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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2023.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to
Commission File Number: 1-07151
CLX logo.jpg
THE CLOROX COMPANY
(Exact name of registrant as specified in its charter) 
Delaware31-0595760
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1221 Broadway, Oakland, California, 94612-1888
(Address of principal executive offices) (Zip code)
(510) 271-7000
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
___________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - $1.00 par valueCLXNew York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  
Large accelerated filerAccelerated filerNon-accelerated filerSmaller Reporting CompanyEmerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
 
As of January 18, 2024, there were 124,106,333 shares outstanding of the registrant’s common stock ($1.00 par value).
1


TABLE OF CONTENTS

2


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
The Clorox Company
Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited)
(Dollars in millions, except per share data)
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Net sales$1,990 $1,715 $3,376 $3,455 
Cost of products sold1,124 1,095 1,978 2,209 
Gross profit866 620 1,398 1,246 
Selling and administrative expenses322 282 598 543 
Advertising costs186 156 351 317 
Research and development costs32 33 61 65 
Pension settlement charge171  171  
Interest expense26 23 47 45 
Other (income) expense, net(7)(4)5 30 
Earnings before income taxes136 130 165 246 
Income tax expense40 28 44 57 
Net earnings96 102 121 189 
Less: Net earnings attributable to noncontrolling interests3 3 6 5 
Net earnings attributable to Clorox$93 $99 $115 $184 
Net earnings per share attributable to Clorox
Basic net earnings per share$0.75 $0.81 $0.93 $1.49 
Diluted net earnings per share$0.75 $0.80 $0.92 $1.49 
Weighted average shares outstanding (in thousands)
Basic124,176 123,546 124,075 123,443 
Diluted124,620 123,988 124,635 123,951 
Comprehensive income$231 $115 $255 $166 
Less: Total comprehensive income attributable to noncontrolling interests3 3 6 5 
Total comprehensive income attributable to Clorox$228 $112 $249 $161 

See Notes to Condensed Consolidated Financial Statements (Unaudited)
3


The Clorox Company
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share data)
12/31/20236/30/2023
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents$355 $367 
Receivables, net679 688 
Inventories, net655 696 
Prepaid expenses and other current assets115 77 
Total current assets1,804 1,828 
Property, plant and equipment, net of accumulated depreciation and amortization
        of $2,792 and $2,705, respectively
1,314 1,345 
Operating lease right-of-use assets354 346 
Goodwill1,252 1,252 
Trademarks, net542 543 
Other intangible assets, net156 169 
Other assets486 462 
Total assets$5,908 $5,945 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable$247 $50 
Current operating lease liabilities92 87 
Accounts payable and accrued liabilities1,649 1,659 
Income taxes payable34 121 
Total current liabilities2,022 1,917 
Long-term debt2,479 2,477 
Long-term operating lease liabilities311 310 
Other liabilities852 825 
Deferred income taxes26 28 
Total liabilities5,690 5,557 
Commitments and contingencies
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding
  
Common stock: $1.00 par value; 750,000,000 shares authorized; 130,741,461 shares issued as of December 31, 2023 and June 30, 2023; and 124,080,634 and 123,820,022 shares outstanding as of December 31, 2023 and June 30, 2023, respectively
131 131 
Additional paid-in capital1,245 1,245 
Retained earnings241 583 
Treasury stock, at cost: 6,660,827 and 6,921,439 shares as of December 31, 2023
        and June 30, 2023, respectively
(1,205)(1,246)
Accumulated other comprehensive net (loss) income(359)(493)
Total Clorox stockholders’ equity
53 220 
Noncontrolling interests165 168 
Total stockholders’ equity218 388 
Total liabilities and stockholders’ equity$5,908 $5,945 

