CLOROX CO /DE/, 10-K filed on 8/14/2018
Annual Report
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DOCUMENT AND ENTITY INFORMATION - USD ($)
$ in Billions
12 Months Ended
Jun. 30, 2018
Jul. 27, 2018
Dec. 29, 2017
Document And Entity Information      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Jun. 30, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Entity Registrant Name CLOROX CO /DE/    
Entity Central Index Key 0000021076    
Current Fiscal Year End Date --06-30    
Entity Filer Category Large Accelerated Filer    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Public Float     $ 19.2
Entity Common Stock, Shares Outstanding   128,085,895  
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CONSOLIDATED STATEMENT OF EARNINGS - USD ($)
shares in Thousands, $ in Millions
12 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2016
Income Statement [Abstract]      
Net sales $ 6,124 $ 5,973 $ 5,761
Cost of products sold 3,449 3,302 3,163
Gross profit 2,675 2,671 2,598
Selling and administrative expenses 837 810 806
Advertising costs 570 599 587
Research and development costs 132 135 141
Interest expense 85 88 88
Other (income) expense, net (3) 6 (7)
Earnings from continuing operations before income taxes 1,054 1,033 983
Income taxes on continuing operations 231 330 335
Earnings from continuing operations 823 703 648
Losses from discontinued operations, net of tax 0 (2) 0
Net earnings $ 823 $ 701 $ 648
Basic      
Basic continuing operations (in dollars per share) $ 6.37 $ 5.45 $ 5.01
Basic discontinued operations (in dollars per share) 0.00 (0.02) 0.00
Basic net earnings per share (in dollars per share) 6.37 5.43 5.01
Diluted      
Diluted continuing operations (in dollars per share) 6.26 5.35 4.92
Diluted discontinued operations (in dollars per share) 0.00 (0.02) 0.00
Diluted net earnings per share (in dollars per share) $ 6.26 $ 5.33 $ 4.92
Weighted Average Number of Shares Outstanding, Diluted [Abstract]      
Weighted average shares outstanding - basic (in shares) 129,293 128,953 129,472
Weighted average shares outstanding - diluted (in shares) 131,581 131,566 131,717
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
12 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2016
Statement of Comprehensive Income [Abstract]      
Earnings from continuing operations $ 823 $ 703 $ 648
Losses from discontinued operations, net of tax 0 (2) 0
Net earnings 823 701 648
Other comprehensive income (losses):      
Foreign currency adjustments, net of tax (28) (3) (53)
Net unrealized gains (losses) on derivatives, net of tax 12 7 9
Pension and postretirement benefit adjustments, net of tax 12 23 (24)
Total other comprehensive income (losses), net of tax (4) 27 (68)
Comprehensive income $ 819 $ 728 $ 580
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CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Jun. 30, 2018
Jun. 30, 2017
Current assets    
Cash and cash equivalents $ 131 $ 418
Receivables, net 600 565
Inventories, net 506 459
Prepaid expenses and other current assets 74 72
Total current assets 1,311 1,514
Property, plant and equipment, net 996 931
Goodwill 1,602 1,196
Trademarks, net 795 654
Other intangible assets, net 134 68
Other assets 222 210
Total assets 5,060 4,573
Current liabilities    
Notes and loans payable 199 404
Current maturities of long-term debt 0 400
Accounts payable and accrued liabilities 1,001 1,005
Total current liabilities 1,200 1,809
Long-term debt 2,284 1,391
Other liabilities 778 770
Deferred income taxes 72 61
Total liabilities 4,334 4,031
Commitments and contingencies
Stockholders’ equity    
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding 0 0
Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares issued as of June 30, 2018 and 2017; and 127,982,767 and 129,014,172 shares outstanding as of June 30, 2018 and 2017, respectively 159 159
Additional paid-in capital 975 928
Retained earnings 2,797 2,440
Treasury shares, at cost: 30,758,694 and 29,727,289 shares as of June 30, 2018 and 2017, respectively (2,658) (2,442)
Accumulated other comprehensive net (losses) income (547) (543)
Stockholders’ equity 726 542
Total liabilities and stockholders’ equity $ 5,060 $ 4,573
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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Jun. 30, 2018
Jun. 30, 2017
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) 127,982,767 129,014,172
Treasury stock, shares (in shares) 30,758,694 29,727,289
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Millions
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Shares [Member]
AOCI Attributable to Parent [Member]
Balance, amount at Jun. 30, 2015 $ 118 $ 159 $ 775 $ 1,923 $ (2,237) $ (502)
Balance, shares (in shares) at Jun. 30, 2015   158,741     (30,127)  
Net earnings 648     648    
Other comprehensive income (loss) (68)         (68)
Accrued dividends (406)     (406)    
Stock-based compensation 45   45      
Other employee stock plan activities, amount 214   48 (2) $ 168  
Other employee stock plan activities, shares         2,892  
Treasury stock purchased, amount (254)       $ (254)  
Treasury stock purchased, shares         (2,151)  
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
Accrued dividends (421)     (421)    
Stock-based compensation 51   51      
Other employee stock plan activities, amount 76   9 (3) $ 70  
Other employee stock plan activities, shares         1,164  
Treasury stock purchased, amount (189)       $ (189)  
Treasury stock purchased, shares         (1,505)  
Balance, amount at Jun. 30, 2017 542 $ 159 928 2,440 $ (2,442) (543)
Balance, shares (in shares) at Jun. 30, 2017   158,741     (29,727)  
Net earnings 823     823    
Other comprehensive income (loss) (4)         (4)
Accrued dividends (467)     (467)    
Stock-based compensation 53   53      
Other employee stock plan activities, amount 51   (6) 1 $ 56  
Other employee stock plan activities, shares         1,139  
Treasury stock purchased, amount (272)       $ (272)  
Treasury stock purchased, shares         (2,171)  
Balance, amount at Jun. 30, 2018 $ 726 $ 159 $ 975 $ 2,797 $ (2,658) $ (547)
