NOTE 2. BUSINESS ACQUIRED

Saudi Joint Venture Acquisition

On July 9, 2020, the Company increased its investment in each of the ~~two~~2 entities comprising its joint venture in the Kingdom of Saudi Arabia (Saudi joint venture). from 30 percent to 51 percent. The joint venture offers customers in the Gulf region a range of cleaning and disinfecting products. ~~The Company had previously accounted for its 30 percent~~With the additional investment, ~~of $27 as of June 30, 2020, under~~ the ~~equity method of accounting. Subsequent to the closing of this transaction, the Company’s total ownership interest in each of the entities increased to 51 percent. The~~ Company has consolidated this joint venture into ~~the Company’s~~its consolidated financial statements from the date of acquisition and reflects operations within the International reportable segment. The equity and income attributable to the other joint venture owners is recorded and presented as noncontrolling interests. As a result of this transaction, the carrying value of the Company’s previously held equity investment was remeasured to fair value, and resulted in an $85 non-recurring, noncash gain recorded in Other (income) expense, net in the condensed consolidated statement of earnings and adjusted in Other operating activities in the condensed consolidated statement of cash flows for the first quarter of fiscal year 2021.

The Saudi joint venture acquisition was accounted for under the acquisition method of accounting for business combinations. The total purchase consideration ofwas $111 ~~consisted~~consisting of $100 cash paid ~~which was sourced from operations,~~ and $11 from the net effective settlement of preexisting arrangements between the Company and the joint venture. The assets and liabilities of the joint venture were recorded at their respective estimated fair value as of the acquisition ~~date using generally accepted accounting principles for business combinations.~~date. The ~~excess of the purchase price over the~~ fair value of the total net ~~identifiable~~ assets ~~acquired has been allocated to goodwill in the International reportable segment in the amount of $208. The goodwill is primarily attributable to the synergies expected to arise after the acquisition~~ and ~~reflects the value of further growth anticipated in the Gulf region. NaNne~~noncontrolling interests recorded as of the ~~goodwill is deductible for tax purposes.~~

~~As a result~~date of ~~this transaction, the carrying value of the Company’s previously held equity investment~~acquisition was ~~remeasured to fair value,~~$412 and resulted in an $85 non-recurring, non-cash gain recorded in Other (income) expense, net in the condensed consolidated statement of earnings and adjusted in Other operating activities in the condensed consolidated statement of cash flows for the first quarter of fiscal year 2021. The fair values of the noncontrolling interests and previously held equity interest were determined using a discounted cash flow (DCF) method under the income approach. Under this approach, the Company estimates future cash flows and discounts these cash flows at a rate of return that reflects the entities’ relative risk.

$198, respectively. The purchase price allocation was finalized during the second quarter of fiscal year 2021. ~~The following table summarizes~~

Refer to the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for the final purchase price allocation, ~~for the fair value of the joint venture’s assets acquired~~valuation methodology and liabilities assumed and the related deferred income taxes as of the acquisition date. The fair value of the assets acquired and liabilities assumed reflects the final insignificant measurement period adjustmentsother information related to ~~goodwill, deferred income taxes and income taxes payable. The definite-lived intangibles acquired primarily represent~~ the ~~Company reacquiring previously licensed trademarks and customer relationships. The weighted-average estimated useful life of intangible assets subject to amortization is 9 years.~~Saudi joint venture acquisition.


	~~Joint Venture~~
~~Goodwill~~	$	~~208~~
~~Reacquired rights (included in Other intangible assets, net)~~	~~138~~
~~Property, plant and equipment~~	46
~~Customer relationships (included in Other intangible assets, net)~~	10
~~Working capital, net (includes cash acquired of $26)~~	34
~~Noncurrent liabilities, net~~	~~(5)~~
~~Deferred income taxes~~	~~(19)~~
~~Total fair value of net assets~~	~~412~~
~~Less: Fair value of noncontrolling interests~~	~~(198)~~
~~Less: Fair value of previously held equity interest~~	~~(103)~~
~~Total purchase consideration~~	$	~~111~~

Included in the Company’s results for the three and nine months ended March 31, 2021 was $19 and $65, respectively, of net sales from the joint venture. Pro forma results reflecting this transaction were not presented because it is not significant to the Company’s consolidated financial results.

NOTE 3. INVENTORIES, NET

Inventories, net, consisted of the following as of:

3/31/2021 6/30/2020
Finished goods $ 522 $ 340
Raw materials and packaging 188 140
Work in process 10 7
LIFO allowances (32) (33)
Total $ 688 $ 454


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

NOTE 4. GOODWILL, TRADEMARK AND OTHER ~~ASSETS~~ASSET IMPAIRMENTS

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

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

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


	Impairment Charge
Goodwill	$	228
Trademarks, net	8693
Other intangible assets, net	147
Property, plant and equipment, net	1
Total	$	329

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

~~The impairment charges are a result of a higher level of competitive activity than originally assumed, accelerated declines~~Refer to the Notes to Consolidated Financial Statements in the ~~channel where~~Company's Annual Report on Form 10-K for the ~~business is over-developed, and higher than anticipated investments~~fiscal year ended June 30, 2021 for further information related to ~~grow the business, which have adversely affected the assumptions used to determine the fair value of the respective assets held by~~ the VMS reporting unit for growth and the estimates of expenses necessary to achieve that growth. These impairment charges are based on the Company’s current estimates regarding the future financial performance of the VMS SBU and macroeconomic factors.

To determine the fair value of the VMS reporting unit, the Company used a DCF method under the income approach. Under this approach, the Company estimated the future cash flows of the VMS reporting unit and discounted these cash flows at a rate of return that reflects its relative risk. The other key estimates and factors used in the DCF method include, but are not limited to, net sales and expense growth rates, and a terminal growth rate.

~~Changes in the carrying amount of Goodwill as of March 31, 2021 from June 30, 2020, were as follows:~~

Goodwill
Health and Wellness Household Lifestyle International Total
Balance as of June 30, 2020 $ 857 $ 85 $ 244 $ 391 $ 1,577
Acquisitions 0 0 0 212 212
Translation adjustments and other 0 0 0 4 4
Balance as of September 30, 2020 857 85 244 607 1,793
Translation adjustments and other (1)
0 0 0 10 10
Balance as of December 31, 2020 857 85 244 617 1,803
Goodwill impairment (228) 0 0 0 (228)
Translation adjustments and other 0 0 0 (1) (1)
Balance as of March 31, 2021 $ 629 $ 85 $ 244 $ 616 $ 1,574

~~(1) Includes $(4) purchase price allocation adjustment related to the Saudi joint venture acquisition. Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements.~~

To determine the estimated fair values of the VMS related indefinite-lived trademarks, which were included within the Health and Wellness reportable segment, the Company used the income approach. This approach requires significant judgments in determining the royalty rates and the assets’ estimated cash flows as well as the appropriate discount rates applied to those cash flows to determine fair value. In addition, the useful lives of the impaired trademarks, with a remaining net carrying value of $13 as of March 31, 2021, were changed from indefinite to definite beginning on April 1, 2021, which reflects the remaining expected useful lives of the trademarks based on the most recent financial and operational plans. The weighted-average estimated useful life of these trademarks is 16 years.

~~The following table summarizes the carrying amount of trademarks~~goodwill, intangibles and other ~~intangible assets as of March 31, 2021 and as of June 30, 2020:~~

As of March 31, 2021 As of June 30, 2020
Gross carrying amount Accumulated amortization / Impairments Net carrying amount Gross carrying amount Accumulated amortization / Impairments Net carrying amount
Trademarks not subject to amortization $ 769 $ 86 $ 683 $ 766 $ 0 $ 766
Trademarks subject to amortization 47 36 11 47 28 19
Other intangible assets 583 337 246 424 315 109
Total $ 1,399 $ 459 $ 940 $ 1,237 $ 343 $ 894

Amortization expense relating to the Company’s intangible assets was $8 and $23 for the three and nine months ended March 31, 2021, respectively, and $3 and $10 for the three and nine months ended March 31, 2020, respectively. Estimated amortization expense for these intangible assets is $8, $32, $30, $29 and $28 for the remainder of fiscal year 2021 and fiscal years 2022, 2023, 2024 and 2025, respectively.asset impairments.

NOTE 5. DEBT

Short-term borrowings

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

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

NOTE 5: DEBT (continued)

Credit arrangements

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

NOTE 5.6. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial Risk Management and Derivative Instruments

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

Commodity Price Risk Management

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

As of March 31, ~~2021,~~2022, the notional amount of commodity derivatives was ~~$24,~~$25, of which ~~$15 related~~$13 related to soybean oil futures used for the Food products ~~business~~business and $9$12 related to jet fuel swaps used for the Grilling business. As of June 30, ~~2020,~~2021, the notional amount of commodity derivatives was ~~$27,~~$32, of which ~~$14~~$23 related to soybean oil futures and ~~$13~~$9 related to jet fuel swaps.

Foreign Currency Risk Management

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

The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were ~~$68~~$59 and $70, respectively, as of March 31, ~~2021~~2022 and June 30, ~~2020.~~

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

2021.

Interest Rate Risk Management

The Company may enter into over-the-counter interest rate ~~forward or swap~~ contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate ~~debt or to manage the Company’s level of fixed and floating rate~~ debt. These interest rate ~~forward or swap~~ contracts ~~historically~~generally have ~~had~~ durations of less than 3 years. The interest rate contracts are measured at fair value using information quoted by ~~U.S. government~~ bond ~~and interest rate derivative~~ dealers.

