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 March 31, ~~2018.~~2019.

		OR

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



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)

(510) 271-7000

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

_________________________



Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨ ~~(Do not check if a smaller reporting company)~~	Smaller Reporting Company ¨	Emerging Growth Company ¨

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The Clorox Company

Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited)

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


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	3/31/2018			3/31/2017			3/31/2018			3/31/2017			3/31/2019			3/31/2018			3/31/2019		3/31/2018
Net sales	$	1,517		$	1,477		$	4,433		$	4,326		$	1,551		$	1,517		$	4,587	$	4,433
Cost of products sold		868			827			2,502			2,407			878			868			2,593		2,502
Gross profit		649			650			1,931			1,919			673			649			1,994		1,931
Selling and administrative expenses		208			201			609			598			216			208			639		609
Advertising costs		150			161			424			417			161			150			445		424
Research and development costs		32			35			95			98			34			32			98		95
Interest expense		20			22			61			66			24			20			72		61
Other (income) expense, net		(3	)		(16	)		(6	)		2			(2	)		(3	)		8		(6	)
Earnings from continuing operations before income taxes		242			247			748			738			240			242			732		748
Income taxes on continuing operations		61			75			142			237			53			61			153		142
Earnings from continuing operations		181			172			606			501			187			181			579		606
Earnings (losses) from discontinued operations, net of tax		—			—			—			(1	)		—			—			—		—
Net earnings	$	181		$	172		$	606		$	500		$	187		$	181		$	579	$	606
Net earnings (losses) per share
Basic
Continuing operations	$	1.39		$	1.34		$	4.69		$	3.89		$	1.46		$	1.39		$	4.53	$	4.69
Discontinued operations		—			—			—			(0.01	)		—			—			—		—
Basic net earnings per share	$	1.39		$	1.34		$	4.69		$	3.88		$	1.46		$	1.39		$	4.53	$	4.69
Diluted
Continuing operations	$	1.37		$	1.31		$	4.60		$	3.82		$	1.44		$	1.37		$	4.45	$	4.60
Discontinued operations		—			—			—			(0.01	)		—			—			—		—
Diluted net earnings per share	$	1.37		$	1.31		$	4.60		$	3.81		$	1.44		$	1.37		$	4.45	$	4.60
Weighted average shares outstanding (in thousands)
Basic		129,694			128,752			129,357			128,899			128,404			129,694			128,092		129,357
Diluted		131,900			131,362			131,703			131,399			130,266			131,900			130,218		131,703
Dividends per share declared	$	0.96		$	0.80		$	2.64		$	2.40

Comprehensive income	$	180		$	186		$	624		$	505		$	200		$	180		$	562	$	624

The Clorox Company

Condensed Consolidated Balance Sheets ~~(Unaudited)~~

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


							3/31/2019			6/30/2018
	3/31/2018			6/30/2017			(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	1,174		$	418		$	178		$	131
Receivables, net		595			565			587			600
Inventories, net		508			459			556			506
Prepaid expenses and other current assets		96			72			72			74
Total current assets		2,373			1,514			1,393			1,311
Property, plant and equipment, net of accumulated depreciation and amortization of $2,055 and $2,001, respectively		933			931
Property, plant and equipment, net of accumulated depreciation and amortization of $2,125 and $2,061, respectively								1,000			996
Goodwill		1,200			1,196			1,589			1,602
Trademarks, net		655			654			791			795
Other intangible assets, net		63			68			124			134
Other assets		220			210			265			222
Total assets	$	5,444		$	4,573		$	5,162		$	5,060
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	1,066		$	404		$	321		$	199
Current maturities of long-term debt		—			400
Accounts payable and accrued liabilities		947			1,005			940			1,001
Income taxes payable		—			—
Total current liabilities		2,013			1,809			1,261			1,200
Long-term debt		1,789			1,391			2,286			2,284
Other liabilities		778			770			774			778
Deferred income taxes		27			61			60			72
Total liabilities		4,607			4,031			4,381			4,334
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 March 31, 2018 and June 30, 2017; and 129,489,382 and 129,014,172 shares outstanding as of March 31, 2018 and June 30, 2017, respectively		159			159
Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares issued as of March 31, 2019 and June 30, 2018; and 127,888,226 and 127,982,767 shares outstanding as of March 31, 2019 and June 30, 2018, respectively								159			159
Additional paid-in capital		956			928			1,033			975
Retained earnings		2,704			2,440			3,004			2,797
Treasury shares, at cost: 29,252,079 and 29,727,289 shares as of March 31, 2018 and June 30, 2017, respectively		(2,457	)		(2,442	)
Accumulated other comprehensive net (losses) income		(525	)		(543	)
Treasury shares, at cost: 30,853,235 and 30,758,694 shares as of March 31, 2019 and June 30, 2018, respectively								(2,851	)		(2,658	)
Accumulated other comprehensive net (loss) income								(564	)		(547	)
Stockholders’ equity		837			542			781			726
Total liabilities and stockholders’ equity	$	5,444		$	4,573		$	5,162		$	5,060

The Clorox Company

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)


							Nine Months Ended
	Nine Months Ended						3/31/2019			3/31/2018
	3/31/2018			3/31/2017						(As Adjusted*)
Operating activities:
Net earnings	$	606		$	500		$	579		$	606
Deduct: Losses from discontinued operations, net of tax		—			(1	)		—			—
Earnings from continuing operations		606			501			579			606
Adjustments to reconcile earnings from continuing operations to net cash provided by continuing operations:
Depreciation and amortization		121			121			133			121
Stock-based compensation		37			38			34			37
Deferred income taxes		(43	)		(38	)		(7	)		(43	)
Other		23			17			(29	)		24
Changes in:
Receivables, net		(29	)		2			11			(29	)
Inventories, net		(58	)		(70	)		(51	)		(58	)
Prepaid expenses and other current assets		(3	)		(14	)		(10	)		(2	)
Accounts payable and accrued liabilities		(64	)		(75	)		(55	)		(64	)
Income taxes payable		(16	)		1
Net cash provided by (used for) continuing operations		574			483
Net cash provided by (used for) discontinued operations		—			(1	)
Net cash provided by (used for) operations		574			482
Income taxes payable/receivable, net								(2	)		(16	)
Net cash provided by continuing operations								603			576
Net cash provided by discontinued operations								—			—
Net cash provided by operations								603			576
Investing activities:
Capital expenditures		(126	)		(161	)		(135	)		(126	)
Other		14			25			9			14
Net cash provided by (used for) investing activities		(112	)		(136	)
Net cash used for investing activities								(126	)		(112	)
Financing activities:
Notes and loans payable, net		657			123			117			657
Long-term debt borrowings, net of issuance costs		396			—			—			396
Long-term debt repayments		(400	)		—			—			(400	)
Treasury stock purchased		(70	)		(183	)		(315	)		(70	)
Cash dividends paid		(326	)		(309	)		(368	)		(326	)
Issuance of common stock for employee stock plans and other		35			55			137			35
Net cash provided by (used for) financing activities		292			(314	)
Effect of exchange rate changes on cash and cash equivalents		2			(2	)
Net increase in cash and cash equivalents		756			30
Cash and cash equivalents:
Net cash (used for) provided by financing activities								(429	)		292
Effect of exchange rate changes on cash, cash equivalents, and restricted cash								(2	)		2
Net increase in cash, cash equivalents, and restricted cash								46			758
Cash, cash equivalents, and restricted cash:
Beginning of period		418			401			134			419
End of period	$	1,174		$	431		$	180		$	1,177

*Adjusted to reflect the retrospective adoption of Accounting Standards Update (ASU) No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” effective July 1, 2018. As of March 31, 2019 and 2018 and June 30, 2018 and 2017, the Company had $2, $3, $3 and $2 of restricted cash, respectively, and the restricted cash was included in Prepaid expenses and other current assets and Other assets in the condensed consolidated balance sheets.

The Clorox Company

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 nine months ended March 31, ~~2018~~2019 and ~~2017,~~2018, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its subsidiaries (the Company) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain prior year reclassifications were made in the condensed consolidated statements of cash flows to conform to the current year presentation. The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, ~~2017,~~2018, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

Revenue Recognition

Revenue is recognized when performance obligations under the terms of the contracts with customers are satisfied. The Company's performance obligation generally consists of the promise to sell finished products to wholesalers, distributors, retailers or consumers. Control of finished products is transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract. Once control is transferred to the customer, the Company has completed its performance obligation, and revenue is recognized. After completion of the performance obligation, there is an unconditional right to consideration as outlined in the contract. A right is unconditional if nothing other than the passage of time is required before payment of that consideration is due. The Company typically collects its customer receivables within two months. All performance obligations under the terms of contracts with customers have an original duration of one year or less.

The Company routinely commits to one-time or ongoing trade-promotion programs with customers and consumer coupon programs that require the Company to estimate and accrue the expected costs of such programs, which include shelf price reductions, end-of-aisle or in-store displays of the Company’s products and graphics and other trade-promotion activities conducted by the customer. The costs of such activities, defined as variable consideration under Topic 606 of the Accounting Standards Codification, "Revenue from Contracts with Customers," are netted against sales and recorded when the related sale takes place. The accruals for trade promotion programs and consumer coupon liabilities are established based on the Company’s best estimate of the amounts necessary to settle future and existing obligations for products sold as of the balance sheet date. The Company uses forecasted appropriations, historical trend analysis, and customer and sales organization inputs in determining the accruals for promotional activities, and uses historical trend experience and coupon redemption estimates for the coupon accrual requirements.

