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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 2, 1997
----------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
for the transition period from to
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Commission file number 0-7977
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NORDSON CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 34-0590250
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(State 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.
$588,939,000 as of December 31, 1997
- ------------------------------------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date. 16,745,049 Common Shares as of
December 31, 1997 -------------------------------
- -----------------
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 1997 Annual Report - Parts I, II and IV
-------------------------------------------------------
Portions of the Proxy Statement for the 1998 Annual Meeting - Part III
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1
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PART I
------
Item 1. Business.
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GENERAL DEVELOPMENT OF BUSINESS
-------------------------------
General Description of Business
- -------------------------------
Founded in 1954, Nordson Corporation designs, manufactures and markets
systems that apply adhesives, sealants and coatings to a broad range of consumer
products during manufacturing operations. Our high value-added product line
includes customized electronic control technology for the precise application of
materials to meet customer's productivity, quality and environmental management
targets.
Nordson products are used around the world in the appliance,
automotive, bookbinding, construction, container, converting, electronics, food
and beverage, furniture, metal finishing, nonwovens, packaging and other diverse
industries.
The Company's consistent growth is based on a customer-driven strategy
that is global in scope. Reaching out from corporate headquarters in Westlake,
Ohio, Nordson markets its products through four international sales
divisions--North America, Europe, Japan and Pacific South. These sales
organizations are supported by a network of 40 direct operations in 32
countries. Consistent with this strategy, more than 60 percent of the Company's
revenues are generated outside the United States.
Nordson has more than 4,000 employees worldwide and has principal
manufacturing facilities in Ohio, Georgia, California, Connecticut, Germany, the
Netherlands, Sweden, and the United Kingdom.
Corporate Purpose and Goals
- ---------------------------
Nordson Corporation 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.
Nordson operates for the purpose of creating balanced, long-term
benefits for all of our constituencies: customers, employees, shareholders
and communities.
Our corporate goal for growth is to double the value of the Company
over a five-year period, with the primary measure of value set by the market for
Company shares.
While external factors may impact value, the achievement of this goal
will rest with earnings growth, capital and human resource efficiency, and
positioning for the future.
Nordson does not expect every quarter to produce increased sales,
earnings and earnings per share, or to exceed the comparative prior year's
quarter. We do expect to produce long-term gains. When short-term swings occur,
we do not intend to alter our basic objectives in efforts to mitigate the impact
of these natural occurrences.
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Growth is achieved by seizing opportunities with existing products and
markets, investing in systems to maximize productivity, and pursuing growth
markets. This strategy is augmented through product line additions, engineering,
research and development, and acquisition of companies that can serve
multinational industrial markets.
We create benefits for our customers through a Package of Values(TM),
which includes carefully engineered, durable products; strong service support;
the backing of a well-established worldwide company with financial and technical
strengths; and a corporate commitment to deliver what was promised.
We strive to provide genuine customer satisfaction; it is the
foundation upon which we continue to build our business.
Complementing our business strategy is the objective to provide
opportunities for employee self-fulfillment, growth, security, recognition and
equitable compensation.
This goal is met through employee training and the creation of
on-the-job growth opportunities. The result is a highly qualified and
professional management team capable of meeting corporate objectives.
We recognize the value of employee participation in the planning
process. Strategic and operating plans are developed by all business units and
divisions, resulting in a sense of ownership and commitment on the part of
employees in accomplishing company objectives.
Nordson Corporation is an equal opportunity employer.
Nordson is committed to contributing an average of 5 percent of
domestic pretax earnings to human services, health, education and other
charitable activities, particularly in communities where the Company has major
facilities.
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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 16 (pages
38-39) of the 1997 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.
Product Assembly - Adhesive and sealant dispensing systems for
bonding or sealing plastic, metal and wood products.
Converting - Coating and laminating systems used to
manufacture continuous-roll goods; specialty equipment for manufacturing bags
and envelopes.
Nonwovens - Automated equipment for applying adhesives, super-
absorbent powders, liquids, and fibers to disposable nonwoven products.
Gasketing - Automated gasketing systems for dispensing solid
and foamed adhesives and sealants to bond and seal various assemblies and to
produce form-in-place gaskets.
Automotive - Adhesive and sealant dispensing systems for
bonding and sealing glass, body panels and structural components used in
automobiles; powder finishing systems for spraying primers, anti-chip coatings,
basecoats and clearcoats to body panels.
Powder Coating - Electrostatic spray systems for applying
powder paints and coatings.
Liquid Finishing - Electrostatic spray systems for applying
liquid paints and coatings to plastic, metal and wood products.
Container - Automated systems for dispensing and curing liquid
and powder coatings that are applied to the interiors and ends of metal
containers.
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Electronics - Automated systems for applying protective
conformal coatings, solder fluxes and adhesive materials to printed circuit
boards and electronic assemblies.
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.
Accelerated Drying and Curing - Ultraviolet (UV), infrared
(IR), induction heating, microwave and other automated drying and curing systems
for graphic arts, finishing and product assembly operations.
Nordson markets its products in the United States and fifty-six 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 principal manufacturing operations in Amherst and
Elyria, Ohio; Norcross, Georgia; Carlsbad and Monterey, 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.
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.
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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 1997, no single customer
accounted for 5 percent or more of sales.
Backlog
- -------
The Company's backlog of orders increased to $68.4 million at November
2, 1997 from $53.5 million at November 3, 1996. All orders in the November 1997
backlog are expected to be shipped to customers in fiscal 1998.
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
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.
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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 $29,812,000 in fiscal 1997, compared
with approximately $30,471,000 in fiscal 1996 and $28,866,000 in fiscal 1995. As
a percentage of sales, these investments were approximately 5.0 percent in
fiscal 1997, 1996 and 1995.
Environmental Compliance
- ------------------------
Compliance with federal, state and local environmental protection laws
during fiscal 1997 had no material effect on the Company's capital expenditures,
earnings, or competitive position. The Company also does not anticipate a
material effect in 1998.
Employees
- ---------
As of November 2, 1997, Nordson had 4,024 employees, including all
full-time and part-time employees.
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Item 2. Properties.
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The following table summarizes the principal properties of the Company.
Description Approximate
Location of Property Square Feet
- -------- ----------- -----------
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)
Monterey, A manufacturing, laboratory 63,000
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)
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Description Approximate
Location of Property Square Feet
- -------- ----------- -----------
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 31,000
warehouse (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
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 8 of Notes to
Consolidated Financial Statements on page 33 of the 1997 Annual Report,
incorporated herein by reference thereto.
Item 3. Legal Proceedings.
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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.
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None.
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Executive Officers of the Company.
- ----------------------------------
The executive officers of the Company as of December 31, 1997 were as
follows:
Served Position or Office With
As The Company and Business
Officer Experience During the Past
Name Since Five (5) Year Period
- ---------------------- ------- -------------------------------
Edward P. Campbell 1988 President and Chief Executive
Age 48 Officer, 1997.
President and Chief Operating
Officer, 1996.
Executive Vice President and Chief
Operating Officer, 1994.
Vice President, 1988.
John E. Jackson 1986 Senior Vice President, 1994.
Age 52 Vice President, 1986.
Christian C. Bernadotte 1994 Vice President, Corporate
Age 48 Development, 1997.
Vice President, 1994.
General Manager-Packaging and
Product Assembly, 1986.
Drexel R. Bunch 1986 Vice President, Manufacturing, 1986.
Age 53
Raymond L. Cushing 1995 Treasurer, 1995.
Age 43 Assistant Treasurer, 1990.
Samuel O. Dawson 1996 Vice President, 1996.
Age 57 General Manager-Powder Systems, 1988.
Robert A. Dunn, Jr. 1997 Vice President, 1997.
Age 50 General Manager-Automotive Systems, 1987.
Bruce H. Fields 1992 Vice President, Human Resources, 1992.
Age 46 Director, Human Resources, 1989.
William D. Ginn 1966 Secretary, 1966.
Age 74
Michael Groos 1995 Vice President, 1995.
Age 46 General Manager, Central Region,
European Division, 1990.
Dr. Richard G. Klein 1986 Vice President, Corporate Research
Age 55 & Technology, 1986.
Donald J. McLane 1986 Vice President, 1986.
Age 54
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Served Position or Office With
As The Company and Business
Officer Experience During the Past
Name Since Five (5) Year Period
- ---------------------- ------- ---------------------------------
Yoshihiko Miyahara 1989 Vice President, 1989.
Age 60
Thomas L. Moorhead 1981 Vice President, Law and Assistant
Age 61 Secretary, 1981.
Nicholas D. Pellecchia 1986 Vice President, Finance and
Age 52 Controller, 1986.
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PART II
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Item 5. Market for the Company's Common Equity and Related Stockholder Matters.
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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 44 of the 1997 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, 1997 was as follows:
Number of
Title of Class Record Holders
-------------- --------------
Common shares with no 3,005
par value
Item 6. Selected Financial Data.
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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 40 and 41 of the 1997 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 22 through 24
of the 1997 Annual Report.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
- -------- -----------------------------------------------------------
The Company incorporates herein by reference the information appearing
under the caption "Management's Discussion and Analysis" on pages 22 through 24
of the 1997 Annual Report and Note 11 on page 35 of the 1997 Annual Report.
Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------
The information required by this item appears on pages 25 through 39 of
the 1997 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.
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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 30, 1998.
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 30, 1998.
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 30, 1998.
Item 13. Certain Relationships and Related Transactions.
- -------- -----------------------------------------------
The Company incorporates herein by reference the information appearing
under the caption "Agreements with Officers and Directors" on pages 24 and 25 of
the Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission by January 30, 1998.
William D. Ginn, a director and Secretary of the Company, is Of Counsel
to Thompson Hine & Flory LLP, a law firm which has in the past provided and
continues to provide legal services to the Company.
Messrs. Eric T. Nord and Evan W. Nord, directors of the Company, are
brothers.
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PART IV
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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 30, 1998 By: /s/ Nicholas D. Pellecchia
--------------------------
Nicholas D. Pellecchia
Vice President, Finance
and Controller
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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/ William P. Madar January 30, 1998
- ----------------------------
William P. Madar
Director and Chairman of the Board
/s/ Edward P. Campbell January 30, 1998
- ---------------------------
Edward P. Campbell
Director, President and Chief Executive Officer
(Principal Executive Officer)
/s/ Nicholas D. Pellecchia January 30, 1998
- ----------------------------
Nicholas D. Pellecchia
Vice President, Finance and Controller
(Principal Accounting Officer and
Principal Financial Officer)
/s/ William D. Ginn January 30, 1998
- ----------------------------
William D. Ginn
Director and Secretary
/s/ Dr. Glenn R. Brown January 30, 1998
- ----------------------------
Dr. Glenn R. Brown
Director
/s/ William W. Colville January 30, 1998
- ----------------------------
William W. Colville
Director
/s/ Stephen R. Hardis January 30, 1998
- ----------------------------
Stephen R. Hardis
Director
/s/ Dr. Anne O. Krueger January 30, 1998
- ----------------------------
Dr. Anne O. Krueger
Director
/s/ Eric T. Nord January 30, 1998
- ----------------------------
Eric T. Nord
Director
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/s/ Evan W. Nord January 30, 1998
- ----------------------------
Evan W. Nord
Director
/s/ William L. Robinson January 30, 1998
- ----------------------------
William L. Robinson
Director
16
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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 2, 1997
17
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NORDSON CORPORATION
INDEX TO FINANCIAL STATEMENTS
(Item 14(a)(1))
Page Reference
--------------
Data incorporated by reference from
the 1997 Annual Report:
Consolidated statement of income for
the years ended November 2, 1997,
November 3, 1996 and October 29, 1995 25
Consolidated balance sheet as of
November 2, 1997 and November 3, 1996 26
Consolidated statement of cash flows
for the years ended November 2, 1997,
November 3, 1996 and October 29, 1995 27
Consolidated statement of shareholders'
equity for the years ended November 2,
1997, November 3, 1996 and October 29,
1995 28
Notes to consolidated financial statements 29-39
Report of independent auditors 39
The consolidated financial statements of the Registrant listed in the
preceding index, which are included in the 1997 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 1997 Annual
Report is not to be deemed filed as part of this report.
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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 Restated Rights Agreement between Nordson Corporation
and National City Bank, Rights Agent (incorporated herein
by reference to Exhibit 1 to Registrant's
registration of rights to purchase common shares
on Form 8-A/Amendment No.1 filed December 8, 1997)
(10) Material Contracts
10-a Nordson Corporation 1995 Management Incentive
Compensation Plan as Amended*
10-a-1 Nordson Corporation 1995 Management Incentive
Compensation Plan -- Exhibit 1 for 1998 Plan Year
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)*
19
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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*
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)*
20
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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 (incorporated herein by
reference to Exhibit 10-f to Registrant's Annual
Report on Form 10-K for the year ended November
3, 1996)*
10-g Indemnity Agreement (incorporated herein by
reference to Exhibit 10-g to Registrant's Annual
Report on Form 10-K for the year ended November
3, 1996)*
10-h Restated Nordson Corporation Excess Defined
Contribution Retirement Plan*
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*
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 Nordson Corporation Officers' Deferred Compensation
Plan*
21
<PAGE> 22
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 (incorporated herein by
reference to Exhibit 10-l to Registrant's Annual
Report on Form 10-K for the year ended November
3, 1996)*
10-m 1992 Restricted Stock Plan*
10-n Nordson Corporation 1993 Long-Term Performance
Plan*
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)*
10-p Consulting Agreement between the Registrant and
William P. Madar
(11) Calculation of Earnings per Share
(13) Selected portions of the 1997 Annual Report
13-a Management's Discussion and Analysis (pages 22
through 24 of the 1997 Annual Report)
13-b Consolidated Statement of Income (page 25
of the 1997 Annual Report)
13-c Consolidated Balance Sheet (page 26 of the
1997 Annual Report)
13-d Consolidated Statement of Cash Flows (page 27
of the 1997 Annual Report)
13-e Consolidated Statement of Shareholders'
Equity (page 28 of the 1997 Annual Report)
13-f Notes to Consolidated Financial Statements
(pages 29 through 39 of the 1997 Annual
Report)
22
<PAGE> 23
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
13-g Report of Independent Auditors (page 39 of
the 1997 Annual Report)
13-h Eleven-Year Summary (pages 40 and 41 of the
1997 Annual Report)
13-i Shareholder Information (page 44 of the 1997
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, 33-18309 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, 1997
99-d Annual Report on Form 11-K of the Nordson
Hourly-Rated Employees' Savings Trust Plan for
its fiscal year ended December 31, 1997
*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.
23
<PAGE> 1
Exhibit 10-a
NORDSON CORPORATION
1995 MANAGEMENT
INCENTIVE COMPENSATION PLAN
AS AMENDED (FY 1997)
1. PLAN OBJECTIVES
The objectives of the Plan are to advance the interests of the
corporation and its shareholders by providing executive officers
incentive opportunities and to attract, retain and motivate outstanding
personnel by:
a. Providing compensation opportunities that are competitive with
those of other corporations of comparable size and value in
similar businesses.
b. Focusing key executives' attention on the
accomplishment of specifically identified Corporate
objectives.
c. Establishing incentive pay opportunities appropriate for
various levels of individual performance.
2. DEFINITIONS
For purposes of the Plan, the following definitions shall control:
a. "CORPORATION" - Nordson Corporation, its Divisions and
subsidiaries.
b. "BOARD" - The Board of Directors of Nordson
Corporation.
c. "COMMITTEE" - The Compensation Committee appointed by the
Board consisting of non-employee Directors.
d. "INCENTIVE AWARD" - Awards made by the Committee under this
Plan. All awards will be paid in cash.
e. "PLAN" - The 1995 Management Incentive Compensation
Plan as adopted by the Board.
f. "PLAN YEAR" - The Corporation's fiscal year.
3. ADMINISTRATION OF THE PLAN
The Plan will be administered by the Committee. The Committee is
authorized to interpret the Plan and to establish and amend guidelines
necessary for Plan administration. Decisions and determinations of the
Committee shall be binding on all persons claiming rights under the
Plan.
<PAGE> 2
The Committee can amend the 1995 Bonus Plan to the extent necessary to
treat the compensation payable pursuant to the 1995 Bonus Plan as
qualified performance-based compensation exempt from the non-deductible
limitation of Section 162(m) of the Internal Revenue Code.
4. DESCRIPTION OF THE PLAN
At the end of each fiscal year the Committee establishes the base
salary for executive officers ("Officers") of the Corporation to be in
effect the following fiscal year, taking into consideration individual
performance, competitive position and salary practices of "peer group"
companies. The Committee may also adjust base salaries of Officers from
time to time to reflect bona fide promotions or changes in
responsibilities. In addition to their base salary, the Officers are
also eligible for a cash bonus, the amount of which is established in
accordance with the Plan.
