☑
|
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
|
|
for the fiscal year ended
|
June 30, 2019
|
OR
|
||
|
||
☐
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
|
for the transition period from__________to__________.
|
||
|
Commission file number:
|
1-07151
|
Delaware
|
|
31-0595760
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification Number)
|
(Address of principal executive offices) (ZIP code)
|
|||||
|
|||||
|
|
(510)
|
271-7000
|
|
|
(Registrant’s telephone number, including area code)
|
|||||
|
|||||
Securities registered pursuant to Section 12(b) of the Act:
|
|||||
|
|||||
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|||
Common Stock–$1.00 par value
|
CLX
|
New York Stock Exchange
|
|||
|
|
|
|
|
|
Securities registered pursuant to Section 12(g) of the Act:
|
|||||
None
|
|||||
(Title of class)
|
Large accelerated filer
|
☑
|
Accelerated filer
|
☐
|
Non-accelerated filer
(Do not check if a smaller reporting company)
|
☐
|
Smaller reporting company
|
☐
|
Emerging Growth Company
|
☐
|
|
|
|
|
|
|
Page
|
|
|
||||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
||||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
||||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
||||
|
|
|
|||
|
|
|
|
•
|
Cleaning consists of laundry, home care and professional products marketed and sold in the United States. Products within this segment include laundry additives, such as 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, disinfecting, and food service products under the CloroxPro™, Dispatch®, Clorox Healthcare®, Hidden Valley® and KC Masterpiece® 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, natural personal care products, and dietary supplements mainly 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; natural personal care products under the Burt’s Bees® 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 systems and filters; digestive health products; charcoal; cat litter products; food products; bags, wraps and containers; 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®, Burt’s Bees®, CloroxPro™ and Clorox Healthcare® brands.
|
|
2019
|
|
2018
|
|
2017
|
|||
Home Care products
|
26
|
%
|
|
26
|
%
|
|
25
|
%
|
Bags, wraps and containers
|
16
|
%
|
|
18
|
%
|
|
18
|
%
|
Laundry additives
|
14
|
%
|
|
15
|
%
|
|
15
|
%
|
Food products
|
10
|
%
|
|
10
|
%
|
|
10
|
%
|
Charcoal products
|
9
|
%
|
|
10
|
%
|
|
11
|
%
|
•
|
successfully integrate acquired companies, products, technologies, systems or personnel into the Company’s existing business operations in an effective, timely and cost efficient manner;
|
•
|
maintain uniform standards, controls, procedures and policies throughout acquired companies, including effective integration of acquired companies into the Company’s internal controls over financial reporting;
|
•
|
minimize any potential interruption to the ongoing business of the Company or the acquired company;
|
•
|
successfully enter categories and markets in which the Company may have limited or no prior experience;
|
•
|
achieve expected synergies and obtain the desired financial or strategic benefits from acquisitions;
|
•
|
achieve distribution expansion related to products, categories and markets from acquisitions; and
|
•
|
retain key relationships with employees, customers, partners and suppliers of acquired companies.
|
•
|
economic or political instability;
|
•
|
price controls and related government actions;
|
•
|
foreign currency fluctuations, including devaluations, currency controls and inflation, which may adversely affect the Company’s ability to do business in certain markets and reduce the U.S. dollar value of revenues, profits or cash flows it generates in non-U.S. markets;
|
•
|
continued high levels of inflation in Argentina;
|
•
|
difficulty in obtaining non-local currency (e.g., U.S. dollars) to pay for the raw materials needed to manufacture the Company’s products and contract-manufactured products;
|
•
|
restrictions on or costs related to the repatriation of foreign profits to the U.S.;
|
•
|
the imposition of tariffs, trade restrictions, price, profit or other government controls, labor laws, travel or immigration restrictions, import and export laws or other government actions generating a negative impact on the Company’s business, including changes in trade policies that may be implemented and the impact of geopolitical events generally;
|
•
|
difficulties in hiring and retaining qualified employees;
|
•
|
civil unrest, work stoppages and labor disputes;
|
•
|
employment litigation related to employees, contractors and suppliers, particularly in Argentina;
|
•
|
difficulties in obtaining or unavailability of raw materials;
|
•
|
potential loss of distribution channels as a result of retailer consolidation;
|
•
|
increased credit risk of customers, suppliers and distributors;
|
•
|
potential harm to third parties, the Company’s employees and/or surrounding communities, and related liabilities and damages to the Company’s reputation, from the use, storage and transportation of chlorine in certain international markets where chlorine is used in the production of bleach, whether such actions are undertaken by the Company or by the Company’s business partners;
|
•
|
difficulties in enforcing intellectual property and contractual rights;
|
•
|
lack of well-established or reliable, and impartial legal systems in certain countries where the Company operates;
|
•
|
challenges relating to enforcement of or compliance with local laws and regulations and with U.S. laws affecting operations outside of the U.S., including without limitation, the Foreign Corrupt Practices Act;
|
•
|
the possibility of nationalization, expropriation of assets or other similar government actions; and
|
•
|
risks related to natural disasters, terrorism and other events beyond the Company’s control.
|
•
|
require the Company to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, which would reduce the availability of its cash flow to fund working capital requirements, capital expenditures, future acquisitions, dividends, repurchase the Company’s common stock and for other general corporate purposes;
|
•
|
limit the Company’s flexibility in planning for or reacting to general adverse economic conditions or changes in its business and the industries in which it operates;
|
•
|
place the Company at a competitive disadvantage compared to its competitors that have less debt; and
|
•
|
limit, along with the financial and other restrictive covenants in the Company’s debt documents, its ability to borrow additional funds.
|
Name
|
Age
|
Year First
Elected
Executive
Officer
|
Title
|
Benno Dorer
|
55
|
2009
|
Chair and Chief Executive Officer
|
Laura Stein
|
57
|
2005
|
Executive Vice President – General Counsel and Corporate Affairs
|
Eric Reynolds
|
49
|
2015
|
Executive Vice President – Household and Lifestyle
|
Linda Rendle
|
41
|
2016
|
Executive Vice President – Cleaning, International, Strategy and Operations
|
Kirsten Marriner
|
46
|
2016
|
Executive Vice President – Chief People Officer
|
Kevin B. Jacobsen
|
53
|
2018
|
Executive Vice President – Chief Financial Officer
|
William S. Bailey
|
53
|
2016
|
Senior Vice President – Corporate and Business Development
|
Diego J. Barral
|
49
|
2018
|
Senior Vice President – General Manager, International Division
|
Michael R. Costello
|
53
|
2011
|
Senior Vice President – General Manager, Nutranext and RenewLife
|
Troy Datcher
|
51
|
2019
|
Senior Vice President – Chief Customer Officer
|
Denise Garner
|
56
|
2015
|
Senior Vice President – Chief Innovation Officer
|
Stacey Grier
|
56
|
2019
|
Senior Vice President – Chief Marketing Officer
|
John J. McNulty
|
63
|
2018
|
Senior Vice President – Chief Information Officer
|
Andrew J. Mowery
|
53
|
2018
|
Senior Vice President – Chief Product Supply Officer
|
|
[a]
|
|
[b]
|
|
[c]
|
|
[d]
|
||||
Period
|
Total Number of
Shares (or Units)
Purchased (1)
|
|
Average Price Paid
per Share (or Unit) (2)
|
|
Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
|
|
Maximum Number (or
Approximate Dollar
Value) that May Yet
Be Purchased Under the
Plans or Programs
|
||||
April 1 to 30, 2019
|
674,795
|
|
|
$
|
154.57
|
|
|
674,795
|
|
|
$1,808 million
|
May 1 to 31, 2019
|
1,471,875
|
|
|
148.34
|
|
|
1,471,875
|
|
|
$1,593 million
|
|
June 1 to 30, 2019
|
185,380
|
|
|
152.46
|
|
|
185,380
|
|
|
$1,578 million
|
|
|
2,332,050
|
|
|
$
|
150.47
|
|
|
2,332,050
|
|
|
|
(1)
|
Of the shares purchased in April 2019, 549,078 shares were acquired pursuant to the Company’s Evergreen Program and 125,717 shares were acquired pursuant to the Company’s 2018 Open-Market Program. Of the shares purchased in May 2019, 1,445,787 shares were acquired pursuant to the Company’s 2018 Open-Market Program and 26,088 shares were acquired pursuant to the Company’s Evergreen Program. Of the shares purchased in June 2019, 102,956 shares were acquired pursuant to the Company’s 2018 Open-Market Program and 82,424 shares were acquired pursuant to the Company’s Evergreen Program.
|
(2)
|
Average price paid per share in the period includes commission.
|
(a)
|
Financial Statements and Schedules:
|
(b)
|
Exhibits:
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|
10-K
|
|
001-07151
|
|
3.1
|
|
August 14, 2018
|
||
|
|
8-K
|
|
001-07151
|
|
3.2
|
|
September 15, 2016
|
||
|
|
8-K
|
|
001-07151
|
|
3.1
|
|
July 19, 2011
|
||
|
|
8-K
|
|
001-07151
|
|
4.1
|
|
December 3, 2004
|
||
|
|
S-3ASR
|
|
333-200722
|
|
4.1
|
|
December 4, 2014
|
||
|
|
S-3ASR
|
|
333-200722
|
|
4.2
|
|
December 4, 2014
|
||
|
|
S-3ASR
|
|
333-200722
|
|
4.3
|
|
December 4, 2014
|
||
|
|
S-3ASR
|
|
333-200722
|
|
4.4
|
|
December 4, 2014
|
||
|
|
S-3ASR
|
|
333-200722
|
|
4.5
|
|
December 4, 2014
|
||
|
|
8-K
|
|
001-07151
|
|
4.1
|
|
December 9, 2014
|
||
|
|
8-K
|
|
001-07151
|
|
4.1
|
|
September 28, 2017
|
||
|
|
8-K
|
|
001-07151
|
|
4.1
|
|
May 9, 2018
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
||
|
|
10-Q
|
|
001-07151
|
|
10.55
|
|
May 2, 2008
|
||
|
|
10-K
|
|
001-07151
|
|
10(x)
|
|
August 27, 2004
|
||
|
|
10-K
|
|
001-07151
|
|
10.3
|
|
August 16, 2016
|
||
|
|
10-K
|
|
001-07151
|
|
10.8
|
|
August 25, 2014
|
||
|
|
10-Q
|
|
001-07151
|
|
10.1
|
|
February 5, 2013
|
||
|
|
10-Q
|
|
001-07151
|
|
10.1
|
|
November 2, 2016
|
||
|
|
10-Q
|
|
001-07151
|
|
10.2
|
|
November 1, 2017
|
||
|
|
10-Q
|
|
001-07151
|
|
10.2
|
|
October 31, 2018
|
||
|
|
10-Q
|
|
001-07151
|
|
10.1
|
|
October 31, 2018
|
||
|
|
10-Q
|
|
001-07151
|
|
10.3
|
|
November 1, 2017
|
||
|
|
10-K
|
|
001-07151
|
|
10.18
|
|
August 19, 2008
|
||
|
|
10-K
|
|
001-07151
|
|
10.18
|
|
August 26, 2011
|
||
|
|
10-K
|
|
001-07151
|
|
10.13
|
|
August 16, 2016
|
||
|
|
10-Q
|
|
001-07151
|
|
10.17
|
|
November 3, 2009
|
||
|
|
10-Q
|
|
001-07151
|
|
10.21
|
|
November 3, 2011
|
||
|
|
10-Q
|
|
001-07151
|
|
10.2
|
|
November 2, 2012
|
||
|
|
10-Q
|
|
001-07151
|
|
10.1
|
|
May 2, 2018
|
||
|
|
10-Q
|
|
001-07151
|
|
10.58
|
|
May 2, 2008
|
||
|
|
10-Q
|
|
001-07151
|
|
10.27
|
|
May 4, 2010
|
||
|
|
10-Q
|
|
001-07151
|
|
10.1
|
|
February 5, 2015
|
||
|
|
10-Q
|
|
001-07151
|
|
10.2
|
|
February 5, 2015
|
||
|
|
10-Q
|
|
001-07151
|
|
10.27
|
|
May 4, 2011
|
||
|
|
10-K
|
|
001-07151
|
|
10.22
|
|
August 16, 2016
|
||
|
|
10-K
|
|
001-07151
|
|
10.29
|
|
August 26, 2011
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|
10-K
|
|
001-07151
|
|
10.24
|
|
August 16, 2016
|
||
|
|
10-K
|
|
001-07151
|
|
10.26
|
|
August 14, 2018
|
||
|
|
8-K
|
|
001-07151
|
|
10.1
|
|
February 10, 2017
|
||
|
|
10-K/A
|
|
001-07151
|
|
10.26
|
|
September 30, 2016
|
||
|
|
10-Q
|
|
001-07151
|
|
10.2
|
|
February 2, 2018
|
||
|
|
10-Q
|
|
001-07151
|
|
10.1
|
|
February 2, 2018
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the 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.
