XML 44 R24.htm IDEA: XBRL DOCUMENT v3.23.3
Retirement Plans
 12 Months Ended
Sep. 30, 2023
Retirement Benefits [Abstract]  
RETIREMENT PLANS RETIREMENT PLANS
Pension Benefits

The Company has non-contributory defined benefit pension plans covering certain U.S. and non-U.S. employees. The benefits provided are primarily based on years of service and average compensation or a monthly retirement benefit amount. Certain of the Company’s U.S. pension plans no longer allow new participants to enter the plans and no longer accrue benefits. Funding for U.S. pension plans equals or exceeds the minimum requirements of the Employee Retirement Income Security Act of 1974. Funding for non-U.S. plans observes the local legal and regulatory limits. Also, the Company makes contributions to union-trusteed pension funds for construction and service personnel.

The following table includes information for pension plans with accumulated benefit obligations ("ABO") in excess of plan assets (in millions):
September 30,
20232022
Accumulated benefit obligation$1,834 $2,004 
Fair value of plan assets1,618 1,720 
The following table includes information for pension plans with projected benefit obligations ("PBO") in excess of plan assets (in millions):
September 30,
20232022
Projected benefit obligation$1,846 $2,013 
Fair value of plan assets1,633 1,729 

The Company contributed $55 million to the defined benefit plans in fiscal 2023 and expects to contribute approximately $24 million in cash in fiscal 2024. None of contributions made by the Company were voluntary.

Projected benefit payments from the plans as of September 30, 2023 are estimated as follows (in millions):

2024$277 
2025235 
2026235 
2027233 
2028172 
2029 - 20331,160 

Postretirement Benefits

The Company provides certain health care and life insurance benefits for eligible retirees and their dependents primarily in the U.S. and Canada. Most non-U.S. employees are covered by government sponsored programs. The cost to the Company is not significant.

Eligibility for coverage is based on meeting certain years of service and retirement age qualifications. These benefits may be subject to deductibles, co-payment provisions and other limitations. The Company has reserved the right to modify these benefits.

The health care cost trend assumption does not have a significant effect on the amounts reported.

The following table includes information for postretirement plans with accumulated postretirement benefit obligations ("APBO") in excess of plan assets (in millions):

September 30,
20232022
Accumulated postretirement benefit obligation$58 $68 
Fair value of plan assets24 28 

The Company contributed $2 million to the postretirement benefit plans in fiscal 2023 and expects to contribute approximately $2 million in cash in fiscal 2024.

Projected benefit payments from the plans as of September 30, 2023 are estimated as follows (in millions):

2024$10 
202510 
20269 
20279 
20287 
2029 - 203327 
Defined Contribution Plans

The Company sponsors various defined contribution savings plans that allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan specified guidelines. Under specified conditions, the Company will contribute to certain savings plans based on predetermined percentages of compensation earned by the employee and/or will match a percentage of the employee contributions up to certain limits. Defined contribution plan contributions charged to expense amounted to $209 million, $196 million and $118 million during the years ended September 30, 2023, 2022 and 2021, respectively. The Company temporarily suspended certain contributions in fiscal 2021 in response to the COVID-19 pandemic.

Multiemployer Benefit Plans

The Company contributes to multiemployer benefit plans based on obligations arising from collective bargaining agreements related to certain of its hourly employees in the U.S. These plans provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. The trustees typically are responsible for determining the level of benefits to be provided to participants as well as for such matters as the investment of the assets and the administration of the plans.

The risks of participating in these multiemployer benefit plans are different from single-employer benefit plans in the following aspects:

•Assets contributed to the multiemployer benefit plan by one employer may be used to provide benefits to employees of other participating employers.

•If a participating employer stops contributing to the multiemployer benefit plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

•If the Company stops participating in some of its multiemployer benefit plans, it may be required to pay those plans an amount based on its allocable share of the underfunded status of the plan, referred to as a withdrawal liability.

The Company participates in approximately 260 multiemployer benefit plans, none of which are individually significant to the Company. The number of employees covered by the Company’s multiemployer benefit plans has remained consistent over the past three years, and there have been no significant changes that affect the comparability of fiscal 2023, 2022 and 2021 contributions. The Company recognizes expense for the contractually-required contribution for each period. The Company contributed $67 million, $71 million and $67 million to multiemployer benefit plans during the years ended September 30, 2023, 2022 and 2021, respectively.

Based on the most recent information available, the Company believes that the present value of actuarial accrued liabilities in certain of these multiemployer benefit plans may exceed the value of the assets held in trust to pay benefits. Currently, the Company is not aware of any significant multiemployer benefit plans for which it is probable or reasonably possible that the Company will be obligated to make up any shortfall in funds. Moreover, if the Company were to exit certain markets or otherwise cease making contributions to these funds, the Company could trigger a withdrawal liability. Currently, the Company is not aware of any multiemployer benefit plans for which it is probable or reasonably possible that the Company will have a significant withdrawal liability. Any accrual for a shortfall or withdrawal liability will be recorded when it is probable that a liability exists and it can be reasonably estimated.

Plan Assets

The Company’s investment policies employ an approach whereby a mix of equities, fixed income and alternative investments are used to maximize the long-term return of plan assets for a prudent level of risk. The investment portfolio primarily contains a diversified blend of equity and fixed income investments. Equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value and small to large capitalization. Fixed income investments include corporate and government issues, with short-, mid- and long-term maturities, with a focus on investment grade when purchased and a target duration close to that of the plan liability. Investment and market risks are measured and monitored on an ongoing basis through regular investment portfolio reviews, annual liability measurements and periodic asset/liability studies. The majority of the real estate component of the portfolio is invested in a diversified portfolio of high-quality, operating properties with cash yields greater than the targeted appreciation. Investments in other alternative asset classes, including hedge funds, diversify the expected investment returns relative to the equity and fixed income investments. As a result of the Company's diversification strategies, there are no significant concentrations of risk within the portfolio of investments.
The Company’s actual asset allocations are in line with target allocations. The Company rebalances asset allocations as appropriate, in order to stay within a range of allocation for each asset category.

The expected return on plan assets is based on the Company’s expectation of the long-term average rate of return of the capital markets in which the plans invest. The average market returns are adjusted, where appropriate, for active asset management returns. The expected return reflects the investment policy target asset mix and considers the historical returns earned for each asset category.
The Company’s plan assets at September 30, 2023 and 2022, by asset category, are as follows (in millions):

 Fair Value Measurements Using:
Asset CategoryTotal as of September 30, 2023Quoted Prices
in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
U.S. Pension
Cash and Cash Equivalents$61 $— $61 $— 
Equity Securities
Large-Cap60 60 — — 
Small-Cap65 65 — — 
International - Developed108 108 — — 
International - Emerging20 20 — — 
Fixed Income Securities
Government225 225 — — 
Corporate/Other583 583 — — 
Alternative211 — 211 — 
Total Investments in the Fair Value Hierarchy1,333 $1,061 $272 $— 
Real Estate Investments Measured at Net Asset Value(1)
295 
Due to Broker(129)
Total Plan Assets$1,499 
Non-U.S. Pension
Cash and Cash Equivalents$52 $52 $— $— 
Equity Securities
Large-Cap52 9 43 — 
International - Developed52 12 40 — 
International - Emerging2 — 2 — 
Fixed Income Securities
Government701 40 661 — 
Corporate/Other415 271 144 — 
Hedge Fund15 — 15 — 
Real Estate9 9 — — 
Total Investments in the Fair Value Hierarchy1,298 $393 $905 $— 
Real Estate Investments Measured at Net Asset Value(1)
90 
Total Plan Assets$1,388 
Postretirement
Cash and Cash Equivalents$8 $8 $— $— 
Equity Securities - Global
71 — 71 — 
Total Investments in the Fair Value Hierarchy79 $8 $71 $— 
Multi-Credit Strategy Investments Measured at Net Asset Value(1)
65 
Total Plan Assets$144 
 Fair Value Measurements Using:
Asset CategoryTotal as of September 30, 2022Quoted Prices
in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
U.S. Pension
Cash and Cash Equivalents$40 $— $40 $— 
Equity Securities
Large-Cap160 160 — — 
Small-Cap175 175 — — 
International - Developed139 139 — — 
International - Emerging39 39 — — 
Fixed Income Securities
Government217 216 1 — 
Corporate/Other804 804 — — 
Total Investments in the Fair Value Hierarchy1,574 $1,533 $41 $— 
Real Estate Investments Measured at Net Asset Value(1)
322 
Due to Broker(166)
Total Plan Assets$1,730 
Non-U.S. Pension
Cash and Cash Equivalents$150 $150 $— $— 
Large-Cap45 8 37 — 
International - Developed43 12 31 — 
International - Emerging3 — 3 — 
Fixed Income Securities
Government650 50 600 — 
Corporate/Other418 277 141 — 
Hedge Fund18 — 18 — 
Real Estate9 9 — — 
Total Investments in the Fair Value Hierarchy1,336 $506 $830 $— 
Real Estate Investments Measured at Net Asset Value(1)
97 
Total Plan Assets$1,433 
Postretirement
Cash and Cash Equivalents$13 $13 $— $— 
Equity Securities
Global66 — 66 — 
Total Investments in the Fair Value Hierarchy79 13 66 — 
Multi-Credit Strategy Investments Measured at Net Asset Value(1)
65 
Total Plan Assets$144 

