CLOROX CO /DE/, 10-Q filed on 5/2/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
9 Months Ended
Mar. 31, 2018
Apr. 18, 2018
Document And Entity Information    
Entity Registrant Name CLOROX CO /DE/  
Entity Central Index Key 0000021076  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   129,507,979
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2018  
v3.8.0.1
Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited) - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]        
Net sales $ 1,517 $ 1,477 $ 4,433 $ 4,326
Cost of products sold 868 827 2,502 2,407
Gross profit 649 650 1,931 1,919
Selling and administrative expenses 208 201 609 598
Advertising costs 150 161 424 417
Research and development costs 32 35 95 98
Interest expense 20 22 61 66
Other (income) expense, net (3) (16) (6) 2
Earnings from continuing operations before income taxes 242 247 748 738
Income taxes on continuing operations 61 75 142 237
Earnings from continuing operations 181 172 606 501
Earnings (losses) from discontinued operations, net of tax 0 0 0 (1)
Net earnings $ 181 $ 172 $ 606 $ 500
Net earnings (losses) per share, Basic        
Continuing operations, basic (in dollars per share) $ 1.39 $ 1.34 $ 4.69 $ 3.89
Discontinued operations, basic (in dollars per share) 0.00 0.00 0.00 (0.01)
Basic net earnings per share (in dollars per share) 1.39 1.34 4.69 3.88
Net earnings (losses) per share, Diluted        
Continuing operations, diluted (in dollars per share) 1.37 1.31 4.60 3.82
Discontinued operations, diluted (in dollars per share) 0.00 0.00 0.00 (0.01)
Diluted net earnings per share (in dollars per share) $ 1.37 $ 1.31 $ 4.60 $ 3.81
Weighted average shares outstanding (in thousands)        
Basic (in shares) 129,694 128,752 129,357 128,899
Diluted (in shares) 131,900 131,362 131,703 131,399
Dividends declared per share (in dollars per share) $ 0.96 $ 0.80 $ 2.64 $ 2.40
Comprehensive income $ 180 $ 186 $ 624 $ 505
v3.8.0.1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Mar. 31, 2018
Jun. 30, 2017
Current assets    
Cash and cash equivalents $ 1,174 $ 418
Receivables, net 595 565
Inventories, net 508 459
Prepaid expenses and other current assets 96 72
Total current assets 2,373 1,514
Property, plant and equipment, net of accumulated depreciation and amortization of $2,055 and $2,001, respectively 933 931
Goodwill 1,200 1,196
Trademarks, net 655 654
Other intangible assets, net 63 68
Other assets 220 210
Total assets 5,444 4,573
Current liabilities    
Notes and loans payable 1,066 404
Current maturities of long-term debt 0 400
Accounts payable and accrued liabilities 947 1,005
Income taxes payable 0 0
Total current liabilities 2,013 1,809
Long-term debt 1,789 1,391
Other liabilities 778 770
Deferred income taxes 27 61
Total liabilities 4,607 4,031
Commitments and contingencies
Stockholders’ equity    
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding 0 0
Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares issued as of March 31, 2018 and June 30, 2017; and 129,489,382 and 129,014,172 shares outstanding as of March 31, 2018 and June 30, 2017, respectively 159 159
Additional paid-in capital 956 928
Retained earnings 2,704 2,440
Treasury shares, at cost: 29,252,079 and 29,727,289 shares as of March 31, 2018 and June 30, 2017, respectively (2,457) (2,442)
Accumulated other comprehensive net (losses) income (525) (543)
Stockholders’ equity 837 542
Total liabilities and stockholders’ equity $ 5,444 $ 4,573
v3.8.0.1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2018
Jun. 30, 2017
Statement of Financial Position [Abstract]    
Property, plant and equipment, accumulated depreciation and amortization $ 2,055 $ 2,001
Preferred stock, par value (in dollars per share) $ 1.00 $ 1.00
Preferred stock, shares authorized (in shares) 5,000,000 5,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 1.00 $ 1.00
Common stock, shares authorized (in shares) 750,000,000 750,000,000
Common stock, shares issued (in shares) 158,741,461 158,741,461
Common stock, shares outstanding (in shares) 129,489,382 129,014,172
Treasury stock, shares (in shares) 29,252,079 29,727,289
v3.8.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
9 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Operating activities:    
Net earnings $ 606 $ 500
Deduct: Losses from discontinued operations, net of tax 0 (1)
Earnings from continuing operations 606 501
Adjustments to reconcile earnings from continuing operations to net cash provided by continuing operations:    
Depreciation and amortization 121 121
Stock-based compensation 37 38
Deferred income taxes (43) (38)
Other 23 17
Changes in:    
Receivables, net (29) 2
Inventories, net (58) (70)
Prepaid expenses and other current assets (3) (14)
Accounts payable and accrued liabilities (64) (75)
Income taxes payable (16) 1
Net cash provided by (used for) continuing operations 574 483
Net cash provided by (used for) discontinued operations 0 (1)
Net cash provided by (used for) operations 574 482
Investing activities:    
Capital expenditures (126) (161)
Other 14 25
Net cash provided by (used for) investing activities (112) (136)
Financing activities:    
Notes and loans payable, net 657 123
Long-term debt borrowings, net of issuance costs 396 0
Long-term debt repayments (400) 0
Treasury stock purchased (70) (183)
Cash dividends paid (326) (309)
Issuance of common stock for employee stock plans and other 35 55
Net cash provided by (used for) financing activities 292 (314)
Effect of exchange rate changes on cash and cash equivalents 2 (2)
Net increase in cash and cash equivalents 756 30
Cash and cash equivalents:    
Beginning of period 418 401
End of period $ 1,174 $ 431
v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three and nine months ended March 31, 2018 and 2017, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its subsidiaries (the Company) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2017, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