The Plan provides for the establishment by the Committee of target
award levels of Incentive Awards based on the Corporation's performance
against specific predetermined performance goals. Performance goals are
established on a consolidated basis for Corporate performance for each
Plan Year.
At the beginning of each Plan Year, the Chief Executive Officer shall
submit to the Committee recommendations for the Plan Year which shall
include proposed participants and target award levels, and the
Committee shall approve or modify these recommendations on or before
the 90th day of such Plan Year.
As soon as practicable after the end of the Plan Year, each
participant's Incentive Award will be determined based on performance
against the pre-established performance objectives, and the Committee
will certify achievement and approve the awards before payment is made.
5. PARTICIPANTS
Participants will be selected by the Committee each year from among the
Officers of the Corporation. Directors who are employees of the
Corporation will be eligible for inclusion.
a. Awards under this Plan may be made only to Officers of the
Corporation who are in a position to make significant
contributions to the financial success of the Corporation.
b. The Chief Executive Officer of the Corporation shall recommend
to the Committee, in writing, the Officers who are to be
participants under the Plan for each Plan Year.
<PAGE> 3
c. Participants for each Plan Year shall be those Officers
occupying eligible positions as set forth in Exhibit 1, which
exhibit may be amended from time to time with approval of the
Committee.
d. Employees who are promoted or hired into an eligible position
set forth on Exhibit 1 (as amended from time to time) will
participate in the Plan for such first year based on their
base pay earnings (pro-rated) at the Corporation for the Plan
Year and at the target award level associated with the
position.
e. If, during the Plan Year, a participant shifts between
eligible positions set forth on Exhibit 1 (as amended
from time to time), the target award level for such
participant for such Plan Year will be the average of
the target award levels associated with each position
held by the participant during the Plan Year based on
the number of days in the year that the participant
held each position.
f. In the event of termination of employment during a Plan Year
by reason of disability, retirement within the provisions of
the Retirement Plan or other policies of the Corporation,
plant closing or divestiture of a business unit, the
participant shall earn a pro-rata amount based on the time
employed prior to termination during the Plan Year and upon
the Corporation's actual performance against established
targets during the entire Plan Year.
g. In the event of a death of a participant during the Plan Year,
the participant's beneficiary under the Corporation's Pension
Plan shall receive a pro-rata amount based on the time
employed prior to death during the Plan Year and upon the
Corporation's actual performance against established targets
during the entire Plan Year.
h. In the event of termination of employment during a Plan Year
for any other reason, participation in the Plan will be as
determined by the Committee.
6. TARGET AWARD LEVELS
a. The target award levels of annual Incentive Awards, expressed
as percentages (not to exceed 150%) of each participant's base
salary earnings during the Plan Year, will be recommended by
the CEO to the Committee for approval, provided that the
maximum annual dollar award to any participant for the Plan
Year which began on October 31, 1994 will be $950,000 and the
maximum
<PAGE> 4
dollar award for each subsequent Plan Year will be 107% of the
immediately preceding Plan Year. For example, the maximum
annual dollar award for the 1996 Plan Year is $1,016,500, and
for the 1997 Plan Year is $1,087,655. Carrying this example
forward, the maximum award for the 2005 Plan Year would be
$1,868,794.
b. Target award levels shall be established by the Committee for
each Plan Year as stated in Section 4.
7. PERFORMANCE FACTORS
For each Plan Year, two Company performance goals have been
established, and are used in a formula for calculating individual
Incentive Awards. These are as follows-
a. Return on Average Invested Capital (ROAIC), comprising
a 50% weighting in the award calculation, with 8% ROAIC
meriting a 0% performance factor, 12% ROAIC meriting a 75%
performance factor, 16% ROAIC and above meriting a 150%
performance factor; and
b. Profitability, measured by Earnings Per Share (EPS),
comprising a 50% weighting in the award calculation,
with an EPS equal to or less than the previous year
meriting a 0% performance factor, a 7.5% increase in
EPS meriting a 50% performance factor, a 15% increase
in EPS meriting a 100% performance factor, and a 20% or
higher increase in Earnings Per Share over the previous
year meriting a 150% performance factor.
Weighted average performance factors will be determined for
participants by the extent of the Corporation's achievement of each of
the performance goals for the year. Intermediate points will be
determined by interpolation.
8. CALCULATION OF AWARDS
The Incentive Award of a participant for any Plan Year shall be
calculated by multiplying the base salary earnings of the participant
for the Plan Year (B) times the target award level (TA, expressed as a
% of base salary) times the sum of the Return on Average Invested
Capital performance factor (ROAIC-PF) multiplied by .5 and the
Profitability performance factor (EPS-PF), multiplied by .5. Otherwise
expressed:
Incentive Award=B x TA x (ROAIC-PFx.5 + EPS-PFx.5)
9. PAYMENTS OF AWARDS
a. Incentive Awards shall be earned and payable in the local
currency of the participants and shall be paid in cash not
later than the first payroll date in January
<PAGE> 5
following the Plan Year in which the Incentive Award was
earned.
b. The Committee will have the authority and responsibility to
reduce the actual Incentive Award payable to a participant by
up to a maximum of 20% of the calculated Incentive Award,
based upon an individual participant's performance.
c. In the event of the death of a participant, any amounts shall
be paid as soon as practicable after the end of the Plan Year
to the participant's designated beneficiary as provided in
Article 5g.
d. If termination is by reason of disability or retirement within
the provisions of the Retirement Plan or other policies of the
Corporation, the date of payment shall be made as determined
by the Chief Executive Officer.
10. COMMUNICATION OF THE PLAN
After performance results are known and the Committee certifies
achievement, the Chief Executive Officer, or his designee, shall
communicate to each participant the specific performance factors, the
Incentive Award levels, and the manner in which awards will be paid.
11. TERM OF THE PLAN
The Plan will remain in effect until terminated by the Committee.
<PAGE> 1
Exhibit 10-a-1
Exhibit 1
NORDSON CORPORATION
1995 MANAGEMENT INCENTIVE
COMPENSATION PLAN
ELIGIBLE POSITIONS FOR 1998 PLAN YEAR
- - President and Chief Executive Officer
- - Sr. Vice President
- - Vice President
- - Vice President
- - Vice President
- - Vice President
- - Vice President
- - Vice President - Corporate Development
- - Vice President - Corporate Research and Technology
- - Vice President - Finance and Controller
- - Vice President - Law and Assistant Secretary
- - Vice President - Manufacturing
- - Vice President - Human Resources
<PAGE> 1
Exhibit 10-c-2
NORDSON CORPORATION
-------------------
RESOLUTION OF THE BOARD OF DIRECTORS
ADOPTING AMENDMENTS TO THE
NORDSON CORPORATION 1982
INCENTIVE STOCK OPTION PLAN
January 30, 1987
WHEREAS, the Tax Reform Act of 1986 made certain amendments to
the provisions of the Internal Revenue Code (the "Code") governing incentive
stock options; and
WHEREAS, the Board of Directors has determined that it is in the
best interests of the Corporation and its shareholders that the Nordson
Corporation 1982 Incentive Stock Option plan (the "Plan") be amended in view of
these changes in the provisions of the Code governing incentive stock options;
NOW, THEREFORE, BE IT RESOLVED, that the amendments to the Plan
set forth on Exhibit A attached hereto and made a part hereof be, and hereby
are, adopted.
<PAGE> 2
EXHIBIT A
PROPOSED AMENDMENTS TO
1982 INCENTIVE STOCK
OPTION PLAN
1. The fourth sentence of Section 4 of the Plan is amended by replacing "The"
with "the" and adding the following phrase at the beginning of the sentence:
For incentive stock options granted hereunder prior to January 1,
1987,
2. Section 4 of the Plan is amended by adding the following additional sentence
after the fourth sentence of the Section:
For incentive stock options granted after December 31, 1986, the
aggregate fair market value, determined as of the date of grant of the
option, of the Common Shares with respect to which incentive stock
options are exercisable for the first time during any calendar year by
an employee granted incentive stock options, under this Plan or any
other stock option plans of Nordson and its parent and subsidiary
corporations, shall not exceed $100,000.
3. Section 7 of the Plan is amended by adding the following phrase at the end
of the fourth sentence before the period:
, except that the provisions of this sentence shall not apply to any
incentive stock option granted hereunder after December 31, 1986.
<PAGE> 1
Exhibit 10-h
NORDSON CORPORATION
EXCESS DEFINED CONTRIBUTION RETIREMENT PLAN
Nordson Corporation hereby establishes, effective November 1, 1985, the
Nordson Corporation Excess Defined Contribution Retirement Plan ("Plan") to
supplement the retirement benefits of certain salaried employees, designated by
the Compensation Committee of the Board of Directors or its designee, as
eligible to participate in the Plan in accordance with the terms hereof, as
permitted by Section 3(36) of the Employee Retirement Income Security Act of
1974 ("ERISA"); and whereas, it is desired to restate the Plan as of November 1,
1987.
ARTICLE I
---------
DEFINITIONS
-----------
1.1 DEFINITIONS. The following words and phrases
shall have the meanings indicated, unless a different meaning is plainly
required by the context:
(a) The term "Company" shall mean Nordson
Corporation, an Ohio corporation, its corporate successors and the surviving
corporation resulting from any merger of Nordson Corporation with any other
corporation or corporations.
(b) The term "Employee" shall mean any person
employed by the Company on a salaried basis who is designated by the
Compensation Committee of the Board of Directors or its designee to participate
in the Plan and who has not waived participation in the Plan.
(c) The term "Plan" shall mean the excess defined
contribution retirement Plan as set forth herein, together with all amendments
hereto, which Plan shall be called the "Nordson Corporation Excess Defined
Contribution Retirement Plan."
(d) The term "Savings Trust Plan" shall mean the
Nordson Employees' Savings Trust Plan in effect on the date of an employee's
retirement, death or other termination of employment.
(e) The term "Code" shall mean the Internal
Revenue Code of 1986, as amended from time to time. Reference to
<PAGE> 2
a section of the Code shall include such section and any comparable section or
sections of any future legislation that amends, supplements, or supersedes such
section.
1.2 ADDITIONAL DEFINITIONS. All other words and
phrases used herein shall have the meanings given them in the Employees' Savings
Trust Plan, unless a different meaning is clearly required by the context.
ARTICLE II
----------
EXCESS RETIREMENT BENEFIT
-------------------------
2.1 ELIGIBILITY. An Employee who is a Participant in
the Employees' Savings Trust Plan and whose benefits thereunder have been
limited by Section 415 or 402(g)(1) of the Code, including limitations on
tax-deferred and employer-matching contributions, shall be eligible for an
excess retirement benefit determined by Section 2.2. In the event that the Tax
Deferred Contributions of an eligible Employee under the Employees' Savings
Trust Plan are limited by the provisions of Section 415 or 402(g)(1) of the
Code, such eligible Employee may elect to defer payment of that portion of his
compensation that otherwise could have been made as Tax Deferred Contributions
but for these limitations. The deferred payment election shall be made in
writing by the eligible Employee and delivered to the Company prior to the
beginning of a Plan Year. The election shall be irrevocable until the first day
of the next Plan Year.
2.2 AMOUNT. The excess retirement benefit payable to
an eligible Employee or his beneficiary shall be an amount equal to the sum of:
(i) the amount, if any, of the limited contributions
an eligible Employee elected to defer in Section 2.1,
except that if such limited contributions would be
further restricted under the Employees' Savings Trust
Plan for a Plan Year to comply with Section 40l(k) of
the Code with respect to the deferral of compensation
by highly
<PAGE> 3
compensated employees, the amount determined
hereunder shall be similarly limited, plus (ii) an
amount that, when added to the vested interest of
such Employee in Employer Matching Contributions
under the Employees' Savings Trust Plan, equals the
value his vested interest in Employer Matching
Contributions would have been on the date
distribution commences under the Employees' Savings
Trust Plan if the limitations of Section 415 or
402(g)(1) of the Code had not been in effect.
In determining the value under the Employees' Savings Trust Plan that his Tax
Deferred Contributions and his vested interest in Employer Matching
Contributions would have equaled if the limitations of Section 415 or 402(g)(1)
of the Code had not been in effect as described in (i) and (ii) above, it shall
be assumed that:
(a) his Tax Deferred Contributions and his
Employer Matching Contributions were deposited on the
dates such contributions would have otherwise been
made to the Employees' Savings Trust Plan and held in
the guaranteed income contract maintained as part of
the Guaranteed Fund that holds the largest amount of
assets from the Employees' Savings Trust Plan for
such year; and
(b) the interest actually paid with respect to such
guaranteed income contract under the Guaranteed Fund
was paid with respect to the contributions that would
otherwise have been made under the Plan; and
(c) such interest was reinvested in the Guaranteed
Fund on the date and in the same manner as actual
interest under the Guaranteed Fund.
2.3 PAYMENTS. All payments under the Plan to an
eligible Employee or his beneficiary shall be made by the Company from its
general assets. The payment of the excess retirement
<PAGE> 4
benefits hereunder shall be made at such time and in either a lump sum or equal
monthly installments over a two (2) year period as determined by and in the sole
discretion of the Compensation Committee of the Board of Directors.
2.4 WITHDRAWALS. An Employee, upon demonstration
of hardship to and approval by the Compensation Committee of the Board of
Directors, may withdraw from a Plan an amount not to exceed the lesser of
$5,000.00 or fifty (50%) percent of the Employee's benefit in the Plan. An
Employee shall be limited to one withdrawal in any one Plan Year as such is
defined in the Employees' Savings Trust Plan.
ARTICLE III
-----------
ADMINISTRATION
--------------
The Company shall be responsible for the general
administration of the Plan, for carrying out its provisions, and for making any
required excess benefit payments. The Company shall have any powers necessary to
administer and carry out the Plan. Actions taken and decisions made by the
Company shall be final and binding upon all interested parties. In accordance
with the provisions of Section 503 of ERISA, the Company shall provide a
procedure for handling claims for benefits under the Plan. The procedure shall
be in accordance with regulations issued by the Secretary of Labor and provide
adequate written notice within a reasonable period of time with respect to a
claim denial. The procedure shall also provide for a reasonable opportunity for
a full and fair review by the Company of any claim denial. The Company shall be
the "administrator" for purposes of ERISA.
ARTICLE IV
----------
AMENDMENT AND TERMINATION
-------------------------
The Company reserves the right to amend or terminate the Plan
at any time by action of its Board of Directors. No such action shall however
adversely affect any Employee or his beneficiary who is receiving excess
retirement benefits under the Plan, unless an equivalent benefit is provided
under another Plan or program sponsored by the Company.
<PAGE> 5
ARTICLE V
---------
MISCELLANEOUS
-------------
5.1 NON-ALIENATION OF RETIREMENT RIGHTS OR BENEFITS.
An Employee or beneficiary is not permitted to assign, transfer, alienate or
otherwise encumber the right to receive payments under the Plan. Any attempt to
do so or to permit the payments to be subject to garnishment, attachment or levy
of any kind will permit the Company to make payments directly to and for the
benefit of the Employee, his beneficiary or any other person. Each such payment
may be made without the intervention of a guardian. The receipt of the payee
shall constitute a complete acquittance to the Company with respect to the
payment. The Company shall have no responsibility for the proper application of
any payment.
5.2 INCAPACITY. The Company shall be permitted to
make payments in the same manner as provided for in Section 5.1 if in the
judgment of the Company, and Employee or his beneficiary is incapable of
attending to his financial affairs.
5.3 PLAN NON-CONTRACTUAL. This Plan shall not be
construed as a commitment or agreement on the part of any person employed by the
Company to continue his employment with the Company, nor shall it be construed
as a commitment on the part of the Company to continue the employment or the
annual rate of compensation of any such person for any period. All Employees
shall remain subject to discharge to the same extent as if the Plan had never
been established.
5.4 INTEREST OF EMPLOYEE. The obligation of the
Company under the Plan to provide an Employee or his beneficiary with an excess
retirement benefit merely constitutes the unsecured promise of the Company to
make payments as provided herein. No person shall have any interest in, or a
lien or prior claim upon, any property of the Company.
5.5 CONTROLLING STATUS. No Employee or beneficiary
shall be eligible for a benefit under the Plan unless such Employee is an
Employee on the date of his retirement, death, or other termination of
employment.
<PAGE> 6
5.6 CLAIMS OF OTHER PERSONS. The provisions of
the Plan shall in no event be construed as giving any person, firm or
corporation any legal or equitable right as against the Company, its officers,
employees, or directors, except any such rights as are specifically provided for
in the Plan or are hereafter created in accordance with the terms and provisions
of the Plan.
