e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO
SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF
1934
(Mark One)
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x
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ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the
fiscal year ended October 31, 2009
OR
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o
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from
to
Commission file number 0-7977
NORDSON CORPORATION
(Exact name of Registrant as
specified in its charter)
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Ohio
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34-0590250
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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28601 Clemens Road
Westlake, Ohio
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44145
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(Address of principal executive
offices)
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(Zip Code)
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(440) 892-1580
(Registrants Telephone
Number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
Common Shares with no par value
Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes x No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No x
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, and (2) has been subject to such
filing requirements for the past
90 days. Yes x No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the Registrant
was required to submit and post such files).
Yes o
No o
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 registrants 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
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large
accelerated
filer x
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No x
The aggregate market value of Common Shares no par value per
share, held by nonaffiliates (based on the closing sale price on
the Nasdaq) as of April 30, 2009 was approximately
$1,117,266,000.
There were 33,678,979 Common Shares outstanding as of
November 30, 2009.
DOCUMENTS
INCORPORATED BY REFERENCE:
Portions of the Proxy Statement for the 2010 Annual
Meeting Part III
Table of
Contents
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i
PART I
NOTE REGARDING
AMOUNTS
In this annual report, all amounts related to United States
dollars and foreign currency and to the number of Nordson
Corporations common shares, except for per share earnings
and dividend amounts, are expressed in thousands.
General
Description of Business
We are one of the worlds leading manufacturers of
equipment used for precision material dispensing, testing and
inspection, surface preparation and curing. Our technology-based
systems can be found in production facilities around the world.
We serve many diverse markets, including the appliance,
automotive, bookbinding, container, converting, electronics,
food and beverage, furniture, life sciences, medical, metal
finishing, nonwoven, packaging, semiconductor and solar energy
industries.
Our strategy for long-term growth is based on a customer-driven
focus and a global mindset. Headquartered in Westlake, Ohio, our
products are marketed through a network of direct operations in
more than 30 countries. Consistent with this global strategy,
more than 70 percent of our revenues are generated outside the
United States.
We have more than 3,600 employees worldwide. Principal
manufacturing facilities are located in the United States in
California, Georgia, New Jersey, Ohio and Rhode Island, as well
as in China, Germany, India, The Netherlands and the United
Kingdom.
Corporate
Purpose and Goals
We strive to be a vital, self-renewing, worldwide organization
that, within the framework of ethical behavior and enlightened
citizenship, grows and produces wealth for our customers,
employees, shareholders and communities.
We operate 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 our value over a
five-year period, with the primary measure of value set by the
market for our common 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.
We do not expect every quarter to produce increased sales,
earnings and earnings per share, or to exceed the comparative
prior years 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.
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®,
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
Human Resources facilitation of employee training and
leadership 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.
2
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 our
objectives. In addition, employees participate in Lean and Six
Sigma initiatives to continuously improve our processes.
We are an equal opportunity employer.
We are committed to contributing approximately five percent of
domestic pretax earnings to human services, education and other
charitable activities, particularly in communities where we have
major facilities.
Financial
Information About Operating Segments, Foreign and Domestic
Operations and Export Sales
In accordance with accounting standards, we have reported
information about our three operating segments. This information
is contained in Note 16 of Notes to Consolidated Financial
Statements, which can be found in Part II, Item 8 of
this document.
Principal
Products and Uses
We are one of the worlds leading manufacturers of
equipment used for precision dispensing, testing and inspection,
surface preparation and curing. Our technology-based systems can
be found in production facilities around the world. Equipment
ranges from manual, stand-alone units for low-volume operations
to microprocessor-based automated systems for high-speed,
high-volume production lines.
We market our products in the United States and in more than 50
other countries, primarily through a direct sales force and also
through qualified distributors and sales representatives. We
have built a worldwide reputation for creativity and expertise
in the design and engineering of high-technology application
equipment that meets the specific needs of our customers.
The following is a summary of the products and markets served by
our operating segments:
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1.
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Adhesive Dispensing Systems
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This segment delivers our proprietary precision dispensing
technology to diverse markets for applications that commonly
reduce material consumption, increase line efficiency and
enhance product strength, durability, brand and appearance.
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Nonwovens Equipment for applying
adhesives, lotions, liquids and fibers to disposable products.
Key strategic markets include adult incontinence products, baby
diapers and child-training pants, feminine hygiene products and
surgical drapes, gowns, shoe covers and face masks.
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Packaging Automated adhesive
dispensing systems used in the food and beverage and packaged
goods industries. Key strategic markets include food packages
and wrappers and drink containers.
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Paper and Paperboard Converting Hot
melt and cold glue adhesive dispensing systems for the paper and
paperboard converting industries. Key strategic markets include
bag and sack manufacturing, bookbinding, envelope manufacturing
and folding carton manufacturing.
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Product Assembly Adhesive and sealant
dispensing systems for bonding or sealing plastic, metal and
wood products. Key strategic markets include appliances,
automotive components, building and construction materials,
electronics, furniture and solar energy.
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Web Coating Laminating and coating
systems used to manufacture continuous-roll goods in the
nonwovens, textile, paper and flexible-packaging industries. Key
strategic markets include carpet, labels, tapes and textiles.
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Advanced Technology Systems
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This segment integrates our proprietary product technologies
found in progressive stages of a customers production
process, such as surface preparation, precisely controlled
dispensing of material onto the surface, curing of dispensed
material, bond testing and X-ray inspection to ensure quality.
This segment primarily serves the specific needs of electronic
and related high-tech industries.
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Surface Preparation Automated gas
plasma treatment systems used to clean and condition surfaces
for the semiconductor, medical and printed circuit board
industries. Key strategic markets include contact lenses,
electronics, medical instruments and devices, printed circuit
boards and semiconductors.
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Dispensing Systems Controlled manual
and automated systems for applying materials in customer
processes typically requiring extreme precision and material
conservation. These systems include piezoelectric and motionless
two-component mixing dispensing systems. Key strategic markets
include aerospace, electronics (cell phones, liquid crystal
displays, micro hard drives, microprocessors, printed circuit
boards, Radio Frequency Identification (RFID) tags, CDs and
DVDs), general industrial, life sciences (dental and medical
devices, including pacemakers and stents), light emitting diodes
(LED) and solar energy.
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Curing and Drying Systems Ultraviolet
equipment used primarily in curing and drying operations for
specialty inks, coatings, semiconductor materials and paints.
Key strategic markets include electronics, graphic arts, plastic
containers, printed-paper and packaging, semiconductor equipment
and wood and medium-density fiberboard (MDF).
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Bond Testing and Inspection Systems
Testing and automated optical and x-ray inspection
systems used in the semiconductor and printed circuit board
industries. Key strategic markets include electronics (digital
music players and cell phones), printed circuit board assemblies
and semiconductor packages.
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3.
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Industrial Coating Systems
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The name of the Industrial Coating and Automotive Systems
segment has been changed to Industrial Coating Systems to more
accurately reflect the broad composition of the segments
customer base. This segment provides both standard and
highly-customized equipment used primarily for applying
coatings, paint, finishes, sealants and other materials. This
segment primarily serves the consumer durables market.
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Automotive Automated and manual
dispensing systems used to apply materials in the automotive,
heavy truck and recreational vehicle manufacturing industries.
Key strategic markets include powertrain components, body
assembly and final trim applications.
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Container Coating and Curing Automated
and manual dispensing and curing systems used to coat and cure
containers. Key strategic markets include beverage containers
and food cans.
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Liquid Finishing Automated and manual
dispensing systems used to apply liquid paints and coatings to
consumer and industrial products. Key strategic markets include
automotive components, construction, metal shelving and drums.
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Powder Coating Automated and manual
dispensing systems used to apply powder paints and coatings to a
variety of metal, plastic and wood products. Key strategic
markets include agriculture and construction equipment,
appliances, automotive components, home and office furniture,
lawn and garden equipment and wood and metal shelving.
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4
Manufacturing
and Raw Materials
Our production operations include machining and assembly. We
manufacture specially designed parts and assemble 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. We
have principal manufacturing operations in the United States in
Amherst, Ohio; Norcross, Swainsboro and Dawsonville, Georgia;
Carlsbad, California; Robbinsville, New Jersey and East
Providence, Rhode Island; as well as in Shanghai and Suzhou,
China; Luneburg, Germany; Bangalore, India; Maastricht, The
Netherlands and in Aylesbury and Slough, United Kingdom.
Principal materials used to make our products are metals and
plastics, typically in sheets, bar stock, castings, forgings and
tubing. We also purchase many electrical and electronic
components, fabricated metal parts, high-pressure fluid hoses,
packings, seals and other items integral to our products.
Suppliers are competitively selected based on cost, quality and
service. All significant raw materials that we use are available
through multiple sources.
Senior operating executives supervise an extensive quality
control program for our equipment, machinery and systems.
Natural gas and other fuels are our primary energy sources.
However, standby capacity for alternative sources is available
if needed.
Intellectual
Property
We maintain procedures to protect our intellectual property
(including patents, trademarks and copyrights) both domestically
and internationally. Risk factors associated with our
intellectual property are discussed in Item 1A Risk Factors.
Seasonal
Variation in Business
Generally, the highest volume of sales occurs in our fourth
fiscal quarter due in large part to the timing of
customers capital spending programs. First quarter sales
volume is typically the lowest of the year due to customer
holiday shutdowns.
Working
Capital Practices
No special or unusual practices affect our working capital.
However, we generally require advance payments as deposits on
customized equipment and systems and, in certain cases, require
progress payments during the manufacturing of these products. We
have initiated a number of new processes focused on reduction of
manufacturing lead times. These initiatives have resulted in
lower investment in inventory while maintaining the capability
to respond promptly to customer needs.
5
Customers
We serve a broad customer base, both in terms of industries and
geographic regions. In fiscal year 2009, no single customer
accounted for five percent or more of sales.
Backlog
Our backlog of open orders decreased to approximately $79,000 at
October 31, 2009 from approximately $82,000 at
October 31, 2008. The decrease can be traced primarily to
the Industrial Coating Systems segment, partially offset by
favorable effects of changes in currency rates. All orders in
the fiscal 2009 year-end backlog are expected to be shipped
to customers in fiscal year 2010.
Government
Contracts
Our business neither includes nor depends upon a significant
amount of governmental contracts or subcontracts. Therefore, no
material part of our business is subject to renegotiation or
termination at the option of the government.
Competitive
Conditions
Our equipment is sold in competition with a wide variety of
alternative bonding, sealing, caulking, finishing, coating,
testing and inspection techniques. Any production process that
requires surface preparation or modification, application of
material to a substrate or surface, curing or testing and
inspection is a potential use for our equipment.
Many factors influence our competitive position, including
pricing, product quality and service. We enjoy a leadership
position in our business segments 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 our leadership position. Our worldwide network of
direct sales and technical resources also is a competitive
advantage.
Research
and Development
Investments in research and development are important to our
long-term growth, enabling us to keep pace with changing
customer and marketplace needs through the development of new
products and new applications for existing products. We place
strong emphasis on technology developments and improvements
through internal engineering and research teams. Research and
development expenses were approximately $25,528 in fiscal year
2009, compared with approximately $33,566 in fiscal year 2008
and $35,432 in fiscal year 2007.
Environmental
Compliance
We are subject to extensive federal, state, local and foreign
environmental, safety and health laws and regulations
concerning, among other things, emissions to the air, discharges
to land and water and the generation, handling, treatment and
disposal of hazardous waste and other materials. Under certain
of these laws, we can be held strictly liable for hazardous
substance contamination of any real property we have ever owned,
operated or used as a disposal site or for natural resource
damages associated with such contamination. We are also required
to maintain various related permits and licenses, many of which
require periodic modification and renewal. The operation of
manufacturing plants unavoidably entails environmental, safety
and health risks, and we could incur material unanticipated
costs or liabilities in the future if any of these risks were
realized in ways or to an extent that we did not anticipate.
6
We believe that we operate in compliance, in all material
respects, with applicable environmental laws and regulations.
Compliance with environmental laws and regulations requires
continuing management effort and expenditures. We have incurred,
and will continue to incur, costs and capital expenditures to
comply with these laws and regulations and to obtain and
maintain the necessary permits and licenses. We believe that the
cost of complying with environmental laws and regulations will
not have a material affect on our earnings, liquidity or
competitive position but cannot assure that material
compliance-related costs and expenses may not arise in the
future. For example, future adoption of new or amended
environmental laws, regulations or requirements or newly
discovered contamination or other circumstances that require us
to incur costs and expenses that cannot be presently anticipated.
We believe that policies, practices and procedures have been
properly designed to prevent unreasonable risk of material
environmental damage arising from our operations. We accrue for
estimated environmental liabilities with charges to expense and
believe our environmental accrual is adequate to provide for our
portion of the costs of all such known environmental
liabilities. Compliance with federal, state and local
environmental protection laws during fiscal year 2009 had no
material effect on our capital expenditures, earnings or
competitive position. Based upon consideration of currently
available information, we believe liabilities for environmental
matters will not have a material adverse affect on our financial
position, operating results or liquidity, but we cannot assure
that material environmental liabilities may not arise in the
future.
Employees
As of October 31, 2009, we had 3,681 full- and part-time
employees, including 112 at our Amherst, Ohio, facility who are
represented by a collective bargaining agreement that expires on
October 31, 2010. No material work stoppages have been
experienced at any of our facilities during any of the periods
covered by this report.