|
|
|
|
|
|
|
|
|
(*)
|
Indicates a management or director contract or compensatory plan or arrangement required to be filed as an exhibit to this report.
|
|
THE CLOROX COMPANY
|
|
|
||
Date: August 13, 2019
|
By:
|
/s/ Benno Dorer
|
|
|
Benno Dorer
|
|
|
Chair and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
/s/ A. Banse
|
|
Director
|
|
August 13, 2019
|
A. Banse
|
|
|
|
|
/s/ R. H. Carmona
|
|
Director
|
|
August 13, 2019
|
R. H. Carmona
|
|
|
|
|
/s/ S. C. Fleischer
|
|
Director
|
|
August 13, 2019
|
S. C. Fleischer
|
|
|
|
|
/s/ E. Lee
|
|
Director
|
|
August 13, 2019
|
E. Lee
|
|
|
|
|
/s/ A. D. D. Mackay
|
|
Director
|
|
August 13, 2019
|
A. D. D. Mackay
|
|
|
|
|
/s/ R. W. Matschullat
|
|
Director
|
|
August 13, 2019
|
R. W. Matschullat
|
|
|
|
|
/s/ M. J. Shattock
|
|
Director
|
|
August 13, 2019
|
M. J. Shattock
|
|
|
|
|
/s/ P. Thomas-Graham
|
|
Director
|
|
August 13, 2019
|
P. Thomas-Graham
|
|
|
|
|
/s/ C. M. Ticknor
|
|
Director
|
|
August 13, 2019
|
C. M. Ticknor
|
|
|
|
|
/s/ R. J. Weiner
|
|
Director
|
|
August 13, 2019
|
R. J. Weiner
|
|
|
|
|
/s/ C. J. Williams
|
|
Director
|
|
August 13, 2019
|
C. J. Williams
|
|
|
|
|
/s/ B. Dorer
|
|
Chair and Chief Executive Officer
(Principal Executive Officer)
|
|
August 13, 2019
|
B. Dorer
|
|
|
|
|
/s/ K. B. Jacobsen
|
|
Executive Vice President – Chief Financial Officer
(Principal Financial Officer)
|
|
August 13, 2019
|
K. B. Jacobsen
|
|
|
|
|
/s/ J. R. Baker
|
|
Vice President – Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)
|
|
August 13, 2019
|
J. R. Baker
|
|
|
|
Name of Company
|
|
Jurisdiction of Incorporation
|
1221 Olux, LLC
|
|
Delaware
|
6570 Donlon Group, LLC
|
|
Delaware
|
A & M Products Manufacturing Company
|
|
Delaware
|
Andover Properties, Inc.
|
|
Delaware
|
Iodine Holdings, Inc.
|
|
Connecticut
|
Brita Canada Corporation
|
|
Nova Scotia
|
Brita Canada Holdings Corporation
|
|
Nova Scotia
|
Brita GP
|
|
Ontario
|
Brita LP
|
|
Ontario
|
Brita Manufacturing Company
|
|
Delaware
|
The Brita Products Company
|
|
Delaware
|
BGP (Switzerland) S. a. r. l.
|
|
Switzerland
|
Burt’s Bees, Inc.
|
|
Delaware
|
Burt’s Bees Australia Pty Ltd.
|
|
Australia
|
Burt’s Bees International Holdings
|
|
Delaware
|
Burt’s Bees Licensing, LLC
|
|
Delaware
|
The Burt’s Bees Products Company
|
|
Delaware
|
Caltech Industries, Inc.
|
|
Michigan
|
CBee (Europe) Limited
|
|
United Kingdom
|
Chesapeake Assurance Limited
|
|
Hawaii
|
Clorox Africa (Proprietary) Ltd.
|
|
South Africa
|
Clorox Africa Holdings (Proprietary) Ltd.
|
|
South Africa
|
Clorox Argentina S.A.
|
|
Argentina
|
Clorox Australasia Holdings, Inc.
|
|
Delaware
|
Clorox Australia Pty. Ltd.
|
|
Australia
|
Clorox Brazil Holdings LLC
|
|
Delaware
|
Clorox (Cayman Islands) Ltd.
|
|
Cayman Islands
|
Clorox Chile S.A.
|
|
Chile
|
Clorox China (Guangzhou) Ltd.
|
|
Guangzhou, P.R.C.
|
Clorox Commercial Company
|
|
Delaware
|
The Clorox Company of Canada Ltd.
|
|
Canada (Federal)
|
Clorox de Centro America, S.A.
|
|
Costa Rica
|
Clorox de Colombia S.A.
|
|
Colombia
|
Clorox de Mexico, S.A. de C.V.
|
|
Mexico
|
Clorox de Panama S.A.
|
|
Panama
|
Clorox del Ecuador S.A. Ecuaclorox
|
|
Ecuador
|
Clorox Diamond Production Company
|
|
Delaware
|
Clorox Dominicana S.R.L.
|
|
Dominican Republic
|
Clorox (Europe) Financing S.a.r.l.
|
|
Luxembourg
|
Clorox Healthcare Holdings, LLC
|
|
Delaware
|
Clorox Holdings Pty. Limited
|
|
Australia
|
Clorox Hong Kong Limited
|
|
Hong Kong
|
Clorox Hungary Liquidity Management Kft
|
|
Hungary
|
The Clorox International Company
|
|
Delaware
|
Clorox International Holdings, LLC
|
|
Delaware
|
Clorox International Philippines, Inc.
|
|
The Philippines
|
Clorox Luxembourg S.a.r.l.
|
|
Luxembourg
|
Clorox (Malaysia) Sdn. Bhd.
|
|
Malaysia
|
Clorox Manufacturing Company
|
|
Delaware
|
Clorox Manufacturing Company of Puerto Rico, Inc.
|
|
Puerto Rico
|
Clorox Mexicana S. de R.L. de C.V.
|
|
Mexico
|
Clorox New Zealand Limited
|
|
New Zealand
|
The Clorox Outdoor Products Company
|
|
Delaware
|
Clorox Peru S.A.
|
|
Peru
|
The Clorox Pet Products Company
|
|
Texas
|
Clorox Professional Products Company
|
|
Delaware
|
The Clorox Sales Company
|
|
Delaware
|
Clorox Services Company
|
|
Delaware
|
Clorox Servicios Corporativos S. de R.L. de C.V.
|
|
Mexico
|
Clorox Spain, S.L.
|
|
Spain
|
Clorox Spain Holdings, S.L.
|
|
Spain
|
Clorox Sub-Sahara Africa Limited
|
|
Kenya
|
Clorox (Switzerland) S.a.r.l.
|
|
Switzerland
|
Clorox Uruguay S.A.
|
|
Uruguay
|
The Consumer Learning Center, LLC
|
|
Delaware
|
Corporacion Clorox de Venezuela, S.A.
|
|
Venezuela
|
CLX Realty Co.
|
|
Delaware
|
Everest NeoCell LLC
|
|
Delaware
|
Evolution Sociedad S.A.
|
|
Uruguay
|
Fabricante de Productos Plasticos, S.A. de C.V.
|
|
Mexico
|
First Brands (Bermuda) Limited
|
|
Bermuda
|
First Brands Corporation
|
|
Delaware
|
First Brands do Brasil Ltda.
|
|
Brazil
|
First Brands Mexicana, S.A. de C.V.
|
|
Mexico
|
Fully Will Limited
|
|
Hong Kong
|
Gazoontite, LLC
|
|
Delaware
|
Glad Manufacturing Company
|
|
Delaware
|
The Glad Products Company
|
|
Delaware
|
The Household Cleaning Products Company of Egypt Ltd.
|
|
Egypt
|
The HV Food Products Company
|
|
Delaware
|
HV Manufacturing Company
|
|
Delaware
|
Invermark S.A.
|
|
Argentina
|
Jingles LLC
|
|
Delaware
|
Kaflex S.A.
|
|
Argentina
|
Kingsford Manufacturing Company
|
|
Delaware
|
The Kingsford Products Company, LLC
|
|
Delaware
|
Lerwood Holdings Limited
|
|
British Virgin Islands
|
The Mexco Company
|
|
Delaware
|
Mohamed Ali Abudawood for Industry and Partners for Industry Company Ltd.
|
|
Saudi Arabia
|
National Cleaning Products Company Limited
|
|
Saudi Arabia
|
Nature’s Products, Inc.
|
|
Florida
|
Nutranext, LLC
|
|
Delaware
|
Nutranext Business, LLC
|
|
Delaware
|
Nutranext eHealth LLC
|
|
Delaware
|
Nutranext Direct, LLC
|
|
Delaware
|
Nutri-Health Direct Real Estate Holding Company, LLC
|
|
Delaware
|
Paulsboro Packaging Inc.
|
|
New Jersey
|
Petroplus Productos Automotivos S.A.
|
|
Brazil
|
Petroplus Sul Comercio Exterior S.A.
|
|
Brazil
|
Rainbow Light Nutritional Systems, LLC
|
|
Delaware
|
Rainbow Light Real Estate Holding Company, LLC
|
|
Delaware
|
ReNew Life Formulas, LLC
|
|
Delaware
|
ReNew Life Holdings Corporation
|
|
Delaware
|
Round Ridge Production Company
|
|
Delaware
|
Soy Vay Enterprises, Inc.
|
|
California
|
STP do Brasil Ltda.
|
|
Brazil
|
Yuhan-Clorox Co., Ltd.
|
|
Korea
|
(1)
|
Registration Statement (Form S-3 No. 333-224699) and in the related Prospectuses of The Clorox Company, and
|
(2)
|
Registration Statements (Form S-8 Nos. 33-56563, 33-56565, 33-41131, including post effective amendments No. 1 and No. 2, 333-16969, 333-29375, 333-44675, 333-69455, including post effective amendment No. 1, 333-86783, 333-90386, including the post effective amendment No. 1, 333-131487, 333-193913 and 333-213161) of The Clorox Company;
|
1.
|
I have reviewed this annual report on Form 10-K of The Clorox Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Benno Dorer
|
Benno Dorer
|
Chair and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of The Clorox Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Kevin B. Jacobsen
|
Kevin B. Jacobsen
|
Executive Vice President - Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
|
/s/ Benno Dorer
|
|
Benno Dorer
|
|
Chair and Chief Executive Officer
|
|
|
|
|
|
/s/ Kevin B. Jacobsen
|
|
Kevin B. Jacobsen
|
|
Executive Vice President – Chief Financial Officer
|
•
|
Executive Overview
|
•
|
Results of Operations
|
•
|
Financial Position and Liquidity
|
•
|
Contingencies
|
•
|
Quantitative and Qualitative Disclosures about Market Risk
|
•
|
Recently Issued Accounting Standards
|
•
|
Critical Accounting Policies and Estimates
|
•
|
Summary of Non-GAAP Financial Measures
|
•
|
Cleaning consists of laundry, home care and professional products marketed and sold in the United States. Products within this segment include laundry additives, such as 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, disinfecting and food service products under the CloroxPro™, Dispatch®, Clorox Healthcare®, Hidden Valley® and KC Masterpiece® 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, natural personal care products, and dietary supplements marketed and sold mainly 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; natural personal care products under the Burt’s Bees® 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 systems and filters; digestive health products; charcoal; cat litter products; food products; bags, wraps and containers; 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®, Burt’s Bees®, CloroxPro™, and Clorox Healthcare® brands.
