CLOROX CO /DE/, 10-K filed on 8/14/2019
Annual Report
v3.19.2
Cover Page - USD ($)
$ in Billions
12 Months Ended
Jun. 30, 2019
Jul. 26, 2019
Dec. 31, 2018
Cover page.      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Jun. 30, 2019    
Document Transition Report false    
Entity File Number 1-07151    
Entity Registrant Name THE CLOROX COMPANY    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 31-0595760    
Entity Address, Address Line One 1221 Broadway    
Entity Address, City or Town Oakland    
Entity Address, State or Province CA    
Entity Address, Postal Zip Code 94612-1888    
City Area Code (510)    
Local Phone Number 271-7000    
Title of 12(b) Security Common Stock–$1.00 par value    
Trading Symbol CLX    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Public Float     $ 19.7
Entity Common Stock, Shares Outstanding   125,742,476  
Amendment Flag false    
Current Fiscal Year End Date --06-30    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Entity Central Index Key 0000021076    
Documents Incorporated by Reference Portions of the registrant’s definitive proxy statement for the 2019 Annual Meeting of Stockholders (the “Proxy Statement”), to be filed within 120 days after June 30, 2019, are incorporated by reference into Part III, Items 10 through 14 of this Annual Report on Form 10-K    
v3.19.2
CONSOLIDATED STATEMENT OF EARNINGS - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 12 Months Ended
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2017
Income Statement [Abstract]                      
Net sales $ 1,627 $ 1,551 $ 1,473 $ 1,563         $ 6,214    
Net sales         $ 1,691 $ 1,517 $ 1,416 $ 1,500   $ 6,124 $ 5,973
Cost of products sold 893 878 830 885 947 868 807 827 3,486 3,449 3,302
Gross profit                 2,728 2,675 2,671
Selling and administrative expenses                 856 837 810
Advertising costs                 612 570 599
Research and development costs                 136 132 135
Interest expense                 97 85 88
Other (income) expense, net                 3 (3) 6
Earnings from continuing operations before income taxes                 1,024 1,054 1,033
Income taxes on continuing operations                 204 231 330
Earnings from continuing operations 241 187 182 210 217 181 233 192 820 823 703
Losses from discontinued operations, net of tax 0 0 0 0 0 0 0 0 0 0 (2)
Net earnings $ 241 $ 187 $ 182 $ 210 $ 217 $ 181 $ 233 $ 192 $ 820 $ 823 $ 701
Basic                      
Basic continuing operations (in dollars per share) $ 1.91 $ 1.46 $ 1.42 $ 1.65 $ 1.69 $ 1.39 $ 1.81 $ 1.49 $ 6.42 $ 6.37 $ 5.45
Basic discontinued operations (in dollars per share) 0 0 0 0 0 0 0 0 0 0 (0.02)
Basic net earnings per share (in dollars per share) 1.91 1.46 1.42 1.65 1.69 1.39 1.81 1.49 6.42 6.37 5.43
Diluted                      
Diluted continuing operations (in dollars per share) 1.88 1.44 1.40 1.62 1.66 1.37 1.77 1.46 6.32 6.26 5.35
Diluted discontinued operations (in dollars per share) 0 0 0 0 0 0 0 0 0 0 (0.02)
Diluted net earnings per share (in dollars per share) $ 1.88 $ 1.44 $ 1.40 $ 1.62 $ 1.66 $ 1.37 $ 1.77 $ 1.46 $ 6.32 $ 6.26 $ 5.33
Weighted average shares outstanding (in thousands)                      
Weighted average shares outstanding - basic (in shares)                 127,734 129,293 128,953
Weighted average shares outstanding - diluted (in shares)                 129,792 131,581 131,566
v3.19.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
12 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2017
Statement of Comprehensive Income [Abstract]      
Earnings from continuing operations $ 820 $ 823 $ 703
Losses from discontinued operations, net of tax 0 0 (2)
Net earnings 820 823 701
Other comprehensive income (loss):      
Foreign currency adjustments, net of tax (22) (28) (3)
Net unrealized gains (losses) on derivatives, net of tax 2 12 7
Pension and postretirement benefit adjustments, net of tax 4 12 23
Total other comprehensive income (loss), net of tax (16) (4) 27
Comprehensive income $ 804 $ 819 $ 728
v3.19.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Jun. 30, 2019
Jun. 30, 2018
Current assets    
Cash and cash equivalents $ 111 $ 131
Receivables, net 631 600
Inventories, net 512 506
Prepaid expenses and other current assets 51 74
Total current assets 1,305 1,311
Property, plant and equipment, net 1,034 996
Goodwill 1,591 1,602
Trademarks, net 791 795
Other intangible assets, net 121 134
Other assets 274 222
Total assets 5,116 5,060
Current liabilities    
Notes and loans payable 396 199
Accounts payable and accrued liabilities 1,035 1,001
Income taxes payable 9 0
Total current liabilities 1,440 1,200
Long-term debt 2,287 2,284
Other liabilities 780 778
Deferred income taxes 50 72
Total liabilities 4,557 4,334
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 June 30, 2019 and 2018; and 125,686,325 and 127,982,767 shares outstanding as of June 30, 2019 and 2018, respectively 159 159
Additional paid-in capital 1,046 975
Retained earnings 3,150 2,797
Treasury shares, at cost: 33,055,136 and 30,758,694 shares as of June 30, 2019 and 2018, respectively (3,194) (2,658)
Accumulated other comprehensive net (loss) income (602) (547)
Stockholders’ equity 559 726
Total liabilities and stockholders’ equity $ 5,116 $ 5,060
v3.19.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Jun. 30, 2019
Jun. 30, 2018
Statement of Financial Position [Abstract]    
Preferred stock, par value (in dollars per share) $ 1 $ 1
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 $ 1
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) 125,686,325 127,982,767
Treasury stock, shares (in shares) 33,055,136 30,758,694
v3.19.2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Millions
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
AOCI Attributable to Parent [Member]
Balance, amount at Jun. 30, 2016 $ 297 $ 159 $ 868 $ 2,163 $ (2,323) $ (570)
Balance, shares (in shares) at Jun. 30, 2016   158,741     29,386  
Net earnings 701     701    
Other comprehensive income (loss) 27         27
Dividends (421)     (421)    
Stock-based compensation 51   51      
Other employee stock plan activities 76   9 (3) $ 70  
Other Employee Stock Plan Activities (in shares)         1,164  
Treasury stock purchased $ (189)       $ (189)  
Treasury stock purchased (in shares) (1,505)       (1,505)  
Balance, shares (in shares) at Jun. 30, 2017   158,741     29,727  
Balance, amount at Jun. 30, 2017 $ 542 $ 159 928 2,440 $ (2,442) (543)
Dividends per share declared (in dollars per share) $ 3.24          
Net earnings $ 823     823    
Other comprehensive income (loss) (4)         (4)
Dividends (467)     (467)    
Stock-based compensation 53   53      
Other employee stock plan activities 51   (6) 1 $ 56  
Other Employee Stock Plan Activities (in shares)         1,139  
Treasury stock purchased $ (272)       $ (272)  
Treasury stock purchased (in shares) (2,171)       (2,171)  
Balance, shares (in shares) at Jun. 30, 2018   158,741     30,759  
Balance, amount at Jun. 30, 2018 $ 726 $ 159 975 2,797 $ (2,658) (547)
Dividends per share declared (in dollars per share) $ 3.60          
Net earnings $ 820     820    
Other comprehensive income (loss) (16)         (16)
Dividends (503)     (503)    
Stock-based compensation 43   43      
Other employee stock plan activities 152   28 0 $ 124  
Other Employee Stock Plan Activities (in shares)         2,178  
Treasury stock purchased $ (660)       $ (660)  
Treasury stock purchased (in shares) (4,474)       (4,474)  
Balance, shares (in shares) at Jun. 30, 2019   158,741     33,055  
Balance, amount at Jun. 30, 2019 $ 559 $ 159 $ 1,046 $ 3,150 $ (3,194) $ (602)
Dividends per share declared (in dollars per share) $ 3.94          
v3.19.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Jun. 30, 2019
Sep. 30, 2018
Jun. 30, 2018
Sep. 30, 2017
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2016
Operating activities:                
Net earnings $ 241 $ 210 $ 217 $ 192 $ 820 $ 823 $ 701 $ 648
Deduct: Losses from discontinued operations, net of tax 0 0 0 0 0 0 (2) 0
Earnings from continuing operations 241 210 217 192 820 823 703 648
Adjustments to reconcile earnings from continuing operations to net cash provided by continuing operations:                
Depreciation and amortization         180 166 163  
Stock-based compensation         43 53 51  
Deferred income taxes         (20) (23) (35)  
Other         (29) 44 33  
Changes in:                
Receivables, net         (32) (24) (1)  
Inventories, net         (7) (21) (19)  
Prepaid expenses and other current assets         (6) 4 (5)  
Accounts payable and accrued liabilities         17 (47) (34)  
Income taxes payable/receivable, net         26 1 12  
Net cash provided by continuing operations         992 976 868  
Net cash used for discontinued operations         0 0 (3)  
Net cash provided by operations         992 976 865  
Investing activities:                
Capital expenditures         (206) (194) (231)  
Businesses acquired, net of cash acquired         0 (681) 0  
Other         10 16 26  
Net cash used for investing activities         (196) (859) (205)  
Financing activities:                
Notes and loans payable, net         189 (214) (125)  
Long-term debt borrowings, net of issuance costs         0 891 0  
Long-term debt repayments         0 (400) 0  
Treasury stock purchased         (661) (271) (183)  
Cash dividends paid         (490) (450) (412)  
Issuance of common stock for employee stock plans and other         147 45 75  
Net cash used for financing activities         (815) (399) (645)  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash         (2) (3) (1)  
Net increase (decrease) in cash, cash equivalents and restricted cash         (21) (285) 14  
Cash, cash equivalents and restricted cash:                
Beginning of year   $ 134   $ 419 134 419 405  
End of year 113   134   113 134 419 $ 405
Supplemental cash flow information:                
Interest paid         87 75 78  
Income taxes paid, net of refunds         207 245 347  
Non-cash financing activities:                
Cash dividends declared and accrued, but not paid $ 133   $ 123   $ 133 $ 123 $ 108  
v3.19.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Presentation
The Company is principally engaged in the production, marketing and sales of consumer products through mass retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drug, pet and military stores, third-party and owned e-commerce channels, and distributors. The consolidated financial statements include the statements of the Company and its wholly owned and controlled subsidiaries. All significant intercompany transactions and accounts were eliminated in consolidation. Certain prior year reclassifications were made in the consolidated financial statements and related notes to the consolidated financial statements to conform to the current year presentation.
Effective September 22, 2014, the Company’s Venezuela affiliate, Corporación Clorox de Venezuela S.A. (Clorox Venezuela), discontinued its operations. Consequently, the Company presents the financial results of Clorox Venezuela as a discontinued operation in the consolidated financial statements for all periods presented herein.
Use of Estimates
The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) requires management to reach opinions as to estimates and assumptions that affect reported amounts and related disclosures. Specific areas requiring the application of management’s estimates and judgments include, among others, assumptions pertaining to accruals for consumer and trade-promotion programs, stock-based compensation, retirement income plans, future cash flows associated with impairment testing of goodwill and other long-lived assets and the valuation of the venture agreement terminal obligation, the valuation of assets acquired and liabilities assumed in connection with a business combination, the credit worthiness of customers, uncertain tax positions, tax valuation allowances and legal, environmental and insurance matters. Actual results could materially differ from estimates and assumptions made.
Cash, Cash Equivalents and Restricted Cash
Cash equivalents consist of highly liquid interest-bearing accounts, time deposits held by financial institutions and money market funds with an initial maturity at purchase of three months or less. The fair value of cash and cash equivalents approximates the carrying amount.
The Company’s cash position includes amounts held by foreign subsidiaries and, as a result, the repatriation of certain cash balances from some of the Company’s foreign subsidiaries could result in additional withholding tax costs in certain foreign jurisdictions. However, these cash balances are generally available without legal restriction to fund local business operations. In addition, a portion of the Company’s cash balance is held in U.S. dollars by foreign subsidiaries whose functional currency is their local currency. Such U.S. dollar balances are reported on the foreign subsidiaries’ books in their functional currency, and the impact on such balances from foreign currency exchange rate differences is recorded in Other (income) expense, net.
As of June 30, 2019, 2018, 2017, and 2016, the Company had $2, $3, $2 and $4 of restricted cash, respectively, which was primarily related to a cash margin deposit held for exchange-traded futures contracts. The June 30, 2017 and 2016 balances also included restricted cash related to fiscal year 2012 acquisitions. The restricted cash was included in Prepaid expenses and other current assets and Other assets as of June 30, 2019, 2018, 2017 and 2016.
Inventories
The Company values its inventories using both the First-In, First-Out (“FIFO”) and the Last-In, First-Out (“LIFO”) methods. The FIFO inventory is stated at the lower of cost or net realizable value, which includes any costs to sell or dispose. In addition, appropriate consideration is given to obsolescence, excessive inventory levels, product deterioration and other factors in evaluating net realizable value. The LIFO inventory is stated at the lower of cost or market.
Property, Plant and Equipment and Finite-Lived Intangible Assets
Property, plant and equipment and finite-lived intangible assets are stated at cost. Depreciation and amortization expense are primarily calculated by the straight-line method using the estimated useful lives or lives determined by reference to the related lease contract in the case of leasehold improvements. The table below provides estimated useful lives of property, plant and equipment by asset classification.
 
