Cover and table of contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2023

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-7977

____________________________________________________

NORDSON CORPORATION

(Exact name of registrant as specified in its charter)

___________________________________________________

Ohio

(State or other jurisdiction of incorporation or organization)

28601 Clemens Road

Westlake, Ohio

(Address of principal executive offices)

34-0590250

(I.R.S. Employer Identification No.)

44145

(Zip Code)

(440) 892-1580

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class						Trading Symbol(s)						Name of Each Exchange On Which Registered
Common Shares, without par value						NDSN						Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒						Accelerated filer			☐
Non-accelerated filer			☐						Smaller reporting company			☐
Emerging growth company			☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Shares, without par value as of August 22, 2023: 57,014,497

Table of Contents

PART I – FINANCIAL INFORMATION			3
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)			3
Condensed Consolidated Statements of Income			3
Consolidated Statements of Comprehensive Income			4
Consolidated Balance Sheets			5
Consolidated Statements of Shareholders' Equity			6
Condensed Consolidated Statements of Cash Flows			8
Notes to Condensed Consolidated Financial Statements			9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			24
Overview			24
Critical Accounting Policies and Estimates			24
Results of Operations			25
Financial Condition			28
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			29
ITEM 4. CONTROLS AND PROCEDURES			29
PART II – OTHER INFORMATION			30
ITEM 1. LEGAL PROCEEDINGS			30
ITEM 1A. RISK FACTORS			30
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			30
ITEM 5. OTHER INFORMATION			30
ITEM 6. EXHIBITS			31
SIGNATURE			32

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Part I – FINANCIAL INFORMATION

ITEM 1.			FINANCIAL STATEMENTS (UNAUDITED)

Condensed Consolidated Statements of Income

						Three Months Ended												Nine Months Ended
(In thousands, except for per share data)						July 31, 2023						July 31, 2022						July 31, 2023						July 31, 2022
Sales						$	648,677					$	662,128					$	1,909,319					$	1,906,697
Operating costs and expenses:
Cost of sales						288,357						296,544						868,007						843,344
Selling and administrative expenses						189,324						180,666						553,590						538,602
						477,681						477,210						1,421,597						1,381,946
Operating profit						170,996						184,918						487,722						524,751
Other income (expense):
Interest expense						(12,089)						(5,737)						(32,532)						(16,748)
Interest and investment income						603						572						1,628						1,456
Other income (expense)- net						2,542						752						(2,059)						(37,720)
						(8,944)						(4,413)						(32,963)						(53,012)
Income before income taxes						162,052						180,505						454,759						471,739
Income taxes						34,161						38,694						95,044						99,885
Net income						$	127,891					$	141,811					$	359,715					$	371,854
Average common shares						56,989						57,409						57,114						57,782
Incremental common shares attributable to equity compensation						541						560						543						610
Average common shares and common share equivalents						57,530						57,969						57,657						58,392
Basic earnings per share						$	2.24					$	2.47					$	6.30					$	6.44
Diluted earnings per share						$	2.22					$	2.45					$	6.24					$	6.37

See accompanying notes.

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Consolidated Statements of Comprehensive Income

						Three Months Ended												Nine Months Ended
(In thousands)						July 31, 2023						July 31, 2022						July 31, 2023						July 31, 2022
Net income						$	127,891					$	141,811					$	359,715					$	371,854
Components of other comprehensive income (loss):
Foreign currency translation adjustments						3,455						(21,220)						79,986						(81,479)
Pension settlement adjustment, net of tax						—						—						—						32,047
Pension and other postretirement plan adjustments, net of tax						(159)						1,848						(908)						7,686
Total other comprehensive income (loss)						3,296						(19,372)						79,078						(41,746)
Total comprehensive income						$	131,187					$	122,439					$	438,793					$	330,108

See accompanying notes.

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Consolidated Balance Sheets

(In thousands)
Assets
Current assets:						July 31, 2023						October 31, 2022
Cash and cash equivalents						$	143,138					$	163,457
Receivables - net						533,793						537,313
Inventories - net						439,741						383,398
Prepaid expenses and other current assets						60,249						48,803
Total current assets						1,176,921						1,132,971
Goodwill						2,110,780						1,804,693
Intangible assets - net						350,524						329,402
Property, plant and equipment - net						350,735						353,442
Operating right of use lease assets						104,592						102,279
Deferred income taxes						12,199						10,447
Other assets						91,281						87,141
Total assets						$	4,197,032					$	3,820,375
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt and notes payable						$	110,643					$	392,537
Accrued liabilities						169,635						206,828
Accounts payable						105,075						99,276
Customer advanced payments						95,274						92,584
Income taxes payable						26,661						22,333
Operating lease liability - current						16,809						15,738
Finance lease liability - current						4,512						4,907
Total current liabilities						528,609						834,203
Long-term debt						727,455						345,320
Operating lease liability - noncurrent						91,287						90,768
Deferred income taxes						119,734						110,781
Postretirement obligations						57,528						56,804
Pension obligations						46,782						40,551
Finance lease liability - noncurrent						10,507						11,184
Other long-term liabilities						35,324						36,389
Shareholders' equity:
Common shares						12,253						12,253
Capital in excess of stated value						660,218						626,697
Retained earnings						3,900,384						3,652,216
Accumulated other comprehensive loss						(128,704)						(207,782)
Common shares in treasury, at cost						(1,864,345)						(1,789,009)
Total shareholders' equity						2,579,806						2,294,375
Total liabilities and shareholders' equity						$	4,197,032					$	3,820,375

See accompanying notes.

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Consolidated Statements of Shareholders’ Equity

						Nine Months Ended July 31, 2023
(In thousands, except for share and per share data)						Common Shares						Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Common Shares in Treasury, at cost						TOTAL
November 1, 2022						$	12,253					$	626,697					$	3,652,216					$	(207,782)					$	(1,789,009)					$	2,294,375
Shares issued under company stock and employee benefit plans						—						7,032						—						—						1,775						8,807
Stock-based compensation						—						7,071						—						—						—						7,071
Purchase of treasury shares						—						—						—						—						(6,875)						(6,875)
Dividends declared ($0.65 per share)						—						—						(37,199)						—						—						(37,199)
Net income						—						—						104,261						—						—						104,261
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—						—						76,821						—						76,821
Defined benefit pension and post-retirement plan adjustments						—						—						—						(576)						—						(576)
January 31, 2023						$	12,253					$	640,800					$	3,719,278					$	(131,537)					$	(1,794,109)					$	2,446,685
Shares issued under company stock and employee benefit plans						—						2,632						—						—						369						3,001
Stock-based compensation						—						4,970						—						—						—						4,970
Purchase of treasury shares						—						—						—						—						(47,490)						(47,490)
Dividends declared ($0.65 per share)						—						—						(37,264)						—						—						(37,264)
Net income						—						—						127,563						—						—						127,563
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—						—						(290)						—						(290)
Defined benefit pension and post-retirement plan adjustments						—						—						—						(173)						—						(173)
April 30, 2023						$	12,253					$	648,402					$	3,809,577					$	(132,000)					$	(1,841,230)					$	2,497,002
Shares issued under company stock and employee benefit plans						—						5,958						—						—						683						6,641
Stock-based compensation						—						5,858						—						—						—						5,858
Purchase of treasury shares						—						—						—						—						(23,798)						(23,798)
Dividends declared ($0.65 per share)						—						—						(37,084)						—						—						(37,084)
Net income						—						—						127,891						—						—						127,891
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—						—						3,455						—						3,455
Defined benefit pension and post-retirement plan adjustments						—						—						—						(159)						—						(159)
July 31, 2023						$	12,253					$	660,218					$	3,900,384					$	(128,704)					$	(1,864,345)					$	2,579,806

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Consolidated Statements of Shareholders’ Equity

						Nine Months Ended July 31, 2022
(In thousands, except for share and per share data)						Common Shares						Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Common Shares in Treasury, at cost						TOTAL
November 1, 2021						$	12,253					$	585,334					$	3,265,027					$	(175,835)					$	(1,527,649)					$	2,159,130
Shares issued under company stock and employee benefit plans						—						5,046						—						—						675						5,721
Stock-based compensation						—						8,392						—						—						—						8,392
Purchase of treasury shares						—						—						—						—						(35,002)						(35,002)
Dividends declared ($0.51 per share)						—						—						(29,724)						—						—						(29,724)
Net income						—						—						120,409						—						—						120,409
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—						—						(13,358)						—						(13,358)
Defined benefit pension and post-retirement plan adjustments						—						—						—						3,060						—						3,060
January 31, 2022						$	12,253					$	598,772					$	3,355,712					$	(186,133)					$	(1,561,976)					$	2,218,628
Shares issued under company stock and employee benefit plans						—						1,843						—						—						234						2,077
Stock-based compensation						—						7,394						—						—						—						7,394
Purchase of treasury shares						—						—						—						—						(105,464)						(105,464)
Dividends declared ($0.51 per share)						—						—						(29,577)						—						—						(29,577)
Net income						—						—						109,634						—						—						109,634
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—						—						(46,901)						—						(46,901)
Pension plan settlement adjustment						—						—						—						32,047						—						32,047
Defined benefit pension and post-retirement plan adjustments						—						—						—						2,778						—						2,778
April 30, 2022						$	12,253					$	608,009					$	3,435,769					$	(198,209)					$	(1,667,206)					$	2,190,616
Shares issued under company stock and employee benefit plans						—						940						—						—						107						1,047
Stock-based compensation						—						7,618						—						—						—						7,618
Purchase of treasury shares						—						—						—						—						(93,301)						(93,301)
Dividends declared ($0.51 per share)						—						—						(29,374)						—						—						(29,374)
Net income						—						—						141,811						—						—						141,811
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—						—						(21,220)						—						(21,220)
Defined benefit pension and post-retirement plan adjustments						—						—						—						1,848						—						1,848
July 31, 2022						$	12,253					$	616,567					$	3,548,206					$	(217,581)					$	(1,760,400)					$	2,199,045

See accompanying notes.

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Condensed Consolidated Statements of Cash Flows

(In thousands)						Nine Months Ended
Cash flows from operating activities:						July 31, 2023						July 31, 2022
Net income						$	359,715					$	371,854
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization						80,637						75,242
Non-cash stock compensation						17,067						23,404
Deferred income taxes						(930)						(11,094)
Other non-cash expense						762						43,325
Loss on sale of property, plant and equipment						1,624						(707)
Changes in operating assets and liabilities						19,197						(162,333)
Net cash provided by operating activities						478,072						339,691
Cash flows from investing activities:
Additions to property, plant and equipment						(24,244)						(39,373)
Proceeds from sale of property, plant and equipment						91						415
Acquisition of business, net of cash acquired						(377,843)						(171,613)
Net cash used in investing activities						(401,996)						(210,571)
Cash flows from financing activities:
Proceeds from long-term debt						1,279,151						63,067
Repayment of long-term debt						(1,205,195)						(40,162)
Repayment of finance lease obligations						(4,769)						(3,726)
Issuance of common shares						18,449						8,845
Purchase of treasury shares						(78,163)						(233,767)
Dividends paid						(111,547)						(88,675)
Net cash used in financing activities						(102,074)						(294,418)
Effect of exchange rate changes on cash						5,679						(5,937)
Decrease in cash and cash equivalents						(20,319)						(171,235)
Cash and cash equivalents at beginning of period						163,457						299,972
Cash and cash equivalents at end of period						$	143,138					$	128,737

See accompanying notes.

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Notes to Condensed Consolidated Financial Statements

July 31, 2023

NOTE REGARDING AMOUNTS AND FISCAL YEAR REFERENCES

In this quarterly report, all amounts related to United States dollars and foreign currency and to the number of Nordson Corporation’s common shares, except for per share earnings and dividend amounts, are expressed in thousands. Unless the context otherwise indicates, all references to “we” or the “Company” mean Nordson Corporation.

Unless otherwise noted, all references to years relate to our fiscal year ending October 31.

Significant accounting policies

Basis of presentation. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States (U.S. GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended July 31, 2023 are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes included in our Annual Report on Form 10-K for the year ended October 31, 2022.

Consolidation. The Condensed Consolidated Financial Statements include the accounts of Nordson Corporation and its 100%-owned and controlled subsidiaries. Investments in affiliates and joint ventures in which our ownership is 50% or less or in which we do not have control but have the ability to exercise significant influence, are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. Actual amounts could differ from these estimates.

Revenue recognition. A contract exists when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. Revenue is recognized when performance obligations under the terms of the contract with a customer are satisfied. Generally, our revenue results from short-term, fixed-price contracts and primarily is recognized as of a point in time when the product is shipped or at a later point when the control of the product transfers to the customer. Revenue for undelivered items is deferred and included within Accrued liabilities in our Consolidated Balance Sheets. Revenues deferred as of July 31, 2023 and 2022 were not material.

However, for certain contracts related to the sale of customer-specific products within our Medical and Fluid Solutions segment, revenue is recognized over time as we satisfy performance obligations because of the continuous transfer of control to the customer. The continuous transfer of control to the customer occurs as we enhance assets that are customer controlled and we are contractually entitled to payment for work performed to date plus a reasonable margin.

As control transfers over time, revenue is recognized based on progress toward completion of the performance obligations. The selection method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We have elected to use the input method – costs incurred for these contracts because it best depicts the transfer of products or services to the customer based on incurring costs on the contract. Under this method, revenues are recorded proportionally as costs are incurred. Contract assets recognized are recorded in Prepaid expenses and other current assets and contract liabilities are recorded in Accrued liabilities in our Consolidated Balance Sheets and were not material on July 31, 2023 and October 31, 2022. Revenue recognized over time represented approximately less than ten percent of our overall consolidated revenues at July 31, 2023 and October 31, 2022.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services. Taxes, including sales and value add, that we collect concurrently with revenue-producing activities are excluded from revenue. As a practical expedient, we may exclude the assessment of whether goods or services are performance obligations, if they are immaterial in the context of the contract, and combine these with other performance obligations. While payment terms and conditions vary by contract type, we have determined that our contracts generally do not include a significant financing component. We have elected to apply the practical expedient to treat all shipping and handling costs as fulfillment costs as a significant portion of these costs are incurred prior to transfer of control to the customer. We have also elected to apply the practical expedient to expense sales commissions as they are incurred as the amortization period resulting from capitalizing the

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costs is one year or less. These costs are recorded within Selling and administrative expenses in our Condensed Consolidated Statements of Income.

We offer assurance-type warranties on our products as well as separately sold warranty contracts. Revenue related to warranty contracts that are sold separately is recognized over the life of the warranty term and are not material. Certain arrangements may include installation, installation supervision, training, and spare parts, which tend to be completed in a short period of time, at an insignificant cost, and utilizing skills not unique to us, and, therefore, these items are typically regarded as inconsequential or not material.

We disclose disaggregated revenues by operating segment and geography in accordance with the revenue standard and on the same basis used internally by the chief operating decision maker for evaluating performance of operating segments and for allocating resources. Refer to our Operating segments Note for details.

Earnings per share. Basic earnings per share are computed based on the weighted-average number of common shares outstanding during each year, while diluted earnings per share are based on the weighted-average number of common shares and common share equivalents outstanding. Common share equivalents consist of shares issuable upon exercise of stock options computed using the treasury stock method, as well as restricted shares and deferred stock-based compensation. Options whose exercise price is higher than the average market price are excluded from the calculation of diluted earnings per share because the effect would be anti-dilutive. Options excluded from the calculation of diluted earnings per share for the three months ended July 31, 2023 and 2022 were 138 and 76, respectively. Options excluded from the calculation of diluted earnings per share for the nine months ended July 31, 2023 and 2022 were 141 and 79, respectively.

Recently issued accounting standards

There have been no new accounting standards issued which would require either disclosure or adoption during the current periods.

Acquisitions

Business acquisitions have been accounted for using the acquisition method, with the acquired assets and liabilities recorded at estimated fair value on the dates of acquisition. The cost in excess of the net assets of the business acquired is included in goodwill. Operating results since the respective dates of acquisitions are included in the Condensed Consolidated Statements of Income.

2023 Acquisitions

On August 24, 2023, the Company completed the acquisition of the ARAG Group and its subsidiaries (ARAG Group or ARAG) pursuant to the terms of the Sale and Purchase Agreement, dated as of June 25, 2023, by and among the Company, its Italian subsidiary, Capvis Equity V LP (Capvis), DRIP Co-Investment (DRIP), and certain individuals (the Individual Sellers, and together with Capvis and DRIP, collectively, the Sellers). ARAG is a global market and innovation leader in the development, production and supply of precision control systems and smart fluid components for agricultural spraying. ARAG will operate as a division of our Industrial Precision Solutions segment. In anticipation of the acquisition, the Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the Term Facility). The Term Facility has a 364-day term and matures in August 2024, and loans under the facility bear interest at a eurocurrency rate plus an applicable margin that will range from 1.1250% to 1.625% based on the Company’s Leverage Ratio (as defined in the term loan credit agreement and calculated on a consolidated net debt basis). The all-cash ARAG acquisition of approximately €957,000, net of the repayment of approximately €30,300 of debt of the acquired companies, was funded using the Term Facility and Revolving Facility. The financial results of the ARAG Group acquisition are not expected to have a material impact on our Consolidated Financial Statements.

On November 3, 2022, we acquired 100% of CyberOptics Corporation (CyberOptics). CyberOptics is a leading global developer and manufacturer of high-precision 3D optical sensing technology solutions. The CyberOptics acquisition expanded our test and inspection platform, providing differentiated technology that expands our product offering in the semiconductor and electronics industries and is reported in our Advanced Technology Solutions segment. We acquired CyberOptics for an aggregate purchase price of $377,843, net of cash of approximately $40,890, funded using borrowings under our revolving credit facility and cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $279,630 and identifiable intangible assets of $58,600 were recorded. The identifiable intangible assets consist primarily of $15,200 of tradenames (amortized over fifteen years), $14,600 of technology (amortized over seven years), and $28,800 of customer contracts (amortized over twelve years). The results of CyberOptics are not material to our Consolidated Financial Statements. As of July 31, 2023, the purchase price allocation remains preliminary as we complete our assessment of intangibles and income taxes.

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The assets and liabilities acquired were as follows:

			November 3, 2022
Cash			$	40,890
Receivables - net			21,364
Inventories - net			35,300
Goodwill			279,630
Intangibles			58,600
Other assets			14,046
Total Assets			$	449,830
Accounts payable			$	8,109
Deferred income taxes			14,294
Other liabilities			8,694
Total Liabilities			$	31,097

2022 Acquisition

On November 1, 2021, we acquired 100% of NDC Technologies (NDC), a leading global provider of precision measurement solutions for in-line manufacturing process control. NDC's technology portfolio includes in-line measurement sensors, gauges and analyzers using near-infrared, laser, X-ray, optical and nucleonic technologies, as well as proprietary algorithms and software. We acquired NDC for an aggregate purchase price of $171,613, net of cash of approximately $7,533 and other working capital adjustments of $2,763, utilizing cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $131,129 and identifiable intangible assets of $31,130 were recorded. The identifiable intangible assets consist primarily of $10,800 of tradenames (amortized over thirteen years), $10,000 of technology (amortized over seven years), $9,500 of customer relationships (amortized over four years) and $830 of non-compete agreements (amortized over three years). Goodwill associated with this acquisition of $72,018 is tax deductible. This acquisition is being reported in our Industrial Precision Solutions segment and the results of NDC are not material to our Consolidated Financial Statements.

