Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Jun. 30, 2019

Schedule of Projected Benefit Obligation, Changes in Fair Value of Plan Assets and Funded Status

The Company uses a June 30 measurement date for all Direct Plans. The following table sets forth the change in the projected benefit obligation, change in the fair value of plan assets and funded status for the Company’s Direct Plans:

	Pension benefits						Postretirement benefits
	As of June 30,
	2019			2018			2019			2018
	(in millions)
Projected benefit obligation, beginning of the year	$	322		$	350		$	-		$	-
Service cost		19			2			1			-
Interest cost		30			10			2			-
Benefits paid		(17	)		(12	)		(1	)		-
Settlements(a)		(16	)		(21	)		-			-
Actuarial losses (gains)(b)		148			(7	)		4			-
Liabilities assumed from 21CF		765			-			98			-
Other		4			-			(1	)		-
Projected benefit obligation, end of the year		1,255			322			103			-
Change in the fair value of plan assets for the Company's benefit plans:
Fair value of plan assets, beginning of the year		70			70			-			-
Actual return on plan assets		50			3			-			-
Employer contributions		83			30			1			-
Benefits paid		(17	)		(12	)		(1	)		-
Settlements(a)		(16	)		(21	)		-			-
Assets received from 21CF		630			-			-			-
Fair value of plan assets, end of the year		800			70			-			-
Funded status(c)	$	(455	)	$	(252	)	$	(103	)	$	-
Grantor Trust assets(c)	$	249		$	265		$	-		$	-

^(a) Represents the full settlement of former employees deferred pension benefit obligations through lump sum payments.

^(b) The actuarial losses (gains) for June 30, 2019 and 2018 were mainly due to a change in the discount rate assumption utilized in measuring plan obligations.

^(c) The Company has established an irrevocable grantor trust (the “Grantor Trust”), administered by an independent trustee, with the intention of making cash contributions to the Trust to fund certain future pension benefit obligations of the Company. The assets in the Grantor Trust are unsecured funds of the Company and can be used to satisfy the Company’s obligations in the event of bankruptcy or insolvency. Prior to the Distribution, the assets of the Grantor Trust were held by an irrevocable grantor trust of 21CF (the “21CF Grantor Trust”).

Schedule of Amounts Recognized in Balance Sheet

Amounts recognized in the Balance Sheets consist of:

	Pension benefits						Postretirement benefits
	As of June 30,
	2019			2018			2019			2018
	(in millions)
Accrued pension liabilities	$	(455	)	$	(252	)	$	(103	)	$	-
Net amount recognized	$	(455	)	$	(252	)	$	(103	)	$	-

Schedule of Amounts Recognized in Other Comprehensive Income

Amounts recognized in Accumulated other comprehensive (loss) income, before tax, consist of:

	Pension benefits				Postretirement benefits
	As of June 30,
	2019		2018		2019		2018
	(in millions)
Actuarial losses(a)	$	385	$	80	$	22	$	-
Prior service cost		3		5		-		-
Net amounts recognized	$	388	$	85	$	22	$	-

^(a) The increase in actuarial losses was primarily related to the accumulated actuarial losses transferred to the Company from 21CF of $188 million and $18 million for pension and postretirement benefits, respectively, and the change in the discount rate assumption utilized in measuring plan obligations.

Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year

Amounts in Accumulated other comprehensive (loss) income, before tax, expected to be recognized as a component of net periodic benefit costs in fiscal 2020:

	As of June 30, 2019
	Pension benefits		Postretirement benefits
	(in millions)
Actuarial losses	$	28	$	1
Net amounts expected to be recognized	$	28	$	1

Schedule of Accumulated and Projected Benefit Obligations

Accumulated pension benefit obligations as of June 30, 2019 and 2018 were $1,113 million and $311 million, respectively. For the Direct Plans, the accumulated benefit obligation exceeds fair value of the plan assets. Information about funded and unfunded pension plans is presented below:

	Funded plans				Unfunded plans
	As of June 30,
	2019		2018		2019			2018
	(in millions)
Projected benefit obligation	$	976	$	82	$	279		$	240
Accumulated benefit obligation		842		82		271			229
Fair value of plan assets		800		70		-	(a)		-	(a)

^(a) The fair value of the assets in the Grantor Trust as of June 30, 2019 and 21CF Grantor Trust attributable to the Company as of June 30, 2018 was $249 million and $265 million, respectively.

Schedule of Components of Periodic Benefit Costs

The components of periodic benefit costs were as follows:

	Pension benefits									Postretirement benefits
	For the years ended June 30,
	2019			2018			2017			2019			2018		2017
	(in millions)
Service cost benefits earned during the period	$	19		$	2		$	2		$	1		$	-	$	-
Interest costs on projected benefit obligations		30			10			9			2			-		-
Expected return on plan assets		(30	)		(5	)		(4	)		-			-		-
Amortization of deferred losses		11			3			3			1			-		-
Other		7			1			1			(1	)		-		-
Net periodic benefit costs- Direct plans		37			11			11			3			-		-
Shared Plans		14			33			39			4			7		9
Net periodic benefit costs- Total		51			44			50			7			7		9
Settlement loss
Direct Plans		-			4			4			-			-		-
Shared Plans		-			49			21			-			-		-
Total periodic benefit costs	$	51		$	97		$	75		$	7		$	7	$	9

Schedule of Assumptions Used

The components of net periodic benefit costs other than the service cost component are included in Other, net in the Statements of Operations.

