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FINANCIAL INSTRUMENTS | 3 Months Ended
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Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS Hedging Activities – As of December 31, 2024, the notional amount of foreign currency hedge positions was approximately $3.4 billion. All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of December 31, 2024 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, of which €500 was repaid in 2024. 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. Cash flows related to the euro-denominated debt are classified within financing cash flows. The following gains and losses are included in earnings and other comprehensive income (OCI) for the three months ended December 31, 2024 and 2023:
|  |  |  | Three Months Ended December 31, |  |
|  |  |  | Into Earnings |  | Into OCI
Gains (Losses) |  | Location |  | 2023 |  |  | 2024 |  |  |  |  |  |  | 2023 |  |  | 2024 |  |  |  |  |
Foreign currency |  | Sales |  | — |  |  | 1 |  |  |  |  |  |  | 7 |  |  | 11 |  |  |  |  |
Foreign currency |  | Cost of sales |  | 3 |  |  | — |  |  |  |  |  |  | 1 |  |  | 3 |  |  |  |  |
Foreign currency |  | Other deductions, net |  | 15 |  |  | (51) |  |  |  |  |  |  |  |  |  |  |  |  |
Net Investment Hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Euro denominated debt |  |  |  |  |  | — |  |  |  |  |  |  | (55) |  |  | 70 |  |  |  |  |
Total |  |  |  | $ | 18 |  |  | (50) |  |  |  |  |  |  | (47) |  |  | 84 |  |  |  |  |
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 as sessment 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. As of December 31, 2024, the fair value of long-term debt was approximately $6.7 billion, which was lower than the carrying value by $932. The fair value of foreign currency contracts, which are reported in Other current assets and Accrued expenses, did not materially change since September 30, 2024. Counterparties to derivatives arrangements are companies with investment-grade credit ratings. The Company has bilateral collateral arrangements with counterparties with credit rating-based posting thresholds that vary depending on the arrangement. If credit ratings on the Company's debt fall below pre-established levels, counterparties can require immediate full collateralization of all derivatives in net liability positions. The maximum amount that could potentially have been required was immaterial. The Company also can demand full collateralization of derivatives in net asset positions should any counterparty credit ratings fall below certain thresholds. No collateral was posted with counterparties and none was held by the Company as of December 31, 2024.

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