Available
Information
Our proxy statement, annual report to the Securities and
Exchange Commission
(Form 10-K),
quarterly reports
(Form 10-Q)
and current reports
(Form 8-K)
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934 are available free of charge at
http://www.nordson.com/investors/SEC/
as soon as reasonably practical after such material is
electronically filed with, or furnished to, the SEC. Copies of
these reports may also be obtained free of charge by sending
written requests to Corporate Communications, Nordson
Corporation, 28601 Clemens Road, Westlake, Ohio 44145.
In an enterprise as diverse as ours, a wide range of factors
could affect future performance. We discuss in this section some
of the risk factors that, if they actually occurred, could
materially and adversely affect our business, financial
condition, value and results of operations. You should consider
these risk factors in connection with evaluating the
forward-looking statements contained in this Annual Report on
Form 10-K
because these factors could cause our actual results and
financial condition to differ materially from those projected in
forward-looking statements. The risks that we highlight below
are not the only ones that we face. Additional risks and
uncertainties that we do not presently know about or that we
currently believe will be immaterial may also affect our
business.
The significant risk factors affecting our operations include
the following:
Changes
in United States or international economic conditions could
adversely affect the profitability of any of our
operations.
In fiscal year 2009, 29 percent of our revenue was derived
from domestic customers while 71 percent was derived from
international customers. Our largest markets include appliance,
automotive, bookbinding, construction, container, converting,
electronics assembly, food and beverage, furniture, life
sciences, medical, metal finishing, nonwovens, packaging and
semiconductor. A slowdown in any of these specific end markets
could directly affect our revenue stream and profitability.
7
A portion of our product sales is attributable to industries and
markets, such as the semiconductor and metal finishing
industries, which historically have been cyclical and sensitive
to relative changes in supply and demand and general economic
conditions. The demand for our products depends, in part, on the
general economic conditions of the industries or national
economies of our customers. Downward economic cycles in our
customers industries or countries may reduce sales of some
of our products. It is not possible to predict accurately the
factors that will affect demand for our products in the future.
Any significant downturn in the health of the general economy,
either globally, regionally or in the markets in which we sell
products could have an adverse effect on our revenues and
financial performance, resulting in impairment of assets.
Significant
movements in foreign currency exchange rates or change in
monetary policy may harm our financial results.
We are exposed to fluctuations in foreign currency exchange
rates, particularly with respect to the Euro, the Yen and the
British Pound. Any significant change in the value of the
currencies of the countries in which we do business against the
United States dollar could affect our ability to sell products
competitively and control our cost structure, which could have a
material adverse effect on our business, financial condition and
results of operations. For additional detail related to this
risk, see Item 7A, Quantitative and Qualitative Disclosure
About Market Risk.
The majority of our consolidated revenues in fiscal year 2009
were generated in currencies other than the United States
dollar, which is our reporting currency. We recognize foreign
currency transaction gains and losses arising from our
operations in the period incurred. As a result, currency
fluctuations between the United States dollar and the currencies
in which we do business have caused and will continue to cause
foreign currency transaction and translation gains and losses,
which historically have been material and could continue to be
material. We cannot predict the effects of exchange rate
fluctuations upon our future operating results because of the
number of currencies involved, the variability of currency
exposures and the potential volatility of currency exchange
rates. We take actions to manage our foreign currency exposure,
such as entering into hedging transactions, where available, but
we cannot assure that our strategies will adequately protect our
consolidated operating results from the effects of exchange rate
fluctuations.
We also face risks arising from the imposition of exchange
controls and currency devaluations. Exchange controls may limit
our ability to convert foreign currencies into United States
dollars or to remit dividends and other payments by our foreign
subsidiaries or customers located in or conducting business in a
country imposing controls. Currency devaluations diminish the
United States dollar value of the currency of the country
instituting the devaluation and, if they occur or continue for
significant periods, could adversely affect our earnings or cash
flow.
We could
be adversely affected by rapid changes in interest
rates.
Any period of unexpected or rapid increase in interest rates may
also adversely affect our profitability. At October 31,
2009, we had $157,837 of total debt outstanding, of which
approximately 57 percent was priced at interest rates that
float with the market. A one percent increase in the interest
rate on the floating rate debt in fiscal year 2009 would have
resulted in approximately $1,661 of additional interest expense.
A higher level of floating rate debt would increase the exposure
discussed above. For additional detail related to this risk, see
Item 7A, Quantitative and Qualitative Disclosure About
Market Risk.
8
Inability
to access capital could impede growth or the repayment or
refinancing of existing indebtedness.
The limits imposed on us by the restrictive covenants contained
in our credit facilities could prevent us from making
acquisitions or cause us to lose access to these facilities.
Our existing credit facilities contain restrictive covenants
that limit our ability to, among other things:
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borrow money or guarantee the debts of others;
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use assets as security in other transactions;
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make investments or other restricted payments or distributions;
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change our business or enter into new lines of business;
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sell or acquire assets or merge with or into other companies.
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In addition, our credit facilities require us to meet financial
ratios, including total indebtedness to consolidated trailing
EBITDA (both as defined in the credit facility) and consolidated
trailing EBITDA to consolidated trailing interest expense (as
defined in the credit facility).
These restrictions could limit our ability to plan for or react
to market conditions or meet extraordinary capital needs and
could otherwise restrict our financing activities.
Our ability to comply with the covenants and other terms of our
credit facilities will depend on our future operating
performance. If we fail to comply with such covenants and terms,
we will be in default and the maturity of the related debt could
be accelerated and become immediately due and payable. We may be
required to obtain waivers from our lenders in order to maintain
compliance under our credit facilities, including waivers with
respect to our compliance with certain financial covenants. If
we are unable to obtain necessary waivers and the debt under our
credit facilities is accelerated, we would be required to obtain
replacement financing at prevailing market rates.
We may need new or additional financing in the future to expand
our business or refinance existing indebtedness. If we are
unable to access capital on satisfactory terms and conditions,
we may not be able to expand our business or meet our payment
requirements under our existing credit facilities. Our ability
to obtain new or additional financing will depend on a variety
of factors, many of which are beyond our control. We may not be
able to obtain new or additional financing because we have
substantial debt or because we may not have sufficient cash flow
to service or repay our existing or future debt. In addition,
depending on market conditions and our financial performance,
neither debt nor equity financing may be available on
satisfactory terms or at all. Finally, as a consequence of
worsening financial market conditions, our credit facility
providers may not provide the agreed capital if they become
undercapitalized.
Our
growth strategy includes acquisitions, and we may not be able to
make acquisitions of suitable candidates or integrate
acquisitions successfully.
Our recent historical growth has depended, and our future growth
is likely to continue to depend, in part on our acquisition
strategy and the successful integration of acquired businesses
into our existing operations. We intend to continue to seek
additional acquisition opportunities both to expand into new
markets and to enhance our position in existing markets
throughout the world. We cannot assure, however, that we will be
able to successfully identify suitable candidates, prevail
against competing potential acquirers, negotiate appropriate
acquisition terms, obtain financing that may be needed to
consummate such acquisitions, complete proposed acquisitions,
successfully integrate acquired businesses into our existing
operations or expand into new markets. In addition, we cannot
assure that any acquisition, once successfully integrated, will
perform as planned, be accretive to earnings, or prove to be
beneficial to our operations and cash flow.
9
The success of any acquisition is subject to other risks and
uncertainties, including:
|
|
|
|
|
our ability to realize operating efficiencies, synergies or
other benefits expected from an acquisition, and possible delays
in realizing the benefits of the acquired company or products;
|
|
|
|
diversion of managements time and attention from other
business concerns;
|
|
|
|
difficulties in retaining key employees, customers or suppliers
of the acquired business;
|
|
|
|
difficulties in maintaining uniform standards, controls,
procedures and policies throughout acquired companies;
|
|
|
|
adverse effects on existing business relationships with
suppliers or customers;
|
|
|
|
the risks associated with the assumption of contingent or
undisclosed liabilities of acquisition targets;
|
|
|
|
the ability to generate future cash flows or the availability of
financing.
|
In addition, an acquisition could adversely impact our operating
performance as a result of the incurrence of acquisition-related
debt, acquisition expenses, or the amortization of
acquisition-acquired assets.
We may also face liability with respect to acquired businesses
for violations of environmental laws occurring prior to the date
of our acquisition, and some or all of these liabilities may not
be covered by environmental insurance secured to mitigate the
risk or by indemnification from the sellers from which we
acquired these businesses. We could also incur significant
costs, including, but not limited to, remediation costs, natural
resources damages, civil or criminal fines and sanctions and
third-party claims, as a result of past or future violations of,
or liabilities associated with environmental laws.
The
inability to continue to develop new products could limit our
revenue and profitability.
Innovation is critical to our success. We believe that we must
continue to enhance our existing products and to develop and
manufacture new products with improved capabilities in order to
continue to be a market leader. We also believe that we must
continue to make improvements in our productivity in order to
maintain our competitive position. Our inability to anticipate,
respond to or utilize changing technologies could have a
material adverse effect on our business and our consolidated
results of operations.
Our
inability to protect our intellectual property rights could
adversely affect product sales and financial
performance.
Difficulties in acquiring and maintaining our intellectual
property rights could also adversely affect our business and
financial position. Our performance may depend in part on our
ability to establish, protect and enforce intellectual property
rights with respect to our patented technologies and proprietary
rights and to defend against any claims of infringement. These
activities involve complex and constantly evolving legal,
scientific and factual questions and uncertainties. Our ability
to compete effectively with other companies depends in part on
our ability to maintain and enforce our patents and other
proprietary rights, which are essential to our business. These
measures afford only limited protection and may not in all cases
prevent our competitors from gaining access to our intellectual
property and proprietary information.
10
Litigation has been and may continue to be necessary to enforce
our intellectual property rights, to protect our trade secrets
and to determine the validity and scope of our proprietary
rights. In addition, we may face claims of infringement that
could interfere with our ability to use technology or other
intellectual property rights that are material to our business
operations. If litigation that we initiate is unsuccessful, we
may not be able to protect the value of some of our intellectual
property. If a claim of infringement against us is successful,
we may be required to pay royalties or license fees to continue
to use technology or other intellectual property rights that we
have been using or we may be unable to obtain necessary licenses
from third parties at a reasonable cost or within a reasonable
time. If we are unable to timely obtain licenses on reasonable
terms, we may be forced to cease selling or using any of our
products that incorporate the challenged intellectual property,
or to redesign or, in the case of trademark claims, rename our
products to avoid infringing the intellectual property rights of
third parties. This may not always be possible or, if possible,
may be time consuming and expensive. Intellectual property
litigation, whether successful or unsuccessful, could be
expensive to us and divert some of our resources. Our
intellectual property rights may not be as valuable as we
believe, which could result in a competitive disadvantage or
adversely affect our business and financial performance.
Political
conditions in foreign countries in which we operate could
adversely affect us.
We conduct our manufacturing, sales and distribution operations
on a worldwide basis and are subject to risks associated with
doing business outside the United States. In fiscal year 2009,
approximately 71 percent of our total sales were to
customers outside the United States. We expect that
international operations and United States export sales will
continue to be important to our business for the foreseeable
future. Both the sales from international operations and export
sales are subject in varying degrees to risks inherent in doing
business outside the United States. Such risks include, but are
not limited to, the following:
|
|
|
|
|
risks of economic instability;
|
|
|
|
unanticipated or unfavorable circumstances arising from host
country laws or regulations;
|
|
|
|
restrictions on the transfer of funds into or out of a country;
|
|
|
|
currency exchange rate fluctuations;
|
|
|
|
difficulties in enforcing agreements and collecting receivables
through some foreign legal systems;
|
|
|
|
international customers with longer payment cycles than
customers in the United States;
|
|
|
|
potential negative consequences from changes to taxation
policies;
|
|
|
|
the disruption of operations from foreign labor and political
disturbances;
|
|
|
|
the imposition of tariffs, import or export licensing
requirements;
|
|
|
|
exchange controls or other trade restrictions including transfer
pricing restrictions when products produced in one country are
sold to an affiliated entity in another country.
|
Any of these events could reduce the demand for our products,
limit the prices at which we can sell our products, or otherwise
have an adverse effect on our operating performance.
We may, from time to time, post financial or other information
on our Web site,
http://www.nordson.com/Investors/.
The Internet address is for informational purposes only and is
not intended for use as a hyperlink. We are not incorporating
any material on our Web site into this Report.
|
|
Item 1B.
|
Unresolved
Staff Comments
|
None.
