CLOROX CO /DE/, 10-Q filed on 11/1/2021
Quarterly Report
v3.21.2
Cover Page - shares
3 Months Ended
Sep. 30, 2021
Oct. 19, 2021
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2021  
Document Transition Report false  
Entity File Number 1-07151  
Entity Registrant Name THE CLOROX COMPANY  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 31-0595760  
Entity Address, Address Line One 1221 Broadway  
Entity Address, City or Town Oakland  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 94612-1888  
City Area Code 510  
Local Phone Number 271-7000  
Title of 12(b) Security Common Stock - $1.00 par value  
Trading Symbol CLX  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   122,862,766
Entity Central Index Key 0000021076  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2022  
v3.21.2
Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited) - USD ($)
shares in Thousands, $ in Millions
3 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Income Statement [Abstract]    
Net sales $ 1,806 $ 1,916
Cost of products sold 1,136 996
Gross profit 670 920
Selling and administrative expenses 236 238
Advertising costs 182 179
Research and development costs 33 32
Interest expense 25 25
Other (income) expense, net 9 (80)
Earnings before income taxes 185 526
Income taxes 42 109
Net earnings 143 417
Less: Net earnings attributable to noncontrolling interests 1 2
Net earnings attributable to Clorox $ 142 $ 415
Net earnings per share attributable to Clorox    
Basic net earnings per share (in dollars per share) $ 1.15 $ 3.28
Diluted net earnings per share (in dollars per share) $ 1.14 $ 3.22
Weighted average shares outstanding (in thousands)    
Basic (in shares) 122,980 126,346
Diluted (in shares) 124,042 128,729
Comprehensive income $ 122 $ 434
Less: Total comprehensive income attributable to noncontrolling interests 1 2
Total comprehensive income attributable to Clorox $ 121 $ 432
v3.21.2
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Sep. 30, 2021
Jun. 30, 2021
Current assets    
Cash and cash equivalents $ 210 $ 319
Receivables, net 654 604
Inventories, net 785 752
Prepaid expenses and other current assets 171 154
Total current assets 1,820 1,829
Property, plant and equipment, net of accumulated depreciation and amortization of $2,422 and $2,382, respectively 1,301 1,302
Operating lease right-of-use assets 310 332
Goodwill 1,566 1,575
Trademarks, net 691 693
Other intangible assets, net 218 225
Other assets 368 378
Total assets 6,274 6,334
Current liabilities    
Notes and loans payable 86 0
Current maturities of long-term debt 899 300
Current operating lease liabilities 72 81
Accounts payable and accrued liabilities 1,582 1,675
Total current liabilities 2,639 2,056
Long-term debt 1,885 2,484
Long-term operating lease liabilities 288 301
Other liabilities 846 834
Deferred income taxes 69 67
Total liabilities 5,727 5,742
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; 130,741,461 shares issued as of September 30, 2021 and June 30, 2021; and 122,856,251 and 122,780,220 shares outstanding as of September 30, 2021 and June 30, 2021, respectively 131 131
Additional paid-in capital 1,166 1,186
Retained earnings 1,027 1,036
Treasury stock, at cost: 7,885,210 and 7,961,241 shares as of September 30, 2021 and June 30, 2021, respectively (1,389) (1,396)
Accumulated other comprehensive net (loss) income (567) (546)
Total Clorox stockholders’ equity 368 411
Noncontrolling interests 179 181
Total stockholders’ equity 547 592
Total liabilities and stockholders’ equity $ 6,274 $ 6,334
v3.21.2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2021
Jun. 30, 2021
Statement of Financial Position [Abstract]    
Property, plant and equipment, accumulated depreciation and amortization $ 2,422 $ 2,382
Preferred stock, par value (in dollars per share) $ 1.00 $ 1.00
Preferred stock, shares authorized (in shares) 5,000,000 5,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 1.00 $ 1.00
Common stock, shares authorized (in shares) 750,000,000 750,000,000
Common stock, shares issued (in shares) 130,741,461 130,741,461
Common stock, shares outstanding (in shares) 122,856,251 122,780,220
Treasury stock, shares (in shares) 7,885,210 7,961,241
v3.21.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Operating activities:    
Net earnings $ 143 $ 417
Adjustments to reconcile net earnings to net cash provided by operations:    
Depreciation and amortization 55 51
Stock-based compensation 9 13
Deferred income taxes 2 20
Other 8 (71)
Changes in:    
Receivables, net (53) (8)
Inventories, net (37) (70)
Prepaid expenses and other current assets (14) (18)
Accounts payable and accrued liabilities (96) 20
Operating lease right-of-use assets and liabilities, net 0 (1)
Income taxes payable / prepaid 24 30
Net cash provided by operations 41 383
Investing activities:    
Capital expenditures (52) (69)
Businesses acquired, net of cash acquired 0 (85)
Other (4) 3
Net cash used for investing activities (56) (151)
Financing activities:    
Notes and loans payable, net 86 0
Treasury stock purchased (25) (100)
Cash dividends paid to Clorox stockholders (142) (140)
Issuance of common stock for employee stock plans and other (11) (7)
Net cash used for financing activities (92) (247)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (3) 3
Net increase (decrease) in cash, cash equivalents, and restricted cash (110) (12)
Cash, cash equivalents, and restricted cash:    
Beginning of period 324 879
End of period $ 214 $ 867
v3.21.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Sep. 30, 2021
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2021 and 2020, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its controlled subsidiaries (the Company) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2021, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, “Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions to the general principles in ASC 740 and amends existing guidance to improve consistent application. Certain amendments must be applied prospectively, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings. The Company adopted this standard as of July 1, 2021. The adoption of this new standard did not have a material impact on the Company’s condensed consolidated financial statements.
v3.21.2
BUSINESS ACQUIRED
3 Months Ended
Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]  
BUSINESS ACQUIRED BUSINESS ACQUIRED
Saudi Joint Venture Acquisition