Balance, shares (in shares) at Jun. 30, 2018   158,741     (30,759)  
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CONSOLIDATED STATEMENTS OF CASH FLOWS
12 Months Ended
Jun. 30, 2018
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2016
USD ($)
Operating activities:      
Net earnings $ 823,000,000 $ 701,000,000 $ 648,000,000
Deduct: Losses from discontinued operations, net of tax 0 (2,000,000) 0
Earnings from continuing operations 823,000,000 703,000,000 648,000,000
Adjustments to reconcile earnings from continuing operations to net cash provided by continuing operations:      
Depreciation and amortization 166,000,000 163,000,000 165,000,000
Stock-based compensation 53,000,000 51,000,000 45,000,000
Deferred income taxes (23,000,000) (35,000,000) 5,000,000
Settlement of interest rate forward contracts 0 0  
Other 43,000,000 36,000,000 1,000,000
Changes in:      
Receivables, net (24,000,000) (1,000,000) (52,000,000)
Inventories, net (21,000,000) (19,000,000) (45,000,000)
Prepaid expenses and other current assets 3,000,000 (5,000,000) 6,000,000
Accounts payable and accrued liabilities (47,000,000) (34,000,000) 57,000,000
Income taxes payable 1,000,000 12,000,000 (62,000,000)
Net cash provided by continuing operations 974,000,000 871,000,000 768,000,000
Net cash (used for) provided by discontinued operations 0 (3,000,000) 10,000,000
Net cash provided by operations 974,000,000 868,000,000 778,000,000
Investing activities:      
Capital expenditures (194,000,000) (231,000,000) (172,000,000)
Businesses acquired, net of cash acquired (681,000,000) 0 (290,000,000)
Other 16,000,000 26,000,000 32,000,000
Net cash used for investing activities (859,000,000) (205,000,000) (430,000,000)
Financing activities:      
Notes and loans payable, net (214,000,000) (125,000,000)  
Notes and loans payable, net     426,000,000
Long-term debt borrowings, net of issuance costs 891,000,000 0 0
Long-term debt repayments (400,000,000) 0 (300,000,000)
Treasury stock purchased (271,000,000) (183,000,000) (254,000,000)
Cash dividends paid (450,000,000) (412,000,000) (398,000,000)
Issuance of common stock for employee stock plans and other 45,000,000 75,000,000 210,000,000
Net cash used for financing activities (399,000,000) (645,000,000) (316,000,000)
Effect of exchange rate changes on cash and cash equivalents (3,000,000) (1,000,000) (13,000,000)
Net increase (decrease) in cash and cash equivalents (287,000,000) 17,000,000 19,000,000
Cash and cash equivalents:      
Beginning of year 418,000,000 401,000,000 382,000,000
End of year 131,000,000 418,000,000 401,000,000
Supplemental cash flow information:      
Interest paid 75,000,000 78,000,000 79,000,000
Income taxes paid, net of refunds 245,000,000 347,000,000 323,000,000
Non-cash financing activities:      
Cash dividends declared and accrued, but not paid $ 123,000,000 $ 108,000,000 $ 104,000,000
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Jun. 30, 2018
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, e-commerce channels, military stores 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.
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, 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 and Cash Equivalents
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, 2018 and 2017, the Company had $3 and $2 of restricted cash, respectively, which was primarily related to a cash margin deposit held for exchange-traded futures contracts. The restricted cash was included in Prepaid expenses and other current assets and Other assets as of June 30, 2018 and 2017.
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 lease contracts for the related assets. 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 perpetuity 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 both 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 primarily 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
Sales are recognized as revenue when the risk of loss and title pass to the customer and when all of the following have occurred: a firm sales arrangement exists, pricing is fixed or determinable and collection is reasonably assured. Sales are recorded net of allowances for trade promotions, coupons, returns and other discounts. 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. Coupons are recognized as a liability when distributed based upon expected consumer redemptions. The Company maintains liabilities related to these programs for the estimated expenses incurred, but not paid, at the end of each period.
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 $7 and $3 as of June 30, 2018 and 2017, respectively. Receivables, net, included non-customer receivables of $10 and $3 as of June 30, 2018 and 2017, 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 9).
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, and all 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 different 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 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.
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, 2018, 2017 and 2016, 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 February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which amends its guidance to allow a reclassification from Accumulated Other Comprehensive Income to Retained Earnings for the stranded income tax effects resulting from The Tax Act. The amendments are effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will potentially have on its consolidated financial statements.
In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which amends the hedge accounting recognition and presentation requirements to better align an entity’s risk management activities with its financial reporting. This standard also simplifies the application of hedge accounting in certain situations. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires 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. This new guidance will be adopted in the first quarter of fiscal year 2019 and will not have a material impact on the Company’s consolidated financial statements.

