FINANCIAL INSTRUMENTS

12 Months Ended

Sep. 30, 2024

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Following is a discussion regarding the Company’s use of financial instruments:

Hedging Activities

As of September 30, 2024, the notional amount of foreign currency hedge positions was approximately $3.3 billion. All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of September 30, 2024 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 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
		2022		2023	2024	2022	2023	2024
	Location
Commodity	Cost of sales	$	12	(19)	—	(20)	6	—
Foreign currency	Sales	(2)		(3)	—	(9)	—	2
Foreign currency	Cost of sales	31		65	10	53	42	(8)
Foreign currency	Other deductions, net	48		(128)	10

Net Investment Hedge
Euro denominated debt				16	—	266	(128)	(70)
Total		$	89	(69)	20	290	(80)	(76)

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"), valued at $136 as of September 30, 2023 (reported in Other noncurrent assets), 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 $7.0 billion and $6.9 billion, respectively, as of September 30, 2024 and 2023, which was lower than the carrying value by $705 and $1,275, respectively. The fair values of foreign currency contracts were reported in Other current assets and Accrued expenses as summarized below:


	2023				2024
	Assets			Liabilities	Assets	Liabilities
Foreign currency		$	30	22	31	20

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 September 30, 2023.