<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 October 31, 1999
------------------
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.
$621,837,000 as of December 31, 1999
- ------------------------------------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
16,325,784 Common Shares as of December 31, 1999
- ------------------------------------------------
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 1999 Annual Report - Parts I, II and IV
-------------------------------------------------------
Portions of the Proxy Statement for the 2000 Annual Meeting - Part III
----------------------------------------------------------------------
<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 automated systems that apply adhesives, sealants and
coatings to a broad range of consumer and industrial products during
manufacturing operations, helping customers meet quality, productivity and
environmental targets. The Company also manufactures technology-based systems
for curing and surface treatment processes.
Nordson products are used in a diverse range of end markets including:
food and beverage, pharmaceuticals, electronic components, appliances,
disposable nonwoven products, telecommunications, home and office furniture and
automotive assembly.
The Company's consistent growth is based on a customer-driven strategy
that is global in scope. Headquartered in Westlake, Ohio, Nordson markets its
products through a network of direct operations in 32 countries throughout North
America, Europe, Japan, Asia, Latin America and Australia. Consistent with this
strategy, more than 50 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, New
Jersey, Florida, Germany, The Netherlands, and the United Kingdom.
Corporate Purpose and Goals
- ---------------------------
Nordson Corporation strives to be a vital, self-renewing, worldwide
organization which, within the framework of ethical behavior and enlightened
citizenship, grows and produces wealth for its customers, employees,
shareholders, and communities.
Nordson operates for the purpose of creating balanced, long-term
benefits for all of our constituencies: customers, employees, shareholders and
communities.
Our corporate goal for growth is to double the value of the Company
over a five-year period, with the primary measure of value set by the market for
Company shares.
While external factors may impact value, the achievement of this goal
will rest with earnings growth, capital and human resource efficiency, and
positioning for the future.
Nordson does not expect every quarter to produce increased sales,
earnings and earnings per share, or to exceed the comparative prior year's
quarter. We do expect to produce long-term gains. When short-term swings occur,
we do not intend to alter our basic objectives in efforts to mitigate the impact
of these natural occurrences.
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Growth is achieved by seizing opportunities with existing products and
markets, investing in systems to maximize productivity, and pursuing growth
markets. This strategy is augmented through product line additions, engineering,
research and development, and acquisition of companies that can serve
multinational industrial markets.
We create benefits for our customers through a Package of Values(TM),
which includes carefully engineered, durable products; strong service support;
the backing of a well-established worldwide company with financial and technical
strengths; and a corporate commitment to deliver what was promised.
We strive to provide genuine customer satisfaction; it is the
foundation upon which we continue to build our business.
Complementing our business strategy is the objective to provide
opportunities for employee self-fulfillment, growth, security, recognition and
equitable compensation.
This goal is met through employee training and the creation of
on-the-job growth opportunities. The result is a highly qualified and
professional management team capable of meeting corporate objectives.
We recognize the value of employee participation in the planning
process. Strategic and operating plans are developed by all business units and
divisions, resulting in a sense of ownership and commitment on the part of
employees in accomplishing company objectives.
Nordson Corporation is an equal opportunity employer.
Nordson is committed to contributing an average of 5 percent of
domestic pretax earnings to human services, health, education and other
charitable activities, particularly in communities where the Company has major
facilities.
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FINANCIAL INFORMATION ABOUT OPERATING SEGMENT,
----------------------------------------------
FOREIGN AND DOMESTIC OPERATIONS, AND EXPORT SALES
-------------------------------------------------
In accordance with Statement of Financial Accounting Standards No. 131,
"Disclosure about Segments of an Enterprise and Related Information", Nordson
has reported information about the Company's four geographic operating segments.
This information is contained in Note 16 (pages 39-40) of the 1999 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 and many high-performance
compounds. Nordson also produces technology-based systems for curing and surface
treatment processes. Equipment ranges from manual, stand-alone units for
low-volume operations to microprocessor-based automated systems for high-speed,
high-volume production lines.
A summary of the Company's various products and examples of their uses
are as follows:
Adhesive Dispensing and Nonwoven Fiber Systems
- ----------------------------------------------
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 window glass, body panels and structural components used in
automobiles.
Coating and Finishing Systems
- -----------------------------
Powder Coating - Electrostatic spray systems for applying
powder paints and coatings to plastic, metal and wood products.
Liquid Finishing - Automated and manual spray systems for
applying liquid paints and coatings to plastic, metal and wood products.
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Container - Automated systems for dispensing and curing liquid
and powder coatings that are used in the manufacturing of metal, plastic and
other containers.
Advanced Technology Systems
- ---------------------------
Electronics - 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. Automated
systems for applying protective conformal coatings, solder fluxes and adhesive
materials to printed circuit boards and electronic assemblies.
UV Curing - Ultraviolet and infrared automated drying and
curing systems for graphic arts, finishing and product assembly operations.
Gas Plasma Treatment - Automated systems that use gas plasma
technology to modify surfaces and clean components during manufacturing
processes in the medical, electronics and printed circuit board industries.
Nordson markets its products in the United States and fifty-six other countries,
primarily through a direct sales force and also through qualified distributors.
Nordson has built a worldwide reputation for its creativity and expertise in the
design and engineering of high-technology application equipment which meets the
specific needs of its customers.
Manufacturing and Raw Materials
- -------------------------------
Nordson's production operations include machining and assembly. The
Company finishes specially designed parts and assembles components into finished
equipment. Many components are made in standard modules that can be used in more
than one product or in combination with other components for a variety of
models. The Company has principal manufacturing operations in Amherst, and
Elyria, Ohio; Norcross and Dawsonville, Georgia; Talladega, Alabama; Carlsbad,
Concord and Monterey, California; Branford, Connecticut; St. Petersburg,
Florida; Fairfield and Phillipsburg, New Jersey; Luneburg, Germany; Maastricht,
The Netherlands; and Slough, U.K.
Principal materials used to make Nordson products are metals and
plastics, typically in sheets, bar stock, castings, forgings, and tubing.
Nordson also purchases many electrical and electronic components, fabricated
metal parts, high-pressure fluid hoses, packings, seals and other items integral
to its products. Suppliers are competitively selected based on cost and quality.
Virtually all raw materials Nordson uses are available through multiple sources.
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An extensive quality control program for Nordson equipment, machinery
and systems is supervised by Nordson's vice president of manufacturing.
Natural gas and other fuels are primary energy sources for Nordson.
However, standby capacity for alternative sources is available if needed.
Patents and Trademarks
- ----------------------
The Company maintains procedures to protect patents and trademarks both
domestically and internationally. However, Nordson's business is not materially
dependent upon any one or more of the patents, or on patent protection in
general.
Seasonal Variation in Business
- ------------------------------
There is no significant seasonal variation in the Company's business.
Working Capital Practices
- -------------------------
No special or unusual practices affect Nordson's working capital.
However, the Company generally requires substantial advance payments as deposits
on customized equipment and systems and, in certain cases, requires progress
payments during the manufacturing of these products. The Company maintains a
relatively high investment in inventory to ensure products are available to
customers when ordered. This investment reflects Nordson's commitment to
customer service, part of its Package of Values (TM).
Customers
- ---------
The Company serves a broad customer base, both in terms of industries
and geographic regions. The loss of a single or few customers would not have a
material adverse effect on the Company's business. In 1999, no single customer
accounted for 5 percent or more of sales.
Backlog
- -------
The Company's backlog of orders decreased to $60.2 million at October
31, 1999 from $79.3 million at November 1, 1998. All orders in the November 1999
backlog are expected to be shipped to customers in fiscal 2000.
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.
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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.
Research and Development
- ------------------------
Investments in research and development are important to Nordson's
long-term growth because they enable the Company to keep pace with changing
customer and marketplace needs, and they help to sustain sales improvements year
after year. The Company places strong emphasis on technology developments and
improvements through its internal engineering and research teams. Research and
development expenses were approximately $29,672,000 in fiscal 1999, compared
with approximately $42,640,000 in fiscal 1998 and $29,812,000 in fiscal 1997.
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 ranged between 4 to 5 percent in fiscal 1999, 1998 and 1997.
Environmental Compliance
- ------------------------
Compliance with federal, state and local environmental protection laws
during fiscal 1999 had no material effect on the Company's capital expenditures,
earnings, or competitive position. The Company also does not anticipate a
material effect in 2000.
Employees
- ---------
As of October 31, 1999, Nordson had 4,154 employees, including all
full-time and part-time employees.
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<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
Duluth, Georgia An office and laboratory 108,000
building (leased)
Carlsbad, Two manufacturing and office 88,000
California buildings (leased)
Dawsonville, A manufacturing, laboratory 80,000
Georgia and office 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)
Monterey, A manufacturing, laboratory 63,000
California and office building (leased)
Concord, A manufacturing and office 28,000
California building (leased)
Talladega, A manufacturing and office 27,000
Alabama building (leased)
St. Petersburg, A manufacturing and office 26,000
Florida building (leased)
Elyria, Ohio A manufacturing and warehouse 19,000
building
Luneburg, A manufacturing, laboratory 130,000
Germany and office complex
Erkrath, An office, laboratory and 63,000
Germany warehouse (leased)
</TABLE>
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<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
Bangalore, An office and warehouse 16,000
India building
Xirivella, An office and warehouse 16,000
Spain building
Stenungsund, A manufacturing and office 15,000
Sweden building
</TABLE>
Several of these properties are pledged as security for
industrial revenue bonds and mortgage notes payable.
For a description of operating segments which correspond to the
geographic location of the properties listed above, refer to Note 16 of Notes to
Consolidated Financial Statements on page 39 of the 1999 Annual Report,
incorporated herein by reference thereto.
Other properties at international subsidiary locations and at
branch locations within the United States are leased. Lease terms do not exceed
25 years and generally contain a provision for cancellation with some penalty at
an earlier date.
In addition, the Company leases equipment under various
operating and capitalized leases. Information about leases is reported in Note 8
of Notes to Consolidated Financial Statements on page 34 of the 1999 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, 1999 were as
follows:
Served Position or Office With
As The Company and Business
Officer Experience During the Past
Name Since Five (5) Year Period
- ---------------------- ------ --------------------------
Edward P. Campbell 1988 President and Chief Executive
Age 50 Officer, 1997.
President and Chief Operating
Officer, 1996.
Executive Vice President and Chief
Operating Officer, 1994.
Vice President, 1988.
Donald J. McLane 1986 Senior Vice President, 1999.
Age 56 Vice President, 1986.
Drexel R. Bunch 1986 Vice President, Manufacturing, 1986.
Age 55
Raymond L. Cushing 1995 Treasurer, 1995.
Age 45 Assistant Treasurer, 1990.
Robert A. Dunn, Jr. 1997 Vice President, 1997.
Age 52 General Manager-Automotive Systems,
1987.
Bruce H. Fields 1992 Vice President, Human Resources, 1992.
Age 48
Mark G. Gacka 1998 Vice President, 1998.
Age 45 Vice President, Container Systems Group/
General Manager, Electronics Business
Group, 1992.
William D. Ginn 1966 Secretary, 1966.
Age 76
Michael Groos 1995 Vice President, 1995.
Age 48 General Manager, Central Region,
European Division, 1990.
Dr. Richard G. Klein 1986 Vice President, Corporate Research
Age 57 & Technology, 1986.
Nicholas D. Pellecchia 1986 Vice President, Finance and
Age 54 Controller, 1986.
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PART II
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Item 5. Market for the Company's Common Equity and Related Stockholder Matters.
- ------- -----------------------------------------------------------------------
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 46 of the 1999 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, 1999 was as follows:
Number of
Title of Class Record Holders
-------------- --------------
Common shares with no 2,675
par value
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 42 and 43 of the 1999 Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations.
----------------------
The Company incorporates herein by reference the information
appearing under the caption "Management's Discussion and Analysis" on pages 20
through 24 of the 1999 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 20
through 24 of the 1999 Annual Report and Note 11 on page 36 of the 1999 Annual
Report.
Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------
The information required by this item appears on pages 25
through 41 of the 1999 Annual Report, incorporated herein by reference thereto.
Item 9. Changes In and Disagreements With Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure.
---------------------
None.
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PART III
--------
Item 10. Directors and Executive Officers of the Company.
- -------- ------------------------------------------------
The Company incorporates herein by reference the information
appearing under the caption "Election of Directors" on pages 2 through 5 of the
Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission by January 28, 2000.
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 page 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 28, 2000.
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 28, 2000.
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 28, 2000.
William D. Ginn, a director and Secretary of the Company, is Of
Counsel to Thompson Hine & Flory LLP, a law firm which has in the past provided
and continues to provide legal services to the Company.
Messrs. Eric T. Nord and Evan W. Nord, directors of the Company,
are brothers.
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PART IV
-------
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 28, 2000 By: /s/ Nicholas D. Pellecchia
-------------------------------
Nicholas D. Pellecchia
Vice President, Finance
and Controller
13
<PAGE> 14
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
/s/ William P. Madar January 28, 2000
- ----------------------------
William P. Madar
Director and Chairman of the Board
/s/ Edward P. Campbell January 28, 2000
- ---------------------------
Edward P. Campbell
Director, President and Chief Executive Officer
(Principal Executive Officer)
/s/ Nicholas D. Pellecchia January 28, 2000
- ----------------------------
Nicholas D. Pellecchia
Vice President,Finance and Controller
(Principal Accounting Officer and
Principal Financial Officer)
/s/ William D. Ginn January 28, 2000
- ----------------------------
William D. Ginn
Director and Secretary
/s/ Dr. Glenn R. Brown January 28, 2000
- ----------------------------
Dr. Glenn R. Brown
Director
/s/ William W. Colville January 28, 2000
- ----------------------------
William W. Colville
Director
/s/ Stephen R. Hardis January 28, 2000
- ----------------------------
Stephen R. Hardis
Director
/s/ Dr. Anne O. Krueger January 28, 2000
- ----------------------------
Dr. Anne O. Krueger
Director
/s/ Eric T. Nord January 28, 2000
- ----------------------------
Eric T. Nord
Director
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<PAGE> 15
/s/ Evan W. Nord January 28, 2000
- ----------------------------
Evan W. Nord
Director
/s/ William L. Robinson January 28, 2000
- ----------------------------
William L. Robinson
Director
/s/ Benedict P. Rosen January 28, 2000
- ----------------------------
Benedict P. Rosen
Director
15
<PAGE> 16
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 OCTOBER 31, 1999
16
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NORDSON CORPORATION
INDEX TO FINANCIAL STATEMENTS
(Item 14(a)(1))
Page Reference
--------------
Data incorporated by reference from
the 1999 Annual Report:
Consolidated statement of income for
the years ended October 31, 1999,
November 1, 1998 and November 2, 1997 25
Consolidated balance sheet as of
October 31, 1999 and November 1, 1998 26
Consolidated statement of cash flows
for the years ended October 31, 1999,
November 1, 1998 and November 2, 1997 27
Consolidated statement of shareholders'
equity for the years ended October 31,
1999, November 1, 1998 and November 2,
1997 28
Notes to consolidated financial statements 29-41
Report of independent auditors 41
The consolidated financial statements of the Registrant listed
in the preceding index, which are included in the 1999 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 1999
Annual Report is not to be deemed filed as part of this report.
17
<PAGE> 18
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
(3) Articles of Incorporation and By-Laws
3-a 1989 Amended Articles of Incorporation
3-b 1998 Amended Regulations
(incorporated herein by reference to Exhibit
3-b to Registrant's Annual Report on Form 10-K
for the year ended November 1, 1998)
(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*
10-b-1 Amendment to 1979 Employees Stock Option Plan of
the Registrant, adopted April 20, 1982*
18
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NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
10-b-2 Amendments to 1979 Employee Stock Option Plan of
the Registrant, adopted October 27, 1988
(incorporated herein by reference to Exhibit
10-b-2 to Registrant's Annual Report on Form
10-K for the year ended November 1, 1998)*
10-c 1982 Incentive Stock Option Plan of the
Registrant, as adopted January 18, 1982*
10-c-1 Amendment to 1982 Incentive Stock Option Plan
of the Registrant, adopted April 20, 1982*
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
(incorporated herein by reference to Exhibit
10-c-3 to Registrant's Annual Report on Form
10-K for the year ended November 1, 1998)*
10-e Board of Directors Deferred Compensation Plan, as
amended October 27, 1988*
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 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)*
19
<PAGE> 20
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
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)*
10-k Employment Agreement between the Registrant and
Edward P. Campbell (incorporated herein by
reference to Exhibit 10-k to Registrant's Annual
Report on Form 10-K for the year ended November
1, 1998)*
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)*
20
<PAGE> 21
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
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
(incorporated herein by reference to Exhibit
10-q to Registrant's Annual Report on Form 10-K
for the year ended November 1, 1998)
10-q-1 Employment Agreement (Change in Control) between
the Registrant and Edward P. Campbell
(incorporated herein by reference to Exhibit
10-q-1 to Registrant's Annual Report on Form
10-K for the year ended November 1, 1998)*
10-q-2 Form of Employment Agreement (Change in Control)
between the Registrant and Officers - excluding
Edward P. Campbell - (incorporated herein by
reference to Exhibit 10-q-2 to Registrant's
Annual Report on Form 10-K for the year ended
November 1, 1998)*
10-r Separation Agreement between the Registrant and
Christian C. Bernadotte*
10-s Separation Agreement between the Registrant and
John E. Jackson*
10-t Separation Agreement between the Registrant and
Thomas L. Moorhead*
(13) Selected portions of the 1999 Annual Report
13-a Management's Discussion and Analysis (pages 20
through 24 of the 1999 Annual Report)
13-b Consolidated Statement of Income (page 25
of the 1999 Annual Report)
13-c Consolidated Balance Sheet (page 26 of the
1999 Annual Report)
13-d Consolidated Statement of Cash Flows (page 27
of the 1999 Annual Report)
21
<PAGE> 22
NORDSON CORPORATION
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
Number Description
- ------ -----------
13-e Consolidated Statement of Shareholders'
Equity (page 28 of the 1999 Annual Report)
13-f Notes to Consolidated Financial Statements
(pages 29 through 41 of the 1999 Annual Report)
13-g Report of Independent Auditors (page 41 of
the 1999 Annual Report)
13-h Eleven-Year Summary (pages 42 and 43 of the
1999 Annual Report)
13-i Shareholder Information (page 46 of the 1999
Annual Report)
(21) Subsidiaries of the Registrant
(23) Consent of Independent Auditors
(27) Financial Data Schedules
27-a Period Ending October 31, 1999
27-b Period Ending November 1, 1998
27-c Period Ending November 2, 1997
(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, 1999
99-d Annual Report on Form 11-K of the Nordson
Hourly-Rated Employees' Savings Trust Plan for
its fiscal year ended December 31, 1999
*Indicates management contract or compensatory plan,
contract or arrangement in which one or more
directors and/or executive officers of Nordson
Corporation may be participants.
22
<PAGE> 1
Exhibit 3a
NORDSON CORPORATION
-------------------
1989
----
AMENDED ARTICLES OF INCORPORATION
---------------------------------
FIRST. The name of the Corporation is NORDSON CORPORATION.
SECOND. The place in the State of Ohio where its principal office
is located is the City of Amherst, in Lorain County.
THIRD. This Corporation operates for the purpose of creating
long-term benefits for all of its constituencies, including shareholders,
customers, employees, and the communities in which it exists. In furtherance
thereof, the Corporation is authorized:
(a) To manufacture, to purchase, lease, or otherwise acquire, to hold
and use, and to sell, lease, or otherwise dispose of, equipment, processes,
methods, articles, products, and supplies connected with or relating to the
application of thermoplastic adhesives used in packaging, product assembly, and
other industrial processes;
(b) To manufacture, to purchase, lease, or otherwise acquire, to hold
and use, and to sell, lease, or otherwise dispose of equipment, processes,
methods, articles, products, and supplies connected with or relating to the
spraying, extrusion, or other handling and application of paints and other
coating materials and substances;
(c) To manufacture, to purchase, lease, or otherwise acquire, to hold
and use, to sell, lease, or otherwise dispose of, and to deal in or with
personal property of any description and any interest therein;
(d) To purchase, lease, or otherwise acquire, to invest in, hold, use,
and encumber, and to sell, lease, exchange, transfer, or otherwise equip,
maintain, and operate structures and real property of any description and any
interest therein;
<PAGE> 2
(e) To borrow money, to issue, sell, and pledge its notes, bonds, and
other evidences of indebtedness, to secure any of its obligations by mortgage,
pledge, or deed of trust of all or any of its property, and to guarantee and
secure obligations of any person, all to the extent necessary, useful, or
conducive to carrying out any of the purposes of the Corporation;
(f) To invest its funds in any shares or other securities of another
corporation, business or undertaking or of a government, governmental authority,
or governmental subdivision; and
(g) To do whatever is deemed necessary, useful, or conducive to
carrying out any of the purposes of the Corporation and to engage in any lawful
activity for which corporations may be formed under the Ohio General Corporation
Law.
FOURTH. The authorized number of shares of the Corporation is
90,000,000, consisting of 10,000,000 Preferred Shares, without par value (the
"Preferred Shares"), and 80,000,000 Common Shares, without par value (the
"Common Shares").
DIVISION A Express Terms of Preferred Shares
1. PREFERRED SHARES. With respect to the Preferred Shares, the
Directors, without any further action by the shareholders, may, at any time and
from time to time, adopt an amendment or amendments to the Articles of
Incorporation of the Corporation, in respect of any Preferred Shares which
constitute unissued or treasury shares at the time of such adoption, for the
purpose of dividing any or all of such Preferred Shares into such series as the
Directors shall determine, each of which series shall bear such distinguishing
designation as the Directors shall determine and, within the limitations
prescribed by the provisions of the Ohio General Corporation Law, fix the
express terms of any such series of Preferred Shares, which may include
statements specifying:
(a) Dividend rights, which may be cumulative or non-cumulative, at a
specified rate, amount, or proportion, with or without further participation
rights, and in preference
<PAGE> 3
to, junior to, or on a parity in whole or in part with dividend rights of shares
of any other class or series:
(b) Liquidation rights, preferences, and price;
(c) Redemption rights and price or prices, if any;
(d) Sinking fund requirements, if any, which may require the
Corporation to provide a sinking fund out of earnings or otherwise for the
purchase or redemption of such shares or for dividends thereon;
(e) Voting rights, which may be full (not more, however, than one vote
per share), limited, or denied, except as otherwise required by law;
(f) Conversion rights, if any, and the conversion rate or rates or
price or prices and the adjustments thereof, if any, and all other terms and
conditions upon which conversions may be made; and
(g) Restrictions on the issuance of shares of any class or series of
the Corporation.
