FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1995
------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-7977
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NORDSON CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 34-0590250
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(State or other jurisdiction of (I.R.S Employer Identification No.)
incorporation or organization)
28601 Clemens Road, Westlake, Ohio 44145
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 892-1580
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Shares without par value as of April 30, 1995: 18,203,965
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Page 1
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NORDSON CORPORATION
INDEX
Part I - Financial Information Page Number
Condensed Consolidated Statement of Income -
Thirteen and Twenty-Six Weeks ended April 30, 1995
and May 1, 1994 3
Condensed Consolidated Balance Sheet -
April 30, 1995 and October 30, 1994 4
Condensed Consolidated Statement of Cash
Flows - Twenty-Six Weeks ended April 30, 1995
and May 1, 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Results of Operations and Financial Condition 7-9
Part II - Other Information
Item 4, Submission of Matters to a Vote
of Security Holders 10
Item 6, Exhibits and Reports on Form 8-K 10
Signature 11
Exhibit Index 12
2
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<TABLE>
<CAPTION>
Part I - Financial Information
NORDSON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Dollars and shares in thousands except for per share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended
April 30, 1995 May 1, 1994 April 30, 1995 May 1, 1994
-------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Sales $143,075 $121,502 $266,552 $226,182
Cost of sales 59,364 50,792 111,470 92,197
Selling &
administrative
expenses 62,816 53,331 120,173 104,291
-------- -------- -------- --------
Operating profit 20,895 17,379 34,909 29,694
Other income (expense):
Interest expense (1,223) (1,147) (2,194) (2,227)
Interest and
investment income 204 208 392 500
Other - net (349) 234 176 794
-------- -------- -------- --------
Income before income
taxes 19,527 16,674 33,283 28,761
Income taxes 6,834 5,920 11,649 10,211
-------- -------- -------- --------
Net income $ 12,693 $ 10,754 $ 21,634 $ 18,550
======== ======== ======== ========
Weighted average common
shares and common
share equivalents 18,654 19,217 18,720 19,194
======== ======== ======== ========
Primary earnings
per share $ .68 $ .56 $ 1.16 $ .97
======== ======== ======== ========
Dividends per
common share $ .16 $ .14 $ .32 $ .28
======== ======== ======== ========
<FN>
See accompanying notes.
</TABLE>
3
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<TABLE>
<CAPTION>
NORDSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
April 30, 1995 October 30, 1994
-------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,737 $ 4,578
Marketable securities 3,525 6,486
Receivables 120,734 120,073
Inventories 110,868 93,615
Deferred income taxes 22,007 20,575
Prepaid expenses 4,986 4,980
-------- --------
Total current assets 270,857 250,307
Property, plant and equipment 175,748 167,611
Less accumulated depreciation and
amortization of property, plant
and equipment (84,334) (78,956)
Intangible assets - net 33,052 29,900
Other assets 14,847 12,082
-------- --------
$410,170 $380,944
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 44,163 $ 26,917
Accounts payable 26,180 26,900
Current portion of long-term debt 5,636 5,723
Other current liabilities 70,072 63,771
-------- --------
Total current liabilities 146,051 123,311
Long-term debt 17,336 19,254
Other liabilities 27,928 25,955
Shareholders' equity:
Common shares 12,253 12,253
Other shareholders' equity 206,602 200,171
-------- --------
Total shareholders' equity 218,855 212,424
-------- --------
$410,170 $380,944
======== ========
<FN>
See accompanying notes.
</TABLE>
4
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<TABLE>
<CAPTION>
NORDSON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Twenty-Six Weeks Ended
April 30, 1995 May 1, 1994
-------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $21,634 $18,550
Changes in working capital (8,880) (7,346)
Other - net 6,709 9,186
------- -------
19,463 20,390
Cash flows from investing activities:
Additions to property, plant
and equipment (9,932) (8,252)
Proceeds from sale of property,
plant and equipment 1,700 5
Acquisition of new businesses (4,097) (1,518)
Purchase of marketable securities - (3,557)
Proceeds from sale of marketable
securities 2,961 2,315
------- -------
(9,368) (11,007)
Cash flows from financing activities:
Proceeds from notes payable 32,814 16,431
Payment of notes payable (17,807) (14,841)
Payment of long-term debt (3,148) (3,683)
Issuance of common shares 967 1,196
Purchase of treasury shares (13,510) (13,266)
Dividends paid (5,868) (5,229)
------- -------
(6,552) (19,392)
Effect of exchange rate changes 616 (821)
------- -------
Increase(decrease) in cash 4,159 (10,830)
Cash and cash equivalents
Beginning of fiscal year 4,578 18,128
------- -------
End of period $ 8,737 $ 7,298
======= =======
<FN>
See accompanying notes.
