SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

☒☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐
~~For the quarterly period ended December 31, 2017.~~

		OR

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-07151

~~_________________________~~

(Exact name of registrant as specified in its charter)



Delaware		31-0595760
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

~~1221 Broadway~~
~~Oakland, California~~	~~94612-1888~~
~~(Address of principal executive offices)~~	~~(Zip code)~~

1221 Broadway, Oakland, California, 94612-1888

(Address of principal executive offices) (Zip code)

(Registrant’s telephone number, including area code)


~~(Registrant's telephone number, including area code)~~

(Former name, former address and former fiscal year, if changed since last report)
~~_________________________~~___________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock - $1.00 par value	CLX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☑

☑

Accelerated filer ☐

☐

Non-accelerated filer ~~☐ (Do not check if a smaller reporting company)~~

☐

Smaller Reporting Company ☐

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of January 19, ~~2018,~~2023, there were ~~129,403,990~~123,524,928 shares outstanding of the registrant’s common stock ($1.00 – par value).

PART I – FINANCIAL INFORMATION

Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited)

(Dollars in millions, except ~~share and~~ per share data)


	Three Months Ended				Six Months Ended
	12/31/2022		12/31/2021		12/31/2022		12/31/2021
Net sales	$	1,715	$	1,691	$	3,455	$	3,497
Cost of products sold		1,095		1,133		2,209		2,269
Gross profit		620		558		1,246		1,228
Selling and administrative expenses		282		241		543		477
Advertising costs		156		167		317		349
Research and development costs		33		34		65		67

Interest expense		23		23		45		48
Other (income) expense, net		(4)		—		30		9
Earnings before income taxes		130		93		246		278
Income taxes		28		21		57		63
Net earnings		102		72		189		215
Less: Net earnings attributable to noncontrolling interests		3		3		5		4
Net earnings attributable to Clorox	$	99	$	69	$	184	$	211
Net earnings per share attributable to Clorox
Basic net earnings per share	$	0.81	$	0.56	$	1.49	$	1.71
Diluted net earnings per share	$	0.80	$	0.56	$	1.49	$	1.70
Weighted average shares outstanding (in thousands)
Basic		123,546		123,064		123,443		123,022
Diluted		123,988		123,910		123,951		123,976

Comprehensive income	$	115	$	65	$	166	$	187
Less: Total comprehensive income attributable to noncontrolling interests		3		3		5		4
Total comprehensive income attributable to Clorox	$	112	$	62	$	161	$	183

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Net sales $ 1,416
$ 1,406
$ 2,916
$ 2,849
Cost of products sold 807
777
1,634
1,580
Gross profit 609
629
1,282
1,269
Selling and administrative expenses 197
197
401
397
Advertising costs 140
128
274
256
Research and development costs 31
32
63
63
Interest expense 20
22
41
44
Other (income) expense, net (6 ) 23
(3 ) 18
Earnings from continuing operations before income taxes 227
227
506
491
Income taxes on continuing operations (6 ) 77
81
162
Earnings from continuing operations 233
150
425
329
Earnings (losses) from discontinued operations, net of tax —
(1 ) —
(1 )
Net earnings $ 233
$ 149
$ 425
$ 328
Net earnings (losses) per share
Basic
Continuing operations $ 1.81
$ 1.16
$ 3.29
$ 2.55
Discontinued operations —
—
—
(0.01 )
Basic net earnings per share $ 1.81
$ 1.16
$ 3.29
$ 2.54
Diluted
Continuing operations $ 1.77
$ 1.14
$ 3.23
$ 2.51
Discontinued operations —
—
—
(0.01 )
Diluted net earnings per share $ 1.77
$ 1.14
$ 3.23
$ 2.50
Weighted average shares outstanding (in thousands)
Basic 129,359
128,497
129,189
128,973
Diluted 131,655
130,775
131,559
131,406
Dividends per share declared $ 0.84
$ 0.80
$ 1.68
$ 1.60
Comprehensive income $ 233
$ 137
$ 444
$ 319

See Notes to Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets ~~(Unaudited)~~

(Dollars in millions, except ~~share and~~ per share data)


	12/31/2022		6/30/2022
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	168	$	183
Receivables, net		600		681
Inventories, net		741		755
Prepaid expenses and other current assets		113		106
Total current assets		1,622		1,725
Property, plant and equipment, net of accumulated depreciation and amortization of $2,621 and $2,530, respectively		1,322		1,334
Operating lease right-of-use assets		349		342
Goodwill		1,553		1,558
Trademarks, net		685		687
Other intangible assets, net		183		197
Other assets		331		315
Total assets	$	6,045	$	6,158
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	209	$	237

Current operating lease liabilities		80		78
Accounts payable and accrued liabilities		1,589		1,469

Total current liabilities		1,878		1,784
Long-term debt		2,476		2,474
Long-term operating lease liabilities		318		314
Other liabilities		826		791
Deferred income taxes		56		66
Total liabilities		5,554		5,429
Commitments and contingencies
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding		—		—
Common stock: $1.00 par value; 750,000,000 shares authorized; 130,741,461 shares issued as of December 31, 2022 and June 30, 2022; and 123,478,269 and 123,152,132 shares outstanding as of December 31, 2022 and June 30, 2022, respectively		131		131
Additional paid-in capital		1,207		1,202
Retained earnings		782		1,048
Treasury stock, at cost: 7,263,192 and 7,589,329 shares as of December 31, 2022 and June 30, 2022, respectively		(1,297)		(1,346)
Accumulated other comprehensive net (loss) income		(502)		(479)
Total Clorox stockholders’ equity		321		556
Noncontrolling interests		170		173
Total stockholders’ equity		491		729
Total liabilities and stockholders’ equity	$	6,045	$	6,158

Property, plant and equipment, net of accumulated depreciation

and amortization of $2,031 and $2,001, respectively

Preferred stock: $1.00 par value; 5,000,000 shares authorized; none

issued or outstanding

Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares

issued as of December 31, 2017 and June 30, 2017; and 129,348,120 and 129,014,172 shares outstanding as of December 31, 2017 and June 30, 2017, respectively

Treasury shares, at cost: 29,393,341 and 29,727,289 shares

as of December 31, 2017 and June 30, 2017, respectively

See Notes to Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)


	Six Months Ended
	12/31/2022		12/31/2021
Operating activities:
Net earnings	$	189	$	215
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization		114		110
Stock-based compensation		31		25
Deferred income taxes		(8)		6

Other		37		18
Changes in:
Receivables, net		78		31
Inventories, net		9		(72)
Prepaid expenses and other current assets		(23)		(2)
Accounts payable and accrued liabilities		(54)		(130)
Operating lease right-of-use assets and liabilities, net		—		(1)
Income taxes payable / prepaid		14		22
Net cash provided by operations		387		222
Investing activities:
Capital expenditures		(88)		(109)

Other		1		(3)
Net cash used for investing activities		(87)		(112)
Financing activities:
Notes and loans payable, net		(28)		383
Long-term debt repayments		—		(300)
Treasury stock purchased		—		(25)
Cash dividends paid to Clorox stockholders		(291)		(285)
Cash dividends paid to noncontrolling interests		—		(5)
Issuance of common stock for employee stock plans and other		4		(3)
Net cash used for financing activities		(315)		(235)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(1)		(3)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(16)		(128)
Cash, cash equivalents, and restricted cash:
Beginning of period		186		324
End of period	$	170	$	196

Six Months Ended
12/31/2017 12/31/2016
Operating activities:
Net earnings $ 425
$ 328
Deduct: Losses from discontinued operations, net of tax —
(1 )
Earnings from continuing operations 425
329
Adjustments to reconcile earnings from continuing operations to net cash
provided by continuing operations:

Depreciation and amortization 81
82
Stock-based compensation 23
25
Deferred income taxes (37 ) (4 )
Other 29
20
Changes in:
Receivables, net 31
57
Inventories, net (40 ) (63 )
Prepaid expenses and other current assets (6 ) (13 )
Accounts payable and accrued liabilities (113 ) (142 )
Income taxes payable (71 ) (20 )
Net cash provided by continuing operations 322
271
Net cash provided by discontinued operations —
(1 )
Net cash provided by operations 322
270
Investing activities:
Capital expenditures (89 ) (117 )
Other 15
3
Net cash used for investing activities (74 ) (114 )
Financing activities:
Notes and loans payable, net 88
233
Long-term debt borrowings, net of issuance costs 396
—
Long-term debt repayments (400 ) —
Treasury stock purchased (70 ) (183 )
Cash dividends paid (217 ) (206 )
Issuance of common stock for employee stock plans and other 26
17
Net cash used for financing activities (177 ) (139 )
Effect of exchange rate changes on cash and cash equivalents —
(4 )
Net increase in cash and cash equivalents 71
13
Cash and cash equivalents:
Beginning of period 418
401
End of period $ 489
$ 414

See Notes to Condensed Consolidated Financial Statements (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in millions, except ~~share and~~ per share data)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three and six months ended December 31, ~~2017~~2022 and ~~2016,~~2021, 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)~~Company or Clorox) 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, ~~2017,~~2022, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

Restructuring Liabilities

The Company incurs restructuring costs in connection with workforce reductions; consolidation or closure of a facility; sale or termination of a line of business; and other actions. Such costs include employee termination benefits (one-time arrangements and benefits attributable to prior service), termination of contractual obligations, non-cash asset charges and other direct incremental costs.

The Company records employee termination liabilities once they are both probable and estimable for severance provided under the Company’s existing severance policy. Employee termination liabilities outside of the Company’s existing severance policy are recognized at the time relevant employees are notified, unless the employees will be retained to render service beyond a minimum retention period for transition purposes, in which case the liability is recognized ratably over the future service period. Other costs associated with a restructuring plan or exit or disposal activities, such as consulting and professional fees, facility exit costs, employee relocation, outplacement costs, accelerated depreciation or asset impairments associated with a restructuring plan, are recognized in the period in which the liability is incurred or the asset is impaired.

Recently Issued Accounting Standards

Recently Issued Accounting Standards ~~not yet adopted~~

In ~~August 2017,~~September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. ~~2017-12, “Derivatives~~2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” These amendments require disclosure of the key terms of outstanding supplier finance programs and ~~Hedging (Topic 815): Targeted Improvements to Accounting~~a rollforward of the related obligations. These amendments are effective for ~~Hedging Activities,”~~fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, 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 fiscal years beginning after December 15, 2023. As these amendments relate to disclosures only, there are no impacts expected to the ~~Company beginning in~~Company’s consolidated results of operations, financial position and cash flows.

NOTE 2. RESTRUCTURING AND RELATED COSTS

In the first quarter of fiscal year ~~2020, with early adoption permitted.~~2023, the Company began recognizing costs related to a plan that involves streamlining its operating model to meet its objectives of driving growth and productivity. The streamlined operating model is expected to enhance the Company’s ability to respond more quickly to changing consumer behaviors and innovate faster. The Company ~~is currently evaluating~~anticipates the ~~impact that the adoption~~implementation of this ~~guidance~~new model 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 the presentation of the service cost component of net periodic benefit costbe completed in the same income statement line item(s) 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. Additionally, the new guidance limits the components that are eligible for capitalization in assets to only the service cost component. The new guidance is effective for the Company beginning in the first quarter of fiscal year ~~2019.~~ 2024, with different phases occurring throughout the implementation period.

The Company ~~is currently evaluating the impact that adoption~~anticipates incurring approximately $75 to $100 of costs in fiscal years 2023 and 2024 related to this ~~guidance will have on its consolidated financial statements.~~

~~In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,”~~initiative, of which ~~eliminates the requirement~~approximately $40 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 is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

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

~~NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

receive for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers, including information about significant judgments and changes in judgments. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2019, and$60 is expected to be ~~applied on a modified retrospective basis.~~

~~Based on the Company's preliminary assessment, the adoption of the standard is not~~incurred in fiscal year 2023. Related costs are primarily expected to ~~have a significant impact on its annual consolidated financial statements; however, there may be an impact on the Company's financial results in interim periods due~~include employee-related costs to ~~the timing of recognition~~reduce certain staffing levels such as severance payments, as well as for certain trade promotion spending. As the Company completes its overall assessment, it is also identifying potential changes to its accounting policies, business processes, systems and controls to align with the new revenue recognition guidance and disclosure requirements.

~~NOTE 2. DISCONTINUED OPERATIONS~~

On September 22, 2014, the Company's Venezuela affiliate, Corporación Clorox de Venezuela S.A. (Clorox Venezuela) announced that it was discontinuing its operations, effective immediately, and seeking to sell its assets. Since fiscal year 2012, Clorox Venezuela has been required to sell more than two thirds of its products at prices frozen by the Venezuelan government. During this same period, Clorox Venezuela experienced successive years of hyperinflation resulting in significant sustained increases in its input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela had been selling its products at a loss, resulting in ongoing operating losses. Clorox Venezuela repeatedly met with government authorities in an effort to help them understand the rapidly declining state of the business, including the need for immediate, significant and ongoing price increasesconsulting and other ~~critical remedial actions~~costs. Costs incurred are expected 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~~settled primarily in cash.

Restructuring and related implementation costs, net were ~~insufficient~~$4 and would have caused Clorox Venezuela to continue operating at a significant loss into the foreseeable future. As such, Clorox Venezuela was no longer financially viable and was forced to discontinue its operations.

On September 26, 2014, the Company reported that Venezuelan Vice President Jorge Arreaza announced, with endorsement by President Nicolás Maduro, that the Venezuelan government had occupied the Santa Lucía and Guacara production facilities of Clorox Venezuela. On November 6, 2014, the Company reported that the Venezuelan government had published a resolution granting a government-sponsored Special Administrative Board full authority to restart and operate the business of Clorox Venezuela, thereby reaffirming the government's expropriation of Clorox Venezuela’s assets. Further, President Nicolás Maduro announced the government's intention to facilitate the resumed production of bleach and other cleaning products at Clorox Venezuela plants. He also announced his approval of a financial credit to invest in raw materials and production at the plants. These actions by the Venezuelan government were taken without the consent or involvement of Clorox Venezuela, its parent Clorox Spain S.L. (Clorox Spain) or any of their affiliates. Clorox Venezuela, Clorox Spain and their affiliates reserved their rights under all applicable laws and treaties.

~~With this exit, the financial results of Clorox Venezuela are reflected as discontinued operations in the Company’s condensed consolidated financial statements~~$23 for ~~all periods presented. The results of Clorox Venezuela had historically been part of the International reportable segment.~~

~~There were no net sales for each of~~ the three and six months ended December 31, ~~2017~~2022, respectively. The following table summarizes the total restructuring and ~~2016,~~related implementation costs, net associated with the Company’s streamlined operating model plan as reflected in the Consolidated Statements of Earnings and ~~losses~~Comprehensive Income.


	Three Months Ended		Six Months Ended
	12/31/2022		12/31/2022
Costs of products sold	$	—	$	(1)
Selling and administrative expenses	4		5
Other (income) expense, net:
Employee-related costs	—		19


Total, net	$	4	$	23

Employee-related costs primarily include severance and other termination benefits calculated based on salary levels, prior service and statutory requirements. Other costs primarily include consulting fees incurred for the organizational design and implementation of the future streamlined operating model, related processes and other professional fees incurred.

Charges for restructuring and related implementation costs are recorded in the Corporate segment as these initiatives are centrally directed and controlled and are not included in internal measures of segment operating performance.

The Company may, from ~~discontinued operations, net of tax were insignificant~~time to time, decide to pursue additional restructuring-related initiatives that involve costs in future periods.

The following tables reconcile the accrual for ~~these same periods.~~the streamlined operating model restructuring and related implementation costs discussed above, which are recorded within Accounts payable and accrued liabilities in the Consolidated Balance Sheets:


	Three Months Ended December 31
	Employee-Related Costs		Other		Total
Accrual Balance as of September 30, 2022	$	19	$	3	$	22
Charges	—		4		4
Cash payments	(6)		(5)		(11)

Accrual Balance as of December 31, 2022	$	13	$	2	$	15

	Six Months Ended December 31
	Employee-Related Costs		Other		Total
Accrual Balance as of June 30, 2022	$	—	$	—	$	—
Charges	19		7		26
Cash payments	(6)		(5)		(11)

Accrual Balance as of December 31, 2022	$	13	$	2	$	15

NOTE 3. INVENTORIES, NET

Inventories, net, consisted of the following as of:


	12/31/2022		6/30/2022
Finished goods	$	617	$	593
Raw materials and packaging	205		191
Work in process	15		16
LIFO allowances	(94)		(40)
Total inventories, net	$	743	$	760
Less: Noncurrent inventories, net (1)	2		5
Total current inventories, net	$	741	$	755

12/31/2017 6/30/2017
Finished goods $ 399
$ 363
Raw materials and packaging 115
119
Work in process 6
3
LIFO allowances (26 ) (26 )
Total $ 494
$ 459
(1) Noncurrent inventories, net is recorded in Other assets.

NOTE 4. ~~FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS~~OTHER LIABILITIES

~~Financial Risk Management and Derivative Instruments~~

The Company ~~is exposed~~has an agreement with The Procter & Gamble Company (P&G) for the Company’s Glad bags and wraps business. In connection with this agreement, P&G provides research and development (R&D) support 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.~~

Glad business. As of December 31, 2017, the notional amount of commodity derivatives was $21, of which $11 related to jet fuel swaps used for the charcoal business and $10 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 $35 as of December 31, 2017, and $49 as of June 30, 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.

~~As of December 31, 2017~~2022 and June 30, ~~2017,~~2022, P&G had a 20% interest in the ~~Company had no outstanding interest rate forward contracts.~~

~~NOTE 4. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)~~

~~Commodity, Foreign Exchange and Interest Rate Derivatives~~

venture. The Company ~~designates~~pays a royalty to P&G for its ~~commodity forward~~interest in the profits, losses and ~~future contracts for forecasted purchases~~cash flows, as contractually defined, 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 (loss) and Net earnings were as follows:~~

~~The gains (losses) reclassified from Accumulated other comprehensive net (losses) income and recognized in Net earnings during~~ the ~~three and six months ended December 31, 2017 and 2016, for commodity purchase and foreign exchange contracts were~~Glad business, which is included in Cost of products ~~sold,~~sold. In December 2017, the Company and ~~for interest rate contracts were included in Interest expense.~~

~~The estimated amount~~P&G extended the term of the ~~existing net gain (loss)~~agreement and the related R&D support provided by P&G. The term will expire in ~~Accumulated~~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 ~~comprehensive net (losses) income~~relevant action. The agreement can be terminated earlier 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 December 31, 2022 and June 30, 2022, the estimated fair value of P&G’s interest in the venture was $527 and $635, respectively. Of the estimated fair value, $489 and $468 has been recognized and is reflected in Other liabilities as of December 31, ~~2017, which is expected to be reclassified into Net earnings within~~2022 and June 30, 2022, respectively. The difference between the ~~next twelve months is $(4). Gains~~estimated fair value and ~~losses on derivative instruments representing either hedge ineffectiveness or hedge components excluded from~~ the ~~assessment of effectiveness are~~amount recognized, ~~in Net earnings. During the three~~ and ~~six months ended December 31, 2017 and 2016, hedge ineffectiveness was not significant.~~

~~NOTE 4. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)~~

~~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 whenany future changes in the fair value of ~~the derivative instrument exceeds contractually defined counterparty liability position limits. Of the over-the-counter derivative instruments held as~~P&G’s interest, is charged to Cost of December 31, 2017 and June 30, 2017, $0 and $1, respectively, contained such terms. As of December 31, 2017 and June 30, 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 December 31, 2017 and June 30, 2017, the Company and each of its counterparties had been assigned investment grade credit ratings by both Standard & Poor’s and Moody’s.

Certain of the Company’s exchange-traded futures contracts used for commodity price risk management include requirements for the Company to post collateral in the form of a cash margin account held by the Company’s broker for trades conducted on that exchange. As of December 31, 2017 and June 30, 2017, the Company maintained cash margin balances related to exchange-traded futures contracts of $0 and $1, respectively, which are classified as Prepaid expenses and other current assets in the condensed consolidated balance sheets.

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

~~Fair Value Measurements~~

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

~~Level 1: Quoted market prices in active markets for identical assets or liabilities.~~

~~Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.~~

~~Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.~~

As of December 31, 2017 and June 30, 2017, 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.

~~NOTE 4. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)~~

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

12/31/2017 6/30/2017
Balance sheet
classification Fair value
hierarchy
level Carrying
Amount Estimated
Fair
Value Carrying
Amount Estimated
Fair
Value
Assets
Investments including money market funds
Cash and cash
equivalents ^(a)
1 $ 240
$ 240
$ 221
$ 221
Time deposits
Cash and cash
equivalents ^(a)
2 149
149
115
115
Commodity purchase swaps contracts Prepaid expenses and other current assets 2 2
2
1
1
Commodity purchase swaps contracts Other assets 2 1
1
—
—
Trust assets for nonqualified deferred compensation plans Other assets 1 84
84
72
72
$ 476
$ 476
$ 409
$ 409
Liabilities
Notes and loans payable
Notes and loans payable ^(b)
2 $ 495
$ 495
$ 404
$ 404
Commodity purchase swaps contracts
Accounts payable and
accrued liabilities
2 —
—
1
1
Foreign exchange forward contracts
Accounts payable and
accrued liabilities
2 1
1
1
1
Current maturities of long-term debt
and Long-term debt
Current maturities of long-
term debt and Long-term
debt ^(c)
2 1,788
1,843
1,791
1,855
$ 2,284
$ 2,339
$ 2,197
$ 2,261

~~____________________~~

The proceeds from the debt issuance were used to repay commercial paper in September 2017. In October 2017, the Company used commercial paper borrowings to repay its $400 senior notes with an annual fixed interest rate of 5.95%.

NOTE ~~6. OTHER LIABILITIES~~5. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

~~Other liabilities consisted~~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 futures, options and swap contracts to limit the impact of price volatility on a portion of its forecasted raw material requirements. These commodity derivatives may be exchange traded or over-the-counter contracts and generally have original contractual maturities of less than two years. Commodity purchase and options 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 both December 31, 2022, and June 30, 2022, the notional amount of commodity derivatives was $27, which related primarily to exposures in soybean oil used for the Food products business and jet fuel used for the Grilling business.

Foreign Currency Risk Management

The Company may also enter into certain over-the-counter derivative contracts to manage a portion of the ~~following:~~Company’s forecasted foreign currency exposure associated with the purchase of inventory. These foreign currency contracts generally have original contractual maturities of less than two 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 $56 and $31 as of December 31, 2022 and June 30, 2022, respectively.

12/31/2017 6/30/2017
Venture agreement terminal obligation, net $ 327
$ 317
Employee benefit obligations 307
298
Taxes 47
42
Other 110
113
Total $ 791
$ 770
Interest Rate Risk Management

~~Venture Agreement~~

The Company held no interest rate contracts as of December 31, 2022 and June 30, 2022.

Commodity, Foreign Exchange and Interest Rate Derivatives

The Company designates its commodity forward, futures and options 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.

NOTE 5. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)


	Gains (losses) recognized in Other comprehensive (loss) income
	Three Months Ended				Six Months Ended
	12/31/2022		12/31/2021		12/31/2022		12/31/2021
Commodity purchase derivative contracts	$	1	$	2	$	(2)	$	2
Foreign exchange derivative contracts	(1)		—		—		1
Interest rate derivative contracts	—		(3)		—		—
Total	$	—	$	(1)	$	(2)	$	3


	Location of gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earnings	Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
		Three Months Ended				Six Months Ended
		12/31/2022		12/31/2021		12/31/2022		12/31/2021
Commodity purchase derivative contracts	Cost of products sold	$	3	$	5	$	7	$	10
Foreign exchange derivative contracts	Cost of products sold	—		—		1		—
Interest rate derivative contracts	Interest expense	3		(1)		6		(3)
Total		$	6	$	4	$	14	$	7

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of December 31, 2022 that is expected to be reclassified into Net earnings within the next twelve months is $13.

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 December 31, 2022 and June 30, 2022, $0 contained such terms. As of both December 31, 2022 and June 30, 2022, 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 Company’s 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 ~~agreement with The Procter~~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 December 31, 2022 and June 30, 2022, the Company and each of its counterparties had been assigned investment grade ratings by both Standard & ~~Gamble Company (P&G)~~Poor’s and Moody’s.

Certain of the Company’s exchange traded futures and options 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 ~~Glad~~^® ~~bags, wraps and containers business. In connection with this agreement, P&G provides research and development (R&D) support to the Glad~~^® ~~business.~~broker for trades conducted on that exchange. As of December 31, ~~2017~~2022 and June 30, ~~2017, P&G had a 20% interest~~2022, the Company maintained cash margin balances related to exchange traded futures and options contracts of $2 and $1, respectively, which are classified as Prepaid expenses and other current assets on the condensed consolidated balance sheets.

NOTE 5. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

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 ~~venture. The Company pays a royalty to P&G for its interest~~nonqualified deferred compensation plans, who are the Company’s current and former employees, may select among certain mutual funds 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.~~

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a ~~royalty-free~~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 ~~licensed products marketed.~~reporting entity’s own assumptions.

As of both December 31, 2022 and June 30, 2022, 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:


			12/31/2022				6/30/2022
	Balance Sheet Classification	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Commodity purchase options contracts	Prepaid expenses and other current assets	1	$	1	$	1	$	—	$	—
Commodity purchase swaps contracts	Prepaid expenses and other current assets	2	1		1		6		6

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

			$	3	$	3	$	7	$	7
Liabilities
Commodity purchase futures contracts	Accounts payable and accrued liabilities	1	1		1		1		1


			$	1	$	1	$	1	$	1

NOTE 5. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

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:


			12/31/2022				6/30/2022
	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	$	44	$	44	$	86	$	86
Time deposits	Cash and cash equivalents (1)	2	5		5		4		4


Trust assets for nonqualified deferred compensation plans	Other assets	1	126		126		119		119
			$	175	$	175	$	209	$	209
Liabilities
Notes and loans payable	Notes and loans payable (2)	2	$	209	$	209	$	237	$	237

Current maturities of long-term debt and Long-term debt	Current maturities of long- term debt and Long-term debt (3)	2	2,476		2,309		2,474		2,386
			$	2,685	$	2,518	$	2,711	$	2,623

(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 and/or amounts drawn on the Company’s credit agreements, all of 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.

NOTE 7.6. INCOME TAXES

In determining its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The effective tax rate on earnings ~~from continuing operations~~ was ~~(3.1)%~~21.2% and ~~15.9%~~23.0% for the three and six months ended December 31, ~~2017,~~2022, respectively, and ~~34.1%~~23.1% and ~~33.0%~~22.8% for the three and six months ended December 31, ~~2016,~~2021, respectively.

The ~~decrease in the effective tax rate on earnings from continuing operations for the current three and six month periods was primarily due to the enactment of The Tax Cuts and Jobs~~Inflation Reduction Act (the ~~Tax Act) during the quarter.~~

~~The Tax Act~~“Act”) was signed into law byon August 16, 2022. The Act introduces a new 15% corporate minimum tax for certain large corporations that becomes effective at the ~~President~~beginning of the ~~United States on December 22, 2017. The Tax Act makes significant changes to U.S. tax law,~~Company’s fiscal 2024 and ~~includes~~it imposes a reduction of U.S. corporation statutory income tax rates from 35% to 21% effective January 1, 2018. Under the Tax Act, the Company is subject to an average federal statutory tax rate of 28.1% for its fiscal year ending June 30, 2018. The Company’s federal statutory tax rate will be 21.0% beginning in July 2018 for the fiscal year ending June 30, 2019. The Tax Act also includes, among other things, a one-time transition1% excise tax on ~~accumulated foreign earnings and~~ the ~~adoption~~value of ~~a modified territorial approach to the taxation~~share repurchases, net of ~~future foreign earnings.~~

Based on the provisions of the Tax Act, the Company provisionally remeasured its net deferred tax liabilities to incorporate the future lower corporate tax rate resulting in a $33 reduction to net deferred tax liabilities. In addition, remeasurements specifically related to the reversal of deferred tax liabilities for U.S. tax on foreign unremitted earnings, related deferred foreign tax credits and related unrealized foreign exchange gains and losses, reduced the Company’s net deferred tax liability by a provisional amount of $27. These reductions in the net deferred tax liabilities were recognized as a benefit in the Company’s provision for income taxes in the three and six months ended December 31, 2017. The Company is continuing to analyze certain aspects of the Tax Act and is refining its calculations which could potentially affect the measurements of these balances or potentially give rise to new deferred tax amounts. The total provisional amounts related to the remeasurement of the Company’s deferred tax balances resulted in a $60 beneficial impact.

A provisional, one-time transition tax expense on accumulated foreign earnings, net of applicable foreign tax credits, of $7 was recognized in the Company’s provision for income taxes in the three and six months ended December 31, 2017. This amount may change as the Company continues to finalize the calculation of post-1986 foreign earnings and profits previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets. This amount may also change as new guidance and clarifications are issued by the Internal Revenue Service. The Company anticipates that it will be able to utilize existing foreign tax credit carryforwards to fully offset its one-time transition tax liability.

The impact of the Tax Act in the three and six months ended December 31, 2017 also includes a provisional $28 benefit related to current year taxable income. Taken together, the beneficial impact of the Tax Act totaled $81 for the three and six months ended December 31, 2017 and was due to several provisional adjustments including net deferred tax liability reductions of $60, a beneficial current taxable income impact of $28 and a provisional one-time transition tax of $7.

NOTE 8.7. 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		Six Months Ended
	12/31/2022	12/31/2021	12/31/2022	12/31/2021
Basic	123,546	123,064	123,443	123,022
Dilutive effect of stock options and other	442	846	508	954
Diluted	123,988	123,910	123,951	123,976

Antidilutive stock options and other	2,942	1,065	2,963	1,067

Basic net earnings per share and Diluted net earnings per share are calculated on Net earnings attributable to Clorox.

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Basic 129,359 128,497
129,189 128,973
Dilutive effect of stock options and other 2,296 2,278
2,370 2,433
Diluted 131,655 130,775
131,559 131,406

Antidilutive stock options and other 1,223 1,335
1,223 39

The Company has two share repurchase programs: an open-market purchase program with an authorized aggregate purchase amount of up to $750, all of which was available from share repurchases as of December 31, 2017, and a program to offset the anticipated impact of share dilution related to share-based awards (the Evergreen Program), which has no authorization limit as to amount or timing of repurchases. There were no share repurchases under the open-market purchase program during either of the three and six months ended December 31, 2017 and 2016.

