glad® team!”                                                plant team did just the opposite and recently
     Jee Ahn, Clorox Global Insights, on                            hit a new low: they now send zero waste to
     the Glad® One Bag Challenge                                    a landfill.
                                                                    In 2009, the Tampa team was the first to borrow the “dumpster dive” model
                                                                    created by Burt’s Bees® employees. Now, they’ve become the first zero waste-
                                                                    to-landfill facility outside the Burt’s Bees network. The Tampa employee eco
     As a former Parent-Teacher                                     network led the charge to understand what they were throwing away, then
                                                                    found ways to reduce, reuse and recycle more than 90 percent of their waste
     Association (PTA) president,                                   stream. The final 10 percent goes to a waste-to-energy facility, so nothing ends
     I’ve seen firsthand the difference                             up in the dump.
     we can make in our schools
                                                                    The Burt’s Bees and Tampa teams are not the only ones to set their sights low.
     and communities!”                                              Our regional distribution center in Aberdeen, Maryland, has committed
     Alpharetta, Georgia, employee                                  to achieving zero waste to landfill. In Orangeville, Ontario, Canada, and
     Kate Barkelew on Product Supply’s                              Quilicura, Santiago, Chile, our teams have set goals to reduce their waste by
     community service
                                                                    at least 90 percent by 2013. In Spring Hill, Kansas, our cat litter team retooled
                                                                    plant operations to recycle more than 70 percent of the reclaimable clay that
                                                                    was going to a landfill.
                                                                    The list of Clorox facility achievements goes on, and even as individuals,
     Absolutely love how natural it is                              we can all get in on the act. In our offices, plants and distribution centers
     and doesn’t smell like Play-Doh                                around the world, Clorox people are sorting waste into different bins. We’re
     just because it is natural!”                                   now composting food waste and nonrecyclable paper in California, North
                                                                    Carolina, Colombia and Chile.
     Consumer comment posted on
     GreenWorksCleaners.com about                                   The Glad® team is taking this thinking to consumers, with a number of tools
     Green Works® dishwashing liquid                                to help people reduce waste. In addition to cutting down the amount of plastic
                                                                    in our trash bags, we launched our “One Bag” program, which includes
                                                                    partnering with a number of U.S. universities to significantly curb the amount
                                                                    of trash created in and around their football stadiums. The Glad website
                                                                    provides tips and even the chance to win grants to encourage groups to hold
     Are you excited? Are you fired up?                             One Bag events in their communities.
     Are you ready?”                                                It may not be possible for all of us to send zero waste to landfills. It’s probably a
     Heath Rigsby, director – Global Sales,                         stretch to get an entire college football crowd’s trash into just one bag. But it’s
     Burt’s Bees®, unveiling the güd TM product                     good to know Clorox people are leading the way and helping others aim low.
     line at the Aug. 4 global town hall meeting




     The Clorox Company                                             Don Knauss
     Corporate Communications
     1221 Broadway, Oakland, CA 94612
     510-271-3004
     corporate.communications@clorox.com


2
     Play-Doh is a registered trademark of Hasbro, Inc.
                                                                                                                              In Brief


                                                                                         Think Outside
                                                                                         the Bottle
                                                                                         This year, for the first time, we’ve
                                           Many studies have shown that using your       integrated our annual financial
                                           head — reading, doing crossword puzzles       and corporate responsibility (CR)
                                           or actively engaging in intellectual          reporting, making us one of only a

            KEEP
                                           pursuits — reduces your risk of dementia.
                                                                                         small number of companies to do so.
                                           Think of your brain as a muscle: use it or
                                           lose it.


            YOUR
            BRAIN
                                           Exercise also builds up the hippocampus,
                                           which helps move information from
                                           short-term to long-term memory. Just
                                           30 minutes of daily activity — walking,
                                           gardening, housekeeping — can cut the
                                           threat of dementia by 16 percent.




           TUNED
                                           Food choices also impact brain health.
Ignoring small health issues can lead      Cut back on saturated fats and fill the
                                           gap with monounsaturated fats (nuts), as
to big brain problems, according to a      well as folate, vitamin B-12 and vitamin E
Canadian Study of Health and Aging,        (found in fresh, brightly colored produce
which tracked participants for a decade.   and whole grains). And aim for healthy
The study found that little things like    ar teries, which deliver oxygen-rich
                                           blood to your brain, by keeping a check
outdated eyeglasses, foot problems         on your LDL cholesterol, blood pressure
and digestive issues increased an          and diabetes.
otherwise healthy person’s risk of
developing dementia by 3 percent per
issue, compared to a person without
minor complaints. Add it all up, and                                                     Our report, “Think Outside the Bottle,”
you could be unknowingly increasing                                                      highlights our innovative approaches
your risk of dementia by 30 percent.       Finally, avoid heavy drinking and drop        in the areas of Performance, People,
                                           those cigarettes (a two-pack a day habit      Products, Planet and Purpose. These
It’s unclear why small complaints          increases your risk 157 percent). If you’ve   five pillars represent the intersection
add up, but doctors have guesses. Not      already tried to stop smoking, doctors
                                           will tell you to try again. North Americans
                                                                                         of our business and social imperatives.
taking care of sinus infections and        average about seven attempts before they
arthritis inflammation can damage                                                        A d ig ita l repor t ca n be fou nd at
                                           finally kick the habit.
                                                                                         w w w.T h e C l o r o x C o m p a n y. c o m .
your arteries and brain cells. Also,
                                                                                         We’re using bot h t he print a nd
when your vision and hearing are
sharp, your stomach is calm and your             The Bottom Line:                        digital versions to continue engaging
                                                                                         with stakeholders and fulfilling our
sinuses aren’t throbbing, you’re more                 When it comes
                                                                                         commitment to transparency.
open to trying new things and being                    to your brain,
physically active — both of which                     sometimes you
engage your brain and encourage                        should sweat                      Have questions or feedback about
                                                      the small stuff.                   the report? Email corporate.
neurons to make new connections.
                                                                                         communications @ clorox.com.