5.7 NO COMPETITION. The right of any Employee or
his beneficiary to an excess retirement benefit will be terminated, or, if
payment thereof has begun, all further payments will be discontinued and
forfeited in the event the Employee or his beneficiary at any time subsequent to
the effective date hereof:
(i) wrongfully discloses any secret process or trade
secret of the Company or any of its subsidiaries, or
(ii) becomes involved directly or indirectly as an
officer, trustee, employee, consultant, partner, or
substantial shareholder, on his own account or in any
other capacity, in a business venture that within the
two-year period following his retirement or
termination of employment, the Company's Board of
Directors determines to be competitive with the
Company.
5.8 SEVERABILITY. The invalidity or
unenforceability of any particular provision of the Plan shall not effect any
other provision hereof, and the Plan shall be construed in all respects as if
such invalid or unenforceable provision were omitted herefrom.
5.9 GOVERNING LAW. The provisions of the Plan
shall be governed and construed in accordance with the laws of
the State of Ohio.
EXECUTED this _______ day of ___________ , 198_.
NORDSON CORPORATION
By:
---------------------------------------
Title:
------------------------------------
<PAGE> 1
Exhibit 10-i
NORDSON CORPORATION
-------------------
EXCESS DEFINED BENEFIT PENSION PLAN
-----------------------------------
Nordson Corporation hereby establishes, effective November 1, 1985,
the Nordson Corporation Excess Defined Benefit Pension Plan ("Plan") to
supplement the pension benefits of certain salaried employees designated by the
Compensation Committee of the Board of Directors or its designee eligible to
participate in the Plan in accordance with the terms hereof, as permitted by
Section 3(36) of the Employee Retirement Income Security Act of 1974 ("ERISA").
ARTICLE I
---------
DEFINITIONS
-----------
1.1 DEFINITIONS. The following words and phrases shall have
the meanings indicated, unless a different meaning is plainly required by the
context:
(a) The term "Beneficiary" shall mean an Employee's
beneficiary or contingent annuitant.
(b) The term "Company" shall mean Nordson
Corporation, an Ohio corporation, its corporate successors and the
surviving corporation resulting from any merger of Nordson Corporation
with any other corporation or corporations.
(c) The term "Employee" shall mean any person
employed by the Company on a salaried basis who is designated by the
Compensation Committee of the Board of Directors or its designee to
participate in the Plan and who has not waived participation in the
Plan.
(d) The term "Plan" shall mean the excess defined
benefit pension plan as set forth herein, together with all amendments
hereto, which Plan shall be called the "Nordson Corporation Excess
Defined Benefit Pension Plan."
(e) The term "Salaried Pension Plan" shall mean the
Nordson Corporation Salaried Employees Pension Plan in effect on the
date of an employee's retirement, death, or other termination of
employment.
1.2 ADDITIONAL DEFINITIONS. All other words and phrases used
herein shall have the meanings given them in the Salaried Pension Plan, unless a
different meaning is clearly
<PAGE> 2
required by the context.
ARTICLE II
----------
EXCESS PENSION BENEFIT
----------------------
2.1 ELIGIBILITY. An Employee who is retired, dies, or
otherwise terminates his employment with the Company under conditions which make
such Employee or Beneficiary eligible for a benefit under the Salaried Pension
Plan, and whose benefits under the Salaried Pension Plan are limited by Section
415 of the Internal Revenue Code of 1954, as amended ("Code"), shall be eligible
for an excess pension benefit determined by Section 2.2.
2.2 AMOUNT. Subject to the provisions of Article III, the
monthly excess pension benefit payable to an Employee or Beneficiary shall be
such an amount which, when added to the monthly pension payable (before any
reduction applicable to an optional method of payment) under the Salaried
Pension Plan to such person, equals the monthly pension benefit that would have
been payable (before any reduction applicable to an optional method of payment)
under the Salaried Pension Plan to such person if the limitations of Section 415
of the Code were not in effect.
2.3 PAYMENTS. All payments under the Plan to an Employee or
Beneficiary shall be made by the Company from its general assets. The terms of
payment of the excess pension benefit shall be identical to those specified in
the Salaried Pension Plan for the type of benefit the Employee or Beneficiary
receives under the Salaried Pension Plan.
ARTICLE III
-----------
OPTIONAL METHODS OF PAYMENT
---------------------------
Payment of the excess pension benefit to an Employee or
Beneficiary shall be made in accordance with the terms and provisions of any
method of payment under the Salaried Pension Plan whether by option or by
operation of law, applicable to such Employee or Beneficiary. The amount of the
excess pension benefit payable to an Employee or Beneficiary shall be reduced to
<PAGE> 3
reflect any such optional method of payment. In making the determination and
reductions provided for in this Article III, the Company may rely upon
calculations made by the independent actuaries for the Salaried Pension Plan,
who shall apply the assumptions then in use in connection with the Salaried
Pension Plan.
ARTICLE IV
----------
ADMINISTRATION
--------------
The Company shall be responsible for the general
administration of the Plan, for carrying out its provisions, and for making any
required excess benefit payments. The Company shall have any powers as may be
necessary to administer and carry out the provisions of the Plan. Actions taken
and decisions made by the Company shall be final and binding upon all interested
parties. In accordance with the provisions of Section 503 of ERISA, the Company
shall provide a procedure for handling claims of Employees and Beneficiary for
benefits under the Plan. The procedure shall be in accordance with regulations
issued by the Secretary of Labor and provide adequate written notice within a
reasonable period of time with respect to a claim denial. The procedure shall
also provide for a reasonable opportunity for a full and fair review by the
Company of any claim denial. The Company shall be the "administrator" for
purposes of ERISA.
ARTICLE V
---------
AMENDMENT AND TERMINATION
-------------------------
The Company reserves the right to amend or terminate the Plan
at any time by action of its Board of Directors. No such action shall, however,
adversely affect any Employee or Beneficiary who is receiving excess pension
benefits under the Plan, unless an equivalent benefit is provided under the
Salaried Pension Plan or another plan sponsored by the Company.
<PAGE> 4
ARTICLE VI
----------
MISCELLANEOUS
-------------
6.1 NON-ALIENATION OF RETIREMENT RIGHTS OR BENEFITS.
Employees or Beneficiaries are not permitted to assign, transfer, alienate or
otherwise encumber the right to receive payments under the Plan. Any attempt to
do so or to permit the payments to be subject to garnishment, attachment or
levy of any kind will permit the Company to make payments directly to and for
the benefit of the Employee, Beneficiary or any other person. Each such payment
may be made without the intervention of a guardian. The receipt of the
payee shall constitute a complete acquittance to the Company with respect to
any payments, and the Company shall have no responsibility for the proper
application of any payment.
6.2 INCAPACITY. The Company shall be permitted to make
payments in the same manner as provided for in Section 6.1 if in the judgment of
the Company an Employee or Beneficiary is incapable of attending to his
financial affairs.
6.3 PLAN NON-CONTRACTUAL. This Plan shall not be construed as
a commitment or agreement on the part of any person employed by the Company to
continue his employment with the Company, nor shall it be construed as a
commitment on the part of the Company to continue the employment or the annual
rate of compensation of any such person for any period. All Employees shall
remain subject to discharge to the same extent as if the Plan had never been
established.
6.4 INTEREST OF EMPLOYEE. The obligation of the Company under
the Plan to provide an Employee or Beneficiary with an excess pension benefit
merely constitutes the unsecured promise of the Company to make payments as
provided herein, and no person shall have any interest in, or a lien or prior
claim upon, any property of the Company.
6.5 CONTROLLING STATUS. No Employee or Beneficiary shall be
eligible for a benefit under the Plan unless the Employee is an Employee on the
date of his retirement, death, or other termination of employment.
6.6 CLAIMS OF OTHER PERSONS. The provisions of the Plan shall
in no event be construed as giving any person, firm or
<PAGE> 5
corporation any legal or equitable right against the Company, its officers,
employees, or directors, except any such rights as are specifically provided for
in the Plan or are hereafter created in accordance with the terms and provisions
of the Plan.
6.7 NO COMPETITION. The right of any Employee or Beneficiary
to an excess pension benefit will be terminated, or, if payment thereof has
begun, all further payments will be discontinued and forfeited in the event the
Employee or Beneficiary at any time subsequent to the effective date hereof:
(i) wrongfully discloses any secret process or trade
secret of the Company or any of its subsidiaries, or
(ii) becomes involved, directly or indirectly as an
officer, trustee, employee, consultant, partner, or
substantial shareholder, on his own account or in any other
capacity, in a business venture that within the two-year
period following the retirement or termination of employment
of the Employee, the Company's Board of Directors determines
to be competitive with the Company.
6.8 SEVERABILITY. The invalidity or unenforceability
of any particular provision of the Plan shall not effect any other provision
hereof, and the Plan shall be construed in all respects as if such invalid or
unenforceable provision were omitted herefrom.
6.9 GOVERNING LAW. The provisions of the Plan shall be
governed and construed in accordance with the laws of the State of Ohio.
EXECUTED this _____ day of _______________, 198_ .
NORDSON CORPORATION
By
---------------------------------------
Title:
-------------------------------------
<PAGE> 1
Exhibit 10-j
NORDSON CORPORATION
OFFICERS' DEFERRED COMPENSATION PLAN
Nordson Corporation hereby establishes the Nordson Corporation Officers'
Deferred Compensation Plan for the benefit of officers of the Corporation
designated by the Compensation Committee of the Board of Directors of Nordson
Corporation to participate in the Plan.
GENERAL
1. PURPOSE
The purposes of this Officers' Deferred Compensation Plan are (1) to
provide officers of Nordson Corporation and its subsidiaries an
opportunity to defer incentive compensation as an alternative means of
providing retirement income or for other objectives and (2) to provide
an employment benefit to enable the Corporation to retain officers who
will contribute to increasing the value of the Corporation to its
shareholders.
2. DEFINITIONS
The following words and phrases shall have the meanings indicated and
be applicable throughout the Officers' Deferred Compensation Plan:
(a) "Beneficiary" - the person or persons who upon the death,
disability or incompetency of a Participant shall have
acquired, by will, by laws of descent and distribution or by
other legal proceedings, the right to the Participant's Cash
Account.
(b) "Board" - the Board of Directors of Nordson Corporation.
(c) "Cash Account" - the Participant's account established
pursuant to Section 6(a).
(d) "Cash Credit" - deferred Officer Compensation and interest
credited to a Participant's Cash Account.
(e) "Company" - collectively Nordson Corporation and its
subsidiaries, its successors and the surviving corporation
resulting from any merger of the Company with any other
corporation(s).
(f) "Director Committee" - the committee composed of members of
the Compensation Committee of the Board of Directors of
Nordson Corporation.
(g) "Officer" - a full time salaried employee of the Company
elected by the Board to serve as an officer of
<PAGE> 2
the Company for a period of time so designated by the
Board.
(h) "Officer Compensation" - any incentive compensation earned by
an Officer of the Company, determined by the Director
Committee to be deferable under this Plan.
(i) "Participant" - an Officer who has elected to defer payment of
all or a portion of Officer Compensation under this Plan.
(j) "Plan" - this Nordson Corporation Officers' Deferred
Compensation Plan.
(k) "Service Year" - the twelve (12) month period or portion
thereof coinciding with Nordson Corporation's fiscal year
during which services have been rendered by an Officer of the
Company and within which incentive compensation is earned.
(l) "Termination" - separation from the Company due to a
Participant's voluntary or involuntary termination of
employment, but not including separation due to death,
disability or retirement.
3. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan, upon adoption by the Board, shall become effective for the
Service Year commencing November 2, 1987. The Plan shall remain in
effect until such time as it may be terminated by the Board.
4. ADMINISTRATION
(a) Administration of the Plan. The Director Committee
shall be responsible for administering the terms of the
Plan. A majority of the Director Committee shall
constitute a quorum. The Director Committee shall act
by majority action at a meeting, except that action
permitted to be taken at a meeting may be taken without
a meeting if written consent thereto is given by all
members of the Director Committee.
(b) Nomination and Approval of Participants. The Chief
Executive Officer and President of the Company shall
submit for Director Committee approval a list of
Officers nominated for participation in the Plan. This
submittal shall occur no later than sixty (60) days
prior to commencement of a Service Year or, in the
event an Officer is appointed to his or her position
during a Service Year, prior to the Officer performing
services in the capacity of an Officer of the Company.
The Director Committee shall notify Officers whom it
<PAGE> 3
has approved for participation in the Plan of their ability to
defer Officer Compensation thirty (30) days prior to the
Service Year in which Officer Compensation may be earned. For
Officers elected by the Board during a Service Year, the
Director Committee shall notify those Officers approved to
participate in the Plan of their ability to defer Officer
Compensation prior to performance of services as an Officer of
the Company.
(c) Powers. The Director Committee shall have such powers
as are delegated to it by the Chairman of the Board and
other provisions of the Plan. Subject to the express
provisions of the Plan, this shall include the power to
construe the Plan, to prescribe rules and regulations
relating to the Plan and to make all other
determinations necessary or advisable for administering
the Plan. The Director Committee may adopt rules and
procedures which will restrict operation of the
provisions of the Plan with respect to Officers to the
extent necessary to comply with applicable federal
securities laws and regulations thereunder. The
Director Committee may delegate to employees of the
Company the responsibility of performing ministerial
acts in furtherance of the Plan's purposes. Decisions
and determinations by the Board Committee shall be
final and binding upon Participants except as otherwise
provided in Section 9.
5. ELECTION TO DEFER
(a) Timing and Manner of Election. Once notified of his or
her ability to defer Officer Compensation in accordance
with Section 4(b), an Officer may elect, under the
terms and conditions of the Plan, to defer payment of
all or a portion of his or her Officer Compensation.
Such election shall be made by written notice to the
Director Committee prior to the commencement of each
Service Year in which an Officer is a Participant in
the Plan.
With respect to Officers elected during a Service Year, an
election to defer Officer Compensation shall be made prior to
the commencement of services as an Officer of the Company. An
election to defer Officer Compensation is effective for one
Service year and is irrevocable.
(b) Election Alternatives. An Officer may choose to defer the
payment of Officer Compensation for a period of one (1) year;
five (5) years; ten (10) years; (15) years following the close
of a Service Year in which an election to defer is made or
until retirement.
<PAGE> 4
6. PARTICIPANT CASH ACCOUNT
(a) Cash Account. Officer Compensation which is deferred shall be
credited to the Participant's Cash Account. The amount so
credited shall constitute a Cash Credit.
(b) Interest. Interest on a Participant's Cash Account
will be credited to the Cash Account after the close of
the Company's Fiscal Year. Interest will be calculated
as of the last business day prior to the close of the
Company's Fiscal Year and will be based on the rate of
interest of Ten Year Treasury Securities as reported in
the Federal Reserve Bank Constant Maturity Series H-15
Report.
Except in the event Participant's Termination, interest will
continue to be credited to the balance of Participant's Cash
Account during installment distribution of Participant's Cash
Account.
(c) Credits for Book Entry Purposes Only. The Company shall
maintain records with respect to the credits to each
Participant's Cash Account, but such credits shall be made
only in the records of the Company pursuant to Section 11(a).
7. DISTRIBUTION OF DEFERRED OFFICER COMPENSATION
(a) General. The Director Committee shall determine, as of the
date of the first distribution to be made under a
Participant's distribution schedule, the total amount of Cash
Credits, including accrued interest to date in the
Participant's Cash Account.
(b) Time and Form of Distribution:
(1) Other Than in the Event of Death, Disability or
Termination of Employment. Distribution may be
elected in lump sum form or annual, semi-annual or
quarterly installments not to exceed ten (10) annual,
twenty (20) semi-annual or forty (40) quarterly
installments.
(2) In the Event of Death of Participant. Distribution
will be made to the Beneficiary designated by
Participant at the time Participant makes an election
to defer Employee Compensation. The form of
distribution will be a lump sum payment of
Participant's Cash Account unless, at the time of
making an election to defer, Participant elects an
installment form of distribution under the various
installment distribution methods as provided in
Section 7(b)(1) above.
(3) In the Event of Disability of Participant. Where
Participant suffers a disability preventing
<PAGE> 5
Participant from continuing active employment with
the Company, Participant's Cash Account will be
distributed to Participant in a lump sum or annual,
semi-annual or quarterly installments as provided in
Section 7(b)(1) above.
(4) In the event of Termination of Employment Other than
for Death, Disability or Retirement. Participant's
entire Cash Account shall be distributed to
Participant within one hundred twenty (120) days
following Participant's last day of employment with
the Company. Interest will no longer accrue to the
Cash Account following the Participant's last day of
employment with the Company.
Where Participant elects an installment method of distribution, the
amount of each installment payment will equal the balance of the Cash
Account at the time of each distribution divided by the number of
remaining installments.