Recently Issued Accounting Standards

Recently Issued Accounting Standards not yet adopted

In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which amends its guidance to allow a reclassification from Accumulated Other Comprehensive Income to Retained Earnings for the stranded income tax effects resulting from The Tax Cuts and Jobs Act (the Tax Act). The amendments are effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will potentially have on its consolidated financial statements.
In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which amends the hedge accounting recognition and presentation requirements to better align an entity’s risk management activities with its financial reporting. This standard also simplifies the application of hedge accounting in certain situations. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires the presentation of the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. This standard also requires that other components of the net periodic benefit cost be presented separately from the line item(s) that includes service costs and outside of any subtotal of operating income, if one is presented, on a retrospective basis. Additionally, the new guidance limits the components that are eligible for capitalization in assets to only the service cost component. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2019. The Company is currently evaluating the impact that adoption of this guidance will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2021, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize a right-of-use asset and a lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation will depend on the classification of a lease as either a finance or an operating lease. ASU 2016-02 also requires expanded disclosures about leasing arrangements. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which replaces most of the existing U.S. GAAP revenue recognition guidance and is intended to improve and converge with international standards on the financial reporting requirements for revenue from contracts with customers. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers, including information about significant judgments and changes in judgments. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2019, and is expected to be applied on a modified retrospective basis.

Based on the Company's preliminary assessment, the adoption of the standard is not expected to have a significant impact on its annual consolidated financial statements; however, there may be an impact on the Company's financial results in interim periods due to the timing of recognition for certain trade promotion spending. As the Company completes its overall assessment, it is also identifying potential changes to its accounting policies, business processes, systems and controls to align with the new revenue recognition guidance and disclosure requirements.

Recently Adopted Accounting Standards

In March 2018, the FASB issued ASU No. 2018-05, “Income Taxes (Topic 740)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” which amends its guidance to address the initial accounting for the income tax effects of the Tax Act, which was enacted on December 22, 2017 (enactment date). This new guidance allows reasonable estimates of income tax effects to be reported as provisional amounts during the measurement period, which is one year from the enactment date, when the necessary information is not available, prepared, or analyzed in sufficient detail to complete the accounting. The amendments also added specific disclosure requirements. The Company has adopted this new guidance. The Company recorded $81 of provisional benefits in the second quarter of fiscal year 2018. Refer to Note 7 to the Condensed Consolidated Financial Statements for more information.
v3.8.0.1
DISCONTINUED OPERATIONS
9 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS
On September 22, 2014, the Company's Venezuela affiliate, Corporación Clorox de Venezuela S.A. (Clorox Venezuela) announced that it was discontinuing its operations, effective immediately, and seeking to sell its assets. Since fiscal year 2012, Clorox Venezuela has been required to sell more than two thirds of its products at prices frozen by the Venezuelan government. During this same period, Clorox Venezuela experienced successive years of hyperinflation resulting in significant sustained increases in its input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela had been selling its products at a loss, resulting in ongoing operating losses. Clorox Venezuela repeatedly met with government authorities in an effort to help them understand the rapidly declining state of the business, including the need for immediate, significant and ongoing price increases and other critical remedial actions to address these adverse impacts. Based on the Venezuelan government’s representations, Clorox Venezuela had expected significant price increases would be forthcoming much earlier; however, the price increases subsequently approved were insufficient and would have caused Clorox Venezuela to continue operating at a significant loss into the foreseeable future. As such, Clorox Venezuela was no longer financially viable and was forced to discontinue its operations.
On September 26, 2014, the Company reported that Venezuelan Vice President Jorge Arreaza announced, with endorsement by President Nicolás Maduro, that the Venezuelan government had occupied the Santa Lucía and Guacara production facilities of Clorox Venezuela. On November 6, 2014, the Company reported that the Venezuelan government had published a resolution granting a government-sponsored Special Administrative Board full authority to restart and operate the business of Clorox Venezuela, thereby reaffirming the government's expropriation of Clorox Venezuela’s assets. Further, President Nicolás Maduro announced the government's intention to facilitate the resumed production of bleach and other cleaning products at Clorox Venezuela plants. He also announced his approval of a financial credit to invest in raw materials and production at the plants. These actions by the Venezuelan government were taken without the consent or involvement of Clorox Venezuela, its parent Clorox Spain S.L. (Clorox Spain) or any of their affiliates. Clorox Venezuela, Clorox Spain and their affiliates reserved their rights under all applicable laws and treaties.
With this exit, the financial results of Clorox Venezuela are reflected as discontinued operations in the Company’s condensed consolidated financial statements for all periods presented. The results of Clorox Venezuela had historically been part of the International reportable segment.
There were no net sales for each of the three and nine months ended March 31, 2018 and 2017, and losses from discontinued operations, net of tax were insignificant for these same periods.
v3.8.0.1
INVENTORIES, NET
9 Months Ended
Mar. 31, 2018
Inventory Disclosure [Abstract]  
INVENTORIES, NET
INVENTORIES, NET
Inventories, net, consisted of the following as of:
 
3/31/2018
 
6/30/2017
Finished goods
$
415

 
$
363

Raw materials and packaging
114

 
119

Work in process
5

 
3

LIFO allowances
(26
)
 
(26
)
Total
$
508

 
$
459

v3.8.0.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
9 Months Ended
Mar. 31, 2018
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS [Abstract]  
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial Risk Management and Derivative Instruments

The Company is exposed to certain commodity, foreign currency and interest rate risks related to its ongoing business operations and uses derivative instruments to mitigate its exposure to these risks.

Commodity Price Risk Management

The Company may use commodity exchange traded futures and over-the-counter swap contracts, which are generally no longer than 2 years, to fix the price of a portion of its forecasted raw material requirements. Commodity purchase contracts are measured at fair value using market quotations obtained from commodity derivative dealers.

As of March 31, 2018, the notional amount of commodity derivatives was $21, of which $10 related to jet fuel swaps used for the charcoal business and $11 related to soybean oil futures used for the food business. As of June 30, 2017, the notional amount of commodity derivatives was $26, of which $14 related to jet fuel swaps and $12 related to soybean oil futures.

