CLOROX CO /DE/, 10-Q filed on 10/31/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
3 Months Ended
Sep. 30, 2018
Oct. 17, 2018
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, 2018  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Entity Filer Category Large Accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business false  
Entity Common Stock, Shares Outstanding   127,652,097
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2019  
v3.10.0.1
Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited) - USD ($)
shares in Thousands, $ in Millions
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Income Statement [Abstract]    
Net sales $ 1,563 $ 1,500
Cost of products sold 885 827
Gross profit 678 673
Selling and administrative expenses 212 204
Advertising costs 139 134
Research and development costs 32 32
Interest expense 24 21
Other (income) expense, net 3 3
Earnings from continuing operations before income taxes 268 279
Income taxes on continuing operations 58 87
Earnings from continuing operations 210 192
Earnings (losses) from discontinued operations, net of tax 0 0
Net earnings $ 210 $ 192
Net earnings (losses) per share, Basic    
Continuing operations, basic (in dollars per share) $ 1.65 $ 1.49
Discontinued operations, basic (in dollars per share) 0.00 0.00
Basic net earnings per share (in dollars per share) 1.65 1.49
Net earnings (losses) per share, Diluted    
Continuing operations, diluted (in dollars per share) 1.62 1.46
Discontinued operations, diluted (in dollars per share) 0.00 0.00
Diluted net earnings per share (in dollars per share) $ 1.62 $ 1.46
Weighted average shares outstanding (in thousands)    
Basic (in shares) 127,803 129,019
Diluted (in shares) 129,946 131,509
Dividends declared per share (in dollars per share) $ 0.96 $ 0.84
Comprehensive income $ 210 $ 211
v3.10.0.1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Sep. 30, 2018
Jun. 30, 2018
Current assets    
Cash and cash equivalents $ 162 $ 131
Receivables, net 568 600
Inventories, net 519 506
Prepaid expenses and other current assets 68 74
Total current assets 1,317 1,311
Property, plant and equipment, net of accumulated depreciation and amortization of $2,084 and $2,061, respectively 988 996
Goodwill 1,602 1,602
Trademarks, net 794 795
Other intangible assets, net 131 134
Other assets 226 222
Total assets 5,058 5,060
Current liabilities    
Notes and loans payable 280 199
Accounts payable and accrued liabilities 947 1,001
Income taxes payable 8 0
Total current liabilities 1,235 1,200
Long-term debt 2,285 2,284
Other liabilities 793 778
Deferred income taxes 68 72
Total liabilities 4,381 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 September 30, 2018 and June 30, 2018; and 127,605,069 and 127,982,767 shares outstanding as of September 30, 2018 and June 30, 2018, respectively 159 159
Additional paid-in capital 984 975
Retained earnings 2,883 2,797
Treasury shares, at cost: 31,136,392 and 30,758,694 shares as of September 30, 2018 and June 30, 2018, respectively (2,802) (2,658)
Accumulated other comprehensive net (loss) income (547) (547)
Stockholders’ equity 677 726
Total liabilities and stockholders’ equity $ 5,058 $ 5,060
v3.10.0.1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2018
Jun. 30, 2018
Statement of Financial Position [Abstract]    
Property, plant and equipment, accumulated depreciation and amortization $ 2,084 $ 2,061
Preferred stock, par value (in dollars per share) $ 1.00 $ 1.00
Preferred stock, shares authorized (in shares) 5,000,000 5,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 1.00 $ 1.00
Common stock, shares authorized (in shares) 750,000,000 750,000,000
Common stock, shares issued (in shares) 158,741,461 158,741,461
Common stock, shares outstanding (in shares) 127,605,069 127,982,767
Treasury stock, shares (in shares) 31,136,392 30,758,694
v3.10.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Operating activities:    
Net earnings $ 210 $ 192
Deduct: Losses from discontinued operations, net of tax 0 0
Earnings from continuing operations 210 192
Adjustments to reconcile earnings from continuing operations to net cash provided by continuing operations:    
Depreciation and amortization 44 40
Stock-based compensation 8 12
Deferred income taxes (3) (4)
Other 16 18
Changes in:    
Receivables, net 33 35
Inventories, net (13) (10)
Prepaid expenses and other current assets (13) (6)
Accounts payable and accrued liabilities (52) (89)
Income taxes payable 29 71
Net cash provided by continuing operations 259 259
Net cash provided by (used for) discontinued operations 0 1
Net cash provided by operations 259 260
Investing activities:    
Capital expenditures (36) (49)
Other 0 13
Net cash used for investing activities (36) (36)
Financing activities:    
Notes and loans payable, net 80 (391)
Long-term debt borrowings, net of issuance costs 0 396
Treasury stock purchased (203) (66)
Cash dividends paid (122) (108)
Issuance of common stock for employee stock plans and other 53 (7)
Net cash used for financing activities (192) (176)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 0 4
Net increase in cash, cash equivalents, and restricted cash 31 52
Cash, cash equivalents, and restricted cash:    
Beginning of period 134 419
End of period 165 471
Accounting Standards Update 2016-18 [Member]    
Cash, cash equivalents, and restricted cash:    
Restricted cash $ 3 $ 3
v3.10.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2018 and 2017, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its subsidiaries (the Company) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain prior year reclassifications were made in the condensed consolidated statements of cash flows to conform to the current year presentation. 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, 2018, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

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 the finished products are transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract. Once control is transferred to the customer, the Company has completed its performance obligation, and revenue is recognized. After completion of the performance obligation, there is an unconditional right to consideration as outlined in the contract. A right is 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. Programs 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 sale takes place. The accruals for trade promotion programs and consumer coupon liabilities are established based on the Company’s best estimate of the amounts necessary to settle future and existing 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 promotional activities, and uses historical trend experience and coupon redemption estimates for the coupon accrual requirements.

The Company provides an allowance for doubtful accounts based on its historical experience and ongoing assessment of its customers’ credit risk and aging. Receivables are presented net of the allowance for doubtful accounts.


Foreign Currency Transactions and Translation

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 condensed consolidated statement of earnings.


Recently Issued Accounting Standards

Recently Issued Accounting Standards Not Yet Adopted

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

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

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


Recently Adopted Accounting Standards

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 does not expect the guidance to have a material impact on the Company's annual consolidated financial statements. However, there will be 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 new guidance allows reasonable estimates of income tax effects to be reported as provisional amounts during the measurement period, which is one year from the enactment date, when the necessary information is not available, prepared, or analyzed in sufficient detail to complete the accounting. The amendments also added specific disclosure requirements. The Company has adopted this new guidance. The Company recorded $81 of provisional benefits in the second quarter of fiscal year 2018. Refer to Note 6 for more information.
v3.10.0.1
BUSINESS ACQUIRED
3 Months Ended
Sep. 30, 2018
Business Combinations [Abstract]  
BUSINESS ACQUIRED
BUSINESS ACQUIRED

On April 2, 2018, the Company acquired 100 percent of Nutranext, a health and wellness company based in Sunrise, Florida. Nutranext manufactures and markets leading dietary supplement brands in the retail and e-commerce channels as well as in its direct-to-consumer business. The purchase of the business reflects the Company's strategy to acquire leading brands in fast-growing categories with attractive gross margins and a focus on health and wellness.

The total 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 of $309 and $102, respectively. The goodwill of $411 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 following table summarizes the estimated fair value of Nutranext's assets acquired and liabilities assumed and the 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.
 
Nutranext
Goodwill ($309 in Lifestyle reportable segment and $102 in Household reportable segment)
$
411

Trademarks
143

Customer relationships
75

Property, plant and equipment
49

Working capital, net
23

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.
Pro forma results reflecting the acquisition were not presented because the acquisition did not meet the threshold requirements for additional disclosure.
v3.10.0.1
DISCONTINUED OPERATIONS
3 Months Ended
Sep. 30, 2018
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS
On September 22, 2014, the Company's Venezuela affiliate, Corporación Clorox de Venezuela S.A. (Clorox Venezuela) announced that it was discontinuing its operations, effective immediately, and seeking to sell its assets. Since fiscal year 2012, Clorox Venezuela has been required to sell more than two thirds of its products at prices frozen by the Venezuelan government. During this same period, Clorox Venezuela experienced successive years of hyperinflation resulting in significant sustained increases in its input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela had been selling its products at a loss, resulting in ongoing operating losses. Clorox Venezuela repeatedly met with government authorities in an effort to help them understand the rapidly declining state of the business, including the need for immediate, significant and ongoing price increases and other critical remedial actions to address these adverse impacts. Based on the Venezuelan government’s representations, Clorox Venezuela had expected significant price increases would be forthcoming much earlier; however, the price increases subsequently approved were insufficient and would have caused Clorox Venezuela to continue operating at a significant loss into the foreseeable future. As such, Clorox Venezuela was no longer financially viable and was forced to discontinue its operations.
On September 26, 2014, the Company reported that Venezuelan Vice President Jorge Arreaza announced, with endorsement by President Nicolás Maduro, that the Venezuelan government had occupied the Santa Lucía and Guacara production facilities of Clorox Venezuela. On November 6, 2014, the Company reported that the Venezuelan government had published a resolution granting a government-sponsored Special Administrative Board full authority to restart and operate the business of Clorox Venezuela, thereby reaffirming the government's expropriation of Clorox Venezuela’s assets. Further, President Nicolás Maduro announced the government's intention to facilitate the resumed production of bleach and other cleaning products at Clorox Venezuela plants. He also announced his approval of a financial credit to invest in raw materials and production at the plants. These actions by the Venezuelan government were taken without the consent or involvement of Clorox Venezuela, its parent Clorox Spain S.L. (Clorox Spain) or any of their affiliates. Clorox Venezuela, Clorox Spain and their affiliates reserved their rights under all applicable laws and treaties.
With this exit, the financial results of Clorox Venezuela are reflected as discontinued operations in the Company’s condensed consolidated financial statements for all periods presented. The results of Clorox Venezuela had historically been part of the International reportable segment.
There were no net sales for each of the three months ended September 30, 2018 and 2017, and losses from discontinued operations, net of tax were insignificant for these same periods.
v3.10.0.1
INVENTORIES, NET
3 Months Ended
Sep. 30, 2018
Inventory Disclosure [Abstract]  
INVENTORIES, NET
INVENTORIES, NET
Inventories, net, consisted of the following as of:
 