8. DISTRIBUTION IN THE EVENT OF FINANCIAL HARDSHIP
Notwithstanding the provisions of Section 5(b), a Participant may
withdraw all of a portion of amounts in a Participant's Cash Account
upon a demonstration by the Participant of financial hardship as a
result of accident, illness, disability or other event beyond the
control of the Participant which would cause the Participant great
hardship if withdrawal were not permitted. The amount of any such
distribution shall be limited to the amount deemed necessary by the
Director Committee to alleviate or remedy the Participant's hardship.
9. REVIEW OF DETERMINATIONS BY THE BOARD COMMITTEE
Any Participant or their Beneficiary who claims a benefit under the
Plan which is wholly or partially denied or requests a determination
with respect to any provision of the Plan shall be advised in writing
of the denial or determination by the Director Committee and the
reasons for the denial.
Upon receipt of a written request which is filed with the Director
Committee within sixty (60) days after the claim is denied or the
determination is made, the Participant or his or her Beneficiary will
be afforded a full and fair review by the Director Committee of the
claim denied or the determination made. The result of such review shall
be delivered in writing within sixty (60) days after the request for
review is received and shall include specific reasons for the decision.
<PAGE> 6
10. OTHER MATTERS
(a) No Reserve or Trust. This Plan does not require the
Company to segregate from its general funds, or to
create any trust or make any special deposit in respect
of, any amount payable under the Plan to any
Participant or Beneficiary. All credits to a
Participant's Cash Account shall be made only in the
records of the Company. All distributions under the
Plan shall be paid out of the general funds of the
Company.
(b) No Right to Assign. No right or interest of any
Participant in the Plan shall, prior to actual payment
or distribution to such Participant, be assignable or
transferable in whole or in part, either voluntarily or
by operation of law or otherwise, or be subject to
payment of debts of any Participant by execution, levy,
garnishment, attachment, pledge, bankruptcy or in any
other manner.
(c) No Employment Rights Conferred. Nothing contained in
the Plan shall (i) confer upon any Officer any right
with respect to continuation of employment with the
Company, (ii) be construed as a commitment on the part
of the Company to provide incentive compensation to any
Officer, (iii) interfere in any way with the right of
the Company to terminate the Officer's employment at
any time or (iv) confer upon any Officer or Beneficiary
any claim or right to any distribution under the Plan
except in accordance with its terms.
(d) Interest of Officer or Beneficiary. The obligation of
the Company to provide benefits under the Plan is an
unsecured promise on the part of the Company to make
payments to an Officer or his or her respective
Beneficiary as provided herein. All Officer
Compensation deferred and amounts credited to a
Participant's Cash Account remain assets of the Company
and are subject to claims of its general creditors.
(e) Severability. The invalidity or unenforceability of any
particular provision of the Plan shall not effect any other
provision of the Plan. The Plan shall be construed in all
respects as if such invalid or unenforceable provisions were
omitted herefrom.
(f) Governing Law. The provisions of the Plan shall be
governed and construed in accordance with the laws of
the State of Ohio.
11. AMENDMENT
The Board may from time to time amend, suspend, terminate or reinstate
any or all of the provisions of the Plan, except that no amendment,
suspension or termination shall adversely
<PAGE> 7
affect any Participant's Cash Account as it existed on the effective
date of such amendment, suspension or termination.
In the event of termination of the Plan, Cash Account balances shall be
distributed under the terms of the Plan without additional deferrals
permitted.
<PAGE> 1
Exhibit 10-m
NORDSON CORPORATION
1992 RESTRICTED STOCK PLAN
SECTION 1. PURPOSES
The purpose of this Plan is to attract, retain, and motivate
key employees of Nordson Corporation and its subsidiaries and to reward the
performance and to build the equity interest of key employees by providing
long-term incentives to individuals who are in a position to make a substantial
contribution to the continued progress and success of the Company.
SECTION 2. DEFINITIONS
Whenever used in this Plan, the following terms will have the
meanings set forth below:
2.1 "Award" means a grant of Restricted Stock under this Plan.
2.2 "Board of Directors" means the Board of Directors of Nordson
Corporation.
2.3 "Change of Control" will be deemed to have occurred if at any time
after the Effective Date of this Plan:
(a) any Person (other than the Company, any of its
subsidiaries, any employee benefit plan or employee stock ownership
plan of the Company, or any Person organized, appointed, or established
by the Company 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 Nord Family Foundation
will be excluded and, for purposes of determining whether the Walter G.
Nord Trust or the Nord Family 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
Section 2.3, the terms "Adverse Person," "Affiliates," "Associates,"
"Beneficial Owner," and "Person"
<PAGE> 2
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 (the "Rights
Agreement").
(b) At any time during a period of 24 consecutive
months, individuals who were Directors of the Company at the beginning
of the period no longer constitute a majority of the members of the
Board of Directors, unless the election, or the nomination for election
by the Company'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.
(c) A record date is established for determining
shareholders entitled to vote upon (i) a merger or consolidation of the
Company with another corporation in which the Company 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, (ii) a sale or other disposition
of all or substantially all of the assets of the Company, or (iii) the
dissolution of the Company.
(d) Any person who proposes to make a "control share
acquisition" of the Company, 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 the Company.
2.4 "Committee" means the Compensation Committee of the Board of Directors,
consisting of not less than three Directors appointed by and serving
during the pleasure of the Board of Directors, so long as the
composition of the Committee satisfies the "disinterested"
administration standard of Rule 16b-3 under the Exchange Act. Except to
the extent permitted by Rule 16b-3, no Director who, during one year
prior to service as a member of the Committee or at any time during
such service, has been granted or awarded equity securities of the
Company pursuant to this Plan or any other plan of the Company may
serve as a member of the Committee.
2.5 "Company" means Nordson Corporation and its subsidiaries and
affiliates, including any corporation, partnership, joint venture, or
other business entity in which the Nordson Corporation owns, directly,
or indirectly, more than 50 percent of the total combined voting power
of all classes of stock or other ownership interests.
2.6 "Disability" means a physical or mental impairment, due
to accident or illness, that renders a Participant
<PAGE> 3
incapable of performing the duties of his normal occupation, as
determined by the Committee. The Committee may, in its discretion,
require that the existence of the Disability be verified by a physician
approved by the Committee.
2.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute.
2.8 "Participant" means any employee of the Company to whom an Award is
made.
2.9 "Plan" means this Nordson Corporation 1992 Restricted Stock Plan.
2.10 "Restriction Period" means the period from the date of the Award until
the earlier of (i) the date of lapse of restrictions and risk of
forfeiture specified by the Committee in the grant or thereafter
amended by the Committee pursuant to Section 6.2, 6.3, or 8.3 of the
Plan, (ii) the date of occurrence of a Change in Control, or (iii) the
termination of the Participant's employment with the Company by
retirement in accordance with Section 6.1.
2.11 "Restricted Stock" means the Common Shares, with no par value, of the
Company awarded to a Participant under this Plan, subject to adjustment
as provided in Section 7.
2.12 "Restricted Stock Award" means the award of Restricted Stock under this
Plan.
SECTION 3. PLAN ADMINISTRATION
This Plan will be administered by the Committee. The Committee
will have the authority to interpret and administer this Plan, including the
selection of the Participants to whom Awards will be granted, the determination
of the Restriction Period, number of shares of Restricted Stock, and other terms
of each Award and the granting of Awards.
The Committee will also have the authority, if it deems appropriate, to make
rules governing the operation of this Plan and to prescribe the form of
agreements to be entered into by Participants. As to Participants who are not
subject to Section 16 of Exchange Act, the Committee may, in its discretion and
subject to any limitations it may prescribe, delegate to the Chief Executive
Officer of the Company its authority to administer this Plan, including its
authority to grant Awards. Any action by the Committee or by the Chief Executive
Officer, as the case may be, in administering this Plan will be final and
binding on the Company, the Participants, their successors and assigns, and
anyone else claiming under or through them.
<PAGE> 4
SECTION 4. SHARES SUBJECT TO THIS PLAN
Subject to adjustment as provided in Section 7, the total
number of shares of Restricted Stock that may be granted under this Plan will be
500,000. Any shares issued under this Plan may consist, in whole or in part, of
authorized and unissued shares, treasury shares, or Common Shares acquired on
the open market specifically for distribution under this Plan.
SECTION 5. AWARDS
5.1 Awards. Restricted Stock Awards will be evidenced by a writing, will
conform to the requirements of this Plan, and may contain such other
provisions (such as performance targets) as the Committee deems
advisable.
5.2 Rights as a Shareholder. Subject to the restrictions on transfer and
the risk of forfeiture, a Participant will have all of the rights of a
holder of the Restricted Stock subject to the Award, including the
right to receive dividends paid on and to vote the Restricted Stock.
5.3 Restriction on Transfer. During the Restriction Period, the Restricted
Stock may not be sold, given, pledged, assigned, or otherwise
transferred for any reason other than by will, the laws of descent and
distribution, or pursuant to a qualified domestic relations order, and
any attempt to do so will be ineffective and, subject to the discretion
of the Committee, will result in the forfeiture of the Restricted
Stock.
5.4 Restrictive Legend. Certificates representing all shares of Restricted
Stock will bear the following legend:
"Transfer of the shares represented by this certificate is
restricted in accordance with the Nordson Corporation 1992
Restricted stock Plan. These shares may not be sold, given,
pledged, assigned, or otherwise transferred prior to [date on
which restriction lapses]."
If the Restriction Period lapses pursuant to the Plan prior to the date
set forth in the legend, the Participant will be entitled to have the
legend removed from the certificate.
SECTION 6. TERMINATION OF EMPLOYMENT
6.1 Termination of Employment Due to Retirement at Normal Retirement Date.
In the event that a Participant, during the Restriction Period
applicable to any Restricted Stock, terminates employment with the
Company due to
<PAGE> 5
retirement at the Participant's normal retirement date under the terms
of the retirement plan of the Company applicable to the Participant,
the Restriction Period will terminate, and all of the Restricted Stock
will become free of the restrictions on transfer set forth in Section
5.3.
6.2 Termination of Employment Due to Early Retirement, Death, or
Disability. In the event a participant, during the Restriction Period
applicable to any Restricted Stock, terminates his employment with the
Company due to retirement before his or her normal retirement date,
death, or disability, the Restriction Period will terminate with
respect to that number of shares of the Restricted Stock (rounded to
the nearest whole number) equal to the product of (i) the total number
of shares of the Restricted Stock multiplied by (ii) a fraction the
numerator of which is the number of full months that have elapsed since
the date of grant and the denominator of which is the number of full
months of the full Restriction Period, and that number of shares of the
Restricted Stock will become free of the restrictions on transfer set
forth in Section 5.3. All remaining shares of the Restricted Stock will
be forfeited and returned to the Company; except that the Committee
may, in its discretion, waive the forfeiture of any or all such
remaining shares.
6.3 Termination of Employment for Reasons Other Than Death, Disability, or
Retirement. In the event that a Participant, during the Restriction
Period applicable to any Restricted Stock, terminates his employment
with the Company for any reason other than those set forth in Sections
6.1 and 6.2, then all shares of the Restricted Stock will be forfeited
and returned to the Company; except that, in the event of an
involuntary termination of the employment of a Participant by the
Company, the Committee may, in its discretion, waive the forfeiture of
any or all such shares.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation, or any
other change in the corporate structure of the Company affecting the Common
Shares of the Company, or a distribution to shareholders other than a normal
cash dividend, the Board of Directors will make an appropriate adjustment in the
number and type of shares to be awarded under this Plan and in any outstanding
Restricted Stock Awards.
<PAGE> 6
SECTION 8. EFFECTIVE DATE, DURATION, AND AMENDMENTS
8.1 Effective Date. This Plan will become effective as of January 1, 1992.
8.2 Duration; Amendment of Plan. This Plan will remain in full force and
effect until all Common Shares subject to this Plan have been awarded
and the Restriction Period relating to such Common Shares has lapsed.
The Board of Directors will have the power to amend, suspend, or
terminate this Plan at any time, provided that no such action will
adversely affect any outstanding Award without the Participant's
consent. This Plan may not be amended without shareholder approval if
such approval is required to qualify the Plan under Rule 16b-3 of the
Exchange Act.
8.3 Amendment of Awards. The Committee may, in its discretion, amend any or
all outstanding Restricted Stock Awards, including amendments to
accelerate the lapse of the Restriction Period, to the extent it deems
appropriate. In no event however, will the Restriction Period
applicable to a Restricted Stock Award granted to a Participant who is
subject to Section 16 of the Exchange Act be less than six months from
the date of grant (unless otherwise permitted under Rule 16b-3 of the
Exchange Act). Such amendment may be unilateral by the Committee,
except in the case of amendments adverse to the Participant, in which
case the Participant's consent is required to any such amendment.
SECTION 9. GENERAL PROVISIONS
9.1 Plan Noncontractual. Nothing contained in this Plan, or in any Award
granted under this Plan, will confer upon any Participant any right to
the continuation of employment by the Company.
9.2 Transfer of Employment. For purposes of this Plan, transfer of
employment between Nordson Corporation and its subsidiaries and
affiliates will not be deemed to be a termination of employment.
9.3 Tax Withholding. Appropriate provision may be made for the payment of
all taxes required to be withheld in connection with any Award or with
dividends payable on any shares of Restricted Stock. The Committee may,
in its discretion, permit a Participant to satisfy, in whole or in
part, any withholding tax that may arise in connection with an Award,
or the lapse of restrictions on an Award, by delivering Common Shares
of the Company with a fair market value equal to the amount of the
withholding tax. The fair market value of the Common Shares to be
delivered or retained shall be the closing price of the Common Shares
as reported by the NASDAQ National Market
<PAGE> 7
System for the last date on which trades were reported prior to the
date on which the amount of the withholding tax is determined.
9.4 Governing Law. This Plan and all documents delivered pursuant to this
Plan will be construed in accordance with and governed by the laws of
Ohio.
9.5 Grants to Employees in Foreign Countries. Without amending this Plan,
Restricted Stock Awards may be granted to Participants who are foreign
nationals, or who are United States nationals employed outside the
United States, on such terms and conditions different from those
specified in this Plan as may, in discretion of the Committee, be
necessary or desirable to further the purpose of this Plan.
<PAGE> 1
Exhibit 10-n
NORDSON CORPORATION
1993 LONG-TERM PERFORMANCE PLAN
1. PURPOSE
The Nordson Corporation 1993 Long-Term Performance Plan (the
"Plan") is designed to foster and promote the long-term growth and performance
of the Company by: (a) enhancing the Company's ability to attract and retain
qualified Directors and employees and (b) motivating Directors and employees
through stock ownership and performance-based incentives. To achieve this
purpose, this Plan provides authority for the grant of Stock Options, Director
Options, Restricted Stock, Stock Equivalent Units, Stock Appreciation Rights,
and other stock and performance-based incentives and the maintenance of an
employee stock purchase program.
2. DEFINITIONS
(a) "AFFILIATE" - This term has the meaning given to it in Rule
12b-2 under the Exchange Act.
(b) "AWARD" - The grant of Stock Options, Director Options,
Restricted Stock, Stock Equivalent Units, Stock Appreciation Rights, Stock
Purchase Rights, Cash Awards, and other stock and performance-based incentives
under this Plan.
(c) "AWARD AGREEMENT" - Any agreement between the Company and a
Participant that sets forth terms, conditions, and restrictions applicable to an
Award.
(d) "BOARD OF DIRECTORS" - The Board of Directors of the Company.
(e) "CASH AWARD" - This term has the meaning given to it in
Section 6(b)(vi).
(f) "CHANGE IN CONTROL" - A "Change in Control" will be deemed to
occur if at any time after the date of the adoption of this Plan:
(i) any person (other than Nordson Corporation, any
of its subsidiaries, any employee benefit plan or employee stock
ownership plan of Nordson Corporation, or any Person organized,
appointed, or established by Nordson Corporation 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
<PAGE> 2
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 Thomas 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 Nord Family Foundation (or
any successor to the Nord Family Foundation) will be excluded and, for
purposes of determining whether the Walter G. Nord Trust or the Nord
Family Foundation (or any successor), 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
Thomas Nord and by Evan W. Nord will be excluded). For purposes of this
Section 2(e)(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 Corporation 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 at the beginning of the period
no longer constitute a majority of the members of the Board of
Directors, unless the election, or the nomination for election by
Nordson Corporation'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 Corporation with another corporation in which Nordson
Corporation 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
Corporation, or (C) the dissolution of Nordson Corporation.
(iv) Any person who proposes to make a "control share
acquisition" of Nordson Corporation, 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 Corporation.
(g) "CODE" - The Internal Revenue Code of 1986, or any law that
supersedes or replaces it, as amended from time to time.
<PAGE> 3
(h) "COMMITTEE" - The Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that the Board of
Directors authorizes to administer this Plan. The Committee will be constituted
in a manner that satisfies all applicable legal requirements, including
satisfying the disinterested administration standard set forth in Rule 16b-3.
(i) "COMMON SHARES" or "SHARES" - Common Shares without par value
of Nordson Corporation, including authorized and unissued shares and treasury
shares.
(j) "COMPANY" - Nordson Corporation, an Ohio corporation, and its
direct and indirect subsidiaries.
(k) "CONTINUING DIRECTOR" - A Director who was a Director prior
to a Change in Control or was recommended or elected to succeed a Continuing
Director by a majority of the Continuing Directors then in office.
(l) "DIRECTOR" - A director of Nordson Corporation.
(m) "DIRECTOR OPTION" - A right to purchase Common Shares granted
to a Director pursuant to Section 7.
(n) "EXCHANGE ACT" - Securities Exchange Act of 1934, and any law
that supersedes or replaces it, as amended from time to time
(o) "FAIR MARKET VALUE" of Common Shares - The value of the
Common Shares determined by the Committee, or pursuant to rules established by
the Committee on a basis consistent with regulations under the Code; except
that, "Fair Market Value" with respect to Director Options has the meaning
set forth in Section 7(h).
(p) "INCENTIVE STOCK OPTION" - A Stock Option that meets the
requirements of Section 422 of the Code.
(q) "NON-EMPLOYEE DIRECTOR" - A Director who is not an employee
of the Company.
(r) "NOTICE OF AWARD" - Any notice by the Committee to a
Participant that advises the Participant of the grant of an Award or sets forth
terms, conditions, and restrictions applicable to an Award.
(s) "PARTICIPANT" - Any person to whom an Award has been granted
under this Plan.
(t) "RESTRICTED STOCK" - An Award of Common Shares that are
subject to restrictions or risk of forfeiture.
<PAGE> 4
(u) "RULE 16b-3" - Rule 16b-3 under the Exchange Act, or any rule
that supersedes or replaces it, as amended from time to time.
(v) "STOCK APPRECIATION RIGHT" - This term has the meaning given
to it in Section 6(b)(ii).
(w) "STOCK AWARD" - This term has the meaning given to it in
Section 6(b)(iii).
(x) "STOCK EQUIVALENT UNIT" - An Award that is valued by
reference to the value of Common Shares.
(y) "STOCK OPTION" - This term has the meaning given to it in
Section 6(b)(iv).
(z) "STOCK PURCHASE RIGHT" - This term has the meaning given to
it in Section 6(b)(v).
3. ELIGIBILITY
All employees of the Company and its Affiliates are eligible for
the grant of Awards (other than Director Options). The selection of the
employees to receive Awards (other than Director Options) will be within the
discretion of the Committee. More than one Award may be granted to the same
employee.
All Non-Employee Directors are eligible for the grant of Director
Options, as provided in Section 7. Non-Employee Directors are not, however,
eligible for the grant of any Awards other than Director Options.
4. COMMON SHARES AVAILABLE FOR AWARDS; ADJUSTMENT
(a) NUMBER OF COMMON SHARES. The aggregate number of Common
Shares that may be subject to Awards granted under this Plan in any fiscal year
of the Company during the term of this Plan will be equal to the sum of (i)
three percent (3.0%) of the number of Common Shares outstanding as of the first
day of that fiscal year plus (ii) the number of Common Shares that were
available for the grant of Awards, but not granted, under this Plan in previous
fiscal years; provided that, in no event will the number of Common Shares
available for the grant of Awards in any fiscal year exceed three and one-half
percent (3.5%) of the Common Shares outstanding as of the first day of that
fiscal year. The aggregate number of Common Shares that may be issued upon
exercise of Incentive Stock Options is 1,000,000.
The assumption of awards granted by an organization acquired by
the Company, or the grant of Awards
<PAGE> 5
under this Plan in substitution for any such awards, will not reduce the number
of Common Shares available in any fiscal year for the grant of Awards under this
Plan.
Common Shares subject to an Award that is forfeited, terminated,
or canceled without having been exercised (other than Common Shares subject to a
Stock Option that is canceled upon the exercise of a related Stock Appreciation
Right) will be again be available for grant under this Plan, without reducing
the number of Common Shares available in any fiscal year for grant of Awards
under this Plan, except to the extent that the availability of those Common
Shares would cause this Plan or any Awards granted under this Plan to fail to
qualify for the exemption provided by Rule 16b-3.
(b) NO FRACTIONAL SHARES. No fractional shares will be issued,
and the Committee will determine the manner in which the value of fractional
shares will be treated.
(c) ADJUSTMENT. In the event of any change in the Common Shares
by reason of a merger, consolidation, reorganization, recapitalization, or
similar transaction, or in the event of a stock dividend, stock split, or
distribution to shareholders (other than normal cash dividends), the Committee
will adjust the number and class of shares that may be issued under this Plan,
the number and class of shares subject to outstanding Awards, the exercise price
applicable to outstanding Awards, and the Fair Market Value of the Common
Shares and other value determinations applicable to outstanding Awards.
5. ADMINISTRATION
(a) COMMITTEE. This Plan will be administered by the Committee.
The Committee will, subject to the terms of this Plan, have the authority to:
(i) select the eligible employees who will receive Awards, (ii) grant Awards
(other than Director Options), (iii) determine the number and types of Awards to
be granted to employees, (iv) determine the terms, conditions, vesting periods,
and restrictions applicable to Awards (other than Director Options), (v) adopt,
alter, and repeal administrative rules and practices governing this Plan, (vi)
interpret the terms and provisions of this Plan and any Awards granted under
this Plan, (vii) prescribe the forms of any Notices of Award, Award Agreements,
or other instruments relating to Awards, and (viii) otherwise supervise the
administration of this Plan. All decisions by the Committee will be made with
the approval of not less than a majority of its members.
<PAGE> 6
(b) DELEGATION. The Committee may delegate any of its authority
to any other person or persons that it deems appropriate, provided the
delegation does not cause this Plan or any Awards granted under this Plan to
fail to qualify for the exemption provided by Rule 16b-3.
(c) DECISIONS FINAL. All decisions by the Committee, and by any
other person or persons to whom the Committee has delegated authority, will be
final and binding on all persons.
6. AWARDS
(a) GRANT OF AWARDS. The Committee will determine the type or
types of Awards to be granted to each Participant and will set forth in the
related Notice of Award or Award Agreement the terms, conditions, vesting
periods, and restrictions applicable to each Award. Awards may be granted singly
or in combination or tandem with other Awards. Awards may also be granted in
replacement of, or in substitution for, other awards granted by the Company,
whether or not granted under this Plan; without limiting the foregoing, if a
Participant pays all or part of the exercise price or taxes associated with an
Award by the transfer of Common Shares or the surrender of all or part of an
Award (including the Award being exercised), the Committee may, in its
discretion, grant a new Award to replace the Common Shares that were transferred
or the Award that was surrendered. The Company may assume awards granted by an
organization acquired by the Company or may grant Awards in replacement of, or
in substitution for, any such awards.
(b) TYPES OF AWARDS. Awards may include, but are not limited to,
the following:
(i) DIRECTOR OPTION - A right to purchase Common
Shares granted to a Director pursuant to Section 7.
(ii) STOCK APPRECIATION RIGHT - A right to receive a
payment, in cash or Common Shares, equal to the excess of (A) the Fair
Market Value, or other specified valuation, of a specified number of
Common Shares on the date the right is exercised over (B) the Fair
Market Value, or other specified valuation, on the date the right is
granted, all as determined by the Committee. The right may be
conditioned upon the occurrence of certain events, such as a Change in
Control of the Company, or may be unconditional, as determined by the
Committee.
(iii) STOCK AWARD - An Award that is made in Common
Shares, Restricted Stock, or Stock Equivalent Units or that is
otherwise based on, or valued in whole or in part by reference to, the
Common Shares. All or part of any
<PAGE> 7
Stock Award may be subject to conditions, restrictions, and risks of
forfeiture, as and to the extent established by the Committee. Stock
Awards may be based on the Fair Market Value of the Common Shares, or
on other specified values or methods of valuation, as determined by the
Committee.
(iv) STOCK OPTION - A right to purchase a specified
number of Common Shares, during a specified period, and at a specified
exercise price, all as determined by the Committee. A Stock Option may
be an Incentive Stock Option or a Stock Option that does not qualify as
an Incentive Stock Option. In addition to the terms, conditions,
vesting periods, and restrictions established by the Committee,
Incentive Stock Options must comply with the requirements of Section
422 of the Code. The exercise price of a Stock Option that does not
qualify as an Incentive Stock Option may be more or less than the Fair
Market Value of the Common Shares on the date the Stock Option is
granted.
(v) STOCK PURCHASE RIGHT - A right to participate in
a stock purchase program, including but not limited to a stock purchase
program that meets the requirements of Section 423 of the Code.
Among other requirements, Section 423 currently
provides that (A) only employees of Nordson Corporation, or of any
direct or indirect subsidiary of Nordson Corporation designated by the
Committee, may receive Stock Purchase Rights that qualify under Section
423 ("Section 423 Rights"), (B) Section 423 Rights may not be granted
to any Participant who, immediately after the Section 423 Rights are
granted, owns stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of Nordson
Corporation, (C) Section 423 Rights must be granted to all employees of
Nordson Corporation, and of any direct or indirect subsidiary of
Nordson Corporation designated by the Committee, except that there may
be excluded (1) employees who have been employed less than two years,
(2) employees whose customary employment is 20 hours or less per week,
(3) employees whose customary employment is for not more than five
months in any calendar year, and (4) highly compensated employees
(within the meaning of Section 414(q) of the Code), (D) all employees
granted Section 423 Rights must have the same rights and privileges,
except that the number of Common Shares that may be purchased by any
employee upon exercise of Section 423 Rights may bear a uniform
relationship to the total compensation, or the basic or regular rate of
compensation, of the employee, (E) the exercise price of Section 423
Rights may not be less than the lesser of (1) eighty five percent (85%)
of the Fair Market Value of the Common Shares at the time Section 423
Rights are granted, or (2) eighty five percent (85%) of the Fair Market
Value of the Common
<PAGE> 8
Shares at the time the Section 423 Rights are exercised; (F) Section
423 Rights cannot be exercised after the expiration of 27 months from
the date the Section 423 Rights are granted, and (G) no employee may be
granted Section 423 Rights, under this Plan and any other plans of
Nordson Corporation and it subsidiaries, that permit the purchase of
Common Shares with a Fair Market Value of more than $25,000 (determined
at the time the Section 423 Rights are granted) in any calendar year.
(vi) CASH AWARD - An Award denominated in cash. All
or part of any cash award may be subject to conditions established by
the Committee, including but not limited to future service with the
Company or the achievement of specific performance objectives.
7. DIRECTOR OPTIONS
(a) GRANT OF DIRECTOR OPTIONS. Each Non-Employee Director who
first becomes a Director at the 1993 Annual Meeting of Shareholders of Nordson
Corporation or at any time thereafter, 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 the Company 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 under the Plan (or who had previously
received a Director option under the Nordson Corporation 1989 Stock Option Plan)
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) NUMBER OF COMMON SHARES SUBJECT TO EACH DIRECTOR OPTION. 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. No fractional Common Shares will be issued; if the quotient is not a
whole number, it will be rounded up to the next whole number. Notwithstanding
the provisions of Section 14, the formula set forth in this Section 7(b) may not
be amended more than once every six months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act, as amended, or the
<PAGE> 9
rules thereunder.
(c) EXERCISE PRICE. The purchase price of the Common Shares
subject to each Director Option will be the Fair Market Value of the Common
Shares at the date of grant.
(d) DATE DIRECTOR OPTIONS BECOME EXERCISABLE. Each Director
Option will become exercisable six months after the date of grant or upon the
earlier occurrence of a Change in Control.
(e) EXPIRATION DATE. Unless terminated earlier pursuant to the
next sentence, 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. Each
Director Option will terminate, and the right of the holder to purchase Common
Shares upon exercise of the Director Option will expire, upon the completion of
a transaction of the type identified in Section 2(f)(iii), but only if provision
satisfactory to the Committee is made for the payment to the holder of the
Director Option of the excess of (i) the Fair Market Value of the Common Shares
subject to the Director Option immediately prior to the completion of the
transaction over (ii) the exercise price.
(f) NOT INCENTIVE STOCK OPTIONS. None of the Director Options
will be Incentive Stock Options.
(g) CONTINUOUS SERVICE AS A DIRECTOR. No Director Option may be
exercised unless the Non-Employee Director to whom the Director Option was
granted has continued to be a Non-Employee Director from the time of grant
through the time of exercise, except as provided in this Section 7(g).
(i) If the service in office of a Non-Employee
Director is terminated due to the death of the Non-Employee Director,
the Non-Employee Director's estate, executor, administrator, personal
representative, or beneficiary will have the right to exercise the
Director 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 Director Option.
(ii) If a Non-Employee Director ceases to be a
Non-Employee Director by reason of his employment by the Company, the
Director Option granted to that Non-Employee Director will be treated
the same as Stock Options held by employees and will continue to be
exercisable prior to the expiration of the Director Option, subject to
the limitations on exercise following termination of employment
established by the Committee pursuant to Section 11.
<PAGE> 10
(iii) If the service in office of a Non-Employee
Director is terminated for any reason other than those set forth in
Sections 7(g)(i) and 7(g)(ii), the holder of the Director Option may
exercise the Director 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 Director Option exercised prior to the earlier of
(i) three months after the date of the termination of service in office
of a Non-Employee Director and (ii) the expiration of the Director
Option.
(h) FAIR MARKET VALUE FOR PURPOSES OF DIRECTOR OPTIONS. For
purposes of Director Options, 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, (b) if the Common Shares are not listed on an exchange but
transactions in the Common Shares are reported in the NASDAQ 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, and (c)
if either of the methods referred to in (a) or (b) become impracticable for any
reason, the value determined using a method established by the Committee on a
basis consistent with regulations under the Code.
(i) NO FURTHER GRANTS OF DIRECTOR OPTIONS UNDER NORDSON
CORPORATION 1989 STOCK OPTION PLAN. The Plan represents a continuation of the
Director Option program under the Nordson Corporation 1989 Stock Option Plan.
Upon approval of the Plan at the 1993 Annual Meeting of Shareholders, no
Director Options will be granted under the 1989 Stock Option Plan at the 1993
Annual Meeting or at any time thereafter.
8. DEFERRAL OF PAYMENT
With the approval of the Committee, the delivery of the Common
Shares, cash, or any combination thereof subject to an Award (other than
Director Options) may be deferred, either in the form of installments or a
single future delivery. The Committee may also permit selected Participants to
defer the payment of some or all of their Awards, as well as other compensation,
in accordance with procedures established by the Committee to assure that the
recognition of taxable income is deferred under the Code. Deferred amounts may,
to the extent permitted by the Committee, be credited as cash or Stock
Equivalent Units. The Committee may also establish rules and procedures for the
crediting of interest on deferred cash payments and dividend equivalents on
Stock Equivalent Units.
<PAGE> 11
9. PAYMENT OF EXERCISE PRICE
The exercise price of a Stock Option (other than an Incentive
Stock Option), Director Option, Stock Purchase Right, and any Stock Award for
which the Committee has established an exercise price may be paid in cash, by
the transfer of Common Shares, by the surrender of all or part of an Award
(including the Award being exercised), or by a combination of these methods, as
and to the extent permitted by the Committee. The exercise price of an Incentive
Stock Option may be paid in cash, by the transfer of Common Shares, or by a
combination of these methods, as and to the extent permitted by the Committee at
the time of grant, but may not be paid by the surrender of all or part of an
Award. The Committee may prescribe any other method of paying the exercise price
that it determines to be consistent with applicable law and the purpose of this
Plan.
In the event shares of Restricted Stock are used to pay the
exercise price of a Stock Award, a number of the Common Shares issued upon the
exercise of the Award equal to the number of shares of Restricted Stock used to
pay the exercise price will be subject to the same restrictions as the
Restricted Stock.
10. TAXES ASSOCIATED WITH AWARD
Prior to the payment of an Award, the Company may withhold, or
require a Participant to remit to the Company, an amount sufficient to pay any
Federal, state, and local taxes associated with the Award. The Committee may, in
its discretion and subject to such rules as the Committee may adopt, permit a
Participant to pay any or all taxes associated with the Award (other than an
Incentive Stock Option) in cash, by the transfer of Common Shares, by the
surrender of all or part of an Award (including the Award being exercised), or
by a combination of these methods. The Committee may permit a Participant to pay
any or all taxes associated with an Incentive Stock Option in cash, by the
transfer of Common Shares, or by a combination of these methods.