DIVISION B Express Terms of Common Shares
1. The Common Shares shall be subject to the express terms of the
Preferred Shares and any series thereof. Each Common Share shall be equal to
every other Common Share. The holders of Common Shares shall be entitled to one
vote for each share held by them upon all matters presented to the shareholders.
2. No holder of Common Shares, as such, shall have any
pre-emptive right to purchase or subscribe for shares of the Corporation, of any
class, or other securities of the Corporation, of any class, whether now or
hereafter authorized.
FIFTH. The Corporation, by action of its Directors, and without
action by its shareholders, may purchase its own shares, of any class or series,
in accordance with the provisions of the Ohio General Corporation
<PAGE> 4
Law, either in the open market or at public or private sale, in such manner and
amounts, from such holder or holders of outstanding shares of the Corporation,
and at such prices as the Directors shall from time to time determine, subject,
however, to such limitation or restriction, if any, as may be contained in the
express terms of any class or series of shares of the Corporation outstanding at
the time of such purchase.
SIXTH. FAIR PRICE OR SUPERMAJORITY VOTE PROVISION.
1. VOTING REQUIREMENT. Unless both the fair price requirement set
forth in paragraph 2 and the other conditions set forth in paragraph 3 have been
satisfied, the affirmative vote of the holders of 80% of all outstanding shares
of the Corporation entitled to vote in elections of directors, voting together
as a single class, shall be required for the authorization or approval of any of
the following transactions:
(a) MERGER OR CONSOLIDATION. The merger or consolidation of the
Corporation or any of its subsidiaries with or into an interested shareholder
(as hereinafter defined).
(b) DISPOSITION OF ASSETS. The sale, lease, pledge, or other
disposition, in one transaction or in a series of transactions, from the
Corporation or any of its subsidiaries to an interested shareholder, or from an
interested shareholder to the Corporation or any of its subsidiaries, of assets
having an aggregate fair market value (as hereinafter defined) of $1,000,000 or
more.
(c) ISSUANCE OR TRANSFER OF SECURITIES. The issuance, sale, or other
transfer, in one transaction or in a series of transactions, by the Corporation
or any of its subsidiaries to an interested shareholder, or by an interested
shareholder to the Corporation or any of its subsidiaries, of securities for
cash or other consideration having an aggregate fair market value of $1,000,000
or more.
(d) LIQUIDATION OR DISSOLUTION. The liquidation or dissolution of the
Corporation proposed by an interested shareholder.
<PAGE> 5
(e) RECLASSIFICATION OR RECAPITALIZATION. The reclassification of
securities, recapitalization of the Corporation, or other transaction that has
the effect of increasing the proportionate share of any class of outstanding
securities of the Corporation or any of its subsidiaries beneficially owned (as
hereinafter defined) by an interested shareholder or of otherwise diluting the
position of any shareholder of the Corporation in comparison with the position
of an interested shareholder.
(f) OTHER TRANSACTIONS. Any other transaction or series of
transactions that is similar in purpose or effect to those referred to in
clauses (a) through (e) of this paragraph 1.
This voting requirement shall apply even though no vote, or a lesser percentage
vote, may be required by law, by any other provision of these Articles of
Incorporation, or otherwise. The term "business combination", as used in this
Article, means any of the transactions referred to in clauses (a) through (f) of
this paragraph 1.
2. FAIR PRICE REQUIREMENT. The fair price requirement will be
satisfied if the consideration to be received in the business combination by the
holders of the Corporation's Common Shares and Preferred Shares, and by the
Corporation or any of its subsidiaries, as the case may be, meets the
following tests:
(a) AMOUNT OF CONSIDERATION TO BE RECEIVED BY SHAREHOLDERS. If any
holder of the Corporation's Common Shares or Preferred Shares, other than an
interested shareholder, is to receive consideration in the business combination
for any of the shares, the aggregate amount of cash and fair market value of any
other consideration to be received per share may not be less than the sum of - -
(A) the greater of (i) the highest per share price, including
commissions, paid by the interested shareholder for any shares of the same class
or series during the two-year period ending on the date of the most recent
purchase by the interested shareholder of any such shares, (ii) the highest
sales price reported for shares of the same
<PAGE> 6
class or series traded on a national securities exchange or in the
over-the-counter market during the one year period preceding the first public
announcement of the proposed business transaction, or (iii) in the case of
Preferred Shares, the amount of the per share liquidation preference; plus
(B) interest on the per share price calculated at the prime rate for
unsecured short-term loans in effect at AmeriTrust Company, Cleveland, Ohio, on
the date on which the interested shareholder first became an interested
shareholder, compounded annually from that date until the business combination
is consummated, less the per share amount of cash dividends payable to holders
of record on record dates in the interim, up to the amount of such interest.
For purposes of this clause (a), per share amounts will be adjusted for any
stock dividend, stock split, or similar transaction.
(b) FORM OF CONSIDERATION TO BE RECEIVED BY SHAREHOLDERS. The
consideration to be received by holders of the Corporation's Common Shares or
Preferred Shares must be in cash or in the same form as was previously paid by
the interested shareholder for shares of the same class or series; if the
interested shareholder previously paid for such shares with different forms of
consideration, the consideration to be received by the holders of the shares
must be in cash or in the same form as was previously paid by the interested
shareholder for the largest number of shares previously acquired by it. The
provisions of this clause (b) are not intended to diminish the aggregate amount
of cash and fair market value of any other consideration that any holder of the
Corporation's Common Shares or Preferred Shares is otherwise entitled to receive
upon the liquidation or dissolution of the Corporation, under the terms of any
contract with the Corporation or an interested shareholder, or otherwise.
(c) CONSIDERATION TO BE RECEIVED BY THE CORPORATION OR ANY OF ITS
SUBSIDIARIES. If the Corporation or any of its subsidiaries is to
<PAGE> 7
receive consideration in the business combination, the consideration to be
received must be fair to the Corporation or its subsidiaries, as determined by
the continuing directors (as hereinafter defined).
3. OTHER CONDITIONS. The other conditions will be satisfied if,
from the time the interested shareholder became an interested shareholder until
the completion of the business combination, each of the following has at all
times been and continues to be true:
(a) CONTINUING DIRECTORS. The Corporation's Board of Directors has
included at least five continuing directors. The term "continuing director", as
used in this Article, means an individual who (i) either was a director of the
Corporation at the time the interested shareholder became an interested
shareholder or was subsequently nominated or elected by the other continuing
directors and (ii) is not an affiliate or associate (as hereinafter defined) of
the interested shareholder. All actions required or permitted to be taken by the
continuing directors under this Article shall be taken by the unanimous written
consent of all continuing directors or by the vote of a majority of the
continuing directors at a meeting convened upon such notice as would be required
for a meeting of the full Board of Directors.
(b) NO ACQUISITION OF ADDITIONAL SHARES. The interested shareholder
has not become the beneficial owner (as hereinafter defined) of any additional
Common Shares or Preferred Shares of the Corporation, except (i) as part of the
transaction that resulted in the interested shareholder becoming an interested
shareholder, (ii) upon conversion of securities previously acquired by it, or
(iii) pursuant to a stock dividend or stock split.
(c) NO SPECIAL BENEFITS TO THE INTERESTED SHAREHOLDER. The interested
shareholder has not received, directly or indirectly, the benefit (except
proportionately as a shareholder) of any loan, advance, guaranty, pledge, or
other financial assistance, tax credit or deduction, or other benefit from the
Corporation or any of its subsidiaries.
<PAGE> 8
(d) PROXY STATEMENT. A proxy or information statement describing the
business combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations under it (or any
subsequent provisions replacing that Act and the rules and regulations under it)
has been mailed at least 30 days prior to the completion of the business
combination to the holders of all outstanding shares of the Corporation entitled
to vote in elections of directors, whether or not shareholder approval of the
business combination is required. If deemed advisable by the continuing
directors, the proxy or information statement shall contain a recommendation by
the continuing directors as to the advisability (or inadvisability) of the
business combination and/or an opinion by an investment banking firm, selected
by the continuing directors and retained at the expense of the Corporation, as
to the fairness (or unfairness) of the business combination to holders of the
Corporation's Common Shares or Preferred Shares other than the interested
shareholder.
(e) NO OMISSION OR REDUCTION OF DIVIDENDS. Except to the extent
approved by the continuing directors, there has been no (i) failure to pay in
full, when and as due, any dividends on the Corporation's Preferred Shares or
(ii) failure to pay or reduction in the annual rate of dividends on the
Corporation's Common Shares, whether directly or indirectly through a
reclassification, recapitalization, or otherwise.
(f) NO CHANGE IN BUSINESS OR CAPITAL STRUCTURE. Except to the extent
approved by the continuing directors, there has been no material change in (i)
the nature of the business conducted by the Corporation and its subsidiaries or
(ii) the capital structure of the Corporation, including but not limited to any
change in the number of outstanding Common Shares, the number and series of any
outstanding Preferred Shares, and the types and aggregate principal amount of
any outstanding debt securities, except for changes resulting from the exercise
of previously issued options, warrants, or other rights, the conversion of
previously issued shares, the issuance of previously authorized debt securities,
<PAGE> 9
and the mandatory redemption or retirement of debt securities in accordance with
their terms.
4. DEFINITIONS. As used in this Article Sixth:
(a) "AFFILIATE" AND "ASSOCIATE". The terms "affiliate" and "associate"
have the meanings ascribed to them in Rule 12b-2 of the General Rules and
Regulations under the Securities and Exchange Act of 1934, as in effect on
February 21, 1984.
(b) "BENEFICIAL OWNERSHIP". A person or entity is deemed to
"beneficially own" shares if, directly or indirectly through any contract,
understanding, arrangement, relationship, or otherwise, that person or entity
has or shares (i) the power to vote or to dispose, or to direct the voting or
disposition, of the shares or (ii) the right to acquire the shares pursuant to
any contract or arrangement, upon the exercise of any option, warrant, or right,
upon the conversion of any other shares, upon revocation of a trust, or
otherwise. The person or entity is also deemed to "beneficially own" shares that
are beneficially owned by affiliates and associates of that person or entity.
(c) "BUSINESS COMBINATION". The term "business combination" has the
meaning ascribed to it in paragraph 1 of this Article.
(d) "CONTINUING DIRECTORS". The term "continuing directors" has the
meaning ascribed to it in clause (a) of paragraph 3 of this Article.
(e) "FAIR MARKET VALUE". The term "fair market value" means, (i) in
the case of securities listed on a national securities exchange or quoted in the
National Association of Securities Dealers Automated Quotation Systems (NASDAQ),
the highest sales price reported for securities of the same class or series
traded on the national securities exchange or in the over-the-counter market
during the preceding 30-day period, or if no such report or quotation is
available, the value determined by the continuing
<PAGE> 10
directors, and (ii) in the case of other securities and of consideration other
than securities or cash, the value determined by the continuing directors.
(f) "INTERESTED SHAREHOLDER". The term "interested shareholder" means
any person or entity that, together with its affiliates and associates, is at
the time of, or has been within the two-year period immediately prior to, the
consummation of a business combination the beneficial owner of shares having at
least 20% of the aggregate voting power of all outstanding shares of the
Corporation entitled to vote in elections of directors. The term "interested
shareholder", for purposes of the requirements and conditions of this Article,
also includes the affiliates and associates of the interested shareholder.
Notwithstanding the foregoing, the Corporation and its subsidiaries, and any
profit-sharing, employee stock ownership, employee pension, or other employee
benefit plan of the Corporation or any subsidiary, are not deemed to be
"interested shareholders".
5. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED SHAREHOLDERS.
Nothing contained in this Article shall be construed to relieve any interested
shareholder from any fiduciary obligations imposed by law.
6. AMENDMENT, REPEAL, ETC. Notwithstanding any other provision of
these Articles of Incorporation or the Regulations of the Corporation (and
notwithstanding the fact that a lesser percentage may be required by law, these
Articles of Incorporation, or the Regulations of the Corporation), the
affirmative vote of the holders of 80% of the outstanding shares of the
Corporation entitled to vote in elections of directors, voting together as a
single class, shall be required to amend or repeal, or adopt any provisions
inconsistent with, this Article Sixth.
SEVENTH. These 1989 Amended Articles of Incorporation supersede
the existing 1986 Amended Articles of Incorporation of the Corporation.
<PAGE> 1
Exhibit 10-b
NORDSON CORPORATION
1979 EMPLOYEES STOCK OPTION PLAN
AS AMENDED OCTOBER 27, 1980
1. PURPOSE. This 1979 Employees Stock Option Plan (the "Plan") is
designed to enable Nordson Corporation ("Nordson") and its subsidiaries, by the
grant of options to purchase Common Shares of Nordson, to retain and attract
executive, managerial, technical, and professional personnel for Nordson and its
subsidiaries and to provide additional incentive to such personnel through
increased stock ownership.
2. ADMINISTRATION. The Plan shall be administered by the
Compensation Committee of Nordson's Board of Directors (the "Committee"), which
shall consist of not less than three Directors appointed by and serving during
the pleasure of Nordson's Board of Directors. No Director who has at any time
within one year been eligible to participate in the Plan, or in any employee
stock purchase plan or in any other stock option or stock appreciation rights
plan of Nordson or any of its affiliates, may serve as a member of the
Committee. The Committee shall have full power and authority to grant options
under the Plan and to interpret the provisions and to supervise the
administration of the Plan. All decisions of the Committee shall be made by not
less than a majority of its members and shall be final.
3. SHARES SUBJECT TO THE PLAN. The shares subject to this Plan
are Nordson's authorized Common Shares with a par value of $1 each ("Common
Shares") and may be authorized but unissued or treasury shares as the Committee
may from time to time determine. The total number of Common Shares that may be
issued and sold upon the exercise of options granted under the Plan may not
exceed 200,000, giving effect to the 2-for-1 stock split declared on November
19, 1979, subject to adjustment in accordance with Section 12. Nordson may
reacquire Common Shares at the time options are exercised or from time to time
in advance, whenever the Board of Directors deems such purchase advisable. If an
option is surrendered or ceases to be exercisable for any reason other than the
exercise of related stock appreciation rights, the Common Shares as to which the
option has ceased to be exercisable shall again be available for offering under
the Plan. Upon exercise of stock appreciation rights, the option or applicable
part of the option related to the stock appreciation rights shall be deemed to
have been exercised, and the Common Shares that would otherwise have been issued
upon exercise of the option shall not again be available for offering under the
Plan.
<PAGE> 2
4. ELIGIBLE EMPLOYEES. The Committee shall, from time to time,
designate the employees to whom options are granted. Options may be granted to
any salaried employee of Nordson or of any subsidiary with executive,
managerial, technical, or professional responsibility, including any Director or
officer who is a salaried employee. An employee may hold more than one option.
5. OPTION PRICE. The option price under each option shall be
determined by the Committee or by the Board of Directors and may not be less
than 100% of the fair market value of the Common Shares on the date of the
granting of the option. In no event, however, may previously unissued Common
Shares be issued at a price less than that permitted by the Ohio General
Corporation Law. The fair market value shall, for purposes of the Plan, be
determined by the Committee.
6. NOTICE OF GRANT OF OPTION. Upon the granting of any option to
an employee, the Committee shall promptly cause the employee to be notified of
the grant and terms of the option. The date on which the Committee approves the
grant of the option shall be considered to be the date on which the option is
granted.
7. EXERCISE OF OPTIONS.
(a) The date on which each option becomes exercisable shall be
determined by the Committee or by the Board of Directors on or before
grant of the option. On and after that date the option may be exercised
in whole or, from time to time, in part at any time during the life of
the option.
(b) Notwithstanding any exercise date determined by the Committee
or by the Board of Directors under Subsection (a), an option shall
become exercisable in whole or in part prior to any merger or
consolidation in which Nordson is not the surviving corporation, any
sale of all or substantially all of the assets of Nordson, any
liquidation or dissolution of Nordson, or the termination of any tender
or exchange offer for 25% or more of the total number of outstanding
Common Shares, unless the corporation surviving the merger or
consolidation, acquiring the assets, or making the exchange offer
assumes or substitutes new options for all options outstanding under
the Plan on a basis approved by the Committee. As soon as practicable
<PAGE> 3
prior to the anticipated effective date of any such proposed
transaction, the Committee shall cause to be given to each optionee
written notice identifying the proposed transaction and specifying a
date, which shall not be more than 10 days prior to the anticipated
effective date of the proposed transaction, prior to which the option
may be exercised. The exercise of an option which becomes exercisable
under this Subsection (b) shall be, and the exercise of an option which
is already exercisable without regard to this Subsection (b) in the
discretion of the optionee may be, conditioned upon consummation of the
proposed transaction, in which case the optionee need not make payment
for the Common Shares to be purchased upon exercise of the option until
five days after written notice by Nordson to the optionee that the
proposed transaction has been consummated.
(c) No fraction of a Common Share may be purchased upon exercise
of an option.
8. EXERCISE OF OPTIONS AFTER TERMINATION OF EMPLOYMENT. No option
may be exercised after termination of an optionee's employment for any reason
except as provided in this Section 8.
(a) If the termination of employment is due to permanent
disability or to retirement under the applicable retirement plan or
policy of Nordson or of a subsidiary, the optionee shall have the right
to exercise the option in whole or in part within the earlier of (i)
three months after the date of the termination of the optionee's
employment or (ii) the expiration of the life of the option.
(b) If the termination of employment is due to the death of the
optionee, the optionee's estate, personal representative, or
beneficiary shall have the right to exercise the option in whole or in
part within the earlier of (i) 12 months after the date of the
optionee's death or (ii) the expiration of the life of the option.
(c) If the termination of employment is due to any reason other
than permanent disability, retirement under the applicable
<PAGE> 4
retirement plan or policy of Nordson or of a subsidiary, or death, the
optionee may exercise the option in whole or in part only with the
consent of the Committee. In such event, the consent of the Committee
must be obtained and the option exercised within the earlier of (i)
three months after the date of the termination of the optionee's
employment or (ii) the expiration of the life of the option.
9. TERMINATION OF OPTIONS.
(a) Unless terminated earlier under Subsection (b) or (c) of this
Section 9, an option granted under the Plan shall terminate, and the
right of the optionee or of any other person to purchase Common Shares
upon exercise of the option shall expire, at the time determined by the
Committee and specified in the notice of grant of the option, which may
not be later than ten years from the date the option is granted.
(b) An option shall terminate, and the right of the optionee or
of any other person to purchase Common Shares upon exercise of the
option shall expire, upon consummation of any merger or consolidation
in which Nordson is not the surviving corporation, any sale of all or
substantially all of the assets of Nordson, or any liquidation or
dissolution of Nordson.
(c) If this Plan is not approved by Nordson's shareholders within
12 months before or after the Plan is adopted by Nordson's Board of
Directors, any option granted shall be terminated, and the right of the
optionee or any other person to purchase Common Shares upon exercise of
the option shall expire.
10. EXERCISE OF OPTIONS AND PAYMENT FOR SHARES. Options shall be
exercised by delivery of written notice of exercise to Nordson accompanied,
except as provided in Section 7(b), 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, except as
provided in Section 7(b), 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
<PAGE> 5
at the mean between the highest and lowest selling prices of the Common Shares
as reported by the National Association of Securities Dealers through NASDAQ for
the date on which the option is exercised. If no sales are reported on the
exercise date, the Common Shares shall be valued in accordance with Treasury
Regulation, Section 20.2031-2. 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.
11. ASSIGNABILITY. An option granted under the Plan may not be
transferred or assigned by the optionee, otherwise than by will or the laws of
descent and distribution to the extent contemplated by Section 8(b), and may be
exercised during the optionee's lifetime only by him or by his guardian or legal
representative. A corporation surviving a merger or consolidation with Nordson,
acquiring all or substantially all of the assets of Nordson, or acquiring 25% or
more of the total number of outstanding Common Shares may, without the consent
of the optionee, assume or substitute a new option for an option granted under
the Plan, provided the Committee approves the basis on which the assumption or
substitution is made.
12. ADJUSTMENTS UPON CHANGE IN SHARES. In the event of any change
in the Common Shares subject to this Plan or to an option granted under the Plan
by reason of a merger, consolidation, reorganization, or other corporate
transaction or of a stock dividend, stock split, or other capital adjustment,
the total number and class of shares that may be issued and sold upon exercise
of options to be granted under the Plan, the number and class of shares subject
to each outstanding option, and the option price with respect to such shares
shall be appropriately adjusted by the Committee, whose determination shall be
final.
13. SUBSTITUTE STOCK OPTIONS. Notwithstanding any other
provisions to this Plan, options may be granted under this Plan in substitution
for options to purchase shares of capital stock of another corporation which is
merged into, consolidated with, or all or a substantial portion of the property
or stock of which is acquired by Nordson or a subsidiary of Nordson. The terms,
provisions, and benefits to optionees of such substitute options shall in all
respects be identical to the terms, provisions, and benefits to optionees of the
options of the other corporation on the date of substitution, except that such
substitute options shall provide for the purchase of Common Shares of Nordson
instead of shares of such other corporation.
<PAGE> 6
14. PURCHASE FOR INVESTMENT. Each person exercising an option may
be required by Nordson to furnish a representation that he is acquiring the
Common Shares upon exercise of the option as an investment and not with a view
to distribution if Nordson, in its sole discretion, determines that the
representation is needed to insure that the resale or other disposition of the
Common Shares will not involve a violation of the Securities Act of 1933, as
amended, or of applicable state securities laws. Any such representation shall
cease to be applicable when the representation is no longer needed for such
purpose. To assure compliance with the representation, Nordson may place a
legend or other symbol on any certificate for Common Shares issued or sold under
the Plan and may issue stop transfer orders or similar instructions to the
transfer agent for its Common Shares.
15. COMPLIANCE WITH SECURITIES LAWS. No Common Shares may be
issued and sold and no share certificate may be delivered upon exercise of an
option until Nordson has taken all actions then required to comply with the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the Ohio Securities Act, as amended, any other applicable state
securities laws, and any exchange on which the Common Shares may be listed.
16. DURATION AND TERMINATION OF THE PLAN. The Plan shall remain
in effect until October 31, 1989, and shall then terminate, unless terminated at
an earlier date by action of the Board of Directors; provided, however, that
termination of the Plan shall not affect options previously granted.
17. AMENDMENT OF THE PLAN. The Board of Directors may from time
to time amend this Plan, although no such amendment may, without the approval of
shareholders, increase the total number of Common Shares that may be issued and
sold upon exercise of options granted under the Plan (except in accordance with
Section 12), reduce the option price at which options may be exercised, extend
the time within which options may be granted under the Plan or the time within
which an option may be exercised, or change the requirements relating to either
eligibility for participation in the Plan or administration of the Plan. Except
in accordance with Section 12, neither the Board of Directors nor the Committee
may, without the consent of the optionee, alter or impair an option previously
granted under the Plan.
18. EFFECTIVE DATE. This Plan shall become effective when adopted
by Nordson's Board of Directors, subject to approval by Nordson's shareholders
within 12 months before or after such adoption.
Adopted by the Board of Directors
November 19, 1979
<PAGE> 1
Exhibit 10-b-1
NORDSON CORPORATION
RESOLUTION AMENDING 1979 EMPLOYEES
STOCK OPTION PLAN TO PROVIDE FOR OPTIONS
EXERCISABLE IN INSTALLMENTS
April 20, 1982
RESOLVED, that Section 7(a) of the Company's 1979 Employees
Stock Option Plan (the "Option Plan") be, and hereby is, amended to read
as follows:
(a) Each option shall become exercisable at such
time or times, wholly or in such installments, as
the Committee may determine at the time of grant. Any option
that, at the time of grant, is exercisable in installments
may be subsequently accelerated to the extent determined by
the Committee, provided that no part of an option, as
accelerated, shall become exercisable before the first
installment of the option, prior to acceleration, would have
become exercisable.
<PAGE> 1
Exhibit 10-c
NORDSON CORPORATION
1982 INCENTIVE STOCK OPTION PLAN
1. PURPOSE. This 1982 Incentive Stock Option Plan (the "Plan") is
designed to enable Nordson Corporation ("Nordson") and its subsidiaries, by the
grant of options to purchase Common Shares of Nordson, to retain and attract
executive, managerial, technical, and professional personnel for Nordson and its
subsidiaries and to provide additional incentive to such personnel through
increased stock ownership. The options which may be granted under this Plan are
intended to meet the requirements of "incentive stock options" within the
meaning of Section 422A of the Internal Revenue Code, as amended by the Economic
Recovery Tax Act of 1981 (the "Code").
2. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee of Nordson's Board of Directors (the "Committee"), which shall consist
of not less than three Directors appointed by and serving during the pleasure of
Nordson's Board of Directors. No Director who has at any time within one year
been eligible to participate in the Plan, in any employee stock purchase plan or
restricted stock plan, or in any other stock option or stock appreciation rights
plan of Nordson or any of its affiliates may serve as a member of the Committee.
The Committee shall have full power and authority to grant options under the
Plan and to interpret the provisions and to supervise the administration of the
Plan. All decisions of the Committee shall be made by not less than a majority
of its members and shall be final.
3. SHARES SUBJECT TO THE PLAN. The shares subject to this Plan are
Nordson's authorized Common Shares with a par value of $1 each ("Common Shares")
and may be authorized but unissued or treasury shares as the committee may from
time to time determine. The total number of Common Shares that may be issued and
sold upon the exercise of options granted under the Plan may not exceed 100,000,
subject to adjustment in accordance with Section 12. Nordson may reacquire
Common Shares at the time options are exercised, or acquire Common Shares from
time to time in advance, whenever the Board of Directors deems such acquisition
advisable. If an option is surrendered or ceases to be exercisable for any
reason other than the exercise of related stock appreciation rights, the Common
Shares as to which the option has ceased to be exercisable shall again be
available for offering under the Plan. Upon exercise of stock appreciation
rights, the option or applicable part of the option related to the stock
appreciation rights shall be deemed to have been exercised, and the Common
Shares that would otherwise have been issued upon exercise of the option shall
not again be available for offering under the Plan.
<PAGE> 2
4. ELIGIBLE EMPLOYEES. The committee shall, from time to time,
designate the employees to whom options are granted. Options may be granted to
any salaried employee of Nordson or of any subsidiary with executive,
managerial, technical, or professional responsibility, including any Director or
officer who is a salaried employee, except that no employee may be granted an
option under this Plan if at the time of grant the employee owns Common Shares
and any other stock of Nordson possessing in the aggregate, more than 10% of the
total combined voting power of all classes of stock of Nordson. An employee may
hold more than one option. The aggregate fair market value, determined as of the
date of grant of the option, of the Common Shares for which an employee may be
granted incentive stock options during any calendar year under this Plan or any
other stock option plans of Nordson and its parent and subsidiaries shall not
exceed $100,000 plus any unused limit carryover to such year.
5. OPTION PRICE. The option price under each option shall be determined
by the Committee or by the Board of Directors and may not be less than 100% of
the fair market value of the Common Shares on the date of the granting of the
option. In no event, however, may previously unissued Common Shares be issued at
a price less than that permitted by the Ohio General Corporation Law.
6. NOTICE OF GRANT OF OPTION. Upon the granting of any option to an
employee, the Committee shall promptly cause the employee to be notified of the
grant and terms of the option. The date on which the Committee approves the
grant of the option shall be considered to be the date on which the option is
granted.
7. LIMITATIONS ON EXERCISE OF OPTIONS. An employee to whom an option
has been granted must remain in the continuous employ of Nordson or a subsidiary
(or of a corporation, or a parent or subsidiary of such corporation, issuing or
assuming the option in a transaction to which Section 425(a) of the Code
applies) at all times during the period beginning on the date of the granting of
the option and ending on the day three months before the date of exercise of the
option. No option may be exercised for one year from the date on which the
option is granted. Thereafter until the option expires, the option may be
exercised at any time as to all, and from time to time as to part, of the Common
Shares subject to the option. Notwithstanding any of the provisions of this
Plan, no incentive stock option granted hereunder may be exercised while there
is outstanding any incentive stock option which was granted, before the granting
of such option, to the employee to purchase Common Shares of Nordson. An
incentive stock option is considered to be outstanding until it is exercised in
full or expires by reason of lapse of time.
No fraction of a Common Share may be purchased upon exercise of an
option.
<PAGE> 3
8. EXERCISE OF OPTIONS AFTER TERMINATION OF EMPLOYMENT. No option may
be exercised after termination of an optionee's employment for any reason except
as provided in this Section 8.
(a) If the termination of employment is due to permanent disability
or to retirement under the applicable retirement plan or policy of
Nordson or of a subsidiary, the optionee shall have the right to
exercise the option in whole or in part within the earlier of (i) three
months after the date of the termination of the optionee's employment
or (ii) expiration of the option, except that, in the event of
"permanent and total disability" within the meaning of Section
105(d)(4) of the Code, the period in (i) above shall be 12 months.
(b) If the termination of employment is due to the death of the
optionee, the optionee's estate, personal representative, or
beneficiary shall have the right to exercise the option in whole or in
part within the earlier of (i) twelve months after the date of the
optionee's death or (ii) expiration of the option.
9. TERMINATION OF OPTIONS.
(a) Unless terminated earlier under Subsection (b) or (c) of this
Section 9, an option granted under the Plan shall terminate, and the
right of the optionee or of any other person to purchase Common Shares
upon exercise of the Option shall expire, at the time determined by the
Committee when the option is granted and specified in the notice of
grant of the option, which may not be later than ten years from the
date the option is granted.
(b) An option shall terminate, and the right of the optionee or of
any other person to purchase Common Shares upon exercise of the option
shall expire, upon the substitution of a new option on a basis approved
by the Committee pursuant to Section 11.
(c) If this Plan is not approved by Nordson's shareholders within 12
months before or after the Plan is adopted by Nordson's Board of
Directors, any option granted shall be terminated, and the right of the
optionee or any other person to purchase Common Shares upon exercise of
the option shall expire.
10. EXERCISE OF OPTIONS AND PAYMENT FOR SHARES. 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 (a) through
<PAGE> 4
the transfer to the Corporation by the employee of Common Shares having a
current market value equal to the purchase price or (b) by a combination of cash
and the transfer of Common Shares. 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.
11. ASSIGNABILITY. An option granted under the Plan may not be
transferred or assigned by the optionee, otherwise than by will or the laws of
descent and distribution to the extent contemplated by Section 8(b), and may be
exercised during the optionee's lifetime only by him. A corporation surviving a
merger or consolidation with Nordson, acquiring all or substantially all of the
assets of Nordson, or acquiring 25% or more of the total number of outstanding
Common Shares may, without the consent of the optionee, assume or substitute a
new option for an option granted under the Plan, provided the Committee approved
the basis on which the assumption or substitution is made.
12. ADJUSTMENTS UPON CHANGE IN SHARES. In the event of any change in
the Common Shares subject to this Plan or to an option granted under the Plan by
reason of a merger, consolidation, reorganization, or other corporate
transaction or of a stock dividend, stock split, or other capital adjustment,
the total number and class of shares that may be issued and sold upon exercise
of options to be granted under the Plan, the number and class of shares subject
to each outstanding option, and the option price with respect to such shares
shall be appropriately adjusted by the Committee, whose determination shall be
final.
13. SUBSTITUTE STOCK OPTIONS. Notwithstanding any other provisions of
this Plan, options may be granted under this Plan in substitution for options to
purchase shares of capital stock of another corporation which is merged into,
consolidated with, or all or a substantial portion of the property or stock of
which is acquired by Nordson or a subsidiary of Nordson. The terms, provisions,
and benefits to optionees of such substitute options may in any or all respects
be identical to the terms, provisions, and benefits to optionees of the options
of the other corporation on the date of substitution, except that such
substitute options shall provide for the purchase of Common Shares of Nordson
instead of shares of such other corporation.
14. PURCHASE FOR INVESTMENT. Each person exercising an option may be
required by Nordson to furnish a representation that he is acquiring the Common
Shares upon exercise of the option as an investment and not with a view to
distribution if Nordson, in its sole discretion, determined that the
representation is needed to insure that the resale or other disposition of the
Common Shares will not involve a violation of the Securities Act of 1933, as
amended, or of applicable state securities laws. Any such
<PAGE> 5
representation shall cease to be applicable when the representation is no longer
needed for such purpose. To assure compliance with the representation, Nordson
may place a legend or other symbol on any certificate for Common Shares issued
or sold under the Plan and may issue stop transfer orders or similar
instructions to the transfer agent for its Common Shares.
15. COMPLIANCE WITH SECURITIES LAWS. No Common Shares may be issued and
sold and no share certificate may be delivered upon exercise of an option until
Nordson has taken all actions then required to comply with the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, the Ohio
Securities Act, as amended, any other applicable state securities laws, and any
exchange on which the Common Shares may be listed.
16. DURATION AND TERMINATION OF THE PLAN. The Plan shall remain in
effect until December 31, 1991, and shall then terminate, unless terminated at
an earlier date by action of the Board of Directors; provided, however, that
termination of the Plan shall not affect options previously granted.
17. AMENDMENT OF THE PLAN. The Board of Directors may from time to time
amend this Plan, although no such amendment may, without the approval of
shareholders, increase the total number of Common Shares that may be issued and
sold upon exercise of options granted under the Plan (except in accordance with
Section 12), reduce the option price at which options may be exercised, extend
the time within which options may be granted under the Plan or the time within
which an option may be exercised, or change the requirements relating to either
eligibility for participation in the Plan or administration of the Plan. Except
in accordance with Section 12, neither the Board of Directors nor the Committee
may, without the consent of the optionee, impair an option previously granted
under the Plan.
18. EFFECTIVE DATE. This Plan shall become effective when adopted by
Nordson's Board of Directors, subject to approval by Nordson's shareholders
within 12 months before or after such adoption.
Adopted by the Board of Directors
January 18, 1982
<PAGE> 1
Exhibit 10-c-1
NORDSON CORPORATION
RESOLUTION AMENDING 1982 INCENTIVE
STOCK OPTION PLAN TO PROVIDE FOR OPTIONS
EXERCISABLE IN INSTALLMENTS AND
GRANTING OPTIONS
April 20, 1982
RESOLVED, that the third sentence in Section 7 of the
Company's 1982 Incentive Stock Option Plan (the "Plan") be, and hereby is,
deleted and the following sentence inserted in its place:
Thereafter, each option shall become exercisable at such
time or times, wholly or in such installments, as the
Committee may determine at the time of grant.
RESOLVED FURTHER, that incentive stock options be, and hereby
are, granted under the Plan to the persons named, and for the respective numbers
of shares, indicated on the list attached to this resolution, with a term of
five years ending at the close of business on April 19, 1987, exercisable in
cumulative installments of 25% per year beginning on April 20, 1983, at an
option price of $20.75 per share.
RESOLVED FURTHER, that pursuant to Section 10 of the Plan,
this Board hereby determined that the option price may be paid in cash, by
delivery of Common Shares of the Company, or partly in cash and partly by
delivery of Common Shares.
<PAGE> 1
Exhibit 10-e
NORDSON CORPORATION
BOARD OF DIRECTORS
DEFERRED COMPENSATION PLAN
AS AMENDED OCTOBER 27, 1988
This Deferred Compensation Plan (hereinafter referred to as the
"Plan") affords the members of the Board of Directors of Nordson Corporation
(the "Company") and members of the Compensation Committee, the Audit Committee,
and other Committees appointed by the Board of Directors of the Company the
right to defer the receipt, to a later period of time, of all or a portion of
the fees (including quarterly retainer fees, meeting fees, and such special or
other fees as may be authorized by the Board of Directors, all of which shall be
referred to herein as "Directors Compensation") paid to them by reason of their
serving on the Board and, if applicable, on Committees of the Board. The Plan
provides that the Directors Compensation shall, at the option of each Director
who elects to defer Directors Compensation, be either credited to an account
maintained for him by the Company as cash or allocated as stock equivalent units
("Stock Units") representing Common Shares of the Company ("Common Shares"). The
purpose of the Plan is to provide an incentive for service on the Board of
Directors by permitting Directors to defer the receipt of Directors
Compensation, as well as an additional incentive to Directors through the
indirect equity participation represented by the Stock Units. References in this
Plan to a "year" or to a
<PAGE> 2
"quarter" are to a calendar year or quarter. The provisions of the Plan are as
follows:
1. ELECTIONS TO DEFER DIRECTORS COMPENSATION.
(a) TIME OF ELECTION. Any person who is appointed to fill a vacancy
on the Board, or is newly elected as a Director, may elect at any time within
the first Window Period (as hereinafter defined) after commencement of his term
as Director to defer the receipt of all or a specified portion of his Directors
Compensation for the balance of the year in which his term begins and succeeding
years. Any Director who does not make such an election within the first Window
Period after commencement of his term as a Director, may thereafter elect within
the last Window Period in any year to defer the receipt of Directors
Compensation for the year following his election and succeeding years. For
purposes of the Plan, a Window Period shall be the period beginning on the third
business day following the date of the release of quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following the date of such release.
(b) DURATION OF AN ELECTION. An election to defer Directors
Compensation shall be irrevocable and shall continue from year to year until a
Director terminates the election by written request or until the end of the year
preceding the initial distribution to the Director under the schedule set forth
in Section 3 hereof, whichever first occurs, but, in the event of a termination,
the amount theretofore
<PAGE> 3
deferred shall not be paid to the Director until the dates specified in the
schedule set forth in Section 3 hereof.
(c) ELECTION TO DEFER LESS THAN ALL DIRECTORS COMPENSATION. In the
event that any Director elects to defer less than all of the Directors
Compensation payable to him for any period, the Company shall first pay the
non-deferred portion of the Directors Compensation to the Director in cash and
shall only commence to defer his Directors Compensation, whether as cash or as
Stock Units, at such time as the entire non-deferred portion has been paid to
the Director in cash.
2. Election of Cash or Stock Units.
(a) TIME OF ELECTION. At the time that each Director makes an
election to defer the receipt of all or a specified portion of his Directors
Compensation, the Director shall designate whether the amount of the Directors
Compensation he elects to defer shall be credited to his account as cash or
allocated as Stock Units. Moreover, each Director who, prior to the amendment of
the Plan on May 30, 1986, has elected to defer the receipt of all or a portion
of his Directors Compensation and, as a result, has an amount credited to his
account as cash may elect (i) to have the cash credited to his account as of May
30, 1986 converted into Stock Units equal in number to the quotient of the
amount of cash credited to his account at that time divided by the Market Price
(as hereinafter defined) of the Common Shares on May 30, 1986, and (ii) to have
the Directors Compensation he elects to defer in the future allocated to his
<PAGE> 4
account as Stock Units. For purposes of the Plan, the Market Price of Common
Shares on a particular date shall be the closing price of the Common Shares on
the immediately preceding trading date as quoted in the NASDAQ system for
national market issues.
(b) CASH CREDITS. The Company shall establish and maintain an
account for each Director who elects to defer as cash Directors Compensation due
after May 30, 1986 and shall credit his account (i) on the first day of each
month after May 1986 with the amount of Directors Compensation he elects to
defer which otherwise would have been paid to him during the month and (ii) on
the last day of each quarter commencing the fourth quarter of 1987, with
interest on the balance in this account at a rate equal to the rate of interest
of Ten Year Treasury Securities as reported in the Federal Reserve Bank Constant
Maturity Series H-15 Report for the last business day of the quarter, paid on
the average daily balance in the account during the quarter. For each Director
who elected to defer Directors Compensation prior to May 30, 1986 and does not
elect to have the cash credited to his account converted into Stock Units, the
Company shall maintain a second account and shall credit this second account (i)
with the amount credited to his account as of May 30, 1986 and (ii) on the last
day of each quarter with interest on the balance in this second account at the
rate specified in the preceding sentence. A Director whose account is credited
with cash shall receive all distributions in cash.
<PAGE> 5
(c) STOCK UNITS. The Company shall establish and maintain an
account for each Director who elects to defer as Stock Units Directors
Compensation due after May 30, 1986 and shall credit his account (i) on the 1st
day of each month after May, 1986 with a number of Stock Units equal to the
quotient of the amount of Directors Compensation he elects to defer which
otherwise would have been paid to him during the month divided by the Market
Price of the Common Shares on that day and (ii) on dividend payment dates with
an additional number of Stock Units, equal to the product of the number of Stock
Units credited to this account immediately prior to the dividend payment date
multiplied by a fraction, the numerator of which is the amount of the dividend
per Common Share and the denominator of which is the Market Price of the Common
Shares on the dividend payment date. For each Director who elected to defer
Directors Compensation prior to May 30, 1986 and elects to have the cash
credited to his account converted into Stock Units, the Company shall maintain a
second account and shall credit this second account (i) with the number of Stock
Units into which the cash is converted, as provided in Section 2(a), and (ii) on
dividend payment dates with an additional number of Stock Units credited to this
second account immediately prior to the dividend payment date multiplied by the
fraction specified in the preceding sentence. A Director whose account is
credited with Stock Units shall receive all distributions in Common Shares.
<PAGE> 6
(d) SUBJECT TO CLAIMS OF GENERAL CREDITORS. All Directors
Compensation deferred and amounts credited to accounts as cash or Stock Units
under the terms of the Plan shall remain part of the assets of the Company and
shall be subject to the claims of its general creditors.
3. DISTRIBUTION. The account maintained for each Director who elects
to defer Directors Compensation due after May 30, 1986 shall be distributed in
16 quarterly installments (the amount of each to equal the balance in this
account at the particular time divided by the number of remaining installments)
beginning with the first day of the month immediately succeeding the month in
which that Director ceases to be a Director. The second account maintained for
each Director who elected to defer Directors Compensation prior to May 30, 1986
shall be distributed in 16 quarterly installments (the amount of each to equal
the balance in this second account at the particular time divided by the number
of remaining installments) beginning with the first day of the month immediately
succeeding the month in which that Director (i) ceases to be a Director or (ii)
attains age 70, whichever occurs first. The undistributed balance of any account
shall bear interest, or be credited with additional Stock Units upon the payment
of dividends, as provided in Section 2 hereof until the account shall have been
completely distributed.
4. DEATH OF A DIRECTOR. A Director may elect whether, in the event of
his death prior to the expiration of the period during which his account balance
is distributable, the
<PAGE> 7
account balance shall be distributed to his estate (or his designated
beneficiary) in a single distribution or in the installments contemplated by
Section 3 hereof. Such election shall be made at the time of the election
contemplated by Section 1 hereof; if no such election is made, the account
balance shall be distributed in a single distribution.
5. NON-COMPETITION. In the event a Director ceases to be a Director
and becomes a proprietor, officer, partner, or employee of, or otherwise becomes
affiliated with, any business that is in competition with the Company, his
account balance shall, if the Compensation Committee of the Board of Directors
of the Company in its sole discretion so directs, be distributed immediately to
him in single cash distribution. Any Stock Units allocated to the Director's
account will be converted into an amount of cash equal to the product of the
number of Stock Units allocated to his account multiplied by the Market Price of
the Common Shares on the date of the distribution.
6. PLAN TERMINATION. This Plan may be terminated or amended at any
time at the sole discretion of the Board of Directors. In the event of a
termination of the Plan, the respective account balances shall be distributed
under the terms of this Plan with no additional deferrals permitted.
7. ADMINISTRATION. This Plan shall be administered by the Compensation
Committee of the Board of Directors, which shall have the sole right and
authority to interpret and construe the Plan and to resolve any disputes arising
hereunder, and its
<PAGE> 8
decisions shall be binding and conclusive upon the participants. In the event
that a participant is a member of the Committee, he shall not participate in any
deliberations or actions of the Committee relating exclusively to his
participation in this Plan.
