XML 35 R25.htm IDEA: XBRL DOCUMENT v3.22.1
Fair Value Measurements
 6 Months Ended
Mar. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
ASC 820, Fair Value Measurement (“ASC 820”) defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.
In addition to defining fair value, ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in
measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
•Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
•Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.
In accordance with the fair value hierarchy, described above, the following tables show the fair value of the Company’s financial instruments that are required to be measured at fair value as of March 31, 2022 and September 30, 2021.
Fair Value Measurements as of March 31, 2022
(Level 1)(Level 2)(Level 3)Total
(in millions)
Other Current Assets:
Foreign Currency Forward Exchange Contracts (a)$— $3 $— $3 
Other Current Liabilities:
Interest Rate Swap (e)— (2)— (2)
Foreign Currency Forward Exchange Contracts (a)— (1)— (1)
Other Noncurrent Assets:
Interest Rate Swap (e)— 8 — 8 
Equity Investments with Readily Determinable Fair Value (d)21 — — 21 
Other Noncurrent Liabilities:
Contractual Obligations (b)— — (11)(11)
Total$21 $8 $(11)$18 

Fair Value Measurements as of September 30, 2021
(Level 1)(Level 2)(Level 3)Total
(in millions)
Other Current Liabilities:
Contractual Obligations (b)$— $— $(4)$(4)
Other Noncurrent Assets:
Equity Method Investment (c)26 — — 26 
Equity Investment with Readily Determinable Fair Value (d)37 — — 37 
Other Noncurrent Liabilities:
Contractual Obligations (b)— — (15)(15)
Interest Rate Swaps (e)— (22)— (22)
Total$63 $(22)$(19)$22 
______________________________________
(a)The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates.
(b)This represents contingent consideration related to acquisitions. This is based on a probability weighted performance approach and it is adjusted to fair value on a recurring basis and any adjustments are typically included as a component of operating income in the consolidated statements of operations. This amount was mainly calculated using unobservable inputs such as future earnings performance of the acquiree and the expected timing of payments.
(c)This represents an equity method investment which was acquired in fiscal 2019 whereby the Company elected the fair value option under ASC 825, Financial Instruments (“ASC 825”). During the three months ended March 31, 2022, this investment was sold.
(d)These represent equity investments with a readily determinable fair value. The Company has measured its investments to fair value in accordance with ASC 321, Investments—Equity Securities, based on quoted prices in active markets.
(e)The fair value of the interest rate swaps is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay as of March 31, 2022 for contracts involving the same attributes and maturity dates.
The following table reconciles the beginning and ending balances of net liabilities classified as Level 3:
Total
(in millions)
Balance at September 30, 2021$(19)
Additions(1)
Reductions5 
Payments4 
Balance at March 31, 2022$(11)
The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the asset is written down to its fair value. In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets.
Equity Investments Without Readily Determinable Fair Value
The Company evaluates its equity investments without readily determinable fair values for impairment if factors indicate that a significant decrease in value has occurred. The Company has elected to use the measurement alternative to fair value that will allow these investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes. The Company did not record any impairment charges on these investments during the three and six months ended March 31, 2022 and 2021. In addition, there were no observable price changes events that were completed during the three and six months ended March 31, 2022 and 2021.
Fair Value of Debt
Based on the level of interest rates prevailing at March 31, 2022, the fair value of the Company’s debt was $3.652 billion. Based on the level of interest rates prevailing at September 30, 2021, the fair value of the Company’s debt was $3.412 billion. The fair value of the Company’s debt instruments is determined using quoted market prices from less active markets or by using quoted market prices for instruments with identical terms and maturities; both approaches are considered a Level 2 measurement.