What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-12-20 compared with 2022-12-19 · 71 added, 113 removed, 170 unchanged (52% of the section changed)

21 unchanged sentences

The valuations are generally based upon future cash flow projections for the acquired assets, discounted to present value.

The determination of fair values requires significant judgment by management, particularly with respect to the value of identifiable intangible assets.

Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future revenue growth rates and EBITDA margins, discount rates, customer attrition rates, and asset lives, among other items.

This judgment could result in either a higher or lower value assigned to amortizable or depreciable assets.

6 unchanged sentences

To test for goodwill impairment, we estimate the fair value of each of our reporting units using a combination of the Income Approach and the Market Approach.

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.

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.

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Discount rates are developed using a WACC methodology.

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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.

For 2023, the WACC rates used ranged from 8.3 percent to 11.0 percent depending upon the reporting unit's size, end market volatility and projection risk.

See Note 6 - Goodwill and intangible assets for further details regarding the valuation methodologies used.

See Note 5 to the Consolidated Financial Statements for further details regarding the valuation methodologies used.

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In 2023, 2022 and 2021, the results of our annual impairment tests indicated no impairment.

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We consult with and consider the opinions of financial and actuarial experts in developing appropriate return assumptions.

The expected rate of return (long-term investment rate) on domestic pension assets used to determine net benefit costs was 5.75 percent in both 2022 and 2021.

The expected rate of return (long-term investment rate) on domestic pension assets used to determine net benefit costs was 6.40 percent and 5.75 percent in 2023 and 2022, respectively.

The assumed rate of compensation increases used to determine the present value of our domestic pension plan obligations was 3.92 percent and 4.30 percent at October 31, 2023 and October 31, 2022, respectively.

19 unchanged sentences

$ 15,052 $ (13,644)

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Income taxes – Income taxes are estimated based on income for financial reporting purposes.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain changes in valuation allowances.

We provide valuation allowances against deferred tax assets if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

We provide valuation allowances

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against deferred tax assets if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Management believes the valuation allowances are adequate after considering future taxable income, allowable carryforward periods and ongoing prudent and feasible tax planning strategies.

6 unchanged sentences

Any resulting differences are recorded in the period they become known.

CyberOptics Acquisition

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

ARAG Group Acquisition

On August 24, 2023, the Company completed the acquisition of the ARAG Group pursuant to the terms of the Sale and Purchase Agreement, dated as of June 25, 2023, by and among the Company and the Sellers.

ARAG is a global market and innovation leader in the development, production and supply of precision control systems and smart fluid components for agricultural spraying.

ARAG operates as a division of our Industrial Precision Solutions segment.

In anticipation of the acquisition, the Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the “364-Day Term Loan Facility”).

The all-cash ARAG acquisition of approximately €957,000, net of the repayment of approximately €30,300 of debt of the acquired companies, was funded using borrowings under the 364-Day Term Loan Facility and the Company's revolving credit facility.

The 364-Day Term Loan Facility was subsequentially paid off in September 2023 with the net proceeds of a senior notes offering (see Note 9 to the Consolidated Financial Statements for additional details).

Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $694,900 and identifiable intangible assets of $353,500 were recorded.

The identifiable intangible assets consist primarily of $27,500 of tradenames (amortized over nine years), $31,000 of technology (amortized over five years), and $295,000 of customer relationships (amortized over twenty-two years).

The financial results of the ARAG Group acquisition are not expected to have a material impact on our Consolidated Financial Statements.

Results of Operations

Effective in the fourth quarter of 2022, we realigned and separated our two former operating segments into the following three operating segments:

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.

Existing product lines were unchanged as part of this new structure.

We made these changes to realign our management team and our operating segments.

We believe this realignment gives us better visibility into our medical and electronics platforms, which have grown significantly through both organic and acquisitive opportunities, including through the recent acquisition of CyberOptics.

We also believe that the three revised operating segments better reflect how we now manage the Company, allocate resources and assess performance of the businesses.

We also revised our geographic regions, such that the United States and Japan are now included in the Americas and Asia Pacific regions, respectively.

As such, our geographical regions as used throughout this annual report include the Americas (United States, Canada, Mexico and Central and South America), Asia Pacific (including Japan) and Europe.

