CLOROX CO /DE/, 10-Q filed on 2/6/2012
Quarterly Report
Document And Entity Information
6 Months Ended
Dec. 31, 2011
Jan. 31, 2012
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Dec. 31, 2011 
 
Document Fiscal Year Focus
2012 
 
Document Fiscal Period Focus
Q2 
 
Entity Registrant Name
CLOROX CO /DE/ 
 
Entity Central Index Key
0000021076 
 
Current Fiscal Year End Date
--06-30 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
129,802,146 
Condensed Consolidated Statements Of Earnings (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Condensed Consolidated Statements Of Earnings [Abstract]
 
 
 
 
Net sales
$ 1,221 
$ 1,179 
$ 2,526 
$ 2,445 
Cost of products sold
714 
687 
1,473 
1,392 
Gross profit
507 
492 
1,053 
1,053 
Selling and administrative expenses
184 
180 
374 
361 
Advertising costs
115 
117 
233 
235 
Research and development costs
29 
28 
57 
57 
Goodwill impairment
 
258 
 
258 
Interest expense
30 
33 
59 
65 
Other income, net
(6)
(12)
(12)
(13)
Earnings (losses) from continuing operations before income taxes
155 
(112)
342 
90 
Income taxes on continuing operations
50 
51 
107 
113 
Earnings (losses) from continuing operations
105 
(163)
235 
(23)
Discontinued operations:
 
 
 
 
Earnings from Auto businesses, net of tax
 
 
23 
Gain on sale of Auto businesses, net of tax
 
177 
 
237 
Earnings from discontinued operations
 
184 
 
260 
Net earnings
$ 105 
$ 21 
$ 235 
$ 237 
Basic
 
 
 
 
Continuing operations
$ 0.79 
$ (1.17)
$ 1.78 
$ (0.17)
Discontinued operations
 
$ 1.32 
 
$ 1.87 
Basic net earnings per share
$ 0.79 
$ 0.15 
$ 1.78 
$ 1.70 
Diluted
 
 
 
 
Continuing operations
$ 0.79 
$ (1.17)
$ 1.76 
$ (0.17)
Discontinued operations
 
$ 1.32 
 
$ 1.87 
Diluted net earnings per share
$ 0.79 
$ 0.15 
$ 1.76 
$ 1.70 
Weighted average shares outstanding (in thousands)
 
 
 
 
Basic
131,112 
138,678 
131,540 
139,077 
Diluted
132,358 
138,678 
133,022 
139,077 
Dividend declared per share
$ 0.60 
$ 0.55 
$ 1.20 
$ 1.10 
Condensed Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Jun. 30, 2011
ASSETS
 
 
Cash and cash equivalents
$ 297 
$ 259 
Receivables, net
489 
525 
Inventories, net
451 
382 
Other current assets
111 
113 
Total current assets
1,348 
1,279 
Property, plant and equipment, net
1,041 
1,039 
Goodwill
1,093 
1,070 
Trademarks, net
566 
550 
Other intangible assets, net
103 
83 
Other assets
139 
142 
Total assets
4,290 
4,163 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
 
Notes and loans payable
476 
459 
Current maturities of long-term debt
350 
 
Accounts payable
345 
423 
Accrued liabilities
438 
442 
Income taxes payable
28 
41 
Total current liabilities
1,637 
1,365 
Long-term debt
2,070 
2,125 
Other liabilities
641 
619 
Deferred income taxes
141 
140 
Total liabilities
4,489 
4,249 
Contingencies
   
   
Stockholders' deficit
 
 
Preferred stock: $0.001 par value; 5,000,000 shares authorized; none issued or outstanding
   
   
Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares issued at December 31, 2011 and June 30, 2011; and 129,694,049 and 131,066,864 shares outstanding at December 31, 2011 and June 30, 2011, respectively
159 
159 
Additional paid-in capital
616 
632 
Retained earnings
1,210 
1,143 
Treasury shares, at cost: 29,047,412 and 27,674,597 shares at December 31, 2011 and June 30, 2011, respectively
(1,861)
(1,770)
Accumulated other comprehensive net losses
(323)
(250)
Stockholders' deficit
(199)
(86)
Total liabilities and stockholders' deficit
$ 4,290 
$ 4,163 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2011
Jun. 30, 2011
Condensed Consolidated Balance Sheets [Abstract]
 
 
Preferred stock, par value
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
5,000,000 
5,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 1.00 
$ 1.00 
Common stock, shares authorized
750,000,000 
750,000,000 
Common stock, shares issued
158,741,461 
158,741,461 
Common stock, shares outstanding
129,694,049 
131,066,864 
Treasury shares, at cost
29,047,412 
27,674,597 
Condensed Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Operating activities:
 
 
Net earnings
$ 235 
$ 237 
Deduct: Earnings from discontinued operations
 
260 
Earnings (losses) from continuing operations
235 
(23)
Adjustments to reconcile earnings (losses) from continuing operations to net cash provided by operations:
 
