Published: 2022-08-10 00:00:00 ET

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Nature of Operations and Basis of Presentation

The Company is principally engaged in the production, marketing and sale of consumer products through mass retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drug, pet and military stores, third-party and owned e-commerce channels, and distributors. The consolidated financial statements include the statements of the Company and its wholly owned and controlled subsidiaries. All significant intercompany transactions and accounts were eliminated in consolidation.

Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) requires management to reach opinions as to estimates and assumptions that affect reported amounts and related disclosures. Specific areas requiring the application of management’s estimates and judgments include, among others, assumptions pertaining to accruals for consumer and trade-promotion programs, stock-based compensation, retirement income plans, future cash flows associated with impairment testing of goodwill and other long-lived assets and the valuation of the venture agreement terminal obligation, the valuation of assets acquired and liabilities assumed in connection with a business combination, the credit worthiness of customers, uncertain tax positions, tax valuation allowances and legal, environmental and insurance matters. Actual results could materially differ from estimates and assumptions made.

Cash, Cash Equivalents and Restricted Cash

Cash equivalents consist of highly liquid interest-bearing accounts, time deposits held by financial institutions and money market funds with an initial maturity at purchase of 90 days or less. The fair value of cash and cash equivalents approximates the carrying amount.

The Company’s cash position includes amounts held by foreign subsidiaries and, as a result, the repatriation of certain cash balances from some of the Company’s foreign subsidiaries could result in additional withholding tax costs in certain foreign jurisdictions. However, these cash balances are generally available without legal restriction to fund local business operations. In addition, a portion of the Company’s cash balance is held in U.S. dollars by foreign subsidiaries whose functional currency is their local currency. Such U.S. dollar balances are reported on the foreign subsidiaries’ books in their functional currency, and the impact on such balances from foreign currency exchange rate differences is recorded in Other (income) expense, net.

As of June 30, 2022, 2021, 2020 and 2019, the Company had $3, $5, $8 and $2 of restricted cash, respectively, which was included in Prepaid expenses and other current assets and Other assets. The restricted cash as of June 30, 2022 was primarily related to cash margin deposits held for exchange-traded futures contracts and funds held in an escrow account with limitations on usage.

Inventories

The Company values its inventories using both the First-In, First-Out (FIFO) and the Last-In, First-Out (LIFO) methods. The FIFO inventory is stated at the lower of cost or net realizable value, which includes any costs to sell or dispose. In addition, appropriate consideration is given to obsolescence, excessive inventory levels, product deterioration and other factors in evaluating net realizable value. The LIFO inventory is stated at the lower of cost or market.

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Property, Plant and Equipment and Finite-Lived Intangible Assets

Property, plant and equipment and finite-lived intangible assets are stated at cost. Depreciation and amortization expense are primarily calculated by the straight-line method using the estimated useful lives or lives determined by reference to the related lease contract in the case of leasehold improvements. The table below provides estimated useful lives of property, plant and equipment by asset classification.

			Estimated Useful Lives
Buildings and leasehold improvements			7 - 40 years
Land improvements			10 - 30 years
Machinery and equipment			3 - 15 years
Computer equipment			3 - 5 years
Capitalized software costs			3 - 7 years

Finite-lived intangible assets are amortized over their estimated useful lives, which range from 7 to 30 years.

Property, plant and equipment and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset (or asset group) may not be fully recoverable. The risk of impairment is initially assessed based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist. Impairment occurs when the carrying value of the asset (or asset group) exceeds the estimated future undiscounted cash flows generated by the asset (or asset group). When impairment is indicated, an impairment charge is recorded for the difference between the carrying value of the asset (or asset group) and its estimated fair market value. Depending on the asset, estimated fair market value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in similar condition.

Capitalization of Software Costs

The Company capitalizes certain qualifying costs incurred in the acquisition and development of software for internal use, including the costs of the software, materials, consultants, interest and payroll and payroll-related costs for employees during the application development stage. Internal and external costs incurred during the preliminary project stage and post implementation-operation stage, mainly training and maintenance costs, are expensed as incurred. Once the application is substantially complete and ready for its intended use, qualifying costs are amortized on a straight-line basis over the software’s estimated useful life. Capitalized internal use software is included in Property, plant and equipment. Capitalized software as a service is included in Prepaid expenses and other current assets or Other assets and is amortized using the straight-line method over the term of the hosting arrangement which is typically no greater than 6 years.

Business Combinations

The Company records acquired businesses within the consolidated financial statements using the acquisition method prospectively from the acquisition date. Under the acquisition method, once control is obtained, assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values on the acquisition date. The Company’s estimates of fair value are inherently uncertain and subject to refinement. The excess of the total of the purchase consideration, fair value of the noncontrolling interest and fair value of the previously held equity interest over the identifiable assets acquired and liabilities assumed is recorded as goodwill. Measurement period adjustments to the fair values of the identifiable assets acquired and liabilities assumed with the corresponding offset to goodwill, if applicable, are applied in the reporting period in which the adjustment amounts are determined based on new information obtained during the measurement period. In the event of a step acquisition, the Company records a gain or loss in Other income (expense), net on the consolidated statement of earnings as a result of remeasuring a previously held equity interest to fair value on the acquisition date. Transaction expenses are recognized separately from the business combination and are expensed as incurred.

Impairment Review of Goodwill and Indefinite-Lived Intangible Assets

The Company tests its goodwill, trademarks with indefinite lives and other indefinite-lived intangible assets annually for impairment in the fiscal fourth quarter unless there are indications during a different interim period that these assets may have become impaired.

With respect to goodwill, the Company has the option to first assess qualitative factors, such as the maturity and stability of the reporting unit, the magnitude of the excess fair value over carrying value from a previous period’s impairment testing, other reporting unit specific operating results, micro and macroeconomic factors, as well as new events and circumstances impacting the operations at the reporting unit level. Reporting units for goodwill impairment testing purposes were its individual strategic business units (SBUs). If the result of a qualitative test indicates a potential for impairment of a reporting unit, a quantitative

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test is performed. In the quantitative test, the Company compares the estimated fair value of the reporting unit to its carrying value. If the estimated fair value of any reporting unit is less than its carrying value, an impairment charge is recorded for the difference between the carrying value and the fair value of the reporting unit.

To determine the fair value of a reporting unit as part of its quantitative test, the Company uses the discounted cash flow (DCF) method under the income approach, as it believes that this approach is the most reliable indicator of the fair value of its businesses and the fair value of their future earnings and cash flows. Under this approach, which requires significant judgments, the Company estimates the future cash flows of each reporting unit and discounts these cash flows at a rate of return that reflects their relative risk. The cash flows used in the DCF method are consistent with those the Company uses in its internal planning, which gives consideration to actual business trends experienced, and the broader business strategy for the long term. The other key estimates and factors used in the DCF method include, but are not limited to, net sales and expense growth rates, commodity prices, foreign exchange rates, inflation and a terminal growth rate. Changes in such estimates or the application of alternative assumptions could produce different results.

For trademarks and other intangible assets with indefinite lives, the Company has the option to first assess qualitative factors, such as the maturity and stability of the trademark or other intangible asset, the magnitude of the excess fair value over carrying value from a previous period’s impairment testing, other specific operating results, as well as new events and circumstances impacting the significant inputs used to determine the fair value of the intangible asset. If the result of a qualitative test indicates that it is more likely than not that the asset is impaired, a quantitative test is performed. When a quantitative test is performed, the estimated fair value of an asset is compared to its carrying value. If the carrying value of such asset exceeds its estimated fair value, an impairment charge is recorded for the difference between the carrying value and the estimated fair value. The Company uses the DCF method under the relief from royalty income approach to estimate the fair value of its trademarks and other intangible assets with indefinite lives. This approach requires significant judgments in determining the royalty rates and the assets’ estimated cash flows, as well as the appropriate discount and foreign exchange rates applied to those cash flows to determine fair value. Changes in such estimates or the use of alternative assumptions could produce different results.

Leases

The Company determines whether an arrangement contains a lease at inception by determining if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration and other facts and circumstances. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are calculated based on the lease liability adjusted for any lease payments paid to the lessor at or before the commencement date and initial direct costs incurred by the Company and excludes any lease incentives received from the lessor. Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. The lease term may include an option to extend or terminate the lease when it is reasonably certain that the Company will exercise that option as of the commencement date of the lease, and is reviewed in subsequent periods if a triggering event occurs. As the Company’s leases typically do not contain a readily determinable implicit rate, the Company determines the present value of the lease liability using its incremental borrowing rate at the lease commencement date based on the lease term and the currency of the lease on a collateralized basis. Variable lease payments are the portion of lease payments that are not fixed over the lease term. Variable lease payments are expensed as incurred, and include certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease, as applicable. The Company elected to combine lease and non-lease components as a single lease component and to exclude short-term leases, defined as leases with an initial term of 12 months or less, from its consolidated balance sheet.