11. TERMINATION OF EMPLOYMENT
If the employment of a Participant terminates for any reason, all
unexercised, deferred, and unpaid Awards may be exercisable or paid only in
accordance with rules established by the Committee. These rules may provide, as
the Committee deems appropriate, for the expiration, continuation, or
acceleration of the vesting of all or part of the Awards.
<PAGE> 12
12. TERMINATION OF AWARDS UNDER CERTAIN CONDITIONS
The Committee may cancel any unexpired, unpaid, or deferred
Awards at any time if the Participant is not in compliance with all applicable
provisions of this Plan or with any Notice of Award or Award Agreement or if the
Participant, without the prior written consent of the Company, engages in any of
the following activities:
(i) Renders services for an organization, or engages in a
business, that is, in the judgment of the Committee, in competition
with the Company.
(ii) Discloses to anyone outside of the Company, or uses for any
purpose other than the Company's business, any confidential information
or material relating to the Company, whether acquired by the
Participant during or after employment with the Company.
The Committee may, in its discretion and as a condition to the
exercise of an Award, require a Participant to acknowledge in writing that he or
she is in compliance with all applicable provisions of this Plan and of any
Notice of Award or Award Agreement and has not engaged in any activities
referred to in clauses (i) and (ii) above.
13. CHANGE IN CONTROL
In the event of a Change in Control of the Company, unless and to
the extent otherwise determined by the Board of Directors, (i) all Stock
Appreciation Rights, Stock Options, and other Stock Purchase Rights then
outstanding will become fully exercisable as of the date of the Change in
Control, (ii) all restrictions and conditions applicable to Restricted Stock and
other Stock Awards will be deemed to have been satisfied as of the date of the
Change in Control, and (iii) all Cash Awards will be deemed to have been fully
earned as of the date of the Change in Control. Any such determination by the
Board of Directors that is made after the occurrence of a Change in Control will
not be effective unless a majority of the Directors then in office are
Continuing Directors and the determination is approved by a majority of the
Continuing Directors.
14. AMENDMENT, SUSPENSION, OR TERMINATION OF THIS PLAN; AMENDMENT OF
OUTSTANDING AWARDS
(a) AMENDMENT, SUSPENSION, OR TERMINATION OF THIS PLAN. The Board
of Directors may amend, suspend, or terminate this Plan at any time. Shareholder
approval for any such amendment will be required only to the extent
<PAGE> 13
necessary to preserve the exemption provided by Rule 16b-3 for this Plan and
Awards granted under this Plan.
(b) AMENDMENT OF OUTSTANDING AWARDS. The Committee may, in its
discretion, amend the terms of any Award (other than a Director Option),
prospectively or retroactively, but no such amendment may impair the rights of
any Participant without his or her consent. The Committee may, in whole or in
part, waive any restrictions or conditions applicable to, or accelerate the
vesting of, any Award (other than a Director Option).
15. AWARDS TO FOREIGN NATIONALS AND EMPLOYEES OUTSIDE THE UNITED STATES
To the extent that the Committee deems appropriate to comply with
foreign law or practice and to further the purpose of this Plan, the Committee
may, without amending this Plan, (i) establish special rules applicable to
Awards granted to Participants who are foreign nationals, are employed outside
the United States, or both, including rules that differ from those set forth in
this Plan, and (ii) grant Awards to such Participants in accordance with those
rules.
16. NONASSIGNABILITY
Unless otherwise determined by the Committee, (i) no Award
granted under this Plan may be transferred or assigned by the Participant to
whom it is granted other than by will, pursuant to the laws of descent and
distribution, or pursuant to a qualified domestic relations order and (ii) an
Award granted under this Plan may be exercised, during the Participant's
lifetime, only by the Participant or by the Participant's guardian or legal
representative; except that, no Incentive Stock Option and no Section 423 Right
may be transferred or assigned pursuant to a qualified domestic relations order
or exercised, during the Participant's lifetime, by the Participant's guardian
or legal representative.
17. GOVERNING LAW
The interpretation, validity, and enforcement of this Plan will,
to the extent not otherwise governed by the Code or the securities laws of the
United States, be governed by the law of the State of Ohio.
18. RIGHTS OF EMPLOYEES
Nothing in this Plan will confer upon any
<PAGE> 14
Participant the right to continued employment by the Company or limit in any way
the Company's right to terminate any Participant's employment at will.
19. EFFECTIVE AND TERMINATION DATE
(a) EFFECTIVE DATE. This Plan will become effective on the date
it is approved by the holders of a majority of the Common Shares then
outstanding.
(b) TERMINATION DATE. This Plan will continue in effect until
terminated by the Board of Directors.
<PAGE> 1
Exhibit 10-p
October 31, 1997
William P. Madar
13515 Shaker Boulevard
Apartment 5-B
Cleveland, OH 44120
Dear Bill:
This will confirm our understanding regarding the terms under which you will
provide consulting services to Nordson Corporation (the "Company"), commencing
on November 3, 1997 and ending October 31, 1999. These are as follows:
At the request of the CEO of the Company, you will provide consulting and
advisory services to the Company as an independent contractor.
For your services the Company will pay you $25,000 per quarter for up to 9 days
of consultation per quarter. You will be reimbursed for reasonable and necessary
expenses incurred in carrying out the above services through the Company
reimbursement process. The Company will also pay your membership dues and fees
for the Union Club and the Pepper Pike Club during the term of this agreement.
This letter constitutes the entire agreement between us relating to your
provision of consulting services to the Company. It does not in any way modify
the Employment Agreement between us dated January 30, 1986, the Amendment to
Employment Agreement dated March 10, 1993, or any of your retirement benefits
thereunder.
If you agree to the foregoing terms and conditions, please so indicate by
signing and dating both copies of this letter and return one copy to me.
Very truly yours,
NORDSON CORPORATION
/s/ Edward P. Campbell
----------------------
Edward P. Campbell
ACCEPTED & AGREED:
By: /s/ W. P. Madar Date: October 31, 1997
------------------------- -------------------------
<PAGE> 1
Exhibit 11
NORDSON CORPORATION
CALCULATION OF EARNINGS PER SHARE
Years Ended November 2, 1997, November 3, 1996 and October 29, 1995
(Dollar and shares in thousands except for per share amounts)
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Primary:
Net income $49,967 $53,071 $52,676
======= ======= =======
Weighted average number of common
shares outstanding during the year 17,276 17,869 18,219
Effect of Company stock plans based
on the treasury stock method 277 335 358
------- ------- -------
Total weighted average common and
common equivalent shares 17,553 18,204 18,577
======= ======= =======
Earnings per share $ 2.85 $ 2.92 $ 2.84
======= ======= =======
Fully Diluted:
Net income $49,967 $53,071 $52,676
======= ======= =======
Weighted average number of common
shares outstanding during the year 17,276 17,869 18,219
Effect of Company stock plans based
on the treasury stock method 313 350 360
------- ------- -------
Total weighted average common and
common equivalent shares 17,589 18,219 18,579
======= ======= =======
Earnings per share $ 2.84 $ 2.91 $ 2.84
======= ======= =======
</TABLE>
<PAGE> 1
Exhibit 13-a
MANAGEMENT'S DISCUSSION AND ANALYSIS
FISCAL YEARS 1997 AND 1996
Worldwide sales in 1997 reached a record level of $636.7 million, a 4 percent
increase over 1996 sales of $609.4 million. Advances in local volume and price
increases accounted for a 9 percent increase in sales. However, the translation
effect from a stronger U.S. dollar against most major foreign currencies reduced
reported sales by 5 percent.
Sales outside the United States represented 61 percent of total sales in
1997, compared to 64 percent in 1996. Volume gains were achieved in each of
Nordson's geographic sales regions in 1997. In North America, sales volume
advanced 12 percent throughout the year, primarily due to strong sales of
automated fluid dispensing equipment to customers in the electronics industry.
Compared with the prior year, sales volume grew 7 percent in Europe, with
steadily improving activity. Japan's sales volume increased 4 percent, with
uneven demand over the course of the year. Sales volume in the Pacific South
region advanced 14 percent, influenced by strong activity in Latin America and
China. Price increases averaging 2 percent were implemented at the beginning of
1997 on standardized small systems and parts.
Worldwide volume gains were driven by demand from electronics industry
customers for automated fluid dispensing equipment along with demand for
customized nonwovens systems. Sales of adhesive dispensing systems for packaging
and product assembly applications and of powder equipment for finishing
applications grew at a steady pace; strong demand for these products outside the
United States mitigated flat sales comparisons in North America. Volume gains in
1997 were enhanced by full-year results from businesses acquired in 1996.
Gross margins, expressed as a percentage of sales, were 56.6 percent in
1997, compared with 58.1 percent in 1996. This change is traced to the mix of
products sold, combined with unfavorable currency exchange rate fluctuations.
Selling and administrative costs, expressed as a percentage of sales, were
45.0 percent in 1997 and 44.3 percent in 1996. In 1997, these costs included a
non-recurring fourth-quarter charge of $3.6 million for an unamortized pension
obligation. Without this charge, spending grew at approximately the same rate as
sales. Savings from productivity improvements were redirected to continued
geographic expansion and development activities in newly acquired businesses.
Worldwide operating profits, expressed as a percentage of sales, were 11.6
percent in 1997 and 13.8 percent in 1996. Regional operating profit percentages
in 1997 and 1996, respectively, were: 15 percent and 20 percent for North
America; 13 percent and 8 percent for Europe; 14 percent and 17 percent for
Japan; and 4 percent and 5 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.
Amounts in 1997 reflect a full year of operations for the European distribution
center. Differences between years also result from changes in local economic
conditions.
Interest expense, net of interest income, increased $2.1 million due to
higher borrowing levels, driven primarily by the funding of two business
acquisitions in 1996 and repurchases of Nordson stock. Other income increased
$3.0 million and in 1997 included a non-recurring fourth-quarter gain of $1.5
million related to a property insurance settlement.
Nordson's overall 1997 tax rate was 30.4 percent and includes the
fourth-quarter recognition of $1.9 million in tax benefits related to prior
years. Without this one-time tax benefit, the effective rate would have been
33.0 percent in 1997, compared with a rate of 34.5 percent in 1996. The decrease
in the rate can be traced to lower state and local taxes. The Company's
effective tax rate is lower than the statutory federal rate due to benefits from
exporting products through the Company's Foreign Sales Corporation, which is
subject to lower tax rates.
Net income in 1997 was $50.0 million, or $2.85 per share, compared with
$53.1 million, or $2.92 per share, in 1996.
Nordson has not yet adopted the following Statements of Financial Accounting
Standards: No. 128, "Earnings Per Share;" No. 130, "Reporting Comprehensive
Income;" or No. 131, "Disclosure about Segments of an Enterprise and Related
Information." These statements are not expected to have a material effect on the
Company's financial statements.
FISCAL YEARS 1996 AND 1995
Sales in 1996 were $609.4 million, a 5 percent increase over 1995. 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.
22
<PAGE> 2
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 5 percent and 6 percent for the Pacific South region. Regional
operating profits include profits on inventory transfers between geographic
regions. 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.
The Company's 1996 overall 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.
LIQUIDITY AND SOURCES OF CAPITAL
In 1997, working capital increased $28.7 million to $139.2 million. In August,
the Company received $50 million under a new long-term debt agreement and used
the proceeds to reduce short-term debt. Receivables increased $4.1 million as a
result of higher sales in the fourth quarter of the year compared with the same
period of the prior year. Inventories rose $3.7 million in response to growth of
orders received but not fulfilled. Taxes payable decreased $9.4 million due to
the timing of tax payments and the recognition of $1.9 million in prior-year tax
benefits.
Cash provided by operations was $52.2 million. Additional cash needs were
funded by drawing down $6.4 million from available cash balances and by $29.6
million of additional borrowings. Significant uses for cash included capital
expenditures, dividends and repurchases of Nordson stock.
Nordson concentrated the majority of its 1997 capital expenditures on sales
facilities, manufacturing operations and information systems in an ongoing
program to replace, update and expand worldwide capabilities.
Dividend payments to shareholders increased 7 percent over 1996.
Purchases of treasury shares, net of shares issued, were $52.9 million. The
Company uses repurchased shares for stock-based employee compensation and
incentive plans. At November 2, 1997, management had authorization to repurchase
up to 1,474,000 shares through July 2000 on the open market, or in privately
negotiated transactions at the prevailing market price.
23
<PAGE> 3
Nordson has various lines of credit with both domestic and foreign banks. At
November 2, 1997, these lines totaled $244.1 million, of which $169.6 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 1998. There are no significant
restrictions limiting the transfer of funds from international subsidiaries to
the parent company.
EFFECTS OF FOREIGN CURRENCY
The impact of changes in foreign currency exchange rates on sales and operating
results cannot be precisely measured because of fluctuating selling prices,
sales volume, product mix and cost structures in each country where Nordson
operates. As a 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 1997 compared to 1996, the U.S. dollar was generally stronger against
foreign currencies. If 1996 exchange rates had been in effect during 1997, sales
would have been approximately $29.7 million or 5 percent higher, and third-party
costs would have been approximately $19.9 million higher. 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. 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 40 and 41 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.
YEAR 2000 CONVERSION
Nordson recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures. The Company is in the process of
evaluating the risks and replacing or correcting the appropriate software. The
remaining cost of achieving Year 2000 compliance over the cost of normal
software upgrades and replacements is estimated at $2 million, and will be
incurred through 1999.
SAFE HARBOR STATEMENTS UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this report pertaining to future periods are "forward-looking
statements" intended to qualify for the protection afforded by the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based on current expectations and involve risks and uncertainties. Consequently,
the Company's actual results could differ materially from the expectations
expressed in the forward-looking statements. Factors that could cause the
Company's actual results to differ materially from the expected results include
deferral of orders, customer-requested delays in system installations, currency
exchange rate fluctuations, a sales mix different from assumptions, and
significant changes in local business conditions in geographic regions in which
the Company conducts business.
24
<PAGE> 1
Exhibit 13-b
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 2, 1997, NOVEMBER 3, 1996
AND OCTOBER 29, 1995 1997 1996 1995
(In thousands except for per share amounts)
<S> <C> <C> <C>
SALES $636,710 $609,444 $581,444
OPERATING COSTS AND EXPENSES:
Cost of sales 276,425 255,095 245,587
Selling and administrative expenses 286,226 270,088 251,913
- ---------------------------------------------------------------------------------------------------------------------------
562,651 525,183 497,500
- ---------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 74,059 84,261 83,944
Other income (expense):
Interest expense (7,763) (5,955) (4,553)
Interest and investment income 638 910 777
Other - net 4,811 1,845 474
- ---------------------------------------------------------------------------------------------------------------------------
(2,314) (3,200) (3,302)
- ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 71,745 81,061 80,642
Income taxes:
Current 21,548 29,561 32,844
Deferred 230 (1,571) (4,878)
- ---------------------------------------------------------------------------------------------------------------------------
21,778 27,990 27,966
- ---------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 49,967 $ 53,071 $ 52,676
===========================================================================================================================
COMMON SHARES AND COMMON SHARE EQUIVALENTS 17,553 18,204 18,577
===========================================================================================================================
EARNINGS PER SHARE $2.85 $2.92 $2.84
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
25
<PAGE> 1
Exhibit 13-c
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
NOVEMBER 2, 1997 AND NOVEMBER 3, 1996 1997 1996
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,517 $ 9,221
Marketable securities 200 310
Receivables 163,692 159,573
Inventories 122,084 118,388
Deferred income taxes 23,263 23,368
Prepaid expenses 8,059 6,842
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 318,815 317,702
Property, plant and equipment - net 101,667 107,018
Intangible assets - net 60,378 65,282
Deferred income taxes 12,014 11,557
Other assets 10,122 8,934
- ---------------------------------------------------------------------------------------------------------------------------
$502,996 $510,493
===========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 74,500 $ 97,688
Accounts payable 37,699 35,022
Income taxes payable 1,406 10,845
Accrued liabilities 54,172 52,486
Customer advance payments 5,711 6,023
Current maturities of long-term debt 2,597 1,220
Current obligations under capital leases 3,578 3,932
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 179,663 207,216
Long-term debt 62,697 15,883
Obligations under capital leases 3,805 4,679
Pension and retirement obligations 33,471 33,877
Other liabilities 2,815 3,541
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 75,899 63,996
Cumulative translation adjustments (977) 7,392
Retained earnings 417,589 381,436
Common shares in treasury, at cost (283,816) (219,398)
Deferred stock-based compensation (403) (382)
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 220,545 245,297
- ---------------------------------------------------------------------------------------------------------------------------
$502,996 $510,493
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
26
<PAGE> 1
Exhibit 13-d
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 2, 1997, NOVEMBER 3, 1996
AND OCTOBER 29, 1995 1997 1996 1995
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $49,967 $53,071 $52,676
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 20,144 19,224 16,779
Amortization 5,163 4,298 3,835
Provision for losses on receivables 1,267 1,782 979
Deferred income taxes (613) (2,181) (4,907)
Other 5,560 826 (1,796)
Changes in operating assets and liabilities:
Receivables (15,129) (13,495) (26,265)
Inventories (8,896) (6,346) (14,392)
Other current assets (1,491) (578) (323)
Other non-current assets (2,337) (5,589) (2,603)
Accounts payable 3,719 5,251 751
Income taxes payable (8,840) (2,553) 2,591
Accrued liabilities 4,193 (6,665) 8,699
Customer advance payments (126) (546) 1,010
Other non-current liabilities (334) 7,106 5,068
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 52,247 53,605 42,102
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (15,939) (23,399) (25,035)
Proceeds from sale of property, plant and equipment 928 33 1,705
Acquisition of businesses (993) (39,114) (4,634)
Purchases of marketable securities -- (100) (2,000)
Proceeds from sales or maturities of marketable securities 110 1,015 7,261
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (15,894) (61,565) (22,703)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (repayment of) short-term borrowing (20,392) 55,731 16,076
Proceeds from long-term debt 50,000 8,520 634
Repayment of long-term debt (1,625) (6,204) (1,925)
Repayment of capital lease obligations (4,068) (3,859) (3,961)
Issuance of common shares under company
stock and employee benefit plans 6,993 2,106 1,669
Purchase of treasury shares (59,854) (25,794) (25,314)
Dividends paid (13,814) (12,858) (11,676)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (42,760) 17,642 (24,497)
Effect of exchange rate changes on cash (1,297) (820) 879
- ---------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,704) 8,862 (4,219)
Cash and cash equivalents at beginning of year 9,221 359 4,578
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 1,517 $ 9,221 $ 359
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
27
<PAGE> 1
Exhibit 13-e
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON SHARES
CAPITAL IN CUMULATIVE IN TREASURY DEFERRED
YEARS ENDED NOVEMBER 2, 1997, COMMON EXCESS OF TRANSLATION RETAINED ------------------ STOCK-BASED
NOVEMBER 3, 1996 AND OCTOBER 29, 1995 SHARES STATED VALUE ADJUSTMENTS EARNINGS SHARES AMOUNT COMPENSATION
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
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)
Shares issued under
company stock and
employee benefit plans 11,903 (387) 2,527 (346)
Amortization of deferred
stock-based compensation 325
Purchase of treasury shares 1,182 (66,945)
Translation adjustments (8,369)
Net income 49,967
Dividends - $.80 per share (13,814)
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT NOVEMBER 2, 1997 $12,253 $75,899 $ (977) $417,589 7,667 $(283,816) $ (403)
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
28
<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.
