Item 1. Financial Statements

The Clorox Company

Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited)

(Dollars in millions, except per share data)

						Three Months Ended																		Nine Months Ended
						3/31/2022									3/31/2021									3/31/2022									3/31/2021
Net sales						$			1,809						$			1,781						$			5,306						$			5,539
Cost of products sold									1,160									1,007									3,429									3,008
Gross profit									649									774									1,877									2,531
Selling and administrative expenses									233									237									710									744
Advertising costs									153									200									502									566
Research and development costs									31									32									98									104
Goodwill, trademark and other asset impairments									—									329									—									329
Interest expense									21									25									69									74
Other (income) expense, net									11									10									20									(85)
Earnings (losses) before income taxes									200									(59)									478									799
Income taxes									48									—									111									180
Net earnings (losses)									152									(59)									367									619
Less: Net earnings attributable to noncontrolling interests									2									2									6									6
Net earnings (losses) attributable to Clorox						$			150						$			(61)						$			361						$			613
Net earnings (losses) per share attributable to Clorox
Basic net earnings (losses) per share						$			1.22						$			(0.49)						$			2.93						$			4.86
Diluted net earnings (losses) per share						$			1.21						$			(0.49)						$			2.91						$			4.78
Weighted average shares outstanding (in thousands)
Basic									123,177									125,610									123,074									126,057
Diluted									123,877									125,610									123,943									128,030
Comprehensive income (loss)						$			207						$			(37)						$			394						$			706
Less: Total comprehensive income attributable to noncontrolling interests									2									2									6									6
Total comprehensive income (loss) attributable to Clorox						$			205						$			(39)						$			388						$			700

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share data)

			3/31/2022									6/30/2021
			(Unaudited)
ASSETS
Current assets
Cash and cash equivalents			$			241						$			319
Receivables, net						660									604
Inventories, net						803									752
Prepaid expenses and other current assets						165									154
Total current assets						1,869									1,829
Property, plant and equipment, net of accumulated depreciation and amortization of $2,510 and $2,382, respectively						1,312									1,302
Operating lease right-of-use assets						311									332
Goodwill						1,572									1,575
Trademarks, net						690									693
Other intangible assets, net						204									225
Other assets						364									378
Total assets			$			6,322						$			6,334
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable			$			395						$			—
Current maturities of long-term debt						600									300
Current operating lease liabilities						73									81
Accounts payable and accrued liabilities						1,575									1,675
Total current liabilities						2,643									2,056
Long-term debt						1,887									2,484
Long-term operating lease liabilities						288									301
Other liabilities						843									834
Deferred income taxes						85									67
Total liabilities						5,746									5,742
Commitments and contingencies
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding						—									—
Common stock: $1.00 par value; 750,000,000 shares authorized; 130,741,461 shares issued as of March 31, 2022 and June 30, 2021; and 123,071,356 and 122,780,220 shares outstanding as of March 31, 2022 and June 30, 2021, respectively						131									131
Additional paid-in capital						1,195									1,186
Retained earnings						951									1,036
Treasury stock, at cost: 7,670,105 and 7,961,241 shares as of March 31, 2022 and June 30, 2021, respectively						(1,358)									(1,396)
Accumulated other comprehensive net (loss) income						(519)									(546)
Total Clorox stockholders’ equity						400									411
Noncontrolling interests						176									181
Total stockholders’ equity						576									592
Total liabilities and stockholders’ equity			$			6,322						$			6,334

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)