Receivables

Our allowance for credit losses is principally determined based on aging of receivables. Receivables are exposed to credit risk based on the customers' ability to pay which is influenced by, among other factors, their financial liquidity. We perform ongoing customer credit evaluation to maintain sufficient allowances for potential credit losses. Our segments perform credit evaluation and monitoring to estimate and manage credit risk through the review of customer information, credit ratings, approval and monitoring of customer credit limits, and assessment of market conditions. We may also require prepayments or bank guarantees from customers to mitigate credit risk. Our receivables are generally short-term in nature with a majority of receivables outstanding less than 90 days. Accounts receivable balances are written-off against the allowance if deemed uncollectible.

Accounts receivable are net of an allowance for credit losses of $8,076 and $8,218 on July 31, 2023 and October 31, 2022, respectively. Provision losses related to allowance for credit losses of $410 and provision income of $239 was recorded for the three and nine months ended July 31, 2023, respectively, compared to provision expense of $788 and $1,439 for the same periods a year ago, respectively. The remaining change in the allowance for credit losses is principally related to net write-off/recoveries of uncollectible accounts as well as currency translation.

Inventories

Components of inventories were as follows:

						July 31, 2023						October 31, 2022
Finished goods						$	234,690					$	218,491
Raw materials and component parts						200,475						157,447
Work-in-process						62,856						53,195
						498,021						429,133
Obsolescence and other reserves						(58,280)						(45,735)
						$	439,741					$	383,398

See Acquisitions Note for inventory increase attributable to acquisition of CyberOptics.

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Property, Plant and Equipment

Components of property, plant and equipment were as follows:

			July 31, 2023						October 31, 2022
Land			$	9,856					$	9,278
Land improvements			5,033						4,979
Buildings			282,260						271,450
Machinery and equipment			536,215						505,343
Enterprise management system			52,938						52,513
Construction-in-progress			20,130						31,466
Leased property under finance leases			28,047						27,512
			934,479						902,541
Accumulated depreciation and amortization			(583,744)						(549,099)
			$	350,735					$	353,442

Depreciation expense was $13,180 and $12,178 for the three months ended July 31, 2023 and 2022, respectively. Depreciation expense was $38,798 and $36,876 for the nine months ended July 31, 2023 and 2022, respectively.

Goodwill and other intangible assets

Changes in the carrying amount of goodwill for the nine months ended July 31, 2023 by operating segment were as follows:

						Industrial Precision Solutions						Medical Fluid Systems						Advanced Technology Solutions						Total
Balance at October 31, 2022						$	520,236					$	1,172,069					$	112,388					$	1,804,693
Acquisitions						—						—						279,630						279,630
Currency effect						4,744						3,869						17,844						26,457
Balance at July 31, 2023						$	524,980					$	1,175,938					$	409,862					$	2,110,780

The increase in goodwill for the nine months ended July 31, 2023 was due to the acquisition of CyberOptics. See Acquisitions Note for additional details.

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Information regarding our intangible assets subject to amortization was as follows:

						July 31, 2023
						Carrying Amount						Accumulated Amortization						Net Book Value
Customer relationships						$	517,147					$	282,598					$	234,549
Patent/technology costs						176,396						109,783						66,613
Trade name						99,413						50,673						48,740
Non-compete agreements						10,559						9,937						622
Other						143						143						—
Total						$	803,658					$	453,134					$	350,524
						October 31, 2022
						Carrying Amount						Accumulated Amortization						Net Book Value
Customer relationships						$	480,058					$	250,798					$	229,260
Patent/technology costs						157,549						96,426						61,123
Trade name						82,759						44,707						38,052
Non-compete agreements						10,253						9,290						963
Other						446						442						4
Total						$	731,065					$	401,663					$	329,402

Amortization expense for the three months ended July 31, 2023 and 2022 was $13,922 and $12,709, respectively. Amortization expense for the nine months ended July 31, 2023 and 2022 was $41,839 and $38,366, respectively. See Acquisitions Note for details regarding intangibles recorded due to the acquisition of CyberOptics.

Pension and other postretirement plans

During the second quarter of 2022, we completed a partial plan settlement transaction in regards to two of our U.S. pension plans in which plan assets amounting to $171,181 were used to purchase a group annuity contract from The Prudential Insurance Company of America (Prudential). The settlement resulted in a loss of $41,221, which is included in Other-net on the Condensed Consolidated Statements of Income. This transaction relieved the Company of its responsibility for the pension obligation related to certain retired employees and transferred the obligation and payment responsibility to Prudential for retirement benefits owed to approximately 1,500 retirees and other beneficiaries. The annuity contract covered retirees who commenced receiving benefits on or before November 1, 2021. The monthly retirement benefit payment amounts currently received by retirees and their beneficiaries did not change as a result of this transaction. Plan participants not included in the transaction remain in the plans and responsibility for payment of the retirement benefits remains with the Company.

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The components of net periodic pension and other postretirement cost for the three and nine months ended July 31, 2023 and 2022 were:

						U.S.												International
Three Months Ended						2023						2022						2023						2022
Service cost						$	2,744					$	3,423					$	281					$	423
Interest cost						4,176						3,322						642						272
Expected return on plan assets						(6,529)						(5,692)						(392)						(347)
Amortization of prior service cost (credit)						—						12						(13)						(13)
Amortization of net actuarial loss						—						1,197						20						558
Total benefit cost						$	391					$	2,262					$	538					$	893
						U.S.												International
Nine Months Ended						2023						2022						2023						2022
Service cost						$	8,233					$	13,338					$	838					$	1,343
Interest cost						12,526						11,146						1,887						861
Expected return on plan assets						(19,587)						(22,082)						(1,151)						(1,109)
Amortization of prior service cost (credit)						—						36						(38)						(43)
Amortization of net actuarial loss						—						6,282						61						1,758
Settlement loss						—						41,221						—						—
Total benefit cost						$	1,172					$	49,941					$	1,597					$	2,810

The components of other postretirement benefit costs for the three and nine months ended July 31, 2023 and 2022 were:

						U.S.												International
Three Months Ended						2023						2022						2023						2022
Service cost						$	100					$	172					$	1					$	3
Interest cost						766						481						3						3
Amortization of net actuarial (gain) loss						—						244						(16)						(12)
Total benefit cost (income)						$	866					$	897					$	(12)					$	(6)
						U.S.												International
Nine Months Ended						2023						2022						2023						2022
Service cost						$	299					$	515					$	4					$	9
Interest cost						2,297						1,443						8						10
Amortization of net actuarial (gain) loss						—						733						(47)						(37)
Total benefit cost (income)						$	2,596					$	2,691					$	(35)					$	(18)

The components of net periodic pension and other postretirement cost other than service cost are included in Other – net in our Condensed Consolidated Statements of Income.

Income taxes

We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current periods. The effective tax rate for the three months ended July 31, 2023 and 2022 was 21.1% and 21.4%, respectively. The effective tax rate for the nine months ended July 31, 2023 and 2022 was 20.9% and 21.2%, respectively.

Due to our share-based payment transactions, our income tax provision included a discrete tax benefit of $996 and $2,745 for the three months and nine months ended July 31, 2023, respectively, compared to $115 and $1,539 for the three and nine months ended July 31, 2022, respectively.

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Accumulated other comprehensive income (loss)

The components of accumulated other comprehensive income (loss), including adjustments for items that are reclassified from accumulated other comprehensive loss to net income, are shown below.

						Cumulative translation adjustments						Pension and postretirement benefit plan adjustments						Accumulated other comprehensive income (loss)
Balance at October 31, 2022						$	(160,046)					$	(47,736)					$	(207,782)
Pension and other postretirement plan adjustments, net of tax of ($305)						—						(908)						(908)
Foreign currency translation adjustments (a)						79,986						—						79,986
Balance at July 31, 2023						$	(80,060)					$	(48,644)					$	(128,704)

(a) Includes a net loss of $3,672, net of tax of $1,097, on net investment hedges.

Stock-based compensation

During the 2021 Annual Meeting of Shareholders, our shareholders approved the Nordson Corporation 2021 Stock Incentive and Award Plan (the 2021 Plan) as the successor to the Amended and Restated 2012 Stock Incentive and Award Plan (the 2012 Plan). The 2021 Plan provides for the granting of stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, cash awards and other stock or performance-based incentives. A maximum of 900 common shares were authorized for grant under the 2021 Plan plus the number of shares that remained available to be granted under the 2012 Plan, as well as issuable under the CyberOptics equity plan. As of July 31, 2023, a total of 2,012 common shares were available to be granted under the 2021 Plan.

Stock Options

Nonqualified or incentive stock options may be granted to our employees and directors. Generally, options granted to employees may be exercised beginning one year from the date of grant at a rate not exceeding 25% per year and expire 10 years from the date of grant. Vesting accelerates upon a qualified termination in connection with a change in control. In the event of termination of employment due to early retirement or normal retirement at age 65, options granted within 12 months prior to termination are forfeited, and vesting continues post retirement for all other unvested options granted. In the event of disability or death, all unvested stock options granted within 12 months prior to termination fully vest. Termination for any other reason results in forfeiture of unvested options and vested options in certain circumstances. The amortized cost of options is accelerated if the retirement eligibility date occurs before the normal vesting date. Option exercises are satisfied through the issuance of treasury shares on a first-in, first-out basis. We recognized compensation expense related to stock options of $1,697 and $4,982 for the three month and nine months ended July 31, 2023, respectively, compared to $1,580 and $5,743 for the three and nine months ended July 31, 2022, respectively.

The following table summarizes activity related to stock options for the nine months ended July 31, 2023:

						Number of Options						Weighted- Average Exercise Price Per Share						Aggregate Intrinsic Value						Weighted Average Remaining Term
Outstanding at October 31, 2022						1,187						$	141.82
Granted						80						239.44
Exercised						(163)						115.67
Forfeited or expired						(10)						206.93
Outstanding at July 31, 2023						1,094						$	151.09					$	111,165					5.1 years
Expected to vest						245						$	214.42					$	10,006					7.5 years
Exercisable at July 31, 2023						846						$	132.58					$	101,014					4.4 years

As of July 31, 2023, there was $7,013 of total unrecognized compensation cost related to unvested stock options. That cost is expected to be amortized over a weighted average period of approximately 1.7 years.

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The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Nine Months Ended			July 31, 2023												July 31, 2022
Expected volatility			30.4%			-			31.8%						30.6%			-			30.8%
Expected dividend yield			1.12%			-			1.27%						0.76%			-			0.76%
Risk-free interest rate			3.79%			-			4.21%						1.36%			-			1.47%
Expected life of the option (in years)			5.0			-			6.2						5.3			-			6.2

The weighted-average expected volatility used to value the 2023 and 2022 options was 30.6% and 30.6%, respectively.

Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued.

The weighted average grant date fair value of stock options granted during the nine months ended July 31, 2023 and 2022 was $77.99 and $79.03, respectively.

The total intrinsic value of options exercised during the three months ended July 31, 2023 and 2022 was $7,741 and $1,052, respectively. The total intrinsic value of options exercised during the nine months ended July 31, 2023 and 2022 was $19,873 and $10,418, respectively.

Cash received from the exercise of stock options for the nine months ended July 31, 2023 and 2022 was $18,449 and $8,845, respectively.

Restricted Shares and Restricted Share Units

We may grant restricted shares and/or restricted share units to our employees and directors. These shares or units may not be transferred for a designated period of time (generally one to three years) defined at the date of grant. We may also grant continuation awards in the form of restricted share units with cliff vesting and a performance measure that must be achieved for the restricted share units to vest.

For employee recipients, in the event of termination of employment due to early retirement, with the consent of the Company, restricted shares and units granted within 12 months prior to termination are forfeited, and other restricted shares and units vest on a pro-rata basis, subject to the consent of the Compensation Committee. In the event of termination of employment due to normal retirement at age 65, restricted shares and units granted within 12 months prior to termination are forfeited, and, for other restricted shares and units, the restriction period applicable to restricted shares will lapse and the shares will vest and be transferable and all unvested units will become vested in full, subject to the consent of the Compensation Committee. In the event of a recipient's disability or death, all restricted shares and units granted within 12 months prior to termination fully vest. Termination for any other reason prior to the lapse of any restrictions or vesting of units results in forfeiture of the shares or units.

For non-employee directors, all restrictions lapse in the event of disability or death of the non-employee director. Termination of service as a director for any other reason within one year of date of grant results in a pro-rata vesting of shares or units.

As shares or units are issued, deferred stock-based compensation equivalent to the fair value on the date of grant is expensed over the vesting period.

The following table summarizes activity related to restricted shares during the nine months ended July 31, 2023:

						Number of Shares						Weighted-Average Grant Date Fair Value
Restricted shares at October 31, 2022						6						$	167.99
Vested						(6)						167.99
Restricted shares at July 31, 2023						—						$	—

As of July 31, 2023, there was no unrecognized compensation cost related to restricted shares. The amount charged to expense related to restricted shares during the three months ended July 31, 2023 and 2022 was $73 and $243, respectively, which included common share dividends of $2 and $4, respectively. For the nine months ended July 31, 2023 and 2022, the amounts charged to expense related to restricted shares were $336 and $856, respectively, which included common shares dividends of $5 and $14, respectively.

