Leases

12 Months Ended

Sep. 30, 2025

Note R. Leases

The Company determines if an arrangement is or contains a lease at inception. The Company considers a contract to be or to contain a lease if the contract conveys the right to control the use of identified property, plant or equipment (an identified asset) for a period of time in exchange for consideration.

A lease liability is recorded at commencement for the net present value of future lease payments over the lease term. The discount rate used is generally the Company’s estimated incremental borrowing rate based on credit-adjusted and term-specific discount rates, using a third-party yield curve. A right of use (“ROU”) asset is recorded and recognized at commencement at the lease liability amount, adjusted for lease prepayments, initial direct costs incurred and lease incentives received. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

In the normal course of its business, the Company enters as the lessee into various leases, primarily related to certain transportation vehicles, warehouse facilities, office space, and machinery and equipment. These leases have remaining lease terms between one and twelve years, some of which may include options to extend the leases for up to fifteen years or options to terminate the leases. The Company’s land leases have remaining lease terms up to seventy-seven years.

The Company has elected not to recognize short-term leases on the balance sheet for all underlying asset classes. Short-term leases are leases that, at the commencement date, have a lease term of twelve months or less and do not include a purchase option that the Company is reasonably certain to exercise. Short-term leases are expensed on a straight-line basis over the lease term.

The components of the Company’s lease costs were as follows:


	Years Ended September 30
	2025		2024		2023
	(In millions)
Operating lease cost	$	25	$	25	$	26
Finance lease cost		8		5		6
Total lease cost	$	33	$	30	$	32

Included within operating lease costs are short-term lease costs, which were $7 million in each of fiscal 2025, 2024 and 2023. Some lease arrangements require variable payments that are dependent on usage, output, or index-based adjustments. Variable lease costs were $1 million in fiscal 2025 and $2 million in both fiscal 2024 and 2023.

Supplemental cash flow information related to the Company’s leases was as follows:


	Years Ended September 30
	2025		2024		2023
	(In millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	17	$	18	$	18
Operating cash flows from finance leases		2		1		2
Financing cash flows from finance leases		6		4		3
Right-of-use assets obtained in exchange for new operating lease liabilities	$	8	$	9	$	11
Right-of-use assets obtained in exchange for new finance lease liabilities	$	11	$	2	$	4

Supplemental balance sheet information related to the Company’s leases was as follows:


Description	Balance Sheet Classification	September 30, 2025		September 30, 2024
		(In millions)
Lease ROU assets:
Operating	Other assets	$	101	$	104
Finance	Net property, plant and equipment		26		37
Total lease ROU assets		$	127	$	141

Lease liabilities:
Current:
Operating	Accounts payable and accrued liabilities	$	13	$	14
Finance	Current portion of long-term debt		6		4
Long-term:
Operating	Other liabilities		85		88
Finance	Long-term debt		24		23
Total lease liabilities		$	128	$	129

The following table presents the weighted-average remaining lease term and discount rates for the Company’s leases:


Description	September 30, 2025			September 30, 2024
Weighted-average remaining lease term (years):
Operating leases		21			21
Finance leases		7			9
Weighted-average discount rate:
Operating leases		3.22	%		3.11	%
Finance leases		4.69	%		5.09	%

Future minimum lease payments under non-cancelable operating and finance leases as of September 30, 2025 were as follows:


Years Ending September 30	Operating leases		Finance leases
	(In millions)
2026	$	17	$	7
2027		14		5
2028		11		5
2029		10		3
2030		10		3
2031 and thereafter		65		11
Total lease payments		127		34
Less: imputed interest		29		4
Total	$	98	$	30