8. NON-ALIENATION. The amount credited to any accounts maintained
under the Plan may not be pledged, assigned or transferred by the Director for
whom such account is maintained or by any other individual, and any purported
pledge, assignment or transfer shall be void and unenforceable.
<PAGE> 1
Exhibit 10-r
NORDSON CORPORATION
28601 CLEMENS ROAD
WESTLAKE, OHIO 44145-1119
October 31, 1999
Personal and Confidential
- -------------------------
Mr. Christian C. Bernadotte
2513 Marlboro Road
Cleveland Heights, OH 44118
Dear Christian:
This letter sets forth the agreement (this "Agreement") we have reached
regarding the termination of your status as an officer and employee of Nordson
Corporation ("Nordson"), the compensation and benefits to be paid to you, and
certain other matters. You should review this Agreement with legal counsel of
your choice to be certain that you understand and agree with all of the
provisions of this Agreement.
1. Cessation of Status as an Officer. On the date hereof, your status as an
officer of Nordson, and of any subsidiaries and other affiliates of Nordson of
which you are an officer, and your status as a trustee of The Nordson
Corporation Foundation will cease. By signing this Agreement, you hereby resign
as an officer of Nordson and of each such subsidiary and affiliate and as a
trustee of The Nordson Corporation Foundation. After the date hereof, you will
not hold yourself out as being an officer or trustee, or as having any authority
to bind, Nordson, any such subsidiary or affiliate, or The Nordson Corporation
Foundation.
2. Continued Employment through the Termination Date. You will continue as an
employee of Nordson through December 31, 1999. As an employee, you will report
to the Chief Executive Officer of Nordson and will perform such duties as you
and the Chief Executive Officer may from time-to-time agree. All of these duties
will be performed in Westlake, Ohio, unless you otherwise agree. Your employment
with Nordson may be terminated by Nordson before December 31, 1999, only for
cause. For this purpose, "for cause" means a material breach of the provisions
of this Agreement or the Standard Employee Agreement referred to in paragraph 6
hereof (the "Standard Employee Agreement"), including but not limited to a
material breach of the confidentiality provisions and the covenant not to
compete in the Standard Employee Agreement, following notice of the breach and
an opportunity to cure for 30 days after receipt of the notice. As used in this
Agreement, "Termination Date" means the earlier of (a) December 31, 1999, and
(b) the date of any such termination for cause.
3. Compensation. In consideration of your execution of this Agreement, your
continued employment with Nordson through the Termination Date, the modification
of the Standard Employee Agreement, and your observance of the other terms and
conditions hereof, Nordson
<PAGE> 2
Mr. Christian C. Bernadotte
October 31, 1999 Page 2
will pay to you or your estate the following amounts and provide you with the
following benefits:
1. Salary; Lump Sum Termination Benefit. Through the Termination Date,
Nordson will continue to pay your salary at the annual rate of
$227,000. In the first week of January 2000, Nordson will pay you a
lump sum termination benefit in the amount of $302,667.
2. Bonus. For the fiscal year ended October 31, 1999, Nordson will pay a
bonus to you under the Nordson Corporation 1995 Management Incentive
Compensation Plan to the extent earned by you, payable in the first
week of January 2000. For the period from November 1, 1999 through the
Termination Date, you will receive a severance bonus in the amount of
$221,325, payable in the first week of January 2001.
3. Stock Options. No additional stock options will be granted to you. Each
outstanding stock option previously granted to you under the Nordson
Corporation 1993 Long-Term Performance Plan, as amended (the "Omnibus
Plan"), will vest in full at the Termination Date (to the extent not
therefore vested) and may be exercised at any time before its
expiration, notwithstanding the earlier termination of your employment.
Each outstanding stock option granted to you under any plan or program
other than the Omnibus Plan may be exercised by you until the earlier
of (a) the termination of the option and (b) the Termination Date. A
schedule of the outstanding stock options granted to you is set forth
in Exhibit 1 hereto.
d. Other Benefits. You will be entitled to other benefits as and to the
extent provided under the Nordson Salaried Employees' Pension Plan, the
Nordson Corporation Excess Defined Benefit Pension Plan, the Nordson
Employees' Savings Trust Plan, the Nordson Corporation Excess Defined
Contribution Retirement Plan, the Nordson Corporation Non-Union
Employees Stock Ownership Plan and Trust, and the Nordson Corporation
Officers' Deferred Compensation Plan. The lump sum termination benefit
referred to in paragraph 3(a) and the severance bonus referred to in
paragraph 3(b) will not be counted for purposes of determining the
amount of your benefits under any of Nordson's benefit plans. During
the continuation of your employment, you will be entitled to benefits
as and to the extent provided under Nordson's medical, dental, life
insurance, and disability income plans and programs. You will be
entitled to outplacement support consisting of the Executive Service
Program provided by Right Associates, a car allowance pro-rated through
the Termination Date, and tax preparation assistance for the 1999 and
the 2000 tax years. After the Termination Date, you will have such
rights to continuing medical insurance coverage as Nordson is required
to provide under Part 6 of Title I of ERISA (commonly referred to as
"COBRA"); Nordson will pay the COBRA premiums through December 31, 2000
or until such earlier time as you are covered by another medical
benefit program.
<PAGE> 3
Mr. Christian C. Bernadotte
October 31, 1999 Page 3
e. If you have not begun employment with another employer on or before May
1, 2001, Nordson will pay you an additional $31,213 in cash, and, if
you have not begun employment with another employer on or before June
1, 2001, Nordson will pay you another $31,213 in cash, provided, in
each case, that you use all reasonable efforts (taking into
consideration the state of your health) to obtain such employment.
4. Nordson Equipment and Property. As soon as practicable, you will return to
Nordson any equipment and property that belongs to Nordson, and all materials
that contain any Nordson confidential or proprietary information (including
floppy disks and other storage devices for computer files), that you may have in
your possession. You will be given access to your former office at Nordson to
obtain your personal effects at a time agreed upon by you and Nordson. After the
execution of this Agreement, you will not access any Nordson computer network,
whether directly or by use of a modem.
5. Termination of Change of Control Agreement. The Employment Agreement between
you and Nordson that is effective upon a change in control (the "Change of
Control Agreement") is hereby terminated, and, after the execution of this
Agreement, you will have no rights or obligations under the Change of Control
Agreement.
6. Modification of Standard Employee Agreement. The Standard Employee Agreement,
signed by you and accepted by Nordson on March 11, 1988, will remain in effect
during the continuation of your employment and thereafter in accordance with its
terms, except that (a) the period in which the covenants in paragraphs 5, 6, and
7 of the Standard Employee Agreement apply will be extended until the end of the
third year after the Termination Date and (b) Nordson will have no obligation to
make payments to you under paragraph 9 of the Standard Employee Agreement.
Nordson acknowledges that neither this Agreement nor the Standard Employee
Agreement precludes you from obtaining employment with any company that you
researched as a potential acquisition candidate of Nordson while you were a
Nordson employee, or obtaining employment with any company in connection with
the implementation of enterprise-wide software (including SAP), provided in
either case that the company does not design, manufacture, market, or sell any
products or services that are competitive with any products or services
designed, manufactured, marketed, or sold by Nordson at the time you obtain
employment with that company. Nordson also acknowledges that the term
"Confidential Information," as used in the Standard Employee Agreement, does not
include information that is generally available to the public, information about
enterprise-wide software (including SAP), or information about acquisition
candidates that came to your attention while you were a Nordson employee.
7. Restrictions Applicable to Transactions in Nordson Common Shares. Even though
you will no longer be an officer of Nordson or of any subsidiary or other
affiliate of Nordson, certain restrictions will apply to any purchase or sale of
Nordson Common Shares by you. By signing
<PAGE> 4
Mr. Christian C. Bernadotte
October 31, 1999 Page 4
this Agreement, you acknowledge that you have received the summary of those
restrictions that is attached to this Agreement as Exhibit 2 hereto and agree
that you will comply with those restrictions.
8. Confidentiality; Nondisparagement; Cooperation. In consideration of the
payments and benefits to be provided to you by Nordson pursuant to this
Agreement:
1. You will not reveal any information regarding the substance of this
Agreement to any person or entity other than (i) your wife, (ii) your
personal accountant or other person preparing your tax returns, and
(iii) counsel retained by you in connection with this Agreement, and
you will be responsible to see to it that none of these people reveals
any information regarding the substance of this Agreement to any other
person or organization.
2. You will not disparage, attempt to discredit, or otherwise call into
disrepute Nordson, its affiliates, successors, assigns, officers,
directors, employees, or agents (in their capacity as agents of
Nordson), or any of their products or services, in any manner that
might damage the business or reputation of Nordson or its affiliates,
successors, assigns, officers, directors, employees, or agents. The
preceding sentence applies to any statement that disparages,
discredits, or calls into disrepute without regard to the truth or
falsehood of the statement. It does not, however, apply to statements
about Nordson's products or services that you make more than three
years after the Termination Date in the course of your employment with
a competitor of Nordson, provided that the statements are not based on
any Confidential Information (as defined in the Standard Employee
Agreement).
3. You will not assist any party other than Nordson in any litigation or
investigation against Nordson or its affiliates, successors, assigns,
officers, directors, employees, or agents with respect to any facts or
circumstances existing at any time on or before the Termination Date,
except as may be required by law. If you believe any such action is
required by law, you will use your best efforts to afford Nordson the
opportunity to raise any objection that Nordson may have to the
purported requirement that such action be taken by you.
Your obligations under this paragraph 8 will remain in effect without any
limitation as to time.
9. Nondisparagement. In consideration of your execution of this Agreement,
Nordson agrees that none of its corporate officers will disparage you, attempt
to discredit you, or otherwise call you into disrepute in any manner that might
damage your reputation. The preceding sentence applies to any statement that
disparages, discredits, or calls into disrepute without regard to the truth or
falsehood of the statement. Nordson's obligations under this paragraph 9 will
remain in effect without any limitation as to time.
<PAGE> 5
Mr. Christian C. Bernadotte
October 31, 1999 Page 5
10. Release. In consideration of the payments and benefits to be provided to you
by Nordson pursuant to this Agreement:
1. For yourself, your heirs, executors, administrators, successors, and
assigns, you hereby release and discharge forever Nordson, its
affiliates, successors, assigns, officers, directors, employees, and
agents from any and all claims, demands, causes of action, losses, and
expenses, whether known or unknown, arising out of or in any way
connected with any facts or circumstances existing on or occurring
before the date of this Agreement or arising out of or in any way
connected with your employment by Nordson, the termination of your
employment, or any breach of contract (express or implied), promissory
estoppel, wrongful discharge, intentional infliction of emotional harm,
defamation, libel, slander, or other tort, or any violation of federal,
state, or municipal law relating to discrimination in employment,
including Title VII of the Civil Rights Act of 1964 (42 U.S.C. Section
2000(e) et seq.), Ohio Revised Code Section 4112 et seq., the Americans
with Disabilities Act of 1990, 42 U.S.C. Section 12101, or any state
laws of similar import.
2. You agree not to bring any suit or action in any court or
administrative agency against any of the beneficiaries of this release
arising out of or relating to the subject matter of this release.
Nothing in this paragraph 10 will release Nordson from its obligations under
this Agreement or prevent you from bringing an action to enforce or seek damages
for breach of this Agreement by Nordson.
11. Certain Statements and Procedures.
1. Nordson will make the following statement regarding your termination of
employment:
"Christian Bernadotte has resigned from his position as Vice
President of Nordson. During his tenure with Nordson, Christian
made a significant contribution to the growth and profitability of
the Company, and we wish him continued professional and personal
success in his future endeavors."
2. You may make the following statement regarding your termination of
employment:
"I resigned on mutually agreed upon terms. I wish Nordson
continued success in the future."
c. If you request Nordson or any of its officers, directors, employees, or
agents to provide to any prospective employer a recommendation or
evaluation of your services to Nordson,
<PAGE> 6
Mr. Christian C. Bernadotte
October 31, 1999 Page 6
they will be permitted to provide the recommendation or evaluation to
the employer. In that event, you hereby waive any claim that you may
have against them by reason of the disclosure of the recommendation or
evaluation, including any claim that the recommendation or evaluation
is unfair in any respect.
d. Notwithstanding the foregoing, either party may communicate with its or
his own counsel, with counsel for the other party, and with such other
agents or representatives of the other party as may be authorized by
the other party.
12. Injunctive Relief. In the event of a breach by you of your obligations under
this Agreement or the Standard Employee Agreement as modified hereby, Nordson
will be entitled to an injunction against any further breach, as well as money
damages suffered by it or any of the beneficiaries of the release set forth in
paragraph 10 above as a result of the breach.
13. Legal Fees. If either party to this Agreement brings any suit or action to
enforce or seek damages for breach of this Agreement, the parties agree that the
court in which the suit or action is brought may, in its discretion, award to
the prevailing party recovery of his or its reasonable legal fees and expenses
incurred in the suit or action.
14. Governing Law; Venue. This Agreement will be governed by the laws of the
State of Ohio applicable to contracts made and to be performed entirely within
that state. Any suit, action, or other legal proceeding arising out of or
relating to this Agreement may only be brought in the Court of Common Pleas of
Cuyahoga County, Ohio. Nordson and you each (a) consents to the jurisdiction of
that court in any such suit, action, or proceeding and (b) waives, to the
fullest extent permitted by applicable law, any objection that it or he may have
to the laying of venue of any such suit, action, or proceeding in that court and
any claim that any such suit, action, or proceeding has been brought in an
inconvenient forum.
15. Withholding. All payments to be made by Nordson pursuant to this Agreement
are subject to applicable federal, state, and local tax withholding.
<PAGE> 7
Mr. Christian C. Bernadotte
October 31, 1999 Page 7
16. Entire Agreement, Binding Nature. This Agreement and the Standard Employee
Agreement as modified hereby set forth the entire agreement between you and
Nordson regarding the subject matter hereof and supersede all prior agreements
and understandings, whether oral or written, between you and Nordson with
respect to the subject matter. This Agreement and the Standard Employee
Agreement as modified hereby will be binding upon and inure to the benefit of
you and your heirs, executors, administrators, personal representatives,
successors, and assigns and Nordson and its successors and assigns.
Sincerely,
NORDSON CORPORATION
By /s/ Edward P. Campbell
----------------------
Edward P. Campbell
President and Chief Executive Officer
I hereby accept and agree to all of the terms of this Agreement.
/s/ Christian C. Bernadotte 11/16/99
- -------------------------------------
Christian C. Bernadotte
October 31, 1999
<PAGE> 8
Mr. Christian C. Bernadotte
October 31, 1999 Page 8
EXHIBIT 1
SCHEDULE OF OUTSTANDING STOCK OPTIONS
1. Options Granted under Omnibus Plan
<TABLE>
<CAPTION>
Date of Grant No. of Options Exercise Price Expiration Date Date Must Exercise
- ------------- -------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
11/2/98 14,000 $44.81 11/2/08 11/2/08
11/3/97 12,000 $49.63 11/3/07 11/3/07
11/4/96 12,000 $55.25 11/4/06 11/4/06
10/30/95 10,000 $57.25 10/30/05 10/30/05
10/31/94 8,000 $57.00 10/31/04 10/31/04
11/1/93 3,600 $53.50 11/1/03 11/1/03
</TABLE>
2. Options Granted under Other Plans or Programs
<TABLE>
<CAPTION>
Date of Grant No. of Options Exercise Price Expiration Date Date Must Exercise
- ------------- -------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
11/2/92 3,600 $47.00 11/2/02 12/31/99
11/4/91 3,000 $42.50 11/4/01 12/31/99
</TABLE>
<PAGE> 9
Mr. Christian C. Bernadotte
October 31, 1999 Page 9
EXHIBIT 2
STOCK TRANSFER ISSUES ARISING OUT OF
TERMINATION OF OFFICER STATUS
Insider Trading Prohibition.
- ----------------------------
The prohibition on trading in Nordson Common Shares while you are in
possession of "inside information" will continue to apply to you after
you cease to be an officer of Nordson.
Affiliate Status.
- -----------------
You have been an affiliate of Nordson because of your status as an
officer. You will continue to be deemed to be an affiliate for purposes
of federal securities laws until January 25, 2000, three months after
you cease to be an officer, but will not be deemed to be an affiliate
thereafter.
Accordingly, from October 25, 1999 through January 25, 2000, you will
be subject to the same restrictions on sales of your Nordson Common
Shares as applied while you were an officer of Nordson. You will be
able to sell Nordson Common Shares during this three-month period only
in compliance with the requirements of Rule 144.
After January 25, 2000, you will no longer be deemed to be an affiliate
of Nordson and, insofar as Rule 144 is concerned, there will be no
restrictions on your sale of (a) any unregistered Nordson Common Shares
that you have held for at least one year or (b) any registered Nordson
Common Shares, regardless of the holding period. We believe that all of
the Nordson Common Shares acquired by you from Nordson were registered,
and, therefore, that the one-year holding period does not apply to you.
Window Period.
- --------------
In order to comply with Nordson's policy on trading in Nordson Common
Shares by its associates, while you continue to be an employee of
Nordson, you may not purchase or sell Nordson Common Shares except
during an open window period and then only with the consent of the Vice
President - Law of Nordson.
<PAGE> 10
Mr. Christian C. Bernadotte
October 31, 1999 Page 10
Margin Restrictions.
- --------------------
For so long as you might be prevented either by Nordson's policy or by
federal securities laws from selling Nordson Common Shares on any given
day, you should not margin any of your Nordson Common Shares. Doing so
would subject you to a risk of a margin call when the margined stock
could not be sold. Accordingly, you should not margin any Nordson
Common Shares until after January 25, 2000, when you will no longer be
subject to restrictions on the purchase and sale of Nordson Common
Shares.
Section 16.
- -----------
You have been subject to Section 16 and the requirement that any
profits on purchases and sales within six months be disgorged to
Nordson.
After you cease to be an officer, you will no longer be subject to
Section 16 except that any purchase or sale by you after you cease to
be an officer may be matched with any sale or purchase that was made
during the preceding six months while you were an officer of Nordson.
For example, if you purchased Nordson Common Shares on August 31, 1999,
while you were still an officer of Nordson, that purchase could be
matched with a sale on or before February 29, 2000, even though you are
no longer an officer.
Reporting Obligation.
- ---------------------
Any sale or purchase that might be matched with a transaction while you
were still an officer of Nordson will have to be reported on a Form 4.
Accordingly, counsel to Nordson should be advised if you engage in any
purchase or sale of Nordson Common Shares before the later of (i)
October 25, 1999 and (ii) six months after any previous sale or
purchase of Nordson Common Shares by you while you were an officer of
Nordson.
<PAGE> 1
Exhibit 10-s
NORDSON CORPORATION
28601 CLEMENS ROAD
WESTLAKE, OHIO 44145-1119
October 31, 1999
Personal and Confidential
- -------------------------
Mr. John E. Jackson
60 Club Court
Alpharetta, GA 30005
Dear John:
This letter sets forth the agreement (this "Agreement") we have reached
regarding the termination of your status as an officer and employee of Nordson
Corporation ("Nordson"), the compensation and benefits to be paid to you, and
certain other matters. You should review this Agreement with legal counsel of
your choice to be certain that you understand and agree with all of the
provisions of this Agreement.
1. Cessation of Status as an Officer. On the date hereof, your status as an
officer of Nordson, and of any subsidiaries and other affiliates of Nordson of
which you are an officer, and your status as a trustee of The Nordson
Corporation Foundation will cease. By signing this Agreement, you hereby resign
as an officer of Nordson and of each such subsidiary and affiliate and as a
trustee of The Nordson Corporation Foundation. After the date hereof, you will
not hold yourself out as being an officer or trustee, or as having any authority
to bind, Nordson, any such subsidiary or affiliate, or The Nordson Corporation
Foundation.
2. Continued Employment through the Termination Date. You will continue as an
employee of Nordson until March 5, 2000. As an employee, you will report to the
Chief Executive Officer of Nordson and will perform such duties as you and the
Chief Executive Officer may from time-to-time agree. All of these duties will be
performed in the State of Florida, unless you otherwise agree. Your employment
with Nordson may be terminated by Nordson before March 5, 2000, only for cause.
For this purpose, "for cause" means a material breach of the provisions of this
Agreement or the Standard Employee Agreement referred to in paragraph 6 hereof
(the "Standard Employee Agreement"), including but not limited to a material
breach of the confidentiality provisions and the covenant not to compete in the
Standard Employee Agreement, following notice of the breach and an opportunity
to cure for 30 days after receipt of the notice. As used in this Agreement,
"Termination Date" means the earlier of (a) March 5, 2000, and (b) the date of
any such termination for cause.
3. Compensation. In consideration of your execution of this Agreement, your
continued employment with Nordson through the Termination Date, the modification
of the Standard Employee Agreement, and your observance of the other terms and
conditions hereof, Nordson
<PAGE> 2
Mr. John E. Jackson
October 31, 1999 Page 2
will pay to you or your estate the following amounts and provide you with the
following benefits:
1. Salary; Lump Sum Termination Benefit. Through the Termination Date,
Nordson will continue to pay your salary at the annual rate of
$314,000. At the Termination Date, Nordson will pay you a lump sum
termination benefit in the amount of $366,333.
2. Bonus. For the fiscal year ended October 31, 1999, Nordson will pay a
bonus to you under the Nordson Corporation 1995 Management Incentive
Compensation Plan to the extent earned by you, payable in the first
week of January 2000. For the period from November 1, 1999 through the
Termination Date, you will receive a severance bonus in the amount of
$306,150, payable in the first week of January 2001.