See Notes to Condensed Consolidated Financial Statements (Unaudited)
4


The Clorox Company
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in millions)
Six months ended
12/31/202312/31/2022
Operating activities:
Net earnings$121 $189 
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization118 114 
Stock-based compensation29 31 
Deferred income taxes(60)(8)
Pension settlement charge
171  
Other8 37 
Changes in:
Receivables, net15 78 
Inventories, net43 9 
Prepaid expenses and other current assets(20)(23)
Accounts payable and accrued liabilities(163)(54)
Operating lease right-of-use assets and liabilities, net  
Income taxes payable / prepaid(89)14 
Net cash provided by operations173 387 
Investing activities:
Capital expenditures(76)(88)
Other20 1 
Net cash used for investing activities(56)(87)
Financing activities:
Notes and loans payable, net195 (28)
Cash dividends paid to Clorox stockholders(298)(291)
Issuance of common stock for employee stock plans and other(1)4 
Net cash used for financing activities
(104)(315)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(23)(1)
Net increase (decrease) in cash, cash equivalents and restricted cash(10)(16)
Cash, cash equivalents and restricted cash:
Beginning of period368 186 
End of period$358 $170 


See Notes to Condensed Consolidated Financial Statements (Unaudited)
5


The Clorox Company
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in millions, except per share data)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited interim condensed consolidated financial statements for the three and six months ended December 31, 2023 and 2022, in the opinion of management, reflect all normal and recurring adjustments considered necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its controlled subsidiaries (the Company or Clorox) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2023, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.
Recently Issued Accounting Standards
Recently Issued Accounting Standards Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” These amendments primarily require enhanced disclosures and disaggregation of income tax information by jurisdiction in the annual income tax reconciliation and quantitative and qualitative disclosures regarding income taxes paid. These amendments are to be applied prospectively, with the option to apply the standard retrospectively, for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” These amendments primarily require enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. These amendments are to be applied retrospectively for all periods presented in the financial statements and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.
Recently Adopted Accounting Standards
In September 2022, the FASB issued ASU No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” These amendments require disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted the standard as of July 1, 2023. The adoption relates to disclosures only and does not have an impact on the condensed consolidated financial statements, results of operations, or cash flows.
NOTE 2. CYBERATTACK
On Monday, August 14, 2023, the Company disclosed it had identified unauthorized activity on some of its Information Technology (IT) systems. That activity began on Friday, August 11, 2023 and after becoming aware of it that evening, the Company immediately began taking steps to stop and remediate the activity. The Company also took certain systems offline and engaged third-party cybersecurity experts to support its investigation and recovery efforts. The Company implemented its business continuity plans, including manual ordering and processing procedures at a reduced rate of operations in order to continue servicing its customers. However, the incident resulted in wide-scale disruptions to the Company’s business operations throughout the remainder of the quarter ended September 30, 2023.
The impacts of these system disruptions included order processing delays and significant product outages, resulting in a negative impact on net sales and earnings. The Company has since transitioned back to automated order processing. The Company experienced lessening operational impacts in the second quarter as it made progress in returning to normalized operations.
6

NOTE 2. CYBERATTACK (Continued)
The Company also incurred incremental expenses of approximately $25 and $49 as a result of the cyberattack for the three and six months ended December 31, 2023, respectively. The following table summarizes the recognition of costs in the condensed consolidated statements of earnings and comprehensive income:

Three months endedSix months ended
12/31/202312/31/2023
Costs of products sold
$9 $20 
Selling and administrative expenses16 29 
Total$25 $49 
The costs incurred relate primarily to third-party consulting services, including IT recovery and forensic experts and other professional services incurred to investigate and remediate the attack, as well as incremental operating costs incurred from the resulting disruption to the Company’s business operations. The Company expects to incur lessening costs related to the cyberattack in future periods. The Company has not recognized any insurance proceeds in the three and six months ended December 31, 2023 related to the cyberattack. The timing of recognizing insurance recoveries, if any, may differ from the timing of recognizing the associated expenses.
NOTE 3. SUPPLY CHAIN FINANCING PROGRAM
The Company has arranged for a global financial institution to offer a voluntary supply chain finance (SCF) program for the benefit of the Company’s suppliers. The Company’s current payment terms do not exceed 120 days in keeping with industry standards. The SCF program enables suppliers to directly contract with the financial institution to receive payment from the financial institution prior to the payment terms between the Company and the supplier by selling the Company’s payables to the financial institution. Participation in the program is at the sole discretion of the supplier and the Company has no economic interest in a supplier's decision to enter into the agreement and has no direct financial relationship with the financial institution, as it relates to the SCF program. Once a supplier elects to participate in the SCF program and reaches an agreement with the financial institution, the supplier elects which individual Company invoices to sell to the financial institution. The terms of the Company’s payment obligations are not impacted by a supplier’s participation in the program and as such, the SCF program has no direct impact on the Company’s balance sheets, cash flows or liquidity. The Company has not pledged any assets as security or provided guarantees under the SCF program.
All outstanding amounts related to suppliers participating in the SCF program are recorded within Accounts payable and accrued liabilities in the condensed consolidated balance sheets and the associated payments are included in operating activities within the condensed consolidated statements of cash flows. As of December 31, 2023 and June 30, 2023, the amount due to suppliers participating in the SCF program and included in Accounts payable and accrued liabilities was $188 and $220, respectively.
NOTE 4. RESTRUCTURING AND RELATED COSTS
In the first quarter of fiscal year 2023, the Company began recognizing costs related to a plan that involves streamlining its operating model to meet its objectives of driving growth and productivity. The streamlined operating model is expected to enhance the Company’s ability to respond more quickly to changing consumer behaviors and innovate faster. The Company anticipates the implementation of this new model will be completed in fiscal year 2024, with different phases occurring throughout the implementation period.
The Company incurred $60 of costs in fiscal year 2023 and anticipates incurring approximately $30 to $40 of costs in fiscal year 2024 related to this initiative, of which approximately $5 to $10 are expected to be employee-related costs to reduce certain staffing levels such as severance payments, with the remainder for consulting and other costs. Costs incurred are expected to be settled primarily in cash.
7

NOTE 4. RESTRUCTURING AND RELATED COSTS (Continued)
The total restructuring and related implementation costs, net associated with the Company’s streamlined operating model as reflected in the condensed consolidated statements of earnings and comprehensive income:
Three months endedSix months endedInception to date ended
12/31/202312/31/202212/31/202312/31/202212/31/2023
Costs of products sold$ $ $ $(1)$(3)
Selling and administrative expenses3 4 3 5 15 
Research and development    (1)
Other (income) expense, net:
Employee-related costs   19 52 
Total, net$3 $4 $3 $23 $63 
Employee-related costs primarily include severance and other termination benefits calculated based on salary levels, prior service and statutory requirements. Other costs primarily include consulting fees incurred for the organizational design and implementation of the streamlined operating model, related processes and other professional fees incurred.
The Company may, from time to time, decide to pursue additional restructuring-related initiatives that involve costs in future periods.
The following table reconciles the accrual for the streamlined operating model’s restructuring and related implementation costs discussed above, which are recorded within Accounts payable and accrued liabilities in the condensed consolidated balance sheets:
Employee-Related CostsOtherTotal
Accrual Balance as of June 30, 2023
$23 $5 $28 
Charges
 3 3 
Cash payments(17)(6)(23)
Accrual Balance as of December 31, 2023$6 $2 $8 
NOTE 5. INVENTORIES, NET
Inventories, net consisted of the following as of:
12/31/20236/30/2023
Finished goods$562 $595 
Raw materials and packaging188 182 
Work in process11 8 
LIFO allowances(104)(87)
Total inventories, net$657 $698 
Less: Non-current inventories, net (1)
2 2 
Total current inventories, net$655 $696 
(1)Non-current inventories, net are recorded in Other assets.
8


