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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended
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Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Schedule of fair values of the derivative financial instruments included in the consolidated balance sheets | The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows:
|  | Asset Derivatives |  | Liability Derivatives
|  |  |  | Fair Value (1) |  |  |  | Fair Value (1)
(In millions) |  | Balance Sheet Location |  | March 31, 2024 |  | June 30, 2023 |  | Balance Sheet Location |  | March 31, 2024 |  | June 30, 2023
Derivatives Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency cash flow hedges |  | Prepaid expenses and other current assets |  | $ | 36 |  |  | $ | 56 |  |  | Other accrued liabilities |  | $ | 8 |  |  | $ | 16 |
Cross-currency swap contracts |  | Prepaid expenses and other current assets |  | 52 |  |  | 22 |  |  | Other accrued liabilities |  | — |  |  | — |
Net investment hedges |  | Prepaid expenses and other current assets |  | 7 |  |  | — |  |  | Other accrued liabilities |  | — |  |  | 13 |
Interest rate-related derivatives |  | Prepaid expenses and other current assets |  | — |  |  | — |  |  | Other accrued liabilities |  | 148 |  |  | 150 |
Total Derivatives Designated as Hedging Instruments |  |  |  | 95 |  |  | 78 |  |  |  |  | 156 |  |  | 179 |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | Prepaid expenses and other current assets |  | 7 |  |  | 20 |  |  | Other accrued liabilities |  | 7 |  |  | 20 |
Total derivatives |  |  |  | $ | 102 |  |  | $ | 98 |  |  |  |  | $ | 163 |  |  | $ | 199 |
(1)See Note 6 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.
Schedule of gains and losses related to derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness | The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows:
|  | Amount of Gain (Loss) Recognized in OCI on Derivatives |  | Location of Gain (Loss) Reclassified from AOCI into Earnings |  | Amount of Gain (Loss) Reclassified from AOCI into Earnings(1)
|  | Three Months Ended March 31 |  |  | Three Months Ended March 31
(In millions) |  | 2024 |  | 2023 |  |  | 2024 |  | 2023
Derivatives in Cash Flow Hedging Relationships: |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | $ | 36 |  |  | $ | (11) |  |  | Net sales |  | $ | 15 |  |  | $ | 22 |
Interest rate-related derivatives |  | — |  |  | (11) |  |  | Interest expense |  | — |  |  | (1) |
|  | 36 |  |  | (22) |  |  |  |  | 15 |  |  | 21 |
Derivatives in Net Investment Hedging Relationships(2): |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts(3) |  | 11 |  |  | (23) |  |  |  |  | — |  |  | — |
Total derivatives |  | $ | 47 |  |  | $ | (45) |  |  |  |  | $ | 15 |  |  | $ | 21 |
(1)The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period was not material. (2)During the three months ended March 31, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $3 million and $6 million, respectively. (3)Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.
|  | Amount of Gain (Loss) Recognized in OCI on Derivatives |  | Location of Gain (Loss) Reclassified from AOCI into Earnings |  | Amount of Gain (Loss) Reclassified from AOCI into Earnings(1)
|  | Nine Months Ended March 31 |  |  | Nine Months Ended March 31
(In millions) |  | 2024 |  | 2023 |  |  | 2024 |  | 2023
Derivatives in Cash Flow Hedging Relationships: |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | $ | 28 |  |  | $ | 7 |  |  | Net sales |  | $ | 36 |  |  | $ | 59 |
Interest rate-related derivatives |  | — |  |  | 1 |  |  | Interest expense |  | (1) |  |  | (1) |
|  | 28 |  |  | 8 |  |  |  |  | 35 |  |  | 58 |
Derivatives in Net Investment Hedging Relationships(2): |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts(3) |  | (6) |  |  | (38) |  |  |  |  | — |  |  | — |
Total derivatives |  | $ | 22 |  |  | $ | (30) |  |  |  |  | $ | 35 |  |  | $ | 58 |
(1)The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period was not material. (2)During the nine months ended March 31, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $13 million and $19 million, respectively. (3)Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.
|  |  |  | Amount of Gain (Loss) Recognized in Earnings on Derivatives |  |  |  |
|  | Location of Gain (Loss) Recognized in Earnings on Derivatives |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Three Months Ended March 31 |  | Nine Months Ended March 31 |  |
(In millions) |  |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |  |
Derivatives in Fair Value Hedging Relationships: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swap contracts (1) |  | Selling, general and administrative |  | $ | 30 |  |  | $ | 1 |  |  | $ | 19 |  |  | $ | 1 |  |  |  |  |
Interest rate swap contracts (2) |  | Interest expense |  | $ | (17) |  |  | $ | 18 |  |  | $ | 3 |  |  | $ | (17) |  |  |  |  |
(1)Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt. The gain recognized in earnings from cross-currency swap contracts related to the amount excluded from effectiveness testing during the three months ended March 31, 2024 and 2023 was $5 million and $4 million, respectively, and for the nine months ended March 31, 2024 and 2023 was $14 million and $4 million, respectively. (2)Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt.
Schedule of cumulative amount of fair value hedging adjustments for designated and qualifying hedged items | Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in earnings for items designated and qualifying as hedged items in fair value hedges is as follows:
(In millions) |  |  |  |
Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included |  | Carrying Amount of the Hedged Liabilities |  | Cumulative Amount of Fair Value Hedging Gain (Loss) Included in the Carrying Amount of the Hedged Liability
|  | March 31, 2024 |  | March 31, 2024
Long-term debt |  | $ | 845 |  |  | $ | (148) |
Intercompany debt |  | $ | — |  |  | $ | 62 |
Schedule of effects of fair value and cash flow hedging relationships for designated and qualified hedging instruments | Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows:
|  | Three Months Ended March 31
|  | 2024 |  | 2023
(In millions) |  | Net Sales |  | Selling, General and Administrative |  | Interest Expense |  | Net Sales |  | Selling, General and Administrative |  | Interest Expense
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded |  | $ | 3,940 |  |  | $ | 2,284 |  |  | $ | 94 |  |  | $ | 3,751 |  |  | $ | 2,281 |  |  | $ | 58 |
The effects of fair value and cash flow hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Gain (loss) on fair value hedge relationships – interest rate contracts: |  |  |  |  |  |  |  |  |  |  |  |
Hedged item |  | N/A |  | N/A |  | 17 |  |  | N/A |  | N/A |  | (18) |
Derivatives designated as hedging instruments |  | N/A |  | N/A |  | (17) |  |  | N/A |  | N/A |  | 18 |
Gain (loss) on fair value hedge relationships – cross-currency swap contracts: |  |  |  |  |  |  |  |  |  |  |  |
Hedged item |  | N/A |  | (30) |  |  | N/A |  | N/A |  | (1) |  |  | N/A
Derivatives designated as hedging instruments |  | N/A |  | 30 |  |  | N/A |  | N/A |  | 1 |  |  | N/A
Loss on cash flow hedge relationships – interest rate contracts: |  |  |  |  |  |  |  |  |  |  |  |
Amount of loss reclassified from AOCI into earnings |  | N/A |  | N/A |  | — |  |  | N/A |  | N/A |  | (1) |
Gain on cash flow hedge relationships – foreign currency forward contracts: |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain reclassified from AOCI into earnings |  | 15 |  |  | N/A |  | N/A |  | 22 |  |  | N/A |  | N/A
N/A (Not applicable)
|  | Nine Months Ended March 31
|  | 2024 |  | 2023
(In millions) |  | Net Sales |  | Selling, General and Administrative |  | Interest Expense |  | Net Sales |  | Selling, General and Administrative |  | Interest Expense