The notional amounts of outstanding interest rate contracts used by the Company were ~~$300~~$950 and ~~$225,~~$300, respectively, as of March 31, ~~2021~~2022 and June 30, ~~2020.~~2021. These contracts represent ~~forward starting~~ interest rate swap ~~contracts with a maturity date of September 2022~~lock agreements to manage the exposure to interest rate volatility associated with future interest payments on a forecasted debt issuance.

Commodity, Foreign Exchange and Interest Rate Derivatives

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

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

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


		Gains (losses) recognized in Other comprehensive (loss) income									Gains (losses) recognized in Other comprehensive (loss) income
		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		3/31/2021		3/31/2020		3/31/2021		3/31/2020			3/31/2022		3/31/2021		3/31/2022		3/31/2021
Commodity purchase derivative contracts	Commodity purchase derivative contracts	$	5	$	(11)	$	12	$	(8)	Commodity purchase derivative contracts	$	10	$	5	$	12	$	12
Foreign exchange derivative contracts	Foreign exchange derivative contracts	2		2		(1)		2		Foreign exchange derivative contracts	(1)		2		—		(1)
Interest rate derivative contracts	Interest rate derivative contracts	26		0		36		0		Interest rate derivative contracts	39		26		39		36
Total	Total	$	33	$	(9)	$	47	$	(6)	Total	$	48	$	33	$	51	$	47

NOTE 6.7. INCOME TAXES

In determining its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The effective tax rate on earnings (losses) was 23.9% and 23.3% for the three and nine months ended March 31, 2022, respectively, and (1.4)% and 22.5% for the ~~current~~ three and nine months ended March 31, 2021, ~~respectively, and 18.9% and 20.4% for the prior three and nine months ended March 31, 2020,~~ respectively. The substantially lower tax rate on ~~loss~~losses before income taxes in the ~~current~~prior three month period ~~and higher tax rate on earnings before income taxes in the current nine month period were~~was driven by the partial non-deductibility of impaired VMS goodwill.

NOTE 7.8. NET EARNINGS (LOSSES) PER SHARE (EPS)

The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:

Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 3/31/2021 3/31/2020
Basic 125,610 125,661 126,057 125,641
Dilutive effect of stock options and other 0 1,667 1,973 1,595
Diluted 125,610 127,328 128,030 127,236
Antidilutive stock options and other 4,826 0 428 2


	Three Months Ended		Nine Months Ended
	3/31/2022	3/31/2021	3/31/2022	3/31/2021
Basic	123,177	125,610	123,074	126,057
Dilutive effect of stock options and other	700	—	869	1,973
Diluted	123,877	125,610	123,943	128,030

Antidilutive stock options and other	2,489	4,826	2,489	428

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

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

NOTE 8.9. COMPREHENSIVE INCOME (LOSS)

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

Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 3/31/2021 3/31/2020
Net earnings (losses) $ (59) $ 241 $ 619 $ 629
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (7) (51) 40 (58)
Net unrealized gains (losses) on derivatives 27 (5) 42 1
Pension and postretirement benefit adjustments 2 1 5 3
Total other comprehensive (loss) income, net of tax 22 (55) 87 (54)
Comprehensive income (loss) (37) 186 706 575
Less: Total comprehensive income attributable to noncontrolling interests 2 0 6 0
Total comprehensive income (loss) attributable to Clorox $ (39) $ 186 $ 700 $ 575


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

1211

NOTE 9.10. STOCKHOLDERS’ EQUITY

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

Three Months Ended March 31
(Dollars in millions except per share data; shares in thousands) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated
Other
Comprehensive
Net (Loss) Income Non-controlling interests
Total Stockholders’ Equity
Amount Shares Amount Shares
Balance as of December 31, 2019 $ 159 158,741 $ 1,062 $ 3,292 $ (3,357) (33,717) $ (601) $ 0 $ 555
Net earnings — — — 241 — — — — 241
Other comprehensive (loss) income — — — — — — (55) — (55)
Dividends to Clorox stockholders ($1.06 per share declared) — — — (135) — — — — (135)
Stock-based compensation — — 18 — — — — — 18
Other employee stock plan activities — — 31 0 70 1,083 — — 101
Treasury stock purchased — — — — (30) (184) — — (30)
Balance as of March 31, 2020 $ 159 158,741 $ 1,111 $ 3,398 $ (3,317) (32,818) $ (656) $ 0 $ 695
Balance as of December 31, 2020 $ 131 130,741 $ 1,176 $ 1,302 $ (850) (5,017) $ (575) $ 196 $ 1,380
Net earnings (losses) — — — (61) — — — 2 (59)
Other comprehensive (loss) income — — — — — — 22 — 22
Dividends to Clorox stockholders ($1.11 per share declared) — — — (139) — — — — (139)
Dividends to non-controlling interests — — — — — — — (3) (3)
Stock-based compensation — — 17 — — — — — 17
Other employee stock plan activities — — (3) (16) 44 283 — — 25
Treasury stock purchased — — — — (305) (1,648) — 0 (305)
Balance as of March 31, 2021 $ 131 130,741 $ 1,190 $ 1,086 $ (1,111) (6,382) $ (553) $ 195 $ 938


	Three Months Ended March 31
(Dollars in millions except per share data; shares in thousands)	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Net (Loss) Income		Non-controlling interests		Total Stockholders’ Equity
	Amount		Shares					Amount		Shares
Balance as of December 31, 2020	$	131	130,741	$	1,176	$	1,302	$	(850)	(5,017)	$	(575)	$	196	$	1,380
Net earnings (losses)	—		—	—		(61)		—		—	—		2		(59)
Other comprehensive (loss) income	—		—	—		—		—		—	22		—		22
Dividends to Clorox stockholders ($1.11 per share declared)	—		—	—		(139)		—		—	—		—		(139)
Dividends to non-controlling interests	—		—	—		—		—		—	—		(3)		(3)

Stock-based compensation	—		—	17		—		—		—	—		—		17
Other employee stock plan activities	—		—	(3)		(16)		44		283	—		—		25
Treasury stock purchased	—		—	—		—		(305)		(1,648)	—		—		(305)

Balance as of March 31, 2021	$	131	130,741	$	1,190	$	1,086	$	(1,111)	(6,382)	$	(553)	$	195	$	938

Balance as of December 31, 2021	$	131	130,741	$	1,180	$	949	$	(1,373)	(7,777)	$	(574)	$	178	$	491
Net earnings	—		—	—		150		—		—	—		2		152
Other comprehensive (loss) income	—		—	—		—		—		—	55		—		55
Dividends to Clorox stockholders ($1.16 per share declared)	—		—	—		(143)		—		—	—		—		(143)
Dividends to non-controlling interests	—		—	—		—		—		—	—		(4)		(4)

Stock-based compensation	—		—	19		—		—		—	—		—		19
Other employee stock plan activities	—		—	(4)		(5)		15		107	—		—		6


Balance as of March 31, 2022	$	131	130,741	$	1,195	$	951	$	(1,358)	(7,670)	$	(519)	$	176	$	576

1312

NOTE 9.10. STOCKHOLDERS’ EQUITY (Continued)


		Nine Months Ended March 31																									Nine Months Ended March 31
(Dollars in millions except per share data; shares in thousands)	(Dollars in millions except per share data; shares in thousands)	Common Stock			Additional Paid-in Capital				Retained Earnings				Treasury Stock						Accumulated Other Comprehensive Net (Loss) Income			Non-controlling interests		Total Stockholders’ Equity		(Dollars in millions except per share data; shares in thousands)	Common Stock				Additional Paid-in Capital			Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Net (Loss) Income		Non-controlling interests		Total Stockholders’ Equity
		Amount		Shares							Amount				Shares						Amount						Shares						Amount			Shares
Balance as of June 30, 2019		$	159	158,741			$	1,046			$	3,150			$	(3,194)		(33,055)				$	(602)	$	0			$	559
Cumulative effect of accounting changes, net of tax (1)		—		—	—				22				—				—		—			—		22
Net earnings		—		—	—				629				—				—		—			—		629
Other comprehensive (loss) income		—		—	—				—				—				—		(54)			—		(54)
Dividends to Clorox stockholders ($3.18 per share declared)		—		—	—				(402)				—				—		—			—		(402)
Stock-based compensation		—		—	37				—				—				—		—			—		37
Other employee stock plan activities		—		—	28				(1)				96				1,661		—			—		123
Treasury stock purchased		—		—	—				—				(219)				(1,424)		—			—		(219)
Balance as of March 31, 2020		$	159	158,741	$	1,111			$	3,398			$	(3,317)			(32,818)		$	(656)		$	0	$	695
Balance as of June 30, 2020																										Balance as of June 30, 2020	$	159		158,741	$	1,137		$	3,567	$	(3,315)	(32,543)	$	(640)	$	—	$	908