~~Share repurchases under the Evergreen Program were as follows during the three and six months ended December 31:~~

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Amount Shares (in 000's) Amount Shares (in 000's) Amount Shares (in 000's) Amount Shares (in 000's)
Evergreen Program $ 3
26
$ 70
572
$ 63
476
$ 183
1,455

NOTE 9.8. COMPREHENSIVE INCOME (LOSS)

The following table provides a summary of Comprehensive income (loss) for the periods indicated:


	Three Months Ended				Six Months Ended
	12/31/2022		12/31/2021		12/31/2022		12/31/2021
Net earnings	$	102	$	72	$	189	$	215
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	18		(5)		(11)		(28)
Net unrealized gains (losses) on derivatives	(6)		(4)		(14)		(3)
Pension and postretirement benefit adjustments	1		2		2		3
Total other comprehensive (loss) income, net of tax	13		(7)		(23)		(28)
Comprehensive income	115		65		166		187
Less: Total comprehensive income attributable to noncontrolling interests	3		3		5		4
Total comprehensive income attributable to Clorox	$	112	$	62	$	161	$	183

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Earnings from continuing operations $ 233
$ 150
$ 425
$ 329
Earnings (losses) from discontinued operations, net of tax —
(1 ) —
(1 )
Net earnings 233
149
425
328
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (4 ) (17 ) 10
(18 )
Net unrealized gains (losses) on derivatives 3
4
8
7
Pension and postretirement benefit adjustments 1
1
1
2
Total other comprehensive income (loss), net of tax —
(12 ) 19
(9 )
Comprehensive income $ 233
$ 137
$ 444
$ 319

NOTE 9. STOCKHOLDERS’ EQUITY

Changes in the components of Stockholders’ equity were as follows for the periods indicated:


	Three Months Ended December 31
(Dollars in millions except per share data; shares in thousands)	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Net (Loss) Income		Non controlling interests		Total Stockholders’ Equity
	Amount		Shares					Amount		Shares
Balance as of September 30, 2021	$	131	130,741	$	1,166	$	1,027	$	(1,389)	(7,885)	$	(567)	$	179	$	547
Net earnings	—		—	—		69		—		—	—		3		72
Other comprehensive (loss) income	—		—	—		—		—		—	(7)		—		(7)
Dividends to Clorox stockholders ($1.16 per share declared)	—		—	—		(144)		—		—	—		—		(144)
Dividends to noncontrolling interests	—		—	—		—		—		—	—		(4)		(4)

Stock-based compensation	—		—	16		—		—		—	—		—		16
Other employee stock plan activities	—		—	(2)		(3)		16		108	—		—		11


Balance as of December 31, 2021	$	131	130,741	$	1,180	$	949	$	(1,373)	(7,777)	$	(574)	$	178	$	491

Balance as of September 30, 2022	$	131	130,741	$	1,193	$	832	$	(1,315)	(7,385)	$	(515)	$	170	$	496
Net earnings	—		—	—		99		—		—	—		3		102
Other comprehensive (loss) income	—		—	—		—		—		—	13		—		13
Dividends to Clorox stockholders ($1.18 per share declared)	—		—	—		(147)		—		—	—		—		(147)
Dividends to noncontrolling interests	—		—	—		—		—		—	—		(3)		(3)

Stock-based compensation	—		—	21		—		—		—	—		—		21
Other employee stock plan activities	—		—	(7)		(2)		18		122	—		—		9



Balance as of December 31, 2022	$	131	130,741	$	1,207	$	782	$	(1,297)	(7,263)	$	(502)	$	170	$	491

	Six Months Ended December 31
(Dollars in millions except per share data; shares in thousands)	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Net (Loss) Income		Non-controlling interests		Total Stockholders’ Equity
	Amount		Shares					Amount		Shares
Balance as of June 30, 2021	$	131	130,741	$	1,186	$	1,036	$	(1,396)	(7,961)	$	(546)	$	181	$	592

Net earnings	—		—	—		211		—		—	—		4		215
Other comprehensive (loss) income	—		—	—		—		—		—	(28)		—		(28)
Dividends to Clorox stockholders ($2.32 per share declared)	—		—	—		(287)		—		—	—		—		(287)
Dividends to noncontrolling interests	—		—	—		—		—		—	—		(7)		(7)

Stock-based compensation	—		—	25		—		—		—	—		—		25
Other employee stock plan activities	—		—	(31)		(11)		48		336	—		—		6
Treasury stock purchased	—		—	—		—		(25)		(152)	—		—		(25)

Balance as of December 30, 2021	$	131	130,741	$	1,180	$	949	$	(1,373)	(7,777)	$	(574)	$	178	$	491

Balance as of June 30, 2022	$	131	130,741	$	1,202	$	1,048	$	(1,346)	(7,589)	$	(479)	$	173	$	729
Net earnings	—		—	—		184		—		—	—		5		189
Other comprehensive (loss) income	—		—	—		—		—		—	(23)		—		(23)
Dividends to Clorox stockholders ($3.54 per share declared)	—		—	—		(440)		—		—	—		—		(440)
Dividends to noncontrolling interests	—		—	—		—		—		—	—		(8)		(8)

Stock-based compensation	—		—	31		—		—		—	—		—		31
Other employee stock plan activities	—		—	(26)		(10)		49		326	—		—		13



Balance as of December 31, 2022	$	131	130,741	$	1,207	$	782	$	(1,297)	(7,263)	$	(502)	$	170	$	491

NOTE 9. STOCKHOLDERS’ EQUITY (Continued)

Changes in Accumulated other comprehensive net ~~(losses)~~(loss) income attributable to Clorox by component were as follows for the ~~six months ended December 31:~~

Foreign currency translation adjustments Net unrealized gains (losses) on derivatives Pension and postretirement benefit adjustments Accumulated other comprehensive (losses) income
Balance as of June 30, 2016 $ (353 ) $ (44 ) $ (173 ) $ (570 )
Other comprehensive income (loss) before reclassifications (20 ) 2
—
(18 )
Amounts reclassified from Accumulated other comprehensive net losses —
7
4
11
Income tax benefit (expense) 2
(2 ) (2 ) (2 )
Net current period other comprehensive income (loss) (18 ) 7
2
(9 )
Balance as of December 31, 2016 $ (371 ) $ (37 ) $ (171 ) $ (579 )
Balance as of June 30, 2017 $ (356 ) $ (37 ) $ (150 ) $ (543 )
Other comprehensive income (loss) before reclassifications 13
5
—
18
Amounts reclassified from Accumulated other comprehensive net losses —
5
3
8
Income tax benefit (expense) (3 ) (2 ) (2 ) (7 )
Net current period other comprehensive income (loss) 10
8
1
19
Balance as of December 31, 2017 $ (346 ) $ (29 ) $ (149 ) $ (524 )
periods indicated:


	Three Months Ended December 31
	Foreign currency translation adjustments		Net unrealized gains (losses) on derivatives		Pension and postretirement benefit adjustments		Accumulated other comprehensive net (loss) income
Balance as of September 30, 2021	$	(426)	$	22	$	(163)	$	(567)
Other comprehensive (loss) income before reclassifications	(5)		(1)		—		(6)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		(4)		2		(2)
Income tax benefit (expense)	—		1		—		1
Net current period other comprehensive (loss) income	(5)		(4)		2		(7)
Balance as of December 31, 2021	$	(431)	$	18	$	(161)	$	(574)

Balance as of September 30, 2022	$	(477)	$	113	$	(151)	$	(515)
Other comprehensive (loss) income before reclassifications	18		—		—		18
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		(6)		2		(4)
Income tax benefit (expense), and other	—		—		(1)		(1)
Net current period other comprehensive (loss) income	18		(6)		1		13
Balance as of December 31, 2022	$	(459)	$	107	$	(150)	$	(502)

	Six Months Ended December 31
	Foreign currency translation adjustments		Net unrealized gains (losses) on derivatives		Pension and postretirement benefit adjustments		Accumulated other comprehensive net (loss) income
Balance as of June 30, 2021	$	(403)	$	21	$	(164)	$	(546)
Other comprehensive (loss) income before reclassifications	(28)		3		—		(25)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		(7)		4		(3)
Income tax benefit (expense)	—		1		(1)		—
Net current period other comprehensive (loss) income	(28)		(3)		3		(28)
Balance as of December 31, 2021	$	(431)	$	18	$	(161)	$	(574)

Balance as of June 30, 2022	$	(448)	$	121	$	(152)	$	(479)
Other comprehensive (loss) income before reclassifications	(11)		(2)		—		(13)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		(14)		3		(11)
Income tax benefit (expense), and other	—		2		(1)		1
Net current period other comprehensive (loss) income	(11)		(14)		2		(23)
Balance as of December 31, 2022	$	(459)	$	107	$	(150)	$	(502)

Included in foreign currency translation adjustments are ~~re-measurement~~remeasurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. For the three and six months ended December 31, 2017, Other comprehensive income (loss) on these loans totaled $(3) and $(4), respectively. For the three and six months ended December 31, 2016, Other comprehensive income (loss) on these loans totaled $(3). There were no amounts associated with these loans reclassified from Accumulated other comprehensive net ~~(losses)~~(loss) income for the periods presented.

NOTE 10. EMPLOYEE BENEFIT PLANS

The Company has a domestic qualified pension plan (the Plan). The Plan is frozen for all participants. The Plan generally was frozen effective June 30, 2011 for all employees, except for certain collectively bargained employees, whose Plan freeze was effective January 1, 2019. As a result of the Plan freeze, no employees are eligible to commence participation in the Plan or accrue any additional benefits under the Plan.

On May 17, 2022, the Company’s Board of Directors approved a resolution to terminate the Plan. The amendment will allow the settlement of the pension obligation with either a lump sum payout or a purchased annuity. It is expected to take 18 to 24 months to complete the termination from the date of the approved resolution to terminate the Plan. The completion of the process of offering and accepting lump sum elections are dependent on when certain regulatory approvals are obtained. Currently, there is not enough information available to determine the ultimate charge of the termination. The Plan is fully funded under specified Employee Retirement Income Security Act (ERISA) funding rules as of December 31, 2022.

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


														Three Months Ended				Six Months Ended
	Three Months Ended						Six Months Ended							12/31/2022		12/31/2021		12/31/2022		12/31/2021
	12/31/2017			12/31/2016			12/31/2017			12/31/2016
Service cost	$	—		$	—		$	—		$	—
Interest cost	5			6			11			11			Interest cost	$	4	$	4	$	9	$	8
Expected return on plan assets⁽¹⁾	(4		)	(5		)	(9		)	(10		)	Expected return on plan assets (1)	(2)		(3)		(5)		(7)

Amortization of unrecognized items	2			3			5			6			Amortization of unrecognized items	2		2		4		4
Total	$	3		$	4		$	7		$	7		Total	$	4	$	3	$	8	$	5

(1) The weighted average long-term expected rate of return on plan assets used in computing the fiscal year ~~2018~~2023 net periodic benefit cost is ~~4.42%~~2.7%.

~~During~~The net periodic benefit cost for the Company’s retirement health care plans was $0 for both the three and six months ended December 31, ~~2017,~~2022 and 2021.

During both the three months ended December 31, 2022 and 2021, the Company made $2 ~~and $4~~ in contributions to ~~the~~its domestic retirement income ~~plans, respectively. For~~plans. During the ~~three and~~ six months ended December 31, ~~2016,~~2022 and 2021, the Company made $2$4 and ~~$19~~$5 in contributions to ~~the~~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.

NOTE 11. OTHER CONTINGENCIES AND GUARANTEES

The Company is involved in certain environmental matters, including response actions at various locations. The Company had recorded liabilities totaling $26 and $28 as of December 31, ~~2017~~2022 and June 30, ~~2017,~~2022, respectively, for its share of aggregate future remediation costs related to these matters.

One matter, which accounted ~~for~~for $12 and $14 of the recorded liability as of December 31, ~~2017~~2022 and June 30, ~~2017,~~2022, respectively, 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,~~Following further discussions with the regulators in 2017, the Company recorded ~~in Other (income) expense, net~~ an undiscounted liability for costs estimated to be incurred over a 30-year period, based on one of the ~~option recommended~~options in the Feasibility Study. ~~However,~~In September 2021, as a result of ~~ongoing~~an additional study and further discussions with regulators, ~~in June 2017~~ the Company ~~increased its~~submitted a Soil Vapor Intrusion Report to the regulators, which has not resulted in a change to the recorded ~~liability to $14, which reflects anticipated costs to implement additional remediation measures at this site.~~liability. While the Company believes its latest ~~estimate is~~estimates of remediation costs are reasonable, the ultimate remediation requirements are not yet finalized and the regulators could require the Company to implement ~~one of the other options evaluated in the Feasibility Study, with~~remediation actions for a longer period or take additional actions, which could include estimated undiscounted costs of up to approximately $28 over an estimated 30-year period, or require the Company to take ~~other~~different actions and incur ~~costs not included in the study.~~additional costs.

Another matter in Dickinson County, Michigan, at the site of one of the ~~Company's~~Company’s former operations for which the Company is jointly and severally liable, accounted for ~~$12~~ $9 of the recorded liability as of both December 31, ~~2017~~2022 and June 30, ~~2017.~~2022. This amount reflects the ~~Company's~~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~~agreement with a third party. If the third party is unable to pay its share of the response and

NOTE 11: OTHER CONTINGENCIES AND GUARANTEES (continued)

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~~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 (including costs connected to the transition and unwinding of certain supply and manufacturing relationships), 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.

~~NOTE 11. OTHER CONTINGENCIES AND GUARANTEES (continued)~~

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 both December 31, ~~2017~~2022 and June 30, ~~2017.~~2022.

~~As of December 31, 2017, the~~The Company was a party to letters of credit of $9$14 as of December 31, 2022, primarily related to ~~one of~~ its insurance carriers, of which $0 had been drawn upon.

NOTE 12. SEGMENT RESULTS

The Company operates through strategic business units (SBUs) that are organized into the Company’s operating segments. The operating segments are then aggregated into four reportable ~~segments based on the economics~~segments: Health and ~~nature of the products sold: Cleaning,~~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 ~~investments~~long-term assets and deferred taxes.

The ~~table~~tables below ~~presents~~present reportable segment information and a reconciliation of the segment information to the Company’s consolidated ~~Net~~net sales and ~~Earnings from continuing operations~~earnings (losses) before income taxes, with amounts that are not allocated to the reportable segments reflected in Corporate.


