CLOROX CO /DE/, 10-Q filed on 11/2/2016
Quarterly Report
Document and Entity Information
3 Months Ended
Sep. 30, 2016
Oct. 19, 2016
Document And Entity Information
 
 
Entity Registrant Name
CLOROX CO /DE/ 
 
Entity Central Index Key
0000021076 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2016 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--06-30 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
128,743,698 
Document Fiscal Period Focus
Q1 
 
Document Fiscal Year Focus
2017 
 
Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Income Statement [Abstract]
 
 
Net sales
$ 1,443 
$ 1,390 
Cost of products sold
803 
765 
Gross profit
640 
625 
Selling and administrative expenses
200 
186 
Advertising costs
128 
123 
Research and development costs
31 
30 
Interest expense
22 
23 
Other (income) expense, net
(5)
(1)
Earnings from continuing operations before income taxes
264 
264 
Income taxes on continuing operations
85 
91 
Earnings from continuing operations
179 
173 
Earnings (losses) from discontinued operations, net of tax
(1)
Net earnings
179 
172 
Net earnings (losses) per share, Basic
 
 
Continuing operations
$ 1.39 
$ 1.34 
Discontinued operations
$ 0.00 
$ (0.01)
Basic net earnings per share
$ 1.39 
$ 1.33 
Net earnings (losses) per share, Diluted
 
 
Continuing operations
$ 1.36 
$ 1.32 
Discontinued operations
$ 0.00 
$ (0.01)
Diluted net earnings per share
$ 1.36 
$ 1.31 
Weighted average shares outstanding (in thousands)
 
 
Basic
129,449 
129,155 
Diluted
132,193 
131,220 
Dividend declared per share
$ 0.80 
$ 0.77 
Comprehensive income
$ 182 
$ 133 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Jun. 30, 2016
Current assets
 
 
Cash and cash equivalents
$ 408 
$ 401 1
Receivables, net
494 
569 1
Inventories, net
465 
443 1
Other current assets
49 
72 1
Total current assets
1,416 
1,485 1
Property, plant and equipment, net of accumulated depreciation and amortization of $1,944 and $1,911 respectively
917 
906 1
Goodwill
1,196 
1,197 1
Trademarks, net
657 
657 1
Other intangible assets, net
76 
78 1
Other assets
204 
187 1
Total assets
4,466 
4,510 1
Current liabilities
 
 
Notes and loans payable
618 
523 1
Current maturities of long-term debt
1
Accounts payable and accrued liabilities
874 
1,035 1
Income taxes payable
30 
1
Total current liabilities
1,522 
1,558 1
Long-term debt
1,789 
1,789 1
Other liabilities
783 
784 1
Deferred income taxes
83 
82 1
Total liabilities
4,177 
4,213 1
Commitments and contingencies
   
   1
Stockholders' equity
 
 
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding
1
Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares issued as of both September 30, 2016 and June 30, 2016; and 128,707,796 and 129,355,263 shares outstanding as of September 30, 2016 and June 30, 2016, respectively
159 
159 1
Additional paid-in capital
881 
868 1
Retained earnings
2,238 
2,163 1
Treasury shares, at cost: 30,033,665 and 29,386,198 shares as of September 30, 2016 and June 30, 2016, respectively
(2,422)
(2,323)1
Accumulated other comprehensive net (losses) income
(567)
(570)1
Stockholders' equity
289 
297 1
Total liabilities and stockholders' equity
$ 4,466 
$ 4,510 1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2016
Jun. 30, 2016
Statement of Financial Position [Abstract]
 
 
Property, plant and equipment, accumulated depreciation and amortization
$ 1,944 
$ 1,911 
Preferred stock, par value
$ 1.00 
$ 1.00 
Preferred stock, shares authorized
5,000,000 
5,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 1.00 
$ 1.00 
Common stock, shares authorized
750,000,000 
750,000,000 
Common stock, shares issued
158,741,461 
158,741,461 
Common stock, shares outstanding
128,707,796 
129,355,263 
Treasury stock, shares
30,033,665 
29,386,198 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Operating activities:
 
 
Net earnings
$ 179 
$ 172 
Deduct: Losses from discontinued operations, net of tax
(1)
Earnings from continuing operations
179 
173 
Adjustments to reconcile earnings from continuing operations to net cash provided by continuing operations:
 
 
Depreciation and amortization
41 
41 
Share-based compensation
12 
Deferred income taxes
(2)
(5)
Other
(14)
(5)
Changes in:
 
 
Receivables, net
74 
39 
Inventories, net
(23)
(30)
Other current assets
(6)
(10)
Accounts payable and accrued liabilities
(153)
(95)
Income taxes payable
62 
18 
Net cash provided by continuing operations
170 
135 
Net cash provided by discontinued operations
12 
Net cash provided by operations
170 
147 
Investing activities:
 
 
Capital expenditures
(59)
(28)
Other
12 
Net cash used for investing activities
(58)
(16)
Financing activities:
 
 
Notes and loans payable, net
95 
36 
Treasury stock purchased
(110)
(103)
Cash dividends paid
(104)
(99)
Issuance of common stock for employee stock plans and other
15 
46 
Net cash used for financing activities
(104)
(120)
Effect of exchange rate changes on cash and cash equivalents
(1)
(10)
Net increase in cash and cash equivalents
Cash and cash equivalents:
 
 
Beginning of period
401 1
382 
End of period
$ 408 
$ 383 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2016 and 2015, 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.

