Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We operate internationally and enter into intercompany transactions denominated in foreign currencies. Consequently, we are subject to market risk arising from exchange rate movements between the dates foreign currencies are recorded and the dates they are settled. We regularly use foreign exchange contracts to reduce our risks related to most of these transactions. These contracts, primarily associated with the euro, yen and pound sterling, typically have maturities of 90 days or less, and generally require the exchange of foreign currencies for U.S. dollars at rates stated in the contracts. Gains and losses from changes in the market value of these contracts offset foreign exchange losses and gains, respectively, on the underlying transactions. We use foreign exchange contracts on a routine basis to help mitigate the risks related to transactions denominated in foreign currencies.
The impact of changes in foreign currency exchange rates on sales and operating results cannot be precisely measured due to fluctuating selling prices, sales volume, product mix and cost structures in each country where we operate. As a general rule, a weakening of the U.S. dollar relative to foreign currencies has a favorable effect on sales and net income, while a strengthening of the dollar has a detrimental effect.
In 2025, as compared with 2024, the U.S. dollar was slightly weaker against foreign currencies. If 2024 exchange rates had been in effect during 2025, sales would have been approximately $7,359 lower and costs would have been approximately $6,305 lower. In 2024, as compared with 2023, the U.S. dollar was slightly stronger against foreign currencies. If 2023 exchange rates had been in effect during 2024, sales would have been approximately $3,352 higher and costs would have been approximately $902 higher. These effects on reported sales do not include the impact of local price adjustments made in response to changes in currency exchange rates.
Refer to Note 12 to the Consolidated Financial Statements for further discussion about our foreign currency transactions and the methods and assumptions used to record these transactions.
A portion of our operations is financed with short-term and long-term borrowings and is subject to market risk arising from changes in interest rates.
We have variable-rate long-term debt. The weighted average interest rate of this variable-rate debt wa s 5.10 pe rcent at October 31, 2025 and 5.66 percent at October 31, 2024. We also have fixed rate long term debt that has been swapped to floating rates. As of October 31, 2025, a one percent increase in interest rates would result in additional annual interest expense of approximately $7,000 on the variable rate long-term debt and debt that has been swapped to floating rates.
Nordson Corporation 30
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