|
•
|
Free cash flow and free cash flow as a percentage of net sales. Free cash flow is calculated as net cash provided by continuing operations less capital expenditures.
|
•
|
Earnings from continuing operations before interest and taxes (EBIT) margin (the ratio of EBIT to net sales)
|
•
|
Earnings from continuing operations before interest, taxes, depreciation and amortization and non-cash asset impairment charges (Consolidated EBITDA, as defined in our Credit Agreement) to interest expense ratio (Interest Coverage ratio)
|
•
|
Economic profit (EP) is calculated as earnings from continuing operations before income taxes, excluding non-cash U.S. GAAP restructuring and intangible asset impairment charges, and interest expense; less income taxes (calculated utilizing the Company’s effective tax rate), and less a capital charge (calculated as average capital employed multiplied by a cost of capital percentage rate).
|
•
|
Organic sales growth is defined as net sales growth excluding the effect of foreign exchange rate changes and any acquisitions and divestitures.
|
•
|
The Company’s fiscal year 2019 net sales increased by 1% to $6,214 in fiscal year 2019 from $6,124 in fiscal year 2018, reflecting 3 points of net benefit from the Nutranext acquisition and Aplicare divestiture, offset by the negative 3-point impact from unfavorable foreign currency exchange rates. Fiscal-year 2019 sales also included the benefit of pricing net of trade spending.
|
•
|
Gross margin increased by 20 basis points to 43.9% in fiscal year 2019 from 43.7% in fiscal year 2018, reflecting the benefit of price increases and cost savings, partially offset by higher manufacturing and logistics costs and unfavorable commodity costs.
|
•
|
The Company reported earnings from continuing operations of $820 in fiscal year 2019, compared to $823 in fiscal year 2018. The Company reported earnings from continuing operations before income taxes of $1,024 in fiscal year 2019, compared to $1,054 in fiscal year 2018.
|
•
|
The Company delivered diluted net earnings per share (EPS) from continuing operations in fiscal year 2019 of $6.32, an increase of approximately 1%, or $0.06, from fiscal year 2018 diluted net EPS of $6.26. The increase was mainly driven by a lower effective tax rate, primarily from the benefit of The Tax Cuts and Jobs Act (the Tax Act), and a higher gross margin, partially offset by increased advertising spending.
|
•
|
EP decreased by 2% to $610 in fiscal year 2019 compared to $624 in fiscal year 2018 (refer to the reconciliation of EP to earnings from continuing operations before income taxes in Exhibit 99.2).
|
•
|
The Company’s net cash provided by continuing operations was $992 in fiscal year 2019, compared to $976 in fiscal year 2018, reflecting improvements in working capital and current-year benefits from the Tax Act, partially offset by a higher contribution to employee retirement income plans. Free cash flow was $786 or 12.6% of net sales in fiscal year 2019, compared to $782 or 12.8% of net sales in fiscal year 2018 (refer to the reconciliation of net cash provided by continuing operations to free cash flow in “Financial Position and Liquidity - Investing - Free Cash Flow”).
|
•
|
The Company paid $490 in cash dividends to stockholders in fiscal year 2019, compared to $450 in cash dividends in fiscal year 2018. In May 2019, the Company announced an increase of 10% in its quarterly cash dividend from prior year.
|
•
|
In fiscal year 2019, the Company repurchased 2,266 thousand shares of its common stock at a cost of $328 under the Open-market purchase program and 2,208 thousand shares of its common stock at a cost of $332 under the Evergreen Program.
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
||||||||
Net sales
|
$
|
6,214
|
|
|
$
|
6,124
|
|
|
$
|
5,973
|
|
|
1
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
||||||||
Gross profit
|
$
|
2,728
|
|
|
$
|
2,675
|
|
|
$
|
2,671
|
|
|
2
|
%
|
|
—
|
%
|
Gross margin
|
43.9
|
%
|
|
43.7
|
%
|
|
44.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
% of Net sales
|
|||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||
Selling and administrative expenses
|
$
|
856
|
|
|
$
|
837
|
|
|
$
|
810
|
|
|
2
|
%
|
|
3
|
%
|
|
13.8
|
%
|
|
13.7
|
%
|
|
13.6
|
%
|
Advertising costs
|
612
|
|
|
570
|
|
|
599
|
|
|
7
|
|
|
(5
|
)
|
|
9.8
|
|
|
9.3
|
|
|
10.0
|
|
|||
Research and development costs
|
136
|
|
|
132
|
|
|
135
|
|
|
3
|
|
|
(2
|
)
|
|
2.2
|
|
|
2.2
|
|
|
2.3
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Interest expense
|
$
|
97
|
|
|
$
|
85
|
|
|
$
|
88
|
|
Other (income) expense, net
|
3
|
|
|
(3
|
)
|
|
6
|
|
|||
Effective tax rate on earnings
|
19.8
|
%
|
|
21.8
|
%
|
|
31.9
|
%
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
||||||||
Diluted net EPS from continuing operations
|
$
|
6.32
|
|
|
$
|
6.26
|
|
|
$
|
5.35
|
|
|
1
|
%
|
|
17
|
%
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
||||||||
Net sales
|
$
|
2,109
|
|
|
$
|
2,060
|
|
|
$
|
2,002
|
|
|
2
|
%
|
|
3
|
%
|
Earnings from continuing operations before income taxes
|
600
|
|
|
574
|
|
|
523
|
|
|
5
|
|
|
10
|
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
||||||||
Net sales
|
$
|
1,870
|
|
|
$
|
1,959
|
|
|
$
|
1,961
|
|
|
(5
|
)%
|
|
—
|
%
|
Earnings from continuing operations before income taxes
|
316
|
|
|
370
|
|
|
419
|
|
|
(15
|
)
|
|
(12
|
)
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
||||||||
Net sales
|
$
|
1,265
|
|
|
$
|
1,077
|
|
|
$
|
1,000
|
|
|
17
|
%
|
|
8
|
%
|
Earnings from continuing operations before income taxes
|
255
|
|
|
243
|
|
|
244
|
|
|
5
|
|
|
—
|
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
||||||||
Net sales
|
$
|
970
|
|
|
$
|
1,028
|
|
|
$
|
1,010
|
|
|
(6
|
)%
|
|
2
|
%
|
Earnings from continuing operations before income taxes
|
96
|
|
|
84
|
|
|
81
|
|
|
14
|
|
|
4
|
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
to
2018
|
|
2018
to
2017
|
||||||||
Losses from continuing operations before income taxes
|
$
|
(243
|
)
|
|
$
|
(217
|
)
|
|
$
|
(234
|
)
|
|
12
|
%
|
|
(7
|
)%
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by continuing operations
|
$
|
992
|
|
|
$
|
976
|
|
|
$
|
868
|
|
Net cash used for investing activities
|
(196
|
)
|
|
(859
|
)
|
|
(205
|
)
|
|||
Net cash used for financing activities
|
(815
|
)
|
|
(399
|
)
|
|
(645
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by continuing operations
|
$
|
992
|
|
|
$
|
976
|
|
|
$
|
868
|
|
Less: capital expenditures
|
(206
|
)
|
|
(194
|
)
|
|
(231
|
)
|
|||
Free cash flow
|
$
|
786
|
|
|
$
|
782
|
|
|
$
|
637
|
|
Free cash flow as a percentage of net sales
|
12.6
|
%
|
|
12.8
|
%
|
|
10.7
|
%
|
|
2019
|
|
2018
|
||||
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
Standard and Poor’s
|
A-2
|
|
A-
|
|
A-2
|
|
A-
|
Moody’s
|
P-2
|
|
Baa1
|
|
P-2
|
|
Baa1
|
|
2019
|
||
Earnings from continuing operations
|
$
|
820
|
|
Add back:
|
|
||
Interest expense
|
97
|
|
|
Income tax expense
|
204
|
|
|
Depreciation and amortization
|
180
|
|
|
Non-cash asset impairment charges
|
—
|
|
|
Less:
|
|
||
Interest income
|
(3
|
)
|
|
Consolidated EBITDA
|
$
|
1,298
|
|
Interest expense
|
$
|
97
|
|
Interest Coverage ratio
|
13.4
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Amount
|
|
Shares
(in thousands)
|
|
Amount
|
|
Shares
(in thousands)
|
|
Amount
|
|
Shares
(in thousands)
|
|||||||||
Open-market purchase program
|
$
|
328
|
|
|
2,266
|
|
|
$
|
95
|
|
|
749
|
|
|
$
|
—
|
|
|
—
|
|
Evergreen Program
|
332
|
|
|
2,208
|
|
|
177
|
|
|
1,422
|
|
|
189
|
|
|
1,505
|
|
|||
Total stock repurchases
|
$
|
660
|
|
|
4,474
|
|
|
$
|
272
|
|
|
2,171
|
|
|
$
|
189
|
|
|
1,505
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Dividends per share declared
|
$
|
3.94
|
|
|
$
|
3.60
|
|
|
$
|
3.24
|
|
Dividends per share paid
|
3.84
|
|
|
3.48
|
|
|
3.20
|
|
|||
Total dividends paid
|
490
|
|
|
450
|
|
|
412
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Long-term debt maturities including interest
payments
|
$
|
79
|
|
|
$
|
79
|
|
|
$
|
374
|
|
|
$
|
659
|
|
|
$
|
49
|
|
|
$
|
1,530
|
|
|
$
|
2,770
|
|
Notes and loans payable
|
397
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
399
|
|
|||||||
Purchase obligations (1)
|
77
|
|
|
36
|
|
|
26
|
|
|
14
|
|
|
11
|
|
|
—
|
|
|
164
|
|
|||||||
Operating leases
|
71
|
|
|
65
|
|
|
50
|
|
|
42
|
|
|
37
|
|
|
124
|
|
|
389
|
|
|||||||
Payments related to nonqualified retirement income and retirement health care plans (2)
|
14
|
|
|
13
|
|
|
13
|
|
|
13
|
|
|
14
|
|
|
71
|
|
|
138
|
|
|||||||
Venture agreement terminal obligation (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
619
|
|
|
619
|
|
|||||||
Total
|
$
|
638
|
|
|
$
|
194
|
|
|
$
|
464
|
|
|
$
|
728
|
|
|
$
|
111
|
|
|
$
|
2,344
|
|
|
$
|
4,479
|
|
(1)
|
Purchase obligations are defined as purchase agreements that are enforceable and legally binding and that contain specified or determinable significant terms, including quantity, price and the approximate timing of the transaction. For purchase obligations subject to variable price and/or quantity provisions, an estimate of the price and/or quantity has been made. Examples of the Company’s purchase obligations include contracts to purchase raw materials, commitments to contract manufacturers, commitments for information technology and related services, advertising contracts, capital expenditure agreements, software acquisition and license commitments and service contracts. The raw material contracts included above are entered into during the regular course of business based on expectations of future purchases. Many of these raw material contracts are flexible to allow for changes in the Company’s business and related requirements. If such changes were to occur, the Company believes its exposure could differ from the amounts listed above. Any amounts reflected in the consolidated balance sheets as Accounts payable and accrued liabilities are excluded from the table above, as they are short-term in nature and expected to be paid within one year.
|
(2)
|
These amounts represent expected payments through 2029. Based on the accounting rules for nonqualified retirement income and retirement health care plans, the liabilities reflected in the Company’s consolidated balance sheets differ from these expected future payments (see Notes to Consolidated Financial Statements).
