<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
___ EXCHANGE ACT OF 1934
for the fiscal year ended November 1, 1998
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
___ EXCHANGE ACT OF 1934
for the transition period from _____________ to ____________
Commission file number 0-7977
-----------
NORDSON CORPORATION
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0590250
- ------------------------------- ------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
28601 Clemens Road, Westlake, Ohio 44145 (440) 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.
$651,963,000 AS OF DECEMBER 31, 1998
- ------------------------------------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date. 16,694,923 COMMON SHARES AS OF
DECEMBER 31, 1998 ------------------------------
- -----------------
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 1998 Annual Report - Parts I, II and IV
-------------------------------------------------------
Portions of the Proxy Statement for the 1999 Annual Meeting - Part III
----------------------------------------------------------------------
1
<PAGE> 2
PART I
------
Item 1. Business.
- ------- ---------
GENERAL DEVELOPMENT OF BUSINESS
-------------------------------
General Description of Business
- -------------------------------
Founded in 1954, Nordson Corporation (the Company) designs,
manufactures and markets systems that apply adhesives, sealants and coatings to
a broad range of consumer and industrial products during manufacturing
operations. Our high value-added product line includes customized electronic
controls for the precise application and curing of materials to meet customers'
productivity, quality and environmental 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 44 direct operations in 32
countries. Consistent with this strategy, nearly 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, Alabama, 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.
2
<PAGE> 3
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.
3
<PAGE> 4
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 17 (pages
32-33) of the 1998 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 in the nonwovens, textile, paper and flexible
packaging industries.
Nonwovens - Automated equipment for producing synthetic
nonwoven fabrics and applying adhesives, superabsorbent powders, liquids, and
fibers to disposable nonwoven products.
Automotive - Adhesive and sealant dispensing systems for
bonding and sealing glass, body panels and structural components used in
automobiles.
Powder Coating - Electrostatic spray systems for applying
powder paints and coatings to plastic, metal and wood products.
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 used in the manufacturing of metal, plastic and
other containers.
4
<PAGE> 5
Electronics - Automated systems for applying protective
conformal coatings, solder fluxes and adhesive materials to printed circuit
boards and electronic assemblies. 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.
UV Curing - Ultraviolet and infrared 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, Norwalk
and Elyria, Ohio; Norcross and Dawsonville, Georgia; Talladega, Alabama;
Carlsbad, Campbell and Monterey, California; Branford, Connecticut; Luneburg,
Germany; Maastricht, 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.
5
<PAGE> 6
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 1998, no single customer
accounted for 5 percent or more of sales.
Backlog
- -------
The Company's backlog of orders increased to $79.3 million at November
1, 1998 from $68.4 million at November 2, 1997. All orders in the November 1998
backlog are expected to be shipped to customers in fiscal 1999.
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.
6
<PAGE> 7
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 $42,640,000 in fiscal 1998, compared
with approximately $29,812,000 in fiscal 1997 and $30,471,000 in fiscal 1996.
The 1998 amount includes $14,300,000 of acquired research and development. As a
percentage of sales, excluding acquired research and development costs, these
investments were approximately 5.0 percent in fiscal 1998, 1997 and 1996.
Environmental Compliance
- ------------------------
Compliance with federal, state and local environmental protection laws
during fiscal 1998 had no material effect on the Company's capital expenditures,
earnings, or competitive position. The Company also does not anticipate a
material effect in 1999.
Employees
- ---------
As of November 1, 1998, Nordson had 4,074 employees, including all
full-time and part-time employees.
7
<PAGE> 8
Item 2. Properties.
- ------- -----------
The following table summarizes the principal properties of the
Company.
<TABLE>
<CAPTION>
Description Approximate
Location of Property Square Feet
- -------- ----------- -----------
<S> <C> <C>
Amherst, Ohio A manufacturing, laboratory 585,000
and office complex located
on 52 acres of land
Norcross, Georgia A manufacturing, laboratory 150,000
and office building located
on 10 acres of land
A manufacturing and office 27,000
building (leased)
Dawsonville, A manufacturing, laboratory 110,000
Georgia and office 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)
Talladega, A manufacturing and office 27,000
Alabama 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)
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Description Approximate
Location of Property Square Feet
- -------- ----------- -----------
<S> <C> <C>
Maastricht, The A manufacturing, warehouse 59,000
Netherlands and office building (leased)
St. Thibault Des An office building (leased) 45,000
Vignes, France
Tokyo, Japan An office, laboratory and 42,000
warehouse (leased)
Milano, Italy An office, laboratory and 41,000
warehouse (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 warehouse and office 9,000
Netherlands building
</TABLE>
Several of these properties are pledged as security for
industrial revenue bonds and mortgage notes payable.
Other properties at international subsidiary locations and at
branch locations within the United States are leased. Lease terms do not exceed
25 years and generally contain a provision for cancellation with some penalty at
an earlier date.
In addition, the Company leases equipment under various
operating and capitalized leases. Information about leases is reported in Note 9
of Notes to Consolidated Financial Statements on page 27 of the 1998 Annual
Report, incorporated herein by reference thereto.
Item 3. Legal Proceedings.
- ------- -------------------
The Company is involved in legal proceedings incidental to its
business, none of which is material to the results of operations in the opinion
of management.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------- ----------------------------------------------------
None.
9
<PAGE> 10
Executive Officers of the Company.
- ----------------------------------
The executive officers of the Company as of December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
Served Position or Office With
As The Company and Business
Officer Experience During the Past
Name Since Five (5) Year Period
- ---------------------- -------- --------------------------------------
<S> <C> <C>
Edward P. Campbell 1988 President and Chief Executive
Age 49 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 53 Vice President, 1986.
Christian C. Bernadotte 1994 Vice President, Corporate
Age 49 Development, 1997.
Vice President, 1994.
General Manager-Packaging and
Product Assembly, 1986.
Drexel R. Bunch 1986 Vice President, Manufacturing, 1986.
Age 54
Raymond L. Cushing 1995 Treasurer, 1995.
Age 44 Assistant Treasurer, 1990.
Robert A. Dunn, Jr. 1997 Vice President, 1997.
Age 51 General Manager-Automotive Systems, 1987.
Bruce H. Fields 1992 Vice President, Human Resources, 1992.
Age 47
Mark G. Gacka 1998 Vice President, 1998.
Age 44 Vice President, Container Systems Group/
General Manager, Electronics Business
Group, 1992.
William D. Ginn 1966 Secretary, 1966.
Age 75
Michael Groos 1995 Vice President, 1995.
Age 47 General Manager, Central Region,
European Division, 1990.
Dr. Richard G. Klein 1986 Vice President, Corporate Research
Age 56 & Technology, 1986.
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Served Position or Office With
As The Company and Business
Officer Experience During the Past
Name Since Five (5) Year Period
- ----------------------- --------- -----------------------------------
<S> <C> <C>
Donald J. McLane 1986 Vice President, 1986.
Age 55
Yoshihiko Miyahara 1989 Vice President, 1989.
Age 61
Thomas L. Moorhead 1981 Vice President, Law and Assistant
Age 62 Secretary, 1981.
Nicholas D. Pellecchia 1986 Vice President, Finance and
Age 53 Controller, 1986.
</TABLE>
11
<PAGE> 12
PART II
-------
Item 5. Market for the Company's Common Equity and Related Stockholder
- ------- --------------------------------------------------------------
Matters.
--------
Market Information and Dividends.
- ---------------------------------
The Company's common shares are listed on The Nasdaq Stock
Market's National Market. The information appearing under the captions "Dividend
Information and Price Range Per Common Shares" and "Stock Listing Information"
on page 38 of the 1998 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, 1998 was as follows:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Common shares with no 2,855
par value
</TABLE>
Item 6. Selected Financial Data.
- ------- ------------------------
The Company incorporates herein by reference the information as
to each of the Company's last five fiscal years appearing under the caption
"Eleven-Year Summary" on pages 34 and 35 of the 1998 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 14
through 18 of the 1998 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 14
through 18 of the 1998 Annual Report and Note 12 on page 29 of the 1998 Annual
Report.
Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------
The information required by this item appears on pages 19
through 33 of the 1998 Annual Report, incorporated herein by reference thereto.
Item 9. Changes In and Disagreements With Accountants on Accounting
- ------- -----------------------------------------------------------
and Financial Disclosure.
-------------------------
None.
12
<PAGE> 13
PART III
--------
Item 10. Directors and Executive Officers of the Company.
- -------- ------------------------------------------------
The Company incorporates herein by reference the information
appearing under the caption "Election of Directors" on pages 2 through 5 of the
Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission by January 29, 1999.
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 6 and
7, and information pertaining to compensation of officers located on pages 11
through 24 of the Company's definitive Proxy Statement to be filed with the
Securities and Exchange Commission by January 29, 1999.
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 8
through 10 of the Company's definitive Proxy Statement to be filed with the
Securities and Exchange Commission by January 29, 1999.
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 26
through 28 of the Company's definitive Proxy Statement to be filed with the
Securities and Exchange Commission by January 29, 1999.
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.
13
<PAGE> 14
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
- -------- ----------------------------------------------------------------
(a)(1). Financial Statements.
---------------------
The financial statements listed in the accompanying index to
financial statements are filed as part of this Annual Report on Form 10-K.
(a)(2) and (d). Financial Statement Schedules.
------------------------------
No consolidated financial statement schedules are presented
because the schedules are not required, because the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements, including the notes thereto.
(a)(3) and (c). Exhibits.
---------
The exhibits listed on the accompanying index to exhibits are
filed as part of this Annual Report on Form 10-K.
(b). Reports on Form 8-K.
--------------------
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
NORDSON CORPORATION
Date: January 29, 1999 By: /s/ Nicholas D. Pellecchia
------------------------------
Nicholas D. Pellecchia
Vice President, Finance
and Controller
14
<PAGE> 15
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 29, 1999
- ----------------------------
William P. Madar
Director and Chairman of the Board
/s/ Edward P. Campbell January 29, 1999
- ---------------------------
Edward P. Campbell
Director, President and Chief Executive Officer
(Principal Executive Officer)
/s/ Nicholas D. Pellecchia January 29, 1999
- ----------------------------
Nicholas D. Pellecchia
Vice President,Finance and Controller
(Principal Accounting Officer and
Principal Financial Officer)
/s/ William D. Ginn January 29, 1999
- ----------------------------
William D. Ginn
Director and Secretary
/s/ Dr. Glenn R. Brown January 29, 1999
- ----------------------------
Dr. Glenn R. Brown
Director
/s/ William W. Colville January 29, 1999
- ----------------------------
William W. Colville
Director
/s/ Stephen R. Hardis January 29, 1999
- ----------------------------
Stephen R. Hardis
Director
/s/ Dr. Anne O. Krueger January 29, 1999
- ----------------------------
Dr. Anne O. Krueger
Director
/s/ Eric T. Nord January 29, 1999
- ----------------------------
Eric T. Nord
Director
15
<PAGE> 16
/s/ Evan W. Nord January 29, 1999
- ----------------------------
Evan W. Nord
Director
/s/ William L. Robinson January 29, 1999
- ----------------------------
William L. Robinson
Director
/s/ Benedict P. Rosen January 29, 1999
- ----------------------------
Benedict P. Rosen
Director
16
<PAGE> 17
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 1, 1998
17
<PAGE> 18
NORDSON CORPORATION
INDEX TO FINANCIAL STATEMENTS
(Item 14(a)(1))
<TABLE>
<CAPTION>
Page Reference
--------------
<S> <C>
Data incorporated by reference from the 1998 Annual Report:
Consolidated statement of income for
the years ended November 1, 1998,
November 2, 1997 and November 3, 1996 19
Consolidated balance sheet as of
November 1, 1998 and November 2, 1997 20
Consolidated statement of cash flows
for the years ended November 1, 1998,
November 2, 1997 and November 3, 1996 21
Consolidated statement of shareholders' equity for the years ended
November 1, 1998, November 2, 1997 and November 3,
1996 22
Notes to consolidated financial statements 23-33
Report of independent auditors 33
</TABLE>
The consolidated financial statements of the Registrant listed
in the preceding index, which are included in the 1998 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 1998
Annual Report is not to be deemed filed as part of this report.
18
<PAGE> 19
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
<S> <C>
(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 1998 Amended Regulations
(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 (incorporated herein by
reference to Exhibit 10-a to Registrant's Annual Report
on Form 10-K for the year ended November 2, 1997)*
10-a-1 Nordson Corporation 1995 Management Incentive Compensation
Plan -- Exhibit 1 for 1998 Plan Year (incorporated herein
by reference to Exhibit 10-a-1 to Registrant's Annual
Report on Form 10-K for the year ended November 2,
1997)*
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)*
</TABLE>
19
<PAGE> 20
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- -----------
<S> <C>
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*
10-c 1982 Incentive Stock Option Plan of the
Registrant, as adopted January 18, 1982
(incorporated herein by reference to Exhibit
10-c to Registrant's Annual Report on Form 10-K
for the year ended October 30, 1994)*
10-c-1 Amendment to 1982 Incentive Stock Option Plan of
the Registrant, adopted April 20, 1982
(incorporated herein by reference to Exhibit
10-c-1 to Registrant's Annual Report on Form
10-K for the year ended October 30, 1994)*
10-c-2 Amendments to the 1982 Incentive Stock Option
Plan of the Registrant, adopted January 30, 1987
(incorporated herein by reference to Exhibit
10-c-2 to Registrant's Annual Report on Form 10-K
for the year ended November 2, 1997)*
10-c-3 Amendment to 1982 Incentive Stock Option Plan of
the Registrant, adopted October 27, 1988*
</TABLE>
20
<PAGE> 21
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
<S> <C>
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 (incorporated herein
by reference to Exhibit 10-h to Registrant's
Annual Report on Form 10-K for the year ended
November 2, 1997)*
10-h-1 First Amendment to Nordson Corporation Excess
Defined Contribution Retirement Plan
(incorporated herein by reference to Exhibit
10-h-1 to Registrant's Annual Report on Form
10-K for the year ended October 29, 1995)*
10-h-2 Amendment to Nordson Corporation Excess Defined
Contribution Retirement Plan (incorporated
herein by reference to Exhibit 10-h-2 to
Registrant's Annual Report on Form 10-K for the
year ended October 29, 1995)*
10-i Nordson Corporation Excess Defined Benefit Pension
Plan (incorporated herein by reference to Exhibit
10-i to Registrant's Annual Report on Form 10-K
for the year ended November 2, 1997)*
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
(incorporated herein by reference to Exhibit 10-j
to Registrant's Annual Report on Form 10-K for the
year ended November 2, 1997)*
</TABLE>
21
<PAGE> 22
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- -----------
<S> <C>
10-k Employment Agreement between the Registrant and
Edward P. Campbell*
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 Nordson Corporation 1992 Restricted Stock Plan
(incorporated herein by reference to Exhibit 10-m
to Registrant's Annual Report on Form 10-K for
the year ended November 2, 1997)*
10-n Nordson Corporation 1993 Long-Term Performance
Plan (incorporated herein by reference to Exhibit
10-n to Registrant's Annual Report on Form 10-K
for the year ended November 2, 1997)*
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 (incorporated herein by reference
to Exhibit 10-p to Registrant's Annual Report on
Form 10-K for the year ended November 2, 1997)
10-q Nordson Corporation Assurance Trust Agreement*
10-q-1 Employment Agreement (Change in Control) between
the Registrant and Edward P. Campbell*
10-q-2 Form of Employment Agreement (Change in Control)
between the Registrant and Officers (excluding
Edward P. Campbell)*
(13) Selected portions of the 1998 Annual Report
13-a Management's Discussion and Analysis (pages 14
through 18 of the 1998 Annual Report)
13-b Consolidated Statement of Income (page 19
of the 1998 Annual Report)
13-c Consolidated Balance Sheet (page 20 of the
1998 Annual Report)
13-d Consolidated Statement of Cash Flows (page 21
of the 1998 Annual Report)
13-e Consolidated Statement of Shareholders'
Equity (page 22 of the 1998 Annual Report)
13-f Notes to Consolidated Financial Statements
(pages 23 through 33 of the 1998 Annual Report)
</TABLE>
22
<PAGE> 23
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
<TABLE>
<CAPTION>
Exhibit
Number Description
- ---------- -----------
<S> <C>
13-g Report of Independent Auditors (page 33 of
the 1998 Annual Report)
13-h Eleven-Year Summary (pages 34 and 35 of the
1998 Annual Report)
13-i Shareholder Information (page 38 of the 1998
Annual Report)
(21) Subsidiaries of the Registrant
(23) Consent of Independent Auditors
(27) Financial Data Schedules
27-a Period Ending November 1, 1998
27-b Period Ending November 2, 1997
27-c Period Ending November 3, 1996
(99) Additional Exhibits
99-a Form S-8 Undertakings (Nos. 33-32201, 2-82915,
33-18279, 33-20451, 33-20452, 33-18309 and
33-33481)
99-b Form S-8 Undertakings (No. 2-66776)
99-c Annual Report on Form 11-K of the Nordson
Employees' Savings Trust Plan for its fiscal
year ended December 31, 1998
99-d Annual Report on Form 11-K of the Nordson
Hourly-Rated Employees' Savings Trust Plan for
its fiscal year ended December 31, 1998
</TABLE>
*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 3-b
NORDSON CORPORATION
1998 AMENDED REGULATIONS
ARTICLE I
---------
SHAREHOLDERS
------------
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders of the
Company for the election of directors, the consideration of reports, and the
transaction of such other business as may properly be brought before the meeting
shall be held at the principal office of the Company in Westlake, Ohio, or at
such other place either within or without the State of Ohio as may be designated
by the Board of Directors, by the Chairman of the Board, or by the President and
specified in the notice of the meeting, at 5:15 o'clock p.m. on the fourth
Tuesday in February in each year, or at such other time and on such other date
(not, however, earlier than February 15 or later than March 15 in any year) as
the Board of Directors may determine.
SECTION 2. SPECIAL MEETING. Special meetings of the shareholders of the
Company may be held on any business day when called by the President, or by a
Vice President; by the Board of Directors acting at a meeting or by a majority
of the directors acting without a meeting; or by persons who hold fifty percent
of all the shares outstanding and entitled to vote thereat. Upon request in
writing delivered either in person or by registered mail to the President or the
Secretary by any person entitled to call a special meeting of the shareholders,
that officer shall forthwith cause to be given to the shareholders entitled
thereto notice of a meeting to be held on a date not less than seven or more
than sixty days after the receipt of the request, as that officer may fix. If
the notice is not given within thirty days after the delivery or mailing of the
request, the persons calling the meeting may fix the time of the meeting and
give notice thereof in the manner provided by law or as provided in these
Regulations, or cause the notice to be given by any designated representative.
Each special meeting shall be called to convene between nine o'clock a.m. and
four o'clock p.m. and shall be held at the principal Office of the Company at
Westlake, Ohio, unless the meeting is called by the directors, acting with or
without a meeting, in which case the meeting may be held at any place either
within or without the State of Ohio determined by the Board of Directors and
specified in the notice of the meeting.
SECTION 3. NOTICE OF MEETINGS. Not less than seven or more than sixty
days before the date fixed for a meeting of the shareholders, written notice
stating the time, place, and purposes of the meeting shall be given by or at the
direction of the President, a Vice President, the Secretary, or an Assistant
Secretary (or, if notice is not timely given, by a designated representative of
the person calling the meeting under Section 2 of this Article I). The notice
shall be given by personal delivery or by mail to each shareholder entitled to
notice of the meeting who is not of record as of the date next preceding the day
on which notice is given or, if a record date therefor is duly fixed, of record
as of that date; if mailed, the notice shall be addressed to the shareholders at
their respective addresses as they appear on the records of the Company. Notice
of the time, place, and purposes of any meeting of shareholders may be waived in
writing, either before or after the holding of the meeting, by any shareholders,
which
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<PAGE> 2
writing shall be filed with or entered upon the records of the meeting. The
attendance of any shareholder at any meeting without protesting, prior to or at
the commencement of the meeting, the lack of proper notice shall be deemed to be
a waiver by him of notice of the meeting.
SECTION 4. QUORUM; ADJOURNMENT. Except as may be otherwise provided by
law or by the Articles of Incorporation, at any meeting of the shareholders,
holders of one-third of the outstanding voting shares of the Company present in
person or by proxy shall constitute a quorum of such meeting; provided, however,
that no action required by law, the Articles, or these Regulations to be
authorized or taken by a designated proportion of the shares of any particular
class or of each class of the Company may be authorized or taken by a lesser
proportion and except that the holders of a majority of the voting shares
represented at the meeting may adjourn the meeting from time to time; if any
meeting is adjourned, notice of the adjournment need not be given if the time
and place to which such meeting is adjourned are fixed and announced at the
meeting.
SECTION 5. PROXIES. Persons entitled to vote shares or act with respect
to shares may vote or act in person or by proxy. The person appointed as proxy
need not be a shareholder. Unless the writing appointing a proxy otherwise
provides, the presence at a meeting of a person who has appointed a proxy shall
not operate to revoke the appointment. Notice to the Company, in writing or in
open meeting, of the revocation of the appointment of a proxy shall not affect
any vote or act previously taken or authorized.
SECTION 6. APPROVAL AND RATIFICATION OF ACTS OF OFFICERS AND BOARD OF
DIRECTORS. Except as otherwise provided by the Articles of Incorporation or by
law, any contract, act, or transaction, prospective or past, of the Company, of
the Board of Directors, or of the officers may be approved or ratified by the
affirmative vote at a meeting of the shareholders, or by written consent, with
or without a meeting, of the holders of record of shares entitling them to
exercise a majority of the voting power of the Company, and that approval or
ratification shall be as valid and binding as though affirmatively voted for or
consented to by every shareholder of the Company.
SECTION 7. ORDER OF BUSINESS.
(a) The Chairman of the Board, or such other officer of the
Company as may be designated by the Board of Directors, will call
meetings of the shareholders to order and will preside at the meetings.
The presiding officer will determine the order of business at the
meeting and have the authority to regulate the conduct of the meeting,
including (i) limiting the persons (other than shareholders and their
duly appointed proxies) who may attend the meeting, (ii) determining
whether any shareholder or his or her proxy should be excluded from the
meeting because the shareholder or proxy has disrupted or is likely to
disrupt the meeting, (iii) determining the circumstances in which any
person may make a statement or ask questions at the meeting, and (iv)
establishing such other procedures as the presiding officer may deem
appropriate for the orderly conduct of the meeting.
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<PAGE> 3
(b) At an annual meeting of the shareholders, only such
business as is properly brought before the meeting will be considered.
To be properly brought before an annual meeting, business must be (i)
specified in the notice of the meeting (or any supplement to that
notice) given by or at the direction of the President, a Vice
President, the Secretary, or an Assistant Secretary in accordance with
Section 3 of this Article I, (ii) brought before the meeting by the
presiding officer or by or at the direction of the Board of Directors,
or (iii) properly requested by a shareholder to be brought before the
meeting in accordance with subsection (c) of this Section 7.
(c) For business to be properly requested by a shareholder to
be brought before an annual meeting of the shareholders, the
shareholder must (i) be a shareholder of the Company of record at the
time of the giving of the notice for the annual meeting and at the time
of the annual meeting, (ii) be entitled to vote at the annual meeting,
and (iii) have given timely written notice of the business to the
Secretary. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Company
not less than 60 nor more than 90 days prior to the annual meeting;
except that, if the first public announcement of the date of the annual
meeting is not made at least 70 days prior to the date of the meeting,
notice by the shareholder will be timely if it is so received not later
than the close of business on the tenth day following the day on which
the first public announcement of the date of the meeting is made. A
shareholder's notice must set forth, as to each matter the shareholder
proposes to bring before the annual meeting, (A) a description in
reasonable detail of the business proposed to be brought before the
meeting, (B) the name and address, as they appear on the Company's
books, of the shareholder proposing such business and of the beneficial
owner, if any, on whose behalf the proposal is made, (C) the class and
number os shares that are owned of record and beneficially by the
shareholder proposing the business and by the beneficial owner, if any,
on whose behalf the proposed is made, and (D) any material interest of
such shareholder or beneficial owner in such business. This Section
7(c) will not affect any rights that the shareholder may have pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, to
request the inclusion of proposals in the Company's proxy statement.
(d) At a special meeting of the shareholders, only such
business as is properly brought before the meeting will be conducted.
To be properly brought before a special meeting, business must be (i)
specified in the notice of the meeting (or any supplement to that
notice) given by or at the direction of the President, a Vice
President, the Secretary, or an Assistant Secretary in accordance with
Section 3 of this Article I (or, if notice is not timely given, by a
designated representative of the person calling the meeting under
Section 2 of this Article I), or (ii) brought before the meeting by the
presiding officer or by or at the direction of the Board of Directors.
(e) The determination of whether any business sought
to be brought before any annual or special meeting of the shareholders
is properly brought in accordance with this Section 7 will be made by
the presiding officer of the meeting. If the presiding officer
determines that any business is not properly brought before the
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<PAGE> 4
meeting, he or she will so declare to the meeting, and the business
will not be considered or acted upon.
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
SECTION 1. NUMBER AND CLASSIFICATION. The Board of Directors will be
divided into three classes consisting of not less than three directors each. The
number of directors may be fixed or changed (a) by the shareholders at any
meeting of shareholders called to elect directors at which a quorum is present,
by the vote of the holders of shares representing 80% of the voting power in
elections of directors, or (b) by the Board of Directors by the vote of a
majority of the directors then in office. The terms in office of the directors
in each of the classes will expire in consecutive years. At each annual election
of directors, directors will be elected to the class whose term in office
expires in that year and will hold office for a term of three years and until
their respective successors are elected. In case of any increase in the number
of directors of any class, the additional director or directors elected to that
class will hold office for the remainder of the term in office of that class.
SECTION 2. RESIGNATION; REMOVAL; VACANCIES. Any director may resign at
any time by oral statement made at a meeting of the Board of Directors or in a
writing delivered to the Secretary; the resignation will take effect immediately
or at such other time as the director may specify. No director may be removed
prior to the expiration of his term except for gross negligence or willful
misconduct in the performance of his duties as a director. No reduction in the
number of directors of any class, and no modification or elimination of the
classification of the Board of Directors, will of itself have the effect of
shortening the term of any incumbent director. In the event of any vacancy or
vacancies in the Board of Directors, however caused, the directors then in
office, though less than a majority of their number, fill each vacancy for the
remainder of the term in office of the director whose resignation, removal, or
death resulted in the vacancy.