Effective September 22, 2014, the Company’s Venezuela affiliate, Corporación Clorox de Venezuela S.A. (Clorox Venezuela), discontinued its operations. Consequently, the Company reclassified the financial results of Clorox Venezuela as a discontinued operation in the condensed consolidated financial statements for all periods presented herein.

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, 2016, which includes a complete set of footnote disclosures including the Company’s significant accounting policies.

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for share-based payment transactions, including requiring excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the consolidated statement of earnings. Additionally, the standard requires cash flows from excess tax benefits and deficiencies, previously classified as a financing activity, to be classified as an operating activity in the consolidated statement of cash flows. The Company adopted this guidance in the first quarter of fiscal year 2017. Excess tax benefits of $6 were recognized in the consolidated statement of earnings and classified as an operating activity in the consolidated statement of cash flows during the three months ended September 30, 2016. The prior period consolidated statement of cash flows has not been adjusted as permitted. The adoption resulted in approximately a 2 percentage point benefit to the Company’s effective tax rate for the first quarter of fiscal year 2017. The guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The Company did not make this election and will continue to account for forfeitures on an estimated basis.

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 the 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 April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Cost,” which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this standard in the first quarter of fiscal year 2017 and retrospectively applied the standard to the June 30, 2016 consolidated balance sheet, resulting in an $8 reduction in Other assets and Long-term debt. The adoption had no impact on the Company’s consolidated statement of earnings or consolidated statement of cash flows.

In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis,” which changes the guidance for evaluating whether to consolidate certain legal entities. The amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities. The Company adopted this standard in the first quarter of fiscal year 2017. The adoption did not have an impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which replaces most existing U.S. GAAP revenue recognition guidance and is intended to improve and converge with international standards 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, with the option to early adopt in the first quarter of fiscal year 2018. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS

NOTE 2. DISCONTINUED OPERATIONS

On September 22, 2014, Clorox Venezuela announced that it was discontinuing its operations, effective immediately, and seeking to sell its assets. Since fiscal year 2012, Clorox Venezuela was 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.

Net sales for Clorox Venezuela were $0 for each of the three months ended September 30, 2016 and 2015.

The following table provides a summary of earnings (losses) from discontinued operations for Clorox Venezuela and earnings (losses) from discontinued operations other than Clorox Venezuela for the periods indicated:

    Three Months Ended
    9/30/2016   9/30/2015   
Operating losses from Clorox Venezuela before income taxes   $           -   $                   -  
Exit costs and other related expenses for Clorox Venezuela     -     -  
Total losses from Clorox Venezuela before income taxes     -     -  
Income tax benefit attributable to Clorox Venezuela     -     -  
Total losses from Clorox Venezuela, net of tax     -     -  
 
Gains (losses) from discontinued operations              
       other than Clorox Venezuela, net of tax     -     (1 )
Losses from discontinued operations, net of tax   $ -   $ (1 )
BUSINESSES ACQUIRED
BUSINESSES ACQUIRED

NOTE 3. BUSINESSES ACQUIRED

On May 2, 2016, the Company acquired 100 percent of ReNew Life Holdings Corporation (RenewLife), a leading brand in digestive health. The amount paid was $290 funded through commercial paper. The amount paid of $290 represents the aggregate purchase price less cash acquired. The purchase of the RenewLife business reflects the Company’s strategy to acquire leading brands with attractive margins in growth categories. Results for RenewLife’s U.S. business are reflected in the Household reportable segment and results for RenewLife’s international business are reflected in the International reportable segment.

The assets and liabilities of RenewLife were recorded at their respective estimated fair value as of the date of the acquisition using U.S. GAAP for business combinations. The excess of the purchase price over the fair value of the net identifiable assets acquired was allocated to goodwill. Goodwill recorded primarily reflects the value of expanding the Company’s portfolio further into the health and wellness arena.

The following table summarizes the estimated fair value of RenewLife’s assets acquired and liabilities assumed and related deferred income taxes as of the acquisition date. Due to the timing of the acquisition, the fair value of the assets acquired and liabilities assumed are based on a preliminary valuation and the Company’s estimates and assumptions are subject to change within the measurement period. The primary areas of the purchase price that are not yet finalized are related to goodwill and income taxes. The weighted-average estimated useful life of intangible assets subject to amortization is 15 years.

 

    RenewLife
Goodwill   $            137  
Trademarks     134  
Customer relationships     36  
Property, plant and equipment     3  
Working capital, net     41  
Deferred income taxes     (61 )
Purchase Price   $ 290  

Pro forma results reflecting the acquisition were not presented because the acquisition did not meet the threshold requirements for additional disclosure.

INVENTORIES, NET
INVENTORIES, NET

NOTE 4. INVENTORIES, NET

Inventories, net, consisted of the following as of:

    9/30/2016   6/30/2016
Finished goods   $         374     $           361  
Raw materials and packaging     114       111  
Work in process     3       3  
LIFO allowances     (26 )     (32 )
Total   $ 465     $ 443  

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

NOTE 5. FINANCIAL INSTRUMENTS AND 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 September 30, 2016 and June 30, 2016, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis during the applicable periods included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund certain of the Company’s nonqualified deferred compensation plans, which were classified as Level 1.

Financial Risk Management and Derivative Instruments

The Company is exposed to certain commodity, interest rate, foreign currency and counterparty 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 to fix the price of a portion of its forecasted raw material requirements. Contract maturities, which are generally no longer than 2 years, are matched to the length of the raw material purchase contracts. Commodity purchase contracts are measured at fair value using market quotations obtained from commodity futures exchanges or commodity derivative dealers.