Ownership interests of 20 percent or more in non-controlled affiliates are
accounted for by the equity method. Other investments are recorded at cost.
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 1997, 1996 and 1995, contained 52, 53 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
$6,410,000 in 1997 ($5,507,000 in 1996 and $5,360,000 in 1995).
RESEARCH AND DEVELOPMENT -- Research and development costs are charged to
expense as incurred and amounted to $29,812,000 in 1997 ($30,471,000 in 1996 and
$28,866,000 in 1995).
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 of shares
issuable upon exercise of the Company's stock options, 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 2, 1997, 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 47 percent of
consolidated inventories at November 2, 1997 (51 percent at November 3, 1996).
The first-in, first-out (FIFO) method is used for all other inventories.
Consolidated inventories would have been $9,373,000 and $10,136,000 higher than
reported at November 2, 1997 and November 3, 1996, 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
are carried at cost. Plant and equipment are 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 1996 and 1995 amounts have been reclassified to conform
with the 1997 presentation.
29
<PAGE> 2
NOTE 2 -- ACCOUNTING CHANGES
In 1997, the Company adopted Financial Accounting Standards Board (FASB)
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." This statement requires that, under
certain circumstances, long-lived assets be reviewed for impairment and any
applicable impairment loss be recognized. The Company recognized no impairment
loss as a result of adoption.
The Company also adopted FASB Statement No. 123, "Accounting for Stock-Based
Compensation." This statement allows accounting for employee stock options under
either the fair value or the intrinsic value method. The Company elected to
continue using the intrinsic value method in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
The FASB has issued the following statements which the Company has not yet
adopted: Statement No. 128, "Earnings Per Share" (FAS 128); Statement No. 130,
"Reporting Comprehensive Income" (FAS 130); and Statement No. 131, "Disclosure
about Segments of an Enterprise and Related Information" (FAS 131). FAS 128
establishes new computation and presentation requirements for earnings per
share, FAS 130 establishes standards for reporting comprehensive income and FAS
131 requires reporting certain information about operating segments. The Company
must adopt FAS 128 for fiscal year 1998, and FAS 130 and FAS 131 no later than
fiscal year 1999. These statements are not expected to have a material effect on
the financial statements.
NOTE 3 -- 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 $1,203,000 in 1997 ($2,320,000 in 1996 and
$2,681,000 in 1995).
NOTE 4 -- RETIREMENT, PENSION AND OTHER
POSTRETIREMENT PLANS
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 1997, 1996 and 1995 was approximately $2,489,000,
$2,726,000 and $2,392,000, respectively.
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>
1997 1996 1995
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Service cost - benefits
earned during period $ 4,294 $ 3,619 $ 3,844
Interest cost on projected
benefit obligations 5,381 5,173 4,522
Actual return on assets (10,306) (7,270) (7,253)
Net amortization and
deferral 8,898 2,940 3,217
- --------------------------------------------------------------------------------
Net periodic pension cost $ 8,267 $ 4,462 $ 4,330
================================================================================
</TABLE>
Net pension cost for 1997 includes a non-recurring charge of $3,649,000 for an
unamorized pension obligation.
30
<PAGE> 3
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)
<S> <C> <C>
1997:
Actuarial present value of obligations:
Vested benefit obligations $ 41,648 $ 6,985
================================================================================
Accumulated benefit obligations $ 44,213 $ 11,799
================================================================================
Projected benefit obligations $ 55,764 $ 17,938
Plan assets at fair value 63,957 3,631
- --------------------------------------------------------------------------------
Excess (deficiency) of assets over
projected benefit obligations 8,193 (14,307)
Unrecognized prior service costs (171) 1,112
Unrecognized net (gain) loss (14,160) 3,966
Unrecognized net transition
(asset) obligation (842) 134
- --------------------------------------------------------------------------------
Accrued pension costs $ (6,980) $ (9,095)
================================================================================
<CAPTION>
1996:
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)
================================================================================
</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.
The actuarial present value of projected benefit obligations at the end of 1997
and 1996 was determined using a weighted average discount rate of 7.6 and 7.8
percent, respectively, and a rate of increase in future compensation levels of
4.7 and 5.0 percent, respectively. Plan assets consist primarily of stocks and
bonds. The expected long-term rate of return on plan assets was 8.0 percent for
1997, 1996 and 1995.
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>
1997 1996 1995
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Service cost - benefits
earned during period $ 383 $ 378 $ 379
Interest cost on accumulated
benefit obligations 810 741 676
- --------------------------------------------------------------------------------
Net periodic
postretirement
benefit cost $1,193 $1,119 $1,055
================================================================================
</TABLE>
The following table sets forth the amount recognized in the Company's balance
sheet for its postretirement benefit plan:
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 3,193 $ 2,908
Fully eligible active plan
participants 2,742 2,498
Other active plan participants 4,867 4,433
- --------------------------------------------------------------------------------
10,802 9,839
Unrecognized net gain 357 400
- --------------------------------------------------------------------------------
Accrued postretirement benefit costs $11,159 $10,239
================================================================================
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation at the end of both 1997 and 1996 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 7.5 percent for 1998, 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 1997 by $200,000 and the
accumulated postretirement benefit obligation as of November 2, 1997 by
$1,484,000.
31
<PAGE> 4
NOTE 5 -- INCOME TAXES
Income tax expense includes the following:
<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
U.S. federal $ 8,319 $ 12,032 $ 18,114
State and local 570 3,094 3,259
Foreign 12,659 14,435 11,471
- --------------------------------------------------------------------------------
Total current 21,548 29,561 32,844
Deferred:
U.S. federal (603) (1,015) (3,277)
State and local 198 18 (390)
Foreign 635 (574) (1,211)
- --------------------------------------------------------------------------------
Total deferred 230 (1,571) (4,878)
- --------------------------------------------------------------------------------
$ 21,778 $ 27,990 $ 27,966
================================================================================
</TABLE>
The reconciliation of the United States statutory federal income tax rate to the
worldwide consolidated effective tax rate follows:
<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal
income tax rate 35.0% 35.0% 35.0%
Foreign Sales Corporation
exemption (3.8) (3.7) (3.8)
Benefits related to
prior years (2.6) -- --
Foreign tax rate variances,
net of foreign tax credits 1.4 .8 1.5
State and local taxes, net
of federal income tax
benefit .9 2.4 2.1
Other - net (.5) -- (.1)
- --------------------------------------------------------------------------------
Effective tax rate 30.4% 34.5% 34.7%
================================================================================
</TABLE>
Earnings before income taxes of international operations were $28,891,000,
$30,332,000 and $21,734,000 in 1997, 1996 and 1995, 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 $43,034,000 and
$37,047,000 at November 2, 1997 and November 3, 1996, 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>
1997 1996
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Deferred tax assets:
Sales to international subsidiaries and
related consolidation adjustments $18,343 $16,971
Employee benefits 11,285 12,710
Other accruals not currently deductible
for taxes 5,685 5,780
Translation of foreign currency
accounts 2,389 2,403
Inventory adjustments 576 534
Other - net 1,999 1,237
- --------------------------------------------------------------------------------
Total deferred tax assets 40,277 39,635
Deferred tax liabilities:
Depreciation 4,065 3,979
Other - net 935 731
- --------------------------------------------------------------------------------
Total deferred tax liabilities 5,000 4,710
- --------------------------------------------------------------------------------
Net deferred tax assets $35,277 $34,925
================================================================================
</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 October 1997, the Company acquired a provider of ultraviolet curing equipment
to the container industry. 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. The cost of acquisitions
amounted to $1,240,000 in 1997 and $41,346,000 in 1996. 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 1997 and 1996, pro forma results for 1997 and 1996,
respectively, would not be materially different.
32
<PAGE> 5
NOTE 7 -- DETAILS OF BALANCE SHEET
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Receivables:
Accounts $ 144,652 $ 142,866
Notes 16,458 16,055
Other 5,543 4,225
- --------------------------------------------------------------------------------
166,653 163,146
Allowance for doubtful accounts (2,961) (3,573)
- --------------------------------------------------------------------------------
$ 163,692 $ 159,573
================================================================================
Inventories:
Finished goods $ 51,639 $ 43,818
Work-in-process 12,056 14,083
Raw materials and finished parts 58,389 60,487
- --------------------------------------------------------------------------------
$ 122,084 $ 118,388
================================================================================
Property, plant and equipment:
Land $ 3,267 $ 3,171
Land improvements 2,738 2,745
Buildings 60,505 61,497
Machinery and equipment 118,630 110,361
Construction-in-progress 11,640 14,510
Leased property under
capitalized leases 13,350 14,796
- --------------------------------------------------------------------------------
210,130 207,080
Accumulated depreciation
and amortization (108,463) (100,062)
- --------------------------------------------------------------------------------
$ 101,667 $ 107,018
================================================================================
Intangible assets:
Costs in excess of net assets of
acquired businesses $ 78,717 $ 79,995
Other 5,393 5,447
- --------------------------------------------------------------------------------
84,110 85,442
Accumulated amortization (23,732) (20,160)
- --------------------------------------------------------------------------------
$ 60,378 $ 65,282
================================================================================
Accrued liabilities:
Salaries and other compensation $ 25,297 $ 24,719
Pension and retirement 4,103 3,535
Taxes other than income taxes 4,581 4,643
Other 20,191 19,589
- --------------------------------------------------------------------------------
$ 54,172 $ 52,486
================================================================================
</TABLE>
NOTE 8 -- 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
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 $1,203,000 to $1,766,000 and approximate market rates.
Rent expense for all operating leases was approximately $8,578,000 in 1997,
$10,786,000 in 1996 and $10,581,000 in 1995.
Assets held under capitalized leases and included in property, plant and
equipment are as follows:
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Transportation equipment $ 12,289 $ 12,866
Other 1,061 1,930
- --------------------------------------------------------------------------------
Total capitalized leases 13,350 14,796
Accumulated amortization (5,967) (6,185)
- --------------------------------------------------------------------------------
Net capitalized leases $ 7,383 $ 8,611
================================================================================
</TABLE>
At November 2, 1997, 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:
1998 $ 4,816 $ 7,096
1999 3,188 5,302
2000 1,494 4,112
2001 294 3,434
2002 41 2,947
Later years 6 23,613
- --------------------------------------------------------------------------------
Total minimum lease payments 9,839 $46,504
=======
Less amount representing
executory costs 1,153
- ------------------------------------------------------------------
Net minimum lease payments 8,686
Less amount representing interest 1,303
- ------------------------------------------------------------------
Present value of net minimum
lease payments 7,383
Less current portion 3,578
- ------------------------------------------------------------------
Long-term obligations at
November 2, 1997 $ 3,805
==================================================================
</TABLE>
33
<PAGE> 6
NOTE 9 -- NOTES PAYABLE
Bank lines of credit and notes payable are summarized as follows:
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Available bank lines of credit:
Domestic banks $159,300 $ 81,300
Foreign banks 84,768 99,924
- --------------------------------------------------------------------------------
Total $244,068 $181,224
================================================================================
Notes payable:
Domestic bank debt $ 45,875 $ 60,176
Foreign bank debt 28,615 37,491
Other 10 21
- --------------------------------------------------------------------------------
Total $ 74,500 $ 97,688
================================================================================
Weighted average interest rate
on notes payable 4.8% 5.6%
Unused bank lines of credit $169,578 $ 83,557
================================================================================
</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.
NOTE 10 -- LONG-TERM DEBT
The long-term debt of the Company is as follows:
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Senior notes $50,000 --
Industrial revenue bonds--
Gwinnett County, Georgia 6,000 $ 6,000
Industrial revenue bonds--
City of Westlake, Ohio 4,250 5,100
Acquisition financing notes 3,010 3,438
Leasehold improvements financing note 1,662 1,796
Other 372 769
- --------------------------------------------------------------------------------
65,294 17,103
Less current maturities 2,597 1,220
- --------------------------------------------------------------------------------
Total $62,697 $15,883
================================================================================
</TABLE>
SENIOR NOTES -- The proceeds from these notes were used to reduce short-term
debt. These notes are payable in one installment in 2007. Interest, payable at a
fixed rate of 6.78 percent, was converted to a variable rate through an interest
rate swap. The variable rate is reset semi-annually and was 6.17 percent at
November 2, 1997.
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
3.75 percent at November 2, 1997. 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 3.60 percent at November 2, 1997. The bonds are secured by a
$4,432,000 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 6.18 percent at
November 2, 1997.
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, payable at a fixed rate of 3.10 percent, was converted to a variable
rate through an interest rate swap. The variable rate is reset semi-annually and
was .30 percent at November 2, 1997.
OTHER LONG-TERM DEBT -- Other long-term debt represents mortgage and other notes
payable. These notes have various maturities through 1999. Interest is payable
at fixed rates with a weighted-average rate of 5.25 percent at November 2, 1997.
ANNUAL MATURITIES -- The annual maturities of long-term debt for the five years
subsequent to November 2, 1997 are as follows: $2,597,000 in 1998, $935,000 in
1999, $1,450,000 in 2000, $3,000,000 in 2001, and $1,450,000 in 2002.
34
<PAGE> 7
NOTE 11 -- 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>
1997:
Cash and cash equivalents $ 1,517 $ 1,517
Marketable securities 200 200
Notes payable (74,500) (74,500)
Long-term debt (65,294) (64,365)
Forward exchange contracts 181 97
Interest rate swaps -- 544
================================================================================
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
================================================================================
</TABLE>
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 fair value of interest rate swaps is estimated using valuation
techniques based on discounted future cash flows.
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 settled. 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 carrying amount of these forward contracts is included in receivables at the
differential between the contract rates and the spot rates. Gains and losses
from foreign currency forward contracts are included in other income/expense.
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 2,
1997:
<TABLE>
<CAPTION>
SELL BUY
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Contract amount:
German marks $15,669 $ 3,656
Japanese yen 8,955 887
Pound sterling 7,640 366
French francs 4,300 163
Italian lira 3,720 --
Other 9,389 3,520
- --------------------------------------------------------------------------------
Total $49,673 $ 8,592
================================================================================
</TABLE>
To manage interest rate exposure on outstanding balances of long-term debt, the
Company enters into interest rate swaps under which it receives a fixed rate and
pays a variable rate. No carrying value is assigned to these swaps. Net amounts
to be paid or received under these agreements are recognized as adjustments to
interest expense. A swap on Japanese Yen 200 million of underlying principal
expires in 2006. A swap on $50 million of underlying principal expires in 2004
and at the option of the counterparty can be extended to 2007.