                                                                                                                                          3
    What happens when a leader
      in natural personal care
          focuses on color,
           energy and fun
             fragrances?




                                                  by SIMONE SEELEY




                        H     ello eco-friendly-fabulous twenty-
                              somethings. Meet güd™, the new
                        brand that’s bringing fun, flirty fragrances
                        to the natural personal care category.
                        “Instead of just being eco-friendly like
                         much of the category, with the güd brand,
                         we can be something completely new and
                         different,” says Garrett Putman, senior
                         brand manager – Global Marketing.
                        “We can be eco-fun. Eco-fun is like a
                         Smart car, it’s like Ben & Jerry’s. And by
                         being eco-fun, we intend to bring a new
                         consumer into the natural personal care
                         category — the Beauty Enthusiast, who
                         thinks natural is trendy, but who won’t
                         sacrifice on things like great scents.”
                        To attract this millennial and make
                        natural cool, we worked with an agency
                        to design colorful and playful packaging.
                        We also hired world-renowned “nose”
                        Roger Schmid and Givaudan, one of the
                        largest fragrance houses in the world, to
                        develop our signature scents: Orange
                                    ,
                        Petalooza™ Vanilla Flame™ Floral,
                        Cherrynova™ and Pearanormal Activity™   .


4
                                                                                              It’s a

                                                                                                                                                      sing
     The güd line will ship in the U.S. in                                                                                                           If you don’t
                                                                                                                                                          To support the launch, we’ll be focusing
                                                                                            fragrant
     November with 24 all-new products.
                                                                                    shindig.
                                                                                       For hair                                  on PR, in-store execution and social



foam,
     We also partnered with the Burt’s Bees®
Last time you                                                                         that says                                  media. This includes in-store circulars,
                                                                                                                             in the
saw this much
     brand’s largest customer, Target, to
     exclusively feature eight additional items
           It’s a
                                                                                             .
                                                                                    “touch me”
                                                                                        And your
                                                                                         invited.
                                                                                                                                 end-cap displays and store signage,
                                                                                                                            shower,
                                                                                                                          you will now.
                                                                                                                                 QR codes, sampling, customer emails,


                                                                                   sing
     with the Pearanormal Activity scent for                                             Talking hair,
                                                                                  If you don’t                                   Facebook promotions and outreach to
        were
 therefragrant                                                                            pretty nifty.

  shindig.
 strobe first six months. Our lineup includes
     the lights.                                                                                                                 beauty magazine editors. We will also
     shampoo, conditioner, body wash, body                                                                                       use The Hive (the Burt’s Bees website
     butter, body mist, body lotion, foaming
       And your
     hand wash and hand cream.
                                                                                      in the
                                                                                     shower,
                                                                                  and keep driving the project forward,”
                                                                                                                                 email list) to invite consumers to the
                                                                                                                                 güd website, where they can purchase
                                                                                                                                                                                                                            m
                                                                                  you will now.
     To invited. eco in eco-fun, all güd
                                                                                                                                 products online.
         put the                                                                  says Celeste Lutrario, vice president –
     ingredients are at least 97 percent natural                                  R&D, Burt’s Bees. “We’ve learned a lot       “The güd launch is all about growth on
     and its packaging is recyclable. Like                                                   Like a                              two fronts. First of all, growth for us!”
                                                                                         love letter
                                                                                  with this launch that I believe we can
     Burt’s Bees products, they contain no                                        apply to other parts of the business           says Pete Alberse, vice president – Global
     parabens, petrochemicals, phthalates or                                      that will help skin speed up the process
                                                                                           to your us                            Sales, Burt’s Bees. “I love to be on the
     SLS, and are never tested on animals.                                                 (without the                          offensive — it’s a shot in the arm for both
                                                                                  of innovation.”
                                                                                          naughty parts).
                                                                                                                                 our people and our business. It is also
                                                                                  Getting the güd word out                       nice growth for the natural category. The
                                                                                  Customer response has been strong, and         category definitely needs another brand
                                                                                  most major retailers plan to carry the         to attract consumers, and it certainly
                                                                                  line. The güd brand will be merchandised       should be ours!”
                Like a
     love letter
                                                                                  on the natural personal care aisle, near
                                                                                  Burt’s Bees products.
           to your skin                                                         “If we get the same response from
           (without the                                                          consumers that we have from retailers,
          naughty parts).                                                        we’ve got a winner,” Garrett says. “These


