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DERIVATIVE INSTRUMENTS | 9 Months Ended
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Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Foreign Exchange Risk 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 and cross-currency swaps 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 2019, the Company entered into cross-currency swap contracts in the notional amount of $550.0 and designated these cross-currency swaps as hedges of its net investment in certain foreign subsidiaries. In September 2020, the Company terminated its existing net investment cross currency swap derivatives in exchange for cash payment of $37.6. The related loss from this termination is included in accumulated other comprehensive income (loss) (“AOCI/(L)”) until the sale or substantial liquidation of the underlying net investments. As of March 31, 2023 and June 30, 2022, the notional amount of the outstanding forward foreign exchange contracts designated as cash flow hedges were $27.4 and $30.0, respectively. The Company also uses certain derivatives not designated as hedging instruments consisting primarily of foreign currency forward contracts and cross currency swaps to hedge intercompany transactions and foreign currency denominated external debt. Although these derivatives were not designated for hedge accounting, the overall objective of mitigating foreign currency exposure is the same for all derivative instruments. For derivatives not designated as hedging instruments, changes in fair value are recorded in the line item in the Condensed Consolidated Statements of Operations to which the derivative relates. As of March 31, 2023 and June 30, 2022, the notional amounts of these outstanding non-designated foreign currency forward and cross currency forward contracts were $1,567.2 and $2,403.8, respectively. Interest Rate Risk 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 impact of increases 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. As of March 31, 2023 and June 30, 2022, the Company had interest rate swap contracts designated as effective hedges in the notional amount of $200.0 and $800.0. These interest rate swaps are designated and qualify as cash flow hedges and were highly effective. Net Investment Hedge Foreign currency gains and losses on borrowings designated as a net investment hedge, except ineffective portions, are reported in the cumulative translation adjustment (“CTA”) component of AOCI/(L), along with the foreign currency translation adjustments on those investments. As of March 31, 2023 and June 30, 2022, the nominal exposures of foreign currency denominated borrowings designated as net investment hedges were €801.6 million and €289.0 million, respectively. The designated hedge amounts were considered highly effective. Forward Repurchase Contracts In June and December 2022, the Company entered into certain forward repurchase contracts to start hedging for potential $200.0 and $196.0 share buyback programs, in 2024 and 2025, respectively. These forward repurchase contracts are accounted for at fair value, with changes in the fair value recorded in Other expense (income), net in the Condensed Consolidated Statements of Operations. Refer to Note 15—Equity and Convertible Preferred Stock. 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 $(11.2) and $41.7 as of March 31, 2023 and June 30, 2022, 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) as of March 31, 2023 and June 30, 2022. 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,
| 2023 |  | 2022 |  | 2023 |  | 2022
Foreign exchange forward contracts | $ | (3.1) |  |  | $ | (4.7) |  |  | $ | (1.8) |  |  | $ | (3.0) |
Interest rate swap contracts | (0.1) |  |  | 7.9 |  |  | 1.7 |  |  | 9.8 |
Net investment hedges | (16.2) |  |  | 5.3 |  |  | (52.9) |  |  | 24.2 |
The accumulated (loss) gain on derivative instruments classified as cash flow hedges in AOCI/(L), net of tax, was $(0.8) and $4.3 as of March 31, 2023 and June 30, 2022, respectively. The estimated net gain 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 $(0.8). As of March 31, 2023, all of the Company's remaining foreign currency forward contracts designated as hedges were highly effective. 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,
| 2023 |  | 2022
| Net revenues |  | Cost of sales |  | Interest expense, net |  | Net revenues |  | Cost of sales |  | Interest expense, net
Foreign exchange forward contracts: |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) reclassified from AOCI into income | $ | — |  |  | $ | 0.3 |  |  | $ | — |  |  | $ | — |  |  | $ | 1.2 |  |  | $ | — |
Interest rate swap contracts: |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) reclassified from AOCI into income | — |  |  | — |  |  | 1.2 |  |  | — |  |  | — |  |  | (2.2) |
Location and Amount of Gain (Loss) Recognized in Income on Cash Flow Hedging Relationships | Nine Months Ended March 31,
| 2023 |  | 2022
| Net revenues |  | Cost of sales |  | Interest expense, net |  | Net revenues |  | Cost of sales |  | Interest expense, net
Foreign exchange forward contracts: |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) reclassified from AOCI into income | $ | — |  |  | $ | (1.3) |  |  | $ | — |  |  | $ | — |  |  | $ | 1.4 |  |  | $ | — |
Interest rate swap contracts: |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) reclassified from AOCI into income | — |  |  | — |  |  | 7.9 |  |  | — |  |  | — |  |  | (12.0) |
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,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Foreign exchange contracts | Selling, general and administrative expenses | $ | (4.6) |  |  | $ | (0.4) |  |  | $ | (4.7) |  |  | $ | (0.3) |
Foreign exchange contracts | Interest expense, net | 14.7 |  |  | (1.5) |  |  | (64.6) |  |  | 18.7 |
Foreign exchange and forward repurchase contracts | Other (expense) income, net | 161.4 |  |  | 2.8 |  |  | 167.1 |  |  | 2.3 |

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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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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