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The following table summarizes activity related to restricted share units during the nine months ended July 31, 2023:

						Number of Units						Weighted-Average Grant Date Fair Value
Restricted share units at October 31, 2022						81						$	223.77
Granted						39						237.18
Forfeited						(5)						241.37
Vested						(45)						219.06
Restricted share units at July 31, 2023						70						$	232.88

As of July 31, 2023, there was $10,080 of remaining expense to be recognized related to outstanding restricted share units, which is expected to be recognized over a weighted average period of 1.8 years. The amount charged to expense related to restricted share units during each of the three months ended July 31, 2023 and 2022 was $2,152 and $2,154, respectively, compared to $6,658 and $6,246 for the nine months ended July 31, 2023 and 2022, respectively.

Performance Share Incentive Awards

Executive officers and selected other key employees are eligible to receive common share-based incentive awards. Payouts, in the form of unrestricted common shares, vary based on the degree to which corporate financial performance exceeds predetermined threshold, target and maximum performance goals over three-year performance periods. No payout will occur unless threshold performance is achieved.

The amount of compensation expense is based upon current performance projections and the percentage of the requisite service that has been rendered. The calculations are based upon the grant date fair value, which is principally driven by the stock price on the date of grant or a Monte Carlo valuation for awards with market conditions. The per share values were $231.34, $211.25 and $214.51 in 2023, and $260.60, $273.50 and $221.94 for 2022. The amount charged to expense related to performance awards for the three months ended July 31, 2023 and 2022 was $1,831 and $3,555, respectively, compared to charges of $4,785 and $10,296 for the nine months ended July 31, 2023 and 2022, respectively. As of July 31, 2023, there was $7,947 of unrecognized compensation cost related to performance share incentive awards.

Deferred Compensation

Our executive officers and other highly compensated employees may elect to defer up to 100% of their base pay and cash incentive compensation, and for executive officers, up to 90% of their share-based performance incentive payout each year. Additional share units are credited for quarterly dividends paid on our common shares. Expense related to dividends paid under this plan for the three months ended July 31, 2023 and 2022 was $30 and $17, respectively, compared to $77 and $53 for the nine months ended July 31, 2023 and 2022, respectively.

Deferred Directors' Compensation

Non-employee directors may defer all or part of their cash and equity-based compensation until retirement. Cash compensation may be deferred as cash or as share equivalent units. Deferred cash amounts are recorded as liabilities, and share equivalent units are recorded as equity. Additional share equivalent units are earned when common share dividends are declared.

The following table summarizes activity related to director deferred compensation share equivalent units during the nine months ended July 31, 2023:

						Number of Shares						Weighted-Average Grant Date Fair Value
Outstanding at October 31, 2022						90						$	77.70
Distributions						(13)						52.50
Outstanding at July 31, 2023						78						$	84.02

The amount charged to expense related to director deferred compensation for the three months ended July 31, 2023 and 2022 was $76 and $73, respectively, compared to $234 and $224 for the nine months ended July 31, 2023 and 2022, respectively.

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Warranties

We offer warranties to our customers depending on the specific product and terms of the customer purchase agreement. A typical warranty program requires that we repair or replace defective products within a specified time period (generally one year) from the date of delivery or first use. We record an estimate for future warranty-related costs based on actual historical return rates. Based on analysis of return rates and other factors, the adequacy of our warranty provisions is adjusted as necessary. The liability for warranty costs is included in Accrued liabilities in the Consolidated Balance Sheets.

Following is a reconciliation of the product warranty liability for the nine months ended July 31, 2023 and 2022:

						July 31, 2023						July 31, 2022
Beginning balance at October 31						$	11,723					$	11,113
Accruals for warranties						14,938						12,496
Warranty payments						(12,939)						(10,704)
Currency effect						566						(676)
Ending balance						$	14,288					$	12,229

Operating segments

We conduct business in three primary operating segments: Industrial Precision Solutions, Medical and Fluid Solutions, and Advanced Technology Solutions. The composition of segments and measure of segment profitability is consistent with that used by our chief operating decision maker. The primary measure used by the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing performance is operating profit, which equals sales less cost of sales and certain operating expenses. Items below the operating profit line of the Condensed Consolidated Statements of Income (interest and investment income, interest expense and other income/expense) are excluded from the measure of segment profitability reviewed by our chief operating decision maker and are not presented by operating segment. The accounting policies of the segments are the same as those described in the Significant accounting policies Note.

Industrial Precision Solutions: This segment focuses on delivering proprietary dispensing and processing technology, both standard and highly customized equipment, to diverse end markets. Product lines commonly reduce material consumption, increase line efficiency through precision dispense and measurement and control, and enhance product brand and appearance. Components are used for dispensing adhesives, coatings, paint, finishes, sealants and other materials. This segment primarily serves the industrial, consumer durables and non-durables markets.

Medical and Fluid Solutions: This segment includes the Company’s fluid management solutions for medical, high-tech industrial and other diverse end markets. Related plastic tubing, balloons, catheters, syringes, cartridges, tips and fluid connection components are used to dispense or control fluids within customers’ medical devices or products, as well as production processes.

Advanced Technology Solutions: This segment focuses on products serving electronics end markets. Advanced Technology Solutions products integrate our proprietary product technologies found in progressive stages of an electronics customer’s production processes, such as surface treatment, precisely controlled dispensing of material and test and inspection to ensure quality and reliability. Applications include, but are not limited to, semiconductors, printed circuit boards, electronic components and automotive electronics.

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The following table presents information about our segments:

Three Months Ended						Industrial Precision Solutions						Medical and Fluid Solutions						Advanced Technology Solutions						Corporate						Total
July 31, 2023
Net external sales						$	338,257					$	170,871					$	139,549					$	—					$	648,677
Operating profit (loss)						115,346						54,019						27,083						(25,452)						170,996
July 31, 2022
Net external sales						$	341,215					$	177,840					$	143,073					$	—					$	662,128
Operating profit (loss)						119,706						58,103						28,155						(21,046)						184,918
Nine Months Ended
July 31, 2023
Net external sales						$	985,610					$	491,683					$	432,026					$	—					$	1,909,319
Operating profit (loss)						329,439						141,326						70,136						(53,179)						487,722
July 31, 2022
Net external sales						$	981,582					$	508,836					$	416,279					$	—					$	1,906,697
Operating profit (loss)						324,089						165,510						95,533						(60,381)						524,751

We had significant sales in the following geographic regions:

						Three Months Ended												Nine Months Ended
						July 31, 2023						July 31, 2022						July 31, 2023						July 31, 2022
Americas						$	290,515					$	279,205					$	834,125					$	792,859
Europe						167,536						151,659						498,379						479,900
Asia Pacific						190,626						231,264						576,815						633,938
Total net external sales						$	648,677					$	662,128					$	1,909,319					$	1,906,697