</TABLE>
5
<PAGE>
NORDSON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1995
1. BASIS OF PRESENTATION. The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results
for the twenty-six week period ended April 30, 1995 are not necessarily
indicative of the results that may be expected for the full fiscal year.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form
10-K for the year ended October 30, 1994.
2. INVENTORIES. Inventories consisted of the following (in thousands of
dollars):
April 30, 1995 October 30, 1994
-------------- ----------------
Finished goods $ 41,964 $33,919
Work-in-process 18,285 10,579
Raw materials and
finished parts 50,619 49,117
-------- -------
$110,868 $93,615
======== =======
3. ACCOUNTING CHANGES. Effective as of the beginning of fiscal 1995, the
Company adopted Financial Accounting Standards Board Statement
"Accounting for Certain Investments in Debt and Equity Securities" (FAS
115). Under FAS 115, the Company's marketable securities are classified
as "available for sale" and recorded at current market value. Adoption
of this statement did not have a material effect on the Company's con-
solidated financial position.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following is Management's discussion and analysis of certain significant
factors affecting the Company's results of operations and financial condition
for the periods included in the accompanying condensed consolidated financial
statements.
RESULTS OF OPERATIONS
SALES
- -----
Sales for the second quarter and year-to-date 1995 increased 17.8% over the
comparable 1994 periods as a result of price/volume gains, combined with
favorable currency effects.
In the second quarter, price/volume changes accounted for a 12.4% increase in
sales, while for the year-to-date, they accounted for a 12.7% increase. In
both the second quarter and year-to-date periods, the Company experienced
volume gains in all geographic regions. For the year-to-date period, sales
volume in North America was up 19%, shipments in Europe were up 8%, Japanese
sales volume increased 1%, and activity in the Pacific Rim countries and
Latin America grew 26%. Price increases averaging 1.4% were implemented on
orders taken after the beginning of the year on standardized small systems
and parts.
Sales to international customers for year-to-date 1995 comprised approxi-
mately 59% of total sales. Translating international sales at exchange rates
reflecting a generally weaker U.S. dollar as compared to the prior year had
the effect of increasing sales by 5.1% for the second quarter and 5.4% for
the year-to-date.
OPERATING PROFIT
- ----------------
For the second quarter of 1995, operating profit, as a percentage of sales,
increased to 14.6% from 14.3% in 1994. Year-to-date operating profit was
13.1% of sales for 1995, unchanged from the same period in 1994.
As a percentage of sales, gross margins increased slightly during the second
quarter of 1995 as compared to the second quarter of 1994, although on a
year-to-date basis, the gross margin percentage in 1995 is lower than in
1994. These changes can be attributed to lower margins from the mix of
products sold, offset by favorable currency effects. Product sales mix was
influenced by the sales growth of large engineered powder coating systems
sold into automotive and other industrial markets. The year-to-date decline
in gross margins was offset by reductions in selling and administrative
expenses, expressed as a percentage of sales, as spending grew at a slower
rate than sales.
7
<PAGE>
NET INCOME
- ----------
For the second quarter of 1995, net income, as a percentage of sales, was
8.9%, unchanged from the same period of 1994. Year-to-date income decreased
to 8.1% of sales for 1995 from 8.2% in 1994.
In addition to the factors impacting operating profit discussed above, the
Company experienced small currency exchange losses in both the second quarter
and year-to-date periods of 1995 compared to small gains in the comparable
periods of 1994.
FOREIGN CURRENCY EFFECTS
- ------------------------
In the aggregate, average exchange rates for second quarter and year-to-date
1995 used to translate international sales and operating results into U.S.
dollars compared favorably with average exchange rates existing during the
comparable 1994 periods. It is not possible to precisely measure the impact
on operating results arising from foreign currency exchange rate changes,
because of changes in selling prices, sales volume, product mix and cost
structures in each country in which the Company operates. However, if
transactions for the second quarter 1995 were translated at exchange rates in
effect during 1994, sales would have been approximately $6,601,000 lower
while third-party costs and expenses would have been $3,999,000 lower. If
transactions for year-to-date 1995 were translated at exchange rates in
effect during 1994, sales would have been approximately $11,485,000 lower and
third-party costs and expenses $7,122,000 lower.
FINANCIAL CONDITION
During the first half of 1995, net assets increased $6,431,000. This
increase is primarily due to earnings of $21,634,000 and an increase of
$1,774,000 from translating foreign net assets at the end of the second
quarter when the U.S. dollar was weaker against other currencies than at
prior year end, offset by net repurchases of Nordson stock totalling
$12,543,000 and the payment of $5,868,000 in dividends.