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

Foreign Currency Transactions and Translation

Effective July 1, 2018, under the requirements of U.S. GAAP, Argentina was designated as a highly inflationary economy, since it has experienced cumulative inflation of approximately 100 percent or more over a three-year period. As a result, beginning July 1, 2018, the U.S. dollar replaced the Argentine peso as the functional currency of the Company’s subsidiaries in Argentina (collectively, "Clorox Argentina"). Consequently, gains and losses from non-U.S. dollar denominated monetary assets and liabilities for Clorox Argentina are recognized in Other (income) expense, net in the condensed consolidated statement of earnings.

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Standards

Recently Issued Accounting Standards ~~not yet adopted~~Not Yet Adopted

In February 2018, the Financial Accounting Standards Board (FASB) issued ~~Accounting Standards Update (ASU)~~ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which amends its guidance to allow a reclassification from Accumulated Other Comprehensive Income to Retained Earnings for the stranded income tax effects resulting from The Tax Cuts and Jobs Act of 2017 (the Tax Act). If elected, this reclassification adjustment may be applied to either the period of adoption or retrospectively to the periods impacted by the Tax Act. The amendments are effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company expects to early adopt this guidance in, and apply it to, the fourth quarter of fiscal year 2019. The Company is ~~currently~~ evaluating the impact that the adoption of this guidance will ~~potentially~~ have on its consolidated financial statements.

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

In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires the presentation of the service cost component of net periodic benefit cost 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. The Company is currently evaluating the impact that adoption of this guidance will have on its consolidated financial statements.

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

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

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize a right-of-use asset and a lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation will depend on the classification of a lease as either a finance or an operating lease. ASU 2016-02 also requires expanded disclosures about leasing arrangements. In July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842), Targeted Improvements," which provides an optional transition method in applying the new lease standard. Topic 842 can be applied using either a modified retrospective approach at the beginning of the earliest period presented, or, as permitted by ASU 2018-11, at the beginning of the period in which it is adopted. The Company will adopt the new ~~guidance is effective~~standard on July 1, 2019, on a modified retrospective basis using the optional transition method, and, accordingly, will not restate comparative periods. The Company has initiated its plan for the adoption and implementation of this new accounting standard, including assessing its lease arrangements and implementing software to meet the reporting and disclosure requirements of this standard. Additionally, the Company ~~beginning~~is in the ~~first quarter~~process of ~~fiscal year 2020, with early~~identifying changes to its business processes and controls to support the adoption ~~permitted. The Company~~and is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements. Refer to Note 12 of the Notes to Consolidated Financial Statements in Form 10-K for the fiscal year ended June 30, 2018 for the future minimum annual lease payments required under the Company’s existing non-cancelable operating and capital lease arrangements as of June 30, 2018.

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Adopted Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which replaces most of the existing U.S. GAAP revenue recognition guidance and is intended to improve and converge with international standards on the financial reporting requirements for revenue from contracts with customers. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers, including information about significant judgments and changes in judgments.

The Company adopted the new guidance ~~is effective for the Company beginning in the first quarter of fiscal year 2019, and is expected to be applied~~ on a modified retrospective ~~basis.~~

~~Based~~basis effective July 1, 2018, and does not expect the guidance to have a material impact on the Company's ~~preliminary assessment, the adoption of the standard is not expected to have a significant impact on its~~ annual consolidated financial ~~statements; however,~~statements. However, there ~~may~~will be an impact on the ~~Company's~~Company’s financial results in the interim periods due to the timing of recognition for certain trade promotion spending. AsDue to a change in the timing of recognition for certain trade promotion spending, the Company ~~completes its overall assessment, it is also identifying potential~~recorded an immaterial cumulative effect of initially applying the new guidance as an adjustment to the fiscal year 2019 opening balance of Retained earnings. Results for periods beginning on or after July 1, 2018 are recognized and presented in accordance with Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the prior accounting guidance under Topic 605, "Revenue Recognition." The Company has made changes to its accounting policies, business processes, systems and controls to align with the new revenue recognition guidance and disclosure requirements.

~~Recently Adopted Accounting Standards~~In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires presenting the service cost component of net periodic benefit cost in the same income statement line items as other employee compensation costs arising from services rendered during the period. This standard also requires that other components of the net periodic benefit cost be presented separately from the line item(s) that includes service costs and outside of any subtotal of operating income, if one is presented, on a retrospective basis. The Company adopted this new guidance in the first quarter of fiscal year 2019 and the adoption did not have a material impact on the Company's consolidated financial statements. Following the adoption of this guidance, the Company records the non-service cost components of net periodic benefit cost in Other (income) expense, net.

In March 2018, the FASB issued ASU No. 2018-05, “Income Taxes (Topic 740)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” which amends its guidance to address the initial accounting for the income tax effects of the Tax Act, which was enacted on December 22, 2017 (enactment date). This ~~new~~ guidance ~~allows~~allowed reasonable estimates of income tax effects to be reported as provisional amounts during the measurement period, which is one year from the enactment date, when the necessary information is not available, prepared, or analyzed in sufficient detail to complete the accounting. The amendments also added specific disclosure requirements. The Company ~~has~~ adopted this new ~~guidance. The Company~~guidance and initially recorded $81 of provisional benefits in the second quarter of fiscal year 2018. Refer to Note ~~7 to the Condensed Consolidated Financial Statements~~6 for more information.

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 increases and other critical remedial actions to address these adverse impacts. Based on the Venezuelan government’s representations, Clorox Venezuela had expected significant price increases would be forthcoming much earlier; however, the price increases subsequently approved were insufficient and would have caused Clorox Venezuela to continue operating at a significant loss into the foreseeable future. As such, Clorox Venezuela was no longer financially viable and was forced to discontinue its operations.

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

~~NOTE 2. DISCONTINUED OPERATIONS (Continued)~~

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

There were no net sales for each of the three and nine months ended March 31, ~~2018~~2019 and ~~2017,~~2018, and losses from discontinued operations, net of tax were insignificant for these same periods.

NOTE 3. BUSINESS ACQUIRED

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

The total consideration paid of $681, which included post-closing working capital and other adjustments, was initially funded through commercial paper borrowings and subsequently repaid using a combination of long-term debt financing and cash repatriated from foreign subsidiaries. The assets and liabilities of Nutranext were recorded at their respective estimated fair value as of the acquisition date using U.S. GAAP for business combinations. The excess of the purchase price over the fair value of the net identifiable assets acquired has been allocated to goodwill in the Lifestyle and Household reportable segments of $310 and $102, respectively. The goodwill of $412 is primarily attributable to the synergies, including those with the digestive health business, expected to arise after the acquisition and reflects the value of further expanding the Company’s portfolio into the health and wellness arena. Of the total goodwill, $363 is expected to be deductible for tax purposes.

The following table summarizes the final purchase price allocation for the fair value of Nutranext's assets acquired and liabilities assumed and the related deferred income taxes as of March 31, 2019. The fair value of the assets acquired and liabilities assumed reflects the final insignificant measurement period adjustments related to goodwill, deferred income taxes and income taxes payable. The weighted-average estimated useful life of intangible assets subject to amortization is 15 years.



	Nutranext
Goodwill ($310 in Lifestyle reportable segment and $102 in Household reportable segment)	$	412
Trademarks	143
Customer relationships	75
Property, plant and equipment	49
Working capital, net	22
Deferred income taxes	(20		)
Consideration paid	$	681

Effective April 2, 2018, Nutranext was consolidated into the Company's results of operations. Results for Nutranext's global business are reflected in the Lifestyle reportable segment.

Pro forma results reflecting the acquisition were not presented because the acquisition did not meet the threshold requirements for additional disclosure.

NOTE 3.4. INVENTORIES, NET

Inventories, net, consisted of the following as of:



	3/31/2019			6/30/2018
Finished goods	$	445		$	395
Raw materials and packaging	136			129
Work in process	6			9
LIFO allowances	(31		)	(27		)
Total	$	556		$	506

3/31/2018 6/30/2017
Finished goods $ 415
$ 363
Raw materials and packaging 114
119
Work in process 5
3
LIFO allowances (26 ) (26 )
Total $ 508
$ 459

NOTE 4.5. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial Risk Management and Derivative Instruments

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

Commodity Price Risk Management

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

As of March 31, ~~2018,~~2019, the notional amount of commodity derivatives was ~~$21,~~$29, of which ~~$10~~$18 related to soybean oil futures used for the food business and $11 related to jet fuel swaps used for the charcoal ~~business and $11 related to soybean oil futures used for the food~~ business. As of June 30, ~~2017,~~2018, the notional amount of commodity derivatives was ~~$26,~~$34, of which ~~$14~~$24 related to soybean oil futures and $10 related to jet fuel ~~swaps and $12 related to soybean oil futures.~~swaps.

Foreign Currency Risk Management

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

The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were ~~$34~~$50 as of both March 31, ~~2018,~~2019 and ~~$49 as of~~ June 30, ~~2017.~~2018.

Interest Rate Risk Management

The Company may enter into over-the-counter interest rate forward contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt or to manage the Company’s level of fixed and floating rate debt. These interest rate forward contracts generally have durations of less than 12 months. The interest rate contracts are measured at fair value using information quoted by U.S. government bond dealers.

As of March 31, ~~2018~~2019 and June 30, ~~2017,~~2018, the Company had no outstanding interest rate forward contracts.

NOTE 4.5. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

Commodity, Foreign Exchange and Interest Rate Derivatives

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

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



	Gains (losses) recognized in Other comprehensive income
	Three Months Ended				Nine Months Ended
	3/31/2019		3/31/2018		3/31/2019			3/31/2018
Commodity purchase derivative contracts	$	2	$	—	$	(4	)	$	3
Foreign exchange derivative contracts	—		1		1			1
Interest rate derivative contracts	—		—		—			2
Total	$	2	$	1	$	(3	)	$	6

Gains (losses) recognized in Other comprehensive income
Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 3/31/2018 3/31/2017
Commodity purchase derivative contracts $ —
$ (3 ) $ 3
$ (2 )
Foreign exchange derivative contracts 1
(1 ) 1
—
Interest rate derivative contracts —
—
2
—
Total $ 1
$ (4 ) $ 6
$ (2 )



	Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
	Three Months Ended						Nine Months Ended
	3/31/2019			3/31/2018			3/31/2019			3/31/2018
Commodity purchase derivative contracts	$	(1	)	$	—		$	(1	)	$	—
Foreign exchange derivative contracts	1			—			2			(1		)
Interest rate derivative contracts	(2		)	(1		)	(5		)	(5		)
Total	$	(2	)	$	(1	)	$	(4	)	$	(6	)

Gains (losses) reclassified from Accumulated other comprehensive net (losses) income and recognized in Net earnings
Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 3/31/2018 3/31/2017
Commodity purchase derivative contracts $ —
$ —
$ —
$ (1 )
Foreign exchange derivative contracts —
—
(1 ) (3 )
Interest rate derivative contracts (1 ) (2 ) (5 ) (5 )
Total $ (1 ) $ (2 ) $ (6 ) $ (9 )

The gains (losses) reclassified from Accumulated other comprehensive net ~~(losses)~~(loss) income and recognized in Net earnings during the three and nine months ended March 31, ~~2018~~2019 and ~~2017,~~2018, for commodity purchase and foreign exchange contracts were included in Cost of products sold, and for interest rate contracts were included in Interest expense.

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net ~~(losses)~~(loss) income as of March 31, ~~2018,~~2019, which is expected to be reclassified into Net earnings within the next twelve months, is ~~$(4)~~$(6). Gains and losses on derivative instruments representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in Net earnings. During the three and nine months ended March 31, ~~2018~~2019 and ~~2017,~~2018, hedge ineffectiveness was not significant.

NOTE 4.5. 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 when the fair value of the derivative instrument exceeds contractually defined counterparty liability position limits. Of the over-the-counter derivative instruments in liability positions held as of March 31, ~~2018~~2019 and June 30, ~~2017, $0 and $1, respectively,~~2018, none contained such terms. As of March 31, ~~2018~~2019 and June 30, ~~2017,~~2018, neither the Company nor any counterparty was required to post any collateral as no counterparty liability position limits were exceeded.

Certain terms of the agreements governing the Company’s over-the-counter derivative instruments require the credit ratings of the Company and its counterparties, as assigned by Standard & Poor’s and Moody’s, ~~to 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 March 31, ~~2018~~2019 and June 30, ~~2017,~~2018, the Company and each of its counterparties had been assigned investment grade credit ratings by both Standard & Poor’s and Moody’s.

Certain of the Company’s exchange-traded futures contracts used for commodity price risk management include requirements for the Company to post collateral in the form of a cash margin account held by the Company’s broker for trades conducted on that exchange. As of March 31, ~~2018~~2019 and June 30, ~~2017,~~2018, the Company maintained cash margin balances related to exchange-traded futures contracts of $1 and $2, respectively, which are classified as Prepaid expenses and other current assets in the condensed consolidated balance sheets.

Trust Assets

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

Fair Value 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 March 31, ~~2018~~2019 and June 30, ~~2017,~~2018, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.

NOTE 4.5. 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:


			3/31/2018				6/30/2017						3/31/2019				6/30/2018
	Balance sheet classification	Fair value hierarchy level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		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	$	891	$	891	$	221	$	221
Investments, including money market funds											Cash and cash equivalents ^(a)	1	$	40	$	40	$	24	$	24
Time deposits	Cash and cash equivalents ^(a)	2	182		182		115		115		Cash and cash equivalents ^(a)	2	29		29		23		23
Commodity purchase swaps contracts	Prepaid expenses and other current assets	2	2		2		1		1		Prepaid expenses and other current assets	2	1		1		3		3
Foreign exchange forward contracts	Prepaid expenses and other current assets	2	1		1		—		—		Prepaid expenses and other current assets	2	1		1		2		2
Trust assets for nonqualified deferred compensation plans	Other assets	1	84		84		72		72		Other assets	1	91		91		86		86
			$	1,160	$	1,160	$	409	$	409			$	162	$	162	$	138	$	138
Liabilities
Notes and loans payable	Notes and loans payable ^(b)	2	$	1,066	$	1,066	$	404	$	404	Notes and loans payable ^(b)	2	$	321	$	321	$	199	$	199
Commodity purchase futures contracts											Accounts payable and accrued liabilities	1	1		1		1		1
Commodity purchase swaps contracts	Accounts payable and accrued liabilities	2	—		—		1		1		Accounts payable and accrued liabilities	2	1		1		—		—
Foreign exchange forward contracts	Accounts payable and accrued liabilities	2	—		—		1		1
Current maturities of long-term debt and Long-term debt	Current maturities of long- term debt and Long-term debt ^(c)	2	1,789		1,797		1,791		1,855		Current maturities of long- term debt and Long-term debt ^(c)	2	2,286		2,353		2,284		2,269
			$	2,855	$	2,863	$	2,197	$	2,261			$	2,609	$	2,676	$	2,484	$	2,469

____________________

~~NOTE 6. OTHER LIABILITIES~~

~~Other liabilities consisted of the following as of:~~

3/31/2018 6/30/2017
Venture agreement terminal obligation, net $ 334
$ 317
Employee benefit obligations 292
298
Taxes 48
42
Other 104
113
Total $ 778
$ 770

~~Venture Agreement~~

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 21.8% and 20.8% for the three and nine months ended March 31, 2019, respectively, and 25.5% and 19.0% for the three and nine months ended March 31, 2018, ~~respectively, and 30.2% and 32.1% for the three and nine months ended March 31, 2017,~~ respectively. The decrease in the effective tax rate on continuing operations for the current three-month period was primarily due to the lower federal statutory tax rate for fiscal year 2019 as a result of enactment of the Tax Act, partially offset by the repeal of the domestic manufacturing deduction in fiscal year 2019. The lower effective tax rate on earnings from continuing operations for the ~~current three- and~~prior nine-month ~~periods~~period was primarily due to one-time tax benefits from the enactment of the Tax Act during the second quarter of fiscal year 2018 ~~(the period~~and the final year of domestic manufacturing deduction benefits in fiscal year 2018, partially offset by the ~~Tax Act's enactment).~~lower federal statutory tax rate for fiscal year 2019.

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

~~Under U.S. GAAP, deferred taxes must be adjusted for enacted changes in tax laws or rates during~~During the ~~period in which new tax legislation is enacted. As~~second quarter of ~~March 31,~~fiscal year 2018, the Company ~~continued to obtain, prepare and analyze information necessary to finalize the accounting for the impacts of the Tax Act. Consequently,~~made reasonable estimates of the impacts of the Tax Act ~~on the Company’s deferred tax balances~~ and ~~one-time transition tax have been reported~~initially recorded total benefits of $81 as provisional, as defined in Staff Accounting Bulletin No. ~~118.~~118, as follows:



	Adjustments
One-time net deferred tax liability reduction	$	60
One-time transition tax	(7		)
Net total one-time tax benefit	53
Beneficial year-to-date current taxable income impact	28
Total tax benefits	$	81

As of December 31, 2018, the ~~provisions~~Company completed its accounting for all of the enactment-date income tax effects 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 the period of the Tax Act's enactment. 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. 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 in the period of the Tax Act's enactment.

Per U.S. GAAP, foreign withholding taxes are not provided when foreign earnings are indefinitely reinvested. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion. Throughthrough the second quarter of fiscal year ~~2018, the Company had determined that the undistributed earnings of a number of its foreign subsidiaries~~2019 were indefinitely reinvested. In the third quarter of fiscal year 2018, the Company made the determination that none of the undistributed earnings of its foreign subsidiaries were indefinitely reinvested due to the passage of the Tax Act, which significantly reduced the cost of U.S. repatriation. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable, which has no significant impact on the Company’s consolidated results. insignificant.

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		Nine Months Ended
	3/31/2019	3/31/2018	3/31/2019	3/31/2018
Basic	128,404	129,694	128,092	129,357
Dilutive effect of stock options and other	1,862	2,206	2,126	2,346
Diluted	130,266	131,900	130,218	131,703

Antidilutive stock options and other	23	1,136	807	1,136

Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 3/31/2018 3/31/2017
Basic 129,694 128,752
129,357 128,899
Dilutive effect of stock options and other 2,206 2,610
2,346 2,500
Diluted 131,900 131,362
131,703 131,399

Antidilutive stock options and other 1,136 5
1,136 44

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 for share repurchases as of March 31, 2018, 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 nine months ended March 31, 2018 and 2017.