11
The following table summarizes our principal properties as of
October 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
Approximate
|
Location
|
|
Description of Property
|
|
Square Feet
|
|
Amherst,
Ohio(1)(2)(3)
|
|
A manufacturing, laboratory and office complex
|
|
|
585,000
|
|
Norcross,
Georgia(1)
|
|
A manufacturing, laboratory and office building
|
|
|
150,000
|
|
Dawsonville,
Georgia(1)
|
|
A manufacturing, laboratory and office building
|
|
|
134,000
|
|
East Providence, Rhode
Island(2)
|
|
A manufacturing, warehouse and office building
|
|
|
116,000
|
|
Duluth,
Georgia(1)
|
|
An office and laboratory building
|
|
|
110,000
|
|
Carlsbad,
California(2)
|
|
Two manufacturing and office buildings (leased)
|
|
|
88,000
|
|
Robbinsville, New
Jersey(2)
|
|
A manufacturing, warehouse and office building (leased)
|
|
|
88,000
|
|
Swainsboro,
Georgia(1)
|
|
A manufacturing building
|
|
|
59,000
|
|
Vista,
California(2)
|
|
A manufacturing building (leased)
|
|
|
41,000
|
|
Westlake, Ohio
|
|
Corporate headquarters (leased)
|
|
|
23,000
|
|
Luneburg,
Germany(1)
|
|
A manufacturing and laboratory building
|
|
|
130,000
|
|
Shanghai,
China(1)(3)
|
|
A manufacturing, warehouse and office building (leased)
|
|
|
92,000
|
|
Erkrath,
Germany(1)(2)(3)
|
|
An office, laboratory and warehouse building (leased)
|
|
|
63,000
|
|
Bangalore,
India(1)(2)(3)
|
|
A manufacturing, warehouse and office building
|
|
|
56,000
|
|
Shanghai,
China(1) (2)
(3)
|
|
An office and laboratory building
|
|
|
54,000
|
|
Tokyo,
Japan(1)(2)(3)
|
|
An office, laboratory and warehouse building (leased)
|
|
|
42,000
|
|
Aylesbury,
U.K.(2)
|
|
A manufacturing, warehouse and office building (leased)
|
|
|
36,000
|
|
Slough,
U.K.(2)
|
|
A manufacturing, warehouse and office building (leased)
|
|
|
33,000
|
|
Mexico City,
Mexico(1)(2)(3)
|
|
A warehouse and office building (leased)
|
|
|
23,000
|
|
Suzhou,
China(2)
|
|
A manufacturing, warehouse and office building (leased)
|
|
|
22,000
|
|
Lagny Sur Marne,
France(1)(3)
|
|
An office building (leased)
|
|
|
17,000
|
|
Segrate,
Italy(1)(3)
|
|
An office, laboratory and warehouse building (leased)
|
|
|
7,000
|
|
Singapore(1)(2)(3)
|
|
A warehouse and office building (leased)
|
|
|
6,000
|
|
Business Segment Property Identification
Legend
1 Adhesive Dispensing Systems
2 Advanced Technology Systems
3 Industrial Coating Systems
The facilities listed above have adequate, suitable and
sufficient capacity (production and nonproduction) to meet
present and foreseeable demand for our products.
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, we lease equipment under various operating and
capitalized leases. Information about leases is reported in
Note 7 of Notes to Consolidated Financial Statements that
can be found in Part II, Item 8 of this document.
12
|
|
Item 3.
|
Legal
Proceedings
|
We are involved in pending or potential litigation regarding
environmental, product liability, patent, contract, employee and
other matters arising from the normal course of business.
Including the environmental matter discussed below, it is our
opinion, after consultation with legal counsel, that resolutions
of these matters are not expected to result in a material effect
on our financial condition, quarterly or annual operating
results or cash flows.
Environmental We have voluntarily agreed with the
City of New Richmond, Wisconsin and other Potentially
Responsible Parties (PRPs) to share costs associated with the
remediation of the City of New Richmond municipal landfill (the
Site) and constructing a potable water delivery
system serving the impacted area down gradient of the Site.
The Feasibility Study / Remedial Investigation for
this project was completed and approved by the Wisconsin
Department of Natural Resources (WDNR) in September 2006. In the
fourth quarter of fiscal year 2007, the PRPs signed an
Environmental Repair Contract with the WDNR. At that time, the
estimated cost to us for Site remediation, constructing a
potable water delivery system and ongoing operation, maintenance
and monitoring (OM&M) at the Site and the impacted area
down gradient of the Site over the statutory monitoring period
of 30 years was $3,008. At October 31, 2007, $1,858
was recorded in other current liabilities, with the remaining
amount of $1,150 classified as long-term. During fiscal year
2008, $1,858 was paid in fulfillment of our obligation to fund a
portion of the estimated cost of site remediation, construction
of the potable water delivery system and one year of OM&M.
During fiscal year 2009, an additional payment of $265 was made,
leaving a balance for the remaining OM&M obligation of
$885. This amount was reported in other long-term liabilities at
October 31, 2009.
During fiscal year 2008, agreements were reached with seven
insurance companies that resulted in reimbursement to us of
$1,863 for costs related to this remediation project.
The liability for environmental remediation represents
managements best estimate of the probable and reasonably
estimable undiscounted costs related to known remediation
obligations. The accuracy of our estimate of environmental
liability is affected by several uncertainties such as
additional requirements that may be identified in connection
with remedial activities, the complexity and evolution of
environmental laws and regulations, and the identification of
presently unknown remediation requirements. Consequently, our
liability could be greater than our current estimate. However,
we do not expect that the costs associated with remediation will
have a material adverse effect on our financial condition or
results of operations.
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
None.
13
Executive
Officers of the Company
Our executive officers as of October 31, 2009, were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Position or Office with The Company and Business
|
Name
|
|
Age
|
|
Officer Since
|
|
Experience During the Past Five (5) Year Period
|
|
Edward P. Campbell
|
|
|
59
|
|
|
|
1988
|
|
|
Chairman of the Board of Directors, President and Chief
Executive Officer, 2008
|
|
|
|
|
|
|
|
|
|
|
Chairman of the Board of Directors and Chief Executive Officer,
2004
|
John J. Keane
|
|
|
48
|
|
|
|
2003
|
|
|
Senior Vice President, 2005
|
|
|
|
|
|
|
|
|
|
|
Vice President, 2003
|
Douglas C. Bloomfield
|
|
|
50
|
|
|
|
2005
|
|
|
Vice President, 2005
|
|
|
|
|
|
|
|
|
|
|
Vice President, Automotive and UV, North American Division, 2003
|
Michael Groos
|
|
|
58
|
|
|
|
1995
|
|
|
Vice President, 1995
|
Peter G. Lambert
|
|
|
49
|
|
|
|
2005
|
|
|
Vice President, 2005
|
|
|
|
|
|
|
|
|
|
|
Vice President, Packaging and Product Assembly, 2003
|
Gregory P. Merk
|
|
|
38
|
|
|
|
2006
|
|
|
Vice President, 2006
|
|
|
|
|
|
|
|
|
|
|
General Manager, Latin America South, 2000
|
Shelly M. Peet
|
|
|
44
|
|
|
|
2007
|
|
|
Vice President, 2009
|
|
|
|
|
|
|
|
|
|
|
Vice President, Chief Information Officer, 2007
|
|
|
|
|
|
|
|
|
|
|
Director, Corporate Information Services and Chief Information
Officer, 2003
|
Gregory A. Thaxton
|
|
|
48
|
|
|
|
2007
|
|
|
Vice President, Chief Financial Officer, 2008
|
|
|
|
|
|
|
|
|
|
|
Vice President, Controller, 2007
|
|
|
|
|
|
|
|
|
|
|
Corporate Controller and Chief Accounting Officer, 2006
|
|
|
|
|
|
|
|
|
|
|
Group Controller, 2000
|
Robert E. Veillette
|
|
|
57
|
|
|
|
2007
|
|
|
Vice President, General Counsel and Secretary, 2007
|
|
|
|
|
|
|
|
|
|
|
Secretary and Assistant General Counsel, 2002
|
14
PART II
|
|
Item 5.
|
Market
for the Companys Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
|
Market
Information and Dividends
(a) Our common shares are listed on the NASDAQ Global
Select Market under the symbol NDSN. As of November 30,
2009, there were 1,891 registered shareholders. The table below
is a summary of dividends paid per common share and the range of
market prices during each quarter of fiscal years 2009 and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend
|
|
|
Common Share Price
|
|
Fiscal Quarters
|
|
Paid
|
|
|
High
|
|
|
Low
|
|
|
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
$
|
.1825
|
|
|
$
|
39.95
|
|
|
$
|
24.04
|
|
Second
|
|
|
.1825
|
|
|
|
38.06
|
|
|
|
20.30
|
|
Third
|
|
|
.1825
|
|
|
|
46.29
|
|
|
|
34.47
|
|
Fourth
|
|
|
.19
|
|
|
|
59.77
|
|
|
|
44.99
|
|
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
$
|
.1825
|
|
|
$
|
61.58
|
|
|
$
|
42.30
|
|
Second
|
|
|
.1825
|
|
|
|
59.66
|
|
|
|
47.16
|
|
Third
|
|
|
.1825
|
|
|
|
78.98
|
|
|
|
58.35
|
|
Fourth
|
|
|
.1825
|
|
|
|
73.00
|
|
|
|
31.19
|
|
(b) Use of Proceeds. Not applicable.
(c) Issuer Purchases of Equity Securities
In October 2006, the board of directors authorized the
repurchase until October 2009 of up to 1,000 shares of
Nordson Corporation common shares on the open market or in
privately negotiated transactions. Share repurchases under this
program were completed in November 2008.
On December 10, 2008 the board of directors approved a
stock repurchase program of up to 1,000 shares over a
three-year period beginning December 22, 2008. Expected
uses for repurchased shares include the funding of benefit
programs including stock options, nonvested stock and 401(k)
matching. Shares purchased will be treated as treasury shares
until used for such purposes. The repurchase program will be
funded using working capital. There have been no share
repurchases under this program.
15
Performance
Graph
The following is a graph that compares the five-year cumulative
return, calculated on a dividend-reinvested basis, from
investing $100 on November 1, 2004 in Nordson common
shares, the S&P MidCap 400 Index and the S&P MidCap
400 Industrial Machinery.
TOTAL
SHAREHOLDER RETURNS
INDEXED RETURNS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
NORDSON CORPORATION
|
|
|
|
100.00
|
|
|
|
|
108.51
|
|
|
|
|
135.92
|
|
|
|
|
160.17
|
|
|
|
|
111.98
|
|
|
|
|
163.47
|
|
S&P MIDCAP 400
|
|
|
|
100.00
|
|
|
|
|
117.65
|
|
|
|
|
133.45
|
|
|
|
|
156.16
|
|
|
|
|
99.22
|
|
|
|
|
117.26
|
|
S&P MIDCAP 400 INDUSTRIAL
|
|
|
|
100.00
|
|
|
|
|
98.56
|
|
|
|
|
117.82
|
|
|
|
|
147.50
|
|
|
|
|
84.42
|
|
|
|
|
112.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
Item 6.
|
Selected
Financial
Data
|
Five-Year
Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands except for per-share amounts)
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
Operating
Data(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
819,165
|
|
|
$
|
1,124,829
|
|
|
$
|
993,649
|
|
|
$
|
892,221
|
|
|
$
|
832,179
|
|
Cost of sales
|
|
|
350,239
|
|
|
|
494,394
|
|
|
|
439,804
|
|
|
|
379,800
|
|
|
|
362,824
|
|
% of sales
|
|
|
43
|
|
|
|
44
|
|
|
|
44
|
|
|
|
43
|
|
|
|
44
|
|
Selling and administrative expenses
|
|
|
337,294
|
|
|
|
434,476
|
|
|
|
401,294
|
|
|
|
362,179
|
|
|
|
337,782
|
|
% of sales
|
|
|
41
|
|
|
|
39
|
|
|
|
40
|
|
|
|
41
|
|
|
|
41
|
|
Severance and restructuring costs
|
|
|
16,396
|
|
|
|
5,621
|
|
|
|
409
|
|
|
|
2,627
|
|
|
|
875
|
|
Goodwill and long-lived asset impairments
|
|
|
243,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(127,807
|
)
|
|
|
190,338
|
|
|
|
152,142
|
|
|
|
147,615
|
|
|
|
130,698
|
|
% of sales
|
|
|
(16
|
)
|
|
|
17
|
|
|
|
15
|
|
|
|
17
|
|
|
|
16
|
|
Income (loss) from continuing operations
|
|
|
(160,055
|
)
|
|
|
117,504
|
|
|
|
90,692
|
|
|
|
97,667
|
|
|
|
84,510
|
|
% of sales
|
|
|
(20
|
)
|
|
|
10
|
|
|
|
9
|
|
|
|
11
|
|
|
|
10
|
|
Financial
Data(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
|
|
$
|
190,249
|
|
|
$
|
180,317
|
|
|
$
|
180,010
|
|
|
$
|
105,979
|
|
|
$
|
66,442
|
|
Net property, plant and equipment and other non-current assets
|
|
|
544,003
|
|
|
|
782,356
|
|
|
|
801,916
|
|
|
|
475,586
|
|
|
|
476,810
|
|
Total invested
capital(b)
|
|
|
743,867
|
|
|
|
1,013,618
|
|
|
|
1,031,330
|
|
|
|
656,401
|
|
|
|
615,000
|
|
Total assets
|
|
|
890,674
|
|
|
|
1,166,669
|
|
|
|
1,211,840
|
|
|
|
822,890
|
|
|
|
790,417
|
|
Long-term liabilities
|
|
|
364,276
|
|
|
|
388,561
|
|
|
|
450,809
|
|
|
|
151,037
|
|
|
|
212,340
|
|
Shareholders equity
|
|
|
369,976
|
|
|
|
574,112
|
|
|
|
531,117
|
|
|
|
430,528
|
|
|
|
330,912
|
|
Return on average invested capital
%(c)
|
|
|
(19
|
)
|
|
|
13
|
|
|
|
13
|
|
|
|
18
|
|
|
|
15
|
|
Return on average shareholders equity
%(d)
|
|
|
(28
|
)
|
|
|
20
|
|
|
|
19
|
|
|
|
26
|
|
|
|
21
|
|
Per-Share
Data(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares
|
|
|
33,565
|
|
|
|
33,746
|
|
|
|
33,547
|
|
|
|
33,365
|
|
|
|
35,718
|
|
Average number of common shares and common share equivalents
|
|
|
33,565
|
|
|
|
34,307
|
|
|
|
34,182
|
|
|
|
34,180
|
|
|
|
36,527
|
|
Basic earnings (loss) per share from continuing operations
|
|
$
|
(4.77
|
)
|
|
$
|
3.48
|
|
|
$
|
2.70
|
|
|
$
|
2.93
|
|
|
$
|
2.37
|
|
Diluted earnings (loss) per share from continuing operations
|
|
|
(4.77
|
)
|
|
|
3.43
|
|
|
|
2.65
|
|
|
|
2.86
|
|
|
|
2.31
|
|
Dividends per common share
|
|
|
0.7375
|
|
|
|
0.73
|
|
|
|
0.70
|
|
|
|
0.67
|
|
|
|
0.645
|
|
Book value per common share
|
|
|
10.99
|
|
|
|
17.03
|
|
|
|
15.76
|
|
|
|
12.89
|
|
|
|
10.05
|
|
|
|
(a) |
See accompanying Notes to Consolidated Financial Statements.
|
|
|
(b) |
Notes payable, plus current portion of long-term debt, plus
current portion of capital lease obligations, plus total
long-term liabilities, plus shareholders equity.
|
|
|
(c) |
Income from continuing operations, plus interest expense on
borrowings and other long-term liabilities net of income taxes,
as a percentage average invested capital.
|
|
|
(d) |
Income from continuing operations as a percentage of
shareholders equity.
|
17
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
In this annual report, all amounts related to United States
dollars and foreign currency and to the number of shares of
Nordson Corporation common shares, except for per share earnings
and dividend amounts, are expressed in thousands.