As of September 30, 2016, the notional amount of commodity derivatives was $24, of which $14 related to jet fuel swaps and $10 related to soybean oil futures. As of June 30, 2016, the notional amount of commodity derivatives was $30, of which $16 related to jet fuel swaps and $14 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 $57 as of September 30, 2016, and $84 as of June 30, 2016.

Interest Rate Risk Management

The Company may also enter into over-the-counter interest rate derivative instruments to fix a portion of the benchmark interest rate prior to an anticipated issuance of fixed rate debt or to manage the Company’s level of fixed and floating rate debt. The interest rate derivative instruments are measured at fair value using information quoted by U.S. government bond dealers.

As of both September 30, 2016 and June 30, 2016, the Company had no interest rate derivative instruments.

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 derivative instruments of $3 and $5 reflected in Accounts payable and accrued liabilities as of September 30, 2016 and June 30, 2016, respectively, $2 and $4, respectively, contained such terms. As of both September 30, 2016 and June 30, 2016, 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 September 30, 2016 and June 30, 2016, 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 September 30, 2016 and June 30, 2016, the Company maintained cash margin balances related to exchange-traded futures contracts of $1, which are classified as Other current assets on 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 certain of its nonqualified deferred compensation plans. The participants in the 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. These 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 of Financial Instruments

The following table summarizes the fair value of the Company’s assets and liabilities for which disclosure of fair value is required:

            9/30/2016   6/30/2016
    Balance sheet
classification
  Fair value
hierarchy
level
  Carrying
Amount
  Estimated
Fair
Value
  Carrying
Amount
  Estimated
Fair
Value
Assets                                
Investments including money market   Cash and cash                            
funds   equivalents (a)   1   $ 253   $ 253   $ 234   $ 234
Time deposits   Cash and cash                            
    equivalents (a)   2     76     76     79     79
Commodity purchase derivative contracts   Other current assets   1     1     1     1     1
Foreign exchange derivative contracts   Other current assets   2     1     1     1     1
Commodity purchase derivative contracts   Other assets   2     1     1     1     1
Trust assets for nonqualified deferred   Other assets                            
compensation plans       1     62     62     52     52
            $ 394   $ 394   $ 368   $ 368
 
Liabilities                                
Notes and loans payable   Notes and loans payable (b)   2   $ 618   $ 618   $ 523   $ 523
Commodity purchase derivative contracts   Accounts payable and                            
    accrued liabilities   2     1     1     1     1
Foreign exchange derivative contracts   Accounts payable and                            
    accrued liabilities   2     2     2     4     4
Current maturities of long-term debt   Current maturities of long-                            
and Long-term debt   term debt and Long-term                            
    debt (c)   2     1,789     1,911     1,789     1,922
            $ 2,410   $ 2,532   $ 2,317   $ 2,450

____________________

(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 debts 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, is determined using secondary market prices quoted by corporate bond dealers, and is classified as Level 2.

Derivatives

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

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

 

    Three Months Ended
    Gains (losses) recognized in
Other comprehensive income
    9/30/2016   9/30/2015
Commodity purchase derivative contracts   $                              -     $                              (7 )
Interest rate derivative contracts     -       -  
Foreign exchange derivative contracts     -       6  
Total   $ -     $ (1 )
 
    Three Months Ended
    Gains (losses) reclassified from
Accumulated other comprehensive loss and
recognized in Net earnings
    9/30/2016   9/30/2015
Commodity purchase derivative contracts   $ (1 )   $ 2  
Interest rate derivative contracts     (2 )     2  
Foreign exchange derivative contracts     (1 )     (1 )
Total   $ (4 )   $ 3  

The gains (losses) reclassified from Accumulated other comprehensive losses and recognized in Net earnings during the three months ended September 30, 2016 and 2015, 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 losses as of September 30, 2016, that is expected to be reclassified into Net earnings within the next twelve months is $8. 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 months ended September 30, 2016 and 2015, hedge ineffectiveness was not significant.

INCOME TAXES
INCOME TAXES

NOTE 6. 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 32.0% for the three months ended September 30, 2016, and 34.5% for the three months ended September 30, 2015. This decrease was primarily due to the recognition of excess tax benefits from share-based compensation upon the adoption of ASU No. 2016-09 in the first quarter of fiscal year 2017. Refer to Note 1 for further details.

NET EARNINGS PER SHARE (EPS)
NET EARNINGS PER SHARE (EPS)

NOTE 7. NET EARNINGS PER SHARE (EPS)

The following is a 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
    9/30/2016   9/30/2015
Basic   129,449   129,155
Dilutive effect of stock options and other   2,744   2,065
Diluted   132,193   131,220
 
Antidilutive stock options and other   -   1,271

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 September 30, 2016, 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.

Share repurchases under authorized programs were as follows during the three months ended September 30:

 

    Three Months Ended
    9/30/2016   9/30/2015
    Amount   Shares
(in 000's)
  Amount   Shares
(in 000's)
Open-market purchase programs   $      -   -   $      -   -
Evergreen Program     113   883     112   1,006
Total   $ 113   883   $ 112   1,006
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME

NOTE 8. COMPREHENSIVE INCOME

Comprehensive income was as follows for the periods indicated:

 

    Three Months Ended
    9/30/2016   9/30/2015
Earnings from continuing operations   $           179     $           173  
Earnings (losses) from discontinued operations, net of tax     -       (1 )
Net earnings     179       172  
Other comprehensive income (loss), net of tax:                
       Foreign currency translation adjustments     (1 )     (43 )
       Net unrealized gains (losses) on derivatives     3       3  
       Pension and postretirement benefit adjustments     1       1  
Total other comprehensive income (loss), net of tax     3       (39 )
Comprehensive income   $ 182     $ 133  

Changes in Accumulated other comprehensive net (losses) income by component were as follows for the three months ended September 30:

    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, 2015   $              (300 )   $                      (53 )   $                   (149 )   $                    (502 )
       Other comprehensive (loss) income before                                
       reclassifications     (41 )     -       -       (41 )
       Amounts reclassified from accumulated other                                
       comprehensive net losses     -       3       1       4  
       Income tax benefit (expense)     (2 )     -       -       (2 )
Net current period other comprehensive income (loss)     (43 )     3       1       (39 )
Balance as of September 30, 2015   $ (343 )   $ (50 )   $ (148 )   $ (541 )
 
Balance as of June 30, 2016   $ (353 )   $ (44 )   $ (173 )   $ (570 )
       Other comprehensive (loss) income before                                
       reclassifications     (1 )     -       -       (1 )
       Amounts reclassified from accumulated other                                
       comprehensive net losses     -       4       2       6  
       Income tax benefit (expense)     -       (1 )     (1 )     (2 )
Net current period other comprehensive income (loss)     (1 )     3       1       3  
Balance as of September 30, 2016   $ (354 )   $ (41 )   $ (172 )   $ (567 )

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 months ended September 30, 2016 and 2015, Other comprehensive income (loss) on these loans totaled $0 and $(5), respectively, and there were no amounts reclassified from Accumulated other comprehensive net (losses) income.

EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS

NOTE 9. EMPLOYEE BENEFIT PLANS

The following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:

    Three Months Ended
    9/30/2016   9/30/2015
Service cost   $               -     $               -  
Interest cost     5       7  
Expected return on plan assets     (5 )     (4 )
Amortization of unrecognized items     3       2  
Total   $ 3     $ 5  

The net periodic benefit cost for the Company’s retirement health care plans was $0 for each of the three months ended September 30, 2016 and 2015.

During the three months ended September 30, 2016, the Company made $15 in discretionary contributions to the domestic qualified retirement income plan.

OTHER CONTINGENCIES AND GUARANTEES
OTHER CONTINGENCIES AND GUARANTEES

NOTE 10. OTHER CONTINGENCIES AND GUARANTEES

Contingencies

The Company is involved in certain environmental matters, including response actions at various locations. The Company had a recorded liability of $13 and $14 as of September 30, 2016 and June 30, 2016, respectively, for its share of aggregate future remediation costs related to these matters. One matter in Dickinson County, Michigan, for which the Company is jointly and severally liable, accounted for a substantial majority of the recorded liability as of both September 30, 2016 and June 30, 2016. The Company has agreed 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. Currently, the Company cannot accurately predict the timing of future payments that may be made under this obligation. In addition, the Company’s estimated loss exposure is sensitive to a variety of uncertain factors, including the efficacy of remediation efforts, changes in remediation requirements and the future availability of alternative clean-up technologies. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded, any amount of such additional exposures, or range of exposures, is not estimable at this time.

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 September 30, 2016.

As of September 30, 2016, the Company was a party to letters of credit of $10 primarily related to one of its insurance carriers, of which $0 had been drawn upon.

SEGMENT RESULTS
SEGMENT RESULTS

NOTE 11. 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. As a result of Clorox Venezuela being reported as discontinued operations, the results of Clorox Venezuela are no longer included in the International reportable segment.

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, 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   Earnings (losses) from continuing
operations before income taxes
    Three Months Ended   Three Months Ended
    9/30/2016   9/30/2015   9/30/2016   9/30/2015
Cleaning   $          534   $          497   $                    164     $                    149  
Household     422     411     69       82  
Lifestyle     236     231     62       59  
International     251     251     27       32  
Corporate     -     -     (58 )     (58 )
Total   $ 1,443   $ 1,390   $ 264     $ 264  

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 26% and 27% for the three months ended September 30, 2016 and 2015, respectively.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2016 and 2015, 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.

Effective September 22, 2014, the Company’s Venezuela affiliate, Corporación Clorox de Venezuela S.A. (Clorox Venezuela), discontinued its operations. Consequently, the Company reclassified the financial results of Clorox Venezuela as a discontinued operation in the condensed consolidated financial statements for all periods presented herein.

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, 2016, which includes a complete set of footnote disclosures including the Company’s significant accounting policies.

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for share-based payment transactions, including requiring excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the consolidated statement of earnings. Additionally, the standard requires cash flows from excess tax benefits and deficiencies, previously classified as a financing activity, to be classified as an operating activity in the consolidated statement of cash flows. The Company adopted this guidance in the first quarter of fiscal year 2017. Excess tax benefits of $6 were recognized in the consolidated statement of earnings and classified as an operating activity in the consolidated statement of cash flows during the three months ended September 30, 2016. The prior period consolidated statement of cash flows has not been adjusted as permitted. The adoption resulted in approximately a 2 percentage point benefit to the Company’s effective tax rate for the first quarter of fiscal year 2017. The guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The Company did not make this election and will continue to account for forfeitures on an estimated basis.

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 the 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 April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Cost,” which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this standard in the first quarter of fiscal year 2017 and retrospectively applied the standard to the June 30, 2016 consolidated balance sheet, resulting in an $8 reduction in Other assets and Long-term debt. The adoption had no impact on the Company’s consolidated statement of earnings or consolidated statement of cash flows.

In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis,” which changes the guidance for evaluating whether to consolidate certain legal entities. The amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities. The Company adopted this standard in the first quarter of fiscal year 2017. The adoption did not have an impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which replaces most existing U.S. GAAP revenue recognition guidance and is intended to improve and converge with international standards 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, with the option to early adopt in the first quarter of fiscal year 2018. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

DISCONTINUED OPERATIONS (Tables)
Summary of (losses) gains from discontinued operations

The following table provides a summary of earnings (losses) from discontinued operations for Clorox Venezuela and earnings (losses) from discontinued operations other than Clorox Venezuela for the periods indicated:

    Three Months Ended
    9/30/2016   9/30/2015   
Operating losses from Clorox Venezuela before income taxes   $           -   $                   -  
Exit costs and other related expenses for Clorox Venezuela     -     -  
Total losses from Clorox Venezuela before income taxes     -     -  
Income tax benefit attributable to Clorox Venezuela     -     -  
Total losses from Clorox Venezuela, net of tax     -     -  
 
Gains (losses) from discontinued operations              
       other than Clorox Venezuela, net of tax     -     (1 )
Losses from discontinued operations, net of tax   $ -   $ (1 )
BUSINESSES ACQUIRED (Tables)
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed as of Acquisition Date

The following table summarizes the estimated fair value of RenewLife’s assets acquired and liabilities assumed and related deferred income taxes as of the acquisition date. Due to the timing of the acquisition, the fair value of the assets acquired and liabilities assumed are based on a preliminary valuation and the Company’s estimates and assumptions are subject to change within the measurement period. The primary areas of the purchase price that are not yet finalized are related to goodwill and income taxes. The weighted-average estimated useful life of intangible assets subject to amortization is 15 years.

 

    RenewLife
Goodwill   $            137  
Trademarks     134  
Customer relationships     36  
Property, plant and equipment     3  
Working capital, net     41  
Deferred income taxes     (61 )
Purchase Price   $ 290  

INVENTORIES, NET (Tables)
Schedule of Inventories, Net

Inventories, net, consisted of the following as of:

    9/30/2016   6/30/2016
Finished goods   $         374     $           361  
Raw materials and packaging     114       111  
Work in process     3       3  
LIFO allowances     (26 )     (32 )
Total   $ 465     $ 443  

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)

The following table summarizes the fair value of the Company’s assets and liabilities for which disclosure of fair value is required:

            9/30/2016   6/30/2016
    Balance sheet
classification
  Fair value
hierarchy
level
  Carrying
Amount
  Estimated
Fair
Value
  Carrying
Amount
  Estimated
Fair
Value
Assets                                
Investments including money market   Cash and cash                            
funds   equivalents (a)   1   $ 253   $ 253   $ 234   $ 234
Time deposits   Cash and cash                            
    equivalents (a)   2     76     76     79     79
Commodity purchase derivative contracts   Other current assets   1     1     1     1     1
Foreign exchange derivative contracts   Other current assets   2     1     1     1     1
Commodity purchase derivative contracts   Other assets   2     1     1     1     1
Trust assets for nonqualified deferred   Other assets                            
compensation plans       1     62     62     52     52
            $ 394   $ 394   $ 368   $ 368
 
Liabilities                                
Notes and loans payable   Notes and loans payable (b)   2   $ 618   $ 618   $ 523   $ 523
Commodity purchase derivative contracts   Accounts payable and                            
    accrued liabilities   2     1     1     1     1
Foreign exchange derivative contracts   Accounts payable and                            
    accrued liabilities   2     2     2     4     4
Current maturities of long-term debt   Current maturities of long-                            
and Long-term debt   term debt and Long-term                            
    debt (c)   2     1,789     1,911     1,789     1,922
            $ 2,410   $ 2,532   $ 2,317   $ 2,450

____________________

(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 debts 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, is determined using secondary market prices quoted by corporate bond dealers, and is classified as Level 2.

 

    Three Months Ended
    Gains (losses) recognized in
Other comprehensive income
    9/30/2016   9/30/2015
Commodity purchase derivative contracts   $                              -     $                              (7 )
Interest rate derivative contracts     -       -  
Foreign exchange derivative contracts     -       6  
Total   $ -     $ (1 )
 

 

Three Months Ended
    Gains (losses) reclassified from
Accumulated other comprehensive loss and
recognized in Net earnings
    9/30/2016   9/30/2015
Commodity purchase derivative contracts   $ (1 )   $ 2  
Interest rate derivative contracts     (2 )     2  
Foreign exchange derivative contracts     (1 )     (1 )
Total   $ (4 )   $ 3  

NET EARNINGS PER SHARE (EPS) (Tables)

The following is a 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
    9/30/2016   9/30/2015
Basic   129,449   129,155
Dilutive effect of stock options and other   2,744   2,065
Diluted   132,193   131,220
 
Antidilutive stock options and other   -   1,271

Share repurchases under authorized programs were as follows during the three months ended September 30:

 

    Three Months Ended
    9/30/2016   9/30/2015
    Amount   Shares
(in 000's)
  Amount   Shares
(in 000's)
Open-market purchase programs   $      -   -   $      -   -
Evergreen Program     113   883     112   1,006
Total   $ 113   883   $ 112   1,006
COMPREHENSIVE INCOME (Tables)