NOTE 6. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Financial Risk Management and Derivative Instruments
The Company is exposed to certain commodity, foreign currency and interest rate risks related to its ongoing business operations and uses derivative instruments to mitigate its exposure to these risks.
Commodity Price Risk Management
The Company may use commodity futures, options and swap contracts to limit the impact of price volatility on a portion of its forecasted raw material requirements. These commodity derivatives may be exchange traded or over-the-counter contracts and generally have original contractual maturities of less than 2 years. Commodity purchase and options contracts are measured at fair value using market quotations obtained from the Chicago Board of Trade commodity futures exchange and commodity derivative dealers.
For both December 31, 2023, and June 30, 2023, the notional amount of commodity derivatives was $41 respectively, which related primarily to exposures in soybean oil used for the Food business and jet fuel used for the Grilling business.
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 original contractual maturities of less 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 $45 and $51 as of December 31, 2023 and June 30, 2023, respectively.
Interest Rate Risk Management
The Company may enter into over-the-counter interest rate contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt. These interest rate contracts generally have original contractual maturities of less than 3 years. The interest rate contracts are measured at fair value using information quoted by bond dealers.
The Company held no interest rate contracts as of both December 31, 2023 and June 30, 2023.
Commodity, Foreign Exchange and Interest Rate Derivatives
The Company designates its commodity forward, futures and options contracts for forecasted purchases of raw materials, foreign currency forward contracts for forecasted purchases of inventory and interest rate contracts for forecasted interest payments as cash flow hedges.

9

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 were as follows:
Gains (losses) recognized in Other comprehensive (loss) income
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Commodity purchase derivative contracts$(4)$1 $(5)$(2)
Foreign exchange derivative contracts(2)(1)(1) 
Interest rate derivative contracts    
Total$(6)$ $(6)$(2)

Location of gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earningsGains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Commodity purchase derivative contractsCost of products sold$ $3 $(2)$7 
Foreign exchange derivative contractsCost of products sold   1 
Interest rate derivative contractsInterest expense3 3 6 6 
Total$3 $6 $4 $14 
The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of December 31, 2023 that is expected to be reclassified into Net earnings within the next twelve months is $8.
Counterparty Risk Management and Derivative Contract Requirements
The Company utilizes a variety of financial institutions as counterparties for over-the-counter derivative instruments. The Company enters into agreements governing the use of over-the-counter derivative instruments and sets internal limits on the aggregate over-the-counter derivative instrument positions held with each counterparty. Certain terms of these agreements require the Company or the counterparty to post collateral when the fair value of the derivative instruments exceeds contractually defined counterparty liability position limits. Of the over-the-counter derivative instruments in liability positions, $1 contained such terms as of both December 31, 2023 and June 30, 2023. As of both December 31, 2023 and June 30, 2023, neither the Company nor any counterparty was required to post any collateral as no counterparty liability position limits were exceeded.
Certain terms of the agreements governing the Company’s over-the-counter derivative instruments require the Company’s credit ratings, as assigned by Standard & Poor’s and Moody’s to the Company and its counterparties, to remain at a level equal to or better than the minimum of an investment grade credit rating. If the Company’s credit ratings were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. As of both December 31, 2023 and June 30, 2023, the Company and each of its counterparties had been assigned investment grade ratings by both Standard & Poor’s and Moody’s.
Certain of the Company’s exchange traded futures and options contracts used for commodity price risk management include requirements for the Company to post collateral in the form of a cash margin account held by the Company’s broker for trades conducted on that exchange. As of December 31, 2023 and June 30, 2023, the Company maintained cash margin balances related to exchange traded futures and options contracts of $2 and $0, respectively, which are classified as Prepaid expenses and other current assets on the condensed consolidated balance sheets.
Trust Assets
The Company holds interests in mutual funds and cash equivalents as part of trust assets related to its nonqualified deferred compensation plans. The participants in the nonqualified deferred compensation plans, who are the Company’s current and former employees, may select among certain mutual funds in which their compensation deferrals are invested in accordance
10