Foreign Currency Risk Management

The Company may also enter into certain over-the-counter derivative contracts to manage a portion of the Company’s forecasted foreign currency exposure associated with the purchase of inventory. These foreign currency contracts generally have durations of no longer than 2 years. The foreign exchange contracts are measured at fair value using information quoted by foreign exchange dealers.

The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were $34 as of March 31, 2018, and $49 as of June 30, 2017.

Interest Rate Risk Management

The Company may enter into over-the-counter interest rate forward contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt or to manage the Company’s level of fixed and floating rate debt. These interest rate forward contracts generally have durations of less than 12 months. The interest rate contracts are measured at fair value using information quoted by U.S. government bond dealers.

As of March 31, 2018 and June 30, 2017, the Company had no outstanding interest rate forward contracts.
Commodity, Foreign Exchange and Interest Rate Derivatives

The Company designates its commodity forward and future contracts for forecasted purchases of raw materials, foreign currency forward contracts for forecasted purchases of inventory, and interest rate forward contracts for forecasted interest payments as cash flow hedges.

The effects of derivative instruments designated as hedging instruments on Other comprehensive income and Net earnings were as follows:

 
Gains (losses) recognized in Other comprehensive income
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Commodity purchase derivative contracts
$

 
$
(3
)
 
$
3

 
$
(2
)
Foreign exchange derivative contracts
1

 
(1
)
 
1

 

Interest rate derivative contracts

 

 
2

 

Total
$
1

 
$
(4
)
 
$
6

 
$
(2
)


 
Gains (losses) reclassified from Accumulated other comprehensive net (losses) income and recognized in Net earnings
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Commodity purchase derivative contracts
$

 
$

 
$

 
$
(1
)
Foreign exchange derivative contracts

 

 
(1
)
 
(3
)
Interest rate derivative contracts
(1
)
 
(2
)
 
(5
)
 
(5
)
Total
$
(1
)
 
$
(2
)
 
$
(6
)
 
$
(9
)


The gains (losses) reclassified from Accumulated other comprehensive net (losses) income and recognized in Net earnings during the three and nine months ended March 31, 2018 and 2017, for commodity purchase and foreign exchange contracts were included in Cost of products sold, and for interest rate contracts were included in Interest expense.

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (losses) income as of March 31, 2018, which is expected to be reclassified into Net earnings within the next twelve months is $(4). Gains and losses on derivative instruments representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in Net earnings. During the three and nine months ended March 31, 2018 and 2017, hedge ineffectiveness was not significant.

Counterparty Risk Management and Derivative Contract Requirements

The Company utilizes a variety of financial institutions as counterparties for over-the-counter derivative instruments. The Company enters into agreements governing the use of over-the-counter derivative instruments and sets internal limits on the aggregate over-the-counter derivative instrument positions held with each counterparty. Certain terms of these agreements require the Company or the counterparty to post collateral when the fair value of the derivative instrument exceeds contractually defined counterparty liability position limits. Of the over-the-counter derivative instruments in liability positions held as of March 31, 2018 and June 30, 2017, $0 and $1, respectively, contained such terms. As of March 31, 2018 and June 30, 2017, neither the Company nor any counterparty was required to post any collateral as no counterparty liability position limits were exceeded.

Certain terms of the agreements governing the Company’s over-the-counter derivative instruments require the credit ratings, as assigned by Standard & Poor’s and Moody’s to the Company and its counterparties, to remain at a level equal to or better than the minimum of an investment grade credit rating. If the Company’s credit ratings were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. As of both March 31, 2018 and June 30, 2017, the Company and each of its counterparties had been assigned investment grade credit ratings by both Standard & Poor’s and Moody’s.

Certain of the Company’s exchange-traded futures contracts used for commodity price risk management include requirements for the Company to post collateral in the form of a cash margin account held by the Company’s broker for trades conducted on that exchange. As of March 31, 2018 and June 30, 2017, the Company maintained cash margin balances related to exchange-traded futures contracts of $1, which are classified as Prepaid expenses and other current assets in the condensed consolidated balance sheets.

Trust Assets

The Company has held interests in mutual funds and cash equivalents as part of trust assets related to its nonqualified deferred compensation plans. The participants in the nonqualified deferred compensation plans, who are the Company’s current and former employees, may select among certain mutual funds in which their compensation deferrals are invested in accordance with the terms of the plans and within the confines of the trusts, which hold the marketable securities. The trusts represent variable interest entities for which the Company is considered the primary beneficiary, and, therefore, trust assets are consolidated and included in Other assets in the condensed consolidated balance sheets. The interests in mutual funds are measured at fair value using quoted market prices. The Company has designated these marketable securities as trading investments.

Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis in the condensed consolidated balance sheets are required to be classified and disclosed in one of the following three categories of the fair value hierarchy:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.

As of March 31, 2018 and June 30, 2017, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.
The following table summarizes the fair value of the Company’s assets and liabilities for which disclosure of fair value is required:
 
 
 
 
 
3/31/2018
 
6/30/2017
 
Balance sheet
classification
 
Fair value
hierarchy
level
 
Carrying
Amount
 
Estimated
Fair
Value
 
Carrying
Amount
 
Estimated
Fair
Value
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments including money market funds
Cash and cash
equivalents
(a)
 
1
 
$
891

 
$
891

 
$
221

 
$
221

Time deposits
Cash and cash
equivalents
(a)
 
2
 
182

 
182

 
115

 
115

Commodity purchase swaps contracts
Prepaid expenses and other current assets
 
2
 
2

 
2

 
1

 
1

Foreign exchange forward contracts
Prepaid expenses and other current assets
 
2
 
1

 
1

 

 

Trust assets for nonqualified deferred compensation plans
Other assets
 
1
 
84

 
84

 
72

 
72

 
 
 
 
 
$
1,160

 
$
1,160

 
$
409

 
$
409

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Notes and loans payable
Notes and loans payable (b)
 