Balance as of June 30, 2020		$	159	158,741	$	1,137			$	3,567			$	(3,315)			(32,543)		$	(640)		$	0	$	908
Net earnings	Net earnings	—		—	—				613				—				—		—			6		619		Net earnings	—			—	—			613		—		—	—		6		619
Other comprehensive (loss) income	Other comprehensive (loss) income	—		—	—				—				—				—		87			—		87		Other comprehensive (loss) income	—			—	—			—		—		—	87		—		87
Dividends to Clorox stockholders ($3.33 per share declared)	Dividends to Clorox stockholders ($3.33 per share declared)	—		—	—				(421)				—				—		—			—		(421)		Dividends to Clorox stockholders ($3.33 per share declared)	—			—	—			(421)		—		—	—		—		(421)
Dividends to noncontrolling interests	Dividends to noncontrolling interests	—		—	—				—				—				—		—			(9)		(9)		Dividends to noncontrolling interests	—			—	—			—		—		—	—		(9)		(9)
Business combinations including purchase accounting adjustments	Business combinations including purchase accounting adjustments	—		—	—				—				—				—		—			198		198		Business combinations including purchase accounting adjustments	—			—	—			—		—		—	—		198		198
Stock-based compensation	Stock-based compensation	—		—	52				—				—				—		—			—		52		Stock-based compensation	—			—	52			—		—		—	—		—		52
Other employee stock plan activities	Other employee stock plan activities	—		—	1				(33)				141				1,233		—			—		109		Other employee stock plan activities	—			—	1			(33)		141		1,233	—		—		109
Treasury stock purchased	Treasury stock purchased	—		—	—				—				(605)				(3,072)		—			—		(605)		Treasury stock purchased	—			—	—			—		(605)		(3,072)	—		—		(605)
Treasury stock retirement		(28)		(28,000)	—				(2,640)				2,668				28,000		—			0		0
Treasury stock retirement (1)																										Treasury stock retirement (1)	(28)			(28,000)	—			(2,640)		2,668		28,000	$	—	—		—
Balance as of March 31, 2021	Balance as of March 31, 2021	$	131	130,741	$	1,190			$	1,086			$	(1,111)			(6,382)		$	(553)		$	195	$	938	Balance as of March 31, 2021	$	131		130,741	$	1,190		$	1,086	$	(1,111)	(6,382)	$	(553)	$	195	$	938

Balance as of June 30, 2021																										Balance as of June 30, 2021	$	131		130,741	$	1,186		$	1,036	$	(1,396)	(7,961)	$	(546)	$	181	$	592
Net earnings																										Net earnings	—			—	—			361		—		—	—		6		367
Other comprehensive (loss) income																										Other comprehensive (loss) income	—			—	—			—		—		—	27		—		27
Dividends to Clorox stockholders ($3.48 per share declared)																										Dividends to Clorox stockholders ($3.48 per share declared)	—			—	—			(430)		—		—	—		—		(430)
Dividends to noncontrolling interests																										Dividends to noncontrolling interests	—			—	—			—		—		—	—		(11)		(11)

Stock-based compensation																										Stock-based compensation	—			—	44			—		—		—	—		—		44
Other employee stock plan activities																										Other employee stock plan activities	—			—	(35)			(16)		63		443	—		—		12
Treasury stock purchased																										Treasury stock purchased	—			—	—			—		(25)		(152)	—		—		(25)

Balance as of March 31, 2022																										Balance as of March 31, 2022	$	131		130,741	$	1,195		$	951	$	(1,358)	(7,670)	$	(519)	$	176	$	576

(1) As a result of adopting ASU No. 2016-02, “Leases (Topic 842),” on July 1, 2019, the Company recorded a cumulative effect of initially applying the new guidance as an adjustment to the fiscal year 2020 opening balance of Retained earnings.

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

The Company has 2 stock repurchase programs: an open-market purchase program with an authorized aggregate purchase amount of up to $2,000, which has no expiration date, and a program to offset the anticipated impact of dilution related to stock-based awards (the Evergreen Program), which has 0 authorization limit on the dollar amount and no expiration date.

~~Stock repurchases under the 2 stock repurchase programs were as follows for the periods indicated:~~

Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 3/31/2021 3/31/2020
Amount Shares
(in thousands) Amount Shares
(in thousands) Amount Shares
(in thousands) Amount Shares
(in thousands)
Open-market purchase program $ 200 1,088 $ 0 0 $ 200 1,088 $ 85 577
Evergreen Program 105 560 30 184 405 1,984 134 847
Total stock repurchases $ 305 1,648 $ 30 184 $ 605 3,072 $ 219 1,424

1413

NOTE 9.10. STOCKHOLDERS’ EQUITY (Continued)

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

Three Months Ended March 31
Foreign currency translation adjustments Net unrealized gains (losses) on derivatives Pension and postretirement benefit adjustments Accumulated other comprehensive net (loss) income
Balance as of December 31, 2019 $ (421) $ (17) $ (163) $ (601)
Other comprehensive (loss) income before reclassifications (49) (9) 0 (58)
Amounts reclassified from Accumulated other comprehensive net (loss) income 0 2 2 4
Income tax benefit (expense) (2) 2 (1) (1)
Net current period other comprehensive (loss) income (51) (5) 1 (55)
Balance as of March 31, 2020 $ (472) $ (22) $ (162) $ (656)
Balance as of December 31, 2020 $ (403) $ (3) $ (169) $ (575)
Other comprehensive (loss) income before reclassifications (6) 33 0 27
Amounts reclassified from Accumulated other comprehensive net (loss) income 0 2 3 5
Income tax benefit (expense), and other (1) (8) (1) (10)
Net current period other comprehensive (loss) income (7) 27 2 22
Balance as of March 31, 2021 $ (410) $ 24 $ (167) $ (553)
Nine Months Ended March 31
Foreign currency translation adjustments Net unrealized gains (losses) on derivatives Pension and postretirement benefit adjustments Accumulated other comprehensive net (loss) income
Balance as of June 30, 2019 $ (414) $ (23) $ (165) $ (602)
Other comprehensive (loss) income before reclassifications (55) (6) 0 (61)
Amounts reclassified from Accumulated other comprehensive net (loss) income 0 6 5 11
Income tax benefit (expense) (3) 1 (2) (4)
Net current period other comprehensive (loss) income (58) 1 3 (54)
Balance as of March 31, 2020 $ (472) $ (22) $ (162) $ (656)
Balance as of June 30, 2020 $ (450) $ (18) $ (172) $ (640)
Other comprehensive (loss) income before reclassifications 38 47 0 85
Amounts reclassified from Accumulated other comprehensive net (loss) income 0 7 7 14
Income tax benefit (expense), and other 2 (12) (2) (12)
Net current period other comprehensive (loss) income 40 42 5 87
Balance as of March 31, 2021 $ (410) $ 24 $ (167) $ (553)


	Three Months Ended March 31
	Foreign currency translation adjustments		Net unrealized gains (losses) on derivatives		Pension and postretirement benefit adjustments		Accumulated other comprehensive net (loss) income
Balance as of December 31, 2020	$	(403)	$	(3)	$	(169)	$	(575)
Other comprehensive (loss) income before reclassifications	(6)		33		—		27
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		2		3		5
Income tax benefit (expense)	(1)		(8)		(1)		(10)
Net current period other comprehensive (loss) income	(7)		27		2		22
Balance as of March 31, 2021	$	(410)	$	24	$	(167)	$	(553)

Balance as of December 31, 2021	$	(431)	$	18	$	(161)	$	(574)
Other comprehensive (loss) income before reclassifications	19		48		—		67
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		(3)		2		(1)
Income tax benefit (expense), and other	—		(11)		—		(11)
Net current period other comprehensive (loss) income	19		34		2		55
Balance as of March 31, 2022	$	(412)	$	52	$	(159)	$	(519)

	Nine Months Ended March 31
	Foreign currency translation adjustments		Net unrealized gains (losses) on derivatives		Pension and postretirement benefit adjustments		Accumulated other comprehensive net (loss) income
Balance as of June 30, 2020	$	(450)	$	(18)	$	(172)	$	(640)
Other comprehensive (loss) income before reclassifications	38		47		—		85
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		7		7		14
Income tax benefit (expense)	2		(12)		(2)		(12)
Net current period other comprehensive (loss) income	40		42		5		87
Balance as of March 31, 2021	$	(410)	$	24	$	(167)	$	(553)

Balance as of June 30, 2021	$	(403)	$	21	$	(164)	$	(546)
Other comprehensive (loss) income before reclassifications	(9)		51		—		42
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		(10)		6		(4)
Income tax benefit (expense), and other	—		(10)		(1)		(11)
Net current period other comprehensive (loss) income	(9)		31		5		27
Balance as of March 31, 2022	$	(412)	$	52	$	(159)	$	(519)

Included in foreign currency translation adjustments are ~~re-measurement~~remeasurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. There were 0no amounts associated with these loans reclassified from Accumulated other comprehensive net (loss) income for the periods presented.

1514

NOTE ~~10.~~11. EMPLOYEE BENEFIT PLANS

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


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		3/31/2021		3/31/2020		3/31/2021		3/31/2020			3/31/2022		3/31/2021		3/31/2022		3/31/2021
Service cost	Service cost	$	0	$	0	$	0	$	0	Service cost	$	—	$	—	$	—	$	—
Interest cost	Interest cost	4		5		11		15		Interest cost	3		4		11		11
Expected return on plan assets (1)	Expected return on plan assets (1)	(4)		(5)		(11)		(14)		Expected return on plan assets (1)	(4)		(4)		(11)		(11)
Settlement loss recognized										Settlement loss recognized	1		—		1		—
Amortization of unrecognized items	Amortization of unrecognized items	3		3		8		7		Amortization of unrecognized items	3		3		7		8
Total	Total	$	3	$	3	$	8	$	8	Total	$	3	$	3	$	8	$	8

NOTE ~~11.~~12. OTHER CONTINGENCIES AND GUARANTEES

Contingencies

The Company is involved in certain environmental matters, including response actions at various locations. The Company had recorded liabilities totaling ~~$27 and~~ $28 as of both March 31, ~~2021~~2022 and June 30, ~~2020, respectively,~~2021, for its share of aggregate future remediation costs related to these matters.

