XML 36 R21.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Derivative Instruments and Hedging Activities | 12 Months Ended
--- | ---
Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company uses derivative instruments to mitigate certain exposures. The Company does not enter into derivative financial instruments for trading or speculative purposes. The effects these derivative instruments and hedged items had on the Company’s balance sheets and the fair values of the derivatives outstanding at September 30, 2022 and 2021 were not material. The effects on the Company’s financial performance and cash flows are provided below. Foreign Currency Risks and Related Strategies The Company has foreign currency exposures throughout Europe, Greater Asia, Canada and Latin America. Transactional currency exposures that arise from entering into transactions, generally on an intercompany basis, in non-hyperinflationary countries that are denominated in currencies other than the functional currency are mitigated primarily through the use of forward contracts. In order to mitigate foreign currency exposure relating to its investments in certain foreign subsidiaries, the Company has hedged the currency risk associated with those investments with certain instruments such as foreign currency-denominated debt and cross-currency swaps, which are designated as net investment hedges, as well as currency exchange contracts. The notional amounts of the Company’s foreign currency-related derivative instruments as of September 30, 2022 and 2021 were as follows:
(Millions of dollars) | Hedge Designation |  | 2022 |  | 2021
Foreign exchange contracts (a) | Undesignated |  | $ | 2,766 |  |  | $ | 2,735 |
Foreign currency-denominated debt (b) | Net investment hedges |  | 2,140 |  |  | 2,543 |
Cross-currency swaps (c) | Net investment hedges |  | 910 |  |  | 1,958 |
(a)Represent hedges of transactional foreign exchange exposures resulting primarily from intercompany payables and receivables. Gains and losses on these instruments are recognized immediately in income. These gains and losses are largely offset by gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments. Net amounts recognized in Other (expense) income, net, during the years ending September 30, 2022, 2021 and 2020 are detailed in Note 19. (b)Represents foreign currency-denominated notes outstanding which were effective as economic hedges of net investments in certain of the Company's foreign subsidiaries. (c)Represents cross-currency swaps which were effective as economic hedges of net investments in certain of the Company's foreign subsidiaries. Net gains or losses relating to the net investment hedges, which are attributable to changes in the foreign currencies to U.S. dollar spot exchange rates, are recorded as accumulated foreign currency translation in Other comprehensive income (loss). Upon the termination of a net investment hedge, any net gain or loss included in Accumulated other comprehensive income (loss) relative to the investment hedge remains until the foreign subsidiary investment is disposed of or is substantially liquidated. Net gains (losses) recorded to Accumulated other comprehensive income (loss) relating to the Company's net investment hedges as of September 30, 2022, 2021 and 2020 were as follows:
(Millions of dollars) | 2022 |  | 2021 |  | 2020
Foreign currency-denominated debt | $ | 320 |  |  | $ | 32 |  |  | $ | (106) |
Cross-currency swaps (a) | 173 |  |  | (21) |  |  | (109) |
(a)The amounts in 2022 and 2021 include a gain of $46 million and a loss of $35 million, respectively, recognized on terminated cross-currency swaps. Interest Rate Risks and Related Strategies The Company uses a mix of fixed and variable rate debt, which is further discussed in Note 16, to manage its interest rate exposure, and periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Company exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated as either cash flow or fair value hedges. Changes in the fair value of the interest rate swaps designated as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk) are recorded in Other comprehensive income (loss). If interest rate derivatives designated as cash flow hedges are terminated, the balance in Accumulated other comprehensive income (loss) attributable to those derivatives is reclassified into earnings over the remaining life of the hedged debt. The amounts reclassified from accumulated other comprehensive income relating to cash flow hedges during 2022, 2021 and 2020, as well as the amounts expected to be reclassified within the next 12 months, are not material to the Company's consolidated financial results. The Company recorded net after-tax gains (losses) of $92 million, $72 million and $(75) million in Other comprehensive income (loss) relating to interest rate-related cash flow hedges during the years ended September 30, 2022, 2021 and 2020, respectively. The gains recorded during fiscal year 2022 included a net after-tax gain of $41 million that was realized upon the Company’s termination of $500 million of forward starting interest rate swaps. For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates. The amounts recorded during the years ended September 30, 2022 and 2021 for changes in fair value of these hedges were immaterial to the Company's consolidated financial results. The notional amounts of the Company’s interest rate-related derivative instruments as of September 30, 2022 and 2021 were as follows:
(Millions of dollars) | Hedge Designation |  | 2022 |  | 2021
Interest rate swaps (a) | Fair value hedges |  | $ | 700 |  |  | $ | 700 |
Forward starting interest rate swaps (b) | Cash flow hedges |  | 500 |  |  | 1,000 |
(a)Represents fixed-to-floating interest rate swap agreements the Company entered into to convert the interest payments on certain long-term notes from the fixed rate to a floating interest rate based on LIBOR. (b)Represents interest rate derivatives entered into to mitigate exposure to interest rate risk related to future debt issuances. Other Risk Exposures The Company purchases resins, which are oil-based components used in the manufacture of certain products. Significant increases in world oil prices that lead to increases in resin purchase costs could impact future operating results. From time to time, the Company has managed price risks associated with these commodity purchases through commodity derivative forward contracts. The Company’s commodity derivative forward contracts at September 30, 2022 were not material, and there were no outstanding commodity derivative forward contracts at September 30, 2021.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration