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Derivative Instruments and Hedging Activities | 6 Months Ended
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Mar. 31, 2024
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 March 31, 2024 and September 30, 2023 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 March 31, 2024 and September 30, 2023 were as follows:
(Millions of dollars) | Hedge Designation |  | March 31, 2024 |  | September 30, 2023
Foreign exchange contracts (a) | Undesignated |  | $ | 2,220 |  |  | $ | 3,146 |
Foreign currency-denominated debt (b) | Net investment hedges |  | 1,891 |  |  | 1,056 |
Cross-currency swaps (c) | Net investment hedges |  | 2,119 |  |  | 2,119 |
(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 three and six months ended March 31, 2024 and 2023 were immaterial to the Company's consolidated financial results. (b)Represents foreign currency-denominated long-term 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 for the three and six-month periods were as follows:
| Three Months Ended March 31, |  | Six Months Ended March 31,
(Millions of dollars) | 2024 |  | 2023 |  | 2024 |  | 2023
Foreign currency-denominated debt | $ | 4 |  |  | $ | (22) |  |  | $ | (25) |  |  | $ | (164) |
Cross-currency swaps (a) | 21 |  |  | (21) |  |  | $ | (34) |  |  | $ | (101) |
(a) The amounts for the three and six months ended March 31, 2023 include a gain, net of tax, of $13 million recognized on terminated cross-currency swaps. Interest Rate Risks and Related Strategies The Company uses a mix of fixed and variable rate debt 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, within Interest expense, over the remaining life of the hedged debt. The amounts reclassified from accumulated other comprehensive income relating to cash flow hedges during the three and six months ended March 31, 2024 and 2023, as well as the amounts expected to be reclassified within the next 12 months, are not material to the Company's consolidated financial results. Net after-tax gains (losses) recorded in Other comprehensive income relating to interest rate cash flow hedges were immaterial to the Company’s consolidated financial results during the three and six months ended March 31, 2024 and 2023. The net amounts recognized during the three and six months ended March 31, 2024 included a net after-tax gain of $67 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. Amounts recorded during the three and six months ended March 31, 2024 and 2023 were immaterial to the Company's consolidated financial results. The notional amounts of the Company’s interest rate-related derivative instruments as of March 31, 2024 and September 30, 2023 were as follows:
(Millions of dollars) | Hedge Designation |  | March 31, 2024 |  | September 30, 2023
Interest rate swaps (a) | Fair value hedges |  | $ | 700 |  |  | $ | 700 |
Forward starting interest rate swaps (b) | Cash flow hedges |  | — |  |  | 500 |
(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 secured overnight financing rates (“SOFR”). (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 March 31, 2024 and September 30, 2023 were immaterial to the Company's consolidated financial results.

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- 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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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