	Net sales
	Three Months Ended				Six Months Ended
	12/31/2022		12/31/2021		12/31/2022		12/31/2021
Health and Wellness	$	635	$	648	$	1,347	$	1,393
Household	462		423		885		865
Lifestyle	332		324		652		655
International	286		296		571		584

Total	$	1,715	$	1,691	$	3,455	$	3,497

	Earnings (losses) before income taxes
	Three Months Ended				Six Months Ended
	12/31/2022		12/31/2021		12/31/2022		12/31/2021
Health and Wellness	$	103	$	56	$	218	$	161
Household	44		10		66		46
Lifestyle	74		80		134		173
International	24		19		47		49
Corporate (1)	(115)		(72)		(219)		(151)
Total	$	130	$	93	$	246	$	278

(1) The earnings (losses) before income taxes for Corporate includes restructuring and related implementation costs, net for the streamlined operating model of $4 and $23 for the three and six months ended December 31, 2022, respectively. While recorded within the Corporate segment, for informational purposes the following table provides the approximate restructuring and related implementation costs, net corresponding to the Company’s reportable segments as a percentage of the total costs:

Net sales
Three Months Ended Six Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Cleaning $ 472
$ 469
$ 1,031
$ 1,003
Household 410
421
851
843
Lifestyle 268
260
514
496
International 266
256
520
507
Corporate —
—
—
—
Total $ 1,416
$ 1,406
$ 2,916
$ 2,849

Earnings (losses) from continuing operations before income taxes
Three Months Ended Six Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Cleaning $ 121
$ 104
$ 293
$ 268
Household 54
71
127
140
Lifestyle 69
77
133
139
International 23
28
46
55
Corporate (40 ) (53 ) (93 ) (111 )
Total $ 227
$ 227
$ 506
$ 491


	Three Months Ended		Six Months Ended
	12/31/2022		12/31/2022
Health and Wellness	—	%	5	%
Household	—		—
Lifestyle	—		5
International	—		16
Corporate	100		74
Total	100	%	100	%

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,~~Walmart Inc. and its affiliates, as a percentage of consolidated net sales, were 25% and 26% for ~~each of~~ the three and six months ended December 31, ~~2017~~2022, respectively, and ~~2016.~~25% for the three and six months ended December 31, 2021.

~~In August 2017,~~

NOTE 12. SEGMENT RESULTS (Continued)

The following table provides Net sales as a percentage of the ~~Company sold the Aplicare business, previously reported in the Cleaning reportable segment. For the fiscal year ended June 30, 2017, the Aplicare business had~~Company’s consolidated net sales, ~~of $46 and insignificant net earnings excluding~~disaggregated by operating segment, for the ~~$21 non-cash impairment charge recorded in December 2016.~~periods indicated:


	Net sales
	Three Months Ended				Six Months Ended
	12/31/2022		12/31/2021		12/31/2022		12/31/2021
Cleaning	29	%	29	%	31	%	31	%
Professional Products	5		5		5		5
Vitamins, Minerals and Supplements	3		4		3		4
Health and Wellness	37	%	38	%	39	%	40	%
Bags and Wraps	14		13		13		12
Grilling	4		4		4		5
Cat Litter	9		8		9		7
Household	27	%	25	%	26	%	24	%
Food	10		10		10		10
Natural Personal Care	5		5		4		5
Water Filtration	4		4		4		4
Lifestyle	19	%	19	%	18	%	19	%
International	17	%	18	%	17	%	17	%
Total	100	%	100	%	100	%	100	%

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Clorox Company

(Dollars in millions, except ~~share and~~ per share data)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of The Clorox Company’s (the Company or Clorox) financial statements with a narrative from the perspective of management on the Company’s financial condition, results of operations, liquidity and certain other factors that may affect future results. The following discussion of the Company’s financial condition and results of operations should be read in conjunction with MD&A and the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017,~~2022, which was filed with the ~~Securities and Exchange Commission (SEC)~~SEC on August ~~15, 2017,~~10, 2022, and the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q (this Report). Unless otherwise noted, MD&A compares the ~~three-~~three and ~~six-month~~six month periods ended December 31, ~~2017~~2022 (the current period) to the ~~three-~~three and ~~six-month period~~six month periods ended December 31, ~~2016~~2021 (the prior period), with percentage and basis point calculations based on rounded numbers, except for per share data and the effective tax rate.

EXECUTIVE OVERVIEW

Clorox is a leading multinational manufacturer and marketer of consumer and professional products with approximately ~~8,100~~9,000 employees worldwide. Clorox sells its products primarily through mass ~~retail outlets and~~retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drug, pet and military stores, third-party and owned e-commerce channels, ~~military stores~~ and ~~other retail outlets, and medical supply~~ distributors. Clorox markets some of the most trusted and recognized consumer brand names, including its namesake bleach and cleaning products, Pine-Sol^® ~~cleaners,~~ cleaners; Liquid-Plumr^®clog ~~removers,~~removers; Poett^® home care ~~products,~~products; Fresh Step^® cat ~~litter,~~litter; Glad^® bags ~~wraps~~ and ~~container products,~~wraps; Kingsford^®~~and Match Light~~^® ~~charcoal, RenewLife~~^® ~~digestive health products,~~ grilling products; Hidden Valley^® dressings, dips, seasonings and ~~sauces,~~sauces; Brita^® water-filtration ~~products and~~products; Burt’s Bees^® natural personal care ~~products.~~products; and RenewLife®, Rainbow Light®, Natural Vitality® and NeoCell® vitamins, minerals and supplements. The Company also markets toindustry-leading products and technologies for professional ~~services channels,~~customers, including ~~infection control products for~~those sold under the ~~healthcare industry with~~CloroxPro™and Clorox Healthcare^®brand ~~and commercial cleaning products with Commercial Solutions~~^® ~~brand.~~names. The Company has operations in more than 25 countries or territories and sells its products in more than 100 markets.

The Company primarily markets its leading brands in midsized categories considered to be financially attractive. Most of the Company’s products compete with other nationally advertised brands within each category and with “private label” brands.

The Company operates through strategic business units (SBUs) that are organized into the Company’s operating segments. These operating segments are then aggregated into ~~the following~~four reportable segments: Health and Wellness, Household, Lifestyle and International. These four reportable segments ~~based on~~consist of the ~~economics~~following:

•Health and ~~nature~~Wellness consists of cleaning products, professional products and vitamins, minerals and supplements mainly marketed and sold in the U.S. Products within this segment include cleaning products such as laundry additives and home care products, primarily under the Clorox®, Clorox2®, Scentiva®, Pine-Sol, Liquid-Plumr, Tilex® and Formula 409® brands; professional cleaning and disinfecting products under the CloroxPro and Clorox Healthcare brands; professional food service products under the Hidden Valley brand; and vitamins, minerals and supplements under the RenewLife, Natural Vitality, NeoCelland Rainbow Light brands.

•Household consists of bags and wraps, grilling products and cat litter marketed and sold in the U.S. Products within this segment include bags and wraps under the Glad brand; grilling products under the Kingsford brand; and cat litter primarily under the Fresh Stepand Scoop Away® brands.

•Lifestyle consists of food, natural personal care products and water-filtration products marketed and sold in the U.S. Products within this segment include dressings, dips, seasonings and sauces, primarily under the Hidden Valley brand; natural personal care products under the Burt’s Bees brand; and water-filtration products under the Brita brand.

•International consists of products sold outside the U.S. Products within this segment include laundry additives, home care products, water-filtration products, digestive health products; grilling products; cat litter; food; bags and wraps; natural personal care products; and professional cleaning and disinfecting products marketed primarily under the Clorox, Ayudin®, Clorinda®, Poett, Pine-Sol, Glad, Brita, RenewLife, Ever Clean® and Burt’s Bees brands.

RECENT EVENTS AFFECTING THE COMPANY

For the fiscal quarter ended December 31, 2022, the Company continued to experience supply chain disruptions including the impacts of cost inflation resulting in persistently high manufacturing and logistics costs as well as higher commodity costs. In addition to these evolving challenges, ongoing uncertainties and economic and social disruptions remained present due to the continued effects of the coronavirus (COVID-19) pandemic, which were further heightened by the conflict in Ukraine that began in the previous fiscal year.

While demand for many of the products ~~sold:~~

•

~~Cleaning~~ ~~consists of laundry, home care and professional products marketed and sold in the United States. Products within this segment include laundry additives, including bleach products under the Clorox~~^® ~~brand and Clorox 2~~^® ~~stain fighter and color booster; home care products, primarily under the Clorox~~^®~~, Formula 409~~^®~~, Liquid-Plumr~~^®~~, Pine-Sol~~^®~~, S.O.S~~^® ~~and Tilex~~^® ~~brands; naturally derived products under the Green Works~~^® ~~brand; and professional cleaning and disinfecting products under the Clorox~~^®~~, Dispatch~~^®~~, HealthLink~~^® ~~and Clorox Healthcare~~^® ~~brands.~~

•

~~Household~~ consists of charcoal, bags, wraps and containers, cat litter, and digestive health products marketed and sold in the United States. Products within this segment include charcoal products under the Kingsford^® ~~and Match Light~~^® ~~brands; bags, wraps and containers under the Glad~~^® ~~brand; cat litter products under the Fresh Step~~^®~~, Scoop Away~~^® ~~and Ever Clean~~^® ~~brands; and digestive health products under the RenewLife~~^® ~~brand.~~

•

~~Lifestyle~~ consists of food products, water-filtration systems and filters and natural personal care products marketed and sold in the United States. Products within this segment include dressings and sauces, primarily under the Hidden Valley^®~~, KC Masterpiece~~^® ~~, Kingsford~~^® ~~and Soy Vay~~^® ~~brands; water-filtration systems and filters under the Brita~~^® ~~brand; and natural personal care products under the Burt’s Bees~~^® ~~brand.~~

•

~~International~~ consists of products sold outside the United States. Products within this segment include laundry, home care, water-filtration, digestive health products, charcoal and cat litter products, food products, bags, wraps and containers and natural personal care products and professional cleaning and disinfecting products, primarily under the Clorox^®~~, Glad~~^®~~, PinoLuz~~^®~~, Ayudin~~^®~~, Limpido~~^®~~, Clorinda~~^®~~, Poett~~^®~~, Mistolin~~^®~~, Lestoil~~^®~~, Bon Bril~~^®~~, Brita~~^®~~, Green Works~~^®~~, Pine-Sol~~^®~~, Agua Jane~~^®~~, Chux~~^®~~, RenewLife~~^®~~, Kingsford~~^®~~, Fresh Step~~^®~~, Scoop Away~~^®~~, Ever Clean~~^®~~, KC Masterpiece~~^®~~, Hidden Valley~~^® ~~and Burt’s Bees~~^® ~~brands and Clorox Healthcare~~^® ~~brands.~~

across the Company's portfolio remained strong compared to pre-pandemic levels, it has moderated versus the initial periods of the COVID-19 pandemic. An inflationary environment marked by supply chain disruptions, higher manufacturing and logistics costs and higher commodity costs is expected to continue through fiscal year 2023. While we have not experienced significant disruptions in our operations during fiscal year 2023 to date, the risks of future negative impacts due to transportation, logistical or supply constraints and higher commodity costs for certain raw materials remain present, and the Company continues to experience corresponding incremental costs and gross margin pressures. For fiscal year 2023, the Company’s focus will be on addressing supply chain disruptions and volatility in commodity costs and foreign exchange markets and countering inflationary pressures through pricing actions and cost-cutting measures. In order to enhance the Company’s ability to respond more quickly to changing consumer behaviors and innovate faster, the Company has announced a streamlined operating model to be implemented over the course of fiscal years 2023 and 2024.

The impact of continued inflationary pressures and geopolitical events, specifically the conflict in Ukraine, have increased global economic and political uncertainty due to the uncertainty around the duration and resolution of the conflict and potential economic and global supply chain disruptions. Additionally, the extent of COVID-19’s effect on the Company’s operational and financial performance in the future will depend on future developments, including the duration, spread, intensity and phase of the pandemic in different countries, the emergence of COVID-19 variants and the effectiveness of vaccines against these variants, the Company’s continued ability to manufacture and distribute its products, any future government actions affecting consumers, our business operations, including any vaccine mandates, or the economy in general, and effectiveness of global vaccines. All of these factors are difficult to predict considering the rapidly evolving landscape as the Company continues to expect a variable operating environment going forward.

For additional information on the impacts and our response to the coronavirus pandemic, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Exhibit 99.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

RESULTS OF OPERATIONS

CONSOLIDATED RESULTS ~~FROM CONTINUING OPERATIONS~~


	Three Months Ended						Six Months Ended
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021		% Change
Net sales	$	1,715	$	1,691	1	%	$	3,455	$	3,497	(1)	%

~~Continuing operations~~


	Three Months Ended December 31, 2022
	Percentage change versus the year-ago period
	Reported (GAAP) Net Sales Growth / (Decrease)		Reported Volume		Acquisitions & Divestitures		Foreign Exchange Impact		Price/Mix/ Other (1)		Organic Sales Growth / (Decrease) (Non-GAAP) (2)		Organic Volume (3)
Health and Wellness	(2)	%	(19)	%	—	%	—	%	17	%	(2)	%	(19)	%
Household	9		3		—		—		6		9		3
Lifestyle	2		(6)		—		—		8		2		(6)
International	(3)		(8)		—		(12)		17		9		(8)
Total	1	%	(10)	%	—	%	(3)	%	14	%	4	%	(10)	%

	Six Months Ended December 31, 2022
	Percentage change versus the year-ago period
	Reported (GAAP) Net Sales Growth / (Decrease)		Reported Volume		Acquisitions & Divestitures		Foreign Exchange Impact		Price/Mix/Other (1)		Organic Sales Growth / (Decrease) (Non-GAAP) (2)		Organic Volume (3)
Health and Wellness	(3)	%	(20)	%	—	%	—	%	17	%	(3)	%	(20)	%
Household	2		(6)		—		—		8		2		(6)
Lifestyle	—		(8)		—		—		8		—		(8)
International	(2)		(6)		—		(11)		15		9		(6)
Total	(1)	%	(13)	%	—	%	(2)	%	14	%	1	%	(13)	%

(1) This represents the net impact on net sales growth / (decrease) from pricing actions, mix and other factors.

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016 % Change
Net sales $ 1,416
$ 1,406
1 % $ 2,916
$ 2,849
2 %
(2) Organic sales growth / (decrease) is defined as net sales growth / (decrease) excluding the effect of any acquisitions and divestitures and foreign exchange rate changes. See “Non-GAAP Financial Measures” below for reconciliation of organic sales growth / (decrease) to net sales growth / (decrease), the most directly comparable GAAP financial measure.

(3) Organic volume represents volume excluding the effect of any acquisitions and divestitures.

Net salesin the current ~~quarter~~three month period increased ~~1%. Volume increased~~by 1%, ~~reflecting higher shipments~~primarily driven by sales growth in the ~~Cleaning~~Household reportable segment, partially offset by lower sales in the Health and ~~Lifestyle~~Wellness reportable ~~segments.~~ segment. Volume decreased by 10% versus the prior period primarily due to pricing actions. The variance between volume and net sales was primarily due to the impact of favorable price mix.

Net sales ~~also included~~ and volume in the current six month period decreased by 1% and 13%, respectively, reflecting lower shipments across all reportable segments primarily due to pricing actions. The variance between volume and net sales was primarily due to the impact of favorable price mix.


	Three Months Ended								Six Months Ended
	12/31/2022			12/31/2021			% Change		12/31/2022			12/31/2021			% Change
Gross profit	$	620		$	558		11	%	$	1,246		$	1,228		1	%
Gross margin	36.2		%	33.0		%			36.1		%	35.1		%

Gross margin increased by 320 basis points in the current three month period from 33.0% to 36.2%. The increase was primarily driven by the benefit of price increases and cost savings, partially offset by unfavorable ~~mix.~~commodity costs and mix and higher manufacturing and logistics costs.

