v3.26.1
Retirement Benefits
 12 Months Ended
Jun. 30, 2026
Retirement Benefits [Abstract]  
Retirement Benefits Retirement Benefits
Pensions and Other Postretirement Benefits
The Company has noncontributory defined benefit pension plans covering eligible employees, including certain employees in foreign countries. Our largest plans are generally closed to new participants. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat-dollar amounts and years of service. We also have arrangements for certain key employees, which provide for supplemental retirement benefits. In general, the Company's policy is to fund these plans based on legal requirements, tax considerations, local practices and investment opportunities.
The Company provides postretirement medical and life insurance benefits to certain retirees and eligible dependents through an unfunded plan. The plan is contributory, with retiree contributions adjusted annually, and pays stated percentages of covered medically necessary expenses incurred by retirees after subtracting payments
by Medicare or other providers and after stated deductibles have been met. The Company has established cost maximums to more effectively control future health care costs. We have reserved the right to change this benefit plan.
Components of Net Periodic Benefit Cost (Credit)
U.S. Pension BenefitsNon-U.S. Pension Benefits
Other Postretirement Benefits
For the years ended June 30,202620252024202620252024202620252024
Service cost$25 $28 $29 $22 $22 $22 $— $— $— 
Interest cost167 184 190 72 76 80 3 4 4 
Expected return on plan assets(232)(245)(258)(89)(87)(95)— — — 
Amortization of prior service cost3 3 1 — — — — — — 
Amortization of net actuarial loss (gain)5 7 2 6 7 6 (2)(2)(2)
Settlements— 3 — 3 — — — — — 
Net periodic benefit cost (credit)$(32)$(20)$(36)$14 $18 $13 $1 $2 $2 
Components of net periodic benefit cost (credit), other than service cost, are included in other expense (income), net in the Consolidated Statements of Income.
Benefit Obligations and Funded Status
The following tables present the funded status of the Company's pension and other postretirement benefit plans and related balance sheet amounts:
U.S. Pension BenefitsNon-U.S. Pension Benefits
Other Postretirement Benefits
202620252026202520262025
Change in benefit obligation
Benefit obligation at beginning of year$3,615 $3,723 $1,885 $1,817 $63 $71 
Service cost25 28 22 22 — — 
Interest cost167 184 72 76 3 4 
Acquisition— — 14 — — — 
Actuarial gain(1)
(102)(12)(31)(104)(10)(6)
Benefits paid(260)(254)(86)(88)(5)(6)
Settlements— (55)(24)(6)— — 
Plan amendments— 1 — — — — 
Foreign currency translation and other(6)— (75)168 (1)— 
Benefit obligation at end of year$3,439 $3,615 $1,777 $1,885 $50 $63 
Change in plan assets
Fair value of plan assets at beginning of year$3,463 $3,363 $2,183 $2,003 $— $— 
Actual return on plan assets282 347 81 — — — 
Acquisition— — 14 — — — 
Employer contributions9 62 36 87 5 6 
Benefits paid(260)(254)(86)(88)(5)(6)
Settlements— (55)(24)(6)— — 
Foreign currency translation and other— — (76)187 — — 
Fair value of plan assets at end of year$3,494 $3,463 $2,128 $2,183 $— $— 
Funded status$55 $(152)$351 $298 $(50)$(63)
(1) The actuarial gain for the U.S. pension plans in 2026 was primarily driven by higher discount rates and favorable demographic experience. The actuarial gain for the Non-U.S. pension plans in 2026 was primarily driven by higher discount rates, partially offset by unfavorable demographic experience. In 2025, the actuarial gain for the Non-U.S. pension plans was driven by higher discount rates and favorable demographic experience.
U.S. Pension BenefitsNon-U.S. Pension BenefitsOther Postretirement Benefits
June 30,202620252026202520262025
Amounts recognized on the Consolidated Balance Sheets
Other long-term assets$176 $— $379 $346 $— $— 
Other current liabilities(10)(11)— (1)(5)(6)
Pensions and other postretirement benefits(111)(141)(28)(47)(45)(57)
Net amount recognized$55 $(152)$351 $298 $(50)$(63)
Pre-tax amounts recognized in Accumulated Other Comprehensive Loss
Net actuarial loss (gain)$34 $191 $193 $230 $(33)$(25)
Prior service cost15 18 1 2 — — 
Net amount recognized$49 $209 $194 $232 $(33)$(25)
In addition to the pension and other postretirement benefit obligations presented in the tables above, the amounts reported on the Consolidated Balance Sheets include other immaterial defined benefit pension liabilities.
