<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
for the fiscal year ended November 3, 1996
------------------
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 number 0-7977
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NORDSON CORPORATION
-------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0590250
------------------------ ------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
28601 Clemens Road, Westlake, Ohio 44145 (216) 892-1580
- ---------------------------------- ----- --------------
(Address of principal executive offices) (Zip Code) (Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
Common Shares with no par value
-------------------------------
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing.
$864,161,000 as of December 31, 1996
- ------------------------------------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
17,491,947 Common Shares as of December 31, 1996
- ------------------------------------------------
Documents incorporated by reference: list the following documents if
incorporated by reference and the part of the Form 10-K into which the document
is incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(C) under the Securities Act of 1933.
Portions of the 1996 Annual Report - Parts I, II and IV
-------------------------------------------------------
Portions of the Proxy Statement for the 1997 Annual Meeting - Part III
----------------------------------------------------------------------
1
<PAGE> 2
PART I
------
Item 1. Business.
- ------- ---------
GENERAL DEVELOPMENT OF BUSINESS
-------------------------------
General Description of Business
- -------------------------------
Founded in 1954, Nordson Corporation is a multinational company that
designs, manufactures and markets systems that apply adhesives, sealants and
liquid and powder coatings to consumer and industrial products during
manufacturing.
Nordson's industrial application systems are used, for example, to seal
cartons and cases, assemble furniture, spray protective finishes on automobiles,
apply liquid and powder paints to appliances, and coat the interiors of food and
beverage containers.
Headquartered in Westlake, Ohio, Nordson markets its products worldwide
through four sales divisions -- North America, Europe, Japan, and Pacific South.
These organizations are comprised of a network of 37 direct operations and 43
sales support offices in a total of 31 countries. Each location is managed by
local personnel who understand their markets and cultures. Over 60 percent of
the Company's revenues are generated outside the United States.
Corporate Purpose and Strategies
- --------------------------------
Nordson strives to be a vital, self-renewing, worldwide organization
which, within the framework of ethical behavior and enlightened citizenship,
grows and produces wealth for its customers, employees, shareholders, and
communities.
The Company operates to create balanced, long-term benefits for all of
these constituencies. Growth is achieved by seizing opportunities to sell
existing products for new applications and markets, developing new products and
technologies to serve growth markets, and investing in systems to maximize
internal productivity. These strategies are augmented through the acquisition of
businesses that can serve multinational industrial markets.
Nordson creates benefits for customers through a Package of Values(TM),
which include carefully engineered, durable products; strong service support;
backing of a worldwide company with financial and technical strength; and a
corporate commitment to deliver what was promised.
Nordson highly regards employee contribution toward the Company's goals
and, therefore, strives to provide employees with opportunities for
self-fulfillment, growth, security, recognition and equitable compensation.
Commitment to the community is a vital part of Nordson's overall
business strategy and is considered essential to the Company's long-term
success. As a corporate citizen, Nordson contributes an average of 5 percent of
domestic pretax earnings for charitable purposes in the communities where it
operates and draws its employees.
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FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENT,
---------------------------------------------
FOREIGN AND DOMESTIC OPERATIONS, AND EXPORT SALES
-------------------------------------------------
In accordance with Statement of Financial Accounting Standards No. 14,
"Financial Reporting for Segments of a Business Enterprise", Nordson has
reported information about the Company's single industry segment, its geographic
operations and its export sales. This information is contained in Note 14 (page
36) of the 1996 Annual Report, incorporated herein by reference thereto.
NARRATIVE DESCRIPTION OF BUSINESS
---------------------------------
Principal Products and Uses
- ---------------------------
Nordson offers a full range of equipment that moves and dispenses
liquid and powder coatings, adhesives and sealants, as well as many
high-performance compounds. Equipment ranges from manual, stand-alone units for
low-volume operations to microprocessor-based automated systems for high-speed,
high-volume production lines.
The Company's various products and examples of their uses, arranged by
the markets which they serve, are as follows:
Packaging - Automated adhesive dispensing systems for sealing
corrugated cases and paperboard cartons, applying product labels, and
stabilizing pallets in the agriculture, cosmetics, food and beverage, and
pharmaceutical industries.
Product Assembly - Adhesive and sealant dispensing systems for
bonding or sealing plastic, metal and wood products in the appliance,
automotive, bookbinding, building and construction, cosmetics, electronics,
furniture, and telecommunications industries.
Nonwovens - Automated equipment for applying adhesives,
superabsorbent powders, liquids, and fibers to disposable products such as
adult incontinence products, baby diapers, child training pants and feminine
hygiene products.
Converting - Specialty equipment for manufacturing bags and
envelopes, and coating and laminating systems used to manufacture
continuous-roll goods such as automotive body cloth, back-coated textiles,
medical disposables, specialty label stocks, and specialty tapes.
Gasketing and Composites - Automated gasketing systems for
dispensing solid and foamed adhesives and sealants to produce form-in-place
gaskets, and precision metering and dispensing systems used to manufacture
composites and reinforced plastic materials for appliances, automotive
components, circuit boards, construction products, containers, electrical
enclosures, and sporting goods.
Automotive - Powder finishing systems for spraying primers,
anti-chip coatings, basecoats and clearcoats to body panels; adhesive and
sealant dispensing systems for bonding and sealing glass, body panels and
structural components used in automobiles.
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Powder Coating - Electrostatic spray systems for applying
powder paints and coatings to appliances, automotive components, electrical
transformers, metal office furniture and storage shelving, and recreational
equipment.
Liquid Finishing - Electrostatic spray systems for applying
liquid paints and coatings to plastic, metal and wood products such as
automotive components, building materials, home and office furniture, pipes and
tubing, shipping containers, and warehouse shelving.
Container - Automated equipment and systems for dispensing and
curing liquid and powder coatings that are applied to the interiors and ends of
metal containers in the food and beverage industry.
Electronics - Automated systems for applying protective
conformal coatings, solder fluxes and adhesive materials to printed circuit
boards and electronic assemblies in the appliance, automotive, avionics,
defense, electrical and electronic controls, and telecommunications industries.
Automated Fluid Dispensing - Automated dispensing equipment
for applying a broad range of fluids including adhesives, epoxies and soldering
pastes to assemble semiconductor packages and printed circuit board assemblies
in the appliance, automotive, electronics, medical devices, semiconductors, and
telecommunications industries.
Accelerated Drying and Curing - Automated ultraviolet (UV),
infrared (IR) and other drying and curing systems for finishing and product
assembly operations in the electronics, flooring, graphic arts, metal
decorating, packaging, plastics, and wood finishing industries.
Nordson markets its products in the United States and fifty-one other
countries, primarily through a direct sales force and also through qualified
distributors. Nordson has built a worldwide reputation for its creativity and
expertise in the design and engineering of high-technology application
equipment which meets the specific needs of its customers.
Manufacturing and Raw Materials
- -------------------------------
Nordson's production operations include machining and assembly. The
company finishes specially designed parts and assembles components into finished
equipment. Many components are made in standard modules that can be used in more
than one product or in combination with other components for a variety of
models. The Company has manufacturing operations in Amherst and Elyria, Ohio;
Norcross, Georgia; Carlsbad and Sand City, California; Branford, Connecticut;
Luneburg, Germany; Udenhout, The Netherlands; Stenungsund, Sweden; and Slough,
U.K.
Principal materials used to make Nordson products are metals and
plastics, typically in sheets, bar stock, castings, forgings, and tubing.
Nordson also purchases many electrical and electronic components, fabricated
metal parts, high-pressure fluid hoses, packings, seals and other items integral
to its products. Suppliers are competitively selected based on cost and quality.
Virtually all raw materials Nordson uses are available through multiple sources.
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An extensive quality control program for Nordson equipment, machinery
and systems is supervised by Nordson's vice president of manufacturing.
Natural gas and other fuels are primary energy sources for Nordson.
However, standby capacity for alternative sources is available if needed.
Patents and Trademarks
- ----------------------
The Company maintains procedures to protect patents and trademarks both
domestically and internationally. However, Nordson's business is not materially
dependent upon any one or more of the patents, or on patent protection in
general.
Seasonal Variation in Business
- ------------------------------
There is no significant seasonal variation in the Company's business.
Working Capital Practices
- -------------------------
No special or unusual practices affect Nordson's working capital.
However, the Company generally requires substantial advance payments as deposits
on customized equipment and systems and, in certain cases, requires progress
payments during the manufacturing of these products. The Company maintains a
relatively high investment in inventory to ensure products are available to
customers when ordered. This investment reflects Nordson's commitment to
customer service, part of its Package of Values (TM).
Customers
- ---------
The Company serves a broad customer base, both in terms of industries
and geographic regions. The loss of a single or few customers would not have a
material adverse effect on the Company's business. In 1996, no single customer
accounted for 5 percent or more of sales.
Backlog
- -------
The Company's backlog of orders decreased to $53.5 million at November
3, 1996 from $56.8 million at October 29, 1995. All orders in the November 1996
backlog are expected to be shipped to customers in fiscal 1997.
Government Contracts
- --------------------
Nordson's business neither includes nor depends upon a significant
amount of governmental contracts or sub-contracts. Therefore, no material part
of the Company's business is subject to renegotiation or termination at the
option of the government.
Competitive Conditions
- ----------------------
Nordson equipment is sold in competition with a wide variety of
alternative bonding, sealing, caulking, finishing and coating techniques. Any
production process that requires the application of material to a substrate or
surface is a potential use for Nordson equipment.
Nordson enjoys a leadership position in the competitive industrial
5
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application systems business by delivering high-quality, innovative products and
technologies, as well as after-the-sale service and technical support. Working
with customers to understand their processes and developing the application
solutions that help them meet their production requirements also contributes to
Nordson's leadership position. Nordson products help customers improve
productivity, reduce raw material and energy consumption, lower maintenance
costs, improve environmental conditions, and produce better performing finished
products. Nordson's worldwide network of direct sales and technical resources
also is a competitive advantage.
Risk factors associated with Nordson's competitive position include the
development and commercial acceptance of alternative processes or materials and
the growth of local competitors serving specific markets.
Research and Development
- ------------------------
Investments in research and development are important to Nordson's
long-term growth because they enable the Company to keep pace with changing
customer and marketplace needs, and they help to sustain sales improvements year
after year. The Company places strong emphasis on technology developments and
improvements through its internal engineering and research teams. Research and
development expenses were approximately $30,471,000 in fiscal 1996, compared
with approximately $28,866,000 in fiscal 1995 and $24,434,000 in fiscal 1994. As
a percentage of sales, these investments were approximately 5.0 percent in
fiscal 1996, 5.0 percent in fiscal 1995, and 4.8 percent for fiscal 1994.
Environmental Compliance
- ------------------------
Compliance with federal, state and local environmental protection laws
during fiscal 1996 had no material effect on the Company's capital expenditures,
earnings, or competitive position. The Company also does not anticipate a
material effect in 1997.
Employees
- ---------
As of November 3, 1996, Nordson had 3,823 employees, including all
full-time and part-time employees.
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Item 2. Properties.
- ------- -----------
The following table summarizes the principal properties of the
Company.
<TABLE>
<CAPTION>
Description Approximate
Location of Property Square Feet
- -------- ----------- -----------
<S> <C> <C>
Amherst, Ohio A manufacturing, laboratory 585,000
and office complex located
on 52 acres of land
Norcross, Georgia A manufacturing, laboratory 150,000
and office building located
on 10 acres of land
A manufacturing and office 27,000
building (leased)
Duluth, Georgia An office and laboratory 108,000
building (leased)
Westlake, Ohio An office and laboratory 68,000
building located on 25 acres
of land
Branford, A manufacturing and office 47,000
Connecticut building (leased)
Carlsbad, A manufacturing and office 41,000
California building (leased)
Sand City, A manufacturing, laboratory 35,000
California and office building (leased)
Elyria, Ohio A manufacturing and warehouse 20,000
building
Luneburg, A manufacturing, laboratory 130,000
Germany and office complex
Erkrath, An office, laboratory and 63,000
Germany warehouse (leased)
St. Thibault Des An office building (leased) 45,000
Vignes, France
Tokyo, Japan An office, laboratory and 42,000
warehouse (leased)
</TABLE>
7
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<TABLE>
<CAPTION>
Description Approximate
Location of Property Square Feet
- -------- ----------- -----------
<S> <C> <C>
Milano, Italy An office, laboratory and 41,000
warehouse (leased)
Maastricht, The A warehouse and office 34,000
Netherlands building (leased)
Stockport, U.K. An office, laboratory and 25,000
warehoue (leased)
Slough, U.K. A manufacturing and office 25,000
building (leased)
Albertslund, An office and warehouse 18,000
Denmark building
Stenungsund, A manufacturing and office 15,000
Sweden building
Udenhout, The A manufacturing and office 9,000
Netherlands building
</TABLE>
Several of these properties are pledged as security for industrial
revenue bonds and mortgage notes payable.
Other properties at international subsidiary locations and at branch
locations within the United States are leased. Lease terms do not exceed 25
years and generally contain a provision for cancellation with some penalty at
an earlier date.
In addition, the Company leases equipment under various operating and
capitalized leases. Information about leases is reported in Note 7 of Notes to
Consolidated Financial Statements on page 31 of the 1996 Annual Report,
incorporated herein by reference thereto.
Item 3. Legal Proceedings.
- ------- ------------------
The Company is involved in legal proceedings incidental to its
business, none of which is material to the results of operations in the opinion
of management.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------- ----------------------------------------------------
None.
8
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Executive Officers of the Company.
- ----------------------------------
The executive officers of the Company as of December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
Served Position or Office With
As The Company and Business
Officer Experience During the Past
Name Since Five (5) Year Period
---- ----- --------------------
<S> <C> <C>
William P. Madar 1986 Vice Chairman and Chief Executive
Age 57 Officer, 1996.
President & CEO, 1986.
Edward P. Campbell 1988 President & Chief Operating
Age 47 Officer, 1996.
Executive Vice President & Chief
Operating Officer, 1994.
Vice President, 1988.
John E. Jackson 1986 Senior Vice President, 1994.
Age 51 Vice President, 1986.
Christian C. Bernadotte 1994 Vice President, 1994.
Age 47 General Manager-Packaging and
Product Assembly, 1986.
Drexel R. Bunch 1986 Vice President, Manufacturing, 1986.
Age 52
Raymond L. Cushing 1995 Treasurer, 1995.
Age 42 Assistant Treasurer, 1990.
Samuel O. Dawson 1996 Vice President, 1996.
Age 56 General Manager-Powder Systems, 1988
Bruce H. Fields 1992 Vice President, Human Resources, 1992.
Age 45 Director, Human Resources, 1989.
William D. Ginn 1966 Secretary, 1966.
Age 73
Michael Groos 1995 Vice President, 1995.
Age 45 General Manager, Central Region,
European Division, 1990.
Dr. Richard G. Klein 1986 Vice President, Corporate Research
Age 54 & Technology, 1986.
Donald J. McLane 1986 Vice President, 1986.
Age 53
</TABLE>
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<TABLE>
<CAPTION>
Served Position or Office With
As The Company and Business
Officer Experience During the Past
Name Since Five (5) Year Period
---- ----- --------------------
<S> <C> <C>
Yoshihiko Miyahara 1989 Vice President, 1989.
Age 59
Thomas L. Moorhead 1981 Vice President, Law and Assistant
Age 60 Secretary, 1981.
Nicholas D. Pellecchia 1986 Vice President, Finance and
Age 51 Controller, 1986.
</TABLE>
Messrs. Eric T. Nord and Evan W. Nord (director and retired officer) are
brothers. No other directors and officers are related.
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PART II
-------
Item 5. Market for the Company's Common Equity and Related Stockholder
- ------- --------------------------------------------------------------
Matters.
--------
Market Information and Dividends.
- ---------------------------------
The Company's common shares are listed on The Nasdaq Stock Market's
National Market. The information appearing under the captions "Dividend
Information and Price Range Per Common Shares" and "Stock Listing Information"
on page 42 of the 1996 Annual Report is incorporated herein by reference
thereto.
Holders.
- --------
The approximate number of holders of record of each class of equity
securities of the Company as of December 31, 1996 was as follows:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Common shares with no 2,905
par value
</TABLE>
Item 6. Selected Financial Data.
- ------- ------------------------
The Company incorporates herein by reference the information as to each
of the Company's last five fiscal years appearing under the caption
"Eleven-Year Summary" on pages 38 and 39 of the 1996 Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations.
----------------------
The Company incorporates herein by reference the information
appearing under the caption "Management's Discussion and Analysis" on pages 20
through 22 of the 1996 Annual Report.
Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------
The information required by this item appears on pages 23
through 37 of the 1996 Annual Report, incorporated herein by reference thereto.
Item 9. Changes In and Disagreements With Accountants on Accounting
- ------- -----------------------------------------------------------
and Financial Disclosure.
-------------------------
None.
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PART III
--------
Item 10. Directors and Executive Officers of the Company.
- -------- ------------------------------------------------
The Company incorporates herein by reference the information
appearing under the caption "Election of Directors" on pages 1 through 4 of the
Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission by January 31, 1997.
Executive officers of the Company serve for a term of one year from
date of election to the next organizational meeting of the Board of Directors
and until their respective successors are elected and qualified, except in the
case of death, resignation or removal. Information concerning executive
officers of the Company is contained in Part I of this report under the caption
"Executive Officers of the Company."
Item 11. Executive Compensation.
- -------- -----------------------
The Company incorporates herein by reference the information appearing
under the caption "Compensation of Directors" located on pages 5 and 6, and
information pertaining to compensation of officers located on pages 9 through
22 of the Company's definitive Proxy Statement to be filed with the Securities
and Exchange Commission by January 31, 1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- -------- ---------------------------------------------------------------
The Company incorporates herein by reference the information
appearing under the caption "Ownership of Nordson Common Shares" on pages 6
through 8 of the Company's definitive Proxy Statement to be filed with the
Securities and Exchange Commission by January 31, 1997.
Item 13. Certain Relationships and Related Transactions.
- -------- -----------------------------------------------
William D. Ginn, a director and Secretary of the Company, is Of Counsel
to Thompson Hine & Flory P.L.L., a law firm which has in the past provided and
continues to provide legal services to the Company.
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PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
- -------- ----------------------------------------------------------------
(a)(1). Financial Statements.
---------------------
The financial statements listed in the accompanying index to
financial statements are filed as part of this Annual Report on Form 10-K.
(a)(2) and (d). Financial Statement Schedules.
------------------------------
No consolidated financial statement schedules are presented because the
schedules are not required, because the required information is not present or
not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the financial statements,
including the notes thereto.
(a)(3) and (c). Exhibits.
---------
The exhibits listed on the accompanying index to exhibits are
filed as part of this Annual Report on Form 10-K.
(b). Reports on Form 8-K.
--------------------
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NORDSON CORPORATION
Date: January 31, 1997 By: /s/ Nicholas D. Pellecchia
--------------------------
Nicholas D. Pellecchia
Vice President, Finance
and Controller
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<PAGE> 14
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
/s/ Eric T. Nord January 31, 1997
- -----------------------------
Eric T. Nord
Director and Chairman of the Board
/s/ William P. Madar January 31, 1997
- ----------------------------
William P. Madar
Director, Vice Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ Edward P. Campbell January 31, 1997
- ----------------------------
Edward P. Campbell
Director, President and Chief Operating Officer
/s/ Nicholas D. Pellecchia January 31, 1997
- ----------------------------
Nicholas D. Pellecchia
Vice President, Finance and Controller
(Principal Accounting Officer and
Principal Financial Officer)
/s/ William D. Ginn January 31, 1997
- ----------------------------
William D. Ginn
Director and Secretary
/s/ Dr. Glenn R. Brown January 31, 1997
- ----------------------------
Dr. Glenn R. Brown
Director
/s/ William W. Colville January 31, 1997
- ----------------------------
William W. Colville
Director
/s/ Stephen R. Hardis January 31, 1997
- ----------------------------
Stephen R. Hardis
Director
/s/ Dr. Anne O. Krueger January 31, 1997
- ----------------------------
Dr. Anne O. Krueger
Director
14
<PAGE> 15
/s/ Evan W. Nord January 31, 1997
- ----------------------------
Evan W. Nord
Director
/s/ William L. Robinson January 31, 1997
- ------------------------
William L. Robinson
Director
15
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NORDSON CORPORATION
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (3), and (c)
INDEX TO FINANCIAL STATEMENTS
INDEX TO EXHIBITS
CERTAIN EXHIBITS
FISCAL YEAR ENDED NOVEMBER 3, 1996
16
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NORDSON CORPORATION
INDEX TO FINANCIAL STATEMENTS
(Item 14(a)(1))
<TABLE>
<CAPTION>
Page Reference
--------------
<S> <C>
Data incorporated by reference from the 1996 Annual Report:
Consolidated statement of income for
the years ended November 3, 1996,
October 29, 1995 and October 30, 1994 23
Consolidated balance sheet as of
November 3, 1996 and October 29, 1995 24
Consolidated statement of cash flows
for the years ended November 3, 1996,
October 29, 1995 and October 30, 1994 25
Consolidated statement of shareholders'
equity for the years ended November 3,
1996, October 29, 1995 and October 30,
1994 26
Notes to consolidated financial statements 27-37
Report of independent auditors 37
</TABLE>
The consolidated financial statements of the Registrant listed
in the preceding index, which are included in the 1996 Annual Report, are
incorporated herein by reference. With the exception of the pages listed in the
above index and information incorporated by reference elsewhere herein, the 1996
Annual Report is not to be deemed filed as part of this report.
17
<PAGE> 18
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
(3) Articles of Incorporation and By-Laws
3-a 1989 Amended Articles of Incorporation
(incorporated herein by reference to Exhibit
3-a to Registrant's Annual Report on Form 10-K
for the year ended October 30, 1994)
3-b Amendment to 1984 Regulations, adopted February
22, 1989, and 1984 Amended Regulations, as
amended (incorporated herein by reference to
Exhibit 3-b to Registrant's Annual Report on
Form 10-K for the year ended October 30, 1994)
(4) Instruments Defining the Rights of Security
Holders, including indentures
4-a Instruments related to Industrial Revenue Bonds
(These instruments are not being filed as
exhibits to this Annual Report on Form 10-K. The
Registrant agrees to furnish a copy of such
instruments to the Commission upon request.)
4-b Rights Agreement between Nordson Corporation and
Ameritrust Company National Association
(incorporated herein by reference to Exhibit 4-b
to Registrant's Annual Report on Form 10-K for
the year ended October 31, 1993)
(10) Material Contracts
10-a Nordson Corporation 1995 Management Incentive
Compensation Plan (incorporated herein by
reference to Appendix A to the Registrant's
Proxy Statement filed with the Securities and
Exchange Commission January 31, 1995)*
10-a-1 Nordson Corporation 1995 Management Incentive
Compensation Plan - Exhibits 2 and 3
10-b 1979 Employees Stock Option Plan of the
Registrant, as amended October 27, 1980
(incorporated herein by reference to Exhibit
10-b to Registrant's Annual Report on Form 10-K
for the year ended October 30, 1994)*
18
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NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
10-b-1 Amendment to 1979 Employees Stock Option Plan of
the Registrant, adopted April 20, 1982
(incorporated herein by reference to Exhibit
10-b-1 to Registrant's Annual Report on Form
10-K for the year ended October 30, 1994)*
10-b-2 Amendments to 1979 Employee Stock Option Plan of
the Registrant, adopted October 27, 1988
(incorporated herein by reference to Exhibit
10-c-2 to Registrant's Annual Report on Form
10-K for the year ended October 31, 1993)*
10-c 1982 Incentive Stock Option Plan of the
Registrant, as adopted January 18, 1982
(incorporated herein by reference to Exhibit
10-c to Registrant's Annual Report on Form 10-K
for the year ended October 30, 1994)*
10-c-1 Amendment to 1982 Incentive Stock Option Plan of
the Registrant, adopted April 20, 1982
(incorporated herein by reference to Exhibit
10-c-1 to Registrant's Annual Report on Form
10-K for the year ended October 30, 1994)*
10-c-2 Amendments to the 1982 Incentive Stock Option
Plan of the Registrant, adopted January 30, 1987
(incorporated herein by reference to Exhibit
10-e-2 to Registrant's Annual Report on Form
10-K for the year ended November 1, 1992)*
10-c-3 Amendment to 1982 Incentive Stock Option Plan of
the Registrant, adopted October 27, 1988
(incorporated herein by reference to Exhibit
10-d-3 to Registrant's Annual Report on Form
10-K for the year ended October 31, 1993)*
10-d Employment Agreement between the Registrant and
William P. Madar (incorporated herein by reference
to Exhibit 10-d to Registrant's Annual Report on
Form 10-K for the year ended October 29, 1995)*
10-d-1 Amendment to Employment Agreement between the
Registrant and William P. Madar (incorporated
herein by reference to Exhibit 10-e-1 to
Registrant's Annual Report on Form 10-K for
the year ended October 31, 1993)*
19
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NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
10-e Board of Directors Deferred Compensation Plan,
as amended October 27, 1988 (incorporated herein
by reference to Exhibit 10-e to Registrant's
Annual Report on Form 10-K for the year ended
October 30, 1994)*
10-f Employment Agreement between the Registrant and
John E. Jackson*
10-g Indemnity Agreement*
10-h Restated Nordson Corporation Excess Defined
Contribution Retirement Plan (incorporated
herein by reference to Exhibit 10-k to
Registrant's Annual Report on Form 10-K for the
year ended November 1, 1992)*
10-h-1 First Amendment to Nordson Corporation Excess
Defined Contribution Retirement Plan
(incorporated herein by reference to Exhibit
10-h-1 to Registrant's Annual Report on Form
10-K for the year ended October 29, 1995)*
10-h-2 Amendment to Nordson Corporation Excess Defined
Contribution Retirement Plan (incorporated
herein by reference to Exhibit 10-h-2 to
Registrant's Annual Report on Form 10-K for the
year ended October 29, 1995)*
10-i Nordson Corporation Excess Defined Benefit
Pension Plan (incorporated herein by reference
to Exhibit 10-l to Registrant's Annual Report on
Form 10-K for the year ended November 1, 1992)*
10-i-1 First Amendment to Nordson Corporation Excess
Defined Benefit Pension Plan (incorporated
herein by reference to Exhibit 10-i-1 to
Registrant's Annual Report on Form 10-K for the
year ended October 29, 1995)*
10-i-2 Second Amendment to Nordson Corporation Excess
Defined Benefit Retirement Plan (incorporated
herein by reference to Exhibit 10-i-2 to
Registrant's Annual Report on Form 10-K for the
year ended October 29, 1995)*
10-j Officers' Deferred Compensation Plan
(incorporated herein by reference to Exhibit
10-m to Registrant's Annual Report on Form 10-K
for the year ended November 1, 1992)*
20
<PAGE> 21
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
10-k Employment Agreement between the Registrant and
Edward P. Campbell (incorporated herein by
reference to Exhibit 10-l to Registrant's
Annual Report on Form 10-K for the year ended
October 31, 1993)*
10-l 1989 Stock Option Plan, as amended
December 20, 1991*
10-m 1992 Restricted Stock Plan (incorporated herein
by reference to Exhibit 10-p to Registrant's
Annual Report on Form 10-K for the year ended
November 1, 1992)*
10-n Nordson Corporation 1993 Long-Term Performance
Plan (incorporated herein by reference to
Exhibit 10-q to Registrant's Annual Report on
Form 10-K for the year ended
November 1, 1992)*
10-o 1988 Amended and Restated Stock Appreciation
Rights Plan (incorporated herein by reference to
Exhibit 10-o to Registrant's Annual Report on
Form 10-K for the year ended October 29, 1995)*
(11) Calculation of Earnings per Share
(13) Selected portions of the 1996 Annual Report
13-a Management's Discussion and Analysis (pages 20
through 22 of the 1996 Annual Report)
13-b Consolidated Statement of Income (page 23
of the 1996 Annual Report)
13-c Consolidated Balance Sheet (page 24 of the
1996 Annual Report)
13-d Consolidated Statement of Cash Flows (page 25
of the 1996 Annual Report)
13-e Consolidated Statement of Shareholders'
Equity (page 26 of the 1996 Annual Report)
13-f Notes to Consolidated Financial Statements
(pages 27 through 37 of the 1996 Annual
Report)
21
<PAGE> 22
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
13-g Report of Independent Auditors (page 37 of
the 1996 Annual Report)
13-h Eleven-Year Summary (pages 38 and 39 of the
1996 Annual Report)
13-i Shareholder Information (page 42 of the 1996
Annual Report)
(21) Subsidiaries of the Registrant
(23) Consent of Independent Auditors
(27) Financial Data Schedule
(99) Additional Exhibits
99-a Form S-8 Undertakings (Nos. 33-32201, 2-82915,
33-18279, 33-20451, 33-20452, 33-18309 and
33-33481)
99-b Form S-8 Undertakings (No. 2-66776)
99-c Annual Report on Form 11-K of the Nordson
Employees' Savings Trust Plan for its fiscal
year ended December 31, 1996
99-d Annual Report on Form 11-K of the Nordson
Hourly-Rated Employees' Savings Trust Plan for
its fiscal year ended December 31, 1996
*Indicates management contract or compensatory plan,
contract or arrangement in which one or more
directors and/or executive officers of Nordson
Corporation may be participants.
22
<PAGE> 1
Exhibit 10-a-1
NORDSON CORPORATION
1996 MANAGEMENT INCENTIVE COMPENSATION PLAN
-------------------------------------------
EXHIBITS 2 AND 3
<PAGE> 2
Exhibit 10-a-1
EXHIBIT 2
NORDSON CORPORATION
TARGET INCENTIVE AWARDS
FY 1997 PLAN YEAR
-----------------
<TABLE>
<CAPTION>
Target
Position Title Incumbent Award Amount
-------------- --------- ------------
<S> <C> <C>
Vice Chairman and
Chief Executive Officer W. P. Madar $ 552,000
President
& Chief Operating Officer E. P. Campbell 280,000
Sr. Vice President J. E. Jackson 169,650
President -
Pacific South Division D. J. McLane 139,750
Vice President C. C. Bernadotte 132,600
Vice President S. O. Dawson 130,000
Vice President M. Groos 105,519*
Vice President - Finance
& Controller N. D. Pellecchia 97,900
Vice President - Law
and Assistant Secretary T. L. Moorhead 88,550
Vice President -
Manufacturing D. R. Bunch 87,450
Vice President - Corporate
Research and Technology R. G. Klein 87,450
Vice President -
Human Resources B. H. Fields 87,450
President - Nordson K.K. Y. Miyahara 77,687**
----------
Aggregate Target Award: $2,036,006
==========
<FN>
*Represents DM 162,500 converted at the December 31, 1996
exchange rate of 1.54 Deutsche marks to the U.S. $1.00
**Represents Yen 9,000,000 converted at the December 31, 1996
exchange rate of 115.85 Yen to the U.S. $1.00
</TABLE>
<PAGE> 3
Exhibit 10-a-1
EXHIBIT 3
NORDSON CORPORATION
1996 MANAGEMENT INCENTIVE COMPENSATION PLAN
FISCAL 1997 PERFORMANCE COMPONENTS
----------------------------------
- --------------------------------------------------------------------------------
I. RETURN ON AVERAGE II. PROFITABILITY -
INVESTED CAPITAL: EPS GROWTH:
50% of Target Award 50% of Target Award
- --------------------------------------------------------------------------------
CORPORATE
GOAL 16% Per Year Increase 15% Per Year
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAYOUT
TABLE % of Component Earnings % of Component
ROAIC Of Target Award Per Share of Target Award
----- --------------- --------- ---------------
<S> <C> <C> <C>
8% 0% *X=$2.92 0%
12% 75% 1.075X=$3.14 50%
16%+ 150% 1.150X=$3.36 100%
1.300X=$3.80+ 150%
<FN>
*X=Earnings Per Share for the previous plan year.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 10-f
NORDSON CORPORATION
28601 Clemens Road o Westlake, Ohio 44145-1148 o Telephone
216/892-1580
April 25, 1986
Mr. John E. Jackson
105 Quail Hollow Drive
Moreland Hills, Ohio 44022
Dear John:
This letter is written to confirm the Nordson Compensation Committee's approval
and your acceptance of the offer of employment which I extended to you in my
letter of April 3, 1986.
Very truly yours,
/s/ W. P. Madar
W. P. Madar
President
WPM:lh
<PAGE> 2
CONFIDENTIAL
NORDSON CORPORATION
28601 Clemens Road o P.O. Box 458010 o Westlake Ohio 44145 o
Telephone 216/892-1580
April 3, 1986
Mr. John E. Jackson
105 Quail Hollow Drive
Moreland Hills, Ohio 44022
Dear John:
I am pleased to confirm my offer to you for the position of Vice President,
Operations for Nordson Corporation. In this position you will be responsible for
the manufacturing function as well as new business development. In this key and
vital executive management position you will report directly to me. Your initial
benefit and compensation package will include:
Compensation
- ------------
Base Salary
-----------
One hundred forty thousand dollars ($140,000) per year. You will have a
Base Salary review on November 1, 1986 and yearly thereafter,
coinciding with an annual performance review.
Bonus
-----
A target bonus of thirty-five percent (35%) has been established for
your position under the Nordson Executive Incentive Bonus Plan. As we
discussed, should you accept this offer, you will be guaranteed a
twenty-five thousand dollar ($25,000) Incentive Bonus for Fiscal Year
1986, ending October 31, 1986. As with all bonuses paid under the Plan,
payment will be made on or about January 3 following the end of a
Fiscal Year.
Stock
- -----
In our discussions I have stressed my goals for the Corporation. Achievement of
these goals enhances the value of Nordson stock. Your participation as a member
of my team allows you to contribute to the achievement of these goals and share
in the increased value of our stock as a reward for your efforts.
<PAGE> 3
Mr. John E. Jackson -2- April 3, 1986
Restricted Stock
----------------
I have requested the Compensation Committee of our Board of Directors
to grant you 2,000 shares of Nordson Restricted Stock contingent upon
commencement of your employment. Upon expiration of the three year
restriction period, you will have full rights, title and interest in
the stock provided you are still an active Nordson employee. Under the
Restricted Stock Plan, you relinquish rights, title and interest if
your employment terminates prior to the expiration of the restriction
period.
Incentive Stock Options
-----------------------
Commencing with your first day of employment you will be entitled to an
option on 4,500 shares of incentive stock. The option price will be
established on your first day of employment in accordance with the
Incentive Stock Option Plan. The Stock Options have a five year
exercise period.
Non-Qualified Stock Options
---------------------------
You will be entitled to 4,000 shares of non-qualified stock options.
Subject to earlier expiration in accordance with the terms of the ISO
Plan, the option will expire five years after the effective date. The
option will become exercisable in cumulative installments of 25% per
year beginning one year after the effective date.
Relocation
- ----------
You will be entitled to a full relocation allowance in accordance with Nordson
Policy E-24A, a copy being attached for your review. In the event you do not
meet the IRS mileage requirement, we will provide an equivalent grossed up
relocation allowance.
Car Allowance
- -------------
You will be entitled to an Executive Automobile Allowance in the amount of Eight
Thousand Dollars ($8,000), payable in quarterly installments.
Benefits
- --------
You will be entitled to Nordson Corporation's benefit package normally offered
to executives at the Vice President level. They include:
- Medical Plan
- Paid vacation (your initial vacation authorization will be
equivalent to your present Standard Oil vacation)
- Dental Plan
- Life Insurance
- Tuition reimbursement
- Retirement Plan (401K)
- The Company will recognize your years of service for the purpose of
calculating the Nordson Pension Plan Benefit. A summary of
this Pension Plan Benefit is provided in Exhibit A (attached)
- Disability Income (Long-term disability coverage will commence upon
your first day of employment. We are waiving the customary
waiting period for this benefit.)
<PAGE> 4
Mr. John E. Jackson -3- April 3, 1986
This offer is contingent upon Compensation Committee approval and your
successful completion of a physical examination and the signing of the Nordson
Corporation's Employee Agreement. We have enclosed a copy of the Employee
Agreement for your review. If you have any questions concerning this Agreement,
please feel free to discuss them with me. This Agreement will be signed in the
presence of a member of the Human Resources Department on the first day of your
employment. We also need you to complete the enclosed Nordson Employee
Application prior to commencement of work.
On behalf of Nordson Corporation, and particularly those executives who have had
an opportunity to get to know you through the interviews, I want you to know we
feel you can contribute significantly towards the growth and success of the
Company. We believe that you will find the position of Vice President,
Operations stimulating, challenging and rewarding.
Very truly yours,
/s/ W. P. Madar
W. P. Madar
President and
Chief Executive Officer
WPM:lh
<PAGE> 5
EXHIBIT A
Pension Benefit
---------------
1. COMPUTATION. Upon termination of the Executive's employment with the Company,
the Executive shall be eligible to receive an annual straight-life supplemental
pension benefit equal to a percentage of his Highest Consecutive 36-Month
Average Annual Compensation reduced by:
(i) The Sum of:
(A) the annual straight-life normal retirement benefits to
which the Executive is eligible under the qualified defined benefit pension plan
and any supplemental defined benefit pension retirement plan of The Standard Oil
Company which are attributable to employer contributions;
(B) the annual straight-life normal retirement benefit to
which the Executive becomes eligible under any nonqualified defined benefit
program of the Company which is attributable to contributions by the Company;
(C) the annual straight-life normal retirement pension benefit
to which the Executive becomes eligible under any tax-qualified defined benefit
pension plan of the Company which is attributable to contributions of the
company; and
(D) Fifty percent (50%) of the Executive's Primary Social
Security Amount, as defined under the Nordson Corporation Salaried Employees
Pension Plan (the "Nordson Pension Plan") and
(ii) .4166 percent for each month that commencement of his
supplemental pension benefit occurs prior to age 60.
The percentage referred to in the preceding sentence shall be equal to the
lesser of (i) fifty six percent (56%) and (ii) the product of one and six-tenths
percent (1.6%) multiplied by a fraction, the numerator of which is the sum of
one hundred sixty eight (168) plus the number of months of the Executive's
benefit service under the Nordson Pension Plan and the denominator of which is
twelve (12).
-2-
<PAGE> 6
2. METHOD OF PAYMENT. The supplemental pension benefit computed under paragraph
1 above shall be payable to the Executive in (i) a lump sum form computed
utilizing the interest rate and deferred rates for lump sum benefit purposes
under the Nordson Pension Plan or (ii) any optional method of payment available
to a participant in the Nordson Pension Plan computed utilizing the same factors
applicable thereto, as the Executive shall elect in writing.
3. THE HIGHEST CONSECUTIVE 36-MONTH AVERAGE ANNUAL COMPENSATION. For purposes of
the computation in paragraph 1 above, the Highest Consecutive 36-Month Average
Annual Compensation shall mean one-third of the aggregate amount of the
Executive's base salary under Section 5(a) and incentive bonuses under Section
5(b) with respect to the thirty-six (36) consecutive calendar months which
produce a higher average than any other such thirty six (36) consecutive
calendar months; for this purpose, one-twelfth of the Executive's incentive
bonus for each Fiscal Year shall be allocated to each month of the Fiscal Year
for which the incentive bonus is awarded, and the Executive's base salary and
incentive bonuses shall include any portion thereof that is deferred pursuant to
any deferred compensation program sponsored by the Company. Notwithstanding the
foregoing, if the Executive's months of employment with the company are fewer
than thirty six (36), such term shall mean the annual average of the aggregate
amount of such base salary and incentive bonuses for his entire employment
period.
RETIREMENT BENEFITS. Upon the termination of Executive's employment with the
Company, the Executive will receive a supplemental retirement benefit, payable
in a lump sum, equal to any amount forfeited by him solely by reason of the
termination of his employment prior to the vesting in full of his benefits under
the Nordson Corporation Salaried Employee's Retirement Plan and the Nordson
Corporation Excess Defined Contribution Retirement Plan, or any subsequent plan
adopted by the Company that furnishes comparable benefits to participants.
<PAGE> 1
EXHIBIT 10-g
NORDSON CORPORATION
-------------------
RESOLUTION OF BOARD OF DIRECTORS
AUTHORIZING EXECUTION OF
INDEMNIFICATION AGREEMENTS
October 28, 1986
RESOLVED, that the officers of the Corporation,
and each of them, be, and they hereby are, authorized and directed, subject to
approval by the Corporation's shareholders, to execute and deliver Indemnity
Agreements substantially in the form presented to this Board providing
indemnification from the Corporation to the directors and officers of the
Corporation in the circumstances and to the extent therein provided.
RESOLVED FURTHER, that the entering into of such
indemnity Agreements by the Corporation be submitted to the Corporation's
shareholders for their approval at the Company's 1987 Annual Meeting of
Shareholders.
RESOLVED FURTHER, that the officers of the
Corporation be, and they hereby are, authorized and directed to take all other
actions that they deem necessary or appropriate to carry out the purposes and
intent of this Resolution.
<PAGE> 2
INDEMNITY AGREEMENT
THIS AGREEMENT is made on, 1986, among NORDSON CORPORATION, an
Ohio corporation ("Nordson"), and the undersigned director or officer of
Nordson (the "Indemnified Party").
Article V of the 1984 Amended Regulations of Nordson (the
"Regulations"), adopted by the shareholders of Nordson on February 21, 1984,
provide for the indemnification of the present and former directors, officers,
and employees of Nordson to the full extent permitted or authorized by the Ohio
General Corporation Law, as it may be amended from time to time. The
indemnification provisions of the Regulations and of the Ohio General
Corporation Law provide that they are not exclusive and, therefore, contemplate
that additional indemnification may be provided by agreement or otherwise.
Moreover, as expressly authorized by the Ohio General Corporation Law, Nordson
has purchased and maintains a policy of directors and officers liability
insurance ("D&O insurance") covering certain liabilities that may be incurred
by its directors and officers in the performance of services on behalf of
Nordson.
Recent developments with respect to the application and
enforcement of the indemnification provisions of the Regulations and with the
scope of coverage, cost, and availability D&O insurance have raised concerns
about
<PAGE> 3
the adequacy and reliability of the protection afforded to Nordson's directors
and officers. The purpose of this Agreement, and counterparts of this Agreement
between Nordson and certain other directors and officers, is to allay these
concerns by providing the directors and officers with additional protection
against liabilities that may be incurred by them in connection with their
service to Nordson and, as a result, to enable the directors and officers to
continue to serve Nordson without undue risk of personal liability.
Nordson and the Indemnified Party agree as follows:
1. INDEMNIFICATION OF INDEMNIFIED PARTY. Nordson will indemnify,
to the full extent permitted or authorized by the Ohio General Corporation Law,
as it may from time to time be amended, or by any other statutory provisions
authorizing or permitting such indemnification.
2. MAINTENANCE OF D&O INSURANCE. Nordson will use its best
efforts to maintain, for as long as the Indemnified Party continues to be a
director or officer of Nordson and for five years thereafter, D&O insurance
covering the Indemnified Party the terms of which (including limits of
liability, retention amounts, and scope of coverage) are at least as favorable
to the Indemnified Party as the D&O insurance maintained by Nordson at the date
of this Agreement. Nordson will not, however, be required to
-2-
<PAGE> 4
purchase and maintain such D&O insurance if it is unavailable or the Board of
Directors of Nordson, in its reasonable business judgment, determines that the
amount of the premium is substantially disproportionate to the amount or scope
of the coverage provided.
3. ADDITIONAL INDEMNIFICATION OF INDEMNIFIED PARTY.
(a) Subject only to the exclusions set forth in Section 3(b),
Nordson will further indemnify the Indemnified Party against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him (the "Expenses") in connection with any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, including any action by or in the right of
Nordson, to which he is or was a party or is threatened to be made a party (a
"Proceeding") by reason of the fact that he is or was a director, officer,
employee, or agent of Nordson, or is or was serving at the request of Nordson as
a director, trustee, officer, employee, or agent of another corporation,
domestic or foreign, nonprofit or for profit, partnership, joint venture, trust,
or other enterprise.
(b) The indemnification provided by Section 3(a) will not be paid
by Nordson with respect to any claim:
-3-
<PAGE> 5
(i) for which payment is actually made to the Indemnified
Party under any D&O insurance purchased and maintained by Nordson,
except to the extent that the aggregate amount of the expenses for
which the Indemnified Party is otherwise entitled to indemnification
under Section 3(a) exceeds the amount of such payment;
(ii) based upon or attributable to the Indemnified Party
gaining in fact any personal profit or advantage to which he was not
legally entitled;
(iii) for an accounting of profits made from the purchase or
sale by the Indemnified Party of securities of Nordson within the
meaning of Section 16(b) of the Securities Act of 1934 and amendments
thereto or similar provisions of any state statutory law or common law;
or
(iv) brought about or contributed to by the dishonesty of the
Indemnified Party; however, notwithstanding the foregoing, the
Indemnified Party will be indemnified under Section 3(a) as to any
claims upon which suit may be brought against him, by reason of any
alleged dishonesty on the part of the Indemnified Party, unless a
judgment or other final adjudication thereof adverse to the Indemnified
-4-
<PAGE> 6
Party establishes that acts of active and deliberate dishonesty
committed by the Indemnified Party with actual dishonest purpose and
intent were material to the cause of action so adjudicated.
4. NOTIFICATION AND DEFENSE OF CLAIMS. The Indemnified Party
will give to Nordson, as soon as practicable, written notice of any claim made
against him for which indemnification will or could be sought under this
Agreement. The failure to give such notice will not, however, relieve Nordson
of its obligations under this Agreement. In addition, the Indemnified Party and
Nordson will cooperate with each other in the defense of any such claim.
5. PAYMENT OF EXPENSES. At the Indemnified Party's request,
Nordson shall pay the Expenses as and when incurred by the Indemnified Party,
after receipt of written notice pursuant to Section 4 above and an
undertaking, in form satisfactory to Nordson, by or on behalf of the
Indemnified Party to repay the amounts so paid on the Indemnified Party's
behalf if it shall ultimately be determined that the Indemnified Party is not
entitled to be indemnified by Nordson for the Expenses pursuant to law, the
Regulations, or this Agreement, in each case as in effect on the date hereof or
as hereafter in effect by virtue of any amendment, modification, or supplement.
Expenses that represent
-5-
<PAGE> 7
attorneys' fees or other costs incurred in defending any proceeding shall be
paid by Nordson within thirty days of its receipt of such request, together with
reasonable documentation of the amount and nature of the Expenses, subject to
receipt of the notice and the undertaking described in the preceding sentence of
this Section 5.
6. NON-EXCLUSIVITY. Nothing in this Agreement will be deemed to
diminish or otherwise restrict the right of the Indemnified Party to
indemnification or recovery under the Regulations, any D&O insurance maintained
by Nordson, or otherwise.
7. SEVERABILITY. If any provision or provisions of this
Agreement are held to be unenforceable, the other provisions of this Agreement
will remain in full force and effect.
8. GOVERNING LAW. This Agreement will be governed by and
construed in accordance with Ohio law.
IN WITNESS WHEREOF, the parties have
executed this Agreement on the date first above written.
NORDSON CORPORATION
By
---------------------------------
---------------------------------
Indemnified Party
<PAGE> 1
EXHIBIT 10-l
NORDSON CORPORATION
1989 Stock Option Plan
----------------------
(As Amended December 20, 1991)
1. PURPOSE. This 1989 Stock Option Plan (the "Plan") is designed to enable
Nordson Corporation ("Nordson") and its subsidiaries, by the grant of options to
purchase Common Shares of Nordson, to attract and retain qualified employees and
Directors who are not employees ("Non-Employee Directors") and to provide
additional incentive to those employees and Non-Employee Directors through
increased stock ownership.
2. ADMINISTRATION. The Plan will be administered by the Compensation
Committee of Nordson's Board of Directors (the "Committee"), consisting of not
less than three Directors appointed by and serving during the pleasure of
Nordson's Board of Directors. No Director who has at any time within one year
been eligible to receive options under the Plan (other than Director Options
granted pursuant to Section 7) or to participate in any other employee stock
option, stock purchase, or stock appreciation rights plan of Nordson or any of
its affiliates (other than the Board of Directors Deferred Compensation Plan),
may serve as a member of the Committee. The Committee will have the authority,
subject to the terms of the Plan, (a) to define the terms of each option granted
under the Plan (other than Director Options), including the type of option, the
number of shares subject to the option, the time or times at which the option
becomes exercisable, the option price, the method of paying the option price,
and the method of making withholding tax payments, (b) to grant options (other
than Director Options), (c) to interpret the provisions of the Plan, and (d) to
supervise the administration of the Plan. All decisions by the Committee will be
made with the approval of not less than a majority of its members and will be
final.
3. TYPES OF OPTIONS. Options may be either (a) "incentive stock options"
within the meaning of Section 432A of the Internal Revenue Code of 1986, as
amended (the "Code"), or (b) options that do not qualify as incentive stock
options.
