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EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Jun. 30, 2016
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] |
EMPLOYEE BENEFIT PLANS | NOTE 19. EMPLOYEE BENEFIT PLANS Retirement Income Plans Effective July 1, 2011, and as part of a set of long-term, cost-neutral enhancements to the Company’s overall employee benefit plans, the domestic qualified retirement income pension plan was frozen for service accrual and eligibility purposes for most participants, however, interest credits have continued to accrue on participant balances. As of June 30, 2016 and 2015, the benefits of the domestic pension plan are based on either employee years of service and compensation or a stated dollar amount per year of service. The Company is the sole contributor to the plan in amounts deemed necessary to provide benefits and to the extent deductible for federal income tax purposes. Assets of the plan consist primarily of investments in cash equivalents and common collective trusts. The Company contributed $15 to its domestic qualified pension plan during fiscal year 2016. No contributions were made in fiscal year 2015 and 2014. The Company’s funding policy for its qualified plans is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit tax laws plus additional amounts as the Company may determine to be appropriate. Subsequent to June 30, 2016, the Company made a $15 discretionary contribution to the pension plan. Contributions made to the domestic non-qualified pension plans were $16, $13 and $13 in fiscal years 2016, 2015 and 2014, respectively. 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. The assumed domestic health care cost trend rate used in measuring the accumulated benefit obligation (ABO) was 6.75% for both medical and prescription drugs for fiscal year 2016. These rates have been assumed to gradually decrease each year until an assumed ultimate trend of 4.5% is reached in 2037. The health care cost trend rate assumption has a minimal effect on the amounts reported due primarily to the existence of benefit cap provisions in the Company’s domestic plan. As such, the effect of a hypothetical 100 basis point increase or decrease in the assumed domestic health care cost trend rate on the total service and interest cost components as well as the postretirement benefit obligation would have been immaterial for each of the fiscal years ended June 30, 2016, 2015 and 2014. Financial Information Related to Retirement Income and Retirement Health Care 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
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Change in benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation as of beginning of year |  | $ | 639 |  |  | $ | 641 |  |  | $ | 45 |  |  | $ | 49 |
Service cost |  |  | 1 |  |  |  | 2 |  |  |  | - |  |  |  | - |
Interest cost |  |  | 26 |  |  |  | 25 |  |  |  | 2 |  |  |  | 2 |
Actuarial loss (gain) |  |  | 51 |  |  |  | 14 |  |  |  | 2 |  |  |  | - |
Plan amendments |  |  | (1 | ) |  |  | - |  |  |  | - |  |  |  | (1 | )
Translation and other adjustments |  |  | (1 | ) |  |  | (5 | ) |  |  | - |  |  |  | (2 | )
Benefits paid |  |  | (42 | ) |  |  | (38 | ) |  |  | (2 | ) |  |  | (3 | )
Projected benefit obligation as of end of year |  |  | 673 |  |  |  | 639 |  |  |  | 47 |  |  |  | 45 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of assets as of beginning of year |  | $ | 409 |  |  | $ | 432 |  |  | $ | - |  |  | $ | - |
Actual return on plan assets |  |  | 26 |  |  |  | 6 |  |  |  | - |  |  |  | - |
Employer contributions |  |  | 31 |  |  |  | 13 |  |  |  | 2 |  |  |  | 3 |
Benefits paid |  |  | (42 | ) |  |  | (38 | ) |  |  | (2 | ) |  |  | (3 | )
Translation and other adjustments |  |  | (1 | ) |  |  | (4 | ) |  |  | - |  |  |  | - |
