NOTE 10. SEGMENT RESULTS

The Company operates through strategic business units that are aggregated into four reportable segments: Cleaning, Household, Lifestyle and International.

Cleaning consists of laundry, home care and professional products marketed and sold in the United States. Products within this segment include laundry additives, including bleach products under the Clorox^® brand and Clorox 2^® stain fighter and color booster; home care products, primarily under the Clorox^®, Formula 409^®, Liquid-Plumr^®, Pine-Sol^®, S.O.S^® and Tilex^® brands; naturally derived products under the Green Works^® brand; and professional cleaning and disinfecting products under the Clorox^®, Dispatch^®, Aplicare^®, HealthLink^® and Clorox Healthcare^TM brands.
Household consists of charcoal, cat litter and plastic bags, wraps and container products marketed and sold in the United States. Products within this segment include plastic bags, wraps and containers under the Glad^® brand; cat litter products under the Fresh Step^®, Scoop Away^® and Ever Clean^® brands; and charcoal products under the Kingsford^® and Match Light^® brands.
Lifestyle consists of food products, water-filtration systems and filters, and natural personal care products marketed and sold in the United States. Products within this segment include dressings and sauces, primarily under the Hidden Valley^®, KC Masterpiece^® and Soy Vay^® brands; water-filtration systems and filters under the Brita^® brand; and natural personal care products under the Burt's Bees^® and güd^® brands.
International consists of products sold outside the United States. Products within this segment include laundry, home care, water-filtration, charcoal and cat litter products, dressings and sauces, plastic bags, wraps and containers and natural personal care products, primarily under the Clorox^®, Javex^®, Glad^®, PinoLuz^®, Ayudin^®, Limpido^®, Clorinda^®, Poett^®, Mistolin^®, Lestoil^®, Bon Bril^®, Nevex^®, Brita^®, Green Works^®, Pine-Sol^®, Agua Jane^®, Chux^®, Kingsford^®, Fresh Step^®, Scoop Away^®, Ever Clean^®, KC Masterpiece^®, Hidden Valley^® and Burt's Bees^® brands.

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, property and equipment, other investments and deferred taxes.

The table below presents reportable segment information and a reconciliation of the segment information to the Company's consolidated net sales and earnings from continuing operations before income taxes, with amounts that are not allocated to the reportable segments reflected in Corporate.

	Net sales
	Three Months Ended						Nine Months Ended
	3/31/2014			3/31/2013			3/31/2014			3/31/2013
Cleaning	$	437		$	454		$	1,348		$	1,351
Household		428			413			1,152			1,125
Lifestyle		237			245			692			690
International		284			301			888			910
Total	$	1,386		$	1,413		$	4,080		$	4,076

	Earnings (losses) from continuing operations before income taxes
	Three Months Ended						Nine Months Ended
	3/31/2014			3/31/2013			3/31/2014			3/31/2013
Cleaning	$	93		$	99		$	325		$	319
Household		76			76			169			182
Lifestyle		67			71			189			197
International		11			20			69			73
Corporate		(33	)		(64	)		(149	)		(187	)
Total	$	214		$	202		$	603		$	584

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, Wal-Mart Stores, Inc. and its affiliates, as a percentage of consolidated net sales, were 27% and 26% for the three and nine months ended March 31, 2014, respectively, and 27% and 26% for the three and nine months ended March 31, 2013, respectively.

Venezuela

Net sales from the Company's Venezuela subsidiary (the Venezuela business) represented approximately 1% and 2% of the Company's consolidated net sales for the three and nine months ended March 31, 2014, respectively. The operating environment in Venezuela is challenging, with high inflation, political instability, governmental restrictions in the form of currency exchange, price and margin controls, and the possibility of government actions such as further devaluations, business occupations or intervention and expropriation of assets. In addition, the foreign exchange controls in Venezuela limit the Venezuela business's ability to remit dividends and pay intercompany balances.

Due to a sustained inflationary environment, the financial statements of the Venezuela business are consolidated under the rules governing the preparation of financial statements in a highly inflationary economy. As such, the Venezuela business's non-U.S. dollar (non-USD) monetary assets and liabilities are remeasured into U.S. dollars (USD) each reporting period with the resulting gains and losses reflected in other expense (income), net.