Comprehensive income was as follows for the periods indicated:

 

    Three Months Ended
    9/30/2016   9/30/2015
Earnings from continuing operations   $           179     $           173  
Earnings (losses) from discontinued operations, net of tax     -       (1 )
Net earnings     179       172  
Other comprehensive income (loss), net of tax:                
       Foreign currency translation adjustments     (1 )     (43 )
       Net unrealized gains (losses) on derivatives     3       3  
       Pension and postretirement benefit adjustments     1       1  
Total other comprehensive income (loss), net of tax     3       (39 )
Comprehensive income   $ 182     $ 133  

 

Changes in Accumulated other comprehensive net (losses) income by component were as follows for the three months ended September 30:

    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, 2015   $              (300 )   $                      (53 )   $                   (149 )   $                    (502 )
       Other comprehensive (loss) income before                                
       reclassifications     (41 )     -       -       (41 )
       Amounts reclassified from accumulated other                                
       comprehensive net losses     -       3       1       4  
       Income tax benefit (expense)     (2 )     -       -       (2 )
Net current period other comprehensive income (loss)     (43 )     3       1       (39 )
Balance as of September 30, 2015   $ (343 )   $ (50 )   $ (148 )   $ (541 )
 
Balance as of June 30, 2016   $ (353 )   $ (44 )   $ (173 )   $ (570 )
       Other comprehensive (loss) income before                                
       reclassifications     (1 )     -       -       (1 )
       Amounts reclassified from accumulated other                                
       comprehensive net losses     -       4       2       6  
       Income tax benefit (expense)     -       (1 )     (1 )     (2 )
Net current period other comprehensive income (loss)     (1 )     3       1       3  
Balance as of September 30, 2016   $ (354 )   $ (41 )   $ (172 )   $ (567 )
EMPLOYEE BENEFIT PLANS (Tables)
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
    9/30/2016   9/30/2015
Service cost   $               -     $               -  
Interest cost     5       7  
Expected return on plan assets     (5 )     (4 )
Amortization of unrecognized items     3       2  
Total   $ 3     $ 5  

SEGMENT RESULTS (Tables)
Selected Financial Information Relating to the Company's Segments

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   Earnings (losses) from continuing
operations before income taxes
    Three Months Ended   Three Months Ended
    9/30/2016   9/30/2015   9/30/2016   9/30/2015
Cleaning   $          534   $          497   $                    164     $                    149  
Household     422     411     69       82  
Lifestyle     236     231     62       59  
International     251     251     27       32  
Corporate     -     -     (58 )     (58 )
Total   $ 1,443   $ 1,390   $ 264     $ 264  

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Jun. 30, 2016
Accounting Policies [Abstract]
 
 
Excess tax benefits impact from adoption of ASU No. 2016-09
$ 6 
 
Reduction in effective tax rate from adoption of ASU No. 2016-09
2.00% 
 
Reclassification of debt issuance costs from adoption of ASU No. 2015-03
 
$ 8 
DISCONTINUED OPERATIONS (Summary of (Losses) Gains from Discontinued Operations) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
Total gain (losses) from discontinued operations, net of tax
$ 0 
$ (1)
Clorox Venezuela [Member]
 
 
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
Net sales
Operating losses from discontinued operations before income taxes
Exit costs and other related expense
Total losses from discontinued operations before income taxes
Income tax benefit attributable to discontinued operations
Total gain (losses) from discontinued operations, net of tax
Other Discontinued Operations [Member]
 
 
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
Total gain (losses) from discontinued operations, net of tax
$ 0 
$ (1)
BUSINESSES ACQUIRED (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Jun. 30, 2016
Sep. 30, 2016
RenewLife [Member]
May 2, 2016
RenewLife [Member]
May 2, 2016
RenewLife [Member]
Customer Relationships [Member]
May 2, 2016
RenewLife [Member]
Trademarks [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
Business acquisition date
 
 
May 02, 2016 
 
 
 
Percentage of business acquired
 
 
 
100.00% 
 
 
Amount paid for acquisition
 
 
$ 290 
 
 
 
The weighted-average estimated useful life of intangible assets subject to amortization
 
 
15 years 
 
 
 
Estimated fair values of assets acquired and liabilities assumed and related deferred income taxes as of the acquisition date:
 
 
 
 
 
 
Goodwill
1,196 
1,197 1
 
137 
 
 
Other intangible assets
 
 
 
 
36 
134 
Property, plant and equipment
 
 
 
 
 
Working capital, net
 
 
 
41 
 
 
Deferred income taxes
 
 
 
(61)
 
 
Purchase price
 
 
 
$ 290 
 
 
INVENTORIES, NET (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Jun. 30, 2016
Inventory Disclosure [Abstract]
 
 
Finished goods
$ 374 
$ 361 
Raw materials and packaging
114 
111 
Work in process
LIFO allowances
(26)
(32)
Total
$ 465 
$ 443 1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Jun. 30, 2016
Derivative [Line Items]
 
 
Derivatives
$ 3 
$ 5 
Derivative instruments subject to contractually defined counterparty liability position limits
Estimated amount of the existing net gain (loss) to be reclassified into earnings in the next 12 months
 
Commodity purchase derivative contracts [Member]
 
 
Derivative [Line Items]
 
 
Maximum contract duration
2 years 
 
Notional amounts
24 
30 
Cash margin balances amount
Commodity purchase derivative contracts [Member] |
Jet Fuel [Member]
 
 
Derivative [Line Items]
 
