instruments, we also enter into derivative instruments that are designed to hedge a risk but are not designated as hedging instruments. These derivative instruments are adjusted to current fair value through earnings at the end of each period. We are exposed to counterparty credit risk on all of our derivative instruments. Accordingly, we have established and maintain strict counterparty credit guidelines and only enter into derivative instruments with major financial institutions that are rated investment grade or better. We do not have significant exposure to any one counterparty and we believe the risk of loss is remote. Additionally, we do not require collateral under these agreements.

Interest Rate Risk Management

We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities on our fixed-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.

Currency Exchange Risk Management

We conduct business in several major international currencies and are subject to risks associated with changing foreign exchange rates. Our objective is to reduce earnings and cash flow volatility associated with foreign exchange rate changes to allow management to focus its attention on business operations. Accordingly, we enter into various contracts that change in value as foreign exchange rates change to protect the value of existing foreign currency assets and liabilities, commitments, and anticipated foreign currency revenue and expenses.

The following table summarizes the fair value of our assets and liabilities related to derivatives designated as hedging instruments and the respective line items in which they were recorded in the consolidated balance sheets at June 30:


(in millions)	2026		2025
Assets:


Cross-currency swap	$	13	$	—
Foreign currency contracts	9		6
Pay-floating interest rate swaps	3		14


Total assets (1)	$	25	$	20

Liabilities:

Cross-currency swap	$	4	$	24
Foreign currency contracts	3		1

Pay-floating interest rate swaps	50		43

Total liabilities (2)	$	57	$	68

(1) Included in other assets in the consolidated balance sheets.

(2) Included in deferred income taxes and other liabilities in the consolidated balance sheets.

Fair Value Hedges

We enter into pay-floating interest rate swaps to hedge the changes in the fair value of fixed-rate debt resulting from fluctuations in interest rates. These contracts are designated and qualify as fair value hedges. Accordingly, the gain or loss recorded

on the pay-floating interest rate swaps is directly offset by the change in fair value of the underlying debt. Both the derivative instrument and the underlying debt are adjusted to market value at the end of each period with any resulting gain or loss recorded in interest expense, net in the consolidated statements of earnings. During fiscal 2026, 2025, and 2024 there were no gains or losses recorded to interest expense as changes in the market value of our derivative instruments offset changes in the market value of the underlying debt.

During fiscal 2026 and 2024, we entered into pay-floating interest rate swaps with total notional amounts of $600 million and $500 million, respectively. We did not enter into any pay-floating interest rate swaps during fiscal 2025. These swaps have been designated as fair value hedges of our fixed rate debt and are included in deferred income taxes and other liabilities in the consolidated balance sheets.

The following table summarizes the outstanding interest rate swaps designated as fair value hedges at June 30, 2026 and 2025:



2026
(in millions)	Notional Amount		Maturity Date
Pay-floating interest rate swaps	$	2,200	Jun 2027	-	Jun 2038



2025
(in millions)	Notional Amount		Maturity Date
Pay-floating interest rate swaps	$	1,600	Jun 2027	-	Feb 2031

The following table summarizes the gain/(loss) recognized in earnings for interest rate swaps designated as fair value hedges:


(in millions)	2026		2025		2024
Pay-floating interest rate swaps (1)	$	(18)	$	51	$	2
Fixed-rate debt (1)	18		(51)		(2)

(1) Included in interest expense, net in the consolidated statements of earnings.

Cash Flow Hedges

We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rate and foreign currency fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. Accordingly, the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings.

Gains currently included within accumulated other comprehensive loss associated with our cash flow hedges to be reclassified into net earnings within the next 12 months are $6 million.

We enter into foreign currency contracts to protect the value of anticipated foreign currency revenues and expenses. At June 30, 2026 and 2025, we held contracts to hedge probable, but not firmly committed, revenue and expenses. The principal currencies hedged are the Mexican peso, Canadian dollar, Chinese renminbi, and Thai baht.

