{ "ticker": "CLX", "company": "Clorox Company", "filing_type": "10-K", "year_current": "2025", "year_prior": "2024", "summary": { "added": 1, "removed": 3, "modified": 8, "unchanged": 17, "total_current": 26, "total_prior": 28 }, "source": "SEC EDGAR", "url": "https://riskdiff.com/clx/2025-vs-2024/", "markdown_url": "https://riskdiff.com/clx/2025-vs-2024/index.md", "json_url": "https://riskdiff.com/clx/2025-vs-2024/index.json", "generated": "2026-05-10", "ai_summary": "Clorox consolidated its risk disclosures around strategic execution by removing three separate risks related to COVID-19 impacts, governance structures, and cost-saving implementation, while adding a single new risk focused on the Company's ability to execute and realize benefits from strategic initiatives. Eight material risks were substantively modified, including enhanced disclosures on macroeconomic and geopolitical conditions, debt obligations, and board governance. The net reduction in risk factor count reflects a streamlined approach to risk presentation while maintaining disclosure of eighteen unchanged risks, indicating stable, ongoing operational and market concerns.", "risks": [ { "status": "ADDED", "current_title": "The Company may not successfully execute or realize the anticipated benefits of its strategic or transformational initiatives.", "prior_title": null, "current_body": "The Company is implementing certain strategic and transformational initiatives intended to generate cost savings, improve operational efficiencies and enhance its competitive position. These initiatives include the implementation of a new ERP system, expansion of digital capabilities and productivity enhancements, and continued execution of its long-standing cost savings program focused on reducing material and manufacturing costs, improving supply chain operations, and reducing overhead. These initiatives (and their concurrent execution) may have unintended consequences, such as business disruptions, diversion of management attention, reduced employee morale and productivity, organizational fatigue, loss of institutional knowledge, and negative impacts on relationships with customers, suppliers, and business partners. The ERP system implementation, expected to be completed in the U.S. during fiscal year 2026, has required and will continue to require investment of personnel and financial resources to support post-implementation efforts and system functionality. Following implementation, the Company may experience system inefficiencies or integration challenges, delays in key business processes or workflows, data quality or migration issues, security access gaps, or operational disruptions. Any such disruptions could impact our ability to process transactions (including invoicing and collections), manage inventory and supply chain operations, or fulfill customer orders, which could adversely impact our customer relationships, cash flows and business. Additionally, the expected value and cost savings from the ERP system and other transformational initiatives may not be achieved, may be realized more slowly than anticipated, may not be maintained including through training or effective change management, or may be offset by increased costs or other unintended consequences. 8 8 8 Table of Contents Table of Contents The Company also may not be able to successfully enter new markets, launch new products and innovations, implement pricing actions, restructure operations, and pursue strategic acquisitions or divestitures. These strategic initiatives may not be effectively implemented, may fail to achieve intended results, or may result in unanticipated costs or complexities. If the Company is unable to successfully execute its strategic or transformation initiatives or realize their anticipated value or benefits, its business, financial condition, and results of operations could be materially adversely affected." }, { "status": "REMOVED", "current_title": null, "prior_title": "The COVID-19 pandemic and related impacts has had, and could continue to have, an adverse effect on the Company’s business, financial condition and results of operations.", "prior_body": "The COVID-19 pandemic has affected and could continue to negatively affect the Company's business by causing or contributing to, among other things: •Disruptions in business operations and in the ability of significant third-party vendors, manufacturers and other business partners, including customers, to meet their obligations to us; •Worldwide, regional and local adverse economic and financial market conditions, all of which could impact the manufacturing operations of the Company or third-party partners; •Adverse impacts on the supply chain, including manufacturing by the Company or third-party partners, due to raw material, packaging or other supply shortages, labor shortages or reduced availability of commercial transport and port operational disruptions; and •Sustained labor shortages or increased turnover rates. Although the World Health Organization and the federal government have declared an end to COVID-19 as a global and national health emergency, respectively, risks related to COVID-19 have adversely affected and may continue to adversely affect the Company’s business, results of operations, cash flows and financial condition." }, { "status": "REMOVED", "current_title": null, "prior_title": "The Company's amended and restated bylaws designate specific courts as the exclusive forum for certain stockholder litigation, which could limit the Company's stockholders’ ability to obtain a judicial forum of their choice.", "prior_body": "The Company's amended and restated bylaws provide that, unless it consents in writing to the selection of an alternative forum, the state courts of Delaware (or if no state court has jurisdiction, the federal district court of the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for certain types of actions or proceedings under Delaware statutory or common law. The choice of forum provision in the Company's bylaws does not waive its compliance with its obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or by the Securities Act. The Company's exclusive forum provision may limit the ability of its stockholders to bring a claim in a judicial forum of such stockholders’ choice for disputes with the Company or its directors, officers or employees, which may discourage such lawsuits, even though an action, if successful, might benefit its stockholders. If a court were to find the exclusive forum provision either to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving such action in other jurisdictions, all of which may increase costs of litigation. Any person or entity purchasing or otherwise acquiring any interest in shares of the Company's capital stock will be deemed to have notice of, and consented to, the provisions of its amended and restated bylaws described in the preceding sentences." }, { "status": "REMOVED", "current_title": null, "prior_title": "Profitability and cash flow could suffer if the Company is unable to generate anticipated cost savings, successfully implement its transformational initiatives or strategies, or efficiently manage supply chain and manufacturing processes.", "prior_body": "The Company continues to make progress to improve its competitive position, generate efficiencies and transform the Company's operations through implementing certain transformational initiatives (such as its digital capabilities upgrade including enhancing operating efficiencies, transitioning to a cloud-based platform and replacing its enterprise resource planning system), optimizing its supply chain and generating savings through its long-standing cost savings program intended to reduce material costs and manufacturing inefficiencies and realize productivity gains, distribution and logistical efficiencies and overhead reductions. If the Company cannot successfully implement its transformational initiatives or cost savings plans or 19 19 19 Table of Contents Table of Contents optimize its supply chain, the Company may experience system outages and operating inefficiencies following these implementations and may not realize all anticipated operational and efficiency benefits and cost savings, which could adversely affect its business and long-term strategies. The Company also continues to seek to enter new markets and introduce new products and product innovations. These goals and strategies may not be implemented or may fail to achieve the desired results. The Company may also not be able to successfully implement any future price increases, including to account for increased costs, which may negatively affect its profitability and cash flow, and any such price increases may also negatively affect sales volumes. In addition, the Company expects to continue to restructure its operations as necessary to improve operational efficiency, including occasionally opening or closing offices, facilities or plants. Gaining additional efficiencies may become increasingly difficult over time, there may be one-time and other costs and negative impacts on employee, customer or supplier relations or sales growth relating to facility or plant closures or other restructurings and anticipated cost savings, and the Company’s strategies may not be implemented or may fail to achieve desired results. If the Company is unable to generate anticipated cost savings; successfully implement its strategies; implement new pricing; efficiently manage its supply chain and manufacturing processes; is ineffective or slow in developing and implementing its transformational initiatives; or is unable to achieve the anticipated benefits or cost savings from its digital capabilities upgrade or streamlined operating model, the Company’s results of operations could suffer. These plans and strategies could also have a negative impact on the Company’s relationships with employees or customers, which could also adversely affect the Company’s business, financial condition and results of operations." }, { "status": "MODIFIED", "current_title": "Board of Directors", "prior_title": "Board of Directors", "similarity_score": 0.917, "confidence": "high", "key_changes": [ "Reworded sentence: \"The Audit Committee receives quarterly updates on the topics set forth above from the CISIO, CIDO, and Chief Legal and External Affairs Officer.\"" ], "current_body": "The Board, through the Audit Committee, is responsible for the oversight of the Company’s compliance with legal and regulatory requirements relating to data privacy, cybersecurity and IT risks and its framework and guidelines with respect to risk assessment and risk management. The Audit Committee receives quarterly updates on the topics set forth above from the CISIO, CIDO, and Chief Legal and External Affairs Officer. The Board retains responsibility for the overall process of assessing and managing major risks facing the Company and receives updates regarding information security and cybersecurity risks as part of its oversight of ERM. The CIDO and Chief Legal and External Affairs Officer provide quarterly updates to the Board on topics that may include information security and cybersecurity matters. The Board may also be notified and engaged as part of the Company's cybersecurity incident response plans, depending on the severity of the impact of an incident. The Board and Audit Committee include directors with knowledge, skills and experience in data security, privacy, IT governance, and management of cyber risks.", "prior_body": "The Board, through the Audit Committee, is responsible for the oversight of the Company’s compliance with legal and regulatory requirements relating to data privacy, cybersecurity and IT risks and its framework and guidelines with respect to risk assessment and risk management. The Audit Committee receives quarterly updates from the CISIO on the topics set forth above, in addition to the Chief Legal Officer and CIDO. The Board retains responsibility for the overall process for assessing and managing major risks facing the Company and receives updates regarding information security and cybersecurity risks as part of its oversight of ERM. The CIDO and Chief Legal Officer provide quarterly updates to the Board on topics that may include information security and cybersecurity matters. The Board may also be notified and engaged as part of the Company's cybersecurity incident response plans, depending on the 22 22 22 Table of Contents Table of Contents severity of the impact of an incident. The Board and Audit Committee include directors with knowledge, skills and experience in data security, privacy, IT governance, and management of cyber risks." }, { "status": "MODIFIED", "current_title": "Unfavorable and uncertain general economic and geopolitical conditions beyond the Company's control could negatively impact its financial results.", "prior_title": "Unfavorable and uncertain general economic and geopolitical conditions beyond the Company's control could negatively impact its financial results.", "similarity_score": 0.905, "confidence": "high", "key_changes": [ "Reworded sentence: \"These factors include, but are not limited to, inflation, tariffs, recession and economic slowdown, labor shortages, wage pressures, and supply chain disruptions, as well as housing markets, consumer credit availability, consumer debt levels, fuel and energy costs, interest rate fluctuations, tax rates and policy, unemployment trends, natural disasters, pandemics/epidemics, civil disturbances and terrorist activities, foreign currency exchange rate fluctuations, conditions affecting the retail environment for the Company's products and other factors that influence consumer demand, spending and preferences that could impact the demand for the Company's products and negatively impact its net sales and results of operations.\"", "Removed sentence: \"The situation continues to evolve and significant uncertainties regarding the full impact of these conflicts or the related impacts on the global economy and geopolitical relations remain.\"" ], "current_body": "Unfavorable general economic factors that are beyond the Company's control have materially adversely affected, and could continue to materially adversely affect, its business, results of operations, financial condition and liquidity. These factors include, but are not limited to, inflation, tariffs, recession and economic slowdown, labor shortages, wage pressures, and supply chain disruptions, as well as housing markets, consumer credit availability, consumer debt levels, fuel and energy costs, interest rate fluctuations, tax rates and policy, unemployment trends, natural disasters, pandemics/epidemics, civil disturbances and terrorist activities, foreign currency exchange rate fluctuations, conditions affecting the retail environment for the Company's products and other factors that influence consumer demand, spending and preferences that could impact the demand for the Company's products and negatively impact its net sales and results of operations. In addition, geopolitical instability (including the conflicts in Ukraine and the Middle East, the potential for escalation in hostilities between the U.S. and Iran, and rising tensions between China and Taiwan); actual and potential shifts in U.S. and foreign trade, economic and other policies (including as a result of escalating trade tensions between the U.S. and its trading 2 The Company's fiscal year 2025 RIR of 0.66 means that for every 100 full-time equivalent Clorox employees globally, the Company averaged less than one recordable incident during the past year. The criteria used to determine RIR follows the U.S. Department of Labor’s OSHA guidelines and is applied globally. The RIR does not include workers at offices with fewer than 10 employees, but it does include remote workers. 