Stock-based Compensation

The Company grants various nonqualified stock-based compensation awards to eligible employees, including stock options, restricted stock awards and performance shares.

For stock options, the Company estimates the fair value of each award on the date of grant using the Black-Scholes valuation model, which requires management to make estimates regarding expected option life, stock price volatility and other assumptions. Groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The Company estimates stock option forfeitures based on historical data for each employee grouping. The total number of stock options expected to vest is adjusted by actual and estimated forfeitures. Changes to the actual and estimated forfeitures will result in a cumulative adjustment in the period of change. Compensation expense is recorded by amortizing the grant date fair values on a straight-line basis over the vesting period, adjusted for estimated forfeitures.

For restricted stock awards, the fair value of each grant issued is estimated on the date of grant based on the current market price of the stock. Forfeitures are estimated based on historical data. The total number of restricted stock awards expected to vest is adjusted by actual and estimated forfeitures. Changes to the actual and estimated forfeitures will result in a cumulative

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adjustment in the period of change. Compensation expense is recorded by amortizing the grant date fair values on a straight-line basis over the vesting period, adjusted for estimated forfeitures.

The Company’s performance shares provide for the issuance of common stock to certain managerial staff and executive management if the Company achieves specified performance targets. The number of shares issued is dependent upon the achievement of specified performance targets. The performance period is three years and the payout determination is made at the end of the three-year performance period. Performance shares receive dividends earned during the vesting period upon vesting. The fair value of each grant issued is estimated on the date of grant based on the current market price of the stock. The total amount of compensation expense recognized reflects estimated forfeiture rates and management’s assessment of the probability that performance goals will be achieved. A cumulative adjustment is recognized to compensation expense in the current period to reflect any changes in the probability of achievement of performance goals.

Cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for stock-based payment arrangements (excess tax benefits) are classified as operating cash inflows.

Employee Benefits

The Company accounts for its retirement income and retirement health care plans using actuarial methods. These methods use an attribution approach that generally spreads “plan events” over the service lives or expected lifetime (for frozen plans) of plan participants. Examples of plan events are plan amendments and changes in actuarial assumptions such as the expected return on plan assets, discount rate, rate of compensation increase and certain employee-related factors, such as retirement age and mortality. The principle underlying the attribution approach is that employees render service over their employment period on a relatively “smooth” basis and, therefore, the statement of earnings effects of retirement income and retirement health care plans are recognized in the same pattern. One of the principal assumptions used in the net periodic benefit cost calculation is the expected return on plan assets. The expected return on plan assets may result in recognized expense or income that differs from the actual returns of those plan assets in any given year. Over time, however, the goal is for the expected long-term returns to approximate the actual returns and, therefore, the expectation is that the pattern of income and expense recognition should closely match the pattern of the services provided by the participants. The Company uses a market-related value method for calculating plan assets for purposes of determining the amortization of actuarial gains and losses. The differences between actual and expected returns are recognized in the net periodic benefit cost calculation over the average remaining service period or expected lifetime (for frozen plans) of the plan participants using the corridor approach. Under this approach, only actuarial gains (losses) that exceed 5% of the greater of the projected benefit obligation or the market-related value of assets are amortized to the Company’s net periodic benefit cost. In developing its expected return on plan assets, the Company considers the long-term actual returns relative to the mix of investments that comprise its plan assets and also develops estimates of future investment returns by considering external sources.

The Company recognizes an actuarial-based obligation at the onset of disability for certain benefits provided to individuals after employment, but before retirement, that includes medical, dental, vision, life and other benefits.

Environmental Costs

The Company is involved in certain environmental remediation and ongoing compliance activities. Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has been incurred and based upon a reasonable estimate of the liability. The Company’s accruals reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs. These accruals are adjusted periodically as assessment and remediation efforts progress or as additional technical or legal information becomes available. Actual costs to be incurred at identified sites in future periods may vary from the estimates, given the inherent uncertainties in evaluating environmental exposures. The accrual for environmental matters is included in Accounts payable and accrued liabilities and Other liabilities in the Company’s consolidated balance sheets on an undiscounted basis due to uncertainty regarding the timing of future payments.

Revenue Recognition

The Company’s revenue is primarily generated from the sale of finished product to customers. Revenue is recognized at the point in time when performance obligations under the terms of customer contracts are satisfied, which is when ownership, risks and rewards transfer, and can be on the date of shipment or the date of receipt by the customer, depending upon the particular customer arrangement. Shipping and handling activities are accounted for as contract fulfillment costs and included within Cost of products sold. After the completion of the performance obligation, there is an unconditional right to consideration as outlined in the contract. A right is considered unconditional if nothing other than the passage of time is required before payment of that consideration is due. The Company typically collects its customer receivables within two months. All performance obligations under the terms of contracts with customers have an original duration of one year or less.

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The Company has trade promotion programs, which primarily include shelf price reductions, in-store merchandising and consumer coupons. The costs of such activities, defined as variable consideration under ASC 606, “Revenue from Contracts with Customers,” are netted against sales and recorded when the related sales take place. Accruals for trade promotion programs are established based on the Company’s best estimate of the amounts necessary to settle existing and future obligations for products sold as of the balance sheet date. Amounts accrued for trade-promotions are based on various factors such as contractual terms and sales volumes, and also incorporate estimates that include customer participation rates, the rate at which customers will achieve program performance criteria, product availability and historical consumer redemption rates.

The Company provides an allowance for doubtful accounts based on its historical experience and ongoing assessment of its customers’ credit risk and aging. Customer receivables are presented net of an allowance for doubtful accounts of $9 and $8 as of June 30, 2022 and 2021, respectively. Receivables, net, include non-customer receivables of $22 and $22 as of June 30, 2022 and 2021, respectively, and related allowance of $0 and $14 as of June 30, 2022 and 2021, respectively.

Cost of Products Sold

Cost of products sold represents the costs directly related to the manufacture and distribution of the Company’s products and primarily includes raw materials, packaging, contract manufacturing fees, shipping and handling, warehousing, package design, depreciation, amortization, direct and indirect labor and operating costs for the Company’s manufacturing and distribution facilities, including salary, benefit costs and incentive compensation, and royalties and other charges related to the Company’s Glad Venture Agreement (See Note 8).

Costs associated with developing and designing new packaging, including design, artwork, films and labeling, are expensed as incurred and included within Cost of products sold.

Selling and Administrative Expenses

Selling and administrative expenses represent costs incurred by the Company in generating revenues and managing the business and include market research, commissions and certain administrative expenses. Administrative expenses include salary, benefits, incentive compensation, professional fees and services and other operating costs (such as software and licensing costs) associated with the Company’s non-manufacturing, non-research and development operations.

Advertising and Research and Development Costs

The Company expenses advertising and research and development costs in the period incurred.

Income Taxes

The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax basis. Management reviews the Company’s deferred tax assets to determine whether their value can be realized based upon available evidence. A valuation allowance is established when management believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change. In addition to valuation allowances, the Company provides for uncertain tax positions when such tax positions do not meet certain recognition thresholds or measurement standards. Amounts for uncertain tax positions are adjusted in quarters when new information becomes available or when positions are effectively settled.

Per U.S. GAAP, foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion and determined that none of the undistributed earnings of its foreign subsidiaries are indefinitely reinvested. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable.

Foreign Currency Transactions and Translation

Local currencies are the functional currencies for substantially all of the Company’s foreign operations. When the transactional currency is different than the functional currency, transaction gains and losses are included as a component of Other (income) expense, net. In addition, certain assets and liabilities denominated in currencies other than a foreign subsidiary’s functional currency are reported on the subsidiary’s books in its functional currency, with the impact from exchange rate differences recorded in Other (income) expense, net. Assets and liabilities of foreign operations are translated into U.S. dollars using the exchange rates in effect at the balance sheet date, while income and expenses are translated at the respective average monthly exchange rates during the year.

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Gains and losses on foreign currency translations are reported as a component of Other comprehensive (loss) income. The income tax effect of currency translation adjustments is recorded as a component of deferred taxes with an offset to Other comprehensive (loss) income where appropriate.

Effective July 1, 2018, under the requirements of U.S. GAAP, Argentina was designated as a highly inflationary economy, since it has experienced cumulative inflation of approximately 100 percent or more over a three-year period. As a result, beginning July 1, 2018, the U.S. dollar replaced the Argentine peso as the functional currency of the Company’s subsidiaries in Argentina (collectively, “Clorox Argentina”). Consequently, gains and losses from non-U.S. dollar denominated monetary assets and liabilities for Clorox Argentina are recognized in Other (income) expense, net in the consolidated statement of earnings.

