XML 22 R14.htm IDEA: XBRL DOCUMENT
v3.24.3

DERIVATIVES | 3 Months Ended
--- | ---
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | NOTE 5 — DERIVATIVES We use derivative instruments to manage risks related to foreign currencies, interest rates, equity prices, and credit; to enhance investment returns; and to facilitate portfolio diversification. Our objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment. Foreign Currencies Certain forecasted transactions, assets, and liabilities are exposed to foreign currency risk. We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency hedge positions. Foreign currency risks related to certain Euro-denominated debt are hedged using foreign exchange forward contracts that are designated as cash flow hedging instruments. Certain options and forwards not designated as hedging instruments are also used to manage the variability in foreign exchange rates on certain balance sheet amounts and to manage other foreign currency exposures. Interest Rate Interest rate risks related to certain fixed-rate debt are hedged using interest rate swaps that are designated as fair value hedging instruments to effectively convert the fixed interest rates to floating interest rates. Securities held in our fixed-income portfolio are subject to different interest rate risks based on their maturities. We manage the average maturity of our fixed-income portfolio to achieve economic returns that correlate to certain broad-based fixed-income indices using option, futures, and swap contracts. These contracts are not designated as hedging instruments and are included in “Other contracts” in the tables below. Equity Securities held in our equity investments portfolio are subject to market price risk. At times, we may hold options, futures, and swap contracts. These contracts are not designated as hedging instruments. Credit Our fixed-income portfolio is diversified and consists primarily of investment-grade securities. We use credit default swap contracts to manage credit exposures relative to broad-based indices and to facilitate portfolio diversification. These contracts are not designated as hedging instruments and are included in “Other contracts” in the tables below. Credit-Risk-Related Contingent Features Certain counterparty agreements for derivative instruments contain provisions that require our issued and outstanding long-term unsecured debt to maintain an investment grade credit rating and require us to maintain minimum liquidity of $1.0 billion. To the extent we fail to meet these requirements, we will be required to post collateral, similar to the standard convention related to over-the-counter derivatives. As of September 30, 2024, our long-term unsecured debt rating was AAA, and cash investments were in excess of $1.0 billion. As a result, no collateral was required to be posted. The following table presents the notional amounts of our outstanding derivative instruments measured in U.S. dollar equivalents:
(In millions) |  | September 30, 2024 |  |  | June 30, 2024 |
Designated as Hedging Instruments |  |  |  |  |  |  |  |
Foreign exchange contracts purchased |  | $ | 1,492 |  |  | $ | 1,492 |
Interest rate contracts purchased |  |  | 1,144 |  |  |  | 1,100 |
Not Designated as Hedging Instruments |  |  |  |  |  |  |  |
Foreign exchange contracts purchased |  |  | 8,438 |  |  |  | 7,167 |
Foreign exchange contracts sold |  |  | 22,559 |  |  |  | 31,793 |
Equity contracts purchased |  |  | 4,290 |  |  |  | 4,016 |
Equity contracts sold |  |  | 2,165 |  |  |  | 2,165 |
Other contracts purchased |  |  | 2,829 |  |  |  | 2,113 |
Other contracts sold |  |  | 1,121 |  |  |  | 811 |
Fair Values of Derivative Instruments The following table presents our derivative instruments:
(In millions) |  | Derivative Assets |  |  |  | Derivative Liabilities |  |  | Derivative Assets |  |  | Derivative Liabilities |
|  | September 30, 2024 |  |  | June 30, 2024 |
Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | 50 |  |  | $ | (65 | ) |  | $ | 24 |  |  | $ | (76 | )
Interest rate contracts |  |  | 5 |  |  |  | 0 |  |  |  | 19 |  |  |  | 0 |
Not Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | 189 |  |  |  | (615 | ) |  |  | 213 |  |  |  | (230 | )
Equity contracts |  |  | 68 |  |  |  | (804 | ) |  |  | 63 |  |  |  | (491 | )
Other contracts |  |  | 6 |  |  |  | (6 | ) |  |  | 12 |  |  |  | (3 | )
Gross amounts of derivatives |  |  | 318 |  |  |  | (1,490 | ) |  |  | 331 |  |  |  | (800 | )
Gross amounts of derivatives offset in the balance sheets |  |  | (196 | ) |  |  | 198 |  |  |  | (151 | ) |  |  | 152 |
Cash collateral received |  |  | 0 |  |  |  | (18 | ) |  |  | 0 |  |  |  | (104 | )
Net amounts of derivatives |  | $ | 122 |  |  | $ | (1,310 | ) |  | $ | 180 |  |  | $ | (752 | )
Reported as |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term investments |  | $ | (1 | ) |  | $ | 0 |  |  | $ | 12 |  |  | $ | 0 |
Other current assets |  |  | 118 |  |  |  | 0 |  |  |  | 149 |  |  |  | 0 |
Other long-term assets |  |  | 5 |  |  |  | 0 |  |  |  | 19 |  |  |  | 0 |
Other current liabilities |  |  | 0 |  |  |  | (900 | ) |  |  | 0 |  |  |  | (401 | )
Other long-term liabilities |  |  | 0 |  |  |  | (410 | ) |  |  | 0 |  |  |  | (351 | )
Total |  | $ | 122 |  |  | $ | (1,310 | ) |  | $ | 180 |  |  | $ | (752 | )
Gross derivative assets and liabilities subject to legally enforceable master netting agreements for which we have elected to offset were $306 million and $1.5 billion, respectively, as of September 30, 2024, and $304 million and $800 million, respectively, as of June 30, 2024. The following table presents the fair value of our derivatives instruments on a gross basis:
(In millions) |  | Level 1 |  |  |  | Level 2 |  |  | Level 3 |  |  | Total |
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets |  | $ | 0 |  |  | $ | 313 |  |  | $ | 5 |  |  | $ | 318 |
Derivative liabilities |  |  | (1 | ) |  |  | (1,489 | ) |  |  | 0 |  |  |  | (1,490 | )
June 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets |  |  | 0 |  |  |  | 327 |  |  |  | 4 |  |  |  | 331 |
Derivative liabilities |  |  | (1 | ) |  |  | (799 | ) |  |  | 0 |  |  |  | (800 | )
Gains (losses) on derivative instruments recognized in other income (expense), net were as follows:
(In millions) |  |  |  |
Three Months Ended September 30, |  |  | 2024 |  |  |  | 2023 |
Designated as Fair Value Hedging Instruments |  |  |  |  |  |  |  |
Interest rate contracts |  |  |  |  |  |  |  |
Derivatives |  | $ | 20 |  |  | $ | (16 | )
Hedged items |  |  | (32 | ) |  |  | 3 |
Designated as Cash Flow Hedging Instruments |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  |  |  |  |  |
Amount reclassified from accumulated other comprehensive loss |  |  | 49 |  |  |  | (46 | )
Not Designated as Hedging Instruments |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | (383 | ) |  |  | 206 |
Equity contracts |  |  | (348 | ) |  |  | 113 |
Other contracts |  |  | 24 |  |  |  | (33 | )
Gains (losses), net of tax, on derivative instruments recognized in our consolidated comprehensive income statements were as follows:
(In millions) |  |  |
Three Months Ended September 30, |  | 2024 |  |  | 2023 |
Designated as Cash Flow Hedging Instruments |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  |  |  |  |  |
Included in effectiveness assessment |  | $ | 29 |  |  | $ | (15 | )

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration