NORDSON CORP 10-K

Item 8. Financial Statements and Supplementary Data Consolidated Statements of Income Years ended October 31, 2022, 2021 and 2020 (In thousands except for per-share amounts) 2022 2021 2020 Sales $ 2,590,278 $ 2,362,209 $ 2,121,100 Operating costs and expenses: Cost of sales 1,163,742 1,038,129 990,632 Selling and administrative expenses 724,176 708,953 693,552 Assets held for sale impairment charge — — 87,371 1,887,918 1,747,082 1,771,555 Operating profit 702,360 615,127 349,545 Other income (expense): Interest expense ( 22,413 ) ( 25,491 ) ( 32,160 ) Interest and investment income 2,026 2,150 1,681 Pension settlement charge for U.S. Plans ( 41,221 ) — — Other - net 8,527 ( 17,610 ) ( 17,577 ) ( 53,081 ) ( 40,951 ) ( 48,056 ) Income before income taxes 649,279 574,176 301,489 Income tax provision: Current 146,908 115,737 65,906 Deferred ( 10,732 ) 4,071 ( 13,956 ) 136,176 119,808 51,950 Net income $ 513,103 $ 454,368 $ 249,539 Average common shares 57,629 58,091 57,757 Incremental common shares attributable to equity compensation 620 643 716 Average common shares and common share equivalents 58,249 58,734 58,473 Basic earnings per share $ 8.90 $ 7.82 $ 4.32 Diluted earnings per share $ 8.81 $ 7.74 $ 4.27 Dividends declared per common share $ 2.18 $ 1.69 $ 1.53 The accompanying notes are an integral part of the consolidated financial statements. Nordson Corporation 31 Table of Contents Consolidated Statements of Comprehensive Income Years ended October 31, 2022, 2021 and 2020 (In thousands) 2022 2021 2020 Net income $ 513,103 $ 454,368 $ 249,539 Components of other comprehensive income (loss), net of tax: Foreign currency translation adjustments ( 126,657 ) 7,033 12,910 Pension and postretirement benefit plans: Prior service (cost) credit arising during the year — 124 ( 6 ) Net actuarial gain (loss) arising during the year 54,065 25,289 ( 21,607 ) Amortization of prior service cost ( 201 ) ( 304 ) ( 232 ) Amortization of actuarial loss 7,575 14,954 12,767 Curtailment gain 1,052 — — Settlement loss recognized 32,219 3,187 1,931 Total pension and postretirement benefit plans 94,710 43,250 ( 7,147 ) Total other comprehensive income (loss) ( 31,947 ) 50,283 5,763 Total comprehensive income $ 481,156 $ 504,651 $ 255,302 The accompanying notes are an integral part of the consolidated financial statements. Nordson Corporation 32 Table of Contents Consolidated Balance Sheets October 31, 2022 and 2021 (In thousands) Assets Current assets: 2022 2021 Cash and cash equivalents $ 163,457 $ 299,972 Receivables - net 537,313 489,389 Inventories - net 383,398 327,195 Prepaid expenses and other current assets 48,803 48,282 Total current assets 1,132,971 1,164,838 Goodwill 1,804,693 1,713,148 Property, plant and equipment - net 353,442 355,565 Intangible assets - net 329,402 357,367 Operating right of use lease assets 102,279 110,851 Deferred income taxes 10,447 11,381 Other assets 87,141 77,811 $ 3,820,375 $ 3,790,961 Liabilities and shareholders' equity Current liabilities: Current maturities of long - term debt $ 392,537 $ 34,188 Accrued liabilities 206,828 201,992 Accounts payable 99,276 91,689 Customer advance payments 92,584 77,868 Income taxes payable 22,333 16,636 Operating lease liability - current 15,738 17,222 Finance lease liability 4,907 5,799 Total current liabilities 834,203 445,394 Long-term debt 345,320 781,709 Operating lease liability - noncurrent 90,768 97,685 Deferred income taxes 110,781 88,467 Postretirement obligations 56,804 82,652 Pension obligations 40,551 80,584 Finance lease liability - noncurrent 11,184 14,944 Other long-term liabilities 36,389 40,396 Shareholders' equity: Preferred shares, no par value; 10,000 shares authorized; none issued — — Common shares, no par value; 160,000 shares authorized; 98,023 shares issued at October 31, 2022 and 2021 12,253 12,253 Capital in excess of stated value 626,697 585,334 Retained earnings 3,652,216 3,265,027 Accumulated other comprehensive loss ( 207,782 ) ( 175,835 ) Common shares in treasury, at cost ( 1,789,009 ) ( 1,527,649 ) Total shareholders' equity 2,294,375 2,159,130 $ 3,820,375 $ 3,790,961 The accompanying notes are an integral part of the consolidated financial statements. Nordson Corporation 33 Table of Contents Consolidated Statements of Shareholders’ Equity Years ended October 31, 2022, 2021 and 2020 (In thousands, except for per share data) Common Shares Additional Paid-in- Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Common Shares in Treasury, at cost TOTAL October 31, 2019 $ 12,253 $ 483,116 $ 2,747,650 $ ( 231,881 ) $ ( 1,430,093 ) $ 1,581,045 Shares issued under company stock and employee benefit plans — 38,712 — — 12,141 50,853 Stock-based compensation — 12,856 — — — 12,856 Purchase of treasury shares ( 384,498 shares) — — — — ( 52,614 ) ( 52,614 ) Dividends declared ($ 1.53 per share) — — ( 88,347 ) — — ( 88,347 ) Net income — — 249,539 — — 249,539 Reclassification due to adoption of ASU 2016-02 — — ( 104 ) — — ( 104 ) Other comprehensive income (loss): Foreign currency translation adjustments — — — 12,910 — 12,910 Defined benefit pension and post-retirement plans adjustment — — — ( 7,147 ) — ( 7,147 ) October 31, 2020 $ 12,253 $ 534,684 $ 2,908,738 $ ( 226,118 ) $ ( 1,470,566 ) $ 1,758,991 Shares issued under company stock and employee benefit plans — 27,893 — — 3,887 31,780 Stock-based compensation — 22,757 — — — 22,757 Purchase of treasury shares ( 291,253 shares) — — — — ( 60,970 ) ( 60,970 ) Dividends declared ($ 1.69 per share) — — ( 97,683 ) — — ( 97,683 ) Net income — — 454,368 — — 454,368 Impact of adoption of ASU 2016-13 — — ( 396 ) — — ( 396 ) Other comprehensive income (loss): Foreign currency translation adjustments — — — 7,033 — 7,033 Defined benefit pension and post-retirement plans adjustment — — — 43,250 — 43,250 October 31, 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 — 10,615 — — 1,509 12,124 Stock-based compensation — 30,748 — — — 30,748 Purchase of treasury shares ( 1,200,546 shares) — — — — ( 262,869 ) ( 262,869 ) Dividends declared ($ 2.18 per share) — — ( 125,914 ) — — ( 125,914 ) Net income — — 513,103 — — 513,103 Other comprehensive income (loss): Foreign currency translation adjustments — — — ( 126,657 ) — ( 126,657 ) Pension plan settlement adjustment — — — 33,271 — 33,271 Defined benefit pension and post-retirement plans adjustment — — — 61,439 — 61,439 October 31, 2022 $ 12,253 $ 626,697 $ 3,652,216 $ ( 207,782 ) $ ( 1,789,009 ) $ 2,294,375 The accompanying notes are an integral part of the consolidated financial statements. Nordson Corporation 34 Table of Contents Consolidated Statements of Cash Flows Years ended October 31, 2022, 2021 and 2020 (In thousands) Cash flows from operating activities: 2022 2021 2020 Net income $ 513,103 $ 454,368 $ 249,539 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 49,098 53,332 56,323 Amortization 50,825 50,551 56,979 Provision for losses on receivables 1,259 32 2,165 Deferred income taxes ( 10,732 ) 4,071 ( 13,956 ) Non-cash stock compensation 30,748 22,757 12,856 Loss (gain) on sale of property, plant and equipment ( 581 ) 589 484 Impairment loss on assets held for sale — — 87,371 Pension settlement charge for U.S. Plans 41,221 — — Other non-cash 1,259 4,907 3,729 Changes in operating assets and liabilities: Receivables ( 72,907 ) ( 13,720 ) 50,098 Inventories ( 69,132 ) ( 50,584 ) 5,785 Prepaid expenses ( 1,708 ) ( 5,209 ) 1,978 Accounts payable 10,671 20,769 ( 10,673 ) Income taxes payable 6,155 8,659 ( 7,816 ) Accrued liabilities 925 32,929 6,360 Customer advance payments 18,682 36,167 ( 619 ) Other ( 55,755 ) ( 73,691 ) 1,818 Net cash provided by operating activities 513,131 545,927 502,421 Cash flows from investing activities: Additions to property, plant and equipment ( 51,428 ) ( 38,303 ) ( 50,535 ) Proceeds from sale of property, plant and equipment 280 163 840 Acquisition of businesses, net of cash acquired ( 171,613 ) — ( 142,414 ) Other — 4,971 ( 2,000 ) Net cash used in investing activities ( 222,761 ) ( 33,169 ) ( 194,109 ) Cash flows from financing activities: Proceeds from long-term debt 63,067 9,414 165,734 Repayment of long-term debt ( 96,975 ) ( 298,830 ) ( 319,550 ) Repayment of capital lease obligations ( 5,439 ) ( 6,624 ) ( 7,605 ) Issuance of common shares 12,124 31,780 50,853 Purchase of treasury shares ( 262,869 ) ( 60,970 ) ( 52,614 ) Dividends paid ( 125,914 ) ( 97,683 ) ( 88,347 ) Net cash used in financing activities ( 416,006 ) ( 422,913 ) ( 251,529 ) Effect of exchange rate changes on cash ( 10,879 ) 1,834 346 Increase (decrease) in cash and cash equivalents ( 136,515 ) 91,679 57,129 Cash and cash equivalents at beginning of year 299,972 208,293 151,164 Cash and cash equivalents at end of year $ 163,457 $ 299,972 $ 208,293 The accompanying notes are an integral part of the consolidated financial statements. Nordson Corporation 35 Table of Contents Notes to Consolidated Financial Statements NOTE REGARDING AMOUNTS AND FISCAL YEAR REFERENCES In this annual 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. Note 1 — Significant accounting policies Consolidation — The 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 percent 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 Consolidated Financial Statements and notes. Actual amounts could differ from these estimates. Fiscal year — Our fiscal year is November 1 through October 31. 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 October 31, 2022 and 2021 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 for these contracts 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 for these products or services, 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 at October 31, 2022 or 2021. Revenue recognized over time represented approximately less than ten percent of our overall consolidated revenues at October 31, 2022 or 2021. 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 costs is one year or less. These costs are recorded within Selling, general and administrative expenses in our 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 is 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; 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 Note 16 for details on our operating segments. Nordson Corporation 36 Table of Contents Notes to Consolidated Financial Statements — (Continued) Shipping and handling costs — Amounts billed to customers for shipping and handling are recorded as revenue. Shipping and handling expenses are included in cost of sales. Advertising costs — Advertising costs are expensed as incurred and were $ 7,028 , $ 5,986 and $ 7,174 in 2022, 2021 and 2020, respectively. Research and development — Investments in research and development are important to our long-term growth, enabling us to keep pace with changing customer and marketplace needs through the development of new products and new applications for existing products. We place strong emphasis on technology developments and improvements through internal engineering and research teams. Research and development costs are expensed as incurred and were $ 63,031 , $ 59,422 and $ 63,591 in 2022, 2021 and 2020, respectively. 