|
(3)
|
The Company has a venture agreement with The Procter & Gamble Company (P&G) for the Company’s Glad® bags, wraps and containers business. As of June 30, 2019, P&G had a 20% interest in the venture. Upon termination of the agreement in January 2026, the Company is required to purchase P&G’s 20% interest for cash at fair value as established by predetermined valuation procedures. Refer to Notes to Consolidated Financial Statements for further details.
|
•
|
intense competition in the Company’s markets;
|
•
|
the impact of the changing retail environment, including the growth of alternative retail channels and business models, and changing consumer preferences;
|
•
|
volatility and increases in commodity 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;
|
•
|
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;
|
•
|
the Company’s ability to maintain its business reputation and the reputation of its brands and products;
|
•
|
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;
|
•
|
lower revenue, increased costs or reputational harm 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;
|
•
|
worldwide, regional and local economic and financial market conditions;
|
•
|
risks related to international operations and international trade, including foreign currency fluctuations, including devaluations, and foreign currency exchange rate controls, including periodic changes in such controls; changes in U.S. immigration or trade policies, including the imposition of new or additional tariffs, labor claims, labor unrest and inflationary pressures, particularly in Argentina; political instability and the uncertainty regarding the outcome of Brexit; government-imposed price controls or other regulations; 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, or expand into adjacent categories and countries;
|
•
|
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;
|
•
|
risks related to additional increases in the estimated fair value of P&G’s interest in the Glad® business;
|
•
|
the Company’s ability to attract and retain key personnel;
|
•
|
supply disruptions and other risks inherent in reliance on a limited base of suppliers;
|
•
|
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;
|
•
|
increased focus by governmental and non-governmental organizations, customers, consumers and investors on sustainability issues, including those related to climate change;
|
•
|
the facilities of the Company and its suppliers being subject to disruption by events beyond the Company’s control, including work stoppages, cyber-attacks, natural disasters and terrorism;
|
•
|
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 accuracy of the Company’s estimates and assumptions on which its financial projections are based;
|
•
|
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;
|
•
|
uncertainties relating to tax positions, tax disputes and changes in the Company’s tax rate, and any additional effects of the Tax Act on the Company;
|
•
|
the Company’s ability to maintain an effective system of internal controls;
|
•
|
the impacts of potential stockholder activism; and
|
•
|
risks related to the Company’s discontinuation of operations in Venezuela.
|
|
Valuation of Goodwill and Trademarks with Indefinite Lives
|
Description of the Matter
|
At June 30, 2019, the Company’s goodwill was $1.6 billion and represented 31% of total assets; trademarks with indefinite lives was $777 million and represented 15% of total assets. As discussed in Note 1 of the consolidated financial statements, goodwill and trademarks with indefinite lives are tested by the Company’s management for impairment at least annually, in the fiscal fourth quarter, unless there are indications of impairment at other points throughout the year. Goodwill is tested for impairment at the reporting unit level.
Auditing the Company’s annual impairment test for goodwill and trademarks with indefinite lives is complex and highly judgmental and required the involvement of a valuation specialist due to the significant judgment in estimating the fair value of reporting units and trademarks with indefinite lives. In particular, the fair value estimates of reporting units with fair values that do not significantly exceed their carrying values are sensitive to assumptions such as net sales growth rates, gross margins and discount rates. Trademarks with indefinite lives with fair values that do not significantly exceed their carrying values are sensitive to assumptions such as net sales growth rates, discount rates and royalty rates. All of these assumptions are sensitive to and affected by expected future market or economic conditions, particularly those in emerging markets, and industry and company-specific qualitative factors.
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and trademarks impairment review process. This included evaluating controls over the Company’s budgetary and forecasting process used to develop the estimated future earnings and cash flows used in estimating the fair value of reporting units and trademarks with indefinite lives. We also tested controls over management’s review of the data used in their valuation models and review of the significant assumptions such as estimation of net sales, expense growth rates and terminal growth rates.
To test the estimated fair value of the Company’s reporting units and trademarks with indefinite lives (with fair values that do not significantly exceed carrying values), we performed audit procedures that included, among others, assessing the methodologies, testing the significant assumptions discussed above used to develop the estimates of future earnings and cash flows and testing the completeness and accuracy of the underlying data. We compared the significant assumptions used by management to current industry and economic trends, the Company’s historical results and other guideline companies within the same industry, and evaluated whether changes in the Company’s business would affect the significant assumptions. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the reporting units and trademarks with indefinite lives resulting from changes in these assumptions. We involved our valuation specialists to assist in reviewing the valuation methodology and testing the terminal growth rates, discount rates and royalty rates.
In addition, for goodwill we also tested the Company’s calculation of implied multiples of the reporting units, compared them to guideline companies and evaluated the resulting premium. For trademarks with indefinite lives, where applicable, we also assessed whether the assumptions used were consistent with those used in the goodwill impairment review process.
|
|
Valuation of Venture Agreement Terminal Obligation
|
Description of the Matter
|
As discussed in Note 8 of the consolidated financial statements, the Company has an agreement with The Proctor & Gamble Company (P&G) for the Company’s Glad® bags, wraps and containers business, for which the Company is required to purchase P&G’s 20% interest in the venture for cash at fair value of the global Glad® business upon termination of the agreement. At June 30, 2019, the fair value of $370 million has been recognized as a venture agreement terminal obligation and represented 8% of total liabilities.
Auditing the Company’s Glad® venture agreement terminal obligation is complex and highly judgmental and required the involvement of a valuation specialist due to the significant judgment in estimating the fair value of the global Glad® business. In particular, the fair value estimate is sensitive to assumptions such as net sales growth rates, gross margins, discount rate and commodity prices. These assumptions are sensitive to and affected by expected future market or economic conditions, particularly those in emerging markets, and industry and company-specific qualitative factors.
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the venture agreement terminal obligation valuation review process. This included controls over the Company’s budgetary and forecasting process used to develop the estimated fair value of the global Glad® business. We also tested management’s controls over the data used in their valuation models and review of the significant assumptions such as estimation of net sales, expense growth rates, terminal growth rates and commodity prices.
|
|
To test the estimated fair value of the venture agreement terminal obligation, we performed audit procedures that included, among others, assessing the methodologies, testing the significant assumptions discussed above used to develop estimates of future earnings and cash flows, testing the completeness and accuracy of the underlying data and comparing the assumptions used for the U.S. Glad® business with those used in the valuation of the Glad® reporting unit for goodwill impairment review purposes. We compared the significant assumptions used by management to current industry and economic trends, the Company’s historical results and other guideline companies within the same industry, and evaluated whether changes in the Company’s business, including shifts in consumer demands and commodity prices, would affect the significant assumptions. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the venture agreement terminal obligation resulting from changes in these assumptions. We involved our valuation specialist to assist in reviewing the valuation methodology and testing the terminal growth rates and discount rates.
|
Dollars in millions, except share and per share data
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
|
$
|
6,214
|
|
|
$
|
6,124
|
|
|
$
|
5,973
|
|
Cost of products sold
|
|
3,486
|
|
|
3,449
|
|
|
3,302
|
|
|||
Gross profit
|
|
2,728
|
|
|
2,675
|
|
|
2,671
|
|
|||
Selling and administrative expenses
|
|
856
|
|
|
837
|
|
|
810
|
|
|||
Advertising costs
|
|
612
|
|
|
570
|
|
|
599
|
|
|||
Research and development costs
|
|
136
|
|
|
132
|
|
|
135
|
|
|||
Interest expense
|
|
97
|
|
|
85
|
|
|
88
|
|
|||
Other (income) expense, net
|
|
3
|
|
|
(3
|
)
|
|
6
|
|
|||
Earnings from continuing operations before income taxes
|
|
1,024
|
|
|
1,054
|
|
|
1,033
|
|
|||
Income taxes on continuing operations
|
|
204
|
|
|
231
|
|
|
330
|
|
|||
Earnings from continuing operations
|
|
820
|
|
|
823
|
|
|
703
|
|
|||
Losses from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Net earnings
|
|
$
|
820
|
|
|
$
|
823
|
|
|
$
|
701
|
|
Net earnings (losses) per share
|
|
|
|
|
|
|
||||||
Basic
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
6.42
|
|
|
$
|
6.37
|
|
|
$
|
5.45
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
|||
Basic net earnings per share
|
|
$
|
6.42
|
|
|
$
|
6.37
|
|
|
$
|
5.43
|
|
Diluted
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
6.32
|
|
|
$
|
6.26
|
|
|
$
|
5.35
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
|||
Diluted net earnings per share
|
|
$
|
6.32
|
|
|
$
|
6.26
|
|
|
$
|
5.33
|
|
Weighted average shares outstanding (in thousands)
|
|
|
|
|
|
|
||||||
Basic
|
|
127,734
|
|
|
129,293
|
|
|
128,953
|
|
|||
Diluted
|
|
129,792
|
|
|
131,581
|
|
|
131,566
|
|
Years ended June 30
|
|
|
|
|
|
|
||||||
Dollars in millions
|
|
2019
|
|
2018
|
|
2017
|
||||||
Earnings from continuing operations
|
|
$
|
820
|
|
|
$
|
823
|
|
|
$
|
703
|
|
Losses from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Net earnings
|
|
820
|
|
|
823
|
|
|
701
|
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Foreign currency adjustments, net of tax
|
|
(22
|
)
|
|
(28
|
)
|
|
(3
|
)
|
|||
Net unrealized gains (losses) on derivatives, net of tax
|
|
2
|
|
|
12
|
|
|
7
|
|
|||
Pension and postretirement benefit adjustments, net of tax
|
|
4
|
|
|
12
|
|
|
23
|
|
|||
Total other comprehensive income (loss), net of tax
|
|
(16
|
)
|
|
(4
|
)
|
|
27
|
|
|||
Comprehensive income
|
|
$
|
804
|
|
|
$
|
819
|
|
|
$
|
728
|
|
As of June 30
|
|
|
|
|
||||
Dollars in millions, except share and per share data
|
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
111
|
|
|
$
|
131
|
|
Receivables, net
|
|
631
|
|
|
600
|
|
||
Inventories, net
|
|
512
|
|
|
506
|
|
||
Prepaid expenses and other current assets
|
|
51
|
|
|
74
|
|
||
Total current assets
|
|
1,305
|
|
|
1,311
|
|
||
Property, plant and equipment, net
|
|
1,034
|
|
|
996
|
|
||
Goodwill
|
|
1,591
|
|
|
1,602
|
|
||
Trademarks, net