One matter, which accounted for $14 of the recorded liability as of both March 31, ~~2021~~2022 and June 30, ~~2020,~~2021, relates to environmental costs associated with one of the Company’s former operations at a site located in Alameda County, California. In November 2016, at the request of regulators and with the assistance of environmental consultants, the Company submitted a Feasibility Study that evaluated various options for managing the site and included estimates of the related costs. ~~As a result,~~Following further discussions with the regulators in 2017, the Company recorded ~~in Other (income) expense, net~~ an undiscounted liability for costs estimated to be incurred over a 30-year period, based on one of the ~~option recommended~~options in the Feasibility Study. ~~However,~~In September 2021, as a result of ~~ongoing~~an additional study and further discussions with regulators, ~~in June 2017,~~ the Company ~~increased its~~submitted a Soil Vapor Intrusion Report to the regulators, which has not resulted in a change to the recorded ~~liability to $14, which reflects anticipated costs to implement additional remediation measures at this site.~~liability. While the Company believes its latest ~~estimate is~~estimates of remediation costs are reasonable, the ultimate remediation requirements are not yet finalized and the regulators could require the Company to implement ~~one of the other options evaluated in the Feasibility Study, with~~remediation actions for a longer period or take additional actions, which could include estimated undiscounted costs of up to approximately $28 over an estimated 30-year period, or require the Company to take ~~other~~different actions and incur ~~costs not included in the study.~~additional costs.

Another matter in Dickinson County, Michigan, at the site of one of the Company’s former operations for which the Company is jointly and severally liable, accounted for $9 and $10 of the recorded liability, as of March 31, ~~2021~~2022 and June 30, ~~2020.~~2021, respectively. This amount reflects the Company’s agreement to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing arrangement with a third party. If the third party is unable to pay its share of the response and remediation obligations, the Company may be responsible for such obligations. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded for the Dickinson County matter, any amount of such additional exposures, or range of exposures, is not estimable at this time.

NOTE 12: OTHER CONTINGENCIES AND GUARANTEES (continued)

The Company’s estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements and the future availability of alternative clean-up technologies.

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

Guarantees

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

The Company had not recorded any material liabilities on the aforementioned guarantees as of both March 31, ~~2021~~2022 and June 30, ~~2020.~~2021.

As of March 31, ~~2021,~~2022, the Company was party to a letter of credit of ~~$11,~~$14, related to one of its insurance carriers, of which $0 had been drawn upon.

1716

NOTE ~~12.~~13. SEGMENT RESULTS

The Company operates through ~~SBUs~~strategic business units (SBUs) that are also the Company’s operating segments. The SBUs are then aggregated into 4 reportable ~~segments based on the economics and nature of the products sold:~~segments: Health and Wellness, Household, Lifestyle and International. ~~Prior periods presented have been recast to reflect the reportable segment changes effective in the fourth quarter of fiscal year 2020.~~

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

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

Net sales
Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 3/31/2021 3/31/2020
Health and Wellness $ 680 $ 736 $ 2,310 $ 1,944
Household 510 480 1,421 1,183
Lifestyle 293 294 928 856
International 298 273 880 755
Corporate 0 0 0 0
Total $ 1,781 $ 1,783 $ 5,539 $ 4,738
Earnings (losses) before income taxes
Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 3/31/2021 3/31/2020
Health and Wellness (1)
$ (183) $ 210 $ 315 $ 514
Household 97 114 266 190
Lifestyle 68 80 259 242
International 30 36 184 106
Corporate (71) (143) (225) (262)
Total $ (59) $ 297 $ 799 $ 790


	Net sales
	Three Months Ended				Nine Months Ended
	3/31/2022		3/31/2021		3/31/2022		3/31/2021
Health and Wellness	$	662	$	680	$	2,055	$	2,310
Household	539		510		1,404		1,421
Lifestyle	306		293		961		928
International	302		298		886		880

Total	$	1,809	$	1,781	$	5,306	$	5,539

	Earnings (losses) before income taxes
	Three Months Ended				Nine Months Ended
	3/31/2022		3/31/2021		3/31/2022		3/31/2021
Health and Wellness (1)	$	84	$	(183)	$	245	$	315
Household	92		97		138		266
Lifestyle	66		68		239		259
International	31		30		80		184
Corporate	(73)		(71)		(224)		(225)
Total	$	200	$	(59)	$	478	$	799

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

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

Net sales to the Company’s largest customer, Wal-Mart Stores, Inc. and its affiliates, as a percentage of consolidated net sales, were ~~24%~~25% for ~~each of~~ the three and nine months ended March 31, ~~2021, respectively,~~2022, and ~~25%~~24% for ~~each of~~ the three and nine months ended March 31, ~~2020, respectively.~~2021.

1817

NOTE ~~12.~~13. SEGMENT RESULTS (Continued)

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

Net sales
Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 3/31/2021 3/31/2020
Cleaning 29 % 32 % 30 % 31 %
Professional Products 5 % 6 % 7 % 6 %
Vitamins, Minerals and Supplements 4 % 4 % 4 % 4 %
Health and Wellness 38 % 42 % 41 % 41 %
Bags and Wraps 11 % 11 % 11 % 12 %
Cat Litter 7 % 7 % 7 % 7 %
Grilling 11 % 9 % 8 % 6 %
Household 29 % 27 % 26 % 25 %
Food Products 10 % 8 % 9 % 9 %
Natural Personal Care 3 % 4 % 4 % 5 %
Water Filtration 3 % 4 % 4 % 4 %
Lifestyle 16 % 16 % 17 % 18 %
International 17 % 15 % 16 % 16 %
Total 100 % 100 % 100 % 100 %


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

1918

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

The Clorox Company

(Dollars in millions, except per share data)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of The Clorox Company’s (the Company or Clorox) financial statements with a narrative from the perspective of management on the Company’s financial condition, results of operations, liquidity and certain other factors that may affect future results. The following discussion of the Company’s financial condition and results of operations should be read in conjunction with MD&A and the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020,~~2021, which was filed with the SEC on August ~~13, 2020,~~10, 2021, and the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q (this Report). Unless otherwise noted, MD&A compares the three and nine month periods ended March 31, ~~2021~~2022 (the current period) to the three and nine month periods ended March 31, ~~2020~~2021 (the prior period), with percentage and basis point calculations based on rounded numbers, except for per share data and the effective tax rate.

EXECUTIVE OVERVIEW

Clorox is a leading multinational manufacturer and marketer of consumer and professional products with approximately ~~8,800~~9,000 employees worldwide. Clorox sells its products primarily through mass retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drug, pet and military stores, third-party and owned e-commerce channels, and distributors. Clorox markets some of the most trusted and recognized consumer brand names, including its namesake bleach and cleaning products, Pine-Sol® cleaners; Liquid-Plumr® clog removers; Poett® home care products; Fresh Step® cat litter; Glad® bags and wraps; Kingsford® grilling products; Hidden Valley® ~~dressings;~~dressings, dips, seasonings and sauces; Brita® water-filtration ~~products;~~systems and filters; Burt’s Bees® natural personal care products; and RenewLife®, Rainbow Light®, Natural Vitality®,and NeoCell® ~~and Stop Aging Now~~®vitamins, minerals and supplements. The Company also markets industry-leading products and technologies for professional customers, including those sold under the CloroxPro™ and ~~the~~ Clorox Healthcare® brand names. The Company has operations in more than 25 countries or territories and sells its products in more than 100 markets.

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

The Company operates through strategic business units (SBUs) which are also the Company’s operating segments. These SBUs are then aggregated into four reportable ~~segments. Prior periods presented have been recast to reflect the reportable segment changes effective in the fourth quarter of fiscal year 2020. The~~segments: Health and Wellness, Household, Lifestyle and International. These four reportable segments consist of the following:

•Health and Wellness consists of cleaning products, professional products and vitamins, minerals and supplement products mainly marketed and sold in the U.S. Products within this segment include cleaning products such as laundry additives ~~including bleach products under the Clorox~~® ~~brand~~ and ~~Clorox 2~~® ~~stain fighter and color booster;~~ home care products, primarily under the Clorox®, ~~Clorox~~Clorox2®, Scentiva®, ~~Formula 409~~Pine-Sol®, Liquid-Plumr®, ~~Pine-Sol~~Tilex® and ~~Tilex~~Formula 409®brands; professional cleaning and disinfecting products under the ~~CloroxPro~~™CloroxPro™, Clorox Healthcare®, and Clorox® ~~Total 360~~TurboPro®TM ~~brands and~~brands; professional food service products under the Hidden Valley® brand; and vitamins, minerals and supplement products under the RenewLife®, ~~Rainbow Light~~®, Natural Vitality®, NeoCell®and Rainbow Light® ~~and Stop Aging Now~~® brands.

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

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

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

RECENT EVENTS RELATED TO COVID-19

~~The novel~~For our fiscal quarter ended March 31, 2022, the coronavirus (COVID-19) pandemic ~~has caused a severe global health crisis, along with~~continued to cause economic and ~~societal~~social disruptions that led to ongoing uncertainties. Demand for many of the products across the Company portfolio remained elevated compared to pre-pandemic levels. The Company expects a continuing inflationary environment heightened by the conflict in Ukraine, marked by higher manufacturing and ~~uncertainties. As a result,~~logistics costs as well as increased commodity costs. While we have not experienced significant disruptions in our operations during fiscal year 2022 to date, risks of future negative impacts due to transportation, logistical or supply constraints and higher commodity costs for certain raw materials remain present. We are continuing to address these impacts to our operations.