Estimated
Useful Lives
Buildings and leasehold improvements
7 - 40 years
Land improvements
10 - 30 years
Machinery and equipment
3 - 15 years
Computer equipment
3 - 5 years
Capitalized software costs
3 - 7 years


Property, plant and equipment and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset (or asset group) may not be fully recoverable. The risk of impairment is initially assessed based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist. Impairment occurs when the carrying value of the asset exceeds the estimated future undiscounted cash flows generated by the asset. When impairment is indicated, an impairment charge is recorded for the difference between the carrying value of the asset and its estimated fair market value. Depending on the asset, estimated fair market value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in similar condition.
Capitalization of Software Costs
The Company capitalizes certain qualifying costs incurred in the acquisition and development of software for internal use, including the costs of the software, materials, consultants, interest and payroll and payroll-related costs for employees during the application development stage. Internal and external costs incurred during the preliminary project stage and post implementation-operation stage, mainly training and maintenance costs, are expensed as incurred. Once the application is substantially complete and ready for its intended use, qualifying costs are amortized on a straight-line basis over the software’s estimated useful life.
Impairment Review of Goodwill and Indefinite-Lived Intangible Assets
The Company tests its goodwill, trademarks with indefinite lives and other indefinite-lived intangible assets annually for impairment in the fiscal fourth quarter unless there are indications during a different interim period that these assets may have become impaired.
With respect to goodwill, the Company has the option to first assess qualitative factors such as the maturity and stability of the reporting unit, the magnitude of the excess fair value over carrying value from the prior year’s impairment testing, other reporting unit specific operating results as well as new events and circumstances impacting the operations at the reporting unit level. If the result of a qualitative test indicates a potential for impairment of a reporting unit, a quantitative test is performed. The quantitative test is a two-step process. In the first step, the Company compares the estimated fair value of the reporting unit to its carrying value. In all instances, the estimated fair value exceeded the carrying value of the reporting unit. Had the estimated fair value of any reporting unit been less than its carrying value, the Company would have performed a second step to determine the implied fair value of the reporting unit’s goodwill. If the carrying amount of a reporting unit’s goodwill had exceeded its implied fair value, an impairment charge would have been recorded for the difference between the carrying amount and the implied fair value of the reporting unit’s goodwill.
To determine the fair value of a reporting unit as part of its quantitative test, the Company uses a discounted cash flow (DCF) method under the income approach, as it believes that this approach is the most reliable indicator of the fair value of its businesses and the fair value of their future earnings and cash flows. Under this approach, which requires significant judgments, the Company estimates the future cash flows of each reporting unit and discounts these cash flows at a rate of return that reflects their relative risk. The cash flows used in the DCF method are consistent with those the Company uses in its internal planning, which gives consideration to actual business trends experienced, and the broader business strategy for the long term. The other key estimates and factors used in the DCF method include, but are not limited to, future volumes, net sales and expense growth rates, commodity prices, changes in working capital, foreign exchange rates, inflation and a terminal growth rate. Changes in such estimates or the application of alternative assumptions could produce different results.
For trademarks and other intangible assets with indefinite lives, the Company performs a quantitative analysis to test for impairment. When a quantitative test is performed, the estimated fair value of an asset is compared to its carrying amount. If the carrying amount of such asset exceeds its estimated fair value, an impairment charge is recorded for the difference between the carrying amount and the estimated fair value. The Company uses the income approach to estimate the fair value of its trademarks and other intangible assets with indefinite lives. This approach requires significant judgments in determining the royalty rates and the assets’ estimated cash flows as well as the appropriate discount and foreign exchange rates applied to those cash flows to determine fair value. Changes in such estimates or the use of alternative assumptions could produce different results.
Stock-based Compensation
The Company grants various nonqualified stock-based compensation awards to eligible employees, including stock options, restricted stock and performance shares.
For stock options, the Company estimates the fair value of each award on the date of grant using the Black-Scholes valuation model, which requires management to make estimates regarding expected option life, stock price volatility and other assumptions. Groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The Company estimates stock option forfeitures based on historical data for each employee grouping. The total number of stock options expected to vest is adjusted by actual and estimated forfeitures. Changes to the actual and estimated forfeitures will result in a cumulative adjustment in the period of change. Compensation expense is recorded by amortizing the grant date fair values on a straight-line basis over the vesting period, adjusted for estimated forfeitures.
The Company’s performance shares provide for the issuance of common stock to certain managerial staff and executive management if the Company achieves specified performance targets. The number of shares issued is dependent upon the achievement of specified performance targets. The performance period is three years and the payout determination is made at the end of the three-year performance period. Performance shares receive dividends earned during the vesting period upon vesting. The fair value of each grant issued is estimated on the date of grant based on the current market price of the stock. The total amount of compensation expense recognized reflects estimated forfeiture rates and management’s assessment of the probability that performance goals will be achieved. A cumulative adjustment is recognized to compensation expense in the current period to reflect any changes in the probability of achievement of performance goals.
Cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for stock-based payment arrangements (excess tax benefits) are classified as operating cash inflows.
Employee Benefits
The Company accounts for its retirement income and retirement health care plans using actuarial methods. These methods use an attribution approach that generally spreads “plan events” over the service lives or expected lifetime (for frozen plans) of plan participants. Examples of plan events are plan amendments and changes in actuarial assumptions such as the expected return on plan assets, discount rate, rate of compensation increase and certain employee-related factors, such as retirement age and mortality. The principle underlying the attribution approach is that employees render service over their employment period on a relatively “smooth” basis and, therefore, the statement of earnings effects of retirement income and retirement health care plans are recognized in the same pattern. One of the principal assumptions used in the net periodic benefit cost calculation is the expected return on plan assets. The expected return on plan assets may result in recognized expense or income that differs from the actual returns of those plan assets in any given year. Over time, however, the goal is for the expected long-term returns to approximate the actual returns and, therefore, the expectation is that the pattern of income and expense recognition should closely match the pattern of the services provided by the participants. The Company uses a market-related value method for calculating plan assets for purposes of determining the amortization of actuarial gains and losses. The differences between actual and expected returns are recognized in the net periodic benefit cost calculation over the average remaining service period or expected lifetime (for frozen plans) of the plan participants using the corridor approach. Under this approach, only actuarial gains (losses) that exceed 5% of the greater of the projected benefit obligation or the market-related value of assets are amortized to the Company’s net periodic benefit cost. In developing its expected return on plan assets, the Company considers the long-term actual returns relative to the mix of investments that comprise its plan assets and also develops estimates of future investment returns by considering external sources.
The Company recognizes an actuarial-based obligation at the onset of disability for certain benefits provided to individuals after employment, but before retirement, that include medical, dental, vision, life and other benefits.
Environmental Costs
The Company is involved in certain environmental remediation and ongoing compliance activities. Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has been incurred and based upon a reasonable estimate of the liability. The Company’s accruals reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs. These accruals are adjusted periodically as assessment and remediation efforts progress or as additional technical or legal information becomes available. Actual costs to be incurred at identified sites in future periods may vary from the estimates, given the inherent uncertainties in evaluating environmental exposures. The accrual for environmental matters is included in Accounts payable and accrued liabilities and Other liabilities in the Company’s consolidated balance sheets on an undiscounted basis due to uncertainty regarding the timing of future payments.
Revenue Recognition
Revenue is recognized when performance obligations under the terms of the contracts with customers are satisfied. The Company’s performance obligation generally consists of the promise to sell finished products to wholesalers, distributors, retailers or consumers. Control of finished products is transferred upon shipment to, or receipt at, customers’ locations, as determined by the specific terms of the customer contract. Shipping and handling activities are accounted for as contract fulfillment costs and classified as Cost of products sold. Once control is transferred to the customer, the Company has completed its performance obligation, and revenue is recognized. After the completion of the performance obligation, there is an unconditional right to consideration as outlined in the contract. A right is considered unconditional if nothing other than the passage of time is required before payment of that consideration is due. The Company typically collects its customer receivables within two months. All performance obligations under the terms of contracts with customers have an original duration of one year or less.
The Company routinely commits to one-time or ongoing trade-promotion programs with customers and consumer coupon programs that require the Company to estimate and accrue the expected costs of such programs, which include shelf price reductions, end-of-aisle or in-store displays of the Company’s products and graphics and other trade-promotion activities conducted by the customer. The costs of such activities, defined as variable consideration under Topic 606 of the Accounting Standards Codification, “Revenue from Contracts with Customers,” are netted against sales and recorded when the related sales take place. The accruals for trade promotion programs and consumer coupons are established based on the Company’s best estimate of the amounts necessary to settle existing and future obligations for products sold as of the balance sheet date. The Company uses forecasted appropriations, historical trend analysis, and customer and sales organization inputs in determining the accruals for trade promotional activities, and uses historical trend experience and coupon redemption estimates for the coupon accruals.
The Company provides an allowance for doubtful accounts based on its historical experience and ongoing assessment of its customers’ credit risk and aging. Receivables were presented net of an allowance for doubtful accounts of $4 and $7 as of June 30, 2019 and 2018, respectively. Receivables, net, included non-customer receivables of $17 and $10 as of June 30, 2019 and 2018, respectively.
Cost of Products Sold
Cost of products sold represents the costs directly related to the manufacture and distribution of the Company’s products and primarily includes raw materials, packaging, contract manufacturing fees, shipping and handling, warehousing, package design, depreciation, amortization, direct and indirect labor and operating costs for the Company’s manufacturing and distribution facilities, including salary, benefit costs and incentive compensation, and royalties and other charges related to the Company’s Glad® Venture Agreement (See Note 8).
Costs associated with developing and designing new packaging, including design, artwork, films and labeling, are expensed as incurred and included within Cost of products sold.
Selling and Administrative Expenses
Selling and administrative expenses represent costs incurred by the Company in generating revenues and managing the business and include market research, commissions and certain administrative expenses. Administrative expenses include salary, benefits, incentive compensation, professional fees and services and other operating costs associated with the Company’s non-manufacturing, non-research and development staff, facilities and equipment, as well as software and licensing fees.
Advertising and Research and Development Costs
The Company expenses advertising and research and development costs in the period incurred.
Income Taxes
The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax basis. Management reviews the Company’s deferred tax assets to determine whether their value can be realized based upon available evidence. A valuation allowance is established when management believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change. In addition to valuation allowances, the Company provides for uncertain tax positions when such tax positions do not meet certain recognition thresholds or measurement standards. Amounts for uncertain tax positions are adjusted in quarters when new information becomes available or when positions are effectively settled.
Per U.S. GAAP, foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. 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 December 2017, The Tax Cuts and Jobs Act (the Tax Act) was passed into law, which significantly reduced the cost of U.S. repatriation. In the third quarter of fiscal year 2018, the Company concluded an analysis wherein it determined that none of the undistributed earnings of its foreign subsidiaries were indefinitely reinvested. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable.
Foreign Currency Transactions and Translation
Local currencies are the functional currencies for substantially all of the Company’s foreign operations. When the transactional currency is different than the functional currency, transaction gains and losses are included as a component of Other (income) expense, net. In addition, certain assets and liabilities denominated in currencies other than a foreign subsidiary’s functional currency are reported on the subsidiary’s books in its functional currency, with the impact from exchange rate differences recorded in Other (income) expense, net. Assets and liabilities of foreign operations are translated into U.S. dollars using the exchange rates in effect at the balance sheet date, while income and expenses are translated at the respective average monthly exchange rates during the year.
Gains and losses on foreign currency translations are reported as a component of Other comprehensive income (loss). The income tax effect of currency translation adjustments is recorded as a component of deferred taxes with an offset to Other comprehensive income (loss) where appropriate.
Effective July 1, 2018, under the requirements of U.S. GAAP, Argentina was designated as a highly inflationary economy, since it has experienced cumulative inflation of approximately 100 percent or more over a three-year period. As a result, beginning July 1, 2018, the U.S. dollar replaced the Argentine peso as the functional currency of the Company’s subsidiaries in Argentina (collectively, “Clorox Argentina”). Consequently, gains and losses from non-U.S. dollar denominated monetary assets and liabilities for Clorox Argentina are recognized in Other (income) expense, net in the consolidated statement of earnings.
Derivative Instruments
The Company’s use of derivative instruments, principally swaps, futures and forward contracts, is limited to non-trading purposes and is designed to partially manage exposure to changes in commodity prices, interest rates and foreign currencies. The Company’s contracts are hedges for transactions with notional amounts and periods consistent with the related exposures and do not constitute investments independent of these exposures.
The changes in the fair value (i.e., gains or losses) of a derivative instrument are recorded as either assets or liabilities in the consolidated balance sheets with an offset to Net earnings or Other comprehensive income (loss) depending on whether, for accounting purposes, it has been designated and qualifies as an accounting hedge and, if so, on the type of hedging relationship. The criteria used to determine if hedge accounting treatment is appropriate are: (a) formal designation and documentation of the hedging relationship, the risk management objective and hedging strategy at hedge inception; (b) eligibility of hedged items, transactions and corresponding hedging instrument; and (c) effectiveness of the hedging relationship both at inception of the hedge and on an ongoing basis in achieving the hedging objectives. For those derivative instruments designated and qualifying as hedging instruments, the Company must designate the hedging instrument either as a fair value hedge or as a cash flow hedge. 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. During the fiscal years ended June 30, 2019, 2018 and 2017, the Company had no hedging instruments designated as fair value hedges.
For derivative instruments designated and qualifying as cash flow hedges, the effective portion of gains or losses is reported as a component of Other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. From time to time, the Company may have contracts not designated as hedges for accounting purposes, for which it recognizes changes in the fair value in the consolidated statement of earnings in the current period. Cash flows from hedging activities are classified as operating activities in the consolidated statements of cash flows.
Recently Issued Accounting Standards
Recently Issued Accounting Standards Not Yet Adopted
In August 2017, the Financial Accounting Standards Board (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 does not expect this guidance to have a material impact on its consolidated financial statements upon adoption.
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 (ROU) 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. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842), Targeted Improvements,” which provides an optional transition method in applying the new lease standard. Topic 842 can be applied using either a modified retrospective approach at the beginning of the earliest period presented, or, as permitted by ASU 2018-11, at the beginning of the period in which it is adopted. The Company will adopt the new standard in the first quarter of fiscal year 2020, on a modified retrospective basis using the optional transition method, and, accordingly, will not restate the comparative periods. The Company expects to elect certain practical expedients, including the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company has substantially completed its plan for the adoption and implementation of this new accounting standard, including assessing its lease arrangements and implementing software to meet the reporting and disclosure requirements of this standard. The Company anticipates the adoption of this new standard will result in the recognition of ROU assets of between approximately $315 and $345 and aggregate current and non-current liabilities of between $350 and $380 on the Company’s consolidated balance sheet with the difference largely due to deferred rent that will be reclassified to the ROU asset. The Company also expects to record a cumulative-effect adjustment to the opening balance of Retained earnings of between approximately $20 and $25 related primarily to the remaining deferred gain from the sale-leaseback of the Company’s general office building in Oakland, California (see Note 8). This new standard is not expected to have a material impact on the Company’s consolidated statement of earnings or the consolidated statement of cash flows.

Recently Adopted Accounting Standards

In February 2018, the FASB issued 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 Act. The Company early adopted this guidance in, and applied it to, the fourth quarter of fiscal year 2019. As a result of the adoption, the Company decreased Accumulated other comprehensive net (loss) income and increased Retained earnings by $39.
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 Company adopted the new guidance on a modified retrospective basis effective July 1, 2018, and the adoption did not have a material impact on the Company’s annual consolidated financial statements. However, there was an impact on the Company’s financial results in the interim periods due to the timing of recognition for certain trade promotion spending. Due to a change in the timing of recognition for certain trade promotion spending, the Company recorded an immaterial cumulative effect of initially applying the new guidance as an adjustment to the fiscal year 2019 opening balance of Retained earnings. Results for periods beginning on or after July 1, 2018 are recognized and presented in accordance with Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the prior accounting guidance under Topic 605, “Revenue Recognition.” The Company has made changes to its accounting policies, business processes, systems and controls to align with the new revenue recognition guidance and disclosure requirements.
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 presenting the service cost component of net periodic benefit cost in the same income statement line items 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. The Company adopted this new guidance in the first quarter of fiscal year 2019 and the adoption did not have a material impact on the Company’s consolidated financial statements. Following the adoption of this guidance, the Company records the non-service cost components of net periodic benefit cost in Other (income) expense, net.
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 guidance allowed 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 16 for more information.
v3.19.2
BUSINESS ACQUIRED
12 Months Ended
Jun. 30, 2019
Business Combinations [Abstract]  
BUSINESS ACQUIRED BUSINESS ACQUIRED
Nutranext Acquisition
On April 2, 2018, the Company acquired 100 percent of Nutranext, a dietary supplements 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.
The total consideration paid of $681, which included post-closing working capital and other adjustments, was initially funded through commercial paper borrowings and subsequently repaid using a combination of long-term debt financing and cash repatriated from foreign subsidiaries. The assets and liabilities of Nutranext were recorded at their respective estimated fair value as of the acquisition date using generally accepted accounting principles for business combinations. The excess of the purchase price over the fair value of the net identifiable assets acquired has been allocated to goodwill in the Lifestyle and Household reportable segments in the amounts of $310 and $102, respectively. The goodwill of $412 is primarily attributable to the synergies, including those with the digestive health business, expected to arise after the acquisition and reflects the value of further expanding the Company’s portfolio into the health and wellness arena. Of the total goodwill, $363 is expected to be deductible for tax purposes.
The purchase price allocation was finalized during the third quarter of fiscal year 2019. The following table summarizes the final purchase price allocation for the fair value of Nutranext’s assets acquired and liabilities assumed and the related deferred income taxes. The fair value of the assets acquired and liabilities assumed reflects the final insignificant measurement period adjustments related to goodwill, deferred income taxes and income taxes payable. The weighted-average estimated useful life of intangible assets subject to amortization is 15 years.

Nutranext
Goodwill ($310 in Lifestyle reportable segment and $102 in Household reportable segment)
$
412

Trademarks
143

Customer relationships
75

Property, plant and equipment
49

Working capital, net
22

Deferred income taxes
(20
)
Consideration paid
$
681


Effective April 2, 2018, Nutranext was consolidated into the Company’s results of operations. Results for Nutranext’s global business are reflected in the Lifestyle reportable segment. Included in the Company’s results for fiscal year 2019 and 2018 was $217 and $53, respectively, of Nutranext’s global net sales.
Pro forma results reflecting the acquisition were not presented because the acquisition did not meet the threshold requirements for additional disclosure.
v3.19.2
INVENTORIES
12 Months Ended
Jun. 30, 2019
Inventory Disclosure [Abstract]  
INVENTORIES INVENTORIES
Inventories consisted of the following as of June 30:
 
2019
 
2018
Finished goods
$
411

 
$
395

Raw materials and packaging
125

 
129

Work in process
6

 
9

LIFO allowances
(30
)
 
(27
)
Total
$
512

 
$
506


The LIFO method was used to value approximately 34% and 38% of inventories as of June 30, 2019 and 2018, respectively. The carrying values for all other inventories are determined on the FIFO method. The effect on earnings of the liquidation of LIFO layers was insignificant for each of the fiscal years ended June 30, 2019, 2018 and 2017.
v3.19.2
PROPERTY, PLANT AND EQUIPMENT, NET
12 Months Ended
Jun. 30, 2019
Property, Plant and Equipment, Net [Abstract]  
PROPERTY, PLANT AND EQUIPMENT, NET PROPERTY, PLANT AND EQUIPMENT, NET
The components of property, plant and equipment, net, consisted of the following as of June 30:
 
2019
 
2018
Machinery and equipment
$
1,867

 
$
1,808

Buildings
596

 
574

Capitalized software costs
358

 
375

Land and improvements
138

 
131

Construction in progress
131

 
77

Computer equipment
94

 
92

Total
3,184

 
3,057

Less: Accumulated depreciation and amortization
(2,150
)
 
(2,061
)
Property, plant and equipment, net
$
1,034

 
$
996


Included in Machinery and equipment above was $21 and $13 of capital leases as of June 30, 2019 and 2018. Accumulated depreciation for assets under capital leases was $12 and $10 as of June 30, 2019 and 2018, respectively.
Included in Buildings above was $0 and $2 of asset retirement obligations as of June 30, 2019 and 2018, respectively, for leased properties. There were no asset retirement obligations recorded in fiscal year 2019 and 2018.
Depreciation and amortization expense related to property, plant and equipment, net, was $165, $156 and $153 in fiscal years 2019, 2018 and 2017, respectively, which includes depreciation of assets under capital leases. This also includes amortization of capitalized software of $8, $11 and $15 in fiscal years 2019, 2018 and 2017, respectively.
During the second quarter of fiscal year 2017, the Company recognized a $21 non-cash charge, within the Cleaning reportable segment, related to impairing certain assets of the subsequently divested Aplicare business. The asset impairment charge primarily related to writing down Property, plant and equipment to fair value in connection with an updated valuation of the Aplicare business.
Non-cash capital expenditures were $2 in each of the fiscal years ended June 30, 2019, 2018 and 2017.
v3.19.2
GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS
12 Months Ended
Jun. 30, 2019
GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS [Abstract]  
GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS
The changes in the carrying amount of goodwill by reportable segment for the fiscal years ended June 30, 2019 and 2018 were as follows:
 
Goodwill
 
Cleaning
 
Household
 
Lifestyle
 
International
 
Total
Balance as of June 30, 2017
$
323

 
$
207

 
$
244

 
$
422

 
$
1,196

Acquisition

 
102

 
309

 

 
411

Effect of foreign currency translation

 

 

 
(5
)
 
(5
)
Balance as of June 30, 2018
$
323

 
$
309

 
$
553

 
$
417

 
$
1,602

Acquisition

 

 
1

 

 
1

Effect of foreign currency translation

 

 

 
(12
)
 
(12
)
Balance as of June 30, 2019
$
323

 
$
309

 
$
554

 
$
405

 
$
1,591


The changes in the carrying amount of trademarks and other intangible assets for the fiscal years ended June 30 were as follows:
 
As of June 30, 2019
 
As of June 30, 2018
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
amount
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
amount
Trademarks with indefinite lives
$
777

 
$

 
$
777

 
$
778

 
$

 
$
778

Trademarks with finite lives
40

 
26

 
14

 
41

 
24

 
17

Other intangible assets
430

 
309

 
121

 
430

 
296

 
134

Total
$
1,247

 
$
335

 
$
912

 
$
1,249

 
$
320

 
$
929


Finite-lived intangible assets are amortized over their estimated useful lives, which range from 2 to 30 years. Amortization expense relating to the Company’s intangible assets was $15, $10 and $10 for the years ended June 30, 2019, 2018 and 2017, respectively. Estimated amortization expense for these intangible assets is $14, $12, $12, $12 and $10 for fiscal years 2020, 2021, 2022, 2023 and 2024, respectively.
v3.19.2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
12 Months Ended
Jun. 30, 2019
Accounts Payable and Accrued Liabilities, Current [Abstract]  
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following as of June 30:
 
2019
 
2018
Accounts payable
$
507

 
$
507

Compensation and employee benefit costs
158

 
154

Trade and sales promotion costs
115

 
91

Dividends
139

 
129

Other
116

 
120

Total
$
1,035

 
$
1,001


v3.19.2
DEBT
12 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
DEBT DEBT
Short-term borrowings
Notes and loans payable primarily consist of U.S. commercial paper issued by the Company, which mature in less than one year, and were $396 and $199 as of June 30, 2019 and 2018, respectively.
The weighted average interest rates incurred on average outstanding notes and loans payable during the fiscal years ended June 30, 2019, 2018 and 2017, including fees associated with the Company’s undrawn revolving credit facility, were 2.98%, 2.10% and 1.21%, respectively. The weighted average effective interest rates on U.S. commercial paper balances as of June 30, 2019 and 2018 were 2.65% and 2.31%, respectively.
Long-term borrowings
Long-term debt, carried at face value net of unamortized discounts, premiums and debt issuance costs, included the following as of June 30:
 
2019
 
2018
Senior unsecured notes and debentures:
 
 
 
3.80%, $300 due November 2021
$
299

 
$
298

3.05%, $600 due September 2022
598

 
597

3.50%, $500 due December 2024
498

 
497

3.10%, $400 due October 2027
397

 
397

3.90%, $500 due May 2028
495

 
495

Total
2,287

 
2,284

Less: Current maturities of long-term debt

 

Long-term debt
$
2,287

 
$
2,284


The weighted average interest rates incurred on average outstanding long-term debt during the fiscal years ended June 30, 2019, 2018 and 2017, were 3.81%, 3.94% and 4.41%, respectively. The weighted average effective interest rates on long-term debt balances as of both June 30, 2019 and 2018 were 3.81%.
Long-term debt maturities as of June 30, 2019, are $0, $0, $300, $600, $0, and $1,400 in fiscal years 2020, 2021, 2022, 2023, 2024, and thereafter, respectively.
In May 2018, the Company issued $500 of senior notes with an annual fixed interest rate of 3.90% and a maturity date of May 15, 2028 and used the proceeds to repay a portion of the outstanding commercial paper, including amounts raised in connection with the Nutranext acquisition. Interest on the notes is payable semi-annually in May and November. The notes carry an effective interest rate of 4.02%, which includes the impact of amortizing debt issuance costs and the loss on the related interest rate forward contracts over the life of the notes (See Note 9). The notes rank equally with all of the Company's existing senior indebtedness.