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded |  | $ | 11,737 |  |  | $ | 7,177 |  |  | $ | 287 |  |  | $ | 12,301 |  |  | $ | 7,155 |  |  | $ | 156 |
The effects of fair value and cash flow hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Gain (loss) on fair value hedge relationships – interest rate contracts: |  |  |  |  |  |  |  |  |  |  |  |
Hedged item |  | N/A |  | N/A |  | (3) |  |  | N/A |  | N/A |  | 17 |
Derivatives designated as hedging instruments |  | N/A |  | N/A |  | 3 |  |  | N/A |  | N/A |  | (17) |
Gain (loss) on fair value hedge relationships – cross-currency swap contracts: |  |  |  |  |  |  |  |  |  |  |  |
Hedged item |  | N/A |  | (19) |  |  | N/A |  | N/A |  | (1) |  |  | N/A
Derivatives designated as hedging instruments |  | N/A |  | 19 |  |  | N/A |  | N/A |  | 1 |  |  | N/A
Loss on cash flow hedge relationships – interest rate contracts: |  |  |  |  |  |  |  |  |  |  |  |
Amount of loss reclassified from AOCI into earnings |  | N/A |  | N/A |  | (1) |  |  | N/A |  | N/A |  | (1) |
Gain on cash flow hedge relationships – foreign currency forward contracts: |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain reclassified from AOCI into earnings |  | 36 |  |  | N/A |  | N/A |  | 59 |  |  | N/A |  | N/A
N/A (Not applicable)
Schedule of gains and losses related to derivative financial instruments not designated as hedging instruments | The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows:
|  |  |  | Amount of Gain Recognized in Earnings on Derivatives |  |  |  |
|  | Location of Gain Recognized in Earnings on Derivatives |  | Three Months Ended March 31 |  | Nine Months Ended March 31 |  |
(In millions) |  |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |  |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | Selling, general and administrative |  | $ | 18 |  |  | $ | 4 |  |  | $ | 31 |  |  | $ | 21 |  |  |  |  |
Schedule of Offsetting Assets | The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties:
|  |  | As of March 31, 2024 |  | As of June 30, 2023 |  |
(In millions) |  |  | Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet |  | Contracts Subject to Netting |  | Net Amounts of Assets / (Liabilities) |  | Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet |  | Contracts Subject to Netting |  | Net Amounts of Assets / (Liabilities) |  |  |  |
Derivative Financial Contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets |  |  | $ | 102 |  |  | $ | (36) |  |  | $ | 66 |  |  | $ | 98 |  |  | $ | (53) |  |  | $ | 45 |  |  |  |  |
Derivative liabilities |  |  | (163) |  |  | 36 |  |  | (127) |  |  | (199) |  |  | 53 |  |  | (146) |  |  |  |  |
Total |  |  | $ | (61) |  |  | $ | — |  |  | $ | (61) |  |  | $ | (101) |  |  | $ | — |  |  | $ | (101) |  |  |  |  |
Schedule of Offsetting Liabilities | The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties:
|  |  | As of March 31, 2024 |  | As of June 30, 2023 |  |
(In millions) |  |  | Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet |  | Contracts Subject to Netting |  | Net Amounts of Assets / (Liabilities) |  | Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet |  | Contracts Subject to Netting |  | Net Amounts of Assets / (Liabilities) |  |  |  |
Derivative Financial Contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets |  |  | $ | 102 |  |  | $ | (36) |  |  | $ | 66 |  |  | $ | 98 |  |  | $ | (53) |  |  | $ | 45 |  |  |  |  |
Derivative liabilities |  |  | (163) |  |  | 36 |  |  | (127) |  |  | (199) |  |  | 53 |  |  | (146) |  |  |  |  |
Total |  |  | $ | (61) |  |  | $ | — |  |  | $ | (61) |  |  | $ | (101) |  |  | $ | — |  |  | $ | (101) |  |  |  |  |

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