We have taken an active role in addressing the ongoing pandemic’s impact on our employees, operations, customers, consumers and communities, including taking precautionary measures, such as implementing contingency plans, making operational adjustments where necessary, and providing support to organizations that support front-line workers. ~~The impact~~As the U.S. and other countries have begun or are expected to begin to reopen their economies and the world moves into new phases of ~~COVID-19 and responses of governments, consumers, and others to~~ the pandemic, ~~are affecting our business in many ways; however, we believe that~~ the ~~actions we are taking~~Company will ~~help us emerge from this global pandemic operationally sound,~~continue to focus on these priorities, while continuing to strive to serve people as consumer behaviors evolve inside and ~~well positioned for continued long-term growth.~~outside the home.

For our fiscal third quarter ended March 31, 2021, we continued to experience elevated demand for many of our products, especially our disinfecting cleaning products, in response to COVID-19 in comparison to periods before the pandemic. The extent of COVID-19’s effect on ~~our~~the Company’s operational and financial performance in the future will depend on future developments, including the duration, spread, intensity and ~~intensity~~phase of the pandemic ~~our~~in different countries, the emergence of COVID-19 variants and the effectiveness of vaccines against these variants, the Company’s continued ability to manufacture and distribute ~~our~~its products, ~~as well as~~ any future government actions affecting consumers, ~~and~~our business operations, including any vaccine mandates, or the economy ~~generally,~~in general, and effectiveness of global vaccines, all of which are uncertain and difficult to predict considering the rapidly evolving ~~landscape.~~landscape as the Company continues to expect a variable operating environment going forward.

For additional information on the impacts and our response to the coronavirus pandemic, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Exhibit 99.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~

2021.

2120

RESULTS OF OPERATIONS

CONSOLIDATED RESULTS


	Three Months Ended						Nine Months Ended
	3/31/2022		3/31/2021		% Change		3/31/2022		3/31/2021		% Change
Net sales	$	1,809	$	1,781	2	%	$	5,306	$	5,539	(4)	%

Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 % Change 3/31/2021 3/31/2020 % Change
Net sales $ 1,781 $ 1,783 — % $ 5,539 $ 4,738 17 %

Three Months Ended March 31, 2021
Percentage change versus the year-ago period
Reported (GAAP) Net Sales Growth / (Decrease) Reported Volume Acquisitions & Divestitures Foreign Exchange Impact
Price/Mix/Other (1)
Organic Sales Growth / (Decrease) (Non-GAAP) (2)
Organic Volume (3)
Health and Wellness (8) % (11) % — % — % 3 % (8) % (11) %
Household 6 4 — — 2 6 4
Lifestyle — (1) — — 1 — (1)
International 9 2 7 (2) 7 4 (3)
Total — % (4) % 1 % — % 4 % (1) % (5) %
Nine Months Ended March 31, 2021
Percentage change versus the year-ago period
Reported (GAAP) Net Sales Growth / (Decrease) Reported Volume Acquisitions & Divestitures Foreign Exchange Impact
Price/Mix/Other (1)
Organic Sales Growth / (Decrease) (Non-GAAP) (2)
Organic Volume (3)
Health and Wellness 19 % 15 % — % — % 4 % 19 % 15 %
Household 20 14 — — 6 20 14
Lifestyle 8 8 — — — 8 8
International 17 13 8 (4) 7 13 6
Total 17 % 13 % 1 % — % 4 % 16 % 12 %


	Three Months Ended March 31, 2022
	Percentage change versus the year-ago period
	Reported (GAAP) Net Sales Growth / (Decrease)		Reported Volume		Acquisitions & Divestitures		Foreign Exchange Impact		Price/Mix/ Other (1)		Organic Sales Growth / (Decrease) (Non-GAAP) (2)		Organic Volume (3)
Health and Wellness	(3)	%	1	%	—	%	—	%	(4)	%	(3)	%	1	%
Household	6		2		—		—		4		6		2
Lifestyle	4		6		—		—		(2)		4		6
International	1		2		—		(5)		4		6		2
Total	2	%	2	%	—	%	—	%	—	%	2	%	2	%

	Nine Months Ended March 31, 2022
	Percentage change versus the year-ago period
	Reported (GAAP) Net Sales Growth / (Decrease)		Reported Volume		Acquisitions & Divestitures		Foreign Exchange Impact		Price/Mix/Other (1)		Organic Sales Growth / (Decrease) (Non-GAAP) (2)		Organic Volume (3)
Health and Wellness	(11)	%	(6)	%	—	%	—	%	(5)	%	(11)	%	(6)	%
Household	(1)		(2)		—		—		1		(1)		(2)
Lifestyle	4		4		—		—		—		4		4
International	1		(1)		—		(3)		5		4		(1)
Total	(4)	%	(3)	%	—	%	—	%	(1)	%	(4)	%	(3)	%

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

(2) Organic sales ~~growth /~~growth/ (decrease) is defined as net sales ~~growth /~~growth/ (decrease) excluding the effect of any acquisitions and divestitures ~~as well as changes in~~and foreign exchange ~~rate.~~rate changes. See “Non-GAAP Financial Information” below for reconciliation of organic sales growth/(decrease) to net sales growth/ (decrease), the most directly comparable GAAP financial information.

(3) Organic volume represents volume excluding the effect of any acquisitions and divestitures. In the three months ended March 31, 2021, the volume impact of acquisitions was 5% and 1% for International and Total Company, respectively. In the nine months ended March 31, 2021, the volume impact of acquisitions was 7% and 1% for International and Total Company, respectively.

~~Net sales~~ in the current three month period was essentially flat when compared to the prior period, reflecting lower sales in the Health and Wellness reportable segment, partially offset by sales growth in the Household and International reportable segments. Volume decreased by 4% versus the prior period. The variance between volume growth and net sales growth was primarily due to the impact of lower trade promotion spending and favorable mix.

Net sales and volume in the current ~~nine~~three month period both increased by ~~17%~~2%, reflecting higher shipments across all reportable segments, primarily driven by ~~increased demand due to COVID-19~~the Lifestyle and related behavioral shifts. Volume increased by 13% versus the prior period. The variance between volume growth and net sales growth was primarily due to the impact of favorable mix, partially offset by unfavorable foreign currency exchange rates.Household reportable segments.

Net sales and volumein the current nine month period decreased by 4% and 3%, respectively, reflecting lower shipments primarily in the Health and Wellness reportable segment.

Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 % Change 3/31/2021 3/31/2020 % Change
Gross profit $ 774 $ 832 (7) % $ 2,531 $ 2,134 19 %
Gross margin 43.5 % 46.7 % 45.7 % 45.0 %


	Three Months Ended								Nine Months Ended
	3/31/2022			3/31/2021			% Change		3/31/2022			3/31/2021			% Change
Gross profit	$	649		$	774		(16)	%	$	1,877		$	2,531		(26)	%
Gross margin	35.9		%	43.5		%			35.4		%	45.7		%

Gross margin, ~~defined as gross profit as a percentage of net sales,~~ decreased by ~~320~~760 basis points in the current three month period from ~~46.7%~~43.5% to ~~43.5%~~35.9%. The decrease was primarily driven by higher manufacturing and logistics costs and unfavorable commodity costs, partially offset by ~~lower trade promotion spending and~~ the benefit of price increases and cost ~~savings initiatives.~~savings.

Gross margin ~~increased~~decreased by 701030 basis points in the current nine month period from ~~45.0%~~45.7% to ~~45.7%~~35.4%. The ~~increase~~decrease was primarily driven by higher ~~volume, cost savings, and lower trade promotion spending, partially offset by higher~~ manufacturing and logistics costs and unfavorable commodity costs.

Three Months Ended
% of Net Sales
3/31/2021 3/31/2020 % Change 3/31/2021 3/31/2020
Selling and administrative expenses $ 237 $ 269 (12) % 13.3 % 15.1 %
Advertising costs 200 184 9 11.2 10.3
Research and development costs 32 39 (18) 1.8 2.2
Nine Months Ended
% of Net Sales
3/31/2021 3/31/2020 % Change 3/31/2021 3/31/2020
Selling and administrative expenses $ 744 $ 690 8 % 13.4 % 14.6 %
Advertising costs 566 461 23 10.2 9.7
Research and development costs 104 103 1 1.9 2.2
Expenses


	Three Months Ended
							% of Net Sales
	3/31/2022		3/31/2021		% Change		3/31/2022		3/31/2021
Selling and administrative expenses	$	233	$	237	(2)	%	12.9	%	13.3	%
Advertising costs	153		200		(24)		8.5		11.2
Research and development costs	31		32		(3)		1.7		1.8

	Nine Months Ended
							% of Net Sales
	3/31/2022		3/31/2021		% Change		3/31/2022		3/31/2021
Selling and administrative expenses	$	710	$	744	(5)	%	13.4	%	13.4	%
Advertising costs	502		566		(11)		9.5		10.2
Research and development costs	98		104		(6)		1.8		1.9

Selling and administrative expenses, as a percentage of net sales, decreased by ~~180 basis points and 120~~40 basis points in the current three month period and ~~nine month periods, respectively. The change~~were essentially flat in the current ~~three~~nine month period compared to the prior period. The dollar decrease in the current nine month period in selling and administrative expenses was primarily due to lower incentive compensation ~~expenses. The change in~~expenses and the ~~current nine month period was primarily due to increased investments in several growth opportunities.~~benefit from cost savings, partially offset by the Company’s digital capabilities and productivity enhancements investments.