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

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize a right-of-use asset and a lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation will depend on the classification of a lease as either a finance or an operating lease. ASU 2016-02 also requires expanded disclosures about leasing arrangements. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company 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. Refer to Note 12 for the future minimum annual lease payments required under the Company's existing non-cancelable operating and capital lease agreements as of June 30, 2018.

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’s revenue is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. This guidance will be adopted in the first quarter of fiscal year 2019 on a modified retrospective basis and will not have a material impact in future periods on its annual consolidated financial statements. However, there will be an impact on the Company’s financial results in interim periods due to the timing of recognition for certain trade promotion spending. The Company is implementing changes to its accounting policies, business processes, systems and controls to align with the new revenue recognition guidance and disclosure requirements.

Recently Adopted Accounting Standards

In March 2018, the FASB issued ASU No. 2018-05, “Income Taxes (Topic 740)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” which amends its guidance to address the initial accounting for the income tax effects of the Tax Act, which was enacted on December 22, 2017 (enactment date). This new guidance allows reasonable estimates of income tax effects to be reported as provisional amounts during the measurement period, which is one year from the enactment date, when the necessary information is not available, prepared, or analyzed in sufficient detail to complete the accounting. The amendments also added specific disclosure requirements. The Company has adopted this new guidance. The Company recorded $81 of provisional benefits in the second quarter of fiscal year 2018. Refer to Note 17 for more information.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for share-based payment transactions, including requiring excess tax benefits and tax deficiencies to be recognized as income tax benefits or expenses in the consolidated statement of earnings. Additionally, the standard requires cash flows from excess tax benefits and deficiencies, previously classified as a financing activity, to be classified as an operating activity in the consolidated statement of cash flows. The Company adopted this guidance in the first quarter of fiscal year 2017. Excess tax benefits of $22 were recognized in the consolidated statement of earnings and classified as an operating activity in the consolidated statement of cash flows during the year ended June 30, 2017. The prior period consolidated statement of cash flows has not been adjusted as permitted. The guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The Company did not make this election and will continue to account for forfeitures on an estimated basis.
v3.10.0.1
DISCONTINUED OPERATIONS
12 Months Ended
Jun. 30, 2018
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS
On September 22, 2014, Clorox Venezuela announced that it was discontinuing its operations, effective immediately, and seeking to sell its assets. Since fiscal year 2012, Clorox Venezuela was required to sell more than two thirds of its products at prices frozen by the Venezuelan government. During this same period, Clorox Venezuela experienced successive years of hyperinflation resulting in significant sustained increases in its input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela had been selling its products at a loss, resulting in ongoing operating losses. Clorox Venezuela repeatedly met with government authorities in an effort to help them understand the rapidly declining state of the business, including the need for immediate, significant and ongoing price increases and other critical remedial actions to address these adverse impacts. Based on the Venezuelan government’s representations, Clorox Venezuela had expected significant price increases would be forthcoming much earlier; however, the price increases subsequently approved were insufficient and would have caused Clorox Venezuela to continue operating at a significant loss into the foreseeable future. As such, Clorox Venezuela was no longer financially viable and was forced to discontinue its operations.
On September 26, 2014, the Company reported that Venezuelan Vice President Jorge Arreaza announced, with endorsement by President Nicolás Maduro, that the Venezuelan government had occupied the Santa Lucía and Guacara production facilities of Clorox Venezuela. On November 6, 2014, the Company reported that the Venezuelan government had published a resolution granting a government-sponsored Special Administrative Board full authority to restart and operate the business of Clorox Venezuela, thereby reaffirming the government's expropriation of Clorox Venezuela’s assets. Further, President Nicolás Maduro announced the government's intention to facilitate the resumed production of bleach and other cleaning products at Clorox Venezuela plants. He also announced his approval of a financial credit to invest in raw materials and production at the plants. These actions by the Venezuelan government were taken without the consent or involvement of Clorox Venezuela, its parent Clorox Spain S.L. (Clorox Spain) or any of their affiliates. Clorox Venezuela, Clorox Spain and their affiliates reserved their rights under all applicable laws and treaties.
With this exit, the financial results of Clorox Venezuela are reflected as discontinued operations in the Company’s consolidated financial statements. The results of Clorox Venezuela had historically been part of the International reportable segment.
There were no net sales for each of the fiscal years ended June 30, 2018, 2017 and 2016, and losses from discontinued operations, net of tax were insignificant for these same periods.
v3.10.0.1
BUSINESSES ACQUIRED
12 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
BUSINESSES ACQUIRED
BUSINESSES ACQUIRED
Nutranext Acquisition
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. Included in the Company's results for fiscal year 2018 was $53 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.

RenewLife Acquisition
On May 2, 2016, the Company acquired 100 percent of ReNew Life Holdings Corporation (RenewLife), a leading brand in digestive health. The amount paid of $290 was funded through commercial paper borrowings. The purchase of the RenewLife business reflects the Company’s strategy to acquire leading brands with attractive margins in growth categories and a focus on health and wellness. Results for RenewLife's U.S. business are reflected in the Household reportable segment and results for RenewLife's international business are reflected in the International reportable segment.
The purchase price allocation was finalized during the third quarter of fiscal year 2017. The following table summarizes the final purchase price allocation for the fair value of RenewLife’s assets acquired and liabilities assumed and related deferred income taxes.

RenewLife
Goodwill
$
137

Trademarks
134

Customer relationships
36

Property, plant and equipment
3

Working capital, net
40

Deferred income taxes
(60
)
Consideration paid
$
290

v3.10.0.1
INVENTORIES
12 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
INVENTORIES
INVENTORIES
Inventories consisted of the following as of June 30:
 
2018
 
2017
Finished goods
$
395

 
$
363

Raw materials and packaging
129

 
119

Work in process
9

 
3

LIFO allowances
(27
)
 
(26
)
Total
$
506

 
$
459


The last-in, first-out (LIFO) method was used to value approximately 38% and 37% of inventories as of June 30, 2018 and 2017, respectively. The carrying values for all other inventories are determined on the first-in, first-out (FIFO) method. The effect on earnings of the liquidation of LIFO layers was insignificant for each of the fiscal years ended June 30, 2018, 2017 and 2016.
v3.10.0.1
PROPERTY, PLANT AND EQUIPMENT, NET
12 Months Ended
Jun. 30, 2018
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:
 
2018
 
2017
Machinery and equipment
$
1,808

 
$
1,696

Buildings
574

 
524

Capitalized software costs
375

 
371

Land and improvements
131

 
116

Construction in progress
77

 
130

Computer equipment
92

 
95

Total
3,057

 
2,932

Less: Accumulated depreciation and amortization
(2,061
)
 
(2,001
)
Property, plant and equipment, net
$
996

 
$
931


Included in Machinery and equipment above was $13 of capital leases as of June 30, 2018 and 2017. Accumulated depreciation for assets under capital leases was $10 and $8 as of June 30, 2018 and 2017, respectively.
Included in Land and improvements above was $2 and $3 of asset retirement obligations as of June 30, 2018 and 2017, respectively, for leased properties. There were no asset retirement obligations recorded in fiscal year 2018 and 2017.
Depreciation and amortization expense related to property, plant and equipment, net, was $156, $153 and $157 in fiscal years 2018, 2017 and 2016, respectively, which includes depreciation of assets under capital leases. This also includes amortization of capitalized software of $11, $15 and $16 in fiscal years 2018, 2017 and 2016, 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, $2 and $10 in fiscal years 2018, 2017 and 2016, respectively.
v3.10.0.1
GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS
12 Months Ended
Jun. 30, 2018
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, 2018 and 2017 were as follows:
 
Goodwill
 
Cleaning
 
Household
 
Lifestyle
 
International
 
Total
Balance June 30, 2016
$
323

 
$
207

 
$
244

 
$
423

 
$
1,197

Effect of foreign currency translation

 

 

 
(1
)
 
(1
)
Balance June 30, 2017
$
323

 
$
207

 
$
244

 
$
422

 
$
1,196

Acquisition

 
102

 
309

 

 
411

Effect of foreign currency translation

 

 

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

 
$
309

 
$
553

 
$
417

 
$
1,602


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, 2018
 
As of June 30, 2017
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
amount
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
amount
Trademarks not subject to amortization
$
778

 
$

 
$
778

 
$
645

 
$

 
$
645

Trademarks subject to amortization
41

 
24

 
17

 
32

 
23

 
9

Other intangible assets
430

 
296

 
134

 
358

 
290

 
68

Total
$
1,249

 
$
320

 
$
929

 
$
1,035

 
$
313

 
$
722


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 $10, $10 and $8 for the years ended June 30, 2018, 2017 and 2016, respectively. Estimated amortization expense for these intangible assets is $14, $13, $12, $11 and $12 for fiscal years 2019, 2020, 2021, 2022 and 2023, respectively.
v3.10.0.1
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
12 Months Ended
Jun. 30, 2018
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:
 
2018
 
2017
Accounts payable
$
507

 
$
501

Compensation and employee benefit costs
154

 
162

Trade and sales promotion
91

 
117

Dividends
129

 
116

Other
120

 
109

Total
$
1,001

 
$
1,005

v3.10.0.1
DEBT
12 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
DEBT
DEBT
Short-term borrowings
Notes and loans payable, which mature in less than one year, included the following as of June 30:
 