6 6 6 Table of Contents Table of Contents partners, including China, particularly due to the imposition of tariffs by the U.S. and retaliatory tariffs by those partners); and other global events, have significantly increased global macroeconomic uncertainty and volatility. Sustained macroeconomic uncertainty and volatility and geopolitical instability could undermine global consumer confidence and could continue to reduce consumer spending and purchasing power, thereby reducing demand for the Company's products, and continue to disrupt global supply chains, impacting the availability and cost of transportation, logistics, raw materials, commodities, labor and packaging. Furthermore, U.S. government policy or election outcomes may prompt nationalist sentiment abroad, potentially resulting in targeted boycotts of U.S. products and services, which could adversely affect demand for the Company’s products in certain international markets and negatively impact financial results. This uncertainty and volatility also make it difficult for the Company, as well as its customers, suppliers, distributors and business partners to anticipate the resulting impacts and to accurately forecast, make financial projections, and plan future business activities, which may, in turn, cause customers to limit their purchase orders or affect their ability to pay amounts owed to the Company in a timely manner or at all, or adversely affect its business partners' ability to supply or provide services. These situations continue to evolve, and there is significant uncertainty as to their full or related impacts on the global economy and geopolitical relations, in general, and on the Company’s business, in particular. These geopolitical conflicts and tensions may also heighten other risks disclosed in this Report, including relating to cybersecurity, any of which could have an adverse impact on the Company’s business, results of operations, cash flows and/or financial condition. The Company has experienced, and expects to continue to experience, the indirect impacts of the conflicts in Ukraine and the Middle East, including increases in the cost of raw and packaging materials and commodities (including the price of oil), supply chain and logistics challenges, and it is not possible to predict the broader or longer-term consequences of these conflicts or the sanctions and export controls imposed in response to each conflict. Increasing unfavorable macroeconomic and geopolitical conditions have caused, and may also lead to, recession risk, increased credit and collectability risks, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments, declines in the value of the Company's financial instruments, and failures of counterparties including financial institutions and insurers. If any financial institution party to the Company's credit or other financing arrangements were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with the Company, which could result in reduced borrowing capacity. In addition, if any parties with which the Company conducts business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to continue to fund their business and perform their obligations to the Company could be adversely affected. Any of these factors could negatively and materially impact the Company's business, financial condition, and results of operations.", "prior_body": "Unfavorable general economic factors that are beyond the Company's control have materially adversely affected, and could continue to materially adversely affect, its business, results of operations, financial condition and liquidity. These factors include, but are not limited to, supply chain disruptions, labor shortages, wage pressures, ongoing elevated levels of inflation, recession and economic slowdown, as well as housing markets, consumer credit availability, consumer debt levels, fuel and energy costs (for example, the price of gasoline or alternative energy sources), rising interest rates, tax rates and policy, unemployment trends, the impact of natural disasters, pandemics/epidemics, civil disturbances and terrorist activities, foreign currency exchange rate fluctuations, conditions affecting the retail environment for the Company's products and other matters that influence consumer demand, spending and preferences that could impact the demand for the Company's products and negatively impact its net sales and results of operations. In addition, geopolitical instability, including the conflicts in Ukraine and the Middle East and rising tensions between China and Taiwan, actual and potential shifts in U.S. and foreign trade, economic and other policies, including as a result of escalating trade tensions between the U.S. and its trading partners, including China, as well as other global events, have significantly increased global macroeconomic uncertainty and volatility. Sustained macroeconomic uncertainty and volatility and geopolitical instability, including relating to the results of elections, could undermine global consumer confidence and could continue to reduce consumers’ purchasing power, thereby reducing demand for the Company's products, and continue to disrupt global supply chains, impacting the availability and cost of transportation, logistics, raw materials, commodities, labor and packaging. This uncertainty and volatility also make it difficult for the Company, as well as its customers, suppliers, distributors and business partners to anticipate the resulting impacts and to accurately forecast and plan future business activities, which may, in turn, cause customers to limit their purchase orders or affect their ability to pay amounts owed to the Company in a timely manner or at all, or adversely affect its business partners' ability to supply or provide services. These situations are evolving, and there is significant uncertainty as to their full or related impacts on the global economy and geopolitical relations, in general, and on the Company’s business, in particular. These geopolitical conflicts and tensions may also heighten other risks 7 7 7 Table of Contents Table of Contents disclosed in this Report, any of which could have an adverse impact on the Company’s business, results of operations, cash flows and/or financial condition. The Company has experienced, and expects to continue to experience, the indirect impacts of the conflicts in Ukraine and the Middle East, including increases in the cost of raw and packaging materials and commodities (including the price of oil), supply chain and logistics challenges, and it is not possible to predict the broader or longer-term consequences of these conflicts or the sanctions and export controls imposed in response to each conflict. The situation continues to evolve and significant uncertainties regarding the full impact of these conflicts or the related impacts on the global economy and geopolitical relations remain. Increasing unfavorable macroeconomic and geopolitical conditions have caused, and may also lead to, recession risk, increased credit and collectability risks, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments, declines in the value of the Company's financial instruments, and failures of counterparties including financial institutions and insurers. If any financial institution party to the Company's credit or other financing arrangements were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with the Company, which could result in reduced borrowing capacity. In addition, if any parties with which the Company conducts business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to continue to fund their business and perform their obligations to the Company could be adversely affected. Any of these factors could negatively and materially impact the Company's business, financial condition, and results of operations." }, { "status": "MODIFIED", "current_title": "The Company’s indebtedness could have a material adverse effect on its business, financial condition and results of operations and prevent the Company from fulfilling its financial obligations, and the Company may not be able to maintain its current credit ratings, continue to pay dividends or repurchase its stock or remain in compliance with existing debt covenants.", "prior_title": "The Company’s indebtedness could have a material adverse effect on its business, financial condition and results of operations and prevent the Company from fulfilling its financial obligations, and the Company may not be able to maintain its current credit ratings, continue to pay dividends or repurchase its stock or remain in compliance with existing debt covenants.", "similarity_score": 0.895, "confidence": "high", "key_changes": [ "Reworded sentence: \"As of June 30, 2025, the Company had approximately $2.5 billion of debt.\"", "Reworded sentence: \"For example, it could: •require the Company to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, which would reduce the availability of its cash flow to fund working capital requirements, capital expenditures, future acquisitions, dividends, repurchase the Company’s common stock and for other general corporate purposes; •limit the Company’s flexibility in planning for or reacting to general adverse macroeconomic conditions or changes in its business and the industries in which it operates; •place the Company at a competitive disadvantage compared to its competitors that have less debt; and •limit, along with the financial and other restrictive covenants in the Company’s debt documents, its ability to borrow additional funds.\"", "Reworded sentence: \"Certain of the Company’s over-the-counter derivative agreements require the Company to maintain investment-grade credit ratings from Standard & Poor’s and Moody’s.\"", "Added sentence: \"20 20 20 Table of Contents Table of Contents ITEM 1.C.\"" ], "current_body": "As of June 30, 2025, the Company had approximately $2.5 billion of debt. The Company’s indebtedness could have important consequences. For example, it could: •require the Company to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, which would reduce the availability of its cash flow to fund working capital requirements, capital expenditures, future acquisitions, dividends, repurchase the Company’s common stock and for other general corporate purposes; •limit the Company’s flexibility in planning for or reacting to general adverse macroeconomic conditions or changes in its business and the industries in which it operates; •place the Company at a competitive disadvantage compared to its competitors that have less debt; and •limit, along with the financial and other restrictive covenants in the Company’s debt documents, its ability to borrow additional funds. The Company may also incur substantial additional indebtedness in the future to fund acquisitions, repurchase stock or fund other activities for general business purposes. Certain of the Company’s over-the-counter derivative agreements require the Company to maintain investment-grade credit ratings from Standard & Poor’s and Moody’s. As of June 30, 2025, the Company’s credit ratings were both investment-grade. However, a downgrade below investment-grade would allow the Company’s derivative instrument counterparties to request full collateralization, which may negatively impact the Company’s other financial arrangements, including the Company’s supply chain financing, which could, in turn, impact its working capital. The Company has historically declared and paid quarterly cash dividends on its common stock and has repurchased stock subject to certain limitations under its stock repurchase programs. The board of directors’ determination to continue these actions will depend on its assessment that they are in the best interests of the Company’s shareholders. In the event the Company ceases these activities, the Company’s stock price could be adversely affected. 19 19 19 Table of Contents Table of Contents ITEM 1.B. UNRESOLVED STAFF COMMENTS None. 20 20 20 Table of Contents Table of Contents ITEM 1.C. CYBERSECURITY", "prior_body": "As of June 30, 2024, the Company had approximately $2.5 billion of debt. The Company’s indebtedness could have important consequences. For example, it could: • require the Company to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, which would reduce the availability of its cash flow to fund working capital requirements, capital expenditures, future acquisitions, dividends, repurchase the Company’s common stock and for other general corporate purposes; • limit the Company’s flexibility in planning for or reacting to general adverse economic conditions or changes in its business and the industries in which it operates; • place the Company at a competitive disadvantage compared to its competitors that have less debt; and • limit, along with the financial and other restrictive covenants in the Company’s debt documents, its ability to borrow additional funds. The Company may also incur substantial additional indebtedness in the future to fund acquisitions, repurchase stock or fund other activities for general business purposes. Further, certain terms of the agreements governing the Company’s over-the-counter derivative instruments contain provisions that require the Company’s credit ratings, assigned by Standard & Poor’s and Moody’s to the Company, to remain at investment-grade or above. As of June 30, 2024, the Company’s Standard & Poor’s and Moody’s ratings were both investment-grade. However, if these credit ratings were to fall below investment-grade, the counterparties to the derivative instruments in net liability positions could request full collateralization, and it may negatively impact the Company’s other financial arrangements, including the supply chain financing arrangement offered by a financial institution to the Company's suppliers, which could, in turn, impact its working capital. The Company has historically declared and paid quarterly cash dividends on its common stock and has been authorized to repurchase its stock subject to certain limitations under its stock repurchase programs. Any determinations by the board of directors to continue to declare and pay cash dividends on the Company’s common stock or to repurchase the Company’s common stock, however, will be based on a number of factors, including the board of directors’ continuing determination that the repurchase programs and the declaration and payment of dividends are in the best interests of the Company’s stockholders. In the event the Company does not declare and pay a quarterly dividend or repurchase its stock, the Company’s stock price could be adversely affected. ITEM 1.B. UNRESOLVED STAFF COMMENTS None. ITEM 1.C. CYBERSECURITY" }, { "status": "MODIFIED", "current_title": "The Company’s business could be negatively impacted as a result of shareholder activism or an unsolicited takeover proposal or a proxy contest.", "prior_title": "The Company’s business could be negatively impacted as a result of stockholder activism or an unsolicited takeover proposal or a proxy contest.", "similarity_score": 0.862, "confidence": "high", "key_changes": [ "Reworded sentence: \"In recent years, proxy contests and other forms of shareholder activism have been directed against numerous public companies.\"", "Reworded sentence: \"Shareholder activists may also seek to involve themselves in the governance, strategic direction and operations of the Company through shareholder proposals or otherwise.\"", "Reworded sentence: \"In addition, actions of activist shareholders may cause significant fluctuations in the Company's stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of its business.