 
Notional amounts
14 
16 
Commodity purchase derivative contracts [Member] |
Soybean Oil [Member]
 
 
Derivative [Line Items]
 
 
Notional amounts
10 
14 
Foreign exchange derivative contracts [Member]
 
 
Derivative [Line Items]
 
 
Maximum contract duration
2 years 
 
Notional amounts
$ 57 
$ 84 
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Schedule of Assets and Liabilities for Fair Value Disclosure) (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Jun. 30, 2016
Sep. 30, 2015
Jun. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
$ 408 
$ 401 1
$ 383 
$ 382 
Other current assets
49 
72 1
 
 
Other assets
204 
187 1
 
 
Total assets
4,466 
4,510 1
 
 
Notes and loans payable
618 
523 1
 
 
Accounts payable and accrued liabilities
874 
1,035 1
 
 
Current maturities of long-term debt
1
 
 
Total liabilities
4,177 
4,213 1
 
 
Carrying Amount [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Total assets
394 
368 
 
 
Total liabilities
2,410 
2,317 
 
 
Estimated Fair Value [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Total assets
394 
368 
 
 
Total liabilities
2,532 
2,450 
 
 
Cash and Cash Equivalents [Member] |
Level 1 [Member] |
Carrying Amount [Member] |
Investments including money market funds [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
253 2
234 2
 
 
Cash and Cash Equivalents [Member] |
Level 1 [Member] |
Estimated Fair Value [Member] |
Investments including money market funds [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
253 2
234 2
 
 
Cash and Cash Equivalents [Member] |
Level 2 [Member] |
Carrying Amount [Member] |
Time deposits [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
76 2
79 2
 
 
Cash and Cash Equivalents [Member] |
Level 2 [Member] |
Estimated Fair Value [Member] |
Time deposits [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
76 2
79 2
 
 
Other current assets [Member] |
Level 1 [Member] |
Carrying Amount [Member] |
Commodity purchase derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Other current assets
 
 
Other current assets [Member] |
Level 1 [Member] |
Estimated Fair Value [Member] |
Commodity purchase derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Derivative assets
 
 
Other current assets [Member] |
Level 2 [Member] |
Carrying Amount [Member] |
Foreign exchange derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Other current assets
 
 
Other current assets [Member] |
Level 2 [Member] |
Estimated Fair Value [Member] |
Foreign exchange derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Derivative assets
 
 
Other assets [Member] |
Level 1 [Member] |
Carrying Amount [Member] |
Trust Assets for nonqualified deferred compensation plans [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Trust assets for nonqualified deferred compensation plans
62 
52 
 
 
Other assets [Member] |
Level 1 [Member] |
Estimated Fair Value [Member] |
Trust Assets for nonqualified deferred compensation plans [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Trust assets for nonqualified deferred compensation plans
62 
52 
 
 
Other assets [Member] |
Level 2 [Member] |
Carrying Amount [Member] |
Commodity purchase derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Other assets
 
 
Other assets [Member] |
Level 2 [Member] |
Estimated Fair Value [Member] |
Commodity purchase derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Derivative assets
 
 
Notes and loans payable [Member] |
Level 2 [Member] |
Carrying Amount [Member] |
Notes and loans payable [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Notes and loans payable
618 3
523 3
 
 
Notes and loans payable [Member] |
Level 2 [Member] |
Estimated Fair Value [Member] |
Notes and loans payable [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Notes and loans payable
618 3
523 3
 
 
Accounts payable and accrued liabilities [Member] |
Level 2 [Member] |
Carrying Amount [Member] |
Commodity purchase derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Accounts payable and accrued liabilities
 
 
Accounts payable and accrued liabilities [Member] |
Level 2 [Member] |
Carrying Amount [Member] |
Foreign exchange derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Accounts payable and accrued liabilities
 
 
Accounts payable and accrued liabilities [Member] |
Level 2 [Member] |
Estimated Fair Value [Member] |
Commodity purchase derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Derivative liabilities
 
 
Accounts payable and accrued liabilities [Member] |
Level 2 [Member] |
Estimated Fair Value [Member] |
Foreign exchange derivative contracts [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Derivative liabilities
 
 
Current maturities of long-term debt and Long-term debt [Member] |
Level 2 [Member] |
Carrying Amount [Member] |
Current maturities of long-term debt and Long-term debt [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Current maturities of long-term debt and Long-term debt
1,789 4
1,789 4
 
 
Current maturities of long-term debt and Long-term debt [Member] |
Level 2 [Member] |
Estimated Fair Value [Member] |
Current maturities of long-term debt and Long-term debt [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Current maturities of long-term debt and Long-term debt
$ 1,911 4
$ 1,922 4
 
 
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Schedule of the Effects of Derivative Instruments Designated as Hedging Instruments) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Gains (losses) recognized in Other comprehensive income
$ 0 
$ (1)
Gains (losses) reclassified from Accumulated other comprehensive loss and recognized in Net earnings
(4)
Commodity purchase derivative contracts [Member]
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Gains (losses) recognized in Other comprehensive income
(7)
Gains (losses) reclassified from Accumulated other comprehensive loss and recognized in Net earnings
(1)
Interest rate derivative contracts [Member]
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Gains (losses) recognized in Other comprehensive income
Gains (losses) reclassified from Accumulated other comprehensive loss and recognized in Net earnings
(2)
Foreign exchange derivative contracts [Member]
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Gains (losses) recognized in Other comprehensive income
Gains (losses) reclassified from Accumulated other comprehensive loss and recognized in Net earnings
$ (1)
$ (1)
INCOME TAXES (Details)
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Income Tax Disclosure [Abstract]
 