Critical
Accounting Policies and Estimates
Our consolidated financial statements and accompanying notes
have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of
these financial statements requires management to make
estimates, judgments and assumptions that affect reported
amounts of assets, liabilities, revenues and expenses. On an
ongoing basis, we evaluate the accounting policies and estimates
that are used to prepare financial statements. We base our
estimates on historical experience and assumptions believed to
be reasonable under current facts and circumstances. Actual
amounts and results could differ from these estimates used by
management.
Certain accounting policies that require significant management
estimates and are deemed critical to our results of operations
or financial position are discussed below. On a regular basis,
critical accounting policies are reviewed with the Audit
Committee of the board of directors.
Revenue Recognition Most of our revenues are
recognized upon shipment, provided that persuasive evidence of
an arrangement exists, the sales price is fixed or determinable,
collectibility is reasonably assured, and title and risk of loss
have passed to the customer. Revenues from contracts with
multiple element arrangements, such as those including
installation or other services, are recognized as each element
is earned based on objective evidence of the relative fair value
of each element. If the installation or other services are
inconsequential to the functionality of the delivered product,
the entire amount of revenue is recognized upon satisfaction of
the criteria noted above. Inconsequential installation or other
services are those that can generally be completed in a short
period of time, at insignificant cost, and the skills required
to complete these installations are not unique to us. If
installation or other services are essential to the
functionality of the delivered product, revenues attributable to
these obligations are deferred until completed. Amounts received
in excess of revenue recognized are included as deferred revenue
within accrued liabilities in the accompanying balance sheets.
Revenues deferred in fiscal years 2009, 2008 and 2007 were not
material.
Goodwill Goodwill is the excess of purchase
price over the fair value of tangible and identifiable
intangible net assets acquired in various business combinations.
Goodwill is not amortized but is tested for impairment annually
at the reporting unit level, or more often if indications of
impairment exist. The number of reporting units tested for
goodwill impairment increased in fiscal year 2009 because we
tested one level below one of our three operating segments as a
result of the impact of the global economic downturn. For fiscal
year 2009, our reporting units are the Adhesive Dispensing
Systems segment, the Industrial Coating Systems segment and one
level below the Advanced Technology Systems segment. Based upon
the results of our impairment testing, we recognized an
impairment charge for a reduction in the carrying value of
goodwill in the amount of $232,789, relating to six reporting
units as follows: Dage $166,916, Picodostec $7,530, YESTech
$26,149, March Plasma Systems $16,449, UV Curing $12,129, and
Industrial Coating Systems $3,616.
18
The goodwill impairment test is a two-step process. In the first
step, performed in the fourth quarter of each year, we calculate
a reporting units fair value using a discounted cash flow
valuation methodology and compare the result against the
reporting units carrying value of net assets. If the
carrying value of a reporting unit exceeds its fair value, then
a second step is performed to determine if goodwill is impaired.
In step one, the assumptions used for discounted cash flow,
revenue growth, operating margin, and working capital turnover
are based on general managements strategic plans tempered
by performance trends and reasonable expectations about those
trends. With respect to revenue growth assumptions in
particular, we tempered our outlook for fiscal year 2010 and
future years by looking at historical data since the last
recession in 2001 and 2002, measuring apparent recovery and
rebound growth apart from growth experienced after the recovery,
and noting order growth for sequential reporting periods during
fiscal year 2009. Terminal value calculations employ a published
formula known as the Gordon Growth Model Method that
essentially captures the present value of perpetual cash flows
beyond the last projected period assuming a constant Weighted
Average Cost of Capital methodology (WACC) and growth rate. For
each reporting unit, sensitivity calculations vary the discount
and terminal growth rates in order to provide a range of
assurance that our expected assumptions are fair for detecting
impairment.
Discount rates were developed using a WACC methodology. The WACC
represents the blended average required rate of return for
equity and debt capital based on observed market return data and
company specific risk factors. The discount rates used ranged
from 11 percent to 19.5 percent depending upon the
reporting units size, end market volatility, and
projection risk. The calculated internal rate of return for the
step one consolidated valuation was 11.9 percent, which is
reasonable when compared to a calculated WACC for total Nordson
of 11.7 percent.
To test the reasonableness of the discounted cash flow
valuations, we performed the control premium test, which
compares the sum of the fair values calculated for our reporting
units (net of debt) to the market value of equity. The control
premium was 30 percent as of the test date of July 31,
2009 and 11 percent as of our fiscal year end of
October 31, 2009. The control premium declined during our
fourth quarter due to an increase in market value of equity.
These comparisons indicated that the discounted cash flow
valuation was reasonable.
As a result of our step one testing, we determined that the
second step of impairment testing was necessary. In the second
step, a hypothetical purchase price allocation of the reporting
units assets and liabilities is performed using the fair
value calculated in step one. The difference between the fair
value of the reporting unit and the hypothetical fair value of
assets and liabilities is the implied goodwill amount.
Impairment is recorded if the carrying value of the reporting
units goodwill is higher than its implied goodwill. The
charge recognized cannot exceed the carrying amount of goodwill.
After a goodwill impairment charge is recognized, the adjusted
carrying amount of goodwill becomes its new accounting basis.
Subsequent reversal of a previously recognized goodwill
impairment charge is prohibited once the measurement of that
charge is completed.
The implied fair value of goodwill is determined in the same
manner as the amount of goodwill recognized in a business
combination, including any unrecognized intangible assets. The
excess of the fair value of a reporting unit over the amounts
assigned to its assets and liabilities is the implied fair value
of goodwill. That assignment process is performed only for
purposes of testing goodwill for impairment; we cannot write up
or write down a recognized asset or liability, nor can we
recognize a previously unrecognized intangible asset as a result
of that allocation process.
Following our write-down of goodwill, the excess of fair value
(FV) over carrying value (CV) was compared to the carrying value
for remaining reporting units having no impairment. Based on the
results shown in the table below, our conclusion is that no
remaining impairment exists. With respect to the EFD reporting
unit, a decline in fair value exceeding 11 percent would be
required for possible impairment. Potential events or
circumstances resulting in a negative effect to the estimated
fair value could range from a further downturn in global
economies to a much slower recovery than assumed.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess of
|
|
|
|
|
WACC
|
|
FV Over CV
|
|
Goodwill
|
|
Adhesive Dispensing
|
|
|
11
|
%
|
|
|
857
|
%
|
|
$
|
33,651
|
|
Asymtek
|
|
|
14
|
%
|
|
|
650
|
%
|
|
$
|
15,144
|
|
EFD
|
|
|
13
|
%
|
|
|
13
|
%
|
|
$
|
274,576
|
|
19
At July 31, 2008, we had no indicators of impairment. By
October 31, 2008, all major stock markets had suffered
sudden and significant declines. For goodwill testing purposes,
we modified downward our growth and profitability assumptions
for what was believed to be a temporary downturn in the economy.
Based on these revised assumptions, the excess of fair value
over carrying value exceeded 25 percent for the three
operating segments tested (Adhesive Dispensing Systems, Advanced
Technology Systems, and Industrial Coating Systems).
The global economic downturn was occurring early in our fiscal
year 2009, and we initiated steps to mitigate the loss of
revenue on profitability, cash flows, and fair value of
reporting units. We implemented actions to reduce workforce and
other costs and to optimize cash flows across reporting units.
Our revenue outlook required time to estimate fairly. Insight
from the volume of customer orders helped us see the bottom,
monitor points of inflection, and see an upturn occurring in
quarters three and four. Accordingly, our annual goodwill
impairment analysis performed in the fourth quarter of fiscal
year 2009 had the benefit of additional insight to order trends,
growth expectations, and effects of mitigating actions. Our
quarterly assessments looked at the market value of equity,
confirmed solvency, and projected positive liquidity,
profitability, and improving order trends in the second half of
the year.
In fiscal year 2009, we tested one level below the operating
segment level for Advanced Technology Systems primarily because
this segment included three acquisitions made in fiscal year
2007 that were still being integrated into the operating segment
during fiscal year 2009. Integration was incomplete and planned
synergies were not yet realized for Dage, Picodostec, and
YESTech, and we realized that the change in business climate in
fiscal year 2009 could reduce the fair value for these recent
acquisitions below their carrying amounts. During fiscal year
2009, we recognized that revenue growth assumptions used in the
original valuations could not be anticipated in the current
economic cycle. In addition, because of concerns of
under-performance and the impact of the economic downturn in
fiscal year 2009, we took a closer look at two prior
acquisitions March Plasma Systems, which had
goodwill resulting from two acquired companies in 1999, and UV
Curing, which had goodwill resulting from two acquired companies
in 1996 and 1999.
The Industrial Coating Systems operating segment suffered
revenue loss in large-dollar engineered systems orders from its
primary automotive customers due to bankruptcies and permanent
plant closures and from other industrial coating customers who
placed fewer orders for large engineered systems during this
difficult economic cycle. In addition, this segment has operated
with a less flexible, base cost structure, adding more risk to
profitability and cash flows during economic downturns.
Other Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets are trademarks and trade
names associated with Dage, Picodostec, YESTech and TAH
Industries. Indefinite-lived intangible assets are not subject
to amortization and need to be tested for impairment annually or
more often if indications of impairment exist. Testing is
performed at the component level with which the asset is
associated. The impairment test consists of a comparison of the
fair value of the intangible asset with its carrying amount. If
the carrying amount of an intangible asset exceeds its fair
value, an impairment charge is recognized in an amount equal to
that excess. After an impairment charge is recognized, the
adjusted carrying amount of the intangible asset becomes its new
accounting basis. Subsequent reversal of a previously recognized
impairment charge is prohibited.
The common valuation technique for trademark and trade names is
the relief from royalty method. The theory is that
these assets relieve the owner from having to pay a hypothetical
royalty attributable to an exclusive license for selling
products under the trademark or trade name. The value of the
hypothetical exclusive license is based upon the present value
of a stream of hypothetical royalty payments, using assumptions
for revenue growth (the same as for goodwill testing), discount
rates (slightly more risk premium than for goodwill testing),
royalty rates (based on market data), and tax amortization
benefits (based upon statutory guidance).
The conclusion of this testing resulted in impairment charges
totaling $8,282 as follows by reporting unit: Dage $5,365,
Picodostec $157, YESTech $350, and TAH Industries $2,410.
20
Other Long-Lived Assets Our test for
recoverability of long-lived depreciable and amortizable assets
used undiscounted cash flows, except for one asset group for
which an external market source was available (described below).
Long-lived assets are grouped at the lowest level for which
there are identifiable cash flows. The total carrying value of
long-lived assets for each reporting unit has been compared to
the forecasted cash flows of each reporting units
long-lived assets being tested. Cash flows have been defined as
earnings before interest, taxes, depreciation, and amortization
less annual maintenance capital spending.
Estimates of future cash flows used to test the recoverability
of a long-lived asset (asset group) are based on the remaining
useful life of the asset. We believe that the relative value of
long-lived assets within each reporting unit is a reasonable
proxy for the relative importance of the assets in the
production of cash flow. To get to a reasonable forecast period,
the aggregate net book value of long-lived assets was divided by
the current depreciation and amortization value to arrive at a
blended remaining useful life. For reporting units tested using
this methodology, our calculations show the undiscounted
aggregate value of cash flows over the remaining useful life for
each reporting unit is greater than the respective carrying
value of the lived assets within each reporting unit. We have
one asset group within our UV Curing reporting unit for which a
value obtained from an external market source was used for
evaluating recoverability. As a result, we have recognized a
charge of $1,972. No further impairment procedures were
necessary for our long-lived asset groups.
Inventories Inventories are valued at the
lower of cost or market. Cost has been determined using the
last-in,
first-out (LIFO) method for 26 percent of consolidated
inventories at October 31, 2009, and 27 percent at
October 31, 2008, with the
first-in,
first-out (FIFO) method used for the remaining inventory. On an
ongoing basis, inventory is tested for technical obsolescence,
as well as for future demand and changes in market conditions.
We have historically maintained inventory reserves to reflect
those conditions when the cost of inventory is not expected to
be recovered. Inventory reserves are also maintained for
inventory used for demonstration purposes. The inventory reserve
balance was $15,740, $13,133 and $12,365 at October 31,
2009, 2008 and 2007, respectively.