3. Supplemental Pension Benefit. You will be entitled to a supplemental
pension benefit calculated in the manner set forth in Exhibit A to the
letter agreement, dated April 3, 1986, between you and Nordson (the
"Employment Agreement"), except that the amount of any lump sum payment
or other optional method of payment will be calculated using the 1992
life expectancy table set forth on Exhibit 1(a) hereto. A sample of the
calculation of the amount of a lump sum payment, assuming that the
Termination Date is March 5, 2000, and that the PBGC interest rate used
therein is the same as that in effect on the Termination Date, is set
forth in Exhibit 1(b) hereto. The lump sum termination benefit referred
to in paragraph 3(a) and the severance bonus referred to in paragraph
3(b) will not be counted in determining the amount of your 36-Month
Average Annual Compensation for purposes of the supplemental pension
benefit under your Employment Agreement or for purposes of determining
the amount of your benefits under any of Nordson's benefit plans.
4. Stock Options. No additional stock options will be granted to you. Each
outstanding stock option previously granted to you under the Nordson
Corporation 1993 Long-Term Performance Plan, as amended (the "Omnibus
Plan"), will vest in full at the Termination Date (to the extent not
therefore vested) and may be exercised at any time before its
expiration, notwithstanding the earlier termination of your employment.
Each outstanding stock option granted to you under any plan or program
other than the Omnibus Plan may be exercised by you until the earlier
of (a) the termination of the option and (b) three months after the
Termination Date. A schedule of the outstanding stock options granted
to you is set forth in Exhibit 2 hereto.
e. Retiree Benefits, Including Medical Insurance Coverage. If the
Termination Date occurs on or after the date on which you attain age
55, Nordson will provide you and your family with all benefits extended
to retirees of the Company, including but not limited to medical
insurance coverage, as and to the extent provided by Nordson's programs
for
<PAGE> 3
Mr. John E. Jackson
October 31, 1999 Page 3
retirees, as those programs may be amended from time to time. If the
Termination Date occurs before the date on which you attain age 55, you
will have such rights to continuing medical insurance coverage as
Nordson is required to provide under Part 6 of Title I of ERISA
(commonly referred to as "COBRA").
f. Other Benefits. You will be entitled to other benefits as and to the
extent provided under the Nordson Salaried Employees' Pension Plan, the
Nordson Corporation Excess Defined Benefit Pension Plan, the Nordson
Employees' Savings Trust Plan, the Nordson Corporation Excess Defined
Contribution Retirement Plan, the Nordson Corporation Non-Union
Employees Stock Ownership Plan and Trust, and the Nordson Corporation
Officers' Deferred Compensation Plan. During the continuation of your
employment, you will be entitled to benefits as and to the extent
provided under Nordson's medical, dental, life insurance, and
disability income plans and programs. You will be entitled to
outplacement support in an amount to be determined by Nordson, a car
allowance pro-rated through the Termination Date, and tax preparation
assistance for the 1999 and 2000 tax years.
4. Nordson Equipment and Property. As soon as practicable, you will return to
Nordson any equipment and property that belongs to Nordson, and all materials
that contain any Nordson confidential or proprietary information (including
floppy disks and other storage devices for computer files), that you may have in
your possession. You will be given access to your former office at Nordson to
obtain your personal effects at a time agreed upon by you and Nordson. After the
execution of this Agreement, you will not access any Nordson computer network,
whether directly or by use of a modem.
5. Termination of Employment Agreement and Change of Control Agreement. Except
for the supplemental pension benefit referred to in paragraph 3(c), the
Employment Agreement is hereby terminated. The Employment Agreement between you
and Nordson that is effective upon a change in control (the "Change of Control
Agreement") is also hereby terminated. After the execution of this Agreement,
you will have no rights or obligations under the Employment Agreement (other
than the supplemental pension benefit) or the Change of Control Agreement.
6. Modification of Standard Employee Agreement. The Standard Employee Agreement,
signed by you and accepted by Nordson on April 30, 1986, will remain in effect
during the continuation of your employment and thereafter in accordance with its
terms, except that (a) the period in which the covenants in paragraphs 5, 6, and
7 of the Standard Employee Agreement apply will be extended until the end of the
third year after the Termination Date and (b) Nordson will have no obligation to
make payments to you under paragraph 8 of the Standard Employee Agreement.
7. Restrictions Applicable to Transactions in Nordson Common Shares. Even though
you will no longer be an officer of Nordson or of any subsidiary or other
affiliate of Nordson, certain
<PAGE> 4
Mr. John E. Jackson
October 31, 1999 Page 4
restrictions will apply to any purchase or sale of Nordson Common Shares by you.
By signing this Agreement, you acknowledge that you have received the summary of
those restrictions that is attached to this Agreement as Exhibit 3 hereto and
agree that you will comply with those restrictions.
8. Confidentiality; Nondisparagement; Cooperation. In consideration of the
payments and benefits to be provided to you by Nordson pursuant to this
Agreement:
1. You will not reveal any information regarding the substance of this
Agreement to any person or entity other than (i) your wife, (ii) your
personal accountant or other person preparing your tax returns, and
(iii) counsel retained by you in connection with this Agreement, and
you will be responsible to see to it that none of these people reveals
any information regarding the substance of this Agreement to any other
person or organization.
2. You will not disparage, attempt to discredit, or otherwise call into
disrepute Nordson, its affiliates, successors, assigns, officers,
directors, employees, or agents (in their capacity as agents of
Nordson), or any of their products or services, in any manner that
might damage the business or reputation of Nordson or its affiliates,
successors, assigns, officers, directors, employees, or agents. The
preceding sentence applies to any statement that disparages,
discredits, or calls into disrepute without regard to the truth or
falsehood of the statement.
3. You will not assist any party other than Nordson in any litigation or
investigation against Nordson or its affiliates, successors, assigns,
officers, directors, employees, or agents with respect to any facts or
circumstances existing at any time on or before the Termination Date,
except as may be required by law. If you believe any such action is
required by law, you will use your best efforts to afford Nordson the
opportunity to raise any objection that Nordson may have to the
purported requirement that such action be taken by you.
Your obligations under this paragraph 8 will remain in effect without any
limitation as to time.
9. Nondisparagement. In consideration of your execution of this Agreement,
Nordson agrees that none of its officers who have actual knowledge of the terms
of this Agreement will disparage you, attempt to discredit you, or otherwise
call you into disrepute in any manner that might damage your reputation. The
preceding sentence applies to any statement that disparages, discredits, or
calls into disrepute without regard to the truth or falsehood of the statement.
Nordson's obligations under this paragraph 9 will remain in effect without any
limitation as to time.
<PAGE> 5
Mr. John E. Jackson
October 31, 1999 Page 5
10. Release. In consideration of the payments and benefits to be provided to you
by Nordson pursuant to this Agreement:
1. For yourself, your heirs, executors, administrators, successors, and
assigns, you hereby release and discharge forever Nordson, its
affiliates, successors, assigns, officers, directors, employees, and
agents from any and all claims, demands, causes of action, losses, and
expenses, whether known or unknown, arising out of or in any way
connected with any facts or circumstances existing on or occurring
before the date of this Agreement or arising out of or in any way
connected with your employment by Nordson, the termination of your
employment, or any breach of contract (express or implied), promissory
estoppel, wrongful discharge, intentional infliction of emotional harm,
defamation, libel, slander, or other tort, or any violation of federal,
state, or municipal law relating to discrimination in employment,
including Title VII of the Civil Rights Act of 1964 (42 U.S.C. Section
2000(e) et seq.), Ohio Revised Code Section 4112 et seq., the Americans
with Disabilities Act of 1990, 42 U.S.C. Section 12101, or any state
laws of similar import.
2. You agree not to bring any suit or action in any court or
administrative agency against any of the beneficiaries of this release
arising out of or relating to the subject matter of this release.
Nothing in this paragraph 10 will release Nordson from its obligations under
this Agreement or prevent you from bringing an action to enforce or seek damages
for breach of this Agreement by Nordson.
11. Certain Statements and Procedures.
1. Nordson will make the following statement regarding your termination of
employment:
"John Jackson has taken early retirement from his position as
Senior Vice President of Nordson. During his tenure with Nordson,
John made a significant contribution to the growth and
profitability of the Company, and we wish him continued
professional and personal success in his future endeavors."
2. You may make the following statement regarding your termination of
employment:
"I elected to take early retirement on mutually agreed upon terms.
I wish Nordson continued success in the future."
<PAGE> 6
Mr. John E. Jackson
October 31, 1999 Page 6
c. If you request Nordson or any of its officers, directors, employees, or
agents to provide to any prospective employer a recommendation or
evaluation of your services to Nordson, they will be permitted to
provide the recommendation or evaluation to the employer. In that
event, you hereby waive any claim that you may have against them by
reason of the disclosure of the recommendation or evaluation, including
any claim that the recommendation or evaluation is unfair in any
respect.
d. Notwithstanding the foregoing, either party may communicate with its or
his own counsel, with counsel for the other party, and with such other
agents or representatives of the other party as may be authorized by
the other party.
12. Injunctive Relief. In the event of a breach by you of your obligations under
this Agreement or the Standard Employee Agreement as modified hereby, Nordson
will be entitled to an injunction against any further breach, as well as money
damages suffered by it or any of the beneficiaries of the release set forth in
paragraph 10 above as a result of the breach.
13. Legal Fees. If either party to this Agreement brings any suit or action to
enforce or seek damages for breach of this Agreement, the parties agree that the
court in which the suit or action is brought may, in its discretion, award to
the prevailing party recovery of his or its reasonable legal fees and expenses
incurred in the suit or action.
14. Governing Law; Venue. This Agreement will be governed by the laws of the
State of Ohio applicable to contracts made and to be performed entirely within
that state. Any suit, action, or other legal proceeding arising out of or
relating to this Agreement may only be brought in the Court of Common Pleas of
Cuyahoga County, Ohio. Nordson and you each (a) consents to the jurisdiction of
that court in any such suit, action, or proceeding and (b) waives, to the
fullest extent permitted by applicable law, any objection that it or he may have
to the laying of venue of any such suit, action, or proceeding in that court and
any claim that any such suit, action, or proceeding has been brought in an
inconvenient forum.
15. Withholding. All payments to be made by Nordson pursuant to this Agreement
are subject to applicable federal, state, and local tax withholding.
16. Entire Agreement, Binding Nature. This Agreement and the Standard Employee
Agreement as modified hereby set forth the entire agreement between you and
Nordson regarding the subject matter hereof and supersede all prior agreements
and understandings, whether oral or written, between you and Nordson with
respect to the subject matter. This Agreement and the Standard Employee
Agreement as modified hereby will be binding upon and inure to the benefit of
you and your heirs, executors, administrators, personal representatives,
successors, and assigns and Nordson and its successors and assigns.
<PAGE> 7
Mr. John E. Jackson
October 31, 1999 Page 7
Sincerely,
NORDSON CORPORATION
By /s/ Edward P. Campbell
-----------------------
Edward P. Campbell
President and Chief Executive Officer
I hereby accept and agree to all of the terms of this Agreement.
/s/ John E. Jackson 11/30/99
- -----------------------------
John E. Jackson
October 31, 1999
<PAGE> 8
Mr. John E. Jackson
October 31, 1999 Page 8
EXHIBIT 1(a)
MORTALITY TABLE
<PAGE> 9
Mr. John E. Jackson
October 31, 1999 Page 9
EXHIBIT 1(b)
SAMPLE CALCULATION OF LUMP SUM
SUPPLEMENTAL PENSION BENEFIT
<PAGE> 10
Mr. John E. Jackson
October 31, 1999 Page 10
EXHIBIT 2
SCHEDULE OF OUTSTANDING STOCK OPTIONS
1. Options Granted under Omnibus Plan
<TABLE>
<CAPTION>
Date of Grant No. of Options Exercise Price Expiration Date Date Must Exercise
- ------------- -------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
11/2/98 40,000 $44.81 11/2/08 11/2/08
11/3/97 16,000 $49.63 11/3/07 11/3/07
11/4/96 16,000 $55.25 11/4/06 11/4/06
10/30/95 16,000 $57.25 10/30/05 10/30/05
10/31/94 16,000 $57.00 10/31/04 10/31/04
11/1/93 16,000 $53.50 11/1/03 11/1/03
</TABLE>
2. Options Granted under Other Plans or Programs
<TABLE>
<CAPTION>
Date of Grant No. of Options Exercise Price Expiration Date Date Must Exercise
- ------------- -------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
11/2/92 16,000 $47.00 11/2/02 6/5/00
11/4/91 14,000 $42.50 11/4/01 6/5/00
10/29/90 20,000 $19.75 10/29/00 6/5/00
</TABLE>
<PAGE> 11
Mr. John E. Jackson
October 31, 1999 Page 11
EXHIBIT 3
STOCK TRANSFER ISSUES ARISING OUT OF
TERMINATION OF OFFICER STATUS
Insider Trading Prohibition.
- ----------------------------
The prohibition on trading in Nordson Common Shares while you are in
possession of "inside information" will continue to apply to you after
you cease to be an officer of Nordson.
Affiliate Status.
- -----------------
You have been an affiliate of Nordson because of your status as an
officer. You will continue to be deemed to be an affiliate for purposes
of federal securities laws until January 26, 2000, three months after
you cease to be an officer, but will not be deemed to be an affiliate
thereafter.
Accordingly, from October 26, 1999 through January 26, 2000, you will
be subject to the same restrictions on sales of your Nordson Common
Shares as applied while you were an officer of Nordson. You will be
able to sell Nordson Common Shares during this three-month period only
in compliance with the requirements of Rule 144.
After January 26, 2000, you will no longer be deemed to be an affiliate
of Nordson and, insofar as Rule 144 is concerned, there will be no
restrictions on your sale of (a) any unregistered Nordson Common Shares
that you have held for at least one year or (b) any registered Nordson
Common Shares, regardless of the holding period. We believe that all of
the Nordson Common Shares acquired by you from Nordson were registered,
and, therefore, that the one-year holding period does not apply to you.
Window Period.
- --------------
In order to comply with Nordson's policy on trading in Nordson Common
Shares by its associates, while you continue to be an employee of
Nordson, you may not purchase or sell Nordson Common Shares except
during an open window period and then only with the consent of the Vice
President - Law of Nordson.
Margin Restrictions.
- --------------------
<PAGE> 12
Mr. John E. Jackson
October 31, 1999 Page 12
For so long as you might be prevented either by Nordson's policy or by
federal securities laws from selling Nordson Common Shares on any given
day, you should not margin any of your Nordson Common Shares. Doing so
would subject you to a risk of a margin call when the margined stock
could not be sold. Accordingly, you should not margin any Nordson
Common Shares until after March 5, 2000, when you will no longer be
subject to Nordson's policy on purchase and sale of Nordson Common
Shares.
Section 16.
- -----------
You have been subject to Section 16 and the requirement that any
profits on purchases and sales within six months be disgorged to
Nordson.
After you cease to be an officer, you will no longer be subject to
Section 16 except that any purchase or sale by you after you cease to
be an officer may be matched with any sale or purchase that was made
during the preceding six months while you were an officer of Nordson.
For example, if you purchased Nordson Common Shares on August 31, 1999,
while you were still an officer of Nordson, that purchase could be
matched with a sale on or before February 29, 2000, even though you are
no longer an officer.
Reporting Obligation.
- ---------------------
Any sale or purchase that might be matched with a transaction while you
were still an officer of Nordson will have to be reported on a Form 4.
Accordingly, counsel to Nordson should be advised if you engage in any
transactions in Nordson Common Shares before the later of (i) October
26, 1999 and (ii) six months after any previous sale or purchase of
Nordson Common Shares by you while you were an officer of Nordson.
<PAGE> 1
Exhibit 10-t
NORDSON CORPORATION
28601 CLEMENS ROAD
WESTLAKE, OHIO 44145-1119
October 31, 1999
Personal and Confidential
- -------------------------
Mr. Thomas L. Moorhead
31127 Nantucket Row
Bay Village, OH 44140
Dear Tom:
This letter sets forth the agreement (this "Agreement") we have reached
regarding the termination of your status as an officer and employee of Nordson
Corporation ("Nordson"), the compensation and benefits to be paid to you, and
certain other matters. You should review this Agreement with legal counsel of
your choice to be certain that you understand and agree with all of the
provisions of this Agreement.
1. Retire as an Officer Effective December 31,1999. On December 31, 1999, your
status as an officer of Nordson, and of any subsidiaries and other affiliates of
Nordson of which you are an officer, and your status as a trustee of The Nordson
Corporation Foundation will cease. By signing this Agreement, you hereby retire
as an officer of Nordson and each such subsidiary and affiliate, and as a
trustee of The Nordson Corporation Foundation, effective as of that date. After
December 31, 1999, you will not hold yourself out as being an officer or
trustee, or as having any authority to bind, Nordson, any such subsidiary or
affiliate, or The Nordson Corporation Foundation.
2. Continued Employment through Termination Date. You will continue as an
employee of Nordson through December 31, 1999, unless your employment with
Nordson is terminated before that date for cause. For this purpose, "for cause"
means a material breach of the provisions of this Agreement or the Standard
Employee Agreement, signed by you and accepted by Nordson on July 18, 1983 (the
"Standard Employee Agreement"), including but not limited to a material breach
of the confidentiality provisions and the covenant not to compete in the
Standard Employee Agreement, following notice of the breach and an opportunity
to cure for 30 days after receipt of the notice. As used in this Agreement,
"Termination Date" means the earlier of (a) December 31, 1999, and (b) the date
of any such termination for cause.
3. Compensation. In consideration of your execution of this Agreement, your
continued employment with Nordson through the Termination Date, and your
observance of the other terms and conditions hereof, Nordson will pay to you or
your estate the following amounts and provide you with the following benefits:
<PAGE> 2
Mr. Thomas L. Moorhead
October 31, 1999 Page 2
1. Salary; Lump Sum Termination Benefit. Through the Termination Date,
Nordson will continue to pay your salary at the annual rate of
$180,000. In the first week of January 2000, Nordson will pay you a
lump sum termination benefit in the amount of $240,000.
2. Bonus. For the fiscal year ended October 31, 1999, Nordson will pay a
bonus to you under the Nordson Corporation 1995 Management Incentive
Compensation Plan to the extent earned by you, payable in the first
week of January 2000. For the period from November 1, 1999 through the
Termination Date, you will receive a severance bonus in the amount of
$148,500, payable in the first week of January 2001.
3. Stock Options. No additional stock options will be granted to you. Each
outstanding stock option previously granted to you under the Nordson
Corporation 1993 Long-Term Performance Plan, as amended (the "Omnibus
Plan"), will vest in full at the Termination Date (to the extent not
therefore vested) and may be exercised at any time before its
expiration, notwithstanding the earlier termination of your employment.
Each outstanding stock option granted to you under any plan or program
other than the Omnibus Plan may be exercised by you until the earlier
of (a) the termination of the option and (b) three months after the
Termination Date. A schedule of the outstanding stock options granted
to you is set forth in Exhibit 1 hereto.
d. Other Benefits. You will be entitled to other benefits as and to the
extent provided under the Nordson Salaried Employees' Pension Plan, the
Nordson Corporation Excess Defined Benefit Pension Plan, the Nordson
Employees' Savings Trust Plan, the Nordson Corporation Excess Defined
Contribution Retirement Plan, the Nordson Corporation Non-Union
Employees Stock Ownership Plan and Trust, and the Nordson Corporation
Officers' Deferred Compensation Plan. The lump sum termination benefit
referred to in paragraph 3(a) and the severance bonus referred to in
paragraph 3(b) will not be counted for purposes of determining the
amount of your benefits under any of Nordson's benefit plans. During
the continuation of your employment, you will be entitled to benefits
as and to the extent provided under Nordson's medical, dental, life
insurance, and disability income plans and programs. You will be
entitled to a car allowance pro-rated through the Termination Date, tax
preparation assistance for the 1999 and 2000 tax years, and
reimbursement of up to $5,000 for out-of-pocket expenses incurred by
you in connection with the preparation for and taking of the bar
examination in the State of Florida. After the Termination Date, you
and your family will be entitled to all benefits customarily extended
to retirees of the Company, including but not limited to medical
insurance coverage, as and to the extent provided by Nordson's programs
for retirees, as those programs may be amended from time to time.
4. Nordson Equipment and Property. Not later than the Termination Date, you will
return to Nordson any equipment and property that belongs to Nordson, and all
materials that contain any
<PAGE> 3
Mr. Thomas L. Moorhead
October 31, 1999 Page 3
Nordson confidential or proprietary information (including floppy disks and
other storage devices for computer files), that you may have in your possession.
After the Termination Date, you will not access any Nordson computer network,
whether directly or by use of a modem.
5. Termination of Change of Control Agreement. The Employment Agreement between
you and Nordson that is effective upon a change in control (the "Change of
Control Agreement") will be terminated as of the Termination Date, and, after
the Termination Date, you will have no rights or obligations under the Change of
Control Agreement.
6. Restrictions Applicable to Transactions in Nordson Common Shares. Even though
you will no longer be an officer of Nordson or of any subsidiary or other
affiliate of Nordson, certain restrictions will apply to any purchase or sale of
Nordson Common Shares by you. By signing this Agreement, you acknowledge that
you have received the summary of those restrictions that is attached to this
Agreement as Exhibit 2 hereto and agree that you will comply with those
restrictions.
7. Confidentiality; Nondisparagement; Cooperation. In consideration of the
payments and benefits to be provided to you by Nordson pursuant to this
Agreement:
1. You will not reveal any information regarding the substance of this
Agreement to any person or entity other than (i) your wife, (ii) your
personal accountant or other person preparing your tax returns, and
(iii) counsel retained by you in connection with this Agreement, and
you will be responsible to see to it that none of these people reveals
any information regarding the substance of this Agreement to any other
person or organization.
2. You will not disparage, attempt to discredit, or otherwise call into
disrepute Nordson, its affiliates, successors, assigns, officers,
directors, employees, or agents (in their capacity as agents of
Nordson), or any of their products or services, in any manner that
might damage the business or reputation of Nordson or its affiliates,
successors, assigns, officers, directors, employees, or agents. The
preceding sentence applies to any statement that disparages,
discredits, or calls into disrepute without regard to the truth or
falsehood of the statement.
3. You will not assist any party other than Nordson in any litigation or
investigation against Nordson or its affiliates, successors, assigns,
officers, directors, employees, or agents with respect to any facts or
circumstances existing at any time on or before the Termination Date,
except as may be required by law. If you believe any such action is
required by law, you will use your best efforts to afford Nordson the
opportunity to raise any objection that Nordson may have to the
purported requirement that such action be taken by you.