The following tables summarize the outstanding cash flow hedges at June 30:


	2026
(in millions)	Notional Amount		Maturity Date

Foreign currency contracts	$	418	Jul 2026	-	Jun 2027


	2025
(in millions)	Notional Amount		Maturity Date

Foreign currency contracts	$	381	Jul 2025	-	Jun 2026

The following table summarizes the pre-tax gain/(loss) included in OCI for derivative instruments designated as cash flow hedges:


(in millions)	2026		2025		2024


Foreign currency contracts	$	—	$	11	$	(7)

The following table summarizes the pre-tax gain/(loss) reclassified from AOCI into earnings for derivative instruments designated as cash flow hedges:


(in millions)	2026		2025		2024
Foreign currency contracts (1)	$	—	$	3	$	1
Foreign currency contracts (2)	16		(6)		4
Foreign currency contracts (3)	(1)		(1)		—
Forward interest rate swaps (4)	2		2		2

(1) Included in revenue in the consolidated statements of earnings.

(2) Included in cost of products sold in the consolidated statements of earnings.

(3) Included in SG&A expenses in the consolidated statements of earnings.

(4) Included in interest expense, net in the consolidated statements of earnings.

Net Investment Hedges

We hedge the foreign currency risk associated with certain net investment positions in foreign subsidiaries. To accomplish this, we enter into cross-currency swaps that are designated as hedges of net investments.

In May 2026, we terminated the €50 million ($52 million) cross-currency swaps entered into in February 2025 and paid a settlement in cash of $6 million, recorded in proceeds from/(payments for) net investment hedge terminations in our consolidated statements of cash flows.

In March 2026, we entered into €68 million ($80 million) cross-currency swaps maturing in March 2028.

In March 2026, we terminated the €68 million ($73 million) cross-currency swaps entered into in March 2023 and paid a settlement in cash of $7 million, recorded in proceeds from/(payments for) net investment hedge terminations in our consolidated statements of cash flows.

In December 2025, we partially terminated the €32 million ($37 million) cross-currency swaps entered into in March 2023 and paid a settlement in cash of $3 million, recorded in proceeds from/(payments for) net investment hedge terminations in our consolidated statements of cash flows.

In September 2025, we entered into ¥18 billion ($120 million) cross-currency swaps maturing in September 2027.

In September 2025, we terminated the ¥18 billion ($120 million) cross-currency swaps entered into in September 2023 and

received settlement in cash of $3 million, recorded in proceeds from/(payments for) net investment hedge terminations in our consolidated statements of cash flows.

In February 2025, we entered into €100 million ($105 million) cross-currency swaps maturing in February 2027.

In February 2025, we terminated the €100 million ($107 million) cross-currency swaps entered into in March 2023 and received net settlement in cash of $2 million, recorded in proceeds from/(payments for) net investment hedge terminations in our consolidated statements of cash flows.

In June 2024, we terminated the ¥18 billion ($120 million) cross-currency swaps entered into in September 2023, and received net settlements in cash of $6 million, which was recorded in proceeds from/(payments for) net investment hedge terminations in our consolidated statements of cash flows.

In September 2023, we entered into ¥18 billion ($120 million) cross-currency swaps maturing in September 2025 and ¥18 billion ($120 million) cross-currency swaps maturing in June 2027.

In September 2023, we terminated the ¥38 billion ($300 million) cross-currency swaps entered into in January 2023 and received net settlement in cash of $28 million, recorded in proceeds from/(payments for) net investment hedge terminations in our consolidated statements of cash flows.

Cross-currency swaps designated as net investment hedges are marked-to-market using the current spot exchange rate as of the end of the period, with gains and losses included in the foreign currency translation component of accumulated other comprehensive loss until the sale or substantial liquidation of the underlying net investments. To the extent the cross-currency swaps designated as net investment hedges are not highly effective, changes in carrying value attributable to the change in spot rates are recorded in earnings.

Pre-tax gains and losses from net investment hedges recorded in the foreign currency translation component of accumulated other comprehensive loss were a $34 million gain and a $33 million loss during fiscal 2026 and 2025, respectively. Gains and losses recognized in interest expense, net in the consolidated statements of earnings for the portion of the net investment hedges excluded from the assessment of hedge effectiveness were immaterial during both fiscal 2026 and 2025, respectively.

Economic (Non-Designated) Hedges

We enter into foreign currency contracts to manage our foreign exchange exposure related to sales transactions, intercompany financing transactions, and other balance sheet items subject to revaluation that do not meet the requirements for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through earnings. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability. The settlement of the derivative instrument and the remeasurement adjustment on the foreign currency denominated asset or liability are both recorded in other (income)/expense, net in the consolidated