Derivative Instruments

The Company’s use of derivative instruments, principally swaps, futures and forward contracts, is limited to non-trading purposes and is designed to partially manage exposure to changes in commodity prices, interest rates and foreign currencies. The Company’s contracts are hedges for transactions with notional amounts and periods consistent with the related exposures and do not constitute investments independent of these exposures.

The changes in the fair value (i.e., gains or losses) of a derivative instrument are recorded as either assets or liabilities in the consolidated balance sheets with an offset to Net earnings or Other comprehensive (loss) income depending on whether, for accounting purposes, it has been designated and qualifies as an accounting hedge and, if so, on the type of hedging relationship. The criteria used to determine if hedge accounting treatment is appropriate are: (a) formal designation and documentation of the hedging relationship, the risk management objective and hedging strategy at hedge inception; (b) eligibility of hedged items, transactions and corresponding hedging instrument; and (c) effectiveness of the hedging relationship both at inception of the hedge and on an ongoing basis in achieving the hedging objectives. For those derivative instruments designated and qualifying as hedging instruments, the Company must designate the hedging instrument either as a fair value hedge or as a cash flow hedge. The Company designates its commodity forward and future contracts for forecasted purchases of raw materials, interest rate contracts for forecasted interest payments, and foreign currency forward contracts for forecasted purchases of inventory as cash flow hedges. During the fiscal years ended June 30, 2022, 2021 and 2020, the Company had no hedging instruments designated as fair value hedges.

For derivative instruments designated and qualifying as cash flow hedges, gains or losses are reported as a component of Other comprehensive (loss) income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. From time to time, the Company may have contracts not designated as hedges for accounting purposes, for which it recognizes changes in the fair value in the consolidated statement of earnings in the current period. Cash flows from hedging activities are classified as operating activities in the consolidated statements of cash flows.

Recently Issued Accounting Standards

Recently Adopted Accounting Standards

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

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Saudi Joint Venture Acquisition

On July 9, 2020, the Company increased its investment in each of the two entities comprising its joint venture in the Kingdom of Saudi Arabia (Saudi joint venture). The joint venture offers customers in the Gulf region a range of cleaning and disinfecting products. The Company had previously accounted for its 30 percent investment of $27 as of June 30, 2020, under the equity method of accounting. Subsequent to the closing of this transaction, the Company's total ownership interest in each of the entities increased to 51 percent. The Company has consolidated this joint venture into its consolidated financial statements from the date of acquisition and reflects operations within the International reportable segment. The equity and income attributable to the other joint venture owners is recorded and presented as noncontrolling interests.

The total purchase consideration of $111 consisted of $100 cash paid, which was sourced from operations, and $11 from the net effective settlement of preexisting arrangements between the Company and the joint venture. The assets and liabilities of the joint venture were recorded at their respective estimated fair value as of the acquisition date using generally accepted accounting principles for business combinations. The excess of the purchase price over the fair value of the net identifiable assets acquired was allocated to goodwill in the International reportable segment in the amount of $208. The goodwill is primarily attributable to the synergies expected to arise after the acquisition and reflected the value of further growth anticipated in the Gulf region. None of the goodwill is deductible for tax purposes.

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

The purchase price allocation was finalized during the second quarter of fiscal year 2021. The following table summarizes the final purchase price allocation for the fair value of the joint venture’s assets acquired and liabilities assumed and the related deferred income taxes as of the acquisition date. The fair value of the assets acquired and liabilities assumed reflects the final insignificant measurement period adjustments related to goodwill, deferred income taxes and income taxes payable. The finite-lived intangibles acquired primarily represent the Company reacquiring previously licensed trademarks and customer relationships. The weighted-average estimated useful life of intangible assets subject to amortization was 9 years.

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

Included in the Company’s results for both fiscal years 2022 and 2021 was $84 of net sales from the joint venture. Pro forma results reflecting this transaction were not presented because it is not significant to the Company’s consolidated financial results.

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Inventories, net consisted of the following as of June 30:

			2022						2021
Finished goods			$	593					$	543
Raw materials and packaging			191						229
Work in process			16						11
LIFO allowances			(40)						(31)
Total inventories, net			760						752
Non-current inventories, net (1)			5						—
Total current inventories, net			$	755					$	752

(1) Non-current inventories, net is recorded in Other assets.

The LIFO method was used to value approximately 36% and 34% of inventories as of June 30, 2022 and 2021, respectively. The carrying values for all other inventories are determined on the FIFO method. The effect on earnings of the liquidation of LIFO layers was insignificant for each of the fiscal years ended June 30, 2022, 2021 and 2020.

The components of property, plant and equipment, net, consisted of the following as of June 30:

			2022						2021
Machinery and equipment			$	2,215					$	2,105
Buildings			729						707
Capitalized software costs			389						368
Land and improvements			166						148
Construction in progress			249						249
Computer equipment			116						107
Total			3,864						3,684
Less: Accumulated depreciation and amortization			(2,530)						(2,382)
Property, plant and equipment, net			$	1,334					$	1,302

Depreciation and amortization expense related to property, plant and equipment, net, was $193, $179 and $166 in fiscal years 2022, 2021 and 2020, respectively, of which $8, $6 and $5 were related to amortization of capitalized software, respectively.

Non-cash capital expenditures were $6, $13 and $7 for fiscal years, 2022, 2021 and 2020, respectively. There were no significant asset retirement obligations recorded and included in Buildings above for both fiscal years 2022 and 2021.

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The changes in the carrying amount of goodwill by reportable segment for the fiscal years ended June 30, 2022 and 2021 were as follows:

			Goodwill
			Health and Wellness						Household						Lifestyle						International						Total
Balance as of June 30, 2020			$	857					$	85					$	244					$	391					$	1,577
Acquisition			—						—						—						208						208
Goodwill impairment			(228)						—						—						—						(228)
Effect of foreign currency translation			—						—						—						18						18
Balance as of June 30, 2021			$	629					$	85					$	244					$	617					$	1,575
Effect of foreign currency translation			—						—						—						(17)						(17)
Balance as of June 30, 2022			$	629					$	85					$	244					$	600					$	1,558

The changes in the carrying amount of trademarks and other intangible assets for the fiscal years ended June 30, 2022 and 2021 were as follows:

			As of June 30, 2022																		As of June 30, 2021
			Gross carrying amount						Accumulated amortization / Impairments						Net carrying amount						Gross carrying amount						Accumulated amortization / Impairments						Net carrying amount
Trademarks with indefinite lives			$	668					$	—					$	668					$	670					$	—					$	670
Trademarks with finite lives			57						38						19						60						37						23
Other intangible assets with finite lives			577						380						197						593						368						225
Total			$	1,302					$	418					$	884					$	1,323					$	405					$	918

Amortization expense relating to the Company’s intangible assets was $31, $32 and $14 for the years ended June 30, 2022, 2021 and 2020, respectively. Estimated amortization expense for these intangible assets is $29, $28, $27, $27 and $27 for fiscal years 2023, 2024, 2025, 2026 and 2027, respectively.

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

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

The impairment charges were a result of a higher level of competitive activity than originally assumed, accelerated declines in certain channels where the business was over-developed and higher than anticipated investments to grow the business, which adversely affected the assumptions used to determine the fair value of the respective assets held by the VMS reporting unit for growth and the estimates of expenses necessary to achieve that growth. These impairment charges were based on the Company’s estimates regarding the future financial performance of the VMS SBU and macroeconomic factors. In connection with recognizing these impairment charges, the Company recognized tax benefits related to the impairments of $62 due to the partial tax deductibility of these charges.

To determine the fair value of the VMS reporting unit, the Company used the DCF method under the income approach. Under this approach, the Company estimated the future cash flows of the VMS reporting unit and discounted these cash flows at a rate

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of return that reflected its relative risk. The other key estimates and factors used in the DCF method included, but were not limited to, net sales and expense growth rates, and a terminal growth rate.

To determine the estimated fair values of the VMS related indefinite-lived trademarks, which were included within the Health and Wellness reportable segment, the Company used the relief from royalty income approach. This approach required significant judgments in determining the royalty rates and the assets’ estimated cash flows as well as the appropriate discount rates applied to those cash flows to determine fair value.

Additionally during fiscal year 2021, an impairment charge of $14 was recorded within Cost of products sold related to other intangible assets with finite lives that were no longer expected to be recoverable due to a pending exit from a Professional Products SBU supplier relationship. The remaining carrying value of these assets was $0 following the impairment charge.