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

NOTE 9.8. COMPREHENSIVE INCOME

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



	Three Months Ended					Nine Months Ended
	3/31/2019		3/31/2018			3/31/2019			3/31/2018
Earnings from continuing operations	$	187	$	181		$	579		$	606
Earnings (losses) from discontinued operations, net of tax	—		—			—			—
Net earnings	187		181			579			606
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	8		(4		)	(23		)	6
Net unrealized gains (losses) on derivatives	3		2			2			10
Pension and postretirement benefit adjustments	2		1			4			2
Total other comprehensive income (loss), net of tax	13		(1		)	(17		)	18
Comprehensive income	$	200	$	180		$	562		$	624

NOTE 9. STOCKHOLDERS’ EQUITY

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

Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 3/31/2018 3/31/2017
Earnings from continuing operations $ 181
$ 172
$ 606
$ 501
Earnings (losses) from discontinued operations, net of tax —
—
—
(1 )
Net earnings 181
172
606
500
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (4 ) 13
6
(5 )
Net unrealized gains (losses) on derivatives 2
—
10
7
Pension and postretirement benefit adjustments 1
1
2
3
Total other comprehensive income (loss), net of tax (1 ) 14
18
5
Comprehensive income $ 180
$ 186
$ 624
$ 505



	Three Months Ended March 31
	Common Stock			Additional Paid-in Capital			Retained Earnings			Treasury Stock					Accumulated Other Comprehensive Net (Loss) Income			Total Stockholders’ Equity
	Amount		Shares (in thousands)	Additional Paid-in Capital			Retained Earnings			Amount			Shares (in thousands)		Accumulated Other Comprehensive Net (Loss) Income			Total Stockholders’ Equity
Balance as of December 31, 2017	$	159	158,741	$	941		$	2,649		$	(2,465	)	(29,393	)	$	(524	)	$	760
Net earnings							181											181
Other comprehensive income (loss)															(1		)	(1		)
Dividends ($0.96 per share declared)							(125		)									(125		)
Stock-based compensation				14														14
Other employee stock plan activities				1			(1		)	8			141					8
Treasury stock purchased										—			—					—
Balance as of March 31, 2018	$	159	158,741	$	956		$	2,704		$	(2,457	)	(29,252	)	$	(525	)	$	837

Balance as of December 31, 2018	$	159	158,741	$	1,014		$	2,940		$	(2,794	)	(30,651	)	$	(577	)	$	742
Net earnings							187											187
Other comprehensive income (loss)															13			13
Dividends ($0.96 per share declared)							(123		)									(123		)
Stock-based compensation				16														16
Other employee stock plan activities				3			—			16			264					19
Treasury stock purchased										(73		)	(466	)				(73		)
Balance as of March 31, 2019	$	159	158,741	$	1,033		$	3,004		$	(2,851	)	(30,853	)	$	(564	)	$	781

	Nine Months Ended March 31
	Common Stock			Additional Paid-in Capital			Retained Earnings			Treasury Stock					Accumulated Other Comprehensive Net (Loss) Income			Total Stockholders’ Equity
	Amount		Shares (in thousands)	Additional Paid-in Capital			Retained Earnings			Amount			Shares (in thousands)		Accumulated Other Comprehensive Net (Loss) Income			Total Stockholders’ Equity
Balance as of June 30, 2017	$	159	158,741	$	928		$	2,440		$	(2,442	)	(29,727	)	$	(543	)	$	542
Net earnings							606											606
Other comprehensive income (loss)															18			18
Dividends ($2.64 per share declared)							(343		)									(343		)
Stock-based compensation				37														37
Other employee stock plan activities				(9		)	1			48			951					40
Treasury stock purchased										(63		)	(476	)				(63		)
Balance as of March 31, 2018	$	159	158,741	$	956		$	2,704		$	(2,457	)	(29,252	)	$	(525	)	$	837

Balance as of June 30, 2018	$	159	158,741	$	975		$	2,797		$	(2,658	)	(30,759	)	$	(547	)	$	726
Cumulative effect of accounting changes ⁽¹⁾							(3		)									(3		)
Net earnings							579											579
Other comprehensive income (loss)															(17		)	(17		)
Dividends ($2.88 per share declared)							(369		)									(369		)
Stock-based compensation				34														34
Other employee stock plan activities				24			—			116			2,048					140
Treasury stock purchased										(309		)	(2,142	)				(309		)
Balance as of March 31, 2019	$	159	158,741	$	1,033		$	3,004		$	(2,851	)	(30,853	)	$	(564	)	$	781

(1) As a result of adopting ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," on July 1, 2018, the Company recorded a cumulative effect of initially applying the new guidance as an adjustment to the fiscal year 2019 opening balance of Retained earnings. See Note 1 for more information.

NOTE 9. STOCKHOLDERS' EQUITY (continued)

The Company has two stock repurchase programs: an open-market purchase program with an authorized aggregate purchase amount of up to $2,000, which has no expiration date, and a program to offset the anticipated impact of dilution related to stock-based awards (the Evergreen Program), which has no authorization limit on the dollar amount and no expiration date.

Stock repurchases under the two stock repurchase programs were as follows for the periods indicated:



	Three Months Ended						Nine Months Ended
	3/31/2019			3/31/2018			3/31/2019			3/31/2018
	Amount		Shares (in thousands)	Amount		Shares (in thousands)	Amount		Shares (in thousands)	Amount		Shares (in thousands)
Open-market purchase program	$	—	—	$	—	—	$	78	591	$	—	—
Evergreen Program	73		466	—		—	231		1,551	63		476
Total stock repurchases	$	73	466	$	—	—	$	309	2,142	$	63	476

Changes in Accumulated other comprehensive net ~~(losses)~~(loss) income by component were as follows for the ~~nine months ended March 31:~~periods indicated:

NOTE 9. STOCKHOLDERS' EQUITY (continued)



	Nine Months Ended March 31
	Foreign currency translation adjustments			Net unrealized gains (losses) on derivatives			Pension and postretirement benefit adjustments			Accumulated other comprehensive (loss) income
Balance as of June 30, 2017	$	(356	)	$	(37	)	$	(150	)	$	(543	)
Other comprehensive income (loss) before reclassifications	9			6			—			15
Amounts reclassified from Accumulated other comprehensive net (loss) income	—			6			4			10
Income tax benefit (expense)	(3		)	(2		)	(2		)	(7		)
Net current period other comprehensive income (loss)	6			10			2			18
Balance as of March 31, 2018	$	(350	)	$	(27	)	$	(148	)	$	(525	)

Balance as of June 30, 2018	$	(384	)	$	(25	)	$	(138	)	$	(547	)
Other comprehensive income (loss) before reclassifications	(22		)	(3		)	—			(25		)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—			4			5			9
Income tax benefit (expense)	(1		)	1			(1		)	(1		)
Net current period other comprehensive income (loss)	(23		)	2			4			(17		)
Balance as of March 31, 2019	$	(407	)	$	(23	)	$	(134	)	$	(564	)

Included in foreign currency translation adjustments are re-measurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. For the three and nine months ended March 31, 2019, Other comprehensive income (loss) on these loans totaled $1 and $(3), respectively. For the three and nine months ended March 31, 2018, Other comprehensive income (loss) on these loans totaled $0 and $(3), respectively. ~~For the three and nine months ended March 31, 2017, Other comprehensive income (loss) on these loans totaled $4 and $0, respectively.~~ 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 following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	3/31/2018			3/31/2017			3/31/2018			3/31/2017			3/31/2019			3/31/2018			3/31/2019			3/31/2018
Service cost	$	1		$	1		$	1		$	1		$	—		$	1		$	—		$	1
Interest cost	6			5			17			16			5			6			17			17
Expected return on plan assets⁽¹⁾	(5		)	(5		)	(14		)	(15		)	(4		)	(5		)	(13		)	(14		)
Amortization of unrecognized items	2			2			7			8			2			2			7			7
Total	$	4		$	3		$	11		$	10		$	3		$	4		$	11		$	11

(1) The weighted average long-term expected rate of return on plan assets used in computing the fiscal year ~~2018~~2019 net periodic benefit cost is ~~4.42%~~4.33%.

During the three and nine months ended March 31, 2019, the Company made $57 and $61 in contributions to its domestic retirement income plans. During the three and nine months ended March 31, 2018, the Company made $15 and $19 in contributions to ~~the~~its domestic retirement income ~~plans, respectively. For the three~~plans.

As a result of adopting ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715),” effective July 1, 2018, net periodic benefit cost is reflected in Other (income) expense, net for fiscal year 2019, and ~~nine months ended March 31, 2017, the Company made $10~~in Cost of products sold, Selling and ~~$29 in contributions~~administrative expenses and Research and development costs prior to ~~the domestic retirement income plans, respectively.~~

fiscal year 2019. Refer to Note 1 for more details.

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 $28 as of March 31, ~~2018~~2019 and June 30, ~~2017,~~2018, for its share of aggregate future remediation costs related to these matters.

One matter, which accounted for $14 of the recorded liability as of March 31, ~~2018~~2019 and June 30, ~~2017,~~2018, relates to environmental costs associated with one of the Company’s former operations at a site located in Alameda County, California. In November 2016, at the request of regulators and with the assistance of environmental consultants, the Company submitted a Feasibility Study that evaluated various options for managing the site and included estimates of the related costs. As a result, the Company recorded in Other (income) expense, net an undiscounted liability for costs estimated to be incurred over a 30-year period, based on the option recommended in the Feasibility Study. However, as a result of ongoing discussions with regulators, in June 2017, the Company increased its recorded liability to $14, which reflects anticipated costs to implement additional remediation measures at this site. While the Company believes its latest estimate is reasonable, regulators could require the Company to implement one of the other options evaluated in the Feasibility Study, with estimated undiscounted costs of up to $28 over an estimated 30-year period, or require the Company to take other actions and incur costs not included in the study.

Another matter in Dickinson County, Michigan, at the site of one of the Company's former operations for which the Company is jointly and severally liable, accounted for $12 of the recorded liability, as of March 31, ~~2018~~2019 and June 30, ~~2017.~~2018. This amount reflects the Company's agreement to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing arrangement with a third party. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded for the Dickinson County matter, any amount of such additional exposures, or range of exposures, is not estimable at this time. The Company's estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements, and the future availability of alternative clean-up technologies.

The Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements, product liability, patents and trademarks, advertising, labor and employment, environmental, health and safety and other matters. With respect to these proceedings, claims and other loss contingencies, while considerable uncertainty exists, in the opinion of management at this time, the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.

~~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 March 31, ~~2018~~2019 and June 30, ~~2017.~~2018.

As of March 31, ~~2018,~~2019, the Company was a party to letters of credit of $9, primarily related to one of its insurance carriers, of which $0 had been drawn upon.