NOTE 6. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
with the terms of the plans and within the confines of the trusts, which hold the marketable securities. The trusts represent variable interest entities for which the Company is considered the primary beneficiary, and therefore trust assets are consolidated and included in Other assets in the condensed consolidated balance sheets. The gains and losses on the trust assets are recorded in Other (income) expense, net in the condensed consolidated statements of earnings. The interests in mutual funds are measured at fair value using quoted market prices. The Company has designated these marketable securities as trading investments.
Fair Value of Financial Instruments
Financial assets and liabilities measured at fair value on a recurring basis in the condensed consolidated balance sheets are required to be classified and disclosed in one of the following three categories of the fair value hierarchy:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.
As of both December 31, 2023 and June 30, 2023, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis during the period included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.
All of the Company’s derivative instruments qualify for hedge accounting. The following table provides information about the balance sheet classification and the fair values of the Company’s derivative instruments:
 12/31/20236/30/2023
Balance sheet
classification
Fair value
hierarchy
level
Carrying
Amount
Estimated
Fair
Value
Carrying
Amount
Estimated
Fair
Value
Assets
Commodity purchase options contractsPrepaid expenses and other current assets1  2 2 
 $ $ $2 $2 
Liabilities
Commodity purchase futures contractsAccounts payable and accrued liabilities1    
Commodity purchase swaps contractsAccounts payable and accrued liabilities2  1 1 
Foreign exchange forward contractAccounts payable and accrued liabilities21 1   
$1 $1 $1 $1 
11

NOTE 6. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The following table provides information about the balance sheet classification and the fair values of the Company’s other assets and liabilities for which disclosure of fair value is required:
 12/31/20236/30/2023
Balance sheet
classification
Fair value
hierarchy
level
Carrying
Amount
Estimated
Fair
Value
Carrying
Amount
Estimated
Fair
Value
Assets
Interest-bearing investments, including money market funds
Cash and cash
equivalents (1)
1$215 $215 $243 $243 
Time deposits
Cash and cash
equivalents (1)
28 8 9 9 
Trust assets for nonqualified deferred compensation plansOther assets1150 150 129 129 
 $373 $373 $381 $381 
Liabilities
Notes and loans payable
Notes and loans payable (2)
2$247 $247 $50 $50 
Current maturities of long-term debt and Long-term debt
Current maturities of long-
term debt and Long-term
debt (3)
22,479 2,376 2,477 2,327 
$2,726 $2,623 $2,527 $2,377 
(1)Cash and cash equivalents are composed of time deposits and other interest-bearing investments, including money market funds with original maturity dates of 90 days or less. Cash and cash equivalents are recorded at cost, which approximates fair value.
(2)Notes and loans payable are composed of outstanding U.S. commercial paper balances and/or amounts drawn on the Company’s credit agreements, all of which are recorded at cost, which approximates fair value.
(3)Current maturities of long-term debt and Long-term debt are recorded at cost. The fair value of Long-term debt, including current maturities, was determined using secondary market prices quoted by corporate bond dealers, and is classified as Level 2.
NOTE 7. OTHER (INCOME) EXPENSE, NET
The major components of Other (income) expense, net were:
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Amortization of trademarks and other intangible assets$7 $7 $15 $14 
Trust investment (gains) losses, net(12)(6)(10)(1)
Net periodic benefit cost
5 4 10 8 
Foreign exchange transaction (gains) losses, net (1)
15 1 23 3 
Income from equity investees(1)(1)(2)(2)
Interest income(7)(3)(17)(5)
Restructuring costs (2)
   19 
Gain on sale-leaseback transaction (3)
(16) (16) 
Other2 (6)2 (6)
Total$(7)$(4)$5 $30 
(1)Foreign exchange losses are primarily related to the Company’s operations in Argentina.
(2)Restructuring costs related to the implementation of the Company's streamlined operating model. See Note 4 for additional details.
(3)On December 14, 2023, the Company completed an asset sale-leaseback transaction on a warehouse in Fairfield, California. The Company received proceeds of $19, net of selling costs, the asset had a carrying value of $3, and the transaction resulted in a $16 gain which was recognized in Other (income) expense, net in the Health and Wellness segment. The leaseback is accounted for as an operating lease. The term of the lease is 8 years, with options to extend the lease for two 5 year periods.
12


