Company: CLX
Filing Date: 2025-08-08
Form Type: 10-K
Source: 0000021076-25-000039
Chunk: 43

Company: CLOROX CO /DE/
Filing Date: 2025-08-08
Form: 10-K
Item: Item 1A
Chunk 43
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 in the Company’s Glad business increase the value of the Company’s obligation to purchase P&G’s interest in the Glad business upon the termination of the venture agreement and may, in the future, adversely affect the Company’s net earnings and cash flow.

In January 2003, the Company entered into a venture agreement with P&G related to the Company’s Glad bags and wraps business. In connection with this agreement, P&G provides research and development support to the Glad business. In February 2025, Clorox announced that Clorox and P&G jointly decided to wind down the venture, and the agreement with P&G will expire on January 31, 2026. The agreement requires the Company to purchase P&G’s 20% interest at the expiration of its term for cash at fair value as established by predetermined valuation procedures. Following termination, the Glad business will retain the exclusive core intellectual property licenses contributed by P&G at the inception of the venture, on a royalty-free basis for the licensed products marketed. As of June 30, 2025, the estimated fair value of P&G’s interest was $476 million, of which $501 million has been recognized by the Company and is reflected in Accounts payable and accrued liabilities as it is reasonably expected to be settled within one year. As of June 30, 2024 and 2023, the estimated fair value of P&G’s interest was $531 million and $527 million, respectively, of which $510 million and $495 million, respectively, has been recognized by the Company and is reflected in Other liabilities in the Company’s Consolidated Balance Sheets. The difference between the 

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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. As the agreement nears its expiration, there may be increased volatility in the Company’s net earnings and cash flow, as the estimated fair value of P&G’s interest may continue to change, up until any such purchase by the Company of P&G’s interest. The key assumptions and estimates used to arrive at the estimated fair value include, but are not limited to, tax rates, the rate at which future cash flows are discounted (discount rate), commodity prices, future volume estimates, net sales and expense growth rates, changes in working capital, capital expenditures, foreign exchange rates, inflation and terminal growth rates. Any