2
 
$
1,066

 
$
1,066

 
$
404

 
$
404

Commodity purchase swaps contracts
Accounts payable and
accrued liabilities
 
2
 

 

 
1

 
1

Foreign exchange forward contracts
Accounts payable and
accrued liabilities
 
2
 

 

 
1

 
1

Current maturities of long-term debt
and Long-term debt
Current maturities of long-
term debt and Long-term
debt
(c)
 
2
 
1,789

 
1,797

 
1,791

 
1,855

 
 
 
 
 
$
2,855

 
$
2,863

 
$
2,197

 
$
2,261

____________________

(a)
Cash and cash equivalents are composed of time deposits and other interest bearing investments including money market funds with original maturity dates of 90 days or less. Cash and cash equivalents are recorded at cost, which approximates fair value.
(b)
Notes and loans payable is composed of U.S. commercial paper and/or other similar short-term debt issued by non-U.S. subsidiaries, all of which are recorded at cost, which approximates fair value.
(c)
Current maturities of long-term debt and Long-term debt are recorded at cost. The fair value of Long-term debt, including current maturities, was determined using secondary market prices quoted by corporate bond dealers, and is classified as Level 2.
v3.8.0.1
DEBT
9 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
DEBT
DEBT

In September 2017, the Company issued $400 of senior notes with an annual fixed interest rate of 3.10% and a maturity date of October 1, 2027. Interest on the notes is payable semi-annually in April and October. The notes carry an effective interest rate of 3.13%, which includes the impact of amortizing debt issuance costs and the gain on the interest rate forward contracts over the life of the notes. The notes rank equally with all of the Company's existing senior indebtedness. Additionally, the Company entered into, and subsequently terminated, interest rate forward contracts with a notional amount of $200 related to the issuance, which resulted in an insignificant gain to Accumulated other comprehensive net (losses) income.

The proceeds from the debt issuance were used to repay commercial paper in September 2017. In October 2017, the Company used commercial paper borrowings to repay its $400 senior notes with an annual fixed interest rate of 5.95%.

On March 26, 2018, the Company entered into a $250 revolving credit agreement that matures in March 2019. The Company also maintains a $1,100 revolving credit agreement that matures in February 2022. There were no borrowings under these credit agreements as of March 31, 2018 and the Company believes that borrowings under these credit agreements are and will continue to be available for general corporate purposes. The credit agreements include certain restrictive covenants and limitations, with which the Company was in compliance as of March 31, 2018.
v3.8.0.1
OTHER LIABILITIES
9 Months Ended
Mar. 31, 2018
Other Liabilities Disclosure [Abstract]  
OTHER LIABILITIES
OTHER LIABILITIES
Other liabilities consisted of the following as of:
 
3/31/2018
 
6/30/2017
Venture agreement terminal obligation, net
$
334

 
$
317

Employee benefit obligations
292

 
298

Taxes
48

 
42

Other
104

 
113

Total
$
778

 
$
770


Venture Agreement
The Company has an agreement with The Procter & Gamble Company (P&G) for the Company’s Glad® bags, wraps and containers business. In connection with this agreement, P&G provides research and development (R&D) support to the Glad® business. As of March 31, 2018 and June 30, 2017, P&G had a 20% interest in the venture. The Company pays a royalty to P&G for its interest in the profits, losses and cash flows, as contractually defined, of the Glad® business, which is included in Cost of products sold. In December 2017, the Company and P&G extended the term of the agreement and the related R&D support provided by P&G. The term will now expire in January 2026, unless the parties agree, on or prior to January 31, 2025, to further extend the term of the agreement for another seven years or agree to take some other relevant action. The agreement can be terminated under certain circumstances, including at P&G’s option upon a change in control of the Company or, at either party’s option, upon the sale of the Glad® business by the Company.

Upon termination of the agreement, the Company is required to purchase P&G’s 20% interest for cash at fair value as established by predetermined valuation procedures. As of March 31, 2018 and June 30, 2017, the estimated fair value of P&G’s interest was $630 and $458, respectively, of which $334 and $317, respectively, has been recognized and is reflected in Other liabilities, as noted in the table above. The difference between the estimated fair value and the amount recognized, and any future changes in the fair value of P&G’s interest, is charged to Cost of products sold in accordance with the effective interest method over the remaining life of the agreement. Following termination, the Glad® business will retain the exclusive core intellectual property licenses contributed by P&G on a royalty-free basis for the licensed products marketed.
v3.8.0.1
INCOME TAXES
9 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
In determining its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The effective tax rate on earnings from continuing operations was 25.5% and 19.0% for the three and nine months ended March 31, 2018, respectively, and 30.2% and 32.1% for the three and nine months ended March 31, 2017, respectively. The decrease in the effective tax rate on earnings from continuing operations for the current three- and nine-month periods was primarily due to the enactment of the Tax Act during the second quarter of fiscal year 2018 (the period of the Tax Act's enactment).

The Tax Act was signed into law by the President of the United States on December 22, 2017. The Tax Act makes significant changes to U.S. tax law, and includes a reduction of U.S. corporation statutory income tax rates from 35% to 21% effective January 1, 2018. Under the Tax Act, the Company is subject to an average federal statutory tax rate of 28.1% for its fiscal year ending June 30, 2018. The Company’s federal statutory tax rate will be 21.0% beginning in July 2018 for the fiscal year ending June 30, 2019. The Tax Act also includes, among other things, a one-time transition tax on accumulated foreign earnings and the adoption of a modified territorial approach to the taxation of future foreign earnings.

Under U.S. GAAP, deferred taxes must be adjusted for enacted changes in tax laws or rates during the period in which new tax legislation is enacted. As of March 31, 2018, the Company continued to obtain, prepare and analyze information necessary to finalize the accounting for the impacts of the Tax Act. Consequently, reasonable estimates of the impacts of the Tax Act on the Company’s deferred tax balances and one-time transition tax have been reported as provisional, as defined in Staff Accounting Bulletin No. 118.