Below is a detailed discussion comparison of our results of operations for the fiscal years ended October 31, 2022 and October 31, 2021 as well as a comparison of sales and segment results for fiscal years October 31, 2021 and October 31, 2020 due to our change in operating segments and geographic regions.

Below is a detailed discussion comparison of our results of operations for the fiscal years ended October 31, 2023 and October 31, 2022.

For a discussion of other changes from the fiscal year ended October 31, 2022 to the fiscal year ended October 31, 2021, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended October 31, 2022.

As used throughout this annual report, geographic regions include the Americas (United States, Canada, Mexico and Central and South America), Asia Pacific and Europe.

2023 compared to 2022

Worldwide sales for 2023 were $2,628,632, an increase of 1.5 percent from 2022 sales of $2,590,278.

The increase consisted of a 10.8 percent improvement in organic sales, inclusive of pricing to offset inflation, and a net 3.3 percent increase from acquisitions and divestitures, partially offset by unfavorable currency translation effects that decreased sales by 4.4 percent.

The increase consisted of a 3.8 percent increase from acquisitions, partially offset by a 1.4 percent decline in organic sales and unfavorable currency translation effects that decreased sales by 0.9 percent.

Sales outside the United States accounted for 66.2 percent of total sales in 2023, as compared to 66.8 percent in 2022.

On a geographic basis, sales in the Americas region were $1,096,596, an increase of 13.2 percent from 2021, with sales volume increasing 10.9 percent and a net 2.8 percent increase from acquisitions and divestitures, partially offset by unfavorable currency effect of 0.5 percent.

Sales in the Asia Pacific region were $848,079, an increase of 9.3 percent from 2021, with sales volume increasing 11.0 percent and a net 3.2 percent increase from acquisitions and divestitures, partially offset by unfavorable currency effects of 4.9 percent.

Sales in Europe were $645,603, an increase of 4.6 percent from 2021.

The increase in sales

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consisted of a 10.7 percent organic sales volume increase and a net 3.9 percent increase from acquisitions and divestitures, partially offset by unfavorable currency effects of 10.0 percent.

On a geographic basis, sales in the Americas region were $1,149,760, an increase of 4.8 percent from 2022, with organic sales increasing 2.0 percent, a 2.4 percent increase from acquisitions, and favorable currency effects of 0.4 percent.

Sales in the Asia Pacific region were $796,196, a decrease of 6.1 percent from 2022, with organic sales decreasing 8.2 percent and unfavorable currency effects of 3.1 percent, partially offset by a 5.2 percent increase from acquisitions.

Sales in Europe were $682,676, an increase of 5.7 percent from 2022, with organic sales increasing 1.4 percent, a 4.2 percent increase from acquisitions, and favorable currency effects of 0.1 percent.

Cost of sales were $1,203,227 in 2023, up 3.4 percent from $1,163,742 in 2022.

Gross profit, expressed as a percentage of sales, decreased to 54.2 percent in 2023 from 55.1 percent in 2022.

The 1.0 percentage point decrease in gross margin was driven by the impact of passing through inflationary cost increases, partially offset by a favorable divestiture impact.

The 0.9 percentage point decrease in gross margin was primarily driven by incremental inventory step-up amortization related to acquisitions in 2023 of $8,862 and unfavorable foreign currency effects.

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Selling and administrative expenses were $752,644 in 2023, up from $724,176 in 2022.

The 2.1 percent increase was driven by a 5.3 percent first-year effect of an acquisition impact and base business growth of 0.3 percentage points, partially offset by favorable currency translation effects which decreased costs 3.5 percentage points.

Selling and administrative expenses as a percentage of sales decreased to 28.0 percent in 2022 from 30.0 percent in 2021.

The 2.0 percentage point decrease was due primarily to sales growth leverage.

Operating profit as a percentage of sales increased to 27.1 percent in 2022 compared to 26.0 percent in 2021.

The 1.1 percent increase in operating margin was primarily driven by selling and administrative expense leverage due to the 10.8 percent increase in organic sales, partially offset by the impact of passing through inflationary cost increases.

Operating capacity for each of our segments can support fluctuations in order activity without significant changes in operating costs.