No other significant impairments were identified as a result of the Company’s impairment reviews during fiscal year 2021 and no significant impairments were identified during fiscal year 2022 or fiscal year 2020.

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Short-term borrowings

Notes and loans payable are borrowings that mature in less than one year, primarily consisting of U.S. commercial paper issued by the Company and borrowings under the Company's revolving credit agreements. Notes and loans payable were $237 and $0 as of June 30, 2022 and 2021, respectively.

The weighted average interest rates incurred on average outstanding notes and loans payable during the fiscal years ended June 30, 2022, 2021, and 2020, including fees associated with the Company’s revolving credit agreements, were 0.54%, 0% and 2.49% respectively. The Company had no material outstanding notes and loans payable during the fiscal year ended June 30, 2021.

Long-term borrowings

Long-term debt, carried at face value net of unamortized discounts, premiums and debt issuance costs, included the following as of June 30:

			2022						2021
Senior unsecured notes and debentures:
3.80%, $300 due November 2021			$	—					$	300
3.05%, $600 due September 2022			—						599
3.50%, $500 due December 2024			—						498
3.10%, $400 due October 2027			398						398
3.90%, $500 due May 2028			497						497
4.40%, $500 due May 2029			493						—
1.80%, $500 due May 2030			494						492
4.60%, $600 due May 2032			592						—
Total			2,474						2,784
Less: Current maturities of long-term debt			—						300
Long-term debt			$	2,474					$	2,484

In May 2022, the Company issued $1,100 in senior notes, including $500 of senior notes with an annual fixed interest rate of 4.40%, payable semi-annually in May and November, final maturity in May 2029 that carry an effective rate of 3.89% (May 2029 senior notes), which includes the impact from the settlement of interest rate contracts in May 2022, and $600 of senior notes with an annual fixed rate of 4.60%, payable semi-annually in May and November, final maturity in May 2032 that carry an effective rate of 3.25% (May 2032 senior notes), which includes the impact from the settlement of interest rate contracts in May 2022. The notes rank equally with all of the Company's existing senior indebtedness. Proceeds from the senior notes were used to redeem prior to maturity $600 of senior notes with an annual fixed interest rate of 3.05% due in September 2022 and $500 of senior notes with an annual fixed interest rate of 3.50% due in December 2024, which were redeemed in June 2022 prior to their maturities, and for general corporate purposes. In connection with the redemption prior to maturity of the $500 of senior notes due in December 2024, the Company recorded a loss on the early extinguishment of debt of $13, which is included in Interest expense in the Consolidated Statement of Earnings, representing the difference paid in cash between the redemption

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price and the carrying amount of the debt extinguished of $5 and the accelerated amortization of losses on settlement of interest rate contracts and issuance costs associated with the debt extinguished of $8.

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

The weighted average interest rates incurred on average outstanding long-term debt during the fiscal years ended June 30, 2022, 2021 and 2020, were 3.25%, 3.49% and 3.75%, respectively. The weighted average effective interest rates on long-term debt balances as of both June 30, 2022 and 2021 were 3.37% and 3.49%, respectively.

Long-term debt maturities as of June 30, 2022, were $0 in fiscal years 2023 through 2027, and $2,500 thereafter.

Credit arrangements

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

The Company’s borrowing capacity under the revolving credit agreements and other financing arrangements as of June 30 was as follows:

			2022						2021
Revolving credit facility			$	1,200					$	1,200
Foreign and other credit lines			34						35
Total			$	1,234					$	1,235

Of the $34 of foreign and other credit lines as of June 30, 2022, $4 was outstanding and the remainder of $30 was available for borrowing. Of the $35 of foreign and other credit lines as of June 30, 2021, $5 was outstanding and the remainder of $30 was available for borrowing.

Other liabilities consisted of the following as of June 30:

			2022						2021
Venture Agreement terminal obligation, net			$	468					$	432
Employee benefit obligations			263						330
Taxes			19						23
Environmental liabilities			23						24
Other			18						25
Total			$	791					$	834

Venture Agreement

The Company has an agreement with The Procter & Gamble Company (P&G) for the Company’s Glad bags and wraps business. In connection with this agreement, P&G provides research and development (R&D) support to the Glad business. As of June 30, 2022 and 2021, P&G had a 20% interest in the venture. The Company pays a royalty to P&G for its interest in the profits, losses and cash flows, as contractually defined, of the Glad business, which is included in Cost of products sold. In December 2017, the Company and P&G extended the term of the agreement and the related R&D support provided by P&G. The term will expire in January 2026, unless the parties agree, on or prior to January 31, 2025, to further extend the term of the agreement for another seven years or agree to take some other relevant action. The agreement can be terminated under certain

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circumstances, including at P&G’s option upon a change in control of the Company or, at either party’s option, upon the sale of the Glad business by the Company.

Upon termination of the agreement, the Company is required to purchase P&G’s 20% interest for cash at fair value as established by predetermined valuation procedures. As of June 30, 2022, the estimated fair value of P&G’s interest was $635, of which $468 has been recognized and is reflected in Other liabilities as noted in the table above. The difference between the estimated fair value and the amount recognized, and any future changes in the fair value of P&G’s interest, is charged to Cost of products sold in accordance with the effective interest method over the remaining life of the agreement. Following termination, the Glad business will retain the exclusive core intellectual property licenses contributed by P&G on a royalty-free basis for the licensed products marketed.

Financial Risk Management and Derivative Instruments

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

Commodity Price Risk Management

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

As of June 30, 2022, the notional amount of commodity derivatives was $27, of which $18 related to soybean oil futures used for the Food products business and $9 related to jet fuel swaps used for the Grilling business. As of June 30, 2021, the notional amount of commodity derivatives was $32, of which $23 related to soybean oil futures and $9 related to jet fuel swaps.

Foreign Currency Risk Management

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

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

Interest Rate Risk Management

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

The notional amounts of the Company's outstanding interest rate contracts were $0 and $300, respectively, as of June 30, 2022 and 2021. During fiscal year 2022, the Company entered into an additional $650 of interest rate contracts. All contracts represented interest rate swap lock agreements to manage the exposure to interest rate volatility associated with future interest payments on forecasted debt issuance, and were terminated in May 2022 upon issuance of $1,100 in senior notes (See Note 7). These contracts resulted in a $114 gain recorded in Other comprehensive (loss) income, comprised of $25 attributable to the May 2029 senior notes and $89 attributable to the May 2032 senior notes, which is being amortized into Interest expense in the consolidated statement of earnings over the 7-year and 10-year term of the notes.

Commodity, Foreign Exchange and Interest Rate Derivatives

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

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The effects of derivative instruments designated as hedging instruments on Other comprehensive (loss) income and Net earnings were as follows during the fiscal years ended June 30:

			Gains (losses) recognized in Other comprehensive (loss) income
			2022						2021						2020
Commodity purchase derivative contracts			$	17					$	21					$	(7)
Foreign exchange derivative contracts			1						—						—
Interest rate derivative contracts			89						23						2
Total			$	107					$	44					$	(5)

			Location of gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earnings			Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
						2022						2021						2020
Commodity purchase derivative contracts			Cost of products sold			$	23					$	1					$	(4)
Foreign exchange derivative contracts			Cost of products sold			—						—						—
Interest rate derivative contracts			Interest expense			(9)						(6)						(6)
Total						$	14					$	(5)					$	(10)

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of June 30, 2022 that is expected to be reclassified into Net earnings within the next twelve months is $22.

Counterparty Risk Management and Derivative Contract Requirements

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

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

Certain of the Company’s exchange-traded futures contracts used for commodity price risk management include requirements for the Company to post collateral in the form of a cash margin account held by the Company’s broker for trades conducted on that exchange. As of June 30, 2022 and 2021, the Company maintained cash margin balances related to exchange-traded futures contracts of $1 and $0, respectively, which are classified as Prepaid expenses and other current assets on the 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 with the terms of the plan 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 consolidated balance sheets. The gains and losses on the trust assets are recorded in Other (income) expense, net in the consolidated statement 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.

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As of June 30, 2022, the balance of the trust assets related to the Company’s nonqualified deferred compensation plans decreased by $17 as compared to June 30, 2021.

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis in the 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 June 30, 2022 and 2021, 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:

															2022												2021
			Balance sheet classification						Fair value hierarchy level						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Assets
Commodity purchase futures contracts			Prepaid expenses and other current assets						1						$	—					$	—					$	5					$	5
Commodity purchase swaps contracts			Prepaid expenses and other current assets						2						6						6						4						4
Foreign exchange forward contracts			Accounts payable and accrued liabilities						2						1						1						—						—
Interest rate contracts			Other assets						2						—						—						24						24
															$	7					$	7					$	33					$	33
Liabilities
Commodity purchase futures contracts			Accounts payable and accrued liabilities						1						$	1					$	1					$	—					$	—
															$	1					$	1					$	—					$	—

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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:

															2022												2021
			Balance sheet classification						Fair value hierarchy level						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Assets
Interest-bearing investments, including money market funds			Cash and cash equivalents (1)						1						$	86					$	86					$	196					$	196
Time deposits			Cash and cash equivalents (1)						2						4						4						11						11
Trust assets for nonqualified deferred compensation plans			Other assets						1						119						119						136						136
															$	209					$	209					$	343					$	343
Liabilities
Notes and loans payable			Notes and loans payable (2)						2						$	237					$	237					$	—					$	—
Current maturities of long-term debt and Long-term debt			Current maturities of long- term debt and Long-term debt (3)						2						2,474						2,386						2,784						2,963
															$	2,711					$	2,623					$	2,784					$	2,963

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

(2)Notes and loans payable are composed of outstanding U.S. commercial paper balances 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.

Furthermore, impairment charges of $343 were recorded during the fiscal year 2021, of which $228, $93, and $22 related to goodwill, certain indefinite-lived trademarks and other assets, respectively. These adjustments were included as non-cash charges in the consolidated statement of earnings. The non-recurring fair values utilized included unobservable Level 3 inputs based on management’s best estimates and assumptions. See Note 5 for additional information.

Contingencies

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

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

Another matter in Dickinson County, Michigan, at the site of one of the Company’s former operations for which the Company is jointly and severally liable, accounted for $9 and $10 of the recorded liability as of June 30, 2022 and 2021, respectively. This amount reflects the Company’s agreement to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing arrangement with a third party. If the third party is unable to pay its share of the response and remediation obligations, the Company may be responsible for such obligations. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital

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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. 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 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 consolidated financial statements taken as a whole.

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

The Company was a party to a letter of credit of $14 as of June 30, 2022 and $11 as of June 30, 2021, primarily related to one of its insurance carriers, of which $0 had been drawn upon.

Commitments

The Company is a party to certain purchase obligations, which are defined as purchase agreements that are enforceable and legally binding and that contain specified or determinable significant terms, including quantity, price and the approximate timing of the transaction. For purchase obligations subject to variable price and/or quantity provisions, an estimate of the price and/or quantity must be made. Examples of the Company’s purchase obligations include contracts to purchase raw materials, commitments to contract manufacturers, commitments for information technology and related services, advertising contracts, capital expenditure agreements, software acquisition and license commitments and service contracts. The Company enters into purchase obligations based on expectations of future business needs. Many of these purchase obligations are flexible to allow for changes in the Company’s business and related requirements. As of June 30, 2022, the Company’s purchase obligations by purchase date were approximately as follows:

Year			Purchase Obligations
2023			$	186
2024			127
2025			73
2026			35
2027			12
Thereafter			23
Total			$	456

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Supplemental balance sheet information related to the Company’s leases as of June 30 was as follows:

			Balance sheet classification			2022						2021
Operating leases
Right-of-use assets			Operating lease right-of-use assets			$	342					$	332
Current lease liabilities			Current operating lease liabilities			$	78					$	81
Non-current lease liabilities			Long-term operating lease liabilities			314						301
Total operating lease liabilities						$	392					$	382
Finance leases
Right-of-use assets			Other assets			$	18					$	19
Current lease liabilities			Accounts payable and accrued liabilities			$	6					$	5
Non-current lease liabilities			Other liabilities			13						15
Total finance lease liabilities						$	19					$	20

Components of lease cost were as follows for the fiscal years ended June 30:

						2022						2021
Operating lease cost						$	83					$	73
Finance lease cost:
Amortization of right-of-use assets						$	9					$	4
Interest on lease liabilities						1						—
Total finance lease cost						$	10					$	4
Variable lease cost						$	80					$	39
Short term lease cost						$	6					$	2

Supplemental cash flow information and non-cash activity related to the Company’s leases were as follows during fiscal years ended June 30:

			2022						2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases, net			$	84					$	75
Operating cash flows from finance leases			1						—
Financing cash flows from finance leases			9						3
Right-of-use assets obtained in exchange for lease obligations:
Operating leases			$	94					$	106
Finance leases			18						7

Weighted-average remaining lease term and discount rate for the Company’s leases were as follows as of fiscal year ended June 30:

			2022
Weighted-average remaining lease term:
Operating leases			6 years
Finance leases			4 years
Weighted-average discount rate:
Operating leases			2.4		%
Finance leases			4.1		%

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Maturities of lease liabilities by fiscal year for the Company’s leases as of June 30, 2022 were as follows:

Year			Operating leases						Finance leases
2023			$	80					$	7
2024			78						5
2025			67						3
2026			55						2
2027			45						1
Thereafter			101						2
Total lease payments			$	426					$	20
Less: Imputed interest			(34)						(1)
Total lease liabilities			$	392					$	19

Operating and finance lease payments presented in the table above exclude $39 and $0, respectively, of minimum lease payments signed but not yet commenced as of June 30, 2022.

On May 25, 2022, the Company completed an asset sale-leaseback transaction on a plant in Ontario, Canada. The Company received proceeds of $16, net of selling costs, which had a carrying value of $2, and resulted in a $14 gain on the transaction which was recognized in Other (income) expense, net. The leaseback is accounted for as an operating lease. The term of the lease is 10 years, with the option to terminate the lease at 7 years.

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

Dividends per share paid to Clorox stockholders during the fiscal years ended June 30 were as follows:

			2022						2021						2020
Dividends per share paid			$	4.64					$	4.44					$	4.24

On July 12, 2022, a cash dividend was declared in the amount of $1.18 per share payable on August 12, 2022 to common stockholders of record as of the close of business on July 27, 2022.

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Accumulated Other Comprehensive Net (Loss) Income

Changes in Accumulated other comprehensive net (loss) income attributable to Clorox by component were as follows for the fiscal years ended June 30:

			Foreign currency translation adjustments						Net unrealized gains (losses) on derivatives						Pension and postretirement benefit adjustments						Accumulated other comprehensive net (loss) income
Balance June 30, 2019			$	(414)					$	(23)					$	(165)					$	(602)
Other comprehensive (loss) income before reclassifications			(35)						(5)						(16)						(56)
Amounts reclassified from Accumulated other comprehensive net (loss) income			—						10						7						17
Income tax benefit (expense)			(1)						—						2						1
Net current period other comprehensive (loss) income			(36)						5						(7)						(38)
Balance June 30, 2020			(450)						(18)						(172)						(640)
Other comprehensive (loss) income before reclassifications			53						44						(2)						95
Amounts reclassified from Accumulated other comprehensive net (loss) income			(5)						5						14						14
Income tax benefit (expense)			(1)						(10)						(4)						(15)
Net current period other comprehensive (loss) income			47						39						8						94
Balance June 30, 2021			(403)						21						(164)						(546)
Other comprehensive (loss) income before reclassifications			(45)						107						1						63
Amounts reclassified from Accumulated other comprehensive net (loss) income			—						(14)						15						1
Income tax benefit (expense)			—						7						(4)						3
Net current period other comprehensive (loss) income			(45)						100						12						67
Balance June 30, 2022			$	(448)					$	121					$	(152)					$	(479)

Included in foreign currency translation adjustments are re-measurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. There were $0, $11, and $0 associated with these loans reclassified from Accumulated other comprehensive net (loss) income for the fiscal years ended June 30, 2022, 2021, and 2020, respectively.

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 for the fiscal years ended June 30:

			2022						2021						2020
Basic			123,113						125,570						125,828
Dilutive effect of stock options and other			793						1,729						1,843
Diluted			123,906						127,299						127,671
Antidilutive stock options and other			2,448						476						—

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

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In November 2021, the Company’s stockholders voted to approve the amended and restated 2005 Stock Incentive Plan (the Plan). The Plan permits the Company to grant various nonqualified stock-based compensation awards, including stock options, restricted stock, performance shares, deferred stock units, stock appreciation rights and other stock-based awards. The Plan as amended and restated provides that the maximum number of shares which may be issued under the Plan will be 5 million common shares that may be issued for stock-based compensation purposes. As of June 30, 2022, the Company was authorized to grant up to approximately 5 million common shares, plus additional shares equal to shares that are potentially deliverable under an award that expires or are canceled, forfeited or settled without the delivery of shares, under the Plan. As of June 30, 2022, approximately 4 million common shares remained available for grant.