~~Net sales~~Gross margin increased by 100 basis points in the current ~~six-month~~six month period ~~increased 2%~~from 35.1% to 36.1%. ~~Volume increased 3%, reflecting higher shipments in the Cleaning, Household and Lifestyle reportable segments. Volume outpaced net sales due to unfavorable mix, partially offset~~The increase was primarily driven by the benefit of price ~~increases.~~

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016 % Change
Gross profit 609
$ 629
(3 )% $ 1,282
$ 1,269
1 %
Gross margin 43.0 % 44.7 % 44.0 % 44.5 %

~~Gross margin~~, ~~defined as gross profit as a percentage of net sales, decreased 170 basis points in the current quarter from 44.7% to 43.0%. The decrease was primarily driven by higher manufacturing, logistics~~increases and ~~commodity costs,~~cost savings, partially offset by ~~cost savings.~~

~~Gross margin decreased 50 basis points in the current six-month period from 44.5% to 44.0%. The decrease was primarily driven by~~unfavorable commodity costs, higher manufacturing and logistics costs and ~~commodity costs, partially offset by cost savings.~~the impact of unfavorable mix.

Three Months Ended
% of Net Sales
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016
Selling and administrative expenses $ 197
$ 197
— % 13.9 % 14.0 %
Advertising costs 140
128
9
9.9
9.1
Research and development costs 31
32
(3 ) 2.2
2.3

Six Months Ended
% of Net Sales
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016
Selling and administrative expenses $ 401
$ 397
1 % 13.8 % 13.9 %
Advertising costs 274
256
7
9.4
9.0
Research and development costs 63
63
—
2.2
2.2
Expenses


	Three Months Ended
							% of Net Sales
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021
Selling and administrative expenses	$	282	$	241	17	%	16.4	%	14.3	%
Advertising costs	156		167		(7)		9.1		9.9
Research and development costs	33		34		(3)		1.9		2.0
	Six Months Ended
							% of Net Sales
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021
Selling and administrative expenses	$	543	$	477	14	%	15.7	%	13.6	%
Advertising costs	317		349		(9)		9.2		10.0
Research and development costs	65		67		(3)		1.9		1.9

Selling and administrative expenses~~remained essentially flat in the current three- and six-month periods.~~

~~Advertising costs~~, as a percentage of net sales, increased by 210 basis points in both the current three and six month periods versus the prior periods. The dollar increase in selling and administrative expenses in both the current three and six month periods was primarily due to higher incentive compensation expense and the Company’s digital capabilities and productivity enhancements investments.

Advertising costs, as a percentage of net sales, decreased by 80 basis points in both the current ~~quarter~~three and ~~40 basis points~~six month periods versus the prior periods. The dollar decrease in advertising costs in both the current ~~six-month period,~~three and six month periods was primarily due to ~~increased investments to support innovation.~~the timing of advertising spend. The Company’s U.S. retail advertising spend as a percentage of net sales was ~~11%~~10% in the current ~~quarter~~ and ~~10% in the year-ago quarter.~~prior three month periods.

Research and development costs ~~remained~~,as a percentage of net sales, were essentially flat in the current ~~three-~~three and ~~six-month~~six month periods as compared to the prior periods. The Company continues to ~~focus on~~invest behind product innovation and cost savings.

Interest expense, Other (income) expense, net and the effective tax rate on earnings


	Three Months Ended						Six Months Ended
	12/31/2022			12/31/2021			12/31/2022			12/31/2021

Interest expense	$	23		$	23		$	45		$	48
Other (income) expense, net	(4)			—			30			9
Effective tax rate on earnings	21.2		%	23.1		%	23.0		%	22.8		%

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Interest expense $ 20
$ 22
$ 41
$ 44
Other (income) expense, net (6 ) 23
(3 ) 18
Effective tax rate on earnings (3.1 )% 34.1 % 15.9 % 33.0 %

~~Interest~~Other (income) expense, ~~remained essentially flat~~ net was $(4) and $0 in the current ~~three-~~ and ~~six-month periods.~~

~~Other (income) expense, net,~~ ~~was $(6)~~prior three month periods, respectively, and ~~$(3)~~$30 and $9 in the current ~~three-~~ and ~~six-month periods, respectively, and $23 and $18 in the~~ prior ~~three- and six-month~~six month periods, respectively. The ~~change~~variance in the current ~~three-~~three month period was not significant. The variance between the current and ~~six-month~~prior six month periods was primarily ~~driven by a $21 non-cash impairment charge~~due to restructuring and related ~~to certain assets of the Aplicare business and $9 projected environmental~~implementation costs associated with the streamlined operating model incurred in the current period.

Restructuring and related costs

In the first quarter of fiscal year 2023, the Company began recognizing costs related to a plan that involves streamlining its operating model to meet its objectives of driving growth and productivity. The streamlined operating model is expected to enhance the Company’s ~~former operations at~~ability to respond more quickly to changing consumer behaviors and innovate faster. The Company anticipates the implementation of this new model will be completed in fiscal year 2024, with different phases occurring throughout the implementation period.

Once fully implemented, the Company expects annual cost savings to be approximately $75 to $100 annually, with benefits of approximately $25 anticipated in fiscal year 2023. The benefits of the streamlined operating model are currently expected to increase future cash flows as a ~~site~~result of cost savings that will be generated primarily in ~~Alameda County, California, both~~the areas of selling and administration, supply chain, marketing and research and development.

The Company anticipates incurring approximately $75 to $100 of costs in fiscal years 2023 and 2024 related to this initiative, of which approximately $40 to $60 is expected to be incurred in fiscal year 2023. Related costs are primarily expected to include employee-related costs to reduce certain staffing levels such as severance payments, as well as for consulting and other costs. Costs incurred are expected to be settled primarily in cash.

Restructuring and related implementation costs, net were ~~recorded in~~$4 for the three months ended December ~~2016.~~31, 2022, which was related to other costs. Restructuring and related implementation costs, net were $23 for the six months ended December 31, 2022, of which $16 was related to employee-related costs and $7 was related to other costs. For further details on the streamlined operating model and restructuring, refer to the Notes to Consolidated Financial Statements.

The effective tax rate on earnings ~~from continuing operations~~was ~~(3.1)%~~21.2% and ~~15.9%~~23.0% for the current ~~three-~~three and ~~six-month~~six months periods, respectively, and ~~34.1%~~23.1% and ~~33.0%~~22.8% for the prior ~~three-~~three and ~~six-month~~six month periods, respectively. The decrease for the three- and six-month periods was primarily due to the passage of The Tax Cuts and Jobs Act (the Tax Act) during the current quarter (See Note 7 to the Condensed Consolidated Financial Statements). The major drivers contributing to the decrease in the effective tax rate from 34.1% in the prior three-month period to (3.1%) in the current three-month period were due to several provisional adjustments including a $60 benefit related to a reduction in the net deferred tax liability, a $28 benefit from the reduction in the statutory tax rate applied to current taxable income, partially offset by $7 for the one-time transition tax.

Diluted net earnings per share


	Three Months Ended						Six Months Ended
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021		% Change
Diluted net earnings per share	$	0.80	$	0.56	43	%	$	1.49	$	1.70	(12)	%

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016 % Change
Diluted net earnings per share
from continuing operations
$ 1.77
$ 1.14
55 % $ 3.23
$ 2.51
29 %

Diluted net earnings per share ~~from continuing operations~~(EPS) increased ~~$0.63,~~by $0.24, or ~~55%~~43%, in the current ~~quarter,~~three month period, primarily ~~driven by a lower effective tax rate~~ due to ~~the passage of the Tax Act in December 2017 (See Note 7 to the Condensed Consolidated Financial Statements) and higher~~ net sales growth, partially offset by ~~lower gross margin.~~higher selling and administrative expenses.

Diluted ~~net earnings per share from continuing operations increased $0.72,~~EPS decreased by $0.21 or ~~29%,~~12% in the current ~~six-month~~six month period, primarily ~~driven by a lower effective tax rate~~ due to unfavorable commodity costs, higher selling and administrative expenses and manufacturing and logistics costs, decreased volume and the ~~passage~~impact of ~~the Tax Act in December 2017 (See Note 7 to the Condensed Consolidated Financial Statements) and higher net sales,~~unfavorable foreign currency exchange rates, partially offset by ~~lower gross margin.~~the net impact of pricing and cost savings.

~~DISCONTINUED OPERATIONS~~

Since the exit of Clorox Venezuela in the first quarter of fiscal year 2015, the Company has recognized $51 in after-tax exit costs and other related expenses within discontinued operations related to the exit of Clorox Venezuela. While the Company may continue to incur costs relating to this exit going forward, the Company does not expect these costs to be significant.

~~See Notes to the Condensed Consolidated Financial Statements for more information regarding discontinued operations of Clorox Venezuela.~~

SEGMENT RESULTS ~~FROM CONTINUING OPERATIONS~~

The following ~~sections present~~presents the results ~~from operations~~ of the Company’s reportable segments and certain unallocated costs reflected in ~~Corporate:~~Corporate (see Notes to Condensed Consolidated Financial Statements for a reconciliation of segment results to consolidated results):

~~Cleaning~~

Health and Wellness


	Three Months Ended						Six Months Ended
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021		% Change
Net sales	$	635	$	648	(2)	%	$	1,347	$	1,393	(3)	%
Earnings before income taxes	103		56		84		218		161		35

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016 % Change
Net sales $ 472
$ 469
1 % $ 1,031
$ 1,003
3 %
Earnings from continuing operations before income taxes 121
104
16
293
268
9

Volume and net sales decreased by 19% and 2%, respectively, and earnings ~~from continuing operations~~ before income taxes increased by ~~2%, 1% and 16%, respectively, in~~84% during the current ~~quarter. Both~~three month period. The volume ~~growth and net sales growth were driven primarily by higher shipments in Home Care, mainly due to continued strength in Clorox~~^® ~~disinfecting wipes in the club channel and the launch of Scentiva~~^® branded products, partially offset by lower shipments in Professional Products, primarily due to the sale of the Aplicare business in August 2017. Volume outpaced net sales primarily due to unfavorable mix. The increase in earnings from continuing operations before income taxes in the current quarterdecrease was primarily due to ~~the prior year $21 non-cash impairment charge for the Aplicare business.~~pricing actions. The ~~increase also reflected cost savings~~variance between volume and net sales ~~growth, partially offset by higher manufacturing and logistics costs.~~

Volume, net sales and earnings from continuing operations before income taxes increased by 4%, 3% and 9%, respectively, in the current six-month period. Both volume growth and net sales growth were driven primarily by higher shipments in Home Care, mainly due to continued strength in Clorox^® ~~disinfecting wipes in the club channel and the launch of Scentiva~~^® branded products, partially offset by lower shipments in Professional Products, primarily due to the sale of the Aplicare business in August 2017. Volume outpaced net sales primarily due to unfavorable mix. The increase in earnings from continuing operations before income taxes was ~~primarily due to net sales growth, the prior year $21 non-cash impairment charge for the Aplicare business and cost savings, partially offset by higher manufacturing, logistics and commodity costs.~~

~~Household~~

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016 % Change
Net sales $ 410
$ 421
(3 )% $ 851
$ 843
1 %
Earnings from continuing operations before income taxes 54
71
(24 ) 127
140
(9 )

Volume was flat, while net sales and earnings from continuing operations before income taxes decreased by 3% and 24%, respectively, in the current quarter. Volume reflected higher shipments of RenewLife^® ~~digestive health products, primarily due to growth in the e-commerce channel, offset by lower shipments of Glad~~^®~~, Cat Litter and Charcoal products. Net sales decreased primarily due to a price decrease on a portion of the Glad~~^® trash portfolio and unfavorable mix. The decrease in earnings from continuing operations before income taxes was mainly due to lower net sales and higher manufacturing and logistics costs, partially offset by cost savings.

Volume and net sales increased by 3% and 1%, respectively, while earnings from continuing operations before income taxes decreased by 9% in the current six-month period. Both volume growth and net sales growth were driven by higher shipments in Cat Litter, primarily due to increased merchandising activity supporting product innovation, higher shipments of RenewLife^® ~~digestive health products, primarily due to growth in the e-commerce channel, and increased shipments of Glad~~^® due to strength in premium trash bags. Volume outpaced net sales, primarily due to unfavorable mix. The decrease in earnings from continuing operations before income taxes was mainly due to higher manufacturing, logistics and commodity costs, partially offset by cost savings.

~~Lifestyle~~

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016 % Change
Net sales $ 268
$ 260
3 % $ 514
$ 496
4 %
Earnings from continuing operations before income taxes 69
77
(10 ) 133
139
(4 )

Volume and net sales each increased by 3%, while earnings from continuing operations before income taxes decreased by 10% in the current quarter. Both volume growth and net sales growth were primarily driven by higher shipments of Brita^®~~, mainly pour through water-filtration products due to increased merchandising activity and innovation, and growth in the Burt’s Bees~~^® Natural Personal Care business, mainly due to continued strength in lip care. The decrease in earnings from continuing operations before income taxes was primarily due to higher manufacturing and logistics costs and increased advertising costs to support innovation, partially offset by net sales growth.

Volume and net sales increased by 3% and 4%, respectively, while earnings from continuing operations before income taxes decreased by 4% in the current six-month period. Both volume growth and net sales growth were primarily driven by higher shipments of Burt’s Bees^® Natural Personal Care products, mainly due to continued strength in lip care and the new product launch of face and eye cosmetics. Net sales outpaced volume primarily due to favorable mix. The decrease in earnings from continuing operations before income taxes was primarily due to higher manufacturing and logistics costs and increased advertising costs to support innovation, partially offset by net sales growth.

~~International~~

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016 % Change
Net sales $ 266
$ 256
4 % $ 520
$ 507
3 %
Earnings from continuing operations before income taxes 23
28
(18 ) 46
55
(16 )

Volume was flat, net sales increased by 4% and earnings from continuing operations before income taxes decreased by 18% in the current quarter. Volume reflected higher shipments in Canada offset by lower shipments in certain Asian and Latin American countries. Net sales outpaced volume primarily due to the benefit of price increases. The ~~decrease~~increase in earnings ~~from continuing operations~~ before income taxes was primarily due to ~~inflationary pressure on manufacturing, logistics and administrative costs,~~the net impact of pricing, partially offset by lower volume.

Volume and net sales ~~growth.~~

~~Volume~~ decreased by 1%20% and 3%, ~~net sales increased by 3%~~respectively, and earnings ~~from continuing operations~~ before income taxes ~~decreased~~increased by ~~16%~~35% during the current six month period. The volume decrease was primarily due to pricing actions and lower shipments from the ongoing normalization of consumer demand in Cleaning in the current ~~six-month~~ period. ~~Volume decreased primarily due to lower shipments in certain Latin American~~The variance between volume and ~~Asian countries, partially offset by higher shipments in Canada. Net~~net sales ~~outpaced volume~~was primarily due to the benefit of price ~~increases.~~increases and favorable mix. The ~~decrease~~increase in earnings ~~from continuing operations~~ before income taxes was primarily due to ~~inflationary pressure on~~the net impact of pricing and lower advertising spending, partially offset by lower volume.

Household


	Three Months Ended						Six Months Ended
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021		% Change
Net sales	$	462	$	423	9	%	$	885	$	865	2	%
Earnings before income taxes	44		10		340		66		46		43

Volume, net sales and earnings before income taxes increased by 3%, 9% and 340%, respectively, during the current three month period. The volume increase was primarily driven by higher shipments in Litter due to distribution growth and continued strong consumption and merchandising support, partially offset by lower shipments in the other SBUs due to pricing actions. The variance between volume and net sales was primarily due to the benefit of price increases, partially offset by unfavorable mix. The increase in earnings before income taxes was mainly due to net sales growth behind pricing as well as the benefit of cost savings, partially offset by higher commodity costs.