			Nine Months Ended
			3/31/2022									3/31/2021
Operating activities:
Net earnings			$			367						$			619
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization						167									157
Stock-based compensation						44									52
Deferred income taxes						11									(21)
Goodwill, trademark and other asset impairments						—									329
Other						7									(53)
Changes in:
Receivables, net						(56)									46
Inventories, net						(53)									(220)
Prepaid expenses and other current assets						2									(29)
Accounts payable and accrued liabilities						(93)									94
Operating lease right-of-use assets and liabilities, net						—									(1)
Income taxes payable / prepaid						55									(80)
Net cash provided by operations						451									893
Investing activities:
Capital expenditures						(172)									(232)
Businesses acquired, net of cash acquired						—									(85)
Other						5									(24)
Net cash used for investing activities						(167)									(341)
Financing activities:
Notes and loans payable, net						395									—
Long-term debt repayments						(300)									—
Treasury stock purchased						(25)									(605)
Cash dividends paid to Clorox stockholders						(428)									(420)
Cash dividends paid to noncontrolling interests						(5)									(18)
Issuance of common stock for employee stock plans and other						—									99
Net cash used for financing activities						(363)									(944)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash						(2)									10
Net increase (decrease) in cash, cash equivalents, and restricted cash						(81)									(382)
Cash, cash equivalents, and restricted cash:
Beginning of period						324									879
End of period			$			243						$			497

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in millions, except 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, 2022 and 2021, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its controlled subsidiaries (the Company) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

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

Recently Adopted Accounting Standards

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

NOTE 2. BUSINESS ACQUIRED

Saudi Joint Venture Acquisition

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

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

Refer to the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for the final purchase price allocation, valuation methodology and other information related to the Saudi joint venture acquisition.

NOTE 3. INVENTORIES, NET

Inventories, net, consisted of the following as of:

			3/31/2022						6/30/2021
Finished goods			$	602					$	543
Raw materials and packaging			206						229
Work in process			37						11
LIFO allowances			(42)						(31)
Total			$	803					$	752

NOTE 4. GOODWILL, TRADEMARK AND OTHER ASSET IMPAIRMENTS

The Company tests its goodwill and other indefinite-lived intangible assets for impairment annually in the fiscal fourth quarter unless there are indications during a different interim period that these assets may have become impaired. Finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances occur that indicate that the carrying value of an asset (or asset group) may not be recoverable.

There were no impairment charges for goodwill or intangible assets recorded by the Company during the three and nine months ended March 31, 2022.

During the third quarter of fiscal 2021, as a result of lower than expected actual and projected net sales growth and operating performance for the Vitamins, Minerals and Supplements (VMS) strategic business unit (SBU), a strategic review was initiated by management that resulted in updated financial and operational plans. These events were considered a triggering event requiring interim impairment assessments to be performed on the VMS reporting unit, indefinite-lived trademarks and other assets. Based on the outcome of these assessments, the following pre-tax impairment charges were recorded:

			Impairment Charge
Goodwill			$	228
Trademarks, net			93
Other intangible assets, net			7
Property, plant and equipment, net			1
Total			$	329

In connection with recognizing these impairment charges, the Company recognized tax benefits related to the impairments of $62 due to the partial tax deductibility of these charges.

Refer to the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for further information related to the VMS reporting unit goodwill, intangibles and other asset impairments.

NOTE 5. DEBT

Short-term borrowings

In November 2021, $300 of the Company’s senior notes with an annual fixed interest rate of 3.80% became due and were repaid using commercial paper borrowings.

The weighted average effective interest rate of notes and loans payable as of March 31, 2022 was 0.77%. The Company had no notes and loans payable outstanding as of June 30, 2021.

NOTE 5: DEBT (continued)

Credit arrangements

On March 25, 2022, the Company entered into a new $1,200 revolving credit agreement (the Credit Agreement) that matures in March 2027. The Credit Agreement replaced a prior $1,200 revolving credit agreement (the Prior Credit Agreement) in place since November 2019. The Credit Agreement changed the interest rate benchmark used as a reference rate for borrowings under the Credit Agreement from the London Interbank Offered Rate (LIBOR) to the secured overnight financing rate (SOFR). The Company did not incur any termination fees or penalties in connection with entering the new agreement, which was considered a debt modification. There were no borrowings under either the Credit Agreement or the Prior Credit Agreement as of March 31, 2022 and June 30, 2021, respectively, and the Company believes that borrowings under the new Credit Agreement will continue to be available for general corporate purposes. The Credit Agreement includes certain restrictive covenants and limitations consistent with the previous agreement, with which the Company was in compliance as of March 31, 2022.