\"" ], "current_body": "In recent years, proxy contests and other forms of shareholder activism have been directed against numerous public companies. During fiscal years 2012 and 2011, the Company was the target of an unsolicited takeover proposal from a shareholder activist, which resulted in significant costs to the Company. If such a proposal were to be made again, the Company would likely incur significant costs, which could have an adverse effect on the Company’s financial condition and results of operations. Shareholder activists may also seek to involve themselves in the governance, strategic direction and operations of the Company through shareholder proposals or otherwise. Such proposals may disrupt the Company’s business and divert the attention of the Company’s management and employees, and any perceived uncertainties as to the Company’s future direction resulting from such a situation could result in the loss of potential business opportunities, the perception that the Company needs a change in the direction of its business, or the perception that the Company is unstable or lacks continuity, which may be exploited by its competitors, cause concern to its current or potential customers, and make it more difficult for the Company to attract and retain qualified personnel and business partners, which could adversely affect the Company’s business. In addition, actions of activist shareholders may cause significant fluctuations in the Company's stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of its business.", "prior_body": "In recent years, proxy contests and other forms of stockholder activism have been directed against numerous public companies. During fiscal years 2012 and 2011, the Company was the target of an unsolicited takeover proposal from a stockholder activist, which resulted in significant costs to the Company. If such a proposal were to be made again, the Company would likely incur significant costs, which could have an adverse effect on the Company’s financial condition and results of operations. Stockholder activists may also seek to involve themselves in the governance, strategic direction and operations of the Company through stockholder proposals or otherwise. Such proposals may disrupt the Company’s business and divert the attention of the Company’s management and employees, and any perceived uncertainties as to the Company’s future direction resulting from such a situation could result in the loss of potential business opportunities, the perception that the Company needs a change in the direction of its business, or the perception that the Company is unstable or lacks continuity, which may be exploited by its competitors, cause concern to its current or potential customers, and make it more difficult for the Company to attract and retain qualified personnel and business partners, which could adversely affect the Company’s business. In addition, actions of activist stockholders may cause significant fluctuations in the Company's stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of its business." }, { "status": "MODIFIED", "current_title": "Changes in government and tax regulations could have a material effect on our financial results.", "prior_title": "Government regulations could impose material costs.", "similarity_score": 0.797, "confidence": "high", "key_changes": [ "Reworded sentence: \"The Company’s manufacturing, processing, formulation, packaging, labeling, storage, distribution, advertising, and sale of its products and business operations must comply with extensive, increasingly varied, and complex federal, state, and foreign laws and regulations.\"", "Reworded sentence: \"The Company's multi-year phased upgrade to its digital capabilities, including replacement of its ERP system, will result in changes to its processes and procedures which, in turn, could result in changes to its internal controls over financial reporting, which may require significant effort and judgment.\"", "Reworded sentence: \"For example, on July 4, 2025, the One Big Beautiful Bill Act was enacted in the United States.\"", "Reworded sentence: \"In order to comply with any changes in these laws and regulations, the Company may be required to make changes to product formulation, labeling or marketing claims, perform additional testing to substantiate its product claims, make costly changes in its manufacturing processes or supply chain or stop selling certain products until corrective actions have been taken.\"" ], "current_body": "The Company’s manufacturing, processing, formulation, packaging, labeling, storage, distribution, advertising, and sale of its products and business operations must comply with extensive, increasingly varied, and complex federal, state, and foreign laws and regulations. In the U.S., this includes oversight from agencies such as the Environmental Protection Agency, the Food and Drug Administration (including applicable current good manufacturing practice regulations), the Consumer Product Safety Commission, the Federal Trade Commission, and the Occupational Safety and Health Administration. Additionally, significant and wide-ranging reforms, regulatory changes, policies, and executive orders, changing enforcement priorities, and staffing reductions at governmental agencies at the federal level in 2025 have introduced uncertainty regarding future regulatory impacts, including around product safety standards, labeling requirements, or approval processes, which may delay product launches, increase compliance risk, or impact the Company’s ability to bring new products to market expeditiously or efficiently. The Company could also be subject to future inquiries or investigations by governmental or other regulatory bodies, and any determination of non-compliance with applicable laws could result in impairment charges, significant fines, penalties, or other sanctions that may adversely affect its business, reputation, and financial performance. Moreover, federal, state, and foreign governments may introduce new or expand existing legislation and regulations, or impose more stringent interpretations of current laws, requiring the Company to enhance its resources, capabilities, and expertise. For instance, the Company is subject to environmental regulations related to the transportation, storage, and use of certain chemicals. It may also face increased costs or mandatory funding obligations under extended producer responsibility regulations (such as plastic or packaging taxes, recycling, and waste management programs) or restrictions on materials and packaging types. These requirements could raise raw material acquisition and compliance costs, limit material availability, or make the Company’s products more expensive and less competitive, thereby reducing consumer demand. Furthermore, the Company is subject to rapidly evolving and increasingly complex legal and regulatory requirements in areas such as sustainability disclosure, sustainable packaging (including plastic packaging), data privacy, executive compensation, and corporate governance. The lack of regulatory convergence across jurisdictions, especially at the state level, may further increase compliance costs. Due to its extensive international operations, the Company could be adversely affected by violations, or allegations of violations, of the FCPA and similar international anti-bribery laws. The Company cannot provide assurance that its internal controls policies and procedures that mandate compliance with these laws will protect the Company from reckless, intentional or unintentional criminal acts committed by its employees, joint-venture partners or agents. Alleged or actual violations of these laws could disrupt the Company's business and adversely affect its reputation and its business, financial condition and results of operations. The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's multi-year phased upgrade to its digital capabilities, including replacement of its ERP system, will result in changes to its processes and procedures which, in turn, could result in changes to its internal controls over financial reporting, which may require significant effort and judgment. Any failure to maintain an effective system of internal control over financial reporting, including as a result of failure of the ERP system to work properly, could limit the Company’s ability to report its results of operations accurately and on a timely basis, or to detect and prevent fraud and could expose it to regulatory 15 15 15 Table of Contents Table of Contents enforcement action and shareholder claims, which could have a material adverse effect on the Company’s business, financial condition and results of operations. Fluctuations in federal, state, local and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may also impact the Company’s effective tax rate and the Company’s results of operations. Changes in tax laws, including additional guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service or similar bodies of state, local and foreign governments could create uncertainty, impact the Company's recorded liability in future periods and have a material impact on the Company’s results of operations. For example, on July 4, 2025, the One Big Beautiful Bill Act was enacted in the United States. The act contains a number of provisions that are applicable to U.S. corporate taxpayers. The Company is in the process of evaluating the impact of this legislation on its consolidated financial statements. Additionally, on December 20, 2021, the Organization for Economic Development released a set of model rules, known as the Global Anti-Base Erosion rules (GloBE rules) or “Pillar Two,” designed to ensure that large multinational enterprises pay a minimum 15% tax on income arising in each jurisdiction in which they operate. Many countries have implemented Pillar Two, and the Company has been subject to Pillar Two in certain foreign jurisdictions beginning this past fiscal year ended June 30, 2025. The Company has evaluated and will continue to monitor the impact of the GloBE rules but does not anticipate that they will have a material impact on the Company's effective tax rate and cash flows. See also “Critical Accounting Estimates—Income Taxes” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in Exhibit 99.1 for more information on factors influencing the determination of our effective tax rate and tax positions. If the Company is found to be noncompliant with applicable laws and regulations in these or other areas, it could be subject to governmental or regulatory actions, including fines, import detentions, injunctions, product withdrawals or recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on its business. Loss of or failure to obtain necessary permits and registrations, particularly with respect to its charcoal business, could delay or prevent the Company from meeting current product demand, introducing new products, building new facilities or acquiring new businesses and could adversely affect its financial condition and results of operations. In order to comply with any changes in these laws and regulations, the Company may be required to make changes to product formulation, labeling or marketing claims, perform additional testing to substantiate its product claims, make costly changes in its manufacturing processes or supply chain or stop selling certain products until corrective actions have been taken. Any of these developments could increase the Company’s costs significantly, which could have a material adverse effect on the Company’s financial condition and results of operations.", "prior_body": "Generally, the manufacture, processing, formulation, packaging, labeling, storage, distribution, advertising and sale of the Company’s products and its business operations must comply with extensive federal, state and foreign laws and regulations, including, in the U.S., the Environmental Protection Agency, the Food and Drug Administration (including applicable current good manufacturing practice regulations), the Consumer Product Safety Commission, the Federal Trade Commission, and the Occupational Safety and Health Administration. There is also an increased risk of fraud or corruption in certain foreign jurisdictions and related difficulties in maintaining effective internal controls. Additionally, the Company could be subject to future inquiries or investigations by governmental and other regulatory bodies. Any determination that the Company’s operations or activities are not in compliance with applicable law could expose the Company to future impairment charges or significant fines, penalties or other sanctions that may result in a reduction in net income or otherwise adversely impact the business and reputation of the Company. The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's multi-year phased upgrade to its digital capabilities will result in changes to its processes and procedures which, in turn, could result in changes to its internal controls over financial reporting, which may require significant effort and judgment. Any failure to maintain an effective system of internal control over financial reporting could limit the Company’s ability to report its results of operations accurately and on a timely basis, or to detect and prevent fraud and could expose it to regulatory enforcement action and stockholder claims, which could have a material adverse effect on the Company’s business, financial condition and results of operations. Fluctuations in federal, state, local and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may also impact the Company’s effective tax rate and the Company’s results of operations. Changes in tax laws, including additional guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service or similar bodies of state, local and foreign governments could create uncertainty, impact the Company's recorded liability in future periods and have a material impact on the Company’s results of operations. For example, on December 20, 2021, the Organization for Economic Development released a set of model rules designed to ensure that large multinational enterprises pay a minimum 15% tax on income arising in each jurisdiction in which they operate. The model rules are known as the Global Anti-Base Erosion rules (GloBE rules) or “Pillar Two”. Many countries have agreed to implement Pillar Two, and the Company will be subject to Pillar Two in certain foreign jurisdictions beginning with its fiscal year ending June 30, 2025. The Company does not expect Pillar Two to materially impact its effective tax rate or cash flows. The Company will continue to monitor and evaluate new legislation and guidance, which could impact this assessment. The, Company, because of the its extensive international operations, could be adversely affected by violations, or allegations of violations, of the FCPA and similar international anti-bribery laws. These anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to government officials or other third parties for the purpose of obtaining or retaining business. The Company cannot provide assurance that its internal controls policies and procedures that mandate compliance with these laws will protect the Company from reckless, intentional or unintentional criminal acts committed by its employees, joint-venture partners or agents. Alleged or actual violations of these laws could disrupt the Company's business and adversely affect its reputation and its business, financial condition and results of operations. Federal, state and foreign governments may introduce new or expand existing legislation and regulations, or courts or governmental authorities could impose more stringent interpretations of existing legislation and regulations, affecting the Company’s operations, which may require the Company to increase its resources, capabilities and expertise in certain areas. For example, the Company is subject to regulations regarding the transportation, storage or use of certain chemicals to protect the environment, including as a result of evolving climate change standards, and is and may become subject to increased costs or mandatory funding or financial support requirements for recycling and waste management programs under extended producer responsibility regulation or laws, through plastic or packaging taxes, or restrictions on certain products and materials or on the use of certain types of packaging. Such regulations could negatively impact the Company’s ability to obtain raw materials or could increase its acquisition and compliance costs or cause the Company to contribute funds to recycling and other waste management infrastructure, thus making its products more costly, less competitive than other competitive products or reduce 16 16 16 Table of Contents Table of Contents consumer demand. Furthermore, additional or amended legislation in the areas of ESG disclosure, healthcare reform, sustainability of packaging, including plastic packaging, executive compensation and corporate governance, could also increase the Company’s costs. The Company is also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the U.S. and other jurisdictions, which have and could continue to subject the Company to additional compliance costs. If the Company is found to be noncompliant with applicable laws and regulations in these or other areas, it could be subject to governmental or regulatory actions, including fines, import detentions, injunctions, product withdrawals or recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on its business. Loss of or failure to obtain necessary permits and registrations, particularly with respect to its charcoal business, could delay or prevent the Company from meeting current product demand, introducing new products, building new facilities or acquiring new businesses and could adversely affect its financial condition and results of operations. In addition, the Company markets and sells products that are subject to regulations relating to dietary supplements. In order to comply with any changes in these laws and regulations, including any changes that result from newly published clinical studies and emerging studies that may assert or prove that ingredients in the Company's products or the products themselves are ineffective or harmful to consumers, the Company may be required to make changes to product formulation, labeling or marketing claims, perform additional testing to substantiate its product claims, make costly changes in its manufacturing processes or supply chain or stop selling certain products until corrective actions have been taken. Any of these developments could increase the Company’s costs significantly, which could have a material adverse effect on the Company’s financial condition and results of operations." }, { "status": "MODIFIED", "current_title": "Climate change and other sustainability issues may have an adverse effect on the Company's business, financial condition and results of operations and could damage its reputation.", "prior_title": "ESG issues, including those related to climate change and sustainability, may have an adverse effect on the Company's business, financial condition and results of operations and could damage its reputation.", "similarity_score": 0.757, "confidence": "high", "key_changes": [ "Reworded sentence: \"Companies across all industries are facing increasing scrutiny relating to their sustainability policies and practices.\"", "Reworded sentence: \"These demands could impact the profitability of some of the Company's products, or cause it to incur additional manufacturing or other costs which may not be recoverable through price increases or increased sales volumes, make changes to its operations, make additional commitments, set targets or establish additional goals and take actions to meet them, which could expose the Company to market, operational and execution costs or risks.\"", "Reworded sentence: \"Evolving and increasing regulatory requirements, including in relation to sustainability, such as extended producer responsibility or environmental or emissions standards could cause disruptions in the Company's manufacturing processes or increase operating, energy, raw materials and compliance costs.\"", "Reworded sentence: \"Stakeholder perception of, or opposition to, the Company’s actions or inaction with respect to the environment and other sustainability matters or its ability to effectively respond to new, or changes in, related legal or regulatory requirements could lead to negative publicity, which could result in reduced demand for the Company’s products, damage to its reputation or increase the risk of litigation, regulatory proceedings, inquiries or investigations and could adversely affect the Company’s business and reputation.\"" ], "current_body": "Companies across all industries are facing increasing scrutiny relating to their sustainability policies and practices. In particular, there is increasing focus by governmental and non-governmental organizations, investors, customers, consumers, employees and other stakeholders on sustainability matters, such as climate change, water use, deforestation, biodiversity, plastic waste, responsible sourcing, animal welfare, labor and employment practices and human rights, as well as diversity and inclusion efforts. Changing consumer preferences may also result in increased demands regarding plastics and packaging materials, including single-use and non-recyclable plastic packaging, and other components of the Company's products and their environmental impact on sustainability; a growing demand for natural or organic products and ingredients; or increasing consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products. These demands could impact the profitability of some of the Company's products, or cause it to incur additional manufacturing or other costs which may not be recoverable through price increases or increased sales volumes, make changes to its operations, make additional commitments, set targets or establish additional goals and take actions to meet them, which could expose the Company to market, operational and execution costs or risks. Certain investors and other stakeholders have expressed negative sentiment regarding corporate environmental, social and governance (ESG) initiatives, including sustainability and diversity and inclusion practices. In addition, recent regulatory actions and executive orders issued by the current U.S. presidential administration have targeted these areas. The Company’s practices and efforts in these areas may not align with the expectations of all stakeholders, which could negatively affect our relationships with certain stakeholders. Furthermore, our activities in these areas could expose us to increased regulatory or legal scrutiny, potential product boycotts, or other actions that may harm our reputation or adversely affect our business, financial condition, or results of operations. The Company is subject to climate-related transition risks, including increased energy costs due to increasing demand for alternative energy sources and new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Evolving and increasing regulatory requirements, including in relation to sustainability, such as extended producer responsibility or environmental or emissions standards could cause disruptions in the Company's manufacturing processes or increase operating, energy, raw materials and compliance costs. The Company may undertake additional costs to control, assess and report on sustainability metrics as the nature, scope and complexity of sustainability reporting, diligence and disclosure requirements expand. The ability to achieve any stated goal, target, or objective is subject to numerous factors and 16 16 16 Table of Contents Table of Contents conditions, many of which are outside of the Company's control. For example, working towards achieving the Company's goals will require significant effort by and resources from the Company and stakeholders, including suppliers and business partners, governmental entities and the development and adoption of technology that may not currently exist or exist at scale. Stakeholder perception of, or opposition to, the Company’s actions or inaction with respect to the environment and other sustainability matters or its ability to effectively respond to new, or changes in, related legal or regulatory requirements could lead to negative publicity, which could result in reduced demand for the Company’s products, damage to its reputation or increase the risk of litigation, regulatory proceedings, inquiries or investigations and could adversely affect the Company’s business and reputation.", "prior_body": "Companies across all industries are facing increasing scrutiny relating to their ESG policies. In particular, customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, water use, deforestation, biodiversity, plastic waste, responsible sourcing and other sustainability concerns. Changing consumer preferences may also result in increased demands regarding plastics and packaging materials, including single-use and non-recyclable plastic packaging, and other components of the Company's products and their environmental impact on sustainability; a growing demand for natural or organic products and ingredients; or increasing consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products. These demands could impact the profitability of some of the Company's products, cause it to incur additional costs, to make changes to its operations, or to make additional commitments, set targets or establish additional goals and take actions to meet them, which could expose the Company to market, operational and execution costs or risks. In addition, governmental and non-governmental organizations, investors, customers, consumers, employees and other stakeholders have placed increasing importance on ESG matters, such as animal welfare, labor and employment practices and human rights, and depending on their assessment of its ESG practices, certain investors may reconsider their investment in the Company, which may hinder the Company’s access to capital. The Company is subject to climate-related transition risks, including increased energy costs due to increasing demand for alternative energy sources and new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Increased regulatory requirements, including in relation to various aspects of ESG, such as extended producer responsibility, or environmental causes may result in increased compliance or input costs of energy, raw materials or compliance with emissions standards, which may cause disruptions in the manufacture of the Company's products or an increase in operating costs. The Company may undertake additional costs to control, assess and report on ESG metrics as the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand. The ability to achieve any stated goal, target, or objective is subject to numerous factors and conditions, many of which are outside of the Company's control. For example, working towards achieving the Company's goals will require significant effort by and resources from the Company and stakeholders, including suppliers and business partners, governmental entities and the development and adoption of technology that may not currently exist or exist at scale. Lack of progress on or failure to achieve its ESG goals or a perception (whether or not valid) of its failure to act responsibly with respect to the environment and other sustainability matters, such as single-use plastic, or to effectively respond to new, or changes in, legal or regulatory requirements concerning environmental or other ESG matters, or increased operating or manufacturing costs due to increased regulation or environmental causes could lead to negative publicity, which could result in reduced demand for the Company’s products, damage to its reputation or increase the risk of litigation, regulatory proceedings, inquiries or investigations and could adversely affect the Company’s business and reputation." }, { "status": "MODIFIED", "current_title": "The Company may not be able to attract, develop or retain the highly skilled personnel needed to support its business.", "prior_title": "Loss of, or inability to attract, key personnel could adversely impact the Company’s business.", "similarity_score": 0.749, "confidence": "medium", "key_changes": [ "Reworded sentence: \"The Company’s success depends, in part, on its continuing ability to identify, hire, develop and retain highly qualified personnel with diverse perspectives, experiences, and backgrounds that reflect the Company’s varied and diverse consumer base, at all levels of the business, including management and in its manufacturing facilities.\"", "Reworded sentence: \"The Company’s success also depends on its 11 11 11 Table of Contents Table of Contents ability to retain its key personnel, including its executive officers and senior management team, and to continue to implement its succession plans for senior management and other key employees.\"" ], "current_body": "The Company’s success depends, in part, on its continuing ability to identify, hire, develop and retain highly qualified personnel with diverse perspectives, experiences, and backgrounds that reflect the Company’s varied and diverse consumer base, at all levels of the business, including management and in its manufacturing facilities. The Company's ability to attract and retain talent has been and may continue to be impacted by a number of factors, including employee morale, its reputation, competition from other employers and availability of qualified individuals in key geographic areas such as the San Francisco Bay Area, and challenges in the labor market, particularly in the U.S., which has increasing labor costs, sustained labor shortages, and changing worker and talent market expectations around flexible work models and relocation. Increased labor costs as a result of increased competition for employees, higher employee turnover rates, increased employee benefit costs, or labor union organizing efforts could increase the Company’s operating expenses, and its growth and results of operations could be adversely impacted. The Company continues executing organizational change, which may impact hiring and retention efforts. Related activities to identify, hire and onboard qualified talent at increasing compensation costs may require significant time and expense which could further adversely affect the Company’s operations and financial results. The Company’s success also depends on its 11 11 11 Table of Contents Table of Contents ability to retain its key personnel, including its executive officers and senior management team, and to continue to implement its succession plans for senior management and other key employees. The unexpected loss or unavailability of one or more of the Company’s key leaders could disrupt its business.", "prior_body": "The Company’s success depends, in part, on its continuing ability to identify, hire, develop and retain highly qualified and diverse personnel. The Company's ability to attract and retain talent has been and may continue to be impacted by a number of factors, including employee morale, its reputation, competition from other employers and availability of qualified individuals in key geographic areas such as the San Francisco Bay Area, and challenges in the labor market, particularly in the U.S., which has increasing labor costs, sustained labor shortages, and changing worker and talent market expectations around flexible work models and relocation. Increased labor costs as a result of increased competition for employees, higher employee turnover rates, increased employee benefit costs, or labor union organizing efforts could increase the Company’s operating expenses, and its growth and results of operations could be adversely impacted. The Company continues executing organizational change, which may impact hiring and retention efforts. Related activities to identify, hire and onboard qualified talent at increasing compensation costs may require significant time and expense which could further adversely affect the Company’s operations and financial results. The Company’s success also depends on its ability to retain its key personnel, including its executive officers and senior management team, and to continue to implement its succession plans for senior management and other key employees. The unexpected loss or unavailability of one or more of the Company’s key leaders could disrupt its business." }, { "status": "MODIFIED", "current_title": "Market and category declines and the Company’s product and geographic mix may adversely impact the Company’s ability to meet sales growth targets, profitability and financial results.", "prior_title": "Sales growth objectives may be difficult to achieve, and market and category declines and changes to the Company’s product and geographic mix may adversely impact the Company’s financial condition and results of operations.", "similarity_score": 0.562, "confidence": "low", "key_changes": [ "Reworded sentence: \"During fiscal year 2025, 86% of the Company’s net sales were attributable to U.S.