Fair value measurements

The inputs to the valuation techniques used to measure fair value are classified into the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following tables present the classification of our assets and liabilities measured at fair value on a recurring basis:

July 31, 2023						Total						Level 1						Level 2						Level 3
Assets:
Foreign currency forward contracts (a)						$	9,608					$	—					$	9,608					$	—
Net investment contracts (b)						3,036						—						3,036						—
Total assets at fair value						$	12,644					$	—					$	12,644					$	—
Liabilities:
Deferred compensation plans (c)						$	10,636					$	—					$	10,636					$	—
Foreign currency forward contracts (a)						4,209						—						4,209						—
Net investment contracts (b)						4,601						—						4,601						—
Total liabilities at fair value						$	19,446					$	—					$	19,446					$	—

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October 31, 2022						Total						Level 1						Level 2						Level 3
Assets:
Foreign currency forward contracts (a)						$	5,035					$	—					$	5,035					$	—
Total assets at fair value						$	5,035					$	—					$	5,035					$	—
Liabilities:
Deferred compensation plans (b)						$	9,076					$	—					$	9,076					$	—
Foreign currency forward contracts (a)						11,724						—						11,724						—
Total liabilities at fair value						$	20,800					$	—					$	20,800					$	—

(a)We enter into foreign currency forward contracts to reduce the risk of foreign currency exposures resulting from receivables, payables, intercompany receivables, intercompany payables and loans denominated in foreign currencies. Foreign exchange contracts are valued using market exchange rates. These foreign exchange contracts are not designated as hedges.

(b)Net assets of our foreign subsidiaries are exposed to volatility in foreign currency exchange rates. We utilize net investment hedges to offset the translation adjustment arising from re-measuring our investment in foreign subsidiaries. The notional amount of our net investment hedge contracts as of July 31, 2023 was $385,000.

(c)Executive officers and other highly compensated employees may defer up to 100% of their salary and annual cash incentive compensation and for executive officers, up to 90% of their long-term incentive compensation, into various non-qualified deferred compensation plans. Deferrals can be allocated to various market performance measurement funds. Changes in the value of compensation deferred under these plans are recognized each period based on the fair value of the underlying measurement funds.

The carrying amounts and fair values of financial instruments, other than cash and cash equivalents, receivables, and accounts payable, are shown in the table below. The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these instruments.

						July 31, 2023
						Carrying Amount						Fair Value
Long-term debt (including current portion)						$	838,098					$	836,098

Long-term debt is valued by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy. The carrying amount of long-term debt is shown net of unamortized debt issuance costs as disclosed in the Long-term Debt Note.

Derivative financial instruments

Foreign Currency Forward Contracts

We operate internationally and enter into intercompany transactions denominated in foreign currencies. Consequently, we are subject to market risk arising from exchange rate movements between the dates foreign currency transactions occur and the dates they are settled. We regularly use foreign currency forward contracts to reduce our risks related to most of these transactions. These contracts usually have maturities of 90 days or less and generally require us to exchange foreign currencies for U.S. dollars at maturity, at rates stated in the contracts. These contracts are not designated as hedging instruments under U.S. GAAP. Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in “Other – net” on the Condensed Consolidated Statements of Income together with the transaction gain or loss from the related balance sheet position.

For the three months ended July 31, 2023, we recognized a net loss of $93 on foreign currency forward contracts and a net loss of $885 from the change in fair value of balance sheet positions. For the three months ended July 31, 2022, we recognized a net gain of $15,181 on foreign currency forward contracts and a net loss of $14,436 from the change in fair value of balance sheet positions. For the nine months ended July 31, 2023, we recognized a net gain of $12,086 on foreign currency forward contracts and a net loss of $19,710 from the change in fair value of balance sheet positions. For the nine months ended July 31, 2022, we recognized a net gain of $2,503 on foreign currency forward contracts and a net loss of $394 from the change in fair value of balance sheet positions. The fair values of our foreign currency forward contract assets and liabilities are included in Receivable-net and Accrued liabilities, respectively, in our Consolidated Balance Sheets.

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The following table summarizes, by currency, the foreign currency forward contracts outstanding at July 31, 2023 and 2022:

July 31, 2023 contract amounts:						Notional Sell Amounts						Notional Buy Amounts
Euro						$	95,064					$	194,850
British pound						20,489						132,956
Japanese yen						23,195						17,908
Mexican Peso						3,227						28,158
Hong Kong dollar						2,080						7,265
Singapore dollar						60						19,817
Australian dollar						—						9,236
Taiwan Dollar						—						8,000
Others						2,602						71,830
Total						$	146,717					$	490,020
July 31, 2022 contract amounts:						Notional Sell Amounts						Notional Buy Amounts
Euro						$	88,275					$	333,285
British pound						36,779						78,942
Japanese yen						16,688						37,163
Hong Kong dollar						—						67,341
Singapore dollar						378						18,025
Australian dollar						278						9,426
Others						26,012						98,113
Total						$	168,410					$	642,295

We are exposed to credit-related losses in the event of nonperformance by counterparties to financial instruments. These financial instruments include cash deposits and foreign currency forward contracts. We periodically monitor the credit ratings of these counterparties in order to minimize our exposure. Our customers represent a wide variety of industries and geographic regions. For the three and nine months ended July 31, 2023 and 2022, there were no significant concentrations of credit risk.

Net Investment Hedges

Net assets of our foreign subsidiaries are exposed to volatility in foreign currency exchange rates. We may utilize net investment hedges to offset the translation adjustment arising from re-measuring our investment in foreign subsidiaries.

During the second quarter of 2023, the Company designated €180,000 of borrowings as a hedge of our net investment in certain foreign subsidiaries to mitigate the foreign exchange risk associated with certain investments in these subsidiaries. On June 30, 2023, the hedge was terminated. Any increase or decrease related to the remeasurement of the €180,000 borrowing into U.S. dollars was recorded in the currency translation component of Accumulated other comprehensive income (loss) within Shareholders' Equity in the Consolidated Balance Sheet. A gain of $1,144, net of tax, and a loss of $2,467, net of tax, was recorded on these net investment hedges for the three and nine months ended July 31, 2023, respectively.

During the quarter ended July 31, 2023, the Company entered into various cross currency swaps between the U.S. Dollar and Euro, Japanese Yen, Taiwan Dollar and Chinese Yuan which were designated as a hedges of our net investments in certain foreign subsidiaries to mitigate the foreign exchange risk associated with certain investments in these subsidiaries. Any increases or decreases related to the remeasurement of the hedges are recorded in the currency translation component of Accumulated other comprehensive income (loss) within Shareholders' Equity in the Consolidated Balance Sheet until the sale or substantial liquidation of the underlying investments. A loss of $1,205, net of tax, was recorded for both the three and nine months ended July 31, 2023.

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The following table summarizes the fair values of our net investment contracts designated as net investment hedges in the Company's Consolidated Balance Sheets as of July 31, 2023:

						Prepaid expenses and other current assets						Other assets						Accrued liabilities						Other long-term liabilities
Net investment contracts						$	2,977					$	59					$	841					$	3,760

Long-term debt

A summary of long-term debt is as follows:

						July 31, 2023						October 31, 2022
Revolving credit agreement, due 2028						$	200,000					$	—
Senior notes, due 2023-2025						32,000						55,500
Senior notes, due 2023-2027						54,286						71,429
Senior notes, due 2023-2030						260,000						350,000
Term loan due 2026						300,000						—
Euro Loan						—						261,893
						846,286						738,822
Less current maturities and notes payable						110,643						392,537
Less unamortized debt issuance costs						8,188						965
Long-term maturities						$	727,455					$	345,320

Revolving credit agreement, due 2028 — In June 2023, we entered into a $1,150,000 unsecured multi-currency credit facility with a group of banks, which provides for a term loan facility in the aggregate principal amount of $300,000 (the "Term Loan Facility"), maturing in June 2026, and a multicurrency revolving credit facility in the aggregate principal amount of $850,000 (the "Revolving Facility"), maturing in June 2028 (the "New Credit Agreement"). The Company borrowed and has outstanding $300,000 on the Term Loan Facility on June 6, 2023. The Revolving Facility permits borrowing in U.S. Dollars, Euros, Sterling, Swiss Francs, Singapore Dollars, Yen, and each other currency approved by a Revolving Facility lender. The New Credit Agreement provides that the applicable margin for (i) RFR, as defined in the New Credit Agreement, and Eurodollar Loans will range from 0.85% to 1.20% and (ii) Base Rate Loans will range from 0.00% to 0.20%, in each case, based on the Company’s Leverage Ratio (as defined in the Credit Agreement and calculated on a consolidated net debt basis). Borrowings under the New Credit Agreement bear interest at (i) either a base rate or a SOFR rate, with respect to borrowings in U.S. dollars, (ii) a eurocurrency rate, with respect to borrowings in Euros and Yen, or (iii) Daily Simple RFR, with respect to borrowings in Sterling, Swiss Francs or Singapore Dollars, plus, in each case, an applicable margin (and, solely in the case of Singapore Dollars, a spread adjustment). The applicable margin is based on the Company’s Leverage Ratio. The weighted-average interest rate at July 31, 2023 was 6.00%.

Revolving credit agreement, due 2024 — In April 2019, we entered into a $850,000 unsecured multi-currency credit facility with a group of banks, which amended, restated and extended our then existing syndicated revolving credit agreement. This facility had a five-year term expiring in April 2024 and included a $75,000 subfacility for swing-line loans. On April 17, 2023, we entered into an amendment to, among other things, replace LIBOR with SOFR, EURIBOR, SONIA and TIBOR for U.S. Dollar, Euro, British Pound Sterling and Japanese Yen borrowings, respectively. On June 6, 2023, this credit agreement was terminated and replaced by the New Credit Agreement.

Senior notes, due 2023-2025 — These unsecured fixed-rate notes entered into in 2012 with a group of insurance companies have a remaining weighted-average life of 1.25 years. The weighted-average interest rate at July 31, 2023 was 3.10%.

Senior notes, due 2023-2027 — These unsecured fixed-rate notes entered into in 2015 with a group of insurance companies have a remaining weighted-average life of 2.23 years. The weighted-average interest rate at July 31, 2023 was 3.11%.

Senior notes, due 2023-2030 — These unsecured fixed-rate notes entered into in 2018 with a group of insurance companies have a remaining weighted-average life of 3.13 years. The weighted-average interest rate at July 31, 2023 was 3.97%.

Euro loan — The euro term loan facility with Bank of America Merrill Lynch International Limited was due in March 2023 and was repaid.

We were in compliance with all covenants at July 31, 2023, and the amount we could borrow would not have been limited by any debt covenants.

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Contingencies

We are involved in pending or potential litigation regarding environmental, product liability, patent, contract, employee and other matters arising from the normal course of business. Including the environmental matters discussed below, after consultation with legal counsel, we do not believe that losses in excess of the amounts we have accrued would have a material adverse effect on our financial condition, quarterly or annual operating results or cash flows.

Environmental

We have voluntarily agreed with the City of New Richmond, Wisconsin and other potentially responsible parties to share costs associated with the remediation of the City of New Richmond municipal landfill (the Site) and the construction of a potable water delivery system serving the impacted area down gradient of the Site. As of July 31, 2023 and October 31, 2022, our accrual for the ongoing operation, maintenance and monitoring obligation at the Site was $266 and $266, respectively. The liability for environmental remediation represents management’s best estimate of the probable and reasonably estimable undiscounted costs related to known remediation obligations. The accuracy of our estimate of environmental liability is affected by several uncertainties such as additional requirements that may be identified in connection with remedial activities, the complexity and evolution of environmental laws and regulations, and the identification of presently unknown remediation requirements. Consequently, our liability could be greater than our current estimate. However, we do not expect that the costs associated with remediation will have a material adverse effect on our financial condition or results of operations.

Subsequent Event

On August 24, 2023, the Company completed the acquisition of the ARAG Group and its subsidiaries (ARAG Group or ARAG) pursuant to the terms of the Sale and Purchase Agreement, dated as of June 25, 2023, by and among the Company, its Italian subsidiary, Capvis Equity V LP (Capvis), DRIP Co-Investment (DRIP), and certain individuals (the Individual Sellers, and together with Capvis and DRIP, collectively, the Sellers). ARAG is a global market and innovation leader in the development, production and supply of precision control systems and smart fluid components for agricultural spraying. ARAG will operate as a division of our Industrial Precision Solutions segment. In anticipation of the acquisition, the Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the Term Facility). The Term Facility has a 364-day term and matures in August 2024, and loans under the facility bear interest at a eurocurrency rate plus an applicable margin that will range from 1.1250% to 1.625% based on the Company’s Leverage Ratio (as defined in the term loan credit agreement and calculated on a consolidated net debt basis). The all-cash ARAG acquisition of approximately €957,000, net of the repayment of approximately €30,300 of debt of the acquired companies, was funded using the Term Facility and Revolving Facility. The financial results of the ARAG Group acquisition are not expected to have a material impact on our Consolidated Financial Statements.

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