NOTE 6. 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, 2022, the notional amount of commodity derivatives was $25, of which $13 related to soybean oil futures used for the Food products business and $12 related to jet fuel swaps used for the Grilling business. As of June 30, 2021, the notional amount of commodity derivatives was $32, of which $23 related to soybean oil futures and $9 related to jet fuel swaps.

Foreign Currency Risk Management

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

The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were $59 and $70, respectively, as of March 31, 2022 and June 30, 2021.

Interest Rate Risk Management

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

The notional amounts of outstanding interest rate contracts used by the Company were $950 and $300, respectively, as of March 31, 2022 and June 30, 2021. These contracts represent interest rate swap lock agreements to manage the exposure to interest rate volatility associated with future interest payments on forecasted debt issuance.

Commodity, Foreign Exchange and Interest Rate Derivatives

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

NOTE 6. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

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

			Gains (losses) recognized in Other comprehensive (loss) income
			Three Months Ended												Nine Months Ended
			3/31/2022						3/31/2021						3/31/2022						3/31/2021
Commodity purchase derivative contracts			$	10					$	5					$	12					$	12
Foreign exchange derivative contracts			(1)						2						—						(1)
Interest rate derivative contracts			39						26						39						36
Total			$	48					$	33					$	51					$	47

			Location of gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earnings (losses)			Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings (losses)
						Three Months Ended												Nine Months Ended
						3/31/2022						3/31/2021						3/31/2022						3/31/2021
Commodity purchase derivative contracts			Cost of products sold			$	3					$	—					$	13					$	(2)
Foreign exchange derivative contracts			Cost of products sold			—						—						—						—
Interest rate derivative contracts			Interest expense			—						(2)						(3)						(5)
Total						$	3					$	(2)					$	10					$	(7)

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of March 31, 2022 that is expected to be reclassified into Net earnings (losses) within the next twelve months is $12.

Counterparty Risk Management and Derivative Contract Requirements

The Company utilizes a variety of financial institutions as counterparties for over-the-counter derivative instruments. The Company enters into agreements governing the use of over-the-counter derivative instruments and sets internal limits on the aggregate over-the-counter derivative instrument positions held with each counterparty. Certain terms of these agreements require the Company or the counterparty to post collateral when the fair value of the derivative instruments exceeds contractually-defined counterparty liability position limits. Of the over-the-counter derivative instruments in liability positions held as of both March 31, 2022 and June 30, 2021, $0 contained such terms. As of both March 31, 2022 and June 30, 2021, neither the Company nor any counterparty was required to post any collateral, as no counterparty liability position limits were exceeded.

Certain terms of the agreements governing the Company’s over-the-counter derivative instruments require the credit ratings, as assigned by Standard & Poor’s and Moody’s to the Company and its counterparties, to remain at a level equal to or better than the minimum of an investment grade credit rating. If the Company’s credit ratings were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. As of both March 31, 2022 and June 30, 2021, the Company and each of its counterparties had been assigned investment grade ratings by both Standard & Poor’s and Moody’s.

Certain of the Company’s exchange-traded futures contracts used for commodity price risk management include requirements for the Company to post collateral in the form of a cash margin account held by the Company’s broker for trades conducted on that exchange. As of both March 31, 2022 and June 30, 2021, the Company maintained cash margin balances related to exchange-traded futures contracts of $0, which are classified as Prepaid expenses and other current assets on the condensed consolidated balance sheets.

NOTE 6. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

Trust Assets

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

Fair Value of Financial Instruments

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

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

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

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

As of both March 31, 2022 and June 30, 2021, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.

