Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
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 currencies are recorded and the dates they are settled. We regularly use foreign exchange contracts to reduce our risks related to most of these transactions. These contracts, primarily associated with the euro, yen and pound sterling, typically have maturities of 90 days or less, and generally require the exchange of foreign currencies for United States dollars at rates stated in the contracts. Gains and losses from changes in the market value of these contracts offset foreign exchange losses and gains, respectively, on the underlying transactions. We use foreign exchange contracts on a routine basis to help mitigate the risks related to transactions denominated in foreign currencies.
Refer to Note 13 to the Consolidated Financial Statements for further discussion about our foreign currency transactions and the methods and assumptions used to record these transactions.
A portion of our operations is financed with short-term and long-term borrowings and is subject to market risk arising from changes in interest rates.
The tables that follow present principal repayments and weighted-average interest rates on outstanding borrowings of fixed-rate debt.
At October 31, 2022
2023 2024 2025 2026 2027 Thereafter Total
Value Fair
Value
Annual repayments of
long-term debt $130,643 $110,643 $85,642 $50,000 $10,000 $90,000 $476,928 $452,879
Average interest rate on total borrowings outstanding during the year 3.7% 3.8% 3.9% 4.0% 4.0% 4.1% 3.7%
At October 31, 2021
2022 2023 2024 2025 2026 Thereafter Total
Value Fair
Value
Annual repayments of
long-term debt $30,643 $130,643 $110,643 $85,643 $50,000 $100,000 $507,572 $549,895
Average interest rate on total borrowings outstanding during the year 3.7% 3.7% 3.8% 3.9% 4.0% 4.0% 3.7%
We also have variable-rate long-term debt. The weighted average interest rate of this variable-rate debt was 1.74 percent at October 31, 2022 and 0.71 percent at October 31, 2021. A one percent increase in interest rates would have resulted in additional interest expense of approximately $2,841 on the variable rate long-term debt in 2022.
Nordson Corporation 30
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