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DERIVATIVE INSTRUMENTS | 9 Months Ended
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Mar. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Foreign Exchange Risk Management The Company is exposed to foreign currency exchange fluctuations through its global operations. The Company may reduce its exposure to fluctuations in the cash flows associated with changes in foreign exchange rates by creating offsetting positions through the use of derivative instruments and also by designating foreign currency denominated borrowings as hedges of net investments in foreign subsidiaries. The Company expects that through hedging, any gain or loss on the derivative instruments would generally offset the expected increase or decrease in the value of the underlying forecasted transactions. In September 2020, the Company terminated its existing net investment cross currency swap derivatives with notional amount of $550.0 in exchange for cash payment of $37.6. The related loss from this termination is included in AOCI/(L) until the sale or substantial liquidation of the underlying net investments. On December 1, 2020, as part of the divestiture, the Company entered into a novation agreement with Wella to assign all existing foreign exchange forward contracts and related obligations originally executed by the Company in connection with the Wella Business. In December 2020, the Company applied $2,015.5 in proceeds from the Wella transaction to pay down existing U.S. dollar and foreign currency denominated debt obligations. As a result, foreign currency denominated borrowings designated as net investment hedges decreased from nominal exposures of €3,591.0 million at June 30, 2020 to €2,804.8 million as of December 31, 2020. Interest Rate Risk Management The Company is exposed to interest rate fluctuations related to its variable rate debt instruments. The Company may reduce its exposure to fluctuations in the cash flows associated with changes in the variable interest rates by entering into offsetting positions through the use of derivative instruments, such as interest rate swap contracts. The interest rate swap contracts result in recognizing a fixed interest rate for the portion of the Company’s variable rate debt that was hedged. This will reduce the negative and positive impacts of changes in the variable rates over the term of the contracts. Hedge effectiveness of interest rate swap contracts is based on a long-haul hypothetical derivative methodology and includes all changes in value. During September 2019, the Company entered into incremental interest rate swap contracts in the notional amount of $1,000.0, which extended the maturity of the interest rate swap portfolio from 2021 through 2023. These interest rate swaps are designated and qualify as cash flow hedges. In December 2020, the Company terminated certain existing interest rate swaps with notional amount of $600.0 in exchange for cash payment of $4.0. The related loss from this termination is included in Interest expense, net in the Condensed Consolidated Statements of Operations. As of March 31, 2021 and June 30, 2020, the Company had interest rate swap contracts designated as effective hedges in the notional amount of $2,000.0 and $3,000.0, respectively. Derivative and non-derivative financial instruments which are designated as hedging instruments: The accumulated (loss)/gain on foreign currency borrowings classified as net investment hedges in the foreign currency translation adjustment component of AOCI/(L) was $70.8 and $261.9 as of March 31, 2021 and June 30, 2020, respectively. The accumulated loss on derivative instruments classified as net investment hedges in the foreign currency translation adjustment component of AOCI/(L) was $(37.6) and $(12.5) as of March 31, 2021 and June 30, 2020, respectively. The amount of gains and losses recognized in Other comprehensive income (loss) (“OCI”) in the Condensed Consolidated Balance Sheets related to the Company’s derivative and non-derivative financial instruments which are designated as hedging instruments is presented below:
Gain (Loss) Recognized in OCI | Three Months Ended March 31, |  | Nine Months Ended March 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Foreign exchange forward contracts | $ | — |  |  | $ | 1.5 |  |  | $ | (0.4) |  |  | $ | 0.9 |
Interest rate swap contracts | 3.9 |  |  | (27.9) |  |  | 4.3 |  |  | (24.3) |
Cross-currency swap contracts | — |  |  | 14.9 |  |  | (25.1) |  |  | (3.8) |
Net investment hedge | 156.4 |  |  | 67.5 |  |  | (191.1) |  |  | 125.5 |
The accumulated loss on derivative instruments classified as cash flow hedges in AOCI/(L), net of tax, was $(19.8) and $(43.0) as of March 31, 2021 and June 30, 2020, respectively. The estimated net loss related to these effective hedges that is expected to be reclassified from AOCI/(L) into earnings, net of tax, within the next twelve months is $(10.8). The amount of gains and losses reclassified from AOCI/(L) to the Condensed Consolidated Statements of Operations related to the Company’s derivative financial instruments which are designated as hedging instruments is presented below:
Location and Amount of Gain (Loss) Recognized in Income on Cash Flow Hedging Relationships | Three Months Ended March 31, |  | Nine Months Ended March 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
| Net revenues |  |  |  | Interest expense, net |  | Net revenues |  |  |  | Interest expense, net |  | Net revenues |  |  |  | Interest expense, net |  | Net revenues |  |  |  | Interest expense, net
Foreign exchange forward contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) reclassified from AOCI into income | $ | — |  |  |  |  | $ | — |  |  | $ | — |  |  |  |  | $ | — |  |  | $ | 1.0 |  |  |  |  | $ | — |  |  | $ | — |  |  |  |  | $ | — |
Interest rate swap contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) reclassified from AOCI into income | — |  |  |  |  | (6.3) |  |  | — |  |  |  |  | (2.8) |  |  | — |  |  |  |  | (27.6) |  |  | — |  |  |  |  | (3.1) |
Derivatives not designated as hedging: The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments is presented below:
Condensed Consolidated Statements of Operations Classification of Gain (Loss) Recognized in Operations | Three Months Ended March 31, |  | Nine Months Ended March 31,
|  | 2021 |  | 2020 |  | 2021 |  | 2020
Foreign exchange contracts | Selling, general and administrative expenses | $ | — |  |  | $ | (1.1) |  |  | $ | 0.1 |  |  | $ | (1.6) |
Foreign exchange contracts | Interest expense, net | 7.5 |  |  | (14.5) |  |  | 23.7 |  |  | (3.2) |
Foreign exchange contracts | Other expense, net | (0.1) |  |  | 1.0 |  |  | (0.5) |  |  | 0.7 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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