4. SHARES SUBJECT TO THE PLAN. The shares subject to the Plan are Common
Shares, without par value, of Nordson ("Common Shares") and may be authorized
but unissued or treasury shares. The sum of (a) the number of Common Shares sold
upon the exercise of options granted under this
<PAGE> 2
Plan plus (b) the number of Common Shares sold upon the exercise of options
granted, during the life of this Plan, under other stock option plans covering
employees residing in countries other than the United States may not exceed
1,200,000 (adjusted to reflect the 2-for-1 stock split effective September
1991), subject to further adjustment in accordance with Section 12. If all or
part of an option is surrendered or ceases to be exercisable for any reason
other than exercise of an option or related stock appreciation rights, the
Common Shares as to which the option has ceased to be exercisable will again be
available for offering under the Plan. However, upon exercise of the option or
related stock appreciation rights, the Common Shares as to which the option or
stock appreciation rights have been exercised may not be offered again under the
Plan.
5. ELIGIBLE EMPLOYEES. All salaried employees of Nordson or any of its
subsidiaries are eligible for the grant of options (other than Director
Options), subject to the following limitations applicable to incentive stock
options:
(a) No incentive stock option may be granted to an employee who owns,
at the time the option is granted, shares of Nordson having more than 10%
of the total voting power of all classes of shares of Nordson.
(b) No employee may be granted an incentive stock option that,
together with any other incentive stock options granted to the employee
under the Plan and any other plans of Nordson or its subsidiaries, are
exercisable for the first time in any calendar year for shares of Nordson
having an aggregate fair market value, at the time the option or options
are granted, in excess of $100,000.
All Directors who are not employees of Nordson or any of its subsidiaries are
eligible for the grant of Director Options.
6. OPTION PRICE; FAIR MARKET VALUE. The purchase price for the Common
Shares subject to each option may not be less than the fair market value of the
Common Shares on the date of grant. For purposes of the Plan, the fair market
value of Common Shares on any particular date means, (a) if the Common Shares
are listed on a national securities exchange, the closing price as reported for
composite transactions on the exchange for the last day on which trades are
reported prior to that particular date, and (b) if the Common Shares are not
listed on an exchange but transactions in the Common Shares are reported in the
NASDAQ
2
<PAGE> 3
National Market System, the closing price as reported in the NASDAQ National
Market System for the last day on which trades are reported prior to that
particular date.
7. DIRECTOR OPTIONS. The following provisions relate to options ("Director
Options") granted to Non-Employee Directors:
(a) Each Non-Employee Director in office on March 10, 1992, the date
of the 1992 Annual Meeting of Shareholders of Nordson, will receive a
Director Option on that date. Each Non-Employee Director who first becomes
a Director after March 10, 1992, will receive a Director Option on the date
that he or she is first elected or appointed as a Non-Employee Director.
Each Director who ceases to be an employee of Nordson or one of its
subsidiaries during his or her term in office will receive a Director
Option on the date that he or she is first elected as a Director after
ceasing to be an employee. Each Non-Employee Director who receives a
Director Option and continues in office will receive an additional Director
Option on the fifth anniversary date of the date on which the previous
Director Option was received. No action by the Committee will be required
to effect the grant of these Director Options.
(b) The number of Common Shares subject to each Director Option will
be equal to the quotient of (i) the sum of (x) the regular annual retainer
payable to Non-Employee Directors plus (y) five times the regular fee
payable to Non-Employee Directors for attending each meeting of the board
of Directors (excluding any additional amount payable to Chairmen of
Committees of the Board of Directors), in each case at the rate in effect
when the Director Option is granted, divided by (ii) the fair market value
of the Common Shares on the date of grant. Notwithstanding the provisions
of Section 19, the formula set forth in this paragraph (b) may not be
amended more than once every six months, other than to comport with changes
in the Internal Revenue Code, as amended, the Employee Retirement Income
Security Act, as amended, or the rules thereunder.
(c) None of the Director Options will be incentive stock options.
3
<PAGE> 4
8. NOTICE OF GRANT OF OPTION. When an option is granted to an employee or
Non-Employee Director, the Committee will promptly cause the employee or
Non-Employee Director to be notified of the grant and the terms of the option.
The date on which the Committee approves the grant of an option (other than a
Director Option) will be considered to be the date on which the option is
granted. The date on which a Director Option is granted is governed by Section
7.
9. EXERCISE DATE.
(a) Subject to paragraph (b) of this Section 9, each option (other than a
Director Option) will become exercisable at such time or times, wholly or in
such installments, as the Committee may determine at the time of grant. After
the time of grant, the Committee may, in its discretion, accelerate the time or
times at which all or any part of an option (other than a Director Option)
becomes exercisable. Subject to paragraph (c) of this Section 9, each Director
Option will become exercisable six months after the date of grant.
(b) Notwithstanding a later exercise date or dates determined in accordance
with paragraph (a) of this Section 9, all options will become exercisable upon
the occurrence of any of the following:
(i) Any Person (other than Nordson, any of its subsidiaries, any
employee benefit plan or employee stock ownership plan of Nordson or of any
of its subsidiaries, or any Person organized, appointed, or established by
Nordson or any of its subsidiaries for or pursuant to the terms of any such
plan), alone or together with any of its Affiliates or Associates, becomes
the Beneficial Owner of 20% or more of the Common Shares then outstanding,
any such Person is declared to be an Adverse Person by the Board of
Directors, or any such Person commences or publicly announces an intent to
commence a tender offer or exchange offer the consummation of which would
result in the Person becoming the Beneficial Owner of 20% or more of the
Common Shares then outstanding (PROVIDED, HOWEVER, that, for purposes of
determining whether Eric T. Nord or Evan W. Nord, together with each of
their Affiliates or Associates, is the Beneficial Owner of 20% or more of
the Common Shares then outstanding, the Common Shares then held by the
Walter G. Nord Trust and by the Nordson Foundation will be excluded and,
for purposes of determining whether the Walter G. Nord Trust
4
<PAGE> 5
or the Nordson Foundation, together with each of their Affiliates and
Associates, is the Beneficial Owner of 20% or more of the Common Shares
then outstanding, the Common Shares then held by Eric T. Nord and by Evan
W. Nord will be excluded). For purposes of this clause (i), the terms
"Adverse Person," "Affiliates," "Associates," "Beneficial Owner," and
"Person" will have the meanings given to them in the Rights Agreement,
dated as of August 26, 1988, between Nordson and AmeriTrust Company
National Association, as Rights Agent, as amended from time to time.
(ii) At any time during a period of 24 consecutive months, individuals
who were Directors of Nordson at the beginning of the period no longer
constitute a majority of the members of Nordson's Board of Directors,
unless the election, or the nomination for election by Nordson's
shareholders, of each Director who was not a Director at the beginning of
the period is approved by at least a majority of the Directors who are in
office at the time of the election or nomination and were Directors at the
beginning of the period.
(iii) A record date is established for determining shareholders
entitled to vote upon (a) a merger or consolidation of Nordson with another
corporation in which Nordson is not the surviving or continuing corporation
or in which all or part of the outstanding Common Shares are to be
converted into or exchanged for cash, securities, or other property, (b) a
sale or other disposition of all or substantially all of the assets of
Nordson, or (c) the dissolution of Nordson.
(iv) Any person who proposes to make a "control share acquisition" of
Nordson, within the meaning of Section 1701.01(Z) of the Ohio General
Corporation Law, submits or is required to submit an acquiring person
statement to Nordson.
10. CONTINUOUS EMPLOYMENT OR SERVICE AS A DIRECTOR; TERMINATION OF
EMPLOYMENT. No option may be exercised unless the employee or Non-Employee
Director to whom the option was granted has continued to be an employee of
Nordson or one of its subsidiaries or a Non-Employee Director of Nordson, as the
case may be, from the time of grant through the time of exercise, except as
provided in this Section 10.
5
<PAGE> 6
(a) If the employment of an employee is terminated due to permanent
disability or retirement under the applicable retirement plan or policy of
Nordson or any of its subsidiaries, the holder of the option will have the
right to exercise the option in whole or in part prior to the earlier of
(i) three months after the date of the termination of employment of the
employee and (ii) the expiration of the option.
(b) If the employment of an employee or service in office of a
Non-Employee Director is terminated due to the death of the holder of the
option, the holder's estate, executor, administrator, personal
representative, or beneficiary will have the right to exercise the option
in whole or in part prior to the earlier of (i) 12 months after the date of
the holder's death and (ii) the expiration of the option.
(c) If a Non-Employee Director ceases to be a Non-Employee Director by
reason of his employment by Nordson or any of its subsidiaries, the
Director Option granted to that Non-Employee Director will be treated the
same as other options held by employees and will continue to be exercisable
prior to the expiration of the option, subject to the limitations on
exercise following termination of employment set forth in this Section 10.
(d) If the employment of an employee or service in office of a
Non-Employee Director is terminated for any reason other than those set
forth in paragraphs (a), (b), and (c) of this Section 10, the holder of the
option may exercise the option in whole or in part only with the consent of
the Committee. In any such event, the consent of the Committee must be
obtained and the option exercised prior to the earlier of (i) three months
after the date of the termination of employment of the employee or service
in office of a Non-Employee Director and (ii) the expiration of the option.
This Section 10 relates to the exercisability of options following the
termination of employment of an employee or service as a Non-Employee Director,
but is not intended to accelerate the date on which any option or installment of
an option becomes exercisable.
6
<PAGE> 7
11. TERMINATION OF OPTIONS.
(a) Unless terminated earlier under paragraph (b) of this Section 11, each
option (other than a Director Option) will terminate, and the right of the
holder to purchase Common Shares upon exercise of the option will expire, at the
close of business on the date set by the Committee at the time of grant. The
termination date may not, however, be later than the close of business on the
tenth anniversary date of the date of grant. Unless terminated earlier under
paragraph (b) of this Section 11, each Director Option will terminate, and the
right of the holder to purchase Common Shares upon exercise of the Director
Option will expire, at the close of business on the tenth anniversary date of
the date of grant.
(b) Each option will terminate, and the right of the holder to purchase
Common Shares upon exercise of the option will expire, upon the completion of a
transaction of the type identified in Section 9(b)(iii), but only if provision
satisfactory to the Committee is made for the payment to the holder of the
option of the excess of (i) the fair market value of the Common Shares subject
to the option immediately prior to the completion of the transaction over (ii)
the option price.
12. EXERCISE OF OPTIONS; PAYMENT FOR SHARES; WITHHOLDING TAX ELECTION.
(a) Options may be exercised by delivery of written notice of exercise to
Nordson accompanied by payment in full of the option price. The portion of each
option that is exercisable may be exercised in full or from time to time in
part. No fraction of a Common Share may be purchased upon exercise of an option.
(b) The option price of an option that does not qualify as an incentive
stock option may be paid in cash, by the transfer to Nordson of Common Shares
already owned by the holder, by a reduction in the number of Common Shares to be
received upon exercise of the option, or by a combination of these methods, as
determined from time to time by the Committee. The option price of an incentive
stock option may be paid in cash, by the transfer to Nordson of Common Shares
already owned by the holder, or by a combination of these methods, as determined
by the Committee at the time of grant. For purposes of this paragraph (b),
Common Shares will be valued at their fair market value at the time the option
is exercised.
7
<PAGE> 8
(c) The Committee may, in its discretion and subject to such rules as the
Committee may adopt, permit the holder of an option to pay, in whole or in part,
any withholding tax that may arise as a result of the exercise of an option that
does not qualify as an incentive stock option by the transfer to Nordson of
Common Shares already owned by the holder, by a reduction in the number of
Common Shares to be received upon exercise of the option, or by a combination of
these methods. For purposes of this paragraph (c), Common Shares will be valued
at their fair market value at the time the amount of the withholding tax is
determined.
13. ASSIGNABILITY. An option granted under the Plan may not be transferred
or assigned by the holder, otherwise than by will or the laws of descent and
distribution, and may be exercised during the holder's lifetime only by the
holder or by the holder's guardian or legal representative.
14. ADJUSTMENTS UPON CHANGE IN SHARES. In the event of any change in the
Common Shares by reason of a merger, consolidation, reorganization,
recapitalization, or similar transaction or of a stock dividend, stock split, or
other capital adjustment, the total number and class of shares that may be
issued and sold upon exercise of options to be granted under the Plan, the
number and class of shares subject to each outstanding option, and the option
price will be appropriately adjusted by the Committee.
15. SUBSTITUTE OPTIONS. Notwithstanding any other provisions of this Plan,
options may be granted under this Plan in substitution for employee stock
options granted by another corporation that is acquired by Nordson, whether
through a merger, a purchase of assets or shares, or otherwise. The terms,
provisions, and benefits to the holders of the substitute options may, in the
discretion of the Committee, be identical to the terms, provisions, and benefits
to the holders of the options of the other corporation on the date of
substitution, except that the substitute options will provide for the purchase
of Common Shares of Nordson instead of shares of the other corporation.
16. PURCHASE FOR INVESTMENT. Each person exercising an option may be
required by Nordson to furnish a representation that the Common Shares subject
to the option are being acquired as an investment and not with a view to
distribution if Nordson, in its sole discretion, determines that the
representation is needed to insure that the sale or disposition of the Common
Shares will not involve a violation of the Securities Act of 1933, as amended,
or of any other
8
<PAGE> 9
applicable securities laws. To assure compliance with any such representation,
Nordson may place a legend or other symbol on any certificate for Common Shares
sold under the Plan and may issue stop transfer orders or similar instructions
to the transfer agent for its Common Shares.
17. COMPLIANCE WITH SECURITIES LAWS. No Common Shares may be sold and no
share certificate may be delivered upon exercise of an option until Nordson has
taken all actions then required to comply with the Securities Act of 1933, as
amended, and any other applicable securities laws, and with the rules of any
association or exchange on which the Common Shares may be quoted or listed.
18. DURATION AND TERMINATION OF THE PLAN. the Plan will remain in effect
until February 21, 1999, and will then terminate, unless terminated at an
earlier date by action of the Board of Directors. Termination of the Plan will
not, however, affect options previously granted.
19. AMENDMENT OF THE PLAN. The Board of Directors may from time to time
amend this Plan, although no such amendment may, without the approval of
shareholders, increase the total number of Common Shares that may be issued and
sold upon exercise of options granted under the Plan (except in accordance with
Section 14), reduce the option price at which options may be exercised, extend
the time within which options may be granted under the Plan or the time within
which options may be exercised, or change the requirements relating to either
eligibility for participation in the Plan or administration of the Plan. Except
in accordance with Section 14, neither the Board of Directors nor the Committee
may, without the consent of the holder, alter or impair an option previously
granted under the Plan. Subject to the other limitations of this Section 19, the
power of the Board of Directors to amend the Plan shall include, but not be
limited to, the power to adopt amendments to the Plan deemed necessary or
advisable by the Board of Directors in order to comply with or qualify for
relief from the tax or other laws or regulations of foreign countries in which
eligible employees reside. Any such amendments shall be annexed to the Plan and
made a part hereof, but shall only be operative with respect to participants in
the foreign country or countries to which such amendments relate.
19. EFFECTIVE DATE. This Plan became effective on February 22, 1989, when
it was adopted by Nordson's shareholders.
9
<PAGE> 10
Adopted by the Shareholders on
February 22, 1989
Amended by the Board of Directors
on December 20, 1991, subject to
Approval by Shareholders at the
1992 Annual Meeting
<PAGE> 1
Exhibit 11
NORDSON CORPORATION
CALCULATION OF EARNINGS PER SHARE
Years Ended November 3, 1996, October 29, 1995 and October 30, 1994
(Dollar and shares in thousands except for per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Primary:
Net income $53,071 $52,676 $46,654
======= ======= =======
Weighted average number of common
shares outstanding during the year 17,869 18,219 18,623
Effect of Company stock plans based
on the treasury stock method 335 358 444
------- ------- -------
Total weighted average common and
common equivalent shares 18,204 18,577 19,067
======= ======= =======
Earnings per share $ 2.92 $ 2.84 $ 2.45
======= ======= =======
Fully Diluted:
Net income $53,071 $52,676 $46,654
======= ======= =======
Weighted average number of common
shares outstanding during the year 17,869 18,219 18,623
Effect of Company stock plans based
on the treasury stock method 350 360 474
------- ------- -------
Total weighted average common and
common equivalent shares 18,219 18,579 19,097
======= ======= =======
Earnings per share $ 2.91 $ 2.84 $ 2.44
======= ======= =======
</TABLE>
<PAGE> 1
Exhibit 13-a
MANAGEMENT'S DISCUSSION AND ANALYSIS
Fiscal Years 1996 and 1995
Worldwide sales in 1996 reached a record level of $609.4 million, a 5 percent
increase over 1995 sales of $581.4 million. Sales volume, including the effects
of price increases, rose 7 percent. Currency fluctuations decreased reported
sales by 2 percent, due to the strengthening of the U.S. dollar, primarily
against the Japanese yen.