9/30/2018
 
6/30/2018
Finished goods
$
408

 
$
395

Raw materials and packaging
135

 
129

Work in process
7

 
9

LIFO allowances
(31
)
 
(27
)
Total
$
519

 
$
506

v3.10.0.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
3 Months Ended
Sep. 30, 2018
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS [Abstract]  
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial Risk Management and Derivative Instruments

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

Commodity Price Risk Management

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

As of September 30, 2018, the notional amount of commodity derivatives was $39, of which $28 related to soybean oil futures used for the food business and $11 related to jet fuel swaps used for the charcoal business. As of June 30, 2018, the notional amount of commodity derivatives was $34, of which $24 related to soybean oil futures and $10 related to jet fuel swaps.

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 $39 as of September 30, 2018, and $50 as of June 30, 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.

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

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

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

 
Gains (losses) recognized in Other comprehensive income
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Commodity purchase derivative contracts
$
4

 
$
2

Foreign exchange derivative contracts

 
(1
)
Interest rate derivative contracts

 
2

Total
$
4

 
$
3



 
Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Commodity purchase derivative contracts
$
4

 
$

Foreign exchange derivative contracts
1

 
(1
)
Interest rate derivative contracts
(2
)
 
(2
)
Total
$
3

 
$
(3
)


The gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings during the three months ended September 30, 2018 and 2017, for commodity purchase and foreign exchange contracts were included in Cost of products sold, and for interest rate contracts were included in Interest expense.

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of September 30, 2018, which is expected to be reclassified into Net earnings within the next twelve months is $(3). 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, 2018 and 2017, hedge ineffectiveness was not significant.

Counterparty Risk Management and Derivative Contract Requirements

The Company utilizes a variety of financial institutions as counterparties for over-the-counter derivative instruments. The Company enters into agreements governing the use of over-the-counter derivative instruments and sets internal limits on the aggregate over-the-counter derivative instrument positions held with each counterparty. Certain terms of these agreements require the Company or the counterparty to post collateral when the fair value of the derivative instrument exceeds contractually defined counterparty liability position limits. Of the over-the-counter derivative instruments in liability positions held as of September 30, 2018 and June 30, 2018, none contained such terms. As of September 30, 2018 and June 30, 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 of the Company and its counterparties, as assigned by Standard & Poor’s and Moody’s, 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, 2018 and June 30, 2018, 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, 2018 and June 30, 2018, the Company maintained cash margin balances related to exchange-traded futures contracts of $2, which are classified as Prepaid expenses and other current assets in the condensed consolidated balance sheets.

Trust Assets

The Company has held interests in mutual funds and cash equivalents as part of the 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 to invest their compensation deferrals in accordance with the terms of the plans and within the confines of the trusts, which hold the marketable securities. The trusts represent variable interest entities for which the Company is considered the primary beneficiary, and, therefore, trust assets are consolidated and included in Other assets in the condensed consolidated balance sheets. The interests in mutual funds are measured at fair value using quoted market prices. The Company has designated these marketable securities as trading investments.