Net sales and earnings before income taxes increased by 2% and 43%, respectively, and volume decreased by 6% during the current six month period. The volume decrease was primarily driven by lower shipments in Glad and Grilling due to pricing actions, as well as lower shipments in Grilling due to the ongoing normalization of consumer demand in the current period. The variance between volume and net sales was primarily due to the benefit of price increases, partially offset by unfavorable mix. The increase in earnings before income taxes was mainly due to net sales growth behind pricing and cost savings, partially offset by unfavorable commodity costs and higher manufacturing and logistics costs.

Lifestyle


	Three Months Ended						Six Months Ended
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021		% Change
Net sales	$	332	$	324	2	%	$	652	$	655	—	%
Earnings before income taxes	74		80		(8)		134		173		(23)

Volume and ~~administrative~~earnings before income taxes decreased by 6% and 8%, respectively, and net sales increased by 2% during the current three month period. The volume decrease was primarily driven by lower shipments of water filtration products due to inventory reductions at select retailers and lower shipments in Food due to pricing actions. The variance between volume and net sales was mainly due to the benefit of price increases, partially offset by unfavorable mix. The decrease in earnings before

income taxes was primarily due to unfavorable commodity costs and higher advertising spending, partially offset by higher net sales behind pricing and cost savings.

Volume and earnings before income taxes decreased by 8%, and 23%, respectively, and net sales were essentially flat during the current six month period. The volume decrease was primarily driven by lower shipments across all SBUs due to pricing actions. The variance between volume and net sales was mainly due to the benefit of price increases, partially offset by unfavorable mix. The decrease in earnings before income taxes was primarily due to unfavorable commodity costs and higher manufacturing and logistics costs.

International


	Three Months Ended						Six Months Ended
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021		% Change
Net sales	$	286	$	296	(3)	%	$	571	$	584	(2)	%
Earnings before income taxes	24		19		26		47		49		(4)

Volume and net sales decreased by 8%, and 3%, respectively, and earnings before income taxes increased by 26% during the current three month period. The volume decrease was primarily due to pricing actions. The variance between volume and net sales was mainly due to the benefit of price increases, partially offset by unfavorable foreign currency exchange rates. The increase in earnings before income taxes was primarily due to the net impact of pricing and lower advertising spending, partially offset by higher manufacturing and logistics costs and unfavorable ~~commodity costs,~~foreign currency exchange rates.

Volume, net sales and earnings before income taxes decreased by 6%, 2% and 4%, respectively, in the current six month period. The volume decrease was primarily due to pricing actions. The variance between volume and net sales was mainly due to the benefit of price increases, partially offset by the impact of unfavorable foreign currency exchange rates. The decrease in earnings before income taxes was primarily due to unfavorable foreign exchange rates, higher manufacturing and logistics costs, unfavorable commodity costs and lower volume, partially offset by the net ~~sales growth and cost savings.~~impact of pricing.

Argentina

Effective July 1, 2018, under the requirements of U.S. GAAP, Argentina was designated as a highly inflationary economy, and as a result the U.S. dollar replaced the Argentine peso as the functional currency of the Company’s subsidiaries in Argentina. Consequently, gains and losses from non-U.S. dollar denominated monetary assets and liabilities of Clorox Argentina are recognized in Other (income) expense, net in the condensed consolidated statement of earnings. The ~~Company operates~~business environment in Argentina ~~through certain wholly owned subsidiaries (collectively, “Clorox Argentina”).~~continues to be challenging due to significant volatility in Argentina’s currency, high inflation, economic recession and impacts of COVID-19. As of December 31, 2022 and June 30, 2022, the net asset position, excluding goodwill, of Clorox Argentina was $46 and $45, respectively. Of these net assets, cash balances were approximately $18 and $15 as of December 31, 2022 and June 30, 2022, respectively. Net sales from Clorox Argentina represented approximately 3%2% of the Company’s consolidated net sales for both the six months ended December 31, ~~2017~~2022 and the fiscal year ended June 30, 2022.

For additional information on the impacts of, and our response to, the business environment in Argentina, refer to “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017. The operating environment in Argentina continues to present business challenges, including continuing devaluation of Argentina’s currency and high inflation.~~

Clorox Argentina manufactures products at three plants that it owns and operates across Argentina and markets those products to consumers throughout the country. Products are advertised nationally and sold to consumers through wholesalers and retail outlets located throughout Argentina. Sales are made primarily through the use of Clorox Argentina’s sales force. Small amounts of products produced in Argentina are exported each year, including sales to the Company’s other subsidiaries located primarily in Latin America. Clorox Argentina obtains its raw materials almost entirely from local sources. The Company also

conducts research and development activities at its owned facility in Buenos Aires, Argentina. Additionally, Clorox Argentina performs marketing, legal, and various other shared service activities to support the Company’s Latin American operations. Clorox Argentina in turn benefits from shared service activities performed within other geographic locations, such as information technology support and manufacturing technical assistance.

For the six months ended December 31, 2017 and for the year ended June 30, 2017, the value of the Argentine peso (ARS) declined 14% and 9%, respectively. As of December 31, 2017, using the exchange rate of 19.18 ARS per U.S. dollar (USD), Clorox Argentina had total assets of $70, including cash and cash equivalents of $9, net receivables of $20, inventories of $14, net property, plant and equipment of $19 and intangible assets excluding goodwill of $3. Although Argentina is not currently designated as a highly inflationary economy for accounting purposes, further volatility and declines in the exchange rate are expected in the future, which, along with competition and changes in the retail, labor and macro-economic environment, would have an additional adverse impact on Clorox Argentina’s net sales, net earnings, and net monetary asset position.

The Company is closely monitoring developments in Argentina and continues to take steps intended to mitigate the adverse conditions, but there can be no assurances that these actions will be able to mitigate these conditions as they may occur.

2022.

Corporate

~~Certain~~Corporate includes certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and ~~expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, other investments and deferred taxes.~~expenses.


	Three Months Ended						Six Months Ended
	12/31/2022		12/31/2021		% Change		12/31/2022		12/31/2021		% Change
Losses before income taxes	$	(115)	$	(72)	60	%	$	(219)	$	(151)	45	%

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 % Change 12/31/2017 12/31/2016 % Change
Losses from continuing operations before income taxes $ (40 ) $ (53 ) (25 )% $ (93 ) $ (111 ) (16 )%

~~The decrease in losses from continuing operations~~Losses before income taxes ~~attributable to Corporate~~increased by $43 and $68 in the current ~~quarter was~~three and six month periods, respectively, primarily ~~driven by a prior year increase in projected environmental costs associated with the Company's former operations at a site in Alameda County, California and lower employee~~due to higher incentive compensation ~~costs.~~expense and the Company’s digital capabilities and productivity enhancement investments.

The decrease in losses from continuing operations before income taxes attributable to Corporate in the current six-month period was primarily driven by a prior year increase in projected environmental costs associated with the Company's former operations at a site in Alameda County, California and lower employee incentive compensation costs.

FINANCIAL POSITION AND LIQUIDITY

~~The following table summarizes cash activities from continuing operations:~~

Six Months Ended
12/31/2017 12/31/2016
Net cash provided by continuing operations $ 322
$ 271
Net cash used for investing activities (74 ) (114 )
Net cash used for financing activities (177 ) (139 )

~~Operating Activities~~

The Company’s financial condition and liquidity remained strong as of December 31, ~~2017.~~ 2022. The following table summarizes cash activities:


	Six Months Ended
	12/31/2022		12/31/2021
Net cash provided by operations	$	387	$	222
Net cash used for investing activities	(87)		(112)
Net cash used for financing activities	(315)		(235)

Operating Activities

Net cash provided by ~~continuing~~ operations was ~~$322~~$387 in the current ~~six-month~~six month period, compared with ~~$271~~$222 in the prior ~~six-month~~six month period. The ~~year-over-year~~ increase was primarily driven by a decrease in working capital and lower incentive compensation paid in the current six month period. The decrease in working capital was primarily due to lower inventory balances mostly driven by optimization of inventory levels from the prior six month period, decreased accounts receivable driven by the timing of sales and higher Accounts payable and accrued liabilities due to the timing of payments in the current six month period.

Payment Terms Extension and Supply Chain Financing

The Company initiated the extension of its payment terms with its suppliers in the second half of fiscal year 2020 in order to improve working capital as part of and to fund the IGNITE strategy and in keeping with evolving market practices. The Company’s current payment terms do not exceed 120 days in keeping with industry standards. The Company’s operating cash flows are directly impacted as a result of the extension of the payment terms with the suppliers.

As part of those ongoing efforts, the Company has arranged for a global financial institution to offer a voluntary supply chain finance (SCF) program for the benefit of the Company’s suppliers. Leveraging the Company’s credit rating, the SCF program enables suppliers to directly contract with the financial institution to receive payment from the financial institution prior to the payment terms between the Company and the supplier by selling the Company’s payables to the financial institution. Participation in the program is at the sole discretion of the supplier and the Company has no economic interest in a supplier's

decision to enter into the agreement and has no direct financial relationship with the financial institution, as it relates to the SCF program. Once a supplier elects to participate in the SCF program and reaches an agreement with the financial institution, the supplier elects which individual Company invoices to sell to the financial institution. The terms of the Company’s payment obligations are not impacted by a supplier’s participation in the program and as such, the SCF program has no direct impact on the Company’s balance sheets, cash flows or liquidity. No guarantees are provided by the Company or any of our subsidiaries under the SCF program. There would not be an expected material impact to the Company’s liquidity or capital resources if the financial institution or a supplier terminated the SCF arrangement.

All outstanding amounts related to ~~lower employee incentive compensation payments.~~suppliers participating in SCF are recorded within Accounts payable and accrued liabilities in the Consolidated Balance Sheets and the associated payments are included in operating activities within the Consolidated Statements of Cash Flows. As of December 31, 2022 and June 30, 2022, the amount due to suppliers participating in SCF and included in Accounts payable and accrued liabilities was $200 and $211, respectively. While the Company does not have direct access to information on, or influence over, which invoices a participating supplier elects to sell to the financial institution, the Company expects that the majority of these amounts have been sold to the financial institution.

Investing Activities

Net cash used for investing activities was ~~$74~~$87 in the current ~~six-month~~six month period, compared with ~~$114~~$112 in the prior ~~six-month~~six month period. Capital expenditures were $89 in the current six-month period, compared with $117 in the prior six-month period. Capital spending as a percentage of net sales was approximately 3% and 4% in the six months ended December 31, 2017 and 2016, respectively. The year-over-year decrease was mainly due to ~~cash proceeds from the sale of the Aplicare business in August 2017 and~~ lower capital spending in the current ~~six-month~~six month period.

Financing Activities

Net cash used for financing activities was ~~$177~~$315 in the current ~~six-month~~six month period, compared with ~~$139~~$235 in the prior ~~six-month~~six month period. The year-over-year increase was ~~primarily~~mainly due to lower ~~funding~~net cash sourced from ~~notes and loans payable,~~borrowings, partially offset by ~~a decrease in~~lower treasury stock purchases in the current six month period.

Capital Resources and Liquidity

The Company's current liabilities may periodically exceed current assets as a result of the Company's debt management policies, including the Company's use of commercial paper borrowings which fluctuates depending on the amount and timing of operating and investing cash flows and payments for shareholder transactions such as dividends. In addition, the Company’s cash generated from operations has decreased from historical levels primarily due to higher manufacturing and logistics costs and unfavorable commodity costs. The Company continues to take actions to address some of the effects of such cost increases, which include implementing price increases, driving cost savings and optimizing the Company’s supply chain.

Global financial markets have experienced a significant increase in volatility due to heightened uncertainty, the impacts of cost inflation and continued economic and social disruptions caused by the COVID-19 outbreak and other geopolitical circumstances. Notwithstanding potential unforeseen adverse market conditions and as part of the Company’s regular assessment of its cash needs, the Company believes it will have the funds necessary to ~~meet~~support our short- and long-term liquidity and operating needs, including the costs related to the announced streamlined operating model and its ~~financing requirements~~digital capabilities and ~~other fixed obligations as they become due~~productivity enhancements investments, based on ~~its working capital requirements,~~our anticipated ability to generate positive cash flows from operations in the future, ~~investment-grade~~access to capital markets enabled by our strong short-term and long-term credit ratings ~~demonstrated access to long-term and short-term credit markets~~ and current borrowing availability under credit agreements. Additionally, the Company does not believe the one-time transition tax associated with the Tax Act will have any significant liquidity implications since the Company anticipates utilizing existing foreign tax credit carryforwards to fully offset its one-time transition tax liability.availability.

Credit Arrangements

As of December 31, ~~2017,~~2022, the Company maintained a ~~$1,100~~$1,200 revolving credit agreement ~~(the Credit Agreement)~~ that matures in ~~February 2022. As of December 31, 2017, there~~March 2027 (the Credit Agreement). There were no borrowings under the Credit Agreement as of December 31, 2022 and June 30, 2022, and the Company believes that borrowings under the Credit Agreement are and will continue to be available for general corporate purposes. The Credit Agreement includes certain restrictive covenants and limitations. The primary restrictive covenant is a minimum ratio of 4.0, calculated as total earnings before interest, taxes, depreciation and amortization and other similar non-cash ~~asset impairment~~ charges and certain other items (Consolidated EBITDA) to total interest expense for the trailing four quarters (Interest Coverage ratio), as defined and described in the Credit Agreement.

~~The following table sets forth the calculation of the Interest Coverage ratio as of December 31, 2017, using Consolidated EBITDA for the trailing four quarters, as contractually defined:~~

Twelve Months Ended
12/31/2017
Earnings from continuing operations $ 799
Add back:
Interest expense 85
Income tax expense 249
Depreciation and amortization 162
Non-cash asset impairment charges 1
Deduct:
Interest income (5 )
Consolidated EBITDA $ 1,291
Interest expense $ 85
Interest Coverage ratio 15.2

The Company was in compliance with all restrictive covenants and limitations in the Credit Agreement as of December 31, ~~2017,~~2022, and anticipates being in compliance with all restrictive covenants for the foreseeable future. ~~The Company continues to monitor the financial markets and assess its ability to fully draw on its Credit Agreement, and currently expects that any drawing on the agreement will be fully funded.~~

As of December 31, ~~2017,~~2022, the Company maintained ~~$29~~$30 of foreign and other credit lines, of which $3 was ~~outstanding~~outstanding.

Stock Repurchases and ~~the remainder~~Dividend Payments

As of ~~$26 was available for borrowing.~~

~~Long-term borrowings~~

~~In October 2017, $400 of the Company's senior notes with an annual fixed interest rate of 5.95% became due and were repaid using commercial paper borrowings.~~

~~In September 2017,~~December 31, 2022, the Company issued $400 of senior notes with an annual fixed interest rate of 3.10%. The notes carry an effective interest rate of 3.13%, which includes the impact of amortizing debt issuance costs and the impact from the settlement of interest rate forward contracts (see Note 5 to the Condensed Consolidated Financial Statements). The notes rank equally with all of the Company's existing senior indebtedness.