All of the Company’s derivative instruments qualify for hedge accounting. The following table provides information about the balance sheet classification and the fair values of the Company’s derivative instruments:

															3/31/2022												6/30/2021
			Balance Sheet Classification						Fair Value Hierarchy Level						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Assets
Commodity purchase futures contracts			Prepaid expenses and other current assets						1						$	1					$	1					$	5					$	5
Commodity purchase swaps contracts			Prepaid expenses and other current assets						2						6						6						4						4
Commodity purchase swaps contracts			Other assets						2						1						1						—						—
Interest rate contracts			Prepaid expenses and other current assets						2						63						63						24						24
															$	71					$	71					$	33					$	33

NOTE 6. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

The following table provides information about the balance sheet classification and the fair values of the Company’s other assets and liabilities for which disclosure of fair value is required:

															3/31/2022												6/30/2021
			Balance Sheet Classification						Fair Value Hierarchy Level						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Assets
Interest-bearing investments, including money market funds			Cash and cash equivalents (1)						1						$	101					$	101					$	196					$	196
Time deposits			Cash and cash equivalents (1)						2						7						7						11						11
Trust assets for nonqualified deferred compensation plans			Other assets						1						134						134						136						136
															$	242					$	242					$	343					$	343
Liabilities
Notes and loans payable			Notes and loans payable (2)						2						$	395					$	395					$	—					$	—
Current maturities of long-term debt and Long-term debt			Current maturities of long- term debt and Long-term debt (3)						2						2,487						2,461						2,784						2,963
															$	2,882					$	2,856					$	2,784					$	2,963

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

(2)Notes and loans payable are composed of outstanding U.S. commercial paper balances, which are recorded at cost, which approximates fair value.

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

NOTE 7. 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 (losses) was 23.9% and 23.3% for the three and nine months ended March 31, 2022, respectively, and (1.4)% and 22.5% for the three and nine months ended March 31, 2021, respectively. The substantially lower tax rate on losses before income taxes in the prior three month period was driven by the partial non-deductibility of impaired VMS goodwill.

NOTE 8. NET EARNINGS (LOSSES) 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
			3/31/2022						3/31/2021						3/31/2022						3/31/2021
Basic			123,177						125,610						123,074						126,057
Dilutive effect of stock options and other			700						—						869						1,973
Diluted			123,877						125,610						123,943						128,030
Antidilutive stock options and other			2,489						4,826						2,489						428

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

Since the Company generated net losses attributable to Clorox for the three months ended March 31, 2021, there was no dilutive effect of stock options and other instruments because their impact would be antidilutive.

NOTE 9. COMPREHENSIVE INCOME (LOSS)

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

			Three Months Ended												Nine Months Ended
			3/31/2022						3/31/2021						3/31/2022						3/31/2021
Net earnings (losses)			$	152					$	(59)					$	367					$	619
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments			19						(7)						(9)						40
Net unrealized gains (losses) on derivatives			34						27						31						42
Pension and postretirement benefit adjustments			2						2						5						5
Total other comprehensive (loss) income, net of tax			55						22						27						87
Comprehensive income (loss)			207						(37)						394						706
Less: Total comprehensive income attributable to noncontrolling interests			2						2						6						6
Total comprehensive income (loss) attributable to Clorox			$	205					$	(39)					$	388					$	700

NOTE 10. STOCKHOLDERS’ EQUITY

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

			Three Months Ended March 31
(Dollars in millions except per share data; shares in thousands)			Common Stock												Additional Paid-in Capital						Retained Earnings						Treasury Stock												Accumulated Other Comprehensive Net (Loss) Income						Non-controlling interests						Total Stockholders’ Equity
Amount						Shares												Amount						Shares
Balance as of December 31, 2020			$	131					130,741						$	1,176					$	1,302					$	(850)					(5,017)						$	(575)					$	196					$	1,380
Net earnings (losses)			—						—						—						(61)						—						—						—						2						(59)
Other comprehensive (loss) income			—						—						—						—						—						—						22						—						22
Dividends to Clorox stockholders ($1.11 per share declared)			—						—						—						(139)						—						—						—						—						(139)
Dividends to non-controlling interests			—						—						—						—						—						—						—						(3)						(3)
Stock-based compensation			—						—						17						—						—						—						—						—						17
Other employee stock plan activities			—						—						(3)						(16)						44						283						—						—						25
Treasury stock purchased			—						—						—						—						(305)						(1,648)						—						—						(305)
Balance as of March 31, 2021			$	131					130,741						$	1,190					$	1,086					$	(1,111)					(6,382)						$	(553)					$	195					$	938
Balance as of December 31, 2021			$	131					130,741						$	1,180					$	949					$	(1,373)					(7,777)						$	(574)					$	178					$	491
Net earnings			—						—						—						150						—						—						—						2						152
Other comprehensive (loss) income			—						—						—						—						—						—						55						—						55
Dividends to Clorox stockholders ($1.16 per share declared)			—						—						—						(143)						—						—						—						—						(143)
Dividends to non-controlling interests			—						—						—						—						—						—						—						(4)						(4)
Stock-based compensation			—						—						19						—						—						—						—						—						19
Other employee stock plan activities			—						—						(4)						(5)						15						107						—						—						6
Balance as of March 31, 2022			$	131					130,741						$	1,195					$	951					$	(1,358)					(7,670)						$	(519)					$	176					$	576

