- Suppose Clorox had used FIFO as a cost flow assumption for all of their inventories. What would the book value of Inventories be on June 30, 2020
- What is the amount of inventory purchases in fiscal year 2020
- Estimate cash collected from customers in fiscal year 2020 (Assume that sales are net of bad debt expense)
CONSOLIDATED STATEMENTS OF EARNINGS The Clorox Company Years ended June 30 Dollars in millions, except share and per share data 2020 2019 2018 Net sales 69 6,721 $ Cost of products sold 6,214 6,124 3.658 3.486 Gross profit 3.449 3,063 2,728 Selling and administrative expenses 2,675 969 Advertising costs 856 837 675 612 Research and development costs 570 145 136 132 Interest expense 99 97 85 Other (income) expense, net (10) 3 (3) Earnings before income taxes 1,185 1,024 Income taxes 1,054 246 204 231 Net earnings 69 939 S 820 S 823 Net earnings per share Basic net earnings per share 69 69 7.46 Diluted net earnings per share $ 6.42 S 6.37 7.36 6.32 S Weighted average shares outstanding (in thousands) 6.26 Basic 125,828 Diluted 127,734 129,293 127,671 129,792 131,581CONSOLIDATED BALANCE SHEETS The Clorox Company As of June 30 Dollars in millions, except share and per share data 2020 2019 ASSETS Current assets Cash and cash equivalents 871 111 Receivables, net 648 631 Inventories, net 454 512 Prepaid expenses and other current assets 47 51 Total current assets 2,020 1.305 Property, plant and equipment, net 1,10 1,034 Operating lease right-of-use assets 291 Goodwill 1,577 1,591 Trademarks, net 785 791 Other intangible assets, net 109 121 Other assets 328 274 Total assets 6,213 5,116 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes and loans payable $ 396 Current operating lease liabilities 64 Accounts payable and accrued liabilities 1,329 1,035 Income taxes payable 25 9 Total current liabilities 1,418 1,440 Long-term debt 2,780 2,287 Long-term operating lease liabilities 278 Other liabilities 767 780 Deferred income taxes 62 50 Total liabilities 3,305 4.557 Commitments and contingencies Stockholders equity Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares issued as of June 30, 2020 and 2019; and 126,198,606 and 125,686,325 shares outstanding as of June 30, 2020 and 2019, respectively 159 150 Additional paid-in capital 1,137 1,046 Retained earnings 3,567 3,150 Treasury shares, at cost: 32,542,855 and 33,055,136 shares as of June 30, 2020 and 2019, respectively (3,315) (3,194) Accumulated other comprehensive net (loss) income (640) (602) Stockholders' equity 908 559 Total liabilities and stockholders' equity 6,213 5,116CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY The Clorox Company Accumulated Other Additional Comprehensive Paid-in Net (L 089) Common Stock Capital Treasury Stock Income Dollars in millions, Shares Retained Shares except per share data Amount (In thousands ) Earnings Amount (In thousands) Total Balance as of June 30, 2017 $ 159 158,741 928 $ 2.440 5 (2,442 (29.727) (543 $ 542 Net earnings 823 823 Other comprehensive (lose) income (4) Dividends ($3.60 per share declared) (467) (467) Stock-based compensation 53 53 Other employee stock plan activities (6) 56 1,139 51 Treasury stock purchased (272) (2.171) (272) Balance as of June 30, 2018 159 158,741 975 2,797 (2.659) (30.759) (547) 726 Cumulative effect of accounting change: 36 (39) (3) Net earnings 820 820 Other comprehensive (loss) income (15) (16) Dividends ($3.94 per share declared) (503) (503) Stock-based compensation 43 43 Other employee stock plan activities 124 2.178 152 Treasury stock purchased (660) (4.474) (660) Balance as of June 30, 2019 159 158,741 1,046 3,150 (3.194) (33.055) (602) 559 Cumulative effect of accounting change: 12 22 Net earnings 939 939 Other comprehensive (lose) income (38) (38) Dividends ($4.29 per share declared) (544) (544) Stock-based compensation 50 50 Other employee stock plan activities 41 121 2,043 162 Treasury stock purchased (242) (242) Balance as of June 30, 2020 $ 159 158,741 1,137 $ 3.567 $ (3,315 (32.543) (640 $ 908CONSOLIDATED STATEMENTS OF CASH FLOWS The Clorox Company Years ended June 30 Dollars in million! 2020 2019 2018 Operating activities: Net earnings $ 939 $ 820 $ 823 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 180 180 166 Stock-based compensation 50 43 53 Deferred income taxes (2) (20) (23] Other 30 (29) 44 Changes in working capital 349 (21 (871 Net cash provided by operations 1,546 992 976 Investing activities: Capital expenditures (254] (206) (194) Businesses acquired, net of cash acquired (681) Other 10 16 Net cash used for investing activities (252) (196) 859 Financing activities: Notes and loans payable, net (396) 189 (214) Long-term debt borrowings, net of issuance costs paid 492 891 Long-term debt repayments 400 Treasury stock purchased (248) (661) (271) Cash dividends paid (533) (490) (450) Issuance of common stock for employee stock plans and other 162 147 45 Net cash used for financing activities (523) 815) 399 Effect of exchange rate changes on cash, cash equivalents, and restricted cash (5) (2] (3) Net increase (decrease) in cash, cash equivalents and restricted cash 766 (21) "285) Cash, cash equivalents and restricted cash: Beginning of year 113 134 419 End of year 879 $ 113 134 Supplemental cash flow information: Interest paid 89 87 $ 75 Income taxes paid, net of refunds 241 207 245 Non-cash financing activities: Cash dividends declared and accrued, but not paid 140 