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 January 28, 1996
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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 _______
Commission file no. 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 JANUARY 28, 1996: 17,912,750
Page 1
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NORDSON CORPORATION
INDEX
Part I - Financial Information Page Number
Condensed Consolidated Statement of Income -
Thirteen Weeks Ended January 28, 1996 and
January 29, 1995 3
Condensed Consolidated Balance Sheet -
January 28, 1996 and October 29, 1995 4
Condensed Consolidated Statement of Cash
Flows - Thirteen Weeks Ended January 28, 1996
and January 29, 1995 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Results of Operations and Financial Condition 7-8
Part II - Other Information
Item 6, Exhibits and Reports on Form 8-K 9
Signature 10
Exhibit Index 11
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
January 28, 1996 January 29, 1995
----------------- ------------------
<S> <C> <C>
Sales $131,882 $123,477
Cost of sales 54,150 52,106
Selling & administrative expenses 62,887 57,357
------- -------
Operating profit 14,845 14,014
Other income (expense):
Interest expense (1,204) (971)
Interest income 181 188
Other - net 469 525
------- -------
Income before income taxes 14,291 13,756
Income taxes 5,002 4,815
------- -------
Net income $ 9,289 $ 8,941
======= =======
Weighted average common shares and
common share equivalents 18,317 18,781
======= =======
Primary earnings per share $ .51 $ .48
======= =======
Dividends per common share $ .18 $ .16
======= =======
<FN>
See accompanying notes.
</TABLE>
3
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<TABLE>
<CAPTION>
NORDSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
January 28, 1996 October 29, 1995
----------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,155 $ 359
Marketable securities 710 1,225
Receivables 135,601 146,846
Inventories 115,423 110,198
Deferred income taxes 23,889 21,858
Prepaid expenses 6,571 5,455
-------- --------
Total current assets 283,349 285,941
Property, plant and equipment 192,718 188,294
Less accumulated depreciation and
amortization of property, plant
and equipment (91,848) (88,795)
Intangible assets - net 31,058 31,768
Other assets 18,875 17,502
-------- --------
$434,152 $434,710
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 56,491 $ 43,197
Accounts payable 24,005 28,250
Current portion of long-term debt 6,516 6,465
Other current liabilities 68,480 77,467
-------- --------
Total current liabilities 155,492 155,379
Long-term debt 16,627 17,134
Other liabilities 32,055 30,867
Shareholders' equity:
Common shares 12,253 12,253
Other shareholders' equity 217,725 219,077
-------- --------
Total shareholders' equity 229,978 231,330
-------- --------
$434,152 $434,710
======== ========
<FN>
See accompanying notes.
</TABLE>
4
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<TABLE>
<CAPTION>
NORDSON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Thirteen Weeks Ended
January 28, 1996 January 29, 1995
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9,289 $ 8,941
Changes in working capital (12,010) (6,081)
Other - net 5,594 5,038
-------- --------
2,873 7,898
Cash flows from investing activities:
Additions to property, plant
and equipment (5,169) (5,232)
Proceeds from sale of property,
plant and equipment - 1,638
Proceeds from sale of marketable
securities 515 2,255
-------- --------
(4,654) (1,339)
Cash flows from financing activities:
Net proceeds from notes payable 13,961 3,982
Payment of long-term debt (1,179) (1,089)
Issuance of common shares 159 328
Purchase of treasury shares (6,918) (4,959)
Dividends paid (3,237) (2,941)
-------- --------
2,786 (4,679)
Effect of exchange rate changes (209) (193)
-------- --------
Increase in cash 796 1,687
Cash and cash equivalents
Beginning of fiscal year 359 4,578
-------- --------
End of period $ 1,155 $ 6,265
======== ========
<FN>
See accompanying notes.
</TABLE>
5
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NORDSON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 28, 1996
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 thirteen week period ended January 28, 1996 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 29, 1995.
2. INVENTORIES. Inventories consisted of the following (in thousands of
dollars):
January 28, 1996 October 29, 1995
----------------- -----------------
Finished goods $ 40,635 $ 42,246
Work-in-process 17,630 14,355
Raw materials and
finished parts 57,158 53,597
-------- --------
$115,423 $110,198
======== ========
3. SUBSEQUENT EVENT. On January 29, 1996, the Company acquired the shares
of Spectral Technology Group Limited ("Spectral"), Slough, England.
Spectral, which has annual sales of approximately $13 million, designs,
manufactures and markets ultraviolet curing systems used to accelarate
the drying of inks and coatings in the printing, packaging, metal
decorating, wood finishing, electronics and plastics industries. The
acquisition, which was financed through a combination of short-term and
long-term borrowing, will be accounted for as a purchase.
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 first quarter of 1996 increased 6.8% over the comparable 1995
period, as a result of price/volume gains combined with favorable currency
effects.
Sales gains due to price/volume changes accounted for a 5.8% increase,
compared with the same period of the prior year. Volume gains were
experienced in three of our four geographic regions. In Europe, sales volume
was up 14.4% over the first quarter of 1995. Results in Europe were driven
by sales of adhesive dispensing systems sold into the nonwovens market, as
well as engineered powder coating systems. Local sales volume in Japan rose
28.3%, compared with the first quarter of 1995. Growth in Japan was spread
across most of the Company's markets with heavier concentration in container
and nonwoven applications. In the Pacific South region, local volume
increased 25.9% over the prior year period, as demand for Nordson
technologies continued to grow throughout Latin America and Asia. On the
other hand, the slowing U.S. economy interrupted several years of strong
sales growth in North America. Sales volume in North America in the first
quarter declined 12.1%, compared with the first quarter of 1995 due primarily
to reduced demand for engineered systems. Price increases averaging 0.6%
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 1996 comprised approxi-
mately 67.2 % of total sales. Translating international sales at generally
higher average exchange rates as compared to the same period in the prior
year increased sales by 1.0% for the first quarter.
OPERATING PROFIT
- ----------------
Operating profit, as a percentage of sales, was 11.3% for the first quarter
1996, unchanged from the first quarter 1995. Gross margins, expressed as a
percentage of sales, were 58.9% for the quarter, compared with 57.8% a year
ago. The improved margins are due to changes in the product sales mix in
North America. The increase in selling and administrative expenses over the
first quarter 1995 of 9.6% can be attributed to increased sales volume and
currency effects.
7
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NET INCOME
- ----------
Net income, as a percentage of sales, decreased from 7.2% to 7.0% for the
first quarter 1996 as compared to the first quarter 1995. This decrease
results from the factors discussed above, as well as from an increase in
interest expense. The increase in interest expense is due to an increase in
short-term borrowing.
FOREIGN CURRENCY EFFECTS
- ------------------------
In the aggregate, average exchange rates for first quarter 1996 used to
translate international sales and operating results into U.S. dollars
compared favorably with average exchange rates which existed during the
comparable 1995 period. 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 first quarter 1996 were translated at exchange rates in
effect during 1995, sales would have been approximately $1,200,000 lower
while third-party costs and expenses would have been approximately $1,400,000
lower.
FINANCIAL CONDITION
During the first quarter of 1996, net assets decreased $1,352,000. This
decrease is primarily attributable to net purchases of treasury shares
amounting to $6,918,000, the payment of $3,237,000 in dividends, and a
reduction of $713,000 from translating foreign net assets at the end of the
first quarter when the U.S. dollar was generally stronger against other
currencies than at the prior year end, offset by earnings of $9,289,000.
Working capital decreased $2,705,000 during the quarter. This change
consisted primarily of a decrease in receivables and an increase in notes
payable, offset by an increase in inventories and decreases in accounts
payable and other current liabilities. Receivables decreased from the
collection of year-end receivables arising from strong sales in the fourth
quarter of 1995 and notes payable increased from net borrowings. Inventories
increased in anticipation of increased demand for Nordson products, accounts
payable decreased from the payment of additional purchases made prior to
year-end and other current liabilities decreased due to the payment of fiscal
1995 bonuses and other employee benefits.
Cash and cash equivalents increased $796,000 during the quarter. Uses for
cash included purchases of treasury shares, outlays for capital expenditures
and dividends. Net proceeds from notes payable and cash from operations 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.
8
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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
January 28, 1996.
9
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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: March 12, 1996 Nordson Corporation
/s/ Nicholas D. Pellecchia
Nicholas D. Pellecchia
Vice President-Finance
and Controller
(Principal Financial Officer
and Chief Accounting
Officer)
10
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NORDSON CORPORATION
EXHIBIT INDEX
Page Number
Exhibit 11 Calculation of Earnings Per Share 12
Exhibit 27 Financial Data Schedule 13
11
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<CAPTION>
Exhibit 11
NORDSON CORPORATION
CALCULATION OF EARNINGS PER SHARE
(Dollars and shares in thousands except for per share amounts)
Thirteen Weeks Ended
January 28, 1996 January 29, 1995
---------------- ----------------
<S> <C> <C>
PRIMARY:
Weighted average number of common
shares outstanding during the
period 17,960 18,388
Effect of Company stock plans
based on the treasury stock
method 357 393
------- -------
Total weighted average common shares
and common share equivalents 18,317 18,781
======= =======
Net income $ 9,289 $ 8,941
======= =======
Earnings per share $ .51 $ .48
======= =======
FULLY DILUTED:
Weighted average number of common
shares outstanding during the
period 17,960 18,388
Effect of Company stock plans
based on the treasury stock
method 357 393
------- -------
Total weighted average common shares
and common share equivalents 18,317 18,781
======= =======
Net income $ 9,289 $ 8,941
======= =======
Earnings per share $ .51 $ .48
======= =======
12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-03-1996
<PERIOD-END> JAN-28-1996
<CASH> 1155
<SECURITIES> 710
<RECEIVABLES> 135601
<ALLOWANCES> 3250
<INVENTORY> 115423
<CURRENT-ASSETS> 283349
<PP&E> 192718
<DEPRECIATION> 91848
<TOTAL-ASSETS> 434152
<CURRENT-LIABILITIES> 155492
<BONDS> 0
<COMMON> 12253
0
0
<OTHER-SE> 229978
<TOTAL-LIABILITY-AND-EQUITY> 434152
<SALES> 131882
<TOTAL-REVENUES> 131882
<CGS> 54150
<TOTAL-COSTS> 54150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 238
<INTEREST-EXPENSE> 1204
<INCOME-PRETAX> 14291
<INCOME-TAX> 5002
<INCOME-CONTINUING> 9289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9289
<EPS-PRIMARY> .51
<EPS-DILUTED> .51
</TABLE>