 
Depreciation and amortization
89 
88 
Share-based compensation
11 
14 
Deferred income taxes
Goodwill impairment
 
258 
Net gain on disposition of assets
(1)
(19)
Other
19 
Changes in:
 
 
Receivables, net
35 
54 
Inventories, net
(65)
(68)
Other current assets
 
17 
Accounts payable and accrued liabilities
(136)
(129)
Income taxes payable
(11)
(48)
Net cash provided by continuing operations
168 
170 
Net cash provided by discontinued operations
 
55 
Net cash provided by operations
168 
225 
Investing activities:
 
 
Capital expenditures
(82)
(89)
Proceeds from sale of businesses, net of transaction costs
 
747 
Businesses acquired
(85)
 
Other
25 
Net cash (used for) provided by investing activities
(163)
683 
Financing activities:
 
 
Notes and loans payable, net
14 
(369)
Long-term debt borrowings, net of issuance costs
297 
 
Treasury stock purchased
(158)
(134)
Cash dividends paid
(159)
(154)
Issuance of common stock for employee stock plans and other
44 
35 
Net cash provided by (used for) financing activities
38 
(622)
Effect of exchange rate changes on cash and cash equivalents
(5)
Net increase in cash and cash equivalents
38 
292 
Cash and cash equivalents:
 
 
Beginning of period
259 
87 
End of period
$ 297 
$ 379 
Interim Financial Statements
Interim Financial Statements

NOTE 1. INTERIM FINANCIAL STATEMENTS

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three and six months ended December 31, 2011 and 2010, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its subsidiaries (the Company) for the periods presented. The results for the interim period ended December 31, 2011, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2012, or for any future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company's Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2011, which includes a complete set of footnote disclosures, including the Company's significant accounting policies.

Recently Issued Accounting Pronouncements

On September 15, 2011, the Financial Accounting Standards Board (FASB) issued new guidance to simplify how entities test for goodwill impairment. The new guidance allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The new guidance is effective for the annual goodwill impairment test to be performed in fiscal year 2013, with early adoption permitted. The Company is currently evaluating the anticipated timing for its adoption.

 

Businesses Acquired
Businesses Acquired

NOTE 2. BUSINESSES ACQUIRED

On December 31, 2011, the Company acquired HealthLink, Inc., Aplicare, Inc. and Soy Vay Enterprises, Inc. for purchase prices aggregating $97. The Company paid $85 in December 2011, funded through commercial paper borrowings. The amount paid reflects the aggregate purchase prices reduced by the cash acquired and amounts to be paid by the Company pending final cash settlements. HealthLink, based in Jacksonville, Fla., and Aplicare, based in Meriden, Conn., are leading providers of infection control products for the health care industry, complementing and expanding the Company's Away From Home health care business. Results for these businesses will be reflected in the Cleaning reportable segment. Soy Vay Enterprises, a California-based operation, provides the Company's Food business a presence in the growing market for Asian sauces. Results for this business will be reflected in the Lifestyle reportable segment.

Due to the timing of these acquisitions, the purchase accounting is preliminary and subject to certain closing adjustments, which are not expected to be material. Pro forma results reflecting the acquisitions are not presented because the acquisitions are not significant individually, or when aggregated, to the Company's consolidated financial results.

Inventories, Net
Inventories, Net

NOTE 3. INVENTORIES, NET

Inventories, net, consisted of the following as of:

12/31/2011       6/30/2011
Finished goods $       377 $       315
Raw materials and packaging 121     104
Work in process 3 3  
LIFO allowances   (38 ) (29 )
Allowances for obsolescence (12 ) (11 )
Total $ 451 $ 382
Other Liabilities
Other Liabilities

NOTE 4. OTHER LIABILITIES

Other liabilities consisted of the following as of:

12/31/2011       6/30/2011
Venture agreement net terminal obligation $       279 $       277
Employee benefit obligations 220 215
Taxes   93 89
Other 49     38
Total $ 641 $ 619
Debt
Debt

NOTE 5. DEBT

In November 2011, the Company filed a new shelf registration statement with the SEC, which allows the Company to offer and sell an unlimited amount of its senior unsecured indebtedness from time to time. The shelf registration statement will expire in November 2014. Subsequently, the Company issued $300 of senior notes (notes) under the new shelf registration statement. The notes carry an annual fixed interest rate of 3.80% payable semi-annually in May and November. The notes mature on November 15, 2021. Proceeds from the notes were used to retire commercial paper. The notes rank equally with all of the Company's existing and future senior indebtedness.

Net Earnings Per Share
Net Earnings Per Share

NOTE 6. NET EARNINGS PER SHARE

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

  Three Months Ended       Six Months Ended
  12/31/2011       12/31/2010   12/31/2011       12/31/2010
Basic 131,112   138,678   131,540   139,077
Dilutive effect of stock options and other 1,246   -   1,482   -
Diluted 132,358   138,678   133,022   139,077

During the three and six months ended December 31, 2011, the Company did not include stock options to purchase approximately 3.8 million shares and 1.9 million shares, respectively, of the Company's common stock in the calculations of diluted net EPS because their exercise price was greater than the average market price, making them anti-dilutive.