~~Share repurchases and dividends~~

~~The Company has~~had two ~~share~~stock repurchase programs: an open-market purchase program with an authorized aggregate purchase amount of up to ~~$750, all of~~$2,000, which ~~was available for share repurchases as of December 31, 2017,~~has no expiration date, and a program to offset the anticipated impact of ~~share~~ dilution related to ~~share-based~~stock-based awards (the Evergreen Program), which has no authorization limit ~~as to~~on the dollar amount ~~or timing of repurchases.~~and no expiration date. There were no share repurchases ~~under~~of common stock during the ~~open-market purchase program during either of~~three months ended December 31, 2022 and 2021. During the six months ended December 31, ~~2017~~2022 and ~~2016.~~2021, the Company repurchased 0 and 152 thousand shares of common stock at a cost of $0 and $25, respectively.

~~Share repurchases under the Evergreen Program~~Dividends per share declared and total dividends paid to Clorox stockholders were as follows for the periods indicated:

~~Dividends per share and total dividends paid were as follows for the periods indicated:~~

Three Months Ended Six Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Dividends per share declared $ 0.84
$ 0.80
$ 1.68
$ 1.60
Total dividends paid $ 109
102
217
206


	Three Months Ended				Six Months Ended
	12/31/2022		12/31/2021		12/31/2022		12/31/2021
Dividends per share declared	$	1.18	$	1.16	$	3.54	$	2.32
Total dividends paid	146		143		291		285

Venture Agreement

The Company has a venture 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~~^®wraps business. As of December 31, ~~2017~~2022 and June 30, ~~2017,~~2022, P&G had a 20% interest in the venture. 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. 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.

The Company performed a valuation of the Glad bags and wraps business as of December 31, 2022, in connection with an update of the Company’s financial projections in the second quarter of fiscal year 2023. As of December 31, ~~2017~~2022 and June 30, ~~2017,~~2022, the estimated fair value of P&G’s interest in the venture was ~~$630~~$527 and ~~$458,~~$635, respectively, of which ~~$327~~$489 and ~~$317,~~$468, respectively, has been recognized and is reflected in Other liabilities in the Company’s Condensed Consolidated Balance Sheet. ~~Of the $172 increase~~The $108 decrease in the estimated fair value of P&G’s interest since June 30, ~~2017, more than half~~2022 was ~~driven by a lower effective tax rate as a result of the recent passage of the Tax Act with the majority of the remaining change due~~attributable to ~~the extension of the agreement and the related R&D support provided by P&G. Income taxes are a key estimate~~an increase in the ~~income approach~~discount rate and ~~are also inherent to the determination of the discount rate. The tax rates that were used for the calculation of~~a decrease in the estimated future cash flows since the prior valuation. Changes in the judgments, assumptions and market factors used could result in significantly different estimates of fair value of P&G’s interest are based on the Company’s current assessment, estimates and interpretation of the Tax Act. These rates could be materially different based upon the Company’s actual results for future periods, the Company's further analysis of the Tax Act, any additional Congressional, administrative and Financial Accounting Standards Board (FASB) actions or guidance related to the Tax Act and any actions the Company takes as a result of the Tax Act.value. 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.

CONTINGENCIES

See Notes to Condensed Consolidated Financial Statements for information on the Company’s contingencies.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Notes to Condensed Consolidated Financial Statements for a summary of recently issued accounting standards relevant to the Company.

CRITICAL ACCOUNTING ~~POLICIES AND~~ ESTIMATES

The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its consolidated financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates or assumptions that are used. The most critical accounting ~~policies and~~ estimates are those that are most important to the portrayal of the Company’s financial condition and results, and require the Company to make the most difficult and subjective judgments, often estimating the outcome of future events that are inherently uncertain. As of December 31, ~~2017,~~2022, there have been no significant changes to the Company’s critical accounting ~~policies and~~ estimates since the preparation of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017,~~2022, except as noted ~~below.~~below:

Goodwill

The Company tests its goodwill for impairment annually in the fiscal fourth quarter unless there are indications during a different interim period that these assets may have become impaired. The results of the fiscal year 2022 annual impairment review indicated that the Vitamins, Minerals and Supplements (VMS) reporting unit had a heightened risk of future impairments if any assumptions, estimates or market factors unfavorably change in the future. No triggering events were identified in the fiscal quarter ended December 31, 2022 that would more likely than not reduce the fair value of the VMS reporting unit below its carrying value through December 31, 2022. As a result of the ongoing heightened risk of future impairments, the Company continues to closely monitor any events, circumstances or changes in this business that might imply a reduction in the estimated fair value and may lead to additional goodwill impairment.

Venture Agreement Terminal Obligation

The Company ~~has~~performed a ~~venture agreement~~valuation of the Glad bags and wraps business as of December 31, 2022 in connection with ~~P&G for~~an update of the Company’s ~~Glad~~^® ~~bags, wraps and containers business. In connection with this agreement, P&G provides R&D support to~~financial projections in the ~~Glad~~^® ~~business.~~second quarter of fiscal year 2023. As of December 31, ~~2017~~2022 and June 30, ~~2017, P&G had a 20% interest in~~2022, the venture. 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. 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. The Company’s obligation to purchase P&G’s interest is reflected in Other Liabilities (See Notes to Condensed Consolidated Financial Statements). 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.

~~The~~ estimated fair value of P&G’s interest ~~may increase or decrease up until any such purchase by~~in the ~~Company of P&G’s interest. The Company uses the income approach to estimate the~~venture was $527 and $635, respectively. Of this estimated fair value $489 and $468 has been recognized and is reflected in Other liabilities as of ~~P&G’s interest. Under this approach,~~December 31, 2022 and June 30, 2022, respectively. See Notes to Condensed Consolidated Financial Statements for additional information on the Company estimates the future cash flows and discounts these cash flows at a rate of return that reflects its risk. The cash flows used are consistent with those the Company uses in its internal planning, which gives consideration to actual business trends experienced and the long-term business strategy. The other keyVenture Agreement.

Fair value determination requires significant judgment, assumptions and ~~estimates used include, but~~market factors which are ~~not limited~~uncertain and subject to future volumes, net sales and expense growth rates, commodity prices, changes in working capital, capital expenditures, foreign exchange rates, tax rates, discount rates, inflation and perpetuity growth rates.change. Changes in the judgments, assumptions and ~~estimates~~market factors used could result in significantly different estimates of fair value. For perspective, if the discount rate as of December 31, ~~2017~~2022 were to increase or decrease by 100 basis points, the estimated fair value of P&G’s interest would decrease by approximately ~~$60~~$54 or increase by approximately ~~$80,~~$69, respectively. ~~Additionally, if the tax rate as of December 31, 2017 were to increase or decrease by 100 basis points, the estimated fair value of P&G’s interest would change by approximately $8.~~ Such changes would affect the amount of future charges to Cost of products sold.

~~Income Taxes~~

The Company’s effective tax rate is based on income by tax jurisdiction, statutory tax rates and tax planning opportunities available to the Company in the various jurisdictions in which the Company operates. Significant judgment is required in determining the Company’s effective tax rate and in evaluating its tax positions.

The Company maintains valuation allowances when it is more likely than not that all or a portion of a deferred tax asset 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 determining whether a valuation allowance is warranted, the Company takes into account such factors as prior earnings history, expected future earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect the utilization of a deferred tax asset, statutory carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. Valuation allowances maintained by the Company relate mostly to deferred tax assets arising from the Company’s currently anticipated inability to use net operating losses in certain foreign countries. As of December 31, 2017 and June 30, 2017, valuation allowances related to realization of deferred tax assets were approximately $41 and $40, respectively.

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 the period when new information becomes available or when positions are effectively settled. As of December 31, 2017 and June 30, 2017, the liabilities recorded for uncertain tax positions, excluding associated interest and penalties, were approximately $43 and $40, respectively.

It is the Company’s understanding that foreign withholding taxes are not provided when foreign earnings are indefinitely reinvested. The Company determines whether its foreign subsidiaries will invest their undistributed earnings indefinitely and reassesses this determination on a quarterly basis. A change to the Company’s determination may be warranted based on the Company’s experience as well as plans regarding future international operations and expected remittances. Changes in the Company’s determination would likely require an adjustment to the income tax provision in the quarter in which the determination is made. United States income taxes have been provided on foreign earnings in accordance with the one-time transition tax of the Tax Act without regard to the indefinite reinvestment status of foreign earnings.

NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures that are included in this MD&A and the reasons management believes they are useful to investors are described below. These measures should be considered supplemental in nature and are not intended to be a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, these measures may not be the same as similarly named measures presented by other companies.

~~The Company uses~~Organic sales growth / (decrease) is defined as net sales growth / (decrease) excluding the ~~term~~ ~~Consolidated EBITDA, which~~effect of foreign exchange rate changes and any acquisitions and divestitures. Management believes that the presentation of organic sales growth / (decrease) is ~~a financial measure that is not defined by accounting principles generally accepted in the United States of America,~~because it is a term used in its Credit Agreement. As defined in the Credit Agreement, Consolidated EBITDA represents earnings from continuing operations before interest, taxes, depreciation and amortization and non-cash asset impairment charges. ~~Interest Coverage ratio~~ ~~is the ratio of Consolidated EBITDA to interest expense. The Company's management believes disclosure of Consolidated EBITDA provides~~ useful ~~information~~ to investors because it ~~is used~~excludes sales from any acquisitions and divestitures, which results in a comparison of sales only from the ~~primary restrictive covenant in~~businesses that the ~~Company's Credit Agreement. For additional discussion~~Company was operating and expects to continue to operate throughout the relevant periods, and the Company’s estimate of the ~~Interest Coverage ratio, see “Financial Position~~impact of foreign exchange rate changes, which are difficult to predict and ~~Liquidity - Financing Activities - Credit Arrangements” above.~~out of the control of the Company and management.

The following table provides a reconciliation of organic sales growth / (decrease) (non-GAAP) to net sales growth / (decrease) (GAAP), the most comparable GAAP measure:


	Three Months Ended December 31, 2022
	Percentage change versus the year-ago period
	Health and Wellness		Household		Lifestyle		International		Total
Net sales growth / (decrease) (GAAP)	(2)	%	9	%	2	%	(3)	%	1	%
Add: Foreign Exchange	—		—		—		12		3
Add/(Subtract): Divestitures/Acquisitions	—		—		—		—		—
Organic sales growth / (decrease) (non-GAAP)	(2)	%	9	%	2	%	9	%	4	%

	Six Months Ended December 31, 2022
	Percentage change versus the year-ago period
	Health and Wellness		Household		Lifestyle		International		Total
Net sales growth / (decrease) (GAAP)	(3)	%	2	%	—	%	(2)	%	(1)	%
Add: Foreign Exchange	—		—		—		11		2
Add/(Subtract): Divestitures/Acquisitions	—		—		—		—		—
Organic sales growth / (decrease) (non-GAAP)	(3)	%	2	%	—	%	9	%	1	%

Cautionary Statement

This ~~Quarterly~~ Report, ~~on Form 10-Q (the Report),~~ including the exhibits hereto and the information incorporated by reference herein, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, among others, statements related to the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of governments, consumers, customers, suppliers, employees and the Company, on our business, operations, employees, financial condition and results of operations, and any such forward-looking statements, whether concerning the COVID-19 pandemic or otherwise, involve risks, assumptions and uncertainties. Except for historical information, statements about future ~~volume,~~volumes, sales, organic sales growth, foreign currencies, costs, cost savings, ~~margin,~~margins, earnings, earnings per share, diluted earnings per share, foreign currency exchange rates, tax rates, cash flows, plans, objectives, expectations, growth or profitability are forward-looking statements based on management’s estimates, beliefs, assumptions and projections. Words such as “could,” “may,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “predicts,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic and financial performance are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed. Important factors that could affect performance and cause results to differ materially from management’s expectations, are described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017,~~2022, and in this Report, as updated from time to time in the Company’s Securities and Exchange Commission ~~filings, including this Report.~~filings. These factors include, but are not limited to:

~~intense competition in~~ •the ~~Company’s markets;~~impact of the changing retail environment, including the growth of alternative retail channels and business models, and changing consumer preferences;

•volatility and increases in ~~commodity~~the costs ~~such as resin, sodium hypochlorite and agricultural commodities, and increases in~~of raw materials, energy, transportation, labor and other necessary supplies or ~~other costs;~~services;

•the ability of the Company to drive sales growth, increase prices and market share, grow its product categories and manage favorable product and geographic mix;

~~dependence on key customers and~~ •risks related to ~~customer consolidation~~supply chain issues, product shortages and ~~ordering patterns;~~disruptions to the business, as a result of increased supply chain dependencies due to an expanded supplier network and a reliance on certain single-source suppliers;

•the ~~impact~~ongoing COVID-19 pandemic and related impacts, including on the availability of, ~~increases in~~and efficiency of the supply, manufacturing and distribution systems for, the Company’s products, including any significant disruption to such systems; on the demand for and sales of ~~consumer products through alternative retail channels;~~the Company’s products; and on worldwide, regional and local adverse economic conditions;

•intense competition in the Company’s markets;

•unfavorable general economic and political conditions beyond our control, including recent supply chain disruptions, labor shortages, wage pressures, rising inflation, the interest rate environment, fuel and energy costs, foreign currency exchange rate fluctuations, weather events or natural disasters, disease outbreaks or pandemics, such as COVID-19, terrorism, and unstable geopolitical conditions, including the conflict in Ukraine;

•risks related to the Company’s use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or Company information, or service ~~interruptions;~~interruptions, especially at a time when a large number of the Company’s employees are working remotely and accessing its technology infrastructure remotely;

•the ability of the Company to implement and generate cost savings and efficiencies, and successfully implement its business strategies, including achieving anticipated results and cost savings from the implementation of the streamlined operating model;

•dependence on key customers and risks related to customer consolidation and ordering patterns;

•the Company’s ability to attract and retain key personnel, which may continue to be impacted by challenges in the labor market, such as wage inflation and sustained labor shortages;

•the Company’s ability to maintain its business reputation and the reputation of its brands and products;

•lower revenue, or increased costs or reputational harm resulting from government actions and ~~regulations;~~compliance with regulations, or any material costs imposed by changes in regulation;

•the ability of the Company to successfully manage global political, legal, tax and regulatory risks, including changes in regulatory or administrative activity;

~~risks relating to acquisitions, new ventures and divestitures, and associated costs, including the potential for asset impairment charges related to, among others, intangible assets and goodwill;~~

~~worldwide, regional and local economic and financial market conditions;~~

•risks related to international operations and international trade, including changing macroeconomic conditions as a result of inflation, volatile commodity prices and increases in raw and packaging materials prices, labor, energy and logistics; global economic or political instability; ~~government-imposed price controls or other regulations;~~foreign currency fluctuations, such as devaluations, and foreign currency exchange rate ~~controls, including periodic~~controls; changes in ~~such controls, fluctuations~~governmental policies, including trade, travel or immigration restrictions, new or additional tariffs, and ~~devaluations; changes in trade, tax~~price or ~~U.S. immigration policies,~~other controls; labor claims ~~labor unrest~~ and ~~inflationary pressures, particularly~~civil unrest; continued high levels of inflation in Argentina; potential disruption from wars and military conflicts, including the conflict in Ukraine; impact of the United Kingdom’s exit from the European Union; potential negative impact and liabilities from the use, storage and transportation of chlorine in certain international markets where chlorine is used in the production of bleach; widespread health emergencies, such as COVID-19; and the possibility of nationalization, expropriation of assets or other government action;

•the impact of Environmental, Social, and Governance (ESG) issues, including those related to climate change and sustainability on our sales, operating costs or reputation;