2018
 
2017
Commercial paper
$
199

 
$
403

Foreign borrowings

 
1

Total
$
199

 
$
404


The weighted average interest rates incurred on average outstanding notes and loans payable during the fiscal years ended June 30, 2018, 2017 and 2016, including fees associated with the Company’s undrawn revolving credit facility, were 2.10%, 1.21% and 1.10%, respectively. The weighted average effective interest rates on commercial paper balances as of June 30, 2018 and 2017 were 2.31% and 1.33%, 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:
 
2018
 
2017
Senior unsecured notes and debentures:
 
 
 
5.95%, $400 due October 2017
$

 
$
400

3.80%, $300 due November 2021
298

 
298

3.05%, $600 due September 2022
597

 
596

3.50%, $500 due December 2024
497

 
497

3.10%, $400 due October 2027
397

 

3.90%, $500 due May 2028
495

 

Total
2,284

 
1,791

Less: Current maturities of long-term debt

 
(400
)
Long-term debt
$
2,284

 
$
1,391


The weighted average interest rates incurred on average outstanding long-term debt during the fiscal years ended June 30, 2018, 2017 and 2016, were 3.94%, 4.41% and 4.37%, respectively. The weighted average effective interest rates on long-term debt balances as of June 30, 2018 and 2017 were 3.81% and 4.41%.
Long-term debt maturities as of June 30, 2018, are $0, $0, $0, $300, $600, and $1,400 in fiscal years 2019, 2020, 2021, 2022, 2023, 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 10). 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 10). The notes rank equally with all of the Company's existing senior indebtedness.
In November 2015, $300 of the Company’s senior notes with an annual fixed interest rate of 3.55% became due and were repaid using commercial paper borrowings and cash on hand.
Credit arrangements
The Company’s borrowing capacity under other financing arrangements as of June 30 was as follows:
 
2018
 
2017
Revolving credit facility
$
1,100

 
$
1,100

Foreign and other credit lines
37

 
29

Total
$
1,137

 
$
1,129



In March 2018, the Company entered into a $250 revolving credit agreement that was subsequently terminated in May 2018. No termination fees or penalties were incurred in connection with this credit agreement termination.

In February 2017, the Company entered into a new $1,100 revolving credit agreement (the Credit Agreement) that matures in February 2022. The Credit Agreement replaced a prior $1,100 revolving credit agreement in place since October 2014. No termination fees or penalties were incurred in connection with the Company's debt modification.

There were no borrowings under the Credit Agreement as of June 30, 2018 and 2017, 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, 2018.
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. Of the $29 of foreign and other credit lines as of June 30, 2017, $5 was outstanding and the remainder of $24 was available for borrowing.
v3.10.0.1
OTHER LIABILITIES
12 Months Ended
Jun. 30, 2018
Other Liabilities Disclosure [Abstract]  
OTHER LIABILITIES
OTHER LIABILITIES
Other liabilities consisted of the following as of June 30:
 
2018
 
2017
Venture agreement terminal obligation, net
$
341

 
$
317

Employee benefit obligations
283

 
298

Taxes
52

 
42

Other
102

 
113

Total
$
778

 
$
770


Venture Agreement
The Company has an agreement with The Procter & Gamble Company (P&G) for the Company’s Glad® bags, wraps and containers business. In connection with this agreement, P&G provides research and development (R&D) support to the Glad® business. As of June 30, 2018 and 2017, P&G had a 20% interest in the venture. The Company pays a royalty to P&G for its interest in the profits, losses and cash flows, as contractually defined, of the Glad® business, which is included in Cost of products sold. In December 2017, the Company and P&G extended the term of the agreement and the related R&D support provided by P&G. The term will now expire in January 2026, unless the parties agree, on or prior to January 31, 2025, to further extend the term of the agreement for another seven years or agree to take some other relevant action. The agreement can be terminated under certain circumstances, including at P&G’s option upon a change in control of the Company or, at either party’s option, upon the sale of the Glad® business by the Company.
Upon termination of the agreement, the Company is required to purchase P&G’s 20% interest for cash at fair value as established by predetermined valuation procedures. As of June 30, 2018, the estimated fair value of P&G’s interest was $631, of which $341 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, 2018 and 2017, the long-term portion of the deferred gain of $29 and $33, respectively, was included in Other as noted in the table above.
v3.10.0.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
12 Months Ended
Jun. 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 commodity derivative dealers.
As of June 30, 2018, the notional amount of commodity derivatives was $34, of which $10 related to jet fuel swaps used for the charcoal business and $24 related to soybean oil futures used for the food business. As of June 30, 2017, the notional amount of commodity derivatives was $26, of which $14 related to jet fuel swaps and $12 related to soybean oil futures.
Foreign Currency Risk Management
The Company may also enter into certain over-the-counter derivative contracts to manage a portion of the Company’s forecasted foreign currency exposure associated with the purchase of inventory. These foreign currency contracts generally have durations of no longer than 2 years. The foreign exchange contracts are measured at fair value using information quoted by foreign exchange dealers.
The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were $50 and $49, respectively, as of June 30, 2018 and 2017.
Interest Rate Risk Management
The Company may enter into over-the-counter interest rate forward contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt or to manage the Company’s level of fixed and floating rate debt. These interest rate forward contracts generally have durations of less than 12 months. The interest rate contracts are measured at fair value using information quoted by U.S. government bond dealers.
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 8). These contracts resulted in insignificant gains and losses to Accumulated other comprehensive net (losses) 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, 2018 and 2017.
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 during the fiscal years ended June 30:
 