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 stock 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 for 78 common shares were excluded from the diluted earnings per share calculation in 2022 and 46 and 95 options were excluded from the calculation of diluted earnings per share in 2021 and 2020, respectively because their effect would have been anti-dilutive. Under the 2021 Stock Incentive and Award Plan, executive officers and selected other key employees receive common share awards based on corporate performance measures over three -year performance periods. Awards for which performance measures have not been met were excluded from the calculation of diluted earnings per share. Cash and cash equivalents — Highly liquid instruments with maturities of 90 days or less at date of purchase are considered to be cash equivalents. Allowance for doubtful accounts — An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. The amount of the allowance is determined principally on the basis of past collection experience and known factors regarding specific customers. Accounts are written off against the allowance when it becomes evident that collection will not occur. Credit is extended to customers satisfying pre-defined credit criteria. We believe we have limited concentration of credit risk due to the diversity of our customer base. Our primary allowance for credit losses is the allowance for doubtful accounts, which 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 $ 8,218 and $ 7,522 at October 31, 2022 and October 31, 2021, respectively. The provision for losses on receivables was $ 1,259 for the twelve months ended October 31, 2022 compared to $ 32 for the same period a year ago. The remaining change in the allowance for credit losses is principally related to the write-off of uncollectible accounts. Inventories — Inventories are valued at the lower of cost or net realizable value. Effective in the third quarter of 2022, we changed our accounting method for certain U.S. inventories from a last-in, first-out basis (LIFO) to a first-in, first-out basis (FIFO). Previously, the LIFO method was used to determine the cost of a portion of our inventories in the U.S. We believe this change in accounting method is preferable as it is consistent with how we manage our business, results in a uniform method to value our inventory across all regions of our business, improves comparability with our peers and is expected to better reflect the current value of inventory on the consolidated balance sheets. We applied this accounting change as a cumulative effect adjustment to cost of sales in the third quarter of 2022 and did not restate prior period financial statements because the impact was not material. Cost was determined using the LIFO method for 16 percent of consolidated inventories at October 31, 2021. Consolidated inventories would have been $ 4,216 higher than reported at October 31, 2021 had the FIFO method, which approximates current cost, been used for valuation of all inventories. Property, plant and equipment and depreciation — Property, plant and equipment are carried at cost. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Plant and equipment are depreciated for financial reporting purposes using the straight-line method over the estimated Nordson Corporation 37 Table of Contents Notes to Consolidated Financial Statements — (Continued) useful lives of the assets or, in the case of property under finance leases, over the terms of the leases. Leasehold improvements are depreciated over the shorter of the lease term or their useful lives. Useful lives are as follows: Land improvements 15 - 25 years Buildings 20 - 40 years Machinery and equipment 3 - 18 years Enterprise management systems 5 - 13 years Depreciation expense is included in cost of sales and selling and administrative expenses. Internal use software costs are expensed or capitalized depending on whether they are incurred in the preliminary project stage, application development stage or the post-implementation stage. Amounts capitalized are amortized over the estimated useful lives of the software beginning with the project’s completion. All re-engineering costs are expensed as incurred. Interest costs on significant capital projects are capitalized. No interest was capitalized in 2022, 2021 or 2020. Goodwill and intangible assets — Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill relates to and is assigned directly to specific reporting units. Goodwill is not amortized but is subject to annual impairment testing. Our annual impairment testing is performed as of August 1. Testing is done more frequently if an event occurs or circumstances change that would indicate the fair value of a reporting unit is less than the carrying amount of those assets. Other amortizable intangible assets, which consist primarily of patent/technology costs, customer relationships, noncompete agreements and trade names, are amortized over their useful lives on a straight-line basis. At October 31, 2022, the weighted-average useful lives for each major category of amortizable intangible assets were: Patent/technology costs 12 years Customer relationships 14 years Noncompete agreements 4 years Trade names 15 years Foreign currency translation — The financial statements of subsidiaries outside the United States are generally measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet dates. Income and expense items are translated at average monthly rates of exchange. The resulting translation adjustments are included in accumulated other comprehensive income (loss), a separate component of shareholders’ equity. Generally, gains and losses from foreign currency transactions, including forward contracts, of these subsidiaries and the United States parent are included in net income. Gains and losses from intercompany foreign currency transactions of a long-term investment nature are included in accumulated other comprehensive income (loss). Accumulated other comprehensive loss — Accumulated other comprehensive loss at October 31, 2022 and 2021 consisted of: Cumulative translation adjustments Pension and postretirement benefit plan adjustments Accumulated other comprehensive loss Balance at October 31, 2021 $ ( 33,389 ) $ ( 142,446 ) $ ( 175,835 ) Pension and postretirement plan changes, net of tax of ($ 31,007 ) — 94,710 94,710 Currency translation losses ( 126,657 ) — ( 126,657 ) Balance at October 31, 2022 $ ( 160,046 ) $ ( 47,736 ) $ ( 207,782 ) 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 ) measured 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 Sheet. Nordson Corporation 38 Table of Contents Notes to Consolidated Financial Statements — (Continued) Following is a reconciliation of the product warranty liability as of October 31, 2022 and 2021: 2022 2021 Balance at beginning of year $ 11,113 $ 10,550 Accruals for warranties 17,188 16,011 Warranty payments ( 14,609 ) ( 15,475 ) Currency adjustments ( 1,969 ) 27 Balance at end of year $ 11,723 $ 11,113 Note 2 — Recently issued accounting standards There have been no new accounting standards issued that would require either disclosure or adoption for 2022 by the Company. Note 3 — 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 Consolidated Statement of Income. 2022 acquisition On November 1, 2021, we acquired 100 percent 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 13 years), $ 10,000 of technology (amortized over 7 years), $ 9,500 of customer relationships (amortized over 4 years) and $ 830 of non-compete agreements (amortized over 3 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. 2020 acquisitions On September 1, 2020, we acquired 100 percent of the outstanding shares of vivaMOS Ltd. ("vivaMOS"), a developer and fabricator of high-end large-area complementary metal–oxide–semiconductor ("CMOS") image sensors for a wide range of X-ray applications. We acquired vivaMOS for an aggregate purchase price of $ 17,154 net of cash and other closing adjustments of approximately $ 158 , utilizing cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $ 14,394 and identifiable intangible assets of $ 4,040 were recorded. The identifiable intangible assets consist primarily of $ 3,900 of technology (amortized over 10 years) and $ 140 of non-compete agreements (amortized over 3 years). Goodwill associated with this acquisition was not tax deductible. This acquisition is being reported in our Advanced Technology Solutions segment and the results of vivaMOS were not material to our Consolidated Financial Statements. On June 1, 2020, we acquired 100 percent of the outstanding shares of Fluortek, Inc. ("Fluortek"), a precision plastic extrusion manufacturer that provides custom dimensioned tubing to the medical device industry. We acquired Fluortek for an aggregate purchase price of $ 125,260 , net of cash and other closing adjustments of approximately $ 515 , utilizing cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, property, plant and equipment and working capital – net of $ 19,843 , goodwill of $ 76,047 and identifiable intangible assets of $ 29,370 were recorded. The identifiable intangible assets consist primarily of $ 19,700 of customer relationships (amortized over 12 years), $ 7,400 of technology (amortized over 10 years), $ 1,500 of tradenames (amortized over 10 years) and $ 770 of non-compete agreements (amortized over 5 years). Goodwill associated with this acquisition was tax deductible. This acquisition is being reported in our Medical and Fluid Solutions segment and the results for Fluortek were not material to the our Consolidated Financial Statements. Nordson Corporation 39 Table of Contents Notes to Consolidated Financial Statements — (Continued) Note 4 — Divestiture In the fourth quarter of 2020, we committed to a plan to sell our screws and barrels product line within our Industrial Precision Solutions operating segment and determined the criteria to be classified as held for sale were met. We entered into a letter of intent to sell the screws and barrels product line in October 2020, and in December 2020, we entered into a definitive agreement with the buyer. The assets and liabilities were presented as held for sale in the Condensed Consolidated Balance Sheets and measured at the lower of carrying value or fair value less cost to sell from October 31, 2020 until the transaction was completed on February 1, 2021. Before measuring the fair value less costs to sell of the disposal group as a whole, we first reviewed individual assets and liabilities to determine if any fair value adjustments were required and concluded no individual asset impairments were required. Then, based on the definitive agreement entered into by us and the buyer, we determined the fair value of the disposal group to be equal to the selling price, less costs to sell. Based on this review, we recorded a non-cash, assets held for sale impairment charge of $ 87,371 in 2020. Excluding the non-cash, assets held for sale impairment charge recorded in the fourth quarter of 2020, the operating results of the screws and barrels product line were not material to our Consolidated Financial Statements for any period presented. There were no significant adjustments in 2021 to the loss recognized in 2020. Note 5 — Details of Consolidated Balance Sheet 2022 2021 Receivables: Accounts $ 510,300 $ 479,594 Notes 417 2,504 Other 34,814 14,843 545,531 496,941 Allowance for doubtful accounts ( 8,218 ) ( 7,552 ) $ 537,313 $ 489,389 Inventories: Finished goods $ 218,491 $ 211,628 Raw materials and component parts 157,447 111,089 Work-in-process 53,195 54,557 429,133 377,274 Obsolescence and other reserves ( 45,735 ) ( 50,079 ) $ 383,398 $ 327,195 Property, plant and equipment: Land $ 9,278 $ 9,238 Land improvements 4,979 4,786 Buildings 271,450 263,399 Machinery and equipment 505,343 491,180 Enterprise management system 52,513 50,532 Construction-in-progress 31,466 32,719 Leased property under finance leases 27,512 37,506 902,541 889,360 Accumulated depreciation and amortization ( 549,099 ) ( 533,795 ) $ 353,442 $ 355,565 Accrued liabilities: Salaries and other compensation $ 81,181 $ 87,066 Taxes other than income taxes 14,869 13,095 Warranty 11,723 11,113 Interest 6,018 6,262 Pension and retirement 4,456 5,622 Customer commissions 3,526 10,460 Other 85,055 68,374 $ 206,828 $ 201,992 Nordson Corporation 40 Table of Contents Notes to Consolidated Financial Statements — (Continued) Note 6 — Goodwill and intangible assets We account for goodwill and other intangible assets in accordance with the provisions of ASC 350 and account for business combinations using the acquisition method of accounting and accordingly, the assets and liabilities of the entities acquired are recorded at their estimated fair values at the acquisition date. Goodwill is the excess of purchase price over the fair value of tangible and identifiable intangible net assets acquired in various business combinations. Goodwill is not amortized but is subject to annual impairment testing. Our annual impairment testing is performed as of August 1. Testing is done more frequently if an event occurs or circumstances change that would indicate the fair value of a reporting unit is less than the carrying amount of those assets. We assess the fair value of reporting units on a non-recurring basis using a quantitative analysis that uses a combination of the discounted cash flow method of the Income Approach and the guideline public company method of the Market Approach, and compare the result against the reporting unit’s carrying value of net assets. The implied fair value of our reporting units is determined based on significant unobservable inputs, as discussed below; accordingly, these inputs fall within Level 3 of the fair value hierarchy. The discounted cash flow method (Income Approach) uses assumptions for revenue growth, operating margin and working capital turnover that are based on management’s strategic plans tempered by performance trends and reasonable expectations about those trends. Terminal value calculations employ a published formula known as the Gordon Growth Model Method that essentially captures the present value of perpetual cash flows beyond the last projected period assuming a constant Weighted Average Cost of Capital (WACC) methodology and growth rate. For each reporting unit, a sensitivity analysis is performed to vary the discount and terminal growth rates in order to provide a range of reasonableness for detecting impairment. Discount rates are developed using a WACC methodology. The WACC represents the blended average required rate of return for equity and debt capital based on observed market return data and company specific risk factors. In the application of the guideline public company method (Market Approach), fair value is determined using transactional evidence for similar publicly traded equity. The comparable company guideline group is determined based on relative similarities to each reporting unit since exact correlations are not available. An indication of fair value for each reporting unit is based on the placement of each reporting unit within a range of multiples determined for its comparable guideline company group. Valuation multiples are derived by dividing latest twelve-month performance for revenues and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) into total invested capital, which is the sum of traded equity plus interest bearing debt less cash. These multiples are applied against the revenue and EBITDA of each reporting unit. While the implied indications of fair value using the guideline public company method yield meaningful results, the discounted cash flow method of the income approach includes management’s thoughtful projections and insights as to what the reporting units will accomplish in the near future. Accordingly, the reasonable, implied fair value of each reporting unit is a blend based on the consideration of both the Income and Market approaches. An impairment charge is recorded for the amount by which the carrying value of the reporting unit exceeds the fair value of the reporting unit, as calculated in the quantitative analysis described above. Based on our annual impairment tests in 2022, 2021 and 2020, the fair value of each reporting unit exceeded its carrying value, and accordingly, we did not record any goodwill impairment charges in 2022, 2021 or 2020. Effective in the fourth quarter of 2022, we realigned our former two operating segments into three : Industrial Precision Solutions, Medical and Fluid Solutions, and Advanced Technology Solutions. Previously, Advanced Technology Solutions was comprised of Medical and Fluid Solutions and the former Advanced Technology Solutions. Our segment change did not have any impact on our reporting units. Our reporting units include components of the Industrial Precision Solutions, Medical and Fluid Solutions, and the Advanced Technology Solutions segments. Changes in the carrying amount of goodwill during 2022 by operating segment: Industrial Precision Solutions Medical Fluid Systems Advanced Technology Systems Total Balance at October 31, 2021 $ 415,020 $ 1,176,149 $ 121,979 $ 1,713,148 Acquisitions 131,129 — — 131,129 Currency effect ( 25,913 ) ( 4,080 ) ( 9,591 ) ( 39,584 ) Balance at October 31, 2022 $ 520,236 $ 1,172,069 $ 112,388 $ 1,804,693 The increase in goodwill for 2022 was due to the acquisition of NDC. See Note 3 for additional details. Nordson Corporation 41 Table of Contents Notes to Consolidated Financial Statements — (Continued) Changes in the carrying amount of goodwill during 2021 by operating segment: Industrial Precision Solutions Medical Fluid Systems Advanced Technology Systems Total Balance at October 31, 2020 $ 415,862 $ 1,175,972 $ 121,520 $ 1,713,354 Currency effect ( 842 ) 177 459 ( 206 ) Balance at October 31, 2021 $ 415,020 $ 1,176,149 $ 121,979 $ 1,713,148 Accumulated impairment losses, which were recorded in 2009, were $ 232,789 of which $ 229,173 related to the Advanced Technology Solutions segment and $ 3,616 related to the Industrial Precision Solutions segment. Information regarding intangible assets subject to amortization: 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 names 82,759 44,707 38,052 Noncompete agreements 10,253 9,290 963 Other 446 442 4 Total $ 731,065 $ 401,663 $ 329,402 October 31, 2021 Carrying Amount Accumulated Amortization Net Book Value Customer relationships $ 483,815 $ 226,658 $ 257,157 Patent/technology costs 154,267 89,299 64,968 Trade names 74,301 39,858 34,443 Noncompete agreements 9,896 9,099 797 Other 1,385 1,383 2 Total $ 723,664 $ 366,297 $ 357,367 Amortization expense for 2022, 2021 and 2020 was $ 50,825 , $ 50,551 and $ 56,979 , respectively. See Note 3 for details regarding intangibles recorded due to the acquisition of NDC. Estimated amortization expense for each of the five succeeding years: Year Amounts 2023 $ 49,169 2024 46,532 2025 42,685 2026 38,625 2027 34,878 Note 7 — Retirement, pension and other postretirement plans Retirement plans — We have funded contributory retirement plans covering certain employees. Our contributions are primarily determined by the terms of the plans, subject to the limitation that they shall not exceed the amounts deductible for income tax purposes. We also sponsor unfunded contributory supplemental retirement plans for certain employees. Generally, benefits under these plans vest gradually over a period of approximately three years from date of employment, and are based on the employee’s contribution. The expense applicable to retirement plans for 2022, 2021 and 2020 was approximately $ 26,635 , $ 22,983 and $ 20,265 , respectively. Pension plans — We have various pension plans covering a portion of our United States and international employees. Pension plan benefits are generally based on years of employment and, for salaried employees, the level of compensation. Actuarially determined amounts are contributed to United States plans to provide sufficient assets to meet future benefit payment Nordson Corporation 42 Table of Contents Notes to Consolidated Financial Statements — (Continued) requirements. We also sponsor an unfunded supplemental pension plan for certain employees. International subsidiaries fund their pension plans according to local requirements. 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 Pension settlement charge for U.S. Plans on the 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. A reconciliation of the benefit obligations, plan assets, accrued benefit cost and the amount recognized in financial statements for pension plans is as follows: United States International 2022 2021 2022 2021 Change in benefit obligation: Benefit obligation at beginning of year $ 627,271 $ 615,768 $ 106,049 $ 104,849 Service cost 16,820 22,555 1,693 2,120 Interest cost 14,486 13,652 1,105 887 Participant contributions — — 72 80 Amendments — — — 15 Settlements ( 171,181 ) ( 9,016 ) ( 1,446 ) ( 714 ) Curtailments ( 2,715 ) ( 2,436 ) ( 705 ) — Foreign currency exchange rate change — — ( 14,291 ) 1,024 Actuarial (gain) loss ( 165,697 ) 4,561 ( 29,414 ) ( 121 ) Benefits paid ( 15,464 ) ( 17,813 ) ( 2,183 ) ( 2,091 ) Benefit obligation at end of year $ 303,520 $ 627,271 $ 60,880 $ 106,049 Change in plan assets: Beginning fair value of plan assets $ 639,589 $ 510,250 $ 47,274 $ 45,476 Actual return on plan assets ( 121,912 ) 62,063 301 243 Company contributions 2,819 94,105 2,381 3,318 Participant contributions — — 72 80 Settlements ( 171,181 ) ( 9,016 ) ( 1,446 ) ( 714 ) Foreign currency exchange rate change — — ( 8,083 ) 962 Benefits paid ( 15,464 ) ( 17,813 ) ( 2,183 ) ( 2,091 ) Ending fair value of plan assets $ 333,851 $ 639,589 $ 38,316 $ 47,274 Funded status at end of year $ 30,331 $ 12,318 $ ( 22,564 ) $ ( 58,775 ) Amounts recognized in financial statements: Noncurrent asset $ 41,548 $ 30,840 $ 7,588 $ 4,086 Accrued benefit liability ( 813 ) ( 799 ) ( 5 ) — Long-term pension obligations ( 10,404 ) ( 17,723 ) ( 30,147 ) ( 62,861 ) Total amount recognized in financial statements $ 30,331 $ 12,318 $ ( 22,564 ) $ ( 58,775 ) Nordson Corporation 43 Table of Contents Notes to Consolidated Financial Statements — (Continued) The net actuarial gain included in the projected benefit obligation for the United States pension plans for 2022 was primarily due to higher discount rates partially offset by an increase in the compensation increase assumption. The net actuarial loss included in the projected benefit obligation for the United States pension plans for 2021 was primarily due to updated census data partially offset by gains due to changes in the discount rates. Amounts recognized in accumulated other comprehensive (gain) loss: United States International 2022 2021 2022 2021 Net actuarial loss (gain) $ 74,293 $ 142,070 $ ( 2,280 ) $ 30,544 Prior service cost (credit) — 48 ( 133 ) ( 1,808 ) Accumulated other comprehensive loss (income) $ 74,293 $ 142,118 $ ( 2,413 ) $ 28,736 The following table summarizes the changes in accumulated other comprehensive loss (income): United States International 2022 2021 2022 2021 Balance at beginning of year $ 142,118 $ 192,577 $ 28,736 $ 29,960 Net (gain) loss arising during the year ( 16,010 ) ( 29,091 ) ( 28,234 ) 1,220 Prior service cost arising during the year — — — 15 Net gain recognized during the year ( 7,504 ) ( 14,885 ) ( 2,278 ) ( 3,144 ) Prior service adjustment recognized during the year ( 48 ) 64 104 303 Settlement (gain) loss ( 41,548 ) ( 4,111 ) 29 ( 32 ) Curtailment (gain) loss ( 2,715 ) ( 2,436 ) 1,406 — Exchange rate effect during the year — — ( 2,176 ) 414 Balance at end of year $ 74,293 $ 142,118 $ ( 2,413 ) $ 28,736 Information regarding the funded status of the Company's plans is as follows: United States International 2022 2021 2022 2021 For plans with accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation $ 10,555 $ 16,182 $ 32,514 $ 85,559 Fair value of plan assets — — 4,724 32,306 For plans with projected benefit obligation in excess of plan assets: Projected benefit obligation 11,217 18,522 34,931 95,221 Fair value of plan assets — — 4,778 32,360 Net periodic pension costs include the following components: United States International 2022 2021 2020 2022 2021 2020 Service cost $ 16,820 $ 22,555 $ 20,635 $ 1,693 $ 2,120 $ 2,099 Interest cost 14,486 13,652 15,824 1,105 887 1,025 Expected return on plan assets ( 27,776 ) ( 28,410 ) ( 24,667 ) ( 1,430 ) ( 1,585 ) ( 1,273 ) Amortization of prior service credit 48 ( 64 ) ( 84 ) ( 104 ) ( 303 ) ( 290 ) Amortization of net actuarial loss 7,504 14,885 14,032 2,278 3,144 2,972 Settlement loss (gain) 41,548 4,111 2,508 ( 29 ) 32 — Curtailment gain — — — ( 2,112 ) — — Total benefit cost $ 52,630 $ 26,729 $ 28,248 $ 1,401 $ 4,295 $ 4,533 Nordson Corporation 44 Table of Contents Notes to Consolidated Financial Statements — (Continued) Net periodic pension cost for 2022, 2021 and 2020 also included settlement losses of $ 298 , $ 4,143 and $ 2,508 , respectively, due to lump sum retirement payments. Net periodic pension cost for 2022 included a curtailment gain of $ 2,112 due to the freeze of an international defined benefit plan. The components of net periodic pension cost other than service cost are included in Pension settlement charge for U.S. Plans and Other – net in our Consolidated Statements of Income . The weighted average assumptions used in the valuation of pension benefits were as follows: United States International 2022 2021 2020 2022 2021 2020 Assumptions used to determine benefit obligations at October 31: Discount rate 5.70 % 3.02 % 2.85 % 3.78 % 1.30 % 1.01 % Rate of compensation increase 4.30 4.00 4.00 3.44 2.90 2.69 Assumptions used to determine net benefit costs for the years ended October 31: Discount rate - benefit obligation 3.02 2.85 3.25 1.30 1.01 1.26 Discount rate - service cost 3.42 3.30 3.56 1.14 0.93 1.12 Discount rate - interest cost 2.35 2.10 2.78 1.37 0.80 1.05 Expected return on plan assets 5.75 5.75 5.75 3.29 3.31 3.22 Rate of compensation increase 4.00 4.00 4.00 2.90 2.69 3.12 The amortization of prior service cost is determined using a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the plans. The discount rate reflects the current rate at which pension liabilities could be effectively settled at the end of the year. The discount rate used considers a yield derived from matching projected pension payments with maturities of a portfolio of available bonds that receive the highest rating given from a recognized investments ratings agency. The changes in the discount rates in 2022, 2021 and 2020 are due to changes in yields for these types of investments as a result of the economic environment. In determining the expected return on plan assets using the calculated value of plan assets, we consider both historical performance and an estimate of future long-term rates of return on assets similar to those in our plans. We consult with and consider the opinions of financial and other professionals in developing appropriate return assumptions. The rate of compensation increase is based on management’s estimates using historical experience and expected increases in rates. The international plans include a cash balance plan with promised interest crediting rates. The weighted average crediting rates were 0.60 %, 0.50 % and 0.40 % for 2022, 2021 and 2020, respectively. Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when exceeding the accounting corridor, which is set at 10 percent of the greater of the plan assets or benefit obligations. Gains or losses within the corridor remain in other comprehensive income and are retested in subsequent measurements. Gains or losses outside of the corridor are subject to amortization over an average employee future service period that differs by plan. If substantially all of the plan’s participants are no longer actively accruing benefits, the average life expectancy is used. The allocation of pension plan assets as of October 31, 2022 and 2021 is as follows: United States International 2022 2021 2022 2021 Asset Category Equity securities 3 % 13 % — % — % Debt securities 42 46 — — Insurance contracts — — 47 51 Pooled investment funds 54 41 51 48 Other 1 — 2 1 Total 100 % 100 % 100 % 100 % Our investment objective for defined benefit plan assets is to meet the plans’ benefit obligations, while minimizing the potential for future required plan contributions. Nordson Corporation 45 Table of Contents Notes to Consolidated Financial Statements — (Continued) Our United States plans comprise 90 percent of the Company's worldwide pension assets. In general, the investment strategies focus on asset class diversification, liquidity to meet benefit payments and an appropriate balance of long-term investment return and risk. Target ranges for asset allocations are determined by dynamically matching the actuarial projections of the plans’ future liabilities and benefit payments with expected long-term rates of return on the assets, taking into account investment return volatility and correlations across asset classes. For 2022, the target in “return-seeking assets” is 30 percent and 70 percent in longer duration fixed income assets. Plan assets are diversified across multiple investment managers and are invested in liquid funds that are selected to track broad market indices. Investment risk is carefully controlled with plan assets rebalanced to target allocations on a periodic basis and continual monitoring of investment managers’ performance relative to the guidelines established with each investment manager. Our international plans comprise 10 percent of the Company's worldwide pension assets. Asset allocations are developed on a country-specific basis. Our investment strategy is to cover pension obligations with insurance contracts or to employ independent managers to invest the assets. The fair values of our pension plan assets at October 31, 2022 by asset category are in the table below: United States International Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash $ 381 $ 381 $ — $ — $ 775 $ 775 $ — $ — Money market funds 155 155 — — — — — — Equity securities: Basic materials 719 719 — — — — — — Consumer goods 1,802 1,802 — — — — — — Financial 1,489 1,489 — — — — — — Healthcare 1,801 1,801 — — — — — — Industrial goods 1,713 1,713 — — — — — — Technology 1,569 1,569 — — — — — — Fixed income securities: U.S. Government 29,252 328 28,924 — — — — — Corporate 109,433 — 109,433 — — — — — Other 2,964 — 2,964 — — — — — Other types of investments: Insurance contracts — — — — 18,066 — — 18,066 Other 1,474 1,474 — — — — — — Total investments in the fair value hierarchy $ 152,752 $ 11,431 $ 141,321 $ — $ 18,841 $ 775 $ — $ 18,066 Investments measured at Net Asset Value: Real estate collective funds 51,961 — Pooled investment funds 129,138 19,475 Total Investments at Fair Value $ 333,851 $ 38,316 Nordson Corporation 46 Table of Contents Notes to Consolidated Financial Statements — (Continued) The fair values of our pension plan assets at October 31, 2021 by asset category are in the table below: United States International Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash $ 1,467 $ 1,467 $ — $ — $ 519 $ 519 $ — $ — Money market funds 4,495 4,495 — — — — — — Equity securities: Basic materials 2,038 2,038 — — — — — — Consumer goods 4,360 4,360 — — — — — — Financial 3,753 3,753 — — — — — — Healthcare 4,864 4,864 — — — — — — Industrial goods 3,640 3,640 — — — — — — Technology 5,080 5,080 — — — — — — Mutual funds 52,319 52,319 — — — — — — Fixed income securities: U.S. Government 89,614 4,024 85,590 — — — — — Corporate 194,793 — 194,793 — — — — — Other 9,619 — 9,619 — — — — — Other types of investments: Insurance contracts — — — — 23,993 — — 23,993 Other 1,494 1,494 — — — — — — Total investments in the fair value hierarchy $ 377,536 $ 87,534 $ 290,002 $ — $ 24,512 $ 519 $ — $ 23,993 Investments measured at Net Asset Value: Real estate collective funds 44,056 — Pooled investment funds 217,997 22,762 Total Investments at Fair Value $ 639,589 $ 47,274 These investment funds did not own a significant number of Nordson Corporation common shares for any year presented. The inputs and methodology used to measure fair value of plan assets are consistent with those described in Note 12. Following are the valuation methodologies used to measure these assets: • Money market funds - Money market funds are public investment vehicles that are valued with a net asset value of one dollar. This is a quoted price in an active market and is classified as Level 1. • Equity securities - Common stocks and mutual funds are valued at the closing price reported on the active market on which the individual securities are traded and are classified as Level 1. • Fixed income securities - U.S. Treasury bills reflect the closing price on the active market in which the securities are traded and are classified as Level 1. Securities of U.S. agencies are valued using bid evaluations and are classified as Level 2. Corporate fixed income securities are valued using evaluated prices, such as dealer quotes, bids and offers and are therefore classified as Level 2. • Insurance contracts - Insurance contracts are investments with various insurance companies. The contract value represents the best estimate of fair value. These contracts do not hold any specific assets. These investments are classified as Level 3. • Real estate collective funds – These funds are valued using the net asset value of the underlying properties. Net asset value is calculated using a combination of key inputs, such as revenue and expense growth rates, terminal capitalization rates and discount rates. • Pooled investment funds - These are public investment vehicles valued using the net asset value. The net asset value is based on the value of the assets owned by the plan, less liabilities. These investments are not quoted on an active exchange. Nordson Corporation 47 Table of Contents Notes to Consolidated Financial Statements — (Continued) The following tables present an analysis of changes during the years ended October 31, 2022 and 2021 in Level 3 plan assets, by plan asset class, for U.S. and international pension plans using significant unobservable inputs to measure fair value: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Insurance contracts Beginning balance at October 31, 2021 $ 23,993 Actual return on plan assets: Purchases 1,525 Sales ( 1,519 ) Settlements ( 1,446 ) Unrealized losses ( 254 ) Foreign currency translation ( 4,233 ) Ending balance at October 31, 2022 $ 18,066 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Insurance contracts Beginning balance at October 31, 2020 $ 24,496 Actual return on plan assets: Purchases 1,441 Sales ( 541 ) Settlements ( 714 ) Unrealized losses ( 440 ) Foreign currency translation ( 249 ) Ending balance at October 31, 2021 $ 23,993 Contributions to pension plans in 2022 are estimated to be approximately $ 3,105 . Retiree pension benefit payments, which include expected future service, are anticipated to be paid as follows: Year United States International 2023 $ 6,925 $ 2,425 2024 8,728 2,790 2025 10,834 3,466 2026 12,863 4,060 2027 14,835 2,783 2026-2030 103,524 17,257 Other postretirement plans - We sponsor an unfunded postretirement health care benefit plan covering certain of our United States employees. Employees hired after January 1, 2002, are not eligible to participate in this plan. For eligible retirees under the age of 65 who enroll in the plan, the plan is contributory in nature, with retiree contributions in the form of premiums that are adjusted annually. For eligible retirees age 65 and older who enroll in the plan, the plan delivers a benefit in the form of a Health Reimbursement Account (HRA), which retirees use for eligible reimbursable expenses, including premiums paid for purchase of a Medicare supplement plan or other out-of-pocket medical expenses such as deductibles or co-pays. Nordson Corporation 48 Table of Contents Notes to Consolidated Financial Statements — (Continued) A reconciliation of the benefit obligations, accrued benefit cost and the amount recognized in financial statements for other postretirement plans is as follows: United States International 2022 2021 2022 2021 Change in benefit obligation: Benefit obligation at beginning of year $ 85,290 $ 87,645 $ 416 $ 445 Service cost 687 778 12 15 Interest cost 1,923 1,805 12 12 Participant contributions 687 722 — — Foreign currency exchange rate change — — ( 37 ) 33 Actuarial gain ( 25,513 ) ( 2,799 ) ( 215 ) ( 83 ) Benefits paid ( 3,223 ) ( 2,861 ) ( 5 ) ( 6 ) Benefit obligation at end of year $ 59,851 $ 85,290 $ 183 $ 416 Change in plan assets: Beginning fair value of plan assets $ — $ — $ — $ — Company contributions 2,536 2,139 5 6 Participant contributions 687 722 — — Benefits paid ( 3,223 ) ( 2,861 ) ( 5 ) ( 6 ) Ending fair value of plan assets $ — $ — $ — $ — Funded status at end of year $ ( 59,851 ) $ ( 85,290 ) $ ( 183 ) $ ( 416 ) Amounts recognized in financial statements: Accrued benefit liability $ ( 3,224 ) $ ( 3,048 ) $ ( 6 ) $ ( 6 ) Long-term postretirement obligations ( 56,627 ) ( 82,242 ) ( 177 ) ( 410 ) Total amount recognized in financial statements $ ( 59,851 ) $ ( 85,290 ) $ ( 183 ) $ ( 416 ) United States International 2022 2021 2022 2021 Amounts recognized in accumulated other comprehensive (gain) loss: Net actuarial (gain) loss $ ( 5,035 ) $ 21,456 $ ( 661 ) $ ( 543 ) Accumulated other comprehensive (gain) loss $ ( 5,035 ) $ 21,456 $ ( 661 ) $ ( 543 ) The following table summarizes the changes in accumulated other comprehensive (gain) loss: United States International 2022 2021 2022 2021 Balance at beginning of year $ 21,456 $ 25,614 $ ( 543 ) $ ( 466 ) Net gain arising during the year ( 25,513 ) ( 2,799 ) ( 217 ) ( 83 ) Net gain (loss) recognized during the year ( 978 ) ( 1,359 ) 51 41 Exchange rate effect during the year — — 48 ( 35 ) Balance at end of year $ ( 5,035 ) $ 21,456 $ ( 661 ) $ ( 543 ) Nordson Corporation 49 Table of Contents Notes to Consolidated Financial Statements — (Continued) Net postretirement benefit costs include the following components: United States International 2022 2021 2020 2022 2021 2020 Service cost $ 687 $ 778 $ 666 $ 12 $ 15 $ 15 Interest cost 1,923 1,805 2,345 12 12 13 Amortization of prior service credit — — ( 17 ) — — — Amortization of net actuarial (gain) loss 978 1,359 1,355 ( 48 ) ( 41 ) ( 36 ) Total benefit cost (credit) $ 3,588 $ 3,942 $ 4,349 $ ( 24 ) $ ( 14 ) $ ( 8 ) The components of net postretirement benefit cost other than service cost are included in Other – net in our Consolidated Statements of Income. The weighted average assumptions used in the valuation of postretirement benefits were as follows: United States International 2022 2021 2020 2022 2021 2020 Assumptions used to determine benefit obligations at October 31: Discount rate 5.59 % 2.98 % 2.84 % 5.41 % 3.43 % 2.94 % Health care cost trend rate 3.50 3.34 3.40 4.65 4.43 4.22 Rate to which health care cost trend rate is assumed to incline/decline (ultimate trend rate) 3.19 3.15 3.17 4.05 4.05 4.05 Year the rate reaches the ultimate trend rate 2032 2031 2026 2040 2040 2040 Assumption used to determine net benefit costs for the years ended October 31: Discount rate benefit obligation 2.98 % 2.84 % 3.27 % 3.43 % 2.94 % 3.03 % Discount rate service cost 3.55 3.44 3.61 3.48 3.00 3.05 Discount rate interest cost 2.30 2.08 2.79 3.13 2.60 2.88 The weighted average health care trend rates reflect expected increases in the Company’s portion of the obligation. Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when exceeding the accounting corridor, which is set at 10 percent of the greater of the plan assets or benefit obligations. Gains or losses outside of the corridor are subject to amortization over an average employee future service period that differs by plan. If substantially all of the plan’s participants are no longer actively accruing benefits, the average life expectancy is used. Contributions to postretirement plans in 2023 are estimated to be approximately $ 3,230 . Retiree postretirement benefit payments are anticipated to be paid as follows: Year United States International 2023 $ 3,225 $ 5 2024 3,386 5 2025 3,552 5 2026 3,690 5 2027 3,832 5 2028-2030 20,438 34 Nordson Corporation 50 Table of Contents Notes to Consolidated Financial Statements — (Continued) Note 8 — Income taxes Income tax expense includes the following: 2022 2021 2020 Current: U.S. federal $ 59,639 $ 40,879 $ 17,507 State and local 7,535 4,429 984 Foreign 79,734 70,429 47,415 Total current 146,908 115,737 65,906 Deferred: U.S. federal ( 9,408 ) 6,371 ( 9,919 ) State and local ( 596 ) 1,470 ( 1,023 ) Foreign ( 728 ) ( 3,770 ) ( 3,014 ) Total deferred ( 10,732 ) 4,071 ( 13,956 ) $ 136,176 $ 119,808 $ 51,950 Earnings before income taxes of domestic operations, which are calculated after intercompany profit eliminations, were $ 302,549 , $ 279,701 and $ 111,704 in 2022, 2021 and 2020, respectively. Our income tax provision for 2022 included a tax benefit of $ 3,273 due to our share-based payment transactions. Our income tax provision for 2021 included a tax benefit of $ 5,982 due to our share-based payment transactions. Our income tax provision for 2020 included a tax benefit of $ 15,661 due to our share-based payment transactions. Income before taxes in 2020 included a non-cash, assets held for sale impairment charge of $ 87,371 related to our commitment to sell our screws and barrels product line within the Adhesives reporting unit under our