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, and used the proceeds to repay $400 of senior notes with an annual fixed interest rate of 5.95% that became due in October 2017. Interest on the September 2017 senior 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 related interest rate forward contracts over the life of the notes (See Note 9). The notes rank equally with all of the Company’s existing senior indebtedness.
Credit arrangements
The Company’s borrowing capacity under other financing arrangements as of June 30 was as follows:
 
2019
 
2018
Revolving credit facility
$
1,100

 
$
1,100

Foreign and other credit lines
39

 
37

Total
$
1,139

 
$
1,137



As of June 30, 2019 and 2018, the Company had a $1,100 revolving credit agreement (the Credit Agreement) that matures in February 2022. There were no borrowings under the Credit Agreement as of June 30, 2019 and 2018, and the Company believes that borrowings under the Credit Agreement are and will continue to be available for general business purposes. The Credit Agreement includes certain restrictive covenants and limitations, with which the Company was in compliance as of June 30, 2019 and 2018.
Of the $39 of foreign and other credit lines as of June 30, 2019, $4 was outstanding and the remainder of $35 was available for borrowing. Of the $37 of foreign and other credit lines as of June 30, 2018, $3 was outstanding and the remainder of $34 was available for borrowing.
v3.19.2
OTHER LIABILITIES
12 Months Ended
Jun. 30, 2019
Other Liabilities Disclosure [Abstract]  
OTHER LIABILITIES OTHER LIABILITIES
Other liabilities consisted of the following as of June 30:
 
2019
 
2018
Venture agreement terminal obligation, net
$
370

 
$
341

Employee benefit obligations
280

 
283

Taxes
34

 
52

Other
96

 
102

Total
$
780

 
$
778


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 June 30, 2019 and 2018, 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 June 30, 2019, the estimated fair value of P&G’s interest was $619, of which $370 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.

Deferred Gain on Sale-leaseback Transaction
In December 2012, the Company completed a sale-leaseback transaction under which it sold its general office building in Oakland, California to an unrelated third party for net proceeds of $108 and entered into a 15-year operating lease agreement with renewal options with the buyer for a portion of the building. The Company deferred recognition of the portion of the total gain on the sale that was equivalent to the present value of the lease payments and will continue to amortize such amount to earnings ratably over the lease term. As of June 30, 2019 and 2018, the long-term portion of the deferred gain of $22 and $29, respectively, was included in Other, as noted in the table above. The Company will reclassify the remaining deferred gain from the sale-leaseback of the general office building to Retained earnings upon adoption of the new lease guidance under Topic 842 effective July 1, 2019. Refer to Note 1 for more information.
v3.19.2
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
12 Months Ended
Jun. 30, 2019
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 the Chicago Board of Trade commodity futures exchange and commodity derivative dealers.
As of June 30, 2019, the notional amount of commodity derivatives was $24, of which $11 related to jet fuel swaps used for the charcoal business and $13 related to soybean oil futures used for the food business. As of June 30, 2018, the notional amount of commodity derivatives was $34, of which $10 related to jet fuel swaps and $24 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 $61 and $50, respectively, as of June 30, 2019 and 2018.
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.
During fiscal year 2018, the Company entered into, and subsequently terminated, interest rate forward contracts related to the September 2017 issuance of $400 in senior notes and the May 2018 issuance of $500 in senior notes (See Note 7). These contracts resulted in insignificant gains and losses to Accumulated other comprehensive net (loss) income on the consolidated balance sheets, which are being amortized into Interest expense on the consolidated statement of earnings over the 10-year term of each of the notes.
The Company had no outstanding interest rate forward contracts as of June 30, 2019 and 2018.
Commodity, Foreign Exchange and Interest Rate Derivatives
The Company designates its commodity forward and futures 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 during the fiscal years ended June 30:
 
Gains (losses) recognized in Other comprehensive income
 
2019
 
2018
 
2017
Commodity purchase derivative contracts
$
(5
)
 
$
4

 
$
(3
)
Foreign exchange derivative contracts

 
2

 
(1
)
Interest rate derivative contracts

 
2

 

Total
$
(5
)
 
$
8

 
$
(4
)


 
Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
 
2019
 
2018
 
2017
Commodity purchase derivative contracts
$
(2
)
 
$
1

 
$
(2
)
Foreign exchange derivative contracts
2

 
(1
)
 
(3
)
Interest rate derivative contracts
(6
)
 
(6
)
 
(6
)
Total
$
(6
)
 
$
(6
)
 
$
(11
)


The gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings during the fiscal years ended June 30, 2019, 2018 and 2017, for commodity purchase and foreign exchange derivative contracts were included in Cost of products sold, and for interest rate derivative contracts were included in Interest expense.
The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of June 30, 2019 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 each of the fiscal years ended June 30, 2019, 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 instruments exceeds contractually defined counterparty liability position limits. Of the over-the-counter derivative instruments in liability positions held as of June 30, 2019 and 2018, $1 and $0, respectively, contained such terms. As of both June 30, 2019 and 2018, 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 June 30, 2019 and 2018, the Company and each of its counterparties had been assigned investment grade 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 June 30, 2019 and 2018, the Company maintained cash margin balances related to exchange-traded futures contracts of $1 and $2, respectively, which are classified as Prepaid expenses and other current assets on the 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 plan 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 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.
As of June 30, 2019, the value of the trust assets related to the Company’s nonqualified deferred compensation plans increased by $10 as compared to June 30, 2018, primarily due to current year employees’ contributions to these plans.
Fair Value of Financial Instruments
Financial assets and liabilities measured at fair value on a recurring basis in the 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 June 30, 2019 and 2018, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis during the period 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 Company’s assets and liabilities for which disclosure of fair value is required as of June 30:
 
 
 
 
 
2019
 
2018
Assets
Balance sheet classification
 
Fair value
hierarchy
level
 
Carrying
Amount
 
Estimated
Fair
Value
 
Carrying
Amount
 
Estimated
Fair
Value
Investments including money market funds
Cash and cash equivalents (a)
 
1
 
$
26

 
$
26

 
$
24

 
$
24

Time deposits
Cash and cash equivalents (a)
 
2
 
7

 
7

 
23

 
23

Commodity purchase swaps contracts
Prepaid expenses and other current assets
 
2
 

 

 
3

 
3

Foreign exchange forward contracts
Prepaid expenses and other current assets
 
2
 

 

 
2

 
2

Trust assets for nonqualified deferred compensation plans
Other assets
 
1
 
96

 
96

 
86

 
86

 
 
 
 
 
$
129

 
$
129

 
$
138

 
$
138

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Notes and loans payable
Notes and loans payable (b)
 