Based on the provisions of the Tax Act, the Company provisionally remeasured its net deferred tax liabilities to incorporate the future lower corporate tax rate resulting in a $33 reduction to net deferred tax liabilities in the period of the Tax Act's enactment. In addition, remeasurements specifically related to the reversal of deferred tax liabilities for U.S. tax on foreign unremitted earnings, related deferred foreign tax credits and related unrealized foreign exchange gains and losses, reduced the Company’s net deferred tax liability by a provisional amount of $27. These reductions in the net deferred tax liabilities were recognized as a benefit in the Company’s provision for income taxes. The Company is continuing to analyze certain aspects of the Tax Act and is refining its calculations which could potentially affect the measurements of these balances or potentially give rise to new deferred tax amounts. The total provisional amounts related to the remeasurement of the Company’s deferred tax balances resulted in a $60 beneficial impact in the period of the Tax Act's enactment.

A provisional, one-time transition tax expense on accumulated foreign earnings, net of applicable foreign tax credits, of $7 was recognized in the Company’s provision for income taxes in the period of the Tax Act's enactment. This amount may change as the Company continues to finalize the calculation of post-1986 foreign earnings and profits previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets. This amount may also change as new guidance and clarifications are issued by the Internal Revenue Service. The Company anticipates that it will be able to utilize existing foreign tax credit carryforwards to fully offset its one-time transition tax liability.

The impact recognized in the period of the Tax Act's enactment also included a provisional $28 benefit related to current year taxable income. Taken together, total benefits of $81 were recorded in the period of the Tax Act's enactment and were due to several provisional adjustments including net deferred tax liability reductions of $60, a beneficial current taxable income impact of $28 and a provisional one-time transition tax of $7. Measurement adjustments to the provisional amounts were not significant for the third quarter of fiscal year 2018.

Per U.S. GAAP, foreign withholding taxes are not provided when foreign earnings are indefinitely reinvested. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion. Through the second quarter of fiscal year 2018, the Company had determined that the undistributed earnings of a number of its foreign subsidiaries were indefinitely reinvested. In the third quarter of fiscal year 2018, the Company made the determination that none of the undistributed earnings of its foreign subsidiaries were indefinitely reinvested due to the passage of the Tax Act, which significantly reduced the cost of U.S. repatriation. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable, which has no significant impact on the Company’s consolidated results.
v3.8.0.1
NET EARNINGS PER SHARE (EPS)
9 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
NET EARNINGS PER SHARE (EPS)
NET EARNINGS PER SHARE (EPS)
The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Basic
129,694
 
128,752

 
129,357
 
128,899

Dilutive effect of stock options and other
2,206
 
2,610

 
2,346
 
2,500
Diluted
131,900
 
131,362

 
131,703
 
131,399

 
 
 
 
 
 
 
 
Antidilutive stock options and other
1,136
 
5

 
1,136
 
44



The Company has two share repurchase programs: an open-market purchase program with an authorized aggregate purchase amount of up to $750, all of which was available for share repurchases as of March 31, 2018, and a program to offset the anticipated impact of share dilution related to share-based awards (the Evergreen Program), which has no authorization limit as to amount or timing of repurchases. There were no share repurchases under the open-market purchase program during either of the three and nine months ended March 31, 2018 and 2017.

Share repurchases under the Evergreen Program were as follows during the three and nine months ended March 31:
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
 
Amount
 
Shares (in 000's)
 
Amount
 
Shares (in 000's)
 
Amount
 
Shares (in 000's)
 
Amount
 
Shares (in 000's)
Evergreen Program
$

 

 
$

 

 
$
63

 
476

 
$
183

 
1,455

v3.8.0.1
COMPREHENSIVE INCOME
9 Months Ended
Mar. 31, 2018
Stockholders' Equity Note [Abstract]  
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME
The following table provides a summary of Comprehensive income for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Earnings from continuing operations
$
181

 
$
172

 
$
606

 
$
501

Earnings (losses) from discontinued operations, net of tax

 

 

 
(1
)
Net earnings
181

 
172

 
606

 
500

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(4
)
 
13

 
6

 
(5
)
Net unrealized gains (losses) on derivatives
2

 

 
10

 
7

Pension and postretirement benefit adjustments
1

 
1

 
2

 
3

Total other comprehensive income (loss), net of tax
(1
)
 
14

 
18

 
5

Comprehensive income
$
180

 
$
186

 
$
624

 
$
505


Changes in Accumulated other comprehensive net (losses) income by component were as follows for the nine months ended March 31:
 
Foreign currency translation adjustments
 
Net unrealized gains (losses) on derivatives
 
Pension and postretirement benefit adjustments
 
Accumulated other comprehensive (losses) income
Balance as of June 30, 2016
$
(353
)
 
$
(44
)
 
$
(173
)
 
$
(570
)
Other comprehensive income (loss) before reclassifications
(6
)
 
(2
)
 

 
(8
)
Amounts reclassified from Accumulated other comprehensive net losses

 
9

 
6

 
15

Income tax benefit (expense)
1

 

 
(3
)
 
(2
)
Net current period other comprehensive income (loss)
(5
)
 
7

 
3

 
5

Balance as of March 31, 2017
$
(358
)
 
$
(37
)
 
$
(170
)
 
$
(565
)
Balance as of June 30, 2017
$
(356
)
 
$
(37
)
 
$
(150
)
 
$
(543
)
Other comprehensive income (loss) before reclassifications
9

 
6

 

 
15

Amounts reclassified from Accumulated other comprehensive net losses

 
6

 
4

 
10

Income tax benefit (expense)
(3
)
 
(2
)
 
(2
)
 
(7
)
Net current period other comprehensive income (loss)
6

 
10

 
2

 
18

Balance as of March 31, 2018
$
(350
)
 
$
(27
)
 
$
(148
)
 
$
(525
)



