v3.25.1
Financial Instruments and Fair Value Measurements
 6 Months Ended
Mar. 29, 2025
Financial Instruments and Fair Value Measurements [Abstract]  
Financial Instruments and Fair Value Measurements

8.  Financial Instruments and Fair Value Measurements

In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors.  The Company may use derivative financial instruments to help manage market risk and reduce the exposure to fluctuations in interest rates and foreign currencies.  These financial instruments are not used for trading or other speculative purposes.

Cross-Currency Swaps

The Company is party to certain cross-currency swaps to hedge a portion of our foreign currency risk.  Both the euro (€1,625 million) and pound sterling (£700 million) swap agreements mature June 2026.  In addition to cross-currency swaps, we hedge a portion of our foreign currency risk by designating foreign currency denominated long-term debt as net investment hedges of certain foreign operations.  As of March 29, 2025, we had outstanding long-term debt of €375 million that was designated as a hedge of our net investment in certain euro-denominated foreign subsidiaries.  When valuing cross-currency swaps the Company utilizes Level 2 inputs (substantially observable).

Interest Rate Swaps

The primary purpose of the Company’s interest rate swap activities is to manage interest expense variability associated with our outstanding variable rate term loan debt.  When valuing interest rate swaps the Company utilizes Level 2 inputs (substantially observable).

As of March 29, 2025, the Company effectively had (i) a $450 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 4.553% and (ii) a $500 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 4.648%, both of which expire in June 2029.

The Company records the fair value positions of all derivative financial instruments on a net basis by counterparty for which a master netting arrangement is utilized. Balances on a gross basis are as follows:

Derivative Instruments
Hedge Designation
Balance Sheet Location
  
March 29, 2025
    
September 28, 2024
  
Cross-currency swaps
Not designated
Other long-term liabilities
    
52
      
—
  
Cross-currency swaps
Designated
Other long-term liabilities
    
152
      
271
  
Interest rate swaps
Designated
Other long-term assets
    
—
      
—
  
Interest rate swaps
Designated
Other long-term liabilities
    
37
      
75
  
Interest rate swaps
Not designated
Other long-term assets
    
—
      
—
  
Interest rate swaps
Not designated
Other long-term liabilities
    
45
      
62
  

The effect of the Company’s derivative instruments on the Consolidated Statements of Income is as follows:

   
Quarterly Period Ended
    
Two Quarterly Periods Ended
  
Derivative Instruments
 Statements of Income Location
  
March 29, 2025
    
March 30, 2024
    
March 29, 2025
    
March 30, 2024
  
Cross-currency swaps
Interest expense
  
$
(4
)
  
$
(10
)
  
$
(8
)
  
$
(20
)
Interest rate swaps
Interest expense
    
(5
)
    
(21
)
    
(11
)
    
(42
)
Cross-currency swaps
Other expense (income)
    
(25
)
    
—
      
(51
)
    
—
  

Non-recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis when impairment indicators are present or when the Company completes an acquisition.  The Company adjusts certain long-lived assets to fair value only when the carrying values exceed the fair values.  The categorization of the framework used to value the assets is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.  These assets that are subject to our annual impairment analysis primarily include our definite lived and indefinite lived intangible assets, including Goodwill and our property, plant and equipment.  The Company reviews Goodwill and other indefinite lived assets for impairment as of the first day of the fourth fiscal quarter each year and more frequently if impairment indicators exist.  The Company determined Goodwill and other indefinite lived assets were not impaired in our annual fiscal 2024 assessment.  No impairment indicators were identified in the current quarter.

Included in the following tables are the major categories of assets measured at fair value on a non-recurring basis as of March 29, 2025 and September 28, 2024, along with the impairment loss recognized on the fair value measurement during the period:

 
As of March 29, 2025
  
   
Level 1
    
Level 2
    
Level 3
    
Total
    
Impairment
  
Indefinite-lived trademarks
  
$
—
    
$
—
    
$
207
    
$
207
    
$
—
  
Goodwill
    
—
      
—
      
4,173
      
4,173
      
—
  
Definite lived intangible assets
    
—
      
—
      
970
      
970
      
—
  
Property, plant, and equipment
    
—
      
—
      
3,534
      
3,534
      
1
  
Total
  
$
—
    
$
—
    
$
8,884
    
$
8,884
    
$
1
  

 
As of September 28, 2024
  
   
Level 1
    
Level 2
    
Level 3
    
Total
    
Impairment
  
Indefinite-lived trademarks
  
$
—
    
$
—
    
$
207
    
$
207
    
$
—
  
Goodwill
    
—
      
—
      
4,295
      
4,295
      
—
  
Definite lived intangible assets
    
—
      
—
      
1,086
      
1,086
      
—
  
Property, plant, and equipment
    
—
      
—
      
3,627
      
3,627
      
8
  
Total
  
$
—
    
$
—
    
$
9,215
    
$
9,215
    
$
8
  

The Company’s financial instruments consist primarily of cash and cash equivalents, long-term debt, interest rate and cross-currency swap agreements, and finance lease obligations.  The book value of our marketable long-term indebtedness exceeded fair value by $30 million as of March 29, 2025.  The Company’s long-term debt fair values were determined using Level 2 inputs (substantially observable).