Pension Plans and Postretirement Medical
Plans The measurement of liabilities related to
our pension plans and postretirement medical plans is based on
managements assumptions related to future factors,
including interest rates, return on pension plan assets,
compensation increases, mortality and turnover assumptions, and
health care cost trend rates.
The weighted-average discount rate used to determine the present
value of our domestic pension plan obligations was
5.50 percent at October 31, 2009 and 8.00 percent
at October 31, 2008. The discount rate for these plans,
which comprised 78 percent of the worldwide pension
obligations at October 31, 2009, was based on quality fixed
income investments with a duration period approximately equal to
the period over which pension obligations are expected to be
settled. The weighted-average discount rate used to determine
the present value of our various international pension plan
obligations was 4.78 percent at October 31, 2009,
compared to 5.87 percent at October 31, 2008. The
discount rates used for the international plans were determined
by using quality fixed income investments.
In determining the expected return on plan assets, we consider
both historical performance and an estimate of future long-term
rates of return on assets similar to those in our plans. We
consult with and consider the opinions of financial and
actuarial experts in developing appropriate return assumptions.
The expected rate of return (long-term investment rate) on
domestic pension assets was 8.51 percent for fiscal year
2009 and 8.48 percent for fiscal year 2008. The average
expected rate of return on international pension assets
decreased to 4.85 percent in fiscal year 2009 from
5.04 percent in fiscal year 2008.
The assumed rate of compensation increases for domestic
employees was 3.30 percent for both fiscal years 2009 and
2008. The assumed rate of compensation increases for
international employees was 2.86 percent in fiscal year
2009, compared to 3.45 percent in fiscal year 2008.
21
Annual expense amounts are determined based on the discount rate
used at the end of the prior year. Differences between actual
and assumed investment returns on pension plan assets result in
actuarial gains or losses that are amortized into expense over a
period of years.
Economic assumptions have a significant effect on the amounts
reported. The effect of a one percent change in the discount
rate, expected return on assets and compensation increase is
shown in the table below. Bracketed numbers represent decreases
in expense and obligation amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
International
|
|
|
1% Point
|
|
1% Point
|
|
1% Point
|
|
1% Point
|
|
|
Increase
|
|
Decrease
|
|
Increase
|
|
Decrease
|
|
Discount rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
(1,114
|
)
|
|
$
|
2,414
|
|
|
$
|
(716
|
)
|
|
$
|
294
|
|
Effect on pension obligation as of October 31, 2009
|
|
$
|
(28,806
|
)
|
|
$
|
35,401
|
|
|
$
|
(9,273
|
)
|
|
$
|
11,920
|
|
Expected return on assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
(1,435
|
)
|
|
$
|
1,435
|
|
|
$
|
(219
|
)
|
|
$
|
226
|
|
Effect on pension obligation as of October 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation increase:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
1,701
|
|
|
$
|
(1,337
|
)
|
|
$
|
263
|
|
|
$
|
(530
|
)
|
Effect on pension obligation as of October 31, 2009
|
|
$
|
13,776
|
|
|
$
|
(11,402
|
)
|
|
$
|
4,477
|
|
|
$
|
(4,291
|
)
|
With respect to the domestic postretirement medical plan, the
discount rate used to value the benefit obligation decreased
from 8.00 percent at October 31, 2008 to
5.50 percent at October 31, 2009. The annual rate of
increase in the per capita cost of covered benefits (the health
care cost trend rate) is assumed to be 8.25 percent in
fiscal year 2010, decreasing gradually to 4.50 percent in
fiscal year 2015.
For the international postretirement plan, the discount rate
used to value the benefit obligation decreased from
7.70 percent at October 31, 2008 to 6.75 percent
at October 31, 2009. The annual rate of increase in the per
capita cost of covered benefits (the health care cost trend
rate) is assumed to be 7.50 percent in fiscal year 2010,
decreasing gradually to 4.80 percent in fiscal year 2013.
The discount rate and the health care cost trend rate
assumptions have a significant effect on the amounts reported.
For example, a one-percentage point change in the discount rate
and assumed health care cost trend rate would have the following
effects:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
International
|
|
|
1% Point
|
|
1% Point
|
|
1% Point
|
|
1% Point
|
|
|
Increase
|
|
Decrease
|
|
Increase
|
|
Decrease
|
|
Discount rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
(376
|
)
|
|
$
|
444
|
|
|
$
|
(12
|
)
|
|
$
|
11
|
|
Effect on postretirement obligation as of October 31, 2009
|
|
$
|
(6,286
|
)
|
|
$
|
7,801
|
|
|
$
|
(118
|
)
|
|
$
|
157
|
|
Health care trend rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
447
|
|
|
$
|
(371
|
)
|
|
$
|
15
|
|
|
$
|
(7
|
)
|
Effect on postretirement obligation as of October 31, 2009
|
|
$
|
7,297
|
|
|
$
|
(5,978
|
)
|
|
$
|
153
|
|
|
$
|
(117
|
)
|
Employees hired after January 1, 2002, are not eligible to
participate in the domestic postretirement medical plan.
Pension and postretirement expenses in fiscal year 2010 are
expected to be approximately $8,500 higher than fiscal year
2009, primarily reflecting a change in the discount rate.
22
Financial Instruments Assets, liabilities and
commitments that are to be settled in cash and are denominated
in foreign currencies are sensitive to changes in currency
exchange rates. We enter into foreign currency forward
contracts, which are derivative financial instruments, to reduce
the risk of foreign currency exposures resulting from the
collection of receivables, payables and loans denominated in
foreign currencies. The maturities of these contracts are
usually less than 90 days. Forward contracts are marked to
market each accounting period, and the resulting gains or losses
are included in other net within other
income (expense) on the Consolidated Statement of Income.
Warranties We provide customers with a
product warranty that requires us to repair or replace defective
products within a specified period of time (generally one year)
from the date of delivery or first use. An accrual is recorded
for expected warranty costs for products shipped through the end
of each accounting period. In determining the amount of the
accrual, we rely primarily on historical warranty claims.
Amounts charged to the warranty reserve were $3,824, $6,070 and
$5,702 in fiscal years 2009, 2008 and 2007, respectively. The
reserve balance was $4,587, $5,336 and $5,857 at
October 31, 2009, 2008 and 2007, respectively.
Long-Term Incentive Compensation Plan (LTIP)
Under the long-term incentive compensation plan, executive
officers and selected other employees receive stock payouts
based solely on corporate performance measures over three-year
performance periods. Payouts vary based on the degree to which
corporate performance equals or exceeds predetermined threshold,
target and maximum performance levels at the end of a
performance period. No payout will occur unless certain
threshold performance objectives are equaled or exceeded. The
amount of compensation expense is based upon current performance
projections for each three-year period and the percentage of the
requisite service that has been rendered. The calculation is
also based upon the closing price of common shares at the dates
of grant. Payouts are recorded as capital in excess of stated
value in shareholders equity. As performance did not meet
the threshold, there will be no payout for the fiscal year
2007-2009
performance period. There was $5,014 credited to expense
attributable to all LTIP performance periods for executive
officers and selected other employees for fiscal year 2009.
There is no cumulative amount recorded in shareholders
equity at October 31, 2009. For fiscal years 2008 and 2007,
the amounts charged to expense were $4,762 and $4,606,
respectively.
23
Fiscal
Years 2009 and 2008
Sales As a result of the global economic
slowdown, worldwide sales for fiscal year 2009 were $819,165, a
decrease of 27.2 percent from fiscal year 2008 sales of
$1,124,829. Sales volume decreased 23.3 percent, and
unfavorable currency translation effects caused by the stronger
United States dollar decreased sales by an additional
3.9 percent over the prior year.
Sales of the Adhesive Dispensing Systems segment were $460,746
in fiscal year 2009, a decrease of $119,965, or
20.7 percent, from fiscal year 2008. The change is the
result of a sales volume decrease of 16.3 percent and
unfavorable currency translation effects that reduced sales by
an additional 4.4 percent. The sales decrease was largely
attributable to large-dollar system product lines, with sales to
consumer non-durable end markets, such as packaging and
nonwovens, remaining more stable. All product lines within this
segment and all geographic regions experienced sales volume
decreases from the prior year.
Sales of the Advanced Technology Systems segment were $248,827
in fiscal year 2009, a decrease of $118,539, or
32.3 percent from fiscal year 2008. Sales volume decreased
28.2 percent, and unfavorable currency translation effects
decreased sales by 4.1 percent. Within the segment, volume
decreases occurred in all product lines and all geographic
regions largely due to reduced demand in semiconductor and
consumer electronics end markets.
Industrial Coating Systems segment sales in fiscal year 2009
were $109,592, a decrease of $67,160, or 38.0 percent, from
the prior year. The decrease is the result of a sales volume
decrease of 35.9 percent and unfavorable currency
translation effects of 2.1 percent. The sales volume
decline was largely due to the lack of capital spending in
consumer durable end markets. Within the segment, volume
decreases occurred in all product lines and all geographic
regions.
It is estimated that the effect of pricing on total revenue was
neutral relative to the prior fiscal year.
Sales outside the United States accounted for 71.3 percent
of total fiscal year 2009 sales, compared to 71.9 percent
in fiscal year 2008. Sales volume in fiscal year 2009 decreased
from the prior year in all five geographic regions in which we
operate. Sales volume was down 31.6 percent in Japan,
25.4 percent in the United States, 22.9 percent in
Europe, 19.3 percent in Asia Pacific and 14.0 percent
in the Americas (Canada, Mexico and Central and South America).
Sales in all international regions, except Japan, were
negatively impacted by the stronger U.S. dollar.
Operating profit Cost of sales in fiscal year
2009 was $350,239, down 29.2 percent from fiscal year 2008,
due primarily to the decrease in sales volume. Currency effects
reduced cost of sales by 2.8 percent. Gross margins,
expressed as a percent of sales, increased to 57.2 percent
in fiscal year 2009 from 56.0 percent in fiscal year 2008.
The increase was due primarily to a higher mix of consumables
and aftermarket part sales compared to engineered systems sales.
The gross margin percentage was also impacted by a reduction of
overhead costs related to initiatives to reduce spending in
response to the economic slowdown.
Selling and administrative expenses, excluding severance and
restructuring costs, were $337,294 in fiscal year 2009, a
decrease of $97,182, or 22.4 percent, from fiscal year
2008. The decrease was largely due to reduced compensation
expenses associated with lower employment levels, furloughs,
lower incentive compensation expense, and tightened control over
discretionary spending. In addition, currency translation
effects decreased selling and administrative costs by
4.2 percent. Selling and administrative expenses as a
percentage of sales increased to 41.2 percent in fiscal
year 2009 from 38.6 percent in fiscal year 2008 due to the
lower level of sales.
In September 2008, a cost reduction program that involved a
combination of non-workforce related efficiencies and workforce
reductions primarily in North America and Europe was announced.
In response to the continuing economic crisis, additional cost
reduction actions were taken in fiscal year 2009. It is
anticipated that the total severance and related costs of these
actions will be approximately $23,000, of which $5,561 occurred
in fiscal year 2008 and $16,396 occurred in fiscal year 2009.
The remainder will occur in fiscal year 2010. Severance costs
were recorded in the Corporate segment.
24
In fiscal year 2009 we recognized goodwill and long-lived asset
impairment charges of $243,043. Of this amount, $232,789 related
to goodwill, $8,282 related to indefinite lived trade name
assets and $1,972 related to other long-lived assets. Additional
information regarding these charges is described in the Critical
Accounting Policies and Estimates section.
Operating margin was negative 15.6 percent in fiscal year
2009 compared to operating profit of 16.9 percent in fiscal
year 2008. Goodwill and long-lived impairment charges accounted
for 29.7 percent of the 32.5 percent change. The
remainder of the decrease was due primarily to the reduction in
sales volume.
Segment operating profit margins in fiscal years 2009 and 2008
were as follows:
|
|
|
|
|
|
|
|
|
Segment
|
|
2009
|
|
2008
|
|
Adhesive Dispensing Systems
|
|
|
27.7
|
%
|
|
|
25.0
|
%
|
Advanced Technology Systems
|
|
|
(86.2
|
)%
|
|
|
16.8
|
%
|
Industrial Coating Systems
|
|
|
(6.7
|
)%
|
|
|
6.2
|
%
|
Operating capacity for each of our segments can support
fluctuations in order activity without significant changes in
operating costs. Also, currency translation affects reported
operating profit margins. Operating margins for each segment
were unfavorably impacted by a stronger dollar during the year
as compared to the prior year.
Operating margin for the Adhesive Dispensing Systems segment was
27.7 percent, up from 25.0 percent in fiscal year
2008. The increase was due primarily to a higher gross margin
percentage resulting from a mix of more consumables and
aftermarket part sales compared to engineered systems sales in
fiscal year 2009.
Operating margin for the Advanced Technology Systems segment was
negative 86.2 percent in fiscal year 2009 as compared to an
operating profit margin of 16.8 percent in fiscal year
2008. The change is due primarily to goodwill and long-lived
asset impairment and charges of $239,427. Excluding these
impairment charges, operating margin was 10.1 percent in
fiscal year 2009. The decrease from the prior year was due
primarily to sales volume decreasing at a higher rate than both
cost of sales and selling and administrative expenses.
Operating margin for the Industrial Coating Systems segment was
negative 6.7 percent in fiscal year 2009 as compared to an
operating profit margin of 6.2 percent in fiscal year 2008.
The current year includes a goodwill impairment charge of
$3,616. Excluding this charge, operating margin was negative
3.4 percent. The change from fiscal year 2008 was due
primarily to sales volume decreasing at a higher rate than
selling and administrative expenses.