NOTE 12. SEGMENT RESULTS

The Company operates through strategic business units (SBUs) that are aggregated into four reportable segments based on the economics and nature of the products sold: Cleaning, Household, Lifestyle and International.

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

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



	Net sales
	Three Months Ended						Nine Months Ended
	3/31/2019			3/31/2018			3/31/2019			3/31/2018
Cleaning	$	508		$	513		$	1,579		$	1,544
Household	489			493			1,324			1,344
Lifestyle	309			252			953			766
International	245			259			731			779
Corporate	—			—			—			—
Total	$	1,551		$	1,517		$	4,587		$	4,433

	Earnings (losses) from continuing operations before income taxes
	Three Months Ended						Nine Months Ended
	3/31/2019			3/31/2018			3/31/2019			3/31/2018
Cleaning	$	135		$	135		$	450		$	428
Household	93			88			198			215
Lifestyle	51			55			191			188
International	24			23			77			69
Corporate	(63		)	(59		)	(184		)	(152		)
Total	$	240		$	242		$	732		$	748

Net sales
Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 3/31/2018 3/31/2017
Cleaning $ 513
$ 497
$ 1,544
$ 1,500
Household 493
486
1,344
1,329
Lifestyle 252
246
766
742
International 259
248
779
755
Corporate —
—
—
—
Total $ 1,517
$ 1,477
$ 4,433
$ 4,326

Earnings (losses) from continuing operations before income taxes
Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 3/31/2018 3/31/2017
Cleaning $ 135
$ 132
$ 428
$ 400
Household 88
106
215
246
Lifestyle 55
51
188
190
International 23
20
69
75
Corporate (59 ) (62 ) (152 ) (173 )
Total $ 242
$ 247
$ 748
$ 738

All intersegment sales are eliminated and are not included in the Company’s reportable segments’ net sales.

Net sales to the ~~Company’s~~Company's largest customer, Wal-Mart Stores, Inc. and its affiliates, as a percentage of consolidated net sales, were 25% for each of the three and nine months ended March 31, 2019, and 25% and 26% for the three and nine months ended March 31, 2018, ~~respectively, and 27% and 26% for~~respectively.

NOTE 12. SEGMENT RESULTS (continued)

The following table provides Net sales as a percentage of the ~~three and nine months ended March 31, 2017, respectively.~~

~~In August 2017, 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 the $21 non-cash impairment charge recorded in December 2016.~~disaggregated by SBU:

In January 2017, the Company sold an Australian distribution facility, previously reported in the International reportable segment, which resulted in $23 in cash proceeds from investing activities and a gain of $(10) recorded in Other (income) expense, net, on the condensed consolidated statement of earnings.



	Net sales
	Three Months Ended				Nine Months Ended
	3/31/2019		3/31/2018		3/31/2019		3/31/2018
Home care	20	%	20	%	19	%	20	%
Laundry	8	%	8	%	9	%	9	%
Professional products	5	%	6	%	6	%	6	%
Cleaning	33	%	34	%	34	%	35	%
Bags, wraps, and containers	12	%	14	%	13	%	14	%
Cat litter	8	%	7	%	8	%	7	%
Charcoal	10	%	10	%	6	%	7	%
Digestive health	2	%	2	%	2	%	2	%
Household	32	%	33	%	29	%	30	%
Food products	9	%	9	%	9	%	9	%
Natural personal care	4	%	4	%	5	%	5	%
Water filtration	3	%	3	%	3	%	3	%
Dietary supplements ⁽¹⁾	3	%	—	%	4	%	—	%
Lifestyle	19	%	16	%	21	%	17	%
International	16	%	17	%	16	%	18	%
Total	100	%	100	%	100	%	100	%

~~NOTE 13. SUBSEQUENT EVENTS~~

~~On April 2, 2018, the~~(1) The Company acquired ~~100 percent of Nutranext, a health and wellness company based~~the dietary supplements business in Sunrise, Florida. Nutranext manufactures and markets leading dietary supplement brands in the retail and e-commerce channels as well as in its direct-to-consumer business. The purchase of the business reflects the Company's strategy to acquire leading brands in fast-growing categories with attractive gross margins and a focus on health and wellness.April 2018. See Note 3 for details.

Purchase accounting for this acquisition will be included in the Company’s fourth fiscal quarter results subject to customary closing adjustments. Pro forma results reflecting the acquisition will not be presented because the acquisition is not significant to the Company’s consolidated financial results.

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,~~2018, which was filed with the Securities and Exchange Commission (SEC) on August ~~15, 2017,~~14, 2018, 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- and nine-month periods ended March 31, ~~2018~~2019 (the current period) to the three- and nine-month ~~period~~periods ended March 31, ~~2017~~2018 (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~~8,700 employees worldwide. Clorox sells its products primarily through mass ~~retail outlets and~~retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, 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, Liquid-Plumr^®clog removers, Poett^® home care products, Fresh Step^® cat litter, Glad^® bags, wraps and container products, Kingsford^®~~and Match Light~~charcoal, Hidden Valley^® ~~charcoal, RenewLife~~ dressings, Brita^® water-filtration products, Burt’s Bees^® natural personal care products, RenewLife^® digestive health products, ~~Hidden Valley~~and Rainbow Light^® ~~dressings~~, Natural Vitality^® and ~~sauces, Brita~~Neocell^® ~~water-filtration products and Burt’s Bees~~^® ~~natural personal care products.~~ dietary supplements. The Company also markets brands to professional services, ~~channels,~~ including ~~infection control products for the healthcare industry with~~ Clorox Healthcare^® ~~brand,~~ and ~~commercial cleaning products with~~ Commercial Solutions^® ~~brand.~~. 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 that are aggregated into the following four reportable segments based on the economics and nature 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 and food service products under the Clorox^®, Dispatch^®, HealthLink^®, Clorox Healthcare^®, Hidden Valley^®, KC Masterpiece^® and ~~Clorox Healthcare~~Soy Vay^® 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, and dietary supplements primarily 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.~~ brand; and dietary supplements under the Rainbow Light^®, Natural Vitality^® and Neocell^® brands.

•

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.

RESULTS OF OPERATIONS

CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS

Continuing operations

Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 % Change 3/31/2018 3/31/2017 % Change
Net sales $ 1,517
$ 1,477
3 % $ 4,433
$ 4,326
2 %



	Three Months Ended						Nine Months Ended
	3/31/2019		3/31/2018		% Change		3/31/2019		3/31/2018		% Change
Net sales	$	1,551	$	1,517	2	%	$	4,587	$	4,433	3	%

Net sales in the current ~~quarter~~three-month period increased by 2%, reflecting sales growth in the Lifestyle reportable segment, partially offset by lower sales in the International, Cleaning and Household reportable segments. Volume increased by 1%, primarily due to higher shipments in the Lifestyle and International reportable segments, partially offset by lower shipments in the Household and Cleaning reportable segments. Net sales growth outpaced volume growth primarily due to the benefit of price increases, partially offset by the impact of unfavorable foreign currency exchange rates and unfavorable mix.

Net sales in the current nine-month period increased by 3%, reflecting sales growth ~~across all~~in the Lifestyle and Cleaning reportable segments, partially offset by lower sales in the International and Household reportable segments. Volume increased by 3%, ~~reflecting~~primarily due to higher shipments in the ~~Cleaning,~~Lifestyle and International reportable segments, partially offset by lower shipments in the Household and ~~International~~Cleaning reportable segments. Net sales ~~also~~growth included the benefit of price increases, ~~offset by unfavorable mix.~~

Net sales and volume in the current nine-month period increased 2% and 3%, respectively, reflecting higher shipments across all four reportable segments. Volume outpaced net sales, primarily due to unfavorable mix, partially offset by the ~~benefit~~impact of ~~price increases.~~unfavorable foreign currency exchange rates and unfavorable mix.


	Three Months Ended								Nine Months Ended								Three Months Ended								Nine Months Ended
	3/31/2018			3/31/2017			% Change		3/31/2018			3/31/2017			% Change		3/31/2019			3/31/2018			% Change		3/31/2019			3/31/2018			% Change
Gross profit	$	649		$	650		—	%	$	1,931		$	1,919		1	%	$	673		$	649		4	%	$	1,994		$	1,931		3	%
Gross margin	42.8		%	44.0		%			43.6		%	44.4		%			43.4		%	42.8		%			43.5		%	43.6		%

Gross margin, defined as gross profit as a percentage of net sales, ~~decreased 120~~increased by 60 basis points in the current ~~quarter~~three-month period from ~~44.0%~~42.8% to ~~42.8%~~43.4%. The increase was primarily driven by the benefit of price increases and cost savings, partially offset by higher manufacturing and logistics costs, the negative impact of unfavorable foreign currency exchange rates, and unfavorable commodity costs.

Gross margin decreased by 10 basis points in the current nine-month period from 43.6% to 43.5%. The decrease was primarily driven by higher manufacturing and logistics costs, ~~and~~ unfavorable commodity costs, and the negative impact of unfavorable foreign currency exchange rates, partially offset by ~~cost savings and~~ the benefit of price ~~increases.~~

~~Gross margin decreased 80 basis points in the current nine-month period from 44.4% to 43.6%. The decrease was primarily driven by higher manufacturing~~increases and ~~logistics costs and unfavorable commodity costs, partially offset by~~ cost ~~savings and the benefit of price increases.~~savings.


