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Hedging Activities | 3 Months Ended
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Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Hedging Activities | Hedging Activities In the normal course of business, the Company is exposed to interest rate and foreign currency exchange rate fluctuations. At times, the Company limits these risks through the use of derivatives as described below. In accordance with the Company’s policy, derivatives are only used for hedging purposes. The Company does not use derivatives for trading or speculative purposes. The Company uses various counterparties for its derivative contracts to minimize the exposure to credit risk but does not anticipate non-performance by these parties. Foreign Currency Exchange Risk The Company conducts its business worldwide in U.S. dollars and the functional currencies of its foreign subsidiaries, including Canadian dollars. Changes in foreign currency exchange rates could have a material adverse impact on the Company’s financial results that are reported in U.S. dollars. The Company is also exposed to foreign currency exchange rate risk related to its foreign subsidiaries, including intercompany loans denominated in non-functional currencies. The Company has certain foreign currency exchange rate risk programs that use foreign currency forward contracts and cross-currency swaps. These forward contracts and cross-currency swaps are generally used to offset the potential income statement effects from intercompany loans and other obligations denominated in non-functional currencies. These programs reduce but do not entirely eliminate foreign currency exchange rate risk. Interest Rate Risk The Company has exposure to changes in interest rates, and it utilizes risk programs which use interest rate swaps to hedge the changes in debt fair values caused by fluctuations in benchmark interest rates. The Company also enters into forward contracts to hedge the variability of future benchmark interest rates on any planned bond issuances. These programs reduce but do not entirely eliminate interest rate risk. Derivative Instruments At June 30, 2024 and March 31, 2024, the notional amounts of the Company’s outstanding derivatives were as follows:
|  |  |  |  | June 30, 2024 |  | March 31, 2024
(In millions) | Currency |  | Maturity Date (1) |  | Notional
Derivatives designated as net investment hedges: (2) |  |  |  |  |  |  |
Cross-currency swaps (3) | CAD |  | Apr-25 to Jun-26 |  | C$ | 2,500 |  |  | C$ | 1,500 |
Derivatives designated as fair value hedges: (2) |  |  |  |  |  |  |
Cross-currency swaps (4) | GBP |  | Nov-28 |  | £ | 450 |  |  | £ | 450 |
Cross-currency swaps (4) | EUR |  | Aug-25 to Jul-26 |  | € | 1,100 |  |  | € | 1,100 |
Floating interest rate swaps (5) | USD |  | Feb-26 to Sep-29 |  | $ | 1,250 |  |  | $ | 1,250 |
Derivatives designated as cash flow hedges: (2) |  |  |  |  |  |  |
Foreign currency forwards (6) | GBP |  | Jul-24 to Jul-25 |  | £ | 35 |  |  | £ | 39 |
(1)The maturity date reflected is for outstanding derivatives as of June 30, 2024. (2)There was no ineffectiveness in these hedges for the three months ended June 30, 2024 and 2023. (3)The Company agreed with third parties to exchange fixed interest payments in one currency for fixed interest payments in another currency at specified intervals and to exchange principal in one currency for principal in another currency, calculated by reference to agreed-upon notional amounts. (4)Represents cross-currency fixed-to-fixed interest rate swaps to mitigate the foreign currency exchange fluctuations on its foreign currency-denominated notes. (5)Represents fixed-to-floating interest rate swaps to hedge the changes in fair value caused by fluctuations in the benchmark interest rates. (6)The Company entered into agreements with financial institutions to hedge the variability of foreign currency exchange fluctuations in future cash payments due to a third party in the United Kingdom for capital expenditures. Net Investment Hedges The Company uses cross-currency swaps to hedge portions of the Company’s net investments denominated in Canadian dollars against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. The changes in the fair value of these derivatives attributable to the changes in spot currency exchange rates and differences between spot and forward interest rates are recorded in accumulated other comprehensive loss and offset foreign currency translation gains and losses recorded on the Company’s net investments denominated in Canadian dollars. To the extent cross-currency swaps designated as hedges are ineffective, changes in carrying value attributable to the change in spot rates are recorded in earnings. In the first quarter of fiscal 2025, the Company entered into cross-currency swaps designated as net investment hedges with a total notional amount of C$2.5 billion to hedge portions of the Company’s net investments denominated in Canadian dollars against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. These cross-currency swaps mature in April 2025 and June 2026. Further, the Company terminated C$1.5 billion of cross-currency swaps designated as net investment hedges with original maturity dates in November 2024 and extending through March 2025. Fair Value Hedges The Company uses cross-currency swaps