                                                                                                                                                                       foam,
                                                                                                                                                                           Last time you
                                                                                 products look great, they smell great and                                                 saw this much
                                                                                 they work great. One of our tag lines is,
                                                                                ‘When does güd happen? Just open the
                                                                                 cap.’ We think consumers are going to                                                       there were
     A new brand in less than a year                                             be really happy with our products, and
                                                                                                                                                                             strobe lights.
     From idea to formulation to shelf, the                                      we hope they will share their experience
     entire güd project took less than a                                         with their friends.”
     year. According to Garrett, we’ve been
     thinking about expanding in the natural
     personal care space for a while, more
     generally through acquisition. Then,

                                                 theLast this much
     last December, we decided we had the                                                                                                                          While Burt’s Bees products      ®
                                                                                                                                                                                                                   For hair


                                                                                                        foam,
     internal talent to launch a new brand               time you                                                                                                  target the Health and Beauty
                                                                                                                                                                                                                  that say
                                        happens. enthusiasts                                                                                                                                                     “touch m
     ourselves. In January 2011, we formed an       saw                                                                                                            Sleuth, the güd™ brand aims
     agile team of 15 people to run with it, and                                                                                                                   for Beauty Enthusiasts:
     this November, we began shipping.
                                                                                                                                                                   20- to 25-year-old millennials                  Talking hair
     Partnering with outside experts has                                                                        there were                                                                                         pretty nifty
     helped us move more quickly. In addition                                                                   strobe lights.                                     Think natural is trendy, but
     to the fragrance house and packaging                                                                                                                          won’t sacrifice scent
     agency, we also worked with a third-                                                                                                                          Into social media and sharing
     party formulator to develop the different                                                                                                                     with friends
     lotions and washes. And presently,
     we’re using a contract manufacturer to                                                                                                                        Often shop at Target
     produce the line.                                                                                                                                             and Walgreens, so güd aims
                                                                                                                                                                   to bring natural products with
    “We had the right internal experts on                                                                                                                          indulgent fragrances to these
     the team who found the right external                                                                                                                         mainstream channels
     experts to keep this project moving
     quickly. Importantly, the core team also
     had the authority to make big decisions

                                                                                                                                                                                                                     5
     Smart car is a registered trademark of Daimler Vehicle Innovations USA LLC; Ben & Jerry’s is a registered trademark of Ben & Jerry’s Homemade, Inc.; Facebook is a registered trademark of Facebook, Inc.
                                                                              by PHIL WOLF



                                     The strength of our brands, customer
                                  relationships and consumer loyalty make it
                               easier to tackle one of the toughest challenges in
                                               the CPG business.

    “N    o one likes price increases.” Ed Huber makes the challenge
          crystal clear: “We don’t like to raise our prices. Retailers
    don’t like to receive our increases. Consumers don’t like to
                                                                         First, we’re known for great cost-saving efforts, so customers trust
                                                                         we’ve done our best to keep prices down, even as our raw material
                                                                         and transportation costs climb.
    pay more.”                                                           Second, when we raise prices, we’re clear about the choices we
    Like them or not, Clorox has a solid track record of successfully    decided not to make.
    taking price increases. Clorox teams call on several key strengths   “Pricing is a choice,” says Ed, vice president – Sales Planning,
    when they sit down with customers for this difficult discussion.      Cleaning. “We’re very transparent with our customers about
                                                                          what’s driving up our costs, but we also let them know when

6
                                                                                       W H AT ’S Y O U R
                                                                                                            E
                                                                                       B R A N D ’S P R I C
                                                                                         E L AST ICI T Y ?                           u need
                                                                                                             t price increase, yo
                                                                                       Before you take tha
Although Hidden Valley® ranch dressing costs more, consumers recognize the
value of this great-tasting brand.                                                                         nd’s price ela   sticity, or how
                                                                                       to know your bra             p when price goes
                                                                                                                                         up.
we’re not cutting advertising or scaling back innovation. These                        much    volume tends to dro         –2, and we raise
                                                                                                             elasticity of
are also components of our consumer value equation.”                                    If Brand X has price        can expect volume
                                                                                                                                           to
                                                                                        the pri ce 10 percent, we           has elasticity of
                                                                                                              If Brand Y
Balancing that equation requires sound judgment, based on                                decline 20 percent.        ce hike will result
                                                                                                                                         in a
detailed analytics, another key strength.                                                –1, the n a 10 percent pri
                                                                                                             volume.
                                                                                         10 percent drop in
“Everyone’s asking us to be fortune tellers,” says Matt
                                                                                                                 is impacted by:
Gregory, vice president – Sales Planning, Specialty. “That’s
                                                                                         Price elasticity                    ality		
where our Analytic Insights team comes in. They run a ton of                                                elated	to	the	qu
                                                                                         •	Brand	loyalty,	r               ducts
scenarios, and they call out the risks, the upside and how the                                              ce	of	our	pro
                                                                                         	 and	performan
marketplace is likely to respond.”                                                                                          ceived		
                                                                                                            consumers’	per
                                                                                         •	The	price	and	
                                                                                                           lternatives
Those scenarios start with hundreds of thousands of points of                             	 value	of	any	a                      ct,		
retail data, almost like conducting “in-market experiments,”                                                  nting	of	a	produ
                                                                                          •	Frequent	discou ppers	to	wait	for	
                                                                                                              ho
according to Ashish Joshi, director – Analytic Insights. “For                              	 which	“trains”	s
example, we can see what the price of a bottle of Clorox® liquid                           	 a	low	pr ice
                                                                                                                                he		
bleach has been at Jewel stores in Chicago for the past three                                                 s,	like	whether	t
                                                                                            •	Category	factor ary	or	nice-to-have
                                                                                                              ss
years, and how many bottles were sold in those stores each week.                            	 product	is	nece
The art and science of what we do is to isolate the impact of price,
advertising, distribution, promotions, competition and so on, so
we are better able to predict what will happen if we do something
different in the future.”
Predicting what consumers are likely to do is                                                  shoppers may just reach for the cheaper option.
one thing, but our pricing models also need to                                                 Fortunately for us, though, our strengths
account for what customers and competitors                            We invest in             across the 3Ds of Desire, Decide and Delight
may do.                                                                                        mean that we compete on a lot more than price.
                                                                      60/40 wins,
Retailers have their own strategies for                                                       “One of the biggest advantages we have is we
adjusting prices on store shelves. Some                             and consumers              invest in 60/40 wins, and consumers know the
target an everyday low price, while others                                                     difference our brands make,” Ed says. “Even if
sell a product for a slightly higher price,
                                                                       know the                a low price tempts them to try another product,
with periodic lower-price promotions. Each                           difference our            they will come back to our quality.”
customer’s approach and timing may differ,
                                                                                                Hidden Valley® ranch dressing, for example,
but our models are usually pretty good at                           brands make.”               generally costs more than our top competitor,
predicting the overall impact of price changes
                                                                                                but consumers prefer the taste of our brand.
in the long run.
                                                                                                In addition, over the past few years, we’ve
We compete across the 3Ds, not just on price                                 invested in advertising, and our “share of voice” (our share
With the leading brand in many categories, we’re often the first             of total ad spending in the category) has risen from about 60
to raise prices, even when every brand is facing similar cost                percent to more than 80 percent. As a result of these demand-
pressures. (“Anyone who’s making a trash bag is going to have                building efforts, our market share has increased, and the Hidden
to deal with the same increase in resin costs,” Matt points out.)            Valley brand is now a solid leader in salad dressing.
If competitors don’t follow our lead, or the gap widens between              It’s true; no one likes price increases. But everyone loves a good
our price and a branded or private-label competitor’s product,               value, and consumers trust our brands to deliver.

                                                                                                                                                  7
                              NEW &

             HE
                            IMPROVED!

            T
         IM
                                   TASTES



     LAME
                                   GREAT!


    C GA                      REMOVES

                          by AM
                               STAINS!
                               Y HA
                                   ON
                                   RMO                                        N    early everything on a product label
                                                                                   is a claim. Often underappreciated,
                                                                              claims are huge business drivers, and
                                                                              require extensive testing before they’re
                                                                              ever printed on a package or used in
                                                                              an advertisement.
                                                       “Having relevant and differentiating claims drives preference
                                                        with consumers and customers,” says Estela Gonzalez Barreiro,
                                                        CDU brand manager – Clorox LatAm. “Claims are critical to

    How we make sure our product                        increasing market share and growing sales.”
                                                       “Claims start with in-depth insights,” says Jodi Russell,
    claims tell the truth, and nothing                 director – R&D, Specialty. “Claims rooted in consumer needs
                                                       will drive product purchase.”
    but the truth.                                     As consumer needs change, so too does our focus on the claims
                                                       we make.
                                                       “When the H1N1 flu pandemic hit in 2009, consumers
                                                        became more concerned with disinfecting,” says David Cole,
                                                        group manager – R&D, Product Development. “Our Global
                                                        Stewardship group worked with the U.S. Environmental
                                                        Protection Agency to quickly get approval for an H1N1 flu claim
                                                        on products like Clorox® disinfecting wipes, which drove sales.”
                                                       Another consumer insight, this time on the Liquid-Plumr®
                                                       brand, revealed that speed was just as important as efficacy when
                                                       it comes to clearing clogs. So we set out to prove we could clear
                                                       clogs in just seven minutes with Liquid-Plumr Penetrex™ gel.
                                                       “Claims help us stand out, and our seven-minute claim sent
                                                        Drano into a panic,” says Bob Miller, director – R&D, Cleaning.
                                                       “The best claims are compelling across all 3Ds — they create
                                                        desire, prompt consumers to decide to buy our products and
                                                        ultimately delight them when we deliver on our claim.”

                                                       We don’t claim it if we can’t prove it
                          Quick clog clearing is
                          important to consumers,      “From product labels to ads, our people — particularly in R&D,
                          so the Liquid-Plumr® team     Legal and Marketing — are dedicated to safeguarding and
                          proved the claim that
                          Penetrex® gel clears clogs    educating the public on the benefits of our products,” says Liz
                          in just seven minutes.        Sutton, group manager – R&D, Global Stewardship.

8
                                                              cleaner should be applied. Clorox follows
                                                              these methodologies, when they exist.
                                                              When they don’t, our scientists develop
                                                              their own.
                                                              “There was no standard industry                  Claims are categorized as either comparative
                                                               procedure for testing drain opener              (against a competitor) or noncomparative
                                                               products,” says Svetlana Walker,                (focusing on our product’s benefits). In both cases,
                                                               corporate counsel. “So the Liquid-Plumr         there are many different types:
                                                               team did extensive in-home consumer
                                                               testing to understand what the most
                                                               common drain clogs are made of. Then                                      SUPERIORITY
                                                                                                                                         the product is
Using our 38-toilet lab in Pleasanton, California, we          they went to local barber shops, made                                     better than others
run extensive tests to prove that our toilet product
claims are accurate.                                           clogs with real human hair and created
                                                               sinks with realistic plumbing to test
This means being very sure everything                          their products.”
we claim about a product is true.
                                                              Why do all this? Because we believe in
According to Sara Morales, group
                                                                                                                 PARITY no other product is better
                                                              doing the right thing.
manager – R&D, Product Claims
                                                              “We won’t make a claim if we don’t have
and Evaluations Labs, Clorox runs                                                                                                              9 Out of 10
                                                               the hard data to prove it,” Bob says.             PREFERENCE                    Consumers
extensive tests to “prove each and every                                                                                                       Prefer the
                                                              “Clorox has a reputation for being strict          consumers prefer              Taste of
product claim. And we strive to make                                                                             the product
                                                               with our claims, so people don’t tend to                                        Brita ®Pitcher
our test methods consumer-relevant,                                                                                                            Water to Tap.
                                                               challenge us very often.”
reproducible and defendable.”
In foods, ingredient-based claims are
closely regulated by groups like the U.S.                                                                                                      EFFICACY
Food and Drug Administration (FDA).                                                                                                            what the
                                                                                                                                               product does
“We go beyond just meeting FDA                                      We go beyond just
 standards to really deliver on our brand                         meeting FDA standards                           (Kills fungus at the root)

 promise,” says Joe McShane, group
 manager – R&D, Foods. “If we call it                               to really deliver on
 Hidden Valley® Farmhouse Originals
 Savory Bleu Cheese, we’ve made it with                            our brand promise.”                         ESTABLISHMENT backed by
                                                                                                               scientific studies or evidence
 real bleu cheese. To support the kosher-
 certified claim on our food products,
 we’ve worked with rabbis to actually                                                                                                          PRODUCT
 bless how we handle ingredients during                       But sometimes we do get challenged, and                                          IMPROVEMENT
                                                              that’s when our hard work pays off.                                              an upgrade to
 the manufacturing process.”                                                                                                                   the product
For cleaning, industry groups like                            “There’s a great deal of rigor that goes
the American Society for Testing and                           into testing every claim, so we have
Materials publish guidelines for testing                       complete confidence that we’ve done                                                  “For a little extra
                                                                                                                                                      flavor, toss with
claims — everything from how to create                         our due diligence and have the data to          ENDORSEMENT                             Hidden Valley         ®


                                                               prove it,” says Gabe Martinez, associate        testimonials from                       salad dressing.”
greasy counter stains to how much                                                                              trusted sources
                                                               corporate counsel.                                                                           - Jodie Shield,
                                                                                                                                                           registered dietitian

                                                              No matter the type of claim (and there
                                                              are many, see right), we won’t claim it if
                                                              we can’t prove it.                             Claim it, show it
                                                              “Different countries may have different        It’s one thing to tell people what our
                                                               claim regulations, but at Clorox we           products can do. It’s another to show them.
                                                               operate by the principal that our claims      “Demonstrations take claims to the next
                                                               will be honest, truthful, substantiated and    level,” Bob says. “When we show people
                                                               not misleading — on every product, in          our products in action, they choose us.”
                                                               every country,” says Germán Klingenfuss,
When no industry standard for testing drain openers            corporate counsel – International.
existed, we created our own realistic hair clogs and                                                         Watch Clorox product demos on CloroxWeb,
sink pipes to test Liquid-Plumr ® products.                                                                  and see our claims come to life.
                                                                                                                                                                                  9
Drano is a registered trademark of S.C. Johnson & Son, Inc.
                                                   As a privately held company,
                                                   SC Johnson can play by different
                                                   rules than public companies.




                                                                         by JEN DOZIER

     I  n 1886, Samuel Curtis Johnson sold ornate parquet flooring
        to hotels, government buildings and wealthy homeowners. To
     care for those fancy floors, he started including a homemade can
     of Johnson’s prepared paste wax with his floor sales.
     It wasn’t until the 1950s that the company started expanding
     into areas outside of wax, beginning with an aerosol insecticide.
     During the next half-century, they grew from a $150 million
     dollar wax business into an $8 billion family of companies.
     Headquartered in Racine, Wisconsin, SC Johnson (SCJ) sells
     products in more than 100 countries on six continents.

     What it means to be “a family company”
     A public company, like Clorox, is owned by a large number of
     stockholders. Each stockholder owns shares of the company,
     which are traded in a public market or exchange.
     SC Johnson, a private company, has been owned and led by
     the Johnson family for five generations. They have never issued
     shares on a public stock exchange.
     “For a publicly-traded company like Clorox, it’s important to
      remember that our stockholders are the ultimate owners of
      the company,” says Steve Austenfeld, vice president – Investor
      Relations. “We are accountable to them and must make choices we
      think will generate long-term value for them. Private companies
      have greater room to make decisions as they’re only accountable

10
                                                                                                                at a glance


                                                                                               Founded: 1886
                                                                                               Headquarters: Racine, Wisconsin
                                                                                               Annual Sales: More than $8 billion
                                                                                               Employees: 12,000

                                                “When Clorox bought First Brands in            Home Cleaning Brands:
                                                 1999,” Steve explains, “we funded the                    • Drano drain opener
                                                 purchase by issuing new shares of Clorox                 • Duck bathroom
                                                 stock in the marketplace, something SCJ                    cleaners
                                                 can’t do as a private company.”                          • Fantastik all-purpose
 to the few owners of the company — in
                                                                                                            cleaners
 SCJ’s case, the Johnson family.”                Monitoring SCJ’s performance is                          • Mr. Muscle cleaners
Private companies are also less concerned        not easy
                                                                                                          • Nature’s Source
about short-term financial performance.         Comparing our financial performance                         natural cleaners
                                                to SCJ’s is challenging because private                   • Pledge cleaners
“A private company, such as SCJ, has
                                                companies aren’t required to report to the                • Scrubbing Bubbles
 the flexibility to deliver highly variable
                                                Securities and Exchange Commission                          bathroom cleaners
 financial performance,” says Steve. “For
                                                (SEC) like public companies are. However,                 • Shout stain remover
 example, if they want to invest heavily on
                                                there are some metrics we can monitor to                  • Windex glass cleaner
 a strategic initiative for several years, or
                                                gauge how they are performing.
 significantly discount their brands for an
 extended period, they can do so since they     The most straightforward way to track
                                                SCJ’s performance is through market            Air Care Brands:
 are not accountable to public stockholders
                                                share. We primarily compete with SCJ                      • Glade air fresheners
 or analysts.”
                                                in three categories: bags and wraps,                      • Oust air sanitizers
There are also downsides to being a private
                                                cleaning and stain removers.
company. Since they don’t have shares that
trade in the market, they cannot issue new      “Our market-share leadership in home
shares to generate cash. This generally          cleaning has allowed us to grow share
limits private companies to using bank           over time versus SCJ’s cleaning portfolio,”   Pest Control Brands:
loans or issuing debt, which may restrict        says Steve. “And lately, we’ve made good
them from making significant capital             progress in the food storage segment                     • All Out mosquito
investments or large acquisitions.               as well.”                                                  killer
                                                                                                          • Autan insect
                                                We can also monitor private companies’                      repellant
                                                outstanding debt. We evaluate how                         • Baygon bug killer
                We                              much debt they have, whether they are                     • Off! insect repellant
                                                issuing new debt and what interest rates
            primarily                           they have to pay on their debt.
                                                                                                          • Raid bug killer

          compete with                          “SCJ is an able competitor with very good
           SC Johnson                            brands, and what makes them different         Home Storage Brands:
                                                 is our inability to track their financial
              in three                           performance,” says Steve. “But what’s
                                                                                                               • Saran plastic
                                                                                                                 wraps
                                                 important is winning in the marketplace.
            categories:                          So as long as we continue to hold or
                                                                                                               • Ziploc food
                                                                                                                 storage bags
         bags and wraps,                         grow market share against them, our                             and containers
                                                 need to know how they are performing
          cleaning and                           financially isn’t as important.”
         stain removers.                                                                       Auto Care Brands:
                                                                                               • Grand Prix car products
                                                                                                                                    11
     Where in the World Is Clorox?



     CREATING
     COMMUNITY
     IN                                                                                                                                                                        o mo
                                                                                                                                                                                      re




     KENNESAW
                                                                                                                                                              hat l   e ad t
                                                                                                                                                 eeti   ngs t
                                                                                                                                   ad h   oc m
                                                                                                                          u r ag e
                                                                                                                  es enco ion.
                                                                                                            s p ac i n n ova t
                                                                                                     wo r k        d
                                                                                             O p en r at ion an
                                                                                                       o
                                                                                              c o llab



     By breaking down
     walls, the design of the                                              of a heads-down, traditional work style.” But this work style,
                                                                           coupled with closed offices and cubicles, generally hindered the

     new Kennesaw facility
                                                                           collaboration that inspires creativity and innovation.
                                                                           Kennesaw’s new workplace design features open workstations,

     is helping build up a
                                                                           shared offices and community gathering places. Together with
                                                                           plenty of natural light and improved technology — state-of-the
                                                                           art teleconferencing and a flexible phone system, for example

     community.                                                            — the new site has a clear focus on creating a collaborative
                                                                           community. With 30,000 square feet — including 5,500 square
                                                                           feet of lab space — the new facility also provides plenty of space
                                                                           for the team today and a larger community in the future.
     by DAN SHORE
                                                                            When the walls came down, noise came down