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 2, 1997, there were no significant concentrations of credit risk.
35
<PAGE> 8
NOTE 12 -- CAPITAL SHARES
PREFERRED -- The Company has authorized 10,000,000 Series A convertible
preferred shares without par value. No preferred shares were outstanding in
1997, 1996 or 1995.
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 1997, 1996 and 1995,
there were 24,506,000 common shares issued. At November 2, 1997 and November 3,
1996, the number of outstanding common shares, net of treasury shares, was
16,839,000 and 17,634,000, respectively. Treasury shares are reissued using the
first-in, first-out method.
NOTE 13 -- 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 1998, there were 589,000 shares available for grant in
1998.
STOCK OPTIONS -- The Company may grant non-qualified or incentive stock options
to employees and directors of the Company. Generally, the options may be
exercised beginning 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.
The Company uses the intrinsic value method to account for employee stock
options. No compensation expense has been recognized because the exercise price
of the Company's stock options equals the market price of the underlying common
shares on the date of grant. 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 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
Granted 438,246 $56.78
Exercised (353,275) $25.32
Forfeited (47,408) $57.20
- --------------------------------------------------------------------------------
Outstanding at November 2, 1997 2,176,311 $49.83
================================================================================
Exercisable at November 2, 1997 1,084,147 $43.22
================================================================================
</TABLE>
Summarized information on currently outstanding options follows:
<TABLE>
<CAPTION>
RANGE OF EXERCISE PRICE
$19 - $34 $34 - $49 $49 - $64
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Number outstanding 287,149 367,390 1,521,772
Weighted-average remaining
contractual life, in years 2.4 4.7 7.7
Weighted-average
exercise price $22.58 $44.91 $56.16
- --------------------------------------------------------------------------------
Number exercisable 287,149 343,376 453,622
Weighted-average
exercise price $22.58 $44.77 $55.11
================================================================================
</TABLE>
Pro forma information regarding net income and earnings per share has been
determined as if the Company had accounted for employee stock options granted
since 1996 under the fair value method. Under this method, the estimated fair
value of the options is amortized to expense over the options' vesting period.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option-pricing model with the following weighted-average
assumptions: risk-free interest rates ranging from 5.51 percent to 6.44 percent,
dividend yield of 1.25 percent, expected volatility of .22, and an expected life
of 6 1/2 years.
36
<PAGE> 9
Pro forma information follows:
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------
(In thousands except for per share amounts)
<S> <C> <C>
Net income:
As reported $49,967 $53,071
Pro forma $47,789 $52,087
Earnings per share:
As reported $ 2.85 $ 2.92
Pro forma $ 2.72 $ 2.86
Weighted-average fair value of options
granted during the year $ 18.49 $ 17.95
================================================================================
</TABLE>
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
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 1997, 1996 and 1995.
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 2,172,000 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. 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 1997, there were 6,550 restricted shares granted at a weighted average
fair value of $55.46 per share (4,100 and $59.05 in 1996 and 3,600 and $56.44 in
1995). Net amortization was $325,000 in 1997 ($272,000 in 1996 and $303,000 in
1995).
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 1997, 1996 and 1995.
EMPLOYEE STOCK OWNERSHIP PLAN -- The Company sponsors an 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. 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.
In 1997, there was a net credit of $1,277,000 against ESOP compensation expense
due to an accrual reduction of $1,449,000 to reflect actual amounts contributed.
ESOP compensation expense was a charge of $2,708,000 in 1996 and $2,411,000 in
1995. Contributions to the plan were $962,000, $2,269,000 and $1,795,000 in
1997, 1996 and 1995, respectively. The number of allocated ESOP shares
outstanding was 465,000 at November 2, 1997 and 463,000 at November 3, 1996.
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 15
percent or more of the Company's common shares. The exercise price of each right
is $175 per share. The rights trade with the shares until the rights become
exercisable, unless the Board of Directors sets an earlier date for the
distribution of separate right certificates.
If a party acquires at least 15 percent of the Company's common shares (a
"flip-in" event), each right then becomes the right to purchase two common
shares of the Company for $1.00 per share.
The rights may be redeemed by the Company at a price of $.01 per right at any
time prior to a "flip-in" event, or expiration of the rights on October 31,
2007.
SHARES RESERVED FOR FUTURE ISSUANCE -- At November 2, 1997, there were
40,165,000 shares reserved for future issuance through the exercise of
outstanding options or rights, including 37,989,000 shares under the shareholder
rights plan.
37
<PAGE> 10
NOTE 14 -- SUPPLEMENTAL INFORMATION FOR THE
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Cash operating activities:
Interest paid $ 7,126 $ 6,055 $ 4,496
Income taxes paid 25,233 31,993 31,099
================================================================================
Noncash investing and
financing activities:
Capitalized lease
obligations incurred $ 4,680 $ 5,904 $ 5,426
Capitalized lease
obligations terminated 1,325 928 990
Shares acquired and
issued through
exercise of stock
options 7,091 2,322 1,118
================================================================================
Noncash assets and liabilities
of businesses acquired:
Working capital $ 252 $ 2,018 $ 868
Property, plant and
equipment -- 1,668 601
Intangibles and other 741 35,870 3,408
Long-term debt and
other liabilities -- (442) (243)
- --------------------------------------------------------------------------------
$ 993 $ 39,114 $ 4,634
================================================================================
</TABLE>
NOTE 15 -- QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER
FIRST SECOND THIRD FOURTH
- --------------------------------------------------------------------------------
(In thousands except for per share amounts)
<S> <C> <C> <C> <C>
1997:
Sales $137,261 $156,144 $158,888 $184,417
Cost of sales 55,461 68,336 70,087 82,541
Net income 9,237 8,910 12,195 19,625
Earnings per share $.52 $.50 $.70 $1.14
================================================================================
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
================================================================================
</TABLE>
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.
Estimates used in the preparation of financial statements are reevaluated
frequently, and changes in estimates are recorded throughout the year. During
the first quarter of 1997, an accrual representing the Company's estimated
annual ESOP obligation was reduced by $1,449,000 ($949,000 after tax or $.05 per
share) to reflect the actual amount contributed. During the fourth quarter of
1997, certain changes in estimates increased net income $428,000 or $.02 per
share, reflecting $1,900,000 of tax benefits related to prior years, a
$1,491,000 gain for a property insurance settlement, and a $3,649,000 charge for
an unamortized pension obligation.
NOTE 16 -- 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 1997, 1996 or
1995.
Export sales for 1997 were $166,324,000, ($181,179,000 in 1996 and $174,957,000
in 1995) and were principally made to foreign subsidiaries.
38
<PAGE> 11
The following table summarizes the Company's operations within geographic areas:
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Sales to unaffiliated
customers:
United States $249,818 $221,588 $231,089
Europe 226,344 229,301 201,894
Japan 80,718 86,208 87,201
Other* 79,830 72,347 61,260
- -------------------------------------------------------------
636,710 609,444 581,444
Transfers between
geographic areas:
United States 128,095 145,612 146,498
Europe 16,037 11,916 13,587
Japan 369 141 332
Other* 1,138 1,038 946
Eliminations (145,639) (158,707) (161,363)
- -------------------------------------------------------------
Total sales $636,710 $609,444 $581,444
=============================================================
Operating profit:
United States $ 57,291 $ 74,948 $ 89,132
Europe 31,786 20,675 15,433
Japan 11,506 14,973 9,438
Other* 3,783 3,822 3,778
Eliminations 1,648 1,268 (2,362)
- -------------------------------------------------------------
Geographic
operating profit 106,014 115,686 115,419
General corporate
expenses (31,955) (31,425) (31,475)
Other expense (2,314) (3,200) (3,302)
- -------------------------------------------------------------
Income before
income taxes $ 71,745 $ 81,061 $ 80,642
=============================================================
Identifiable assets:
United States $265,354 $253,510 $202,185
Europe 157,729 162,399 142,156
Japan 52,583 56,301 57,573
Other* 44,169 42,829 33,034
Corporate 8,421 15,838 14,122
Eliminations (25,260) (20,384) (14,360)
- -------------------------------------------------------------
Total assets $502,996 $510,493 $434,710
=============================================================
<FN>
* Includes Canada, Latin America and the Pacific Rim.
</TABLE>
39
<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 2, 1997 and November 3, 1996, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended November 2, 1997. 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 2, 1997 and November 3, 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended November 2, 1997 in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
December 9, 1997
39
<PAGE> 1
Exhibit 13-h
ELEVEN-YEAR SUMMARY
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993(d) 1992
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA (a)
Sales $636,710 609,444 581,444 506,692 461,557 425,618
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of sales $276,425 255,095 245,587 212,866 191,575 168,437
% of sales 43 42 42 42 42 40
- ----------------------------------------------------------------------------------------------------------------------------------
Selling and administrative expenses $286,226 270,088 251,913 219,422 202,608 189,887
% of sales 45 44 43 43 44 45
- ----------------------------------------------------------------------------------------------------------------------------------
Operating profit $ 74,059 84,261 83,944 74,404 67,374 67,294
% of sales 12 14 14 15 15 16
- ----------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes $ 49,967 53,071 52,676 46,654 40,775 39,537
% of sales 8 9 9 9 9 9
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 49,967 53,071 52,676 46,654 35,991 39,537
% of sales 8 9 9 9 8 9
==================================================================================================================================
FINANCIAL DATA (a)
Working capital $139,152 110,486 130,562 126,996 125,391 105,138
- ----------------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment and other non-current assets $184,181 192,791 148,769 130,637 116,298 114,461
- ----------------------------------------------------------------------------------------------------------------------------------
Total invested capital $323,333 303,277 279,331 257,633 241,689 219,599
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $502,996 510,493 434,710 380,944 357,970 346,297
- ----------------------------------------------------------------------------------------------------------------------------------
Long-term obligations $102,788 57,980 48,001 45,209 45,284 41,879
- ----------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity $220,545 245,297 231,330 212,424 196,405 177,720
- ----------------------------------------------------------------------------------------------------------------------------------
Return on average invested capital-- % (b) 18 20 21 20 19 20
- ----------------------------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity-- % (c) 22 23 24 24 23 24
==================================================================================================================================
PER SHARE DATA (a)
Earnings per share:
Income before cumulative effect of accounting changes $ 2.85 2.92 2.84 2.45 2.13 2.03
Net income $ 2.85 2.92 2.84 2.45 1.88 2.03
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends per common share $ .80 .72 .64 .56 .48 .44
- ----------------------------------------------------------------------------------------------------------------------------------
Book value per common share $13.10 13.91 12.85 11.55 10.49 9.48
- ----------------------------------------------------------------------------------------------------------------------------------
Common shares and common share equivalents (000s) 17,553 18,204 18,577 19,067 19,184 19,471
==================================================================================================================================
<CAPTION>
1991 1990 1989 1988 1987
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C> <C> <C>
OPERATING DATA (a)
Sales 387,962 344,904 282,098 245,028 205,175
- -----------------------------------------------------------------------------------------------------------------------------
Cost of sales 158,885 154,653 116,588 96,771 81,604
% of sales 41 45 41 40 40
- -----------------------------------------------------------------------------------------------------------------------------
Selling and administrative expenses 170,814 140,450 112,716 99,039 84,106
% of sales 44 41 40 40 41
- -----------------------------------------------------------------------------------------------------------------------------
Operating profit 58,263 49,801 52,794 49,218 39,465
% of sales 15 14 19 20 19
- -----------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes 33,787 29,346 34,187 31,583 24,707
% of sales 9 9 12 13 12
- -----------------------------------------------------------------------------------------------------------------------------
Net income 33,787 29,346 34,187 31,583 24,707
% of sales 9 9 12 13 12
=============================================================================================================================
FINANCIAL DATA (a)
Working capital 87,004 66,093 53,834 64,040 80,528
- -----------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment and other non-current assets 103,015 95,599 79,383 43,075 37,835
- -----------------------------------------------------------------------------------------------------------------------------
Total invested capital 190,019 161,692 133,217 107,115 118,363
- -----------------------------------------------------------------------------------------------------------------------------
Total assets 296,930 269,523 235,551 162,912 164,212
- -----------------------------------------------------------------------------------------------------------------------------
Long-term obligations 37,305 31,318 26,299 18,006 17,158
- -----------------------------------------------------------------------------------------------------------------------------
Shareholders' equity 152,714 130,374 106,918 89,109 101,205
- -----------------------------------------------------------------------------------------------------------------------------
Return on average invested capital-- % (b) 21 21 29 29 23
- -----------------------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity-- % (c) 25 25 35 33 27
=============================================================================================================================
PER SHARE DATA (a)
Earnings per share:
Income before cumulative effect of accounting changes 1.77 1.52 1.76 1.55 1.17
Net income 1.77 1.52 1.76 1.55 1.17
- -----------------------------------------------------------------------------------------------------------------------------
Dividends per common share .40 .36 .32 .28 .24
- -----------------------------------------------------------------------------------------------------------------------------
Book value per common share 8.14 6.94 5.69 4.66 4.89
- -----------------------------------------------------------------------------------------------------------------------------
Common shares and common share equivalents (000s) 19,093 19,266 19,386 20,340 21,040
=============================================================================================================================
<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>
40/41
<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 1997 and 1996. The price-earnings ratios reflect average market
prices relative to trailing four-quarter earnings.
<TABLE>
<CAPTION>
COMMON STOCK PRICE PRICE-
FISCAL DIVIDEND ------------------ EARNINGS
QUARTERS PAID HIGH LOW RATIO
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
1997:
First $ .20 $65.00 $54.25 20.3
Second .20 62.00 47.125 20.4
Third .20 64.75 51.00 21.2
Fourth .20 62.00 47.50 19.2
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
</TABLE>
STOCK LISTING INFORMATION
Nordson stock is traded on The Nasdaq Stock Market's National Market under the
symbol NDSN.
44
<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.
Jurisdiction of
Incorporation Name
--------------- ----
INTERNATIONAL:
--------------
Australia Nordson Australia Pty. Limited
Austria Nordson GmbH
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 Deutschland GmbH (1)
Germany Nordson Engineering GmbH
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 Engineering K.K.
Japan Nordson 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 Applied Curing Technology, Ltd. (7)
United Kingdom Nordson (U.K.) Limited
United Kingdom Spectral Technology Group Limited
United States Virgin Islands Nordson FSC, Inc.
Venezuela Nordson International de Venezuela,
C.A.
Vietnam Nordson Pacific, Inc. - Representative
Office
<PAGE> 2
Jurisdiction of
Incorporation Name
--------------- ----
DOMESTIC:
---------
California Asymptotic Technologies, Inc.(8)
California Mountaingate Engineering, Inc.
California Slautterback Corporation
Connecticut Electrostatic Technology, Inc.
Ohio Applied Curing Technology, Inc.
Ohio Nordson Pacific, Inc.
Ohio Nordson U.S. Trading Company
(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) Owned by Spectral Technology Group Limited
(8) Does business under the name Asymtek
<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 9, 1997
included in the Annual Report to Shareholders of Nordson Corporation for the
year ended November 2, 1997.
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 9, 1997, 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 2, 1997:
- Nordson Corporation 1982 Amended and Restated Stock Appreciation
Rights Plan (now entitled 1988 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 28, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-02-1997
<PERIOD-END> NOV-02-1997
<CASH> 1,517
<SECURITIES> 200
<RECEIVABLES> 163,692
<ALLOWANCES> 2,961
<INVENTORY> 122,084
<CURRENT-ASSETS> 318,815
<PP&E> 210,130
<DEPRECIATION> 108,463
<TOTAL-ASSETS> 502,996
<CURRENT-LIABILITIES> 179,663
<BONDS> 0
12,253
0
<COMMON> 0
<OTHER-SE> 208,292
<TOTAL-LIABILITY-AND-EQUITY> 502,996
<SALES> 636,710
<TOTAL-REVENUES> 636,710
<CGS> 276,425
<TOTAL-COSTS> 276,425
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,267
<INTEREST-EXPENSE> 7,763
<INCOME-PRETAX> 71,745
<INCOME-TAX> 21,778
<INCOME-CONTINUING> 49,967
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,967
<EPS-PRIMARY> 2.85
<EPS-DILUTED> 2.84
</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); 33-18309 (Employees Savings Trust Plan); and 33-33481 (Hourly-Rated
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, 1997
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 15d-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 30, 1998
<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, 1997
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 15d-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 30, 1998