<PAGE> 4
Mr. Thomas L. Moorhead
October 31, 1999 Page 4
Your obligations under this paragraph 7 will remain in effect without any
limitation as to time.
8. Nondisparagement. In consideration of your execution of this Agreement,
Nordson agrees that none of its officers who have actual knowledge of the terms
of this Agreement will disparage you, attempt to discredit you, or otherwise
call you into disrepute in any manner that might damage your reputation. The
preceding sentence applies to any statement that disparages, discredits, or
calls into disrepute without regard to the truth or falsehood of the statement.
Nordson's obligations under this paragraph 8 will remain in effect without any
limitation as to time.
9. Release. In consideration of the payments and benefits to be provided to you
by Nordson pursuant to this Agreement:
1. For yourself, your heirs, executors, administrators, successors, and
assigns, you hereby release and discharge forever Nordson, its
affiliates, successors, assigns, officers, directors, employees, and
agents from any and all claims, demands, causes of action, losses, and
expenses, whether known or unknown, arising out of or in any way
connected with any facts or circumstances existing on or occurring
before the date of this Agreement or arising out of or in any way
connected with your employment by Nordson, the termination of your
employment, or any breach of contract (express or implied), promissory
estoppel, wrongful discharge, intentional infliction of emotional harm,
defamation, libel, slander, or other tort, or any violation of federal,
state, or municipal law relating to discrimination in employment,
including Title VII of the Civil Rights Act of 1964 (42 U.S.C. Section
2000(e) et seq.), Ohio Revised Code Section 4112 et seq., the Americans
with Disabilities Act of 1990, 42 U.S.C. Section 12101, or any state
laws of similar import.
2. You agree not to bring any suit or action in any court or
administrative agency against any of the beneficiaries of this release
arising out of or relating to the subject matter of this release.
Nothing in this paragraph 9 will release Nordson from its obligations under this
Agreement or prevent you from bringing an action to enforce or seek damages for
breach of this Agreement by Nordson.
10. Certain Statements and Procedures.
1. Nordson will make the following statement regarding your termination of
employment:
<PAGE> 5
Mr. Thomas L. Moorhead
October 31, 1999 Page 5
"Tom Moorhead has retired as Vice President - Law of Nordson. Tom
managed Nordson's legal affairs for 30 years, and we thank him for
his long and loyal service to the Company."
2. You may make the following statement regarding your termination of
employment:
"I retired on mutually agreed upon terms. I wish Nordson continued
success in the future."
c. If you request Nordson or any of its officers, directors, employees, or
agents to provide to any prospective employer a recommendation or
evaluation of your services to Nordson, they will be permitted to
provide the recommendation or evaluation to the employer. In that
event, you hereby waive any claim that you may have against them by
reason of the disclosure of the recommendation or evaluation, including
any claim that the recommendation or evaluation is unfair in any
respect.
d. Notwithstanding the foregoing, either party may communicate with its or
his own counsel, with counsel for the other party, and with such other
agents or representatives of the other party as may be authorized by
the other party.
11. Injunctive Relief. In the event of a breach by you of your obligations under
this Agreement or the Standard Employee Agreement, Nordson will be entitled to
an injunction against any further breach, as well as money damages suffered by
it or any of the beneficiaries of the release set forth in paragraph 9 above as
a result of the breach.
12. Legal Fees. If either party to this Agreement brings any suit or action to
enforce or seek damages for breach of this Agreement, the parties agree that the
court in which the suit or action is brought may, in its discretion, award to
the prevailing party recovery of his or its reasonable legal fees and expenses
incurred in the suit or action.
13. Governing Law; Venue. This Agreement will be governed by the laws of the
State of Ohio applicable to contracts made and to be performed entirely within
that state. Any suit, action, or other legal proceeding arising out of or
relating to this Agreement may only be brought in the Court of Common Pleas of
Cuyahoga County, Ohio. Nordson and you each (a) consents to the jurisdiction of
that court in any such suit, action, or proceeding and (b) waives, to the
fullest extent permitted by applicable law, any objection that it or he may have
to the laying of venue of any such suit, action, or proceeding in that court and
any claim that any such suit, action, or proceeding has been brought in an
inconvenient forum.
14. Withholding. All payments to be made by Nordson pursuant to this Agreement
are subject to applicable federal, state, and local tax withholding.
<PAGE> 6
Mr. Thomas L. Moorhead
October 31, 1999 Page 6
15. Entire Agreement, Binding Nature. This Agreement and the Standard Employee
Agreement as modified hereby set forth the entire agreement between you and
Nordson regarding the subject matter hereof and supersede all prior agreements
and understandings, whether oral or written, between you and Nordson with
respect to the subject matter. This Agreement and the Standard Employee
Agreement as modified hereby will be binding upon and inure to the benefit of
you and your heirs, executors, administrators, personal representatives,
successors, and assigns and Nordson and its successors and assigns.
Sincerely,
NORDSON CORPORATION
By /s/ Edward P. Campbell
-----------------------
Edward P. Campbell
President and Chief Executive Officer
I hereby accept and agree to all of the terms of this Agreement.
/s/ Thomas L. Moorhead
- ----------------------
Thomas L. Moorhead
October 31, 1999
<PAGE> 7
Mr. Thomas L. Moorhead
October 31, 1999 Page 7
EXHIBIT 1
SCHEDULE OF OUTSTANDING STOCK OPTIONS
1. Options Granted under Omnibus Plan
<TABLE>
<CAPTION>
Date of Grant No. of Options Exercise Price Expiration Date Date Must Exercise
- ------------- -------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
11/2/98 8,000 $44.81 11/2/08 11/2/08
11/3/97 6,000 $49.63 11/3/07 11/3/07
11/4/96 6,000 $55.25 11/4/06 11/4/06
10/30/95 6,000 $57.25 10/30/05 10/30/05
10/31/94 4,800 $57.00 10/31/04 10/31/04
11/1/93 4,800 $53.50 11/1/03 11/1/03
</TABLE>
2. Options Granted under Other Plans or Programs
<TABLE>
<CAPTION>
Date of Grant No. of Options Exercise Price Expiration Date Date Must Exercise
- ------------- -------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
11/2/92 4,800 $47.00 11/2/02 3/31/00
11/4/91 4,000 $42.50 11/4/01 3/31/00
10/29/90 1,600 $19.75 10/29/00 3/31/00
</TABLE>
<PAGE> 8
Mr. Thomas L. Moorhead
October 31, 1999 Page 8
EXHIBIT 2
STOCK TRANSFER ISSUES ARISING OUT OF
TERMINATION OF OFFICER STATUS
Insider Trading Prohibition.
- ----------------------------
The prohibition on trading in Nordson Common Shares while you are in
possession of "inside information" will continue to apply to you after
you cease to be an officer of Nordson.
Affiliate Status.
- -----------------
You have been an affiliate of Nordson because of your status as an
officer. You will continue to be deemed to be an affiliate for purposes
of federal securities laws until March 31, 2000, three months after you
cease to be an officer, but will not be deemed to be an affiliate
thereafter.
Accordingly, from December 31, 1999 through March 31, 2000, you will be
subject to the same restrictions on sales of your Nordson Common Shares
as applied while you were an officer of Nordson. You will be able to
sell Nordson Common Shares during this three-month period only in
compliance with the requirements of Rule 144.
After March 31, 2000, you will no longer be deemed to be an affiliate
of Nordson and, insofar as Rule 144 is concerned, there will be no
restrictions on your sale of (a) any unregistered Nordson Common Shares
that you have held for at least one year or (b) any registered Nordson
Common Shares, regardless of the holding period. We believe that all of
the Nordson Common Shares acquired by you from Nordson were registered,
and, therefore, that the one-year holding period does not apply to you.
Margin Restrictions.
- --------------------
For so long as you might be prevented by federal securities laws from
selling Nordson Common Shares on any given day, you should not margin
any of your Nordson Common Shares. Doing so would subject you to a risk
of a margin call when the margined stock could not be sold.
Accordingly, you should not margin any Nordson Common Shares until
after March 31, 2000, when you will no longer be subject to
restrictions on the purchase and sale of Nordson Common Shares.
<PAGE> 9
Mr. Thomas L. Moorhead
October 31, 1999 Page 9
Section 16.
- -----------
You have been subject to Section 16 and the requirement that any
profits on purchases and sales within six months be disgorged to
Nordson.
After you cease to be an officer, you will no longer be subject to
Section 16 except that any purchase or sale by you after you cease to
be an officer may be matched with any sale or purchase that was made
during the preceding six months while you were an officer of Nordson.
For example, if you purchase Nordson Common Shares on November 30,
1999, while you are still an officer of Nordson, that purchase could be
matched with a sale on or before April 30, 2000, even though you are no
longer an officer.
Reporting Obligation.
- ---------------------
Any sale or purchase that might be matched with a transaction while you
were still an officer of Nordson will have to be reported on a Form 4.
Accordingly, counsel to Nordson should be advised if you engage in any
purchase or sale of Nordson Common Shares before the later of (i)
December 31, 1999 and (ii) six months after any sale or purchase of
Nordson Common Shares by you while you were an officer of Nordson.
<PAGE> 1
Exhibit 13-a
MANAGEMENT'S DISCUSSION AND ANALYSIS
FISCAL YEARS 1999 AND 1998
Worldwide sales in 1999 reached a record level of $700.5 million, a 6 percent
increase over 1998 sales of $660.9 million. Volume gains exceeded 5 percent,
with favorable currency effects making up the remainder of the difference.
Nordson's sales outside the United States accounted for 56 percent of total
1999 sales, compared with 59 percent for 1998. Volume gains were achieved in two
of Nordson's four geographic regions in 1999. Sales volume in North America grew
13 percent for 1999, primarily due to the solid performance of recent
acquisitions as well as positive contributions from the Company's electronics,
automotive and nonwovens businesses. Local sales volume advanced 13 percent in
the Pacific South region, spurred by strong performance in China, Mexico and
Korea. Looking at other regions, sales volume declined 2 percent in Europe, with
the impact of weakened economic conditions felt across most businesses. Local
sales volume in Japan decreased 4 percent from the same period of 1998,
reflecting the ongoing softness in the Japanese economy. The above noted growth
statistics include price increases that averaged less than 2 percent on
standardized small systems and parts.
Worldwide volume gains were driven by the continued strong pace of activity
within the electronics business as well as increased sales of customized
nonwoven systems. Offsetting these increases, sales of powder coating equipment
decreased from the prior year, while sales of adhesive dispensing systems for
packaging and product assembly remained relatively constant compared to the
prior year. Volume gains were enhanced by full-year results from businesses
acquired in 1998 in addition to new businesses acquired in 1999.
Gross margins, expressed as a percentage of sales before the effects of
non-recurring charges, were 54.6 percent in 1999, compared with 55.1 percent in
1998. The influencing factor behind this decrease was a change in product mix as
the Company experienced higher growth in sales of engineered systems as compared
to standard products.
Selling and administrative costs, expressed as a percentage of sales and
excluding the effects of non-recurring charges, were 43.1 percent in 1999 and
43.3 percent in 1998. Spending for 1999 increased 6 percent over the prior
period, primarily due to recent business acquisitions. Excluding the effects of
acquisitions and foreign currency adjustments, spending increased less than 2
percent over the prior period.
The initial step taken as part of the Company's Action 2000 initiatives
(described more fully in the Letter to Shareholders) resulted in the recognition
of $3.0 million of non-recurring charges consisting of severance payments and
supplemental pension obligations. With respect to the ongoing impact of Action
2000, it is estimated that additional costs of $6 million, primarily related to
severance payments, will be incurred over the next two fiscal years.
Worldwide operating profits, expressed as a percentage of sales before the
effects of non-recurring charges, were 11.4 percent in 1999, compared with 11.8
percent for 1998, mainly as a result of lower gross margin rates. Regional
operating profit (loss) percentages in 1999 and 1998 were as follows:
REGION 1999 1998
- ------------------------------------------------------
North America 15% 17%
Europe 16% 17%
Japan 27% 21%
Pacific South 8% (5)%
Operating profit for Japan increased due to the strengthening of the
Japanese yen against the U.S. dollar. For the Pacific South region,
profitability improved with solid sales gains, while expenses remained
relatively constant over the prior period.
Interest expense increased $.6 million over the comparable period of 1998
mainly as a result of increased borrowing levels. Offsetting these higher
borrowing levels was a decrease in effective short term borrowing rates. In
addition, $.4 million of interest related to the implementation of an enterprise
management system was capitalized.
Nordson's effective tax rate was 33.5 percent in 1999 compared with a rate
of 46.5 percent in 1998. In 1998, the rate was influenced by the write-off of
in-process research and development, which is not tax deductible. Excluding this
item, the effective tax rate would have been 34.0 percent in 1998. The decrease
in the 1999 effective rate compared with 1998 can be traced to benefits from
research and development credits from prior years offset by increased state and
local taxes.
<PAGE> 2
Net income in 1999 was $47.5 million, or $2.84 per share on a diluted basis
compared with $20.8 million, or $1.25 per share on a diluted basis in 1998.
Excluding the effects of non-recurring charges, net income in 1999 was $49.5
million, or $2.96 per share, compared with $47.4 million, or $2.85 per share for
1998. Non-recurring charges on an after-tax basis totaled $2.0 million, or $.12
per share for 1999, and $26.6 million, or $1.60 per share on a diluted basis for
1998.
In-process technology acquired in 1998 from JM Laboratories, Inc. related
primarily to the development of a product that uses two different technologies
to form fibers. During 1999, product development was completed according to the
expected timeframe and at the level of development costs anticipated. A working
prototype of this product was made available to commercial customers in 1999. It
is anticipated that orders will be received from commercial customers during the
first half of 2000, with shipments of the product anticipated for later that
year.
Nordson has not yet adopted Financial Accounting Standards Board Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS
133). This statement is not expected to have a material effect on the Company's
financial statements.
FISCAL YEARS 1998 AND 1997
Worldwide sales in 1998 were $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 volume 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 regions. 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 JM 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 coating systems experiencing declines. Total sales
volume in the Pacific South region decreased 10 percent from the same period of
1997, influenced heavily by a drop-off in powder coating 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 demand for electronics and
UV-curing systems. Due to the sharp downturn in sales of powder coating
equipment in the Pacific South region, powder coating equipment shipments
increased only slightly over 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 region 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. These charges included $8.3 million for costs associated with an
early retirement program and other staff reductions; $7.4 million for inventory
and fixed asset write-downs for U.S. operations; $14.3 million for a portion of
the purchase price paid for JM 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 JM Laboratories, Inc. in 1998 related
primarily to the development of a product that uses two different technologies
to form fibers. As of the transaction date, product development was 92 percent
complete. At the date of acquisition, it was estimated that additional
development costs of approximately $100,000 would be expensed over a three-month
time 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.
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.
<PAGE> 3
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. Operating profits for Japan and the Pacific South regions
decreased due to global economic conditions in these markets. Regional operating
profit (loss) percentages in 1998 and 1997 were as follows:
REGION 1998 1997
- ------------------------------------------------------
North America 17% 17%
Europe 17% 15%
Japan 21% 28%
Pacific South (5)% 8%
Interest expense, net of interest income, increased $1.9 million due to
higher levels of borrowing, driven primarily by funding the acquisition of JM
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
rate included tax benefits related to prior years. Excluding these items, the
effective tax 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.
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, or $1.60 per
share on a diluted basis.
LIQUIDITY, CAPITAL EXPENDITURES AND SOURCES OF CAPITAL
Cash and cash equivalents increased $9.2 million. Cash provided by operations
was $81.3 million. Significant uses for cash included business acquisitions,
capital expenditures, dividends, repurchases of Nordson stock and scheduled
repayments of long-term debt. Additional cash needs were funded by $43.5 million
of short-term and long-term borrowings.
Non-cash assets and liabilities of businesses acquired totaled $26.6 million
and were funded by a combination of cash and short-term and long-term
obligations to sellers.
Nordson concentrated the majority of its 1999 capital expenditures on
information systems, primarily the implementation of an enterprise management
system as well as the upgrade of network capabilities.
Dividend payments to shareholders on a per share basis increased 9 percent
over 1998.
Purchases of treasury shares, net of shares issued, totaled $22.5 million.
The Company uses repurchased shares primarily for stock-based employee
compensation and incentive plans. At October 31, 1999, management had
authorization to repurchase on the open market, or in privately negotiated
transactions at the prevailing market price, up to 357,000 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
October 31, 1999, these lines totaled $460.1 million, of which $322.9 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 2000. There are no significant
restrictions limiting the transfer of funds from international subsidiaries to
the parent company.
In 1999, working capital, excluding notes payable, increased $11.4 million
to $226.7 million. Inventory turns as well as day's sales outstanding for 1999
both improved over the comparable period of 1998. Notes payable increased $43.5
million to fund a variety of cash needs. Customer advance payments decreased
$11.9 million as a result of orders being invoiced during the year for customer
advance payments acquired at the end of 1998.
<PAGE> 4
Property, plant and equipment increased $34.7, primarily due to the
capitalization of $22.8 million of costs associated with the implementation of
an enterprise management system. The increase in intangible assets of $21.8
million can be traced to the cost of business acquisitions being in excess of
the net assets acquired. Other liabilities increased mainly due to additional
pension and postretirement obligations.
EFFECTS OF FOREIGN CURRENCY
The impact of changes in foreign currency exchange rates on sales and operating
results cannot be precisely measured because of fluctuating selling prices,
sales volume, product mix and cost structures in each country where Nordson
operates. As a rule, a weakening of the U.S. dollar relative to foreign
currencies has a favorable effect on sales and net income, while a strengthening
of the U.S. dollar has a detrimental effect.
In 1999 compared with 1998, the U.S. dollar was generally weaker against
foreign currencies. If 1998 exchange rates had been in effect during 1999, sales
would have been approximately $3.9 million lower and third-party costs would
have been approximately $1.8 million lower. In 1998 compared with 1997, the U.S.
dollar was stronger, primarily against the Japanese yen. If exchange rates for
1997 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. These effects on reported sales do not include the impact
of local price adjustments made in response to changes in currency exchange
rates.
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 currencies 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 use of foreign exchange contracts on a routine
basis to reduce the risks related to nearly all of the Company's transactions
denominated in foreign currencies as of October 31, 1999, the Company did not
have a material foreign currency risk related to its derivatives or other
financial instruments.
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 use of these interest rate swaps, at October 31, 1999, the Company did
not have a material interest rate risk related to its derivatives or other
financial instruments.
INFLATION
Inflation affects profit margins because the ability to pass cost increases on
to 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 42 and 43 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.
<PAGE> 5
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 addressed this issue for its information systems, products,
equipment (with embedded microprocessors), facilities, suppliers and vendors. As
a result, Nordson has experienced no significant operational difficulties
related to the Year 2000 issue through the first two weeks of the new year.
Nordson's plan to resolve the Year 2000 issue involved the following four
phases: assessment, remediation, testing and implementation. The assessment
phase was completed as of the end of fiscal year 1998. The results of assessment
indicated that most of the Company's significant information systems could be
affected, including order-entry, manufacturing, distribution, invoicing and
collection systems. Nordson completed the remediation, testing and
implementation phases of its Year 2000 readiness program during 1999 for all
information technology systems, telecommunications equipment and operating
equipment, mainly the internal, local-area computer networks and computer
workstations.
Based on extensive inquiries of its major suppliers as to the status of
their Year 2000 readiness and visits to selected supplier sites, Nordson is not
aware of any third parties with a Year 2000 issue that could 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 were
Year 2000 ready.
Nordson utilized 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 was
approximately $5.1 million and was funded through operating cash flows.
Nordson believes that the steps referred to above have minimized its
business risk related to the Year 2000, as the Company experienced no
significant problems associated with the Year 2000 issue through the first two
weeks of the new year. 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 which 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,
but are not limited to: deferral of orders, customer-requested delays in system
installations, currency exchange rate fluctuations, a sales mix different from
assumptions, significant changes in local business conditions in geographic
regions in which the Company conducts business, and unanticipated delays or
higher than expected costs associated with the implementation of the Company's
new enterprise management system.
