v3.22.2.2
Employee Retirement Benefit Plans
 12 Months Ended
Jun. 30, 2022
Retirement Benefits [Abstract]  
Employee Retirement Benefit Plans EMPLOYEE RETIREMENT BENEFIT PLANS
The Company sponsors various retirement plans, including defined benefit pension plans and defined contribution plans. Substantially all of the Company’s domestic non-union employees are eligible to participate in employer-sponsored retirement savings plans, which include plans created under Section 401(k) of the Internal Revenue Code that provide for the Company to match a portion of contributions by participating U.S. employees. The Company’s contributions to the plans are discretionary but are subject to certain minimum requirements as specified in the plans. The Company uses a measurement date of June 30 for all of its retirement and postretirement benefit plans.
The Company records obligations related to its withdrawal from one multi-employer pension plan that covered former employees at three former sites. This withdrawal was classified as a mass withdrawal under the Multiemployer Pension Plan Amendments Act of 1980, as amended, and the Pension Protection Act of 2006 and resulted in the recognition of liabilities associated with the Company’s long-term obligations in prior years not presented, which were primarily recorded as an expense within discontinued operations. The estimated discounted value of the projected contributions related to these plans is $38 million as of June 30, 2022 and 2021. The annual cash impact associated with the Company’s long-term obligation arising from this plan is $2 million per year.
The following table provides a reconciliation of the change in projected benefit obligation and fair value of plan assets for the defined benefit retirement and other retirement plans, excluding the multi-employer pension plan liability:
Retirement BenefitsOther Post-Retirement Benefits
June 30,June 30,
(Dollars in millions)2022202120222021
Accumulated Benefit Obligation$262 $364 $2 $2 
Change in Benefit Obligation
Benefit obligation at beginning of year372 358 2 3 
Company service cost4 4 — — 
Interest cost5 4 — — 
Settlements(1)— — — 
Benefits paid(9)(13)— (1)
Actuarial (gain) loss (1)
(71)(9)— — 
Exchange rate (loss) gain(32)28 — — 
Benefit obligation at end of year$268 $372 $2 $2 
Change in Plan Assets
Fair value of plan assets at beginning of year318 295 — — 
Actual return on plan assets(50)(1)— — 
Company contributions10 11 — — 
Settlements(1)— — — 
Benefits paid(9)(13)— — 
Exchange rate gain (loss)(28)26 — — 
Fair value of plan assets at end of year$240 $318 $— $— 
Funded Status
Funded status at end of year(28)(54)(2)(2)
Net pension liability$(28)$(54)$(2)$(2)
(1) For the fiscal year ended June 30, 2022, the actuarial gain is driven by a large increase in the aggregate discount rate.
The following table provides a reconciliation of the net amount recognized in the consolidated balance sheets:
 
Retirement BenefitsOther Post-Retirement Benefits
June 30,June 30,
(Dollars in millions)2022202120222021
Amounts Recognized in Statement of Financial Position
Noncurrent assets$37 $43 $— $— 
Current liabilities(1)(1)— — 
Noncurrent liabilities(64)(96)(2)(2)
Total liability(28)(54)(2)(2)
Amounts Recognized in Accumulated Other Comprehensive Loss
Prior service cost(1)(1)— — 
Net loss (gain)49 62 (1)(1)
Total accumulated other comprehensive loss (income) at the end of the fiscal year48 61 (1)(1)
Additional Information for Plan with ABO or PBO in Excess of Plan Assets
Projected benefit obligation132 130 2 2 
Accumulated benefit obligation128 124 2 2 
Fair value of plan assets67 32 — — 
Components of Net Periodic Benefit Cost
Service cost4 4 — — 
Interest cost5 4 — — 
Expected return on plan assets(10)(11)— — 
Amortization of unrecognized:
Net loss2 3 — — 
Net periodic benefit cost$1 $— $— $— 
 