Included in foreign currency translation adjustments are re-measurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. For the three and nine months ended March 31, 2018, Other comprehensive income (loss) on these loans totaled $0 and $(3), respectively. For the three and nine months ended March 31, 2017, Other comprehensive income (loss) on these loans totaled $4 and $0, respectively. There were no amounts reclassified from Accumulated other comprehensive net (losses) income for the periods presented.
v3.8.0.1
EMPLOYEE BENEFIT PLANS
9 Months Ended
Mar. 31, 2018
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]  
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS
The following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Service cost
$
1

 
$
1

 
$
1

 
$
1

Interest cost
6

 
5

 
17

 
16

Expected return on plan assets (1)
(5
)
 
(5
)
 
(14
)
 
(15
)
Amortization of unrecognized items
2

 
2

 
7

 
8

Total
$
4

 
$
3

 
$
11

 
$
10

(1) The weighted average long-term expected rate of return on plan assets used in computing the fiscal year 2018 net periodic benefit cost is 4.42%.
During the three and nine months ended March 31, 2018, the Company made $15 and $19 in contributions to the domestic retirement income plans, respectively. For the three and nine months ended March 31, 2017, the Company made $10 and $29 in contributions to the domestic retirement income plans, respectively.
v3.8.0.1
OTHER CONTINGENCIES AND GUARANTEES
9 Months Ended
Mar. 31, 2018
OTHER CONTINGENCIES AND GUARANTEES [Abstract]  
OTHER CONTINGENCIES AND GUARANTEES
OTHER CONTINGENCIES AND GUARANTEES
Contingencies
The Company is involved in certain environmental matters, including response actions at various locations. The Company had recorded liabilities totaling $28 as of March 31, 2018 and June 30, 2017, for its share of aggregate future remediation costs related to these matters.
One matter, which accounted for $14 of the recorded liability as of March 31, 2018 and June 30, 2017, relates to environmental costs associated with one of the Company’s former operations at a site located in Alameda County, California. In November 2016, at the request of regulators and with the assistance of environmental consultants, the Company submitted a Feasibility Study that evaluated various options for managing the site and included estimates of the related costs. As a result, the Company recorded in Other (income) expense, net an undiscounted liability for costs estimated to be incurred over a 30-year period, based on the option recommended in the Feasibility Study. However, as a result of ongoing discussions with regulators, in June 2017, the Company increased its recorded liability to $14, which reflects anticipated costs to implement additional remediation measures at this site. While the Company believes its latest estimate is reasonable, regulators could require the Company to implement one of the other options evaluated in the Feasibility Study, with estimated undiscounted costs of up to $28 over an estimated 30-year period, or require the Company to take other actions and incur costs not included in the study.
Another matter in Dickinson County, Michigan, at the site of one of the Company's former operations for which the Company is jointly and severally liable, accounted for $12 of the recorded liability, as of March 31, 2018 and June 30, 2017. This amount reflects the Company's agreement to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing arrangement with a third party. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded for the Dickinson County matter, any amount of such additional exposures, or range of exposures, is not estimable at this time. The Company's estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements, and the future availability of alternative clean-up technologies.
The Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements, product liability, patents and trademarks, advertising, labor and employment, environmental, health and safety and other matters. With respect to these proceedings, claims and other loss contingencies, while considerable uncertainty exists, in the opinion of management at this time, the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.
Guarantees
In conjunction with divestitures and other transactions, the Company may provide typical indemnifications (e.g., indemnifications for representations and warranties and retention of previously existing environmental, tax and employee liabilities) that have terms that vary in duration and in the potential amount of the total obligation and, in many circumstances, are not explicitly defined. The Company has not made, nor does it believe that it is probable that it will make, any material payments relating to its indemnifications, and believes that any reasonably possible payments would not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.
The Company had not recorded any liabilities on the aforementioned guarantees as of March 31, 2018 and June 30, 2017.
As of March 31, 2018, the Company was a party to letters of credit of $9 primarily related to one of its insurance carriers, of which $0 had been drawn upon.
v3.8.0.1
SEGMENT RESULTS
9 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
SEGMENT RESULTS
SEGMENT RESULTS
The Company operates through strategic business units that are aggregated into four reportable segments based on the economics and nature of the products sold: Cleaning, Household, Lifestyle and International.
Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, other investments and deferred taxes.
The table below presents reportable segment information and a reconciliation of the segment information to the Company’s consolidated Net sales and Earnings from continuing operations before income taxes, with amounts that are not allocated to the reportable segments reflected in Corporate.
 
Net sales
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Cleaning
$
513

 
$
497

 
$
1,544

 
$
1,500

Household
493

 
486

 
1,344

 
1,329

Lifestyle
252

 
246

 
766

 
742

International
259

 
248

 
779

 
755

Corporate

 

 

 

Total
$
1,517

 
$
1,477

 
$
4,433

 
$
4,326

 
 
 
 
 
 
 
 
 
Earnings (losses) from continuing operations before income taxes
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Cleaning
$
135

 
$
132

 
$
428

 
$
400

Household
88

 
106

 
215

 
246

Lifestyle
55

 
51

 
188

 
190

International
23

 
20

 
69

 
75

Corporate
(59
)
 
(62
)
 
(152
)
 
