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FINANCIAL INSTRUMENTS | 12 Months Ended
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Sep. 30, 2025
General Discussion of Derivative Instruments and Hedging Activities [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS Following is a discussion regarding the Company’s use of financial instruments: Hedging Activities As of September 30, 2025, the notional amount of foreign currency hedge positions was approximately $4.1 billion. All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of September 30, 2025 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. Cash flows related to foreign currency hedges are classified within operating cash flows. Net Investment Hedge In March 2025, the Company issued €500 of 3.0% notes due March 2031 and €500 of 3.5% notes due March 2037. The net proceeds from the sale of the euro notes were used for general corporate purposes and to fund a portion of the purchase price of the AspenTech transaction (see Note 4). In 2019, the Company issued euro-denominated debt of €1.5 billion, of which €500 was repaid in 2024. The outstanding 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. Cash flows related to the euro-denominated debt are classified within financing cash flows. The following gains and losses are included in earnings and other comprehensive income (OCI):
|  |  | Gain (Loss) to Earnings |  | Gain (Loss) to OCI
|  |  | 2023 |  |  | 2024 |  |  | 2025 |  |  | 2023 |  |  | 2024 |  |  | 2025 |
| Location |  |  |  |  |  |  |  |  |  |  |  |
Commodity | Cost of sales |  | $ | (19) |  |  | — |  |  | — |  |  | 6 |  |  | — |  |  | — |
Foreign currency | Sales |  | (3) |  |  | — |  |  | 5 |  |  | — |  |  | 2 |  |  | 7 |
Foreign currency | Cost of sales |  | 65 |  |  | 10 |  |  | 1 |  |  | 42 |  |  | (8) |  |  | 25 |
Foreign currency | Other deductions, net |  | (128) |  |  | 10 |  |  | (8) |  |  |  |  |  |  |
Net Investment Hedge |  |  |  |  |  |  |  |  |  |  |  |  |
Euro denominated debt |  |  | 16 |  |  | — |  |  | — |  |  | (128) |  |  | (70) |  |  | (181) |
Total |  |  | $ | (69) |  |  | 20 |  |  | (2) |  |  | (80) |  |  | (76) |  |  | (149) |
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 had an equity investment in National Instruments Corporation ("NI") and recognized a mark-to-market gain of $56 in 2023. 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 and the transaction closed on October 11, 2023. 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. The fair value of long-term debt was $8.2 billion and $7.0 billion, respectively, as of September 30, 2025 and 2024, which was lower than the carrying value by $693 and $705, respectively. The fair values of foreign currency contracts were reported in Other current assets and Accrued expenses as summarized below:
|  | 2024 |  | 2025
|  | Assets |  | Liabilities |  | Assets |  | Liabilities
Foreign currency |  |  | $ | 31 |  |  | 20 |  |  | 33 |  |  | 23 |

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- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/820/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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