The accumulated benefit obligation for all defined benefit plans was $5.1 billion and $5.4 billion at June 30, 2026 and 2025, respectively.
Information for pension plans with accumulated benefit obligations in excess of plan assets:
June 30,20262025
Accumulated benefit obligation
$212 $316 
Fair value of plan assets
87 171 
Information for pension plans with projected benefit obligations in excess of plan assets:
June 30,20262025
Projected benefit obligation
$301 $3,865 
Fair value of plan assets
102 3,665 
Expected Contributions and Benefit Payments
We expect to make cash contributions of approximately $52 million to our defined benefit pension and other postretirement benefit plans in 2027, of which $37 million relates to the non-U.S. plans.
The following estimated benefit payments are expected to be paid during each respective year:
U.S. Pension BenefitsNon-U.S. Pension BenefitsOther Postretirement Benefits
2027$270 $100 $5 
2028274 106 5 
2029282 108 5 
2030295 114 5 
2031274 117 5 
2032 - 20361,334 597 20 
Assumptions
The weighted-average actuarial assumptions used to measure the net periodic benefit credit and benefit obligations are:
U.S. Pension BenefitsNon-U.S. Pension Benefits
Other Postretirement Benefits
202620252024202620252024202620252024
Net Periodic Benefit Credit
Discount rate5.27 %5.27 %4.88 %4.36 %4.19 %4.24 %5.18 %5.23 %4.86 %
Average increase in compensation3.79 %3.81 %3.81 %2.65 %2.73 %2.76 %NANANA
Expected return on plan assets7.00 %7.00 %7.00 %4.47 %4.47 %5.22 %NANANA
Benefit Obligation
Discount rate5.49 %5.27 %5.27 %4.49 %4.36 %4.19 %5.39 %5.18 %5.23 %
Average increase in compensation3.67 %3.79 %3.76 %2.61 %2.65 %2.73 %NANANA
The discount rate assumption is based on current rates of high-quality, long-term corporate bonds over the same estimated time period that benefit payments will be required to be made. The expected return on plan assets assumption is based on the weighted-average expected return of the various asset classes in the plans' portfolio. The asset class return is developed using historical asset return performance as well as current market conditions such as inflation, interest rates and equity market performance.
The health care cost trend rate assumptions used to measure the postretirement benefit obligations are:
20262025
Health care cost trend rate assumed for next year7.50 %9.73 %
Ultimate health care cost trend rate 4.50 %4.50 %
Year that the ultimate rate is reached20382035
Plan Assets
The weighted-average allocation of the majority of the assets related to the defined benefit plans is as follows:
June 30,20262025
Equities15 %20 %
Fixed income53 %46 %
Other investments32 %34 %
100 %100 %
The weighted-average target asset allocation as of June 30, 2026 is 20% equities, 53% fixed income and 27% other investments. The investment strategy for the Company's worldwide defined benefit pension plan assets focuses on achieving prudent actuarial funding ratios while maintaining acceptable levels of risk in order to provide adequate liquidity to meet immediate and future benefit requirements. This strategy requires investment portfolios that are broadly diversified across various asset classes and external investment managers. Assets held in the U.S. and U.K. defined benefit plans account for 62% and 23%, respectively, of our total defined benefit plan assets. The overall investment strategy with respect to our U.S. defined benefit plan is to use a funding strategy more heavily weighted toward liability-hedging assets as the funded status improves. Over time, we will increase the allocation to long duration fixed income investments and reduce exposure to return seeking assets such as equities and alternatives. The strategy utilizes fixed income investments aligned with the duration and cash flow profile of the plan's liabilities to hedge the impact of interest rate and inflation changes. For the U.K. defined benefit plans, the overall investment strategy primarily focuses on utilizing fixed income investments to achieve a rate of return that is at least commensurate with the changes in the cost of providing fixed and index-linked annuities.
Certain investments that are measured at their fair value using the Net Asset Value ("NAV") per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair values of pension plan assets by asset class are as follows:
20262025
June 30,TotalLevel 1Level 2Level 3NAVTotalLevel 1Level 2Level 3NAV
Cash and cash equivalents$549 $523 $26 $— $— $540 $459 $76 $— $5 
Equities:
U.S. equity securities2 2 — — — 7 7 — — — 
Non-U.S. equity securities39 39 — — — 57 57 — — — 
Commingled equity funds793 — 61 — 732 1,059 — 106 — 953 
Fixed income:
Corporate bonds1,059 23 1,036 — — 801 4 797 — — 
Government issued securities477 422 55 — — 552 521 31 
Commingled fixed income funds1,527 — 446 — 1,081 1,293 — 350 — 943 
Alternatives(1)
708 — — — 708 778 — — 778 
Other(2)
580 35 4 541 — 648 66 (1)583 — 
$5,734 $1,044 $1,628 $541 $2,521 $5,735 $1,114 $1,359 $583 $2,679 
(Payables) receivables, net(112)(89)
Total$5,622 $5,646 
(1) Alternatives includes investments in real estate, hedge funds and private debt.