\"", "Reworded sentence: \"markets for consumer goods are considered more mature and commonly characterized by high household penetration, particularly with respect to our most significant product categories.\"" ], "current_body": "A large percentage of the Company’s revenues comes from mature markets that are subject to high levels of competition. During fiscal year 2025, 86% of the Company’s net sales were attributable to U.S. markets, including U.S. territories. U.S. markets for consumer goods are considered more mature and commonly characterized by high household penetration, particularly with respect to our most significant product categories. The Company’s ability to achieve its sales growth targets depends on its ability to successfully introduce new products, brands, line extensions, and product innovations, or enter or expand into adjacent product categories, sales channels, markets or countries. Even if we are successful at increasing sales, a general decline in the markets for the Company’s product categories has had, and may in the future have, a negative impact on the Company’s financial condition, results of operations and ability to meet its sales growth targets. Further, the Company’s product, category and/or geographic mix may hinder the Company’s ability to meet these strategic targets, especially in conjunction with ongoing macroeconomic volatility, which would adversely impact its profitability and financial results.", "prior_body": "A large percentage of the Company’s revenues comes from mature markets that are subject to high levels of competition. During fiscal year 2024, 84% of the Company’s net sales were attributable to U.S. markets, including U.S. territories. The Company’s ability to achieve sales growth depends on its ability to drive growth through innovation, including as part of its IGNITE Strategy, expand into new products and categories, channels and countries, invest in its established brands and enhanced merchandising, grow categories with retailers and capture market share from competitors. The Company has implemented price increases and may implement additional price increases in the future, including to account for increasing costs, which may adversely affect sales volumes. In addition, competitors may or may not take competitive actions, which may lead to sales declines and loss of market share. If the Company is unable to increase market share in existing product lines, develop product innovations, undertake sales, marketing and advertising initiatives that grow its product categories, effectively adopt and leverage existing and emerging technologies, such as artificial intelligence or machine learning, and/or develop, acquire or successfully launch new products or brands, it may not achieve its sales growth objectives. Furthermore, a general decline in the markets for certain product categories has had and may in the future have a negative impact on the Company’s financial condition and results of operations. In addition, changes to the mix of products that the Company sells, as well as the mix of countries in which its products are sold, may adversely impact the Company’s net sales, profitability and cash flow." }, { "status": "UNCHANGED", "current_title": "Failure to effectively utilize, successfully assert or successfully defend, the Company’s intellectual property rights could impact its competitiveness. If the Company is found to have infringed the intellectual property rights of others or cannot obtain necessary intellectual property rights, its competitiveness could be negatively impacted.", "prior_title": "Failure to effectively utilize, successfully assert or successfully defend, the Company’s intellectual property rights could impact its competitiveness. If the Company is found to have infringed the intellectual property rights of others or cannot obtain necessary intellectual property rights, its competitiveness could be negatively impacted.", "current_body": "The Company's intellectual property rights are a significant and valuable aspect of its business, and the Company utilizes trademark, trade secret, copyright, and patent laws to protect its brands, products, product packaging, goodwill, inventions and confidential information. If the Company fails to obtain, perfect, enforce, or adequately protect its intellectual property rights; license intellectual property rights necessary to support new product introductions and product innovations; or if changes in laws diminish or remove the current legal protections available to them, the competitiveness of the Company’s products may be eroded and its business could suffer. The Company also licenses certain of its brands to third parties, including for the co-development of products or devices, or promotion and sales relationships with companies in industries operating in public spaces. These licensees' actions or inaction may dilute or diminish the value of the Company’s brands and products in the marketplace, or create additional exposure to litigation, investigations, disputes or other proceedings, as well as product safety, quality, sustainability and other concerns. The Company could come into conflict with third parties over intellectual property rights, including to assert and defend those rights, which could result in costly and disruptive litigation. If the Company is found to have violated a third party’s intellectual property rights, the Company may be required to cease use of such intellectual property and pay a substantial amount for past infringement or for continued use of those intellectual property rights. Any of the foregoing could have a material adverse effect on the Company’s business, financial condition and results of operations." }, { "status": "UNCHANGED", "current_title": "The estimates and assumptions on which the Company’s financial projections are based may prove to be inaccurate, which may cause its actual results to materially differ from such projections, which may adversely affect the Company’s future profitability, cash flows and stock price.", "prior_title": "The estimates and assumptions on which the Company’s financial projections are based may prove to be inaccurate, which may cause its actual results to materially differ from such projections, which may adversely affect the Company’s future profitability, cash flows and stock price.", "current_body": "The Company’s financial projections, including any sales or earnings guidance or outlook it may provide from time to time, are dependent on certain estimates and assumptions related to, among other things, category growth, development and launch of innovative new products, market share projections, product pricing and sale, volume and product mix, foreign exchange rates and volatility, tax rates, interest rates, commodity prices, distribution, cost savings, accruals for estimated liabilities, macroeconomic factors, including tariff impacts, and the Company’s ability to generate sufficient cash flow to reinvest in its existing business, fund internal growth, repurchase its stock, make acquisitions, pay dividends and meet debt obligations. These assumptions and estimates may be adversely affected by the risks described in this Report. The Company’s financial projections are based on historical experience, various other estimates and assumptions that the Company believes to be reasonable under the circumstances and at the time they are made. The Company’s actual results may differ materially from its financial projections. Any material variation between the Company’s financial projections and its actual results may adversely affect the Company’s future profitability, cash flows and stock price." }, { "status": "UNCHANGED", "current_title": "Product liability and labeling claims, commercial claims or other legal proceedings could adversely affect the Company’s financial condition and results of operations.", "prior_title": "Product liability and labeling claims, commercial claims or other legal proceedings could adversely affect the Company’s financial condition and results of operations.", "current_body": "The Company has in the past paid, and may be required in the future to pay, for losses or injuries purportedly caused by its products. Such claims may be based on allegations that, among other things, the Company’s products contain contaminants or provide inadequate instructions or warnings regarding their use, have defective packaging, fail to perform as advertised, or damage property or persons. Product liability, advertising and labeling claims could result in negative publicity that could harm the Company’s reputation, sales and results of operations and the reputation of the Company’s brands. In addition, if any of the Company’s products is found to be defective, the Company may recall such products, which could result in adverse publicity, additional litigation, fines, penalties or other losses. Although the Company maintains product liability insurance coverage, potential product liability claims may be subject to a deductible, exceed the amount of insurance coverage or be excluded under the terms of the policies. In addition, the Company is, and may in the future become, the subject of, or party to, various pending or threatened legal actions, government investigations and proceedings relating to, among other things, advertising disputes with competitors, consumer class actions, including those related to advertising claims, labor claims, breach of contract claims, antitrust litigation, securities litigation, premises liability claims, data privacy and security disputes, employment litigation related to employees, contractors and suppliers, including class action lawsuits, and litigation in foreign jurisdictions. In general, claims made by or against the Company in litigation, investigations, disputes or other proceedings have been and may in the future be expensive and time-consuming to bring or defend against and could result in settlements, injunctions or damages that could significantly affect its business, financial condition and results of operations and harm its reputation. While it is not possible to predict the final resolution of any current or future litigation, investigations, disputes or proceedings and any reserves taken in connection therewith may not be consistent with their final resolutions, the impact of these matters, including any reserves taken in connection with such matters, on the Company’s business, financial condition and results of operations could be material. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Notes to Consolidated Financial Statements in Exhibit 99.1 for additional information related to these matters." }, { "status": "UNCHANGED", "current_title": "The changing retail environment and changing consumer preferences could adversely affect the Company’s business, financial condition and results of operations.", "prior_title": "The changing retail environment and changing consumer preferences could adversely affect the Company’s business, financial condition and results of operations.", "current_body": "The Company’s sales are largely concentrated in the traditional retail grocery, mass retail outlet, warehouse club and dollar store channels, in addition to e-commerce channels. Alternative retail channels, including hard discounters, subscription services and buying clubs, have become and may continue to be more prevalent and popular than traditional retailers. In addition, a growing number of alternative sales channels and business models, such as niche brands, native online brands, private label and store brands, direct-to-consumer brands and channels and discounter channels, have emerged. In particular, the growing presence of, and increasing sales through, e-commerce retailers have affected, and may continue to affect, consumer behavior or preferences (as consumers increasingly shop online to compare pricing and product availability) and market dynamics, including any pricing pressures for consumer goods as retailers face added costs to build their e-commerce capacity. Further, consumer preferences continue to evolve due to a number of factors, including macroeconomic volatility and uncertainty, and inflation, which could cause consumers to purchase a smaller pack or quantity of a product or a lower priced alternative to the Company's products; fragmentation of the consumer market and changes in consumer demographics, which includes the aging of the general population and the emergence of millennial and younger generations who have different spending, consumption and purchasing habits; evolving consumer concerns or perceptions regarding the sustainability practices of manufacturers, including the environmental impacts of products (including packaging, energy and water use, and waste management) and the sourcing and sustainability of packaging materials, such as single-use plastics; a growing demand for natural or organic products and ingredients; evolving consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products; and changing consumer sentiment toward non-local products or sources. Any significant changes in consumer preferences or behavior, such as time spent at home or in shared public spaces, could materially and/or negatively impact demand for the Company's products and, in turn, the Company's net sales and results of operations. Consumer preferences are also influenced by perception of the brand image of the Company and its products, the success of advertising and marketing campaigns, the Company’s ability to engage with consumers in the manner they prefer, including through the use of digital media or assets, and the perception of the Company’s advertising, use of social media and engagement in political and social issues, and geopolitical events. If the Company is not successful in continuing to adapt to rapidly changing consumer preferences and market dynamics or expanding sales through e-commerce retailers or alternative retail channels, consumers may reduce their purchasing of the Company's products, which could negatively impact its business, financial condition and results of operations. In addition, e-commerce and alternative retail channels may create significant pricing pressures for consumer goods, presenting additional challenges to increasing prices in response to commodity or other cost increases in all of the channels into which the Company sells. If these e-commerce and alternative retail channels were to take significant market share away from traditional retailers and/or the Company is not successful in these channels or business models, its net sales and results of operations may be materially and negatively impacted." }, { "status": "UNCHANGED", "current_title": "Environmental matters create potential liabilities that could adversely affect the Company’s financial condition and results of operations.", "prior_title": "Environmental matters create potential liabilities that could adversely affect the Company’s financial condition and results of