Interest and other income (expense) Interest
expense in fiscal year 2009 was $7,771, a decrease of $8,943, or
53.5 percent from fiscal year 2008 due to lower borrowing
levels and lower interest rates. Other income was $7,895 in
fiscal year 2009, compared to $4,914 in fiscal year 2008.
Included in other income (expense) were currency gains of $1,571
in fiscal year 2009 and $2,153 in fiscal year 2008. Fiscal year
2009 also includes a $5,011 gain on the sale of real estate in
Westlake, Ohio.
Income taxes Income tax expense was $32,864
in fiscal year 2009. Most of the goodwill and long-lived asset
impairment charges in fiscal year 2009 were non-deductible for
income tax purposes. Income tax expense for fiscal year 2008 was
$62,284.
Net income (loss) Net loss was $160,055, or
$4.77 per diluted share in fiscal year 2009. This compares to
net income of $117,504, or $3.43 per diluted share in fiscal
year 2008.
25
Recently issued accounting standards In June
2009, the Financial Accounting Standards Board (FASB) issued the
Accounting Standards Codification, which establishes a sole
source of U.S. authoritative generally accepted accounting
principles (GAAP). The Codification is meant to simplify user
access to all authoritative accounting guidance by reorganizing
U.S. GAAP pronouncements into approximately ninety
accounting topics within a consistent structure; its purpose is
not to create new accounting and reporting guidance. The
adoption of this guidance did not have an effect on our
consolidated results of operations, financial position or cash
flows.
In September 2006, the FASB issued a standard regarding fair
value measurements. This standard provides a common definition
of fair value and establishes a framework to make the
measurement of fair value in generally accepted accounting
principles more consistent and comparable. It also requires
expanded disclosures to provide information about the extent to
which fair value is used to measure assets and liabilities, the
methods and assumptions used to measure fair value, and the
effect of fair value measures on earnings. In February 2008, the
FASB issued an update that permits a one-year deferral of the
original standard for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at
least annually). As discussed in Note 18, we adopted the
non-deferred portion of the standard as of November 1,
2008. The adoption did not impact our results of operations or
financial position. We will adopt the deferred portion of this
standard effective November 1, 2009.
In February 2007 the FASB issued a standard for reporting the
fair value of financial assets and financial liabilities. This
standard permits entities to choose to measure many financial
instruments and certain other items at fair value and report
unrealized gains and losses on these instruments in earnings. We
did not elect the fair value measurement option for any of our
existing financial instruments other than those that are already
being measured at fair value. As such, the adoption of this
standard on November 1, 2008 did not have an impact on our
results of operations or financial position.
In December 2007, the FASB issued a standard that provides
greater consistency in the accounting and financial reporting of
business combinations. The standard requires the acquiring
entity in a business combination to recognize all assets
acquired and liabilities assumed in the transaction, establishes
the acquisition-date fair value as the measurement objective for
all assets acquired and liabilities assumed, and requires the
acquirer to disclose the nature and financial effect of the
business combination. We must adopt this standard for all
business combinations subsequent to November 1, 2009. The
impact of adoption will depend on the nature and significance of
any future acquisitions.
In December 2007, the FASB issued a pronouncement that
establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. We must adopt this
pronouncement in our fiscal year 2010. The impact of adoption
will depend on future transactions, however we currently believe
the adoption will not have a material effect on our results of
operations or financial position.
In March 2008, the FASB issued a standard that is intended to
improve transparency in financial reporting by requiring
enhanced disclosures of an entitys derivative instruments
and hedging activities and their effects on the entitys
financial position, financial performance, and cash flows. The
standard applies to all derivative instruments as well as
related hedged items, bifurcated derivatives, and nonderivative
instruments that are designated and qualify as hedging
instruments. Entities with instruments subject to this standard
must provide more robust qualitative disclosures and expanded
quantitative disclosures. As discussed in Note 10, we
adopted this standard in the second quarter of fiscal year 2009.
In December 2008, the FASB issued a standard that enhances the
required disclosures about plan assets in an employers
defined benefit pension or other postretirement plan, including
investment allocations decisions, inputs and valuations
techniques used to measure the fair value of plan assets and
significant concentrations of risks within plan assets. We must
adopt this standard in our fiscal year 2010; we are currently
evaluating its disclosure implications.
26
In May 2009, the FASB issued a standard that establishes general
standards of accounting for and disclosure of events that occur
after the balance sheet date but before the financial statements
are issued or are available to be issued. The standard requires
the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date. It sets forth the
period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial
statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance
sheet date in its financial statements, and the disclosures that
an entity should make about events or transactions that occurred
after the balance sheet date. As discussed in Note 21, we
adopted this standard in the third quarter of fiscal year 2009.
In October 2009, the FASB issued authoritative guidance on
multiple-deliverable revenue arrangements that addresses the
unit of accounting for arrangements involving multiple
deliverables. The guidance also addresses how arrangement
consideration should be allocated to separate units of
accounting, when applicable, and expands the disclosure
requirements for multiple-deliverable arrangements. We must
adopt this standard in fiscal year 2011 and have not yet
determined the impact of adoption on our results of operations
or financial position.
Fiscal
Years 2008 and 2007
Sales Worldwide sales for fiscal year 2008
were $1,124,829, an increase of 13.2 percent from fiscal
year 2007 sales of $993,649. Organic sales volume increased
5.1 percent, while the first year effect of acquisitions
accounted for 3.8 percentage points of the growth.
Favorable currency translation effects caused by the weaker
United States dollar increased sales by an additional
4.3 percent over the prior year.
Sales of the Adhesive Dispensing Systems segment were $580,711
in fiscal year 2008, an increase of $71,143, or
14.0 percent, from fiscal year 2007. The increase was split
evenly between sales volume and favorable currency translation
effects. All product lines within this segment and all
geographic regions experienced sales volume increases over the
prior year.
Sales of the Advanced Technology Systems segment were $367,366
in fiscal year 2008, an increase of $66,647, or
22.2 percent from fiscal year 2007. The first year effect
of acquisitions generated a volume increase of
12.4 percent, while organic sales volume increased
9.7 percent. Favorable currency translation effects
contributed 0.1 percent to sales growth within this
segment. The volume increase can be traced primarily to the Asia
Pacific region, the United States and Europe, as demand improved
for our products in certain semiconductor and consumer
electronics end markets.
Industrial Coating Systems segment sales in fiscal year 2008
were $176,752, a decrease of $6,610, or 3.6 percent, from
the prior year. The decrease is the result of a sales volume
decrease of 7.5 percent, partially offset by favorable
currency translation effects of 3.9 percent. The sales
volume decrease can be traced to recent cyclical weakness in key
consumer durable goods markets, primarily in the United States.
It is estimated that the effect of pricing on total revenue was
neutral relative to the prior fiscal year.
Sales outside the United States accounted for 71.9 percent
of total fiscal year 2008 sales, up from 69.3 percent in
fiscal year 2007. Sales volume in fiscal year 2008 exceeded that
of fiscal year 2007 in all five geographic regions in which we
operate, largely driven by the Advanced Technology Systems
segment. Sales volume was up 21.7 percent in Asia Pacific,
10.5 percent in Europe, 4.2 percent in Japan,
3.5 percent in the United States and 2.3 percent in
the Americas (Canada, Mexico and Central and South America).
Currency translation effects favorably impacted sales in all
international regions.
Operating profit Cost of sales in fiscal year
2008 was $494,394, up 12.4 percent from fiscal year 2007,
due primarily to the increase in sales volume. Currency effects
increased cost of sales by 3.1 percent. Gross margins,
expressed as a percent of sales, increased to 56.0 percent
in fiscal year 2008 from 55.7 percent in fiscal year 2007.
The increase was the result of the absence of short-term
inventory purchase accounting adjustments related to
acquisitions that reduced the fiscal year 2007 gross margin
percentage by approximately 0.9 percent and favorable
currency effects that increased the fiscal year 2008 gross
margin rate by 0.4 percent. Offsetting these items were
changes in product mix that reduced the gross margin percentage.
27
Selling and administrative expenses, excluding severance and
restructuring costs, were $434,476 in fiscal year 2008, an
increase of $33,182, or 8.3 percent, from fiscal year 2007.
The increase is largely due to the first year effect of fiscal
2007 acquisitions, which added 3.7 percent, and currency
translation effects, which added 3.5 percent. Annual
compensation increases and higher employee benefit costs also
contributed to the increase. Selling and administrative expenses
as a percentage of sales decreased to 38.6 percent in
fiscal year 2008 from 40.4 percent in fiscal year 2007,
reflecting ongoing operational improvement efforts and revenue
increases that were supported by existing capacity.
In September 2008, a cost reduction program that involved a
combination of non-workforce related efficiencies and workforce
reductions primarily in North America and Europe was announced.
Severance costs were $5,561 in fiscal year 2008 and were
recorded in the Corporate segment.
Our operating profit margin increased to 16.9 percent in
fiscal year 2008 from 15.3 percent in fiscal year 2007.
Purchase accounting adjustments for inventory associated with
fiscal year 2007 acquisitions reduced that years operating
profit margin by 0.9 percent. The improvement was also due
to favorable currency translation effects and revenue increases
that were supported by existing capacity. The operating profit
margin was reduced by 0.5 percent as a result of the
severance and restructuring costs described above.
Segment operating profit margins in fiscal years 2008 and 2007
were as follows:
|
|
|
|
|
|
|
|
|
Segment
|
|
2008
|
|
2007
|
|
Adhesive Dispensing Systems
|
|
|
25.0
|
%
|
|
|
23.2
|
%
|
Advanced Technology Systems
|
|
|
16.8
|
%
|
|
|
13.5
|
%
|
Industrial Coating Systems
|
|
|
6.2
|
%
|
|
|
9.6
|
%
|
Operating capacity for each of our segments can support
fluctuations in order activity without significant changes in
operating costs. Also, currency translation affects reported
operating profit margins. Operating profit margins for each
segment were favorably impacted by a weaker dollar during the
year as compared to the prior year.
Operating profit margin for the Adhesive Dispensing Systems
segment was 25.0 percent, up from 23.2 percent in
fiscal year 2007. The increase can be traced to the increased
sales volume across all product lines and geographic regions and
to favorable currency translation effects.
Operating profit margin for the Advanced Technology Systems
segment increased to 16.8 percent in fiscal year 2008 from
13.5 percent in fiscal year 2007. The increase was
primarily the result of sales volume increasing at a higher rate
than operating costs and the absence of the effect of short-term
purchase accounting adjustments related to fiscal year 2007
acquisitions, partially offset by changes in sales mix.
Operating profit margin for the Industrial Coating Systems
segment was 6.2 percent in fiscal year 2008 as compared to
9.6 percent in fiscal year 2007. The decrease in the
operating profit margin is due primarily to a sales volume
decrease of 7.5 percent and to a higher mix of lower margin
system sales.
Interest and other income (expense) Interest
expense in fiscal year 2008 was $16,714, a decrease of $4,828,
or 22.4 percent from fiscal year 2007 due to lower
borrowing levels and lower interest rates. Other income was
$4,914 in fiscal year 2008, compared to $3,617 in fiscal year
2007. Included in other income (expense) were currency gains of
$2,153 in fiscal year 2008 and currency losses of $1,028 in
fiscal year 2007. The prior year amount also included a $3,038
gain on the sale-leaseback of real estate.
Income taxes Our effective income tax rate
was 34.6 percent in fiscal year 2008, up from
33.2 percent in fiscal year 2007. The increased rate is due
primarily to a favorable adjustment in fiscal year 2007 related
to a prior year tax revision.
Net income Net income was $117,504, or
$3.43 per diluted share in fiscal year 2008. This compares to
net income of $90,692, or $2.65 per diluted share in fiscal year
2007. This represents a 29.6 percent increase in net income
and a 29.4 percent increase in earnings per share.
28
Liquidity
and Capital Resources
Cash provided by operations in fiscal year 2009 was $168,677,
compared to $114,042 in fiscal year 2008. The primary sources
were net income (loss) adjusted for non-cash expenses and the
tax benefit from the exercise of stock options, totaling
$138,529 compared to $134,968 in fiscal year 2008. Also included
in cash provided by operations in the current year were changes
in operating assets and liabilities of $30,148 as compared to
fiscal year 2008 when operating assets and liabilities used
$20,926 of cash. The primary reason for the change is the lower
level of business activity in the current year resulting in
lower operating assets.
Cash used by investing activities was $3,939 in fiscal year
2009, compared to $31,924 in fiscal year 2008. Capital
expenditures were $12,514 in fiscal year 2009, down from $26,386
in the prior year due to tighter spending control in the current
year. Fiscal year 2009 capital expenditures were primarily
focused on our in-process rollout of SAP enterprise management
software and various projects that improve manufacturing and
distribution. Proceeds from the sale of property, plant and
equipment in the current year were $8,611 and primarily
consisted of the sale of our Westlake, Ohio corporate
headquarters building and a portion of the real property
surrounding the building. Included in cash used by investing
activities in fiscal year 2008 was $7,890 for the acquisition of
businesses and the minority interest in a South Korea joint
venture.
Cash of $161,018 was used for financing activities in fiscal
year 2009, compared to $102,716 in fiscal year 2008. The current
year included net repayments of $127,268 of short and long-term
borrowings, compared to $61,566 in the prior year. Issuance of
common shares related to employee benefit plans generated $2,986
of cash in the current year, down from $16,135 in the prior year
due to fewer stock option exercises. Purchases of treasury
shares used $7,115 of cash in fiscal year 2009, down from
$35,615 in fiscal year 2008, as we focused on repayment of debt
in the current year. Dividend payments were $24,747 in fiscal
year 2009, up slightly from $24,645 in fiscal year 2008 due to
an increase in the quarterly dividend from $0.1825 per share to
$0.19 per share in the fourth quarter of the current year.
The following is a summary of significant changes by balance
sheet caption from the end of fiscal year 2008 to the end of
fiscal year 2009. Receivables, inventories and accounts payable
decreased due primarily to lower level of business activity in
the fourth quarter of fiscal year 2009 compared to the fourth
quarter of fiscal year 2008. Long-term deferred tax assets
increased due primarily to deferred taxes related to pension and
postretirement adjustments to other comprehensive income.
Regarding the increase in income taxes payable, the balance at
the end of fiscal year 2008 was reduced to record an expected
refund that was received during fiscal year 2009. Accrued
liabilities decreased due primarily to lower incentive
compensation accruals. The increase in long-term pension and
retirement liabilities is due primarily to lower discount rates
in fiscal year 2009 as compared to fiscal year 2008.
On February 22, 2008, we entered into a Note Purchase and
Private Shelf Agreement (the Agreement) with Prudential
Investment Management, Inc. The Agreement consists of a $50,000
Senior Note and a $100,000 Private Shelf Facility. The Senior
Note bears interest at a rate of 4.98 percent and matures
on February 22, 2013. The Agreement also contains customary
events of default and covenants related to limitations on
indebtedness and the maintenance of certain financial ratios. We
were in compliance with all of our debt covenants at
October 31, 2009. Under the Private Shelf Facility, we may
also borrow during the next three years up to $100,000 at
interest rates in effect at the time of borrowing. Borrowings
can be for up to 12 years with an average life not to
exceed 10 years. At October 31, 2009, the amount we
could borrow under the Private Shelf Facility would not have
been limited by any debt covenants.
The board of directors authorized the repurchase of up to 1,000
of our common shares over a three-year period beginning November
2006. The resolution was amended in August 2007 permitting the
use of written agreements with independent third party brokers
to purchase common shares on the open market or in privately
negotiated transactions. Uses for repurchased shares include the
funding of benefit programs, including stock options, restricted
stock and 401(k) matching. Shares purchased are treated as
treasury shares until used for such purposes. The repurchase
program is funded using working capital. During fiscal year
2009, we repurchased 197 shares at a cost of $6,826,
completing the repurchases authorized under this program.
29
On December 10, 2008, the board of directors approved a
stock repurchase program of up to 1,000 shares over a
three-year period beginning December 22, 2008. Expected
uses for repurchased shares include the funding of benefit
programs including stock options, nonvested stock and 401(k)
matching. There have been no shares repurchased under this
program.
The following table summarizes obligations as of
October 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
After
|
|
Obligations
|
|
Total
|
|
|
1 Year
|
|
|
1-3 Years
|
|
|
4-5 Years
|
|
|
5 Years
|
|
|
Long-term
debt(1)
|
|
$
|
156,550
|
|
|
$
|
4,290
|
|
|
$
|
102,260
|
|
|
$
|
50,000
|
|
|
$
|
|
|
Capital lease obligations
|
|
|
9,162
|
|
|
|
5,243
|
|
|
|
3,648
|
|
|
|
271
|
|
|
|
|
|
Operating leases
|
|
|
31,061
|
|
|
|
10,628
|
|
|
|
9,052
|
|
|
|
2,906
|
|
|
|
8,475
|
|
Notes
payable(2)
|
|
|
1,287
|
|
|
|
1,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest payments on long-term debt
|
|
|
10,078
|
|
|
|
3,730
|
|
|
|
5,560
|
|
|
|
788
|
|
|
|
|
|
Contributions related to pension and postretirement
benefits(3)
|
|
|
31,027
|
|
|
|
31,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation payouts
|
|
|
11,310
|
|
|
|
11,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase obligations
|
|
|
31,323
|
|
|
|
30,394
|
|
|
|
929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations
|
|
$
|
281,798
|
|
|
$
|
97,909
|
|
|
$
|
121,449
|
|
|
$
|
53,965
|
|
|
$
|
8,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) We have a $400,000 unsecured, multicurrency credit
facility with a group of banks that expires in fiscal year 2012
and may be increased to $500,000 under certain conditions. At
October 31, 2009, $88,000 was outstanding under this
facility, compared to $170,000 outstanding at October 31,
2008. There are two primary financial covenants that must be met
under this facility. The first covenant limits the amount of
total indebtedness that can be incurred to 3.5 times
consolidated trailing EBITDA (both indebtedness and EBITDA as
defined in the credit agreement). The second covenant requires
consolidated trailing EBITDA to be at least three times
consolidated trailing interest expense (both as defined in the
credit agreement). We were in compliance with all debt covenants
at October 31, 2009. At October 31, 2009, the amount
we could borrow under the credit facility would not have been
limited by any debt covenants.
(2) We have various lines of credit with foreign banks
totaling $48,433, of which $47,146 was unused at
October 31, 2009.
(3) Pension and postretirement plan funding amounts after
fiscal year 2010 will be determined based on the future funded
status of the plans and therefore cannot be estimated at this
time.
We believe that the combination of present capital resources,
internally generated funds and unused financing sources are more
than adequate to meet cash requirements for fiscal year 2010.
There are no significant restrictions limiting the transfer of
funds from international subsidiaries to the parent company.
30
Outlook
Disruptions in global financial markets and resulting turmoil in
the general economic environment during fiscal year 2009 likely
will have a continuing impact on our performance in fiscal year
2010; however, we are confident that we are well positioned to
manage the impact upon our liquidity. Our liquidity needs arise
from working capital requirements, capital expenditures and
principal and interest payments on indebtedness. Primary sources
of capital to meet these needs are cash provided by operations
and borrowings under our loan agreements. In fiscal year 2009,
cash from operations was 20 percent of revenue.
Comparatively, during the 2001 and 2002 recession years, cash
from operations were 10 percent and 20 percent,
respectively, and then ranged from 10 percent to
14 percent in subsequent years until fiscal year 2009.
Funds provided by borrowings occur under a $400,000 five-year
committed revolving line of credit with 12 domestic and
international banks that expires in 2012. As of October 31,
2009 we were in compliance with the financial covenant of this
credit facility and have $312,000 available borrowing capacity.
In addition, in February 2008, we entered into a Master Shelf
Arrangement with the Prudential Insurance Company to allow for
the issuance of medium to long-term unsecured notes. As of
October 31, 2009, we are in compliance with the financial
covenant relating to a $50,000 five-year note issued under this
arrangement. While these facilities provide the contractual
terms for any borrowing, we cannot be assured that these
facilities would be available in the event of these financial
institutions failure to remain sufficiently capitalized.
We are taking a cautious approach to fiscal year 2010. Our
priorities for fiscal year 2010 are focused on the continuation
of strategic actions taken in fiscal year 2009 to optimize
revenue opportunities in a challenging economic environment and
to sustain the operational improvements achieved through a
combination of non-workforce related efficiencies and workforce
reductions. Given our assumption that economic challenges will
continue to impact us in fiscal year 2010, we expect these
efforts will provide sufficient cash from operations to meet our
liquidity needs. With respect to spending, the table above
presents Nordsons financial obligations for the long-term
as $281,798, of which $97,909 is payable in fiscal year 2010. On
December 10, 2008, our board of directors approved a stock
repurchase program of up to 1,000 shares. Under this
authorization, the timing and actual number of shares subject to
repurchase are at the discretion of management and are
contingent on a number of factors including levels of cash
generation from operations, cash requirements for acquisitions,
repayment of debt and our share price. Capital expenditures for
fiscal year 2010 will be focused primarily upon our in-process
rollout of SAP, various facility projects that improve
manufacturing and distribution, and a new corporate facility to
replace the building sold in fiscal year 2009.
As the economic climate improves, we will continue to look for
strategic acquisition opportunities. We will continue to develop
new applications and markets for our technologies, and move
forward with additional lean and other operational initiatives
to enhance our financial performance.
Effects
of Foreign Currency
The impact of changes in foreign currency exchange rates on
sales and operating results cannot be precisely measured due to
fluctuating selling prices, sales volume, product mix and cost
structures in each country where we operate. As a general rule,
a weakening of the United States dollar relative to foreign
currencies has a favorable effect on sales and net income, while
a strengthening of the dollar has a detrimental effect.
In fiscal year 2009, as compared with fiscal year 2008, the
United States dollar was generally stronger against foreign
currencies. If fiscal year 2008 exchange rates had been in
effect during fiscal year 2009, sales would have been
approximately $43,952 higher and third-party costs would have
been approximately $31,898 higher. In fiscal year 2008, as
compared with fiscal year 2007, the United States dollar was
generally weaker against foreign currencies. If fiscal year 2007
exchange rates had been in effect during fiscal year 2008, sales
would have been approximately $43,051 lower and third-party
costs would have been approximately $27,719 lower. These effects
on reported sales do not include the impact of local price
adjustments made in response to changes in currency exchange
rates.
31
Item 7A.
Quantitative and Qualitative Disclosures About Market
Risk
We operate internationally and enter into intercompany
transactions denominated in foreign currencies. Consequently, we
are subject to market risk arising from exchange rate movements
between the dates foreign currencies are recorded and the dates
they are settled. We regularly use foreign exchange contracts to
reduce our risks related to most of these transactions. These
contracts, primarily associated with the Euro, Yen and British
Pound, typically have maturities of 90 days or less, and
generally require the exchange of foreign currencies for United
States dollars 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. Other transactions denominated in
foreign currencies are designated as hedges of our net
investments in foreign subsidiaries or are intercompany
transactions of a long-term investment nature. As a result of
the use of foreign exchange contracts on a routine basis to
reduce the risks related to most of our transactions denominated
in foreign currencies, as of October 31, 2009, we did not
have material foreign currency exposure.
Note 10 to the financial statements contains additional
information about our foreign currency transactions and the
methods and assumptions used to record these transactions.
A portion of our operations is financed with short-term and
long-term borrowings and is subject to market risk arising from
changes in interest rates.
The tables that follow present principal repayments and related
weighted-average interest rates by expected maturity dates of
fixed-rate debt.
At
October 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There-
|
|
|
Total
|
|
|
Fair
|
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
after
|
|
|
Value
|
|
|
Value
|
|
|
Long-term debt, including current portion
|
|
$
|
4,290
|
|
|
$
|
14,260
|
|
|
|
$
|
|
|
$
|
50,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
68,550
|
|
|
$
|
71,706
|
|
Average interest rate
|
|
|
5.61
|
%
|
|
|
5.51
|
%
|
|
|
4.98
|
%
|
|
|
4.98
|
%
|
|
|
|
|
|
|
|
|
|
|
5.61
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At October 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There-
|
|
|
Total
|
|
|
Fair
|
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
after
|
|
|
Value
|
|
|
Value
|
|
|
Long-term debt, including current portion
|
|
$
|
4,290
|
|
|
$
|
4,290
|
|
|
$
|
14,260
|
|
|
$
|
|
|
|
$
|
50,000
|
|
|
$
|
|
|
|
$
|
72,840
|
|
|
$
|
70,757
|
|
Average interest rate
|
|
|
5.70
|
%
|
|
|
5.61
|
%
|
|
|
5.51
|
%
|
|
|
4.98
|
%
|
|
|
4.98
|
%
|
|
|
|
|
|
|
5.70
|
%
|
|
|
|
|
We also have variable-rate notes payable and long-term debt. The
weighted average interest rate of this debt was 0.6 percent
at October 31, 2009 and 3.7 percent at
October 31, 2008. A one percent increase in interest rates
would have resulted in additional interest expense of
approximately $1,661 on the variable rate notes payable and
long-term debt in fiscal year 2009.
32
Inflation
Inflation affects profit margins as 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, we continue to seek ways to
minimize the impact of inflation through focused efforts to
increase productivity.
Trends
The Five-Year Summary in Item 6 documents our historical
financial trends. Over this period, the worlds economic
conditions fluctuated significantly. Our solid performance is
attributed to our participation in diverse geographic and
industrial markets and our long-term commitment to develop and
provide quality products and worldwide service to meet our
customers changing needs.
Safe
Harbor Statements Under the Private Securities Litigation Reform
Act of 1995
This
Form 10-K,
particularly Managements Discussion and
Analysis, contains forward-looking statements within the
meaning of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995. Such statements relate
to, among other things, income, earnings, cash flows, changes in
operations, operating improvements, businesses in which we
operate and the United States and global economies. Statements
in this 10-K
that are not historical are hereby identified as
forward-looking statements and may be indicated by
words or phrases such as anticipates,
supports, plans, projects,
expects, believes, should,
would, could, hope,
forecast, management is of the opinion,
use of the future tense and similar words or phrases.
In light of these risks and uncertainties, actual events and
results may vary significantly from those included in or
contemplated or implied by such statements. Readers are
cautioned not to place undue reliance on such forward-looking
statements. These forward-looking statements speak only as of
the date made. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required
by law. Factors that could cause our actual results to differ
materially from the expected results are discussed in
Item 1A, Risk Factors.
33
Item 8.
