v3.26.1
Fair Value Measurements
 6 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements FAIR VALUE MEASUREMENTS
ASC 820, "Fair Value Measurement," defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2: Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
Recurring Fair Value Measurements

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value (in millions):
 Fair Value Measurements Using:
 Total as of
March 31, 2026		Quoted Prices
in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Other current assets
Derivatives
$115 $— $115 $— 
Other noncurrent assets
Deferred compensation plan assets63 63 — — 
Exchange traded funds (fixed income)(1)
71 71 — — 
Exchange traded funds (equity)(1)
205 205 — — 
Total assets$454 $339 $115 $— 
Other current liabilities
Derivatives
$136 $— $136 $— 
Contingent earn-out liabilities14 — — 14 
Total liabilities$150 $— $136 $14 
(1) Classified as restricted investments for payment of asbestos liabilities. See Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further details.
 Fair Value Measurements Using:

Total as of
September 30, 2025		Quoted Prices
in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Other current assets
Derivatives
$15 $— $15 $— 
Other noncurrent assets
Deferred compensation plan assets63 63 — — 
Exchange traded funds (fixed income)(1)
73 73 — — 
Exchange traded funds (equity)(1)
217 217 — — 
Total assets$368 $353 $15 $— 
Other current liabilities
Derivatives
$24 $— $24 $— 
Contingent earn-out liabilities19 — — 19 
Total liabilities$43 $— $24 $19 
(1) Classified as restricted investments for payment of asbestos liabilities. See Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further details.

Net Investment Hedges

The Company enters into foreign-currency-denominated debt obligations in order to manage foreign currency translation risk associated with normal operations. The carrying value of foreign operations translates on a recurring basis using the
exchange rate at the end of the applicable period and approximates its fair value. As of both March 31, 2026 and September 30, 2025, the Company had designated debt obligations of €2.9 billion and ¥30 billion as partial hedges of its investments in certain euro-denominated and yen-denominated subsidiaries.

The fair value of foreign-currency-denominated debt was $3.4 billion as of March 31, 2026 and $3.6 billion as of September 30, 2025. The currency effects of the debt obligations are reflected in the accumulated other comprehensive income ("AOCI") account within shareholders' equity attributable to Johnson Controls ordinary shareholders where they offset gains and losses recorded on the Company’s net investments globally.

Pre-tax gains (losses) on net investment hedges recorded as foreign currency translation adjustments ("CTA") within other comprehensive income (loss) were $77 million and $(131) million for the three months ended March 31, 2026 and 2025, respectively, and $93 million and $107 million for the six months ended March 31, 2026 and 2025, respectively.

Valuation Methods

Contingent earn-out liabilities: The contingent earn-out liabilities were established using a Monte Carlo simulation based on the forecasted operating results and the earn-out formula specified in the purchase agreements.

Deferred compensation plan assets: Assets held in the deferred compensation plans will be used to pay benefits under certain of the Company's non-qualified deferred compensation plans. The investments primarily consist of mutual funds which are publicly traded on stock exchanges and are valued using a market approach based on the quoted market prices. Unrealized gains (losses) on the deferred compensation plan assets are recognized in the consolidated statements of income where they offset unrealized gains and losses on the related deferred compensation plan liability.

Derivatives: Derivatives consist primarily of foreign currency exchange derivatives and are valued under a market approach using publicly available prices, where available, or dealer quotes.

Exchange traded funds: Investments in exchange traded funds are valued using a market approach based on quoted market prices, where available, or broker/dealer quotes of identical or comparable instruments. Refer to Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further information.

Unrealized losses recognized in the consolidated statements of income that relate to equity securities still held at March 31, 2026 and 2025 were $11 million and $8 million for the three months ended March 31, 2026 and 2025, respectively, and $7 million and $10 million for the six months ended March 31, 2026 and 2025, respectively.

The fair values of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values.

The fair value of long-term debt at March 31, 2026 and September 30, 2025 was as follows (in billions):
March 31,September 30,
20262025
Public debt$7.7 $8.4 
Other long-term debt0.5 0.5 
Total fair value of long-term debt$8.2 $8.9 
The fair value of public debt was determined primarily using market quotes which are classified as Level 1 inputs within the ASC 820 fair value hierarchy. The fair value of other long-term debt was determined using quoted market prices for similar instruments and are classified as Level 2 inputs within the ASC 820 fair value hierarchy.