(173
)
Total
$
242

 
$
247

 
$
748

 
$
738



All intersegment sales are eliminated and are not included in the Company’s reportable segments’ net sales.
Net sales to the Company’s largest customer, Wal-Mart Stores, Inc. and its affiliates, as a percentage of consolidated net sales, were 25% and 26% for the three and nine months ended March 31, 2018, respectively, and 27% and 26% for the three and nine months ended March 31, 2017, respectively.
In August 2017, the Company sold the Aplicare business, previously reported in the Cleaning reportable segment. For the fiscal year ended June 30, 2017, the Aplicare business had net sales of $46 and insignificant net earnings excluding the $21 non-cash impairment charge recorded in December 2016.
In January 2017, the Company sold an Australian distribution facility, previously reported in the International reportable segment, which resulted in $23 in cash proceeds from investing activities and a gain of $(10) recorded in Other (income) expense, net, on the condensed consolidated statement of earnings.
v3.8.0.1
SUBSEQUENT EVENTS
9 Months Ended
Mar. 31, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS
On April 2, 2018, the Company acquired 100 percent of Nutranext, a health and wellness company based in Sunrise, Florida. Nutranext manufactures and markets leading dietary supplement brands in the retail and e-commerce channels as well as in its direct-to-consumer business. The purchase of the business reflects the Company's strategy to acquire leading brands in fast-growing categories with attractive gross margins and a focus on health and wellness.
The total purchase price was $700, but may ultimately be adjusted for any cash acquired, working capital adjustments and any amounts to be paid by the Company pending final cash settlements. The Company funded the closing of the transaction through commercial paper borrowings.
Purchase accounting for this acquisition will be included in the Company’s fourth fiscal quarter results subject to customary closing adjustments. Pro forma results reflecting the acquisition will not be presented because the acquisition is not significant to the Company’s consolidated financial results.
v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three and nine months ended March 31, 2018 and 2017, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its subsidiaries (the Company) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2017, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.
Recently Issued Accounting Standards
Recently Issued Accounting Standards

Recently Issued Accounting Standards not yet adopted

In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which amends its guidance to allow a reclassification from Accumulated Other Comprehensive Income to Retained Earnings for the stranded income tax effects resulting from The Tax Cuts and Jobs Act (the Tax Act). The amendments are effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will potentially have on its consolidated financial statements.
In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which amends the hedge accounting recognition and presentation requirements to better align an entity’s risk management activities with its financial reporting. This standard also simplifies the application of hedge accounting in certain situations. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires the presentation of the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. This standard also requires that other components of the net periodic benefit cost be presented separately from the line item(s) that includes service costs and outside of any subtotal of operating income, if one is presented, on a retrospective basis. Additionally, the new guidance limits the components that are eligible for capitalization in assets to only the service cost component. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2019. The Company is currently evaluating the impact that adoption of this guidance will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2021, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize a right-of-use asset and a lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation will depend on the classification of a lease as either a finance or an operating lease. ASU 2016-02 also requires expanded disclosures about leasing arrangements. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which replaces most of the existing U.S. GAAP revenue recognition guidance and is intended to improve and converge with international standards on the financial reporting requirements for revenue from contracts with customers. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers, including information about significant judgments and changes in judgments. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2019, and is expected to be applied on a modified retrospective basis.

Based on the Company's preliminary assessment, the adoption of the standard is not expected to have a significant impact on its annual consolidated financial statements; however, there may be an impact on the Company's financial results in interim periods due to the timing of recognition for certain trade promotion spending. As the Company completes its overall assessment, it is also identifying potential changes to its accounting policies, business processes, systems and controls to align with the new revenue recognition guidance and disclosure requirements.

Recently Adopted Accounting Standards

In March 2018, the FASB issued ASU No. 2018-05, “Income Taxes (Topic 740)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” which amends its guidance to address the initial accounting for the income tax effects of the Tax Act, which was enacted on December 22, 2017 (enactment date). This new guidance allows reasonable estimates of income tax effects to be reported as provisional amounts during the measurement period, which is one year from the enactment date, when the necessary information is not available, prepared, or analyzed in sufficient detail to complete the accounting. The amendments also added specific disclosure requirements. The Company has adopted this new guidance. The Company recorded $81 of provisional benefits in the second quarter of fiscal year 2018. Refer to Note 7 to the Condensed Consolidated Financial Statements for more information.
Fair Value Measurements
Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis in the condensed consolidated balance sheets are required to be classified and disclosed in one of the following three categories of the fair value hierarchy:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.

As of March 31, 2018 and June 30, 2017, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.
Segment Results
The Company operates through strategic business units that are aggregated into four reportable segments based on the economics and nature of the products sold: Cleaning, Household, Lifestyle and International.
Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, other investments and deferred taxes.
v3.8.0.1
INVENTORIES, NET (Tables)
9 Months Ended
Mar. 31, 2018
Inventory Disclosure [Abstract]  
Schedule of Inventories, Net
Inventories, net, consisted of the following as of:
 
3/31/2018
 
6/30/2017
Finished goods
$
415

 
$
363

Raw materials and packaging
114

 
119

Work in process
5

 
3

LIFO allowances
(26
)
 
(26
)
Total
$
508

 
$
459

v3.8.0.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)
9 Months Ended
Mar. 31, 2018
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS [Abstract]  
Effects of Derivative Instruments Designated as Hedging Instruments on OCI
The effects of derivative instruments designated as hedging instruments on Other comprehensive income and Net earnings were as follows:

 
Gains (losses) recognized in Other comprehensive income
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Commodity purchase derivative contracts
$

 
$
(3
)
 
$
3

 
$
(2
)
Foreign exchange derivative contracts
1

 
(1
)
 
1

 

Interest rate derivative contracts

 

 
2

 

Total
$
1

 
$
(4
)
 
$
6

 
$
(2
)
Effects of Derivative Instruments Designated as Hedging Instruments on Net Earnings
 
Gains (losses) reclassified from Accumulated other comprehensive net (losses) income and recognized in Net earnings
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Commodity purchase derivative contracts
$

 
$

 
$

 
$
(1
)
Foreign exchange derivative contracts

 

 
(1
)
 
(3
)
Interest rate derivative contracts
(1
)
 
(2
)
 
(5
)
 
(5
)
Total
$
(1
)
 
$
(2
)
 
$
(6
)
 
$
(9
)
Schedule of Assets and Liabilities for Fair Value Disclosure
The following table summarizes the fair value of the Company’s assets and liabilities for which disclosure of fair value is required:
 
 
 
 
 
3/31/2018
 
6/30/2017
 
Balance sheet
classification
 
Fair value
hierarchy
level
 
Carrying
Amount
 
Estimated
Fair
Value
 
Carrying
Amount
 
Estimated
Fair
Value
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments including money market funds
Cash and cash
equivalents
(a)
 
