Financial Instruments

12 Months Ended

Sep. 30, 2021

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Financial Instruments

FINANCIAL INSTRUMENTS

Following is a discussion regarding the Company’s use of financial instruments:

Hedging Activities

As of September 30, 2021, the notional amount of foreign currency hedge positions was approximately $2.0 billion, and commodity hedge contracts totaled approximately $137 (primarily 39 million pounds of copper and aluminum). All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of September 30, 2021 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur. Gains and losses on foreign currency derivatives reported in Other deductions, net reflect hedges of balance sheet exposures that do not receive hedge accounting.

Net Investment Hedge

In fiscal 2019, the Company issued euro-denominated debt of €1.5 billion. The euro notes reduce foreign currency risk associated with the Company's international subsidiaries that use the euro as their functional currency and have been designated as a hedge of a portion of the investment in these operations. Foreign currency gains or losses associated with the euro-denominated debt are deferred in accumulated other comprehensive income (loss) and will remain until the hedged investment is sold or substantially liquidated.

The following gains and losses are included in earnings and other comprehensive income (OCI):

		Gain (Loss) to Earnings				Gain (Loss) to OCI
		2019		2020	2021	2019	2020	2021
	Location
Commodity	Cost of sales	$	(11)	(8)	33	(10)	10	29
Foreign currency	Sales	(7)		(5)	3	(8)	4	3
Foreign currency	Cost of sales	20		4	8	14	(25)	34
Foreign currency	Other deductions, net	66		(40)	53
Net Investment Hedge
Euro denominated debt						70	(123)	21
Total		$	68	(49)	97	66	(134)	87

Regardless of whether derivatives and non-derivative financial instruments receive hedge accounting, the Company expects hedging gains or losses to be offset by losses or gains on the related underlying exposures. The amounts ultimately recognized will differ from those presented above for open positions, which remain subject to ongoing market price fluctuations until settlement. Derivatives receiving hedge accounting are highly effective and no amounts were excluded from the assessment of hedge effectiveness.

Fair Value Measurement

Valuations for all derivatives and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy.     The fair value of long-term debt was $6.8 billion and $7.3 billion, respectively, as of September 30, 2021 and 2020, which exceeded the carrying value by $485 and $629, respectively. The fair values of commodity and foreign currency contracts were reported in Other current assets and Accrued expenses as summarized below:

	2020				2021
	Assets			Liabilities	Assets	Liabilities
Commodity		$	11	—	12	6
Foreign currency		$	26	25	36	6