SECTION 3. NOMINATION OF CANDIDATES FOR ELECTION AS DIRECTORS.
(a) At a meeting of the shareholders at which directors are to
be elected, only persons properly nominated as candidates will be
eligible for election as directors. Candidates may be properly
nominated either (i) by the Board of Directors or (ii) by any
shareholder in accordance with subsection (b) of this Section 3.
(b) For a shareholder properly to nominate a candidate for
election as a director at a meeting of the shareholders, the
shareholder must (i) be a shareholder of the Company of record at the
time of the giving of the notice for the meeting, (ii) be entitled to
vote at the meeting in the election of directors, and (iii) have given
timely written notice of the nomination to the Secretary. To be timely,
a shareholder's notice must be delivered to or mailed and received at
the principal executive offices of the Company not
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<PAGE> 5
less than 60 nor more than 90 days prior to the meeting; except that,
if the first public announcement of the date of the meeting is not made
at least 70 days prior to the date of the meeting, notice by the
shareholder will be timely if it is so received not later than the
close of business on the tenth day following the day on which the first
public announcement of the date of the meeting is made. A shareholder's
notice must set forth, as to each candidate, all of the information
about the candidate required to be disclosed in a proxy statement
complying with the rules of the Securities and Exchange Commission that
is used in connection with the solicitation of proxies for the election
of the candidate as a director. If the officer presiding at the meeting
determines that one or more of the candidates has not been nominated in
accordance with these procedures, he or she will so declare at the
meeting, and the candidates will not be considered or voted upon at the
meeting.
SECTION 4. ORGANIZATION MEETING. Immediately after each annual meeting
of the shareholders, the newly elected directors shall hold an organizational
meeting for the purpose of electing officers and transacting any other business.
Notice of the organizational meeting need not be given.
SECTION 5. REGULAR MEETINGS. Regulation meetings of the Board of
Directors may be held at such times and places within or without the State of
Ohio as may be provided for in bylaws or resolutions adopted by the Board of
Directors and upon such notice, if any, as may be so provided. Unless otherwise
indicated in the notice of a regular meeting, any business may be transacted at
that regular meeting.
SECTION 6. SPECIAL MEETINGS. Special Meetings of the Board of Directors
may be held at any time within or without the State of Ohio (or through use of
telephone or other communications equipment if all the directors participating
in the meeting can hear each other) upon call by the Chairman of the Board, by
the President, by a Vice President, or by any two directors. Written notice of
the time and place of each special meeting shall be given to each director
either by personal delivery or by mail, telegram, or cablegram at least two days
before the meeting, which notice need not specify the purposes of the meeting.
Attendance of any director at a special meeting (or participation in the meeting
through use of telephone or other communications equipment) without protesting,
prior to or at the commencement of the meeting, the lack of proper notice shall
be deemed to be a waiver by him of notice of the meeting, and notice of a
special meeting may be waived in writing, either before or after the holding of
the meeting, by any director, which writing shall be filed with or entered upon
the records of the meeting. Unless otherwise indicated in the notice of a
special meeting, any business may be transacted at that meeting.
SECTION 7. QUORUM; ADJOURNMENT. A quorum of the Board of Directors
shall consist of a majority of the directors then in office; provided, that a
majority of the directors present at a meeting duly held, whether or not a
quorum is present, may adjourn the meeting from time to time. If any meeting is
adjourned, notice of the adjournment need not be given if the time and place to
which the meeting is adjourned are fixed and announced at the meeting. At each
meeting of the Board of Directors at which a quorum is present, all questions
and business shall
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<PAGE> 6
be determined by a majority vote of those present, except as otherwise expressly
provided in these Regulations.
SECTION 8. ACTION WITHOUT A MEETING. Any action which may be authorized
or taken at a meeting of the Board of Directors may be authorized or taken
without a meeting with the affirmative vote or approval of, and in a writing or
writings signed by, all of the directors, which writing or writings shall be
filed with or entered upon the records of the Company.
SECTION 9. COMMITTEES. The Board of Directors may at any time appoint
from its members an Executive, Finance, or other committee or committees,
consisting of such number of members, not less than three, as the Board of
Directors may deem advisable together with such alternates as the Board of
Directors may deem advisable to take the place of any absent member or members
at any meeting of the committee. Each member and each alternative shall hold
office during the pleasure of the Board of Directors. Any committee shall act
only in the intervals between meetings of the Board of Directors and shall have
such authority of the Board of Directors as may, from time to time, be delegated
to it by the Board of Directors, except the authority to fill vacancies in the
Board of Directors or in any committee of the Board of Directors. Subject to
these exceptions, any person dealing with the Company shall be entitled to rely
upon any act or authorization of an act by any committee to the same extent as
an act or authorization of the Board of Directors. Each committee shall keep
full and complete records of all meetings and actions, which shall be open to
inspection by the directors. Unless otherwise ordered by the Board of Directors,
any committee may prescribe its own rules for calling and holding meetings and
for its own method of procedure and may act at a meeting by a majority of its
members or without a meeting by a writing or writings signed by all of its
members.
ARTICLE III
-----------
OFFICERS
--------
SECTION 1. ELECTION AND DESIGNATION OF OFFICERS. The Board of Directors
shall elect a President, a Secretary, a Treasurer, and, in its discretion, may
elect a Chairman of the Board, one or more Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
as it deems necessary. The Chairman of the Board and the President shall be
directors, but none of the other officers need be a director. Any two or more
offices may be held by the same person, but no officer shall execute,
acknowledge, or verify any instrument in a more than one capacity if the
instrument is required to be executed, acknowledged, or verified by two or more
officers.
SECTION 2. TERM OF OFFICE; VACANCIES. Each officer of the Company shall
hold office until the next organizational meeting of the Board of Directors and
until his successor is elected or until his earlier resignation, removal from
office, or death. The Board of Directors may remove any officer at any time with
or without cause by a majority vote of the directors then in office. Any vacancy
in any office may be filled by the Board of Directors.
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<PAGE> 7
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board, if any,
shall preside at all meetings of the Board of Directors, shall, unless that duty
has been delegated by the Board of Directors to the President or another
officer, preside at all meetings of the shareholders, and shall have such
authority and shall perform such other duties as may be determined by the Board
of Directors.
SECTION 4. PRESIDENT. The President shall preside at all meetings of
the shareholders and at all meetings of the Board of Directors, except for
meetings at which the Chairman of the Board, if any, presides in accordance with
the preceding Section. Subject to directions of the Board of Directors and to
the delegation by the Board of Directors to the Chairman of the Board of
specific or general executive supervision, the President shall have general
executive supervision over the property, business, and affairs of the Company.
He may execute all authorized deeds, mortgages, bonds, contracts, and other
obligations in the name of the Company and shall have such other authority and
shall perform such other duties as may be determined by the Board of Directors.
SECTION 5. VICE PRESIDENT. Each Vice President shall have such
authority and perform such duties as may be determined by the Board of
Directors.
SECTION 6. SECRETARY. The Secretary shall keep the minutes of meetings
of the shareholders and of the Board of Directors. He shall keep such books as
may be required by the Board of Directors, shall give notices of meetings of the
shareholders and of the Board of Directors required by law, by these
Regulations, or otherwise, and shall have such authority and shall perform such
other duties as may be determined by the Board of Directors.
SECTION 7. TREASURER. The Treasurer shall receive and have in charge
all money, bills, notes, bonds, stocks in other corporations, and similar
property belonging to the Company, and shall deal with this property as may be
ordered by the Board of Directors. He shall keep accurate financial accounts and
hold them open for inspection and examination by the directors and shall have
such authority and shall perform such other duties as may be determined by the
Board of Directors.
SECTION 8. OTHER OFFICERS. The Assistant Secretaries, Assistant
Treasurers, and other officers, if any, whom the Board of Directors may elect
shall each have such authority and perform such duties as may be determined by
the Board of Directors.
SECTION 9. DELEGATION OF AUTHORITY AND DUTIES. The Board of Directors
is authorized to delegate the authority and duties of any officer to any other
officer and generally to control the action of the officers and to require the
performance of duties in addition to those mentioned in these Regulations.
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<PAGE> 8
ARTICLE IV
----------
COMPENSATION
------------
SECTION 1. DIRECTORS AND MEMBERS OF COMMITTEES. Members of the Board of
Directors and members of any committee of the Board of Directors shall, as such,
receive such compensation, which may be either a fixed sum for attendance at
each meeting of the Board of Directors or of the committee or may be stated
compensation payable at intervals, or may otherwise be compensated as determined
by or pursuant to authority conferred by the Board of Directors or any committee
of the Board of Directors, which compensation may be in different amounts for
various members of the Board of Directors or of any committee. No member of the
Board of Directors shall be disqualified from being counted in the determination
of a quorum or from acting at any meeting of the Board of Directors or of a
committee by reason of the fact that matters affecting his own compensation as a
director, member of a committee, officer, or employee are to be determined.
SECTION 2. OFFICERS AND EMPLOYEES. The compensation of officers and
employees of the Company, or the method of fixing their compensation, shall be
determined by or pursuant to authority conferred by the Board of Directors or
any committee of the Board of Directors. Compensation may include pension,
disability, and death benefits and may be by way of fixed salary, on the basis
of earnings, any combination thereof, or otherwise, as may be determined or
authorized from time to time by the Board of Directors or any committee of the
Board of Directors.
ARTICLE V
---------
INDEMNIFICATION OF DIRECTORS,
-----------------------------
OFFICERS, AND EMPLOYEES
-----------------------
The Company shall indemnify, to the full extent permitted or authorized
by the Ohio General Corporation Law as it may from time to time be amended, any
person made or threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, by reason of the fact that he is or was a director, officer,
or employee of the Company, or is or was serving at the request of the Company
as a director, trustee, officer, employee, or agent of another corporation,
domestic or foreign, nonprofit or for profit, partnership, joint venture, trust
or other enterprise. The Company shall pay, to the full extent permitted or
authorized by the Ohio General Corporation Law, expenses, including attorneys'
fees, as they are incurred by any director or officer in defending any such
action, suit, or proceeding. The indemnification and advancement of expenses
provided by this Article V shall not be deemed exclusive of any other rights to
which any person seeking indemnification may be entitled under the articles of
incorporation or the regulations, or any agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, or
employee and shall inure to the benefit of the heirs, executors, and
administrators of that person.
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<PAGE> 9
ARTICLE VI
----------
RECORD DATES
------------
For any lawful purpose, including, without limitation, the
determination of the shareholders who are entitled to receive notice of or to
vote at a meeting of shareholders, the Board of Directors may fix a record date
in accordance with the provisions of the Ohio General Corporation Law. The
record date for the purpose of the determination of the shareholders who are
entitled to receive notice of or to vote at a meeting of shareholders shall
continue to be the record date for all adjournments of the meeting, unless the
Board of Directors or the persons who have fixed the original record date shall,
subject to the limitations set forth in the Ohio General Corporation Law, fix
another date and cause notice thereof and of the date to which the meeting has
been adjourned to be given to shareholders of record as of the newly fixed date
in accordance with the same requirements as those applying to a meeting newly
called. The Board of Directors may close the share transfer books against
transfers of shares during the whole or any part of the period provided for in
this Article, including the date of the meeting of shareholders and the period
ending with the date, if any, to which it is adjourned. If no record date is
fixed therefor, the record date for determining the shareholders who are
entitled to receive notice of or to vote at a meeting of shareholders shall be
the date next preceding the day on which notice is given, or the date next
preceding the day on which the meeting is held, as the case may be.
ARTICLE VII
-----------
CERTIFICATES FOR SHARES
-----------------------
SECTION 1. FORM OF CERTIFICATES AND SIGNATURES. Each holder of shares
shall be entitled to one or more certificates signed by the Chairman of the
Board, the President, or a Vice President and by the Secretary, an Assistant
Secretary, the Treasurer, or an Assistant Treasurer of the Company and
certifying the number and class of shares held by him, but no certificate for
shares shall be executed or delivered until the shares are fully paid. When a
certificate is countersigned by an incorporated transfer agent or registrar, the
signature of any officer of the Company may be facsimile, engraved, stamped, or
printed. Although any officer of the Company whose manual or facsimile signature
is affixed to a certificate ceases to be that officer before the certificate is
delivered, the certificate nevertheless shall be effective in all respects when
delivered.
SECTION 2. TRANSFER OF SHARES. Shares of the Company shall be
transferrable upon the books of the Company by the holders thereof, in person or
by a duly authorized attorney, upon surrender and cancellation of certificates
for a like number of shares of the same class or series, with duly executed
assignment and power of transfer endorsed thereon or attached thereto, and with
such proof of the authenticity of the signatures to the assignment and power of
transfer as the Company or its agents may reasonably require.
SECTION 3. LOST, STOLEN, OR DESTROYED CERTIFICATES. The Company may
issue a new certificate for shares in place of any certificate theretofore
issued by it and alleged to have been lost, stolen, or destroyed, and the Board
of Directors may, in its discretion, require the owner, or his legal
representatives, to give the Company a bond containing such terms as the
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<PAGE> 10
Board of Directors may require to protect the Company or any person injured by
the execution and delivery of the new certificate.
SECTION 4. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint, or revoke the appointment of, transfer agents and registrars and may
require all certificates for shares to bear the signatures of the transfer
agents and registrars, or any of them.
ARTICLES VIII
-------------
CORPORATE SEAL
--------------
The Ohio General Corporation Law provides that the absence of a
corporate seal from any instrument executed on behalf of the Company does not
affect the validity of the instrument. If, in spite of that provision, a seal is
imprinted on or attached, applied, or affixed to an instrument by embossment,
engraving, stamping, printing, typing, adhesion, or other means, the impression
of the seal on the instrument shall be circular in form and shall contain the
name of the Company and the words "corporate seal".
ARTICLE IX
----------
AMENDMENTS
----------
These Regulations may be amended, or new Regulations may be adopted, by
the shareholders at a meeting held for that purpose by the affirmative vote of
the holders of shares entitling them to exercise a majority of the voting power
on that proposal or without a meeting by the written consent of the holders of
shares entitling them to exercise two-thirds of the voting power on that
proposal; except that, unless the amendment is approved and recommended by the
Board of Directors, the provisions of Sections 2, 3, and 7 of Article I,
Sections 1, 2, and 3 of Article II, Article V, and this Article IX may not be
amended without the affirmative vote or written consent of the holders of shares
entitling them to exercise 80% of the voting power of the Company. If the
Regulations are amended or new Regulations are adopted without a meeting of the
shareholders, the Secretary of the Company shall mail a copy of the amendment or
the new Regulations to each shareholder who would have been entitled to vote
thereon and did not participate in the adoption thereof.
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<PAGE> 1
Exhibit 10-b-2
NORDSON CORPORATION
AMENDMENT TO
1979 EMPLOYEES STOCK OPTION PLAN
PROVIDING FOR
ACCELERATION UPON CHANGE IN CONTROL
Section 7(b) of the 1979 Employees Stock Option Plan shall be
amended to read as follows:
(b) Notwithstanding any exercise date determined by the
Committee or by the Board of Directors under Subsection (a), all
outstanding options shall become exercisable upon the occurrence of any
of the following:
(i) Any Person (other than Nordson, any of its
subsidiaries, any employee benefit plan or employee
stock ownership plan of Nordson or of any of its
subsidiaries, or any Person organized, appointed, or
established by Nordson or any of its subsidiaries for
or pursuant to the terms of any such plan), alone or
together with any of its Affiliates or Associates,
becomes the Beneficial Owner of 20% or more of the
Common Shares then outstanding, any such Person is
declared to be an Adverse Person by the Board of
Directors, or any such Person commences or publicly
announces an intent to commence a tender offer or
exchange offer the consummation of which would result
in the Person becoming the Beneficial Owner of 20% or
more of the Common Shares then outstanding (PROVIDED,
HOWEVER, that, for purposes of determining whether
Eric T. Nord or Evan W. Nord, together with each of
their Affiliates or Associates, is the Beneficial
Owner of 20% or more of the Common Shares then
outstanding, the Common Shares then held by the
Walter G. Nord Trust and by the Nordson Foundation
shall be excluded and, for purposes of determining
whether the Walter G. Nord Trust or the Nordson
Foundation, together with each of their Affiliates
and Associates, is the Beneficial Owner of 20% or
more of the Common Shares then held by Eric T. Nord
and by Evan W. Nord shall be excluded). For purposes
of this clause (i), the terms "Adverse Person,"
"Affiliates," "Associates," "Beneficial Ownership,"
and "Person" shall have the meanings given to them in
the rights Agreement, dated as of August 26, 1988,
between Nordson and AmeriTrust Company National
Association, as Rights Agent, as amended from time to
time.
(ii) At any time during a period of 24 consecutive months,
<PAGE> 2
individuals who were directors of Nordson at the
beginning of the period no longer constitute a
majority of Nordson's directors, unless the election,
or the nomination for election by Nordson's
shareholders, of each director who was not a director
at the beginning of the period is approved by at
least a majority of the directors who are in office
at the time of the election or nomination and were
directors at the beginning of the period.
(iii) A record date is established for determining
shareholders entitled to vote upon (a) a merger or
consolidation of Nordson with another corporation in
which Nordson is not the surviving or continuing
corporation or in which all or part of the
outstanding Common Shares are to be converted into or
exchanged for cash, securities, or other property,
(b) a sale or other disposition of all or
substantially all of the assets of Nordson, or (c)
the Liquidation and dissolution of Nordson.
(iv) Any person who proposes to make a "control share
acquisition" of Nordson, within the meaning of
Section 1701.01(Z)(1) of the Ohio General Corporation
Law, submits or is required to submit an acquiring
person statement of Nordson.
<PAGE> 3
NORDSON CORPORATION
AMENDMENT TO
1979 EMPLOYEES STOCK OPTION PLAN
PROVIDING FOR
WITHHOLDING TAX ELECTION
The heading of Section 10 of the 1979 Employees Stock Option Plan shall
be changed to "Exercise of Options; Payment for Shares; Withholding Tax
Election" and the text of Section 10 shall be amended to read as follows:
(a) Options shall be exercised by delivery of written notice of
exercise to Nordson accompanied by payment of the option price. Common
Shares subject to an option shall be issued or, in the case of treasury
shares, sold only upon exercise of the option in whole or in part and
upon full payment of the option price. Payment of the option price
shall be made in cash, by delivery of Common Shares, or partly in cash
and partly by delivery of Common Shares. Any Common Shares so delivered
shall be valued at the closing price of the Common Shares as reported
by the NASDAQ National Market System for the last date on which trades
were reported prior to the date on which the option is exercised.
(b) The Committee may, in its discretion and subject to such rules
as the Committee may adopt, permit an optionee to satisfy, in whole or
in part, any withholding tax that may arise in connection with the
exercise of an option by delivering Common Shares to Nordson, or by
having Nordson retain a portion of the Common Shares subject to the
option, 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 System for the last date on which trades
were reported prior to the date on which the amount of the withholding
tax is determined.
<PAGE> 1
Exhibit 10-c-3
NORDSON CORPORATION
AMENDMENT TO
1982 INCENTIVE STOCK OPTION PLAN
PROVIDING FOR
ACCELERATION UPON CHANGE IN CONTROL
Section 10 of the 1982 Incentive Stock Option Plan shall be
amended to read as follows:
10. EXERCISE OF OPTIONS AND PAYMENT FOR SHARES.
(a) Options shall be exercised by delivery of written notice
of exercise to Nordson accompanied by payment of the option price. Upon exercise
of an option, the purchase price shall be payable in cash or, if determined by
the Committee when the option is granted and specified in the notice of grant of
the option, either (i) through the transfer to Nordson by the employee of Common
Shares having a current market value equal to the purchase price or (ii) by a
combination of cash and the transfer of Common Shares. Any Common Shares so
delivered shall be valued at the closing price of the Common Shares as reported
by the NASDAQ National Market System for the last date on which trades were
reported prior to the date on which the option is exercised. Common Shares
subject to an option shall be issued or, in the case of treasury shares, sold
only upon exercise of the option in whole or in part and upon full payment of
the option price. An optionee shall have none of the rights of a shareholder
with respect to the Common Shares subject to the option until the Common Shares
are issued or transferred to him.
(b) Notwithstanding any exercise date determined by the
Committee or by the Board of Directors under Subsection (a), all outstanding
options shall become exercisable upon the occurrence of any of the following:
(i) Any Person (other than Nordson, any of its
subsidiaries, any employee benefit plan or employee
stock ownership plan of Nordson or of any of its
subsidiaries, or any Person organized, appointed, or
established by Nordson or any of its subsidiaries for
or pursuant to the terms of any such plan), alone or
together with any of its Affiliates or Associates,
becomes the Beneficial Owner of 20% or more of the
Common Shares then outstanding, any such Person is
declared to be an Adverse Person by the Board of
Directors, or any such Person commences or publicly
announces an intent to commence a tender offer or
exchange offer the consummation of which would result
in the Person becoming the Beneficial Owner of 20% or
more of the Common Shares then outstanding (PROVIDED,
HOWEVER, that, for purposes of determining whether
Eric T. Nord or Evan W. Nord, together with each of
their Affiliates or Associates, is the Beneficial
Owner of 20% or more of the Common Shares then
outstanding, the Common Shares then held by the
Walter G. Nord Trust and by the Nordson Foundation
shall be excluded and, for purposes of determining
whether the Walter G. Nord Trust and by
<PAGE> 2
the Nordson Foundation, together with each of their
Affiliates and Associates, is the Beneficial Owner of
20% or more of the Common Shares then held by Eric T.
Nord and by Evan W. Nord shall be excluded). For
purposes of this clause (i), the terms Adverse
Person," "Affiliates," "Associates," "Beneficial
Ownership," and "Person" shall have the meanings
given to them in the Rights Agreement, dated as of
August 26, 1988, between Nordson and AmeriTrust
Company National Association, as Rights Agent, as
amended from time to time.
(ii) At any time during a period of 24 consecutive months,
individuals who were directors of Nordson at the
beginning of the period no longer constitute a
majority of Nordson's directors, unless the election,
or the nomination for election by Nordson's
shareholders, of each director who was not a director
at the beginning of the period is approved by at
least a majority of the directors who are in office
at the time of the election or nomination and were
directors at the beginning of the period.
(iii) A record date is established for determining
shareholders entitled to vote upon (a) a merger or
consolidation of Nordson with another corporation in
which Nordson is not the surviving or continuing
corporation or in which all or part of the
outstanding Common Shares are to be converted into or
exchanged for cash, securities, or other property,
(b) a sale or other disposition of all or
substantially all of the assets of Nordson, or (c)
the liquidation and dissolution of Nordson.
(iv) Any person who proposes to make a "control share
acquisition" of Nordson, within the meaning of
Section 701.01(Z)(1) of the Ohio General Corporation
Law, submits or is required to submit an acquiring
person statement to Nordson.
<PAGE> 1
Exhibit 10-k
[Nordson Corporation Letterhead] April 7, 1988
CONFIDENTIAL
Mr. Edward P. Campbell
1700 Queen Anne's Gate
Westlake, Ohio 44145
Dear Ed:
I am pleased to confirm my offer to you for the position of Vice President,
Corporate Development for Nordson Corporation. In this key position, you will
report directly to me. Your initial compensation and benefit package will be as
follows:
COMPENSATION
BASE SALARY
Your initial base salary will be ONE HUNDRED FIFTY THOUSAND DOLLARS
($150,OOO) PER YEAR. Your Base Salary will be reviewed on November 1,
1988 and yearly thereafter, coinciding with an annual performance
review.
BONUS - A target bonus of fifty-five percent (55%) of Base Salary has
been established for your position under the Nordson Executive
Incentive Bonus Plan. As we discussed should you accept this offer, you
will be guaranteed the amount of the target Bonus for Fiscal Year 1988,
which ends October 30, 1988, prorated for the part of Fiscal Year 1988
in which you are employed by Nordson. As with all bonuses paid under
the Plan, payment will be made in cash not later than the first payroll
date in January following the end of a Fiscal Year.
STOCK
In our discussions, I have stressed the goals for the Corporation. Achievement
of these goals enhances the value of Nordson Common Stock. Your participation as
a member of my team allows you to contribute to the achievement of these goals
and share in the increased value of our stock as a reward for your efforts.
RESTRICTED STOCK
You will be granted 3,000 shares of Restricted Nordson Common Stock
when you commence your employment. Upon expiration of a three-year
restriction period, you will have full right, title and interest in the
Stock provided you are still an active Nordson employee. Under the
Restricted Stock Plan, you relinquish right, title and interest in the
Stock if your employment terminates prior to the expiration of the
restriction period.
INCENTIVE STOCK OPTIONS - Effective on your first day of employment,
you will be entitled to an Incentive Stock Option on 3,000 shares of
Nordson Common Stock. The option price will be established on your
first day of employment in accordance with the Incentive Stock Option
Plan.
<PAGE> 2
The Stock Options have a ten-year exercise period and will become
exercisable in cumulative installments of 25% per year beginning one
year after the effective date.
NON-QUALIFIED STOCK OPTIONS - Effective on your first day of
employment, you will be entitled to a Non-qualified Stock Option on
4,000 shares of Nordson Common Stock. The option price will be
established on your first day of employment in accordance with the
terms of the Plan. The options will become exercisable in cumulative
installments of 25% per year beginning one year after the effective
date and will expire ten years after the effective date.
CAR ALLOWANCE
You will be entitled to an Executive Automobile Allowance in the amount of Eight
Thousand Dollars ($8,000) per year, payable in quarterly installments.
PENSION PLAN
You will be a participant in the Nordson Corporation Salaried Employees' Pension
Plan. Your pension benefit will be equal to the benefit you quality for under
this Pension Plan described in the attached booklet, but modified by the
following in view of your prior service with The Standard Oil Company/BP
America.
1. Your prior service with The Standard Oil Company/BP America will be
recognized in determining vesting and the amount of your pension
benefit.
2. Your "Final Average Pay" will be determined as the average of your
monthly compensation during your 36 consecutive highest-paid months
(instead of 60).
3. You will be eligible for a full pension benefit at age 60 instead of
age 65. You will be eligible for early retirement at age 55 with a
reduction of 5% per year for each year that actual retirement occurs
prior to age 60.
4. If your employment with Nordson terminates for any reason other than
disability or death prior to retirement at age 55, your pension benefit
will be equal to the benefit you would have received if you had
remained employed by The Standard Oil Company/BP America calculated
using your total years of service at The Standard Oil Company/BP
America and Nordson.