NOTE 10. STOCKHOLDERS’ EQUITY (Continued)

			Nine Months Ended March 31
(Dollars in millions except per share data; shares in thousands)			Common Stock												Additional Paid-in Capital						Retained Earnings						Treasury Stock												Accumulated Other Comprehensive Net (Loss) Income						Non-controlling interests						Total Stockholders’ Equity
Amount						Shares												Amount						Shares
Balance as of June 30, 2020			$	159					158,741						$	1,137					$	3,567					$	(3,315)					(32,543)						$	(640)					$	—					$	908
Net earnings			—						—						—						613						—						—						—						6						619
Other comprehensive (loss) income			—						—						—						—						—						—						87						—						87
Dividends to Clorox stockholders ($3.33 per share declared)			—						—						—						(421)						—						—						—						—						(421)
Dividends to noncontrolling interests			—						—						—						—						—						—						—						(9)						(9)
Business combinations including purchase accounting adjustments			—						—						—						—						—						—						—						198						198
Stock-based compensation			—						—						52						—						—						—						—						—						52
Other employee stock plan activities			—						—						1						(33)						141						1,233						—						—						109
Treasury stock purchased			—						—						—						—						(605)						(3,072)						—						—						(605)
Treasury stock retirement (1)			(28)						(28,000)						—						(2,640)						2,668						28,000						$	—					—						—
Balance as of March 31, 2021			$	131					130,741						$	1,190					$	1,086					$	(1,111)					(6,382)						$	(553)					$	195					$	938
Balance as of June 30, 2021			$	131					130,741						$	1,186					$	1,036					$	(1,396)					(7,961)						$	(546)					$	181					$	592
Net earnings			—						—						—						361						—						—						—						6						367
Other comprehensive (loss) income			—						—						—						—						—						—						27						—						27
Dividends to Clorox stockholders ($3.48 per share declared)			—						—						—						(430)						—						—						—						—						(430)
Dividends to noncontrolling interests			—						—						—						—						—						—						—						(11)						(11)
Stock-based compensation			—						—						44						—						—						—						—						—						44
Other employee stock plan activities			—						—						(35)						(16)						63						443						—						—						12
Treasury stock purchased			—						—						—						—						(25)						(152)						—						—						(25)
Balance as of March 31, 2022			$	131					130,741						$	1,195					$	951					$	(1,358)					(7,670)						$	(519)					$	176					$	576

(1) On November 18, 2020 the Company retired 28 million shares of its treasury stock. These shares are now authorized but unissued. There was no effect on the Company’s overall equity position as a result of the retirement.

NOTE 10. STOCKHOLDERS’ EQUITY (Continued)

Changes in Accumulated other comprehensive net (loss) income attributable to Clorox by component were as follows for the periods indicated:

			Three Months Ended March 31
			Foreign currency translation adjustments						Net unrealized gains (losses) on derivatives						Pension and postretirement benefit adjustments						Accumulated other comprehensive net (loss) income
Balance as of December 31, 2020			$	(403)					$	(3)					$	(169)					$	(575)
Other comprehensive (loss) income before reclassifications			(6)						33						—						27
Amounts reclassified from Accumulated other comprehensive net (loss) income			—						2						3						5
Income tax benefit (expense)			(1)						(8)						(1)						(10)
Net current period other comprehensive (loss) income			(7)						27						2						22
Balance as of March 31, 2021			$	(410)					$	24					$	(167)					$	(553)
Balance as of December 31, 2021			$	(431)					$	18					$	(161)					$	(574)
Other comprehensive (loss) income before reclassifications			19						48						—						67
Amounts reclassified from Accumulated other comprehensive net (loss) income			—						(3)						2						(1)
Income tax benefit (expense), and other			—						(11)						—						(11)
Net current period other comprehensive (loss) income			19						34						2						55
Balance as of March 31, 2022			$	(412)					$	52					$	(159)					$	(519)
			Nine Months Ended March 31
			Foreign currency translation adjustments						Net unrealized gains (losses) on derivatives						Pension and postretirement benefit adjustments						Accumulated other comprehensive net (loss) income
Balance as of June 30, 2020			$	(450)					$	(18)					$	(172)					$	(640)
Other comprehensive (loss) income before reclassifications			38						47						—						85
Amounts reclassified from Accumulated other comprehensive net (loss) income			—						7						7						14
Income tax benefit (expense)			2						(12)						(2)						(12)
Net current period other comprehensive (loss) income			40						42						5						87
Balance as of March 31, 2021			$	(410)					$	24					$	(167)					$	(553)
Balance as of June 30, 2021			$	(403)					$	21					$	(164)					$	(546)
Other comprehensive (loss) income before reclassifications			(9)						51						—						42
Amounts reclassified from Accumulated other comprehensive net (loss) income			—						(10)						6						(4)
Income tax benefit (expense), and other			—						(10)						(1)						(11)
Net current period other comprehensive (loss) income			(9)						31						5						27
Balance as of March 31, 2022			$	(412)					$	52					$	(159)					$	(519)

Included in foreign currency translation adjustments are remeasurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. There were no amounts associated with these loans reclassified from Accumulated other comprehensive net (loss) income for the periods presented.

NOTE 11. 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
			3/31/2022						3/31/2021						3/31/2022						3/31/2021
Service cost			$	—					$	—					$	—					$	—
Interest cost			3						4						11						11
Expected return on plan assets (1)			(4)						(4)						(11)						(11)
Settlement loss recognized			1						—						1						—
Amortization of unrecognized items			3						3						7						8
Total			$	3					$	3					$	8					$	8

(1) The weighted average long-term expected rate of return on plan assets used in computing the fiscal year 2022 net periodic benefit cost is 3.0%.

The net periodic benefit cost for the Company’s retirement health care plans was $0 for both the three and nine months ended March 31, 2022, and $0 and $(1) for the three and nine months ended March 31, 2021, respectively.

During the three months ended March 31, 2022 and 2021, the Company made $8 and $6 in contributions to its domestic retirement income plans, respectively. During the nine months ended March 31, 2022 and 2021, the Company made $13 and $10 in contributions to its domestic retirement income plans, respectively.

Service cost component of the net periodic benefit cost, if any, is reflected in employee benefit costs, all other components are reflected in Other (income) expense, net.

NOTE 12. OTHER CONTINGENCIES AND GUARANTEES

Contingencies

The Company is involved in certain environmental matters, including response actions at various locations. The Company had recorded liabilities totaling $28 as of both March 31, 2022 and June 30, 2021, for its share of aggregate future remediation costs related to these matters.

One matter, which accounted for $14 of the recorded liability as of both March 31, 2022 and June 30, 2021, relates to environmental costs associated with one of the Company’s former operations at a site located in Alameda County, California. In November 2016, at the request of regulators and with the assistance of environmental consultants, the Company submitted a Feasibility Study that evaluated various options for managing the site and included estimates of the related costs. Following further discussions with the regulators in 2017, the Company recorded an undiscounted liability for costs estimated to be incurred over a 30-year period, based on one of the options in the Feasibility Study. In September 2021, as a result of an additional study and further discussions with regulators, the Company submitted a Soil Vapor Intrusion Report to the regulators, which has not resulted in a change to the recorded liability. While the Company believes its latest estimates of remediation costs are reasonable, the ultimate remediation requirements are not yet finalized and the regulators could require the Company to implement remediation actions for a longer period or take additional actions, which could include estimated undiscounted costs of up to approximately $28 over an estimated 30-year period, or require the Company to take different actions and incur additional costs.