|
|
791
|
|
|
795
|
|
||
Other intangible assets, net
|
|
121
|
|
|
134
|
|
||
Other assets
|
|
274
|
|
|
222
|
|
||
Total assets
|
|
$
|
5,116
|
|
|
$
|
5,060
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Notes and loans payable
|
|
$
|
396
|
|
|
$
|
199
|
|
Accounts payable and accrued liabilities
|
|
1,035
|
|
|
1,001
|
|
||
Income taxes payable
|
|
9
|
|
|
—
|
|
||
Total current liabilities
|
|
1,440
|
|
|
1,200
|
|
||
Long-term debt
|
|
2,287
|
|
|
2,284
|
|
||
Other liabilities
|
|
780
|
|
|
778
|
|
||
Deferred income taxes
|
|
50
|
|
|
72
|
|
||
Total liabilities
|
|
4,557
|
|
|
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 June 30, 2019 and 2018; and 125,686,325 and 127,982,767 shares outstanding as of June 30, 2019 and 2018, respectively
|
|
159
|
|
|
159
|
|
||
Additional paid-in capital
|
|
1,046
|
|
|
975
|
|
||
Retained earnings
|
|
3,150
|
|
|
2,797
|
|
||
Treasury shares, at cost: 33,055,136 and 30,758,694 shares as of June 30, 2019 and 2018, respectively
|
|
(3,194
|
)
|
|
(2,658
|
)
|
||
Accumulated other comprehensive net (loss) income
|
|
(602
|
)
|
|
(547
|
)
|
||
Stockholders’ equity
|
|
559
|
|
|
726
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
5,116
|
|
|
$
|
5,060
|
|
|
|
Common Stock
|
Additional
Paid-in Capital |
|
|
|
Treasury Stock
|
Accumulated
Other Comprehensive Net (Loss) Income |
|
|
||||||||||||||||||||
Dollars in millions, except per share data
|
|
Amount
|
|
Shares
(in thousands) |
|
Retained
Earnings |
|
Amount
|
|
Shares
(in thousands) |
|
Total
|
||||||||||||||||||
Balance as of June 30, 2016
|
|
$
|
159
|
|
|
158,741
|
|
|
$
|
868
|
|
|
$
|
2,163
|
|
|
$
|
(2,323
|
)
|
|
(29,386
|
)
|
|
$
|
(570
|
)
|
|
$
|
297
|
|
Net earnings
|
|
|
|
|
|
|
|
701
|
|
|
|
|
|
|
|
|
701
|
|
||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
27
|
|
||||||||||||
Dividends ($3.24 per share declared)
|
|
|
|
|
|
|
|
(421
|
)
|
|
|
|
|
|
|
|
(421
|
)
|
||||||||||||
Stock-based compensation
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
51
|
|
||||||||||||
Other employee stock plan activities
|
|
|
|
|
|
9
|
|
|
(3
|
)
|
|
70
|
|
|
1,164
|
|
|
|
|
76
|
|
|||||||||
Treasury stock purchased
|
|
|
|
|
|
|
|
|
|
(189
|
)
|
|
(1,505
|
)
|
|
|
|
(189
|
)
|
|||||||||||
Balance as of June 30, 2017
|
|
159
|
|
|
158,741
|
|
|
928
|
|
|
2,440
|
|
|
(2,442
|
)
|
|
(29,727
|
)
|
|
(543
|
)
|
|
542
|
|
||||||
Net earnings
|
|
|
|
|
|
|
|
823
|
|
|
|
|
|
|
|
|
823
|
|
||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||||||
Dividends ($3.60 per share declared)
|
|
|
|
|
|
|
|
(467
|
)
|
|
|
|
|
|
|
|
(467
|
)
|
||||||||||||
Stock-based compensation
|
|
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
53
|
|
||||||||||||
Other employee stock plan activities
|
|
|
|
|
|
(6
|
)
|
|
1
|
|
|
56
|
|
|
1,139
|
|
|
|
|
51
|
|
|||||||||
Treasury stock purchased
|
|
|
|
|
|
|
|
|
|
(272
|
)
|
|
(2,171
|
)
|
|
|
|
(272
|
)
|
|||||||||||
Balance as of June 30, 2018
|
|
159
|
|
|
158,741
|
|
|
975
|
|
|
2,797
|
|
|
(2,658
|
)
|
|
(30,759
|
)
|
|
(547
|
)
|
|
726
|
|
||||||
Cumulative effect of accounting changes (1)
|
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
(39
|
)
|
|
(3
|
)
|
|||||||||||
Net earnings
|
|
|
|
|
|
|
|
820
|
|
|
|
|
|
|
|
|
820
|
|
||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16
|
)
|
|
(16
|
)
|
||||||||||||
Dividends ($3.94 per share declared)
|
|
|
|
|
|
|
|
(503
|
)
|
|
|
|
|
|
|
|
(503
|
)
|
||||||||||||
Stock-based compensation
|
|
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
43
|
|
||||||||||||
Other employee stock plan activities
|
|
|
|
|
|
28
|
|
|
—
|
|
|
124
|
|
|
2,178
|
|
|
|
|
152
|
|
|||||||||
Treasury stock purchased
|
|
|
|
|
|
|
|
|
|
(660
|
)
|
|
(4,474
|
)
|
|
|
|
(660
|
)
|
|||||||||||
Balance as of June 30, 2019
|
|
$
|
159
|
|
|
158,741
|
|
|
$
|
1,046
|
|
|
$
|
3,150
|
|
|
$
|
(3,194
|
)
|
|
(33,055
|
)
|
|
$
|
(602
|
)
|
|
$
|
559
|
|
Years ended June 30
|
|
|
|
|
|
|
||||||
Dollars in millions
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
(As Adjusted*)
|
|
(As Adjusted*)
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net earnings
|
|
$
|
820
|
|
|
$
|
823
|
|
|
$
|
701
|
|
Deduct: Losses from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Earnings from continuing operations
|
|
820
|
|
|
823
|
|
|
703
|
|
|||
Adjustments to reconcile earnings from continuing operations to net cash provided by continuing operations:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
180
|
|
|
166
|
|
|
163
|
|
|||
Stock-based compensation
|
|
43
|
|
|
53
|
|
|
51
|
|
|||
Deferred income taxes
|
|
(20
|
)
|
|
(23
|
)
|
|
(35
|
)
|
|||
Other
|
|
(29
|
)
|
|
44
|
|
|
33
|
|
|||
Changes in:
|
|
|
|
|
|
|
||||||
Receivables, net
|
|
(32
|
)
|
|
(24
|
)
|
|
(1
|
)
|
|||
Inventories, net
|
|
(7
|
)
|
|
(21
|
)
|
|
(19
|
)
|
|||
Prepaid expenses and other current assets
|
|
(6
|
)
|
|
4
|
|
|
(5
|
)
|
|||
Accounts payable and accrued liabilities
|
|
17
|
|
|
(47
|
)
|
|
(34
|
)
|
|||
Income taxes payable/receivable, net
|
|
26
|
|
|
1
|
|
|
12
|
|
|||
Net cash provided by continuing operations
|
|
992
|
|
|
976
|
|
|
868
|
|
|||
Net cash used for discontinued operations
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Net cash provided by operations
|
|
992
|
|
|
976
|
|
|
865
|
|
|||
Investing activities:
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(206
|
)
|
|
(194
|
)
|
|
(231
|
)
|
|||
Businesses acquired, net of cash acquired
|
|
—
|
|
|
(681
|
)
|
|
—
|
|
|||
Other
|
|
10
|
|
|
16
|
|
|
26
|
|
|||
Net cash used for investing activities
|
|
(196
|
)
|
|
(859
|
)
|
|
(205
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Notes and loans payable, net
|
|
189
|
|
|
(214
|
)
|
|
(125
|
)
|
|||
Long-term debt borrowings, net of issuance costs
|
|
—
|
|
|
891
|
|
|
—
|
|
|||
Long-term debt repayments
|
|
—
|
|
|
(400
|
)
|
|
—
|
|
|||
Treasury stock purchased
|
|
(661
|
)
|
|
(271
|
)
|
|
(183
|
)
|
|||
Cash dividends paid
|
|
(490
|
)
|
|
(450
|
)
|
|
(412
|
)
|
|||
Issuance of common stock for employee stock plans and other
|
|
147
|
|
|
45
|
|
|
75
|
|
|||
Net cash used for financing activities
|
|
(815
|
)
|
|
(399
|
)
|
|
(645
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
(21
|
)
|
|
(285
|
)
|
|
14
|
|
|||
Cash, cash equivalents and restricted cash:
|
|
|
|
|
|
|
||||||
Beginning of year
|
|
134
|
|
|
419
|
|
|
405
|
|
|||
End of year
|
|
$
|
113
|
|
|
$
|
134
|
|
|
$
|
419
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
87
|
|
|
$
|
75
|
|
|
$
|
78
|
|
Income taxes paid, net of refunds
|
|
207
|
|
|
245
|
|
|
347
|
|
|||
Non-cash financing activities:
|
|
|
|
|
|
|
||||||
Cash dividends declared and accrued, but not paid
|
|
133
|
|
|
123
|
|
|
108
|
|
|
Estimated
Useful Lives
|
Buildings and leasehold improvements
|
7 - 40 years
|
Land improvements
|
10 - 30 years
|
Machinery and equipment
|
3 - 15 years
|
Computer equipment
|
3 - 5 years
|
Capitalized software costs
|
3 - 7 years
|
|
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
|
|
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
411
|
|
|
$
|
395
|
|
Raw materials and packaging
|
125
|
|
|
129
|
|
||
Work in process
|
6
|
|
|
9
|
|
||
LIFO allowances
|
(30
|
)
|
|
(27
|
)
|
||
Total
|
$
|
512
|
|
|
$
|
506
|
|
|
2019
|
|
2018
|
||||
Machinery and equipment
|
$
|
1,867
|
|
|
$
|
1,808
|
|
Buildings
|
596
|
|
|
574
|
|
||
Capitalized software costs
|
358
|
|
|
375
|
|
||
Land and improvements
|
138
|
|
|
131
|
|
||
Construction in progress
|
131
|
|
|
77
|
|
||
Computer equipment
|
94
|
|
|
92
|
|
||
Total
|
3,184
|
|
|
3,057
|
|
||
Less: Accumulated depreciation and amortization
|
(2,150
|
)
|
|
(2,061
|
)
|
||
Property, plant and equipment, net
|
$
|
1,034
|
|
|
$
|
996
|
|
|
Goodwill
|
||||||||||||||||||
|
Cleaning
|
|
Household
|
|
Lifestyle
|
|
International
|
|
Total
|
||||||||||
Balance as of June 30, 2017
|
$
|
323
|
|
|
$
|
207
|
|
|
$
|
244
|
|
|
$
|
422
|
|
|
$
|
1,196
|
|
Acquisition
|
—
|
|
|
102
|
|
|
309
|
|
|
—
|
|
|
411
|
|
|||||
Effect of foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|||||
Balance as of June 30, 2018
|
$
|
323
|
|
|
$
|
309
|
|
|
$
|
553
|
|
|
$
|
417
|
|
|
$
|
1,602
|
|
Acquisition
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Effect of foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
|||||
Balance as of June 30, 2019
|
$
|
323
|
|
|
$
|
309
|
|
|
$
|
554
|
|
|
$
|
405
|
|
|
$
|
1,591
|
|
|
As of June 30, 2019
|
|
As of June 30, 2018
|
||||||||||||||||||||
|
Gross
carrying amount |
|
Accumulated
amortization |
|
Net carrying
amount |
|
Gross
carrying amount |
|
Accumulated
amortization |
|
Net carrying
amount |
||||||||||||
Trademarks with indefinite lives
|
$
|
777
|
|
|
$
|
—
|
|
|
$
|
777
|
|
|
$
|
778
|
|
|
$
|
—
|
|
|
$
|
778
|
|
Trademarks with finite lives
|
40
|
|
|
26
|
|
|
14
|
|
|
41
|
|
|
24
|
|
|
17
|
|
||||||
Other intangible assets
|
430
|
|
|
309
|
|
|
121
|
|
|
430
|
|
|
296
|
|
|
134
|
|
||||||
Total
|
$
|
1,247
|
|
|
$
|
335
|
|
|
$
|
912
|
|
|
$
|
1,249
|
|
|
$
|
320
|
|
|
$
|
929
|
|
|
2019
|
|
2018
|
||||
Accounts payable
|
$
|
507
|
|
|
$
|
507
|
|
Compensation and employee benefit costs
|
158
|
|
|
154
|
|
||
Trade and sales promotion costs
|
115
|
|
|
91
|
|
||
Dividends
|
139
|
|
|
129
|
|
||
Other
|
116
|
|
|
120
|
|
||
Total
|
$
|
1,035
|
|
|
$
|
1,001
|
|
|
2019
|
|
2018
|
||||
Senior unsecured notes and debentures:
|
|
|
|
||||
3.80%, $300 due November 2021
|
$
|
299
|
|
|
$
|
298
|
|
3.05%, $600 due September 2022
|
598
|
|
|
597
|
|
||
3.50%, $500 due December 2024
|
498
|
|
|
497
|
|
||
3.10%, $400 due October 2027
|
397
|
|
|
397
|
|
||
3.90%, $500 due May 2028
|
495
|
|
|
495
|
|
||
Total
|
2,287
|
|
|
2,284
|
|
||
Less: Current maturities of long-term debt
|
—
|
|
|
—
|
|
||
Long-term debt
|
$
|
2,287
|
|
|
$
|
2,284
|
|
|
2019
|
|
2018
|
||||
Revolving credit facility
|
$
|
1,100
|
|
|
$
|
1,100
|
|
Foreign and other credit lines
|
39
|
|
|
37
|
|
||
Total
|
$
|
1,139
|
|
|
$
|
1,137
|
|
|
2019
|
|
2018
|
||||
Venture agreement terminal obligation, net
|
$
|
370
|
|
|
$
|
341
|
|
Employee benefit obligations
|
280
|
|
|
283
|
|
||
Taxes
|
34
|
|
|
52
|
|
||
Other
|
96
|
|
|
102
|
|
||
Total
|
$
|
780
|
|
|
$
|
778
|
|
|
Gains (losses) recognized in Other comprehensive income
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Commodity purchase derivative contracts
|
$
|
(5
|
)
|
|
$
|
4
|
|
|
$
|
(3
|
)
|
Foreign exchange derivative contracts
|
—
|
|
|
2
|
|
|
(1
|
)
|
|||
Interest rate derivative contracts
|
—
|
|
|
2
|
|
|
—
|
|
|||
Total
|
$
|
(5
|
)
|
|
$
|
8
|
|
|
$
|
(4
|
)
|
|
Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Commodity purchase derivative contracts
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
Foreign exchange derivative contracts
|
2
|
|
|
(1
|
)
|
|
(3
|
)
|
|||
Interest rate derivative contracts
|
(6
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|||
Total
|
$
|
(6
|
)
|
|
$
|
(6
|
)
|
|
$
|
(11
|
)
|
|
|
|
|
|
2019
|
|
2018
|
||||||||||||
Assets
|
Balance sheet classification
|
|
Fair value
hierarchy level |
|
Carrying
Amount |
|
Estimated
Fair Value |
|
Carrying
Amount |
|
Estimated
Fair Value |
||||||||
Investments including money market funds
|
Cash and cash equivalents (a)
|
|
1
|
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
24
|
|
|
$
|
24
|
|
Time deposits
|
Cash and cash equivalents (a)
|
|
2
|
|
7
|
|
|
7
|
|
|
23
|
|
|
23
|
|
||||
Commodity purchase swaps contracts
|
Prepaid expenses and other current assets
|
|
2
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Foreign exchange forward contracts
|
Prepaid expenses and other current assets
|
|
2
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Trust assets for nonqualified deferred compensation plans
|
Other assets
|
|
1
|
|
96
|
|
|
96
|
|
|
86
|
|
|
86
|
|
||||
|
|
|
|
|
$
|
129
|
|
|
$
|
129
|
|
|
$
|
138
|
|
|
$
|
138
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Notes and loans payable
|
Notes and loans payable (b)
|
|
2
|
|
$
|
396
|
|
|
$
|
396
|
|
|
$
|
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
|
|
|
—
|
|
|
—
|
|
||||
Current maturities of long-term debt and Long-term debt
|
Current maturities of long-
term debt and Long-term debt (c) |
|
2
|
|
2,287
|
|
|
2,402
|
|
|
2,284
|
|
|
2,269
|
|
||||
|
|
|
|
|
$
|
2,685
|
|
|
$
|
2,800
|
|
|
$
|
2,484
|
|
|
$
|
2,469
|
|
(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.