Compensation cost and the related income tax benefit recognized for stock-based compensation plans were classified as indicated below for the fiscal years ended June 30:

			2022						2021						2020
Cost of products sold			$	6					$	6					$	5
Selling and administrative expenses			42						40						41
Research and development costs			4						4						4
Total compensation costs			$	52					$	50					$	50
Related income tax benefit			$	12					$	12					$	12

Cash received during fiscal years 2022, 2021 and 2020 from stock options exercised under all stock-based payment arrangements was $35, $133 and $176, respectively. The Company issues shares for stock-based compensation plans from treasury stock. The Company may repurchase stock under its Evergreen Program to offset the estimated impact of dilution related to stock-based awards.

Details regarding the valuation and accounting for stock options, restricted stock awards, performance shares and deferred stock units for non-employee directors follow.

Stock Options

The fair value of each stock option award granted during fiscal years 2022, 2021 and 2020 was estimated on the date of grant using the Black-Scholes valuation model and assumptions noted in the following table:

			2022						2021						2020
Expected life			5.4 years						5.3 to 5.4 years						5.4 years
Weighted-average expected life			5.4 years						5.4 years						5.4 years
Expected volatility			21.7% to 25.0%						21.4% to 23.2%						18.7%
Weighted-average volatility			21.8%						21.9%						18.7%
Risk-free interest rate			0.9% to 2.1%						0.3% to 0.5%						1.7%
Weighted-average risk-free interest rate			0.9%						0.3%						1.7%
Dividend yield			2.9% to 3.7%						2.1% to 2.3%						2.8%
Weighted-average dividend yield			2.9%						2.1%						2.8%

The expected life of the stock options is based on historical exercise patterns. The expected volatility is based on implied volatility from publicly traded options on the Company’s stock at the date of grant, historical implied volatility of the Company’s publicly traded options and other factors. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The dividend yield is based on the projected annual dividend payment per share, divided by the stock price at the date of grant.

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Details of the Company’s stock option activities are summarized below:

			Number of Shares (In thousands)						Weighted- Average Exercise Price per Share						Average Remaining Contractual Life						Aggregate Intrinsic Value
Options outstanding as of June 30, 2021			4,020						$	139					6 years						$	179
Granted			669						163
Exercised			317						110
Canceled			174						165
Options outstanding as of June 30, 2022			4,198						$	144					5 years						$	49
Options vested as of June 30, 2022			2,861						$	131					4 years						$	49

The weighted-average fair value per share of each option granted during fiscal years 2022, 2021 and 2020, estimated at the grant date using the Black-Scholes option pricing model, was $22.26, $30.90 and $20.03, respectively. The total intrinsic value of options exercised in fiscal years 2022, 2021 and 2020 was $18, $109 and $145, respectively.

Stock option awards outstanding as of June 30, 2022, have been granted at prices that are equal to the market value of the stock on the date of grant. Stock option grants generally vest over 4 years and expire no later than 10 years after the grant date. The Company recognizes compensation expense on a straight-line basis over the vesting period. As of June 30, 2022, there was $12 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 1 year, subject to forfeiture changes.

Restricted Stock Awards

The fair value of restricted stock awards is estimated on the date of grant based on the market price of the stock and is amortized to compensation expense on a straight-line basis over the related vesting periods, which are generally 3 to 4 years. The total number of restricted stock awards expected to vest is adjusted by actual and estimated forfeitures. Restricted stock awards receive dividend distributions earned during the vesting period upon vesting.

As of June 30, 2022, there was $34 of total unrecognized compensation cost related to non-vested restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of 1 year. The total fair value of the shares that vested in each of the fiscal years 2022, 2021 and 2020 was $20, $15 and $9, respectively. The weighted-average grant-date fair value of awards granted was $157.50, $210.78 and $156.25 per share for fiscal years 2022, 2021 and 2020, respectively.

A summary of the status of the Company’s restricted stock awards is presented below:

			Number of Shares (In thousands)						Weighted-Average Grant Date Fair Value per Share
Restricted stock awards as of June 30, 2021			315						$	178
Granted			261						157
Vested			118						167
Forfeited			46						177
Restricted stock awards as of June 30, 2022			412						$	168

Performance Shares

As of June 30, 2022, there was $13 in unrecognized compensation cost related to non-vested performance shares that is expected to be recognized over a remaining weighted-average performance period of 1 year. The weighted-average grant-date fair value of awards granted was $162.46, $212.00 and $155.54 per share for fiscal years 2022, 2021 and 2020, respectively.

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A summary of the status of the Company’s performance share awards is presented below:

			Number of Shares (In thousands)						Weighted-Average Grant Date Fair Value per Share
Performance share awards as of June 30, 2021			353						$	146
Granted			117						$	162
Distributed			129						$	118
Forfeited			28						$	169
Performance share awards as of June 30, 2022			313						$	162
Performance shares vested and deferred as of June 30, 2022			58						$	110

The non-vested performance shares outstanding as of June 30, 2022 and 2021 were 255,000 and 241,000, respectively, and the weighted average grant date fair value was $173.38 and $172.04 per share, respectively. During fiscal year 2022, 74,000 shares vested. The total fair value of shares vested was $11, $26 and $26 during fiscal years 2022, 2021 and 2020, respectively. Upon vesting, the recipients of the grants receive the distribution as shares or, if previously elected by eligible recipients, as deferred stock. Deferred shares continue to earn dividends, which are also deferred.

Deferred Stock Units for Nonemployee Directors

Nonemployee directors receive annual grants of deferred stock units under the Company’s director compensation program and can elect to receive all or a portion of their annual retainers and fees in the form of deferred stock units. The deferred stock units receive dividend distributions, which are reinvested as deferred stock units, and are recognized at their fair value on the date of grant. Each deferred stock unit represents the right to receive one share of the Company’s common stock following the completion of a director’s service.

During fiscal year 2022, the Company granted 15,000 deferred stock units, reinvested dividends of 5,000 units and distributed 49,000 shares, which had a weighted-average fair value on the grant date of $167.19, $159.37 and $93.60 per share, respectively. As of June 30, 2022, 145,000 units were outstanding, which had a weighted-average fair value on the grant date of $118.99 per share.

The major components of Other (income) expense, net, for the fiscal years ended June 30 were:

			2022						2021						2020
Amortization of trademarks and other intangible assets			$	31					$	31					$	13
Trust investment (gains) losses, net			21						(25)						(3)
Net periodic benefit cost			16						15						10
Foreign exchange transaction (gains) losses, net			3						10						7
Income from equity investees			(6)						(5)						(20)
Interest income			(5)						(5)						(2)
Gain on previously held equity investment (1)			—						(85)						—
Gain on sale-leaseback transaction			(14)						—						—
Indemnity settlement from past acquisition			—						—						(15)
Other			(9)						(8)						—
Total			$	37					$	(72)					$	(10)

(1) Non-recurring, non-cash gain from the remeasurement of the Company’s previously held investment in its Saudi joint venture (see Note 2).

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The provision for income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:

			2022						2021						2020
Current
Federal			$	71					$	146					$	171
State			17						26						32
Foreign			43						41						45
Total current			$	131					$	213					$	248
Deferred
Federal			$	6					$	(26)					$	13
State			(2)						(9)						(5)
Foreign			1						3						(10)
Total deferred			5						(32)						(2)
Total			$	136					$	181					$	246

The components of Earnings before income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:

			2022						2021						2020
United States			$	483					$	696					$	1,041
Foreign			124						204						144
Total			$	607					$	900					$	1,185

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate on operations follows for the fiscal years ended June 30:

			2022						2021						2020
Statutory federal tax rate			21.0		%				21.0		%				21.0		%
State taxes (net of federal tax benefits)			1.9						1.5						1.7
Foreign tax rate differential			3.1						0.2						0.9
Federal excess tax benefits			(0.9)						(2.7)						(2.4)
Net U.S. tax on foreign income			(1.7)						(0.5)						(0.2)
Other differences			(1.0)						0.6						(0.2)
Effective tax rate			22.4		%				20.1		%				20.8		%

Per U.S. GAAP, foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion. None of the undistributed earnings of its foreign subsidiaries were indefinitely reinvested. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable. These withholding taxes had no significant impact on the Company’s consolidated results.

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The components of net deferred tax assets (liabilities) as of June 30 are shown below:

			2022						2021
Deferred tax assets
Compensation and benefit programs			$	100					$	104
Net operating loss and tax credit carryforwards			93						85
Operating and finance lease liabilities			98						100
Accruals and reserves			35						39
Basis difference related to the Venture Agreement			19						19
Inventory costs			25						18
Other			13						15
Subtotal			383						380
Valuation allowance			(52)						(42)
Total deferred tax assets			$	331					$	338
Deferred tax liabilities
Fixed and intangible assets			$	(242)					$	(232)
Lease right-of-use assets			(91)						(94)
Other			(29)						(41)
Total deferred tax liabilities			(362)						(367)
Net deferred tax assets (liabilities)			$	(31)					$	(29)

The Company reviews its deferred tax assets for recoverability on a quarterly basis. A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Valuation allowances have been provided to reduce deferred tax assets to amounts considered recoverable. Details of the valuation allowance were as follows as of June 30:

			2022						2021						2020
Valuation allowance at beginning of year			$	(42)					$	(38)					$	(44)
Net decrease/(increase) for other foreign deferred tax assets			(1)						(1)						1
Net decrease/(increase) for foreign and U.S. net operating loss carryforwards and tax credits			(9)						(3)						5
Valuation allowance at end of year			$	(52)					$	(42)					$	(38)

As of June 30, 2022, the Company had foreign tax credit carryforwards of $27 for U.S. income tax purposes with expiration dates between fiscal years 2025 and 2032. Tax credit carryforwards in U.S. jurisdictions of $2 have expiration dates between fiscal year 2023 and 2032. Tax credit carryforwards in U.S. jurisdictions of $2 can be carried forward indefinitely. Tax credit carryforwards in foreign jurisdictions of $28 can be carried forward indefinitely. Tax benefits from net operating loss carryforwards in U.S. jurisdictions of $3 have expiration dates between fiscal years 2030 and 2041. Tax benefits from net operating loss carryforwards in U.S. jurisdictions of $4 can be carried forward indefinitely. Tax benefits from foreign net operating loss carryforwards of $19 have expiration dates between fiscal years 2023 and 2036. Tax benefits from foreign net operating loss carryforwards of $8 can be carried forward indefinitely.

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, 2015. Various income tax returns in state and foreign jurisdictions are currently in the process of examination.

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of June 30, 2022 and 2021, the total balance of accrued interest and penalties related to uncertain tax positions was $2 and $2, respectively. Interest and penalties related to uncertain tax positions included in income tax expense resulted in a net benefit of $0 in fiscal year 2022, a net benefit of $0 in fiscal year 2021 and a net benefit of $2 in fiscal year 2020.

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The following is a reconciliation of the beginning and ending amounts of the Company’s gross unrecognized tax benefits:

			2022						2021						2020
Unrecognized tax benefits at beginning of year			$	21					$	22					$	31
Gross increases - tax positions in prior periods			—						1						1
Gross decreases - tax positions in prior periods			(7)						(5)						(11)
Gross increases - current period tax positions			4						3						4
Gross decreases - current period tax positions			—						—						—
Lapse of applicable statute of limitations			(1)						—						(1)
Settlements			—						—						(2)
Unrecognized tax benefits at end of year			$	17					$	21					$	22

Included in the balance of unrecognized tax benefits as of June 30, 2022, 2021 and 2020, were potential benefits of $14, $17 and $17, respectively, which if recognized, would affect the effective tax rate. Unrecognized tax benefits are not expected to significantly increase or decrease within the next 12 months.

Retirement Income Plans

The Company has various retirement income plans for eligible domestic and international employees. As of June 30, 2022 and 2021, the domestic retirement income plans were frozen and the benefits of the domestic retirement income plans were generally based on either employee years of service and compensation or a stated dollar amount per year of service.

The Company contributed $15, $14 and $13 to its domestic retirement income plans during fiscal years 2022, 2021 and 2020, respectively. The Company’s funding policy is to contribute amounts sufficient to meet benefit payments and minimum funding requirements as set forth in employee benefit tax laws plus additional amounts as the Company may determine to be appropriate.

The Company has a domestic qualified pension plan (the Plan). The Plan is frozen for all participants. The Plan generally was frozen effective June 30, 2011 for all employees, except for certain collectively bargained employees, whose Plan freeze was effective January 1, 2019. As a result of the Plan freeze, no employees are eligible to commence participation in the Plan or accrue any additional benefits under the Plan.

On May 17, 2022, the Company’s Board of Directors approved a resolution to terminate the Plan. The amendment will allow the settlement of the pension obligation with either a lump sum payout or a purchased annuity. It is expected to take 18 to 24 months to complete the termination from the date of the approved resolution to terminate the Plan.

As of June 30, 2022, the Company reported net unrealized losses of $139, net of tax, in Accumulated other comprehensive net (loss) income on its consolidated balance sheet related to the Plan. These net unrealized losses will be recognized in the Company’s consolidated statement of income as payments are made to settle lump sum elections and to purchase group annuity contracts. Final settlement is dependent on market conditions, which could affect discount rates and returns on plan assets as well as final elections received from plan participants. The completion of the process of offering and accepting lump sum elections are dependent on when certain regulatory approvals are obtained. Currently, there is not enough information available to determine the ultimate charge of the termination.

Retirement Health Care Plans

The Company provides certain health care benefits for employees who meet age, participation and length of service requirements at retirement. The plans pay stated percentages of covered expenses after annual deductibles have been met or stated reimbursements up to a specified dollar subsidy amount. Benefits paid take into consideration payments by Medicare for the domestic plan. The plans are funded as claims are paid, and the Company has the right to modify or terminate certain plans.

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Benefit Obligation and Funded Status

Summarized information for the Company’s retirement income and retirement health care plans as of and for the fiscal years ended June 30 is as follows:

			Retirement Income												Retirement Health Care
			2022						2021						2022						2021
Change in benefit obligations:
Benefit obligation as of beginning of year			$	621					$	628					$	36					$	36
Service cost			1						2						—						—
Interest cost			15						15						1						1
Actuarial loss (gain)			(66)						12						(7)						—
Plan amendments			(7)						—						—						—
Translation and other adjustments			(6)						8						—						1
Plan settlement			(13)						(12)						—						—
Benefits paid			(32)						(32)						(2)						(2)
Benefit obligation as of end of year			$	513					$	621					$	28					$	36
Change in plan assets:
Fair value of assets as of beginning of year			$	506					$	507					$	—					$	—
Actual return on plan assets			(63)						26						—						—
Employer contributions			15						15						2						2
Plan Settlement			(13)						(12)						—						—
Benefits paid			(32)						(32)						(2)						(2)
Translation and other adjustments			(1)						2						—						—
Fair value of plan assets as of end of year			412						506						—						—
Accrued benefit cost, net funded status			$	(101)					$	(115)					$	(28)					$	(36)

Amount recognized in the balance sheets consists of:
Pension benefit assets			$	30					$	61					$	—					$	—
Current accrued benefit liability			(12)						(12)						(2)						(2)
Non-current accrued benefit liability			(119)						(164)						(26)						(34)
Accrued benefit cost, net			$	(101)					$	(115)					$	(28)					$	(36)

For the retirement income plans, the benefit obligation is the projected benefit obligation (PBO). For the retirement health care plan, the benefit obligation is the accumulated benefit obligation (ABO).

The ABO for all retirement income plans was $512, $618 and $626 as of June 30, 2022, 2021 and 2020, respectively.

Retirement income plans with ABO or PBO in excess of plan assets as of June 30 were as follows:

			ABO Exceeds the Fair Value of Plan Assets									PBO Exceeds the Fair Value of Plan Assets
			2022						2021			2022			2021
Projected benefit obligation			$	133					$	176		$	133		$	178
Accumulated benefit obligation			132						174			132			175
Fair value of plan assets			2						—			2			2

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Net Periodic Benefit Cost

The net cost of the retirement income and health care plans for the fiscal years ended June 30 included the following components:

			Retirement Income																		Retirement Health Care
			2022						2021						2020						2022						2021						2020
Service cost			$	1					$	2					$	1					$	—					$	—					$	—
Interest cost			15						15						20						1						1						1
Expected return on plan assets			(15)						(16)						(19)						—						—						—
Settlement loss recognized			7						5						—						—						—						—
Amortization of unrecognized items			9						11						10						(1)						(2)						(3)
Total			$	17					$	17					$	12					$	—					$	(1)					$	(2)

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

Items not yet recognized as a component of postretirement expense as of June 30, 2022, consisted of:

			Retirement Income						Retirement Health Care
Net actuarial loss (gain)			$	222					$	(15)
Prior service benefit			(7)						—
Net deferred income tax (assets) liabilities			(51)						3
Accumulated other comprehensive loss (income)			$	164					$	(12)

Net actuarial loss (gain) recorded in Accumulated other comprehensive net (loss) income for the fiscal year ended June 30, 2022, included the following:

			Retirement Income						Retirement Health Care
Net actuarial loss (gain) as of beginning of year			$	226					$	(10)
Amortization during the year			(16)						1
Loss (gain) during the year			12						(6)
Net actuarial loss (gain) as of end of year			$	222					$	(15)

The Company uses the straight-line amortization method for unrecognized prior service costs and benefits.

Assumptions

Weighted-average assumptions used to estimate the actuarial present value of benefit obligations were as follows as of June 30:

			Retirement Income												Retirement Health Care
			2022						2021						2022						2021
Discount rate			3.72		%				2.56		%				4.65		%				2.61		%
Rate of compensation increase			3.09		%				3.02		%				n/a						n/a
Interest crediting rate			2.69		%				2.57		%				n/a						n/a

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Weighted-average assumptions used to estimate the retirement income and retirement health care costs were as follows as of June 30:

			Retirement Income
			2022						2021						2020
Discount rate			2.56		%				2.45		%				3.41		%
Rate of compensation increase			3.02		%				2.92		%				2.86		%
Expected return on plan assets			3.00		%				3.08		%				3.95		%
Interest crediting rate			2.57		%				1.92		%				3.01		%
			Retirement Health Care
			2022						2021						2020
Discount rate			2.61		%				2.51		%				3.35		%

The expected long-term rate of return assumption is based on prospective returns according to the fund’s current target asset allocation.

The actuarial benefit obligation gain incurred during fiscal year 2022 was primarily driven by increases in the discount rates for the retirement plans, partially offset by the domestic qualified plan reflecting plan termination lump sum window and annuity buyout assumptions. The actuarial benefit obligation loss during fiscal year 2021 was primarily driven by the increase in assumed interest crediting rate, partially offset by asset gains and increase in the discount rate.

Expected Benefit Payments

Expected benefit payments for the Company’s retirement income and retirement health care plans as of June 30, 2022, were as follows:

			Retirement Income						Retirement Health Care
2023			$	46					$	2
2024			356						2
2025			14						2
2026			14						2
2027			13						2
Fiscal years 2028 through 2032			59						11

Expected benefit payments are based on the same assumptions used to measure the benefit obligations and include estimated future employee service.

Plan Assets

The target allocations and weighted average asset allocations by asset category of the investment portfolio for the Company’s domestic retirement income plans as of June 30 were:

			% Target Allocation												% of Plan Assets
			2022						2021						2022						2021
U.S. equity			—		%				3		%				—		%				3		%
International equity			—		%				2		%				—		%				2		%
Fixed income			100		%				95		%				99		%				94		%
Other			—		%				—		%				1		%				1		%
Total			100		%				100		%				100		%				100		%

The target asset allocation is determined based on the optimal balance between risk and return and, at times, may be adjusted to achieve the plan’s overall investment objective to generate sufficient resources to pay current and projected plan obligations over the life of the domestic retirement income plan.

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The following table sets forth the retirement income plans’ assets carried at fair value as of June 30:

						2022			2021
Common collective trusts measured at net asset value
Bond funds						$	391		$	459
International equity funds						14			28
Domestic equity funds						—			14
Short-term investment fund						4			3
Real estate fund						3			2
Total assets at fair value						$	412		$	506

Common collective trust funds are not publicly traded and were valued at a net asset value unit price determined by the portfolio’s sponsor based on the fair value of underlying assets held by the common collective trust fund on June 30, 2022 and 2021.

The common collective trusts are invested in various trusts that attempt to achieve their investment objectives by investing primarily in other collective investment funds that have characteristics consistent with each trust’s overall investment objective and strategy.

Defined Contribution Plans

The Company has various defined contribution plans for eligible domestic and international employees. The aggregate cost of the domestic defined contribution plans was $58, $65 and $54 in fiscal years 2022, 2021 and 2020, respectively. The aggregate cost of the international defined contribution plans was $6, $4 and $4 for the fiscal years ended June 30, 2022, 2021 and 2020, respectively.

The Company operates through SBUs that are also the Company’s operating segments. These SBUs are then aggregated into four reportable segments: Health and Wellness, Household, Lifestyle and International. These four reportable segments consist of the following:

•Health and Wellness consists of cleaning products, professional products and vitamins, minerals and supplements mainly marketed and sold in the U.S.

•Household consists of bags and wraps, grilling products and cat litter marketed and sold in the U.S.

•Lifestyle consists of food, natural personal care products and water-filtration products marketed and sold in the U.S.

•International consists of products sold outside the U.S. Products within this segment include laundry additives; home care products; water-filtration products; digestive health products; grilling products; cat litter; food; bags and wraps; natural personal care products; and professional cleaning and disinfecting products.

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

			Fiscal Year						Health and Wellness (1)						Household						Lifestyle						International (2)						Corporate (3)						Total Company
Net sales			2022						$	2,690					$	1,984					$	1,253					$	1,180					$	—					$	7,107
			2021						2,980						1,981						1,218						1,162						—						7,341
			2020						2,749						1,795						1,154						1,023						—						6,721
Earnings (losses) before income taxes			2022						300						234						280						97						(304)						607
			2021						305						375						320						201						(301)						900
			2020						766						347						320						116						(364)						1,185
Income from equity investees included in Other (income) expense, net			2022						—						—						—						6						—						6
			2021						—						—						—						5						—						5
			2020						—						—						—						20						—						20
Total assets			2022						1,999						1,045						1,035						1,453						626						6,158
			2021						2,043						912						1,011						1,489						879						6,334
Capital expenditures			2022						72						112						24						27						16						251
			2021						135						108						29						42						17						331
			2020						72						94						46						20						22						254
Depreciation and amortization			2022						75						67						24						47						11						224
			2021						67						67						23						45						9						211
			2020						64						65						22						22						7						180
Significant non-cash charges included in earnings (losses) before income taxes:
Stock-based compensation			2022						17						8						6						3						18						52
			2021						19						10						7						2						12						50
			2020						13						9						6						1						21						50

(1) Fiscal year 2021 earnings (losses) before income taxes for the Health and Wellness segment included impairment charges of $343, of which $228, $93, and $22 related to goodwill, certain indefinite-lived trademarks and other assets, respectively.

(2) Fiscal year 2021 earnings (losses) before income taxes for the International segment included an $85 non-cash gain from the remeasurement of the Company’s previously held investment in its Saudi joint venture.

(3) Fiscal year 2022 earnings (losses) before income taxes for the Corporate segment included expenses related to the Company's digital capabilities and productivity enhancements investment.

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, Walmart Stores, Inc. and its affiliates, were 25% of consolidated net sales for each of the fiscal years ended June 30, 2022, 2021 and 2020, and occurred across all of the Company’s reportable segments. No other customers accounted for 10% or more of the Company’s consolidated net sales in any of these fiscal years.

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The following table provides Net sales as a percentage of the Company’s consolidated net sales, disaggregated by SBU, for the fiscal years ended June 30:

						2022						2021						2020
Cleaning						29		%				30		%				30		%
Professional Products						4		%				7		%				7		%
Vitamins, Minerals and Supplements						4		%				4		%				4		%
Health and Wellness						37		%				41		%				41		%
Bags and Wraps						12		%				11		%				12		%
Grilling						8		%				9		%				8		%
Cat Litter						8		%				7		%				7		%
Household						28		%				27		%				27		%
Food						10		%				9		%				9		%
Natural Personal Care						4		%				4		%				4		%
Water Filtration						4		%				3		%				4		%
Lifestyle						18		%				16		%				17		%
International						17		%				16		%				15		%
Total						100		%				100		%				100		%

The Company’s products are marketed and sold globally. The following table provides the Company’s global product lines, which were sold in the U.S. and International, that accounted for 10% or more of consolidated net sales for the fiscal years ended June 30:

			2022						2021						2020
Cleaning products			42		%				43		%				43		%
Bags and wraps			16		%				14		%				15		%
Food products			11		%				10		%				10		%

Net sales and property, plant and equipment, net, by geographic area for and as of the fiscal years ended June 30 were as follows:

			Fiscal Year						United States						Foreign						Total Company
Net sales			2022						$	5,951					$	1,156					$	7,107
			2021						6,207						1,134						7,341
			2020						5,725						996						6,721
Property, plant and equipment, net			2022						1,180						154						1,334
			2021						1,143						159						1,302

The Company holds various equity investments with ownership percentages of up to 50% in a number of consumer products businesses, which operate both within and outside the United States. The equity investments, presented in Other assets and accounted for under the equity method, were $52 and $55 as of the fiscal years ended June 30, 2022 and 2021, respectively. The Company has no ongoing capital commitments, loan requirements, guarantees or any other types of arrangements under the terms of its agreements that would require any future cash contributions or disbursements arising out of an equity investment.

Transactions with the Company’s equity investees typically represent payments for contract manufacturing and purchases of raw materials. Payments to related parties, including equity investees, for such transactions during the fiscal years ended June 30, 2022, 2021 and 2020 were $117, $44 and $55, respectively. Receipts from and ending accounts receivable and payable balances related to the Company’s related parties were not significant during or as of the end of each of the fiscal years presented.

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