Working capital, as of the end of the quarter, decreased $2,190,000 over the
prior year-end. This change consisted primarily of a decrease in marketable
securities and increases in notes payable and other current liabilities,
offset by increases in cash and cash equivalents and inventories. Notes
payable increased to meet current operating needs and to finance the
acquisition of a new business, a European manufacturer of advanced liquid
adhesive dispensing systems. The increase in accrued liabilities is
primarily due to an increase in customer advance payments. Changes in
inventories can be traced to increases in component inventory related to
greater demand and in work-in-process associated with large engineered
systems.
8
<PAGE>
Cash and cash equivalents increased $4,159,000 during the first half of 1995.
Uses for cash included repurchases of Nordson stock, outlays for capital
expenditures, dividends and the acquisition of a new business. Cash from
operations, net proceeds from notes payable and proceeds from the sale of
marketable securities were used to finance the above cash uses. Available
lines of credit continue to be more than adequate to meet additional cash
requirements over the next year.
9
<PAGE>
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of Nordson Corporation was held on
March 9, 1995 for the purpose of electing three directors, and approving the
Nordson Corporation 1995 Management Incentive Compensation Plan.
All of management's nominees for directors, as listing in the proxy
statement, were elected by the following votes:
William D. Ginn: For 16,247,936
Withheld 497,181
Stephen R. Hardis: For 16,556,767
Withheld 188,350
Dr. Jacob O. Kamm: For 16,548,649
Withheld 196,468
In addition to the above directors, the following directors' terms of office
continued after the meeting: Dr. Glenn R. Brown, William W. Colville,
Dr. Anne O. Krueger, William P. Madar, Eric T. Nord and Evan W. Nord.
The Nordson Corporation 1995 Management Incentive Compensation Plan was
approved by the following votes:
For: 15,793,202
Against: 390,745
Abstain: 418,029
No Vote: 143,141
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - Exhibit 11 Calculation of Earnings Per Share.
Exhibit 27 Financial Data Schedule
(b) There were no reports on Form 8-K filed for the quarter ended
April 30, 1995.
10
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 13, 1995 Nordson Corporation
/s/ Nicholas D. Pellecchia
Nicholas D. Pellecchia
Vice President-Finance
and Controller
(Principal Financial Officer
and Chief Accounting Officer)
11
<PAGE>
NORDSON CORPORATION
EXHIBIT INDEX
Page
Number
Exhibit 11 Calculation of Earnings Per Share 13
Exhibit 27 Financial Data Schedule 14
12
<TABLE>
<CAPTION>
Exhibit 11
NORDSON CORPORATION
CALCULATION OF EARNINGS PER SHARE
(Dollars and shares in thousands except for per share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended
April 30, 1995 May 1, 1994 April 30, 1995 May 1, 1994
-------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average number
of common shares
outstanding during
the period 18,277 18,681 18,335 18,702
Effect of Company
stock plans based on
the treasury stock
method using average
market price 377 536 385 492
------- ------- ------- -------
Total weighted average
common shares and
common share
equivalents 18,654 19,217 18,720 19,194
======= ======= ======= =======
Net income $12,693 $10,754 $21,634 $18,550
======= ======= ======= =======
Earnings per share $ .68 $ .56 $ 1.16 $ .97
======= ======= ======= =======
FULLY DILUTED:
Weighted average number
of common shares
outstanding during
the period 18,277 18,681 18,335 18,702
Effect of Company
stock plans based on
the treasury stock
method using average
market price 377 565 385 552
------- ------- ------- -------
Total weighted average
common shares and
common share
equivalents 18,654 19,246 18,720 19,254
======= ======= ======= =======
Net income $12,693 $10,754 $21,634 $18,550
======= ======= ======= =======
Earnings per share $ .68 $ .56 $ 1.16 $ .96
======= ======= ======= =======
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-29-1995
<PERIOD-END> APR-30-1995
<CASH> 8,737
<SECURITIES> 3,525
<RECEIVABLES> 123,979
<ALLOWANCES> 3,245
<INVENTORY> 110,868
<CURRENT-ASSETS> 270,857
<PP&E> 175,748
<DEPRECIATION> 84,334
<TOTAL-ASSETS> 410,170
<CURRENT-LIABILITIES> 145,051
<BONDS> 0
<COMMON> 12,253
0
0
<OTHER-SE> 206,602
<TOTAL-LIABILITY-AND-EQUITY> 410,170
<SALES> 266,552
<TOTAL-REVENUES> 266,552
<CGS> 111,470
<TOTAL-COSTS> 111,470
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 348
<INTEREST-EXPENSE> 2,194
<INCOME-PRETAX> 33,283
<INCOME-TAX> 11,649
<INCOME-CONTINUING> 21,634
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,634
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
</TABLE>