operations.", "current_body": "The Company must comply with various environmental laws and regulations in the jurisdictions in which it operates, including those relating to air emissions, water discharges, handling and disposal of solid and hazardous wastes, remediation of contamination associated with the use and disposal of hazardous substances. The Company has incurred, and will continue to incur, significant expenditures and other costs in complying with environmental laws and regulations and in providing physical security for its worldwide operations, and such expenditures reduce the cash flow available to the Company for other purposes. The Company is currently involved in or has potential liability with respect to the remediation of past contamination in the operation of some of its current and former facilities. In addition, some of its present and former facilities have or had been in operation for many years and, over that time, some of those facilities may have used substances or generated and disposed of wastes that are or may be considered hazardous. It is possible that those sites, as well as disposal sites owned by third parties to whom the Company has sent waste, may be identified and become the subject of remediation. In addition, the Company also handles and/or transports hazardous substances, including but not limited to chlorine, at some of its international production facilities. A release of any hazardous substances, whether in transit or at the Company’s facilities, due to accident or an intentional act, could result in substantial liability and business disruptions. The Company could also become subject to additional environmental liabilities in the future, whether as a result of new laws and regulations or otherwise, that could result in a material adverse effect on its financial condition and results of operations. The Company had a recorded liability of $27 million and $28 million as of June 30, 2025 and 2024, respectively, for its share of aggregate future remediation costs related to certain environmental matters, including response actions at various locations. Two matters, relating to environmental costs associated with one of the Company’s former operations at a site located in Alameda County, California and another relating to former operations in Dickinson County, Michigan account for a significant portion of the recorded liability. The Company’s estimated losses related to these matters are sensitive to a variety of uncertain 17 17 17 Table of Contents Table of Contents factors, including the ability of third parties to pay their share of the response and remediation obligations, the efficacy of any remediation efforts, changes in any remediation requirements, and the future availability of alternative clean-up technologies, and the Company’s exposure may exceed the amount recorded for these matters. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Notes to Consolidated Financial Statements in Exhibit 99.1 for additional information related to these liabilities." }, { "status": "UNCHANGED", "current_title": "Dependence on key customers could adversely affect the Company’s business, financial condition and results of operations.", "prior_title": "Dependence on key customers could adversely affect the Company’s business, financial condition and results of operations.", "current_body": "A limited number of customers account for a large percentage of the Company’s net sales. Net sales to the Company’s largest customer, Walmart Stores, Inc. and its affiliates, were 27%, 25%, and 26% of consolidated net sales for the fiscal years ended June 30, 2025, 2024, and 2023, respectively, and occurred across all of the Company’s reportable segments. The Company’s five largest customers accounted for nearly half of the Company’s consolidated net sales for each of the fiscal years 2025, 2024, and 2023, and a significant portion of the Company’s future revenues may continue to be derived from a small number of customers. As a result, changes in the strategies of the Company’s largest customers, including a reduction in the number of brands they carry, a shift of shelf space to “private label” or competitors’ products or a decision to lower pricing of consumer products, including branded products, may harm the Company’s net sales or net earnings, and reduce the ability of the Company to offer new, innovative products to consumers. Any loss of a key customer or a significant reduction in net sales to a key customer of the Company or a business unit could have a material adverse effect on the Company’s business, financial condition and results of operations. In addition, the use of the latest pricing technology by its customers may lead to category pricing pressures. Consistent with the ongoing variability in information technology (IT) systems industry-wide, the Company's IT platforms, including after the implementation its ERP system, may not be fully compatible at all times with those used by its customers and may not be able to respond to customer data or technology demands. With the growing trend towards retailer consolidation, both in the U.S. and internationally, the continued growth of e-commerce and the integration of traditional and digital operations at key retailers, the Company is increasingly dependent on certain retailers. This trend has resulted in the increased size and influence of large consolidated retailers, who have in the past changed, and may in the future change, their business strategies; demand lower pricing or higher trade discounts; impose other burdensome requirements on product suppliers; or move away from branded products to \"private label.\" These large consolidated companies could also exert additional competitive pressure on the Company’s other customers, which could in turn lead to such customers demanding lower pricing, higher trade discounts or special packaging or imposing other onerous requirements on the Company. If a significant customer ceases doing business with or materially decreases its purchase of the Company's products, the Company’s business, financial condition and results of operations may be harmed. The Company’s business is based primarily upon individual sales orders, and the Company typically does not enter into long-term contracts with its customers. Accordingly, customers could reduce their purchasing levels or cease buying products from the Company at any time. If the Company does not effectively respond to the demands of its customers, they could decrease their purchases, causing the Company’s net sales and net earnings to decline. Furthermore, unfavorable market conditions or competitive pressures may cause customers to reevaluate the number and mix of brands they sell, resulting in lower purchases of the Company’s products by these customers. The Company may also modify key customer credit limits due to customer financial strength, which may have an adverse impact on future sales." }, { "status": "UNCHANGED", "current_title": "Volatility and increases in the costs of raw materials, energy, transportation, labor and other necessary supplies or services have negatively impacted, and may continue to negatively impact, the Company’s net earnings and cash flow.", "prior_title": "Volatility and increases in the costs of raw materials, energy, transportation, labor and other necessary supplies or services have negatively impacted, and may continue to negatively impact, the Company’s net earnings and cash flow.", "current_body": "Volatility and increases in the cost of raw materials, including resin, non-woven fabrics for wipes products, sodium hypochlorite, corrugated cardboard and other packaging materials, soybean oil, solvent, derivatives of amines, and other chemicals and agricultural commodities, and rapid increases in the cost of energy, transportation, labor and other necessary supplies or services, have harmed, and may continue to harm, the Company’s results of operations. Many of the raw and packaging materials and supplies used in the production of the Company's products are subject to price volatility and fluctuations in availability caused by many factors, including macroeconomic and geopolitical developments and uncertainty, governmental actions (including new or increased tariffs, sanctions, quotas, or trade barriers), supplier or transport capacity constraints, changes in supply and demand, weather conditions and natural disasters (including the potential effects of climate change, which could also pose physical risks to the Company's facilities as well as those of its key external manufacturers and suppliers), fire, growing and harvesting conditions, energy costs, health epidemics, pandemics or other contagious outbreaks, labor shortages, currency fluctuations, port congestions or delays, cybersecurity incidents or other disruptions, loss or impairment of key manufacturing sites or lines, acts of terrorism and other factors beyond the Company's control. The Company has also experienced and may continue to experience disruption in its manufacturing operations and supply chain, including facility damage or closures, as a result of the factors set forth above. Although the Company is unable to predict the impact on its ability to source raw and packaging materials and services in the future, the Company does not expect supply constraints in fiscal year 2026. Supply pressures and market disruptions may continue into fiscal year 2026, however, including as a result of new or increasing U.S. or retaliatory tariffs, which could also increase raw material costs. If such cost pressures are incurred or exceed the Company’s estimates and the Company is not able to increase the prices of its products (or sustain such price increases) or achieve cost savings to offset such cost increases, its margins would be harmed. Sustained price increases may also lead to declines in sales volumes and loss of market share, as competitors may not adjust their prices or customers may decide to purchase a lower-priced alternative. The Company’s projections may not accurately predict the volume impact of price increases, which could adversely affect its business, financial condition and results of operations. To reduce the cost volatility associated with anticipated purchases of certain commodities, the Company uses derivative instruments, including commodity futures and swaps. The extent of the Company’s derivative position at any given time depends on the Company’s assessment of the markets for these commodities, the cost volatility in the markets and the cost of the derivative instruments. Many of the commodities used by the Company in its products do not have actively traded derivative instruments. If the Company does not or is unable to take a derivative position and costs subsequently increase, or if it executes a position and costs subsequently decrease, the Company’s costs may be greater than anticipated or higher than its competitors’ costs and the Company’s financial results and margins could be adversely affected." }, { "status": "UNCHANGED", "current_title": "The Company faces intense competition in its markets, which could lead to reduced net sales, net earnings and cash flow.", "prior_title": "The Company faces intense competition in its markets, which could lead to reduced net sales, net earnings and cash flow.", "current_body": "The Company faces intense competition from consumer product companies both in the U.S. and in its international markets, and our ability to maintain or gain market share may be impacted by the actions by competitors. The Company’s ability to achieve sales growth depends on its ability to drive growth through innovation, including as part of its IGNITE strategy, expand into new products and categories, channels and countries, invest in its established brands and enhanced merchandising, grow categories with retailers and capture market share from competitors. Most of the Company’s products compete with other widely advertised, promoted and merchandised brands within each product category. The Company also faces competition from retailers, including club stores, grocery stores, drugstores, dollar stores, mass merchandisers, e-commerce retailers and subscription services, which are increasingly offering “private label” brands that are typically sold at lower prices and compete with the Company’s products in certain categories. Increased purchases of “private label” products or other lower priced brands could negatively impact net sales of the Company’s higher-margin products or there could be a shift in product mix to lower-margin offerings, and this would negatively impact its net earnings and profits. The Company’s products generally compete on the basis of product performance, brand reputation and recognition, image and price, thereby requiring substantial expenditures for advertising, sales promotion and trade merchandising to gain and maintain market position. The Company is also 7 7 7 Table of Contents Table of Contents increasingly using digital media marketing and promotional programs to reach consumers. If the Company’s advertising, marketing and promotional programs, including its use of digital and social media, are not effective or adequate, the Company’s net sales may be negatively impacted. Some of the Company’s competitors are larger than the Company and have greater financial resources. These competitors, as well as new or smaller market entrants, may be able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly, adopt new technology, such as artificial intelligence and machine learning, more quickly and successfully, and respond more effectively to changing business and macroeconomic conditions and consumer preferences than the Company can. Heightened competitive activity from strong local competitors, other large multinational companies, and new entrants into the market may result in more aggressive product claims and marketing challenges, increased promotional spending and geographic expansion, and marketing of new products. Furthermore, the Company’s competitors may attempt to gain market share by offering products at prices at or below those typically offered by the Company. Competitive activity may require the Company to increase its spending on advertising and promotions and/or reduce prices, which could lead to reduced sales, margins and/or net earnings." }, { "status": "UNCHANGED", "current_title": "Supply chain issues can result in product shortages or disruptions to the Company’s business.", "prior_title": "Supply chain issues can result in product shortages or disruptions to the Company’s business.", "current_body": "The Company has a complex global network of suppliers that may, in the future, expand and further evolve in response to market conditions. The Company also relies on a number of single-source suppliers for certain commodities and raw material inputs, including packaging, product components, finished products and other necessary supplies. The Company has experienced and could continue to experience material disruptions in production and other supply chain issues, including as a result of supply chain dependencies, which could result in out-of-stock conditions. The Company’s business continuity and disaster recovery plans to address disruptions to the manufacturing or sourcing of products or raw materials may not be sufficient, comprehensive, or effective. Significant disruptions have and could, in the future, interrupt product supply and, if not remedied in a timely manner or at all, could have an adverse impact on the Company's business, results of operations, cash flows and financial condition. The Company also requires new and existing suppliers to meet its ethical and business partner standards. If the Company's existing or new suppliers fail to meet such standards or any other relevant governmental, industry, customer or Company standards; if the Company is unable to contract with suppliers on favorable terms or at the quantity, quality and price levels needed for its business; if any of the Company’s key suppliers becomes insolvent, ceases or significantly reduces its operations or experiences financial distress; or if any environmental, economic or other outside factors impact its operations, the Company's business, results of operations, cash flows and financial condition could be adversely affected. In addition, the Company may face challenges in production planning and execution, which could impact its ability to cost-effectively meet 12 12 12 Table of Contents Table of Contents product demand, or may be required to increase production in-house and reduce its supply and manufacturing arrangements with third parties, which may lead to additional costs connected to such transition and unwinding of certain manufacturing relationships." }, { "status": "UNCHANGED", "current_title": "Increases in the estimated fair value of The Procter & Gamble Co. (“P&G’s”) interest 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.", "prior_title": "Increases in the estimated fair value of The Procter & Gamble Co. (“P&G’s”) interest 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.", "current_body": "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 18 18 18 Table of Contents Table of Contents 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 changes in the underlying assumptions or estimates used to determine the estimated fair value of the Company's repurchase obligation could significantly affect the estimated fair value of that obligation and may adversely affect the Company’s net earnings in the periods leading up to the purchase, as well as its cash flows at the time of the purchase. Additionally, the final cost of the Company’s repurchase obligation may differ from the estimated fair value, which could result in further impacts to the Company's results of operations and cash flows. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes to Consolidated Financial Statements in Exhibit 99.1." }, { "status": "UNCHANGED", "current_title": "The Company is subject to risks related to its international operations and international trade.", "prior_title": "The Company is subject to risks related to its international operations and international trade.", "current_body": "In fiscal year 2025, 14% of the Company’s net sales were attributable to international markets. The Company has faced and will continue to face substantial risks associated with its foreign operations, including, but not limited to: •unfavorable and uncertain macroeconomic and geopolitical conditions as set forth elsewhere in this section and potential operational or supply chain disruptions as a result of these developments; •the imposition of or increase in tariffs, trade restrictions or sanctions, changes in trade policies, price, profit, capital or other government controls, labor laws, immigration restrictions, travel restrictions, including as a result of pandemics/epidemics, import and export laws, or other government actions generating a negative impact on the Company’s business; •environmental events, civil unrest, work stoppages, labor disputes, widespread health emergencies, pandemics/epidemics, terrorism, kidnapping, and drug‐related or other types of violence; •foreign currency fluctuations, including devaluations, currency controls and inflation, which may adversely affect the Company’s ability to do business in certain markets and reduce the U.S. dollar value of revenues, profits or cash flows it generates in non-U.S. markets; •difficulty in obtaining non-local currency (e.g., U.S. dollars) to pay for the raw materials needed to manufacture the Company’s products and contract-manufactured products; •employment litigation related to employees, contractors and suppliers; •potential loss of distribution channels as a result of retailer consolidation; •increased credit risk of customers, suppliers and distributors, and defaults on obligations of foreign governments; •increased risk of fraud or corruption in certain foreign jurisdictions and related difficulties in maintaining effective internal controls; •potential harm to third parties, the Company’s employees and/or surrounding communities, and related liabilities and damages to the Company’s reputation, from the use, storage and transportation of chlorine in certain international markets where chlorine is used in the production of bleach, whether such actions are undertaken by the Company or by the Company’s business partners; •lack of well-established or reliable, and impartial legal systems in certain countries where the Company operates, including difficulties in enforcing intellectual property and contractual rights; •challenges relating to enforcement of or compliance with local laws and regulations and with U.S. laws affecting operations outside of the U.S., including without limitation, the FCPA and intellectual property laws and protections; •the possibility of nationalization, expropriation of assets or other similar government actions. All of the foregoing risks could have a significant adverse impact on the Company’s ability to commercialize its products on a competitive basis in international markets and may have a material adverse effect on its business, financial condition and results 14 14 14 Table of Contents Table of Contents of operations. The Company’s small sales volume in some countries, relative to some multinational and local competitors, could exacerbate such risks." }, { "status": "UNCHANGED", "current_title": "Reliance on third-party service providers could have an adverse effect on the Company's business.", "prior_title": "Reliance on third-party service providers could have an adverse effect on the Company's business.", "current_body": "The Company relies on third-party service providers for certain areas of its business operations, including aspects of the implementation of the Company’s transformational initiatives (such as its digital and productivity enhancements and replacement of its ERP system), IT, procurement, supply chain, manufacturing, certain finance and accounting functions, including financial reporting, and legal, regulatory and tax compliance. Failure by these third parties to meet their contractual, regulatory and other obligations to the Company, or failure to adequately monitor their performance, has in the past and could continue to result in the Company's inability to achieve expected cost savings or efficiencies and result in additional costs to correct errors made by such service providers. Depending on the function involved and despite the possible availability of contractual remedies against these providers, such errors can also lead to business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to the Company’s reputation or have a negative impact on employee morale, all of which can adversely affect the Company’s business." }, { "status": "UNCHANGED", "current_title": "The Company may not successfully introduce new products and line extensions, or expand into adjacent categories and countries, which could adversely impact its ability to meet sales growth targets, financial condition and results of operations.", "prior_title": "The Company may not successfully introduce new products and line extensions, or expand into adjacent categories and countries, which could adversely impact its financial condition and results of operations.", "current_body": "The Company’s ability to achieve its sales growth targets depends on innovation and its ability to successfully develop or license capabilities to introduce new products, brands, line extensions and product innovations or enter or expand into adjacent product categories, sales channels, markets or countries. The Company’s ability to anticipate changes in consumer preferences and quickly innovate in order to adapt its products (including product packaging and environmental impact and sustainability profile) to meet changing consumer demands and/or evolving regulatory requirements is essential, especially in light of the reduction in barriers for even small competitors, and these innovations may result in increased costs. This risk is further heightened by the continued evolution of consumer needs, habits and preferences as a result of shifts in U.S. demographics. The Company cannot be certain that it will successfully achieve its innovation goals. New product and product packaging development and marketing efforts, including efforts to enter markets or product categories in which the Company has limited or no prior experience, not only incur substantial capital expenditures but also contain inherent risks. These risks include product development or launch delays, noncompliance with applicable laws or regulations, or infringement of third-party intellectual property, any of which could result in the Company not being first to market, and the failure of new products, brands and line extensions to achieve anticipated levels of market acceptance. In addition, success in launching new products is also dependent on the Company’s ability to deliver effective and efficient marketing in an evolving media landscape (including digital), which is subject to dynamic and increasingly restrictive privacy requirements. The Company may not be able to fully recoup the cost of unsuccessful product introductions or may experience a decline in sales of existing products as a result of consumer adoption of its new products, both of which could materially adversely affect the Company’s business, net earnings, margins, financial condition and results of operations." }, { "status": "UNCHANGED", "current_title": "Acquisitions, new venture investments and divestitures may not be successful, which could have an adverse effect on the Company’s business.", "prior_title": "Acquisitions, new venture investments and divestitures may not be successful, which could have an adverse effect on the Company’s business, financial condition and results of operations.", "current_body": "In connection with its strategy, the Company expects to continue to seek acquisition, joint venture and investment opportunities. However, the Company may not be able to identify and successfully negotiate suitable strategic transactions at attractive prices. In addition, an increase in regulatory restrictions or continued market volatility could hinder the Company’s ability to execute strategic business activities including any acquisitions or investments. Furthermore, all acquisitions and investments entail numerous risks, including risks relating to the Company’s ability to: 10 10 10 Table of Contents Table of Contents •successfully integrate acquired companies, brands, products, technologies, systems or personnel into the Company’s existing business operations in an effective, timely and cost-efficient manner; •maintain uniform standards, controls, procedures and policies throughout acquired companies, including effective integration into the Company’s internal control over financial reporting; •successfully enter categories, markets and business models in which the Company may have limited or no prior experience; •achieve expected synergies and financial or strategic benefits from acquisitions within the anticipated time periods, if at all; •achieve distribution expansion related to products, categories and markets from acquisition and retain key relationships and personnel of acquired companies; •identify and manage any legal or reputational risks that may predate or be associated with a transaction, which could negatively impact the Company following closing; and •manage other unanticipated problems or liabilities, including relating to a system shutdown, service disruption, or cyberattack on an acquired company’s IT/operational technology (OT) systems. Acquired companies or operations, joint ventures or investments may not be profitable or may not achieve sales, profitability, and cash flow expectations. Furthermore, acquisitions or ventures could also result in dilutive issuances of equity securities, debt, the assumption of contingent liabilities (such as those relating to advertising claims, environmental issues and litigation, and negative reputational issues), an increase in expenses related to intangible assets, including trademarks and goodwill, and increased operating expenses, all of which could adversely affect the Company’s financial condition, margins and results of operations. Future acquisitions of foreign companies or new foreign ventures would subject the Company to local regulations and could potentially lead to risks related to, among other things, increased exposure to foreign exchange rate changes, tax or labor laws, government price controls, or repatriation of profits and liabilities relating to the Foreign Corrupt Practices Act (“FCPA”). In addition, to the extent that the economic benefits associated with an acquisition or investment diminish in the future or the performance of an acquired company or business is less robust than expected, the Company has recorded, and may, in the future, be required to record, impairments of intangible assets. Any impairment charges could adversely affect the Company’s financial condition, margins and results of operations. The Company has divested and may, in the future, divest certain assets, businesses or brands. A divestiture could affect the profitability of the Company as a result of the gains or losses on such sale of a business or brand, the loss of the operating income or sales resulting from such sale or the costs or liabilities that are not assumed by the acquirer that may negatively impact profitability and cash flow subsequent to any divestiture. The Company may also encounter difficulty finding potential acquirers or other divestiture options on favorable terms. If the Company is unable to complete a divestiture or successfully transition a divested business, including the effective management of the related separation and overhead costs, transition services, and the maintenance of relationships with customers, suppliers, and other business partners, its business and financial results could be negatively impacted. The Company may also be required to recognize impairment charges or other losses as a result of a divestiture. For example, in March 2024 and September 2024, the Company completed the sale of its Argentina business and its Better Health VMS business, respectively, and recorded a loss for each sale. In addition, any potential future acquisitions, new ventures or divestitures may divert the attention of management and resources from other business priorities. The occurrence of any of these risks or uncertainties may have a material adverse effect on the Company’s business, financial condition and results of operations." }, { "status": "UNCHANGED", "current_title": "Risk Management and Strategy", "prior_title": "Risk Management and Strategy", "current_body": "The Company maintains a comprehensive program and processes designed to assess, identify, evaluate and manage vulnerabilities to the Company’s business and operations, and other material risks from cybersecurity threats, as part of its overall Enterprise Risk Management (ERM) and cybersecurity risk management program and processes. The Company’s cybersecurity risk management program includes the following features. •Leverages the National Institute of Standards and Technology (NIST) Cybersecurity and Zero Trust Architecture frameworks for managing cybersecurity risks; •Maintenance of security policies and standards, regular updates to response planning and protocols, and monitoring vulnerabilities, emerging threats and risks through industry information sharing channels and new technology; •A cybersecurity incident response plan designed to facilitate cross-functional coordination across the Company (including escalation based on the severity of the impact of an incident), mitigate brand and reputational damage, and comply with applicable