Operating margins for each segment were unfavorably impacted by a stronger dollar primarily against all major currencies during 2022 as compared to 2021.

Interest expense in 2022 was $22,413, a decrease of $3,078, or 12.1 percent, from 2021 .

The decrease was due to lower average debt levels compared to the prior year.

The 3.9 percent increase was driven by a 8.3 percent increase due to the first-year effect of an acquisition, including acquisition costs, partially offset by lower base business costs and favorable currency translation effects which decreased costs by 5.3 percent.

Selling and administrative expenses as a percentage of sales increased slightly to 28.6 percent in 2023 from 28.0 percent in 2022.

The 0.6 percentage point increase was primarily due to cost structure simplification actions taken in 2023.

Operating profit as a percentage of sales decreased to 25.6 percent in 2023 compared to 27.1 percent in 2022.

The 1.5 percent decrease in operating margin was primarily driven by inventory step-up amortization and other costs related to the first-year effect of acquisitions.

Interest expense in 2023 was $59,505, an increase of $37,092, or 165.5 percent, from 2022 .

The increase was due to higher average debt levels and higher average interest rates compared to the prior year primarily driven by acquisitions.

During 2022, the Company recognized non-cash pension settlement charges of $41,221 related to the purchase of an annuity contract to relieve the Company of certain U.S.

pension benefit obligations.

Other income in 2022 was $8,527 compared to other expense of $17,610 in 2021 .

Included in other income in 2022 w ere $6,270 in net foreign currency gains.

Included in the prior year’s other expense were pension costs of 9,484 and $5,926 in foreign currency losses.

The decrease in pension cost was principally attributable to decreased amortization of net actuarial losses.

Other expense in 2023 was $597 compared to other income of $8,527 in 2022 .

Included in other expense in 2023 w ere $7,742 in net foreign currency losses, which were largely offset by pension gains.

Included in the prior year’s other income were $6,270 in foreign currency gains.

Income tax expense in 2023 was $127,846, or 20.8 percent of pre-tax income, as compared to $136,176, or 21.0 percent of pre-tax income in 2022 .

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Net income was $487,493, or $8.46 per diluted share, in 2023, compared to net income of $513,103, or $8.81 per diluted share, in 2022.

This represented a 12.9 percent increase in net income and a 13.8 percent increase in diluted earnings per share.

The increase of $1.07 per diluted share was primarily driven by sales growth, strong gross margins and selling and administrative expense leverage.

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $1,337,242 in 2022, an increase of 7.2 percent, from 2021 sales of $1,246,947.

The increase was the result of an organic sales increase of 7.0 percent and a net acquisition / divestiture impact of 6.1 percent, partially offset by unfavorable currency effects of 5.9 percent.

Organic sales growth occurred in all product lines, except nonwovens.

Sales growth was generally strong across all product lines and in all regions, except for nonwovens which had sales declines in all regions.

Operating profit as a percentage of sales decreased to 32.5 percent in 2022 compared to 33.2 percent in 2021.

The 0.7 percentage point decline in operating margin was the result of the impact of passing through inflationary cost increases , partially offset by selling and administrative expense leverage due to the increase in sales .

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $690,177 in 2022, an increase of 7.6 percent from 2021 sales of $641,654.

The increase was the result of an organic sales increase of 9.7 percent partially offset by unfavorable currency effects that decreased sales by 2.1 percent.

Sales growth was generally strong across all product lines and in all regions.

Operating profit as a percentage of sales increased to 31.5 percent in 2022 compared to 30.9 percent in 2021.

The 0.6 percent percentage point improvement in operating margin was principally driven by greater selling and administrative expense leverage which contributed 1.6 percentage points, principally associated with the sales volume growth, partially offset by the impact of passing through inflationary cost increases .

Advanced Technology Solutions

Sales of the Advanced Technology Solutions segment were $562,859 in 2022, an increase of 18.8 percent from 2021 sales of $473,608.

The increase was the result of an organic sales increase of 22.4 percent partially offset by unfavorable currency effects that decreased sales by 3.6 percent.

Sales growth was strong across all product lines and in all regions.

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Operating profit as a percentage of sales increased to 23.7 percent in 2022 compared to 15.5 percent in 2021.