In the case of Year 2000 readiness issues, factors that could cause the
Company's actual results to differ materially from the expected results include,
but are not limited to: 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 October 31, 1999, November 1, 1998
and November 2, 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
(In thousands except for per share amounts)
<S> <C> <C> <C>
SALES $700,465 $660,900 $636,710
OPERATING COSTS AND EXPENSES:
Cost of sales 318,230 303,671 276,425
Selling and administrative expenses 302,250 286,120 286,226
Acquired research and development -- 14,300 --
Other non-recurring charges 3,000 11,738 --
- ----------------------------------------------------------------------------------------------------------------------------
623,480 615,829 562,651
- ----------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 76,985 45,071 74,059
Other income (expense):
Interest expense (10,244) (9,647) (7,763)
Interest and investment income 1,601 658 638
Other - net 3,096 2,845 4,811
- ----------------------------------------------------------------------------------------------------------------------------
(5,547) (6,144) (2,314)
- ----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 71,438 38,927 71,745
Income taxes:
Current 23,476 21,219 21,548
Deferred 456 (3,117) 230
- ----------------------------------------------------------------------------------------------------------------------------
23,932 18,102 21,778
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 47,506 $ 20,825 $ 49,967
- ----------------------------------------------------------------------------------------------------------------------------
COMMON SHARES 16,524 16,542 17,276
Incremental common shares attributable to
outstanding stock options, nonvested stock, and
deferred stock-based compensation 218 119 277
- ----------------------------------------------------------------------------------------------------------------------------
COMMON SHARES AND COMMON SHARE EQUIVALENTS 16,742 16,661 17,553
- ----------------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE $2.87 $1.26 $2.89
DILUTED EARNINGS PER SHARE $2.84 $1.25 $2.85
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 1
Exhibit 13-c
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
OCTOBER 31, 1999 AND NOVEMBER 1, 1998 1999 1998
============================================================================================================================
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,030 $ 6,820
Marketable securities 30 30
Receivables 170,519 165,286
Inventories 119,504 124,352
Deferred income taxes 28,563 24,336
Prepaid expenses 6,670 7,652
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 341,316 328,476
Property, plant and equipment - net 128,639 101,183
Intangible assets - net 101,388 84,345
Deferred income taxes 8,839 13,220
Other assets 11,608 11,720
- ----------------------------------------------------------------------------------------------------------------------------
$591,790 $538,944
============================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $137,311 $ 93,851
Accounts payable 35,849 33,753
Income taxes payable 2,947 4,541
Accrued liabilities 59,345 53,679
Customer advance payments 4,752 16,662
Current maturities of long-term debt 7,822 862
Current obligations under capital leases 3,914 3,734
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 251,940 207,082
Long-term debt 61,762 66,564
Obligations under capital leases 4,213 3,880
Pension and retirement obligations 49,549 44,196
Other liabilities 2,928 2,447
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 97,167 92,030
Retained earnings 455,494 423,887
Accumulated other comprehensive loss (7,521) (4,792)
Common shares in treasury, at cost (335,656) (308,368)
Deferred stock-based compensation (339) (235)
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 221,398 214,775
- ----------------------------------------------------------------------------------------------------------------------------
$591,790 $538,944
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 1
Exhibit 13-d
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31, 1999, NOVEMBER 1, 1998
AND NOVEMBER 2, 1997 1999 1998 1997
==============================================================================================================================
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $47,506 $20,825 $49,967
Adjustments to reconcile net income to net cash
provided by operating activities:
Non-recurring charges 3,000 32,960 --
Depreciation 22,257 18,414 20,144
Amortization 7,043 6,589 5,163
Provision for losses on receivables 1,374 1,022 1,267
Deferred income taxes 215 (1,152) (613)
Other 1,165 1,718 5,560
Changes in operating assets and liabilities:
Receivables (2,378) 598 (15,129)
Inventories 6,126 (5,210) (8,896)
Other current assets 1,234 2,155 (1,491)
Other non-current assets (3,218) (3,842) (2,337)
Accounts payable 836 (5,534) 3,719
Income taxes payable (997) 1,204 (8,840)
Accrued liabilities 3,178 (5,720) 4,193
Customer advance payments (11,942) 2,183 (126)
Other non-current liabilities 5,905 3,984 (334)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 81,304 70,194 52,247
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (45,644) (15,436) (15,939)
Proceeds from sale of property, plant and equipment 151 441 928
Acquisition of businesses (26,624) (37,021) (993)
Proceeds from sales or maturities of marketable securities -- 170 110
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (72,117) (51,846) (15,894)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (repayment of) short-term borrowings 40,867 18,921 (20,392)
Proceeds from long-term debt 2,590 5,000 50,000
Repayment of long-term debt (850) (8,245) (1,625)
Repayment of capital lease obligations (4,665) (5,320) (4,068)
Issuance of common shares 6,641 21,431 6,993
Purchase of treasury shares (29,121) (29,987) (59,854)
Dividends paid (15,899) (14,527) (13,814)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (437) (12,727) (42,760)
Effect of exchange rate changes on cash 460 (318) (1,297)
- ------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,210 5,303 (7,704)
Cash and cash equivalents at beginning of year 6,820 1,517 9,221
- ------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $16,030 $ 6,820 $ 1,517
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 1
Exhibit 13-e
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON SHARES ACCUMULATED
IN TREASURY CAPITAL IN OTHER DEFERRED
YEARS ENDED OCTOBER 31, 1999, ---------------- COMMON EXCESS OF RETAINED COMPREHENSIVE STOCK-BASED
NOVEMBER 1, 1998 AND NOVEMBER 2, 1997 SHARES AMOUNT SHARES STATED VALUE EARNINGS INCOME (LOSS) COMPENSATION TOTAL
===================================================================================================================================
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 3, 1996 6,872 $(219,398) $12,253 $63,996 $381,436 $ 7,392 $(382) $245,297
Net income 49,967 49,967
Translation adjustments (8,369) (8,369)
--------
Total comprehensive income 41,598
Shares issued under
company stock and
employee benefit plans (387) 2,527 11,903 (346) 14,084
Amortization of deferred
stock-based compensation 325 325
Purchase of treasury shares 1,182 (66,945) (66,945)
Dividends - $.80 per share (13,814) (13,814)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT NOVEMBER 2, 1997 7,667 (283,816) 12,253 75,899 417,589 (977) (403) 220,545
Net income 20,825 20,825
Translation adjustments (3,815) (3,815)
--------
Total comprehensive income 17,010
Shares issued for acquisition
of new business and under
company stock and employee
benefit plans (570) 8,058 16,131 (135) 24,054
Amortization of deferred
stock-based compensation 303 303
Purchase of treasury shares 669 (32,610) (32,610)
Dividends - $.88 per share (14,527) (14,527)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT NOVEMBER 1, 1998 7,766 (308,368) 12,253 92,030 423,887 (4,792) (235) 214,775
Net income 47,506 47,506
Translation adjustments (2,729) (2,729)
--------
Total comprehensive income 44,777
Shares issued for acquisition
of new business and under
company stock and employee
benefit plans (206) 3,931 5,137 (329) 8,739
Amortization of deferred
stock-based compensation 225 225
Purchase of treasury shares 579 (31,219) (31,219)
Dividends - $.96 per share (15,899) (15,899)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 31, 1999 8,139 $(335,656) $12,253 $97,167 $455,494 $(7,521) $(339) $221,398
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 1
Exhibit 13f
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 contained 52 weeks in 1999, 1998 and 1997. To
facilitate reporting of consolidated accounts, the fiscal year for the Company's
international operations ends on September 30.
REVENUE RECOGNITION -- Revenues are recognized when customer orders are complete
and shipped. Accruals for the cost of product warranties are maintained for
anticipated future claims.
ADVERTISING COSTS -- Advertising costs are expensed as incurred and amounted to
$6,621,000 in 1999 ($5,669,000 in 1998 and $6,410,000 in 1997).
RESEARCH AND DEVELOPMENT -- Research and development costs are charged to
expense as incurred and amounted to $29,672,000 in 1999 ($42,640,000 in 1998 and
$29,812,000 in 1997). 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 October 31, 1999, 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 42 percent of
consolidated inventories at October 31, 1999 (43 percent at November 1, 1998).
The first-in, first-out (FIFO) method is used for all other inventories.
Consolidated inventories would have been $8,207,000 and $8,579,000 higher than
reported at October 31, 1999 and November 1, 1998, 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 35
years. The Company assesses the recoverability of the costs in excess of net
assets of acquired businesses by reviewing for impairment losses whenever events
or changes in circumstances indicate the carrying amount may not be recovered
through future net cash flows generated by the assets.
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 accumulated other comprehensive income
(loss), 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 accumulated other
comprehensive income (loss). For subsidiaries operating in highly inflationary
economies, gains and losses from foreign currency transactions and translation
adjustments are included in net earnings.
COMPREHENSIVE INCOME -- Accumulated other comprehensive income (loss) at October
31, 1999, November 1, 1998, and November 2, 1997 consisted entirely of foreign
currency translation adjustments.
PRESENTATION -- Certain 1998 and 1997 amounts have been reclassified to conform
with the 1999 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.
In 1999, the Company adopted FASB Statement No. 130, "Reporting Comprehensive
Income" (FAS 130); Statement No. 131, "Disclosure about Segments of an
Enterprise and Related Information" (FAS 131); and Statement No. 132,
"Employers' Disclosures About Pensions and Other Postretirement Benefits" (FAS
132). FAS 130 establishes standards for reporting comprehensive income, FAS 131
requires reporting certain information about operating segments, and FAS 132
revises employers' disclosures about pension and other postretirement benefit
plans.
The FASB has issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). Statement No. 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. The
Company must adopt FAS 133 no later than fiscal year 2001. This statement is not
expected to have a material effect on the financial statements.
NOTE 3 -- NON-RECURRING CHARGES
During the fourth quarter of 1999, Nordson recognized non-recurring pre-tax
charges of $3.0 million ($2.0 million on an after-tax basis or $.12 per share).
The charges consist of severance payments and supplemental pension obligations
and were recorded below selling and administrative expenses in the Consolidated
Statement of Income.
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 JM 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
Effective October 31, 1999, the Company adopted FASB Statement No. 132,
"Employers' Disclosures About Pensions and Other Postretirement Benefits." This
statement revises employers' disclosures about pensions and other postretirement
benefit plans. Previously reported information has been restated to conform with
FAS 132 requirements.
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 1999, 1998 and 1997 was approximately $3,913,000,
$4,446,000 and $2,489,000, respectively.
<PAGE> 3
PENSION AND OTHER POSTRETIREMENT 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 also sponsors an unfunded supplemental pension plan for certain
employees. The Company's international subsidiaries fund their pension plans
according to local requirements. The Company also 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.
A reconciliation of the benefit obligations, plan assets, accrued benefit cost
and the amount recognized in financial statements for these plans is as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS
---------------- -----------------------------
1999 1998 1999 1998
======================================================================================================================
(In thousands)
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 95,213 $ 69,334 $ 14,532 $ 10,802
Service cost 3,733 3,473 620 379
Interest cost 6,482 5,407 923 882
Amendments 1,900 7,040 -- 756
Assumption change -- -- (1,734) --
Foreign currency exchange rate change 736 (110) -- --
Actuarial loss (gain) 2,953 12,883 (616) 2,023
Benefits paid from plan assets (3,867) (2,814) (419) (310)
- ----------------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year $107,150 $ 95,213 $ 13,306 $ 14,532
======================================================================================================================
Change in plan assets:
Beginning fair value of plan assets $ 71,571 $ 67,588 $ -- $ --
Actual return on plan assets 6,187 5,865 -- --
Company contributions 853 696 419 310
Foreign currency exchange rate change (140) 236 -- --
Benefits paid from plan assets (3,867) (2,814) (419) (310)
- ----------------------------------------------------------------------------------------------------------------------
Ending fair value of plan assets $ 74,604 $ 71,571 $ -- $ --
======================================================================================================================
Reconciliation of accrued cost:
Funded status of the plan $(32,546) $(23,642) $(13,306) $(14,532)
Unrecognized actuarial loss (gain) 1,266 (2,209) (684) 1,666
Unamortized prior service cost 2,519 858 -- --
Unrecognized net transition obligation (218) (174) -- --
- ----------------------------------------------------------------------------------------------------------------------
Accrued benefit cost $(28,979) $(25,167) $(13,990) $(12,866)
======================================================================================================================
Reconciliation of amount recognized in financial statements:
Prepaid benefit cost $ 601 $ 792 $ -- $ --
Accrued benefit liability (30,499) (26,240) (13,990) (12,866)
Intangible asset 919 281 -- --
- ----------------------------------------------------------------------------------------------------------------------
Total amount recognized in financial statements $(28,979) $(25,167) $(13,990) $(12,866)
======================================================================================================================
</TABLE>
<PAGE> 4
The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for pension plans with accumulated benefit obligations in
excess of plan assets were $107,150,000, $93,412,000 and $74,604,000,
respectively as of October 31, 1999 and $86,555,000, $74,405,000 and $61,777,000
as of November 1, 1998.
Net pension and other postretirement benefit costs include the following
components:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS
-------------------------- -----------------------------
1999 1998 1997 1999 1998 1997
=============================================================================================================
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Service cost $3,733 $ 3,473 $ 4,294 $ 620 $ 379 $ 383
Interest cost 6,482 5,407 5,381 923 882 810
Expected return on plan assets (6,100) (5,814) (10,306) -- -- --
Amortization and deferrals 397 579 8,898 -- -- --
Termination benefit cost 825 7,040 -- -- 756 --
- -------------------------------------------------------------------------------------------------------------
Total benefit cost $5,337 $10,685 $ 8,267 $1,543 $2,017 $1,193
=============================================================================================================
</TABLE>
For pensions, the actuarial value of projected benefit obligations at the end of
1999 and 1998 was determined using a weighted average discount rate of 6.7 and
6.9 percent, respectively, and a rate of increase in future compensation levels
of 3.5 and 4.0 percent, respectively. Plan assets consist primarily of stocks
and bonds. The expected long-term rate of return on plan assets was 9.5 percent
for 1999 and 8.0 percent for 1998 and 1997.
For other postretirement benefits, the discount rate used in determining the
accumulated postretirement benefit obligation at the end of 1999 and 1998 was
7.5 and 7.0 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 6.0
percent for 2000, 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, a one percentage point change in the assumed
health care cost trend rate would have the following effects:
1% POINT 1% POINT
INCREASE DECREASE
================================================================================
Effect on total service and
interest cost components in 1999 $ 373,000 $ (285,000)
Effect on postretirement obligation
as of October 31, 1999 $ 2,703,000 $ (2,115,000)
================================================================================
<PAGE> 5
Note 5 -- Income taxes
Income tax expense includes the following:
1999 1998 1997
================================================================================
(In thousands)
Current:
U.S. federal $ 8,351 $ 8,444 $ 8,319
State and local 860 844 570
Foreign 14,265 11,931 12,659
- --------------------------------------------------------------------------------
Total current 23,476 21,219 21,548
Deferred:
U.S. federal 405 (1,793) (603)
State and local 207 (577) 198
Foreign (156) (747) 635
- --------------------------------------------------------------------------------
Total deferred 456 (3,117) 230
- --------------------------------------------------------------------------------
$ 23,932 $ 18,102 $ 21,778
================================================================================
The reconciliation of the United States statutory federal income tax rate to the
worldwide consolidated effective tax rate follows:
1999 1998 1997
================================================================================
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 (3.7) (4.4) (3.8)
Foreign tax rate variances,
net of foreign tax credits 3.0 3.9 1.4
State and local taxes, net
of federal income tax
benefit 1.3 (.2) .9
Benefits related to
prior years (2.2) -- (2.6)
Other - net .1 (.3) (.5)
- --------------------------------------------------------------------------------
Effective tax rate 33.5% 46.5% 30.4%
================================================================================
Earnings before income taxes of international operations were $30,466,000,
$23,209,000, and $28,891,000 in 1999, 1998 and 1997, 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 $52,033,000 and
$39,179,000 at October 31, 1999 and November 1, 1998, 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:
1999 1998
================================================================================
(In thousands)
Deferred tax assets:
Sales to international subsidiaries and
related consolidation adjustments $14,139 $16,805
Employee benefits 16,988 13,659
Other accruals not currently
deductible for taxes 6,600 7,226
Inventory adjustments 2,249 2,299
Translation of foreign currency
accounts 2,110 1,398
Other - net 504 699
- --------------------------------------------------------------------------------
Total deferred tax assets 42,590 42,086
Deferred tax liabilities:
Depreciation 4,149 3,420
Other - net 1,039 1,110
- --------------------------------------------------------------------------------
Total deferred tax liabilities 5,188 4,530
- --------------------------------------------------------------------------------
Net deferred tax assets $37,402 $37,556
================================================================================
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 $2,018,000 in 1999 ($1,528,000 in 1998 and
$1,203,000 in 1997).
<PAGE> 6
NOTE 7 -- DETAILS OF BALANCE SHEET
1999 1998
===============================================================================
(In thousands)
Receivables:
Accounts $ 153,099 $ 146,368
Notes 17,126 17,173
Other 3,633 4,731
- -------------------------------------------------------------------------------
173,858 168,272
Allowance for doubtful accounts (3,339) (2,986)
- -------------------------------------------------------------------------------
$ 170,519 $ 165,286
===============================================================================
Inventories:
Finished goods $ 38,731 $ 49,897
Work-in-process 29,232 24,914
Raw materials and finished parts 51,541 49,541
- -------------------------------------------------------------------------------
$ 119,504 $ 124,352
===============================================================================
Property, plant and equipment:
Land $ 3,225 $ 3,282
Land improvements 2,677 2,781
Buildings 66,904 63,752
Machinery and equipment 140,598 130,106
Construction-in-progress 31,310 10,016
Leased property under
capitalized leases 14,035 14,098
- -------------------------------------------------------------------------------
258,749 224,035
Accumulated depreciation
and amortization (130,110) (122,852)
- -------------------------------------------------------------------------------
$ 128,639 $ 101,183
===============================================================================
Intangible assets:
Costs in excess of net assets of
acquired businesses $ 124,728 $ 105,515
Other 8,330 5,695
- -------------------------------------------------------------------------------
133,058 111,210
Accumulated amortization (31,670) (26,865)
- -------------------------------------------------------------------------------
$ 101,388 $ 84,345
===============================================================================
Accrued liabilities:
Salaries and other compensation $ 28,795 $ 23,496
Pension and retirement 2,782 4,151
Taxes other than income taxes 4,563 4,314
Other 23,205 21,718
- -------------------------------------------------------------------------------
$ 59,345 $ 53,679
===============================================================================
NOTE 8 -- 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 $1,082,000 to $2,078,000 and
approximate market rates.
Rent expense for all operating leases was approximately $9,603,000 in 1999,
$8,664,000 in 1998 and $8,578,000 in 1997.
Assets held under capitalized leases and included in property, plant and
equipment are as follows:
1999 1998
================================================================================
(In thousands)
Transportation equipment $ 13,036 $ 12,265
Other 999 1,833
- -------------------------------------------------------------------------------
Total capitalized leases 14,035 14,098
Accumulated amortization (5,908) (6,283)
- -------------------------------------------------------------------------------
Net capitalized leases $ 8,127 $ 7,815
================================================================================
At October 31, 1999, future minimum lease payments under non-cancelable
capitalized and operating leases are as follows:
CAPITALIZED OPERATING
LEASES LEASES
================================================================================
(In thousands)
Fiscal Year Ending:
2000 $ 5,002 $ 7,861
2001 3,234 6,166
2002 1,684 5,330
2003 376 4,936
2004 33 3,919
Later years -- 22,057
- --------------------------------------------------------------------------------
Total minimum lease payments 10,329 $50,269
--------
Less amount representing
executory costs 770
- --------------------------------------------------------
Net minimum lease payments 9,559
Less amount representing interest 1,432
- --------------------------------------------------------
Present value of net minimum
lease payments 8,127
Less current portion 3,914
- --------------------------------------------------------
Long-term obligations at
October 31, 1999 $ 4,213
========================================================
<PAGE> 7
NOTE 9 -- NOTES PAYABLE
Bank lines of credit and notes payable are summarized as follows:
1999 1998
================================================================================
(In thousands)
Available bank lines of credit:
Domestic banks $363,645 $324,300
Foreign banks 96,425 95,353
- -------------------------------------------------------------------------------
Total $460,070 $419,653
================================================================================
Notes payable:
Domestic bank debt $105,495 $ 52,300
Foreign bank debt 31,686 36,551
Other 130 5,000
- -------------------------------------------------------------------------------
Total $137,311 $ 93,851
================================================================================
Weighted average interest rate
on notes payable 4.1% 4.3%
Unused bank lines of credit $322,889 $330,802
================================================================================
Included in the domestic available amount above is $215,000,000 of revolving
credit agreements with a group of banks. The agreements expire on various dates
in 2002 and 2003 and require payment of commitment fees. Other 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. Other notes payable
include promissory notes issued in connection with business acquisitions.
NOTE 10 -- LONG-TERM DEBT
The long-term debt of the Company is as follows:
1999 1998
================================================================================
(In thousands)
Senior notes $50,000 $50,000
Industrial revenue bonds--
Gwinnett County, Georgia 6,000 6,000
Industrial revenue bonds--
City of Westlake, Ohio 2,550 3,400
Acquisition financing notes 9,152 6,562
Leasehold improvements financing note 1,882 1,464
- --------------------------------------------------------------------------------
69,584 67,426
Less current maturities 7,822 862
- --------------------------------------------------------------------------------
Total $61,762 $66,564
================================================================================
SENIOR NOTES -- 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 at
October 31, 1999 the Company's effective borrowing rate was 6.22 percent.
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 3.60 percent at
October 31, 1999. The bonds are secured by a $6,300,000 standby letter of
credit.
INDUSTRIAL REVENUE BONDS -- CITY OF WESTLAKE, OHIO -- These bonds were issued in
connection with the construction of the Company's world headquarters in
Westlake, Ohio. The bonds are due in annual installments of $850,000 extending
through 2002 with interest payable quarterly. The tax-free interest rate varies
weekly and was 3.60 percent at October 31, 1999. The bonds are secured by a
$2,659,000 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 6.09
percent at October 31, 1999.
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 at October 31, 1999 the Company's effective borrowing rate
was negative .24 percent.
ANNUAL MATURITIES -- The annual maturities of long-term debt for the five years
subsequent to October 31, 1999 are as follows: $7,822,000 in 2000, $4,230,000 in
2001, $1,450,000 in 2002, $600,000 in 2003, and $600,000 in 2004.
GUARANTEES -- At October 31, 1999 and November 1, 1998, the Company had issued
$3,311,000 and $3,263,000, respectively, of guarantees to support the term
borrowing facilities of an unconsolidated affiliate.
<PAGE> 8
NOTE 11 -- FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Company's financial instruments,
other than receivables and accounts payable, are as follows:
CARRYING FAIR
AMOUNT VALUE
================================================================================
(In thousands)
1999:
Cash and cash equivalents $ 16,030 $ 16,030
Marketable securities 30 30
Notes payable (137,311) (137,311)
Long-term debt (69,584) (65,066)
Forward exchange contracts (145) (370)
Interest rate swaps -- (637)
================================================================================
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 swap -- 2,982
================================================================================
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 October 31,
1999:
SELL BUY
================================================================================
(In thousands)
Contract amount:
Japanese yen $22,549 $11,010
Euro 21,221 17,147
Pound sterling 10,805 983
German marks 5,556 804
French francs 3,322 --
Other 9,952 5,259
- --------------------------------------------------------------------------------
Total $73,405 $35,203
================================================================================
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
October 31, 1999, there were no significant concentrations of credit risk.
<PAGE> 9
NOTE 12 -- CAPITAL SHARES
PREFERRED -- The Company has authorized 10,000,000 Series A convertible
preferred shares without par value. No preferred shares were outstanding in
1999, 1998 or 1997.
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 1999, 1998 and 1997,
there were 24,506,000 common shares issued. At October 31, 1999 and November 1,
1998, the number of outstanding common shares, net of treasury shares, was
16,367,000 and 16,740,000, respectively. Treasury shares are reissued using the
first-in, first-out method.
NOTE 13 -- COMPANY STOCK PLANS
LONG-TERM PERFORMANCE PLAN -- The Company's long-term performance plan, adopted
in 1993, provides for the granting of stock options, stock appreciation rights,
restricted stock, stock purchase rights, stock equivalent units, cash awards,
and other stock or performance-based incentives. The number of common shares
available for grant of awards is 3.0 percent of the number of common shares
outstanding as of the first day of each fiscal year, plus up to an additional
0.5 percent, consisting of shares available, but not granted, in prior years. At
the beginning of fiscal 2000, there were 562,000 shares available for grant in
2000.
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:
WEIGHTED
AVERAGE
EXERCISE
NUMBER OF PRICE
OPTIONS PER SHARE
================================================================================
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
Granted 464,440 $45.26
Exercised (118,341) $32.81
Forfeited (62,863) $55.64
- --------------------------------------------------------------------------------
Outstanding at October 31, 1999 2,741,457 $50.49
================================================================================
Exercisable at October 31, 1999 1,529,251 $50.90
================================================================================
Summarized information on currently outstanding options follows:
RANGE OF EXERCISE PRICE
$19 - $34 $34 - $49 $49 - $64
================================================================================
Number outstanding 88,286 311,081 2,342,090
Weighted-average remaining
contractual life, in years 1.0 2.7 6.9
Weighted-average
exercise price $ 19.75 $ 44.82 $ 52.41
- --------------------------------------------------------------------------------
Number exercisable 88,286 311,081 1,129,884
Weighted-average
exercise price $ 19.75 $ 44.82 $ 55.01
================================================================================
Pro forma information regarding net income and earnings per share has been
determined as if the Company had accounted for employee stock options granted
since 1996 under the fair value method. Under this method, the estimated fair
value of the options is amortized to expense over the options' vesting period.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option-pricing model with the following weighted-average
assumptions: risk-free interest rates ranging from 5.91 percent to 6.17 percent,
dividend yield of 1.35 percent, expected volatility of .23, and an expected life
of seven years.
<PAGE> 10
Pro forma information follows:
1999 1998 1997
================================================================================
(In thousands except for per share amounts)
Net income:
As reported $47,506 $20,825 $49,967
Pro forma $43,572 $18,335 $47,789
Diluted earnings per share:
As reported $ 2.84 $ 1.25 $ 2.85
Pro forma $ 2.61 $ 1.10 $ 2.72
Weighted-average fair value
of options granted during
the year $ 15.19 $ 14.98 $ 18.49
================================================================================
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 1999, 1998 and 1997.
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 2,741,000 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 1999, there were 5,944 restricted shares granted at a weighted average
fair value of $51.17 per share (3,700 and $49.89 in 1998 and 6,550 and $55.46 in
1997). Net amortization was $225,000 in 1999 ($303,000 in 1998 and $325,000 in
1997).
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 1999, 1998 and 1997.
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 $1,325,000 in 1999 and $685,000 in
1998. 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 $1,063,000, $-0- and $962,000 in 1999, 1998 and
1997, respectively. The number of allocated ESOP shares outstanding was 442,000
at October 31, 1999 and 443,000 at November 1, 1998.
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 October 31, 1999, there were
41,072,000 shares reserved for future issuance through the exercise of
outstanding options or rights, including 38,293,000 shares under the shareholder
rights plan.
<PAGE> 11
NOTE 14 -- SUPPLEMENTAL INFORMATION FOR THE STATEMENT OF CASH FLOWS
1999 1998 1997
================================================================================
(In thousands)
Cash operating activities:
Interest paid $ 9,417 $ 9,692 $ 7,126
Income taxes paid 28,501 18,673 25,233
================================================================================
Noncash investing and
financing activities:
Capitalized lease
obligations incurred $ 5,757 $ 5,822 $ 4,680
Capitalized lease
obligations terminated 1,102 1,018 1,325
Shares acquired and
issued through exercise
of stock options 2,098 2,623 7,091
================================================================================
Noncash assets and liabilities
of businesses acquired:
Working capital $ 4,901 $ (897) $ 252
Property, plant and
equipment 1,032 2,232 --
Intangibles and other 21,279 41,254 741
Long-term debt and
other liabilities (588) (5,568) --
================================================================================
$ 26,624 $ 37,021 $ 993
NOTE 15 -- ACQUISITIONS
Business acquisitions have been accounted for as purchases, with the acquired
assets and liabilities recorded at their estimated fair value at the dates of
acquisition. The cost in excess of the net assets of the business acquired is
included in intangible assets.
In January 1999 and March 1999, the Company acquired manufacturers of systems
that use gas plasma technology. In July 1999, the Company acquired a
manufacturer of cold adhesive application equipment and verification systems,
and in September 1999, a manufacturer of ultraviolet curing lamps.
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.
The cost of acquisitions amounted to $29,213,000 in 1999 and $39,543,000 in
1998. The 1998 amount includes the issuance of 436,000 shares which had a value
of $19,939,000. 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 1999 and 1998, pro
forma results for 1999 and 1998, respectively, would not be materially
different.
NOTE 16 -- OPERATING SEGMENTS AND GEOGRAPHIC AREA DATA
Effective October 31, 1999, the Company adopted FASB Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" (FAS 131).
This statement requires the presentation of descriptive information about
reportable segments that is consistent with the way management operates the
Company. Previously reported segment and geographic information has been
restated to conform with FAS No. 131 requirements.
The Company conducts business across four geographical areas: North America,
Europe, Japan and Pacific South. The composition of segments and measure of
segment profitability is consistent with that used by the Company's management.
The primary measurement focus is operating profit, which equals sales less
operating costs and expenses. Operating profit excludes interest income
(expense), investment income (net) and other income (expense). Intersegment
sales and transfers are based on the costs to manufacture plus a reasonable
profit element. Items below the operating income line of the Consolidated
Statement of Income are not presented by segment, since they are excluded from
the measure of segment profitability reviewed by the Company's management.
End markets for Nordson products include food and beverage, metal furniture,
appliances, electronic components, disposable nonwovens products and automotive
components. Nordson sells its products primarily through a direct,
geographically dispersed sales force.
No single customer accounted for more than 5.0 percent of the Company's sales in
1999, 1998 or 1997.
<PAGE> 12
The following table presents information about Nordson's reportable segments:
<TABLE>
<CAPTION>
NORTH PACIFIC ALL
AMERICA EUROPE JAPAN SOUTH OTHER(a) CONSOLIDATED
- ---------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31, 1999
Net external sales $328,573(b) $243,463 $68,579 $59,850 $ -- $700,465
Intersegment sales 108,017 20,495 368 327 (129,207) --
Depreciation and amortization 11,409 7,289 1,320 1,447 7,835 29,300
Operating profit 47,958 39,496 18,237 4,868 (33,574)(c) 76,985
Identifiable assets 362,449 151,407 54,462 30,281 (6,809) 591,790
Long-lived assets(d) 88,939(e) 17,163 6,412 3,947 12,178 128,639
Expenditures for long-lived assets 36,298 3,409 424 1,209 4,304 45,644
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 1, 1998
Net external sales $291,788(b) $251,539 $63,378 $54,195 $ -- $660,900
Intersegment sales 113,740 18,590 274 509 (133,113) --
Depreciation and amortization 9,334 7,088 1,452 704 6,425 25,003
Operating profit 49,929 43,739 13,265 (2,917) (58,945)(c) 45,071
Identifiable assets 308,758 167,017 39,715 35,841 (12,387) 538,944
Long-lived assets(d) 63,742(e) 17,893 5,334 4,285 9,929 101,183
Expenditures for long-lived assets 7,971 4,203 627 1,163 1,472 15,436
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 2, 1997
Net external sales $265,581(b) $226,344 $80,718 $64,067 $ -- $636,710
Intersegment sales 117,886 16,037 369 1,138 (135,430) --
Depreciation and amortization 9,617 6,844 1,212 929 6,705 25,307
Operating profit 44,201 33,920 22,897 4,867 (31,826) 74,059
Identifiable assets 270,835 157,729 52,583 38,688 (16,839) 502,996
Long-lived assets(d) 65,239(e) 15,822 6,425 4,051 10,130 101,667
Expenditures for long-lived assets 8,805 2,913 888 2,005 1,327 15,938
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents items necessary to reconcile to the consolidated financial
statements which generally include unallocated expenses and corporate
eliminations.
(b) Net external sales in the United States for 1999, 1998 and 1997 were
$307.7 million, $273.9 million and $249.8 million, respectively.
(c) Includes $33.0 million of non-recurring charges that were taken during the
second and fourth quarters of 1998 and $3.0 million of non-recurring
charges recorded during the fourth quarter of 1999, none of which were
allocated to reportable segments.
(d) Long-lived assets consist of property, plant and equipment and capital
lease assets, net of accumulated depreciation and amortization,
respectively.
(e) Long-lived assets in the United States for 1999, 1998 and 1997 were $88.8
million, $63.4 million and $64.6 million, respectively.
<TABLE>
<CAPTION>
A reconciliation of total segment operating income to total Nordson's revenues are generated via the sale of
consolidated income before income taxes is as follows: products sold in the following categories:
1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------- --------------------------------------------------------
(In thousands) (In thousands)
<S> <C> <C> <C> <S> <C> <C> <C>
Total operating income Adhesive dispensing
for reported segments $76,985 $45,071 $74,059 and nonwoven fiber $443,799 $411,387 $411,671
Interest expense (10,244) (9,647) (7,763) Coating and finishing 152,866 157,777 158,433
Interest and investment 1,601 658 638 Advanced technology 103,800 86,924 62,456
Other - net 3,096 2,845 4,811 Others -- 4,812 4,150
- ----------------------------------------------------------------- ---------------------------------------------------------
Consolidated income
before income taxes $71,438 $38,927 $71,745 Total $700,465 $660,900 $636,710
- ----------------------------------------------------------------- ---------------------------------------------------------
</TABLE>
<PAGE> 13
NOTE 17 -- QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER FIRST SECOND THIRD FOURTH
- --------------------------------------------------------------------------------
(In thousands except for per share amounts)
<S> <C> <C> <C> <C>
1999:
Sales $ 157,053 $ 174,766 $ 174,411 $ 194,235
Cost of sales 72,631 77,884 78,652 89,063
Net income 6,984 13,024 13,389 14,109
Earnings per share:
Basic $.42 $.79 $.81 $.86
Diluted .42 .77 .80 .85
Diluted before
non-recurring
charges .42 .77 .80 .97
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
</TABLE>
Domestic operations report results using four 13-week quarters. International
subsidiaries report results using calendar quarters.
In the fourth quarter of 1999, the Company recognized non-recurring pre-tax
charges of $3.0 million ($2.0 million after-tax).
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.
<PAGE> 1
Exhibit 13g
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 October 31, 1999 and November 1, 1998, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended October 31, 1999. 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 October 31, 1999 and November 1, 1998, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended October 31, 1999 in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
December 7, 1999
<PAGE> 1
Exhibit 13-h
ELEVEN-YEAR SUMMARY
<TABLE>
<CAPTION>
1999 1998(f) 1997
- ---------------------------------------------------------------------------------------------------------------
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C>
OPERATING DATA(a)
Sales $700,465 660,900 636,710
- ---------------------------------------------------------------------------------------------------------------
Cost of Sales $318,230 303,671(d) 276,425
% of sales 45 46 43
- ---------------------------------------------------------------------------------------------------------------
Selling and administrative expenses $302,250 286,120 286,226
% of sales 43 43 45
- ---------------------------------------------------------------------------------------------------------------
Operating profit $ 76,985(e) 45,071(d) 74,059
% of sales 11 7 12
- ---------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting
changes and non-recurring charges $ 49,501(e) 47,440(d) 49,967
% of sales 7 7 8
- ---------------------------------------------------------------------------------------------------------------
Net income $ 47,506 20,825 49,967
% of sales 7 3 8
- ---------------------------------------------------------------------------------------------------------------
FINANCIAL DATA(a)
Working capital $ 89,376 121,394 139,152
- ---------------------------------------------------------------------------------------------------------------
Net property, plant and equipment
and other non-current assets $250,474 210,468 184,181
- ---------------------------------------------------------------------------------------------------------------
Total invested capital $339,850 331,862 323,333
- ---------------------------------------------------------------------------------------------------------------
Total assets $591,790 538,944 502,996
- ---------------------------------------------------------------------------------------------------------------
Long-term obligations $118,452 117,087 102,788
- ---------------------------------------------------------------------------------------------------------------
Shareholders' equity $221,398 214,775 220,545
- ---------------------------------------------------------------------------------------------------------------
Return on average invested capital--%(b) 16 16 18
- ---------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity--%(c) 23 22 22
- ---------------------------------------------------------------------------------------------------------------
PER SHARE DATA(a)
Basic earnings per share:
Income before cumulative effect of
accounting changes and non-recurring charges $ 3.00(e) 2.87(d) 2.89
Net income $ 2.87 1.26 2.89
Diluted earnings per share:
Income before cumulative effect of accounting
changes and non-recurring charges $ 2.96(e) 2.85(d) 2.85
Net income $ 2.84 1.25 2.85
- -------------------------------------------------------------------------------------------------------------
Dividends per common share $ .96 .88 .80
- -------------------------------------------------------------------------------------------------------------
Book value per common share $ 13.53 12.83 13.10
- -------------------------------------------------------------------------------------------------------------
Common shares 16,524 16,542 17,276
- -------------------------------------------------------------------------------------------------------------
Common shares and common share equivalents (000s) 16,742 16,661 17,553
- -------------------------------------------------------------------------------------------------------------
</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.
(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 JM
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.
<PAGE> 2
<TABLE>
<CAPTION>
1996 1995 1994 1993(g) 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
609,444 581,444 506,692 461,557 425,618 387,962 344,904 282,098
- ----------------------------------------------------------------------------------------------------------------
255,095 245,587 212,866 191,575 168,437 158,885 154,653 116,588
42 42 42 42 40 41 45 41
- ----------------------------------------------------------------------------------------------------------------
270,088 251,913 219,422 202,608 189,887 170,814 140,450 112,716
44 43 43 44 45 44 41 40
- ----------------------------------------------------------------------------------------------------------------
84,261 83,944 74,404 67,374 67,294 58,263 49,801 52,794
14 14 15 15 16 15 14 19
- ----------------------------------------------------------------------------------------------------------------
53,071 52,676 46,654 40,775 39,537 33,787 29,346 34,187
9 9 9 9 9 9 9 12
- ----------------------------------------------------------------------------------------------------------------
53,071 52,676 46,654 35,991 39,537 33,787 29,346 34,187
9 9 9 8 9 9 9 12
- ----------------------------------------------------------------------------------------------------------------
110,486 130,562 126,996 125,391 105,138 87,004 66,093 53,834
- ----------------------------------------------------------------------------------------------------------------
192,791 148,769 130,637 116,298 114,461 103,015 95,599 79,383
- ----------------------------------------------------------------------------------------------------------------
303,277 279,331 257,633 241,689 219,599 190,019 161,692 133,217
- ----------------------------------------------------------------------------------------------------------------
510,493 434,710 380,944 357,970 346,297 296,930 269,523 235,551
- ----------------------------------------------------------------------------------------------------------------
57,980 48,001 45,209 45,284 41,879 37,305 31,318 26,299
- ----------------------------------------------------------------------------------------------------------------
245,297 231,330 212,424 196,405 177,720 152,714 130,374 106,918
- ----------------------------------------------------------------------------------------------------------------
20 21 20 19 20 21 21 29
- ----------------------------------------------------------------------------------------------------------------
23 24 24 23 24 25 25 35
- ----------------------------------------------------------------------------------------------------------------
2.97 2.89 2.51 2.17 2.10 1.80 1.56 1.80
2.97 2.89 2.51 1.92 2.10 1.80 1.56 1.80
2.92 2.84 2.45 2.13 2.03 1.77 1.52 1.76
2.92 2.84 2.45 1.88 2.03 1.77 1.52 1.76
- ----------------------------------------------------------------------------------------------------------------
.72 .64 .56 .48 .44 .40 .36 .32
- ----------------------------------------------------------------------------------------------------------------
13.91 12.85 11.55 10.49 9.48 8.14 6.94 5.69
- ----------------------------------------------------------------------------------------------------------------
17,869 18,219 18,623 18,751 18,828 18,730 18,846 18,964
- ----------------------------------------------------------------------------------------------------------------
18,204 18,577 19,067 19,184 19,471 19,093 19,266 19,386
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(e) Operating profit includes a non-recurring charge of $3.0 million which
consists of severance payments and supplemental pension obligations.
(f) In 1998, the Company adopted Statements of Financial Accounting Standards
No. 128, "Earnings Per Share." Prior years have been restated.
(g) 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 13i
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 1999 and 1998. The price-earnings ratios reflect average market
prices relative to trailing four-quarter earnings before non-recurring charges.
COMMON STOCK PRICE PRICE-
FISCAL DIVIDEND ------------------ EARNINGS
QUARTERS PAID HIGH LOW RATIO
================================================================================
1999:
First $ .24 $ 63.75 $ 44.81 18.2
Second .24 64.25 51.63 18.7
Third .24 65.94 52.75 19.4
Fourth .24 58.50 43.75 17.3
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
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)
McDonald Investments, Inc.(M)(R)
Robinson-Humphrey, LLC(M)(R)
Salomon Smith Barney, Inc.(M)
Sherwood Securities Corp.(M)
Spear, Leeds & Kellogg(M)
Standard & Poors Corp.(R)
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 9, 2000
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.
Jurisdiction of
Incorporation Name
------------- ----
INTERNATIONAL:
--------------
Australia Nordson Australia Pty. Limited
Austria Nordson GmbH
Belgium Nordson Benelux S.A./N.V.
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 (1)
Germany Nordson Engineering GmbH
Germany Nordson Euro Trading GmbH (2)
Hong Kong Nordson Application Equipment, Inc.
India Nordson India Private Limited
Italy Nordson Italia SpA
Japan Nordson K.K.
Japan Nordson Advanced Systems K.K. (3)
Malaysia Nordson (Malaysia) Sdn. Bhd.
Mexico Nordson de Mexico, S.A. de C.V.
The Netherlands Nordson Benelux B.V.
The Netherlands Nordson Technology B.V.
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. (4)
Taiwan Nordson Pacific, Inc. -
Representative Office
Thailand Nordson (Thailand) Limited
United Kingdom Nordson (U.K.) Limited
United Kingdom Spectral Technology Group Limited
<PAGE> 2
INTERNATIONAL LOCATIONS (cont.)
Jurisdiction of Name
Incorporation ----
-------------
United Kingdom Nordson U.V. Limited. (5)
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. (6)
California Slautterback Corporation
California Mountaingate Engineering, Inc.
California Heron Technology, Inc. (7)
California March Instruments, Inc. (8)
Connecticut Electrostatic Technology, Inc.
Delaware Lambda Technologies, Inc. (9)
Florida Advanced Plasma Systems, Inc. (10)
Georgia J and M Laboratories, Inc.
New Jersey Horizon Lamps, Inc. (11)
New Jersey Veritec Technologies, Inc. (12)
Ohio Nordson Pacific, Inc.
Ohio Nordson U.S. Trading Company
Ohio Nordson U.V. Inc. (13)
( 1) Owned by Nordson Engineering GmbH and Nordson Corporation
( 2) Owned by Nordson Engineering GmbH
( 3) Formerly known as Nordson Engineering K.K.
( 4) Owned by Nordson Benelux S.A./N.V.
( 5) Owned by Spectral Technology Group Limited. Formerly known as A.C.T.
Spectral, Ltd.
( 6) Doing business as Asymtek
( 7) Owned by Mountaingate Technology, Inc.
( 8) Acquired a 100% equity interest in this Company effective March 19,
1999.
( 9) 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
(10) Acquired a 100% equity interest in this Company effective January 15,
1999.
(11) Acquired a 100% equity interest in this Company effective September 2,
1999.
(12) Acquired a 100% equity interest in this Company effective July 19,
1999.
(13) Formerly known as A.C.T. Spectral, Inc.
<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 7, 1999,
included in the Annual Report to Shareholders of Nordson Corporation for the
year ended October 31, 1999.
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 7, 1999, with respect to the
consolidated financial statements of Nordson Corporation incorporated by
reference in this Annual Report (Form 10-K) for the year ended October 31, 1999:
- 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 26, 2000
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
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<SECURITIES> 30
<RECEIVABLES> 170,519
<ALLOWANCES> 3,339
<INVENTORY> 119,504
<CURRENT-ASSETS> 341,316
<PP&E> 258,749
<DEPRECIATION> 130,110
<TOTAL-ASSETS> 591,790
<CURRENT-LIABILITIES> 251,940
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0
0
<COMMON> 12,253
<OTHER-SE> 209,145
<TOTAL-LIABILITY-AND-EQUITY> 591,790
<SALES> 700,465
<TOTAL-REVENUES> 700,465
<CGS> 318,230
<TOTAL-COSTS> 318,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,374
<INTEREST-EXPENSE> 10,244
<INCOME-PRETAX> 71,438
<INCOME-TAX> 23,932
<INCOME-CONTINUING> 47,506
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,506
<EPS-BASIC> 2.87
<EPS-DILUTED> 2.84
</TABLE>
<TABLE> <S> <C>
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<RESTATED>
<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
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0
0
<COMMON> 12,253
<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-BASIC> 1.26
<EPS-DILUTED> 1.25
</TABLE>
<TABLE> <S> <C>
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<S> <C>
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<PERIOD-END> NOV-02-1997
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<ALLOWANCES> 2,961
<INVENTORY> 122,084
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<PP&E> 210,130
<DEPRECIATION> 108,463
<TOTAL-ASSETS> 502,996
<CURRENT-LIABILITIES> 179,663
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<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-BASIC> 2.89
<EPS-DILUTED> 2.85
</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, 1999
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 28, 2000
<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, 1999
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 28, 2000