     K    ennesaw, Georgia, is the kind of place where you can drive       Initially, employees were concerned about two of the most
          a half hour in one direction and land in a big city (Atlanta,    prominent workplace design features — the open workstations
     in this case) or a half hour in the opposite direction and escape     and shared office spaces. Would it be too noisy? Would there be
                                                                           enough privacy? Those concerns proved unfounded.
     into the mountains. It’s a place where you’ll find a large barbecue
     restaurant on one block and a small mom-and-pop shack on              “When the cubicle walls came down, the noise level in the office
     another. There’s a home and a lifestyle to suit anyone’s tastes.       actually came way down as well,” says Paul Williams, director –
                                                                            Engineering Services. Cubicles create a false sense of privacy, he
     That variety is mirrored in Clorox’s Kennesaw facility, which
                                                                            explains, and as a result, occupants tend to speak louder. With
     is the East Coast hub for Manufacturing Solutions and R&D
                                                                            the open workstations, people are quieter and more considerate
     support, including Engineering, World Class Manufacturing,
                                                                            of those around them.
     Production Services and Quality Assurance. In addition, the
     facility is home to teams from Manufacturing, Procurement,            The shared office space hasn’t been an issue either. “There’s
     Logistics and Safety, Health and Environmental.                       always an office available for a quick meeting or a private phone
                                                                           call,” Trent says. And “neighborhood” governance committees
     Bringing this diverse population of more than 100 employees
                                                                           ensure everyone’s needs are being met.
     together was one of the goals in designing the site’s new offices,
     which opened in July.                                                 “While the new design has stretched many of us out of our
                                                                            comfort zone, it’s been for the better,” Trent says. “We’re starting
     Workplace design emphasizes collaboration                              to see a lot more people bouncing ideas off of each other and
     “Our average age here is a bit older,” says Trent Sunde, vice          collaborating in the shared spaces.”
      president – Operations Services, “and so we’ve always had more
                                                                           That’s exactly what the new design was intended to accomplish.

12
RISK
TAKER
Q&A WITH CAROLE DAVIDSON
VICE PRESIDENT – IT BUSINESS ENGAGEMENT
& APPLICATION DELIVERY



 Joined Clorox: 1985                                                    What would people be surprised to know about you?
 Background: I started at Clorox as an administrative assistant         I love riding motorcycles — my husband drives and I ride on the
 in Corporate Financial Planning, later working as an associate         back. We go all over California, spending time in small towns in
 marketing manager on the Kingsford® brand and a regional sales         the foothills and along the coast. When riding and sightseeing,
 manager. I led the Project Delta systems and processes upgrade         my senses are overloaded so my brain can take a break from
 and the integration of the Burt’s Bees® business before taking on      thinking about work.
 my current role leading Project Atlas.
                                                                        People may also be surprised to learn that I have a tattoo. In high
 Education: I earned a B.S. in business from Holy Names                 school, I was very conservative, but when I moved to California
 University while working full-time at Clorox.                          at age 20, the first thing I did was get a unicorn tattooed above
 Home town: I grew up in Rimersburg, Pennsylvania, and
                                                                        my ankle.
 currently live in Fremont, California.                                 What’s your favorite cause to support?
 What’s your yardstick for success?                                     I was the first person in my family to go to college, so I’m
 Success is about working hard, taking smart risks and always           passionate about education. I was fortunate to benefit from
 trying to learn new things. I like to think of success as a lattice,   academic counseling and scholarships. I want students today to
 with many diverse and meaningful experiences woven together.           have as many options as possible for pursuing higher education
 A successful career path doesn’t have to be a straight line or         or learning a trade.
 necessarily lead to being an executive. For me, it’s important to      What’s your role in Project Atlas and why is this initiative so
 model for others that it is OK to put yourself out there and not       important for Clorox?
 fear failure. Taking risks and making mistakes can ultimately
                                                                        My job is to be the bridge between developing a common platform
 lead to breakthrough results.
                                                                        for processes and systems to enable growth, and understanding
 What’s your pet peeve?                                                 countries’ needs and desires. International has been charged to
 Getting bogged down in process. One of the refreshing things           deliver profitable growth above the company average. Project
 about working with the Burt’s Bees and International businesses        Atlas is critical because it’s updating many of our old systems
 is their entrepreneurial spirit and drive to get things done           to enable that growth. With common systems and processes, we
 quickly, even with limited resources. The ideal workplace has          can also learn more from each other and keep improving how we
 a bias for action supported by effective processes. That’s what        run our business over time.
 we’re trying to achieve with Project Atlas, our multiyear effort
 to standardize processes, centralize International data and give
 leaders access to information they need to make better business
 decisions, faster.

                                                                                                                                              13
New Products

                                                                                       Burt’s Bees® Natural Acne Solutions


 NEW AROUND                                                                            Maximum Strength Spot Treatment Cream
                                                                                       This spot treatment cream is made with tamanu nut oil



  THE WORLD
                                                                                       to help promote healthy, clear, smooth skin, naturally.
                                                                                       Start-of-ship: November 2011



In the first half of fiscal year 2012, lots of new
Burt’s Bees® products hit markets in the U.S.,                                                                        Burt’s Bees® Refreshing Lip
C a n a d a , A s i a , A u s t r a l i a , N e w Z e a l a n d,                                                      Balm with Pink Grapefruit
Europe and Latin America.
                                                                                                                      This rejuvenating lip balm contains
                                                                                                                      nutritious oil from the seeds of tropical
                                                                                                                      pink grapefruit, rich in powerful vitamins
                                                                                                                      C and E.