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 was 29.3% and 26.7% for the three and six months ended December 31, 2023, respectively, and 21.2% and 23.0% for the three and six months ended December 31, 2022, respectively. The higher tax rates on earnings in both the three and six month periods was primarily driven by nonrecurring tax credits in the prior period, and lower compensation deductions and higher foreign income taxes in the current period.
Income taxes paid, net of refunds, were $194 and $50 for the six months ended December 31, 2023 and December 31, 2022, respectively. The increase in payments in the current period was primarily driven by payment of fiscal year 2023 income taxes previously deferred as a result of the relief provided by the IRS announced in January 2023 due to winter storms in California.
NOTE 9. NET EARNINGS PER SHARE (EPS)
The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Basic124,176123,546124,075123,443
Dilutive effect of stock options and other444442560508
Diluted124,620123,988124,635123,951
Antidilutive stock options and other3,5272,942 3,527 2,963 
Basic net earnings per share and Diluted net earnings per share are calculated on Net earnings attributable to Clorox.
NOTE 10. COMPREHENSIVE INCOME
The following table provides a summary of Comprehensive income for the periods indicated:
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Net earnings$96 $102 $121 $189 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments17 18 6 (11)
Net unrealized gains (losses) on derivatives(8)(6)(9)(14)
Pension and postretirement benefit adjustments126 1 137 2 
Total other comprehensive (loss) income, net of tax135 13 134 (23)
Comprehensive income231 115 255 166 
Less: Total comprehensive income attributable to noncontrolling interests3 3 6 5 
Total comprehensive income attributable to Clorox$228 $112 $249 $161 
13


NOTE 11. STOCKHOLDERS EQUITY
Changes in the components of Stockholders’ equity were as follows for the periods indicated:
Three months ended December 31
(Dollars in millions except per share data; shares in thousands)
Common stockAdditional paid-in capitalRetained earningsTreasury stockAccumulated
other
comprehensive
net (loss) income
Noncontrolling interestsTotal stockholders’ equity
AmountShares AmountShares
Balance as of September 30, 2022$131 130,741 $1,193 $832 $(1,315)(7,385)$(515)$170 $496 
Net earnings— — — 99 — — — 3 102 
Other comprehensive (loss) income— — — — — — 13 — 13 
Dividends to Clorox stockholders ($1.18 per share declared)
— — — (147)— — — — (147)
Dividends to noncontrolling interests— — — — — — — (3)(3)
Stock-based compensation— — 21 — — — — — 21 
Other employee stock plan activities— — (7)(2)18 122   9 
Balance as of December 31, 2022$131 130,741 $1,207 $782 $(1,297)(7,263)$(502)$170 $491 
Balance as of September 30, 2023$131 130,741 $1,246 $299 $(1,219)(6,740)$(494)$168 $131 
Net earnings (losses)— — — 93 — — — 3 96 
Other comprehensive (loss) income— — — — — — 135 — 135 
Dividends to Clorox stockholders ($1.20 per share declared)
— — — (150)— — — — (150)
Dividends to noncontrolling interests— — — — — — — (6)(6)
Stock-based compensation— — 16 — — — — — 16 
Other employee stock plan activities— — (17)(1)14 79 — — (4)
Balance as of December 31, 2023$131 130,741 $1,245 $241 $(1,205)(6,661)$(359)$165 $218 
Six months ended December 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
Noncontrolling interests
Total stockholders’ equity
AmountSharesAmountShares
Balance as of June 30, 2022$131 130,741 $1,202 $1,048 $(1,346)(7,589)$(479)$173 $729 
Net earnings— — — 184 — — — 5 189 
Other comprehensive (loss) income— — — — — — (23)— (23)
Dividends to Clorox stockholders ($3.54 per share declared)
— — — (440)— — — — (440)
Dividends to noncontrolling interests— — — — — — — (8)(8)
Stock-based compensation— — 31 — — — — — 31 
Other employee stock plan activities— — (26)(10)49 326 — — 13 
Balance as of December 31, 2022$131 130,741 $1,207 $782 $(1,297)(7,263)$(502)$170 $491 
Balance as of June 30, 2023$131 130,741 $1,245 $583 $(1,246)(6,921)$(493)$168 $388 
Net earnings (losses)— — — 115 — — — 6 121 
Other comprehensive (loss) income— — — — — — 134 — 134 
Dividends to Clorox stockholders ($3.60 per share declared)
— — — (450)— — — — (450)
Dividends to noncontrolling interests— — — — — — — (9)(9)
Stock-based compensation— — 29 — — — — — 29 
Other employee stock plan activities— — (29)(7)41 260 — — 5 
Balance as of December 31, 2023$131 130,741 $1,245 $241 $(1,205)(6,661)$(359)$165 $218 
14