Nordson's sales outside the United States accounted for 64 percent of total 1996
sales, up from 60 percent in 1995, with volume gains in three of its four
geographic regions. Sales volume advanced 13 percent in Europe and 24 percent in
the Pacific South region, with steady growth in both regions throughout the
year. In Japan, local sales increased 13 percent with a strong first quarter
offsetting a flat third quarter. Sales volume in North America declined 3
percent compared with the previous year's record sales, primarily due to reduced
orders for large engineered systems. North American volume made a strong
recovery in the fourth quarter, following a particularly weak third quarter. At
the beginning of the year, the Company implemented price increases that averaged
less than 1 percent on standardized small systems and parts.
Worldwide volume gains were driven by demand for customized nonwovens, container
and converting systems. Sales of adhesive dispensing systems for packaging and
product assembly applications rose moderately. Solid gains in powder system
installations in the Company's European and Pacific South regions were
mitigated by a softening in demand for large powder systems in the United
States. The January 1996 acquisition of Spectral Technology Group Ltd., a
manufacturer of ultraviolet drying and curing systems, and the August 1996
purchase of Asymtek, a manufacturer of automated fluid dispensing equipment,
also contributed to the year's growth.
Gross margins, expressed as a percentage of sales, were 58.1 percent in 1996,
compared with 57.8 percent in 1995. This improvement can be traced to the mix of
products sold, along with improvements in manufacturing efficiencies.
Selling and administrative costs, expressed as a percentage of sales, increased
from 43.3 percent in 1995 to 44.3 percent in 1996. The growth in spending is
attributable to the following factors: baseline activities that were increased
to support sales volume growth, incremental operating expenses traced to recent
acquisitions, and continuing investments in product development and geographic
expansion programs.
Worldwide operating profits, expressed as a percentage of sales, were 13.8
percent in 1996 and 14.4 percent in 1995. Regional operating profit percentages
in 1996 and 1995, respectively, were: 20 percent and 23 percent for North
America; 8 percent and 6 percent for Europe; 17 percent and 11 percent for
Japan; and 4 percent and 6 percent for the Pacific South region. Operating
profits in North America include intercompany gross profits on Nordson equipment
manufactured in the United States and exported to international subsidiaries.
Differences between years reflect local economic conditions as well as the
division of profits on transactions between geographic areas.
Interest expense, net of interest income, increased $1.3 million due to higher
borrowing levels, driven primarily by the funding of two business
acquisitions in 1996. Other income increased $1.4 million due to higher net
currency exchange gains.
Nordson's effective tax rate is lower than the statutory federal rate due to
benefits derived from export profits on products sold through the Company's
Foreign Sales Corporation, which is subject to lower tax rates. The Company's
overall 1996 tax rate decreased to 34.5 percent from 34.7 percent in 1995, due
to a decline in effective foreign tax rates.
Net income was $53.1 million in 1996, compared with $52.7 million in 1995. This
translates to $2.92 per share in 1996, a 3 percent increase over $2.84 per
share in 1995.
Nordson has not yet adopted Statements of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," or No. 123, "Accounting for Stock-Based
Compensation." These statements, which must be adopted by the Company in fiscal
1997, are not expected to have a material effect on the financial statements.
Fiscal Years 1995 and 1994
Sales in 1995 were $581.4 million, a 15 percent increase over 1994. Advances in
local volume and price increases accounted for a 10 percent increase in sales,
with the balance due to the strengthening of major international currencies
against the U.S. dollar.
20
<PAGE> 2
Sales outside the United States represented 60 percent of total sales in 1995
and 58 percent in 1994. Volume gains were achieved in each of Nordson's
geographic sales regions in 1995. In Europe, sales volume increased 11 percent,
with accelerated activity throughout the year. Although investment activity in
Japan was generally erratic during the year, sales volume increased 4
percent over the prior year with a marked increase in fourth quarter shipments.
Sales volume in the Pacific South region advanced 25 percent due to continued
emergence of dynamic markets for Nordson products in Latin America, Asia and
Australia. In North America, sales volume advanced 9 percent for the year,
despite a decline in fourth quarter activity. Price increases averaging 1
percent were implemented at the beginning of 1995 on standardized small systems
and parts.
Sales of adhesive dispensing systems for packaging and product assembly
applications grew at a steady pace, while sales of powder coating systems
continued to accelerate. Solid gains in sales of special engineered systems to
the container and electronic industries also contributed to 1995 results.
Gross margins, expressed as a percentage of sales, were 57.8 percent in 1995
compared with 58.0 percent in 1994. Favorable currency effects were offset by
changes in the mix of products sold.
Selling and administrative costs, expressed as a percentage of sales, were 43.3
percent in both 1995 and 1994. Although total spending grew at the same rate as
sales, Nordson achieved productivity improvements in both operational and
administrative support areas. In addition, the Company focused incremental
spending on product improvements; research and development; patent protection;
and continued geographic expansion, particularly in countries located in the
Company's Pacific South region.
Worldwide operating profits, expressed as a percentage of sales, were 14.4
percent in 1995 and 14.7 percent in 1994. In both years, regional operating
profits, expressed as a percentage of revenues, were approximately 23
percent for North America and 6 percent to 11 percent for the other regions.
Regional operating profits include those on inventory transfers between
geographic areas.
Interest expense, net of interest income, increased $.3 million due to higher
average borrowing levels. Other income increased $.5 million due to higher net
currency exchange gains.
The effective tax rate increased to 34.7 percent in 1995 from 34.2 percent in
1994. This change can be traced to higher effective foreign, state and local tax
rates.
Net income was $52.7 million, or $2.84 per share, in 1995 compared with $46.7
million, or $2.45 per share, in 1994.
Liquidity and Sources of Capital
In 1996, working capital decreased $20.1 million to $110.5 million. Business
acquisitions, financed primarily by notes payable, reduced working capital by
$33.7 million. Current year operations increased working capital by $13.6
million; the largest single element of this increase was in receivables, which
rose as a result of higher sales in the fourth quarter of 1996, compared with
the fourth quarter of the previous year.
Cash and cash equivalents increased $8.9 million. Cash provided by operations
was $53.6 million, and net proceeds from additional short-term borrowings
generated $55.7 million. Significant uses for cash included acquisitions
of new businesses, dividends, capital expenditures, and net repurchases of
Nordson stock.
The acquisitions of Spectral Technology Group Ltd. and Asymtek extended
Nordson's product lines. Dividend payments to shareholders increased 10 percent
over 1995.
Nordson concentrated the majority of its 1996 capital expenditures
on sales and manufacturing operations such as the following: its Japanese
subsidiary moved into a leased sales and demonstration facility which required
leasehold improvements and additional equipment; customer demonstration
facilities for the Company's container business group were expanded in Amherst,
Ohio; demonstration equipment was installed in a new facility in China;
construction of a building in Amherst, which began in 1995, was completed to
house sales support and manufacturing operations for the Company's worldwide
automotive business; and, manufacturing equipment was purchased in an ongoing
program to update and expand worldwide manufacturing capabilities.
The Company uses repurchased shares for stock-based employee compensation and
incentive plans. At November 3, 1996, management had authorization to
repurchase up to 458,000 shares through June 1997 and an additional 2,000,000
shares through July 2000 on the open market, or in privately negotiated
transactions at the prevailing market price.
21
<PAGE> 3
Nordson has various lines of credit with both domestic and foreign banks. At
November 3, 1996, these lines aggregated $181.2 million, of which $83.6 million
was unused. The Company believes that the combination of present capital
resources, internally generated funds, and unused financing sources are more
than adequate to meet cash requirements for 1997. There are no significant
restrictions limiting the transfer of funds from international subsidiaries to
the parent company.
Intangible assets increased $33.5 million primarily as a result of business
acquisitions.
Effects of Foreign Currency
The impact of changes in foreign currency exchange rates on sales and operating
results cannot be precisely measured because of changes in selling prices,
sales volume, product mix and cost structures in each country where Nordson
operates. 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 U.S. dollar has a detrimental effect.
In 1996 compared to 1995, the U.S. dollar was stronger, primarily against the
Japanese yen. If exchange rates for 1995 had been in effect during 1996, sales
would have been approximately $12.7 million or 2 percent higher, and
third-party costs would have been approximately $6.4 million higher. In 1995
compared to 1994, the U.S. dollar was generally weaker against foreign
currencies. If exchange rates for 1994 had been in effect during 1995,
sales would have been approximately $25.0 million or 4 percent lower, and
third-party costs would have been approximately $15.7 million lower. These
effects on reported sales do not include the impact of local price adjustments
made in response to changes in currency exchange rates.
Nordson uses foreign exchange contracts to reduce its risks related to
transactions denominated in foreign currencies. These contracts usually have
maturities of 90 days or less, and generally require the Company to exchange
foreign currencies for U.S. dollars at maturity, 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.
Inflation
Inflation affects profit margins because the ability to pass cost increases onto
customers is restricted by the need for competitive pricing. Although inflation
has been modest in recent years and has had no material effect on the years
covered by these financial statements, Nordson continues to seek ways to
minimize the impact of inflation. It does so through focused efforts to raise
its productivity.
Trends
The Eleven-Year Summary on pages 38 and 39 documents Nordson's historical
financial trends. Over this period, the world's economic conditions fluctuated
significantly. Nordson's solid performance is attributed to the Company's
participation in diverse geographic and industrial markets and its long-term
commitment to develop and provide quality products and worldwide service to meet
customers' changing needs.
22
<PAGE> 1
Exhibit 13-b
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Years ended November 3, 1996, October 29, 1995
and October 30, 1994 1996 1995 1994
(In thousands except for per share amounts)
<S> <C> <C> <C>
Sales $ 609,444 $ 581,444 $ 506,692
Operating costs and expenses:
Cost of sales 255,095 245,587 212,866
Selling and administrative expenses 270,088 251,913 219,422
- ----------------------------------------------------------------------------------
525,183 497,500 432,288
- ----------------------------------------------------------------------------------
Operating profit 84,261 83,944 74,404
Other income (expense):
Interest expense (5,955) (4,553) (4,392)
Interest and investment income 910 777 866
Other - net 1,845 474 (20)
- ----------------------------------------------------------------------------------
(3,200) (3,302) (3,546)
- ----------------------------------------------------------------------------------
Income before income taxes 81,061 80,642 70,858
Income taxes:
Current 29,561 32,844 28,406
Deferred (1,571) (4,878) (4,202)
- ----------------------------------------------------------------------------------
27,990 27,966 24,204
- ----------------------------------------------------------------------------------
Net income $ 53,071 $ 52,676 $ 46,654
==================================================================================
Common shares and common share equivalents 18,204 18,577 19,067
==================================================================================
Earnings per share $ 2.92 $ 2.84 $ 2.45
==================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
23
<PAGE> 1
Exhibit 13-c
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
November 3, 1996 and October 29, 1995 1996 1995
(In thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 9,221 $ 359
Marketable securities 310 1,225
Receivables 159,573 146,846
Inventories 118,388 110,198
Deferred income taxes 23,368 21,858
Prepaid expenses 6,842 5,455
- ----------------------------------------------------------------------------
Total current assets 317,702 285,941
Property, plant and equipment - net 107,018 99,499
Intangible assets - net 65,282 31,768
Deferred income taxes 11,557 11,108
Other assets 8,934 6,394
- ----------------------------------------------------------------------------
$ 510,493 $ 434,710
============================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 97,688 $ 43,197
Accounts payable 35,022 28,250
Income taxes payable 10,845 13,101
Accrued liabilities 52,486 58,396
Customer advance payments 6,023 5,970
Current maturities of long-term debt 1,220 2,959
Current obligations under capital leases 3,932 3,506
- ----------------------------------------------------------------------------
Total current liabilities 207,216 155,379
Long-term debt 15,883 12,663
Obligations under capital leases 4,679 4,471
Other liabilities 37,418 30,867
Shareholders' equity:
Preferred shares, no par value; 10,000,000
shares authorized; none issued -- --
Common shares, no par value; 80,000,000 shares
authorized; 24,506,000 shares issued 12,253 12,253
Capital in excess of stated value 63,996 60,142
Cumulative translation adjustments 7,392 10,944
Retained earnings 381,436 341,223
Common shares in treasury, at cost (219,398) (192,099)
Deferred stock-based compensation (382) (1,133)
- ----------------------------------------------------------------------------
Total shareholders' equity 245,297 231,330
- ----------------------------------------------------------------------------
$ 510,493 $ 434,710
============================================================================
</TABLE>
The accompanying notes are an intrgral part of the consolidated financial
statements.
24
<PAGE> 1
Exhibit 13-d
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended November 3, 1996, October 29, 1995
and October 30, 1994 1996 1995 1994
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 53,071 $ 52,676 $ 46,654
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 19,224 16,779 15,223
Amortization 4,298 3,835 3,195
Provision for losses on receivables 1,782 979 783
Deferred income taxes (2,181) (4,907) (3,910)
Other 826 (1,796) (1,087)
Changes in operating assets and liabilities:
Receivables (13,495) (26,265) (9,235)
Inventories (6,346) (14,392) (7,305)
Other current assets (578) (323) (351)
Other non-current assets (5,589) (2,603) (1,050)
Accounts payable 5,251 751 4,003
Income taxes payable (2,553) 2,591 (6,391)
Accrued liabilities (6,665) 8,699 3,187
Customer advance payments (546) 1,010 100
Other non-current liabilities 7,106 5,068 3,201
- ------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 53,605 42,102 47,017
Cash flows from investing activities:
Additions to property, plant and equipment (23,399) (25,035) (20,558)
Proceeds from sale of property, plant and equipment 33 1,705 257
Acquisition of businesses (39,114) (4,634) (3,933)
Purchases of marketable securities (100) (2,000) (4,105)
Proceeds from sales or maturities of marketable securities 1,015 7,261 2,755
- ------------------------------------------------------------------------------------------------------
Net cash used in investing activities (61,565) (22,703) (25,584)
Cash flows from financing activities:
Net proceeds from short-term borrowing 55,731 16,076 6,278
Proceeds from long-term debt 8,520 634 106
Repayment of long-term debt (6,204) (1,925) (2,580)
Repayment of capital lease obligations (3,859) (3,961) (3,491)
Issuance of common shares under company
stock and employee benefit plans 2,106 1,669 8,583
Purchase of treasury shares (25,794) (25,314) (33,673)
Dividends paid (12,858) (11,676) (10,419)
- ------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 17,642 (24,497) (35,196)
Effect of exchange rate changes on cash (820) 879 213
- ------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 8,862 (4,219) (13,550)
Cash and cash equivalents at beginning of year 359 4,578 18,128
- ------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 9,221 $ 359 $ 4,578
======================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
25
<PAGE> 1
Exhibit 13-e
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Shares
Years ended November 3, 1996, Capital In Cummulative In Treasury Deferred
October 29, 1995 and Common Excess Of Translation Retained -------------------- Stock-based
October 30, 1994 Shares Stated Value Adjustments Earnings Shares Amount Compensation
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1993 $ 12,253 $ 45,699 $ 7,627 $ 263,988 5,780 $(129,549) $ (3,613)
Shares issued under
company stock and
employee benefit plans 11,891 (353) 1,997 (432)
Amortization of deferred
stock-based compensation 1,524
Purchase of treasury shares 680 (38,546)
Translation adjustments 3,350
Net income 46,654
Dividends - $.56 per share (10,419)
- ---------------------------------------------------------------------------------------------------------------------------
Balance at October 30, 1994 12,253 57,590 10,977 300,223 6,107 (166,098) (2,521)
Shares issued under
company stock and
employee benefit plans 2,552 (76) 431 (195)
Amortization of deferred
stock-based compensation 1,583
Purchase of treasury shares 469 (26,432)
Translation adjustments (33)
Net income 52,676
Dividends - $.64 per share (11,676)
- ---------------------------------------------------------------------------------------------------------------------------
Balance at October 29, 1995 12,253 60,142 10,944 341,223 6,500 (192,099) (1,133)
Shares issued under
company stock and
employee benefit plans 3,854 (145) 817 (242)
Amortization of deferred
stock-based compensation 993
Purchase of treasury shares 517 (28,116)
Translation adjustments (3,552)
Net income 53,071
Dividends - $.72 per share (12,858)
- ---------------------------------------------------------------------------------------------------------------------------
Balance at November 3, 1996 $ 12,253 $ 63,996 $ 7,392 $ 381,436 6,872 $(219,398) $ (382)
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
26
<PAGE> 1
Exhibit 13-f
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION -- The consolidated financial statements include the accounts of
the Company and its controlled majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Investments in non-controlled affiliates are accounted for by the equity method.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and notes. Actual amounts could differ from these estimates.