Retirement BenefitsOther Post-Retirement Benefits
June 30,June 30,
(Dollars in millions)2022202120222021
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Net gain arising during the year$(14)$— $— $— 
Exchange rate loss recognized during the year1 — — — 
Total recognized in other comprehensive income$(13)$— $— $— 
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income
Total recognized in net periodic benefit cost and other comprehensive income$(12)$— $— $— 
Estimated Amounts to be Amortized from Accumulated Other Comprehensive Income into Net Periodic Benefit Cost
Amortization of:
Net loss$1 $3 $— $— 
Financial Assumptions Used to Determine Benefit Obligations at the Balance Sheet Date
Discount rate (%)3.6 %1.6 %4.0 %2.0 %
Rate of compensation increases (%)2.7 %2.0 %n/an/a
Financial Assumptions Used to Determine Net Periodic Benefit Cost for Financial Year
Discount rate (%)1.6 %1.4 %2.0 %1.8 %
Rate of compensation increases (%)2.0 %2.0 %n/an/a
Expected long-term rate of return (%)3.4 %3.6 %n/an/a
Expected Future Contributions
Fiscal year 2023$7 $8 $— $— 
Retirement BenefitsOther Post-Retirement Benefits
June 30,June 30,
(Dollars in millions)2022202120222021
Expected Future Benefit Payments
Financial year
2023$14 $13 $— $— 
202413 14 — — 
202514 15 — — 
202616 15 — — 
202714 15 — — 
2028-2032$80 $84 $1 $1 
Actual Asset Allocation (%)
Equities4.1 %4.4 %— %— %
Government bonds35.6 %30.6 %— %— %
Corporate bonds18.3 %21.0 %— %— %
Property4.9 %3.5 %— %— %
Insurance contracts12.0 %9.6 %— %— %
Other25.1 %30.9 %— %— %
Total100.0 %100.0 %— %— %
Actual Asset Allocation (Amount)
Equities$10 $14 $— $— 
Government bonds85 97 — — 
Corporate bonds44 67 — — 
Property12 11 — — 
Insurance contracts29 31 — — 
Other60 98 — — 
Total$240 $318 $— $— 
Target Asset Allocation (%)
Equities4.1 %4.5 %— %— %
Government bonds35.6 %30.5 %— %— %
Corporate bonds18.3 %21.1 %— %— %
Property4.9 %3.5 %— %— %
Insurance contracts12.0 %9.6 %— %— %
Other25.1 %30.8 %— %— %
Total100.0 %100.0 %— %— %
The Company's Investment Committee employs a building-block approach in determining the long-term rate of return for plan assets, with proper consideration of diversification and rebalancing. Historical markets are studied and long-term historical relationships between equities and fixed income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. Peer data are reviewed to check for reasonability and appropriateness.
Plan assets are recognized and measured at fair value in accordance with the accounting standards regarding fair value measurements. The following are valuation techniques used to determine the fair value of each major category of assets:
•Short-term investments, equity securities, fixed-income securities, and real estate are valued using quoted market prices or other valuation methods, and thus are classified within Level 1 or Level 2.
•Insurance contracts and other types of investments include investments with some observable and unobservable prices that are adjusted by cash contributions and distributions, and thus are classified within Level 2 or Level 3.
The following tables provide a summary of plan assets that are measured at fair value as of June 30, 2022 and 2021, aggregated by the level in the fair value hierarchy within which those measurements fall:
As of June 30, 2022 (dollars in millions)Level 1Level 2Level 3Investments Measured at Net Asset ValueTotal Assets
Equity securities$— $10 $— $— $10 
Debt securities— 129 — — 129 
Real estate— 10 2 — 12 
Other (1)
— 64 25 — 89 
Total$— $213 $27 $— $240 
(1) Other as of June 30, 2022, included $35 million of investments in hedge funds related to the Company's U.K. pension plan, which were classified as Level 2.
 
As of June 30, 2021 (dollars in millions)Level 1Level 2
Level 3
Investments Measured at Net Asset Value
Total Assets
Equity securities$— $14 $— $— $14 
Debt securities— 164 — — 164 
Real estate— 11 — — 11 
Other (1)
— 106 23 — 129 
Total$— $295 $23 $— $318 
(1) Other as of June 30, 2021, included $62 million of investments in hedge funds related to the Company's U.K. pension plan, which were classified as Level 2.
Level 3 other assets as of June 30, 2022 and 2021 consist of an insurance contract in the U.K. to fulfill the benefit obligations for a portion of the participant benefits. The value of this commitment is determined using the same assumptions and methods used to value the pension liability of the associated plan. Level 3 other assets for the same periods also include the partial funding of a pension liability relating to current and former employees of the Company’s Eberbach, Germany facility through a Company promissory note with an annual rate of interest of 5%. The value of this commitment fluctuates due to contributions and benefit payments in addition to loan interest.
The following table provides a reconciliation of the beginning and ending balances of Level 3 assets as well as the changes during the period attributable to assets held and those purchases, sales, settlements, contributions, and benefits that were paid:
Fair Value Measurement Using Significant Unobservable Inputs Total (Level 3)Fair Value Measurement Using Significant Unobservable Inputs Insurance ContractsFair Value Measurement Using Significant Unobservable Inputs Other
Total (Level 3)
(Dollars in millions)
Beginning Balance at June 30, 2021$23 $3 $20 
Actual return on plan assets:
Relating to assets still held at the reporting date(2)— (2)
Purchases, sales, settlements, contributions and benefits paid(5)(3)(2)
Transfers in or out of Level 3, net11 9 2 
Ending Balance at June 30, 2022$27 $9 $18 
The Company's investment policy reflects the long-term nature of the plans’ funding obligations. The assets are invested to provide the opportunity for both income and growth of principal. This objective is pursued as a long-term goal designed to provide required benefits for participants without undue risk. It is expected that this objective can be achieved through a well-diversified asset portfolio. All equity investments are made within the guidelines of quality, marketability, and diversification mandated by the Employee Retirement Income Security Act of 1974, as amended (for plans subject to the act) and other
relevant legal requirements. Investment managers are directed to maintain equity portfolios at a risk level approximately equivalent to that of the specific benchmark established for that portfolio. Assets invested in fixed income securities and pooled fixed-income portfolios are managed actively to pursue opportunities presented by changes in interest rates, credit ratings, or maturity premiums.
Other Post-Retirement Benefits
Assumed Healthcare Cost Trend Rates at the Balance Sheet Date20222021
Healthcare cost trend rate – initial (%)
Pre-65n/an/a
Post-654.6 %7.3 %
Healthcare cost trend rate – ultimate (%)
Pre-65n/an/a
Post-654.1 %4.4 %
Year in which ultimate rates are reached
Pre-65n/an/a
Post-652040 2035