FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 28, 1996 ---------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file no. 0-7977 ------------ NORDSON CORPORATION ----------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 34-0590250 ---------------------------- ------------------------ (State or other jurisdiction of (I.R.S Employer Identification No.) incorporation or organization) 28601 Clemens Road, Westlake, Ohio 44145 ------------------------------------ ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (216) 892-1580 ---------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: COMMON SHARES WITHOUT PAR VALUE AS OF JANUARY 28, 1996: 17,912,750 Page 1
NORDSON CORPORATION INDEX Part I - Financial Information Page Number Condensed Consolidated Statement of Income - Thirteen Weeks Ended January 28, 1996 and January 29, 1995 3 Condensed Consolidated Balance Sheet - January 28, 1996 and October 29, 1995 4 Condensed Consolidated Statement of Cash Flows - Thirteen Weeks Ended January 28, 1996 and January 29, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Results of Operations and Financial Condition 7-8 Part II - Other Information Item 6, Exhibits and Reports on Form 8-K 9 Signature 10 Exhibit Index 11 2
<TABLE> <CAPTION> Part I - Financial Information NORDSON CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (Dollars and shares in thousands except for per share amounts) Thirteen Weeks Ended January 28, 1996 January 29, 1995 ----------------- ------------------ <S> <C> <C> Sales $131,882 $123,477 Cost of sales 54,150 52,106 Selling & administrative expenses 62,887 57,357 ------- ------- Operating profit 14,845 14,014 Other income (expense): Interest expense (1,204) (971) Interest income 181 188 Other - net 469 525 ------- ------- Income before income taxes 14,291 13,756 Income taxes 5,002 4,815 ------- ------- Net income $ 9,289 $ 8,941 ======= ======= Weighted average common shares and common share equivalents 18,317 18,781 ======= ======= Primary earnings per share $ .51 $ .48 ======= ======= Dividends per common share $ .18 $ .16 ======= ======= <FN> See accompanying notes. </TABLE> 3
<TABLE> <CAPTION> NORDSON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Dollars in thousands) January 28, 1996 October 29, 1995 ----------------- ----------------- <S> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 1,155 $ 359 Marketable securities 710 1,225 Receivables 135,601 146,846 Inventories 115,423 110,198 Deferred income taxes 23,889 21,858 Prepaid expenses 6,571 5,455 -------- -------- Total current assets 283,349 285,941 Property, plant and equipment 192,718 188,294 Less accumulated depreciation and amortization of property, plant and equipment (91,848) (88,795) Intangible assets - net 31,058 31,768 Other assets 18,875 17,502 -------- -------- $434,152 $434,710 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 56,491 $ 43,197 Accounts payable 24,005 28,250 Current portion of long-term debt 6,516 6,465 Other current liabilities 68,480 77,467 -------- -------- Total current liabilities 155,492 155,379 Long-term debt 16,627 17,134 Other liabilities 32,055 30,867 Shareholders' equity: Common shares 12,253 12,253 Other shareholders' equity 217,725 219,077 -------- -------- Total shareholders' equity 229,978 231,330 -------- -------- $434,152 $434,710 ======== ======== <FN> See accompanying notes. </TABLE> 4
<TABLE> <CAPTION> NORDSON CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands) Thirteen Weeks Ended January 28, 1996 January 29, 1995 ----------------- ----------------- <S> <C> <C> Cash flows from operating activities: Net income $ 9,289 $ 8,941 Changes in working capital (12,010) (6,081) Other - net 5,594 5,038 -------- -------- 2,873 7,898 Cash flows from investing activities: Additions to property, plant and equipment (5,169) (5,232) Proceeds from sale of property, plant and equipment - 1,638 Proceeds from sale of marketable securities 515 2,255 -------- -------- (4,654) (1,339) Cash flows from financing activities: Net proceeds from notes payable 13,961 3,982 Payment of long-term debt (1,179) (1,089) Issuance of common shares 159 328 Purchase of treasury shares (6,918) (4,959) Dividends paid (3,237) (2,941) -------- -------- 2,786 (4,679) Effect of exchange rate changes (209) (193) -------- -------- Increase in cash 796 1,687 Cash and cash equivalents Beginning of fiscal year 359 4,578 -------- -------- End of period $ 1,155 $ 6,265 ======== ======== <FN> See accompanying notes. </TABLE> 5
NORDSON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS January 28, 1996 1. BASIS OF PRESENTATION. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the thirteen week period ended January 28, 1996 are not necessarily indicative of the results that may be expected for the full fiscal year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended October 29, 1995. 2. INVENTORIES. Inventories consisted of the following (in thousands of dollars): January 28, 1996 October 29, 1995 ----------------- ----------------- Finished goods $ 40,635 $ 42,246 Work-in-process 17,630 14,355 Raw materials and finished parts 57,158 53,597 -------- -------- $115,423 $110,198 ======== ======== 3. SUBSEQUENT EVENT. On January 29, 1996, the Company acquired the shares of Spectral Technology Group Limited ("Spectral"), Slough, England. Spectral, which has annual sales of approximately $13 million, designs, manufactures and markets ultraviolet curing systems used to accelarate the drying of inks and coatings in the printing, packaging, metal decorating, wood finishing, electronics and plastics industries. The acquisition, which was financed through a combination of short-term and long-term borrowing, will be accounted for as a purchase. 