On July 9, 2020, the Company increased its investment in each of the two entities comprising its joint venture in the Kingdom of Saudi Arabia (Saudi joint venture) from 30 percent to 51 percent. The joint venture offers customers in the Gulf region a range of cleaning and disinfecting products. With the additional investment, the Company has consolidated this joint venture into its consolidated financial statements from the date of acquisition and reflects operations within the International reportable segment. The equity and income attributable to the other joint venture owners is recorded and presented as noncontrolling interests. As a result of this transaction, the carrying value of the Company’s previously held equity investment was remeasured to fair value, and resulted in an $85 non-recurring, noncash gain recorded in Other (income) expense, net in the condensed consolidated statement of earnings and adjusted in Other operating activities in the condensed consolidated statement of cash flows for the first quarter of fiscal year 2021.

The Saudi joint venture acquisition was accounted for under the acquisition method of accounting for business combinations. The total purchase consideration was $111 consisting of $100 cash paid and $11 from the net effective settlement of preexisting arrangements between the Company and the joint venture. The assets and liabilities of the joint venture were recorded at their respective estimated fair value as of the acquisition date. The fair value of the total net assets and noncontrolling interests recorded as of the date of acquisition was $412 and $198, respectively. The purchase price allocation was finalized during the second quarter of fiscal year 2021.

Refer to the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for the final purchase price allocation, valuation methodology and other information related to the Saudi joint venture acquisition.
v3.21.2
INVENTORIES, NET
3 Months Ended
Sep. 30, 2021
Inventory Disclosure [Abstract]  
INVENTORIES, NET INVENTORIES, NETInventories, net, consisted of the following as of:
9/30/20216/30/2021
Finished goods$594 $543 
Raw materials and packaging220 229 
Work in process13 11 
LIFO allowances(42)(31)
Total$785 $752 
v3.21.2
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
3 Months Ended
Sep. 30, 2021
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS [Abstract]  
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Financial Risk Management and Derivative Instruments

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

Commodity Price Risk Management

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

As of September 30, 2021, the notional amount of commodity derivatives was $35, of which $24 related to soybean oil futures used for the Food products business and $11 related to jet fuel swaps used for the Grilling business. As of June 30, 2021, the notional amount of commodity derivatives was $32, of which $23 related to soybean oil futures and $9 related to jet fuel swaps.

Foreign Currency Risk Management

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

The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were $50 and $70, respectively, as of September 30, 2021 and June 30, 2021.

Interest Rate Risk Management

The Company may enter into over-the-counter interest rate contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt. These interest rate contracts generally have durations of less than 3 years. The interest rate contracts are measured at fair value using information quoted by bond dealers.

The notional amounts of outstanding interest rate contracts used by the Company were $300 as of both September 30, 2021 and June 30, 2021. These contracts represent forward starting interest rate swap contracts with a maturity date of September 2022 to manage the exposure to interest rate volatility associated with future interest payments on a forecasted debt issuance.