 
Effective tax rate on earnings from continuing operations
32.00% 
34.50% 
NET EARNINGS PER SHARE (EPS) (Schedule of Weighted Average Number of Shares) (Details)
In Thousands, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Earnings Per Share [Abstract]
 
 
Weighted Average Shares Outstanding - Basic
129,449 
129,155 
Dilutive effect of stock options and other
2,744 
2,065 
Weighted Average Shares Outstanding - Diluted
132,193 
131,220 
Antidilutive stock options and other
1,271 
NET EARNINGS PER SHARE (EPS) (Share Repurchase Programs) (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Share Repurchase Programs [Line Items]
 
 
Value of shares repurchased
$ 113 
$ 112 
Shares repurchased
883 
1,006 
Open-market purchase programs [Member]
 
 
Share Repurchase Programs [Line Items]
 
 
Authorized repurchase amount
750 
750 
Remaining authorized repurchase amount
750 
 
Value of shares repurchased
Shares repurchased
Evergreen Program [Member]
 
 
Share Repurchase Programs [Line Items]
 
 
Value of shares repurchased
$ 113 
$ 112 
Shares repurchased
883 
1,006 
COMPREHENSIVE INCOME (Narrative) (Details) (Long term intercompany loans [Member], USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Long term intercompany loans [Member]
 
 
Intercompany Foreign Currency Balance [Line Items]
 
 
Other comprehensive net income (loss) before reclassifications
$ 0 
$ (5)
COMPREHENSIVE INCOME (Schedule of Comprehensive Income) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Stockholders' Equity Note [Abstract]
 
 
Earnings from continuing operations
$ 179 
$ 173 
Earnings (losses) from discontinued operations, net of tax
(1)
Net earnings
179 
172 
Other comprehensive income (loss), net of tax:
 
 
Foreign currency translation adjustments
(1)
(43)
Net unrealized gains (losses) on derivatives
Pension and postretirement benefit adjustments
Total other comprehensive income (loss), net of tax
(39)
Comprehensive income
$ 182 
$ 133 
COMPREHENSIVE INCOME (Schedule of Changes in Accumulated Other Comprehensive Net (Losses) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
Balance, beginning
$ (570)1
$ (502)
Other comprehensive (loss) income before reclassifications
(1)
(41)
Amounts reclassified from accumulated other comprehensive net losses
Income tax benefit (expense)
(2)
(2)
Total other comprehensive income (loss), net of tax
(39)
Balance, ending
(567)
(541)
Foreign currency translation adjustments [Member]
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
Balance, beginning
(353)
(300)
Other comprehensive (loss) income before reclassifications
(1)
(41)
Amounts reclassified from accumulated other comprehensive net losses
Income tax benefit (expense)
(2)
Total other comprehensive income (loss), net of tax
(1)
(43)
Balance, ending
(354)
(343)
Net unrealized gain (losses) on derivatives [Member]
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
Balance, beginning
(44)
(53)
Other comprehensive (loss) income before reclassifications
Amounts reclassified from accumulated other comprehensive net losses
Income tax benefit (expense)
(1)
Total other comprehensive income (loss), net of tax
Balance, ending
(41)
(50)
Pension and postretirement benefit adjustments [Member]
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
Balance, beginning
(173)
(149)
Other comprehensive (loss) income before reclassifications
Amounts reclassified from accumulated other comprehensive net losses
Income tax benefit (expense)
(1)
Total other comprehensive income (loss), net of tax
Balance, ending
$ (172)
$ (148)
EMPLOYEE BENEFIT PLANS (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Retirement Income Plans [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Service cost
$ 0 
$ 0 
Interest cost
Expected return on plan assets
(5)
(4)
Amortization of unrecognized items
Total
Retirement Health Care Plans [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Total
Domestic Qualified Retirement Income Plan [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Discretionary contributions
$ 15 
 
OTHER CONTINGENCIES AND GUARANTEES (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
OTHER CONTINGENCIES AND GUARANTEES [Abstract]
 
 
Liability for aggregate future remediation costs
$ 13 
$ 14 
Percentage of liability for aggregate remediation and associated costs, other than legal fees
24.30% 
 
Remediation period
30 years 
 
Letter of credit
10 
 
Letter of credit, amount outstanding
$ 0 
 
SEGMENT RESULTS (Narrative) (Details) (Net sales [Member], Customer Concentration [Member], Walmart Stores, Inc. [Member])
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Net sales [Member] |
Customer Concentration [Member] |
Walmart Stores, Inc. [Member]
 
 
Concentration Risk [Line Items]
 
 
Concentration percentage
26.00% 
27.00% 
SEGMENT RESULTS (Selected Financial Information Relating To Company's Segments ) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Segment Reporting Information [Line Items]
 
 
Net sales
$ 1,443 
$ 1,390 
Earnings (losses) from continuing operations before income taxes
264 
264 
Cleaning [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net sales
534 
497 
Earnings (losses) from continuing operations before income taxes
164 
149 
Household [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net sales
422 
411 
Earnings (losses) from continuing operations before income taxes
69 
82 
Lifestyle [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net sales
236 
231 
Earnings (losses) from continuing operations before income taxes
62 
59 
International [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net sales
251 
251 
Earnings (losses) from continuing operations before income taxes
27 
32 
Corporate [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net sales
Earnings (losses) from continuing operations before income taxes
$ (58)
$ (58)