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following is Management's discussion and analysis of certain significant factors affecting the Company's results of operations and financial condition for the periods included in the accompanying condensed consolidated financial statements. RESULTS OF OPERATIONS SALES - ----- Sales for the first quarter of 1996 increased 6.8% over the comparable 1995 period, as a result of price/volume gains combined with favorable currency effects. Sales gains due to price/volume changes accounted for a 5.8% increase, compared with the same period of the prior year. Volume gains were experienced in three of our four geographic regions. In Europe, sales volume was up 14.4% over the first quarter of 1995. Results in Europe were driven by sales of adhesive dispensing systems sold into the nonwovens market, as well as engineered powder coating systems. Local sales volume in Japan rose 28.3%, compared with the first quarter of 1995. Growth in Japan was spread across most of the Company's markets with heavier concentration in container and nonwoven applications. In the Pacific South region, local volume increased 25.9% over the prior year period, as demand for Nordson technologies continued to grow throughout Latin America and Asia. On the other hand, the slowing U.S. economy interrupted several years of strong sales growth in North America. Sales volume in North America in the first quarter declined 12.1%, compared with the first quarter of 1995 due primarily to reduced demand for engineered systems. Price increases averaging 0.6% were implemented on orders taken after the beginning of the year on standardized small systems and parts. Sales to international customers for year-to-date 1996 comprised approxi- mately 67.2 % of total sales. Translating international sales at generally higher average exchange rates as compared to the same period in the prior year increased sales by 1.0% for the first quarter. OPERATING PROFIT - ---------------- Operating profit, as a percentage of sales, was 11.3% for the first quarter 1996, unchanged from the first quarter 1995. Gross margins, expressed as a percentage of sales, were 58.9% for the quarter, compared with 57.8% a year ago. The improved margins are due to changes in the product sales mix in North America. The increase in selling and administrative expenses over the first quarter 1995 of 9.6% can be attributed to increased sales volume and currency effects. 7
NET INCOME - ---------- Net income, as a percentage of sales, decreased from 7.2% to 7.0% for the first quarter 1996 as compared to the first quarter 1995. This decrease results from the factors discussed above, as well as from an increase in interest expense. The increase in interest expense is due to an increase in short-term borrowing. FOREIGN CURRENCY EFFECTS - ------------------------ In the aggregate, average exchange rates for first quarter 1996 used to translate international sales and operating results into U.S. dollars compared favorably with average exchange rates which existed during the comparable 1995 period. It is not possible to precisely measure the impact on operating results arising from foreign currency exchange rate changes, because of changes in selling prices, sales volume, product mix and cost structures in each country in which the Company operates. However, if transactions for the first quarter 1996 were translated at exchange rates in effect during 1995, sales would have been approximately $1,200,000 lower while third-party costs and expenses would have been approximately $1,400,000 lower. FINANCIAL CONDITION During the first quarter of 1996, net assets decreased $1,352,000. This decrease is primarily attributable to net purchases of treasury shares amounting to $6,918,000, the payment of $3,237,000 in dividends, and a reduction of $713,000 from translating foreign net assets at the end of the first quarter when the U.S. dollar was generally stronger against other currencies than at the prior year end, offset by earnings of $9,289,000. Working capital decreased $2,705,000 during the quarter. This change consisted primarily of a decrease in receivables and an increase in notes payable, offset by an increase in inventories and decreases in accounts payable and other current liabilities. Receivables decreased from the collection of year-end receivables arising from strong sales in the fourth quarter of 1995 and notes payable increased from net borrowings. Inventories increased in anticipation of increased demand for Nordson products, accounts payable decreased from the payment of additional purchases made prior to year-end and other current liabilities decreased due to the payment of fiscal 1995 bonuses and other employee benefits. Cash and cash equivalents increased $796,000 during the quarter. Uses for cash included purchases of treasury shares, outlays for capital expenditures and dividends. Net proceeds from notes payable and cash from operations were utilized to finance the above cash uses. Available lines of credit continue to be more than adequate to meet additional cash requirements over the next year. 8
Part II - Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 11 Calculation of Earnings Per Share Exhibit 27 Financial Data Schedule (b) There were no reports on Form 8-K filed for the quarter ended January 28, 1996. 9
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: March 12, 1996 Nordson Corporation /s/ Nicholas D. Pellecchia Nicholas D. Pellecchia Vice President-Finance and Controller (Principal Financial Officer and Chief Accounting Officer) 10
NORDSON CORPORATION EXHIBIT INDEX Page Number Exhibit 11 Calculation of Earnings Per Share 12 Exhibit 27 Financial Data Schedule 13 11