	Three Months Ended										Three Months Ended
							% of Net Sales										% of Net Sales
	3/31/2018		3/31/2017		% Change		3/31/2018		3/31/2017		3/31/2019		3/31/2018		% Change		3/31/2019		3/31/2018
Selling and administrative expenses	$	208	$	201	3	%	13.7	%	13.6	%	$	216	$	208	4	%	13.9	%	13.7	%
Advertising costs	150		161		(7	)	9.9		10.9		161		150		7		10.4		9.9
Research and development costs	32		35		(9	)	2.1		2.4		34		32		6		2.2		2.1

	Nine Months Ended										Nine Months Ended
							% of Net Sales										% of Net Sales
	3/31/2018		3/31/2017		% Change		3/31/2018		3/31/2017		3/31/2019		3/31/2018		% Change		3/31/2019		3/31/2018
Selling and administrative expenses	$	609	$	598	2	%	13.7	%	13.8	%	$	639	$	609	5	%	13.9	%	13.7	%
Advertising costs	424		417		2		9.6		9.6		445		424		5		9.7		9.6
Research and development costs	95		98		(3	)	2.1		2.3		98		95		3		2.1		2.1

Selling and administrative expenses, as a percentage of net sales, ~~were relatively flat~~increased by 20 basis points in both the current three- and nine-month periods. Selling and administrative expenses include Nutranext integration expenses in fiscal year 2019.

Advertising costs, as a percentage of net sales, ~~decreased 100~~increased by 50 basis points in the current three-month period, primarily due to increased investments across a majority of the U.S. portfolio, and were relatively flat in the current nine-month period. ~~The decreased spend in the current three-month period was primarily due to the timing of advertising investments mainly in the International reportable segment.~~ The Company’s U.S. retail advertising spend as a percentage of net sales was approximately 11% in the current ~~quarter~~ and year-ago ~~quarter was 11%.~~quarters.

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

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


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	3/31/2018			3/31/2017			3/31/2018			3/31/2017			3/31/2019			3/31/2018			3/31/2019			3/31/2018
Interest expense	$	20		$	22		$	61		$	66		$	24		$	20		$	72		$	61
Other (income) expense, net	(3		)	(16		)	(6		)	2			(2		)	(3		)	8			(6		)
Effective tax rate on earnings	25.5		%	30.2		%	19.0		%	32.1		%	21.8		%	25.5		%	20.8		%	19.0		%

Interest expense ~~remained essentially flat~~ increased by $4 and $11 in the current three- and nine-month ~~periods.~~periods, respectively, primarily due to higher long-term debt balances resulting from the issuance of senior notes in May 2018.

Other (income) expense, net was $(2) and $(3) in the current and prior three-month ~~period~~periods, respectively, and ~~$(16)~~$8 and $(6) in the current and prior ~~three-month period.~~nine-month periods, respectively. The ~~change~~variance in the nine-month period was primarily driven by ~~a $(10) gain from the sale of an Australian distribution facility~~net periodic benefit costs, which are recognized in ~~January 2017.~~

Other (income) expense, net ~~was $(6)~~ in fiscal year 2019, as a result of adopting Accounting Standards Update No. 2017-07, “Compensation-Retirement Benefits (Topic 715),” on July 1, 2018. Prior to the current nine-month period and $2 in the prior nine-month period. The change was primarily driven by a $21 non-cash impairment charge related to certain assets of the Aplicare business and $9 projected environmentaladoption, net periodic benefit costs ~~associated with the Company’s former operations at a site in Alameda County, California, both of which~~ were recorded in ~~December 2016. These were partially offset by a gain~~Cost of ~~$(10) from~~products sold, Selling and administrative expenses and Research and development costs. Refer to Note 1 of the ~~sale of an Australian distribution facility in January 2017.~~Notes to Condensed Consolidated Financial Statements for more information.

The effective tax rate on earnings from continuing operations was 21.8% and 25.5% for the current and prior three-month periods, respectively, and 20.8% and 19.0% for the current ~~three-~~ and ~~nine-month periods, respectively, and 30.2% and 32.1% for the~~ prior ~~three-and~~ nine-month periods, respectively. The decrease in the effective tax rate on earnings from continuing operations for the ~~three- and nine-month periods~~current three-month period was primarily due to the lower federal statutory tax rate for fiscal year 2019 as a result of enactment of the Tax Act, partially offset by the repeal of the domestic manufacturing deduction in fiscal year 2019. The lower effective tax rate on earnings from continuing operations for the prior nine-month period was primarily due to one-time tax benefits from the enactment of The Tax Cuts and Jobs Act (the Tax Act) during the second quarter of fiscal year 2018 ~~(See~~and the final year of domestic manufacturing deduction benefits in fiscal year 2018, partially offset by the lower federal statutory tax rate for fiscal year 2019. See Note 76 of the Notes to ~~the~~ Condensed Consolidated Financial ~~Statements).~~

Statements for more details.

Diluted net earnings per share

Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 % Change 3/31/2018 3/31/2017 % Change
Diluted net earnings per share
from continuing operations
$ 1.37
$ 1.31
5 % $ 4.60
$ 3.82
20 %



	Three Months Ended						Nine Months Ended
	3/31/2019		3/31/2018		% Change		3/31/2019		3/31/2018		% Change
Diluted net earnings per share from continuing operations	$	1.44	$	1.37	5	%	$	4.45	$	4.60	(3	)%

Diluted net earnings per share (EPS) from continuing operations increased ~~$0.06,~~by $0.07, or 5%, in the current three-month period, primarily ~~driven by higher net sales and~~due to 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),~~ partially offset by lower ~~gross margin.~~earnings from continuing operations before income taxes.

Diluted net ~~earnings per share~~EPS from continuing operations ~~increased $0.78,~~decreased by $0.15, or ~~20%~~3%, in the current nine-month period, primarily ~~driven by~~due to lower earnings from continuing operations before income taxes and a ~~lower~~higher effective tax rate, ~~due to the passage~~which was mainly driven by prior year one-time tax benefits as a result of the Tax ~~Act in December 2017 (See Note 7 to the Condensed Consolidated Financial Statements) and higher net sales, partially offset by lower gross margin.~~Act.

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 the results from operations of the Company’s reportable segments and certain unallocated costs reflected in Corporate:

Cleaning


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	3/31/2018		3/31/2017		% Change		3/31/2018		3/31/2017		% Change		3/31/2019		3/31/2018		% Change		3/31/2019		3/31/2018		% Change
Net sales	$	513	$	497	3	%	$	1,544	$	1,500	3	%	$	508	$	513	(1	)%	$	1,579	$	1,544	2	%
Earnings from continuing operations before income taxes	135		132		2		428		400		7		135		135		—		450		428		5

Volume and net sales decreased by 4% and 1%, respectively, and earnings from continuing operations before income taxes was flat in the current three-month period. Volume decreased driven by lower shipments in Home Care, Laundry and Professional Products. The decreased shipments in Home Care were primarily driven by volume softness in Clorox^® disinfecting wipes impacted by a significantly milder cold and flu season compared to a year ago, as well as heightened competitive activity. The variance between volume and net sales was primarily due to the benefit of price increases and lower trade promotion spending, partially offset by unfavorable mix. Earnings from continuing operations before income taxes was flat, reflecting the benefit of cost savings partially offset by higher manufacturing and logistics costs.

Volume decreased by 1%, while net sales and earnings from continuing operations before income taxes increased by ~~4%, 3%~~2% and 2%5%, respectively, in the current ~~quarter. Both volume growth and net sales growth were~~nine-month period. Volume decreased primarily driven ~~primarily~~ by ~~higher~~lower shipments in Home Care ~~mainly~~and Laundry, partially offset by higher shipments of Professional Products due to ~~continued strength~~growth across all categories. The decreased shipments in Home Care were primarily driven by volume softness in Clorox^® disinfecting wipes impacted by a significantly milder cold and ~~the launch of Scentiva~~^® ~~branded products. Volume outpaced~~flu season compared to a year ago, as well as heightened competitive activity. The variance between volume and net sales was primarily due to ~~unfavorable mix and higher trade promotion spending, partially offset by~~ the benefit of price increases. The increase in earnings from continuing operations before income taxes ~~in the current quarter~~ was primarily due to net sales growth and cost savings, partially offset by higher manufacturing and logistics costs and unfavorable commodity costs.

Household



	Three Months Ended						Nine Months Ended
	3/31/2019		3/31/2018		% Change		3/31/2019		3/31/2018		% Change
Net sales	$	489	$	493	(1	)%	$	1,324	$	1,344	(1	)%
Earnings from continuing operations before income taxes	93		88		6		198		215		(8	)

Volume and net sales decreased by 6% and 1%, respectively, while earnings from continuing operations before income taxes increased by 6%, in the current three-month period. Volume decreased, primarily driven by lower shipments of Glad^® bags and wraps, mainly due to price increases in addition to heightened competitive activity, as well as lower shipments in Cat Litter. 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 from continuing operations before income taxes was largely due to the benefit of price increases and cost savings, partially offset by higher manufacturing and logistics costs and lower sales.

Volume, net sales and earnings from continuing operations before income taxes decreased by 4%, 1% and 8%, respectively, in the current nine-month period. Volume decreased, primarily driven by lower shipments of Glad^® bags and wraps, mainly due to price increases in addition to heightened competitive activity, and lower shipments in Charcoal, mainly due to lower consumption. The variance between volume and net sales was primarily due to the benefit of price increases, partially offset by unfavorable mix. The decrease in earnings from continuing operations before income taxes was mainly due to higher manufacturing and logistics costs and unfavorable commodity costs, partially offset by cost savings.

Lifestyle



	Three Months Ended						Nine Months Ended
	3/31/2019		3/31/2018		% Change		3/31/2019		3/31/2018		% Change
Net sales	$	309	$	252	23	%	$	953	$	766	24	%
Earnings from continuing operations before income taxes	51		55		(7	)	191		188		2

Volume and net sales increased by 28% and 23%, respectively, while earnings from continuing operations before income taxes decreased by 7% in the current three-month period. Both volume growth and net sales growth were primarily driven by the benefit of the April 2018 acquisition of the Nutranext dietary supplements business. Volume growth outpaced net sales growth, primarily due to unfavorable mix, partially offset by lower trade promotion spending and the benefit of price increases. The decrease in earnings from continuing operations before income taxes was primarily due to higher manufacturing and logistics costs, partially offset by net sales growth. Earnings from continuing operations before income taxes also included ongoing investments to support the continued integration of Nutranext.