|
Year
|
Operating
leases |
|
Capital
leases |
||||
2020
|
$
|
71
|
|
|
$
|
2
|
|
2021
|
65
|
|
|
2
|
|
||
2022
|
50
|
|
|
1
|
|
||
2023
|
42
|
|
|
1
|
|
||
2024
|
37
|
|
|
1
|
|
||
Thereafter
|
124
|
|
|
2
|
|
||
Total
|
$
|
389
|
|
|
$
|
9
|
|
Year
|
Purchase
Obligations |
||
2020
|
$
|
77
|
|
2021
|
36
|
|
|
2022
|
26
|
|
|
2023
|
14
|
|
|
2024
|
11
|
|
|
Thereafter
|
—
|
|
|
Total
|
$
|
164
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Amount
|
|
Shares
(in thousands) |
|
Amount
|
|
Shares
(in thousands) |
|
Amount
|
|
Shares
(in thousands) |
|||||||||
Open-market purchase program
|
$
|
328
|
|
|
2,266
|
|
|
$
|
95
|
|
|
749
|
|
|
$
|
—
|
|
|
—
|
|
Evergreen Program
|
332
|
|
|
2,208
|
|
|
177
|
|
|
1,422
|
|
|
189
|
|
|
1,505
|
|
|||
Total stock repurchases
|
$
|
660
|
|
|
4,474
|
|
|
$
|
272
|
|
|
2,171
|
|
|
$
|
189
|
|
|
1,505
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Dividends per share paid
|
$
|
3.84
|
|
|
$
|
3.48
|
|
|
$
|
3.20
|
|
|
Foreign currency
translation adjustments |
|
Net
unrealized gains (losses) on derivatives |
|
Pension and
postretirement benefit adjustments |
|
Accumulated
other comprehensive (loss) income |
||||||||
Balance June 30, 2016
|
$
|
(353
|
)
|
|
$
|
(44
|
)
|
|
$
|
(173
|
)
|
|
$
|
(570
|
)
|
Other comprehensive income (loss) before
reclassifications
|
(3
|
)
|
|
(4
|
)
|
|
27
|
|
|
20
|
|
||||
Amounts reclassified from Accumulated other
comprehensive net (loss) income
|
—
|
|
|
11
|
|
|
9
|
|
|
20
|
|
||||
Income tax benefit (expense)
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
||||
Net current period other comprehensive income (loss)
|
(3
|
)
|
|
7
|
|
|
23
|
|
|
27
|
|
||||
Balance June 30, 2017
|
(356
|
)
|
|
(37
|
)
|
|
(150
|
)
|
|
(543
|
)
|
||||
Other comprehensive income (loss) before
reclassifications |
(20
|
)
|
|
8
|
|
|
11
|
|
|
(1
|
)
|
||||
Amounts reclassified from Accumulated other
comprehensive net (loss) income
|
—
|
|
|
6
|
|
|
8
|
|
|
14
|
|
||||
Income tax benefit (expense)
|
(8
|
)
|
|
(2
|
)
|
|
(7
|
)
|
|
(17
|
)
|
||||
Net current period other comprehensive income (loss)
|
(28
|
)
|
|
12
|
|
|
12
|
|
|
(4
|
)
|
||||
Balance June 30, 2018
|
(384
|
)
|
|
(25
|
)
|
|
(138
|
)
|
|
(547
|
)
|
||||
Other comprehensive income (loss) before
reclassifications
|
(20
|
)
|
|
(5
|
)
|
|
—
|
|
|
(25
|
)
|
||||
Amounts reclassified from Accumulated other
comprehensive net (loss) income
|
—
|
|
|
6
|
|
|
6
|
|
|
12
|
|
||||
Income tax benefit (expense)
|
(2
|
)
|
|
1
|
|
|
(2
|
)
|
|
(3
|
)
|
||||
Net current period other comprehensive income (loss)
|
(22
|
)
|
|
2
|
|
|
4
|
|
|
(16
|
)
|
||||
Cumulative effect of accounting changes (1)
|
(8
|
)
|
|
—
|
|
|
(31
|
)
|
|
(39
|
)
|
||||
Balance June 30, 2019
|
$
|
(414
|
)
|
|
$
|
(23
|
)
|
|
$
|
(165
|
)
|
|
$
|
(602
|
)
|
|
2019
|
|
2018
|
|
2017
|
|||
Basic
|
127,734
|
|
|
129,293
|
|
|
128,953
|
|
Dilutive effect of stock options and other
|
2,058
|
|
|
2,288
|
|
|
2,613
|
|
Diluted
|
129,792
|
|
|
131,581
|
|
|
131,566
|
|
|
|
|
|
|
|
|||
Antidilutive stock options and other
|
800
|
|
|
1,192
|
|
|
11
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of products sold
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Selling and administrative expenses
|
35
|
|
|
42
|
|
|
40
|
|
|||
Research and development costs
|
3
|
|
|
4
|
|
|
4
|
|
|||
Total compensation costs
|
$
|
43
|
|
|
$
|
53
|
|
|
$
|
51
|
|
|
|
|
|
|
|
||||||
Related income tax benefit
|
$
|
10
|
|
|
$
|
16
|
|
|
$
|
19
|
|
|
2019
|
|
2018
|
|
2017
|
Expected life
|
5.4 years
|
|
5.5 years
|
|
5.5 years
|
Weighted-average expected life
|
5.4 years
|
|
5.5 years
|
|
5.5 years
|
Expected volatility
|
17.3% to 20.2%
|
|
15.7% to 18.7%
|
|
16.2% to 16.9%
|
Weighted-average volatility
|
17.4%
|
|
15.7%
|
|
16.9%
|
Risk-free interest rate
|
2.5% to 3.0%
|
|
1.3% to 2.6%
|
|
1.3% to 2.2%
|
Weighted-average risk-free interest rate
|
2.9%
|
|
1.8%
|
|
1.3%
|
Dividend yield
|
2.5% to 2.6%
|
|
2.4% to 3.0%
|
|
2.4% to 2.8%
|
Weighted-average dividend yield
|
2.6%
|
|
2.5%
|
|
2.6%
|
|
Number of
Shares (In thousands) |
|
Weighted-
Average Exercise Price per Share |
|
Average
Remaining Contractual Life |
|
Aggregate
Intrinsic Value |
|||||
Options outstanding as of June 30, 2018
|
7,080
|
|
|
$
|
101
|
|
|
6 years
|
|
$
|
240
|
|
Granted
|
863
|
|
|
152
|
|
|
|
|
|
|||
Exercised
|
(1,951
|
)
|
|
88
|
|
|
|
|
|
|||
Canceled
|
(248
|
)
|
|
132
|
|
|
|
|
|
|||
Options outstanding as of June 30, 2019
|
5,744
|
|
|
$
|
112
|
|
|
6 years
|
|
$
|
235
|
|
|
|
|
|
|
|
|
|
|||||
Options vested as of June 30, 2019
|
3,533
|
|
|
$
|
97
|
|
|
5 years
|
|
$
|
198
|
|
|
Number of
Shares (In thousands) |
|
Weighted-Average
Grant Date Fair Value per Share |
|||
Restricted stock awards as of June 30, 2018
|
156
|
|
|
$
|
135
|
|
Granted
|
139
|
|
|
152
|
|
|
Vested
|
(36
|
)
|
|
135
|
|
|
Forfeited
|
(18
|
)
|
|
140
|
|
|
Restricted stock awards as of June 30, 2019
|
241
|
|
|
$
|
144
|
|
|
Number of
Shares (In thousands) |
|
Weighted-Average
Grant Date Fair Value per Share |
|||
Performance share awards as of June 30, 2018
|
698
|
|
|
$
|
111
|
|
Granted
|
216
|
|
|
152
|
|
|
Distributed
|
(334
|
)
|
|
109
|
|
|
Forfeited
|
(43
|
)
|
|
130
|
|
|
Performance share awards as of June 30, 2019
|
537
|
|
|
$
|
120
|
|
|
|
|
|
|||
Performance shares vested and deferred as of June 30, 2019
|
151
|
|
|
$
|
82
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Income from equity investees
|
$
|
(15
|
)
|
|
$
|
(12
|
)
|
|
$
|
(19
|
)
|
Net periodic benefit cost (1)
|
14
|
|
|
—
|
|
|
—
|
|
|||
Loss (gain) on sale of assets and investments, net
|
—
|
|
|
4
|
|
|
(11
|
)
|
|||
Interest income
|
(3
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|||
Asset impairment charges
|
—
|
|
|
1
|
|
|
23
|
|
|||
Amortization of trademarks and other intangible assets
|
17
|
|
|
11
|
|
|
10
|
|
|||
Foreign exchange transaction (gains) losses, net
|
7
|
|
|
3
|
|
|
(1
|
)
|
|||
Other
|
(17
|
)
|
|
(4
|
)
|
|
8
|
|
|||
Total
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
6
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
166
|
|
|
$
|
177
|
|
|
$
|
291
|
|
State
|
24
|
|
|
34
|
|
|
36
|
|
|||
Foreign
|
34
|
|
|
43
|
|
|
38
|
|
|||
Total current
|
224
|
|
|
254
|
|
|
365
|
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
(22
|
)
|
|
(24
|
)
|
|
(29
|
)
|
|||
State
|
(1
|
)
|
|
3
|
|
|
(2
|
)
|
|||
Foreign
|
3
|
|
|
(2
|
)
|
|
(4
|
)
|
|||
Total deferred
|
(20
|
)
|
|
(23
|
)
|
|
(35
|
)
|
|||
Total
|
$
|
204
|
|
|
$
|
231
|
|
|
$
|
330
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
912
|
|
|
$
|
963
|
|
|
$
|
927
|
|
Foreign
|
112
|
|
|
91
|
|
|
106
|
|
|||
Total
|
$
|
1,024
|
|
|
$
|
1,054
|
|
|
$
|
1,033
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Statutory federal tax rate
|
21.0
|
%
|
|
28.1
|
%
|
|
35.0
|
%
|
State taxes (net of federal tax benefits)
|
1.7
|
|
|
2.4
|
|
|
2.2
|
|
Tax differential on foreign earnings
|
1.0
|
|
|
1.2
|
|
|
(0.6
|
)
|
Federal domestic manufacturing deduction
|
—
|
|
|
(1.8
|
)
|
|
(2.6
|
)
|
Change in valuation allowance
|
0.1
|
|
|
0.3
|
|
|
0.2
|
|
Federal excess tax benefits
|
(2.3
|
)
|
|
(1.7
|
)
|
|
(2.0
|
)
|
Reversals of deferred taxes related to foreign unremitted earnings
|
—
|
|
|
(2.6
|
)
|
|
—
|
|
Remeasurement of deferred taxes
|
0.1
|
|
|
(3.1
|
)
|
|
—
|
|
Other differences
|
(1.8
|
)
|
|
(1.0
|
)
|
|
(0.3
|
)
|
Effective tax rate
|
19.8
|
%
|
|
21.8
|
%
|
|
31.9
|
%
|
|
|
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