Commodity, Foreign Exchange and Interest Rate Derivatives

The Company designates its commodity forward and futures contracts for forecasted purchases of raw materials, foreign currency forward contracts for forecasted purchases of inventory and interest rate contracts for forecasted interest payments as cash flow hedges.
The effects of derivative instruments designated as hedging instruments on Other comprehensive (loss) income and Net earnings were as follows:
Gains (losses) recognized in Other comprehensive (loss) income
Three Months Ended
9/30/20219/30/2020
Commodity purchase derivative contracts$— $
Foreign exchange derivative contracts(1)
Interest rate derivative contracts
Total$$

Location of gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earningsGains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
Three Months Ended
9/30/20219/30/2020
Commodity purchase derivative contractsCost of products sold$$(1)
Foreign exchange derivative contractsCost of products sold— — 
Interest rate derivative contractsInterest expense(2)(2)
Total$$(3)

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of September 30, 2021, that is expected to be reclassified into Net earnings (losses) within the next twelve months is $7.

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 both September 30, 2021 and June 30, 2021, $0 contained such terms. As of September 30, 2021 and June 30, 2021, neither the Company nor any counterparty was required to post any collateral, as no counterparty liability position limits were exceeded.

Certain terms of the agreements governing the Company’s over-the-counter derivative instruments require the credit ratings, as assigned by Standard & Poor’s and Moody’s to the Company and its counterparties, to remain at a level equal to or better than the minimum of an investment grade credit rating. If the Company’s credit ratings were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. As of both September 30, 2021 and June 30, 2021, 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 September 30, 2021 and June 30, 2021, the Company maintained cash margin balances related to exchange-traded futures contracts of $2 and $0, respectively, which are classified as Prepaid expenses and other current assets on the condensed consolidated balance sheets.
Trust Assets

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

Fair Value of Financial Instruments

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

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

As of September 30, 2021 and June 30, 2021, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.
All of the Company’s derivative instruments qualify for hedge accounting. The following table provides information about the balance sheet classification and the fair values of the Company’s derivative instruments:
 9/30/20216/30/2021
Balance Sheet
Classification
Fair Value
Hierarchy
Level
Carrying
Amount
Estimated
Fair
Value
Carrying
Amount
Estimated
Fair
Value
Assets
Commodity purchase futures contractsPrepaid expenses and other current assets1$$$$
Commodity purchase swaps contractsPrepaid expenses and other current assets2
Foreign exchange forward contractsPrepaid expenses and other current assets2— — 
Interest rate contractsPrepaid expenses and other current assets226 26 24 24 
 $33 $33 $33 $33 

The following table provides information about the balance sheet classification and the fair values of the Company’s other assets and liabilities for which disclosure of fair value is required:
 9/30/20216/30/2021
Balance Sheet
Classification
Fair Value
Hierarchy
Level
Carrying
Amount
Estimated
Fair
Value
Carrying
Amount
Estimated
Fair
Value
Assets
Interest-bearing investments, including money market funds
Cash and cash
equivalents (1)
1$98 $98 $196 $196 
Time deposits
Cash and cash
equivalents (1)
211 11 
Trust assets for nonqualified deferred compensation plansOther assets1142 142 136 136 
 $241 $241 $343 $343 
Liabilities
Notes and loans payable
Notes and loans payable (2)
2$86 $86 $— $— 
Current maturities of long-term debt and Long-term debt
Current maturities of long-
term debt and Long-term
debt (3)
22,784 2,943 2,784 2,963 
$2,870 $3,029 $2,784 $2,963 

(1)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.
(2)Notes and loans payable are composed of outstanding U.S. commercial paper balances, which are recorded at cost, which approximates fair value.
(3)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.
v3.21.2
INCOME TAXES
3 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXESIn determining its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The effective tax rate on earnings was 22.6% and 20.7% for the three months ended September 30, 2021, and 2020, respectively. The lower effective tax rate in the prior period was primarily due to the non-taxable portion of the remeasurement gain recognized on the previously held equity interest in the Saudi joint venture.
v3.21.2
NET EARNINGS PER SHARE (EPS)
3 Months Ended
Sep. 30, 2021
Earnings Per Share [Abstract]  
NET EARNINGS PER SHARE (EPS) NET EARNINGS PER SHARE (EPS)
The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:
Three Months Ended
9/30/20219/30/2020
Basic122,980126,346
Dilutive effect of stock options and other1,0622,383
Diluted124,042128,729
Antidilutive stock options and other1,068441 

Basic net earnings per share and Diluted net earnings per share are calculated on Net earnings attributable to Clorox.
v3.21.2
COMPREHENSIVE INCOME
3 Months Ended
Sep. 30, 2021
Stockholders' Equity Note [Abstract]  
COMPREHENSIVE INCOME COMPREHENSIVE INCOME The following table provides a summary of Comprehensive income for the periods indicated:
Three Months Ended
9/30/20219/30/2020
Net earnings $143 $417 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments(23)10 
Net unrealized gains (losses) on derivatives
Pension and postretirement benefit adjustments
Total other comprehensive (loss) income, net of tax(21)17 
Comprehensive income122 434 
Less: Total comprehensive income attributable to noncontrolling interests
Total comprehensive income attributable to Clorox$121 $432 
v3.21.2
STOCKHOLDERS' EQUITY
3 Months Ended
Sep. 30, 2021
Equity [Abstract]  
STOCKHOLDERS' EQUITY STOCKHOLDERS EQUITYChanges in the components of Stockholders’ equity were as follows for the periods indicated:
Three Months Ended September 30
(Dollars in millions except per share data; shares in thousands)
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated
Other
Comprehensive
Net (Loss) Income
Non-controlling interestsTotal Stockholders’ Equity
AmountShares AmountShares
Balance as of June 30, 2020$159 158,741 $1,137 $3,567 $(3,315)(32,543)$(640)$— $908 
Net earnings— — — 415 — — — 417 
Other comprehensive (loss) income— — — — — — 17 — 17 
Dividends to Clorox stockholders ($1.11 per share declared)
— — — (141)— — — — (141)
Dividends to non-controlling interests— — — — — — — (4)(4)
Business combinations including purchase accounting adjustments— — — — — — — 198 198 
Stock-based compensation— — 13 — — — — — 13 
Other employee stock plan activities— — (4)(1)283 — — 
Treasury stock purchased— — — — (100)(444)— — (100)
Balance as of September 30, 2020$159 158,741 $1,146 $3,840 $(3,407)(32,704)$(623)$196 $1,311 
Balance as of June 30, 2021$131 130,741 $1,186 $1,036 $(1,396)(7,961)$(546)$181 $592 
Net earnings— — — 142 — — — 143 
Other comprehensive (loss) income— — — — — — (21)— (21)
Dividends to Clorox stockholders ($1.16 per share declared)
— — — (143)— — — — (143)
Dividends to non-controlling interests— — — — — — — (3)(3)
Stock-based compensation— — — — — — — 
Other employee stock plan activities— — (29)(8)32 228 — — (5)
Treasury stock purchased— — — — (25)(152)— — (25)
Balance as of September 30, 2021$131 130,741 $1,166 $1,027 $(1,389)(7,885)$(567)$179 $547 
Changes in Accumulated other comprehensive net (loss) income attributable to Clorox by component were as follows for the periods indicated:
Three Months Ended September 30
Foreign currency translation adjustmentsNet unrealized gains (losses) on derivativesPension and postretirement benefit adjustmentsAccumulated other comprehensive net (loss) income
Balance as of June 30, 2020$(450)$(18)$(172)$(640)
Other comprehensive (loss) income before reclassifications— 12 
Amounts reclassified from Accumulated other comprehensive net (loss) income— 
Income tax benefit (expense)(1)— — 
Net current period other comprehensive (loss) income10 17 
Balance as of September 30, 2020$(440)$(13)$(170)$(623)
Balance as of June 30, 2021$(403)$21 $(164)$(546)
Other comprehensive (loss) income before reclassifications(22)— (18)
Amounts reclassified from Accumulated other comprehensive net (loss) income— (3)(1)
Income tax benefit (expense), and other(1)— (1)(2)
Net current period other comprehensive (loss) income(23)(21)
Balance as of September 30, 2021$(426)$22 $(163)$(567)