133 123Accounts receivables The Company provides an allowance for doubtful accounts based on its historical experience and ongoing assessment of its customers' credit risk and aging. Receivables are presented net of an allowance for doubtful accounts of $10 and $4 as of June 30, 2020 and 2019, respectively. Inventory Inventories consisted of the following as of June 30: 2020 2019 Finished goods 340 411 Raw materials and packaging 140 125 Work in process LIFO allowances (33) (30) Total 454 512 The LIFO method was used to value approximately 31% and 34% of inventories as of June 30, 2020 and 2019, respectively. The carrying values for all other inventories are determined on the FIFO method. The effect on and 2018. earnings of the liquidation of LIFO layers was insignificant for each of the fiscal years ended June 30, 2020, 2019 PPE The components of property, plant and equipment, net, consisted of the following as of June 30: 2020 2019 Machinery and equipment 1.921 1.867 Buildings 642 596 Capitalized software costs 368 358 Land and improvements 145 138 Construction in progress 153 131 Computer equipment 98 94 Tota 3,327 3,184 Less: Accumulated depreciation and amortization (2,224) (2,150) Property, plant and equipment, net 1 103 1,034 Depreciation and amortization expense related to property, plant and equipment, net, was $166, $165 and $156 in fiscal years 2020, 2019 and 2018, respectively, of which $5, $8 and $11 were related to amortization of capitalized software, respectively. Machinery and equipment above also includes capital leases of $21 and corresponding accumulated depreciation of $12 as of June 30, 2019 under Accounting Standards Codification $40, Leases (ASC 840). Non-cash capital expenditures were $7, $2 and $2 for fiscal years, 2020, 2019 and 2018, respectively. There were no significant asset retirement obligations recorded and included in Buildings above for both fiscal years 2020 and 2019Accounts payables and accrued liabilities Accounts payable and accrued liabilities consisted of the following as of June 30: 2020 2019 Accounts payable $ 575 507 Compensation and employee benefit costs 288 Trade and sales promotion costs 164 158 115 Dividends 146 139 Other 156 116 Total 1,329 1,035 Debt 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 $0 and $396 as of June 30, 2020 and 2019, respectively. The weighted average interest rates incurred on average outstanding notes and loans payable during the fiscal years ended June 30, 2020, 2019 and 2018, including fees associated with the Company's revolving credit agreements, were 2.49%, 2.98% and 2.10%, respectively. The weighted average effective interest rates on notes and loans payable as of June 30, 2019 was 2.65%. 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: 2020 2019 Senior unsecured notes and debentures: 3.80%, $300 due November 2021 S 299 $ 299 3.05%, $600 due September 2022 599 598 3.50%, $500 due December 2024 498 498 3.10%, $400 due October 2027 397 397 3.90%, $500 due May 2028 496 495 1.80%, $500 due May 2030 491 Total 2,780 2,287 Less: Current maturities of long-term debt Long-term debt 2,780 2,287 In May 2020, the Company issued $500 of senior notes with an annual fixed interest rate of 1.80% and a maturity date of May 15, 2030 and used the proceeds to repay borrowings under the revolving Credit Agreement and for general corporate purposes. Interest on the notes is payable semi-annually in May and November. The notes carry an effective interest rate of 1.96%, which includes the impact of amortizing debt issuance costs and the gain on the related interest rate forward contracts over the life of the notes (See Note 9). The notes rank equally with all of the Company's existing senior indebtedness. In May 2018, the Company issued $500 of senior notes with an annual fixed interest rate of 3.90% and a maturity date of May 13, 2028 and used the proceeds to repay a portion of the outstanding commercial paper, including amounts raised in connection with the Nutranext acquisition. Interest on the notes is payable semi-annually in May and November. The notes carry an effective interest rate of 4.02%, which includes the impact of amortizing debt issuance costs and the loss on the related interest rate forward contracts over the life of the notes (See Note 9). The notes rank equally with all of the Company's existing senior indebtedness. In September 2017, the Company issued $400 of senior notes with an annual fixed interest rate of 3.10% and a maturity date of October 1, 2027 and used the proceeds to repay $400 of senior notes with an annual fixed interestrate of 5.95% that became due in October 2017. The notes carry an effective interest rate of 3.13%, which includes the impact of amortizing debt issuance costs and the gain on the related interest rate forward contracts over the life of the notes (See Note 9). The notes rank equally with all of the Company's existing senior indebtedness. The weighted average interest rates incurred on average outstanding long-term debt during the fiscal years ended June 30, 2020, 2019 and 2018, were 3.75%, 3.81% and 3.94%, respectively. The weighted average effective interest rates on long-term debt balances as of both June 30, 2020 and 2019 were 3.48% and 3.81%, respectively. Long-term debt maturities as of June 30, 2020, were $0, $300, $600, $0, $500, and $1,400 in fiscal years 2021, 2022, 2023, 2024, 2025, and thereafter, respectively