|
|
|
2019
|
|
2018
|
||||
Deferred tax assets
|
|
|
|
||||
Compensation and benefit programs
|
$
|
100
|
|
|
$
|
103
|
|
Net operating loss and tax credit carryforwards
|
87
|
|
|
86
|
|
||
Accruals and reserves
|
41
|
|
|
28
|
|
||
Basis difference related to Venture Agreement
|
19
|
|
|
19
|
|
||
Inventory costs
|
22
|
|
|
16
|
|
||
Other
|
21
|
|
|
25
|
|
||
Subtotal
|
290
|
|
|
277
|
|
||
Valuation allowance
|
(44
|
)
|
|
(43
|
)
|
||
Total deferred tax assets
|
246
|
|
|
234
|
|
||
Deferred tax liabilities
|
|
|
|
||||
Fixed and intangible assets
|
(236
|
)
|
|
(232
|
)
|
||
Low-income housing partnerships
|
(13
|
)
|
|
(17
|
)
|
||
Other
|
(18
|
)
|
|
(19
|
)
|
||
Total deferred tax liabilities
|
(267
|
)
|
|
(268
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
(21
|
)
|
|
$
|
(34
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Valuation allowance at beginning of year
|
$
|
(43
|
)
|
|
$
|
(40
|
)
|
|
$
|
(37
|
)
|
Net decrease/(increase) for other foreign deferred tax assets
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net decrease/(increase) for foreign net operating loss carryforwards and tax credits
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|||
Valuation allowance at end of year
|
$
|
(44
|
)
|
|
$
|
(43
|
)
|
|
$
|
(40
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Unrecognized tax benefits at beginning of year
|
$
|
47
|
|
|
$
|
40
|
|
|
$
|
37
|
|
Gross increases - tax positions in prior periods
|
2
|
|
|
2
|
|
|
1
|
|
|||
Gross decreases - tax positions in prior periods
|
(20
|
)
|
|
(1
|
)
|
|
(6
|
)
|
|||
Gross increases - current period tax positions
|
6
|
|
|
8
|
|
|
9
|
|
|||
Gross decreases - current period tax positions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Lapse of applicable statute of limitations
|
(3
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Settlements
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Unrecognized tax benefits at end of year
|
$
|
31
|
|
|
$
|
47
|
|
|
$
|
40
|
|
|
Retirement
Income |
|
Retirement
Health Care |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Change in benefit obligations:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation as of beginning of year
|
$
|
593
|
|
|
$
|
633
|
|
|
$
|
38
|
|
|
$
|
42
|
|
Service cost
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Interest cost
|
23
|
|
|
23
|
|
|
2
|
|
|
2
|
|
||||
Actuarial loss (gain)
|
26
|
|
|
(21
|
)
|
|
(3
|
)
|
|
(2
|
)
|
||||
Plan amendments
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Translation and other adjustments
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(39
|
)
|
|
(43
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Benefit obligation as of end of year
|
604
|
|
|
593
|
|
|
34
|
|
|
38
|
|
||||
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of assets as of beginning of year
|
420
|
|
|
434
|
|
|
—
|
|
|
—
|
|
||||
Actual return on plan assets
|
41
|
|
|
8
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
63
|
|
|
22
|
|
|
3
|
|
|
4
|
|
||||
Benefits paid
|
(39
|
)
|
|
(43
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Translation and other adjustments
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets as of end of year
|
485
|
|
|
420
|
|
|
—
|
|
|
—
|
|
||||
Accrued benefit cost, net funded status
|
$
|
(119
|
)
|
|
$
|
(173
|
)
|
|
$
|
(34
|
)
|
|
$
|
(38
|
)
|
|
ABO Exceeds the Fair Value of Plan Assets
|
||||||
|
2019
|
|
2018
|
||||
Projected benefit obligation
|
$
|
167
|
|
|
$
|
571
|
|
Accumulated benefit obligation
|
166
|
|
|
571
|
|
||
Fair value of plan assets
|
—
|
|
|
395
|
|
|
Retirement Income
|
|
Retirement Health Care
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
23
|
|
|
23
|
|
|
22
|
|
|
2
|
|
|
2
|
|
|
2
|
|
||||||
Expected return on plan assets
|
(18
|
)
|
|
(19
|
)
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of unrecognized items
|
9
|
|
|
10
|
|
|
11
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(2
|
)
|
||||||
Total
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
14
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
Retirement
Income |
|
Retirement
Health Care |
||||
Net actuarial loss (gain)
|
$
|
236
|
|
|
$
|
(18
|
)
|
Prior service benefit
|
—
|
|
|
(2
|
)
|
||
Net deferred income tax (assets) liabilities
|
(56
|
)
|
|
5
|
|
||
Accumulated other comprehensive loss (income)
|
$
|
180
|
|
|
$
|
(15
|
)
|
|
Retirement
Income |
|
Retirement
Health Care |
||||
Net actuarial loss (gain) as of beginning of year
|
$
|
242
|
|
|
$
|
(17
|
)
|
Amortization during the year
|
(9
|
)
|
|
2
|
|
||
Loss (gain) during the year
|
3
|
|
|
(3
|
)
|
||
Net actuarial loss (gain) as of end of year
|
$
|
236
|
|
|
$
|
(18
|
)
|
|
Retirement Income
|
|
Retirement Health Care
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Discount rate
|
3.41
|
%
|
|
4.10
|
%
|
|
3.35
|
%
|
|
4.01
|
%
|
Rate of compensation increase
|
2.86
|
%
|
|
2.87
|
%
|
|
n/a
|
|
|
n/a
|
|
|
Retirement
Income |
|
Retirement
Health Care |
||||
2020
|
$
|
38
|
|
|
$
|
2
|
|
2021
|
51
|
|
|
2
|
|
||
2022
|
36
|
|
|
2
|
|
||
2023
|
36
|
|
|
2
|
|
||
2024
|
37
|
|
|
2
|
|
||
Fiscal years 2025 through 2029
|
186
|
|
|
10
|
|
|
% Target Allocation
|
|
% of Plan Assets
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
U.S. equity
|
9
|
%
|
|
11
|
%
|
|
9
|
%
|
|
11
|
%
|
International equity
|
8
|
%
|
|
12
|
%
|
|
8
|
%
|
|
12
|
%
|
Fixed income
|
83
|
%
|
|
74
|
%
|
|
83
|
%
|
|
74
|
%
|
Other
|
—
|
%
|
|
3
|
%
|
|
—
|
%
|
|
3
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
2019
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Total assets in the fair value hierarchy
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
|
|
|
|
|
||||||
Common collective trusts measured at net asset value
|
|
|
|
|
|
||||||
Bond funds
|
|
|
|
|
$
|
393
|
|
||||
International equity funds
|
|
|
|
|
50
|
|
|||||
Domestic equity funds
|
|
|
|
|
39
|
|
|||||
Real estate fund
|
|
|
|
|
1
|
|
|||||
Total common collective trusts measured at net asset value
|
|
|
|
|
483
|
|
|||||
Total assets at fair value
|
|
|
|
|
$
|
485
|
|
|
2018
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Total assets in the fair value hierarchy
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
||||||
Common collective trusts measured at net asset value
|
|
|
|
|
|
||||||
Bond funds
|
|
|
|
|
$
|
299
|
|
||||
International equity funds
|
|
|
|
|
60
|
|
|||||
Domestic equity funds
|
|
|
|
|
44
|
|
|||||
Real estate fund
|
|
|
|
|
14
|
|
|||||
Total common collective trusts measured at net asset value
|
|
|
|
|
417
|
|
|||||
Total assets at fair value
|
|
|
|
|
$
|
420
|
|
•
|
Cleaning consists of laundry, home care and professional products marketed and sold in the United States. Products within this segment include laundry additives, such as 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, disinfecting and food service products under the CloroxPro™, Dispatch®, Clorox Healthcare®, Hidden Valley® and KC Masterpiece® 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, natural personal care products, and dietary supplements mainly 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; natural personal care products under the Burt’s Bees® 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 systems and filters; digestive health products; charcoal; cat litter products; food products; bags, wraps and containers; 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®, Burt’s Bees®, CloroxPro™, and Clorox Healthcare® brands.
|
|
Fiscal
Year |
|
Cleaning
|
|
Household
|
|
Lifestyle
|
|
International
|
|
Corporate
|
|
Total
Company |
||||||||||||
Net sales
|
2019
|
|
$
|
2,109
|
|
|
$
|
1,870
|
|
|
$
|
1,265
|
|
|
$
|
970
|
|
|
$
|
—
|
|
|
$
|
6,214
|
|
|
2018
|
|
2,060
|
|
|
1,959
|
|
|
1,077
|
|
|
1,028
|
|
|
—
|
|
|
6,124
|
|
||||||
|
2017
|
|
2,002
|
|
|
1,961
|
|
|
1,000
|
|
|
1,010
|
|
|
—
|
|
|
5,973
|
|
||||||
Earnings (losses) from continuing
operations before income taxes
|
2019
|
|
600
|
|
|
316
|
|
|
255
|
|
|
96
|
|
|
(243
|
)
|
|
1,024
|
|
||||||
|
2018
|
|
574
|
|
|
370
|
|
|
243
|
|
|
84
|
|
|
(217
|
)
|
|
1,054
|
|
||||||
|
2017
|
|
523
|
|
|
419
|
|
|
244
|
|
|
81
|
|
|
(234
|
)
|
|
1,033
|
|
||||||
Income from equity investees
|
2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||||
|
2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||
|
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
||||||
Total assets
|
2019
|
|
903
|
|
|
1,223
|
|
|
1,581
|
|
|
1,027
|
|
|
382
|
|
|
5,116
|
|
||||||
|
2018
|
|
902
|
|
|
1,223
|
|
|
1,533
|
|
|
1,045
|
|
|
357
|
|
|
5,060
|
|
||||||
Capital expenditures
|
2019
|
|
49
|
|
|
81
|
|
|
39
|
|
|
26
|
|
|
11
|
|
|
206
|
|
||||||
|
2018
|
|
60
|
|
|
73
|
|
|
22
|
|
|
33
|
|
|
6
|
|
|
194
|
|
||||||
|
2017
|
|
76
|
|
|
82
|
|
|
30
|
|
|
37
|
|
|
6
|
|
|
231
|
|
||||||
Depreciation and amortization
|
2019
|
|
52
|
|
|
67
|
|
|
31
|
|
|
25
|
|
|
5
|
|
|
180
|
|
||||||
|
2018
|
|
49
|
|
|
65
|
|
|
23
|
|
|
24
|
|
|
5
|
|
|
166
|
|
||||||
|
2017
|
|
51
|
|
|
64
|
|
|
20
|
|
|
22
|
|
|
6
|
|
|
163
|
|
||||||
Significant non-cash charges included in earnings (losses) from continuing operations before income taxes:
|
|||||||||||||||||||||||||
Stock-based compensation
|
2019
|
|
14
|
|
|
12
|
|
|
7
|
|
|
1
|
|
|
9
|
|
|
43
|
|
||||||
|
2018
|
|
13
|
|
|
12
|
|
|
7
|
|
|
1
|
|
|
20
|
|
|
53
|
|
||||||
|
2017
|
|
16
|
|
|
15
|
|
|
9
|
|
|
2
|
|
|
9
|
|
|
51
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Home care
|
|
19
|
%
|
|
19
|
%
|
|
19
|
%
|
Laundry
|
|
9
|
%
|
|
9
|
%
|
|
9
|
%
|
Professional products
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
Cleaning
|
|
34
|
%
|
|
34
|
%
|
|
34
|
%
|
Bags, wraps, and containers
|
|
13
|
%
|
|
14
|
%
|
|
14
|
%
|
Charcoal
|
|
8
|
%
|
|
9
|
%
|
|
10
|
%
|
Cat litter
|
|
7
|
%
|
|
7
|
%
|
|
7
|
%
|
Digestive health
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
Household
|
|
30
|
%
|
|
32
|
%
|
|
33
|
%
|
Food products
|
|
9
|
%
|
|
9
|
%
|
|
9
|
%
|
Natural personal care
|
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
Water filtration
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
Dietary supplements (1)
|
|
3
|
%
|
|
1
|
%
|
|
—
|
%
|
Lifestyle
|
|
20
|
%
|
|
17
|
%
|
|
16
|
%
|
International
|
|
16
|
%
|
|
17
|
%
|
|
17
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
2019
|
|
2018
|
|
2017
|
|||
Home Care products
|
26
|
%
|
|
26
|
%
|
|
25
|
%
|
Bags, wraps and containers
|
16
|
%
|
|
18
|
%
|
|
18
|
%
|
Laundry additives
|
14
|
%
|
|
15
|
%
|
|
15
|
%
|
Food products
|
10
|
%
|
|
10
|
%
|
|
10
|
%
|
Charcoal products
|
9
|
%
|
|
10
|
%
|
|
11
|
%
|
|
Fiscal
Year |
|
United
States |
|
Foreign
|
|
Total
Company |
||||||
Net sales
|
2019
|
|
$
|
5,281
|
|
|
$
|
933
|
|
|
$
|
6,214
|
|
|
2018
|
|
5,135
|
|
|
989
|
|
|
6,124
|
|
|||
|
2017
|
|
5,001
|
|
|
972
|
|
|
5,973
|
|
|||
Property, plant and equipment, net
|
2019
|
|
929
|
|
|
105
|
|
|
1,034
|
|
|||
|
2018
|
|
887
|
|
|
109
|
|
|
996
|
|
Dollars in millions, except per share data
|
Quarters Ended
|
|
|
||||||||||||||||
|
September 30
|
|
December 31
|
|
March 31
|
|
June 30
|
|
Full Year
|
||||||||||
Fiscal year ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
1,563
|
|
|
$
|
1,473
|
|
|
$
|
1,551
|
|
|
$
|
1,627
|
|
|
$
|
6,214
|
|
Cost of products sold
|
$
|
885
|
|
|
$
|
830
|
|
|
$
|
878
|
|
|
$
|
893
|
|
|
$
|
3,486
|
|
Earnings from continuing operations
|
$
|
210
|
|
|
$
|
182
|
|
|
$
|
187
|
|
|
$
|
241
|
|
|
$
|
820
|
|
Earnings (losses) from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net earnings
|
$
|
210
|
|
|
$
|
182
|
|
|
$
|
187
|
|
|
$
|
241
|
|
|
$
|
820
|
|
Net earnings (losses) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
1.65
|
|
|
$
|
1.42
|
|
|
$
|
1.46
|
|
|
$
|
1.91
|
|
|
$
|
6.42
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Basic net earnings per share
|
$
|
1.65
|
|
|
$
|
1.42
|
|
|
$
|
1.46
|
|
|
$
|
1.91
|
|
|
$
|
6.42
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
1.62
|
|
|
$
|
1.40
|
|
|
$
|
1.44
|
|
|
$
|
1.88
|
|
|
$
|
6.32
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Diluted net earnings per share
|
$
|
1.62
|
|
|
$
|
1.40
|
|
|
$
|
1.44
|
|
|
$
|
1.88
|
|
|
$
|
6.32
|
|
Dividends declared per share
|
$
|
0.96
|
|
|
$
|
0.96
|
|
|
$
|
0.96
|
|
|
$
|
1.06
|
|
|
$
|
3.94
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal year ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
1,500
|
|
|
$
|
1,416
|
|
|
$
|
1,517
|
|
|
$
|
1,691
|
|
|
$
|
6,124
|
|
Cost of products sold
|
$
|
827
|
|
|
$
|
807
|
|
|
$
|
868
|
|
|
$
|
947
|
|
|
$
|
3,449
|
|
Earnings from continuing operations
|
$
|
192
|
|
|
$
|
233
|
|
|
$
|
181
|
|
|
$
|
217
|
|
|
$
|
823
|
|
Earnings (losses) from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net earnings
|
$
|
192
|
|
|
$
|
233
|
|
|
$
|
181
|
|
|
$
|
217
|
|
|
$
|
823
|
|
Net earnings (losses) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
1.49
|
|
|
$
|
1.81
|
|
|
$
|
1.39
|
|
|
$
|
1.69
|
|
|
$
|
6.37
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Basic net earnings per share
|
$
|
1.49
|
|
|
$
|
1.81
|
|
|
$
|
1.39
|
|
|
$
|
1.69
|
|
|
$
|
6.37
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
1.46
|
|
|
$
|
1.77
|
|
|
$
|
1.37
|
|
|
$
|
1.66
|
|
|
$
|
6.26
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Diluted net earnings per share
|
$
|
1.46
|
|
|
$
|
1.77
|
|
|
$
|
1.37
|
|
|
$
|
1.66
|
|
|
$
|
6.26
|
|
Dividends declared per share
|
$
|
0.84
|
|
|
$
|
0.84
|
|
|
$
|
0.96
|
|
|
$
|
0.96
|
|
|
$
|
3.60
|
|
|
Years ended June 30
|
||||||||||||||||||
Dollars in millions, except per share data
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
OPERATIONS
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
6,214
|
|
|
$
|
6,124
|
|
|
$
|
5,973
|
|
|
$
|
5,761
|
|
|
$
|
5,655
|
|
Gross profit
|
2,728
|
|
|
$
|
2,675
|
|
|
$
|
2,671
|
|
|
$
|
2,598
|
|
|
$
|
2,465
|
|
|
Earnings from continuing operations
|
$
|
820
|
|
|
$
|
823
|
|
|
$
|
703
|
|
|
$
|
648
|
|
|
$
|
606
|
|
(Losses) earnings from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(26
|
)
|
|||||
Net earnings
|
$
|
820
|
|
|
$
|
823
|
|
|
$
|
701
|
|
|
$
|
648
|
|
|
$
|
580
|
|
COMMON STOCK
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per share
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
6.42
|
|
|
$
|
6.37
|
|
|
$
|
5.45
|
|
|
$
|
5.01
|
|
|
$
|
4.65
|
|
Diluted
|
6.32
|
|
|
6.26
|
|
|
5.35
|
|
|
4.92
|
|
|
4.57
|
|
|||||
Dividends declared per share
|
3.94
|
|
|
3.60
|
|
|
3.24
|
|
|
3.11
|
|
|
2.99
|
|
|||||
|
As of June 30
|
||||||||||||||||||
Dollars in millions
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
OTHER DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets (1)
|
$
|
5,116
|
|
|
$
|
5,060
|
|
|
$
|
4,573
|
|
|
$
|
4,510
|
|
|
$
|
4,154
|
|
Long-term debt (1)
|
2,287
|
|
|
2,284
|
|
|
1,391
|
|
|
1,789
|
|
|
1,786
|
|
Dollars in millions
|
|
FY19
|
|
FY18
|
|
FY17
|
||||||
Earnings from continuing operations before income taxes
|
|
$
|
1,024
|
|
|
$
|
1,054
|
|
|
$
|
1,033
|
|
Add back:
|
|
|
|
|
|
|
||||||
Non-cash U.S. GAAP restructuring and intangible asset impairment charges
|
|
2
|
|
|
2
|
|
|
4
|
|
|||
Interest expense
|
|
97
|
|
|
85
|
|
|
88
|
|
|||
Earnings from continuing operations before income taxes,
non-cash U.S. GAAP restructuring and intangible asset impairment charges, and interest expense
|
|
1,123
|
|
|
$
|
1,141
|
|
|
1,125
|
|
||
Less:
|
|
|
|
|
|
|
||||||
Income taxes on earnings from continuing operations before
income taxes, non-cash U.S. GAAP restructuring and intangible asset impairment charges and interest expense (2)
|
|
222
|
|
|
249
|
|
|
359
|
|
|||
Adjusted after tax profit
|
|
901
|
|
|
892
|
|
|
766
|
|
|||
Average capital employed (3)
|
|
3,231
|
|
|
2,977
|
|
|
2,680
|
|
|||
Less: Capital charge (4)
|
|
291
|
|
|
268
|
|
|
241
|
|
|||
Economic profit (1) (Adjusted after tax profit less capital charge)
|
|
$
|
610
|
|
|
$
|
624
|
|
|
$
|
525
|
|
Dollars in millions
|
|
FY19
|
|
FY18
|
|
FY17
|
||||||
Total assets
|
|
$
|
5,116
|
|
|
$
|
5,060
|
|
|
$
|
4,573
|
|
Less:
|
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities (5)
|
|
1,033
|
|
|
1,000
|
|
|
1,002
|
|
|||
Income taxes payable
|
|
9
|
|
|
—
|
|
|
—
|
|
|||
Other liabilities (5)
|
|
774
|
|
|
778
|
|
|
770
|
|
|||
Deferred income taxes
|
|
50
|
|
|
72
|
|
|
61
|
|
|||
Non-interest bearing liabilities
|
|
1,866
|
|
|
1,850
|
|
|
1,833
|
|
|||
Total capital employed
|
|
3,250
|
|
|
3,210
|
|
|
2,740
|
|
|||
Add back:
|
|
|
|
|
|
|
||||||
After tax non-cash U.S. GAAP restructuring
and intangible asset impairment charges
|
|
1
|
|
|
1
|
|
|
2
|
|
|||
Adjusted capital employed
|
|
$
|
3,251
|
|
|
$
|
3,211
|
|
|
$
|
2,742
|
|
Average capital employed
|
|
$
|
3,231
|
|
|
$
|
2,977
|
|
|
$
|
2,680
|
|