	Pension benefits									Postretirement benefits
	For the years ended June 30,
	2019			2018			2017			2019			2018	2017
Additional information
Weighted-average assumptions used to determine benefit obligations
Discount rate		3.6	%		4.2	%		3.8	%		3.6	%	N/A	N/A
Weighted-average assumptions used to determine net periodic benefit costs
Discount rate for service cost		4.6	%		4.1	%		4.3	%		4.4	%	N/A	N/A
Discount rate for interest cost		4.1	%		3.1	%		2.7	%		3.9	%	N/A	N/A
Expected return on plan assets		7.0	%		7.0	%		7.0	%	N/A			N/A	N/A

N/A – not applicable.

Schedule of Assumed Health Care cost Trend Rates

The following assumed health care cost trend rates as of June 30 were also used in accounting for postretirement benefits:

	Postretirement benefits
	Fiscal 2019
Health care cost trend rate		7.8	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.5	%
Year that the rate reaches the ultimate trend rate		2039

Schedule of Expected Estimated Benefit Payments

The following table sets forth the estimated benefit payments and estimated settlements for the next five fiscal years and in aggregate for the five fiscal years thereafter. These payments are estimated based on the same assumptions used to measure the Company’s benefit obligation at the end of the fiscal year and include benefits attributable to estimated future employee service:

	Expected benefit payments
	Pension benefits		Postretirement benefits
	(in millions)
Fiscal year
2020	$	53	$	5
2021		56		5
2022		54		5
2023		56		5
2024		60		6
2025-2029		344		28

Schedule of Plan Assets by Level within Fair Value Hierarchy

The table below presents the Company’s plan assets by level within the fair value hierarchy, as described in Note 6—Fair Value, as of June 30, 2019:

	As of June 30, 2019
			Fair value measurements at reporting date using					Assets measured
	Total		Level 1			Level 2		at NAV(a)
	(in millions)
ASSETS
Pooled funds(b)
Money market funds	$	83	$	-		$	83	$	-
Domestic equity funds		72		72			-		-
International equity funds		132		132			-		-
International fixed income funds		39		-			-		39
Balanced funds		198		136			-		62
Common stocks(c)
U.S. common stocks		131		131			-		-
Government and Agency obligations(d)
Domestic government obligations		17		-			17		-
Domestic agency obligations		12		-			12		-
Corporate obligations(d)		44		-			44		-
Partnership interests		13		-			-		13
Exchange traded funds(c)		32		32			-		-
Other		27		(3	)		30		-
Total fair value of plan assets	$	800	$	500		$	186	$	114

^(a) As a practical expedient, pooled funds are valued at the net asset value (“NAV”) provided by the fund issuer and partnership interests are based on the fair value obtained from the general partner.

^(b) Open-ended pooled funds that are registered and/or available to the general public are valued at the daily published NAV.

^(c) Common stock investments that are publicly traded and exchange traded funds are valued at the closing price reported on active markets in which the securities are traded.

^(d) The fair value of corporate, government and agency obligations are valued based on a compilation of primary observable market information or a broker quote in a non-active market.

Schedule of Weighted Average Asset Allocations by Asset Category

The Company’s benefit plan weighted-average asset allocations, by asset category, are as follows:

	Pension benefits
	As of June 30, 2019
Asset Category
Equity securities		47	%
Fixed income securities		18
Other, including cash		35
Total		100	%

Grantor Trust

Schedule of Plan Assets by Level within Fair Value Hierarchy

In addition, the Company has established the Grantor Trust to satisfy the Company’s unfunded pension obligations. The table below presents the assets by level within the fair value hierarchy, as described in Note 6—Fair Value, for the Grantor Trust as of June 30, 2019 and for the 21CF Grantor Trust as of June 30, 2018:

	As of June 30, 2019
	Total		Level 1		Assets measured at NAV
	(in millions)
Assets
Balanced funds	$	213	$	213	$	-
Partnership interests(a)		15		-		15
Total(b)	$	228	$	213	$	15
	As of June 30, 2018
	Total		Level 1		Assets measured at NAV
	(in millions)
Assets
Balanced funds	$	205	$	205	$	-
Partnership interests(a)		15		-		15
Total(b)	$	220	$	205	$	15

^(a) As a practical expedient, partnership interests held in the Grantor Trust and 21CF Grantor Trust are based on the fair value obtained from the general partner.

^(b) The fair value of the assets in the Grantor Trust as of June 30, 2019 and the 21CF Grantor Trust attributable to the Company as of June 30, 2018 was $249 million and $265 million, respectively. The remaining assets held by the Grantor Trust and 21CF Grantor Trust not presented in the table above are cash and cash equivalents.