2
 
$
396

 
$
396

 
$
199

 
$
199

Commodity purchase futures contracts
Accounts payable and accrued liabilities
 
1
 
1

 
1

 
1

 
1

Commodity purchase swaps 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
 
2,287

 
2,402

 
2,284

 
2,269

 
 
 
 
 
$
2,685

 
$
2,800

 
$
2,484

 
$
2,469


(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.
v3.19.2
OTHER CONTINGENCIES AND GUARANTEES
12 Months Ended
Jun. 30, 2019
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 $27 and $28 as of June 30, 2019 and 2018, respectively, for its share of aggregate future remediation costs related to these matters.
One matter, which accounted for $14 of the recorded liability as of both June 30, 2019 and 2018, 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 the 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 $11 and $12 of the recorded liability as of June 30, 2019 and 2018, respectively. 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 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 consolidated financial statements taken as a whole.
The Company had not recorded any material liabilities on the aforementioned guarantees as of June 30, 2019 and 2018.
The Company was a party to letters of credit of $9 as of both June 30, 2019 and 2018, primarily related to one of its insurance carriers, of which $0 had been drawn upon.
v3.19.2
LEASES AND OTHER COMMITMENTS
12 Months Ended
Jun. 30, 2019
LEASES AND OTHER COMMITMENTS [Abstract]  
LEASES AND OTHER COMMITMENTS LEASES AND OTHER COMMITMENTS
The Company leases various property, plant, and equipment, including office, warehousing, manufacturing and research and development facilities, in addition to certain manufacturing and information technology equipment. The Company expects that, in the normal course of business, existing contracts will be renewed or replaced by other leases. Rental expense for all operating leases was $72, $86 and $84 in fiscal years 2019, 2018 and 2017, respectively.
The future minimum annual lease payments required under the Company’s existing non-cancelable operating and capital lease agreements as of June 30, 2019, were as follows:
Year
Operating
leases
 
Capital
leases
2020
$
71

 
$
2

2021
65

 
2

2022
50

 
1

2023
42

 
1

2024
37

 
1

Thereafter
124

 
2

Total
$
389

 
$
9


The Company is also a party to certain purchase obligations, which are defined as purchase agreements that are enforceable and legally binding and that contain specified or determinable significant terms, including quantity, price and the approximate timing of the transaction. For purchase obligations subject to variable price and/or quantity provisions, an estimate of the price and/or quantity must be made. Examples of the Company’s purchase obligations include contracts to purchase raw materials, commitments to contract manufacturers, commitments for information technology and related services, advertising contracts, capital expenditure agreements, software acquisition and license commitments and service contracts. The Company enters into purchase obligations based on expectations of future business needs. Many of these purchase obligations are flexible to allow for changes in the Company’s business and related requirements. As of June 30, 2019, the Company’s purchase obligations by purchase date were as follows:
Year
Purchase
Obligations
2020
$
77

2021
36

2022
26

2023
14

2024
11

Thereafter

Total
$
164


v3.19.2
STOCKHOLDERS' EQUITY
12 Months Ended
Jun. 30, 2019
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY STOCKHOLDERS’ EQUITY
As of June 30, 2019, the Company had two stock repurchase programs: an open-market purchase program with an authorized aggregate purchase amount of up to $2,000, which has no expiration date, was authorized by the Board of Directors in May 2018 and replaced the prior open-market purchase program with an authorized aggregate purchase amount of up to $750, and a program to offset the anticipated impact of dilution related to stock-based awards (the Evergreen Program), which has no authorization limit on the dollar amount and no expiration date.
Stock repurchases under the two stock repurchase programs were as follows during the fiscal years ended June 30:
 
2019
 
2018
 
2017
 
Amount
 
Shares
(in thousands)
 
Amount
 
Shares
(in thousands)
 
Amount
 
Shares
(in thousands)
Open-market purchase program
$
328

 
2,266

 
$
95

 
749

 
$

 

Evergreen Program
332

 
2,208

 
177

 
1,422

 
189

 
1,505

Total stock repurchases
$
660

 
4,474

 
$
272

 
2,171

 
$
189

 
1,505


Dividends per share paid during the fiscal years ended June 30 were as follows:
 
2019
 
2018
 
2017
Dividends per share paid
$
3.84

 
$
3.48

 
$
3.20



Accumulated Other Comprehensive Net (Loss) Income
Changes in Accumulated other comprehensive net (loss) income by component were as follows for the fiscal years ended June 30:
 
Foreign currency
translation adjustments
 
Net
unrealized
gains
(losses) on
derivatives
 
Pension and
postretirement
benefit
adjustments
 
Accumulated
other
comprehensive
(loss) income
Balance June 30, 2016
$
(353
)
 
$
(44
)
 
$
(173
)
 
$
(570
)
Other comprehensive income (loss) before
reclassifications
(3
)
 
(4
)
 
27

 
20

Amounts reclassified from Accumulated other
comprehensive net (loss) income

 
11

 
9

 
20

Income tax benefit (expense)

 

 
(13
)
 
(13
)
Net current period other comprehensive income (loss)
(3
)
 
7

 
23

 
27

Balance June 30, 2017
(356
)
 
(37
)
 
(150
)
 
(543
)
Other comprehensive income (loss) before
reclassifications
(20
)
 
8

 
11

 
(1
)
Amounts reclassified from Accumulated other
comprehensive net (loss) income

 
6

 
8

 
14

Income tax benefit (expense)
(8
)
 
(2
)
 
(7
)
 
(17
)
Net current period other comprehensive income (loss)
(28
)
 
12

 
12

 
(4
)
Balance June 30, 2018
(384
)
 
(25
)
 
(138
)
 
(547
)
Other comprehensive income (loss) before
reclassifications
(20
)
 
(5
)
 

 
(25
)
Amounts reclassified from Accumulated other
comprehensive net (loss) income

 
6

 
6

 
12

Income tax benefit (expense)
(2
)
 
1

 
(2
)
 
(3
)
Net current period other comprehensive income (loss)
(22
)
 
2

 
4

 
(16
)
Cumulative effect of accounting changes (1)
(8
)
 

 
(31
)
 
(39
)
Balance June 30, 2019
$
(414
)
 
$
(23
)
 
$
(165
)
 
$
(602
)


(1) The opening balance of Accumulated other comprehensive net (loss) income was adjusted as a result of adopting ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” on April 1, 2019. See Note 1 for more information.
Included in foreign currency adjustments are re-measurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. For the fiscal years ended June 30, 2019, 2018 and 2017, Other comprehensive losses on these loans totaled $3, $9 and $2, respectively, and there were no amounts reclassified from Accumulated other comprehensive net (loss) income for the periods presented.
v3.19.2
NET EARNINGS PER SHARE (EPS)
12 Months Ended
Jun. 30, 2019
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 for the fiscal years ended June 30:
 
2019
 
2018
 
2017
Basic
127,734

 
129,293

 
128,953

Dilutive effect of stock options and other
2,058

 
2,288

 
2,613

Diluted
129,792

 
131,581

 
131,566

 
 
 
 
 
 
Antidilutive stock options and other
800

 
1,192

 
11


v3.19.2
STOCK-BASED COMPENSATION PLANS
12 Months Ended
Jun. 30, 2019
Share-based Compensation [Abstract]  
STOCK-BASED COMPENSATION PLANS STOCK-BASED COMPENSATION PLANS
In November 2012, the Company’s stockholders voted to approve the amended and restated 2005 Stock Incentive Plan (the Plan). The Plan permits the Company to grant various nonqualified stock-based compensation awards, including stock options, restricted stock, performance shares, deferred stock units, stock appreciation rights and other stock-based awards. The primary amendment reflected in the Plan was an increase of approximately 3 million common shares that may be issued for stock-based compensation purposes. As of June 30, 2019, the Company is authorized to grant up to approximately 7 million common shares, plus additional shares equal to shares that are potentially deliverable under an award that expire or are canceled, forfeited or settled without the delivery of shares, under the Plan. As of June 30, 2019, approximately 8 million common shares remained available for grant.
Compensation cost and the related income tax benefit recognized for stock-based compensation plans were classified as indicated below for the fiscal years ended June 30:
 