Industrial Precision Solutions segment and the tax benefit of the impairment was $ 15,254 . A portion of the impairment charge did not have related tax benefits. A reconciliation of the U.S. statutory federal rate to the worldwide consolidated effective tax rate follows: 2022 2021 2020 Statutory federal income tax rate 21.00 % 21.00 % 21.00 % Share-based and other compensation 0.26 ( 0.30 ) ( 4.15 ) Foreign tax rate variances 0.95 0.84 1.51 State and local taxes, net of federal income tax benefit 0.84 0.81 ( 0.01 ) Foreign-Derived Intangible Income Deduction ( 1.59 ) ( 1.19 ) ( 0.95 ) Global Intangible Low-Taxed Income net of foreign tax credits 0.23 0.44 0.97 Other – net ( 0.72 ) ( 0.73 ) ( 1.14 ) Effective tax rate 20.97 % 20.87 % 17.23 % Earnings before income taxes of international operations, which are calculated before intercompany profit elimination entries, were $ 346,730 , $ 294,475 and $ 189,785 in 2022, 2021 and 2020, respectively. Deferred income taxes are not provided on undistributed earnings of international subsidiaries that are intended to be permanently invested in their operations. These undistributed earnings represent the post-income tax earnings under U.S. GAAP not adjusted for previously taxed income which aggregated approximately $ 1,485,360 and $ 1,255,112 at October 31, 2022 and 2021, respectively. Should these earnings be distributed, applicable foreign tax credits, distributions of previously taxed income and utilization of other attributes would substantially offset taxes due upon the distribution. It is not practical to estimate the amount of additional taxes that might be payable on these basis differences because of the multiple methods by which these differences could reverse and the impact of withholding, U.S. state and local taxes and currency translation considerations. At October 31, 2022 and 2021, total unrecognized tax benefits were $ 2,872 and $ 3,720 , respectively. The amounts that, if recognized, would impact the effective tax rate were $ 2,769 and $ 3,567 at October 31, 2022 and 2021, respectively. During 2022, unrecognized tax benefits related primarily to domestic positions and, as recognized, a substantial portion of the gross unrecognized tax benefits were offset against assets recorded in the Consolidated Balance Sheet. Nordson Corporation 51 Table of Contents Notes to Consolidated Financial Statements — (Continued) A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2022, 2021 and 2020 is as follows: 2022 2021 2020 Balance at beginning of year $ 3,720 $ 6,717 $ 2,909 Additions based on tax positions related to the current year 310 370 370 Additions for tax positions of prior years — — 4,068 Reductions for tax positions of prior years ( 70 ) ( 350 ) — Settlements — — ( 137 ) Lapse of statute of limitations ( 1,088 ) ( 3,017 ) ( 493 ) Balance at end of year $ 2,872 $ 3,720 $ 6,717 At October 31, 2022 and 2021, we had accrued interest and penalty expense related to unrecognized tax benefits of $ 541 and $ 859 , respectively. We include interest accrued related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as other income (expense). We are subject to United States Federal income tax as well as income taxes in numerous state and foreign jurisdictions. We are subject to examination in the U.S. by the Internal Revenue Service (IRS) for the 2019 through 2022 tax years; tax years prior to the 2019 year are closed to further examination by the IRS. Generally, major state and foreign jurisdiction tax years remain open to examination for tax years after 2016. Within the next twelve months, it is reasonably possible that certain statute of limitations periods would expire, which could result in a minimal decrease in our unrecognized tax benefits. Significant components of deferred tax assets and liabilities are as follows: 2022 2021 Deferred tax assets: Lease Liabilities $ 28,413 $ 32,572 Employee benefits 22,079 39,798 Tax credit and loss carryforwards 15,616 19,269 Other accruals not currently deductible for taxes 11,336 16,542 Inventory adjustments 6,423 6,924 Total deferred tax assets 83,867 115,105 Valuation allowance ( 10,130 ) ( 14,141 ) Total deferred tax assets 73,737 100,964 Deferred tax liabilities: Depreciation and amortization 145,285 145,494 Lease right-of-use assets 27,548 31,615 Other - net 1,238 941 Total deferred tax liabilities 174,071 178,050 Net deferred tax liabilities $ ( 100,334 ) $ ( 77,086 ) At October 31, 2022, we had $ 12,648 of tax credit carryforwards, $ 5,053 of which expires in 2028-2032 and $ 7,595 of which has an indefinite carryforward period. We also had $ 34,352 of state operating loss carryforwards, $ 16,965 of foreign operating loss carryforwards, and a $ 3,570 capital loss carryforward, of which $ 41,269 will expire in 2023 through 2038, and $ 13,618 of which has an indefinite carryforward period. The net change in the valuation allowance was a decrease of $ 4,011 in 2022 and a decrease of $ 8,092 in 2021. The valuation allowance of $ 10,130 at October 31, 2022, related primarily to tax credits and loss carryforwards that may expire before being realized. We continue to assess the need for valuation allowances against deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized. Note 9 — Bank lines of credit Bank lines of credit are summarized as follows: 2022 2021 Maximum borrowings available under bank lines of credit (all foreign banks) $ 61,213 $ 60,627 Unused bank lines of credit $ 61,213 $ 57,082 Nordson Corporation 52 Table of Contents Notes to Consolidated Financial Statements — (Continued) Note 10 — Long-term debt A summary of long-term debt is as follows: 2022 2021 Notes Payable $ — $ 3,545 Senior notes, due 2023-2025 55,500 79,000 Senior notes, due 2023-2027 71,429 78,572 Senior notes, due 2023-2030 350,000 350,000 Euro loan, due 2023 261,893 306,358 738,822 817,475 Less current maturities 392,537 34,188 Less unamortized debt issuance costs 965 1,578 Long-term maturities $ 345,320 $ 781,709 Revolving credit agreement — 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 has a five-year term and includes a $ 75,000 subfacility for swing-line loans. It expires in April 2024. At October 31, 2022 and October 31, 2021, we had no balances outstanding under this facility. 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 1.47 years. The weighted-average interest rate at October 31, 2022 was 3.10 percent. 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 2.44 years. The weighted-average interest rate at October 31, 2022 was 3.10 percent. Senior notes, due 2023-2030 — These unsecured fixed-rate notes entered in 2018 with a group of insurance companies have a remaining weighted-average life of 3.04 years. The weighted-average interest rate at October 31, 2022 was 3.90 percent. Euro loan, due 2023 — In March 2020 we amended, restated and extended the term of our existing term loan facility with Bank of America Merrill Lynch International Limited. The interest rate is variable based on the EURIBOR rate. The term loan facility provides for the following term loans due in two tranches: € 115,000 is due in March 2023 and an additional € 150,000 that was drawn down in March 2020 is due in March 2023. The weighted average interest rate at October 31, 2022 was 0.71 percent. We were in compliance with all covenants at October 31, 2022 and the amount we could borrow would not have been limited by any debt covenants. Annual maturities — The annual maturities of long-term debt for the five years subsequent to October 31, 2022, are as follows: $ 392,537 in 2023; $ 110,643 in 2024; $ 85,642 in 2025; $ 50,000 in 2026 and $ 10,000 in 2027. Note 11 — Leases We review new contracts to determine if the contracts include a lease. To the extent a lease agreement includes an extension option that is reasonably certain to be exercised, we have recognized those amounts as part of the right-of-use assets and lease liabilities. We combine lease and non-lease components, such as common area maintenance, in the calculation of the lease assets and related liabilities. As most lease agreements do not provide an implicit rate, we use an incremental borrowing rate (IBR) based on information available at the lease commencement date in determining the present value of lease payments and to help classify the lease as operating or financing. We calculate the IBR based on a bond yield curve which considers secured borrowing rates based on our credit rating and current economic environment, as well as other publicly available data. We lease certain manufacturing facilities, warehouse space, machinery and equipment, and vehicles. We often have options to renew lease terms for buildings and other assets. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. Leases with an initial term of 12 months or less (short-term leases) are not recorded on the Consolidated Balance Sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments occur. Variable payments for leases primarily relate to future rates or amounts, miles, or other quantifiable usage factors which are not determinable at the time the lease agreement commences. Finance lease assets are recorded in Property, plant and equipment – net on the Consolidated Balance Sheet with related amortization recorded in depreciation expense on the Consolidated Statement of Cash Flows. As of October 31, 2022, we had no material leases that had yet to commence. Nordson Corporation 53 Table of Contents Notes to Consolidated Financial Statements — (Continued) Additional lease information is summarized below for the twelve months ended October 31: October 31, 2022 October 31, 2021 Finance Leases Operating Leases Finance Leases Operating Leases Amortization of right of use assets $ 6,388 $ 6,929 Interest 374 373 Lease cost (1) 6,762 $ 20,354 7,302 $ 20,176 Short-term and variable lease cost (1) 1,876 1,611 1,445 2,938 Total lease cost $ 8,638 $ 21,965 $ 8,747 $ 23,114 (1) Lease costs are recorded in both Cost of sales and Selling and administrative expenses on the Consolidated Statements of Income. Supplemental cash flow information is summarized below for the twelve months ended October 31, 2022: Finance Leases Operating Leases Cash outflows for leases $ 5,439 $ 20,125 Weighted average remaining lease term (years) 8.03 9.52 Weighted average discount rate 2.20 % 1.80 % The following table reconciles the undiscounted cash flows for five years and thereafter to the operating and finance lease liabilities recognized on the Consolidated Balance Sheet as of October 31, 2022. The reconciliation excludes short-term leases that are not recognized on the Consolidated Balance Sheet. Year: Finance Leases Operating Leases 2023 $ 4,907 $ 15,738 2024 3,306 14,171 2025 2,133 12,299 2026 929 11,552 2027 438 9,775 Later years 6,113 53,876 Total minimum lease payments 17,826 117,411 Amounts representing interest 1,735 10,905 Present value of minimum lease payments $ 16,091 $ 106,506 Rental expense for operating leases during the fiscal years ended October 31, 2022, 2021 and 2020 was $ 20,479 , $ 20,618 and $ 22,061 , respectively. Capitalized net finance leases included in property, plant and equipment during the fiscal years ended October 31, 2022 and October 31, 2021 was $ 15,176 and $ 19,745 , respectively. Note 12 — 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. Nordson Corporation 54 Table of Contents Notes to Consolidated Financial Statements — (Continued) The following tables present the classification of our assets and liabilities measured at fair value on a recurring basis: 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 $ — October 31, 2021 Total Level 1 Level 2 Level 3 Assets: Foreign currency forward contracts (a) $ 2,755 $ — $ 2,755 $ — Total assets at fair value $ 2,755 $ — $ 2,755 $ — Liabilities: Deferred compensation plans (b) $ 9,115 $ — $ 9,115 $ — Foreign currency forward contracts (a) 4,507 — 4,507 — Total liabilities at fair value $ 13,622 $ — $ 13,622 $ — (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) Executive officers and other highly compensated employees may defer up to 100 percent of their salary and annual cash incentive compensation and for executive officers, up to 90 percent 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. Fair value disclosures related to goodwill and indefinite-lived intangible assets are disclosed in Note 6. 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. 2022 2021 Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt (including current portion) $ 737,857 $ 714,286 $ 812,352 $ 855,376 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 described in Note 10. Note 13 — Derivative financial instruments 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 Consolidated Statement of Income together with the transaction gain or loss from the related balance sheet position. In 2022, we recognized net losses of $ 4,937 on foreign currency forward contracts and net gains of $ 11,207 from the change in fair value of balance sheet positions. In 2021, we recognized net gains of $ 1,485 on foreign currency forward contracts and net Nordson Corporation 55 Table of Contents Notes to Consolidated Financial Statements — (Continued) losses of $ 7,411 from the change in fair value of balance sheet positions. In 2020, we recognized net losses of $ 5,899 on foreign currency forward contracts and net gains of $ 4,367 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 Receivables-net and Accrued liabilities, respectively in the Consolidated Balance Sheets. The following table summarizes, by currency, the contracts outstanding at October 31, 2022 and 2021: Notional Amounts Sell Buy October 31, 2022 contract amounts: Euro $ 85,879 $ 337,530 Pound sterling 31,361 101,960 Japanese yen 12,849 33,210 Mexican peso 9,802 26,509 Hong Kong dollar 5,174 73,953 Singapore dollar 411 18,817 Australian dollar 327 9,163 Taiwan dollar — 24,047 Other 4,327 60,104 Total $ 150,130 $ 685,293 October 31, 2021 contract amounts: Euro $ 100,922 $ 325,581 Pound sterling 50,333 79,934 Japanese yen 14,338 45,436 Mexican peso 5,906 23,424 Hong Kong dollar 6,948 44,831 Australian dollar 709 10,088 Singapore dollar 200 18,029 Other 10,461 63,068 Total $ 189,817 $ 610,391 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. As of October 31, 2022 and 2021, there were no significant concentrations of credit risk. Note 14 — Capital shares Preferred — We have authorized 10,000 Series A convertible preferred shares without par value. No preferred shares were outstanding in 2022, 2021 or 2020. Common — We have 160,000 authorized common shares without par value. At October 31, 2022 and 2021, there were 98,023 common shares issued. At October 31, 2022 and 2021, the number of outstanding common shares, net of treasury shares, was 57,111 and 58,154 , respectively. Common shares repurchased as part of publicly announced programs during 2022, 2021 and 2020 were as follows: Year Number of Shares Total Amount Average per Share 2022 1,190 $ 260,288 $ 218.69 2021 262 55,033 $ 209.97 2020 303 38,138 $ 125.70 These amounts exclude share repurchases associated with employee equity award exercises and vesting. Nordson Corporation 56 Table of Contents Notes to Consolidated Financial Statements — (Continued) Note 15 — 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 were available to be granted under the 2012 Plan. As of October 31, 2022, a total of 2,122 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 percent 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 $ 7,265 , $ 6,946 and $ 10,087 for 2022, 2021 and 2020, respectively. The following table summarizes activity related to stock options during 2022: Number of Options Weighted˗Average Exercise Price Per Share Aggregate Intrinsic Value Weighted˗Average Remaining Term Outstanding at October 31, 2021 1,235 $ 130.93 Granted 85 $ 266.69 Exercised ( 115 ) $ 108.33 Forfeited or expired ( 18 ) $ 197.31 Outstanding at October 31, 2022 1,187 $ 141.82 $ 101,946 5.4 years Expected to vest 372 $ 185.15 $ 18,004 7.0 years Exercisable at October 31, 2022 813 $ 121.76 $ 83,887 4.6 years Summarized information on currently outstanding options follows: Range of Exercise Price $ 61 - $ 125 $ 126 - $ 190 $ 191 - $ 268 Number outstanding 518 506 163 Weighted-average remaining contractual life, in years 4.5 6.3 8.6 Weighted-average exercise price $ 104.76 $ 150.57 $ 232.62 Number exercisable 447 345 21 Weighted-average exercise price $ 101.55 $ 143.04 $ 201.42 As of October 31, 2022, there was $ 6,663 of total unrecognized compensation cost related to unvested stock options. That cost is expected to be amortized over a weighted average period of approximately 1.0 year. The fair value of each option grant was estimated at the date of the grant using the Black-Scholes option-pricing model with the following assumptions: 2022 2021 2020 Expected volatility 30.6 %- 30.8 % 30.8 %- 32.6 % 24.5 %- 30.5 % Expected dividend yield 0.76 %- 0.89 % 0.83 %- 0.85 % 0.87 %- 1.16 % Risk-free interest rate 1.36 %- 2.65 % 0.43 %- 0.77 % 0.44 %- 1.69 % Expected life of the option (in years) 5.3 - 6.2 5.3 - 6.2 5.3 - 6.3 The weighted-average expected volatility used to value options granted in 2022, 2021 and 2020 was 30.6 percent, 31.0 percent and 25.4 percent, respectively. Nordson Corporation 57 Table of Contents Notes to Consolidated Financial Statements — (Continued) 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 United States Treasury issues with terms equal to the expected life of the option being valued. The weighted average grant date fair value of stock options granted during 2022, 2021 and 2020 was $ 78.88 , $ 56.02 and $ 38.57 , respectively. The total intrinsic value of options exercised during 2022, 2021 and 2020 was $ 15,376 , $ 32,791 and $ 65,783 , respectively. Cash received from the exercise of stock options for 2022, 2021 and 2020 was $ 12,124 , $ 31,780 and $ 50,853 , 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 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, stock-based compensation equivalent to the fair market value on the date of grant is expensed over the vesting period. The following table summarizes activity related to restricted shares during 2022: Number of Shares Weighted˗Average Grant Date Fair Value Per Share Restricted at October 31, 2021 19 $ 157.36 Vested ( 13 ) $ 153.28 Restricted at October 31, 2022 6 $ 167.99 As of October 31, 2022, there was $ 331 of unrecognized compensation cost related to restricted shares. The cost is expected to be amortized over a weighted average period of 0.3 years. The amount charged to expense related to restricted shares was $ 1,096 , $ 2,054 and $ 3,956 in 2022, 2021 and 2020, respectively. These amounts included common share dividends of $ 19 , $ 43 and $ 87 in 2022, 2021 and 2020, respectively. The following table summarizes activity related to restricted share units in 2022: Number of Units Weighted˗Average Grant Date Fair Value Restricted share units at October 31, 2021 67 $ 202.81 Granted 43 $ 253.04 Forfeited ( 10 ) $ 224.84 Vested ( 19 ) $ 215.57 Restricted share units at October 31, 2022 81 $ 223.77 As of October 31, 2022, there was $ 8,790 of remaining expense to be recognized related to outstanding restricted share units, which is expected to be recognized over a weighted average period of 0.9 years. The amounts charged to expense related to restricted share units in 2022, 2021 and 2020 were $ 8,403 , $ 6,264 and $ 1,181 , respectively. Restricted share unit expense increased in 2021 compared to prior years as the granting of restricted share units has generally replaced the granting of stock options for key employees. Nordson Corporation 58 Table of Contents Notes to Consolidated Financial Statements — (Continued) 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 $ 260.60 , $ 273.50 and $ 221.94 for 2022; $ 202.05 for 2021; and $ 201.50 modified per share value compared to original per share values of $ 160.02 , $ 133.01 and $ 184.04 for 2020. The amount charged to expense for executive officers and selected other key employees in 2022 was $ 13,626 and $ 7,178 in 2021 while the amount credited to expense in 2020 was $ 2,732 . The cumulative amount recorded in shareholders’ equity at October 31, 2022 and 2021 was $ 20,641 and $ 7,015 , respectively. As of October 31, 2022, there was $ 8,029 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 percent of their base pay and cash incentive compensation and, for executive officers, up to 90 percent of their share-based performance incentive award payout each year. Additional share units are credited for quarterly dividends paid on our common shares. Expense related to dividends paid under this plan was $ 72 , $ 96 and $ 276 for 2022, 2021 and 2020, 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 2022: Number of Shares Weighted˗Average Grant Date Fair Value Per Share Outstanding at October 31, 2021 106 $ 68.11 Restricted stock units vested 4 $ 255.04 Dividend equivalents 1 $ 227.65 Distributions ( 21 ) $ 68.12 Outstanding at October 31, 2022 90 $ 77.70 The amount charged to expense related to director deferred