(2) Other investments primarily includes insurance contracts held under our non-U.S. plans.
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2026 and 2025 due to the following:
20262025
Balance at beginning of year$583 $— 
Actual return on plan assets still held at year-end2 12 
Purchases, sales, settlements - net(26)203 
Transfers into (out of) Level 3(2)325 
Changes due to exchange rates(16)43 
Balance at end of year$541 $583 
Cash and cash equivalents consist of direct cash holdings and short-term investment vehicles. Cash is valued at cost, which approximates fair value. Short-term investments are primarily valued at quoted prices in active markets and are classified within Level 1. The U.S. defined benefit plan uses a liability-hedging initiative that requires the plan to maintain a certain cash balance.
Equity securities are valued at the closing price reported on the active market on which the individual securities are traded. Substantially all equity securities are classified within Level 1.
Corporate bonds and fixed income securities categorized as Level 2 are valued using observable inputs for similar assets that are traded on an active market. The fair value of government issued securities categorized in Level 1 are primarily based on observable quoted prices on the active markets on which the security trades.
Commingled equity and fixed income funds consist of common/collective trusts or other investment vehicles. Most of these funds are valued using the NAV provided by the fund administrator and are based on the fair value of the underlying assets. Commingled funds classified within Level 1 are valued using the closing market price reported on the active market. When quoted market prices for funds are not available in an active market, they are classified as Level 2. Most of these funds have no redemption restrictions or lock-up periods and can be liquidated within 90 days.
Alternatives include investments in real estate, hedge funds, and private debt, which are valued using the fund's NAV based on the fair value of the underlying investments. Funds within this asset class may be subject to redemption restrictions, and valuations for certain real estate and private debt funds may be lagged up to 6 months. For these funds, the NAV is adjusted for cash flows through year end.
Other investments primarily include insurance contracts within the Non-U.S. pension plans' asset portfolio.
Insurance contracts, which are categorized as Level 3, are valued as reported by the insurer which include adjustments for changes in the underlying assets, or are valued using other pricing sources which use unobservable inputs. Other investments also includes derivative instruments which are generally associated with our liability hedging strategies and are valued based on the closing prices of contracts or market observable inputs.
Defined Contribution Plans
We sponsor various defined contribution plans both in the U.S. and internationally, including in the United Kingdom, Germany, Sweden, Canada and South Korea.
Under our primary U.S. 401(k) plan, the Company matches employee contributions up to a maximum of 5% of eligible compensation. Participants may direct the matching contributions among various investment choices, including our common stock held within an employee stock ownership plan ("ESOP"). In addition to shares within the ESOP, employees may elect to invest in our common stock through a company stock fund offered within the primary U.S. 401(k) plan. As of June 30, 2026 and 2025, the plan held 3.5 million and 4.0 million shares of our common stock. The Company also maintains a retirement income account ("RIA") within the primary U.S. 401(k) plan. We make annual cash contributions to each eligible participant's RIA, with most participants receiving a flat 3% contribution of eligible compensation. Some grandfathered participants receive contributions calculated at a higher percentage, but no participant receives less than the flat 3%. Participants do not contribute to the RIA.
Matching and other contributions under all defined contribution plans are expensed as incurred. Expense recognized under the U.S. plans was $194 million, $187 million, and $194 million in 2026, 2025 and 2024, respectively. Expense recognized under the international plans was $36 million, $33 million and $31 million in 2026, 2025 and 2024, respectively.
Other
The Company has established unfunded nonqualified deferred compensation programs that allow officers, directors and certain management employees to annually elect to defer a portion of their compensation on a pre-tax basis until retirement. The retirement benefit to be provided is based on the amount of compensation deferred, company matching contributions and earnings on the deferrals. The Company has invested in corporate-owned life insurance policies to assist in meeting the obligations under these programs. The policies are held in a rabbi trust and are considered general corporate assets. Net gains and losses related to these assets and liabilities are reflected in selling, general and administrative expenses on the Consolidated Statements of Income and are immaterial in total.
As of June 30, 2026 and 2025, the cash surrender values of the corporate-owned life insurance policies were $294 million and $260 million, and the balances of the deferred compensation liabilities were $196 million and $171 million, respectively. These amounts are included in other long-term assets and other long-term liabilities on the Consolidated Balance Sheets.