2019
 
2018
 
2017
Cost of products sold
$
5

 
$
7

 
$
7

Selling and administrative expenses
35

 
42

 
40

Research and development costs
3

 
4

 
4

Total compensation costs
$
43

 
$
53

 
$
51

 
 
 
 
 
 
Related income tax benefit
$
10

 
$
16

 
$
19


Cash received during fiscal years 2019, 2018 and 2017 from stock options exercised under all stock-based payment arrangements was $166, $70 and $81, respectively. The Company issues shares for stock-based compensation plans from treasury stock. The Company may repurchase stock under its Evergreen Program to offset the estimated impact of dilution related to stock-based awards (See Note 12).
Details regarding the valuation and accounting for stock options, restricted stock awards, performance shares and deferred stock units for non-employee directors follow.
Stock Options
The fair value of each stock option award granted during fiscal years 2019, 2018 and 2017 was estimated on the date of grant using the Black-Scholes valuation model and assumptions noted in the following table:
 
2019
 
2018
 
2017
Expected life
5.4 years
 
5.5 years
 
5.5 years
Weighted-average expected life
5.4 years
 
5.5 years
 
5.5 years
Expected volatility
17.3% to 20.2%
 
15.7% to 18.7%
 
16.2% to 16.9%
Weighted-average volatility
17.4%
 
15.7%
 
16.9%
Risk-free interest rate
2.5% to 3.0%
 
1.3% to 2.6%
 
1.3% to 2.2%
Weighted-average risk-free interest rate
2.9%
 
1.8%
 
1.3%
Dividend yield
2.5% to 2.6%
 
2.4% to 3.0%
 
2.4% to 2.8%
Weighted-average dividend yield
2.6%
 
2.5%
 
2.6%

The expected life of the stock options is based on historical exercise patterns. The expected volatility is based on implied volatility from publicly traded options on the Company’s stock at the date of grant, historical implied volatility of the Company’s publicly traded options and other factors. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The dividend yield is based on the projected annual dividend payment per share, divided by the stock price at the date of grant.
Details of the Company’s stock option activities are summarized below:
 
Number of
Shares
(In thousands)
 
Weighted-
Average
Exercise
Price
per Share
 
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value
Options outstanding as of June 30, 2018
7,080

 
$
101

 
6 years
 
$
240

Granted
863

 
152

 
 
 
 
Exercised
(1,951
)
 
88

 
 
 
 
Canceled
(248
)
 
132

 
 
 
 
Options outstanding as of June 30, 2019
5,744

 
$
112

 
6 years
 
$
235

 
 
 
 
 
 
 
 
Options vested as of June 30, 2019
3,533

 
$
97

 
5 years
 
$
198



The weighted-average fair value per share of each option granted during fiscal years 2019, 2018 and 2017, estimated at the grant date using the Black-Scholes option pricing model, was $22.38, $15.33 and $13.75, respectively. The total intrinsic value of options exercised in fiscal years 2019, 2018 and 2017 was $125, $51 and $65, respectively.
Stock option awards outstanding as of June 30, 2019, have been granted at prices that are equal to the market value of the stock on the date of grant. Stock option grants generally vest over 4 years and expire no later than 10 years after the grant date. The Company recognizes compensation expense on a straight-line basis over the vesting period. As of June 30, 2019, there was $11 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 1 year, subject to forfeiture changes.
Restricted Stock Awards
The fair value of restricted stock awards is estimated on the date of grant based on the market price of the stock and is amortized to compensation expense on a straight-line basis over the related vesting periods, which are generally 3 to 4 years. The total number of restricted stock awards expected to vest is adjusted by actual and estimated forfeitures. Restricted stock grants receive dividend distributions earned during the vesting period upon vesting.
As of June 30, 2019, there was $23 of total unrecognized compensation cost related to non-vested restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of 1 year. The total fair value of the shares that vested in each of the fiscal years 2019, 2018 and 2017 was $5, $1 and $1, respectively. The weighted-average grant-date fair value of awards granted was $152.12, $135.29 and $131.67 per share for fiscal years 2019, 2018 and 2017, respectively.
A summary of the status of the Company’s restricted stock awards is presented below:
 
Number of
Shares
(In thousands)
 
Weighted-Average
Grant Date
Fair Value
per Share
Restricted stock awards as of June 30, 2018
156

 
$
135

Granted
139

 
152

Vested
(36
)
 
135

Forfeited
(18
)
 
140

Restricted stock awards as of June 30, 2019
241

 
$
144



Performance Shares
As of June 30, 2019, there was $9 in unrecognized compensation cost related to non-vested performance shares that is expected to be recognized over a remaining weighted-average performance period of 1 year. The weighted-average grant-date fair value of awards granted was $151.95, $135.47 and $122.73 per share for fiscal years 2019, 2018 and 2017, respectively.
A summary of the status of the Company’s performance share awards is presented below:
 
Number of
Shares
(In thousands)
 
Weighted-Average
Grant Date
Fair Value
per Share
Performance share awards as of June 30, 2018
698

 
$
111

Granted
216

 
152

Distributed
(334
)
 
109

Forfeited
(43
)
 
130

Performance share awards as of June 30, 2019
537

 
$
120

 
 
 
 
Performance shares vested and deferred as of June 30, 2019
151

 
$
82


The non-vested performance shares outstanding as of June 30, 2019 and 2018 were 387,000 and 544,000, respectively, and the weighted average grant date fair value was $133.10 and $120.69 per share, respectively. During fiscal year 2019, 330,000 shares vested. Deferred shares continue to earn dividends, which are also deferred. The total fair value of shares vested was $37, $35 and $0 during fiscal years 2019, 2018 and 2017, respectively. Upon vesting, the recipients of the grants receive the distribution as shares or, if previously elected by eligible recipients, as deferred stock.
Deferred Stock Units for Nonemployee Directors
Nonemployee directors receive annual grants of deferred stock units under the Company’s director compensation program and can elect to receive all or a portion of their annual retainers and fees in the form of deferred stock units. The deferred stock units receive dividend distributions, which are reinvested as deferred stock units, and are recognized at their fair value on the date of grant. Each deferred stock unit represents the right to receive one share of the Company’s common stock following the completion of a director’s service.
During fiscal year 2019, the Company granted 13,000 deferred stock units, reinvested dividends of 5,000 units and distributed 24,000 shares, which had a weighted-average fair value on the grant date of $154.23, $153.16 and $82.74 per share, respectively. As of June 30, 2019, 200,000 units were outstanding, which had a weighted-average fair value on the grant date of $87.47 per share.
v3.19.2
OTHER (INCOME) EXPENSE, NET
12 Months Ended
Jun. 30, 2019
Other Income and Expenses [Abstract]  
OTHER (INCOME) EXPENSE, NET OTHER (INCOME) EXPENSE, NET
The major components of Other (income) expense, net, for the fiscal years ended June 30 were:
 
2019
 
2018
 
2017
Income from equity investees
$
(15
)
 
$
(12
)
 
$
(19
)
Net periodic benefit cost (1)
14

 

 

Loss (gain) on sale of assets and investments, net

 
4

 
(11
)
Interest income
(3
)
 
(6
)
 
(4
)
Asset impairment charges

 
1

 
23

Amortization of trademarks and other intangible assets
17

 
11

 
10

Foreign exchange transaction (gains) losses, net
7

 
3