Volume, net sales and earnings from continuing operations before income taxes increased by 4%32%, 3%24% and 7%2%, respectively, in the current nine-month period. Both volume ~~growth~~ and net sales ~~growth were~~grew driven primarily by the benefit of the April 2018 acquisition of the Nutranext dietary supplements business and higher shipments ~~in Home~~of Burt’s Bees^®Natural Personal Care products, mainly due to continued strength in ~~Clorox~~^® ~~disinfecting wipes in the club channel~~lip care supported by innovation and ~~the launch of Scentiva~~^® branded products, partially offset by lower shipments in Professional Products. The decreased shipments in Professional Products were primarily driven by the sale of the Aplicare business in August 2017, partially offset by increased shipments of cleaning products driven by e-commercemerchandising. Volume growth ~~and innovation. Volume~~ outpaced net sales growth, primarily due to unfavorable mix, partially offset by the benefit of price increases. 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 and logistics ~~costs and unfavorable commodity~~ costs.

~~Household~~International


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	3/31/2018		3/31/2017		% Change		3/31/2018		3/31/2017		% Change		3/31/2019		3/31/2018		% Change		3/31/2019		3/31/2018		% Change
Net sales	$	493	$	486	1	%	$	1,344	$	1,329	1	%	$	245	$	259	(5	)%	$	731	$	779	(6	)%
Earnings from continuing operations before income taxes	88		106		(17	)	215		246		(13	)	24		23		4		77		69		12

Volume and net sales increased by 3% and 1%, respectively, while earnings from continuing operations before income taxes decreased by 13% in the current nine-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~~^® products due to strength in premium trash bags. These increases were partially offset by lower shipments of Charcoal products mainly due to poor weather during the third quarter of fiscal year 2018. Volume outpaced net sales, primarily due to unfavorable mix and a price decrease on a portion of the Glad^® trash portfolio. The decrease in earnings from continuing operations before income taxes was mainly due to higher manufacturing and logistics costs and unfavorable commodity costs, partially offset by cost savings.

~~Volume was flat, net sales increased by 2%~~5%, and earnings from continuing operations before income taxes increased by 8%4% in the current ~~quarter.~~three-month period. Volume ~~reflected lower~~increased, primarily driven by higher shipments ~~of Brita~~^® ~~water filtration products primarily due to merchandising timing, offset by growth~~ in ~~the Burt’s Bees~~^® ~~Natural Personal Care business,~~Asia and Canada. The variance between volume and net sales was mainly due to ~~continued strength in lip care~~unfavorable foreign currency exchange rates and ~~the introduction of new face care products. Net sales outpaced volume primarily due to lower~~higher trade promotion ~~spending.~~spending, partially offset by the benefit of price increases. The increase in earnings from continuing operations before income taxes was ~~primarily~~largely due to ~~net sales growth,~~the benefit of price increases, partially offset by ~~higher~~the impact of unfavorable foreign currency exchange rates, mainly from devaluation of the Argentine peso, and inflationary pressure on manufacturing and logistics costs.

Volume ~~and~~increased by 1%, net sales ~~increased by 2% and 3%, respectively, while earnings from continuing operations before income taxes~~ decreased by ~~1% in the current nine-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, partially offset by lower shipments of Brita~~^®water filtration products. Net sales outpaced volume, primarily due to lower trade promotion spending. The decrease in earnings from continuing operations before income taxes was primarily due to higher manufacturing and logistics costs, unfavorable commodity costs, and increased advertising costs to support innovation, partially offset by net sales growth.

The Company operates in Argentina through certain wholly owned subsidiaries (collectively, “Clorox Argentina”). Net sales from Clorox Argentina represented approximately 2% and 3% of the Company’s consolidated net sales for ~~both~~ the nine months ended March 31, 2018 and 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 nine months ended March 31, 2018~~2019 and for the fiscal year ended June 30, ~~2017, value~~2018, respectively. Total assets of Clorox Argentina were approximately 1% of the ~~Argentine peso (ARS) declined 18% and 9%, respectively. As~~Company's consolidated assets as of March 31, 2019 and June 30, 2018. The operating environment in Argentina continues to be challenging, including the continuing significant volatility in Argentina’s currency, high inflation and economic recession.

Effective July 1, 2018, ~~using~~under the ~~exchange rate~~requirements of ~~20.1 ARS per U.S. dollar (USD)~~generally accepted accounting principles in the United States (U.S. GAAP), ~~Clorox~~ Argentina had total assets of $73, including cash and cash equivalents of $9, net receivables of $23, inventories of $13, net property, plant and equipment of $20 and intangible assets excluding goodwill of $3. Although Argentina is not currentlywas designated as a highly inflationary economy, since it has experienced cumulative inflation of approximately 100 percent or more over a three-year period. As a result, beginning July 1, 2018, the U.S. dollar replaced the Argentine peso as the functional currency of the Company’s subsidiaries in Argentina. Consequently, gains and losses from non-U.S. dollar

denominated monetary assets and liabilities for ~~accounting purposes, further volatility and declines~~Clorox Argentina are recognized in Other (income) expense, net in the condensed consolidated statement of earnings.

Volatility in the exchange rate ~~are~~is expected to continue in the future, which, along with competition and changes in the retail, labor and macro-economic environment, ~~would~~could have an ~~additional~~ adverse impact on Clorox Argentina’s net sales, net earnings, cash flows 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.

Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 % Change 3/31/2018 3/31/2017 % Change
Losses from continuing operations before income taxes $ (59 ) $ (62 ) (5 )% $ (152 ) $ (173 ) (12 )%



	Three Months Ended								Nine Months Ended
	3/31/2019			3/31/2018			% Change		3/31/2019			3/31/2018			% Change
Losses from continuing operations before income taxes	$	(63	)	$	(59	)	7	%	$	(184	)	$	(152	)	21	%

~~The losses~~Losses from continuing operations before income taxes ~~attributable to Corporate~~increased by $4 in the current three-month ~~period were essentially flat.~~period.

~~The decrease in losses~~Losses from continuing operations before income taxes ~~attributable to Corporate~~increased by $32 in the current nine-month period, ~~was primarily driven by a prior year~~which included an 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 in the current nine-month period.~~interest expense.

FINANCIAL POSITION AND LIQUIDITY

The Company’s financial condition and liquidity remained strong as of March 31, ~~2018.~~2019. The following table summarizes cash activities from continuing operations:

Nine Months Ended
3/31/2018 3/31/2017
Net cash provided by (used for) continuing operations $ 574
$ 483
Net cash provided by (used for) investing activities (112 ) (136 )
Net cash provided by (used for) financing activities 292
(314 )

Operating Activities

Net cash provided by continuing operations was ~~$574~~$603 in the current nine-month period, compared with ~~$483~~$576 in the ~~year-ago~~prior nine-month period. The year-over-year increase was primarily related to ~~lower tax payments, mainly due to~~current year benefits from the Tax Act and ~~lower employee incentive compensation payments,~~year-over-year improvements in working capital, partially offset by ~~working capital changes.~~

a higher contribution to employee retirement income plans.

Investing Activities

Net cash used for investing activities was ~~$112 in the current nine-month period, compared with $136 in the prior nine-month period. Capital expenditures were~~ $126 in the current nine-month period, compared with $161 in the prior nine-month period. Capital spending as a percentage of net sales was approximately 3% and 4% in the nine months ended March 31, 2018 and 2017, respectively. The year-over-year decrease in net cash used for investing activities was mainly due to lower capital spending in the current nine-month period. In addition, the cash proceeds from the sale of Aplicare in the current nine-month period were lower than the cash proceeds from the sale of an Australian distribution facility$112 in the prior nine-month period.

The total purchase price was $700, but may ultimately be adjusted for any cash acquired, working capital adjustments and any amounts to be paid by the Company pending final cash settlements. The Company funded the closing of the transaction through commercial paper borrowings. This acquisition is disclosed as a subsequent event for the quarter ended March 31, 2018. See Note 13 to the Condensed Consolidated Financial Statements.

In calendar year 2017, Nutranext generated sales of approximately $200. Purchase accounting for this acquisition will be included in the Company’s fourth fiscal quarter results subject to customary closing adjustments. Pro forma results reflecting the acquisition will not be presented because the acquisition is not significant to the Company’s consolidated financial results.

Financing Activities

Capital Resources and Liquidity

The Company believes it will have the funds necessary to meet its financing requirements and other fixed obligations as they become due based on its working capital requirements, anticipated ability to generate positive cash flows from operations in the future, investment-grade credit ratings, demonstrated access to long-term and short-term credit markets and current borrowing availability under the 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.agreement.

As of March 31, ~~2018,~~2019, the Company maintained ~~an aggregate of $1,350 in~~a $1,100 revolving ~~borrowing capacity pursuant to two~~ credit ~~agreements of which $250 matures in March 2019 and $1,100~~agreement that matures in February 2022. ~~As of March 31, 2018, there~~There were no borrowings under ~~the~~this credit ~~agreements~~agreement as of March 31, 2019 and June 30, 2018, and the Company believes that borrowings under ~~theses~~this credit ~~agreements~~agreement are and will continue to be available for general corporate purposes. ~~These~~The credit ~~agreements include~~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 non-cash asset impairment charges (Consolidated EBITDA) to total interest expense for the trailing four quarters (Interest Coverage ratio), as defined and described in ~~these~~the credit ~~agreements.~~agreement.