5. The benefit you qualify for under the Nordson Pension Plan will be
reduced by any pension benefit payment you receive from The Standard
Oil Company/BP America.
OTHER BENEFITS
You will be entitled to Nordson Corporation's benefit package normally offered
to executive at the Vice President level. They include the following:
Medical, Dental and Life Insurance Plans
Disability Income (Long-term disability coverage will commence
upon your first day of employment. We are waiving the
customary waiting period for this benefit.)
Employee Stock Ownership Plan and Stock Purchase Plan
Nordson Employees' Savings Trust Plan (401K)
<PAGE> 3
Four weeks annual paid vacation
Officers Deferred Compensation Plan
Supplemental Executive Retirement Plan
This offer is contingent upon your completion of a physical examination and the
signing of Nordson Corporation's Employee Agreement. We have enclosed a copy of
the Employee Agreement for your review. If you have any questions concerning
this Agreement, please feel free to discuss them with me. This Agreement is to
be signed in the presence of a member of the Human Resource Department on the
first day of your employment. It will also be necessary for you to complete the
enclosed Nordson Employee Application and bring it with you on your first day of
work.
On behalf of Nordson Corporation, I want you to know I feel you can contribute
significantly towards the growth and success of the Company. We believe that you
will find the position of Vice President, Corporate Development stimulating,
challenging and rewarding.
Sincerely.
/s/ W. P. Madar
W. P. Madar
WPM:
Enclosures
<PAGE> 1
Exhibit 10-q
NORDSON CORPORATION
ASSURANCE TRUST
THIS TRUST AGREEMENT, made as of the day of , 1998
is between Nordson Corporation, an Ohio corporation ("Nordson"), and [ ]
(the "Trustee").
WHEREAS, Nordson is obligated to provide certain supplemental
pension benefits to certain of its employees and to provide benefits pursuant to
certain other deferred compensation and executive compensation arrangements,
including agreements with certain of its executives under which those executives
may become entitled to payments and benefits after a change in control of
Nordson;
WHEREAS, Nordson desires to establish a trust (the "Trust") and to
contribute to the Trust assets that shall be held therein and that shall be
subject to the claims of the creditors of Nordson in the event that Nordson
becomes Insolvent (as defined in Section 5.1 below), until distributed as
provided herein or returned to Nordson; and
WHEREAS, it is the intention of the parties that the Trust shall
constitute an unfunded arrangement for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended;
NOW, THEREFORE, Nordson and the Trustee do hereby establish the
Trust and agree that the Trust shall be comprised, held, and disposed of as
follows:
Article 1. Establishment of Trust
1.1 Nordson hereby deposits with the Trustee in trust $100, which
shall become the principal of the Trust to be held, administered, and disposed
of by the Trustee as provided in this Trust Agreement.
1.2 The Trust hereby established may be revoked by Nordson at any
time before the occurrence of the first to occur of (a) a Funding Event (as
defined in Section 15.6) and (b) a Change of Control (as defined in Section
15.3). If any Funding Event occurs, the Trust hereby established may not be
revoked by Nordson until both that particular Funding Event and any other
Funding Event that may have also occurred have been "terminated" (as defined in
Section 15.7) and the Trust then may be revoked by Nordson if and only if no
Change of Control has then occurred. Upon the occurrence of a Change of Control,
the Trust hereby established shall become irrevocable. Nordson's General Counsel
shall notify the Trustee promptly upon the occurrence of any Funding Event and
of any Change of Control.
1.3 The Trust is intended to be a grantor trust, of which Nordson
is the grantor, within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle A of the Internal Revenue Code, and shall be construed accordingly.
1.4 The principal of the Trust and any earnings thereon shall be
held separate and apart from other funds of Nordson and shall be used
exclusively for the uses and purposes herein set forth. No employee of Nordson
shall have any preferred claim on, or any beneficial ownership interest in, any
assets of the Trust. Any rights created under any Covered Plan or
<PAGE> 2
under this Trust Agreement shall be mere unsecured contractual rights against
Nordson. Any assets held by the Trust will be subject to the claims of general
creditors of Nordson under federal and state law in the event Nordson becomes
Insolvent.
Article 2. Additional Funding
2.1 Nordson, in its sole discretion, may at any time, or from time
to time, make or cause to be made, directly or indirectly, additional deposits
of cash or other property in trust with the Trustee to augment the principal to
be held, administered, and disposed of by the Trustee as provided in this Trust
Agreement.
2.2 If a Funding Event occurs, Nordson shall, as soon as
practicable and in no event later than the day before the occurrence of any
Change of Control related to that Funding Event, contribute to the Trust an
amount equal to the excess, if any, of the Full Funding Amount (as defined in
Section 15.5) over the sum of the value of the assets in the Trust (the "Current
Trust Asset Value") immediately prior to the contribution.
2.3 Immediately upon the occurrence of the first Change of Control
to occur after the execution of this Trust Agreement and thereafter on each and
every anniversary of that Change of Control, Nordson shall contribute to the
Trust an amount equal to the excess, if any, of the Full Funding Amount over the
Current Trust Asset Value immediately prior to the contribution.
2.4 Any contribution made under this Article 2 shall be subject to
withdrawal by Nordson only as provided in Article 3, dealing with discretionary
withdrawals.
Article 3. Discretionary Withdrawals
3.1 Nordson, in its sole discretion, at any time before the
occurrence of the first to occur of a Funding Event or a Change of Control, may
withdraw assets from the Trust provided that no such withdrawal shall reduce the
Current Trust Asset Value, immediately after the withdrawal, to an amount below
$100.
3.2 Nordson shall not be entitled to make any discretionary
withdrawal of assets from the Trust, after any Funding Event has occurred, until
both that particular Funding Event and any other Funding Event that may have
also occurred have been terminated and Nordson may then make such a
discretionary withdrawal only if no Change of Control has then occurred. No
discretionary withdrawal under this Section 3.2 shall reduce the Current Trust
Asset Value, immediately after the withdrawal, to an amount below $100.
3.3 After a Change of Control has occurred, Nordson may not make
any discretionary withdrawal from the Trust. Nothing in this Article 3 shall
restrict the right of Nordson to receive a reversion of excess assets under
Article 6.
2
<PAGE> 3
Article 4. Payments to Participants
4.1 Not later than 120 days after the occurrence of a Funding Event
and again not later than 10 days following the occurrence of a Change of
Control, Nordson shall deliver to the Trustee a schedule (the "Payment
Schedule") that lists the names and addresses of all Participants and indicates
the amounts payable and to become payable to each Participant and/or provides a
formula or other instructions acceptable to the Trustee for determining the
amounts so payable and that indicates the form in which such amounts are to be
paid, as provided for or available under each Covered Plan, and the time of
commencement for payment of such amounts. At the same time as Nordson delivers
the Payment Schedule to the Trustee, Nordson shall deliver to each Participant
that portion of the Payment Schedule that pertains to amounts that may become
payable to that particular Participant. After the occurrence of a Change of
Control, Nordson shall update the Payment Schedule, provide revised versions
thereof to the Trustee, and provide the relevant portions thereof to each
Participant from time to time and at such times so that each termination of the
employment of any Participant (or the occurrence of any other fact or
circumstance that alters the payments due or to become due to any Participant
under any of the Covered Plans) is taken into account in a current revised
Payment Schedule that has been appropriately delivered to the Trustee and to
each Participant (to the extent relevant to each such Participant) not later
than ten days after its occurrence. Except as otherwise provided herein, the
Trustee shall make payments to the Participants in accordance with the Payment
Schedule as it may be revised from time to time. The Trustee shall make
provision for the reporting and withholding of any federal, state, or local
taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of each Covered Plan and shall pay amounts
withheld to the appropriate taxing authorities or determine that such amounts
have been reported, withheld, and paid by Nordson.
4.2 Except as otherwise specifically provided herein, the
entitlement of a Participant to payments from Nordson under a particular Covered
Plan shall be determined under the terms of the particular Covered Plan at
issue. It is Nordson's intention that any and all amounts that may become
payable to Participants under the Covered Plans will be paid to the Participants
at the times and in the amounts specified in the relevant Covered Plan.
4.3 In order to provide added assurances to the Participants that
the amounts to which they may be entitled under the Covered Plans will be
calculated in good faith and paid promptly at the times and in the amounts
specified in the respective Covered Plans, the following procedure shall be
followed:
(a) If, concurrently with or after the occurrence of a Change of
Control, Nordson delivers to the Trustee a Payment Schedule indicating that a
Participant is entitled to payments under a Covered Plan, the Trustee shall
promptly thereafter deliver a copy of the relevant portion of the Payment
Schedule to the Participant and shall make the payments so indicated in the
Payment Schedule.
(b) If, after the occurrence of a Change of Control, a Participant
(either because no Payment Schedule has been delivered to the Trustee or because
the Participant believes that the amounts specified in the Payment Schedule are
incorrect) delivers written notice (a "Participant Payment Notice") to the
Trustee that the Participant is entitled to payments under a Covered Plan
3
<PAGE> 4
and requesting that the Trustee make payments to the Participant pursuant to
that Covered Plan, the Trustee shall promptly deliver a copy of the Participant
Payment Notice to Nordson and thereafter:
(i) if Nordson has not, within ten business days of the delivery of
the Participant Payment Notice to the Trustee, delivered to the
Trustee a notice (a "Nordson Stop Payment Notice") in which Nordson
asserts that the Participant is not entitled to the payments set
forth in the Participant Payment Notice, the Trustee shall make the
payments set forth in the Participant Payment Notice, or,
alternatively,
(ii) if Nordson has, within ten business days of the delivery of
the Participant Payment Notice to the Trustee, delivered to the
Trustee a Nordson Stop Payment Notice, the disparity between the
Participant Payment Notice and the Nordson Stop Payment Notice
shall be resolved as provided in Section 4.4 below and any payments
or portions thereof that are not in dispute shall be paid by the
Trustee as and when due to the Participant.
4.4 If the Trustee has received both a Participant Payment Notice
and a Nordson Stop Payment Notice with regard to the same Covered Plan:
(a) the Trustee shall engage the Accounting Firm (as defined in
Section 15.1), at Nordson's expense, to determine what payments the Participant
is entitled to under the particular Covered Plan, which determination shall be
made by the Accounting Firm as promptly as practicable but in all events within
30 days of the engagement of the Accounting Firm by the Trustee,
(b) Nordson shall cooperate with the Accounting Firm and provide to
it all information that is available to Nordson and is required by the
Accounting Firm to make the determination referred to in (a) above within the
time frame set forth therein, and
(c) unless and until ordered to do otherwise by an award of
arbitrators following arbitration proceedings instituted pursuant to Section 4.5
below, the Trustee shall make payments to the Participant in the amount or
amounts and at the time or times determined by the Accounting Firm.
4.5 In the event of any dispute between a Participant and Nordson
with respect to whether the Participant is entitled to payments (or the amounts
thereof) under a Covered Plan and/or to payment thereof from the assets of the
Trust, either party (Nordson or the Participant) may deliver to the other a
demand for binding arbitration. If either party delivers any such demand to the
other, the dispute shall be determined by binding arbitration conducted in
Cleveland, Ohio according to the Commercial Arbitration Rules of the American
Arbitration Association. In any such arbitration the arbitrators may consider,
with such weight as they may deem appropriate, any determination by the
Accounting Firm that may have been made as provided in Section 4.4 above. The
award of the arbitrators will be final and binding and judgment on the award may
be entered in any court having jurisdiction over the subject matter and the
parties.
4
<PAGE> 5
4.6 In order to discourage Nordson from disputing, otherwise than
in good faith, any amounts properly due to a Participant, the costs and expenses
related to any arbitration proceeding referred to in Section 4.5 shall be borne
as provided in this Section 4.6. Nordson shall bear the cost of its own
attorneys and other representatives and all of the fees and expenses of the
arbitrators and the arbitration proceedings. The reasonable fees and expenses of
the Participant's attorneys relating to the subject matter of the arbitration
shall be paid by Nordson unless and to the extent the arbitrators determine
(which determination shall be final and binding upon the parties) that the
positions advanced by the Participant in any such arbitration have no reasonable
basis (which determination need not be made simply because the arbitrators
decide against the Participant on any or all substantive points). If Nordson
fails to pay any of the costs and expenses related to any arbitration as
specified in this Section 4.6, the Trustee shall pay such amounts from the
assets of the Trust.
4.7 Nordson may make payments under any Covered Plan directly to or
on behalf of a Participant as they become due under the terms of the Covered
Plan. If Nordson makes any such payment it shall notify the Trustee of its
decision to make such payments directly prior to the time amounts are payable to
or on behalf of the Participant. In addition, if the principal of the Trust and
any earnings thereon are not sufficient to make any payments that are due and
payable under any Covered Plan in accordance with its terms, Nordson shall make
the balance of each such payment as it falls due. The Trustee shall notify
Nordson whenever principal and earnings are not sufficient.
4.8 When making any payment to a Participant under a Covered Plan
that is overdue, the Trustee shall increase the amount of the payment to include
interest on the overdue payment from the date due to the date of the
distribution calculated on a daily basis, compounded as of the end of each
calendar month, and using as the interest rate for each calendar month or part
thereof during the period with respect to which interest is due the prime
lending rate published by KeyBank National Association or its successor and in
effect on the first day of that calendar month.
4.9 Whenever a payment under a Covered Plan with respect to a
participant is payable to a beneficiary of the Participant rather than to the
Participant, the beneficiary shall be entitled to all of the rights of the
Participant under all of the provisions of this Trust Agreement with respect to
that payment.
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<PAGE> 6
Article 5. Trustee Responsibility when Nordson Is Insolvent
5.1 The Trustee shall cease payments to Participants from the Trust
if Nordson is Insolvent. Nordson shall be considered "Insolvent" for purposes of
this Trust Agreement if (a) it is unable to pay its debts as they become due, or
(b) it is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code. In determining whether Nordson is Insolvent for purposes of
this Trust Agreement, the Trustee may engage the service of legal, accounting,
financial and other advisors, which may be advisors to Nordson, to assist it in
the determination. Nordson agrees to cooperate fully with any reasonable inquiry
of the Trustee or such advisors in making the determination of Nordson's
Insolvency. During the determination of Nordson's Insolvency, the Trustee may,
in its discretion, suspend any transfer or distribution of assets. To the extent
that the Trustee engages the services of an advisor, the Trustee may rely,
without further inquiry, on the written determination of that advisor as to the
solvency or Insolvency of Nordson. All costs reasonably incurred by the Trustee
in making the determination of Nordson's Insolvency shall be reimbursed to the
Trustee by Nordson, and if not so reimbursed, shall be chargeable against the
Trust.
5.2 At all times during the continuance of the Trust, the principal
and income of the Trust shall be subject to claims of general creditors of
Nordson under federal and state law as set forth below.
(a) The Board of Directors and the Chief Executive Officer of
Nordson shall have the duty to inform the Trustee in writing of Nordson's
Insolvency. If a person claiming to be a creditor of Nordson alleges in
writing to the Trustee that Nordson has become Insolvent, the Trustee
shall determine whether Nordson is Insolvent and, pending such
determination, the Trustee shall not transfer any Trust assets to any
other party.
(b) Unless the Trustee has actual knowledge of Nordson's
Insolvency, or has received notice from Nordson or a person claiming to
be a creditor alleging that Nordson is Insolvent, the Trustee shall have
no duty to inquire whether Nordson is Insolvent. The Trustee may in all
events rely on such evidence concerning Nordson's solvency as may be
furnished to the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning Nordson's solvency.
(c) If at any time the Trustee has determined that Nordson is
Insolvent, the Trustee shall hold the assets of the Trust for the benefit
of the general creditors of Nordson. Nothing in this Trust Agreement
shall in any way diminish any rights of Participants to pursue their
rights as general creditors of Nordson.
(d) The Trustee shall resume the making of payments to Participants
in accordance with Section 4 of this Trust Agreement only after the
Trustee has determined that Nordson is not Insolvent (or is not any
longer Insolvent).
5.3 Provided that there are sufficient assets, if the Trustee
discontinues payments under the Covered Plans from the Trust pursuant to Section
5.2 hereof and subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate
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<PAGE> 7
amount of all payments due to Participants under the terms of the Covered Plans
for the period of such discontinuance, less the aggregate amount of any payments
made to the Participants by Nordson in lieu of the payments provided for
hereunder during any such period of discontinuance.
Article 6. Reversion of Excess Assets
From time to time after the third anniversary of the first Change
of Control occurring after the execution of this Trust Agreement, if and when
requested by Nordson to do so, the Trustee shall engage the services of the
Accounting Firm, at the expense of Nordson, to determine the Aggregate Plan
Liability (as defined in Section 15.2). If the Current Trust Asset Value at the
time of the calculation exceeds 150% of the dollar amount of the Aggregate Plan
Liability and the Trustee is requested to do so by Nordson, the Trustee shall
pay the amount of any such excess over 150% to Nordson. The Trustee shall
determine, in its sole discretion, how the funds necessary to make any such
payment are to be raised from Trust assets.
Article 7. Payments to Nordson
Except as provided in Article 3 or in Article 6, Nordson shall not
have any right or power to direct the Trustee to return to Nordson or to divert
to others any of the Trust assets before all payments that may become payable to
any and all Participants under the Covered Plans (as defined in Section 15.4)
have been made to Participants. At such point in time as no further payments are
payable or may become payable in the future to or with respect to any
Participant under any Covered Plan, the remaining assets of the Trust shall be
paid to Nordson.
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<PAGE> 8
Article 8. Investment Authority
8.1 The Trustee shall invest and reinvest the trust property,
including any income accumulated and added to principal, only in (a) annuity or
life insurance contracts that either have been contributed to the trust property
by Nordson or are issued by one or more insurance companies that are rated at
least A++ by Best Life Insurance Reports; (b) interest-bearing deposit accounts
or certificates issued or offered by any one or more Federal Deposit Insurance
Corporation insured financial institutions having in each case a high credit
rating and a capital and surplus of at least $1,000,000,000 in the aggregate;
(c) direct obligations of the United States of America, or obligations the
payment of which is guaranteed, as to both principal and interest, by the
government or an agency of the government of the United States of America; (d)
readily marketable debt securities listed on a United States national securities
exchange (other than securities of Nordson) that are rated at least "investment
grade" by one or more nationally recognized rating agencies; or (e) shares or
other units of participation in any mutual fund, investment trust, or common
trust fund maintained by the Trustee, which are invested exclusively or
predominantly in assets described in the foregoing clauses (a) through (d) of
this Section 8.1. In no event may the Trustee invest in securities (including
stock or the right to acquire stock) or obligations issued by Nordson, other
than a de minimis amount held in common investment vehicles in which the Trustee
invests. All rights associated with assets of the Trust shall be exercised by
the Trustee or the person designated by the Trustee. The Trustee shall not be
liable to any Participant for any insufficiency of the Trust property to
discharge all benefits due the same under the Covered Plans; rather, the
liability for all such benefits shall be and remain the primary and ultimate
responsibility of Nordson.
8.2 The Trustee is empowered to register securities, and to take
and hold title to other property, in the name of the Trustee or in the name of a
nominee without disclosing the Trust. Securities also may be held in bearer form
and may be held in bulk with certificates of the same class and issuer which are
assets of other fiduciary accounts. The Trustee shall be responsible for any
wrongful acts of any nominee of the Trustee.
8.3 The Trustee is empowered to take all actions necessary or
advisable in order to collect any life insurance, annuity, or other benefits or
payments of which the Trustee is the designated beneficiary.
8.4 Nordson may maintain in force all life insurance policies held
in the Trust by paying premiums and other charges due thereon. If any such
premiums or other charges are not paid directly by Nordson, the Trustee shall,
to the extent it has cash or its equivalent readily available for the payment of
premiums due or policy loans and/or dividends are available for such purpose,
pay premiums due with such cash or its equivalent or policy loans and/or
dividends, as the Trustee may deem best; but if the Trustee does not have
sufficient cash or its equivalent readily available and policy loans and
dividends are not available, then the Trustee shall dispose of or otherwise use
other assets held by it in the Trust to generate the necessary cash or, if no
such other assets are available, the Trustee may surrender one or more of the
life insurance policies in order to generate cash with which to pay premiums
on one or more of the other life insurance policies. The Trustee shall have no
liability to Nordson or any other person if, as a result of an insufficiency of
cash or its equivalent, policy loans and dividends, and assets that can be
disposed of or otherwise used to generate cash, the Trustee is unable to pay
premiums
8
<PAGE> 9
as they become due.
8.5 The Trustee shall be named sole owner and beneficiary of each
life insurance policy held in the Trust and shall have full authority and power
to exercise all rights of ownership relating to the policy, except that the
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.
8.6 The Trustee shall have the power to acquire additional life
insurance coverage on Participants through application for new life insurance.
Prior to a Change in Control, the Trustee shall acquire any additional life
insurance from the agent or agents designated by Nordson. After a Change in
Control, the Trustee may acquire any additional life insurance from any agent or
agents that it, in its sole discretion, deems appropriate.
Article 9. Accounting by Trustee
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and other transactions required to be
made, including such specific records as shall be agreed upon in writing between
Nordson and the Trustee. All such accounts, books, and records shall be open to
inspection and audit at all reasonable times by Nordson. Within 60 days
following the close of each calendar year and within 60 days after the removal
or resignation of the Trustee, the Trustee shall deliver to Nordson a written
account of its administration of the Trust during such year or during the period
from the close of the last preceding year to the date of such removal or
resignation, setting forth all investments, receipts, disbursements, and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales, and showing all cash, securities, and other property held in the Trust
at the end of such year or as of the date of such removal or resignation, as the
case may be.
Article 10. Calculations of Current Trust Asset Value and Aggregate
Plan Liability
10.1 Any determination of the Current Trust Asset Value that is to
be made before the occurrence of any Change of Control shall be made by Nordson.
After the occurrence of a Change of Control, all determinations of the Current
Trust Asset Value shall be made by the Trustee and may be based on the
determination of one or more qualified independent appraisers, consultants, or
other experts retained by the Trustee for that purpose.
10.2 Any determination of the Aggregate Plan Liability that is to
be made before the occurrence of any Change of Control shall be made by Nordson.
After the occurrence of a Change of Control, all determinations of the Aggregate
Plan Liability (as defined in Section 15.2) shall be made by the Trustee and may
be based on the determination of one or more qualified independent actuaries,
consultants, or other experts retained by the Trustee for that purpose. All such
determinations shall be based on the terms of the Covered Plans and the
actuarial assumptions and methodology set forth in Exhibit B.
10.3 Nordson shall pay all costs incurred in determining from time
to time the Current
9
<PAGE> 10
Trust Asset Value and/or the Aggregate Plan Liability. If not so paid, these
costs shall be paid from the Trust. Nordson shall reimburse the Trust within 30
days after receipt of a bill from the Trustee for any such costs paid out of the
Trust.
Article 11. Responsibility of Trustee
11.1 The Trustee shall act with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request, or approval that is contemplated by, and in conformity
with, the terms of the Trust and is given in writing by Nordson prior to the
occurrence of any Change of Control. In the event of a dispute between Nordson
and any other party, the Trustee may apply to a court of competent jurisdiction
to resolve the dispute.
11.2 If the Trustee undertakes or defends any litigation arising in
connection with the Trust, Nordson agrees to indemnify the Trustee against the
Trustee's costs, expenses, and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If such costs, expenses, and liabilities are not paid by Nordson
in a reasonably timely manner, the Trustee may obtain payment from the Trust.
Nordson shall reimburse the Trust within 30 days after receipt of a bill from
the Trustee for any such costs, expenses, and liabilities paid out of the Trust.
11.3 The Trustee may consult with legal counsel (who may also be
counsel for the Trustee generally) with respect to any of its duties or
obligations hereunder.
11.4 The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants, or other professionals to assist it
in performing any of its duties or obligations hereunder, including, without
limitation, to assist it in enforcing against Nordson any of the obligations of
Nordson under this Trust Agreement.
11.5 The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly provided otherwise
herein.
11.6 Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not have any power
that could give the Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal Revenue
Code.
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<PAGE> 11
Article 12. Compensation and Expenses of Trustee
The Trustee shall be entitled to receive reasonable compensation
for its services in accordance with its published fee schedule as in effect from
time to time. The Trustee shall be entitled to receive its reasonable expenses
incurred with respect to the administration of the Trust, including fees
incurred by the Trustee pursuant to Sections 11.3 and 11.4 of this Trust
Agreement. Such compensation and expenses shall be payable by Nordson. If not so
paid, the fees and expenses shall be paid from the Trust. Nordson shall
reimburse the Trust within 30 days after receipt of a bill from the Trustee for
any such fees or expenses paid out of the Trust.
Article 13. Tenure and Succession of Trustee
13.1 Nordson may remove any trustee from time to time serving under
this Trust Agreement at any time upon giving 60 days written notice to such
trustee, and each trustee from time to time serving under this instrument shall
have the right to resign by delivering a written notice of resignation to
Nordson, except that: (a) Nordson shall not have any power to remove the Trustee
at any time after a Change of Control, and (b) no such removal or resignation
shall become effective until the acceptance of the trust by a successor trustee
designated in accordance with Section 13.2.
13.2 If [ ], or any successor to it designated in
accordance with this Section 13.2, for any reason shall decline, cease, or
otherwise fail to serve as trustee, the vacancy in the trusteeship shall be
filled by such bank or trust company, wherever located, having a capital and
surplus of at least $25,000,000 in the aggregate, as shall be designated by
Nordson (if the designation is made prior to the occurrence of any Change of
Control) or by the resigning Trustee (if the designation is made after the
occurrence of any Change of Control).
13.3 Upon acceptance of the Trust, each successor trustee shall be
vested with the title to the Trust property possessed by the trustee that it
succeeds and shall have all the powers, discretion, and duties of such
predecessor trustee. No successor trustee shall be required to furnish bond.
13.4 Each successor trustee may accept as complete and correct and
may rely upon any accounting by any predecessor trustee and upon any statement
or representation by any predecessor trustee as to the assets comprising or any
other matter pertaining to the administration of the Trust. No successor trustee
shall be liable for any act or omission of any predecessor trustee or have any
duty to enforce or seek to enforce any claim of any kind against any predecessor
trustee on account of any such act or omission.