Fair Value Measurements

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

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

As of September 30, 2018 and June 30, 2018, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.
The following table summarizes the fair value of the Company’s assets and liabilities for which disclosure of fair value is required:
 
 
 
 
 
9/30/2018
 
6/30/2018
 
Balance sheet
classification
 
Fair value
hierarchy
level
 
Carrying
Amount
 
Estimated
Fair
Value
 
Carrying
Amount
 
Estimated
Fair
Value
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments including money market funds
Cash and cash
equivalents
(a)
 
1
 
$
40

 
$
40

 
$
24

 
$
24

Time deposits
Cash and cash
equivalents
(a)
 
2
 
32

 
32

 
23

 
23

Commodity purchase swaps contracts
Prepaid expenses and other current assets
 
2
 
4

 
4

 
3

 
3

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

 
1

 
2

 
2

Trust assets for nonqualified deferred compensation plans
Other assets
 
1
 
93

 
93

 
86

 
86

 
 
 
 
 
$
170

 
$
170

 
$
138

 
$
138

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Notes and loans payable
Notes and loans payable (b)
 
2
 
$
280

 
$
280

 
$
199

 
$
199

Commodity purchase futures contracts
Accounts payable and accrued liabilities
 
1
 
1

 
1

 
1

 
1

Current maturities of long-term debt
and Long-term debt
Current maturities of long-
term debt and Long-term
debt
(c)
 
2
 
2,285

 
2,269

 
2,284

 
2,269

 
 
 
 
 
$
2,566

 
$
2,550

 
$
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.
v3.10.0.1
INCOME TAXES
3 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
In determining its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The effective tax rate on earnings from continuing operations was 21.5% and 31.3% for the three months ended September 30, 2018 and 2017, respectively. The decrease in the effective tax rate on earnings from continuing operations for the current period was primarily due to the corporate income tax rate reduction resulting from enactment of the Tax Act during the second quarter of fiscal year 2018 (the period of the Tax Act's enactment).

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

As of September 30, 2018, the Company continued to obtain, prepare and analyze information necessary to finalize the accounting for the impacts of the Tax Act. Consequently, reasonable estimates of the impacts of the Tax Act have been reported as provisional, as defined in Staff Accounting Bulletin No. 118.

Total benefits of $81 were recorded in the period of the Tax Act's enactment and were due to several provisional adjustments including net deferred tax liability reductions of $60, a beneficial current taxable income impact of $28 and a provisional one-time transition tax of $7. Measurement adjustments to the provisional amounts were not significant for the first quarter of fiscal year 2019.
v3.10.0.1
NET EARNINGS PER SHARE (EPS)
3 Months Ended
Sep. 30, 2018
Earnings Per Share [Abstract]  
NET EARNINGS PER SHARE (EPS)
NET EARNINGS PER SHARE (EPS)
The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Basic
127,803
 
129,019

Dilutive effect of stock options and other
2,143
 
2,490
Diluted
129,946
 
131,509

 
 
 
 
Antidilutive stock options and other
967
 
1,174



The Company has 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, 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 for the periods indicated:
 
Three Months Ended
 
9/30/2018
 
9/30/2017
 
Amount
 
Shares
(in thousands)
 
Amount
 
Shares
(in thousands)
Open-market purchase program
$
78

 
591

 
$

 

Evergreen Program
120

 
832

 
60

 
450

v3.10.0.1
COMPREHENSIVE INCOME
3 Months Ended
Sep. 30, 2018
Stockholders' Equity Note [Abstract]  
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME
The following table provides a summary of Comprehensive income for the periods indicated:
 
 
Three Months Ended
 
 
9/30/2018
 
9/30/2017
Earnings from continuing operations
 
$
210

 
$
192

Earnings (losses) from discontinued operations, net of tax
 

 

Net earnings
 
210

 
192

Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustments
 
(2
)
 
14

Net unrealized gains (losses) on derivatives
 
1

 
5

Pension and postretirement benefit adjustments
 
1

 

Total other comprehensive income (loss), net of tax
 

 
19

Comprehensive income
 
$
210

 
$
211


Changes in Accumulated other comprehensive net (loss) 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 (loss) income
Balance as of June 30, 2017
$
(356
)
 
$
(37
)
 
$
(150
)
 
$
(543
)
Other comprehensive income (loss) before reclassifications
16

 
3

 

 
19

Amounts reclassified from Accumulated other comprehensive net (loss) income

 
3

 
1

 
4

Income tax benefit (expense)
(2
)
 
(1
)
 
(1
)
 
(4
)
Net current period other comprehensive income (loss)
14

 
5

 

 
19

Balance as of September 30, 2017
$
(342
)
 
$
(32
)
 
$
(150
)
 
$
(524
)
Balance as of June 30, 2018
$
(384
)
 
$
(25
)
 
$
(138
)
 
$
(547
)
Other comprehensive income (loss) before reclassifications
(2
)
 
4

 

 
2

Amounts reclassified from Accumulated other comprehensive net (loss) income

 
(3
)
 
2

 
(1
)
Income tax benefit (expense)

 

 
(1
)
 
(1
)
Net current period other comprehensive income (loss)
(2
)
 
1

 
1

 

Balance as of September 30, 2018
$
(386
)
 
$
(24
)
 
$
(137
)
 
$
(547
)