FISCAL YEAR -- The fiscal year for the Company's domestic operations ends on the
Sunday closest to October 31 and, in 1996, 1995 and 1994, contained 53, 52 and
52 weeks, respectively. To facilitate reporting of consolidated accounts, the
fiscal year for the Company's international operations ends on September 30.
REVENUE RECOGNITION -- Revenues are recognized when customer orders are complete
and shipped. Accruals for the cost of product warranties are maintained for
anticipated future claims.
ADVERTISING COSTS -- Advertising costs are expensed as incurred and amounted to
$5,507,000 in 1996 ($5,360,000 in 1995 and $4,042,000 in 1994).
RESEARCH AND DEVELOPMENT -- Research and development costs are charged to
expense as incurred and amounted to $30,471,000 in 1996 ($28,866,000 in 1995 and
$24,434,000 in 1994).
EARNINGS PER SHARE -- Earnings per common share are computed based on the
weighted average number of common shares and common share equivalents
outstanding during each year. Common share equivalents consist primarily of
shares issuable upon exercise of the Company's stock options and stock purchase
rights, computed using the treasury stock method.
CASH AND CASH EQUIVALENTS -- Highly liquid instruments with a maturity of 90
days or less at date of purchase are considered to be cash equivalents. Cash and
cash equivalents are carried at cost.
MARKETABLE SECURITIES -- Marketable securities consist primarily of municipal
and other short-term notes with maturities greater than 90 days at date of
purchase. At November 3, 1996, all contractual maturities were within one year.
The Company's marketable securities are classified as available for sale and
recorded at quoted market prices which approximate cost.
INVENTORIES -- Inventories are valued at the lower of cost or market. Cost has
been determined using the last-in, first-out (LIFO) method for 51 percent of
consolidated inventories at November 3, 1996 (54 percent at October 29, 1995).
The first-in, first-out (FIFO) method is used for all other inventories.
Consolidated inventories would have been $10,136,000 and $9,753,000 higher than
reported at November 3, 1996 and October 29, 1995, respectively, had the Company
used the FIFO method, which approximates current cost, for valuation of all
inventories.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION -- Property, plant and equipment
is carried at cost. Plant and equipment is depreciated for financial reporting
purposes using the straight-line method over the estimated useful lives of the
assets or, in the case of property under capital leases, over the terms of the
leases.
INTANGIBLE ASSETS -- Intangibles, consisting primarily of costs in excess of net
assets of acquired businesses, are amortized using the straight-line method over
the periods of expected benefit. At present, these periods do not exceed 30
years. The Company assesses the recoverability of the costs in excess of net
assets of acquired businesses by determining whether the amortization of the
balance over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operations.
FOREIGN CURRENCY TRANSLATION -- The financial statements of the Company's
subsidiaries outside the United States, except for those subsidiaries located in
highly inflationary economies, are generally measured using the local currency
as the functional currency. Assets and liabilities of these subsidiaries are
translated at the rates of exchange at the balance sheet dates. Income and
expense items are translated at average monthly rates of exchange. The resulting
translation adjustments are included in cumulative translation adjustments, a
separate component of shareholders' equity. Generally, gains and losses from
foreign currency transactions, including forward contracts, of these
subsidiaries and the United States parent are included in net earnings. Premiums
and discounts on forward contracts are amortized over the lives of the
contracts. Gains and losses from foreign currency transactions which hedge a net
investment in a foreign subsidiary and from intercompany foreign currency
transactions of a long-term investment nature are included in cumulative
translation adjustments. For subsidiaries operating in highly inflationary
economies, gains and losses from foreign currency transactions and translation
adjustments are included in net earnings.
PRESENTATION -- Certain 1995 and 1994 amounts have been reclassified to conform
with the 1996 presentation.
27
<PAGE> 2
NOTE 2 -- ACCOUNTING CHANGES
In 1995, the Financial Accounting Standards Board issued Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" (FAS 121), and Statement No. 123, "Accounting for Stock-Based
Compensation" (FAS 123). FAS 121 requires that, under certain circumstances,
long-lived assets be reviewed for impairment and any applicable impairment loss
be recognized. FAS 123 allows accounting for employee stock options under either
the fair value or the intrinsic value method. The Company plans to continue to
use the intrinsic value method. These statements, which must be adopted by the
Company in the 1997 fiscal year, are not expected to have a material effect on
the financial statements.
NOTE 3 -- RETIREMENT, PENSION AND OTHER POSTRETIREMENT PLANS
PENSION PLANS -- The Company has various pension plans which cover substantially
all employees. Pension plan benefits are generally based on years of employment
and, for salaried employees, the level of compensation. The Company contributes
actuarially determined amounts to domestic plans to provide sufficient assets to
meet future benefit payment requirements. The Company's international
subsidiaries fund their pension plans according to local requirements. The
Company also sponsors an unfunded supplemental pension plan for certain
employees.
Net pension cost for the Company's significant plans consists of the
following components:
<TABLE>
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Service cost - benefits
earned during period $ 3,619 $ 3,844 $ 3,267
Interest cost on projected
benefit obligations 5,173 4,522 3,857
Actual return on assets (7,270) (7,253) (447)
Net amortization and
deferral 2,940 3,217 (3,055)
- -----------------------------------------------------------
Net periodic pension cost $ 4,462 $ 4,330 $ 3,622
===========================================================
</TABLE>
The following tables set forth the plans' funded status and amounts recognized
in the Company's balance sheet for its significant pension plans:
<TABLE>
<CAPTION>
Assets Accumulated
Exceed Benefits
Accumulated Exceed
Benefits Assets
- ------------------------------------------------------------------
(In thousands)
1996:
<S> <C> <C>
Actuarial present value of obligations:
Vested benefit obligations $ 38,590 $ 11,020
==================================================================
Accumulated benefit obligations $ 40,579 $ 15,745
==================================================================
Projected benefit obligations $ 50,773 $ 23,030
Plan assets at fair value 53,701 4,346
- ------------------------------------------------------------------
Excess (deficiency) of assets over
projected benefit obligations 2,928 (18,684)
Unrecognized prior service costs (172) 1,214
Unrecognized net (gain) loss (7,153) 5,133
Unrecognized net transition
(asset) obligation (1,386) 136
- ------------------------------------------------------------------
Accrued pension costs $ (5,783) $(12,201)
==================================================================
1995:
Actuarial present value of obligations:
Vested benefit obligations $ 32,282 $ 9,317
==================================================================
Accumulated benefit obligations $ 33,956 $ 14,488
==================================================================
Projected benefit obligations $ 42,557 $ 22,226
Plan assets at fair value 47,735 3,801
- ------------------------------------------------------------------
Excess (deficiency) of assets over
projected benefit obligations 5,178 (18,425)
Unrecognized prior service costs (819) 1,223
Unrecognized net (gain) loss (6,709) 6,044
Unrecognized net transition
(asset) obligation (1,942) 161
- ------------------------------------------------------------------
Accrued pension costs $ (4,292) $(10,997)
==================================================================
</TABLE>
Plans for which accumulated benefit obligations exceeded plan assets consist of
the unfunded supplemental plan and certain international plans, which are
partially unfunded by local practice.
28
<PAGE> 3
The actuarial present value of projected benefit obligations at the end of 1996
and 1995 was determined using a weighted average discount rate of 7.8 and 7.7
percent, respectively, and a rate of increase in future compensation levels of
5.0 percent. Plan assets consist primarily of stocks and bonds. The expected
long-term rate of return on plan assets was 8.0 percent for 1996, 1995 and 1994.
POSTRETIREMENT BENEFIT PLAN -- The parent company has an unfunded postretirement
defined benefit plan covering substantially all employees. The plan provides
medical and life insurance benefits. The plan is contributory, with retiree
contributions adjusted annually, and contains other cost-sharing features such
as deductibles and coinsurance.
Net postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Service cost - benefits
earned during period $ 378 $ 379 $ 396
Interest cost on accumulated
benefit obligations 741 676 607
- --------------------------------------------------------
Net periodic
postretirement
benefit cost $1,119 $1,055 $1,003
=======================================================
</TABLE>
The following table sets forth the amount recognized in the Company's balance
sheet for its postretirement benefit plan:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------
(In thousands)
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $ 2,908 $ 2,659
Fully eligible active plan
participants 2,498 2,293
Other active plan participants 4,433 4,062
- --------------------------------------------------------
9,839 9,014
Unrecognized net gain 400 358
- --------------------------------------------------------
Accrued postretirement benefit costs $10,239 $ 9,372
========================================================
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation at the end of both 1996 and 1995 was 8.0 percent. The annual rate of
increase in the per capita cost of covered benefits (the health care cost trend
rate) was assumed to be 8.5 percent for 1997, decreasing gradually to 5.0
percent for 2002 and thereafter. The health care cost trend rate assumption has
a significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by one percentage point in each year would
increase the net postretirement benefit cost for 1996 by $188,000 and the
accumulated postretirement benefit obligation as of November 3, 1996 by
$1,348,000.
RETIREMENT PLANS -- The parent company and certain subsidiaries have funded
contributory retirement plans covering certain employees. The Company's
contributions are primarily determined by the terms of the plans subject to the
limitation that they shall not exceed the amounts deductible for income tax
purposes. The Company also sponsors an unfunded contributory supplemental
retirement plan for certain employees. Generally, benefits under these plans
vest gradually over a period of approximately five years from date of
employment, and are based on the employee's contribution. The expense applicable
to retirement plans for 1996, 1995 and 1994 was approximately $2,726,000,
$2,392,000 and $2,423,000, respectively.
NOTE 4 -- INCENTIVE COMPENSATION PLAN
The Company has an incentive compensation plan for executive officers.
Participants in the plan and payments under the plan are approved by a committee
appointed by the Board of Directors. Members of the committee are directors and
are not active officers of the Company. Amounts paid under the plan are based on
a percentage of the base salary of each participant. Compensation expense
attributable to the plan was $2,320,000 in 1996 ($2,681,000 in 1995 and
$2,238,000 in 1994).
29
<PAGE> 4
NOTE 5 -- INCOME TAXES
Income tax expense includes the following:
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
U.S. federal $ 12,032 $ 18,114 $ 16,655
State and local 3,094 3,259 2,726
Foreign 14,435 11,471 9,025
- -------------------------------------------------------------------------
Total current 29,561 32,844 28,406
Deferred:
U.S. federal (1,015) (3,277) (2,346)
State and local 18 (390) (521)
Foreign (574) (1,211) (1,335)
- -------------------------------------------------------------------------
Total deferred (1,571) (4,878) (4,202)
- -------------------------------------------------------------------------
$ 27,990 $ 27,966 $ 24,204
=========================================================================
</TABLE>
The reconciliation of the United States statutory federal income tax rate to the
worldwide consolidated effective tax rate follows:
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal
income tax rate 35.0% 35.0% 35.0%
Foreign Sales Corporation
exemption (3.7) (3.8) (3.7)
Foreign tax rate variances,
net of foreign tax credits .8 1.5 1.0
State and local taxes, net
of federal income tax
benefit 2.4 2.1 2.0
Other - net -- (.1) (.1)
- -------------------------------------------------------------------
Effective tax rate 34.5% 34.7% 34.2%
===================================================================
</TABLE>
Earnings before income taxes of international operations were $30,332,000,
$21,734,000 and $17,149,000 in 1996, 1995 and 1994, respectively. Deferred
income taxes are not provided on undistributed earnings of international
subsidiaries which are intended to be permanently invested in those operations.
These undistributed earnings aggregated approximately $37,047,000 and
$34,078,000 at November 3, 1996 and October 29, 1995, respectively. Should these
earnings be distributed, applicable foreign tax credits would substantially
offset U.S. taxes due upon the distribution.
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Deferred tax assets:
Sales to international subsidiaries and
related consolidation adjustments $16,971 $15,932
Employee benefits 12,710 11,331
Other accruals not currently deductible
for taxes 5,780 6,040
Inventory adjustments 534 1,185
Translation of foreign currency
accounts 2,403 1,238
Other - net 1,237 643
- --------------------------------------------------------------------------------
Total deferred tax assets 39,635 36,369
Deferred tax liabilities:
Depreciation 3,979 3,216
Other - net 731 187
- --------------------------------------------------------------------------------
Total deferred tax liabilities 4,710 3,403
- --------------------------------------------------------------------------------
Net deferred tax assets $34,925 $32,966
================================================================================
</TABLE>
NOTE 6 -- ACQUISITIONS
Business acquisitions have been accounted for as purchases, with the acquired
assets and liabilities recorded at their estimated fair value at the dates of
acquisition. The cost in excess of the net assets of the business acquired is
included in intangible assets.
In January 1996, the Company acquired a European manufacturer of ultraviolet
curing systems and in August 1996, a U.S. manufacturer of automated fluid
dispensing systems. In March 1995, the Company acquired a European manufacturer
of adhesive application equipment. The cost of acquisitions amounted to
$41,346,000 in 1996 and $4,762,000 in 1995. Operating results of these
acquisitions are included in the consolidated statement of income from the
respective dates of acquisition. Assuming the acquisitions had taken place at
the beginning of 1996 and 1995, pro forma results for 1996 and 1995,
respectively, would not be materially different.
30
<PAGE> 5
NOTE 7 -- LEASES
The Company has lease commitments expiring at various dates, principally for
warehouse and office space, automobiles and office equipment. Most leases
contain renewal options and some contain purchase options.
The Company is a partner in two unconsolidated general partnerships which own,
or are constructing, office and manufacturing facilities. The Company has
operating leases for these facilities. The leases have initial terms of 20
years, renewal options and options to purchase the properties at fair market
value. Future annual minimum lease payments range from $1,287,000 to $1,815,000
and approximate market rates.
Rent expense for all operating leases was approximately $10,786,000 in 1996,
$10,581,000 in 1995 and $9,103,000 in 1994.
Assets held under capitalized leases and included in property, plant and
equipment are as follows:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Transportation equipment $ 12,866 $ 11,522
Other 1,930 2,526
- --------------------------------------------------------------------------
Total capitalized leases 14,796 14,048
Accumulated amortization (6,185) (6,078)
- --------------------------------------------------------------------------
Net capitalized leases $ 8,611 $ 7,970
==========================================================================
</TABLE>
At November 3, 1996, future minimum lease payments under non-cancelable
capitalized and operating leases are as follows:
<TABLE>
<CAPTION>
Capitalized Operating
Leases Leases
- -----------------------------------------------------
(In thousands)
<S> <C> <C>
Fiscal Year Ending:
1997 $ 5,518 $ 8,322
1998 4,167 6,602
1999 1,747 4,864
2000 422 4,279
2001 15 3,724
Later years 9 28,774
- -----------------------------------------------------
Total minimum lease payments 11,878 $56,565
=======
Less amount representing
executory costs 1,521
- -------------------------------------------
Net minimum lease payments 10,357
Less amount representing interest 1,746
- -------------------------------------------
Present value of net minimum
lease payments 8,611
Less current portion 3,932
- -------------------------------------------
Long-term obligations at
November 3, 1996 $ 4,679
===========================================
</TABLE>
NOTE 8 -- NOTES PAYABLE
Bank lines of credit and notes payable are summarized as follows:
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------
(In thousands)
<S> <C> <C>
Available bank lines of credit:
Domestic banks $ 81,300 $ 29,000
Foreign banks 99,924 108,695
- ------------------------------------------------------
Total $181,224 $137,695
======================================================
Notes payable:
Domestic bank debt $ 60,176 $ 9,600
Foreign bank debt 37,491 33,597
Other 21 --
- ------------------------------------------------------
Total $ 97,688 $ 43,197
======================================================
Weighted average interest rate
on notes payable 5.6% 5.3%
Unused bank lines of credit $ 83,557 $ 94,498
======================================================
</TABLE>
Lines of credit obtained by the Company can generally be withdrawn at the option
of the banks and do not require material compensating balances or commitment
fees. Amounts due to foreign banks are payable primarily in Japanese yen, German
marks, French francs and Italian lira.