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 $9 and $10 of the recorded liability, as of March 31, 2022 and June 30, 2021, respectively. This amount reflects the Company’s agreement to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing arrangement with a third party. If the third party is unable to pay its share of the response and remediation obligations, the Company may be responsible for such obligations. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded for the Dickinson County matter, any amount of such additional exposures, or range of exposures, is not estimable at this time.

NOTE 12: OTHER CONTINGENCIES AND GUARANTEES (continued)

The Company’s estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements and the future availability of alternative clean-up technologies. The Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements, product liability, patents and trademarks, advertising, labor and employment, environmental, health and safety and other matters. With respect to these proceedings, claims and other loss contingencies, while considerable uncertainty exists, in the opinion of management at this time, the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.

Guarantees

In conjunction with divestitures and other transactions, the Company may provide typical indemnifications (e.g., indemnifications for representations and warranties and retention of previously existing environmental, tax and employee liabilities) that have terms that vary in duration and in the potential amount of the total obligation and, in many circumstances, are not explicitly defined. The Company has not made, nor does it believe that it is probable that it will make, any material payments relating to its indemnifications, and believes that any reasonably possible payments would not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.

The Company had not recorded any material liabilities on the aforementioned guarantees as of both March 31, 2022 and June 30, 2021.

As of March 31, 2022, the Company was party to a letter of credit of $14, related to one of its insurance carriers, of which $0 had been drawn upon.

NOTE 13. SEGMENT RESULTS

The Company operates through strategic business units (SBUs) that are also the Company’s operating segments. The SBUs are then aggregated into four reportable segments: Health and Wellness, Household, Lifestyle and International.

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

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

						Net sales
						Three Months Ended												Nine Months Ended
						3/31/2022						3/31/2021						3/31/2022						3/31/2021
Health and Wellness						$	662					$	680					$	2,055					$	2,310
Household						539						510						1,404						1,421
Lifestyle						306						293						961						928
International						302						298						886						880
Total						$	1,809					$	1,781					$	5,306					$	5,539
						Earnings (losses) before income taxes
						Three Months Ended												Nine Months Ended
						3/31/2022						3/31/2021						3/31/2022						3/31/2021
Health and Wellness (1)						$	84					$	(183)					$	245					$	315
Household						92						97						138						266
Lifestyle						66						68						239						259
International						31						30						80						184
Corporate						(73)						(71)						(224)						(225)
Total						$	200					$	(59)					$	478					$	799

(1) The earnings (losses) before income taxes for the Health and Wellness segment include a $329 non-cash goodwill, trademark and other asset impairment charge for the VMS SBU for the three and nine months ended March 31, 2021.

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

Net sales to the Company’s largest customer, Wal-Mart Stores, Inc. and its affiliates, as a percentage of consolidated net sales, were 25% for the three and nine months ended March 31, 2022, and 24% for the three and nine months ended March 31, 2021.

NOTE 13. SEGMENT RESULTS (Continued)

The following table provides Net sales as a percentage of the Company’s consolidated net sales, disaggregated by SBU, for the periods indicated:

						Net sales
						Three Months Ended																		Nine Months Ended
						3/31/2022									3/31/2021									3/31/2022									3/31/2021
Cleaning						28			%						29			%						30			%						30			%
Professional Products						4									5									5									7
Vitamins, Minerals and Supplements						4									4									4									4
Health and Wellness						36			%						38			%						39			%						41			%
Bags and Wraps						12									11									12									11
Cat Litter						8									7									8									7
Grilling						10									11									6									8
Household						30			%						29			%						26			%						26			%
Food Products						10									10									10									9
Natural Personal Care						4									3									4									4
Water Filtration						3									3									4									4
Lifestyle						17			%						16			%						18			%						17			%
International						17			%						17			%						17			%						16			%
Total						100			%						100			%						100			%						100			%