LEASES

12 Months Ended

Sep. 30, 2024

The Company leases certain manufacturing facilities, offices, land, equipment and vehicles. Such leases, some of which are noncancellable and, in many cases, include renewals, expire at various dates. Such options to renew are included in the lease term when it is reasonably certain that the option will be exercised. The Company’s lease agreements typically do not contain any significant residual value guarantees or restrictive covenants, and payments within certain lease agreements are adjusted periodically for changes in an index or rate.

The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The discount rate implicit within our leases is generally not determinable and therefore we determine the discount rate based on our incremental borrowing rate. The incremental borrowing rate for our leases is determined based on the lease term and the currency in which lease payments are made. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of twelve months or less. Additionally, when accounting for leases, the Company combines payments for leased assets, related services and other components of a lease.

The components of lease expense for the fiscal years ended September 30, 2024 and 2023 are as follows (in millions):


		Fiscal Years Ended September 30,
	Classification	2024		2023
Operating lease cost	Cost of sales or selling and administrative expenses	$	22	$	21
Finance lease cost:
Amortization of leased assets	Cost of sales	12		9
Interest on lease liabilities	Interest expense-net	16		13
Total lease cost		$	50	$	43

Supplemental cash flow information related to leases for the fiscal years ended September 30, 2024 and 2023 is as follows (in millions):


	Fiscal Years Ended September 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	21	$	21
Operating cash outflows from finance leases	14		10
Financing cash outflows from finance leases	6		5

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	21	$	17
Financing leases	83		48

Supplemental balance sheet information related to leases is as follows (in millions):


	Classification	September 30, 2024		September 30, 2023
Operating Leases
Operating lease right-of-use assets	Other non-current assets	$	61	$	64

Current operating lease liabilities	Accrued and other current liabilities	19		16
Long-term operating lease liabilities	Other non-current liabilities	43		51
Total operating lease liabilities		$	62	$	67

Finance Leases
Finance lease right-of-use assets, net	Property, plant and equipment-net	$	252	$	176

Current finance lease liabilities	Current portion of long-term debt	6		5
Long-term finance lease liabilities	Long-term debt	256		188
Total finance lease liabilities		$	262	$	193

As of September 30, 2024, the Company has the following remaining lease term and weighted average discount rates:


Weighted-average remaining lease term
Operating leases			5.4 years
Finance leases			21.0 years

Weighted-average discount rate
Operating leases			6.1%
Finance leases			7.0%

Maturities of lease liabilities at September 30, 2024 are as follows (in millions):


	Operating Leases		Finance Leases
2025	$	22	$	20
2026	16		21
2027	12		22
2028	7		23
2029	5		23
Thereafter	13		432
Total future minimum lease payments	75		541
Less: imputed interest	13		279
Present value of lease liabilities reported	$	62	$	262