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 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
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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 28, 1996: 17,909,027
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 28, 1996
and April 30, 1995 3
Condensed Consolidated Balance Sheet -
April 28, 1996 and October 29, 1995 4
Condensed Consolidated Statement of Cash
Flows - Twenty-Six Weeks ended April 28, 1996
and April 30, 1995 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 28, 1996 April 30, 1995 April 28, 1996 April 30, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sales $151,324 $143,075 $283,206 $266,552
Cost of sales 61,236 59,364 115,386 111,470
Selling &
administrative
expenses 68,507 62,816 131,394 120,173
-------- -------- -------- --------
Operating profit 21,581 20,895 36,426 34,909
Other income (expense):
Interest expense (1,491) (1,223) (2,695) (2,194)
Interest and
investment income 165 204 346 392
Other - net 854 (349) 1,323 176
-------- -------- -------- --------
Income before income
taxes 21,109 19,527 35,400 33,283
Income taxes 7,388 6,834 12,390 11,649
-------- -------- -------- --------
Net income $ 13,721 $ 12,693 $ 23,010 $ 21,634
======== ======== ======== ========
Weighted average common
shares and common
share equivalents 18,271 18,654 18,298 18,720
======== ======== ======== ========
Primary earnings
per share $ .75 $ .68 $ 1.26 $ 1.16
======== ======== ======== ========
Dividends per
common share $ .18 $ .16 $ .36 $ .32
======== ======== ======== ========
<FN>
See accompanying notes.
</TABLE>
3
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<TABLE>
<CAPTION>
NORDSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
April 28, 1996 October 29, 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,942 $ 359
Marketable securities 710 1,225
Receivables 136,283 146,846
Inventories 116,829 110,198
Deferred income taxes 23,820 21,858
Prepaid expenses 4,498 5,455
-------- --------
Total current assets 288,082 285,941
Property, plant and equipment 199,208 188,295
Less accumulated depreciation and
amortization of property, plant
and equipment (94,939) (88,796)
Intangible assets - net 43,902 31,768
Other assets 19,306 17,502
-------- --------
$455,559 $434,710
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 69,797 $ 43,197
Accounts payable 27,264 28,250
Current portion of long-term debt 5,581 6,465
Other current liabilities 66,545 77,467
-------- --------
Total current liabilities 169,187 155,379
Long-term debt 16,483 17,134
Other liabilities 32,021 30,867
Shareholders' equity:
Common shares 12,253 12,253
Other shareholders' equity 225,615 219,077
-------- --------
Total shareholders' equity 237,868 231,330
-------- --------
$455,559 $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)
Twenty-Six Weeks Ended
April 28, 1996 April 30, 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $23,010 $21,634
Changes in working capital (10,703) (8,880)
Other - net 6,451 6,706
------- -------
18,758 19,463
Cash flows from investing activities:
Additions to property, plant
and equipment (11,667) (9,932)
Proceeds from sale of property,
plant and equipment 10 1,700
Acquisition of new businesses (11,647) (4,097)
Proceeds from sale of marketable
securities 515 2,961
------- -------
(22,789) ( 9,368)
Cash flows from financing activities:
Proceeds from notes payable 27,448 15,007
Payment of long-term debt (2,922) (3,148)
Issuance of common shares 1,833 967
Purchase of treasury shares (9,890) (13,510)
Dividends paid (6,460) (5,868)
------- -------
10,009 ( 6,552)
Effect of exchange rate changes (395) 616
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Increase in cash 5,583 4,159
Cash and cash equivalents
Beginning of fiscal year 359 4,578
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End of period $ 5,942 $ 8,737
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<FN>
See accompanying notes.
</TABLE>
5
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NORDSON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 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 twenty-six week period ended
April 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):
April 28, 1996 October 29, 1995
-------------- ----------------
Finished goods $ 39,856 $ 42,246
Work-in-process 19,891 14,355
Raw materials and
finished parts 57,081 53,597
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$116,829 $110,198
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3. ACQUISITIONS. 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 accelerate 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, was
accounted for as a purchase. Costs in excess of businesses acquired for
this and other acquisitions are amortized over periods not exceeding 20
years. Assuming that the acquisition had taken place at the beginning of
1996 and 1995, pro forma results for 1996 and 1995, respectively, would not
be materially different.
6
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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 1996 increased 5.8% and 6.2%,
respectively, over the comparable 1995 periods as a result of price/volume
gains, which were offset by unfavorable currency effects.
In the second quarter, price/volume changes accounted for a 6.8% increase
in sales, while for the year-to-date, they accounted for a 6.3% increase.
In both the second quarter and year-to-date periods, the Company
experienced volume gains in three of its four geographic regions.
In Europe, sales volume was up 10.6% over the second quarter of 1995 and
increased 12.4% over the first half of 1995. Results in Europe were
influenced by very strong activity in the Company's powder and nonwoven
businesses, along with steady improvement in its packaging and product
assembly businesses. Sales of ultraviolet curing equipment also
contributed to European growth during the second quarter.
Local sales volume in Japan rose 14.0% and 20.5% over the second quarter
and year-to-date periods, respectively, of 1995. Growth in Japan resulted
from improvements across most of the Company's businesses.
In the Pacific South region, local sales volume for the second quarter and
first half of 1996 increased 26.7% and 26.4%, respectively, over the prior
year periods. Growth in Mexico and continued expansion in Asia were
significant contributors to this performance.
North American sales volume in the second quarter and first half of 1996
decreased 2.6% and 7.0%, respectively, from the comparable 1995 periods 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
approximately 64.9% of total sales. Translating international sales at
exchange rates reflecting a generally stronger U.S. dollar as compared to
the prior year had the effect of decreasing sales by 1.0% for the second
quarter and 0.1% for the first half of 1996.
7
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OPERATING PROFIT
- ----------------
For the second quarter of 1996, operating profit, as a percent of sales,
decreased to 14.3% from 14.6% in 1995. Year-to-date operating profit
declined to 12.9% of sales for 1996, from 13.1% in the same period in 1995.
As a percent of sales, gross margins increased for both the second quarter
and year-to-date periods of 1996 as compared to 1995. These increases can
be attributed to the mix of products sold, offset by unfavorable currency
effects.
Selling and administrative expenses for the second quarter and first half
of 1996 increased 9.1% and 9.3%, respectively. These increases are due to
higher sales volumes, operating expenses of recent acquisitions and
continuing programs for product and market expansion.
NET INCOME
- ----------
For the second quarter of 1996, net income, as a percent of sales,
increased to 9.1% from 8.9% for the same period of 1995. Year-to-date
income was 8.1% of sales, unchanged from 1995.
In addition to the factors impacting operating profit discussed above, the
Company experienced currency exchange gains in the current year compared
with currency exchange losses in the prior year. Currency exchange gains
and losses are included in other-net. Also, interest expense increased due
to higher average outstanding short-term borrowings.
FOREIGN CURRENCY EFFECTS
- ------------------------
In the aggregate, average exchange rates for second quarter and
year-to-date 1996 used to translate international sales and operating
results into U.S. dollars compared unfavorably with average exchange rates
existing during the comparable 1995 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 1996
were translated at exchange rates in effect during 1995, sales would have
been approximately $1,400,000 higher while third-party costs and expenses
would have been $300,000 higher. If transactions for year-to-date 1996
were translated at exchange rates in effect during 1995, sales would have
been approximately $200,000 higher and third-party costs and expenses
$1,000,000 lower.
FINANCIAL CONDITION
During the first half of 1996, net assets increased $6,538,000. This
increase is primarily due to earnings of $23,010,000, offset by net
repurchases of Nordson stock totalling $8,057,000, the payment of
$6,460,000 in dividends and a decrease of $2,811,000 from translating
foreign net assets at the end of the second quarter when the U.S. dollar
was stronger against other currencies than at the prior year-end.