to hedge the changes in the fair value of its foreign currency notes resulting from changes in benchmark interest rates and foreign currency exchange rates. The Company also uses floating interest rate swaps to hedge the changes in the fair value of its U.S. dollar notes resulting from changes in benchmark interest rates. The changes in the fair value of these derivatives and the offsetting changes in the fair value of the hedged notes are recorded in earnings. Gains and losses from the changes in the Company’s fair value hedges recorded in earnings were largely offset by the gains and losses recorded in earnings on the hedged item. For components excluded from the assessment of hedge effectiveness, the initial value of the excluded component is recognized in accumulated other comprehensive loss and then released into earnings over the life of the hedging instrument. The difference between the change in the fair value of the excluded component and the amount amortized into earnings during the period is recorded in other comprehensive income (loss). Cash Flow Hedges The Company uses cross-currency swaps to hedge intercompany loans denominated in non-functional currencies to reduce the income statement effects arising from fluctuations in foreign currency exchange rates. The Company also uses forward contracts to hedge the variability of future benchmark interest rates on any planned bond issuances and to offset the potential income statement effects from obligations denominated in non-functional currencies. The effective portion of changes in the fair value of these hedges is recorded in accumulated other comprehensive loss and reclassified into earnings in the same period in which the hedged transaction affects earnings. Changes in fair values representing hedge ineffectiveness are recognized in current earnings. There were no gains or losses reclassified from accumulated other comprehensive loss and recorded in “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2024 or 2023. In fiscal 2023, the Company entered into forward-starting fixed interest rate swaps designated as cash flow hedges with a combined notional amount of $450 million, and in the first quarter of fiscal 2024 with a notional amount of $50 million, to hedge the variability of future benchmark interest rates on a planned bond issuance. On June 15, 2023, the Company completed a public offering of the 2033 Notes, at which point the $500 million cash flow hedges were terminated and the proceeds are being amortized to interest expense over the life of the 2033 Notes, or 10 years. Refer to F inancial Note 6, “Debt and Financing Activities,” for additional information on the public offering of the 2033 Notes. Derivatives Not Designated as Hedges Derivative instruments not designated as hedges are marked-to-market at the end of each accounting period with the change in fair value included in earnings. Changes in the fair values for contracts not designated as hedges are recorded directly into earnings in “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. The Company did not enter into or have any outstanding derivative instruments not designated as hedges during the periods presented. Other Information on Derivative Instruments Gains (losses) from derivatives included in other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income were as follows:
|  |  | Three Months Ended June 30,
(In millions) |  |  |  |  | 2024 |  | 2023
Derivatives designated as net investment hedges: |  |  |  |  |  |  |
Cross-currency swaps |  |  |  |  | $ | 7 |  |  | $ | (20) |
Derivatives designated as cash flow and other hedges: |  |  |  |  |  |  |
Cross-currency swaps (1) |  |  |  |  | $ | — |  |  | $ | (6) |
Foreign currency forwards |  |  |  |  | — |  |  | — |
Fixed interest rate swaps |  |  |  |  | — |  |  | 16 |
(1)Includes other comprehensive income (loss) related to the excluded component of certain fair value hedges. Information regarding the fair value of derivatives on a gross basis were as follows:
| Balance Sheet Caption | June 30, 2024 |  | March 31, 2024
| Fair Value of Derivative |  | U.S. Dollar Notional |  | Fair Value of Derivative |  | U.S. Dollar Notional
(In millions) | Asset |  | Liability |  |  | Asset |  | Liability |
Derivatives designated for hedge accounting:
Cross-currency swaps (current) | Prepaid expenses and other/Other accrued liabilities | $ | — |  |  | $ | 3 |  |  | $ | 1,095 |  |  | $ | 13 |  |  | $ | 1 |  |  | $ | 1,122 |
Cross-currency swaps (non-current) | Other non-current assets/liabilities | 100 |  |  | 3 |  |  | 2,366 |  |  | 108 |  |  | — |  |  | 1,638 |
Interest rate swaps (non-current) | Other non-current liabilities | — |  |  | 36 |  |  | 1,250 |  |  | — |  |  | 35 |  |  | 1,250 |
Foreign currency forwards (current) | Prepaid expenses and other/Other accrued liabilities | — |  |  | — |  |  | 41 |  |  | — |  |  | — |  |  | 35 |
Foreign currency forwards (non-current) | Other non-current assets | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | 15 |
Total |  | $ | 100 |  |  | $ | 42 |  |  |  |  | $ | 121 |  |  | $ | 36 |  |  |
Refer to Financial Note 8, "Fair Value Measurements," for more information on these recurring fair value measurements.

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- 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
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