31
<PAGE> 6
NOTE 9 -- LONG-TERM DEBT
The long-term debt of the Company is as follows:
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------
(In thousands)
<S> <C> <C>
Industrial revenue bonds --
Gwinnett County, Georgia $ 6,000 $ 6,000
Industrial revenue bonds--
City of Westlake, Ohio 5,100 5,950
Acquisition financing notes 3,438 --
Leasehold improvements financing note 1,796 --
Guarantee of ESOP obligation -- 721
Other 769 2,951
- ---------------------------------------------------------
17,103 15,622
Less current maturities 1,220 2,959
- ---------------------------------------------------------
Total $15,883 $12,663
=========================================================
</TABLE>
INDUSTRIAL REVENUE BONDS -- GWINNETT COUNTY, GEORGIA -- These bonds were issued
in connection with the acquisition and renovation of the Norcross Manufacturing
Facility in Gwinnett County, Georgia. These bonds are due in annual installments
of $600,000 beginning in 2000 and extending through 2009 with interest payable
quarterly. The tax-free interest rate varies weekly and was 3.70 percent at
November 3, 1996. The bonds are secured by a $6,300,000 standby letter of
credit.
INDUSTRIAL REVENUE BONDS -- CITY OF WESTLAKE, OHIO -- These bonds were issued in
connection with the construction of the Company's world headquarters in
Westlake, Ohio. The bonds are due in annual installments of $850,000 extending
through 2002 with interest payable quarterly. The tax-free interest rate varies
weekly and was 3.55 percent at November 3, 1996. The bonds are secured by a
$5,318,000 standby letter of credit.
ACQUISITION FINANCING NOTES -- These unsecured notes were issued in connection
with two 1996 acquisitions. They have various maturities through 2001. Interest
is payable at variable rates with a weighted-average rate of 5.85 percent at
November 3, 1996.
LEASEHOLD IMPROVEMENTS FINANCING NOTE -- This note partially funded the
leasehold improvements for a new sales and demonstration facility in Japan. The
note is denominated in Japanese yen and is payable in one installment in 2006.
Interest is payable at a fixed rate of 3.10 percent.
GUARANTEE OF ESOP OBLIGATION -- The Company's Employee Stock Ownership Plan
(ESOP) had borrowed under a $10,000,000 revolving credit agreement. Since the
Company had unconditionally guaranteed the repayment of the ESOP's borrowings,
the loans were reported as long-term debt on the consolidated balance sheet.
OTHER LONG-TERM DEBT -- Other long-term debt represents mortgage
and other notes payable primarily denominated in German marks. These notes have
various maturities through 1999. Interest is payable at fixed rates with a
weighted-average rate of 5.33 percent at November 3, 1996. Certain notes are
secured by pledged assets with a net book value of $6,407,000 and by a $385,000
standby letter of credit.
ANNUAL MATURITIES -- The annual maturities of long-term debt for the five years
subsequent to November 3, 1996 are as follows: $1,220,000 in 1997, $3,052,000 in
1998, $935,000 in 1999, $1,450,000 in 2000, and $3,000,000 in 2001.
NOTE 10 -- FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Company's financial instruments,
other than receivables and accounts payable, are as follows:
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
- ---------------------------------------------------
(In thousands)
<S> <C> <C>
1996:
Cash and cash equivalents $ 9,221 $ 9,221
Marketable securities 310 310
Notes payable (97,688) (97,688)
Long-term debt (17,103) (17,034)
Forward exchange contracts 864 766
Interest rate swap -- 71
===================================================
1995:
Cash and cash equivalents $ 359 $ 359
Marketable securities 1,225 1,227
Notes payable (43,197) (43,197)
Long-term debt (15,622) (15,556)
Forward exchange contracts 282 110
===================================================
</TABLE>
32
<PAGE> 7
The following methods and assumptions were used by the Company in estimating the
fair value of financial instruments:
- Cash, cash equivalents and notes payable are valued at their carrying
amounts due to the relatively short period to maturity of the
instruments.
- Marketable securities are valued at quoted market prices.
- Long-term debt is valued by discounting future cash flows at currently
available rates for borrowing arrangements with similar terms and
conditions.
- The fair value of forward exchange contracts is estimated using quoted
exchange rates of comparable contracts. The carrying amounts are
included in receivables.
- The fair value of interest rate swaps is estimated using valuation
techniques based on discounted future cash flows.
At November 3, 1996, the Company had issued $5,346,000 of guarantees to support
the borrowing facilities of an unconsolidated affiliate. The fair value of these
guarantees is not material.
The Company operates internationally and enters into transactions denominated in
foreign currencies. As a result, the Company is subject to the transaction
exposures that arise from exchange rate movements between the dates foreign
currency transactions are recorded and the dates they are consummated. The
Company enters into foreign currency forward exchange contracts to reduce these
risks, and not for trading purposes. The maturities of these contracts are
generally less than one year and usually less than 90 days. The contracts
require the Company to buy or sell foreign currencies, usually in exchange for
U.S. dollars. The following table summarizes, by currency, the contractual
amounts of the Company's forward exchange contracts at November 3, 1996:
<TABLE>
<CAPTION>
Sell Buy
- -------------------------------------
(In thousands)
<S> <C> <C>
Contract amount:
German marks $25,759 $ 6,080
Japanese yen 7,855 --
French francs 6,247 --
Pound sterling 4,400 --
Other 13,725 5,756
- -------------------------------------
Total $57,986 $11,836
=====================================
</TABLE>
In 1996, to reduce the overall cost of long-term debt, the Company entered into
an interest rate swap expiring in 2006 on underlying principal of Japanese
(Yen)200 million. In this swap, the Company will receive a fixed interest rate
of 3.47 percent and pay a variable rate (.69 percent at November 3, 1996). The
differential to be paid or received is recognized as an adjustment to interest
expense.
The Company is exposed to credit-related losses in the event of non-performance
by counterparties to financial instruments. The Company invests in securities
with strong credit ratings and uses major banks throughout the world for cash
deposits, forward exchange contracts and interest rate swaps. The Company's
customers represent a wide variety of industries and geographic regions. As of
November 3, 1996, there were no significant concentrations of credit risk.
NOTE 11 -- CAPITAL SHARES
PREFERRED -- The Company has authorized 10,000,000 Series A convertible
preferred shares without par value. No preferred shares were outstanding in
1996, 1995 or 1994.
COMMON -- The Company has 80,000,000 authorized common shares without par value.
In March 1992, the shareholders adopted an amendment to the Company's articles
of incorporation which, when filed with the State of Ohio, would increase the
number of authorized common shares to 160,000,000. During 1996, 1995 and 1994,
there were 24,506,000 common shares issued. At November 3, 1996 and October 29,
1995, the number of outstanding common shares, net of treasury shares, was
17,634,000 and 18,006,000, respectively. Treasury shares are reissued using the
first-in, first-out method.
33
<PAGE> 8
NOTE 12 -- COMPANY STOCK PLANS
LONG-TERM PERFORMANCE PLAN -- The Company's long-term performance plan, adopted
in 1993, provides for the granting of stock options, stock appreciation rights,
restricted stock, stock purchase rights, stock equivalent units, cash awards,
and other stock or performance-based incentives. The number of common shares
available for grant of awards is 3.0 percent of the number of common shares
outstanding as of the first day of each fiscal year, plus up to an additional
0.5 percent, consisting of shares available, but not granted, in prior years. At
the beginning of fiscal 1997, there were 617,000 shares available for grant in
1997.
STOCK OPTIONS -- The Company may grant non-qualified or incentive stock options
to employees and directors of the Company. The exercise price of outstanding
stock options is the fair market value of the common shares at the date of
grant. Generally, the options may be exercised after one year from the date of
grant at a rate not exceeding 25 percent per year and the options expire 10
years from the date of grant. Vesting accelerates upon the occurrence of events
which involve or may result in a change of control of the Company.
No charges have been made against income in accounting for stock options. Tax
benefits arising from the exercise of non-qualified stock options are recognized
when realized and credited to capital in excess of stated value.
Summarized transactions are as follows:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Number of Price
Options Per Share
- -------------------------------------------------------
<S> <C> <C>
Outstanding at October 31, 1993 1,374,701 $30.16
Granted 317,600 $53.50
Exercised (151,117) $21.31
Forfeited (19,206) $38.63
- -------------------------------------------------------
Outstanding at October 30, 1994 1,521,978 $35.81
Granted 426,161 $57.69
Exercised (64,651) $29.40
Forfeited (19,402) $47.91
- -------------------------------------------------------
Outstanding at October 29, 1995 1,864,086 $40.91
Granted 420,875 $56.18
Exercised (112,655) $25.56
Forfeited (33,558) $53.54
- -------------------------------------------------------
Outstanding at November 3, 1996 2,138,748 $44.52
=======================================================
Exercisable at November 3, 1996 1,424,616 $38.71
=======================================================
</TABLE>
STOCK APPRECIATION RIGHTS -- The Company may grant stock appreciation rights to
employees. A stock appreciation right provides for a payment equal to the excess
of the fair market value of a common share when the right is exercised, over its
value when the right was granted. There were no stock appreciation rights
outstanding during 1996, 1995 and 1994.
Limited stock appreciation rights that become exercisable upon the occurrence of
events which involve or may result in a change of control of the Company have
been granted with respect to 2,092,000 shares.
RESTRICTED STOCK -- The Company may grant restricted stock to employees. These
shares may not be disposed of for a designated period of time defined at the
date of grant and are to be returned to the Company if the recipient's
employment terminates during the restriction period. As shares are issued,
deferred stock-based compensation equivalent to the market value on the date of
grant is charged to shareholders' equity and subsequently amortized over the
restriction period. Net amortization was $272,000 in 1996 ($303,000 in 1995 and
$443,000 in 1994). Tax benefits arising from the lapse of restrictions on the
stock are recognized when realized and credited to capital in excess of stated
value. In 1996, there were 4,100 restricted shares granted (3,600 in 1995 and
8,400 in 1994) and no restricted shares forfeited (400 in 1995 and 0 in 1994).
EMPLOYEE STOCK PURCHASE RIGHTS -- The Company may grant stock purchase rights to
employees. These rights permit eligible employees to purchase a limited number
of common shares at a discount from fair market value. No stock purchase rights
were outstanding during 1996 or 1995. In 1994, there were 183,328 common shares
purchased at an average price of $44.74 per share.
EMPLOYEE STOCK OWNERSHIP PLAN -- The Company sponsors a leveraged Employee Stock
Ownership Plan (ESOP) covering all domestic employees. Company contributions are
discretionary and funded annually by a combination of cash and shares of the
Company's common stock. Suspense shares are committed to be released as the
ESOP's debt is repaid. Allocations to the participants' accounts are made on
December 31 on the basis of their compensation for the year. Each participant
vests in his account at a rate of 20 percent per year from date of employment.
Distribution of a participant's account occurs at retirement, death, or
termination of employment.
34
<PAGE> 9
ESOP compensation expense was $2,708,000 in 1996 ($2,411,000 in 1995 and
$1,642,000 in 1994). Contributions to the plan were $2,269,000, $1,795,000 and
$1,567,000 in 1996, 1995 and 1994, respectively. The number of ESOP shares
outstanding is as follows:
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------
<S> <C> <C>
Allocated shares 462,981 426,424
Committed-to-be-released shares -- 2,324
Suspense shares -- 13,721
- ---------------------------------------------------
Total ESOP shares 462,981 442,469
===================================================
</TABLE>
SHAREHOLDER RIGHTS PLAN -- In August 1988, the Board of Directors declared a
dividend of one common share purchase right for each common share outstanding on
September 9, 1988. Rights are also distributed with common shares issued by the
Company after that date. The rights may only be exercised if a party acquires 20
percent or more of the Company's common shares, makes a tender offer for at
least 20 percent of the Company's common shares, or is declared to be an
"adverse person." The exercise price of each right is $100 per share. The rights
trade with the shares until the rights become exercisable.
If a party acquires at least 25 percent of the Company's common shares, is
declared to be an "adverse person," or attempts a "control share acquisition"
without complying with Ohio law, or if an acquiring party engages in certain
self-dealing actions ("flip-in" events), each right then becomes the right to
purchase two common shares of the Company for $.50 per share. In the event the
Company is acquired in a merger or other business combination ("flip-over"
events), each right entitles its holder to purchase, for $1, shares of the
surviving company having a market value equal to two common shares of Nordson.
The rights may be redeemed by the Company at a price of $.01 per right at any
time prior to the earlier of the "flip-in" or "flip-over" events, or expiration
of the rights on September 9, 1998.
SHARES RESERVED FOR FUTURE ISSUANCE -- At November 3, 1996, there were
42,867,000 shares reserved for future issuance through the exercise of
outstanding options or rights, including 40,334,000 shares under the shareholder
rights plan.
NOTE 13-- DETAILS OF BALANCE SHEET
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------
(In thousands)
<S> <C> <C>
Receivables:
Accounts $ 142,866 $ 124,991
Notes 16,055 22,032
Other 4,225 3,231
- ---------------------------------------------------------
163,146 150,254
Allowance for doubtful accounts (3,573) (3,408)
- ---------------------------------------------------------
$ 159,573 $ 146,846
=========================================================
Inventories:
Finished goods $ 43,818 $ 42,246
Work-in-process 14,083 14,355
Raw materials and finished parts 60,487 53,597
- ---------------------------------------------------------
$ 118,388 $ 110,198
=========================================================
Property, plant and equipment:
Land $ 3,171 $ 3,210
Land improvements 2,745 2,267
Buildings 61,497 55,525
Machinery and equipment 110,361 92,744
Construction-in-progress 14,510 20,501
Leased property under
capitalized leases 14,796 14,048
- ---------------------------------------------------------
207,080 188,295
Accumulated depreciation
and amortization (100,062) (88,796)
- ---------------------------------------------------------
$ 107,018 $ 99,499
=========================================================
Intangible assets:
Costs in excess of net assets of
acquired businesses $ 79,995 $ 44,191
Other 5,447 2,967
- ---------------------------------------------------------
85,442 47,158
Accumulated amortization (20,160) (15,390)
- ---------------------------------------------------------
$ 65,282 $ 31,768
=========================================================
Accrued liabilities:
Salaries and other compensation $ 24,719 $ 24,475
Pension and retirement 3,535 3,178
Taxes other than income taxes 4,643 4,118
Other 19,589 26,625
- ---------------------------------------------------------
$ 52,486 $ 58,396
=========================================================
</TABLE>
35
<PAGE> 10
NOTE 14 -- INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA
INDUSTRY SEGMENT DATA -- The Company operates in one industry segment which
engages in developing, manufacturing and marketing industrial application
equipment. This equipment is used to apply adhesives, sealants, and liquid and
powder coatings to a broad range of consumer and industrial products during
manufacturing operations.
GEOGRAPHIC AREA DATA -- Financial data by geographic area is presented before
elimination of intercompany transactions.
Operating profit equals sales less operating costs and expenses. It includes
intercompany gross profits on inventory transfers between geographic areas,
which are generally accounted for at prices which approximate arm's-length
wholesale market prices. Operating profit excludes general corporate expenses,
other income (expense) and provision for income taxes.
Identifiable assets are those assets used in the operations of each geographic
area. Corporate assets are principally cash and cash equivalents, marketable
securities, and property, plant and equipment maintained for general corporate
purposes.
No single customer accounted for more than 5.0 percent of sales in 1996, 1995 or
1994.
Export sales for 1996 were $181,179,000, ($174,957,000 in 1995 and $151,903,000
in 1994) and were principally made to foreign subsidiaries.