•the ability of the Company to innovate and to develop and introduce commercially successful ~~products;~~products, or expand into adjacent categories and countries;

~~the ability of the Company to implement and generate cost savings and efficiencies;~~

~~the success of the Company’s business strategies;~~

~~the Company’s ability to maintain its business reputation and the reputation of its brands;~~

risks related to the effects of the Tax Cuts and Jobs Act (Tax Act) on the Company as the Company continues to assess and analyze such effects as well as its current interpretation, assumptions and expectations relating to the Tax Act, and the possibility that the final impact of the Tax Act on the Company may be materially different from the Company’s current estimates based on the Company’s actual results for future periods, the Company’s further assessment and analysis of the Tax Act, any additional Congressional administrative and FASB actions, or other guidance related to the Tax Act and any actions that the Company may take as a result of the Tax Act;


•	~~risks related to additional increases in the estimated fair value of P&G's interest in the Glad~~^® business, such as the significant increase over the first half of fiscal year 2018 primarily due to the recent Tax Act and the recent extension of the venture agreement with, and the related R&D support provided by, P&G;

~~supply disruptions and other risks inherent in reliance on a limited base of suppliers;~~

•the impact of product liability claims, labor claims and other legal, governmental or tax proceedings, including in foreign ~~jurisdictions;~~jurisdictions and in connection with any product recalls;

•risks relating to acquisitions, new ventures and divestitures, and associated costs; and the ability to complete announced transactions and, if completed, integration costs and potential contingent liabilities related to those transactions;

•the accuracy of the Company’s ~~ability~~estimates and assumptions on which its financial projections, including any sales or earnings guidance or outlook it may provide from time to ~~attract~~time, are based;

•risks related to additional increases in the estimated fair value of P&G’s interest in the Glad business;

•risk of reductions in the estimated valuation of the VMS business and ~~retain key personnel;~~additional goodwill impairments;

•environmental matters, including costs associated with the remediation and monitoring of past contamination, and possible increases in costs resulting from actions by relevant regulators, and the handling and/or transportation of hazardous substances;

~~the impact of natural disasters, terrorism and other events beyond the Company’s control;~~

•the Company’s ability to ~~maximize,~~effectively utilize, assert and defend its intellectual property ~~rights;~~

rights, and any infringement or claimed infringement by the Company of third-party intellectual property rights;

•the performance of strategic alliances and other business relationships;

•the effect of the Company’s indebtedness and credit rating on its business operations and financial ~~results;~~results and the Company’s ability to access capital markets and other funding sources, as well as the cost of capital to the Company;

•the Company’s ability to pay and declare dividends or repurchase its stock in the future;

~~the Company’s ability to maintain an effective system of internal controls;~~

~~uncertainties relating to tax positions, tax disputes and changes in the Company’s tax rate;~~

~~the accuracy of the Company’s estimates and assumptions on which its financial projections are based;~~

~~risks related to the Company’s discontinuation of operations in Venezuela; and~~

•the impacts of potential stockholder ~~activism.~~activism; and

•risks related to any litigation associated with the exclusive forum provision in the Company’s bylaws.

The Company’s forward-looking statements in this Report are based on management’s current views, beliefs, assumptions and ~~assumptions~~expectations regarding future events and speak only as of the ~~dates when made.~~date of this Report. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws.

In this Report, unless the context requires otherwise, the terms “the Company,” “Clorox,” “we,” ~~“us”~~“us,” and “our” refer to The Clorox Company and its subsidiaries.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have not been any material changes to the Company’s market risk since June 30, ~~2017.~~2022. For additional information, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Exhibit 99.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017.~~2022.

Item 4. Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Report, were effective such that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

No change in the Company’s internal control over financial reporting occurred during the second fiscal quarter of the fiscal year ending June 30, ~~2018,~~2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.A. Risk Factors

For information regarding Risk Factors, please refer to Item 1.A. in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017, as modified by the following additional and revised risk factors,~~2022 and the information in “Cautionary Statement” included in this Report.

~~The effects of the Tax Cuts and Jobs Act on our business and our company have not yet been fully analyzed and the final impacts could be materially different from our current estimates.~~

On December 22, 2017, H.R. 1, also known as the “Tax Cuts and Jobs Act” (the Tax Act), was signed into law. The Tax Act, among other things, contains significant changes to corporate taxation, including a reduction of the corporate tax rate to 21% from 35%, one time taxation of accumulated foreign earnings regardless of whether they are repatriated, limitations on the deduction for interest expense, immediate tax deductions for five years for new investments instead of deductions for depreciation expense over time, disallowance of deductions for certain-performance based compensation, elimination of the deduction for certain domestic production activities and a migration from a “worldwide” system of taxation to a modified territorial system. Although we continue to assess and analyze the full effects of the Tax Act on our business and our company, we expect the Tax Act, as a whole, will reduce our effective tax rate in future periods, in addition to our second fiscal quarter. In addition, although we expect a positive impact to our cash flows from the Tax Act, such impact will be realized in future periods as we realize the benefit from the lower effective tax rates.

Given the close proximity of the Tax Act’s enactment date to the end of our fiscal second quarter reporting period, we continue to assess and analyze the accounting for the impacts of the Tax Act. Moreover, the process of adopting extensive tax legislation in a short amount of time may have led to drafting errors, issues needing clarification and unintended consequences that Congress may decide to review in subsequent tax legislation. In addition, interpretation of many provisions of the Tax Act are still unclear. At this point, it is not clear when, or whether, Congress may address any of these issues or when the Internal Revenue Service may be able to issue administrative guidance on the changes made in the Tax Act. In addition, the FASB recently provided guidance intended to clarify the accounting for certain aspects of the Tax Act. Furthermore, foreign countries may decide to enact tax laws that may negatively affect our foreign tax liabilities in retaliation for any real or perceived negative effects of the Tax Act on their countries that they deem unfair or for other reasons and/or states or local government may decide to enact tax laws that may increase tax liabilities for companies doing business in such jurisdictions as they see opportunities to increase state and local corporate taxes after the federal corporate tax rate was reduced by the Tax Act.

We continue to assess and analyze the impact of the Tax Act on our business and our company. Accordingly, some of the income tax effects reflected in our unaudited Condensed Consolidated Financial Statements are provisional amounts. For example, provisional amounts are reported for our revaluation of net deferred tax liabilities and for our one-time transition tax on accumulated foreign earnings. In addition, certain underlying income tax effects embedded within the valuations of certain balance sheet items, including the liability related to our obligation to purchase The Procter & Gamble Company’s (“P&G’s”) 20% interest in our Glad^® business upon the termination of our venture agreement with P&G, may be subject to change as we finalize the provisional elements in our assessment of the Tax Act. The estimated impacts of the Tax Act, including with respect to our revaluation of net deferred tax liabilities, assessment of our deferred taxes related to foreign unremitted earnings, estimate of our effective tax rates for future periods and valuation of our potential obligation to purchase P&G’s interest in our Glad^® business, are based on management’s current assessment and estimates and could be materially different based on our actual results for future periods, our further analysis of the Tax Act, any additional Congressional, administrative and FASB actions or guidance related to the Tax Act and any actions that we may take as a result of the Tax Act. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 7 to the Condensed Consolidated Financial Statements (Unaudited).

~~Increases in the estimated fair value of P&G’s interest in the Company’s Glad~~^®business, such as the significant increase over the first half of this fiscal year primarily due to the recent enactment of the Tax Act and the recent extension of the venture agreement with, and the related R&D support provided by, P&G, increase the value of the Company’s obligation to purchase P&G’s interest in the Glad^® ~~business upon the termination of the venture agreement and may, in the future, adversely affect the Company’s net earnings and cash flow.~~

~~In January 2003, the Company entered into a venture agreement with P&G related to the Company’s Glad~~^® ~~bags, wraps and containers business. In connection with this agreement, P&G provides research and development support to the Glad~~^® business. The agreement with P&G was extended in December 2017 and the agreement will now expire in January 2026 unless the parties agree to further extend the term. The agreement requires the Company to purchase P&G’s 20% interest at the expiration of its term for cash at fair value as established by predetermined valuation procedures. As of December 31, 2017 and June 30, 2017, the estimated fair value of P&G’s interest was $630 million and $458 million, respectively, of which $327 million and

$317 million, respectively, has been recognized by the Company and is reflected in Other liabilities in the Company’s Condensed Consolidated Balance Sheet (Unaudited). 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. The estimated fair value of P&G's interest, which has increased significantly over the past several years, increased by $172 million from June 30, 2017 to December 31, 2017, primarily as a result of the recent enactment of the Tax Act and the recent extension of the venture agreement with, and the related R&D support provided by, P&G, and may continue to change up until any such purchase by the Company of P&G’s interest. The key assumptions and estimates used to arrive at the estimated fair value include, but are not limited to, tax rates, the rate at which future cash flows are discounted (discount rate), commodity prices, future volume estimates, net sales and expense growth rates, changes in working capital, capital expenditures, foreign exchange rates, inflation and perpetuity growth rates. Any changes in such assumptions or estimates could significantly affect such estimated fair value and, accordingly, the value of the Company’s repurchase obligation and may adversely affect the Company’s net earnings up until any such purchase and cash flow at the time of any such purchase. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 6 to the Condensed Consolidated Financial Statements (Unaudited).

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In May 2018, the Board of Directors authorized the Company to repurchase up to $2,000 million in shares of common stock on the open market (the 2018 Open-Market Program), which has no expiration date.

In August 1999, the Board of Directors authorized a stock repurchase program to reduce or eliminate dilution upon the issuance of common stock pursuant to the Company’s stock compensation plans (the Evergreen Program). In November 2005, the Board of Directors authorized the extension of the Evergreen Program to reduce or eliminate dilution in connection with issuances of common stock pursuant to the Company’s 2005 Stock Incentive Plan. The Evergreen Program has no expiration date and has no specified limit as to dollar amount and therefore is not included in column [d] below.

The following table sets forth the purchases of the Company’s securities by the Company and any affiliated purchasers within the meaning of Rule 10b-18(a)(3) (17 CFR 240.10b-18(a)(3)) during the second quarter of fiscal year ~~2018.~~

[a] [b] [c] [d]
Period
Total Number of
Shares Purchased
(1)

Average Price Paid
per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs
October 1 to 31, 2017 —
$ —
—
(2)
November 1 to 30, 2017 25,534
127.99
25,534
(2)
December 1 to 31, 2017 —
—
—
(2)
Total 25,534
$ 127.99
25,534
(2)

~~____________________~~

2023.

~~(1)~~

[a]

[b]

[c]

[d]

Period

Total Number of
Shares ~~purchased in~~ Purchased

Average Price Paid

per Share (1)

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs

October 1 to 31, 2022

—

$993 million

November ~~2017 were acquired pursuant~~1 to ~~the Company’s share repurchase program~~30, 2022

—

$993 million

December 1 to ~~offset the impact of share dilution related to share-based awards (the Evergreen program).~~31, 2022

—

$993 million

Total

—

~~(2)~~

The Company has two share repurchase programs: an open-market purchase program with an authorized aggregate purchase amount of up to $750 million, all of which was available for share repurchases as of December 31, 2017, and the Evergreen Program, the purpose of which is to offset the anticipated impact of share dilution related to share-based awards and which has no authorization limit as to the amount or timing of repurchases.

(1)Average price paid per share in the period includes commission.

Item 6. Exhibits

See Exhibit Index ~~Below.~~below, which is incorporated by reference herein.

EXHIBIT INDEX

Exhibit No.



~~10.1~~ 31.1		First Extension and Amendment of the Amended and Restated Joint Venture Agreement, dated as of December 20, 2017, between The Glad Products Company and certain affiliates and The Procter & Gamble Company and certain affiliates.
~~10.2~~	Amendment No. 1 to the Amended and Restated Joint Venture Agreement, dated as of October 15, 2010, between The Glad Products Company and certain affiliates and The Procter & Gamble Company and certain affiliates.
~~31.1~~	Certification by the Chief Executive Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification by the Chief Financial Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification by the Chief Executive Officer and Chief Financial Officer of the Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101~~101.SCH		~~The following materials from The Clorox Company’s Quarterly Report on Form 10-Q for~~XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (embedded within the ~~period ended December 31, 2017, are formatted~~Inline XBRL document and included in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Earnings and Comprehensive Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.Exhibit 101).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	THE CLOROX COMPANY
			(Registrant)


DATE: February 2, ~~2018~~2023		BY	/s/ ~~Jeffrey R. Baker~~Laura Peck
			~~Jeffrey R. Baker~~ Laura Peck Vice President – Chief Accounting Officer and Corporate Controller



	12/31/2017			6/30/2017
ASSETS
Current assets
Cash and cash equivalents	$	489		$	418
Receivables, net		536			565
Inventories, net		494			459
Prepaid expenses and other current assets		161			72
Total current assets		1,680			1,514
Property, plant and equipment, net of accumulated depreciation and amortization of $2,031 and $2,001, respectively		935			931
Goodwill		1,202			1,196
Trademarks, net		655			654
Other intangible assets, net		65			68
Other assets		221			210
Total assets	$	4,758		$	4,573
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	495		$	404
Current maturities of long-term debt		—			400
Accounts payable and accrued liabilities		885			1,005
Income taxes payable		—			—
Total current liabilities		1,380			1,809
Long-term debt		1,788			1,391
Other liabilities		791			770
Deferred income taxes		39			61
Total liabilities		3,998			4,031
Commitments and contingencies
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding		—			—
Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares issued as of December 31, 2017 and June 30, 2017; and 129,348,120 and 129,014,172 shares outstanding as of December 31, 2017 and June 30, 2017, respectively		159			159
Additional paid-in capital		941			928
Retained earnings		2,649			2,440
Treasury shares, at cost: 29,393,341 and 29,727,289 shares as of December 31, 2017 and June 30, 2017, respectively		(2,465	)		(2,442	)
Accumulated other comprehensive net (losses) income		(524	)		(543	)
Stockholders’ equity		760			542
Total liabilities and stockholders’ equity	$	4,758		$	4,573


~~(a)~~	Cash and cash equivalents are composed of time deposits and other interest bearing investments including money market funds with original maturity dates of 90 days or less. Cash and cash equivalents are recorded at cost, which approximates fair value.


~~(b)~~	~~Notes and loans payable is composed of U.S. commercial paper and/or other similar short-term debt issued by non-U.S. subsidiaries, all of which are recorded at cost, which approximates fair value.~~


~~(c)~~	Current maturities of long-term debt and Long-term debt are recorded at cost. The fair value of Long-term debt, including current maturities, was determined using secondary market prices quoted by corporate bond dealers, and is classified as Level 2.



	12/31/2017		6/30/2017
Venture agreement terminal obligation, net	$	327	$	317
Employee benefit obligations	307		298
Taxes	47		42
Other	110		113
Total	$	791	$	770



	Twelve Months Ended
	12/31/2017
Earnings from continuing operations	$	799
Add back:
Interest expense	85
Income tax expense	249
Depreciation and amortization	162
Non-cash asset impairment charges	1
Deduct:
Interest income	(5		)
Consolidated EBITDA	$	1,291
Interest expense	$	85
Interest Coverage ratio	15.2



	[a]	[b]		[c]	[d]
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 to 31, 2017	—	$	—	—	(2)
November 1 to 30, 2017	25,534	127.99		25,534	(2)
December 1 to 31, 2017	—	—		—	(2)
Total	25,534	$	127.99	25,534	(2)