On February 8, 2013, the Venezuelan government announced a devaluation of its currency exchange commission (CADIVI) rate from 4.3 to 6.3 bolivares fuertes (VEF) per USD and the elimination of the alternative currency exchange system, SITME. Prior to February 8, 2013, the Company had been utilizing the rate at which it had been obtaining USD through SITME to remeasure its Venezuelan financial statements, which was 5.7 VEF per USD at the announcement date. In response to these developments, the Company began utilizing the CADIVI rate of 6.3 VEF per USD to translate the financial statements of the Venezuela business.

In March 2013, the Venezuelan government announced the creation of a new alternative currency exchange system, a government-controlled auction process referred to as SICAD I, whereby companies meeting certain qualifications may periodically bid to acquire USD. In January 2014, the Venezuelan government announced further changes to the regulations governing the currency exchange systems. Among the changes was the creation of a new government agency, CENCOEX, to administer the currency exchange mechanism previously administered by CADIVI. Based on an analysis of the newly published exchange regulations and an updated assessment of currency requirements applicable to the Venezuela business, the Company has now concluded that the SICAD I rate is currently the most appropriate rate for the Company to use for financial reporting purposes. Consequently, the Company began using the SICAD I rate to record the results of business operations and remeasure the gain or loss on non-USD monetary assets and liabilities in Venezuela beginning on March 1, 2014. The Company recorded a non-tax deductible remeasurement loss of $12 for the quarter ended March 31, 2014, reflecting the effective devaluation from the CENCOEX rate of 6.3 to the March 28, 2014 posted SICAD I rate of 10.8.

In February 2014, the Venezuelan government established another currency exchange mechanism, SICAD II, that provides an additional method to exchange VEF at exchange rates significantly higher than the CENCOEX and SICAD I rates. As of March 28, 2014, the posted rate of the SICAD II exchange system was 50.8 VEF per USD. The Company is monitoring the evolution of this new currency exchange and related published regulations to assess their implications for business operations, future cash flow, and financial reporting for the Venezuela business.

As of March 31, 2014, using the SICAD I rate of 10.8, the Venezuela business had total assets of $71 including cash and cash equivalents of $9, a long-term value added tax (VAT) receivable from the Venezuelan government of $8 and intangible assets excluding goodwill of $6. The Company also had net deferred tax assets of $14 related to foreign tax credits attributable to the Venezuela business as of March 31, 2014. As a result of the devaluation from the CENCOEX rate to the SICAD I rate, which drove the $12 non-tax deductible remeasurement loss referred to above, the Company also evaluated the impact of the currency devaluation and other business factors on the recorded values of its assets, including goodwill, intangible asset groupings containing Venezuela assets, and deferred tax balances related to the Venezuela business. As a result of this evaluation, the Company identified indications of impairment and recorded noncash tax deductible intangible asset impairment charges on trademark values totaling $4 and noncash non-tax deductible increases in deferred tax valuation allowances of $2 during the three months ended March 31, 2014. The aggregate impact of these noncash charges on the Company's condensed consolidated statements of earnings and comprehensive income for the three months ended March 31, 2014, was to reduce earnings from continuing operations by $18.

The Company continues to closely monitor developments in this volatile environment, assess evolving business risks and actively manage its investments in Venezuela.

Argentina

The operating environment in Argentina also presents challenges, including price controls on some of the Company's products, a devaluing currency, and inflation. For the year ended June 30, 2013 and the nine months ended March 31, 2014, the value of the Argentine peso (ARS) per USD declined 16% and 33%, respectively. Were the ARS to continue to decline in the future, it could have an additional adverse impact on the Company's net sales and net earnings. As of March 31, 2014, using an exchange rate of 8.0 ARS per USD, the Company's Argentina subsidiary had cash and cash equivalents of $21 and total assets of $93. For the nine months ended March 31, 2014 and the year ended June 30, 2013, net sales from the Company's Argentina subsidiary represented approximately 3% of the Company's consolidated net sales for those periods. The Company is closely monitoring developments in Argentina and is taking steps intended to mitigate the adverse conditions.