Included in foreign currency translation adjustments are remeasurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. There were no amounts associated with these loans reclassified from Accumulated other comprehensive net (loss) income for the periods presented.
v3.21.2
EMPLOYEE BENEFIT PLANS
3 Months Ended
Sep. 30, 2021
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS
The following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:
Three Months Ended
9/30/20219/30/2020
Service cost$— $— 
Interest cost
Expected return on plan assets (1)
(4)(4)
Amortization of unrecognized items
Total$$
(1) The weighted average long-term expected rate of return on plan assets used in computing the fiscal year 2022 net periodic benefit cost is 3.0%.
The net periodic benefit cost for the Company’s retirement health care plans was $0 for both the three months ended September 30, 2021 and 2020.
During the three months ended September 30, 2021 and 2020, the Company made $3 and $2 in contributions to its domestic retirement income plans, respectively.
Service cost component of the net periodic benefit cost, if any, is reflected in employee benefit costs, all other components are reflected in Other (income) expense, net.
v3.21.2
OTHER CONTINGENCIES AND GUARANTEES
3 Months Ended
Sep. 30, 2021
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 both September 30, 2021 and June 30, 2021, for its share of aggregate future remediation costs related to these matters.
One matter, which accounted for $14 of the recorded liability as of both September 30, 2021 and June 30, 2021, relates to environmental costs associated with one of the Company’s former operations at a site located in Alameda County, California. In November 2016, at the request of regulators and with the assistance of environmental consultants, the Company submitted a Feasibility Study that evaluated various options for managing the site and included estimates of the related costs. As a result, the Company recorded in Other (income) expense, net an undiscounted liability for costs estimated to be incurred over a 30-year period, based on the option recommended in the Feasibility Study. However, as a result of ongoing discussions with regulators, in June 2017, the Company increased its recorded liability to $14, which reflects anticipated costs to implement additional remediation measures at this site. While the Company believes its latest estimate is reasonable, regulators could require the Company to implement one of the other options evaluated in the Feasibility Study, with estimated undiscounted costs of up to $28 over an estimated 30-year period, or require the Company to take other actions and incur costs not included in the study.
Another matter in Dickinson County, Michigan, at the site of one of the Company’s former operations for which the Company is jointly and severally liable, accounted for $10 of the recorded liability, as of September 30, 2021 and June 30, 2021. 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. If the third party is unable to pay its share of the response and remediation obligations, the Company may be responsible for such obligations. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded for the Dickinson County matter, any amount of such additional exposures, or range of exposures, is not estimable at this time. The Company’s estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements and the future availability of alternative clean-up technologies.
The Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements, product liability, patents and trademarks, advertising, labor and employment, environmental, health and safety and other matters. With respect to these proceedings, claims and other loss contingencies, while considerable uncertainty exists, in the opinion of management at this time, the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.
Guarantees
In conjunction with divestitures and other transactions, the Company may provide typical indemnifications (e.g., indemnifications for representations and warranties and retention of previously existing environmental, tax and employee liabilities) that have terms that vary in duration and in the potential amount of the total obligation and, in many circumstances, are not explicitly defined. The Company has not made, nor does it believe that it is probable that it will make, any material payments relating to its indemnifications, and believes that any reasonably possible payments would not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.
The Company had not recorded any material liabilities on the aforementioned guarantees as of September 30, 2021 and June 30, 2021.
As of September 30, 2021, the Company was party to a letter of credit of $14, related to one of its insurance carriers, of which $0 had been drawn upon.
v3.21.2
SEGMENT RESULTS
3 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
SEGMENT RESULTS SEGMENT RESULTS
The Company operates through strategic business units (SBUs) that are also the Company’s operating segments. The SBUs are then aggregated into four reportable segments: Health and Wellness, Household, Lifestyle and International.
Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, operating lease right-of-use assets, other long-term assets and deferred taxes.
The tables below present reportable segment information and a reconciliation of the segment information to the Company’s consolidated net sales and earnings before income taxes, with amounts that are not allocated to the reportable segments reflected in Corporate.
Net sales
Three Months Ended
9/30/20219/30/2020
Health and Wellness$745 $813 
Household442 500 
Lifestyle331 318 
International288 285 
Corporate— — 
Total$1,806 $1,916 
Earnings (losses) before income taxes
Three Months Ended
9/30/20219/30/2020
Health and Wellness $105 $251 
Household36 109 
Lifestyle93 102 
International30 124 
Corporate(79)(60)
Total$185 $526 
All intersegment sales are eliminated and are not included in the Company’s reportable segments’ net sales.
Net sales to the Company’s largest customer, Wal-Mart Stores, Inc. and its affiliates, as a percentage of consolidated net sales, were 25% for the three months ended September 30, 2021, and 2020.
The following table provides Net sales as a percentage of the Company’s consolidated net sales, disaggregated by SBU, for the periods indicated:
Net sales
Three Months Ended
9/30/20219/30/2020
Cleaning33 %29 %
Professional Products%%
Vitamins, Minerals and Supplements%%
Health and Wellness41 %42 %
Bags and Wraps12 %11 %
Cat Litter%%
Grilling%%
Household25 %26 %
Food Products%%
Natural Personal Care%%
Water Filtration%%
Lifestyle18 %17 %
International16 %15 %
Total100 %100 %
v3.21.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Sep. 30, 2021
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2021 and 2020, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its controlled subsidiaries (the Company) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2021, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.
Recently Adopted Accounting Standards
Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, “Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions to the general principles in ASC 740 and amends existing guidance to improve consistent application. Certain amendments must be applied prospectively, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings. The Company adopted this standard as of July 1, 2021. The adoption of this new standard did not have a material impact on the Company’s condensed consolidated financial statements.
Fair Value Measurement
Fair Value of Financial Instruments