Advertising costs, as a percentage of net sales, ~~increased~~decreased by 90270 basis points and 5070 basis points in the current three and nine month periods, respectively. The ~~increase~~dollar decrease in the current three month period in advertising ~~expenses reflected~~costs was primarily due to the ~~Company’s continued support behind its brands.~~timing of spending. The dollar decrease in the current nine month period in advertising costs was primarily due to lower advertising spending. The Company’s U.S. retail advertising spend as a percentage of net sales was ~~approximately~~9% and 12% in the current and prior three month ~~periods.~~periods, respectively.

Research and development costs, as a percentage of net sales, ~~decreased by 40 basis points and 30 basis points~~were essentially flat in the current three and nine month periods ~~respectively. The decrease in research and development expenses was primarily due~~as compared to ~~lower incentive compensation expenses in~~ the ~~current three month period.~~prior periods. The Company continues to invest behind product innovation and cost savings.

Goodwill, trademark and other asset impairments, Interest expense, Other (income) expense, net, and the effective tax rate on earnings


		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
		3/31/2021			3/31/2020			3/31/2021			3/31/2020				3/31/2022			3/31/2021			3/31/2022			3/31/2021
Goodwill, trademark and other asset impairments	Goodwill, trademark and other asset impairments	$	329		$	—		$	329		$	—		Goodwill, trademark and other asset impairments	$	—		$	329		$	—		$	329
Interest expense	Interest expense	25			24			74			74			Interest expense	21			25			69			74
Other (income) expense, net	Other (income) expense, net	10			19			(85)			16			Other (income) expense, net	11			10			20			(85)
Effective tax rate on earnings (losses)	Effective tax rate on earnings (losses)	(1.4)		%	18.9		%	22.5		%	20.4		%	Effective tax rate on earnings (losses)	23.9		%	(1.4)		%	23.3		%	22.5		%

Goodwill, trademark and other asset impairments of $329 in the ~~current~~prior three and nine month periods ~~reflect non-cash~~reflected noncash impairment charges related to goodwill, trademarks, and other assets held by the VMS business (included within the Health and Wellness segment). See Notes to Condensed Consolidated Financial Statements for further ~~information.~~information regarding the impairments recorded.

Other (income) expense, net was ~~$10~~$11 and ~~$19~~$10 in the current and prior three month periods, respectively, and $20 and ($85) ~~and $16~~ in the current and prior nine month periods, respectively. The variance between the current and prior ~~three month periods was not significant. The variance between the current and prior~~ nine month periods was primarily due to the one-time, ~~non-cash~~noncash remeasurement gain ~~recognized in the current period~~ from the Company’s previously held equity interest in the Kingdom of Saudi Arabia (Saudi joint ~~venture~~venture) in the ~~first quarter of fiscal year 2021 (see Notes to Condensed Consolidated Financial Statements).~~prior period.

The effective tax rate on earnings (losses) was ~~(1.4)%~~23.9% and ~~22.5%~~23.3% for the current three and nine month periods, respectively, and ~~18.9%~~(1.4)% and ~~20.4%~~22.5% for the prior three and nine month periods, respectively. The substantially lower tax rate on ~~loss~~losses before income taxes in the ~~current~~prior three month period ~~and higher tax rate on earnings before income taxes in the current nine month period were~~was driven by the partial non-deductibility of impaired VMS goodwill.

Diluted net earnings (losses) per share

Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 % Change 3/31/2021 3/31/2020 % Change
Diluted net earnings (losses) per share $ (0.49) $ 1.89 (126) % $ 4.78 $ 4.94 (3) %


	Three Months Ended						Nine Months Ended
	3/31/2022		3/31/2021		% Change		3/31/2022		3/31/2021		% Change
Diluted net earnings (losses) per share	$	1.21	$	(0.49)	347	%	$	2.91	$	4.78	(39)	%

Diluted net earnings (losses) per share ~~(EPS~~)(EPS) ~~decreased~~increased by ~~$2.38,~~$1.70, or ~~126%~~347%, in the current three month period, primarily due to the ~~non-cash~~noncash impairment charges on assets held by the VMS business in the prior period, as well as lower advertising spending and ~~lower gross margin,~~higher net sales, partially offset by lower ~~selling and administrative expenses.~~gross margin all in the current period.

Diluted net ~~earnings per share~~EPS decreased by ~~$0.16,~~$1.87, or 3%39%, in the current nine month period, primarily due to ~~the non-cash impairment charges on assets held by the VMS business, increased advertising investments and higher selling and administrative expenses, partially offset by~~lower gross margin, ~~expansion~~lower net sales and the one-time, noncash remeasurement gain recognized on the previously held equity interest in the Saudi joint ~~venture.~~venture in the prior period, partially offset by the noncash impairment charges on assets held by the VMS business in the prior period and lower advertising spending in the current period.

SEGMENT RESULTS

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

Health and Wellness

Three Months Ended Nine Months Ended
3/31/2021 3/31/2020 % Change 3/31/2021 3/31/2020 % Change
Net sales $ 680 $ 736 (8) % $ 2,310 $ 1,944 19 %
Earnings (losses) before income taxes (183) 210 (187) 315 514 (39)


	Three Months Ended						Nine Months Ended
	3/31/2022		3/31/2021		% Change		3/31/2022		3/31/2021		% Change
Net sales	$	662	$	680	(3)	%	$	2,055	$	2,310	(11)	%
Earnings (losses) before income taxes	84		(183)		146		245		315		(22)

Volume ~~net sales~~ and earnings (losses) before income taxes increased by 1% and 146%, respectively, and net sales decreased by ~~11%, 8% and 187%, respectively,~~3% during the current three month period. The increase in volume was due to higher shipments in Cleaning driven by market share growth due to merchandising support, increased supply and ~~sales decreases were primarily driven~~innovation, partially offset by lower shipments primarily in ~~Cleaning and~~the Professional Products ~~as well as supply constraints for some key products.~~portfolio due to the ongoing impacts of the COVID-19 pandemic. The variance between volume and net sales was primarily due to ~~lower~~higher trade promotion ~~spending.~~spending and unfavorable mix, partially offset by the benefit of price increases. The ~~decrease~~increase in earnings (losses) before income taxes ~~in the current period~~ was primarily due to the ~~non-cash~~noncash impairment charges on assets held by the VMS business in the prior period, partially offset by higher manufacturing and logistics costs and lower net sales ~~decline.~~all in the current period.

Volume, ~~and~~ net sales ~~increased by 15%, and 19%, respectively,~~ and earnings before income taxes decreased by ~~39%~~6%, 11% and 22%, respectively, during the current nine month period. The volume and net sales ~~growth reflected higher~~decreases were primarily due to lower shipments in ~~Cleaning and~~the Professional Products ~~portfolios~~portfolio due to ~~greater~~higher COVID-19 related demand ~~inside and outside of~~in the ~~home.~~prior period. The variance between volume and net sales was primarily due to ~~lower trader promotion and favorable~~unfavorable mix. The decrease in earnings before income taxes ~~in the current period~~ was primarily due to lower net sales, higher manufacturing and logistics costs and unfavorable commodity costs, partially offset by the ~~non-cash~~noncash impairment charges on assets held by the VMS business ~~higher manufacturing~~in the prior period and ~~logistics costs, and higher~~lower advertising ~~investment, partially offset by net sales growth.~~spending in the current period.

Household

~~Household~~


		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
		3/31/2021		3/31/2020		% Change		3/31/2021		3/31/2020		% Change			3/31/2022		3/31/2021		% Change		3/31/2022		3/31/2021		% Change
Net sales	Net sales	$	510	$	480	6	%	$	1,421	$	1,183	20	%	Net sales	$	539	$	510	6	%	$	1,404	$	1,421	(1)	%
Earnings before income taxes	Earnings before income taxes	97		114		(15)		266		190		40		Earnings before income taxes	92		97		(5)		138		266		(48)

CONTINGENCIES

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

RECENTLY ISSUED ACCOUNTING STANDARDS

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

NON-GAAP FINANCIAL MEASURES

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

~~The Company uses the term~~ ~~Consolidated EBITDA~~ because it is a term used in the Credit Agreement. As defined in the Credit Agreement, Consolidated EBITDA represents earnings before interest, taxes, depreciation and amortization, and other similar non-cash charges (such as non-cash asset impairment charges and other non-cash, non-recurring gains or losses). ~~Interest Coverage ratio~~ is the ratio of Consolidated EBITDA to interest expense. The Company’s management believes disclosure of Consolidated EBITDA provides useful information to investors because it is used in determining compliance with the primary restrictive covenant in the Credit Agreement. For additional discussion of the Interest Coverage ratio and a reconciliation of Consolidated EBITDA to net earnings, see “~~Financial Position and Liquidity - Financing Activities - Credit Arrangements” above.~~

Organic sales growth / (decrease) is defined as net sales growth / (decrease) excluding the effect of foreign exchange rate changes and any acquisitions and divestitures. Management believes that the presentation of organic sales growth / (decrease) is useful to investors because it excludes sales from any acquisitions and divestitures, which results in a comparison of sales only from the businesses that the Company was operating throughout the relevant periods, and the impact of foreign exchange rate changes, which are out of the control of the Company and management.

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

Three Months Ended March 31, 2021
Percentage change versus the year-ago period
Health and Wellness Household Lifestyle International Total
Net sales growth / (decrease) (GAAP) (8) % 6 % — % 9 % — %
Add: Foreign Exchange — — — 2 —
Add/(Subtract): Divestitures/Acquisitions — — — (7) (1)
Organic sales growth / (decrease) (non-GAAP) (8) % 6 % — % 4 % (1) %
Nine Months Ended March 31, 2021
Percentage change versus the year-ago period
Health and Wellness Household Lifestyle International Total
Net sales growth / (decrease) (GAAP) 19 % 20 % 8 % 17 % 17 %
Add: Foreign Exchange — — — 4 —
Add/(Subtract): Divestitures/Acquisitions — — — (8) (1)
Organic sales growth / (decrease) (non-GAAP) 19 % 20 % 8 % 13 % 16 %


	Three Months Ended March 31, 2022
	Percentage change versus the year-ago period
	Health and Wellness		Household		Lifestyle		International		Total
Net sales growth / (decrease) (GAAP)	(3)	%	6	%	4	%	1	%	2	%
Add: Foreign Exchange	—		—		—		5		—
Add/(Subtract): Divestitures/Acquisitions	—		—		—		—		—
Organic sales growth / (decrease) (non-GAAP)	(3)	%	6	%	4	%	6	%	2	%

	Nine Months Ended March 31, 2022
	Percentage change versus the year-ago period
	Health and Wellness		Household		Lifestyle		International		Total
Net sales growth / (decrease) (GAAP)	(11)	%	(1)	%	4	%	1	%	(4)	%
Add: Foreign Exchange	—		—		—		3		—
Add/(Subtract): Divestitures/Acquisitions	—		—		—		—		—
Organic sales growth / (decrease) (non-GAAP)	(11)	%	(1)	%	4	%	4	%	(4)	%

Cautionary Statement

This Report, including the exhibits hereto and the information incorporated by reference herein, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, among others, statements related to the expected or potential impact of the ~~COVID-19~~novel coronavirus (COVID-19) pandemic, and the related responses of governments, consumers, customers, suppliers, employees and the Company, on our business, operations, employees, financial condition and results of operations, and any such forward-looking statements, whether concerning the COVID-19 pandemic or otherwise, involve risks, assumptions and uncertainties. Except for historical information, statements about future volumes, sales, organic sales growth, foreign currencies, costs, cost savings, margins, earnings, ~~earnings attributable to the Company,~~ earnings per share, diluted earnings per share, foreign currency exchange rates, tax rates, cash flows, plans, objectives, expectations, growth or profitability are forward-looking statements based on management’s estimates, beliefs, assumptions and projections. Words such as “could,” “may,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “predicts,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic and financial performance are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed. Important factors that could affect performance and cause results to differ materially from management’s expectations, ~~or could affect the Company’s ability to achieve its strategic goals,~~ are described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020~~2021, and in this Report, as updated from time to time in the Company’s Securities and Exchange Commission filings. These factors include, but are not limited ~~to, the uncertainties relating to the continued impact of COVID-19 on the Company’s business, operations, employees, financial condition and results of operations, as well as:~~to:

•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;

•the impact of COVID-19 on the availability of, and efficiency of the supply, manufacturing and distribution systems for, the Company’s products, including any significant disruption to such systems;

•~~long-term changes in consumer preference or~~ on the demand for the Company’s ~~products as a result~~products; and on worldwide, regional and local adverse economic conditions, including increased risk of ~~any shortages or lack of availability of any products~~inflation;

•volatility and increases in the ~~near-term;~~costs of raw materials, energy, transportation, labor and other necessary supplies or services;

•risks related to supply chain issues and product shortages as a result of increased supply chain dependencies due to an expanded supplier network and a reliance on ~~a limited base of suppliers and~~certain single-source suppliers;

•risks relating to the significant increase in demand for disinfecting and other products due to the COVID-19 ~~pandemic;~~pandemic continuing;

•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, especially at a time when a large number of the Company’s employees are working remotely and accessing its technology infrastructure remotely;

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

•risks relating to acquisitions, ~~including the recent acquisition of the majority interest in the company’s Saudi joint venture,~~ new ventures and divestitures, and associated costs, including for asset impairment charges related to, among others, intangible assets, including trademarks and goodwill, in particular the impairment charges relating to the carrying value of the ~~company’s~~Company’s Vitamins, Minerals and Supplements business;

•~~unfavorable worldwide, regional~~ and ~~local economic~~the ability to complete announced transactions and, ~~financial market conditions, including as a result of fear of exposure~~if completed, integration costs and potential contingent liabilities related to ~~or actual impacts of a widespread disease outbreak, such as COVID-19;~~those transactions;

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

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

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

•~~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;~~

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

•the operations of the Company and its suppliers being subject to disruption by events beyond the Company’s control, including work stoppages, cyber-attacks, weather events or natural disasters, political instability or uncertainty, disease outbreaks or pandemics, such as COVID-19, and terrorism;

•risks related to international operations and international trade, including foreign currency fluctuations, such as devaluations, and foreign currency exchange rate ~~controls, including periodic changes in such~~ controls; changes in ~~U.S. immigration or trade~~governmental policies, including ~~the imposition of~~trade, travel or immigration restrictions, new or additional ~~tariffs;~~tariffs, and price or other controls; labor claims and ~~labor~~civil unrest; inflationary pressures, particularly in Argentina; impact of the United Kingdom’s exit from ~~and the related on-going negotiations with,~~ the European Union; ~~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; widespread health emergencies, such as COVID-19; and the possibility of nationalization, expropriation of assets or other government action;

•the ~~facilities~~impact of macroeconomic and geopolitical trends and events, including the ~~Company~~unfolding situation in Ukraine and its ~~suppliers being subject to disruption by events beyond~~regional and global ramifications and the ~~Company’s control, including work stoppages, cyber-attacks, natural disasters, disease outbreaks or pandemics, such as COVID-19, and terrorism;~~effects of inflation;

•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, governmental or tax proceedings, including in foreign jurisdictions and in connection with any product recalls;

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

•~~the success of the Company’s~~efficiencies, and successfully implement its business strategies;

•~~risks related to additional increases in the estimated fair value of The Procter & Gamble Company’s interest in the Glad business;~~

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

•risks related to additional increases in the estimated fair value of Procter & Gamble Co.’s interest in the Glad business;

•the performance of strategic alliances and other business relationships;

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

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

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

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

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

•results and the Company’s ability to access capital markets and other funding ~~sources, as well as continued or increased market volatility;~~sources;

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

•~~uncertainties relating to tax positions, tax disputes and any changes in tax rates and regulations 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 any litigation associated with the exclusive forum provision in the Company’s ~~discontinuation of operations in Venezuela.~~bylaws.

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

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have not been any material changes to the Company’s market risk since June 30, ~~2020.~~2021. For additional information, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Exhibit 99.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021.

Item 4. Controls and Procedures

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

No change in the Company’s internal control over financial reporting occurred during the third fiscal quarter of the fiscal year ending June 30, ~~2021,~~2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.A. Risk Factors

For information regarding Risk Factors, please refer to Item 1.A. in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020~~2021 and the information in “Cautionary Statement” included in this Report.

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

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

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

The following table sets forth the purchases of the Company’s securities by the Company and any affiliated purchasers within the meaning of Rule 10b-18(a)(3) (17 CFR 240.10b-18(a)(3)) during the third quarter of fiscal year ~~2021.~~

[a] [b] [c] [d]
Period Total Number of
Shares Purchased
(1) Average Price Paid
per Share (2) Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs
January 1 to 31, 2021 — $ — — $1,493 million
February 1 to 28, 2021 910,000 186.23 910,000 $1,428 million
March 1 to 31, 2021 738,130 183.40 738,130 $1,293 million
Total 1,648,130 $ 184.96 1,648,130
2022.

[a]

[b]

[c]

[d]

Period

Total Number of
Shares Purchased

Average Price Paid

per Share (1)

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

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

January 1 to 31, 2022

—

$993 million

February 1 to 28, 2022

—

$993 million

March 1 to 31, 2022

—

$993 million

Total

—

____________________

(1)Of the shares purchased in February 2021, 560,000 shares were acquired pursuant to the Evergreen Program and 350,000 shares were acquired pursuant to the Open-Market Program. All shares purchased in March 2021 were acquired pursuant to the Open-Market Program.

~~(2)~~Average price paid per share in the period includes commission.

3433

Item 6. Exhibits

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

EXHIBIT INDEX

Exhibit No.


10.1						Credit Agreement, dated as of March 25, 2022, among The Clorox Company, ~~Annual Incentive Plan, amended~~the lenders listed therein, JPMorgan Chase Bank, N.A., Citibank, N.A., and ~~restated~~Wells Fargo Bank, National Association, as ~~of February 9, 2021.~~
~~10.2~~						~~The Clorox Company Executive Incentive Compensation Plan, amended~~Administrative Agents, and ~~restated~~JPMorgan Chase Bank, N.A., as ~~of February 9, 2021.~~Servicing Ag
~~10.3~~en						~~The Clorox Company 2005 Stock Incentive Plan, First Amendment and Restatement~~t (filed as ~~of November 14, 2012; Second Amendment and Restatement as of September 22, 2020; Third Amendment and Restatement as of February 9, 2021.~~
~~10.4~~						Exhibit 10.1 to the Current Report on Form ~~of Nonqualified Stock Option Award Agreement under the Company’s 2005 Stock Incentive Plan.~~
~~10.5~~						~~Form of Performance Share Award Agreement under the Company’s 2005 Stock Incentive Plan for awards made in 2021.~~
~~10.6~~						~~Form of Restricted Stock Unit Award Agreement under the Company's 2005 Stock Incentive Plan (Annual Grant)~~8-K, filed March 28, 2022, incorporated herein by reference).
~~10.7~~						~~Form of Restricted Stock Unit Award Agreement under the Company's 2005 Stock Incentive Plan (Off-Cycle Grant).~~
~~10.8~~						~~Severance Plan for Clorox Executive Committee Members, third amended and restated effective February 9, 2021.~~
31.1						Certification by the Chief Executive Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification by the Chief Financial Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Certification by the Chief Executive Officer and Chief Financial Officer of the Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.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.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).

