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Financial Instruments | 9 Months Ended
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Jun. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments | FINANCIAL INSTRUMENTS Hedging Activities – As of June 30, 2023, the notional amount of foreign currency hedge positions was approximately $2.3 billion. All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of June 30, 2023 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 and nine months ended June 30, 2022 and 2023:
|  |  |  | Into Earnings |  | Into OCI
|  |  |  | 3rd Quarter |  | Nine Months |  | 3rd Quarter |  | Nine Months
Gains (Losses) |  | Location |  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |
Commodity |  | Cost of sales |  | $ | 5 |  |  | (9) |  |  | 18 |  |  | (19) |  |  | (32) |  |  | (13) |  |  | (9) |  |  | 6 |
Foreign currency |  | Sales |  | (1) |  |  | — |  |  | — |  |  | (2) |  |  | (3) |  |  | (2) |  |  | (5) |  |  | 1 |
Foreign currency |  | Cost of sales |  | 10 |  |  | 42 |  |  | 21 |  |  | 60 |  |  | 15 |  |  | 24 |  |  | 32 |  |  | 38 |
Foreign currency |  | Other deductions, net |  | 56 |  |  | (91) |  |  | 108 |  |  | (108) |  |  |  |  |  |  |  |  |
Net Investment Hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Euro denominated debt |  |  |  |  |  | 16 |  |  |  |  | 16 |  |  | 84 |  |  | (46) |  |  | 163 |  |  | (183) |
Total |  |  |  | $ | 70 |  |  | (42) |  |  | 147 |  |  | (53) |  |  | 64 |  |  | (37) |  |  | 181 |  |  | (138) |
Regardless of whether derivatives and non-derivative financial instruments receive hedge accounting, the Company expects hedging gains or losses to be 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. Equity Investment – The Company has an equity investment in National Instruments Corporation ("NI"), valued at $128 as of June 30, 2023 (reported in Other current assets), and recognized a mark-to-market gain of $12 and $47 for the three and nine months ended June 30, 2023, respectively. On April 12, 2023, Emerson announced an agreement to acquire NI for $60 per share in cash for the remaining shares not already owned by Emerson. See Note 4. 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 June 30, 2023, the fair value of long-term debt was approximately $7.2 billion, which was lower than the carrying value by $1,055. The fair value of foreign currency contracts, which are reported in Other current assets and Accrued expenses, did not materially change since September 30, 2022. Commodity contracts, which related to discontinued operations, were novated to Copeland upon the completion of the transaction and therefore no amounts are reported in the Company's balance sheet as of June 30, 2023. The fair value of the Company's equity investment in National Instruments falls within Level 1 and was based on the most recent quoted closing market price from its principal exchange for the period ended June 30, 2023. 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 maximum amount that could potentially have been required was immaterial. 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 June 30, 2023.

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