Fair value of plan assets as of end of year |  |  | 423 |  |  |  | 409 |  |  |  | - |  |  |  | - |
Accrued benefit cost, net funded status |  | $ | (250 | ) |  | $ | (230 | ) |  | $ | (47 | ) |  | $ | (45 | )
Amount recognized in the balance sheets consists of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pension benefit assets |  | $ | 1 |  |  | $ | 2 |  |  | $ | - |  |  | $ | - |
Current accrued benefit liability |  |  | (14 | ) |  |  | (16 | ) |  |  | (3 | ) |  |  | (3 | )
Non-current accrued benefit liability |  |  | (237 | ) |  |  | (216 | ) |  |  | (44 | ) |  |  | (42 | )
Accrued benefit cost, net |  | $ | (250 | ) |  | $ | (230 | ) |  | $ | (47 | ) |  | $ | (45 | )
Retirement income plans with ABO in excess of plan assets as of June 30 were as follows:
|  | Pension Plans |  | Other Retirement Plans
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Projected benefit obligation |  | $ | 575 |  | $ | 538 |  | $ | 76 |  | $ | 80
Accumulated benefit obligation |  |  | 574 |  |  | 538 |  |  | 76 |  |  | 80
Fair value of plan assets |  |  | 399 |  |  | 385 |  |  | - |  |  | -
The ABO for all pension plans was $596, $559 and $563 as of June 30, 2016, 2015 and 2014, respectively. The net costs of the retirement income and health care plans for the fiscal years ended June 30 included the following components:
| Retirement Income |  | Retirement Health Care
| 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Service cost | $ | 1 |  |  | $ | 2 |  |  | $ | 3 |  |  | $ | - |  |  | $ | - |  | $ | 1 |
Interest cost |  | 26 |  |  |  | 25 |  |  |  | 27 |  |  |  | 2 |  |  |  | 2 |  |  | 2 |
Expected return on plan assets |  | (17 | ) |  |  | (20 | ) |  |  | (25 | ) |  |  | - |  |  |  | - |  |  | - |
Amortization of unrecognized items |  | 10 |  |  |  | 12 |  |  |  | 11 |  |  |  | (3 | ) |  |  | 2 |  |  | (4 | )
Total | $ | 20 |  |  | $ | 19 |  |  | $ | 16 |  |  | $ | (1 | ) |  | $ | 4 |  | $ | (1 | )
Items not yet recognized as a component of postretirement expense as of June 30, 2016, consisted of:
| Retirement Income |  | Retirement Health Care
Net actuarial loss (gain) | $ | 296 |  |  | $ | (13 | )
Prior service benefit |  | - |  |  |  | (6 | )
Net deferred income tax (assets) liabilities |  | (111 | ) |  |  | 7 |
Accumulated other comprehensive loss (income) | $ | 185 |  |  | $ | (12 | )
Net actuarial loss (gain) recorded in Accumulated other comprehensive net (losses) income for the fiscal year ended June 30, 2016, included the following:
|  | Retirement Income |  | Retirement Health Care
Net actuarial loss (gain) as of beginning of year |  | $ | 264 |  |  | $ | (17 | )
Amortization during the year |  |  | (10 | ) |  |  | 2 |
Loss (gain) during the year |  |  | 42 |  |  |  | 2 |
Net actuarial loss (gain) as of end of year |  | $ | 296 |  |  | $ | (13 | )
The Company uses the straight-line amortization method for unrecognized prior service costs and benefits. In fiscal year 2017, the Company expects to recognize, on a pre-tax basis, $11 of the net actuarial loss as a component of net periodic benefit cost for the Pension Plans. In addition, in fiscal year 2017, the Company expects to recognize, on a pre-tax basis, $1 of the net actuarial gain as a component of net periodic benefit cost for the retirement health care plans. Weighted-average assumptions used to estimate the actuarial present value of benefit obligations as of June 30 were as follows:
|  | Retirement Income |  | Retirement Health Care
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Discount rate |  | 3.42 | % |  | 4.20 | % |  | 3.42 | % |  | 4.16 | %
Rate of compensation increase |  | 2.92 | % |  | 3.37 | % |  | n/a |  |  | n/a |
Weighted-average assumptions used to estimate the net periodic pension and other postretirement benefit costs as of June 30 were as follows:
|  | Retirement Income
|  | 2016 |  | 2015 |  | 2014
Discount rate |  | 4.20 | % |  | 4.05 | % |  | 4.39 | %
Rate of compensation increase |  | 3.37 | % |  | 4.46 | % |  | 3.44 | %
Expected return on plan assets |  | 4.34 | % |  | 5.28 | % |  | 6.61 | %
|  | Retirement Health Care
|  | 2016 |  | 2015 |  | 2014
Discount rate |  | 4.16 | % |  | 4.00 | % |  | 4.33 | %
The expected long-term rate of return assumption is based on an analysis of historical experience of the portfolio and the summation of prospective returns for each asset class in proportion to the fund’s current asset allocation. Expected benefit payments for the Company’s pension and other postretirement plans as of June 30, 2016, were as follows:
| Retirement Income |  | Retirement Health Care
2017 | $ | 39 |  | $ | 3
2018 |  | 52 |  |  | 3
2019 |  | 39 |  |  | 3
2020 |  | 39 |  |  | 2
2021 |  | 39 |  |  | 2
Fiscal years 2022 through 2026 |  | 193 |  |  | 12
Expected benefit payments are based on the same assumptions used to measure the benefit obligations and include estimated future employee service. 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
| 2016 |  | 2015 |  | 2016 |  | 2015
U.S. equity | 11 | % |  | 11 | % |  | 11 | % |  | 11 | %
International equity | 12 |  |  | 12 |  |  | 11 |  |  | 12 |
Fixed income | 74 |  |  | 74 |  |  | 74 |  |  | 74 |
Other | 3 |  |  | 3 |  |  | 4 |  |  | 3 |
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 qualified retirement income plan. The following table sets forth by level within the fair value hierarchy, the retirement income plans’ assets carried at fair value as of June 30:
|  | 2016
|  | Level 1 |  | Level 2 |  | Total
Cash equivalents |  | $ | 2 |  | $ | - |  | $ | 2
Common collective trusts |  |  |  |  |  |  |  |  |
Bond funds |  |  | - |  |  | 307 |  |  | 307
International equity funds |  |  | - |  |  | 56 |  |  | 56
Domestic equity funds |  |  | - |  |  | 44 |  |  | 44
Real estate fund |  |  | - |  |  | 14 |  |  | 14
Total common collective trusts |  |  | - |  |  | 421 |  |  | 421
Total assets at fair value |  | $ | 2 |  | $ | 421 |  | $ | 423
|  | 2015
|  | Level 1 |  | Level 2 |  | Total
Cash equivalents |  | $ | 3 |  | $ | - |  | $ | 3
Common collective trusts |  |  |  |  |  |  |  |  |
Bond funds |  |  | - |  |  | 295 |  |  | 295
International equity funds |  |  | - |  |  | 59 |  |  | 59
Domestic equity funds |  |  | - |  |  | 41 |  |  | 41
Real estate fund |  |  | - |  |  | 11 |  |  | 11
Total common collective trusts |  |  | - |  |  | 406 |  |  | 406
Total assets at fair value |  | $ | 3 |  | $ | 406 |  | $ | 409
The carrying value of cash equivalents approximates its fair value as of June 30, 2016 and 2015. Common collective trust funds are not publicly traded and, therefore, are classified as Level 2. They are 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, 2016 and 2015. The common collective trusts are invested in various trusts that attempt to achieve their investment objectives by investing primarily in other collective investment funds which have characteristics consistent with each trust’s overall investment objective and strategy. Defined Contribution Plans The Company has defined contribution plans for most of its domestic employees. The plans include The Clorox Company 401(k) Plan, The Clorox Company 2011 Nonqualified Defined Contribution Plan and the Executive Retirement Plan. The aggregate cost of the domestic defined contribution plans was $45, $45 and $43 in fiscal years 2016, 2015 and 2014, respectively. Included in the aggregate cost was the cost of The Clorox Company 401(k) Plan of $41, $42 and $38 in fiscal years 2016, 2015 and 2014, respectively. The Company also has defined contribution plans for certain international employees. The aggregate cost of these foreign plans was $3 for the fiscal years ended June 30, 2016, 2015 and 2014.

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