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Financial Instruments
 3 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments FINANCIAL INSTRUMENTS

Following is a discussion regarding the Company’s use of financial instruments:
Hedging Activities – As of December 31, 2019, the notional amount of foreign currency hedge positions was approximately $2.2 billion, and commodity hedge contracts totaled approximately $105 (primarily 43 million pounds of copper and aluminum). All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of December 31, 2019 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur. Gains and losses on foreign currency derivatives reported in Other deductions, net reflect hedges of balance sheet exposures that do not receive hedge accounting.
Net Investment Hedge – In fiscal 2019, the Company issued euro-denominated debt of €1.5 billion. The euro notes reduce foreign currency risk associated with the Company's international subsidiaries that use the euro as their functional currency and have been designated as a hedge of a portion of the investment in these operations. Foreign currency gains or losses associated with the euro-denominated debt are deferred in accumulated other comprehensive income (loss) and will remain until the hedged investment is sold or substantially liquidated.
The following gains and losses are included in earnings and other comprehensive income (OCI) for the three months ended December 31, 2019 and 2018:
 
 
 
 
Into Earnings
 
Into OCI
 
 
 
 
1st Quarter
 
1st Quarter
Gains (Losses)
 
Location
 
2018

 
2019

 
2018

 
2019

Commodity
 
Cost of sales
 
$
(3
)
 
(3
)
 
(7
)
 
7

Foreign currency
 
Sales
 
(2
)
 
(2
)
 
(1
)
 
3

Foreign currency
 
Cost of sales
 
4

 
7

 
(11
)
 
17

Foreign currency
 
Other deductions, net
 
11

 
8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Investment Hedges
 
 
 
 
 
 
 
 
Euro denominated debt
 
 
 


 


 
—

 
(26
)
     Total
 
 
 
$
10

 
10

 
(19
)
 
1


Regardless of whether derivatives and non-derivative financial instruments receive hedge accounting, the Company expects hedging gains or losses to be essentially offset by losses or gains on the related underlying exposures. The amounts ultimately recognized will differ from those presented above for open positions, which remain subject to ongoing market price fluctuations until settlement. Derivatives receiving hedge accounting are highly effective and no amounts were excluded from the assessment of hedge effectiveness.

Fair Value Measurement – Valuations for all derivatives and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy. As of December 31, 2019, the fair value of long-term debt was $4.7 billion, which exceeded the carrying value by $420. The fair values of commodity and foreign currency contracts were reported in Other current assets and Accrued expenses and did not materially change since September 30, 2019.
Counterparties to derivatives arrangements are companies with investment-grade credit ratings. The Company has bilateral collateral arrangements with counterparties with credit rating-based posting thresholds that vary depending on the arrangement. If credit ratings on the Company's debt fall below pre-established levels, counterparties can require immediate full collateralization of all derivatives in net liability positions. The Company also can demand full collateralization of derivatives in net asset positions should any counterparty credit ratings fall below certain thresholds. No collateral was posted with counterparties and none was held by the Company as of December 31, 2019.