compensation was $ 305 , $ 262 and $ 175 in 2022, 2021 and 2020, respectively. Shares reserved for future issuance — At October 31, 2022, there were 1,640 of common shares reserved for future issuance through the exercise of outstanding options or rights . Note 16 — Operating segments and geographic area data 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 Consolidated Statement 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 Note 1, Significant Accounting Policies. Effective in the fourth quarter of 2022, we realigned our former two operating segments into three : Industrial Precision Solutions, Medical and Fluid Solutions, and Advanced Technology Solutions. Existing product lines were unchanged as part of this new structure. We made changes to realign our management team and our operating segments. This realignment gives us better visibility into our medical and electronics platforms, which have grown significantly through both organic and acquisitive opportunities. The revised operating segments better reflect how we now manage the Company, allocate resources and assess performance of the businesses. Certain reclassifications have been made to our segment disclosures, principally related to this segment change. We also revised our geographic regions, such that the United States and Japan are now included in the Americas and Asia Pacific, respectively. As such, our geographical regions as used throughout this report include the Americas (United States, Canada, Mexico and Central and South America), Asia Pacific (including Japan) and Europe. Nordson Corporation 59 Table of Contents Notes to Consolidated Financial Statements — (Continued) Industrial Precision Solutions: This segment is focused 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 is focused 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. No single customer accounted for 10 percent or more of sales in 2022, 2021 or 2020. The following table presents information about our reportable segments: Industrial Precision Solutions Medical and Fluid Solutions Advanced Technology Solutions Corporate Total Year ended October 31, 2022 Net external sales $ 1,337,242 $ 690,177 $ 562,859 $ — $ 2,590,278 Depreciation and amortization 27,891 54,674 8,780 8,578 99,923 Operating profit (loss) 434,476 217,199 133,253 ( 82,568 ) 702,360 Identifiable assets (b) 1,112,825 1,558,861 397,250 812,964 (a) 3,881,900 Property, plant and equipment expenditures 9,490 31,009 2,383 8,546 51,428 Year ended October 31, 2021 Net external sales $ 1,246,947 $ 641,654 $ 473,608 $ — $ 2,362,209 Depreciation and amortization 25,673 56,600 11,826 9,784 103,883 Operating profit (loss) 414,192 198,194 73,466 ( 70,725 ) 615,127 Identifiable assets (b) 964,840 1,519,144 394,572 967,796 (a) 3,846,352 Property, plant and equipment expenditures 9,009 21,115 1,949 6,230 38,303 Year ended October 31, 2020 Net external sales $ 1,143,423 $ 564,899 $ 412,778 $ — $ 2,121,100 Depreciation and amortization 38,939 53,588 10,955 9,820 113,302 Operating profit (loss) 208,028 150,296 41,306 ( 50,085 ) 349,545 Identifiable assets (b) 915,148 1,482,585 396,617 928,358 (a) 3,722,708 Property, plant and equipment expenditures 18,545 27,892 3,628 470 50,535 (a) Corporate assets are principally cash and cash equivalents, deferred income taxes, leases, headquarter facilities, the major portion of our enterprise management system and intangible assets. Includes assets held for sale in 2020, see Note 4. (b) Operating segment identifiable assets include notes and accounts receivable net of allowance for doubtful accounts, inventories net of reserves, property, plant and equipment net of accumulated depreciation and goodwill. Nordson Corporation 60 Table of Contents Notes to Consolidated Financial Statements — (Continued) We have significant sales and long-lived assets in the following geographic areas: 2022 2021 2020 Net external sales Americas $ 1,096,596 $ 969,110 $ 897,115 Europe 645,603 617,492 536,636 Asia Pacific 848,079 775,607 687,349 Total net external sales $ 2,590,278 $ 2,362,209 $ 2,121,100 Long-lived assets Americas $ 332,709 $ 322,878 $ 331,697 Europe 62,039 67,776 69,854 Asia Pacific 60,973 75,762 79,192 Total long-lived assets $ 455,721 $ 466,416 $ 480,743 Long-lived assets includes property, plant and equipment - net and operating right of use lease assets, which were recorded as a result of the new lease standard as codified in ASC 842 and excludes amounts held for sale in 2020, see Note 4. A reconciliation of total assets for reportable segments to total consolidated assets is as follows: 2022 2021 2020 Total identifiable assets for reportable segments $ 3,881,900 $ 3,846,352 $ 3,722,708 Eliminations ( 61,525 ) ( 55,391 ) ( 48,052 ) Total consolidated assets $ 3,820,375 $ 3,790,961 $ 3,674,656 Note 17 — Supplemental information for the statement of cash flows 2022 2021 2020 Cash operating activities: Interest paid $ 22,975 $ 27,122 $ 31,095 Income taxes paid 141,212 106,942 80,849 Note 18 — 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 matter 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. 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. At October 31, 2022 and October 31, 2021, our accrual for the ongoing operation, maintenance and monitoring obligation at the Site was $ 266 and $ 319 , 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. Note 19 — Subsequent Events On November 3, 2022, the Company completed the acquisition of CyberOptics Corporation (“CyberOptics”) pursuant to the terms of the Agreement and Plan of Merger, dated as of August 7, 2022, by and among the Company, Meta Merger Company and 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 will be reported in our Advanced Technology Solutions segment. The all-cash transaction of approximately $ 380,000 , net of cash acquired, was funded using our revolving credit facility and is not expected to have a material impact on our Consolidated Financial Statements. Nordson Corporation 61 Table of Contents Management’s Report on Internal Control Over Financial Reporting The management of Nordson Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Using criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework), Nordson’s management assessed the effectiveness of our internal control over financial reporting as of October 31, 2022. Based on our assessment, management concluded that our internal control over financial reporting was effective as of October 31, 2022. The independent registered public accounting firm, Ernst & Young LLP, has also audited the effectiveness of our internal control over financial reporting as of October 31, 2022. Their report is included herein. /s/ Sundaram Nagarajan /s/ Joseph P. Kelley President and Chief Executive Officer Executive Vice President, Chief Financial Officer December 19, 2022 December 19, 2022 Nordson Corporation 62 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Nordson Corporation Opinion on Internal Control over Financial Reporting We have audited Nordson Corporation’s internal control over financial reporting as of October 31, 2022, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Nordson Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 31, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended October 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated December 19, 2022 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Cleveland, Ohio December 19, 2022 Nordson Corporation 63 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Nordson Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Nordson Corporation (the Company) as of October 31, 2022 and 2021 , the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended October 31, 2022 , and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 31, 2022 and 2021 , and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2022 , in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of October 31, 2022 , based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 19, 2022 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. Nordson Corporation 64 Table of Contents Valuation of Goodwill Description of the Matter At October 31, 2022, the Company had $1,804,693 thousand of goodwill. As discussed in Note 6 to the consolidated financial statements, the Company evaluates the carrying amount of goodwill for impairment annually as of August 1, and between annual evaluations if an event occurs or circumstances change that would indicate the fair value of a reporting unit is less than the carrying amount of those assets. The Company performed a quantitative impairment test for all reporting units in fiscal 2022. As part of the quantitative impairment test, the Company estimated the fair value of each reporting unit using a combination of valuation techniques including the discounted cash flow method, a form of the income approach, and the guideline public company method, a form of the market approach. Auditing management’s annual goodwill impairment assessment relating to goodwill was complex due to the use of valuation methodologies in the determination of the estimated fair values of the reporting units. These fair value estimates are impacted by assumptions such as the selection of comparable guideline companies and the related valuation multiples, as well as discount rates, revenue growth rates, and operating margins which are affected by expectations about future market or economic conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment process whereby the Company develops assumptions that are used as inputs to the annual goodwill impairment test. This included controls over management's review of the valuation models and the assumptions, described above. To test the implied fair value of the Company’s reporting units, we performed audit procedures that included, among others, assessing the valuation methodologies, testing the assumptions, and testing the completeness and accuracy of the underlying data. We involved our internal valuation specialists in assessing the fair value methodologies applied and evaluating the reasonableness of certain assumptions selected by management. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions. We tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company. We also assessed the appropriateness of the disclosures in the consolidated financial statements. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1956. Cleveland, Ohio December 19, 2022 Nordson Corporation 65 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.