Gains (losses)
recognized in Other comprehensive income
 
2018
 
2017
 
2016
Commodity purchase derivative contracts
$
4

 
$
(3
)
 
$
(4
)
Foreign exchange derivative contracts
2

 
(1
)
 
(3
)
Interest rate derivative contracts
2

 

 

Total
$
8

 
$
(4
)
 
$
(7
)


 
Gains (losses) reclassified from Accumulated
other comprehensive net (losses) income and recognized
in Net earnings
 
2018
 
2017
 
2016
Commodity purchase derivative contracts
$
1

 
$
(2
)
 
$
(13
)
Foreign exchange derivative contracts
(1
)
 
(3
)
 
1

Interest rate derivative contracts
(6
)
 
(6
)
 
(6
)
Total
$
(6
)
 
$
(11
)
 
$
(18
)


The gains (losses) reclassified from Accumulated other comprehensive net losses and recognized in Net earnings during the fiscal years ended June 30, 2018, 2017 and 2016, 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 (losses) income as of June 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 each of the fiscal years ended June 30, 2018, 2017 and 2016, 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, 2018 and 2017, $0 and $1, respectively, contained such terms. As of both June 30, 2018 and 2017, neither the Company nor any counterparty was required to post any collateral as no counterparty liability position limits were exceeded.
Certain terms of the agreements governing the Company’s over-the-counter derivative instruments require the credit ratings, as assigned by Standard & Poor’s and Moody’s to the Company and its counterparties, to remain at a level equal to or better than the minimum of an investment grade credit rating. If the Company’s credit ratings were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. As of both June 30, 2018 and 2017, 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, 2018 and 2017, the Company maintained cash margin balances related to exchange-traded futures contracts of $2 and $1, 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, 2018, the value of the trust assets related to the Company’s nonqualified deferred compensation plans increased by $14 as compared to June 30, 2017, 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, 2018 and 2017, 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:
 
 
 
 
 
2018
 
2017
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
 
$
24

 
$
24

 
$
221

 
$
221

Time deposits
Cash and cash equivalents (a)
 
2
 
23

 
23

 
115

 
115

Commodity purchase swaps contracts
Prepaid expenses and other current assets
 
2
 
3

 
3

 
1

 
1

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

 
2

 

 

Trust assets for nonqualified deferred compensation plans
Other assets
 
1
 
86

 
86

 
72

 
72

 
 
 
 
 
$
138

 
$
138

 
$
409

 
$
409

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Notes and loans payable
Notes and loans payable (b)
 
2
 
$
199

 
$
199

 
$
404

 
$
404

Commodity purchase futures contracts
Accounts payable and accrued liabilities
 
1
 
1

 
1

 

 

Commodity purchase swaps contracts
Accounts payable and accrued liabilities
 
2
 

 

 
1

 
1

Foreign exchange forward contracts
Accounts payable and accrued liabilities
 
2
 

 

 
1

 
1

Current maturities of long-term debt and Long-term debt
Current maturities of long-
term debt and Long-term
debt
(c)
 
2
 
2,284

 
2,269

 
1,791

 
1,855

 
 
 
 
 
$
2,484

 
$
2,469

 
$
2,197

 
$
2,261


(a)
Cash and cash equivalents are composed of time deposits and other interest-bearing investments, including money market funds with original maturity dates of 90 days or less. Cash and cash equivalents are recorded at cost, which approximates fair value.
(b)
Notes and loan payable is composed of U.S. commercial paper and/or other similar short-term debts issued by non-U.S. subsidiaries, all of which are recorded at cost, which approximates fair value.
(c)
Current maturities of long-term debt and Long-term debt are recorded at cost. The fair value of Long-term debt, including current maturities, was determined using secondary market prices quoted by corporate bond dealers, and is classified as Level 2.
v3.10.0.1
OTHER CONTINGENCIES AND GUARANTEES
12 Months Ended
Jun. 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 June 30, 2018 and 2017, for its share of aggregate future remediation costs related to these matters.
One matter, which accounted for $14 of the recorded liability as of June 30, 2018 and 2017, relates to environmental costs associated with one of the Company’s former operations at a site located in Alameda County, California. In November 2016, at the request of regulators and with the assistance of environmental consultants, the Company submitted a Feasibility Study that evaluated various options for managing the site and included estimates of the related costs. As a result, the Company recorded in Other (income) expense, net an undiscounted liability for costs estimated to be incurred over a 30-year period, based on the option recommended in the Feasibility Study. However, as a result of ongoing discussions with regulators, in June 2017 the Company increased its recorded liability to $14, which reflects anticipated costs to implement additional remediation measures at 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 $12 of the recorded liability as of June 30, 2018 and 2017. This amount reflects the Company’s agreement to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing arrangement with a third party. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded for the Dickinson County matter, any amount of such additional exposures, or range of exposures, is not estimable at this time. The Company’s estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements, and the future availability of alternative clean-up technologies.
The Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements, product liability, patents and trademarks, advertising, labor and employment, environmental, health and safety and other matters. With respect to these proceedings, claims and other loss contingencies, while considerable uncertainty exists, in the opinion of management at this time, the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, either individually or in the aggregate, on the Company’s 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, 2018 and 2017.
The Company was a party to letters of credit of $9 and $10 as of June 30, 2018 and 2017, respectively, primarily related to one of its insurance carriers, of which $0 had been drawn upon.
v3.10.0.1
LEASES AND OTHER COMMITMENTS
12 Months Ended
Jun. 30, 2018
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 $86, $84 and $77 in fiscal years 2018, 2017 and 2016, respectively.
The future minimum annual lease payments required under the Company’s existing non-cancelable operating and capital lease agreements as of June 30, 2018, were as follows:
Year
Operating
leases
 
Capital
leases
2019
$
56

 
$
1

2020
51

 

2021
46

 

2022
36

 

2023
33

 

Thereafter
108

 

Total
$
330

 
$
1


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. 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. For purchase obligations subject to variable price and/or quantity provisions, an estimate of the price and/or quantity has been made. Many of these purchase obligations are short term in nature and are flexible to allow for changes in the Company’s business and related requirements. As of June 30, 2018, the Company’s purchase obligations were as follows:
Year
Purchase
Obligations
2019
$
169

2020
55

2021
32

2022
20

2023
15

Thereafter
13

Total
$
304

v3.10.0.1
STOCKHOLDERS' EQUITY
12 Months Ended
Jun. 30, 2018
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY
STOCKHOLDERS’ EQUITY
In May 2018, the Board of Directors authorized the Company to repurchase up to $2,000 in shares of common stock on the open market, which replaced the prior open-market purchase program with an authorized aggregate purchase amount of up to $750.
As of June 30, 2018, 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, 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:
 
2018
 
2017
 
2016
 
Amount
 
Shares
(in thousands)
 
Amount
 
Shares
(in thousands)
 
Amount
 
Shares
(in thousands)
Open-market purchase program
$
95

 
749

 
$

 

 
$

 

Evergreen Program
177

 
1,422

 
189

 
1,505

 
254

 
2,151


Dividends per share declared and paid, respectively, during the fiscal years ended June 30 were as follows:
 
2018
 
2017
 
2016
Dividends per share declared
$
3.60

 
$
3.24

 
$
3.11

Dividends per share paid
3.48

 
3.20

 
3.08



Accumulated Other Comprehensive Net (Losses) Income
Changes in Accumulated other comprehensive net (losses) 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
(losses) income
Balance June 30, 2015
$
(300
)
 
$
(53
)
 
$
(149
)
 
$
(502
)
Other comprehensive income (loss) before
reclassifications
(43
)
 
(7
)
 
(38
)
 
(88
)
Amounts reclassified from Accumulated other
comprehensive net losses

 
18

 

 
18

Income tax benefit (expense)
(10
)
 
(2
)
 
14

 
2

Net current period other comprehensive income (loss)
(53
)
 
9

 
(24
)
 
(68
)
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 losses

 
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 losses

 
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
)


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, 2018, 2017 and 2016, Other comprehensive losses on these loans totaled $9, $2 and $14, respectively, and there were no amounts reclassified from Accumulated other comprehensive net (losses) income for the periods presented.
Pension and postretirement benefit reclassification adjustments are reflected in Cost of products sold, Selling and administrative expenses and Research and development costs.
v3.10.0.1
NET EARNINGS PER SHARE (EPS)
12 Months Ended
Jun. 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 for the fiscal years ended June 30:
 
2018
 
2017
 
2016
Basic
129,293

 
128,953

 
129,472

Dilutive effect of stock options and other
2,288

 
2,613

 
2,245

Diluted
131,581

 
131,566

 
131,717

 
 
 
 
 
 
Antidilutive stock options and other
1,192

 
11

 
42

v3.10.0.1
STOCK-BASED COMPENSATION PLANS
12 Months Ended
Jun. 30, 2018
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, 2018, the Company is authorized to grant up to approximately 7 million common shares under the Plan, and, as of June 30, 2018, approximately 7 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:
 
2018
 
2017
 
2016
Cost of products sold
$
7

 
$
7

 
$
6

Selling and administrative expenses
42

 
40

 
35

Research and development costs
4

 
4

 
4

Total compensation costs
$
53

 
$
51

 
$
45

 
 
 
 
 
 
Related income tax benefit
$
16

 
$
19

 
$
17


Cash received during fiscal years 2018, 2017 and 2016 from stock options exercised under all stock-based payment arrangements was $70, $81 and $180, 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 13).
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 2018, 2017 and 2016 was estimated on the date of grant using the Black-Scholes valuation model and assumptions noted in the following table:
 
2018
 
2017
 
2016
Expected life
5.5 years
 
5.5 years
 
5.6 years
Weighted-average expected life
5.5 years
 
5.5 years
 
5.6 years
Expected volatility
15.7% to 18.7%
 
16.2% to 16.9%
 
16.4% to 17.3%
Weighted-average volatility
15.7%
 
16.9%
 
17.2%
Risk-free interest rate
1.3% to 2.6%
 
1.3% to 2.2%
 
1.3% to 1.7%
Weighted-average risk-free interest rate
1.8%
 
1.3%
 
1.7%
Dividend yield
2.4% to 3.0%
 
2.4% to 2.8%
 
2.5% to 2.8%
Weighted-average dividend yield
2.5%
 
2.6%
 
2.8%

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, 2017
6,907

 
$
93

 
6 years
 
$
277

Granted
1,181

 
136

 
 
 
 
Exercised
(901
)
 
80

 
 
 
 
Canceled
(107
)
 
123

 
 
 
 
Options outstanding as of June 30, 2018
7,080

 
$
101

 
6 years
 
$
240

 
 
 
 
 
 
 
 
Options vested as of June 30, 2018
4,366

 
$
88

 
5 years
 
$
205



The weighted-average fair value per share of each option granted during fiscal years 2018, 2017 and 2016, estimated at the grant date using the Black-Scholes option pricing model, was $15.33, $13.75 and $13.21, respectively. The total intrinsic value of options exercised in fiscal years 2018, 2017 and 2016 was $51, $65 and $142, respectively.
Stock option awards outstanding as of June 30, 2018, 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, 2018, there was $15 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, 2018, there was $14 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 2 years. The total fair value of the shares that vested in each of the fiscal years 2018, 2017 and 2016 was $1 for all fiscal years. The weighted-average grant-date fair value of awards granted was $135.29, $131.67 and $128.91 per share for fiscal years 2018, 2017 and 2016, 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, 2017
18

 
$
120

Granted
155

 
135

Vested
(10
)
 
110

Forfeited
(7
)
 
135

Restricted stock awards as of June 30, 2018
156

 
$
135



Performance Shares
As of June 30, 2018, there was $15 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 $135.47, $122.73 and $92.35 per share for fiscal years 2018, 2017 and 2016, 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, 2017
862

 
$
102

Granted
236

 
135

Distributed
(360
)
 
88

Forfeited
(40
)
 
120

Performance share awards as of June 30, 2018
698

 
$
111

 
 
 
 
Performance shares vested and deferred as of June 30, 2018
154

 
$
74


The non-vested performance shares outstanding as of June 30, 2018 and 2017 were 544,000 and 738,000, respectively, and the weighted average grant date fair value was $120.69 and $108.00 per share, respectively. During fiscal year 2018, 389,000 shares vested. Deferred shares continue to earn dividends, which are also deferred. The total fair value of shares vested was $35, $0 and $26 during fiscal years 2018, 2017 and 2016, 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 2018, the Company granted 13,000 deferred stock units, reinvested dividends of 5,000 units and distributed 17,000 shares, which had a weighted-average fair value on the grant date of $146.75, $129.15 and $65.91 per share, respectively. As of June 30, 2018, 206,000 units were outstanding, which had a weighted-average fair value on the grant date of $81.01 per share.
v3.10.0.1
OTHER (INCOME) EXPENSE, NET
12 Months Ended
Jun. 30, 2018
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:
 
2018
 
2017
 
2016
Income from equity investees
$
(12
)
 
$
(19
)
 
$
(15
)
Loss (gain) on sale of assets and investments, net
4

 
(11
)
 
(11
)
Interest income
(6
)
 
(4
)
 
(5
)
Asset impairment charges
1

 
23

 
10

Amortization of trademarks and other intangible assets
11

 
10

 
8

Foreign exchange transaction (gains) losses, net
3

 
(1
)
 
1

Other
(4
)
 
8

 
5

Total
$
(3
)
 
$
6

 
$
(7
)

In January 2017, the Company sold an Australian distribution facility, previously reported in the International reportable segment, which resulted in $23 in cash proceeds from investing activities and a gain of $10 included in Gain on sale of assets and investments, net in the table above for the fiscal year ended June 30, 2017.
In April 2016, the Company sold its Los Angeles bleach manufacturing facility, previously reported in the Cleaning reportable segment, which resulted in $20 in cash proceeds from investing activities and a gain of $11 included in Gain on sale of assets and investments, net in the table above for the fiscal year ended June 30, 2016.
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 is included in Asset impairment charges in the table above for the fiscal year ended June 30, 2017 and primarily related to writing down Property, plant and equipment to fair value in connection with an updated valuation of the Aplicare business.
During fiscal year 2016, the Company recognized $9 of intangible asset impairment charges, of which $6 related to the Aplicare® trademark within the Cleaning reportable segment. The Aplicare® trademark impairment is included in Asset impairment charges in the table above for the fiscal year ended June 30, 2016 and was recognized based on the anticipated impact on future results from a competitive market entrant.