(1)The fair value of certain real estate and multi-credit strategy investments do not have a readily determinable fair value and require the fund managers to independently arrive at fair value by calculating net asset value ("NAV") per share. In order to calculate NAV per share, the fund managers value the investments using any one, or a combination of, the following methods: independent third party appraisals, discounted cash flow analysis of net cash flows projected to be generated by the investment and recent sales of comparable investments. Assumptions used to revalue the investments are updated every quarter. Due to the fact that the fund managers calculate NAV per share, the Company utilizes a practical expedient for measuring the fair value of its real estate and multi-credit strategy investments, as provided for under ASC 820, "Fair Value Measurement." In applying the
practical expedient, the Company is not required to further adjust the NAV provided by the fund manager in order to determine the fair value of its investments as the NAV per share is calculated in a manner consistent with the measurement principles of ASC 946, "Financial Services - Investment Companies," and as of the Company's measurement date. The Company believes this is an appropriate methodology to obtain the fair value of these assets. For the component of the real estate portfolio under development, the investments are carried at cost until they are completed and valued by a third party appraiser. In accordance with ASU No. 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)," investments for which fair value is measured using the net asset value per share practical expedient are disclosed separate from the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of total plan assets to the amounts presented in the notes to consolidated financial statements.

The following is a description of the valuation methodologies used for assets measured at fair value. Certain assets are held within commingled funds which are valued at the unitized NAV or percentage of the net asset value as determined by the manager of the fund. These values are based on the fair value of the underlying net assets owned by the fund.

Cash and Cash Equivalents: The fair value of cash and cash equivalents is valued at cost.

Equity Securities: The fair value of equity securities is determined by direct quoted market prices. The underlying holdings are direct quoted market prices on regulated financial exchanges.

Fixed Income Securities: The fair value of fixed income securities is determined by direct or indirect quoted market prices. If indirect quoted market prices are utilized, the value of assets held in separate accounts is not published, but the investment managers report daily the underlying holdings. The underlying holdings are direct quoted market prices on regulated financial exchanges.

Hedge Funds: The fair value of hedge funds is accounted for by the custodian. The custodian obtains valuations from underlying managers based on market quotes for the most liquid assets and alternative methods for assets that do not have sufficient trading activity to derive prices. The Company and custodian review the methods used by the underlying managers to value the assets. The Company believes this is an appropriate methodology to obtain the fair value of these assets. 

Real Estate: The fair value of real estate is determined by quoted market prices of the underlying Real Estate Investment Trusts
("REITs"), which are securities traded on an open exchange.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Funded Status