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, 2018 and 2017, Other comprehensive income (loss) on these loans totaled $(2) and $(1), respectively. There were no amounts associated with these loans reclassified from Accumulated other comprehensive net (loss) income for the periods presented.
v3.10.0.1
EMPLOYEE BENEFIT PLANS
3 Months Ended
Sep. 30, 2018
Defined Benefit Plan [Abstract]  
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS
The following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Service cost
$

 
$

Interest cost
6

 
6

Expected return on plan assets (1)
(4
)
 
(5
)
Amortization of unrecognized items
2

 
3

Total
$
4

 
$
4

(1) The weighted average long-term expected rate of return on plan assets used in computing the fiscal year 2019 net periodic benefit cost is 4.33%.
During the three months ended September 30, 2018 and 2017, the Company made $2 in contributions to the domestic retirement income plans.
As a result of adopting ASU No. 2017-07, "Compensation-Retirement Benefits (Topic 715)," effective July 1, 2018, net periodic benefit cost is reflected in Other (income) expense, net for fiscal year 2019, and in Cost of products sold, Selling and administrative expenses and Research and development costs prior to fiscal year 2019. Refer to Note 1 for more details.
v3.10.0.1
OTHER CONTINGENCIES AND GUARANTEES
3 Months Ended
Sep. 30, 2018
OTHER CONTINGENCIES AND GUARANTEES [Abstract]  
OTHER CONTINGENCIES AND GUARANTEES
OTHER CONTINGENCIES AND GUARANTEES
Contingencies
The Company is involved in certain environmental matters, including response actions at various locations. The Company had recorded liabilities totaling $28 as of September 30, 2018 and June 30, 2018, for its share of aggregate future remediation costs related to these matters.
One matter, which accounted for $14 of the recorded liability as of September 30, 2018 and June 30, 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 this site. While the Company believes its latest estimate is reasonable, regulators could require the Company to implement one of the other options evaluated in the Feasibility Study, with estimated undiscounted costs of up to $28 over an estimated 30-year period, or require the Company to take other actions and incur costs not included in the study.
Another matter in Dickinson County, Michigan, at the site of one of the Company's former operations for which the Company is jointly and severally liable, accounted for $12 of the recorded liability, as of September 30, 2018 and June 30, 2018. This amount reflects the Company's agreement to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing arrangement with a third party. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded for the Dickinson County matter, any amount of such additional exposures, or range of exposures, is not estimable at this time. The Company's estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements, and the future availability of alternative clean-up technologies.
The Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements, product liability, patents and trademarks, advertising, labor and employment, environmental, health and safety and other matters. With respect to these proceedings, claims and other loss contingencies, while considerable uncertainty exists, in the opinion of management at this time, the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.
Guarantees
In conjunction with divestitures and other transactions, the Company may provide typical indemnifications (e.g., indemnifications for representations and warranties and retention of previously existing environmental, tax and employee liabilities) that have terms that vary in duration and in the potential amount of the total obligation and, in many circumstances, are not explicitly defined. The Company has not made, nor does it believe that it is probable that it will make, any material payments relating to its indemnifications, and believes that any reasonably possible payments would not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.
The Company had not recorded any material liabilities on the aforementioned guarantees as of September 30, 2018 and June 30, 2018.
As of September 30, 2018, the Company was a party to letters of credit of $9, primarily related to one of its insurance carriers, of which $0 had been drawn upon.
v3.10.0.1
SEGMENT RESULTS
3 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
SEGMENT RESULTS
SEGMENT RESULTS
The Company operates through strategic business units that are aggregated into four reportable segments based on the economics and nature of the products sold: Cleaning, Household, Lifestyle and International.
Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, other investments and deferred taxes.
The table below presents reportable segment information and a reconciliation of the segment information to the Company’s consolidated Net sales and Earnings from continuing operations before income taxes, with amounts that are not allocated to the reportable segments reflected in Corporate.
 
Net sales
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Cleaning
$
571

 
$
559

Household
442

 
441

Lifestyle
309

 
246

International
241

 
254

Corporate

 

Total
$
1,563

 
$
1,500

 
 
 
 
 
Earnings (losses) from continuing operations before income taxes
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Cleaning
$
180

 
$
172

Household
59

 
73

Lifestyle
62

 
64

International
28

 
23

Corporate
(61
)
 
(53
)
Total
$
268

 
$
279


All intersegment sales are eliminated and are not included in the Company’s reportable segments’ net sales.
Net sales to the Company's largest customer, Wal-Mart Stores, Inc. and its affiliates, as a percentage of consolidated net sales, were 25% and 26% for the three months ended September 30, 2018 and 2017, respectively.
v3.10.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2018 and 2017, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its subsidiaries (the Company) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain prior year reclassifications were made in the condensed consolidated statements of cash flows to conform to the current year presentation. 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, 2018, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.
Revenue Recognition
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 the finished products are transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract. Once control is transferred to the customer, the Company has completed its performance obligation, and revenue is recognized. After completion of the performance obligation, there is an unconditional right to consideration as outlined in the contract. A right is 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. Programs 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 sale takes place. The accruals for trade promotion programs and consumer coupon liabilities are established based on the Company’s best estimate of the amounts necessary to settle future and existing 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 promotional activities, and uses historical trend experience and coupon redemption estimates for the coupon accrual requirements.