Since the Company experienced losses from continuing operations for both the three and six months ended December 31, 2010, no dilution was applied to the Company's basic weighted average shares outstanding for those periods, as to do so would have reduced the Company's reported losses per share from continuing operations for those periods.

 

Share repurchases under authorized programs were as follows:

  Three Months Ended   Six Months Ended
  12/31/2011   12/31/2010   12/31/2011   12/31/2010
  Amount     Shares
(000)
    Amount     Shares
(000)
    Amount     Shares
(000)
    Amount     Shares
(000)
Open-market purchase programs     $       149   2,300   $       -   -   $       158   2,429   $       -   -
Evergreen Program   -   -     130   2,063     -   -     134          2,121
Total $ 149          2,300   $ 130          2,063   $ 158          2,429   $ 134   2,121

The purpose of the Evergreen Program is to offset the impact of share dilution related to share-based awards.

Comprehensive Income
Comprehensive Income

NOTE 7. COMPREHENSIVE INCOME

Comprehensive income includes net earnings and certain adjustments that are excluded from net earnings, but included as a separate component of stockholders' deficit, net of tax. Comprehensive income was as follows:

Three Months Ended Six Months Ended
12/31/2011       12/31/2010       12/31/2011       12/31/2010
Earnings (losses) from continuing operations $       105 $       (163 ) $       235 $       (23 )
Earnings from discontinued operations - 184 - 260
Net earnings 105 21 235 237
Other comprehensive income, net of tax:      
       Foreign currency translation 2     8     (37 )   42
       Net derivative adjustments (12 ) 8 (35 ) 6
       Pension and postretirement benefit adjustments   1 3 (1 ) 5
Total $ 96 $ 40 $ 162 $ 290

Income Taxes
Income Taxes

NOTE 8. 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) from continuing operations was 32.4% and 31.3% for the three and six months ended December 31, 2011, respectively, and (45.0)% and 125.9% for the three and six months ended December 31, 2010, respectively. The tax rates for the three and six months ended December 31, 2011 include tax benefits associated with foreign earnings and from favorable tax settlements. The substantially different tax rates for the three and six months ended December 31, 2010 resulted from the non-deductible non-cash goodwill impairment charge of $258 related to the Burt's Bees reporting unit as there was no substantial tax benefit associated with this non-cash charge.

The balance of unrecognized tax benefits at December 31, 2011 and June 30, 2011, includes potential benefits of $64 and $68, respectively, which, if recognized, would affect the effective tax rate on earnings.

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2011 and June 30, 2011, the total balance of accrued interest and penalties related to uncertain tax positions was $7 and $8, respectively. Interest and penalties included in income tax expense were net benefits of $0 and $3 for the three and six months ended December 31, 2011, respectively, and net benefits of $1 and $3 for the three and six months ended December 31, 2010, respectively.

The Company files income tax returns in the U.S. federal and various state, local and foreign jurisdictions. The federal statute of limitations has expired for all tax years through June 30, 2007. Various income tax returns in state and foreign jurisdictions are currently in the process of examination.

Retirement Income And Health Care Benefit Plans
Retirement Income And Health Care Benefit Plans

NOTE 9. RETIREMENT INCOME AND HEALTH CARE BENEFIT PLANS

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

Three Months Ended Six Months Ended
12/31/2011       12/31/2010       12/31/2011       12/31/2010
Service cost $         - $         4   $         1 $         7
Interest cost 7   7 14     14
Expected return on plan assets (7 )   (8 )   (15 ) (16 )
Amortization of unrecognized items   2   4   4 8
Total $ 2 $ 7 $ 4 $ 13  

The net periodic benefit cost for the Company's retirement health care plans was less than $1 for both the three and six months ended December 31, 2011, and $1 and $2 for the three and six months ended December 31, 2010, respectively.

Contingencies And Guarantees
Contingencies And Guarantees

NOTE 10. CONTINGENCIES AND GUARANTEES

Contingencies

The Company is involved in certain environmental matters, including Superfund and other response actions at various locations. The Company had a recorded liability of $15 at both December 31, 2011 and June 30, 2011, for its share of aggregate future remediation costs related to these matters. One matter in Dickinson County, Michigan, for which the Company is jointly and severally liable, accounted for a substantial majority of the recorded liability at both December 31, 2011 and June 30, 2011. The Company has agreed to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing arrangement with a third party. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Currently, the Company cannot accurately predict the timing of future payments that may be made under this obligation. In addition, the Company's estimated loss exposure is sensitive to a variety of uncertain factors, including the efficacy of remediation efforts, changes in remediation requirements and the timing, varying costs and alternative clean-up technologies that may become available in the future. Although it is possible that the Company's exposure may exceed the amount recorded, any amount of such additional exposures, or range of exposures, is not estimable at this time.

The Company is subject to various other lawsuits and claims relating to issues such as contract disputes, product liability, patents and trademarks, advertising, and employee and other matters. Based on the Company's analysis of these claims and litigation, it is the opinion of management that the ultimate disposition of these matters, including the environmental matter described above, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on the Company's 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) for which terms vary in duration and 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 payments relating to its indemnifications, and believes that any reasonably possible payments would not have a material effect on its financial position, results of operations or cash flows, either individually or in the aggregate.

At December 31, 2011, the Company was a party to letters of credit of $15, primarily related to one of its insurance carriers.

The Company had not recorded any liabilities on any of the aforementioned guarantees at December 31, 2011.

Segment Results
Segment Results

NOTE 11. SEGMENT RESULTS

The Company operates through strategic business units that are aggregated into four reportable segments: Cleaning, Household, Lifestyle and International.

  • Cleaning consists of laundry, home care and professional products marketed and sold in the United States. Products within this segment include laundry additives, including bleaches under the Clorox® brand and Clorox 2® stain fighter and color booster; home care products, primarily under the Clorox®, Formula 409®, Liquid-Plumr®, Pine-Sol®, S.O.S® and Tilex® brands; and naturally derived home care products under the Green Works® brand.
     
  • Household consists of charcoal, cat litter and plastic bags, wraps and container products marketed and sold in the United States. Products within this segment include plastic bags, wraps and containers, under the Glad® brand; cat litter products under the Fresh Step®, Scoop Away® and Ever Clean® brands; and charcoal products under the Kingsford® and Match Light® brands.
     
  • Lifestyle consists of food products, water-filtration systems and filters marketed and sold in the United States and all natural personal care products. Products within this segment include dressings and sauces, primarily under the Hidden Valley® and K C Masterpiece® brands; water-filtration systems and filters under the Brita® brand; and all natural personal care products under the Burt's Bees® and güd brands.
     
  • International consists of products sold outside the United States, excluding natural personal care products. Products within this segment include laundry, home care, water-filtration, charcoal and cat litter products, dressings and sauces, plastic bags, wraps and containers, and insecticides, primarily under the Clorox®, Javex®, Glad®, PinoLuz®, Ayudin®, Limpido®, Clorinda®, Poett®, Mistolin®, Lestoil®, Bon Bril®, Nevex®, Brita®, Green Works®, Pine-Sol®, Agua Jane®, Chux®, Kingsford®, Fresh Step®, Scoop Away®, Ever Clean®, K C Masterpiece® and Hidden Valley® brands.

Certain nonallocated administrative costs, interest income, interest expense and various other nonoperating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, the Company's headquarters and research and development facilities, information systems hardware and software, pension balances and other investments.

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

Net sales
Three Months Ended Six Months Ended
12/31/2011 12/31/2010 12/31/2011 12/31/2010
Cleaning       $     370       $     354       $     809       $     803
Household 334 320 700 674
Lifestyle 230 218 444 419
International 287 287 573 549
Total Company $ 1,221 $ 1,179 $ 2,526 $ 2,445
 
Earnings (losses) from continuing
operations before income taxes
Three Months Ended Six Months Ended
12/31/2011 12/31/2010 12/31/2011 12/31/2010
Cleaning $ 78 $ 64 $ 186 $ 185
Household 34 25 76 78  
Lifestyle 70 (192 ) 124 (134 )
International 32   41     73   81
Corporate   (59 ) (50 ) (117 )   (120 )
Total Company $ 155 $ (112 ) $ 342 $ 90

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 26% for both the three and six months ended December 31, 2011, and 25% and 26% for the three and six months ended December 31, 2010, respectively.

For the three and six months ended December 31, 2010, the earnings (losses) from continuing operations before income taxes for the Lifestyle segment included a $258 non-cash goodwill impairment charge for the Burt's Bees business.

Fair Value Measurements And Financial Instruments
Fair Value Measurements And Financial Instruments

NOTE 12. FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

Accounting guidance on fair value measurements for certain financial assets and liabilities requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs reflecting the reporting entity's own assumptions.

At December 31, 2011, the Company's financial assets and liabilities that were measured at fair value on a recurring basis during the year included derivative financial instruments, which were all level 2.

Financial Risk Management and Derivative Instruments

The Company is exposed to certain commodity, interest rate and foreign currency risks relating 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 to fix the price of a portion of its forecasted raw material requirements. Contract maturities, which are generally no longer than 18 months, are matched to the length of the raw material purchase contracts. Commodity purchase contracts are measured at fair value using market quotations obtained from commodity derivative dealers.  

As of December 31, 2011, the net notional value of commodity derivatives was $34, of which $23 related to jet fuel, $8 related to soybean oil, and $3 related to crude oil. As of June 30, 2011, the net notional value of commodity derivatives was $44, of which $22 related to jet fuel, $16 related to soybean oil, $3 related to crude oil and $3 related to diesel fuel.

Interest Rate Risk Management

The Company may enter into over-the-counter interest rate forward contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt. These interest rate forward contracts generally have durations of less than six months. The interest rate contracts are measured at fair value using information quoted by U.S. government bond dealers. During the three months ended December 31, 2011, the Company paid $36 to settle interest rate forward contracts, which were reflected as operating cash outflows.

As of December 31, 2011 and June 30, 2011, the net notional value of interest rate forward contracts was $0 and $300.

Foreign Currency Risk Management

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

As of December 31, 2011, the net notional values of outstanding foreign currency forward contracts related to the Company's subsidiaries in Canada and Australia and used to hedge forecasted purchases of inventory were $19 and $13, respectively. As of June 30, 2011, the net notional values of outstanding foreign currency forward contracts related to the Company's subsidiaries in Canada and Australia and used to hedge forecasted purchases of inventory were $28 and $13, respectively.

Counterparty Risk Management

Certain terms of the agreements governing the Company's over-the-counter derivative instruments require the Company or the counterparty to post collateral when the fair value of the derivative instruments exceeds contractually defined counterparty liability position limits. As of December 31, 2011, no collateral was required to be posted.

Certain terms of the agreements governing the over-the-counter derivative instruments contain provisions that require the credit ratings, as assigned by Standard & Poor's and Moody's to the Company and its counterparties, to remain at a level equal to or better than the minimum of an investment grade credit rating. If our credit ratings were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. As of December 31, 2011, the Company and each of its counterparties maintained investment grade ratings with both Standard & Poor's and Moody's.

Fair Value of Derivative Instruments

The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as a hedge, and on the type of the hedging relationship. For those derivative instruments designated and qualifying as hedging instruments, the Company must designate the hedging instrument as a fair value hedge or a cash flow hedge. The Company designates its commodity forward and future contracts for forecasted purchases of raw materials, interest rate forward contracts for forecasted interest payments, and foreign currency forward contracts of forecasted purchases of inventory as cash flow hedges. During the three and six months ended December 31, 2011 and 2010, the Company had no hedging instruments designated as fair value hedges.

The Company's derivative financial instruments designated as hedging instruments are recorded at fair value in the condensed consolidated balance sheets as follows:

Balance Sheet classification       12/31/2011       6/30/2011
Assets
Foreign exchange contracts Other current assets $       1 $       -
Interest rate contracts Other current assets - 1
Commodity purchase contracts Other current assets 1 4
$ 2 $ 5
 
Liabilities
Interest rate contracts Accrued liabilities   $ - $ 1
Commodity purchase contracts Accrued liabilities   1     -
$ 1 $ 1

For derivative instruments designated and qualifying as cash flow hedges, the effective portion of gains or losses is reported as a component of other comprehensive income (OCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The estimated amount of the existing net loss at December 31, 2011, expected to be reclassified into earnings within the next twelve months is less than $1. Gains and losses on the derivative instruments representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. During the three and six months ended December 31, 2011 and 2010, hedge ineffectiveness was not material. The Company de-designates cash flow hedge relationships whenever it determines that the hedge relationships are no longer highly effective or that the forecasted transaction is no longer probable. The portion of gains or losses on the derivative instrument previously accumulated in OCI for de-designated hedges remains in accumulated OCI until the forecasted transaction is recognized in earnings, or is recognized in earnings immediately if the forecasted transaction is no longer probable.

The effects of derivative instruments designated as hedging instruments on OCI and on the condensed consolidated statements of earnings were as follows:

Gain (loss) recognized in OCI
Three Months Ended Six Months Ended
12/31/2011       12/31/2010       12/31/2011       12/31/2010
Commodity purchase contracts $         2 $         6 $         - $         11
Interest rate contracts 1 10   (36 ) 6
Foreign exchange contracts (1 ) (2 ) 2   (3 )
Total $ 2 $ 14   $ (34 ) $ 14
 
Gain reclassified from OCI and recognized in earnings
Three Months Ended Six Months Ended
12/31/2011 12/31/2010 12/31/2011 12/31/2010
Commodity purchase contracts $ 1   $ 1 $ 2 $ 1
Foreign exchange contracts 1   -   - -
Total $ 2   $ 1 $ 2 $ 1

The gains reclassified from OCI and recognized in earnings during the three and six months ended December 31, 2011 and 2010, respectively, for commodity purchase contracts and foreign exchange contracts are included in cost of products sold.

Other

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate their fair values at December 31, 2011 and June 30, 2011, due to the short maturity and nature of those balances. The estimated fair value of long-term debt, including current maturities, was $2,612 and $2,303 at December 31, 2011 and June 30, 2011, respectively. The fair value of long-term debt was determined using secondary market prices quoted by corporate bond dealers. The Company accounts for its long-term debt at face value, net of any unamortized discounts or premiums.

Interim Financial Statements (Policy)

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three and six months ended December 31, 2011 and 2010, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its subsidiaries (the Company) for the periods presented. The results for the interim period ended December 31, 2011, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2012, or for any future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company's Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2011, which includes a complete set of footnote disclosures, including the Company's significant accounting policies.

Inventories, Net (Tables)
Schedule Of Inventories, Net
12/31/2011       6/30/2011
Finished goods $       377 $       315
Raw materials and packaging 121     104
Work in process 3 3  
LIFO allowances   (38 ) (29 )
Allowances for obsolescence (12 ) (11 )
Total $ 451 $ 382
Other Liabilities (Tables)
Schedule Of Other Liabilities
12/31/2011       6/30/2011
Venture agreement net terminal obligation $       279 $       277
Employee benefit obligations 220 215
Taxes   93 89
Other 49     38
Total $ 641 $ 619
Net Earnings Per Share (Tables)
  Three Months Ended       Six Months Ended
  12/31/2011       12/31/2010   12/31/2011       12/31/2010
Basic 131,112   138,678   131,540   139,077
Dilutive effect of stock options and other 1,246   -   1,482   -
Diluted 132,358   138,678   133,022   139,077
  Three Months Ended   Six Months Ended
  12/31/2011   12/31/2010   12/31/2011   12/31/2010
  Amount     Shares
(000)
    Amount     Shares
(000)
    Amount     Shares
(000)
    Amount     Shares
(000)
Open-market purchase programs     $       149   2,300   $       -   -   $       158   2,429   $       -   -
Evergreen Program   -   -     130   2,063     -   -     134          2,121
Total $ 149          2,300   $ 130          2,063   $ 158          2,429   $ 134   2,121
Comprehensive Income (Tables)
Schedule Of Comprehensive Income
Three Months Ended Six Months Ended
12/31/2011       12/31/2010       12/31/2011       12/31/2010
Earnings (losses) from continuing operations $       105 $       (163 ) $       235 $       (23 )
Earnings from discontinued operations - 184 - 260
Net earnings 105 21 235 237
Other comprehensive income, net of tax:      
       Foreign currency translation 2     8     (37 )   42
       Net derivative adjustments (12 ) 8 (35 ) 6
       Pension and postretirement benefit adjustments   1 3 (1 ) 5
Total $ 96 $ 40 $ 162 $ 290
Retirement Income And Health Care Benefit Plans (Tables)
Components Of Net Periodic Benefit Cost
Three Months Ended Six Months Ended
12/31/2011       12/31/2010       12/31/2011       12/31/2010
Service cost $         - $         4   $         1 $         7
Interest cost 7   7 14     14
Expected return on plan assets (7 )   (8 )   (15 ) (16 )
Amortization of unrecognized items   2   4   4 8
Total $ 2 $ 7 $ 4 $ 13  
Segment Results (Tables)
Net sales
Three Months Ended Six Months Ended
12/31/2011 12/31/2010 12/31/2011 12/31/2010
Cleaning       $     370       $     354       $     809       $     803
Household 334 320 700 674
Lifestyle 230 218 444 419
International 287 287 573 549
Total Company $ 1,221 $ 1,179 $ 2,526 $ 2,445
 
Earnings (losses) from continuing
operations before income taxes
Three Months Ended Six Months Ended
12/31/2011 12/31/2010 12/31/2011 12/31/2010
Cleaning $ 78 $ 64 $ 186 $ 185
Household 34 25 76 78  
Lifestyle 70 (192 ) 124 (134 )
International 32   41     73   81
Corporate   (59 ) (50 ) (117 )   (120 )
Total Company $ 155 $ (112 ) $ 342 $ 90
Fair Value Measurements And Financial Instruments (Tables)
Balance Sheet classification       12/31/2011       6/30/2011
Assets
Foreign exchange contracts Other current assets $       1 $       -
Interest rate contracts Other current assets - 1
Commodity purchase contracts Other current assets 1 4
$ 2 $ 5
 
Liabilities
Interest rate contracts Accrued liabilities   $ - $ 1
Commodity purchase contracts Accrued liabilities   1     -
$ 1 $ 1
Gain (loss) recognized in OCI
Three Months Ended Six Months Ended
12/31/2011       12/31/2010       12/31/2011       12/31/2010
Commodity purchase contracts $         2 $         6 $         - $         11
Interest rate contracts 1 10   (36 ) 6
Foreign exchange contracts (1 ) (2 ) 2   (3 )
Total $ 2 $ 14   $ (34 ) $ 14
 
Gain reclassified from OCI and recognized in earnings
Three Months Ended Six Months Ended
12/31/2011 12/31/2010 12/31/2011 12/31/2010
Commodity purchase contracts $ 1   $ 1 $ 2 $ 1
Foreign exchange contracts 1   -   - -
Total $ 2   $ 1 $ 2 $ 1
Businesses Acquired (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Businesses Acquired [Abstract]
 
Aggregate purchase price
$ 97 
Amount paid for acquisition
$ 85 
Inventories, Net (Schedule Of Inventories, Net) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Jun. 30, 2011
Inventories, Net [Abstract]
 
 
Finished goods
$ 377 
$ 315 
Raw materials and packaging
121 
104 
Work in process
LIFO allowances
(38)
(29)
Allowances for obsolescence
(12)
(11)
Total
$ 451 
$ 382 
Other Liabilities (Schedule Of Other Liabilities) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Jun. 30, 2011
Other Liabilities [Abstract]
 
 
Venture agreement net terminal obligation
$ 279 
$ 277 
Employee benefit obligations
220 
215 
Taxes
93 
89 
Other
49 
38 
Total
$ 641 
$ 619 
Debt (Details) (USD $)
In Millions, unless otherwise specified
1 Months Ended 6 Months Ended
Nov. 30, 2011
Dec. 31, 2011
Debt [Abstract]
 
 
Long-term debt issuance
$ 300 
 
Fixed interest rate
3.80% 
 
Maturity date
 
Nov. 15, 2021 
Net Earnings Per Share (Narrative) (Details)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2011
Net Earnings Per Share [Abstract]
 
 
Stock options excluded from calculation of diluted net EPS
3.8 
1.9 
Net Earnings Per Share (Schedule Of Weighted Average Number Of Shares Outstanding) (Details)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Net Earnings Per Share [Abstract]
 
 
 
 
Basic
131,112 
138,678 
131,540 
139,077 
Dilutive effect of stock options and other
1,246 
 
1,482 
 
Diluted
132,358 
138,678 
133,022 
139,077 
Net Earnings Per Share (Schedule Of Share Repurchases Under Authorized Programs) (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Net Earnings Per Share [Line Items]
 
 
 
 
Share repurchases under authorized programs, Amount
$ 149 
$ 130 
$ 158 
$ 134 
Share repurchases under authorized programs, Shares
2,300 
2,063 
2,429 
2,121 
Open-Market Purchase Programs [Member]
 
 
 
 
Net Earnings Per Share [Line Items]
 
 
 
 
Share repurchases under authorized programs, Amount
149 
 
158 
 
Share repurchases under authorized programs, Shares
2,300 
 
2,429 
 
Evergreen Program [Member]
 
 
 
 
Net Earnings Per Share [Line Items]
 
 
 
 
Share repurchases under authorized programs, Amount
 
$ 130 
 
$ 134 
Share repurchases under authorized programs, Shares
 
2,063 
 
2,121 
Comprehensive Income (Schedule Of Comprehensive Income) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Comprehensive Income [Abstract]
 
 
 
 
Earnings (losses) from continuing operations
$ 105 
$ (163)
$ 235 
$ (23)
Earnings from discontinued operations
 
184 
 
260 
Net earnings
105 
21 
235 
237 
Foreign currency translation
(37)
42 
Net derivative adjustments
(12)
(35)
Pension and postretirement benefit adjustments
(1)
Total
$ 96 
$ 40 
$ 162 
$ 290 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Jun. 30, 2011
Income Taxes [Abstract]
 
 
 
 
 
Effective tax rate, continuing operations
32.40% 
(45.00%)
31.30% 
125.90% 
 
Potential benefits which, if recognized, would affect the effective tax rate on earnings
$ 64 
 
$ 64 
 
$ 68 
Accrued interest and penalties related to uncertain tax positions
 
 
Interest and penalties included in income tax expense
 
Goodwill impairment charge
 
$ 258 
 
$ 258 
 
Retirement Income And Health Care Benefit Plans (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Total net periodic benefit cost
$ 2 
$ 7 
$ 4 
$ 13 
Retirement Health Care Plans [Member]
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Total net periodic benefit cost
$ 1 
$ 1 
$ 1 
$ 2 
Retirement Income And Health Care Benefit Plans (Components Of Net Periodic Benefit Cost) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Retirement Income And Health Care Benefit Plans [Abstract]
 
 
 
 
Service cost
 
$ 4 
$ 1 
$ 7 
Interest cost
14 
14 
Expected return on plan assets
(7)
(8)
(15)
(16)
Amortization of unrecognized items
Total
$ 2 
$ 7 
$ 4 
$ 13 
Contingencies And Guarantees (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Dec. 31, 2011
Jun. 30, 2011
Contingencies And Guarantees [Abstract]
 
 
Liability for future remediation costs
$ 15 
$ 15 
Percentage of liability for aggregate remediation and associated costs, other than legal fees
24.30% 
 
Remediation period, years
30 
 
Letters of credit related to insurance carriers
$ 15 
 
Segment Results (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Segment Results [Abstract]
 
 
 
 
Percentage of consolidated net sales to largest customer
26.00% 
25.00% 
26.00% 
26.00% 
Non-cash goodwill impairment
 
$ 258 
 
$ 258 
Segment Results (Company's Reportable Segments' Net Sales And Earnings (Losses) Before Income Taxes) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
$ 1,221 
$ 1,179 
$ 2,526 
$ 2,445 
Earnings From Continuing Operations Before Income Taxes
155 
(112)
342 
90 
Cleaning [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
370 
354 
809 
803 
Earnings From Continuing Operations Before Income Taxes
78 
64 
186 
185 
Household [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
334 
320 
700 
674 
Earnings From Continuing Operations Before Income Taxes
34 
25 
76 
78 
Lifestyle [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
230 
218 
444 
419 
Earnings From Continuing Operations Before Income Taxes
70 
(192)
124 
(134)
International [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
287 
287 
573 
549 
Earnings From Continuing Operations Before Income Taxes
32 
41 
73 
81 
Corporate [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Earnings From Continuing Operations Before Income Taxes
$ (59)
$ (50)
$ (117)
$ (120)
Fair Value Measurements And Financial Instruments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Jun. 30, 2011
Derivative [Line Items]
 
 
 
 
 
Maximum duration for commodity futures and swap contracts, months
 
 
18 
 
 
Maximum duration for interest rate forward contracts, months
 
 
 
 
Maximum duration for foreign currency contracts, months
 
 
12 
 
 
Derivative financial instruments designated as fair value hedges
 
Settlement of interest rate lock
$ 36 
 
 
 
 
Notional value of commodity derivatives
34 
 
34 
 
44 
Estimated fair value of long-term debt
2,612 
 
2,612 
 
2,303 
Diesel Fuel Commodity Contract [Member]
 
 
 
 
 
Derivative [Line Items]
 
 
 
 
 
Notional value of commodity derivatives
 
 
Jet Fuel Commodity Contract [Member]
 
 
 
 
 
Derivative [Line Items]
 
 
 
 
 
Notional value of commodity derivatives
23 
 
23 
 
22 
Soybean Oil Commodity Contract [Member]
 
 
 
 
 
Derivative [Line Items]
 
 
 
 
 
Notional value of commodity derivatives
 
 
16 
Crude Oil Commodity Contract [Member]
 
 
 
 
 
Derivative [Line Items]
 
 
 
 
 
Notional value of commodity derivatives
 
 
Canada Foreign Currency Exchange Contracts [Member]
 
 
 
 
 
Derivative [Line Items]
 
 
 
 
 
Notional value of foreign currency derivatives
19 
 
19 
 
28 
Australia Foreign Currency Exchange Contracts [Member]
 
 
 
 
 
Derivative [Line Items]
 
 
 
 
 
Notional value of foreign currency derivatives
13 
 
13 
 
13 
Interest Rate Contracts [Member]
 
 
 
 
 
Derivative [Line Items]
 
 
 
 
 
Notional value of interest rate forward contracts
 
 
300 
Maximum [Member]
 
 
 
 
 
Derivative [Line Items]
 
 
 
 
 
Estimated amount of the existing net loss to be reclassified into earnings, in the next 12 months
 
 
$ 1 
 
 
Fair Value Measurements And Financial Instruments (Derivative Financial Instruments Designated As Hedging Instruments Recorded At Fair Value) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Jun. 30, 2011
Derivative [Line Items]
 
 
Cash flow hedge derivative instrument assets, at fair value
$ 2 
$ 5 
Cash flow hedge derivative instrument liabilities, at fair value
Interest Rate Contracts [Member] |
Accrued Liabilities [Member]
 
 
Derivative [Line Items]
 
 
Interest rate cash flow hedge liability, at fair value
   
Interest Rate Contracts [Member] |
Other Current Assets [Member]
 
 
Derivative [Line Items]
 
 
Interest rate cash flow hedge asset, at fair value
   
Foreign Exchange Contracts [Member] |
Other Current Assets [Member]
 
 
Derivative [Line Items]
 
 
Foreign currency cash flow hedge asset, at fair value
   
Commodity Purchase Contracts [Member] |
Accrued Liabilities [Member]
 
 
Derivative [Line Items]
 
 
Price risk cash flow hedge liability, at fair value
   
Commodity Purchase Contracts [Member] |
Other Current Assets [Member]
 
 
Derivative [Line Items]
 
 
Price risk cash flow hedge asset, at fair value
$ 1 
$ 4 
Fair Value Measurements And Financial Instruments (Effects Of Derivative Financial Instruments Designated As Hedging Instruments On OCI And On Consolidated Statement Of Earnings) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
(Loss) gain recognized in OCI
$ 2 
$ 14 
$ (34)
$ 14 
Gain reclassified from OCI and recognized in earnings
Interest Rate Contracts [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
(Loss) gain recognized in OCI
10 
(36)
Foreign Exchange Contracts [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
(Loss) gain recognized in OCI
(1)
(2)
(3)
Gain reclassified from OCI and recognized in earnings
   
   
   
Commodity Purchase Contracts [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
(Loss) gain recognized in OCI
   
11 
Gain reclassified from OCI and recognized in earnings
$ 1 
$ 1 
$ 2 
$ 1