8
<PAGE>
Working capital, as of the end of the quarter, decreased $11,667,000 over
the prior year-end. This change consisted primarily of a decrease in
accounts receivable and increases in notes payable, offset by increases in
cash and cash equivalents and inventories and a decrease in other current
liabilities. Receivables decreased due to lower sales in the second
quarter of 1996 as compared to the fourth quarter of 1995. Notes payable
increased to meet current operating needs and to finance the acquisition of
Spectral. Inventories grew in anticipation of increased demand for Nordson
products. Other current liabilities decreased due to the payment of fiscal
1995 bonuses and other employee benefits accrued for at fiscal 1995
year-end.
Cash and cash equivalents increased $5,583,000 during the first half of
1996. Uses for cash included outlays for capital expenditures, the
acquisition of Spectral, repurchases of Nordson stock and dividends. Cash
from operations and net proceeds from notes payable were used to finance
the above cash uses. Available lines of credit are expected to be more
than adequate to meet cash requirements for operations over the next year.
The increase in intangible assets-net is primarily due to the acquisition
of Spectral.
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
7, 1996 for the purpose of electing three directors.
All of management's nominees for directors, as listed in the proxy
statement, were elected by the following votes:
Dr. Glenn R. Brown: For 16,965,013
Withheld 57,533
Dr. Anne O. Krueger: For 16,964,677
Withheld 57,889
Eric T. Nord: For 16,962,481
Withheld 60,065
In addition to the above directors, the following directors' terms of
office continued after the meeting: William W. Colville, William D. Ginn,
Stephen R. Hardis, William P. Madar, Evan W. Nord and William L. Robinson.
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 28, 1996.
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 11, 1996 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 Twenty-Six Weeks Ended
April 28, 1996 April 30, 1995 April 28, 1996 April 30, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average number
of common shares
outstanding during
the period 17,920 18,277 17,944 18,335
Effect of Company
stock plans based on
the treasury stock
method 351 377 354 385
------- ------- ------- -------
Total weighted average
common shares and
common share
equivalents 18,271 18,654 18,298 18,720
======= ======= ======= =======
Net income $13,721 $12,693 $23,010 $21,634
======= ======= ======= =======
Earnings per share $ .75 $ .68 $ 1.26 $ 1.16
======= ======= ======= =======
FULLY DILUTED:
Weighted average number
of common shares
outstanding during
the period 17,920 18,277 17,944 18,335
Effect of Company
stock plans based on
the treasury stock
method 399 377 378 385
------- ------- ------- -------
Total weighted average
common shares and
common share
equivalents 18,319 18,654 18,322 18,720
======= ======= ======= =======
Net income $13,721 $12,693 $23,010 $21,634
======= ======= ======= =======
Earnings per share $ .75 $ .68 $ 1.26 $ 1.16
======= ======= ======= =======
13
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-03-1996
<PERIOD-END> APR-28-1996
<CASH> 5942
<SECURITIES> 710
<RECEIVABLES> 139793
<ALLOWANCES> 3510
<INVENTORY> 116829
<CURRENT-ASSETS> 288082
<PP&E> 199208
<DEPRECIATION> 94939
<TOTAL-ASSETS> 455559
<CURRENT-LIABILITIES> 169187
<BONDS> 0
<COMMON> 12253
0
0
<OTHER-SE> 225615
<TOTAL-LIABILITY-AND-EQUITY> 455559
<SALES> 283206
<TOTAL-REVENUES> 283206
<CGS> 115386
<TOTAL-COSTS> 115386
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 467
<INTEREST-EXPENSE> 2695
<INCOME-PRETAX> 35400
<INCOME-TAX> 12390
<INCOME-CONTINUING> 23010
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23010
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
</TABLE>