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

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

As of September 30, 2021 and June 30, 2021, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.
Segment Results
The Company operates through strategic business units (SBUs) that are also the Company’s operating segments. The SBUs are then aggregated into four reportable segments: Health and Wellness, Household, Lifestyle and International.
Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, operating lease right-of-use assets, other long-term assets and deferred taxes.
v3.21.2
INVENTORIES, NET (Tables)
3 Months Ended
Sep. 30, 2021
Inventory Disclosure [Abstract]  
Schedule of Inventories, Net Inventories, net, consisted of the following as of:
9/30/20216/30/2021
Finished goods$594 $543 
Raw materials and packaging220 229 
Work in process13 11 
LIFO allowances(42)(31)
Total$785 $752 
v3.21.2
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Sep. 30, 2021
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS [Abstract]  
Effects of Derivative Instruments Designated as Hedging Instruments on OCI
The effects of derivative instruments designated as hedging instruments on Other comprehensive (loss) income and Net earnings were as follows:
Gains (losses) recognized in Other comprehensive (loss) income
Three Months Ended
9/30/20219/30/2020
Commodity purchase derivative contracts$— $
Foreign exchange derivative contracts(1)
Interest rate derivative contracts
Total$$
Effects of Derivative Instruments Designated as Hedging Instruments on Net Earnings
Location of gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earningsGains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
Three Months Ended
9/30/20219/30/2020
Commodity purchase derivative contractsCost of products sold$$(1)
Foreign exchange derivative contractsCost of products sold— — 
Interest rate derivative contractsInterest expense(2)(2)
Total$$(3)
Schedule of Assets and Liabilities for Fair Value Disclosure The following table provides information about the balance sheet classification and the fair values of the Company’s derivative instruments:
 9/30/20216/30/2021
Balance Sheet
Classification
Fair Value
Hierarchy
Level
Carrying
Amount
Estimated
Fair
Value
Carrying
Amount
Estimated
Fair
Value
Assets
Commodity purchase futures contractsPrepaid expenses and other current assets1$$$$
Commodity purchase swaps contractsPrepaid expenses and other current assets2
Foreign exchange forward contractsPrepaid expenses and other current assets2— — 
Interest rate contractsPrepaid expenses and other current assets226 26 24 24 
 $33 $33 $33 $33 
The following table provides information about the balance sheet classification and the fair values of the Company’s other assets and liabilities for which disclosure of fair value is required:
 9/30/20216/30/2021
Balance Sheet
Classification
Fair Value
Hierarchy
Level
Carrying
Amount
Estimated
Fair
Value
Carrying
Amount
Estimated
Fair
Value
Assets
Interest-bearing investments, including money market funds
Cash and cash
equivalents (1)
1$98 $98 $196 $196 
Time deposits
Cash and cash
equivalents (1)
211 11 
Trust assets for nonqualified deferred compensation plansOther assets1142 142 136 136 
 $241 $241 $343 $343 
Liabilities
Notes and loans payable
Notes and loans payable (2)
2$86 $86 $— $— 
Current maturities of long-term debt and Long-term debt
Current maturities of long-
term debt and Long-term
debt (3)
22,784 2,943 2,784 2,963 
$2,870 $3,029 $2,784 $2,963 

