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 July 30, 1995
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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 July 30, 1995: 18,086,006
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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 Weeks and Thirty-Nine Weeks ended
July 30, 1995 and July 31, 1994 3
Condensed Consolidated Balance Sheet -
July 30, 1995 and October 30, 1994 4
Condensed Consolidated Statement of Cash
Flows - Thirty-Nine Weeks ended
July 30, 1995 and July 31, 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
Part II - Other Information
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 Thirty-Nine Weeks Ended
July 30, July 31, July 30, July 31,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales $155,152 $133,438 $421,704 $359,620
Cost of sales 66,318 56,658 177,788 148,855
Selling &
administrative
expenses 65,429 55,375 185,602 159,666
--------- --------- --------- ---------
Operating profit 23,405 21,405 58,314 51,099
Other income (expense):
Interest expense (1,143) (1,203) (3,337) (3,430)
Interest and
investment income 194 161 586 661
Other - net 170 (491) 346 303
--------- ---------- --------- ---------
Income before income
taxes 22,626 19,872 55,909 48,633
Income taxes 7,779 6,754 19,428 16,965
--------- --------- --------- ---------
Net income $ 14,847 $ 13,118 $ 36,481 $ 31,668
========= ========= ========= =========
Weighted average common
shares and common
share equivalents 18,514 18,988 18,652 19,125
========= ========= ========= =========
Primary earnings
per share $ .80 $ .69 $ 1.96 $ 1.66
========= ========= ========= =========
Dividends per
common share $ .16 $ .14 $ .48 $ .42
========= ========= ========= =========
<FN>
See accompanying notes.
</TABLE>
3
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<TABLE>
<CAPTION>
NORDSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
July 30, 1995 October 30, 1994
------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,134 $ 4,578
Marketable securities 2,025 6,486
Receivables 135,556 120,073
Inventories 115,698 93,615
Deferred income taxes 22,682 20,575
Prepaid expenses 4,040 4,980
-------- --------
Total current assets 285,135 250,307
Property, plant and equipment 183,336 167,611
Less accumulated depreciation and
amortization of property, plant
and equipment (88,196) (78,956)
Intangible assets - net 32,812 29,900
Other assets 15,701 12,082
-------- --------
$428,788 $380,944
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 45,167 $ 26,917
Accounts payable 30,420 26,900
Current portion of long-term debt 5,896 5,723
Other current liabilities 71,496 63,771
-------- --------
Total current liabilities 152,979 123,311
Long-term debt 17,864 19,254
Other liabilities 29,835 25,955
Shareholders' equity:
Common shares 12,253 12,253
Other shareholders' equity 215,857 200,171
-------- --------
Total shareholders' equity 228,110 212,424
-------- --------
$428,788 $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)
Thirty-Nine Weeks Ended
July 30, 1995 July 31, 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $36,481 $31,668
Changes in working capital (16,305) (13,425)
Other - net 9,011 13,432
-------- --------
29,187 31,675
Cash flows from investing activities:
Additions to property, plant
and equipment (15,624) (13,359)
Proceeds from sale of property,
plant and equipment 1,702 35
Acquisition of new businesses (4,116) (1,518)
Purchase of marketable securities - (3,605)
Proceeds from sale of marketable
securities 4,461 2,755
-------- --------
(13,577) (15,692)
Cash flows from financing activities:
Proceeds from notes payable 34,277 17,974
Payment of notes payable (18,512) (15,716)
Proceeds from long-term debt 651 94
Payment of long-term debt (4,600) (5,043)
Issuance of common shares 1,111 6,990
Purchase of treasury shares (20,366) (26,587)
Dividends paid (8,777) (7,838)
-------- --------
(16,216) (30,126)
Effect of exchange rate changes 1,162 (21)
-------- --------
Increase (decrease) in cash 556 (14,164)
Cash and cash equivalents
Beginning of fiscal year 4,578 18,128
-------- --------
End of period $ 5,134 $ 3,964
======== ========
<FN>
See accompanying notes.
</TABLE>
5
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NORDSON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 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 thirty-nine week period ended July 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):
July 30, 1995 October 30, 1994
------------- ----------------
Finished goods $44,051 $33,919
Work-in-process 18,829 10,579
Raw materials and
finished parts 52,818 49,117
-------- -------
$115,698 $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 or results of operations.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is Management's discussion and analysis of certain significant
factors affecting the Company's financial condition and results of operations
for the periods included in the accompanying condensed consolidated financial
statements.
RESULTS OF OPERATIONS
SALES
-----
Sales for the third quarter and year-to-date 1995 increased 16.3% and 17.3%,
respectively, over the comparable 1994 periods as a result of price/volume
increases, combined with favorable currency effects.
In the third quarter, price/volume changes accounted for a 9.3% increase in
sales, while for the year-to-date, they accounted for an 11.5% increase. In
the third quarter, the Company experienced volume gains in all geographic
regions. In Japan, price adjustments offset volume increases so that local
revenues were flat compared to the third quarter of the prior year. For the
year-to-date period, sales volume in North America was up 15.5%, shipments in
Europe were up 8.9%, and activity in the Pacific Rim countries and Latin
America grew 23.0%, while in Japan, local revenues, net of volume increases
and price adjustments, remained flat as compared to the prior year-to-date
period. On a worldwide basis, 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 59.4% 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 7.0% for the third quarter and 5.8% for
the year-to-date period. This effect on reported sales does not include the
impact of local price adjustments associated with changes in currency
exchange rates.