The following table summarizes the Company's operations within geographic areas:
<TABLE>
<CAPTION>
1996 1995 1994
(In thousands)
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated
customers:
United States $ 221,588 $ 231,089 $ 213,445
Europe 229,301 201,894 167,555
Japan 86,208 87,201 74,493
Other* 72,347 61,260 51,199
- ------------------------------------------------------------------------
609,444 581,444 506,692
Transfers between
geographic areas:
United States 145,612 146,498 126,228
Europe 11,916 13,587 9,817
Japan 141 332 224
Other* 1,038 946 627
Eliminations (158,707) (161,363) (136,896)
- ------------------------------------------------------------------------
Total sales $ 609,444 $ 581,444 $ 506,692
=======================================================================
Operating profit:
United States $ 77,065 $ 89,132 $ 79,917
Europe 18,925 15,433 14,722
Japan 14,933 9,438 6,464
Other* 3,495 3,778 3,580
Eliminations 1,268 (2,362) (3,031)
- ------------------------------------------------------------------------
Geographic
operating profit 115,686 115,419 101,652
General corporate
expenses (31,425) (31,475) (27,248)
Other expense (3,200) (3,302) (3,546)
- ------------------------------------------------------------------------
Income before
income taxes $ 81,061 $ 80,642 $ 70,858
=======================================================================
Identifiable assets:
United States $ 258,223 $ 202,185 $ 173,824
Europe 157,686 142,156 115,792
Japan 56,301 57,573 53,933
Other* 42,829 33,034 28,254
Corporate 15,838 14,122 20,576
Eliminations (20,384) (14,360) (11,435)
- ------------------------------------------------------------------------
Total assets $ 510,493 $ 434,710 $ 380,944
=======================================================================
<FN>
* Includes Canada, Latin America and the Pacific Rim
</TABLE>
36
<PAGE> 11
NOTE 15 -- SUPPLEMENTAL INFORMATION FOR THE STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Cash operating activities:
Interest paid $ 6,055 $ 4,496 $ 4,445
Income taxes paid 31,993 31,099 32,373
===================================================================
Noncash investing and
financing activities:
Capitalized lease
obligations incurred $ 5,904 $ 5,426 $ 3,938
Capitalized lease
obligations terminated 928 990 969
Shares acquired and
issued through
exercise of stock
options 2,322 1,118 4,873
===================================================================
Noncash assets and liabilities
of businesses acquired:
Working capital $ 2,018 $ 868 $ (115)
Property, plant and
equipment 1,668 601 185
Intangibles and other 35,870 3,408 4,173
Long-term debt and
other liabilities (442) (243) (310)
- -------------------------------------------------------------------
$ 39,114 $ 4,634 $ 3,933
===================================================================
</TABLE>
NOTE 16 -- QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Quarter*
- -------------------------------------------------------------------------
First Second Third Fourth
- -------------------------------------------------------------------------
(In thousands except for per share amounts)
<S> <C> <C> <C> <C>
1996:
Sales $131,882 $151,324 $146,699 $179,539
Cost of sales 54,150 61,236 61,290 78,419
Net income 9,289 13,721 11,869 18,192
Earnings per share $ .51 $ .75 $ .65 $ 1.01
=========================================================================
1995:
Sales $123,477 $143,075 $155,152 $159,740
Cost of sales 52,106 59,364 66,318 67,799
Net income 8,941 12,693 14,847 16,195
Earnings per share $ .48 $ .68 $ .80 $ .88
=========================================================================
<FN>
* Domestic operations report results using four 13-week quarters, with the
exception that the third quarter of 1996 contained 14 weeks. International
subsidiaries report results using calendar quarters.
</TABLE>
37
<PAGE> 1
Exhibit 13-g
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
of Nordson Corporation:
We have audited the accompanying consolidated balance sheet of Nordson
Corporation as of November 3, 1996 and October 29, 1995, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended November 3, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Nordson
Corporation at November 3, 1996 and October 29, 1995, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended November 3, 1996 in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
December 10, 1996
37
<PAGE> 1
Exhibit 13-h
ELEVEN-YEAR SUMMARY
<TABLE>
<CAPTION>
1996 1995 1994 1993(d) 1992 1991 1990 1989 1988 1987 1986
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Data (a)
Sales $609,444 581,444 506,692 461,557 425,618 387,962 344,904 282,098 245,028 205,175 168,693
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of sales $255,095 245,587 212,866 191,575 168,437 158,885 154,653 116,588 96,771 81,604 74,494
% of sales 42 42 42 42 40 41 45 41 40 40 44
- -----------------------------------------------------------------------------------------------------------------------------------
Selling and administrative expenses $270,088 251,913 219,422 202,608 189,887 170,814 140,450 112,716 99,039 84,106 71,726
% of sales 44 43 43 44 45 44 41 40 40 41 43
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit $ 84,261 83,944 74,404 67,374 67,294 58,263 49,801 52,794 49,218 39,465 22,473
% of sales 14 14 15 15 16 15 14 19 20 19 13
- -----------------------------------------------------------------------------------------------------------------------------------
Income before cumulative
effect of accounting changes $ 53,071 52,676 46,654 40,775 39,537 33,787 29,346 34,187 31,583 24,707 13,834
% of sales 9 9 9 9 9 9 9 12 13 12 8
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 53,071 52,676 46,654 35,991 39,537 33,787 29,346 34,187 31,583 24,707 13,834
% of sales 9 9 9 8 9 9 9 12 13 12 8
===================================================================================================================================
Financial Data (a)
Working capital $110,486 130,562 126,996 125,391 105,138 87,004 66,093 53,834 64,040 80,528 61,108
- -----------------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment
and other non-current assets $192,791 148,769 130,637 116,298 114,461 103,015 95,599 79,383 43,075 37,835 37,076
- -----------------------------------------------------------------------------------------------------------------------------------
Total invested capital $303,277 279,331 257,633 241,689 219,599 190,019 161,692 133,217 107,115 118,363 98,184
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $510,493 434,710 380,944 357,970 346,297 296,930 269,523 235,551 162,912 164,212 133,981
- -----------------------------------------------------------------------------------------------------------------------------------
Long-term obligations $ 57,980 48,001 45,209 45,284 41,879 37,305 31,318 26,299 18,006 17,158 16,406
- -----------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity $245,297 231,330 212,424 196,405 177,720 152,714 130,374 106,918 89,109 101,205 81,778
- -----------------------------------------------------------------------------------------------------------------------------------
Return on average invested
capital - % (b) 20 21 20 19 20 21 21 29 29 23 16
- -----------------------------------------------------------------------------------------------------------------------------------
Return on average shareholders'
equity - % (c) 23 24 24 23 24 25 25 35 33 27 18
===================================================================================================================================
Per Share Data (a)
Earnings per share:
Income before cumulative effect of
accounting changes $ 2.92 2.84 2.45 2.13 2.03 1.77 1.52 1.76 1.55 1.17 .67
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.92 2.84 2.45 1.88 2.03 1.77 1.52 1.76 1.55 1.17 .67
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends per common share $ .72 .64 .56 .48 .44 .40 .36 .32 .28 .24 .23
- -----------------------------------------------------------------------------------------------------------------------------------
Book value per common share $ 13.91 12.85 11.55 10.49 9.48 8.14 6.94 5.69 4.66 4.89 3.97
- -----------------------------------------------------------------------------------------------------------------------------------
Common shares and common share
equivalents (000s) 18,204 18,577 19,067 19,184 19,471 19,093 19,266 19,386 20,340 21,040 20,752
===================================================================================================================================
<FN>
(a) See accompanying Notes to Consolidated Financial Statements.
(b) Income before cumulative effect of accounting changes plus interest on long-term obligations net of
income taxes, as a percentage of total assets less current liabilities.
(c) Income before cumulative effect of accounting changes, as a percentage of shareholders' equity.
(d) In 1993, the Company adopted Statements of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," No. 109, "Accounting for Income Taxes,"
and No. 112, "Employers' Accounting for Postemployment Benefits." Prior years have not been restated.
</TABLE>
<PAGE> 1
Exhibit 13-i
SHAREHOLDER INFORMATION
Dividend Information and Price Range
Per Common Shares
Following is a summary of dividends paid per common share, the range of market
prices, and average price-earnings ratios with respect to common shares, during
each quarter of 1996 and 1995. The price-earnings ratios reflect average market
prices relative to trailing four-quarter earnings.
<TABLE>
<CAPTION>
Common Stock Price Price-
Fiscal Dividend ------------------- Earnings
Quarter Paid High Low Ratio
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
1996:
First $.18 $59.25 $54.75 19.9
Second .18 62.00 53.00 19.6
Third .18 61.25 45.50 19.1
Fourth .18 56.75 49.50 18.2
1995:
First $.16 $61.00 $52.00 22.4
Second .16 59.25 53.75 21.4
Third .16 57.75 54.50 20.4
Fourth .16 59.50 54.75 20.1
</TABLE>
Stock Listing Information
Nordson stock is traded on The Nasdaq Stock Market's National Market under the
symbol NDSN.
42
<PAGE> 1
Exhibit 21
NORDSON CORPORATION
SUBSIDIARIES OF THE REGISTRANT
The following table sets forth the subsidiaries of the
Registrant (each of which is included in the Registrant's consolidated financial
statements), and the jurisdiction under the laws of which each subsidiary was
organized.
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation Name
------------- ----
INTERNATIONAL:
--------------
<S> <C>
Australia Nordson Australia Pty. Limited
Austria Nordson GbmH
Belgium Nordson Belgium N.V.
Brazil Nordson do Brasil Industria e
Comercio Ltda.
Canada Nordson Canada, Limited
China Nordson (China) Co., Ltd.
Colombia Nordson Andina Ltda.
Czech Republic Nordson CS, spol.s.r.o.
Denmark Nordson Danmark A/S
Finland Nordson Finland Oy
France Nordson France S.A.
Germany Nordson Engineering GmbH
Germany Nordson Deutschland GmbH (1)
Germany Nordson Euro Trading GmbH (2)
Hong Kong Nordson Application Equipment, Inc.
India Nordson India Private Limited
Italy Nordson Finishing S.r.l.
Italy Nordson Italia S.p.A (3)
Japan Nordson K.K.
Japan Nordson Engineering K.K.
Malaysia Nordson (Malaysia) Sdn. Bhd. (4)
Mexico Nordson de Mexico, S.A. de C.V.
Netherlands Nordson European Distribution B.V.
Netherlands Nordson Nederland B.V.
Netherlands Nordson Walcom B.V.
Norway Nordson Norge A/S
Poland Nordson Polska Sp.z.o.o.
Portugal Nordson Portugal Equipamento
Industrial, Lda.
Russia Nordson Deutschland GmbH
Representative Office
Singapore Nordson S.E. Asia (Pte.) Ltd.
South Korea Nordson Sang San Ltd. (5)
Spain Nordson Iberica, S.A.
Sweden Nordson Sverige AB
Switzerland Nordson (Schweiz) AG (6)
United Kingdom Spectral Technology Group Ltd.
United Kingdom Nordson (U.K.) Limited
United States Virgin Islands Nordson FSC, Inc.
Vietnam Nordson Pacific Inc.
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation Name
------------- ----
<S> <C>
DOMESTIC:
---------
California Asymptotic Technologies, Inc.(7)
California Slautterback Corporation
California Mountaingate Engineering, Inc.
Connecticut Electrostatic Technology, Inc.
Ohio Nordson Pacific, Inc.
Ohio Nordson U.S. Trading Company
<FN>
(1) Owned by Nordson Engineering GmbH and Nordson Corporation
(2) Owned by Nordson Engineering GmbH
(3) Owned by Nordson Finishing S.r.l.
(4) A 65%-owned joint venture
(5) A 45%-owned joint venture accounted for on the equity method
(6) Owned by Nordson Belgium S.A.
(7) Does business under the name Asymtek
</TABLE>
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Nordson Corporation of our report dated December 10, 1996
included in the Annual Report to Shareholders of Nordson Corporation for the
year ended November 3, 1996.
We also consent to the incorporation by reference in the
Registration Statements (Forms S-8) listed below and the related prospectuses of
Nordson Corporation of our report dated December 10, 1996, with respect to the
consolidated financial statements of Nordson Corporation incorporated by
reference in this Annual Report (Form 10-K) for the year ended November 3, 1996:
- Nordson Corporation 1982 Amended and Restated Stock Appreciation
Rights Plan (No. 2-66776)
- Nordson Corporation 1979 Employees Stock Option Plan (No. 2-66776)
- Nordson Corporation 1982 Incentive Stock Option Plan (Nos. 2-82915
and 33-18279)
- Nordson Employees' Savings Trust Plan (No. 33-18309)
- Nordson Corporation 1989 Stock Option Plan (No. 33-32201)
- Nordson Hourly-Rated Employees' Savings Trust Plan (No. 33-33481)
- Nordson Corporation 1993 Long-Term Performance Plan (No. 33-67780)
- Nordson Corporation - Slautterback Corporation 401(k) Profit
Sharing Plan (No. 33-73522)
/s/ Ernst & Young LLP
Ernst & Young LLP
Cleveland, Ohio
January 29, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-03-1996
<PERIOD-END> NOV-03-1996
<CASH> 9,221
<SECURITIES> 310
<RECEIVABLES> 159,573
<ALLOWANCES> 3,573
<INVENTORY> 118,388
<CURRENT-ASSETS> 317,702
<PP&E> 207,080
<DEPRECIATION> 100,062
<TOTAL-ASSETS> 510,493
<CURRENT-LIABILITIES> 207,216
<BONDS> 0
<COMMON> 12,253
0
0
<OTHER-SE> 233,044
<TOTAL-LIABILITY-AND-EQUITY> 510,493
<SALES> 609,444
<TOTAL-REVENUES> 609,444
<CGS> 255,095
<TOTAL-COSTS> 255,095
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,782
<INTEREST-EXPENSE> 5,955
<INCOME-PRETAX> 81,061
<INCOME-TAX> 27,990
<INCOME-CONTINUING> 53,071
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,071
<EPS-PRIMARY> 2.92
<EPS-DILUTED> 2.91
</TABLE>
<PAGE> 1
Exhibit 99-a
For the purposes of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned
Registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into Registrant's Registration Statements on Form S-8 Nos. 33-32201
(1989 Stock Option Plan); 2-82915 and 33-18279 (1982 Incentive Stock Option
Plan); 33-20452 (1988 Employees Stock Purchase Plan); 33-20451 (1988
International Employees Stock Purchase Plan); 33-18309 (Employees Savings Trust
Plan); and 33-33481 (Hourly-Rates Employees Savings Trust Plan):
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE> 1
Exhibit 99-b
For the purpose of complying with the amendments to the rules governing Form S-8
under the Securities Act of 1933, the undersigned Registrant hereby undertakes
as follows, which undertaking shall be incorporated by reference into
Registrant's Registration Statement on Form S-8 No. 2-66776 (1979 Stock Option
Plan and 1982 Amended and Restated Stock Appreciation Rights Plan (now entitled
1988 Amended and Restated Stock Appreciation Rights Plan)):
(a) That, for purposes of determining any liability under the Securities
Act of 1933 (the "Act"), each post-effective amendment to this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and that the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(b) To remove from registration by means of a post-effective amendment
of any of the securities being registered which remain unsold at the termination
of the offering.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceedings) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE> 1
Exhibit 99-c
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
NORDSON EMPLOYEES' SAVINGS TRUST PLAN
(Full title of the Plan)
NORDSON CORPORATION
(Name of issuer of securities held pursuant to the Plan)
28601 Clemens Road
Westlake, Ohio 44145
(Address of principal executive office)
<PAGE> 2
In accordance with Rule 12d-21, the financial statements and
exhibits required by Form 11-K with respect to the Plan will be filed as an
amendment to the annual report within 180 days after the Plan's fiscal year end.
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the Plan) have duly caused
this annual report to be signed by the undersigned thereunto duly authorized.
NORDSON CORPORATION
By: /s/ Nicholas D. Pellecchia
---------------------------------------
Nicholas D. Pellecchia
Vice President-Finance and Controller
Nordson Corporation
Date: January 31, 1997
<PAGE> 1
Exhibit 99-d
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
NORDSON HOURLY-RATED EMPLOYEES' SAVINGS TRUST PLAN
(Full title of the Plan)
NORDSON CORPORATION
(Name of issuer of securities held pursuant to the Plan)
28601 Clemens Road
Westlake, Ohio 44145
(Address of principal executive office)
<PAGE> 2
In accordance with Rule 12d-21, the financial statements and
exhibits required by Form 11-K with respect to the Plan will be filed as an
amendment to the annual report within 180 days after the Plan's fiscal year end.
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the Plan) have duly caused
this annual report to be signed by the undersigned thereunto duly authorized.
NORDSON CORPORATION
By: /s/ Nicholas D. Pellecchia
------------------------------------------
Nicholas D. Pellecchia
Vice President-Finance and Controller
Nordson Corporation
Date: January 31, 1997