legal obligations, which includes guidance to support the Company’s assessment of whether an incident is considered “material” for purposes of U.S. securities laws; •Executive and IT team tabletop exercises; •A cybersecurity insurance program to reimburse, up to policy limits, covered costs, losses and claims relating to a data or security breach; •Use of consultants, third-party service providers and information security firms to provide technology systems or support aspects of this program, conduct assessments of the Company's cybersecurity practices and penetration testing, and cybersecurity, risk management and legal experts; •A third-party vendor risk management process that utilizes a risk-based approach for vendors engaged through the Company’s procurement process; and •Cybersecurity awareness training for all employees who have access to Company email and connected devices, periodic phishing awareness simulations, and cybersecurity and phishing awareness content on the Company’s intranet site. The Company’s business strategy, results of operations, and financial condition have been materially affected by our previously disclosed August 2023 cyberattack, and the Company is regularly subject to cyber threats, ransomware and other security breaches. See “Risk Factors” in Item 1A of this Annual Report on Form 10-K for more information on risks from cybersecurity threats that are reasonably likely to materially affect the Company’s business strategy, results of operations and financial condition. Governance Management The Chief Information Security and Infrastructure Officer (CISIO) is responsible for the Company’s cybersecurity risk management program. The CISIO oversees the Company’s technology risk management team. This team works in partnership with the legal, financial reporting controls and internal audit functions to review information technology-related internal controls with the Company’s independent auditors as part of the overall internal controls process. The CISIO has IT and information security experience, including enterprise risk management leadership, and holds a Certified Information Security Manager certification from the Information Systems Audit and Control Association (ISACA). The CISIO reports to the Chief Information and Data Officer (CIDO), who is a member of the Clorox Executive Committee and reports directly to the CEO. The CIDO has experience overseeing and executing technology strategies and implementations in complex, global organizations. The CIDO has been in this role for the Company since June 2020 and has experience leading technology strategy in the consumer packaged goods, manufacturing and retail industries. The Company has established the Clorox Information Security Executive Committee (CISEC) which oversees the information security strategy, policies and practices of the Company. The CISEC supports the Company’s objective of maintaining a strong cybersecurity posture and culture by overseeing alignment between the Company’s cybersecurity objectives and business goals, risk exposure, and compliance requirements. The CISEC is chaired by the CISIO and includes in its membership the CIDO and Chief Legal and External Affairs Officer, who are both members of the Clorox Executive Committee, as well as the Chief Accounting Officer and Controller and the Vice President, Internal Audit, among other management. The CISIO also provides 21 21 21 Table of Contents Table of Contents periodic reports to the Clorox Executive Committee and to the Audit Committee. These reports may include updates on critical information security and cybersecurity risks and the threat landscape; cybersecurity improvement initiatives, the internal control environment, ongoing internal audit activities; and, if relevant, the status of actions taken with respect to significant cybersecurity incidents." }, { "status": "UNCHANGED", "current_title": "Harm to the Company’s reputation or the reputation of one or more of its leading brands or products could have an adverse effect on its business, financial condition and results of operations.", "prior_title": "Harm to the Company’s reputation or the reputation of one or more of its leading brands or products could have an adverse effect on the business, financial condition and results of operations.", "current_body": "Maintaining a strong reputation with consumers, customers and trade and other third-party partners is critical to the success of the Company’s business. The Company devotes significant time and resources to programs designed to protect and preserve its reputation such as ethics and compliance, brand protection and suitability, product safety and quality, and enterprise risk management, and has published goals, including relating to environmental impact and sustainability, as part of its IGNITE Strategy. The Company could be the subject of negative publicity in spite of or as a result of these efforts, including relating to product safety, quality or efficacy; ingredients or substances actually or allegedly present in the Company’s products or packaging; sustainability; or its human capital practices, including if the Company changes its position on or does not achieve its sustainability goals, or provides inaccurate information. In addition, the Company’s products have, in the past, and could, in the future, face withdrawal, recall or other quality issues, which could lead to decreased demand for and reputational damage to the related brands. The Company’s products are dependent on consumers’ perception of their efficacy, safety and quality. Emerging studies have, in the past, and could, in the future, prove or allege that ingredients or substances that are present or allegedly present in the Company's products, the products themselves, or similar products of other companies, are harmful to consumers. The Company also licenses certain of its brands to third parties. Such licenses and partnerships may create additional exposure for those brands to product safety, quality, sustainability and other concerns. 9 9 9 Table of Contents Table of Contents Widespread use of social media and networking sites by consumers has greatly increased the accessibility and speed of dissemination of information (whether accurate or inaccurate). Negative publicity, posts or comments about the Company, its brands, its products, its marketing activities, whether accurate or inaccurate, or disclosure of non-public sensitive information about the Company, could be widely disseminated through the use of social media or in other formats. Additionally, marketing initiatives may not have the desired effect on a brand’s or product’s image. Such events, if they were to occur, could harm the Company’s image and adversely affect its business, financial condition and results of operations, as well as require resources to rebuild the Company’s reputation. In addition, the legal, regulatory and ethical landscape around the use of artificial intelligence and machine learning is rapidly evolving. While the Company’s success may increasingly become dependent on its ability to adopt and effectively leverage this emerging technology, it may not be able to do so in an effective manner. This technology could also prove to be, among other things, false, biased, or inconsistent with the Company’s values and strategies, which could lead to operational disruptions, flawed decision-making, increased costs, or reputational harm. Further, the use of generative artificial intelligence tools may compromise confidential or sensitive information, put the Company’s intellectual property at risk, or subject the Company to claims of intellectual property infringement, all of which could damage the Company's reputation." }, { "status": "UNCHANGED", "current_title": "Failure of key technology systems, cyberattacks, privacy breaches or data breaches could have a material adverse effect on the Company’s business, financial condition, results of operations and reputation.", "prior_title": "Failure of key technology systems, cyberattacks, privacy breaches or data breaches could have a material adverse effect on the Company’s business, financial condition, results of operations and reputation.", "current_body": "To conduct its business, the Company relies extensively on IT and OT systems, many of which are managed, hosted, provided and/or used by third parties and their vendors. These systems include, but are not limited to, programs and processes relating to communicating within the Company and with customers, consumers, business partners, investors and other parties; ordering and managing materials from suppliers; converting materials to finished products; receiving and processing purchase orders and shipping products to customers; processing transactions; storing, processing and transmitting data, including personal confidential information and historical payment card industry data; hosting, processing and sharing confidential and proprietary research, business and financial information; and complying with financial reporting, regulatory, legal and tax requirements. The Company is in the process of a multi-year phased upgrade of its digital and productivity capabilities and ERP system replacement. It also uses various other hardware, software and operating systems that may need to be upgraded or replaced in the near future as such systems cease to be supported by third-party service providers, and may be vulnerable to increased risks, including the risk of further security breaches, system failures and disruptions. Any such upgrade could take time, oversight and be costly to the Company, and may include potential challenges, such as the cost of training personnel, data migration, the potential instability of the new system and cost overruns. If such systems are not successfully upgraded or replaced in a timely manner, system outages, disruptions or delays, or other issues may arise. If a new system does not function properly or is not adequately supported by third-party service providers and processes, it could adversely affect the Company’s business and operations, which, in turn, could adversely impact the Company’s results of operations and cash flows. The IT/OT systems of the Company, its customers, business partners, suppliers, and third-party providers have been, and will continue to be, subject to cyber-threats such as computer viruses or other malicious codes, security breaches, ransomware, unauthorized access attempts, business email compromise, data encryption or exfiltration, cyber extortion, denial of service attacks, phishing, deepfakes, social engineering, unintentional or malicious actions of employees or contractors, hacking and other cyberattacks attempting to exploit vulnerabilities by hackers, criminal groups, nation-states and nation-state-sponsored organizations and social-activist organizations. The Company experienced a cyberattack in August 2023 and may continue to experience an increase in the number of such attacks, which may result in unauthorized access, disclosure and misuse of customer, employee, vendor, Company, or consumer information, including personal consumer information obtained through online and e-commerce sales, and online activities, including promotions, rebates and customer loyalty programs, as well as increased costs related to the Company’s involvement in investigations or notifications conducted by the Company’s business partners. The rapid evolution and increased adoption of emerging technologies, such as artificial intelligence, may also increase the frequency and magnitude of cyberattacks on the Company and amplify its cybersecurity risks. In addition, while the Company has purchased cybersecurity insurance, costs related to a cyberattack may exceed the amount of insurance coverage or be excluded under the terms of its cybersecurity insurance policy. The Company may be unable to obtain cybersecurity insurance in amounts and on terms the Company views as appropriate for its operations. The security efforts of the Company and its third-party providers may not prevent or timely detect future attacks and resulting breaches or breakdowns of its databases or systems. These attacks may also be difficult to detect for periods of time and, even if detected, the nature and extent of the incident may not be immediately clear and an investigation into an incident could take a significant amount of time to complete. These factors may inhibit the Company’s ability to provide rapid, complete, and reliable information about the cybersecurity incident to customers, counterparties, and regulators, as well as the public. The Company has in place disaster recovery and business continuity plans to address Company and third-party incidents, but if these plans or those of its third-party providers are not sufficient or comprehensive, or do not effectively resolve such breaches or breakdowns on a timely basis or at all, the Company may experience interruptions in its ability to manage or conduct business, as well as reputational harm, governmental fines, penalties, regulatory proceedings, litigation and remediation expenses, adverse impacts on employee morale, loss of customers or consumers, as well as heightened regulatory and legal scrutiny. The need to coordinate with various third-party service providers, including with respect to timely notification and access to personnel and information concerning an incident, may complicate the Company’s efforts to address issues that arise. As a result, the Company is subject to the risk that the activities associated with its third-party service providers can adversely affect its business, financial condition and results of operations, even if the attack or breach does not directly impact its systems or information. Cyber-threats and techniques are becoming more sophisticated and are constantly evolving and are being made by groups and individuals with a wide range of expertise and motives, and this increases the difficulty of detecting and successfully defending against them. Continued geopolitical instability has also heightened the risk of cyberattacks. The Company has incurred, and will continue to incur, expenses to comply with privacy and data protection standards and protocols imposed by law, regulation, 13 13 13 Table of Contents Table of Contents industry standards and contractual obligations. Increased regulation of data collection, use, and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, including reporting requirements, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase the Company's cost of compliance and operation, limit its ability to grow its business or otherwise harm its business. In addition, data breaches or theft of personal information collected by the Company and its third-party service providers as well as data breaches or theft of Company information and assets have occurred in the past and may occur in the future. The Company is subject to the laws and regulations of various countries where it operates or does business related to solicitation, collection, processing, transferring, storing or use of consumer, customer, business partner or employee information or related data. These laws and regulations change frequently, and new legislation continues to be introduced and may include different standards and requirements, be interpreted and applied differently from jurisdiction to jurisdiction and create inconsistent or conflicting requirements. The changes introduced by data privacy and protection regulations increase the complexity of regulations enacted to protect business and personal data and subject the Company to additional costs and have required, and may in the future require, costly changes to the Company’s security systems, policies, procedures and practices. These laws and regulations also may result in the Company incurring additional expenses and liabilities in the event of unauthorized access to or disclosure of personal data." } ] }