The following table contains the ABO and reconciliations of the changes in the PBO, the changes in plan assets and the funded status (in millions):
 Pension BenefitsPostretirement
Benefits
 U.S. PlansNon-U.S. Plans
September 30,202320222023202220232022
Accumulated Benefit Obligation$1,564 $1,822 $1,424 $1,417 $76 $89 
Change in Projected Benefit Obligation
Projected benefit obligation at beginning of year$1,822 $2,629 $1,471 $2,625 $89 $123 
Service cost— — 16 20 — 1 
Interest cost78 56 68 39 4 2 
Plan participant contributions— — 3 2 3 3 
Actuarial gain(37)(587)(62)(651)(7)(25)
Benefits and settlements paid(299)(276)(126)(166)(12)(14)
Other— — (3)(3)— — 
Currency translation adjustment— — 106 (395)— (1)
Projected benefit obligation at end of year$1,564 $1,822 $1,473 $1,471 $77 $89 
Change in Plan Assets
Fair value of plan assets at beginning of year$1,730 $2,459 $1,433 $2,344 $144 $172 
Actual return on plan assets66 (454)(77)(459)7 (20)
Employer and employee contributions3 1 55 94 5 6 
Benefits paid(85)(85)(61)(74)(12)(14)
Settlement payments(215)(191)(65)(92)— — 
Other— — (2)(2)— — 
Currency translation adjustment— — 105 (378)— — 
Fair value of plan assets at end of year$1,499 $1,730 $1,388 $1,433 $144 $144 
Funded status$(65)$(92)$(85)$(38)$67 $55 
Amounts recognized in the statement of financial position consist of:
Prepaid benefit cost$1 $37 $97 $151 $101 $95 
Accrued benefit liability(66)(129)(182)(189)(34)(40)
Net amount recognized$(65)$(92)$(85)$(38)$67 $55 
Weighted Average Assumptions (1)
Discount rate (2)
5.48 %5.08 %4.72 %4.36 %5.42 %4.92 %
Rate of compensation increaseN/AN/A2.90 %3.00 %N/AN/A
Interest crediting rateN/AN/A1.63 %1.69 %N/AN/A

(1)Plan assets and obligations are determined based on a September 30 measurement date at September 30, 2023 and 2022.

(2) The Company considers the expected benefit payments on a plan-by-plan basis when setting assumed discount rates. As a result, the Company uses different discount rates for each plan depending on the plan jurisdiction, the demographics of participants and the expected timing of benefit payments. For the U.S. pension and postretirement plans, the Company uses a discount rate provided by an independent third party calculated based on an appropriate mix of high quality bonds. For the non-U.S. pension and postretirement plans, the Company consistently uses the relevant country specific benchmark indices for determining the various discount rates. The Company has elected to utilize a full yield curve approach in the estimation of service and interest components of net periodic benefit cost (credit) for pension and other postretirement for plans that utilize a
yield curve approach. The full yield curve approach applies the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

The fiscal 2023 and fiscal 2022 net actuarial gains related to changes in the projected benefit obligation were primarily the result of the increase in discount rates globally.

Net Periodic Benefit Cost

The following table contains the components of net periodic benefit costs, which are recorded in selling, general and administrative expenses or cost of sales consistent with the related employees' salaries in the consolidated statements of income (in millions):
 Pension BenefitsPostretirement Benefits
 U.S. PlansNon-U.S. Plans
Year ended September 30,202320222021202320222021202320222021
Components of Net Periodic Benefit Cost (Credit):
Service cost$— $— $— $16 $20 $27 $— $1 $1 
Interest cost78 56 47 68 39 32 4 2 2 
Expected return on plan assets(131)(150)(171)(77)(81)(112)(9)(9)(8)
Net actuarial (gain) loss28 16 (214)86 (116)(115)(5)4 (35)
Settlement (gain) loss1 1 — 6 5 (1)— — — 
Amortization of prior service cost (credit)
— — — — — 1 (4)(4)(4)
Other— — — — — (1)— — — 
Net periodic benefit cost (credit) included in continuing operations
$(24)$(77)$(338)$99 $(133)$(169)$(14)$(6)$(44)
Expense Assumptions:
Discount rate5.08 %2.52 %2.25 %4.36 %1.79 %1.35 %4.92 %2.30 %1.90 %
Expected return on plan assets8.25 %7.00 %6.90 %5.02 %3.70 %4.90 %6.64 %5.29 %5.30 %
Rate of compensation increaseN/AN/AN/A3.00 %2.85 %2.75 %N/AN/AN/A
Interest crediting rateN/AN/AN/A1.69 %1.44 %1.50 %N/AN/AN/A