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<PAGE> 12
Article 14. Amendment or Termination
14.1 Except as provided in the second sentence of this Section
14.1, at any time before the occurrence of the first Change of Control to occur
after the execution of this Agreement, Nordson, in its sole discretion, may
amend this Trust Agreement (including the exhibits hereto) in any manner and may
terminate this Trust Agreement. If at any particular point in time (a) one or
more Funding Events have occurred, (b) one or more of those Funding Events has
not yet been terminated, and (c) no Change of Control has occurred, then Nordson
may not, at that particular time, terminate this Trust Agreement and may amend
this Trust Agreement only if and to the extent permitted by Section 14.2 below.
14.2 Whenever (a) one or more Funding Events have occurred, (b) one
or more of those Funding Events has not yet been terminated, and (c) no Change
of Control has occurred, Nordson may not terminate this Trust Agreement but may
add one or more additional plans or agreements to the class of Covered Plans and
may amend this Trust Agreement (including the exhibits hereto), provided that
(x) Nordson determines, in the exercise of its reasonable discretion, that the
amendment is in the best interests of the Participants, taken as a group, (y) no
such amendment shall remove any plan or agreement from the class of Covered
Plans unless the plan has been terminated and there are no further obligations
due or to become due thereunder to any Participant, and (z) no such amendment
shall have the effect of adding circumstances under which a Funding Event shall
be deemed to have terminated, affect the determination of the Aggregate Plan
Liability or the Full Funding amount so as to reduce these amounts, or in any
manner permit the withdrawal or diversion of assets from the Trust.
14.3 After a Change of Control has occurred, this Trust Agreement
(including the exhibits hereto) may not be amended or terminated except as
provided in Section 14.5.
14.4 Unless earlier revoked pursuant to Section 1.2, the Trust
shall not terminate until the date on which Participants are no longer entitled
to any further payments pursuant to the terms of any Covered Plans. Upon
termination of the Trust on or after that date, any assets remaining in the
Trust shall be returned to Nordson.
14.5 Upon written approval of all Participants who are or may in
the future be entitled to receive any payment pursuant to the terms of any of
the Covered Plans, Nordson may terminate the Trust prior to the time all
payments that are or may become due in the future under the Covered Plans have
been made. All assets in the Trust at any such termination shall be returned to
Nordson.
12
<PAGE> 13
Article 15. Certain Definitions
Certain capitalized terms not defined elsewhere in this Trust Agreement are
defined in Article 15 below.
15.1 From and after the occurrence of the first Change of Control
to occur after the execution of this Trust Agreement, the term "Accounting Firm"
shall mean the independent auditors of Nordson for the fiscal year preceding the
first year in which there occurred either (a) that Change of Control or (b) any
Funding Event that had not terminated before the occurrence of that Change of
Control and such firm's successor or successors; provided, however, if such firm
is unable or unwilling to serve and perform in the capacity contemplated by this
Trust Agreement, those members of the Board of Directors of Nordson (as
constituted immediately before the Change of Control) who are not and have never
been employees of Nordson shall select another national accounting firm of
recognized standing to serve and perform in that capacity under this Trust
Agreement, except that such other accounting firm shall not be the then
independent auditors for Nordson or any of its affiliates (as defined in Rule
12b-2 promulgated under the 1934 Act).
15.2 The term "Aggregate Plan Liability" as at any time shall mean
the maximum amount of payments that have not yet been paid but could become
payable in the future under the Covered Plans, determined as provided in Section
10.2.
15.3 A "Change of Control" shall be deemed to occur if and when
there occurs any of the circumstances set forth in any of clauses (a) through
(d) of this Section 15.3.
A. Any Person or group commences a tender offer for more than
50% of the outstanding shares that is not recommended by the
Board of Directors of Nordson and one of the following
occurs:
(i) More than 50% of the outstanding shares are acquired.
(ii) While the tender offer remains open, Nordson is sold or
agrees to be sold, whether by sale of assets, sale of
stock, merger, or otherwise.
B. Any Person or group solicits proxies for the election of
individuals who are not nominated or approved by the Board of
Directors of Nordson and either:
(i) the solicitation results in the election of directors
that constitute a majority of any class of directors or
a majority of the full Board, or
(ii) the solicitation results in the election of two or more
directors, but less than a majority of any class of
directors or a majority of the full Board, and while at
least two of those directors remain in office Nordson
is sold or agrees to be sold.
C. Any Person or group becomes the beneficial owner of 50% or
more of the outstanding shares without prior Board approval.
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<PAGE> 14
D. Any Person or group becomes the beneficial owner of 15% or
more of the outstanding shares without prior Board approval
and, while the Person or group continues to own 15% or more
of the outstanding shares, Nordson is sold or agrees to be
sold.
15.4 The term "Covered Plan" means any one of the plans and
agreements identified on Exhibit A, as the same may be amended from time to time
in accordance with Sections 14.1 and 14.2 above.
15.5 The term "Full Funding Amount" as of any point in time shall
mean an amount equal to 125% of the Aggregate Plan Liability as of that point in
time.
15.6 A "Funding Event" shall be deemed to occur if and when there
occurs any of the circumstances set forth in any of the following clauses (a)
through (c):
A. Any Person or group commences a tender offer for more than
50% of the outstanding shares that is not recommended by the
Board of Directors of Nordson.
B. Any Person or group solicits proxies for the election of two
or more directors not nominated or approved by the Board of
Directors of Nordson.
C. Any Person or group becomes the beneficial owner of 15% or
more of the outstanding shares without prior Board approval.
15.7 A Funding Event shall be deemed to have "terminated:"
A. If funding of the Trust was required by reason of an
unsolicited tender offer or exchange offer, either:
(i) the tender offer or exchange offer is withdrawn or
terminated without the acquisition of 15% or more of
the outstanding shares, or
(ii) if the Person or group acquires 15% or more, but less
than a majority, of the outstanding shares, the Person
or group subsequently disposes of enough shares so that
beneficial ownership falls below 15%.
B. If funding of the Trust was required by reason of a
solicitation of proxies for the election of directors,
either:
(i) the solicitation results in the election of less than
two directors, or
(ii) the solicitation results in the election of more than
two directors, but less than a majority of any class of
directors or a majority of the full Board, and enough
of those directors leave office so that fewer than two
remain as directors.
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<PAGE> 15
C. If funding of the Trust was required by reason of the
acquisition of beneficial ownership of 15% or more, but less
than a majority, of the outstanding shares without prior
Board approval, if the percentage of shares beneficially
owned by the Person or group subsequently falls below 15%.
15.8 The term "Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended.
15.9 The term "Person" shall mean a "person" as used in Section
13(d) and Section 14(d)(2) of the 1934 Act.
15.10 The term "Participant" shall mean a person who is a
participant in or party to any of the Covered Plans.
15.11 The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
16. Miscellaneous
16.1 Any action to be taken by Nordson hereunder shall be by action
of the Chief Executive Officer or any Vice President of Nordson, except that the
actions described in Sections 1.2, 13.1, 14.1, and 14.2 may be taken only by the
Board of Directors of Nordson.
16.2 Any provision of this Trust Agreement prohibited by law shall
be ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
16.3 This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, Nordson and the Trustee have executed this
Trust Agreement as of the date first above written.
[ ] Nordson Corporation
By_________________________________ By___________________________
The "Trustee"
15
<PAGE> 16
EXHIBIT A
Covered Plans
Nordson Corporation Excess Defined Benefit Pension Plan
Nordson Corporation Excess Defined Contribution Retirement Plan
Nordson Corporation Officers' Deferred Compensation Plan
Supplemental pension payments pursuant to employment agreements with Messrs. [
].
Retirement payments to retired officer, [ ].
[Amounts payable under employment agreements with [ ].]
<PAGE> 17
EXHIBIT B
Assumptions and Methodology for
Determining Aggregate Plan Liability
1. The liability for benefits under each Covered Plan will be
calculated using two different assumptions as to when Participants terminate
service:
(a) As of the date of the first Change of Control occurring
after the execution of this Trust Agreement.
(b) Thirty months after the first Change of Control occurring
after the execution of this Trust Agreement, assuming future
compensation continues at current levels, and future deferrals
under deferred compensation plans continue pursuant to prior
elections.
The liability for accrued benefits under each Covered Plan will be the greater
of the liabilities calculated in accordance with (a) and (b) above.
2. Calculations will be based upon the most valuable optional form
of payment available to the Participant.
3. The liability for benefits under deferred compensation or other
defined contribution Covered Plans shall be equal to the deferral or other
account balances (vested and unvested) of Participants as of the applicable
date, plus projected deferrals expected to be made within 30 months after the
applicable date pursuant to prior elections. Account balances of Participants
under a Plan shall be calculated based on crediting the highest rate of interest
which may become payable to Participants under the Plan.
4. The liability for benefits under other Covered Plans shall be
equal to the present value of accrued benefits (vested and unvested) of
Participants as of the relevant dates under 1(a) or (b) above.
5. No mortality is assumed prior to the commencement of benefits.
Future mortality is assumed to occur in accordance with the 1983 Group Annuity
Table Unisex Rates after the commencement of benefits.
6. The present value of amounts shall be determined using a
discount rate equal to the then current Pension Benefit Guaranty Corporation
immediate annuity rate for a nonmultiemployer plan.
7. In determining the dollar cost of providing any benefit that is
to be provided in stock or the value of which is dependent upon the value of
common shares of Nordson, the dollar cost shall of providing those benefits
shall be determined using a value for common shares of Nordson equal to 140% of
the highest closing price for common shares of Nordson at any time within the
six month period ending on the determination date.
<PAGE> 18
8. Where left undefined above, calculations will be performed in
accordance with generally accepted actuarial principles.
<PAGE> 1
Exhibit 10-q-1
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into on this ___ day of
_____________, 1998, by and between NORDSON CORPORATION, an Ohio corporation
(the "Company"), and EDWARD P. CAMPBELL ("Employee").
W I T N E S S E T H:
WHEREAS, Employee is an executive and key employee of the
Company, has fully and ably discharged his responsibilities and duties in his
service to the Company to date, and is now serving the Company as President and
Chief Executive Officer;
WHEREAS, the Company desires to assure itself of continuity of
management in the event of any threatened or actual Change in Control (as
hereafter defined);
WHEREAS, the Company desires to provide inducements for
Employee not to engage in activity competitive with the Company;
WHEREAS, the Company desires to assure itself, in the event of
any threatened or actual Change in Control, of the continued performance of
services by Employee on an objective and impartial basis and without distraction
by concern for his employment status and security;
WHEREAS, Employee is willing to continue in the employ of the
Company but desires assurance that his responsibilities and status as an
executive of the Company will not be adversely affected by any threatened or
actual Change in Control;
NOW, THEREFORE, the Company and Employee agree as follows:
1. OPERATION OF AGREEMENT. This Agreement shall be effective
and binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement shall not be operative unless and
until there has been a Change in Control while Employee is in the employ of the
Company. For purposes of this Agreement, a Change in Control shall have occurred
if at any time any of the following events occurs:
(a) a report is filed with the Securities and
Exchange Commission (the "SEC") on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form, or report), each as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing
that any "person" (as the term "person" is used in Section 13(d) or
Section 14(d)(2) of the Exchange Act) is or has become a beneficial
owner, directly or indirectly, of securities of the Company
representing
<PAGE> 2
25% or more of the combined voting power of the Company's then
outstanding securities;
(b) the Company files a report or proxy statement
with the SEC pursuant to the Exchange Act disclosing in response to
Item 1 of Form 8-K thereunder or Item 5(f) of Schedule 14A thereunder
that a Change in Control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing contract
or transaction;
(c) the Company is merged or consolidated with
another corporation and, as a result thereof, securities representing
less than 50% of the combined voting power of the surviving or
resulting corporation's securities (or of the securities of a parent
corporation in case of a merger in which the surviving or resulting
corporation becomes a wholly-owned subsidiary of the parent
corporation) are owned in the aggregate by holders of the Company's
securities immediately prior to such merger or consolidation;
(d) all or substantially all of the assets of the
Company are sold in a single transaction or a series of related
transactions to a single purchaser or a group of affiliated purchasers;
or
(e) during any period of 24 consecutive months,
individuals who were Directors of the Company at the beginning of such
period cease to constitute at least a majority of the Company's Board
of Directors (the "Board") unless the election, or nomination for
election by the Company's shareholders, of more than one half of any
new Directors of the Company was approved by a vote of at least
two-thirds of the Directors of the Company then still in office who
were Directors of the Company at the beginning of such 24 month period.
The first date on which a Change in Control occurs is referred to herein as the
"Change in Control Date." Upon the occurrence of a Change in Control while
Employee is in the employ of the Company, this Agreement shall become
immediately operative subject, however, to the provisions of Section 2, below.
2. POSSIBLE "UNDOING" OF A CHANGE IN CONTROL. If a report is
filed with the SEC disclosing that a person (the "Acquiror") is or has become a
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the company's
outstanding securities and, as a result of that filing, a Change in Control,
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as defined in Paragraph 1(a), above, occurs, while Employee is in the employ of
the Company, then, as provided in Paragraph 1, above, this Agreement will become
immediately operative. However, if:
(a) a Change in Control as described in Paragraph
1(a) occurs while Employee is in the employ of the Company;
(b) the Acquiror subsequently transfers or otherwise
disposes of sufficient securities of the Company in one or more
transactions, to a person or persons other than affiliates of the
Acquiror or any persons with whom the Acquiror has agreed to act
together for the purpose of acquiring, holding, voting or disposing of
securities of the Company, so that, after such transfer or other
disposition, the Acquiror is no longer the beneficial owner, directly
or indirectly, of securities of the Company representing 10% or more of
the combined voting power of the Company's then outstanding securities;
(c) at the time of the subsequent transfer or
disposition that reduced the Acquiror's holdings to less than 10% as
provided in (b), immediately above, no other event constituting a
Change in Control had occurred; and
(d) at the time of the subsequent transfer or other
disposition that reduced the Acquiror's holdings to less than 10%,
Employee's employment with the Company had not been terminated by the
Company without cause or by Employee for good reason,
then, for all purposes of this Agreement, the filing of the report constituting
a Change in Control under Paragraph 1(a) shall be treated as if it had not
occurred and this Agreement shall return to the status it had immediately before
the filing of the report constituting a Change in Control under Paragraph 1(a).
Accordingly, if and when a new Change in Control occurs, this Agreement will
again become operative on the date of that new Change in Control.
3. EMPLOYMENT, CONTRACT PERIOD.
(a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company
shall continue to employ Employee and Employee shall continue in the
employ of the Company for the period specified in Paragraph 3(b) (the
"Contract Period"), in the position and with the duties and
responsibilities set forth in Paragraph 4.
(b) The Contract Period shall commence on the
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Change in Control Date and, subject only to the provisions of Paragraph
9 below, shall continue for a period of twenty-four months to the close
of business on the day (the "Contract Expiration Date") falling
twenty-four months after the Change in Control Date.
4. POSITION, DUTIES, RESPONSIBILITIES. At all times during the
Contract Period, Employee shall:
(a) hold the same position with substantially the
same duties and responsibilities as an executive of the Company as
Employee held immediately before the Change in Control Date and those
duties and responsibilities may be extended, from time to time during
the Contract Period, by the Board with Employee's consent;
(b) adhere to and implement the policies and
directives promulgated, from time to time, by the Board;
(c) observe all Company policies applicable to
executive personnel of the Company; and
(d) devote his business time, energy, and talent to
the business of and to the furtherance of the purposes and objectives
of the Company to generally the same extent as he has so devoted his
business time, energy, and talent before the Change in Control Date,
and neither directly nor indirectly render any business, commercial, or
professional services to any other person, firm, or organization for
compensation without the prior approval of the Board.
Nothing in this Agreement shall preclude Employee from devoting reasonable
period of time to charitable and community activities or the management of his
investment assets provided such activities do not materially interfere with the
performance by Employee of his duties hereunder.
5. COMPENSATION. For services actually rendered by Employee on
behalf of the Company during the Contract Period as contemplated by this
Agreement the Company shall pay to Employee a base salary, annual bonus and
stock options (together referred to as "Total Compensation") as follows:
(a) base salary at a rate equal to the highest of (i)
the rate in effect immediately before the Change in Control date, (ii)
the rate in effect exactly two years before the Change in Control Date,
or (iii) such greater rate as the Company may determine. The base
salary shall be paid to Employee in the same increments and on the same
schedule each month as in effect immediately before the Effective Date;
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(b) an annual bonus under the 1995 Management
Incentive Compensation Plan as amended, or any substitute therefore,
("Bonus Plan") equal to the highest of (i) the amount calculated using
the Bonus Plan in effect immediately before the Change in Control Date,
(ii) the amount calculated using the Bonus Plan in effect exactly two
years before the Change of Control Date, or (iii) such greater amount
as the Company may determine. The annual bonus shall be paid to the
Employee not later than the first payroll date in January following the
plan year for which the bonus was earned;
(c) stock options shall be granted annually at such
times, under such terms and conditions, and in such amounts, as to be
no less valuable than the greater value of (i) stock options granted
immediately before the Change in Control Date, (ii) stock options
granted two years before the Change in Control Date, and (iii) such
greater value as the Company may determine.
6. VACATION, HOLIDAYS AND SICK LEAVE. Employee will be
entitled to such periods of vacation, holidays and sick leave allowance each
year as are determined by the Company's policies relevant to vacation, holidays
and sick pay for executive personnel as in effect immediately before the Change
in Control Date or as may be increased from time to time thereafter. Neither
vacation time nor sick leave allowance will be accumulated from year to year.
7. OTHER COMPANY PLANS, BENEFITS, AND PERQUISITES. During the
Contract Period Employee shall continue to be entitled to participate in every
employee benefit plan, incentive plan or arrangement ("Plan") that is generally
available to executive personnel of the Company immediately before the Change in
Control Date or that is specifically extended to Employee by the Company before
the Change in Control Date, whether or not Employee is eligible to participate
in such Plan on the date of this Agreement. Employee's participation in and
benefits under any such Plan shall be on the terms and subject to the conditions
specified in the governing document of the particular plan or arrangement as in
effect immediately before the Change in Control Date, which terms and conditions
shall not be amended during the Contract Period unless the benefits to Employee
are at least as great under the Plan as amended (or under a substitute Plan) as
were the benefits under the Plan as in effect immediately before the Change in
Control Date. Specific Plans of the Company to which Employee is entitled to
benefits include, but are not limited to, the Plans (or any substitute Plan)
listed on Exhibit A hereto.
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The Company will also provide Employee with such perquisites during the Contract
Period as the Company customarily provided to similarly situated executive
personnel in the period immediately before the Change in Control Date.
8. ADDITIONAL BENEFIT. If a Change in Control occurs and this
Agreement becomes operative and thereafter Employee's employment is terminated
by the Company without cause or by Employee for good reason, whether such
termination occurs before, on, or after the Contract Expiration Date, the
Company shall pay and provide benefits to or with respect to Employee in such
amounts and at such times so that the aggregate benefits payable to or with
respect to Employee under the Salaried Plan and the Excess Benefit Plans will be
equal to the aggregate benefits that would have been paid to or with respect to
Employee under the Salaried Plan and the Excess Benefit Plans if Employee were
exactly five years older than his actual age and his credit under the Salaried
Plan and the Excess Benefit Plans were equal to the greater of his actual
service or the amount of service he is deemed to have under paragraph 12(a)(iv),
below. If Employee's employment is terminated after a Change in Control by the
Company without cause or by Employee for good reason and Employee is entitled to
additional benefits by virtue of the additional five years of deemed age
provided for in this Paragraph 8, then the Company shall directly provide such
benefits to Employee in the same manner as additional benefits are to be
provided to Employee under paragraph 12(a), below.
9. PRIORITY OF PARAGRAPHS 2 OVER 8. Paragraph 2 of this
Agreement shall take precedence over Paragraph 8 of this Agreement so that if a
Change in Control occurs and is subsequently undone under Paragraph 2 of this
Agreement, Employee will thereafter have no rights under Paragraph 8 of this
Agreement unless and until a further Change in Control occurs.
10. EFFECT OF DISABILITY. If during the Contract Period and
before his employment hereunder is otherwise terminated, Employee becomes
disabled to such an extent that he is prevented from performing his duties
hereunder by reason of physical or mental incapacity: (a) he shall be entitled
to disability and other benefits at least equal to those that would have been
available to him had the Company continued, throughout the period of Employee's
disability, all of its programs, benefits, and policies with respect to disabled
employees that were in effect immediately before the Change in Control; and (b)
if he recovers from his disability before the end of the Contract Period he
shall be reinstated as an active employee for the remainder of the Contract
Period under and subject to all of the terms of this Agreement including,
without limitation, the Company's right to terminate Employee with or without
cause under Paragraph 11(b).
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11. TERMINATION FOLLOWING A CHANGE IN CONTROL. Following a
Change in Control:
(a) Employee's employment hereunder will terminate
without further notice upon the death of Employee;
(b) The Company may terminate Employee's employment
hereunder effective immediately upon giving notice of such termination:
(i) for "cause," (A) if Employee commits an
act of fraud, embezzlement, theft, or other similar criminal
act constituting a felony and involving the Company's business
or (B) if Employee breaches his agreement with respect to the
time to be devoted to the business of the Company set forth in
Paragraph 3(d) hereof and fails to cure such breach within 30
days of receipt of written notice of such breach from the
Board; or
(ii) without cause at any time; and
(c) Employee may terminate his employment hereunder
effective immediately upon giving of notice of such termination or
retirement:
(i) without cause at any time; or
(ii) for "good reason," which, for purposes
of this Agreement shall mean notice by the Employee to the
Company of the occurrence of any of the following:
(A) any reduction in base salary or position or any
material reduction in responsibilities or duties contemplated for
Employee under this Agreement or any material reduction in the
aggregate of employee benefits, perquisites, or fringe benefits
contemplated for Employee under this Agreement, provided that any
particular reduction described in this clause (A) shall constitute
"good reason" only if Employee terminates his employment within six
months of the date of the reduction; or
(B) any good faith determination by Employee that, as
a result of fundamental differences of opinion between Employee and the
Board as to the goals of the Company, Employee is unable to carry out
the responsibilities and duties contemplated for Employee under this
Agreement, provided that any determination by Employee described in
this clause (B) shall constitute "good reason" only if Employee
terminates his employment within six months of the
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Change in Control Date.
12. SEVERANCE COMPENSATION.
(a) If, before the Contract Expiration Date,
Employee's employment is terminated by the Company without cause or by
Employee for good reason, then, except as provided in Paragraph 12(b),
12(c), or 12(d), the Company shall pay and provide to Employee the
following compensation and benefits through the last to occur of
(x) the expiration of twenty-four months after the effective date of
the termination, and (y) the Contract Expiration Date (such
last-to-occur date is hereinafter referred to as the "Severance
Benefits Termination Date"):
(i) Base Salary and Annual Bonus at the
highest rate payable to Employee during the Contract Period,
to be paid at the times provided in Paragraph 5 hereof;
(ii) in lieu of the opportunity to receive
stock option grants during the period from the effective date
of termination through the Severance Benefits Termination
Date, the Company will pay to Employee an amount in cash equal
to the product of (A) the aggregate value of the stock options
granted to Employee with Respect to the fiscal year ended
immediately prior to the Change in Control and (B) a fraction,
the numerator of which is the number of days from the
effective date of termination through the Severance Benefits
Termination Date and the denominator of which is 365; for this
purpose, the value of the stock options will be determined
using the Black-Scholes option price model;
(iii) coverage under the Company's medical,
dental, insurance, short-term disability, long-term disability
plans, and other Plans, as listed on Exhibit A, Items 7
through 14 (provided that he became eligible to participate
therein prior to the date his employment is terminated), each
as in effect on the Change in Control Date (or, if
subsequently amended to increase benefits to Employee or his
dependents, as so amended) and each as if Employee's
employment had continued through the Severance Benefits
Termination Date; and
(iv) coverage and service credit under the
Salaried Plan and the Excess Benefit Plans maintained in
connection with the Salaried Plan under which he is eligible
to participate so that the aggregate benefits payable to or
with respect to the Employee under the
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Salaried Plan and the Excess Benefit Plan will be equal to the
aggregate benefits that would have been paid to or with
respect to Employee under the Salaried Plan and the Excess
Benefit Plans if Employee's employment had continued through
the Severance Benefits Termination Date.
If any of the benefits to be provided under the Company's Plans cannot
be provided through that Plan to Employee following termination of his
employment, the Company shall directly provide the full equivalent of
such benefits to Employee. For example, since it is not possible to
provide additional service credit directly through the Salaried Plan,
if Employee becomes entitled to an additional 18 months of service
credit under the Salaried plan pursuant to (iv) above, the Company will
be required to pay to Employee, from its general assets, on each date
on which Employee receives a payment from the Salaried Plan, a
supplemental payment equal to the amount by which that particular
payment under the Salaried Plan would have been increased if Employee's
total service credit under the Salaried Plan were 18 months greater
than is actually the case by reason of this Agreement. In addition, if
in these circumstances any payments become due under the Salaried Plan
with respect to Employee following his death, the Company will be
obligated to make similar supplemental payments with respect to
Employee on the dates on which payments are made with respect to
Employee under the Salaried Plan.
Furthermore, the provisions of this Agreement shall not affect the
validity or enforceability of any other agreement between the Company
and Employee, and the benefits provided under this Agreement shall be
additive to any other benefits promised to Employee under such other
agreement. Moreover, this Agreement shall not operate to negate any
other assurances provided to Employee.
(b) If Employee becomes entitled to compensation and
benefits pursuant to Paragraph 12(a) he shall use reasonable efforts to
seek other employment, provided, however, that he shall not be required
to accept a position of less importance and dignity or of substantially
different character than of his position with the Company or a position
that would require Employee to engage in activity in violation of
Employee's agreement with respect to noncompetition set forth in
Paragraph 14 hereof nor shall he be required to accept a position
outside the greater Cleveland area. The Company's obligations under
item (i) and (ii) of Paragraph 12(a) will be offset by payments and
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benefits received by Employee from another employer to the following
extent:
(i) The Company's obligation to pay any
particular installment of base salary following Employee's
termination will be offset, on a dollar for dollar basis, by
any cash compensation received by Employee from another
employer before the date on which the installment of base
salary is payable by the Company.
(ii) To the extent that Employee is provided
medical, dental, or short-term or long-term disability income
protection benefits by another employer during any period, the
Company will be relieved of its obligation to provide such
benefits to Employee. For example, if a new employer provides
Employee with a medical benefits plan that pays $500.00 for a
specific claim made by Employee and the Company's medical
insurance plan would have paid $750.00 for that claim, then
the Company will be obligated to pay Employee $250.00 with
respect to that claim.
Other than as provided in this Paragraph 12(b) Employee shall have no
duty to mitigate the amount of any payment or benefit provided for in
this Agreement.
(c) If during any period in which Employee is
entitled to payments or benefits from the Company under Paragraph
12(a):
(i) Employee materially and willfully
breaches his agreement with respect to confidential
information set forth in Paragraph 13 hereof and such breach
directly causes the Company substantial and demonstrable
damage; or
(ii) Employee materially and wilfully
breaches his agreement with respect to noncompetition set
forth in Paragraph 14 hereof and such breach directly causes
the Company substantial and demonstrable damage;
then the Company will be relieved of its obligations under paragraph
12(a) hereof as of the first day of the month immediately following the
date of such material breach.
(d) If Employee dies on or before the Severance
Benefits Termination Date and immediately before his death he is
entitled to payments or benefits from the Company under Paragraph
12(a), the Company will be relieved of its
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obligations under item (i) of Paragraph 12(a) as of the first day of
the month immediately following the month in which Employee dies and
thereafter the Company will provide to Employee's beneficiaries and
dependents salary continuation payments, benefits under the Excess
Benefits Plan (as supplemented by item (iii) of Paragraph 12(a), and
continuing medical and dental benefits to the same extent (subject to
reduction for payments or benefits from a new employer under paragraph
12(b) as if Employee's death had occurred while Employee was in the
active employ of the Company.
13. CONFIDENTIAL INFORMATION. Employee agrees that he will
not, during the term of the Agreement or at any time thereafter, either directly
or indirectly, disclose or make known to any person, firm, or corporation any
confidential information, trade secret, or proprietary information of the
Company that Employee may acquire in the performance of Employee's duties
hereunder. Upon the termination of Employee's employment with the Company,
Employee agrees to deliver forthwith to the Company any and all literature,
documents, correspondence, and other materials and records furnished to or
acquired by Employee during the course of such employment.
14. NONCOMPETITION. During any period in which Employee is
receiving Total Compensation under this Agreement (whether during the Contract
Period pursuant to Paragraph 5 or following termination pursuant to Paragraph
12(a), Employee shall not act as a proprietor, investor, director, officer,
employee, substantial stockholder, consultant, or partner in any business
engaged to a material extent in direct competition with the Company in any
market in any line of business engaged in by the Company during the Contract
period. If Employee delivers to the Company a written waiver of his right to
receive any further compensation or benefits pursuant to Paragraph 12(a), if
agreed to by the Company in writing, he shall be released, effective as of the
date of agreement by the Company, from the post-termination noncompetition
covenant contained in this Paragraph 14.
15. COSTS OF ENFORCEMENT. The Company shall pay and be solely
responsible for any and all costs and expenses (including attorneys' fees)
incurred by Employee in seeking to enforce the Company's obligations under this
Agreement unless and to the extent a court of competent jurisdiction determines
that the Company was relieved of those obligations because (a) the Company
terminated Employee for cause (as determined under Paragraph 11(b)(i) hereof),
(b) Employee voluntarily terminated his employment other than for good reason
(as determined under Paragraph 11(c)(ii) hereof), or (c) Employee materially and
willfully breached his agreement not to compete with the Company
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or his agreement with respect to confidential information and such breach
directly caused substantial and demonstrable damage to the Company. The Company
shall forthwith pay directly or reimburse Employee for any and all such costs
and expenses upon presentation by Employee or by counsel selected from time to
time by Employee of a statement or statements prepared by Employee or by such
counsel of the amount of such costs and expenses. If and to the extent a court
of competent jurisdiction renders a final binding judgment determining that the
Company was relieved of its obligations for any of the reasons set forth in (a),
(b) or (c) above, Employee shall repay the amount of such payments or
reimbursements to the Company. In addition to the payment and reimbursement of
expenses of enforcement provided for in this Paragraph 15, the Company shall pay
to Employee in cash, as and when the Company makes any payment on behalf of, or
reimbursement to, Employee, an additional amount sufficient to pay all federal,
state, and local taxes (whether income taxes or other taxes) incurred by
Employee as a result of (x) payment of the expense or receipt of the
reimbursement, and (y) receipt of the additional cash payment. The Company shall
also pay to Employee interest (calculated at the Base Rate from time to time in
effect at National City Bank, Cleveland, Ohio, compounded monthly) on any
payments or benefits that are paid or provided to Employee later than the date
on which due under the terms of this Agreement.
16. EMPLOYEE RIGHTS. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or Employee
to have Employee remain in the employ of the Company before any Change in
Control and Employee shall have no rights under this Agreement if his employment
with the Company is terminated for any reason or for no reason before any Change
in Control. Nothing expressed or implied in this Agreement shall create any duty
on the part of the Company to continue in effect, or continue to provide to
Employee, any plan or benefit unless and until a Change in Control occurs. If,
before a Change in Control, the Company ceases to provide any plan or benefit to
Employee, nothing in this Agreement shall be construed to require the Company to
reinstitute that plan or benefit to Employee upon the later occurrence of a
Change in Control.
17. NOTICES. For purposes of this Agreement, all
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or when mailed by United States registered
or certified mail, return receipt requested, postage prepaid, addressed to the
Company (Attention: President) at its principal executive office and to Employee
at his principal residence, or to such other address as either party may have
furnished to the other in writing and in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
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18. ASSIGNMENT, BINDING EFFECT.
(a) This Agreement shall be binding upon and shall
inure to the benefit of the Company and the Company's successors and
assigns. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and or assets of the Company, by
agreement in form and substance satisfactory to Employee, to expressly
assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no
such succession had taken place.
(b) This Agreement shall be binding upon Employee and
this Agreement and all rights of Employee hereunder shall inure to the
benefit of, and be enforceable by, Employee and his personal or legal
representatives, executors, or administrators. No right, benefit, or
interest of Employee hereunder shall be subject to assignment,
anticipation, alienation, sale, encumbrance, charge, pledge,
hypothecation, or to execution, attachment, levy, or similar process;
except that Employee may assign any right, benefit, or interest
hereunder if such assignment is permitted under the terms of any plan
or policy of insurance or annuity contract governing such right,
benefit, or interest.
19. INVALID PROVISIONS.
(a) Any provision of this Agreement that is
prohibited or unenforceable shall be ineffective to the extent, but
only to the extent, of such prohibition or unenforceability without
invalidating the remaining portions hereof and such remaining portions
of this Agreement shall continue to be in full force and effect.
(b) In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable, the
parties will negotiate in good faith to replace such provision with
another provision that will be valid or enforceable and that is as
close as practicable to the provision held invalid or unenforceable.
20. MODIFICATION. No modification, amendment, or waiver of any
of the provisions of the Agreement shall be effective unless in writing,
specifically referring hereto, and signed by both parties.
21. WAIVER OF BREACH. The failure at any time to enforce any
of the provisions of this Agreement or to require
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performance by the other party of any of the provisions of this Agreement shall
in no way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement or any part of this Agreement or the right of either
party thereafter to enforce each and every provision of this Agreement in
accordance with the terms hereof.
22. GOVERNING LAW. This Agreement has been made in and shall
be governed and construed in accordance with the laws of the State of Ohio.
23. GROSS-UP OF PAYMENTS DEEMED TO BE EXCESS PARACHUTE
PAYMENTS.
(a) The Company and Employee acknowledge that,
following a Change of Control, one or more payments or distributions to
be made by the Company to or for the benefit of Employee (whether paid
or payable or distributed or distributable pursuant to the terms of
this Agreement, under some other plan, agreement, or arrangement, or
otherwise) (a "Payment") may be determined to be an "excess parachute
payment" that is not deductible by the Company for Federal income tax
purposes and with respect to which Employee will be subject to an
excise tax because of Sections 280G and 4999, respectively, of the
Internal Revenue Code (hereinafter referred to respectively as "Section
280G" and "Section 4999"). If Employee's employment is terminated after
a Change of Control occurs, the Accounting Firm, which, subject to any
inconsistent position asserted by the Internal Revenue Service, shall
make all determinations required to be made under this Paragraph 23,
shall determine whether any Payment would be an excess parachute
payment and shall communicate its determination, together with detailed
supporting calculations, to the Company and to Employee within 30 days
after the date on which Employee's employment with the Company
terminates or such earlier time as is requested by the Company. The
Company and Employee shall cooperate with each other and the Accounting
Firm and shall provide necessary information so that the Accounting
Firm may make all such determinations. The Company shall pay all of the
fees of the Accounting Firm for services performed by the Accounting
Firm as contemplated in this Paragraph 23.
(b) If the Accounting Firm determines that any
Payment gives rise, directly or indirectly, to liability on the part of
Employee for excise tax under Section 4999 (and/or any penalties and/or
interest with respect to any
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such excise tax), the Company shall make additional cash payments to
Employee, from time to time and at the same time as any Payment
constituting an excess parachute payment is paid or provided to
Employee, in such amounts as are necessary to put Employee in the same
position, after payment of all federal, state, and local taxes (whether
income taxes, excise taxes under Section 4999 or otherwise, or other
taxes) and any and all penalties and interest with respect to any such
excise tax, as Employee would have been in after payment of all
federal, state, and local income taxes if the Payments had not given
rise to an excise tax under Section 4999 and no such penalties or
interest had been imposed.
(c) If the Internal Revenue Service determines that
any Payment gives rise, directly or indirectly, to liability on the
part of Employee for excise tax under Section 4999 (and/or any
penalties and/or interest with respect to any such excise tax) in
excess of the amount, if any, previously determined by the Accounting
Firm, the Company shall make further additional cash payments to
Employee not later than the due date of any payment indicated by the
Internal Revenue Service with respect to these matters, in such amounts
as are necessary to put Employee in the same position, after payment of
all federal, state, and local taxes (whether income taxes, excise taxes
under Section 4999 or otherwise, or other taxes) and any and all
penalties and interest with respect to any such excise tax, as Employee
would have been in after payment of all federal, state, and local
income taxes if the Payments had not given rise to an excise tax under
Section 4999 and no such penalties or interest had been imposed.
(d) If the Company desires to contest any
determination by the Internal Revenue Service with respect to the
amount of excise tax under Section 4999, Employee shall, upon receipt
from the Company of an unconditional written undertaking to indemnify
and hold Employee harmless (on an after tax basis) from any and all
adverse consequences that might arise from the contesting of that
determination, cooperate with the Company in that contest at the
Company's sole expense. Nothing in this Paragraph 23(d) shall require
Employee to incur any expense other than expenses with respect to which
the Company has paid to Employee sufficient sums so that after the
payment of the expense by Employee and taking into account the payment
by the Company with respect to that expense and any and all taxes that
may be imposed upon Employee as a result of his receipt of that
payment, the net effect is no cost to Employee. Nothing in this
Paragraph 23(d) shall require Employee to extend the statute of
limitations with respect
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to any item or issue in his tax returns other than, exclusively, the
excise tax under Section 4999. If, as the result of the contest of any
assertion by the Internal Revenue Service with respect to excise tax
under Section 4999, Employee receives a refund of a Section 4999 excise
tax previously paid and/or any interest with respect thereto, Employee
shall promptly pay to the Company such amount as will leave Employee,
net of the repayment and all tax effects, in the same position, after
all taxes and interest, that he would have been in if the refunded
excise tax had never been paid.
(e) For purposes of this Paragraph 23, the term
"Accounting Firm" means the independent auditors of the Company for the
fiscal year preceding the year in which the earlier of (i) the date of
termination of Employee's employment with the Company, or (ii) the
year, if any, in which occurred the first Change of Control occurring
after the date of this Agreement, and such firm's successor or
successors; provided, however, if such firm is unable or unwilling to
serve and perform in the capacity contemplated by this Agreement, the
Company shall select another national accounting firm of recognized
standing to serve and perform in that capacity under this Agreement,
except that such other accounting firm shall not be the then
independent auditors for the Company or any of its affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act).
IN WITNESS WHEREOF, the Company and Employee have executed
this Agreement on the day and year first above written.
NORDSON CORPORATION
By:_________________________________
Thomas L. Moorhead
Title: Vice President, Law and
Assistant Secretary
Employee:___________________________
Edward P. Campbell
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EXHIBIT A
COMPANY PLANS
1. The Nordson Corporation 1995 Management Incentive
Compensation Plan;
2. The Nordson Corporation 1993 Long-Term Performance Plan;
3. The Nordson Corporation Salaried Employees Pension Plan
(the "Salaried Plan");
4. Nordson Corporation Officers' Deferred Compensation Plan;
5. The Nordson Corporation Excess Defined Benefit Pension Plan
and the Excess Defined Contribution Retirement Plan (the "Excess Benefit
Plans");
6. The Nordson Corporation Employees' Savings Trust Plan
(NEST);
7. The Nordson Corporation Non-Union Employees Stock Ownership
Plan;
8. The Nordson Corporation Salaried Employees' Health Plan;
9. The Nordson Corporation Prescription Drug Plan;
10. The Nordson Corporation Short Term and Long Term
Disability Plans;
11. The Nordson Corporation Employees' Dental Expense Plan;
12. The Nordson Corporation Group Life Insurance
Plan-Salaried;
13. The Nordson Corporation Group Travel Accident Plan;
14. The Company's car allowance Plan;
15. Nordson's policy of reimbursement for club dues, airline
travel clubs, and the like.
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Exhibit 10-q-2
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into on this ___ day of
_____________, 1998, by and between NORDSON CORPORATION, an Ohio corporation
(the "Company"), and [NAME] ("Employee").
W I T N E S S E T H:
WHEREAS, Employee is an executive and key employee of the
Company, has fully and ably discharged his responsibilities and duties in his
service to the Company to date, and is now serving the Company as [POSITION];
WHEREAS, the Company desires to assure itself of continuity of
management in the event of any threatened or actual Change in Control (as
hereafter defined);
WHEREAS, the Company desires to provide inducements for
Employee not to engage in activity competitive with the Company;
WHEREAS, the Company desires to assure itself, in the event of
any threatened or actual Change in Control, of the continued performance of
services by Employee on an objective and impartial basis and without distraction
by concern for his employment status and security;
WHEREAS, Employee is willing to continue in the employ of the
Company but desires assurance that his responsibilities and status as an
executive of the Company will not be adversely affected by any threatened or
actual Change in Control;
NOW, THEREFORE, the Company and Employee agree as follows:
1. OPERATION OF AGREEMENT. This Agreement shall be effective
and binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement shall not be operative unless and
until there has been a Change in Control while Employee is in the employ of the
Company. For purposes of this Agreement, a Change in Control shall have occurred
if at any time any of the following events occurs:
(a) a report is filed with the Securities and
Exchange Commission (the "SEC") on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form, or report), each as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing
that any "person" (as the term "person" is used in Section 13(d) or
Section 14(d)(2) of the Exchange Act) is or has become a beneficial
owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the
<PAGE> 2
Company's then outstanding securities;
(b) the Company files a report or proxy statement
with the SEC pursuant to the Exchange Act disclosing in response to
Item 1 of Form 8-K thereunder or Item 5(f) of Schedule 14A thereunder
that a Change in Control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing contract
or transaction;
(c) the Company is merged or consolidated with
another corporation and, as a result thereof, securities representing
less than 50% of the combined voting power of the surviving or
resulting corporation's securities (or of the securities of a parent
corporation in case of a merger in which the surviving or resulting
corporation becomes a wholly-owned subsidiary of the parent
corporation) are owned in the aggregate by holders of the Company's
securities immediately prior to such merger or consolidation;
(d) all or substantially all of the assets of the
Company are sold in a single transaction or a series of related
transactions to a single purchaser or a group of affiliated purchasers;
or
(e) during any period of 24 consecutive months,
individuals who were Directors of the Company at the beginning of such
period cease to constitute at least a majority of the Company's Board
of Directors (the "Board") unless the election, or nomination for
election by the Company's shareholders, of more than one half of any
new Directors of the Company was approved by a vote of at least
two-thirds of the Directors of the Company then still in office who
were Directors of the Company at the beginning of such 24 month period.
The first date on which a Change in Control occurs is referred to herein as the
"Change in Control Date." Upon the occurrence of a Change in Control while
Employee is in the employ of the Company, this Agreement shall become
immediately operative subject, however, to the provisions of Section 2, below.
2. POSSIBLE "UNDOING" OF A CHANGE IN CONTROL. If a report is
filed with the SEC disclosing that a person (the "Acquiror") is or has become a
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the company's
outstanding securities and, as a result of that filing, a Change in Control, as
defined in Paragraph 1(a), above, occurs, while Employee is in
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<PAGE> 3
the employ of the Company, then, as provided in Paragraph 1, above, this
Agreement will become immediately operative. However, if:
(a) a Change in Control as described in Paragraph
1(a) occurs while Employee is in the employ of the Company;
(b) the Acquiror subsequently transfers or otherwise
disposes of sufficient securities of the Company in one or more
transactions, to a person or persons other than affiliates of the
Acquiror or any persons with whom the Acquiror has agreed to act
together for the purpose of acquiring, holding, voting or disposing of
securities of the Company, so that, after such transfer or other
disposition, the Acquiror is no longer the beneficial owner, directly
or indirectly, of securities of the Company representing 10% or more of
the combined voting power of the Company's then outstanding securities;
(c) at the time of the subsequent transfer or
disposition that reduced the Acquiror's holdings to less than 10% as
provided in (b), immediately above, no other event constituting a
Change in Control had occurred; and
(d) at the time of the subsequent transfer or other
disposition that reduced the Acquiror's holdings to less than 10%,
Employee's employment with the Company had not been terminated by the
Company without cause or by Employee for good reason,
then, for all purposes of this Agreement, the filing of the report constituting
a Change in Control under Paragraph 1(a) shall be treated as if it had not
occurred and this Agreement shall return to the status it had immediately before
the filing of the report constituting a Change in Control under Paragraph 1(a).
Accordingly, if and when a new Change in Control occurs, this Agreement will
again become operative on the date of that new Change in Control.
3. EMPLOYMENT, CONTRACT PERIOD.
(a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company
shall continue to employ Employee and Employee shall continue in the
employ of the Company for the period specified in Paragraph 3(b) (the
"Contract Period"), in the position and with the duties and
responsibilities set forth in Paragraph 4.
(b) The Contract Period shall commence on the Change
in Control Date and, subject only to the provisions
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<PAGE> 4
of Paragraph 9 below, shall continue for a period of twenty-four months
to the close of business on the day (the "Contract Expiration Date")
falling twenty-four months after the Change in Control Date.
4. POSITION, DUTIES, RESPONSIBILITIES. At all times during the
Contract Period, Employee shall:
(a) hold the same position with substantially the
same duties and responsibilities as an executive of the Company as
Employee held immediately before the Change in Control Date and those
duties and responsibilities may be extended, from time to time during
the Contract Period, by the Board with Employee's consent;
(b) adhere to and implement the policies and
directives promulgated, from time to time, by the Board;
(c) observe all Company policies applicable to
executive personnel of the Company; and
(d) devote his business time, energy, and talent to
the business of and to the furtherance of the purposes and objectives
of the Company to generally the same extent as he has so devoted his
business time, energy, and talent before the Change in Control Date,
and neither directly nor indirectly render any business, commercial, or
professional services to any other person, firm, or organization for
compensation without the prior approval of the Board.
Nothing in this Agreement shall preclude Employee from devoting reasonable
period of time to charitable and community activities or the management of his
investment assets provided such activities do not materially interfere with the
performance by Employee of his duties hereunder.
5. COMPENSATION. For services actually rendered by Employee on
behalf of the Company during the Contract Period as contemplated by this
Agreement the Company shall pay to Employee a base salary, annual bonus and
stock options (together referred to as "Total Compensation") as follows:
(a) base salary at a rate equal to the highest of (i)
the rate in effect immediately before the Change in Control date, (ii)
the rate in effect exactly two years before the Change in Control Date,
or (iii) such greater rate as the Company may determine. The base
salary shall be paid to Employee in the same increments and on the same
schedule each month as in effect immediately before the Effective Date;
4
<PAGE> 5
(b) an annual bonus under the 1995 Management
Incentive Compensation Plan as amended, or any substitute therefore,
("Bonus Plan") equal to the highest of (i) the amount calculated using
the Bonus Plan in effect immediately before the Change in Control Date,
(ii) the amount calculated using the Bonus Plan in effect exactly two
years before the Change of Control Date, or (iii) such greater amount
as the Company may determine. The annual bonus shall be paid to the
Employee not later than the first payroll date in January following the
plan year for which the bonus was earned;
(c) stock options shall be granted annually at such
times, under such terms and conditions, and in such amounts, as to be
no less valuable than the greater value of (i) stock options granted
immediately before the Change in Control Date, (ii) stock options
granted two years before the Change in Control Date, and (iii) such
greater value as the Company may determine.
6. VACATION, HOLIDAYS AND SICK LEAVE. Employee will be
entitled to such periods of vacation, holidays and sick leave allowance each
year as are determined by the Company's policies relevant to vacation, holidays
and sick pay for executive personnel as in effect immediately before the Change
in Control Date or as may be increased from time to time thereafter. Neither
vacation time nor sick leave allowance will be accumulated from year to year.
7. OTHER COMPANY PLANS, BENEFITS, AND PERQUISITES. During the
Contract Period Employee shall continue to be entitled to participate in every
employee benefit plan, incentive plan or arrangement ("Plan") that is generally
available to executive personnel of the Company immediately before the Change in
Control Date or that is specifically extended to Employee by the Company before
the Change in Control Date, whether or not Employee is eligible to participate
in such Plan on the date of this Agreement. Employee's participation in and
benefits under any such Plan shall be on the terms and subject to the conditions
specified in the governing document of the particular plan or arrangement as in
effect immediately before the Change in Control Date, which terms and conditions
shall not be amended during the Contract Period unless the benefits to Employee
are at least as great under the Plan as amended (or under a substitute Plan) as
were the benefits under the Plan as in effect immediately before the Change in
Control Date. Specific Plans of the Company to which Employee is entitled to
benefits include, but are not limited to, the Plans (or any substitute Plan)
listed on Exhibit A hereto. The Company will also provide Employee with such
perquisites
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<PAGE> 6
during the Contract Period as the Company customarily provided to similarly
situated executive personnel in the period immediately before the Change in
Control Date.
8. ADDITIONAL BENEFIT. If a Change in Control occurs and this
Agreement becomes operative and thereafter Employee's employment is terminated
by the Company without cause or by Employee for good reason, whether such
termination occurs before, on, or after the Contract Expiration Date, the
Company shall pay and provide benefits to or with respect to Employee in such
amounts and at such times so that the aggregate benefits payable to or with
respect to Employee under the Salaried Plan and the Excess Benefit Plans will be
equal to the aggregate benefits that would have been paid to or with respect to
Employee under the Salaried Plan and the Excess Benefit Plans if Employee were
exactly five years older than his actual age and his credit under the Salaried
Plan and the Excess Benefit Plans were equal to the greater of his actual
service or the amount of service he is deemed to have under paragraph 12(a)(iv),
below. If Employee's employment is terminated after a Change in Control by the
Company without cause or by Employee for good reason and Employee is entitled to
additional benefits by virtue of the additional five years of deemed age
provided for in this Paragraph 8, then the Company shall directly provide such
benefits to Employee in the same manner as additional benefits are to be
provided to Employee under paragraph 12(a), below.
9. PRIORITY OF PARAGRAPHS 2 OVER 8. Paragraph 2 of this
Agreement shall take precedence over Paragraph 8 of this Agreement so that if a
Change in Control occurs and is subsequently undone under Paragraph 2 of this
Agreement, Employee will thereafter have no rights under Paragraph 8 of this
Agreement unless and until a further Change in Control occurs.
10. EFFECT OF DISABILITY. If during the Contract Period and
before his employment hereunder is otherwise terminated, Employee becomes
disabled to such an extent that he is prevented from performing his duties
hereunder by reason of physical or mental incapacity: (a) he shall be entitled
to disability and other benefits at least equal to those that would have been
available to him had the Company continued, throughout the period of Employee's
disability, all of its programs, benefits, and policies with respect to disabled
employees that were in effect immediately before the Change in Control; and (b)
if he recovers from his disability before the end of the Contract Period he
shall be reinstated as an active employee for the remainder of the Contract
Period under and subject to all of the terms of this Agreement including,
without limitation, the Company's right to terminate Employee with or without
cause under Paragraph 11(b).
6
<PAGE> 7
11. TERMINATION FOLLOWING A CHANGE IN CONTROL. Following a
Change in Control:
(a) Employee's employment hereunder will terminate
without further notice upon the death of Employee;
(b) The Company may terminate Employee's employment
hereunder effective immediately upon giving notice of such termination:
(i) for "cause," (A) if Employee commits an
act of fraud, embezzlement, theft, or other similar criminal
act constituting a felony and involving the Company's business
or (B) if Employee breaches his agreement with respect to the
time to be devoted to the business of the Company set forth in
Paragraph 3(d) hereof and fails to cure such breach within 30
days of receipt of written notice of such breach from the
Board; or
(ii) without cause at any time; and
(c) Employee may terminate his employment hereunder
effective immediately upon giving of notice of such termination or
retirement:
(i) without cause at any time; or
(ii) for "good reason," which, for purposes
of this Agreement shall mean notice by the Employee to the
Company of the occurrence of any of the following:
(A) any reduction in base salary or position or any
material reduction in responsibilities or duties contemplated for
Employee under this Agreement or any material reduction in the
aggregate of employee benefits, perquisites, or fringe benefits
contemplated for Employee under this Agreement, provided that any
particular reduction described in this clause (A) shall constitute
"good reason" only if Employee terminates his employment within six
months of the date of the reduction; or
(B) any good faith determination by Employee that, as
a result of fundamental differences of opinion between Employee and the
Board as to the goals of the Company, Employee is unable to carry out
the responsibilities and duties contemplated for Employee under this
Agreement, provided that any determination by Employee described in
this clause (B) shall constitute "good reason" only if Employee
terminates his employment within six months of the Change in Control
Date.
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<PAGE> 8
12. SEVERANCE COMPENSATION.
(a) If, before the Contract Expiration Date,
Employee's employment is terminated by the Company without cause or by
Employee for good reason, then, except as provided in Paragraph 12(b),
12(c), or 12(d), the Company shall pay and provide to Employee the
following compensation and benefits through the last to occur of (x)
the expiration of twelve ["twenty-four" for E. P. Campbell] months
after the effective date of the termination, and (y) the Contract
Expiration Date (such last-to-occur date is hereinafter referred to as
the "Severance Benefits Termination Date"):
(i) Base Salary and Annual Bonus at the
highest rate payable to Employee during the Contract Period,
to be paid at the times provided in Paragraph 5 hereof;
(ii) in lieu of the opportunity to receive
stock option grants during the period from the effective date
of termination through the Severance Benefits Termination
Date, the Company will pay to Employee an amount in cash equal
to the product of (A) the aggregate value of the stock options
granted to Employee with Respect to the fiscal year ended
immediately prior to the Change in Control and (B) a fraction,
the numerator of which is the number of days from the
effective date of termination through the Severance Benefits
Termination Date and the denominator of which is 365; for this
purpose, the value of the stock options will be determined
using the Black-Scholes option price model;
(iii) coverage under the Company's medical,
dental, insurance, short-term disability, long-term disability
plans, and other Plans, as listed on Exhibit A, Items 7
through 14 (provided that he became eligible to participate
therein prior to the date his employment is terminated), each
as in effect on the Change in Control Date (or, if
subsequently amended to increase benefits to Employee or his
dependents, as so amended) and each as if Employee's
employment had continued through the Severance Benefits
Termination Date; and
(iv) coverage and service credit under the
Salaried Plan and the Excess Benefit Plans maintained in
connection with the Salaried Plan under which he is eligible
to participate so that the aggregate benefits payable to or
with respect to the Employee under the Salaried Plan and the
Excess Benefit Plan will be equal
8
<PAGE> 9
to the aggregate benefits that would have been paid to or
with respect to Employee under the Salaried Plan and the
Excess Benefit Plans if Employee's employment had continued
through the Severance Benefits Termination Date.
If any of the benefits to be provided under the Company's Plans cannot
be provided through that Plan to Employee following termination of his
employment, the Company shall directly provide the full equivalent of
such benefits to Employee. For example, since it is not possible to
provide additional service credit directly through the Salaried Plan,
if Employee becomes entitled to an additional 18 months of service
credit under the Salaried plan pursuant to (iv) above, the Company will
be required to pay to Employee, from its general assets, on each date
on which Employee receives a payment from the Salaried Plan, a
supplemental payment equal to the amount by which that particular
payment under the Salaried Plan would have been increased if Employee's
total service credit under the Salaried Plan were 18 months greater
than is actually the case by reason of this Agreement. In addition, if
in these circumstances any payments become due under the Salaried Plan
with respect to Employee following his death, the Company will be
obligated to make similar supplemental payments with respect to
Employee on the dates on which payments are made with respect to
Employee under the Salaried Plan.
Furthermore, the provisions of this Agreement shall not affect the
validity or enforceability of any other agreement between the Company
and Employee, and the benefits provided under this Agreement shall be
additive to any other benefits promised to Employee under such other
agreement. Moreover, this Agreement shall not operate to negate any
other assurances provided to Employee.
(b) If Employee becomes entitled to compensation and
benefits pursuant to Paragraph 12(a) he shall use reasonable efforts to
seek other employment, provided, however, that he shall not be required
to accept a position of less importance and dignity or of substantially
different character than of his position with the Company or a position
that would require Employee to engage in activity in violation of
Employee's agreement with respect to noncompetition set forth in
Paragraph 14 hereof nor shall he be required to accept a position
outside the greater Cleveland area. The Company's obligations under
item (i) and (ii) of Paragraph 12(a) will be offset by payments and
benefits received by Employee from another employer to the
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<PAGE> 10
following extent:
(i) The Company's obligation to pay any
particular installment of base salary following Employee's
termination will be offset, on a dollar for dollar basis, by
any cash compensation received by Employee from another
employer before the date on which the installment of base
salary is payable by the Company.
(ii) To the extent that Employee is provided
medical, dental, or short-term or long-term disability income
protection benefits by another employer during any period, the
Company will be relieved of its obligation to provide such
benefits to Employee. For example, if a new employer provides
Employee with a medical benefits plan that pays $500.00 for a
specific claim made by Employee and the Company's medical
insurance plan would have paid $750.00 for that claim, then
the Company will be obligated to pay Employee $250.00 with
respect to that claim.
Other than as provided in this Paragraph 12(b) Employee shall have no
duty to mitigate the amount of any payment or benefit provided for in
this Agreement.
(c) If during any period in which Employee is
entitled to payments or benefits from the Company under Paragraph
12(a):
(i) Employee materially and willfully
breaches his agreement with respect to confidential
information set forth in Paragraph 13 hereof and such breach
directly causes the Company substantial and demonstrable
damage; or
(ii) Employee materially and wilfully
breaches his agreement with respect to noncompetition set
forth in Paragraph 14 hereof and such breach directly causes
the Company substantial and demonstrable damage;
then the Company will be relieved of its obligations under paragraph
12(a) hereof as of the first day of the month immediately following the
date of such material breach.
(d) If Employee dies on or before the Severance
Benefits Termination Date and immediately before his death he is
entitled to payments or benefits from the Company under Paragraph
12(a), the Company will be relieved of its obligations under item (i)
of Paragraph 12(a) as of the
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<PAGE> 11
first day of the month immediately following the month in which
Employee dies and thereafter the Company will provide to Employee's
beneficiaries and dependents salary continuation payments, benefits
under the Excess Benefits Plan (as supplemented by item (iii) of
Paragraph 12(a), and continuing medical and dental benefits to the same
extent (subject to reduction for payments or benefits from a new
employer under paragraph 12(b) as if Employee's death had occurred
while Employee was in the active employ of the Company.
13. CONFIDENTIAL INFORMATION. Employee agrees that he will
not, during the term of the Agreement or at any time thereafter, either directly
or indirectly, disclose or make known to any person, firm, or corporation any
confidential information, trade secret, or proprietary information of the
Company that Employee may acquire in the performance of Employee's duties
hereunder. Upon the termination of Employee's employment with the Company,
Employee agrees to deliver forthwith to the Company any and all literature,
documents, correspondence, and other materials and records furnished to or
acquired by Employee during the course of such employment.
14. NONCOMPETITION. During any period in which Employee is
receiving Total Compensation under this Agreement (whether during the Contract
Period pursuant to Paragraph 5 or following termination pursuant to Paragraph
12(a), Employee shall not act as a proprietor, investor, director, officer,
employee, substantial stockholder, consultant, or partner in any business
engaged to a material extent in direct competition with the Company in any
market in any line of business engaged in by the Company during the Contract
period. If Employee delivers to the Company a written waiver of his right to
receive any further compensation or benefits pursuant to Paragraph 12(a), if
agreed to by the Company in writing, he shall be released, effective as of the
date of agreement by the Company, from the post-termination noncompetition
covenant contained in this Paragraph 14.
15. COSTS OF ENFORCEMENT. The Company shall pay and be solely
responsible for any and all costs and expenses (including attorneys' fees)
incurred by Employee in seeking to enforce the Company's obligations under this
Agreement unless and to the extent a court of competent jurisdiction determines
that the Company was relieved of those obligations because (a) the Company
terminated Employee for cause (as determined under Paragraph 11(b)(i) hereof),
(b) Employee voluntarily terminated his employment other than for good reason
(as determined under Paragraph 11(c)(ii) hereof), or (c) Employee materially and
willfully breached his agreement not to compete with the Company or his
agreement with respect to confidential information and
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<PAGE> 12
such breach directly caused substantial and demonstrable damage to the Company.
The Company shall forthwith pay directly or reimburse Employee for any and all
such costs and expenses upon presentation by Employee or by counsel selected
from time to time by Employee of a statement or statements prepared by Employee
or by such counsel of the amount of such costs and expenses. If and to the
extent a court of competent jurisdiction renders a final binding judgment
determining that the Company was relieved of its obligations for any of the
reasons set forth in (a), (b) or (c) above, Employee shall repay the amount of
such payments or reimbursements to the Company. In addition to the payment and
reimbursement of expenses of enforcement provided for in this Paragraph 15, the
Company shall pay to Employee in cash, as and when the Company makes any payment
on behalf of, or reimbursement to, Employee, an additional amount sufficient to
pay all federal, state, and local taxes (whether income taxes or other taxes)
incurred by Employee as a result of (x) payment of the expense or receipt of the
reimbursement, and (y) receipt of the additional cash payment. The Company shall
also pay to Employee interest (calculated at the Base Rate from time to time in
effect at National City Bank, Cleveland, Ohio, compounded monthly) on any
payments or benefits that are paid or provided to Employee later than the date
on which due under the terms of this Agreement.
16. EMPLOYEE RIGHTS. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or Employee
to have Employee remain in the employ of the Company before any Change in
Control and Employee shall have no rights under this Agreement if his employment
with the Company is terminated for any reason or for no reason before any Change
in Control. Nothing expressed or implied in this Agreement shall create any duty
on the part of the Company to continue in effect, or continue to provide to
Employee, any plan or benefit unless and until a Change in Control occurs. If,
before a Change in Control, the Company ceases to provide any plan or benefit to
Employee, nothing in this Agreement shall be construed to require the Company to
reinstitute that plan or benefit to Employee upon the later occurrence of a
Change in Control.
17. NOTICES. For purposes of this Agreement, all
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or when mailed by United States registered
or certified mail, return receipt requested, postage prepaid, addressed to the
Company (Attention: President) at its principal executive office and to Employee
at his principal residence, or to such other address as either party may have
furnished to the other in writing and in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
18. ASSIGNMENT, BINDING EFFECT.
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(a) This Agreement shall be binding upon and shall
inure to the benefit of the Company and the Company's successors and
assigns. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and or assets of the Company, by
agreement in form and substance satisfactory to Employee, to expressly
assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no
such succession had taken place.
(b) This Agreement shall be binding upon Employee and
this Agreement and all rights of Employee hereunder shall inure to the
benefit of, and be enforceable by, Employee and his personal or legal
representatives, executors, or administrators. No right, benefit, or
interest of Employee hereunder shall be subject to assignment,
anticipation, alienation, sale, encumbrance, charge, pledge,
hypothecation, or to execution, attachment, levy, or similar process;
except that Employee may assign any right, benefit, or interest
hereunder if such assignment is permitted under the terms of any plan
or policy of insurance or annuity contract governing such right,
benefit, or interest.
19. INVALID PROVISIONS.
(a) Any provision of this Agreement that is
prohibited or unenforceable shall be ineffective to the extent, but
only to the extent, of such prohibition or unenforceability without
invalidating the remaining portions hereof and such remaining portions
of this Agreement shall continue to be in full force and effect.
(b) In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable, the
parties will negotiate in good faith to replace such provision with
another provision that will be valid or enforceable and that is as
close as practicable to the provision held invalid or unenforceable.
20. MODIFICATION. No modification, amendment, or waiver of any
of the provisions of the Agreement shall be effective unless in writing,
specifically referring hereto, and signed by both parties.
21. WAIVER OF BREACH. The failure at any time to enforce any
of the provisions of this Agreement or to require performance by the other party
of any of the provisions of this
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Agreement shall in no way be construed to be a waiver of such provisions or to
affect either the validity of this Agreement or any part of this Agreement or
the right of either party thereafter to enforce each and every provision of this
Agreement in accordance with the terms hereof.
22. GOVERNING LAW. This Agreement has been made in and shall
be governed and construed in accordance with the laws of the State of Ohio.
23. GROSS-UP OF PAYMENTS DEEMED TO BE EXCESS PARACHUTE
PAYMENTS.
(a) The Company and Employee acknowledge that,
following a Change of Control, one or more payments or distributions to
be made by the Company to or for the benefit of Employee (whether paid
or payable or distributed or distributable pursuant to the terms of
this Agreement, under some other plan, agreement, or arrangement, or
otherwise) (a "Payment") may be determined to be an "excess parachute
payment" that is not deductible by the Company for Federal income tax
purposes and with respect to which Employee will be subject to an
excise tax because of Sections 280G and 4999, respectively, of the
Internal Revenue Code (hereinafter referred to respectively as "Section
280G" and "Section 4999"). If Employee's employment is terminated after
a Change of Control occurs, the Accounting Firm, which, subject to any
inconsistent position asserted by the Internal Revenue Service, shall
make all determinations required to be made under this Paragraph 23,
shall determine whether any Payment would be an excess parachute
payment and shall communicate its determination, together with detailed
supporting calculations, to the Company and to Employee within 30 days
after the date on which Employee's employment with the Company
terminates or such earlier time as is requested by the Company. The
Company and Employee shall cooperate with each other and the Accounting
Firm and shall provide necessary information so that the Accounting
Firm may make all such determinations. The Company shall pay all of the
fees of the Accounting Firm for services performed by the Accounting
Firm as contemplated in this Paragraph 23.
(b) If the Accounting Firm determines that any
Payment gives rise, directly or indirectly, to liability on the part of
Employee for excise tax under Section 4999 (and/or any penalties and/or
interest with respect to any such excise tax), the Company shall make
additional cash
14
<PAGE> 15
payments to Employee, from time to time and at the same time as any
Payment constituting an excess parachute payment is paid or provided to
Employee, in such amounts as are necessary to put Employee in the same
position, after payment of all federal, state, and local taxes (whether
income taxes, excise taxes under Section 4999 or otherwise, or other
taxes) and any and all penalties and interest with respect to any such
excise tax, as Employee would have been in after payment of all
federal, state, and local income taxes if the Payments had not given
rise to an excise tax under Section 4999 and no such penalties or
interest had been imposed.
(c) If the Internal Revenue Service determines that
any Payment gives rise, directly or indirectly, to liability on the
part of Employee for excise tax under Section 4999 (and/or any
penalties and/or interest with respect to any such excise tax) in
excess of the amount, if any, previously determined by the Accounting
Firm, the Company shall make further additional cash payments to
Employee not later than the due date of any payment indicated by the
Internal Revenue Service with respect to these matters, in such amounts
as are necessary to put Employee in the same position, after payment of
all federal, state, and local taxes (whether income taxes, excise taxes
under Section 4999 or otherwise, or other taxes) and any and all
penalties and interest with respect to any such excise tax, as Employee
would have been in after payment of all federal, state, and local
income taxes if the Payments had not given rise to an excise tax under
Section 4999 and no such penalties or interest had been imposed.
(d) If the Company desires to contest any
determination by the Internal Revenue Service with respect to the
amount of excise tax under Section 4999, Employee shall, upon receipt
from the Company of an unconditional written undertaking to indemnify
and hold Employee harmless (on an after tax basis) from any and all
adverse consequences that might arise from the contesting of that
determination, cooperate with the Company in that contest at the
Company's sole expense. Nothing in this Paragraph 23(d) shall require
Employee to incur any expense other than expenses with respect to which
the Company has paid to Employee sufficient sums so that after the
payment of the expense by Employee and taking into account the payment
by the Company with respect to that expense and any and all taxes that
may be imposed upon Employee as a result of his receipt of that
payment, the net effect is no cost to Employee. Nothing in this
Paragraph 23(d) shall require Employee to extend the statute of
limitations with respect to any item or issue in his tax returns other
than,
15
<PAGE> 16
exclusively, the excise tax under Section 4999. If, as the result of
the contest of any assertion by the Internal Revenue Service with
respect to excise tax under Section 4999, Employee receives a refund of
a Section 4999 excise tax previously paid and/or any interest with
respect thereto, Employee shall promptly pay to the Company such amount
as will leave Employee, net of the repayment and all tax effects, in
the same position, after all taxes and interest, that he would have
been in if the refunded excise tax had never been paid.
(e) For purposes of this Paragraph 23, the term
"Accounting Firm" means the independent auditors of the Company for the
fiscal year preceding the year in which the earlier of (i) the date of
termination of Employee's employment with the Company, or (ii) the
year, if any, in which occurred the first Change of Control occurring
after the date of this Agreement, and such firm's successor or
successors; provided, however, if such firm is unable or unwilling to
serve and perform in the capacity contemplated by this Agreement, the
Company shall select another national accounting firm of recognized
standing to serve and perform in that capacity under this Agreement,
except that such other accounting firm shall not be the then
independent auditors for the Company or any of its affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act).
IN WITNESS WHEREOF, the Company and Employee have executed
this Agreement on the day and year first above written.
NORDSON CORPORATION
By:__________________________________
Edward P. Campbell
Title: President and Chief
Executive Officer
Employee:____________________________
16
<PAGE> 17
EXHIBIT A
COMPANY PLANS
1. The Nordson Corporation 1995 Management Incentive
Compensation Plan;
2. The Nordson Corporation 1993 Long-Term Performance Plan;
3. The Nordson Corporation Salaried Employees Pension Plan
(the "Salaried Plan");
4. Nordson Corporation Officers' Deferred Compensation Plan;
5. The Nordson Corporation Excess Defined Benefit Pension Plan
and the Excess Defined Contribution Retirement Plan (the "Excess Benefit
Plans");
6. The Nordson Corporation Employees' Savings Trust Plan
(NEST);
7. The Nordson Corporation Non-Union Employees Stock Ownership
Plan;
8. The Nordson Corporation Salaried Employees' Health Plan;
9. The Nordson Corporation Prescription Drug Plan;
10. The Nordson Corporation Short Term and Long Term
Disability Plans;
11. The Nordson Corporation Employees' Dental Expense Plan;
12. The Nordson Corporation Group Life Insurance
Plan-Salaried;
13. The Nordson Corporation Group Travel Accident Plan;
14. The Company's car allowance Plan;
15. Nordson's policy of reimbursement for club dues, airline
travel clubs, and the like.
17
<PAGE> 1
Exhibit 13-a
MANAGEMENT'S DISCUSSION AND ANALYSIS
FISCAL YEARS 1998 AND 1997
Worldwide sales in 1998 reached a record level of $660.9 million,
a 4 percent increase over 1997 sales of $636.7 million. Volume gains exceeded 7
percent, but the impact of the strong U.S. dollar on currency translations
reduced reported sales by 3 percent.
Nordson's sales outside the United States accounted for 59 percent of total
1998 sales, compared with 61 percent for 1997, with volume gains in two of its
four geographic divisions. Sales volume in North America grew 12 percent for the
year, primarily due to strong sales in the Company's electronics, powder-coating
and UV-curing businesses. The acquisition of J&M Laboratories, Inc., a
manufacturer of systems that produce synthetic fibers as well as adhesive
dispensing equipment used to assemble disposable nonwoven products, also
contributed to North American sales for 1998. Local sales volume advanced 14
percent in Europe, with strong sales across all the Company's European
businesses. Reflecting the ongoing economic challenges in the Japanese and Asian
markets, total 1998 sales volume in Japan was down 12 percent, with all
businesses other than powder systems experiencing declines. Total sales volume
in the Pacific South division decreased 10 percent from the same period of 1997,
influenced heavily by a drop-off in powder system installations. At the
beginning of the year, the Company implemented price increases that averaged 2
percent on standardized small systems and parts.
Worldwide volume gains for 1998 were driven by strong sales of electronics
and UV-curing systems, with a combined sales volume that increased approximately
40 percent over 1997. Due to the sharp downturn in sales of powder coating
equipment in the Pacific South region, powder coating equipment shipments
increased only 4 percent from the same period of 1997. Solid volume gains from
container coating equipment in North America and Europe were offset by declines
in Japan and the Pacific South division to yield comparable results to 1997.
Shipments of adhesive dispensing systems for packaging and product assembly
remained relatively constant compared with the prior year.
Non-recurring charges in 1998, which totaled $33.0 million, were consistent
with the Company's corporate strategies to improve effectiveness of internal
operations. A $15.7 million non-recurring charge taken during the second quarter
of 1998 included $8.3 million for costs associated with an early retirement
program and other staff reductions, and $7.4 million for inventory and fixed
asset write-downs for U.S. operations. A fourth-quarter charge of $17.3 million
included $14.3 million for a portion of the purchase price paid for J&M
Laboratories, Inc., attributable to in-process research and development, and
$3.0 million for costs associated with the consolidation of European operations
and asset write-downs in that region. The amounts related to inventories, $6.9
million, were charged to cost of sales.
In-process technology acquired from J&M Laboratories, Inc. related
primarily to the development of a product that uses two different techniques to
form fibers. As of the transaction date, product development was 92 percent
complete but had not yet reached the working prototype phase, at which time the
product is expected to be technologically feasible. At the date of acquisition,
it was estimated that additional development costs of approximately $100,000
would be expended over a three-month period. An income approach was used to
value the in-process research and development acquired. A 30 percent discount
factor was applied to projected net cash flows over a 30-year period. It is
anticipated that a working prototype will be available to potential customers in
early 1999.
Gross margins, expressed as a percentage of sales before the effects of
non-recurring charges, were 55.1 percent in 1998, compared with 56.6 percent in
1997. The influencing factors behind the lower margins were the unfavorable
currency effects from the stronger U.S. dollar, combined with the mix of
products sold in both North America and Europe.
Selling and administrative costs, expressed as a percentage of sales and
excluding the effects of non-recurring charges, were 43.3 percent in 1998 and
45.0 percent in 1997. Spending for 1998 increased 4.4 percent over 1997 after
adjusting for the effects of currency and a charge in 1997 of $3.6 million for
an unamortized pension obligation. This rate of increase was well below the rate
of sales volume gains for the year.
Worldwide operating profits, expressed as a percentage of sales before the
effects of non-recurring charges, were 11.8 percent in 1998, compared with 11.6
percent for 1997. Divisional operating
<PAGE> 2
profit (loss) percentages in 1998 and 1997, respectively, were: 14 percent and
15 percent for North America; 14 percent and 13 percent for Europe; 7 percent
and 14 percent for Japan; and (5) percent and 4 percent for the Pacific South
division. Operating profits in North America include the intercompany gross
profits on Nordson equipment manufactured in the United States and exported to
international subsidiaries. Operating profits for Japan and the Pacific South
division decreased due to general economic conditions in these markets.
Interest expense, net of interest income, increased $1.9 million due to
higher levels of borrowing, driven primarily by funding the acquisition of J&M
Laboratories, Inc. and continuing repurchases of Nordson stock. Excluding a gain
in 1997 of $1.5 million related to a property insurance settlement, other income
was comparable to the prior year.
Nordson's effective tax rate was 46.5 percent in 1998, compared with a rate
of 30.4 percent in 1997. In 1998, the rate was influenced by the write-off of
in-process research and development which is not tax deductible. In 1997, the
tax rate included tax benefits related to prior years. Excluding these items,
the effective rates would have been 34.0 percent in 1998 and 33.0 percent in
1997. This increase can be traced to higher effective foreign tax rates. 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 taxes.
Net income in 1998 was $20.8 million, or $1.25 per share on a diluted
basis. Excluding the effects of non-recurring charges, net income in 1998 was
$47.4 million, or $2.85 per share, compared with $50.0 million, or $2.85 per
share in 1997. Non-recurring charges on an after-tax basis totaled $26.6
million, or $1.60 per share on a diluted basis.
Nordson has not yet adopted the following Statements of Financial
Accounting Standards: No. 130, "Reporting Comprehensive Income;" No. 131,
"Disclosures about Segments of an Enterprise and Related Information;" No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits;" and
No. 133, "Accounting for Derivative Instruments and Hedging Activities." These
statements are not expected to have a material effect on the Company's financial
statements.
FISCAL YEARS 1997 AND 1996
Worldwide sales in 1997 were $636.7 million, a 4 percent increase over 1996.
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 with 64 percent in 1996. Volume gains were achieved in each of
Nordson's geographic sales divisions 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
division 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 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
coating 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
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.
<PAGE> 3
Worldwide operating profits, expressed as a percentage of sales, were 11.6
percent in 1997 and 13.8 percent in 1996. Divisional 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 division. Amounts
in 1997 reflect a full year of operations for the European Distribution Center.
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 gain of $1.5 million related to a property
insurance settlement.
Nordson's overall 1997 tax rate was 30.4 percent and includes the
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.
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.
LIQUIDITY, CAPITAL EXPENDITURES AND SOURCES OF CAPITAL
Cash and cash equivalents increased $5.3 million. Cash provided by operations
was $70.2 million. Additional cash needs were funded by $23.9 million of
short-term and long-term borrowings. Significant uses for cash included business
acquisitions, capital expenditures, dividends, repurchases of Nordson stock and
scheduled repayments of long-term debt.
Noncash assets and liabilities of businesses acquired totaled $37.0 million
and were funded by a combination of cash, stock, and short-term and long-term
obligations to sellers.
Nordson concentrated the majority of its 1998 capital expenditures on sales
facilities, manufacturing operations and information systems in an ongoing
program to replace, update and expand sales and manufacturing capabilities.
Dividend payments to shareholders on a per share basis increased 10 percent
over 1997.
Purchases of treasury shares, net of shares issued, was $8.6 million. The
Company uses repurchased shares primarily for stock-based employee compensation
and incentive plans. Treasury shares were also issued for a portion of the
purchase price of J&M Laboratories, Inc. At November 1, 1998, management had
authorization to repurchase on the open market, or in privately negotiated
transactions at the prevailing market price, up to 886,000 shares through July
2000 and an additional 2,000,000 shares through April 2003.
Nordson has various lines of credit with both domestic and foreign banks.
At November 1, 1998, these lines totaled $419.7 million, of which $330.8 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 1999. There are no significant
restrictions limiting the transfer of funds from international subsidiaries to
the parent company.
In 1998, working capital decreased $17.8 million to $121.4 million. Notes
payable increased $19.4 million to fund a variety of cash needs. Customer
advance payments increased $11.0 million due to balances acquired in business
acquisitions.
Intangible assets increased $24.0 million traced to the cost of business
acquisitions being in excess of the net assets acquired. Pension and
postretirement obligations increased $10.7 million resulting mainly from an
early retirement program, which will be paid over an extended number of years
and will not materially affect any individual year.
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.
<PAGE> 4
In 1998 compared with 1997, the U.S. dollar was generally stronger against
foreign currencies. If 1997 exchange rates had been in effect during 1998, sales
would have been approximately $22.8 million or 3 percent higher, and third-party
costs would have been approximately $12.6 million higher. In 1997 compared with
1996, the U.S. dollar was also stronger. If exchange rates for 1996 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. These effects on reported sales do not include the impact of
local price adjustments made in response to changes in currency exchange rates.
THE EURO CONVERSION
On January 1, 1999, eleven of the fifteen member countries of the European Union
established fixed conversion rates between their existing sovereign currencies
and the euro. The Company has recognized the need to ensure that its operations
will not be adversely impacted by the introduction of this new currency, which
is currently trading on currency exchanges and is available for non-cash
transactions. Nordson believes that its information systems are capable of
processing transactions denominated in the euro. Nordson does not expect the
euro conversion to have a material effect on the Company's financial condition
and results of operations.
MARKET RISK
The Company operates internationally and enters into transactions denominated in
foreign currencies. Consequently, the Company is subject to market risk arising
from exchange rate movements between the dates foreign currency transactions are
recorded and the dates they are settled. Nordson regularly uses foreign exchange
contracts to reduce its risks related to most of these transactions. 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. The balance of transactions denominated in foreign
currencies are designated as hedges of the Company's net investments in foreign
subsidiaries or are intercompany transactions of a long-term investment nature.
As a result of the Company's foreign currency hedging activities, the Company
did not have a material foreign currency risk related to its derivatives or
other financial instruments at November 1, 1998.
The Company finances a portion of its operations with short-term and
long-term borrowings. Consequently, the Company is subject to market risk
arising from changes in interest rates. Nordson uses interest rate swaps to
reduce its risks related to substantially all of its fixed-rate debt. Under
these swaps, the Company receives a fixed rate and pays a variable rate,
generally over the life of the underlying fixed-rate debt. As a result of the
Company's fixed-rate hedging activities, the Company did not have a material
interest rate risk related to its derivatives or other financial instruments at
November 1, 1998.
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 34 and 35 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 READINESS
Many computerized systems use only two digits, rather than four,
to record the year in a date field. These systems may recognize the year 2000 as
the year 1900 or some other date, causing systems to process incorrect data or
simply shut down. Nordson is addressing this issue for its information systems,
equipment (with embedded microprocessors), facilities, products, suppliers and
vendors. Nordson's plan to resolve the Year 2000 issue involves the following
four phases: assessment, remediation, testing and implementation.
<PAGE> 5
As of November 1, 1998, the assessment phase has been completed. The
results of the assessment indicated that most of the Company's significant
information systems could be affected, including order-entry, manufacturing,
distribution, invoicing and collection systems. The assessment phase also
revealed that equipment and facilities used in operations are at risk. Based on
a review of its product lines, Nordson has determined that only a few of the
products it has sold and will continue to sell will require remediation to be
Year 2000 ready. Efforts and costs associated with the remediation of these
products are immaterial and will be addressed on an individual basis prior to
the end of 1999. The Company has also gathered information regarding the Year
2000 readiness status of its major suppliers and customers and continues to
monitor their readiness.
For exposures of its information technology systems, Nordson is 70 percent
complete on the remediation phase and expects to have all mission-critical
systems modified for Year 2000 readiness by April 1999. Nordson has tested 70
percent and implemented 60 percent of its remediated information systems. The
Company expects the testing phase for all mission-critical systems to be
completed by June 1999 and these systems to be implemented by July 1999.
Remediation of Nordson's operating equipment is 100 percent complete for
telecommunications equipment and 70 percent complete for other operating
equipment, mainly the internal computer networks. The Company expects that the
remaining operating equipment will be remediated by April 1999. The anticipated
completion for testing and implementation of remediated operating equipment is
June 1999.
Nordson has made inquiries of its major suppliers as to the status of their
Year 2000 readiness and will be conducting site visits of the largest ones in
early 1999. To date, Nordson is not aware of any third parties with a Year 2000
issue that would materially impact the Company's results of operations,
liquidity or capital. However, the Company has no means of ensuring that third
parties doing business with Nordson will be Year 2000 ready.
Nordson will utilize both internal and external resources to reprogram or
replace, test and implement the software and operating equipment for Year 2000
readiness. The total cost of the Company's Year 2000 readiness program is
estimated at $6.0 million and is being funded through operating cash flows.
Remaining readiness program costs are approximately $3.2 million of which $1.8
will be expensed through 1999 and the balance capitalized for the purchases of
Year 2000-ready personal computers and workstations.
Nordson believes that the steps referred to above will minimize its
business risk related to the Year 2000. In the event that the Company makes no
further progress on its Year 2000 readiness program, the Company would be unable
to manufacture and ship products, invoice customers and collect payments.
However, based on the Company's plans and the rate of progress to date,
management believes that at worst, the Company would experience a minor
temporary lapse in customer service. The Company has contingency plans for
critical applications which include manual workarounds and staffing adjustments.
For a listing of risks associated with the Year 2000, refer to the "Safe Harbor
Statements Under the Private Securities Litigation Reform Act of 1995"
disclosure that follows.
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.
In the case of Year 2000 readiness issues, factors that could cause the
Company's actual results to differ materially from the expected results are: the
availability and retention of internal and external resources dedicated to the
Company's Year 2000 readiness program; delayed or unsuccessful completion of
planned activities of the Company; and delayed, unsuccessful or incompatible
Year 2000 readiness programs of third parties on which the Company relies.
<PAGE> 1
Exhibit 13-b
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 1, 1998, NOVEMBER 2, 1997
AND NOVEMBER 3, 1996 1998 1997 1996
===========================================================================================================================
(In thousands except for per share amounts)
<S> <C> <C> <C>
SALES $660,900 $636,710 $609,444
OPERATING COSTS AND EXPENSES:
Cost of sales 303,671 276,425 255,095
Selling and administrative expenses 286,120 286,226 270,088
Acquired research and development 14,300 -- --
Other non-recurring charges 11,738 -- --
- ---------------------------------------------------------------------------------------------------------------------------
615,829 562,651 525,183
- ---------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 45,071 74,059 84,261
Other income (expense):
Interest expense (9,647) (7,763) (5,955)
Interest and investment income 658 638 910
Other - net 2,845 4,811 1,845
- ---------------------------------------------------------------------------------------------------------------------------
(6,144) (2,314) (3,200)
- ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 38,927 71,745 81,061
Income taxes:
Current 21,219 21,548 29,561
Deferred (3,117) 230 (1,571)
- ---------------------------------------------------------------------------------------------------------------------------
18,102 21,778 27,990
- ---------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 20,825 $ 49,967 $ 53,071
===========================================================================================================================
COMMON SHARES 16,542 17,276 17,869
Incremental common shares attributable to
outstanding stock options, nonvested stock, and
deferred stock-based compensation 119 277 335
- ---------------------------------------------------------------------------------------------------------------------------
COMMON SHARES AND COMMON SHARE EQUIVALENTS 16,661 17,553 18,204
===========================================================================================================================
BASIC EARNINGS PER SHARE $1.26 $2.89 $2.97
DILUTED EARNINGS PER SHARE $1.25 $2.85 $2.92
===========================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> 1
Exhibit 13-c
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
NOVEMBER 1, 1998 AND NOVEMBER 2, 1997 1998 1997
============================================================================================================================
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,820 $ 1,517
Marketable securities 30 200
Receivables 165,286 163,692
Inventories 124,352 122,084
Deferred income taxes 24,336 23,263
Prepaid expenses 7,652 8,059
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 328,476 318,815
Property, plant and equipment - net 101,183 101,667
Intangible assets - net 84,345 60,378
Deferred income taxes 13,220 12,014
Other assets 11,720 10,122
- ---------------------------------------------------------------------------------------------------------------------------
$538,944 $502,996
============================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 93,851 $ 74,500
Accounts payable 33,753 37,699
Income taxes payable 4,541 1,406
Accrued liabilities 53,679 54,172
Customer advance payments 16,662 5,711
Current maturities of long-term debt 862 2,597
Current obligations under capital leases 3,734 3,578
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 207,082 179,663
Long-term debt 66,564 62,697
Obligations under capital leases 3,880 3,805
Pension and retirement obligations 44,196 33,471
Other liabilities 2,447 2,815
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 92,030 75,899
Cumulative translation adjustments (4,792) (977)
Retained earnings 423,887 417,589
Common shares in treasury, at cost (308,368) (283,816)
Deferred stock-based compensation (235) (403)
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 214,775 220,545
- ---------------------------------------------------------------------------------------------------------------------------
$538,944 $502,996
============================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> 1
Exhibit 13-d
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 1, 1998, NOVEMBER 2, 1997
AND NOVEMBER 3, 1996 1998 1997 1996
============================================================================================================================
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,825 $ 49,967 $ 53,071
Adjustments to reconcile net income to net cash
provided by operating activities:
Non-recurring charges 32,960 -- --
Depreciation 18,414 20,144 19,224
Amortization 6,589 5,163 4,298
Provision for losses on receivables 1,022 1,267 1,782
Deferred income taxes (1,152) (613) (2,181)
Other 1,718 5,560 826
Changes in operating assets and liabilities:
Receivables 598 (15,129) (13,495)
Inventories (5,210) (8,896) (6,346)
Other current assets 2,155 (1,491) (578)
Other non-current assets (3,842) (2,337) (5,589)
Accounts payable (5,534) 3,719 5,251
Income taxes payable 1,204 (8,840) (2,553)
Accrued liabilities (5,720) 4,193 (6,665)
Customer advance payments 2,183 (126) (546)
Other non-current liabilities 3,984 (334) 7,106
- ---------------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Operating Activities 70,194 52,247 53,605
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (15,436) (15,939) (23,399)
Proceeds from sale of property, plant and equipment 441 928 33
Acquisition of businesses (37,021) (993) (39,114)
Purchases of marketable securities -- -- (100)
Proceeds from sales or maturities of marketable securities 170 110 1,015
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (51,846) (15,894) (61,565)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (repayment of) short-term borrowing 18,921 (20,392) 55,731
Proceeds from long-term debt 5,000 50,000 8,520
Repayment of long-term debt (8,245) (1,625) (6,204)
Repayment of capital lease obligations (5,320) (4,068) (3,859)
Issuance of common shares 21,431 6,993 2,106
Purchase of treasury shares (29,987) (59,854) (25,794)
Dividends paid (14,527) (13,814) (12,858)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (12,727) (42,760) 17,642
Effect of exchange rate changes on cash (318) (1,297) (820)
- ---------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,303 (7,704) 8,862
Cash and cash equivalents at beginning of year 1,517 9,221 359
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 6,820 $ 1,517 $ 9,221
============================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> 1
Exhibit 13-e
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON SHARES
CAPITAL IN CUMULATIVE IN TREASURY DEFERRED
YEARS ENDED NOVEMBER 1, 1998, COMMON EXCESS OF TRANSLATION RETAINED ------------------ STOCK-BASED
NOVEMBER 2, 1997 AND NOVEMBER 3, 1996 SHARES STATED VALUE ADJUSTMENTS EARNINGS SHARES AMOUNT COMPENSATION
=============================================================================================================================
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
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)
Shares issued for acquisition
of new business and under
company stock and employee
benefit plans 16,131 (570) 8,058 (135)
Amortization of deferred
stock-based compensation 303
Purchase of treasury shares 669 (32,610)
Translation adjustments (3,815)
Net income 20,825
Dividends - $.88 per share (14,527)
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT NOVEMBER 1, 1998 $12,253 $92,030 $ (4,792) $423,887 7,766 $(308,368) $ (235)
=============================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<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 1998, 1997 and 1996, contained 52, 52 and
53 weeks, respectively. To facilitate reporting of consolidated accounts, the
fiscal year for the Company's international operations ends on September 30.
REVENUE RECOGNITION -- Revenues are recognized when customer orders are complete
and shipped. Accruals for the cost of product warranties are maintained for
anticipated future claims.
ADVERTISING COSTS -- Advertising costs are expensed as incurred and amounted to
$5,669,000 in 1998 ($6,410,000 in 1997 and $5,507,000 in 1996).
RESEARCH AND DEVELOPMENT -- Research and development costs
are charged to expense as incurred and amounted to $42,640,000 in 1998
($29,812,000 in 1997 and $30,471,000 in 1996). The 1998 amount includes
$14,300,000 of acquired research and development.
EARNINGS PER SHARE -- Basic earnings per share are computed based on the
weighted average number of common shares outstanding during each year, while
diluted earnings per share are based on the weighted average number of common
shares and common share equivalents outstanding. Common share equivalents
consist of shares issuable upon exercise of the Company's stock options,
computed using the treasury stock method, as well as nonvested stock and
deferred stock-based compensation.
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 1, 1998, 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 43 percent of
consolidated inventories at November 1, 1998 (47 percent at November 2, 1997).
The first-in, first-out (FIFO) method is used for all other inventories.
Consolidated inventories would have been $8,579,000 and $9,373,000 higher than
reported at November 1, 1998 and November 2, 1997, 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 1997 and 1996 amounts have been reclassified to conform
with the 1998 presentation.
<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" in 1997. 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."
In 1998, the Company adopted FASB Statement No. 128, "Earnings Per Share."
Statement 128 replaced the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented and where
necessary restated to conform to Statement 128 requirements.
The FASB has issued the following statements which the Company has not yet
adopted: Statement No. 130, "Reporting Comprehensive Income" (FAS 130);
Statement No. 131, "Disclosure about Segments of an Enterprise and Related
Information" (FAS 131); Statement No. 132, "Employers' Disclosures About
Pensions and Other Postretirement Benefits" (FAS 132); and Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (FAS 133). FAS
130 establishes standards for reporting comprehensive income, FAS 131 requires
reporting certain information about operating segments, FAS 132 revises
employers' disclosures about pension and other postretirement benefit plans, and
FAS 133 establishes accounting and reporting standards for derivative
instruments and hedging activities. The Company must adopt FAS 130, FAS 131 and
FAS 132 for fiscal year 1999, and FAS 133 no later than fiscal year 2000. These
statements are not expected to have a material effect on the financial
statements.
NOTE 3 -- NON-RECURRING CHARGES
During 1998, Nordson recognized non-recurring pre-tax charges of $33.0 million
($26.6 million on an after-tax basis or $1.60 per share). The charges consist of
$14.3 million for the portion of the purchase price paid for J&M Laboratories,
Inc. attributable to in-process research and development, $9.8 million for an
early retirement program, involuntary severances and fixed-asset write-downs,
$6.9 million related to inventory valuations, and $2.0 million for costs
associated with the consolidation of European operations. Amounts related to
inventories were charged to cost of sales. The remainder of the charges was
recorded below selling and administrative expenses in the Consolidated Statement
of Income.
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 1998, 1997 and 1996 was approximately $4,446,000,
$2,489,000 and $2,726,000, 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>
1998 1997 1996
================================================================================
(In thousands)
<S> <C> <C> <C>
Service cost - benefits
earned during period $ 3,473 $ 4,294 $ 3,619
Interest cost on projected
benefit obligations 5,407 5,381 5,173
Actual return on assets (5,814) (10,306) (7,270)
Net amortization and
deferral 579 8,898 2,940
- -------------------------------------------------------------------------------
Net periodic pension cost 3,645 8,267 4,462
Termination benefit cost 7,040 -- --
- -------------------------------------------------------------------------------
Total expense $10,685 $ 8,267 $ 4,462
================================================================================
</TABLE>
<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>
1998:
Actuarial present value of obligations:
Vested benefit obligations $ 7,951 $ 65,649
============================================================================
Accumulated benefit obligations $ 8,658 $ 74,405
============================================================================
Projected benefit obligations $ 8,658 $ 86,555
Plan assets at fair value 9,974 61,777
- ----------------------------------------------------------------------------
Excess (deficiency) of assets over
projected benefit obligations 1,316 (24,778)
Unrecognized prior service costs 941 (83)
Unrecognized net gain (1,465) (940)
Unrecognized net transition asset -- (174)
Additional minimum liability -- (280)
- ----------------------------------------------------------------------------
Prepaid (accrued) pension costs $ 792 $(26,255)
============================================================================
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)
============================================================================
</TABLE>
Plans for which accumulated benefit obligations exceeded plan assets consist of
the unfunded supplemental plan, certain international plans which are partially
unfunded by local practice, and in 1998, the domestic salaried plan. The current
year status of the domestic salaried plan is attributable to a change in the
discount rate along with termination benefits associated with the early
retirement program.
The actuarial present value of projected benefit obligations at the end of 1998
and 1997 was determined using a weighted average discount rate of 6.9 and 7.6
percent, respectively, and a rate of increase in future compensation levels of
4.0 and 4.7 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
1998, 1997 and 1996.
POSTRETIREMENT BENEFIT PLAN -- The parent company has an unfunded postretirement
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>
1998 1997 1996
================================================================================
(In thousands)
<S> <C> <C> <C>
Service cost - benefits
earned during period $ 379 $ 383 $ 378
Interest cost on accumulated
benefit obligations 882 810 741
- --------------------------------------------------------------------------------
Net periodic
postretirement
benefit cost 1,261 1,193 1,119
Termination benefit cost 756 -- --
- --------------------------------------------------------------------------------
Total expense $2,017 $1,193 $1,119
================================================================================
</TABLE>
The following table sets forth the amount recognized in the Company's balance
sheet for its postretirement benefit plan:
<TABLE>
<CAPTION>
1998 1997
================================================================================
(In thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 4,828 $ 3,193
Fully eligible active plan
participants 3,497 2,742
Other active plan participants 6,207 4,867
- --------------------------------------------------------------------------------
14,532 10,802
Unrecognized net gain (loss) (1,666) 357
- --------------------------------------------------------------------------------
Accrued postretirement benefit costs $12,866 $11,159
================================================================================
</TABLE>
The discount rate used in determining the accumulated post-retirement benefit
obligation at the end of 1998 and 1997 was 7.0 and 8.0 percent, respectively.
The annual rate of increase in the per capita cost of covered benefits (the
health care cost trend rate) was assumed to be 7.0 percent for 1999, 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 periodic postretirement benefit cost for 1998
by $211,000 and the accumulated postretirement benefit obligation as of November
1, 1998 by $1,996,000.
<PAGE> 4
NOTE 5 -- INCOME TAXES
Income tax expense includes the following:
1998 1997 1996
=============================================================
(In thousands)
Current:
U.S. federal $ 8,444 $ 8,319 $12,032
State and local 844 570 3,094
Foreign 11,931 12,659 14,435
- -------------------------------------------------------------
Total current 21,219 21,548 29,561
Deferred:
U.S. federal (1,793) (603) (1,015)
State and local (577) 198 18
Foreign (747) 635 (574)
- -------------------------------------------------------------
Total deferred (3,117) 230 (1,571)
- -------------------------------------------------------------
$18,102 $21,778 $27,990
=============================================================
The reconciliation of the United States statutory federal income tax rate to the
worldwide consolidated effective tax rate follows:
1998 1997 1996
=============================================================
Statutory federal
income tax rate 35.0% 35.0% 35.0%
Acquired research and
development with no
tax benefit 12.5 -- --
Foreign Sales Corporation
exemption (4.4) (3.8) (3.7)
Foreign tax rate variances,
net of foreign tax credits 3.9 1.4 .8
State and local taxes, net
of federal income tax
benefit (.2) .9 2.4
Benefits related to
prior years -- (2.6) --
Other - net (.3) (.5) --
- -------------------------------------------------------------
Effective tax rate 46.5% 30.4% 34.5%
=============================================================
Earnings before income taxes of international operations were $23,209,000,
$28,891,000 and $30,332,000 in 1998, 1997 and 1996, 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 $39,179,000 and
$43,034,000 at November 1, 1998 and November 2, 1997, 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>
1998 1997
================================================================================
(In thousands)
<S> <C> <C>
Deferred tax assets:
Sales to international subsidiaries and
related consolidation adjustments $16,805 $18,343
Employee benefits 13,659 11,285
Other accruals not currently deductible
for taxes 7,226 5,685
Inventory adjustments 2,299 576
Translation of foreign currency
accounts 1,398 2,389
Other - net 699 1,999
- --------------------------------------------------------------------------------
Total deferred tax assets 42,086 40,277
Deferred tax liabilities:
Depreciation 3,420 4,065
Other - net 1,110 935
- --------------------------------------------------------------------------------
Total deferred tax liabilities 4,530 5,000
- --------------------------------------------------------------------------------
Net deferred tax assets $37,556 $35,277
================================================================================
</TABLE>
NOTE 6 -- 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 $1,528,000 in 1998 ($1,203,000
in 1997 and $2,320,000 in 1996).
NOTE 7 -- 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 September 1998, the Company acquired a manufacturer of melt-blowing systems
used to produce synthetic nonwoven fabrics, and adhesive dispensing equipment
used for nonwoven products. In October 1997, the Company acquired a provider of
ultraviolet- curing equipment to the container industry. The cost of
acquisitions amounted to $39,543,000 in 1998 and $1,240,000 in 1997. 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 1998 and 1997, pro forma results for 1998 and
1997, respectively, would not be materially different.
<PAGE> 5
NOTE 8 -- DETAILS OF BALANCE SHEET
<TABLE>
<CAPTION>
1998 1997
===============================================================================
(In thousands)
<S> <C> <C>
Receivables:
Accounts $ 146,368 $ 144,652
Notes 17,173 16,458
Other 4,731 5,543
- -------------------------------------------------------------------------------
168,272 166,653
Allowance for doubtful accounts (2,986) (2,961)
- -------------------------------------------------------------------------------
$ 165,286 $ 163,692
===============================================================================
Inventories:
Finished goods $ 40,411 $ 51,639
Work-in-process 24,914 12,056
Raw materials and finished parts 59,027 58,389
- -------------------------------------------------------------------------------
$ 124,352 $ 122,084
===============================================================================
Property, plant and equipment:
Land $ 3,282 $ 3,267
Land improvements 2,781 2,738
Buildings 63,752 60,505
Machinery and equipment 130,106 118,630
Construction-in-progress 10,016 11,640
Leased property under
capitalized leases 14,098 13,350
- -------------------------------------------------------------------------------
224,035 210,130
Accumulated depreciation
and amortization (122,852) (108,463)
- -------------------------------------------------------------------------------
$ 101,183 $ 101,667
===============================================================================
Intangible assets:
Costs in excess of net assets of
acquired businesses $ 105,515 $ 78,717
Other 5,695 5,393
- -------------------------------------------------------------------------------
111,210 84,110
Accumulated amortization (26,865) (23,732)
- -------------------------------------------------------------------------------
$ 84,345 $ 60,378
===============================================================================
Accrued liabilities:
Salaries and other compensation $ 23,496 $ 25,297
Pension and retirement 4,151 4,103
Taxes other than income taxes 4,314 4,581
Other 21,718 20,191
- -------------------------------------------------------------------------------
$ 53,679 $ 54,172
===============================================================================
</TABLE>
Note 9 -- LEASES
The Company has lease commitments expiring at various dates, principally for
manufacturing, 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 expiring in 2010 and 2016, renewal
options and options to purchase the properties at fair market value. Future
annual minimum lease payments range from $1,133,000 to $1,697,000 and
approximate market rates.
Rent expense for all operating leases was approximately $8,664,000 in 1998,
$8,578,000 in 1997 and $10,786,000 in 1996.
Assets held under capitalized leases and included in property, plant and
equipment are as follows:
<TABLE>
<CAPTION>
1998 1997
===============================================================================
(In thousands)
<S> <C> <C>
Transportation equipment $12,265 $12,289
Other 1,833 1,061
- -------------------------------------------------------------------------------
Total capitalized leases 14,098 13,350
Accumulated amortization (6,283) (5,967)
- -------------------------------------------------------------------------------
Net capitalized leases $ 7,815 $ 7,383
===============================================================================
</TABLE>
At November 1, 1998, 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:
1999 $ 4,903 $ 7,906
2000 3,319 5,735
2001 1,454 4,724
2002 318 4,127
2003 26 3,821
Later years -- 23,029
- --------------------------------------------------------------
Total minimum lease payments 10,020 $49,342
=======
Less amount representing
executory costs 1,145
- ----------------------------------------------
Net minimum lease payments 8,875
Less amount representing interest 1,261
- ----------------------------------------------
Present value of net minimum
lease payments 7,614
Less current portion 3,734
- ----------------------------------------------
Long-term obligations at
November 1, 1998 $ 3,880
==============================================
</TABLE>
<PAGE> 6
NOTE 10 -- NOTES PAYABLE
Bank lines of credit and notes payable are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
============================================================
(In thousands)
<S> <C> <C>
Available bank lines of credit:
Domestic banks $324,300 $159,300
Foreign banks 95,353 84,768
- -----------------------------------------------------------
Total $419,653 $244,068
============================================================
Notes payable:
Domestic bank debt $ 52,300 $ 45,875
Foreign bank debt 36,551 28,615
Other 5,000 10
- -----------------------------------------------------------
Total $ 93,851 $ 74,500
============================================================
Weighted average interest rate
on notes payable 4.3% 4.8%
Unused bank lines of credit $330,802 $169,578
============================================================
</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. In 1998 other notes payable include a
promissory note issued in connection with a business acquisition.
NOTE 11 -- LONG-TERM DEBT
The long-term debt of the Company is as follows:
<TABLE>
<CAPTION>
1998 1997
================================================================================
(In thousands)
<S> <C> <C>
Senior notes $50,000 $50,000
Industrial revenue bonds--
Gwinnett County, Georgia 6,000 6,000
Industrial revenue bonds--
City of Westlake, Ohio 3,400 4,250
Acquisition financing notes 6,562 3,010
Leasehold improvements financing note 1,464 1,662
Other -- 372
- --------------------------------------------------------------------------------
67,426 65,294
Less current maturities 862 2,597
- --------------------------------------------------------------------------------
Total $66,564 $62,697
================================================================================
</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 6.02 percent at
November 1, 1998.
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 3.20 percent at
November 1, 1998. 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 3.25 percent at November 1, 1998. The bonds are secured by a
$3,545,000 standby letter of credit.
ACQUISITION FINANCING NOTES -- These unsecured notes were issued in connection
with recent business acquisitions. They have
various maturities through 2001. Interest is payable at variable rates with a
weighted-average rate of 5.56 percent at November 1, 1998.
LEASEHOLD IMPROVEMENTS FINANCING NOTE -- This note partially funded the
leasehold improvements for a new sales and demonstration facility in Japan. The
principal balance is Japanese (Y)200 million 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 .23 percent at November 1, 1998.
ANNUAL MATURITIES -- The annual maturities of long-term debt for the five years
subsequent to November 1, 1998 are as follows: $862,000 in 1999, $6,450,000 in
2000, $3,000,000 in 2001, $1,450,000 in 2002, and $600,000 in 2003.
<PAGE> 7
NOTE 12 -- 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>
1998:
Cash and cash equivalents $ 6,820 $ 6,820
Marketable securities 30 30
Notes payable (93,851) (93,851)
Long-term debt (67,426) (67,155)
Forward exchange contracts (705) (768)
Interest rate swaps -- 2,982
=============================================================
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 swap -- 544
=============================================================
</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 1,
1998:
<TABLE>
<CAPTION>
SELL BUY
============================================================
(In thousands)
<S> <C> <C>
Contract amount:
German marks $15,207 $ 4,611
Japanese yen 15,759 5,084
Pound sterling 12,519 2,553
French francs 6,366 --
Italian lira 4,313 870
Other 11,317 7,543
- ------------------------------------------------------------
Total $65,481 $20,661
============================================================
</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 (Y)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 1, 1998, there were no significant
concentrations of credit risk.
<PAGE> 8
NOTE 13 -- CAPITAL SHARES
PREFERRED -- The Company has authorized 10,000,000 Series A convertible
preferred shares without par value. No preferred shares were outstanding in
1998, 1997 or 1996.
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 1998, 1997 and 1996,
there were 24,506,000 common shares issued. At November 1, 1998 and November 2,
1997, the number of outstanding common shares, net of treasury shares, was
16,740,000 and 16,839,000, respectively. Treasury shares are reissued using the
first-in, first-out method.
NOTE 14 -- 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 1999, there were 541,000 shares available for grant in
1999.
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 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
Granted 546,827 $48.80
Exercised (142,636) $26.25
Forfeited (122,281) $54.02
- ------------------------------------------------------------
Outstanding at November 1, 1998 2,458,221 $50.76
=============================================================
Exercisable at November 1, 1998 1,372,535 $48.93
=============================================================
</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 165,041 344,448 1,948,732
Weighted-average remaining
contractual life, in years 1.6 3.7 7.4
Weighted-average
exercise price $22.16 $44.91 $54.22
- ---------------------------------------------------------------------------------
Number exercisable 165,041 344,448 863,046
Weighted-average
exercise price $22.16 $44.91 $55.65
=================================================================================
</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 4.87 percent to 6.44 percent,
dividend yield of 1.25 percent, expected volatility of .22, and an expected life
of 6-1/2 years.
<PAGE> 9
Pro forma information follows:
<TABLE>
<CAPTION>
1998 1997
============================================================
(In thousands except for per share amounts)
<S> <C> <C>
Net income:
As reported $20,825 $49,967
Pro forma $18,335 $47,789
Diluted earnings per share:
As reported $ 1.25 $ 2.85
Pro forma $ 1.10 $ 2.72
Weighted-average fair value of options
granted during the year $ 14.98 $ 18.49
============================================================
</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 1998, 1997 and 1996.
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 2,458,000 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 1998, there were 3,200 restricted shares granted at a weighted average
fair value of $50.01 per share (6,550 and $55.46 in 1997 and 4,100 and $59.05 in
1996). Net amortization was $303,000 in 1998 ($325,000 in 1997 and $272,000 in
1996).
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 1998, 1997 and 1996.
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.
ESOP compensation expense was a charge of $685,000 in 1998 and $2,708,000 in
1996. In 1997, there was a net credit of $1,277,000 against ESOP compensation
expense due to an accrual reduction to reflect actual amounts contributed.
Contributions to the plan were $-0-, $962,000 and $2,269,000 in 1998, 1997 and
1996, respectively. The number of allocated ESOP shares outstanding was 443,000
at November 1, 1998 and 465,000 at November 2, 1997.
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 1, 1998, there were
41,088,000 shares reserved for future issuance through
the exercise of outstanding options or rights, including 37,812,000 shares under
the shareholder rights plan.
<PAGE> 10
NOTE 15 -- SUPPLEMENTAL INFORMATION FOR THE
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1998 1997 1996
====================================================================
(In thousands)
<S> <C> <C> <C>
Cash operating activities:
Interest paid $ 9,692 $ 7,126 $ 6,055
Income taxes paid 18,673 25,233 31,993
====================================================================
Noncash investing and
financing activities:
Capitalized lease
obligations incurred $ 5,822 $ 4,680 $ 5,904
Capitalized lease
obligations terminated 1,018 1,325 928
Shares acquired and
issued through exercise
of stock options 2,623 7,091 2,322
====================================================================
Noncash assets and liabilities
of businesses acquired:
Working capital $ (897) $ 252 $ 2,018
Property, plant and
equipment 2,232 -- 1,668
Intangibles and other 41,254 741 35,870
Long-term debt and
other liabilities (5,568) -- (442)
- --------------------------------------------------------------------
$ 37,021 $ 993 $ 39,114
====================================================================
</TABLE>
NOTE 16 -- QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER FIRST SECOND THIRD FOURTH
=================================================================
(In thousands except for per share amounts)
<S> <C> <C> <C> <C>
1998:
Sales $139,226 $167,814 $167,171 $186,689
Cost of sales 60,609 81,930 73,241 87,891
Net income 5,019 546 13,775 1,485
Earnings per share:
Basic $.30 $.03 $.84 $ .09
Diluted .30 .03 .84 .09
Diluted before
non-recurring
charges .30 .65 .84 1.07
=================================================================
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:
Basic $.53 $.51 $.71 $1.16
Diluted .52 .50 .70 1.14
=================================================================
</TABLE>
Domestic operations report results using four 13-week quarters. International
subsidiaries report results using calendar quarters.
In the second quarter of 1998, the Company recognized non-recurring pre-tax
charges of $15.7 million ($10.3 million after-tax) of which $5.9 million was
charged to cost of sales. In the fourth quarter of 1998, the Company recognized
non-recurring pre-tax charges of $17.3 million ($16.3 million after-tax) of
which $1.0 million was charged to cost of sales. For further information, refer
to Note 3 -- Non-recurring charges.
Estimates used in the preparation of financial statements are reevaluated
frequently, and changes in estimates are recorded throughout the year.
Significant changes in estimates increased net income in the first quarter of
1997 by $949,000 ($.05 per share) from a reduction in the Company's estimated
ESOP obligation, and in the fourth quarter of 1997 by $428,000 ($.02 per share)
reflecting prior year tax benefits and a property insurance gain, offset by a
pension obligation charge.
NOTE 17 -- 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 1998, 1997 or
1996.
Export sales for 1998 were $155,095,000, ($166,324,000 in 1997 and $181,179,000
in 1996) and were principally made to foreign subsidiaries.
<PAGE> 11
The following table summarizes the Company's operations within geographic areas:
<TABLE>
<CAPTION>
1998 1997 1996
=========================================================================
(In thousands)
<S> <C> <C> <C>
Sales to unaffiliated
customers:
United States $ 273,924 $ 249,818 $ 221,588
Europe 251,539 226,344 229,301
Japan 63,378 80,718 86,208
Other* 72,059 79,830 72,347
- -------------------------------------------------------------------------
660,900 636,710 609,444
Transfers between geographic areas:
United States 125,381 128,095 145,612
Europe 18,590 16,037 11,916
Japan 274 369 141
Other* 509 1,138 1,038
Eliminations (144,754) (145,639) (158,707)
- -------------------------------------------------------------------------
Total sales $ 660,900 $ 636,710 $ 609,444
=========================================================================
Operating profit:
United States $ 55,647 $ 57,291 $ 74,948
Europe 38,873 31,786 20,675
Japan 4,417 11,506 14,973
Other* (1,624) 3,783 3,822
Eliminations 1,154 1,648 1,268
- -------------------------------------------------------------------------
Geographic
operating profit 98,467 106,014 115,686
General corporate
expenses (53,396) (31,955) (31,425)
Other expense (6,144) (2,314) (3,200)
- -------------------------------------------------------------------------
Income before
income taxes $ 38,927 $ 71,745 $ 81,061
=========================================================================
Identifiable assets:
United States $ 301,783 $ 265,354 $ 253,510
Europe 167,017 157,729 162,399
Japan 39,715 52,583 56,301
Other* 42,816 44,169 42,829
Corporate 8,426 8,421 15,838
Eliminations (20,813) (25,260) (20,384)
- -------------------------------------------------------------------------
Total assets $ 538,944 $ 502,996 $ 510,493
=========================================================================
* Includes Canada, Latin America and the Pacific Rim.
</TABLE>
<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 1, 1998 and November 2, 1997, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended November 1, 1998. 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 1, 1998 and November 2, 1997, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended November 1, 1998 in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
December 8, 1998
<PAGE> 1
Exhibit 13-h
ELEVEN-YEAR SUMMARY
<TABLE>
<CAPTION>
1998(e) 1997 1996
===========================================================================================================================
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C>
OPERATING DATA (a)
Sales $660,900 636,710 609,444
- ---------------------------------------------------------------------------------------------------------------------------
Cost of sales $303,671(d) 276,425 255,095
% of sales 46 43 42
- ---------------------------------------------------------------------------------------------------------------------------
Selling and administrative expenses $286,120 286,226 270,088
% of sales 43 45 44
- ---------------------------------------------------------------------------------------------------------------------------
Operating profit $ 45,071(d) 74,059 84,261
% of sales 7 12 14
- ---------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes and non-recurring charges $ 47,440 49,967 53,071
% of sale 7 8 9
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 20,825 49,967 53,071
% of sales 3 8 9
===========================================================================================================================
FINANCIAL DATA (a)
Working capital $121,394 139,152 110,486
- ---------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment and other non-current assets $210,468 184,181 192,791
- ---------------------------------------------------------------------------------------------------------------------------
Total invested capital $331,862 323,333 303,277
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $538,944 502,996 510,493
- ---------------------------------------------------------------------------------------------------------------------------
Long-term obligations $117,087 102,788 57,980
- ---------------------------------------------------------------------------------------------------------------------------
Shareholders' equity $214,775 220,545 245,297
- ---------------------------------------------------------------------------------------------------------------------------
Return on average invested capital-- % (b) 16 18 20
- ---------------------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity-- % (c) 22 22 23
===========================================================================================================================
PER SHARE DATA (a)
Basic earnings per share:
Income before cumulative effect of accounting changes and non-recurring charges $ 2.87 2.89 2.97
Net income $ 1.26 2.89 2.97
Diluted earnings per share:
Income before cumulative effect of accounting changes and non-recurring charges $ 2.85 2.85 2.92
Net income $ 1.25 2.85 2.92
- ---------------------------------------------------------------------------------------------------------------------------
Dividends per common share $ .88 .80 .72
- ---------------------------------------------------------------------------------------------------------------------------
Book value per common share $12.83 13.10 13.91
- ---------------------------------------------------------------------------------------------------------------------------
Common shares 16,542 17,276 17,869
- ---------------------------------------------------------------------------------------------------------------------------
Common shares and common share equivalents (000s) 16,661 17,553 18,204
===========================================================================================================================
</TABLE>
(a) See accompanying Notes to Consolidated Financial Statements.
(b) Income before cumulative effect of accounting changes and non-recurring
charges 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 and non-recurring
charges, as a percentage of shareholders' equity.
<PAGE> 2
ELEVEN-YEAR SUMMARY
<TABLE>
<CAPTION>
1995 1994 1993(f)
=================================================================================================================================
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C>
OPERATING DATA (a)
Sales 581,444 506,692 461,557
- ---------------------------------------------------------------------------------------------------------------------------------
Cost of sales 245,587 212,866 191,575
% of sales 42 42 42
- ---------------------------------------------------------------------------------------------------------------------------------
Selling and administrative expenses 251,913 219,422 202,608
% of sales 43 43 44
- ---------------------------------------------------------------------------------------------------------------------------------
Operating profit 83,944 74,404 67,374
% of sales 14 15 15
- ---------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes and non-recurring charges 52,676 46,654 40,775
% of sale 9 9 9
- ---------------------------------------------------------------------------------------------------------------------------------
Net income 52,676 46,654 35,991
% of sales 9 9 8
=================================================================================================================================
FINANCIAL DATA (a)
Working capital 130,562 126,996 125,391
- ---------------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment and other non-current assets 148,769 130,637 116,298
- ---------------------------------------------------------------------------------------------------------------------------------
Total invested capital 279,331 257,633 241,689
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 434,710 380,944 357,970
- ---------------------------------------------------------------------------------------------------------------------------------
Long-term obligations 48,001 45,209 45,284
- ---------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity 231,330 212,424 196,405
- ---------------------------------------------------------------------------------------------------------------------------------
Return on average invested capital-- % (b) 21 20 19
- ---------------------------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity-- % (c) 24 24 23
=================================================================================================================================
PER SHARE DATA (a)
Basic earnings per share:
Income before cumulative effect of accounting changes and non-recurring charges 2.89 2.51 2.17
Net income 2.89 2.51 1.92
Diluted earnings per share:
Income before cumulative effect of accounting changes and non-recurring charges 2.84 2.45 2.13
Net income 2.84 2.45 1.88
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends per common share .64 .56 .48
- ---------------------------------------------------------------------------------------------------------------------------------
Book value per common share 12.85 11.55 10.49
- ---------------------------------------------------------------------------------------------------------------------------------
Common shares 18,219 18,623 18,751
- ---------------------------------------------------------------------------------------------------------------------------------
Common shares and common share equivalents (000s) 18,577 19,067 19,184
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1992 1991 1990
==================================================================================================================================
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C>
OPERATING DATA (a)
Sales 425,618 387,962 344,904
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of sales 168,437 158,885 154,653
% of sales 40 41 45
- ----------------------------------------------------------------------------------------------------------------------------------
Selling and administrative expenses 189,887 170,814 140,450
% of sales 45 44 41
- ----------------------------------------------------------------------------------------------------------------------------------
Operating profit 67,294 58,263 49,801
% of sales 16 15 14
- ----------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes and non-recurring charges 39,537 33,787 29,346
% of sale 9 9 9
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 39,537 33,787 29,346
% of sales 9 9 9
==================================================================================================================================
FINANCIAL DATA (a)
Working capital 105,138 87,004 66,093
- ----------------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment and other non-current assets 114,461 103,015 95,599
- ----------------------------------------------------------------------------------------------------------------------------------
Total invested capital 219,599 190,019 161,692
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets 346,297 296,930 269,523
- ----------------------------------------------------------------------------------------------------------------------------------
Long-term obligations 41,879 37,305 31,318
- ----------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity 177,720 152,714 130,374
- ----------------------------------------------------------------------------------------------------------------------------------
Return on average invested capital-- % (b) 20 21 21
- ----------------------------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity-- % (c) 24 25 25
==================================================================================================================================
PER SHARE DATA (a)
Basic earnings per share:
Income before cumulative effect of accounting changes and non-recurring charges 2.10 1.80 1.56
Net income 2.10 1.80 1.56
Diluted earnings per share:
Income before cumulative effect of accounting changes and non-recurring charges 2.03 1.77 1.52
Net income 2.03 1.77 1.52
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends per common share .44 .40 .36
- ----------------------------------------------------------------------------------------------------------------------------------
Book value per common share 9.48 8.14 6.94
- ----------------------------------------------------------------------------------------------------------------------------------
Common shares 18,828 18,730 18,846
- ----------------------------------------------------------------------------------------------------------------------------------
Common shares and common share equivalents (000s) 19,471 19,093 19,266
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1989 1988
================================================================================================================
(In thousands of dollars except for per share amounts)
<S> <C> <C>
OPERATING DATA (a)
Sales 282,098 245,028
- ----------------------------------------------------------------------------------------------------------------
Cost of sales 116,588 96,771
% of sales 41 40
- ----------------------------------------------------------------------------------------------------------------
Selling and administrative expenses 112,716 99,039
% of sales 40 40
- ----------------------------------------------------------------------------------------------------------------
Operating profit 52,794 49,218
% of sales 19 20
- ----------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes and non-recurring charges 34,187 31,583
% of sale 12 13
- ----------------------------------------------------------------------------------------------------------------
Net income 34,187 31,583
% of sales 12 13
================================================================================================================
FINANCIAL DATA (a)
Working capital 53,834 64,040
- ----------------------------------------------------------------------------------------------------------------
Net property, plant and equipment and other non-current assets 79,383 43,075
- ----------------------------------------------------------------------------------------------------------------
Total invested capital 133,217 107,115
- ----------------------------------------------------------------------------------------------------------------
Total assets 235,551 162,912
- ----------------------------------------------------------------------------------------------------------------
Long-term obligations 26,299 18,006
- ----------------------------------------------------------------------------------------------------------------
Shareholders' equity 106,918 89,109
- ----------------------------------------------------------------------------------------------------------------
Return on average invested capital-- % (b) 29 29
- ----------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity-- % (c) 35 33
================================================================================================================
PER SHARE DATA (a)
Basic earnings per share:
Income before cumulative effect of accounting changes and non-recurring charges 1.80 1.58
Net income 1.80 1.58
Diluted earnings per share:
Income before cumulative effect of accounting changes and non-recurring charges 1.76 1.55
Net income 1.76 1.55
- ----------------------------------------------------------------------------------------------------------------
Dividends per common share .32 .28
- ----------------------------------------------------------------------------------------------------------------
Book value per common share 5.69 4.66
- ----------------------------------------------------------------------------------------------------------------
Common shares 18,964 19,980
- ----------------------------------------------------------------------------------------------------------------
Common shares and common share equivalents (000s) 19,386 20,340
================================================================================================================
</TABLE>
(d) Cost of sales includes non-recurring charges related to inventory
valuations of $6.9 million. Operating profit also includes non-recurring
charges recorded below selling and administrative expenses and consists of
$14.3 million for the portion of the purchase price paid for J&M
Laboratories, Inc. attributable to in-process research and development;
$9.8 million for an early retirement program, involuntary severances and
fixed-asset write-downs; and $2.0 million for costs associated with the
consolidation of European operations.
(e) In 1998, the Company adopted Statements of Financial Accounting Standards
No. 128, "Earnings Per Share." Prior years have been restated.
(f) 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.
<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 1998 and 1997.
The price-earnings ratios reflect average market prices relative to trailing
four-quarter earnings before non-recurring charges.
<TABLE>
<CAPTION>
COMMON STOCK PRICE PRICE-
FISCAL DIVIDEND ------------------ EARNINGS
QUARTERS PAID HIGH LOW RATIO
==================================================
<S> <C> <C> <C> <C>
1998:
First $ .22 $53.50 $44.38 18.5
Second .22 51.875 44.25 17.2
Third .22 52.375 43.25 16.3
Fourth .22 52.00 42.25 16.5
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
</TABLE>
MARKET MAKERS AND RESEARCH FIRMS
The following firms make a market (M) in Nordson Corporation stock and/or
provide research data (R) on Nordson Corporation:
ABN AMRO, Inc. (R)
Barrington Research Assoc. (R)
Knight Securities L.P. (M)
McDonald Investments, Inc. (M) (R)
Parker/Hunter (R)
Robinson-Humphrey, LLC (M) (R)
Salomon Smith Barney, Inc. (M)
Sherwood Securities Corp. (M)
Standard & Poors Corp. (R)
Troster Singer Corp. (M)
Value Line, Inc. (R)
STOCK LISTING INFORMATION
Nordson stock is traded on The Nasdaq Stock Market's National Market under the
symbol NDSN.
TRANSFER AGENT AND REGISTRAR
National City Bank
Corporate Trust Operations
P.O. Box 92301
Cleveland, Ohio 44193-0900
(800)622-6757
ANNUAL SHAREHOLDERS' MEETING
Date: March 11, 1999
Time: 5:30 p.m.
Place: Spitzer Conference Center
1005 North Abbe Road
Elyria, Ohio
DIVIDEND REINVESTMENT PROGRAM
Nordson offers a Dividend Reinvestment Program that gives shareholders the
opportunity to automatically reinvest dividends in the company's common stock.
The program also allows cash contributions in increments of $10 up to $4,000 per
quarter to purchase additional Nordson common shares. For details about this
program, please contact National City Bank at the location listed above.
DIRECT DEPOSIT OF DIVIDENDS
Nordson also offers shareholders the option of electronically depositing
quarterly dividends into a checking or savings account free of charge. For
information about this service, please contact National City Bank.
INTERNET
You can visit Nordson on the Internet at the following address:
www.nordson.com
ADDITIONAL INFORMATION
Copies of Nordson Corporation's Annual Report to the Securities and Exchange
Commission (Form 10-K), quarterly reports and proxy statement are available
without charge to shareholders. Send written requests to Barbara Price, Manager,
Shareholder Relations, Nordson Corporation, 28601 Clemens Road, Westlake, Ohio
44145. Telephone: (440)414-5344; facsimile: (440)892-9507.
<PAGE> 1
Exhibit 21
NORDSON CORPORATION
SUBSIDIARIES OF THE REGISTRANT
The following table sets forth the subsidiaries of the
Registrant (each of which is included in the Registrant's consolidated financial
statements), and the jurisdiction under the laws of which each subsidiary was
organized.
<TABLE>
Jurisdiction of
Incorporation Name
--------------- ----
<S> <C>
INTERNATIONAL:
Australia Nordson Australia Pty. Limited
Austria Nordson GmbH
Belgium Nordson Benelux S.A./N.V. (1)
Brazil Nordson do Brasil Industria
E.Comercio Ltda.
Canada Nordson Canada Limited
China Nordson (China) Co. Ltd.
Colombia Nordson Andina Limitada
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 (2)
Germany Nordson Engineering GmbH
Germany Nordson Euro Trading GmbH (3)
Hong Kong Nordson Application Equipment, Inc.
India Nordson India Private Limited
Italy Nordson Italia SpA
Japan Nordson K.K.
Japan Nordson Engineering K.K.
Malaysia Nordson (Malaysia) Sdn. Bhd.
Mexico Nordson de Mexico, S.A. de C.V.
The Netherlands Nordson Benelux B.V. (4)
The Netherlands Nordson Technology B.V. (5)
The Netherlands Nordson European Distribution B.V.
The Netherlands Nordson 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.
Spain Nordson Iberica, S.A.
Sweden Nordson Sverige AB
Switzerland Nordson (Schweiz) A.G. (6)
Taiwan Nordson Pacific, Inc. -
Representative Office
Thailand Nordson (Thailand) Limited
United Kingdom Nordson (U.K.) Limited
United Kingdom Spectral Technology Group Limited
</TABLE>
<PAGE> 2
INTERNATIONAL LOCATIONS (cont.)
<TABLE>
Jurisdiction of
Incorporation Name
--------------- ----
<S> <C>
United Kingdom A.C.T. Spectral, Ltd. (7)
US Virgin Islands Nordson FSC, Inc.
Venezuela Nordson International de Venezuela,
C.A.
Vietnam Nordson Pacific, Inc. -
Representative Office
DOMESTIC
--------
Alabama Nordson Corporation
California Asymptotic Technologies, Inc. (8)
California Slautterback Corporation
California Mountaingate Engineering, Inc.
California Heron Technology, Inc. (9)
Connecticut Electrostatic Technology, Inc.
Delaware Lambda Technologies, Inc. (10)
Georgia J and M Laboratories, Inc.
Ohio Nordson Pacific, Inc.
Ohio Nordson U.S. Trading Company
Ohio A.C.T. Spectral Inc.
</TABLE>
( 1) Formerly known as Nordson Belgium N.V.
( 2) Owned by Nordson Engineering GmbH and Nordson Corporation
( 3) Owned by Nordson Engineering GmbH
( 4) A 65% owned joint venture
( 4) Formerly known as Nordson Nederland B.V.
( 5) Formerly known as Nordson Walcom B.V.
( 6) Owned by Nordson Benelux S.A./N.V.
( 7) Owned by Spectral Technology Group Limited
( 8) Doing business as Asymtek
( 9) Owned by Mountaingate Technology, Inc.
(10) Acquired an equity interest in this Company by purchasing 307,692 shares
of Series "D" Preferred Stock with an option to purchase an additional
153,846 shares. Lambda Technologies, Inc. is located in Raleigh, North
Carolina
<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 8, 1998,
included in the Annual Report to Shareholders of Nordson Corporation for the
year ended November 1, 1998.
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 8, 1998, 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 1, 1998:
- 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 27, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-01-1998
<PERIOD-END> NOV-01-1998
<CASH> 6,820
<SECURITIES> 30
<RECEIVABLES> 165,286
<ALLOWANCES> 2,986
<INVENTORY> 124,352
<CURRENT-ASSETS> 328,476
<PP&E> 224,035
<DEPRECIATION> 122,852
<TOTAL-ASSETS> 538,944
<CURRENT-LIABILITIES> 207,082
<BONDS> 0
12,253
0
<COMMON> 0
<OTHER-SE> 202,522
<TOTAL-LIABILITY-AND-EQUITY> 538,944
<SALES> 660,900
<TOTAL-REVENUES> 660,900
<CGS> 303,671
<TOTAL-COSTS> 303,671
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,022
<INTEREST-EXPENSE> 9,647
<INCOME-PRETAX> 38,927
<INCOME-TAX> 18,102
<INCOME-CONTINUING> 20,825
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,825
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.25
</TABLE>
<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> 2.89
<EPS-DILUTED> 2.85
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-03-1996
<PERIOD-END> NOV-03-1996
<CASH> 9,221
<SECURITIES> 310
<RECEIVABLES> 159,573
<ALLOWANCES> 3,573
<INVENTORY> 118,388
<CURRENT-ASSETS> 317,702
<PP&E> 207,080
<DEPRECIATION> 100,162
<TOTAL-ASSETS> 510,493
<CURRENT-LIABILITIES> 207,216
<BONDS> 0
12,253
0
<COMMON> 0
<OTHER-SE> 233,044
<TOTAL-LIABILITY-AND-EQUITY> 510,493
<SALES> 609,444
<TOTAL-REVENUES> 609,444
<CGS> 255,095
<TOTAL-COSTS> 255,095
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,782
<INTEREST-EXPENSE> 5,955
<INCOME-PRETAX> 81,061
<INCOME-TAX> 27,990
<INCOME-CONTINUING> 53,071
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,071
<EPS-PRIMARY> 2.97
<EPS-DILUTED> 2.92
</TABLE>
<PAGE> 1
Exhibit 99-a
For the purposes of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned
Registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into Registrant's Registration Statements on Form S-8 Nos. 33-32201
(1989 Stock Option Plan); 2-82915 and 33-18279 (1982 Incentive Stock Option
Plan); 33-20452 (1988 Employees Stock Purchase Plan); 33-20451 (1988
International Employees Stock Purchase Plan); 33-18309 (Employees Savings Trust
Plan); and 33-33481 (Hourly-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, 1998
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 29, 1999
<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, 1998
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 29, 1999