The 8.2 percentage point improvement in operating margin was driven by greater selling and administrative expense leverage associated with the sales volume growth.

2021 compared to 2020

Due to the change in our operating segments and geographical regions, the following comparison of our sales and segment results are being provided.

Worldwide sales for 2021 were $2,362,209, an increase of 11.4 percent from 2020 sales of $2,121,100.

The increase consisted of a 11.3 percent improvement in organic sales volume and favorable currency translation effects, which increased sales by 2.7 percent, partially offset by a net 2.6 percent decrease from acquisitions and divestitures.

On a geographic basis, sales in the Americas region were $969,110, an increase of 8.0 percent from 2020, with organic sales volume increasing 10.7 percent and a favorable currency effect of 0.4 percent, partially offset by a net 3.0 percent decrease from acquisitions and divestitures.

Sales in the Asia Pacific region were $775,607, an increase of 12.8 percent from 2020, with organic sales volume increasing 11.8 percent and favorable currency effects of 3.3 percent, partially offset by a net 2.3 percent decrease from acquisitions and divestitures.

Sales in Europe were $617,492, an increase of 15.1 percent from 2020.

The increase in sales consisted of a 11.4 percent organic sales volume increase and favorable currency effects of 5.7 percent, partially offset by a 2.0 percent decrease from acquisitions and divestitures.

This represented a 5.0 percent decrease in net income and a 4.1 percent decrease in diluted earnings per share.

The decrease of $0.35 per diluted share was primarily driven by higher interest expense and acquisition-related expenses in 2023 compared to non-cash pension settlement charges in 2022.

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $1,391,046 in 2023, an increase of 4.0 percent, from 2022 sales of $1,337,242.

The increase was the result of an organic sales volume increase of 11.7 percent and favorable currency effects that increased sales by 3.4 percent, partially offset by a divestiture impact of 6.0 percent.

Growth occurred in all product lines, except nonwovens, and in all regions except for Japan.

The increase was the result of an organic sales increase of 3.1 percent and an increase of 1.9 percent from acquisitions, partially offset by unfavorable currency effects of 1.0 percent.

Organic sales growth was generally strong across most product lines and regions.

Operating profit as a percentage of sales increased to 33.1 percent in 2023 compared to 32.5 percent in 2022.

The 15.0 percentage point improvement in operating margin was the result of improved operating results, specifically favorable absorption from higher sales volume and favorable product mix driven by a divestiture, and 2020 operating profit negatively impacted by an assets held for sale impairment charge related to a divestiture.

The 0.6 percentage point improvement in operating margin was primarily the result of improved selling and administrative expense leverage due to increased sales volumes.

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $ 641,654 in 2021, an increase of 13.6 percent from 2020 sales of $ 564,899 .

The increase was the result of an organic sales volume increase of 9.8 percent, a positive acquisition impact of 2.3 percent and favorable currency effects that increased sales by 1.5 percent.

Sales growth was generally strong across all product lines and in all regions.

Operating profit as a percentage of sales increased to 30.9 percent in 2021 compared to 26.6 percent in 2020 .

The 4.3 percentage point improvement in operating margin was principally driven by greater selling and administrative expense leverage associated with the sales volume growth.

Sales of the Medical and Fluid Solutions segment were $660,316 in 2023, a decrease of 4.3 percent from 2022 sales of $690,177.

The decrease was the result of an organic sales decrease of 3.7 percent and unfavorable currency effects that decreased sales by 0.6 percent.

The organic sales decrease was driven by lower demand for the medical fluid components and fluid solutions product lines, materially offset by continued strength in medical interventional solutions product lines.

Operating profit as a percentage of sales decreased to 28.7 percent in 2023 compared to 31.5 percent in 2022.

The 2.8 percent percentage point decline in operating margin was principally driven by meaningful sales mix changes within medical product lines and related factory inefficiencies due to reduced volumes.

Advanced Technology Solutions

Sales of the Advanced Technology Solutions segment were $577,270 in 2023, an increase of 2.6 percent from 2022 sales of $562,859.

The increase was the result of an organic sales volume increase of 12.4 percent and favorable currency effects that increased sales by 2.3 percent.

Sales growth was generally strong across all product lines and in all regions.

Operating profit as a percentage of sales increased to 15.5 percent in 2021 compared to 10.0 percent in 2020 .

The 5.5 percentage point improvement in operating margin was principally driven by greater selling and administrative expense leverage associated with the sales volume growth and cost simplification actions taken in 2020.

The increase consisted of a volume increase of 3.7 percent, inclusive of an organic sales decrease of 9.2 percent and a 12.9 percent increase from acquisitions, partially offset by unfavorable currency effects that decreased sales by 1.1 percent.

The organic sales decrease was driven by lower demand in electronics dispense product lines, partially offset by stronger demand in test and inspection product lines.

Operating profit as a percentage of sales decreased to 17.6 percent in 2023 compared to 23.7 percent in 2022.

The 6.1 percentage point decline in operating margin was primarily due to fees, severance, and non-cash inventory charges of $10,295 associated with the CyberOptics acquisition and factory inefficiencies due to reduced volumes.

Liquidity and Capital Resources

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Approximately 81 percent of our consolidated cash and cash equivalents were held at various foreign subsidiaries as of October 31, 2023.

On November 3, 2022, net cash of $380,000 was used to fund the acquisition of CyberOptics as disclosed in Note 19 to these Consolidated Financial Statements.

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Cash provided by operating activities was $641,282 in 2023, compared to $513,131 in 2022.

The primary sources were net income adjusted for non-cash income and expenses (consisting of depreciation and amortization, non-cash stock compensation, provision for losses on receivables, deferred income taxes, other non-cash expense, gain/loss on sale of property, plant and equipment, and non-cash pension settlement charges), which were $615,496 in 2023, compared to $676,200 in 2022.

Changes in working capital items used cash of $107,314 compared to $29,011 provided in 2021 as increases in receivables and inventory

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based on sales growth were partially offset by increases in other liabilities.

In addition, cash used for other operating items decreased by $17,936 in 2022 compared to 2021.

Changes in working capital items used cash of $3,571 compared to $107,314 used in 2022 principally driven by decreases in receivables and inventory while cash provided by other operating items was $29,357 in 2023 compared to cash used of $55,755 in 2022.

Cash used in investing activities was $1,436,879 in 2023, compared to $222,761 in 2022.

In 2022, $171,613 in cash was used, utilizing cash from operations, for acquisitions compared to $0 used in 2021.

In 2023, $1,422,780 in cash was used for acquisitions, utilizing borrowings and cash from operations, compared to $171,613 used in 2022.

Capital expenditures were $34,583 in 2023 compared to $51,428 in 2022.

Cash used in financing activities was $416,006 in 2022, compared to $422,913 cash used in 2021.

Net repayment of long-term debt and long-term borrowings used $33,908 of cash in 2022, compared to $289,416 used in 2021.

In 2022, cash of $262,869 was used for the purchase of treasury shares, up from $60,970 used in 2021.

Dividend payments were $125,914 in 2022, up from $97,683 in 2021 due to an increase in dividend on our common shares, on an annual basis, to $2.18 per share from $1.69 per share.

Issuance of common shares related to employee benefit plans generated $12,124 of cash in 2022, down from $31,780 in 2021.

Cash provided by financing activities was $750,512 in 2023, compared to $416,006 cash used in 2022.

Proceeds and repayments of long-term debt provided $976,043 of cash in 2023, compared to $33,908 used in 2022.

In 2023, cash of $89,708 was used for the purchase of treasury shares, down from $262,869 used in 2022.

Dividend payments were $150,356 in 2023, up from $125,914 in 2022 due to an increase in dividends on our common shares, on an annual basis, to $2.63 per share from $2.18 per share.

Issuance of common shares related to employee benefit plans generated $21,373 of cash in 2023, up from $12,124 in 2022.

The following is a summary of significant changes by balance sheet caption from October 31, 2022 to October 31, 2023.

Receivables-net and inventories-net combined increased $104,127 due to increased business activity during the year.

Goodwill increased $131,129 due to the acquisition of NDC Technologies.

Intangible assets-net decreased $27,965 primarily due to amortization expense.

Pension obligations decreased $40,033 primarily due to a decrease in discount rates.

We have a $850,000 unsecured multi-currency revolving credit facility with a group of banks that expires in April 2024.

At October 31, 2022 and October 31, 2021, we had no balances outstanding under the revolving credit facility.

In connection with the CyberOptics acquisition, we borrowed under the revolving credit facility.

Receivables-net and inventories-net combined increased $124,950, goodwill increased $979,508 , and i ntangible assets-net increased $343,342 principally due to the acquisitions of the ARAG Group and Cy berOptics.

Long-term debt, including current maturities, increased $999,199, principally due to the acquisition of the ARAG Group.

We have a $1,150,000 unsecured multi-currency credit facility with a group of banks which provides for a term loan facility in the aggregate principal amount of $300,000, maturing in June 2026, and a multicurrency revolving credit facility in the aggregate principal amount of $850,000, maturing in June 2028.

In anticipation of the ARAG acquisition, the Company entered into the 364-Day Term Loan Facility in August 2023.

On September 13, 2023, the Company completed an underwritten public offering of $350,000 aggregate principal amount of the Company’s 5.600% Notes due 2028 (the “2028 Notes”) and $500,000 aggregate principal amount of the Company’s 5.800% Notes due 2033 (together with the 2028 Notes, the “Notes").

The Company used the net proceeds from the sale of the Notes to repay its borrowings under the 364-Day Term Loan Facility.

At October 31, 2023, we had $300,000 outstanding on the term loan facility and $248,000 outstanding on the revolving credit facility compared to no outstanding balance at October 31, 2022 under the old revolving credit facility.

Our operating performance, balance sheet position and financial ratios for 2023 remained strong.

Total debt decreased $78,040 during 2022.

Total debt increased $999,199 during 2023 primarily d ue to the acquisition of the ARAG Group.

The Company is well-positioned to manage liquidity needs that arise from working capital requirements, capital expenditures, and contributions related to pension and postretirement obligations, as well as principal and interest payments on our outstanding debt.

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(2) Refer to Note 10 to the Consolidated Financial Statements for further discussion.

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(3) Pension and postretirement plan funding amounts will be determined based on the future funded status of the plans and therefore cannot be estimated at this time.

Refer to Note 6 to the Consolidated Financial Statements for further discussion.

(4) Purchase obligations primarily represent commitments for materials used in our manufacturing processes that are not recorded in our Consolidated Balance Sheet.

(4) Purchase obligations primarily represent commitments for materials used in our manufacturing processes that are not recorded on our Consolidated Balance Sheet.

We believe that the combination of present capital resources, cash from operations and unused financing sources such as our credit facilities, including our revolving credit facility, are more than adequate to meet cash requirements for the twelve months and the foreseeable future thereafter.

There are no significant restrictions limiting the transfer of funds from international subsidiaries to the parent company.

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New Accounting Standards

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If 2022 exchange rates had been in effect during 2023, sales would have been approximately $23,153 higher and third-party costs would have been approximately $15,210 higher.

In 2021, as compared with 2020, the United States dollar was generally weaker against foreign currencies.

If 2020 exchange rates had been in effect during 2021, sales would have been approximately $55,200 lower and third-party costs would have been approximately $24,600 lower.

In 2022, as compared with 2021, the United States dollar was generally stronger against foreign currencies.

If 2021 exchange rates had been in effect during 2022, sales would have been approximately $103,829 higher and third-party costs would have been approximately $68,788 higher.

These effects on reported sales do not include the impact of local price adjustments made in response to changes in currency exchange rates.

9 unchanged sentences

currency exchange rates and devaluations;

possible acquisitions including the Company’s ability to complete and successfully integrate acquisitions, including the integration of CyberOptics;

possible acquisitions including the Company’s ability to complete and successfully integrate acquisitions, including the integration of the ARAG Group and CyberOptics;

the Company’s ability to successfully divest or dispose of businesses that are deemed not to fit with its strategic plan;

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the effects of changes in tax law;

and the possible effects of events beyond our control, such as political unrest, including the conflict between Russia and Ukraine, acts of terror, natural disasters and pandemics, including the COVID-19 pandemic.

and the possible effects of events beyond our control, such as political unrest, including the conflicts in Europe and the Middle East, acts of terror, natural disasters and pandemics.

In light of these risks and uncertainties, actual events and results may vary significantly from those included in or contemplated or implied by such statements.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis