Employee Benefit Plans

12 Months Ended

Jun. 30, 2011

Employee Benefit Plans

Employee Benefit Plans

NOTE 20. EMPLOYEE BENEFIT PLANS

Retirement Income Plans

The Company has qualified and nonqualified defined benefit plans that cover substantially all domestic employees and certain international employees. As of June 30, 2011, the benefits of the domestic qualified plan are based on either employee years of service and compensation or a stated dollar amount per years of service. 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 plan was frozen for service accrual and eligibility purposes, however, interest credits will continue to accrue on participant balances. The Company is the sole contributor to the plans in amounts deemed necessary to provide benefits and to the extent deductible for federal income tax purposes. Assets of the plans consist primarily of investments in cash equivalents, mutual funds and common collective trusts.

The Company made contributions of $15, $43, and $30 to its domestic qualified retirement income plan in fiscal years 2011, 2010 and 2009, respectively. Contributions made to the domestic non-qualified retirement income plans were $8, $8 and $7 in fiscal years 2011, 2010 and 2009, respectively. The Company has also contributed $1, $2, and $1 to its foreign retirement income plans for fiscal years 2011, 2010 and 2009, respectively. The Company's funding policy 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.

Retirement Health Care

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. 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 of these plans.

The assumed domestic health care cost trend rate used in measuring the accumulated post-retirement benefit obligation (APBO) was 8.1% for medical and 9.2% for prescription drugs for fiscal year 2011. These rates have been assumed to gradually decrease each year until an assumed ultimate trend of 4.5% is reached in 2028. The healthcare cost trend rate assumption has an effect on the amounts reported. The effect of a 100 basis point increase or decrease in the assumed domestic healthcare cost trend rate on the total service and interest cost components, and the postretirement benefit obligation was less than $1, respectively, for all three years ended June 30, 2011, 2010 and 2009.

Summarized information for the Company's retirement income and healthcare plans at and for the fiscal years ended June 30 is as follows:

	Retirement Income						Retirement Health Care
	2011			2010			2011			2010
Change in benefit obligations:
Projected benefit obligation at beginning of year	$	560		$	468		$	78		$	70
Service cost		12			9			2			2
Interest cost		29			30			4			4
Employee contributions to deferred compensation plans		7			6			-			-
Actuarial (gain) loss		(12	)		80			(23	)		4
Plan amendments		-			-			(2	)		-
Curtailment (gain) loss		(1	)		-			-			-
Translation adjustment		3			-			-			-
Benefits paid		(32	)		(33	)		(1	)		(2	)
Projected benefit obligation at end of year		566			560			58			78
Change in plan assets:
Fair value of assets at beginning of year		335			275			-			-
Actual return on plan assets		80			39			-			-
Employer contributions to qualified and nonqualified plans		24			53			1			2
Translation adjustment		3			1			-			-
Benefits paid		(32	)		(33	)		(1	)		(2	)
Fair value of plan assets at end of year		410			335			-			-
Funded status (plan assets less than benefit obligation)		(156	)		(225	)		(58	)		(78	)
Accrued benefit cost, net	$	(156	)	$	(225	)	$	(58	)	$	(78	)
Amount recognized in the balance sheets consists of:
Pension benefit assets	$	1		$	1		$	-		$	-
Current accrued benefit liability		(11	)		(10	)		(5	)		(5	)
Non-current accrued benefit liability		(146	)		(216	)		(53	)		(73	)
Accrued benefit cost, net	$	(156	)	$	(225	)	$	(58	)	$	(78	)

Information for retirement income plans with an accumulated benefit obligation (ABO) in excess of plan assets at June 30 follows:

	Pension Plans				Other Retirement Plans
	2011		2010		2011		2010
Projected benefit obligation	$	473	$	478	$	71	$	64
Accumulated benefit obligation		469		472		71		64
Fair value of plan assets		388		317		-		-

The ABO for all pension plans was $490, $490 and $398, respectively, at June 30, 2011, 2010 and 2009. The ABO for all retirement income plans increased by $7 in fiscal year 2011. The Company uses a June 30 measurement date.

The net costs of the retirement income and healthcare plans for the fiscal years ended June 30 include the following components:

	Retirement Income									Retirement Health Care
	2011			2010			2009			2011			2010			2009
Service cost	$	12		$	9		$	10		$	2		$	2		$	2
Interest cost		29			30			29			4			4			4
Expected return on plan assets		(33	)		(31	)		(28	)		-			-			-
Curtailment (gain) loss		(1	)		-			-			-			-			-
Amortization of unrecognized items		17			9			6			(2	)		(2	)		(2	)
Total	$	24		$	17		$	17		$	4		$	4		$	4

Items not yet recognized as a component of post retirement expense as of June 30, 2011, consisted of:

	Retirement Income			Retirement Health Care
Net actuarial loss (gain)	$	186		$	(28	)
Prior service cost (benefit)		1			(3	)
Net deferred income tax (assets) liabilities		(71	)		12
Accumulated other comprehensive loss (income)	$	116		$	(19	)

Net actuarial loss (gain) and prior service cost (benefit) activity recorded in accumulated other comprehensive loss (income) for the fiscal year ended June 30, 2011, included the following:

	Retirement Income			Retirement Health Care
Net actuarial loss (gain) at beginning of year	$	267		$	(4	)
Amortization during the year		(17	)		-
Gain during the year		(64	)		(24	)
Net actuarial loss (gain) at end of year	$	186		$	(28	)

The Company uses the straight line amortization method for unrecognized prior service cost (benefit). In fiscal year 2012, the Company expects to recognize, on a pretax basis, approximately $1 of the prior service cost and $8 of the net actuarial loss and approximately $1 of the prior service benefit and $2 of the net actuarial gain, as a component of net periodic benefit cost for the retirement income and retirement health care plans respectively.

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

	Retirement Income				Retirement Health Care
	2011		2010		2011	2010
Discount rate	5.31	%	5.34	%	5.29%	5.36%
Rate of compensation increase	3.93	%	4.20	%	n/a	n/a

Weighted-average assumptions used to estimate the net periodic pension and other postretirement benefit costs for the fiscal years ended June 30 are as follows:

	Retirement Income
	2011	2010	2009
Discount rate	5.34%	6.81%	6.75%
Rate of compensation increase	4.20%	4.22%	4.19%
Expected return on plan assets	8.11%	8.11%	8.11%
	Retirement Health Care
	2011	2010	2009
Discount rate	5.36%	6.80%	6.69%

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 are as follows:

	Retirement Income		Retirement Health Care
2012	$	32	$	5
2013		32		6
2014		33		5
2015		33		5
2016		33		4
Fiscal years 2017 — 2021		184		20

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 of the investment portfolio for the Company's domestic retirement income plans at June 30 are:

			% of Plan Assets
	% Target		at June 30
	Allocation		2011		2010
Asset Category
U.S. equity	50	%	50	%	48	%
International equity	20		19		19
Fixed income	25		25		27
Other	5		6		6
Total	100	%	100	%	100	%

The target asset allocation was determined based on the risk tolerance characteristics established for the plans and, at times, may be adjusted to achieve the plans' overall investment objective and to minimize any concentration of investment risk. The Company's objective is to invest plan assets in a manner that will generate 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:

	2011
	Level 1		Level 2		Total
Cash equivalents	$	3	$	-	$	3
Mutual funds
Growth and/or value equity index funds		152		-		152
Bond fund		48		-		48
Emerging Market fund		19		-		19
Real Estate fund		19		-		19
Total mutual funds		238		-		238
Common/collective trusts
Growth and/or value equity index funds		-		107		107
Bond funds		-		62		62
Total common/collective trusts		-		169		169
Total assets at fair value	$	241	$	169	$	410
	2010
	Level 1		Level 2		Total
Cash equivalents	$	1	$	-	$	1
Mutual funds
Growth and/or value equity index funds		120		-		120
Bond fund		44		-		44
Emerging Market fund		15		-		15
Real Estate fund		17		-		17
Total mutual funds		196		-		196
Common/collective trusts
Growth and/or value equity index funds		-		83		83
Bond funds		-		55		55
Total common/collective trusts		-		138		138
Total assets at fair value	$	197	$	138	$	335

The carrying value of cash equivalents approximates their fair values at June 30, 2011.

Mutual funds are valued at quoted market prices, which represent the net asset values of shares held by the plans at June 30, 2011.

Common/collective trust funds 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, 2011.

The Common/collective trust funds are invested in the various funds sponsored by State Street Bank and Trust Company. The funds may attempt to achieve their investment objectives by investing primarily in other collective investment funds managed by the trustee which have characteristics consistent with the funds' overall investment objectives.

Defined Contribution Plans

The Company has defined contribution plans for most of its domestic employees. The plans include The Clorox Company 401(k) Plan, which, as of June 30, 2011, had a 401(k) component and a profit sharing component. Employee contributions made to the 401(k) component are partially matched with Company contributions. As of June 30, 2011, Company contributions to the profit sharing component above 3% of employee eligible earnings were discretionary and were based on certain Company performance targets for eligible employees. Effective July 1, 2011, The Clorox Company 401(k) Plan was amended to enhance the matching of employee contributions and also to provide for a fixed and non-discretionary annual contribution in place of the profit sharing component. The aggregate cost of the defined contribution plans was $21, $33, and $24 in fiscal years 2011, 2010 and 2009, respectively, including $17, $29, and $19, respectively, of profit sharing contributions. The Company also has defined contribution plans for certain of its international employees. The aggregate cost of these foreign plans was $1, $3 and $2 in fiscal years 2011, 2010 and 2009, respectively.