The Company provides an allowance for doubtful accounts based on its historical experience and ongoing assessment of its customers’ credit risk and aging. Receivables are presented net of the allowance for doubtful accounts.

Foreign Currency Transactions and Translation
Foreign Currency Transactions and Translation

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 condensed consolidated statement of earnings.
Recently Issued Accounting Standards
Recently Issued Accounting Standards

Recently Issued Accounting Standards Not Yet Adopted

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

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

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


Recently Adopted Accounting Standards

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 does not expect the guidance to have a material impact on the Company's annual consolidated financial statements. However, there will be 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 new guidance allows reasonable estimates of income tax effects to be reported as provisional amounts during the measurement period, which is one year from the enactment date, when the necessary information is not available, prepared, or analyzed in sufficient detail to complete the accounting. The amendments also added specific disclosure requirements. The Company has adopted this new guidance. The Company recorded $81 of provisional benefits in the second quarter of fiscal year 2018. Refer to Note 6 for more information.
Fair Value Measurements
Fair Value Measurements

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

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

As of September 30, 2018 and June 30, 2018, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.
Segment Results
The Company operates through strategic business units that are aggregated into four reportable segments based on the economics and nature of the products sold: Cleaning, Household, Lifestyle and International.
Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, other investments and deferred taxes.
v3.10.0.1
BUSINESS ACQUIRED (Tables)
3 Months Ended
Sep. 30, 2018
Business Combinations [Abstract]  
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed
The following table summarizes the estimated fair value of Nutranext's assets acquired and liabilities assumed and the 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.
 
Nutranext
Goodwill ($309 in Lifestyle reportable segment and $102 in Household reportable segment)
$
411

Trademarks
143

Customer relationships
75

Property, plant and equipment
49

Working capital, net
23

Deferred income taxes
(20
)
Consideration paid
$
681

v3.10.0.1
INVENTORIES, NET (Tables)
3 Months Ended
Sep. 30, 2018
Inventory Disclosure [Abstract]  
Schedule of Inventories, Net
Inventories, net, consisted of the following as of:
 
9/30/2018
 
6/30/2018
Finished goods
$
408

 
$
395

Raw materials and packaging
135

 
129

Work in process
7

 
9

LIFO allowances
(31
)
 
(27
)
Total
$
519

 
$
506

v3.10.0.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Sep. 30, 2018
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS [Abstract]  
Effects of Derivative Instruments Designated as Hedging Instruments on OCI
The effects of derivative instruments designated as hedging instruments on Other comprehensive income and Net earnings were as follows:

 
Gains (losses) recognized in Other comprehensive income
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Commodity purchase derivative contracts
$
4

 
$
2

Foreign exchange derivative contracts

 
(1
)
Interest rate derivative contracts

 
2

Total
$
4

 
$
3

Effects of Derivative Instruments Designated as Hedging Instruments on Net Earnings
 
Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Commodity purchase derivative contracts
$
4

 
$

Foreign exchange derivative contracts
1

 
(1
)
Interest rate derivative contracts
(2
)
 
(2
)
Total
$
3

 
$
(3
)
Schedule of Assets and Liabilities for Fair Value Disclosure
The following table summarizes the fair value of the Company’s assets and liabilities for which disclosure of fair value is required:
 
 
 
 
 
9/30/2018
 
6/30/2018
 
Balance sheet
classification
 
Fair value
hierarchy
level
 
Carrying
Amount
 
Estimated
Fair
Value
 
Carrying
Amount
 
Estimated
Fair
Value
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments including money market funds
Cash and cash
equivalents
(a)
 
1
 
$
40

 
$
40

 
$
24

 
$
24

Time deposits
Cash and cash
equivalents
(a)
 
2
 
32

 
32

 
23

 
23

Commodity purchase swaps contracts
Prepaid expenses and other current assets
 
2
 
4

 
4

 
3

 
3

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

 
1

 
2

 
2

Trust assets for nonqualified deferred compensation plans
Other assets
 
1
 
93

 
93

 
86

 
86

 
 
 
 
 
$
170

 
$
170

 
$
138

 
$
138

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Notes and loans payable
Notes and loans payable (b)
 
2
 
$
280

 
$
280

 
$
199

 
$
199

Commodity purchase futures contracts
Accounts payable and accrued liabilities
 
1
 
1

 
1

 
1

 
1

Current maturities of long-term debt
and Long-term debt
Current maturities of long-
term debt and Long-term
debt
(c)
 
2
 
2,285

 
2,269

 
2,284

 
2,269

 
 
 
 
 
$
2,566

 
$
2,550

 
$
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.
v3.10.0.1
NET EARNINGS PER SHARE (EPS) (Tables)
3 Months Ended
Sep. 30, 2018
Earnings Per Share [Abstract]  
Schedule of Weighted Average Number of Shares Outstanding and Antidilutive Shares
The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Basic
127,803
 
129,019

Dilutive effect of stock options and other
2,143
 
2,490
Diluted
129,946
 
131,509

 
 
 
 
Antidilutive stock options and other
967
 
1,174

Schedule of Share Repurchases Under Authorized Programs
Stock repurchases under the two stock repurchase programs were as follows for the periods indicated:
 
Three Months Ended
 
9/30/2018
 
9/30/2017
 
Amount
 
Shares
(in thousands)
 
Amount
 
Shares
(in thousands)
Open-market purchase program
$
78

 
591

 
$

 

Evergreen Program
120

 
832

 
60

 
450

v3.10.0.1
COMPREHENSIVE INCOME (Tables)
3 Months Ended
Sep. 30, 2018
Stockholders' Equity Note [Abstract]  
Schedule of Comprehensive Income
The following table provides a summary of Comprehensive income for the periods indicated:
 
 
Three Months Ended
 
 
9/30/2018
 
9/30/2017
Earnings from continuing operations
 
$
210

 
$
192

Earnings (losses) from discontinued operations, net of tax
 

 

Net earnings
 
210

 
192

Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustments
 
(2
)
 
14

Net unrealized gains (losses) on derivatives
 
1

 
5

Pension and postretirement benefit adjustments
 
1

 

Total other comprehensive income (loss), net of tax
 

 
19

Comprehensive income
 
$
210

 
$
211

Schedule of Changes in Accumulated Other Comprehensive Net (Losses) Income
Changes in Accumulated other comprehensive net (loss) 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 (loss) income
Balance as of June 30, 2017
$
(356
)
 
$
(37
)
 
$
(150
)
 
$
(543
)
Other comprehensive income (loss) before reclassifications
16

 
3

 

 
19

Amounts reclassified from Accumulated other comprehensive net (loss) income

 
3

 
1

 
4

Income tax benefit (expense)
(2
)
 
(1
)
 
(1
)
 
(4
)
Net current period other comprehensive income (loss)
14

 
5

 

 
19

Balance as of September 30, 2017
$
(342
)
 
$
(32
)
 
$
(150
)
 
$
(524
)
Balance as of June 30, 2018
$
(384
)
 
$
(25
)
 
$
(138
)
 
$
(547
)
Other comprehensive income (loss) before reclassifications
(2
)
 
4

 

 
2

Amounts reclassified from Accumulated other comprehensive net (loss) income

 
(3
)
 
2

 
(1
)
Income tax benefit (expense)

 

 
(1
)
 
(1
)
Net current period other comprehensive income (loss)
(2
)
 
1

 
1

 

Balance as of September 30, 2018
$
(386
)
 
$
(24
)
 
$
(137
)
 
$
(547
)
v3.10.0.1
EMPLOYEE BENEFIT PLANS (Tables)
3 Months Ended
Sep. 30, 2018
Defined Benefit Plan [Abstract]  
Schedule of Components of Net Periodic Benefit Cost
The following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Service cost
$

 
$

Interest cost
6

 
6

Expected return on plan assets (1)
(4
)
 
(5
)
Amortization of unrecognized items
2

 
3

Total
$
4

 
$
4

(1) The weighted average long-term expected rate of return on plan assets used in computing the fiscal year 2019 net periodic benefit cost is 4.33%.
v3.10.0.1
SEGMENT RESULTS (Tables)
3 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
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
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Cleaning
$
571

 
$
559

Household
442

 
441

Lifestyle
309

 
246

International
241

 
254

Corporate

 

Total
$
1,563

 
$
1,500

 
 
 
 
 
Earnings (losses) from continuing operations before income taxes
 
Three Months Ended
 
9/30/2018
 
9/30/2017
Cleaning
$
180

 
$
172

Household
59

 
73

Lifestyle
62

 
64

International
28

 
23

Corporate
(61
)
 
(53
)
Total
$
268

 
$
279

v3.10.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($)
$ in Millions
3 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Accounting Policies [Abstract]    
Contract term one year or less  
Tax Cuts and Jobs Act of 2017, provisional income tax benefit   $ 81
v3.10.0.1
DISCONTINUED OPERATIONS (Summary of (Losses) Gains from Discontinued Operations) (Details) - Clorox Venezuela [Member] - USD ($)
$ in Millions
3 Months Ended 39 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]      
Minimum percentage of products required to be sold at frozen price     66.67%
Net sales $ 0 $ 0  
v3.10.0.1
BUSINESS ACQUIRED (Narrative) (Details) - USD ($)
$ in Millions
Apr. 02, 2018
Sep. 30, 2018
Jun. 30, 2018
Business Acquisition [Line Items]      
Goodwill   $ 1,602 $ 1,602
Nutranext [Member]      
Business Acquisition [Line Items]      
Percentage of business acquired 100.00%    
Amount paid for acquisition $ 681    
Goodwill 411    
Goodwill expected to be tax deductible $ 363    
The weighted-average estimated useful life of intangible assets subject to amortization 15 years    
Lifestyle [Member] | Nutranext [Member]      
Business Acquisition [Line Items]      
Goodwill $ 309    
Household [Member] | Nutranext [Member]      
Business Acquisition [Line Items]      
Goodwill $ 102    
v3.10.0.1
BUSINESS ACQUIRED (Fair Value Of Assets Acquired and Liabilities Assumed) (Details) - USD ($)
$ in Millions
Sep. 30, 2018
Jun. 30, 2018
Apr. 02, 2018
Business Acquisition [Line Items]      
Goodwill $ 1,602 $ 1,602  
Nutranext [Member]      
Business Acquisition [Line Items]      
Goodwill     $ 411
Property, plant and equipment     49
Working capital, net     23
Deferred income taxes     (20)
Consideration paid     681
Customer Relationships [Member] | Nutranext [Member]      
Business Acquisition [Line Items]      
Other intangible assets     75
Trademarks [Member] | Nutranext [Member]      
Business Acquisition [Line Items]      
Other intangible assets     143
Lifestyle [Member] | Nutranext [Member]      
Business Acquisition [Line Items]      
Goodwill     309
Household [Member] | Nutranext [Member]      
Business Acquisition [Line Items]      
Goodwill     $ 102
v3.10.0.1
INVENTORIES, NET (Details) - USD ($)
$ in Millions
Sep. 30, 2018
Jun. 30, 2018
Inventory Disclosure [Abstract]    
Finished goods $ 408 $ 395
Raw materials and packaging 135 129
Work in process 7 9
LIFO allowances (31) (27)
Total $ 519 $ 506
v3.10.0.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Narrative) (Details)
$ in Millions
3 Months Ended
Sep. 30, 2018
USD ($)
instrument
Jun. 30, 2018
USD ($)
instrument
Derivative [Line Items]    
Maximum duration, foreign exchange contracts 2 years  
Number of interest rate derivatives held | instrument 0 0
Estimated amount of the existing net gain (loss) to be reclassified into earnings in the next 12 months $ (3)  
Derivative instruments subject to contractually defined counterparty liability position limits $ 0  
Total Commodity Purchase Derivative Contracts [Member]    
Derivative [Line Items]    
Maximum duration, commodity contracts 2 years  
Notional amounts $ 39 $ 34
Cash margin balances amount 2 2
Jet Fuel Swaps [Member]    
Derivative [Line Items]    
Notional amounts 11 10
Soybean Oil Futures [Member]    
Derivative [Line Items]    
Notional amounts 28 24
Purchases of Inventory [Member] | Foreign Exchange Contract [Member]    
Derivative [Line Items]    
Notional amounts $ 39 $ 50
v3.10.0.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Schedule of the Effects of Derivative Instruments Designated as Hedging Instruments) (Details) - USD ($)
$ in Millions
3 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Derivative Instruments, Gain (Loss) [Line Items]    
Gains (losses) recognized in Other comprehensive income $ 4 $ 3
Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings 3 (3)
Commodity Contract [Member]    
Derivative Instruments, Gain (Loss) [Line Items]    
Gains (losses) recognized in Other comprehensive income 4 2
Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings 4 0
Foreign Exchange Contract [Member]    
Derivative Instruments, Gain (Loss) [Line Items]    
Gains (losses) recognized in Other comprehensive income 0 (1)
Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings 1 (1)
Interest Rate Contract [Member]    
Derivative Instruments, Gain (Loss) [Line Items]    
Gains (losses) recognized in Other comprehensive income 0 2
Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings $ (2) $ (2)
v3.10.0.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Schedule of Assets and Liabilities for Fair Value Disclosure) (Details) - USD ($)
$ in Millions
Sep. 30, 2018
Jun. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents $ 162 $ 131
Total assets 5,058 5,060
Notes and loans payable 280 199