(1)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.
(2)Notes and loans payable are composed of outstanding U.S. commercial paper balances, which are recorded at cost, which approximates fair value.
(3)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.
v3.21.2
NET EARNINGS PER SHARE (EPS) (Tables)
3 Months Ended
Sep. 30, 2021
Earnings Per Share [Abstract]  
Schedule of Weighted Average Number of Shares Outstanding and Antidilutive Shares The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:
Three Months Ended
9/30/20219/30/2020
Basic122,980126,346
Dilutive effect of stock options and other1,0622,383
Diluted124,042128,729
Antidilutive stock options and other1,068441 
v3.21.2
COMPREHENSIVE INCOME (Tables)
3 Months Ended
Sep. 30, 2021
Stockholders' Equity Note [Abstract]  
Schedule of Comprehensive Income The following table provides a summary of Comprehensive income for the periods indicated:
Three Months Ended
9/30/20219/30/2020
Net earnings $143 $417 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments(23)10 
Net unrealized gains (losses) on derivatives
Pension and postretirement benefit adjustments
Total other comprehensive (loss) income, net of tax(21)17 
Comprehensive income122 434 
Less: Total comprehensive income attributable to noncontrolling interests
Total comprehensive income attributable to Clorox$121 $432 
v3.21.2
STOCKHOLDERS' EQUITY (Tables)
3 Months Ended
Sep. 30, 2021
Equity [Abstract]  
Schedule of Stockholders Equity Changes in the components of Stockholders’ equity were as follows for the periods indicated:
Three Months Ended September 30
(Dollars in millions except per share data; shares in thousands)
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated
Other
Comprehensive
Net (Loss) Income
Non-controlling interestsTotal Stockholders’ Equity
AmountShares AmountShares
Balance as of June 30, 2020$159 158,741 $1,137 $3,567 $(3,315)(32,543)$(640)$— $908 
Net earnings— — — 415 — — — 417 
Other comprehensive (loss) income— — — — — — 17 — 17 
Dividends to Clorox stockholders ($1.11 per share declared)
— — — (141)— — — — (141)
Dividends to non-controlling interests— — — — — — — (4)(4)
Business combinations including purchase accounting adjustments— — — — — — — 198 198 
Stock-based compensation— — 13 — — — — — 13 
Other employee stock plan activities— — (4)(1)283 — — 
Treasury stock purchased— — — — (100)(444)— — (100)
Balance as of September 30, 2020$159 158,741 $1,146 $3,840 $(3,407)(32,704)$(623)$196 $1,311 
Balance as of June 30, 2021$131 130,741 $1,186 $1,036 $(1,396)(7,961)$(546)$181 $592 
Net earnings— — — 142 — — — 143 
Other comprehensive (loss) income— — — — — — (21)— (21)
Dividends to Clorox stockholders ($1.16 per share declared)
— — — (143)— — — — (143)
Dividends to non-controlling interests— — — — — — — (3)(3)
Stock-based compensation— — — — — — — 
Other employee stock plan activities— — (29)(8)32 228 — — (5)
Treasury stock purchased— — — — (25)(152)— — (25)
Balance as of September 30, 2021$131 130,741 $1,166 $1,027 $(1,389)(7,885)$(567)$179 $547 
Schedule of Changes in Accumulated Other Comprehensive Net (Losses) Income Changes in Accumulated other comprehensive net (loss) income attributable to Clorox by component were as follows for the periods indicated:
Three Months Ended September 30
Foreign currency translation adjustmentsNet unrealized gains (losses) on derivativesPension and postretirement benefit adjustmentsAccumulated other comprehensive net (loss) income
Balance as of June 30, 2020$(450)$(18)$(172)$(640)
Other comprehensive (loss) income before reclassifications— 12 
Amounts reclassified from Accumulated other comprehensive net (loss) income— 
Income tax benefit (expense)(1)— — 
Net current period other comprehensive (loss) income10 17 
Balance as of September 30, 2020$(440)$(13)$(170)$(623)
Balance as of June 30, 2021$(403)$21 $(164)$(546)
Other comprehensive (loss) income before reclassifications(22)— (18)
Amounts reclassified from Accumulated other comprehensive net (loss) income— (3)(1)
Income tax benefit (expense), and other(1)— (1)(2)
Net current period other comprehensive (loss) income(23)(21)
Balance as of September 30, 2021$(426)$22 $(163)$(567)