OPERATING PROFIT
----------------
For the third quarter of 1995, operating profit, as a percentage of sales,
decreased to 15.1% from 16.0% for the same period of 1994. Year-to-date
operating profit decreased to 13.8% of sales for 1995 from 14.2% in 1994.
As a percentage of sales, gross margins decreased slightly for both the third
quarter and year-to-date periods of 1995 as compared to the same periods 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.
Selling and administrative expenses increased 18.2% in the third quarter and
16.2% for the year-to-date over the comparable period in the prior year.
Spending growth reflects increased sales volume, business acquisitions and
currency effects.
7
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NET INCOME
----------
For the third quarter of 1995, net income, as a percentage of sales, was
9.6%, compared with 9.8% for the same period of 1994. Year-to-date income
was 8.7% of sales in 1995 and 8.8% in 1994.
In addition to the factors impacting operating profit discussed above, the
Company recognized other income in the third quarter of 1995 compared to
other expense in the same period of 1994 related to non-recurring items. On
a year-to-date basis, this improvement offset the effect of small currency
exchange losses in 1995 compared to small gains in 1994. Also, the income
tax rate was lowered in the third quarter of 1995 and 1994 to a year-to-date
effective rate of 34.8% and 34.9%, respectively.
FOREIGN CURRENCY EFFECTS
------------------------
In the aggregate, average exchange rates for third 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
structure in each country in which the Company operates. However, if trans-
actions for the third quarter 1995 were translated at exchange rates in
effect during 1994, sales would have been approximately $9,300,000 lower
while third-party costs and expenses would have been $5,900,000 lower. If
transactions for year-to-date 1995 were translated at exchange rates in
effect during 1994, sales would have been approximately $20,800,000 lower and
third-party costs and expenses would have been $13,100,000 lower.
FINANCIAL CONDITION
During the first three quarters of 1995, net assets increased $15,686,000.
This increase is primarily due to earnings of $36,481,000 and an increase of
$5,726,000 from translating foreign net assets at the end of the third
quarter when the U.S. dollar was weaker against other currencies than at
prior year end, offset by net repurchases of Nordson stock totalling
$19,255,000 and the payment of $8,777,000 in dividends.
Working capital, as of the end of the quarter, increased $5,160,000 over the
prior year-end. This change consisted primarily of increases in receivables
and inventories, offset by decreases in marketable securities and increases
in notes payable and accrued liabilities. Receivables increased as a result
of strong sales in the third quarter of 1995. 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. 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. Accrued liabilities increased due to an increase in
customer advance payments.
8
<PAGE>
Cash and cash equivalents increased $556,000 during the first nine months of
1995. Uses for cash included net repurchases of Nordson stock, outlays for
capital expenditures, dividends, the acquisition of a new business, and net
payments on long-term borrowings. Cash from operations, net proceeds from
notes payable and proceeds from the sale of marketable securities were
utilized 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 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
July 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: September 12, 1995 Nordson Corporation
/s/ Nicholas D. Pellecchia
Nicholas D. Pellecchia
Vice President-Finance
and Controller
(Principal Financial Officer
and Chief Accounting Officer)
11
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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 Thirty-Nine Weeks Ended
July 30, 1995 July 31, 1994 July 30, 1995 July 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average number
of common shares
outstanding during
the period 18,147 18,602 18,273 18,669
Effect of Company
stock plans based on
the treasury stock
method 367 386 379 456
------- ------- ------- -------
Total weighted average
common shares and
common share
equivalents 18,514 18,988 18,652 19,125
======= ======= ======= =======
Net income $14,847 $13,118 $36,481 $31,668
======= ======= ======= =======
Earnings per share $ .80 $ .69 $ 1.96 $ 1.66
======= ======= ======= =======
FULLY DILUTED:
Weighted average number
of common shares
outstanding during
the period 18,147 18,602 18,273 18,669
Effect of Company
stock plans based on
the treasury stock
method 367 386 379 456
------- ------- ------- -------
Total weighted average
common shares and
common share
equivalents 18,514 18,988 18,652 19,125
======= ======= ======= =======
Net income $14,847 $13,118 $36,481 $31,668
======= ======= ======= =======
Earnings per share $ .80 $ .69 $ 1.96 $ 1.66
======= ======= ======= =======
13
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-29-1995
<PERIOD-END> JUL-30-1995
<CASH> 5134
<SECURITIES> 2025
<RECEIVABLES> 135556
<ALLOWANCES> 3607
<INVENTORY> 115698
<CURRENT-ASSETS> 285135
<PP&E> 183336
<DEPRECIATION> 88196
<TOTAL-ASSETS> 428788
<CURRENT-LIABILITIES> 152979
<BONDS> 0
<COMMON> 12253
0
0
<OTHER-SE> 228110
<TOTAL-LIABILITY-AND-EQUITY> 428788
<SALES> 421704
<TOTAL-REVENUES> 421704
<CGS> 177788
<TOTAL-COSTS> 177788
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 559
<INTEREST-EXPENSE> 3337
<INCOME-PRETAX> 55909
<INCOME-TAX> 19428
<INCOME-CONTINUING> 36481
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36481
<EPS-PRIMARY> 1.96
<EPS-DILUTED> 1.96
</TABLE>