NOTE 11. 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 December 31
Foreign currency translation adjustmentsNet unrealized gains (losses) on derivativesPension and postretirement benefit adjustmentsAccumulated other comprehensive net (loss) income
Balance as of September 30, 2022$(477)$113 $(151)$(515)
Other comprehensive (loss) income before reclassifications18   18 
Amounts reclassified from Accumulated other comprehensive net (loss) income (6)2 (4)
Income tax benefit (expense)  (1)(1)
Net current period other comprehensive (loss) income18 (6)1 13 
Balance as of December 31, 2022$(459)$107 $(150)$(502)
Balance as of September 30, 2023$(456)$98 $(136)$(494)
Other comprehensive (loss) income before reclassifications17 (6)(7)4 
Amounts reclassified from Accumulated other comprehensive net (loss) income (1)
 (3)172 169 
Income tax benefit (expense), and other 1 (39)(38)
Net current period other comprehensive (loss) income17 (8)126 135 
Balance as of December 31, 2023$(439)$90 $(10)$(359)
Six months ended December 31
Foreign currency translation adjustmentsNet unrealized gains (losses) on derivatives
Pension and postretirement benefit adjustments
Accumulated other comprehensive net (loss) income
Balance as of June 30, 2022$(448)$121 $(152)$(479)
Other comprehensive (loss) income before reclassifications(11)(2) (13)
Amounts reclassified from Accumulated other comprehensive net (loss) income (14)3 (11)
Income tax benefit (expense) 2 (1)1 
Net current period other comprehensive (loss) income(11)(14)2 (23)
Balance as of December 31, 2022$(459)$107 $(150)$(502)
Balance as of June 30, 2023$(445)$99 $(147)$(493)
Other comprehensive (loss) income before reclassifications6 (6)4 4 
Amounts reclassified from Accumulated other comprehensive net (loss) income (1)
 (4)175 171 
Income tax benefit (expense), and other 1 (42)(41)
Net current period other comprehensive (loss) income6 (9)137 134 
Balance as of December 31, 2023$(439)$90 $(10)$(359)
(1)Includes recognition of pension settlement charge reclassified into Net earnings. See Note 12 for additional details.

15


NOTE 12. EMPLOYEE BENEFIT PLANS
In the second quarter of fiscal year 2024, the Company settled plan benefits of its domestic qualified pension plan (the Plan), through a combination of an annuity contract purchase with a third-party insurance provider and lump sum payouts. These payments were made using Plan assets. The third-party insurance provider assumed the obligation to pay future pension benefits and provide administrative services and started making direct payments to participants in January 2024. In conjunction with this settlement, a one-time noncash charge, net of curtailment gain, of $171 before taxes ($130 after tax) was recorded in the Company’s condensed consolidated statement of earnings and comprehensive income primarily as a result of accelerating the recognition of actuarial losses previously included in Accumulated other comprehensive net (loss) income that would have been recognized in future periods.
The Company continues to maintain various other retirement income plans for eligible domestic and international employees.
The following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Interest cost$3 $4 $8 $9 
Expected return on plan assets (1)
1 (2)(2)(5)
Amortization of unrecognized items1 2 3 4 
Curtailment gain
(6) (6) 
Settlement loss
177  178  
Total$176 $4 $181 $8 
(1)The weighted average long-term expected rate of return on plan assets used in computing the fiscal year 2024 net periodic benefit cost is 3.3%.
The net periodic benefit cost for the Company’s retirement health care plans was $0 for both the three and six months ended December 31, 2023 and 2022.
During both the three months ended December 31, 2023 and 2022, the Company made $2 in contributions to its domestic retirement income plans. During both the six months ended December 31, 2023 and 2022, the Company made $4 in contributions to its domestic retirement income plans.
Service cost component of the net periodic benefit cost, if any, is reflected in employee benefit costs. All other components are reflected in Other (income) expense, net.
NOTE 13. OTHER CONTINGENCIES AND GUARANTEES
Contingencies
The Company is involved in certain environmental matters, including response actions at various locations. The Company recorded liabilities totaling $28 as of both December 31, 2023 and June 30, 2023, respectively, for its share of aggregate future remediation costs related to these matters.
One matter, which accounted for $12 of the recorded liability as of both December 31, 2023 and June 30, 2023, respectively, 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 groundwater at the site and included estimates of the related costs. Following further discussions with the regulators in 2017, the Company recorded an undiscounted liability for costs estimated to be incurred over a 30-year period, based on one of the options in the Feasibility Study related to groundwater. In September 2021, as a result of an additional study and further discussions with regulators, the Company submitted a Soil Vapor Intrusion Report to the regulators. In January 2023, the regulators issued a new order directing the Company and the current property owner to conduct a Remedial Investigation and then prepare a Feasibility Study to evaluate and remediate impacts to soil, soil vapor and indoor air. While the Company believes its latest estimates of remediation costs (including any related to soil, soil vapor and indoor air impacts) are reasonable, the ultimate remediation requirements are not yet finalized and the regulators could require the Company to implement remediation actions for a longer period or take additional actions, which could include estimated undiscounted costs in the aggregate of up to approximately $28 over an estimated 30-year period, or require the Company to take different actions and incur additional costs.
Another matter in Dickinson County, Michigan, at the site of one of the Company’s former operations for which the Company is jointly and severally liable, accounted for $10 of the recorded liability as of both December 31, 2023 and June 30, 2023,
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NOTE 13: OTHER CONTINGENCIES AND GUARANTEES (continued)
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 agreement 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.
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. From time to time, the Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements (including costs connected to the transition and unwinding of certain supply and manufacturing relationships), 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 December 31, 2023 and June 30, 2023.
The Company was a party to letters of credit of $17 as of December 31, 2023, primarily related to its insurance carriers, of which $0 had been drawn upon.
NOTE 14. SEGMENT RESULTS
The Company operates through strategic business units (SBUs) which are organized into operating segments. Operating segments are then aggregated into four reportable segments: Health and Wellness, Household, Lifestyle and International. Operating segments not aggregated into a reportable segment are reflected in Corporate and Other.
Corporate and Other includes certain non-allocated administrative costs and various other non-operating income and expenses, as well as the results of the Vitamins, Minerals and Supplements (VMS) business. Assets in Corporate and Other 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, as well as the assets related to the VMS business.
The principle measure of segment profitability used by management is segment adjusted earnings (losses) before interest and income taxes (segment adjusted EBIT). Segment adjusted EBIT is defined as earnings (losses) before income taxes excluding interest income, interest expense and other significant items that are nonrecurring or unusual (such as the pension settlement charge, incremental charges relating to the cyberattack, asset impairments, charges related to the streamlined operating model, charges related to the digital capabilities and productivity enhancements investment, significant losses/(gains) related to acquisitions and other nonrecurring or unusual items impacting comparability).
The tables below present reportable segment information and a reconciliation of the segment information to the Company’s consolidated net sales and earnings (losses) before income taxes, with amounts that are not allocated to the reportable segments reflected in Corporate and Other.
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NOTE 14. SEGMENT RESULTS (Continued)
Net sales
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Health and Wellness$720 $577 $1,224 $1,234 
Household502 462 827 885 
Lifestyle403 332 632 652 
International311 286 581 571 
Corporate and Other54 58 112 113 
Total$1,990 $1,715 $3,376 $3,455 
Segment adjusted EBIT
Three months endedSix months ended
12/31/202312/31/202212/31/202312/31/2022
Health and Wellness$259 $124