1
 
$
891

 
$
891

 
$
221

 
$
221

Time deposits
Cash and cash
equivalents
(a)
 
2
 
182

 
182

 
115

 
115

Commodity purchase swaps contracts
Prepaid expenses and other current assets
 
2
 
2

 
2

 
1

 
1

Foreign exchange forward contracts
Prepaid expenses and other current assets
 
2
 
1

 
1

 

 

Trust assets for nonqualified deferred compensation plans
Other assets
 
1
 
84

 
84

 
72

 
72

 
 
 
 
 
$
1,160

 
$
1,160

 
$
409

 
$
409

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Notes and loans payable
Notes and loans payable (b)
 
2
 
$
1,066

 
$
1,066

 
$
404

 
$
404

Commodity purchase swaps contracts
Accounts payable and
accrued liabilities
 
2
 

 

 
1

 
1

Foreign exchange forward contracts
Accounts payable and
accrued liabilities
 
2
 

 

 
1

 
1

Current maturities of long-term debt
and Long-term debt
Current maturities of long-
term debt and Long-term
debt
(c)
 
2
 
1,789

 
1,797

 
1,791

 
1,855

 
 
 
 
 
$
2,855

 
$
2,863

 
$
2,197

 
$
2,261

____________________

(a)
Cash and cash equivalents are composed of time deposits and other interest bearing investments including money market funds with original maturity dates of 90 days or less. Cash and cash equivalents are recorded at cost, which approximates fair value.
(b)
Notes and loans payable is composed of U.S. commercial paper and/or other similar short-term debt issued by non-U.S. subsidiaries, all of which are recorded at cost, which approximates fair value.
(c)
Current maturities of long-term debt and Long-term debt are recorded at cost. The fair value of Long-term debt, including current maturities, was determined using secondary market prices quoted by corporate bond dealers, and is classified as Level 2.
v3.8.0.1
OTHER LIABILITIES (Tables)
9 Months Ended
Mar. 31, 2018
Other Liabilities Disclosure [Abstract]  
Summary of Other Liabilities
Other liabilities consisted of the following as of:
 
3/31/2018
 
6/30/2017
Venture agreement terminal obligation, net
$
334

 
$
317

Employee benefit obligations
292

 
298

Taxes
48

 
42

Other
104

 
113

Total
$
778

 
$
770

v3.8.0.1
NET EARNINGS PER SHARE (EPS) (Tables)
9 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
Schedule of Weighted Average Number of Shares Outstanding and Antidilutive Shares
The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Basic
129,694
 
128,752

 
129,357
 
128,899

Dilutive effect of stock options and other
2,206
 
2,610

 
2,346
 
2,500
Diluted
131,900
 
131,362

 
131,703
 
131,399

 
 
 
 
 
 
 
 
Antidilutive stock options and other
1,136
 
5

 
1,136
 
44

Schedule of Share Repurchases Under Authorized Programs
Share repurchases under the Evergreen Program were as follows during the three and nine months ended March 31:
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
 
Amount
 
Shares (in 000's)
 
Amount
 
Shares (in 000's)
 
Amount
 
Shares (in 000's)
 
Amount
 
Shares (in 000's)
Evergreen Program
$

 

 
$

 

 
$
63

 
476

 
$
183

 
1,455

v3.8.0.1
COMPREHENSIVE INCOME (Tables)
9 Months Ended
Mar. 31, 2018
Stockholders' Equity Note [Abstract]  
Schedule of Comprehensive Income
The following table provides a summary of Comprehensive income for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Earnings from continuing operations
$
181

 
$
172

 
$
606

 
$
501

Earnings (losses) from discontinued operations, net of tax

 

 

 
(1
)
Net earnings
181

 
172

 
606

 
500

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(4
)
 
13

 
6

 
(5
)
Net unrealized gains (losses) on derivatives
2

 

 
10

 
7

Pension and postretirement benefit adjustments
1

 
1

 
2

 
3

Total other comprehensive income (loss), net of tax
(1
)
 
14

 
18

 
5

Comprehensive income
$
180

 
$
186

 
$
624

 
$
505

Schedule of Changes in Accumulated Other Comprehensive Net (Losses) Income
Changes in Accumulated other comprehensive net (losses) income by component were as follows for the nine months ended March 31:
 
Foreign currency translation adjustments
 
Net unrealized gains (losses) on derivatives
 
Pension and postretirement benefit adjustments
 
Accumulated other comprehensive (losses) income
Balance as of June 30, 2016
$
(353
)
 
$
(44
)
 
$
(173
)
 
$
(570
)
Other comprehensive income (loss) before reclassifications
(6
)
 
(2
)
 

 
(8
)
Amounts reclassified from Accumulated other comprehensive net losses

 
9

 
6

 
15

Income tax benefit (expense)
1

 

 
(3
)
 
(2
)
Net current period other comprehensive income (loss)
(5
)
 
7

 
3

 
5

Balance as of March 31, 2017
$
(358
)
 
$
(37
)
 
$
(170
)
 
$
(565
)
Balance as of June 30, 2017
$
(356
)
 
$
(37
)
 
$
(150
)
 
$
(543
)
Other comprehensive income (loss) before reclassifications
9

 
6

 

 
15

Amounts reclassified from Accumulated other comprehensive net losses

 
6

 
4

 
10

Income tax benefit (expense)
(3
)
 
(2
)
 
(2
)
 
(7
)
Net current period other comprehensive income (loss)
6

 
10

 
2

 
18

Balance as of March 31, 2018
$
(350
)
 
$
(27
)
 
$
(148
)
 
$
(525
)
v3.8.0.1
EMPLOYEE BENEFIT PLANS (Tables)
9 Months Ended
Mar. 31, 2018
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]  
Schedule of Components of Net Periodic Benefit Cost
The following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:
 
Three Months Ended
 
Nine Months Ended
 
3/31/2018
 
3/31/2017
 
3/31/2018
 
3/31/2017
Service cost
$
1

 
$
1

 
$
1

 
$
1

Interest cost
6

 
5

 
17