Financial Instruments and Fair Value Measurements

6 Months Ended

Mar. 29, 2025

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 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. During the quarter ended March 29, 2025, the Company received net proceeds of $22 million related to the settlement of existing cross-currency rate swaps, with the offset being recorded in Accumulated other comprehensive loss. Following the settlement, the Company entered into a €250 million and a €425 million cross-currency swap, maturing November 2027 and November 2029 respectively. The swaps are designated as a hedge of the Company’s foreign currency investment in foreign subsidiaries.

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

Designated

Other long-term liabilities

(38)

—

The effect of the Company’s derivative instruments on the Consolidated and Combined Statements of Operations 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	$	3	$	—	$	5	$	—

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 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. As a result of the fiscal 2024 assessment, the Company recorded an impairment charge of $172 million. No impairment indicators were identified in the current quarter.

Included in the following tables are the major categories of assets and their current carrying values, along with the impairment loss recognized on the fair value measurement for the period then ended:


	March 29, 2025
	Level 1		Level 2		Level 3		Total		Impairment
Indefinite-lived trademarks	$	—	$	—	$	26	$	26	$	—
Goodwill	—		—		643		643		—
Definite lived intangible assets	—		—		221		221		—
Property, plant, and equipment	—		—		1,519		1,519		—
Total	$	—	$	—	$	2,409	$	2,409	$	—


	September 28, 2024
	Level 1		Level 2		Level 3		Total		Impairment
Indefinite-lived trademarks	$	—	$	—	$	26	$	26	$	—
Goodwill	—		—		624		624		(171)
Definite lived intangible assets	—		—		200		200		(1)
Property, plant, and equipment	—		—		949		949		—
Total	$	—	$	—	$	1,799	$	1,799	$	(172)

The Company’s financial instruments consist primarily of cash and cash equivalents, long-term debt, cross-currency swap agreements, and finance lease obligations. The book value of our marketable long-term indebtedness exceeded fair value by $77 million as of March 29, 2025. The Company’s long-term debt fair values were determined using Level 2 inputs (substantially observable).