             Burt’s Bees® Mama Bee                                                                                    Start-of-ship: September 2011
             Belly Butter
             Moms-to-be can pampe r
             themselves with this extra rich                                             Burt’s Bees® Medicated Lip
             belly butter specially blended                                              Balm with Eucalyptus Oil
             to nourish and moisturize skin
                                                                                         This new lip balm, infused with
             during their nine-month stretch.
                                                                                         menthol and eucalyptus oil, alleviates
             Start-of-ship: July 2011                                                    pain and relieves dry, cracked lips.
                                                                                         Start-of-ship: August 2011



                                                                                                                                          Clorox® Broad Spectrum
                                                                                                                                          Quaternary Disinfectant


     NEW IN
                                                                                                                                          Cleaner
                                                                                                                                          This new hospital-use, non-



     THE U.S.
                                                                                                                                          bleach product is gentle, fast
                                                                                                                                          and effective, killing organisms
                                                                                                                                          33 percent faster than a leading
                                                                                                                                          quaternary spray.
                                                                                                                                          Start-of-ship: November 2011
     güd™ Natural
     Personal Care
     Products
     Why settle for eco-friendly
     when you can have eco-
     f u n? g ü d™ p ro d u c ts
     combine luscious, natural
     formulas with indulgent
     scents to leave women
     looking, smelling and
     feeling great in a way that
     is fun, never boring.
     Start-of-ship:
     November 2011



                                     Hidden Valley® Veggie Kits: Country Ranch,                                Liquid-Plumr® Double Impact™
                                     Parmesan Herb and Brown Sugar & Spice                                     Clog-Clearing System
                                     These kits have the perfect combination of ingredients                    This double-action, power-packed duo comes with a
                                     and spices to turn plain cooked veggies into something                    deep-reaching, 23-inch pipe snake and a professional-
                                     special in less than 10 minutes.                                          strength gel to clear even the toughest clogs.
                                     Start-of-ship: September 2011                                             Start-of-ship: July 2011

14
NEW IN ECUADOR                                                                                             NEW IN EUROPE
Clorox® Ropa Blancos Intensos                                                                              Ever Clean® Aqua Breeze
A laundry product with an antiyellowing breakthrough                                                       Cat Litter
formula ensures clothes will be intensely white                                                            Strong clumping power plus a
without damaging fabric.                                                                                   fresh aqua breeze fragrance work
                                                                                                           together with a patented carbon
Start-of-ship: October 2011
                                                                                                           technology to immediately neu-
                                                                                                           tralize even the strongest odors.
                                                                                                           Start-of-ship: October 2011

                                                                                                           Ever Clean® White With
                                                                                                           Blue Indicators Cat Litter
                                                                                                           This revolutionary white clumping
                                                                                                           litter contains special particles
                                                                                                           that turn blue when wet, helping
                                                                                                           consumers identify and remove
                                                                                                           clumps and keeping the litter box
                                                                                                           fresher, longer.
                                                                                                           Start-of-ship: October 2011



               NEW IN HUNGARY                                        NEW IN CHILE
               Clorox® Disinfecting Wipes                            Clorinda® CloroGel Flores Silvestres
               Now consumers can get the unbeatable cleaning         This thick gel formula foams as it cleans, giving
               and disinfecting performance of Clorox disinfecting   consumers a deep clean with the benefits of bleach.
               wipes in an on-the-go pouch.                          Start-of-ship: November 2011
               Start-of-ship: October 2011




NEW IN ASIA
   Clorox® Manual Toilet Bowl Cleaner                                                    Clorox Clean Up® All-Purpose
   This range of specialized cleaners with wide-                                         Cleaner With Bleach
   dispensing nozzles gets under the rim and                                             This all-purpose cleaner kills 99.9 percent of
   around the bowl, providing complete toilet                                            germs and viruses, so families can enjoy a
   bowl coverage.                                                                        safe, clean home.
   Start-of-ship: October 2011                                                           Start-of-ship: October 2011




                                                                                                                                               15
The Clorox Company




                                                                                                                                                        Diamond
P.O. Box 24305
Oakland, CA 94623

Forwarding Service Requested




                                                                                                                                                        SECOND QUARTER 2012
                                                                                                                                                                güd™ Happens
Diamond Drill                        If there were a movie made about your life, what




                                                                                                                                                                Pricing in a 3D World
                                     would the title be and who would play you?




                                                                                                                                                                The Claim Game
      Michelle Reynolds                       Regina Carter                          Jim Stout                           George Kane
       Oakland, California                  Alpharetta, Georgia                   Burnside, Kentucky                   Aberdeen, Maryland




                                                                                                                                                                SC Johnson: All In the Family
“Spontaneous Combustion” star-      “The Maid’s Daughter” starring        “The Procrastinate Kid” starring ... “The Road to Detention” starring
ring Holly Hunter. I may be short    Jennifer Hudson. My mother            oh, I’ll decide later. Procrastination Meatloaf. I enjoy making light of
and can be cute, but most days       was a maid, and helping her           is a trait I struggle with. It seems   things, but sometimes lose the
everyone should watch out!           in the summers taught me the          easier to put things off, but it’s not filter between my brain and mouth,
                                     value of hard work, compassion        as rewarding. Oh yeah, Bob Hope        which often gets me in hot water.
                                     and humility.                         would star in my movie.




Next Up
What does service mean to you?                                                                                          Printed with vegetable ink on
                                                                                                                        100 percent post-consumer
Post your answers to the Diamond Drill on the CloroxWeb To Do list by Nov. 18 and qualify for a chance                  recycled paper.
to win 12 Bravo points (or equivalent for International employees).
                                                                                                                        NI-16954

				
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