The following table sets forth the calculation of the Interest Coverage ratio as of March 31, ~~2018,~~2019, using Consolidated EBITDA for the trailing four quarters, as contractually defined:

The Company was in compliance with all restrictive covenants and limitations in ~~these~~the credit ~~agreements~~agreement as of March 31, ~~2018,~~2019, 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 ~~agreements,~~agreement, and currently expects that any drawing on ~~these agreements~~the credit agreement will be fully funded.

As of March 31, ~~2018,~~2019, the Company maintained ~~$30~~$39 of foreign and other credit lines, of which $0$4 was outstanding.

Long-term ~~borrowings~~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.~~

~~Share repurchases~~Stock Repurchases and ~~dividends~~Dividends

The Company has 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 March 31, 2018,~~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. There were~~and no ~~share~~expiration date.

Stock repurchases under the ~~open-market purchase program during either of the three and nine months ended March 31, 2018 and 2017.~~

~~Share repurchases under the Evergreen Program~~two stock repurchase programs were as follows for the periods indicated:

Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 3/31/2018 3/31/2017
Amount Shares (in 000's) Amount Shares (in 000's) Amount Shares (in 000's) Amount Shares (in 000's)
Evergreen Program $ —
—
$ —
—
$ 63
476
$ 183
1,455



	Three Months Ended						Nine Months Ended
	3/31/2019			3/31/2018			3/31/2019			3/31/2018
	Amount		Shares (in thousands)	Amount		Shares (in thousands)	Amount		Shares (in thousands)	Amount		Shares (in thousands)
Open-market purchase program	$	—	—	$	—	—	$	78	591	$	—	—
Evergreen Program	73		466	—		—	231		1,551	63		476
Total stock repurchases	$	73	466	$	—	—	$	309	2,142	$	63	476

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

Three Months Ended Nine Months Ended
3/31/2018 3/31/2017 3/31/2018 3/31/2017
Dividends per share declared $ 0.96
$ 0.80
$ 2.64
$ 2.40
Total dividends paid 109
103
326
309

On February 13, 2018, the Company declared a quarterly dividend of 96 cents per share payable on May 11, 2018 to common shareholders of record at the close of business on April 25, 2018. This represented an increase of 14 percent in the quarterly dividend, which was an accelerated declaration of the Company’s dividend increase that has typically taken place in the month of May and was a result of the passage of the Tax Act.

~~Venture Agreement~~



	Three Months Ended				Nine Months Ended
	3/31/2019		3/31/2018		3/31/2019		3/31/2018
Dividends per share declared	$	0.96	$	0.96	$	2.88	$	2.64
Total dividends paid	123		109		368		326

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. 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 March 31, 2018, 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, except as noted below.

~~Venture Agreement Terminal Obligation~~

~~The Company has a venture agreement with P&G for the Company’s Glad~~^® ~~bags, wraps and containers business. In connection with this agreement, P&G provides R&D support to the Glad~~^® business. As of March 31, 2018 and June 30, 2017, 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’s obligation to purchase P&G’s interest is reflected in Other Liabilities (See Note 6 to the 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 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 March 31, 2018 and June 30, 2017, valuation allowances related to realization of deferred tax assets were approximately $43 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 March 31, 2018 and June 30, 2017, the liabilities recorded for uncertain tax positions, excluding associated interest and penalties, were approximately $44 and $40, respectively.

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 require an adjustment to the income tax provision in the quarter in which the determination is made. Through the second quarter of fiscal year 2018, the Company had determined that the undistributed earnings of a number of its foreign subsidiaries were indefinitely reinvested. In the third quarter of fiscal year 2018, the Company made the determination that none of the undistributed earnings of its foreign subsidiaries were indefinitely reinvested due to the passage of the Tax Act, which significantly reduced the cost of U.S. repatriation. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable, which has no significant impact on the Company's consolidated results.

NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures 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 the term Consolidated EBITDA, which is a financial measure that is not defined by ~~accounting principles generally accepted in the United States of America,~~U.S. GAAP,because it is a term used in its Credit ~~Agreements.~~Agreement. As defined in the Credit ~~Agreements,~~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 in the primary restrictive covenant in the Company's Credit ~~Agreements.~~Agreement. For additional discussion of the Interest Coverage ratio, see “Financial Position and Liquidity - Financing Activities - Credit Arrangements” above.

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, and such forward-looking statements involve risks and uncertainties. Except for historical information, statements about future volumes, sales, foreign currencies, costs, cost savings, margins, earnings, earnings per share, including as a result of the Nutranext acquisition, 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,” “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,~~2018, as updated from time to time in the Company’s Securities and Exchange Commission ~~filings, including the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2017 and this Report.~~filings. These factors include, but are not limited to:

intense competition in the Company’s markets;

the impact of the changing retail environment, including the growth of e-commerce retailers, hard discounters and other alternative retail channels;

volatility and increases in commodity costs such as resin, sodium hypochlorite and agricultural commodities, and increases in energy, transportation or other costs;

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 and ordering patterns;

~~the impact of increases in sales of consumer products through alternative retail channels;~~

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;

~~lower revenue or increased costs resulting from government actions~~the Company’s ability to maintain its business reputation and ~~regulations;~~

the ~~ability~~reputation of ~~the Company to successfully manage global political, legal, tax and regulatory risks, including changes in regulatory or administrative activity and as a result of the Nutranext acquisition;~~its brands;

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; and the ability to complete announced transactions and, if completed, integration costs and potential contingent liabilities related to those transactions, including those related to the Nutranext acquisition;

lower revenue or increased costs resulting from government actions and regulations;

the ability of the Company to successfully manage global political, legal, tax and regulatory risks, including changes in regulatory or administrative activity and as a result of the Nutranext acquisition;

worldwide, regional and local economic and financial market conditions;

risks related to international operations and international trade, including political instability; government-imposed price controls or other regulations; foreign currency fluctuations, including devaluation, and foreign currency exchange rate controls, including periodic changes in such ~~controls, fluctuations and devaluations;~~controls; changes in ~~trade, tax or~~ U.S. immigration or trade policies, including tariffs, labor claims, labor unrest and inflationary pressures, particularly in Argentina; 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; and the possibility of nationalization, expropriation of assets or other government action;

the ability of the Company to innovate and to develop and introduce commercially successful products;

the impact of product liability claims, labor claims and other legal or tax proceedings, including in foreign jurisdictions;

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~~The Procter & Gamble Company's (P&G) interest in the Glad^® business such as the significant ~~increase over the first half of fiscal year~~increases from June 30, 2017 to June 30, 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;

the Company's ability to attract and retain key personnel;

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 or tax proceedings, including in foreign jurisdictions;~~

~~the Company’s ability to attract and retain key personnel;~~

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, assert and defend its intellectual property rights;

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

the on-going effects of the Tax Act on the Company, including as a result of any additional Congressional, administrative or other actions, or other guidance related to the Tax Act;

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

the effect of the Company’s indebtedness and credit rating on its business operations and financial results;

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;~~impacts of potential stockholder activism;

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

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

~~the impacts of potential stockholder activism.~~Venezuela.

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. 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” 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.~~2018. 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.~~

2018.

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 third fiscal quarter of the fiscal year ending June 30, ~~2018,~~2019, 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. Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017, as modified by the risk factors in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2017,~~2018, and the information in “Cautionary Statement” included in this Report.

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 and replaced the prior open-market purchase program with an authorized aggregate purchase amount of up to $750 million, which had not been utilized prior to termination in May 2018.

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 third quarter of fiscal year ~~2018.~~2019.



	~~[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~~
~~January 1 to 31, 2018~~	—	$	—	—	~~(2)~~
~~February 1 to 28, 2018~~	—	—		—	~~(2)~~
~~March 1 to 31, 2018~~	—	—		—	~~(2)~~
~~Total~~	—	$	—	—	~~(2)~~



	[a]	[b]		[c]	[d]
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		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
January 1 to 31, 2019	—	$	—	—	$1,827 million
February 1 to 28, 2019	—	—		—	$1,827 million
March 1 to 31, 2019	465,329	157.67		465,329	$1,827 million
Total	465,329	$	157.67	465,329

____________________


(1)	NoAll of the shares purchased in March 2019 were ~~purchased during~~acquired pursuant to the ~~third quarter of fiscal year 2018.~~Company’s Evergreen Program.

(2)

~~The Company has two~~Average price paid per 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 March 31, 2018, and~~in 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.period includes commission.

Item 6. Exhibits

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

EXHIBIT INDEX

Exhibit No.



~~10.1~~31.1		~~Amendment No. 3 to The Clorox Company Supplemental Executive Retirement Plan, effective as of March 28, 2018.~~
~~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.INS		~~The following materials from The Clorox Company’s Quarterly Report on Form 10-Q for~~XBRL Instance Document - the ~~period ended March 31, 2018,~~instance document does not appear in the Interactive Data File because its XBRL tags are ~~formatted in eXtensible Business Reporting Language (XBRL): (i)~~embedded within 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.Inline XBRL document.
101.SCH		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.

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: May ~~2, 2018~~1, 2019	BY	/s/ Jeffrey R. Baker
		Jeffrey R. Baker Vice President – Chief Accounting Officer and Corporate Controller

3538


(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.



	3/31/2018		6/30/2017
Venture agreement terminal obligation, net	$	334	$	317
Employee benefit obligations	292		298
Taxes	48		42
Other	104		113
Total	$	778	$	770


	Twelve Months Ended			Twelve Months Ended
	3/31/2018			3/31/2019
Earnings from continuing operations	$	808		$	796
Add back:
Interest expense	83			96
Income tax expense	235			242
Depreciation and amortization	163			178
Non-cash asset impairment charges	1			—
Deduct:
Interest income	(5		)	(4		)
Consolidated EBITDA	$	1,285		$	1,308
Interest expense	$	83		$	96
Interest Coverage ratio	15.5			13.6