3534

SIGNATURE

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


		THE CLOROX COMPANY
		(Registrant)


DATE: ~~April 30, 2021~~May 2, 2022	BY	/s/ ~~Jeffrey R. Baker~~Laura Peck
		~~Jeffrey R. Baker~~Laura Peck Vice President – Chief Accounting Officer and Corporate Controller

3635


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


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

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


	3/31/2022		6/30/2021
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	241	$	319
Receivables, net		660		604
Inventories, net		803		752
Prepaid expenses and other current assets		165		154
Total current assets		1,869		1,829
Property, plant and equipment, net of accumulated depreciation and amortization of $2,510 and $2,382, respectively		1,312		1,302
Operating lease right-of-use assets		311		332
Goodwill		1,572		1,575
Trademarks, net		690		693
Other intangible assets, net		204		225
Other assets		364		378
Total assets	$	6,322	$	6,334
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	395	$	—
Current maturities of long-term debt		600		300
Current operating lease liabilities		73		81
Accounts payable and accrued liabilities		1,575		1,675

Total current liabilities		2,643		2,056
Long-term debt		1,887		2,484
Long-term operating lease liabilities		288		301
Other liabilities		843		834
Deferred income taxes		85		67
Total liabilities		5,746		5,742
Commitments and contingencies		0		0
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding		—		—
Common stock: $1.00 par value; 750,000,000 shares authorized; 130,741,461 shares issued as of March 31, 2022 and June 30, 2021; and 123,071,356 and 122,780,220 shares outstanding as of March 31, 2022 and June 30, 2021, respectively		131		131
Additional paid-in capital		1,195		1,186
Retained earnings		951		1,036
Treasury stock, at cost: 7,670,105 and 7,961,241 shares as of March 31, 2022 and June 30, 2021, respectively		(1,358)		(1,396)
Accumulated other comprehensive net (loss) income		(519)		(546)
Total Clorox stockholders’ equity		400		411
Noncontrolling interests		176		181
Total stockholders’ equity		576		592
Total liabilities and stockholders’ equity	$	6,322	$	6,334


	3/31/2021		6/30/2020
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	492	$	871
Receivables, net		643		648
Inventories, net		688		454
Prepaid expenses and other current assets		139		47
Total current assets		1,962		2,020
Property, plant and equipment, net of accumulated depreciation and amortization of $2,351 and $2,224, respectively		1,251		1,103
Operating lease right-of-use assets		328		291
Goodwill		1,574		1,577
Trademarks, net		694		785
Other intangible assets, net		246		109
Other assets		386		328
Total assets	$	6,441	$	6,213
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities

Current maturities of long-term debt	$	300	$	0
Current operating lease liabilities		74		64
Accounts payable and accrued liabilities		1,445		1,329
Income taxes payable		0		25
Total current liabilities		1,819		1,418
Long-term debt		2,483		2,780
Long-term operating lease liabilities		305		278
Other liabilities		819		767
Deferred income taxes		77		62
Total liabilities		5,503		5,305
Commitments and contingencies		0		0
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; NaN issued or outstanding		0		0
Common stock: $1.00 par value; 750,000,000 shares authorized; 130,741,461 and 158,741,461 shares issued as of March 31, 2021 and June 30, 2020, respectively; and 124,359,712 and 126,198,606 shares outstanding as of March 31, 2021 and June 30, 2020, respectively		131		159
Additional paid-in capital		1,190		1,137
Retained earnings		1,086		3,567
Treasury stock, at cost: 6,381,749 and 32,542,855 shares as of March 31, 2021 and June 30, 2020, respectively		(1,111)		(3,315)
Accumulated other comprehensive net (loss) income		(553)		(640)
Total Clorox stockholders’ equity		743		908
Noncontrolling interests		195		0
Total stockholders’ equity		938		908
Total liabilities and stockholders’ equity	$	6,441	$	6,213


	Nine Months Ended
	3/31/2021		3/31/2020
Operating activities:
Net earnings	$	619	$	629
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization		157		133
Stock-based compensation		52		37
Deferred income taxes		(21)		5
Goodwill, trademark and other asset impairments		329		0
Other		(53)		26
Changes in:
Receivables, net		46		(102)
Inventories, net		(220)		50
Prepaid expenses and other current assets		(29)		(6)
Accounts payable and accrued liabilities		94		53
Operating lease right-of-use assets and liabilities, net		(1)		7
Income taxes payable / prepaid		(80)		(26)
Net cash provided by operations		893		806
Investing activities:
Capital expenditures		(232)		(158)
Businesses acquired, net of cash acquired		(85)		0
Other		(24)		13
Net cash used for investing activities		(341)		(145)
Financing activities:
Notes and loans payable, net		0		234
Treasury stock purchased		(605)		(225)
Cash dividends paid to Clorox stockholders		(420)		(399)
Cash dividends paid to noncontrolling interests		(18)		0
Issuance of common stock for employee stock plans and other		99		129
Net cash used for financing activities		(944)		(261)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		10		(8)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(382)		392
Cash, cash equivalents, and restricted cash:
Beginning of period		879		113
End of period	$	497	$	505


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


	As of March 31, 2021						As of June 30, 2020
	Gross carrying amount		Accumulated amortization / Impairments		Net carrying amount		Gross carrying amount		Accumulated amortization / Impairments		Net carrying amount
Trademarks not subject to amortization	$	769	$	86	$	683	$	766	$	0	$	766
Trademarks subject to amortization	47		36		11		47		28		19
Other intangible assets	583		337		246		424		315		109
Total	$	1,399	$	459	$	940	$	1,237	$	343	$	894


		Location of Gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earnings	Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings									Location of gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earnings (losses)	Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings (losses)
			Three Months Ended				Nine Months Ended						Three Months Ended				Nine Months Ended
			3/31/2021		3/31/2020		3/31/2021		3/31/2020				3/31/2022		3/31/2021		3/31/2022		3/31/2021
Commodity purchase derivative contracts	Commodity purchase derivative contracts	Cost of products sold	$	0	$	0	$	(2)	$	(1)	Commodity purchase derivative contracts	Cost of products sold	$	3	$	—	$	13	$	(2)
Foreign exchange derivative contracts	Foreign exchange derivative contracts	Cost of products sold	0		0		0		0		Foreign exchange derivative contracts	Cost of products sold	—		—		—		—
Interest rate derivative contracts	Interest rate derivative contracts	Interest expense	(2)		(2)		(5)		(5)		Interest rate derivative contracts	Interest expense	—		(2)		(3)		(5)
Total	Total		$	(2)	$	(2)	$	(7)	$	(6)	Total		$	3	$	(2)	$	10	$	(7)


			3/31/2021				6/30/2020
	Balance Sheet Classification	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Investments, including money market funds	Cash and cash equivalents (1)	1	$	213	$	213	$	584	$	584
Time deposits	Cash and cash equivalents (1)	2	146		146		165		165


Trust assets for nonqualified deferred compensation plans	Other assets	1	131		131		100		100
			$	490	$	490	$	849	$	849
Liabilities


Current maturities of long-term debt and Long-term debt	Current maturities of long- term debt and Long-term debt (2)	2	2,783		2,944		2,780		3,051
			$	2,783	$	2,944	$	2,780	$	3,051


	Three Months Ended March 31, 2021
	Percentage change versus the year-ago period
	Reported (GAAP) Net Sales Growth / (Decrease)		Reported Volume		Acquisitions & Divestitures		Foreign Exchange Impact		Price/Mix/Other (1)		Organic Sales Growth / (Decrease) (Non-GAAP) (2)		Organic Volume (3)
Health and Wellness	(8)	%	(11)	%	—	%	—	%	3	%	(8)	%	(11)	%
Household	6		4		—		—		2		6		4
Lifestyle	—		(1)		—		—		1		—		(1)
International	9		2		7		(2)		7		4		(3)
Total	—	%	(4)	%	1	%	—	%	4	%	(1)	%	(5)	%

	Nine Months Ended March 31, 2021
	Percentage change versus the year-ago period
	Reported (GAAP) Net Sales Growth / (Decrease)		Reported Volume		Acquisitions & Divestitures		Foreign Exchange Impact		Price/Mix/Other (1)		Organic Sales Growth / (Decrease) (Non-GAAP) (2)		Organic Volume (3)
Health and Wellness	19	%	15	%	—	%	—	%	4	%	19	%	15	%
Household	20		14		—		—		6		20		14
Lifestyle	8		8		—		—		—		8		8
International	17		13		8		(4)		7		13		6
Total	17	%	13	%	1	%	—	%	4	%	16	%	12	%


	~~Twelve Months Ended~~
	~~3/31/2021~~
~~Net earnings~~	$	~~929~~
~~Add back:~~
~~Interest expense~~	99
~~Income tax expense~~	~~265~~
~~Depreciation and amortization~~	~~204~~
~~Non-cash asset impairment charges(1)~~	~~330~~
~~Deduct:~~
~~Interest income~~	~~(4)~~
~~Non-recurring, non-cash gain(2)~~	~~(85)~~
~~Consolidated EBITDA~~	$	~~1,738~~
~~Interest expense~~	$	99
~~Interest Coverage ratio~~	~~17.6~~


	[a]	[b]		[c]	[d]
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to 31, 2021	—	$	—	—	$1,493 million
February 1 to 28, 2021	910,000	186.23		910,000	$1,428 million
March 1 to 31, 2021	738,130	183.40		738,130	$1,293 million
Total	1,648,130	$	184.96	1,648,130