Financial Statements and Supplementary Data
Consolidated
Statements of Income
Years ended
October 31, 2009, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
(In thousands except for per-share amounts)
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
819,165
|
|
|
$
|
1,124,829
|
|
|
$
|
993,649
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
350,239
|
|
|
|
494,394
|
|
|
|
439,804
|
|
Selling and administrative expenses
|
|
|
337,294
|
|
|
|
434,476
|
|
|
|
401,294
|
|
Severance and restructuring costs
|
|
|
16,396
|
|
|
|
5,621
|
|
|
|
409
|
|
Goodwill and long-lived asset impairments
|
|
|
243,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
946,972
|
|
|
|
934,491
|
|
|
|
841,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(127,807
|
)
|
|
|
190,338
|
|
|
|
152,142
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(7,771
|
)
|
|
|
(16,714
|
)
|
|
|
(21,542
|
)
|
Interest and investment income
|
|
|
492
|
|
|
|
1,250
|
|
|
|
1,505
|
|
Other net
|
|
|
7,895
|
|
|
|
4,914
|
|
|
|
3,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
616
|
|
|
|
(10,550
|
)
|
|
|
(16,420
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(127,191
|
)
|
|
|
179,788
|
|
|
|
135,722
|
|
Income tax provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
28,809
|
|
|
|
54,929
|
|
|
|
44,613
|
|
Deferred
|
|
|
4,055
|
|
|
|
7,355
|
|
|
|
417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,864
|
|
|
|
62,284
|
|
|
|
45,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(160,055
|
)
|
|
$
|
117,504
|
|
|
$
|
90,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares
|
|
|
33,565
|
|
|
|
33,746
|
|
|
|
33,547
|
|
Incremental common shares attributable to outstanding stock
options, nonvested stock and deferred stock-based compensation
|
|
|
|
|
|
|
561
|
|
|
|
635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares and common share equivalents
|
|
|
33,565
|
|
|
|
34,307
|
|
|
|
34,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
(4.77
|
)
|
|
$
|
3.48
|
|
|
$
|
2.70
|
|
Diluted earnings (loss) per share
|
|
$
|
(4.77
|
)
|
|
$
|
3.43
|
|
|
$
|
2.65
|
|
The accompanying notes are an integral part of the
consolidated financial statements.
34
Consolidated
Balance Sheets
October 31,
2009 and 2008
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
(In thousands)
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
18,781
|
|
|
$
|
11,755
|
|
Marketable securities
|
|
|
43
|
|
|
|
5
|
|
Receivables net
|
|
|
191,201
|
|
|
|
224,813
|
|
Inventories net
|
|
|
97,636
|
|
|
|
118,034
|
|
Deferred income taxes
|
|
|
29,756
|
|
|
|
22,455
|
|
Prepaid expenses and other current assets
|
|
|
9,254
|
|
|
|
7,251
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
346,671
|
|
|
|
384,313
|
|
Property, plant and equipment net
|
|
|
118,291
|
|
|
|
133,843
|
|
Goodwill
|
|
|
341,762
|
|
|
|
571,933
|
|
Intangible assets net
|
|
|
42,144
|
|
|
|
53,874
|
|
Deferred income taxes
|
|
|
18,119
|
|
|
|
|
|
Other assets
|
|
|
23,687
|
|
|
|
22,706
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
890,674
|
|
|
$
|
1,166,669
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Notes payable
|
|
$
|
1,287
|
|
|
$
|
42,061
|
|
Accounts payable
|
|
|
33,368
|
|
|
|
42,916
|
|
Income taxes payable
|
|
|
12,347
|
|
|
|
6,141
|
|
Accrued liabilities
|
|
|
92,285
|
|
|
|
96,473
|
|
Customer advance payments
|
|
|
8,807
|
|
|
|
7,521
|
|
Current maturities of long-term debt
|
|
|
4,290
|
|
|
|
4,290
|
|
Current obligations under capital leases
|
|
|
4,038
|
|
|
|
4,594
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
156,422
|
|
|
|
203,996
|
|
Long-term debt
|
|
|
152,260
|
|
|
|
238,550
|
|
Obligations under capital leases
|
|
|
2,982
|
|
|
|
6,098
|
|
Pension and retirement obligations
|
|
|
133,082
|
|
|
|
66,863
|
|
Postretirement obligations
|
|
|
50,790
|
|
|
|
35,426
|
|
Deferred income taxes
|
|
|
|
|
|
|
2,250
|
|
Other liabilities
|
|
|
25,162
|
|
|
|
39,374
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
Preferred shares, no par value; 10,000 shares authorized;
none issued
|
|
|
|
|
|
|
|
|
Common shares, no par value; 80,000 shares authorized;
|
|
|
|
|
|
|
|
|
49,011 shares issued
|
|
|
12,253
|
|
|
|
12,253
|
|
Capital in excess of stated value
|
|
|
241,494
|
|
|
|
244,096
|
|
Retained earnings
|
|
|
656,086
|
|
|
|
840,888
|
|
Accumulated other comprehensive loss
|
|
|
(55,470
|
)
|
|
|
(40,795
|
)
|
Common shares in treasury, at cost
|
|
|
(484,387
|
)
|
|
|
(482,330
|
)
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
369,976
|
|
|
|
574,112
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
890,674
|
|
|
$
|
1,166,669
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the
consolidated financial statements.
35
Consolidated
Statements of Shareholders Equity
Years ended
October 31, 2009, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Number of common shares in treasury
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
|
15,304
|
|
|
|
15,301
|
|
|
|
15,600
|
|
Shares issued under company stock and employee benefit plans
|
|
|
(176
|
)
|
|
|
(804
|
)
|
|
|
(604
|
)
|
Purchase of treasury shares
|
|
|
206
|
|
|
|
807
|
|
|
|
305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
|
15,334
|
|
|
|
15,304
|
|
|
|
15,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning and ending of year
|
|
$
|
12,253
|
|
|
$
|
12,253
|
|
|
$
|
12,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in excess of stated value
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
244,096
|
|
|
$
|
224,411
|
|
|
$
|
210,690
|
|
Shares issued under company stock and employee benefit plans
|
|
|
(2,089
|
)
|
|
|
874
|
|
|
|
1,235
|
|
Tax benefit from stock option and restricted stock transactions
|
|
|
285
|
|
|
|
9,002
|
|
|
|
4,269
|
|
Stock-based compensation
|
|
|
(798
|
)
|
|
|
9,809
|
|
|
|
8,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
241,494
|
|
|
$
|
244,096
|
|
|
$
|
224,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
840,888
|
|
|
$
|
748,229
|
|
|
$
|
681,018
|
|
Adoption of FIN 48
|
|
|
|
|
|
|
(200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year, adjusted
|
|
|
840,888
|
|
|
|
748,029
|
|
|
|
681,018
|
|
Net income (loss)
|
|
|
(160,055
|
)
|
|
|
117,504
|
|
|
|
90,692
|
|
Dividends paid ($.7375 per share in 2009, $.73 per share in
2008, and $.70 per share in 2007)
|
|
|
(24,747
|
)
|
|
|
(24,645
|
)
|
|
|
(23,481
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
656,086
|
|
|
$
|
840,888
|
|
|
$
|
748,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
(40,795
|
)
|
|
$
|
8,200
|
|
|
$
|
(12,518
|
)
|
Translation adjustments
|
|
|
40,240
|
|
|
|
(41,665
|
)
|
|
|
27,490
|
|
Remeasurement of supplemental pension liability, net of tax of
$2,074
|
|
|
(3,457
|
)
|
|
|
|
|
|
|
|
|
Settlement loss recognized, net of tax of $(728)
|
|
|
1,188
|
|
|
|
|
|
|
|
|
|
Net prior service cost (credit) occurring during the year, net
of tax of $(421) in 2009 and $343 in 2008
|
|
|
726
|
|
|
|
(761
|
)
|
|
|
|
|
Net actuarial loss occurring during the year, net of tax of
$30,339 in 2009 and $354 in 2008
|
|
|
(53,372
|
)
|
|
|
(6,569
|
)
|
|
|
|
|
Pension and postretirement benefit plan adjustments, net of tax
of $(6,014) in 2006
|
|
|
|
|
|
|
|
|
|
|
10,320
|
|
Effect of adoption of FAS 158, net of tax of $15,270
|
|
|
|
|
|
|
|
|
|
|
(17,092
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
(55,470
|
)
|
|
$
|
(40,795
|
)
|
|
$
|
8,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares in treasury, at cost
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
(482,330
|
)
|
|
$
|
(461,976
|
)
|
|
$
|
(460,915
|
)
|
Shares issued under company stock and employee benefit plans
|
|
|
5,131
|
|
|
|
19,944
|
|
|
|
14,222
|
|
Purchase of treasury shares
|
|
|
(7,188
|
)
|
|
|
(40,298
|
)
|
|
|
(15,283
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
(484,387
|
)
|
|
$
|
(482,330
|
)
|
|
$
|
(461,976
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
$
|
369,976
|
|
|
$
|
574,112
|
|
|
$
|
531,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(160,055
|
)
|
|
$
|
117,504
|
|
|
$
|
90,692
|
|
Translation adjustments
|
|
|
40,240
|
|
|
|
(41,665
|
)
|
|
|
27,490
|
|
Remeasurement of supplemental pension liability, net of tax of
$2,074
|
|
|
(3,457
|
)
|
|
|
|
|
|
|
|
|
Settlement loss, net of tax of $(728)
|
|
|
1,188
|
|
|
|
|
|
|
|
|
|
Net prior service cost (credit) occurring during the year, net
of tax of $(421) in 2009 and $343 in 2008
|
|
|
726
|
|
|
|
(761
|
)
|
|
|
|
|
Net actuarial loss occurring during the year, net of tax of
$30,339 in 2009 and $354 in 2008
|
|
|
(53,372
|
)
|
|
|
(6,569
|
)
|
|
|
|
|
Pension and postretirement benefit plan adjustments, net of tax
of $(6,014)
|
|
|
|
|
|
|
|
|
|
|
10,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss)
|
|
$
|
(174,730
|
)
|
|
$
|
68,509
|
|
|
$
|
128,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the
consolidated financial statements.
36
Consolidated
Statements of Cash Flows
Years ended
October 31, 2009, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(160,055
|
)
|
|
$
|
117,504
|
|
|
$
|
90,692
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
26,310
|
|
|
|
26,440
|
|
|
|
23,784
|
|
Amortization
|
|
|
5,100
|
|
|
|
5,797
|
|
|
|
4,149
|
|
Goodwill and long-lived asset impairments
|
|
|
243,043
|
|
|
|
|
|
|
|
|
|
Provision for losses on receivables
|
|
|
1,998
|
|
|
|
413
|
|
|
|
1,147
|
|
Deferred income taxes
|
|
|
4,055
|
|
|
|
7,355
|
|
|
|
417
|
|
Tax benefit from the exercise of stock options
|
|
|
(285
|
)
|
|
|
(9,002
|
)
|
|
|
(4,269
|
)
|
Non-cash stock compensation
|
|
|
(814
|
)
|
|
|
9,247
|
|
|
|
8,217
|
|
Gain on sale of property, plant and equipment
|
|
|
(4,324
|
)
|
|
|
(369
|
)
|
|
|
(3,470
|
)
|
Other
|
|
|
23,501
|
|
|
|
(22,417
|
)
|
|
|
10,593
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
42,182
|
|
|
|
(8,118
|
)
|
|
|
(3,983
|
)
|
Inventories
|
|
|
22,688
|
|
|
|
(5,413
|
)
|
|
|
(1,075
|
)
|
Other current assets
|
|
|
1,170
|
|
|
|
156
|
|
|
|
(2,052
|
)
|
Other noncurrent assets
|
|
|
(872
|
)
|
|
|
7,534
|
|
|
|
(9,807
|
)
|
Accounts payable
|
|
|
(10,257
|
)
|
|
|
(7,678
|
)
|
|
|
5,090
|
|
Income taxes payable
|
|
|
5,456
|
|
|
|
8,817
|
|
|
|
4,928
|
|
Accrued liabilities
|
|
|
(20,766
|
)
|
|
|
(3,102
|
)
|
|
|
(14,212
|
)
|
Customer advance payments
|
|
|
853
|
|
|
|
(2,560
|
)
|
|
|
(195
|
)
|
Other noncurrent liabilities
|
|
|
(10,306
|
)
|
|
|
(10,562
|
)
|
|
|
14,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
168,677
|
|
|
|
114,042
|
|
|
|
124,248
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
|
(12,514
|
)
|
|
|
(26,386
|
)
|
|
|
(31,017
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
8,611
|
|
|
|
2,349
|
|
|
|
8,153
|
|
Acquisition of businesses, net of cash acquired
|
|
|
|
|
|
|
(4,699
|
)
|
|
|
(325,245
|
)
|
Acquisition of minority interest
|
|
|
|
|
|
|
(3,191
|
)
|
|
|
|
|
Proceeds from sale of (purchases of) marketable securities
|
|
|
(36
|
)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(3,939
|
)
|
|
|
(31,924
|
)
|
|
|
(348,109
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from short-term borrowings
|
|
|
613
|
|
|
|
159,387
|
|
|
|
72,026
|
|
Repayment of short-term borrowings
|
|
|
(41,591
|
)
|
|
|
(136,663
|
)
|
|
|
(70,733
|
)
|
Proceeds from long-term debt
|
|
|
46,200
|
|
|
|
108,530
|
|
|
|
315,105
|
|
Repayment of long-term debt
|
|
|
(132,490
|
)
|
|
|
(192,820
|
)
|
|
|
(89,395
|
)
|
Repayment of capital lease obligations
|
|
|
(5,158
|
)
|
|
|
(6,027
|
)
|
|
|
(5,741
|
)
|
Issuance of common shares
|
|
|
2,986
|
|
|
|
16,135
|
|
|
|
9,264
|
|
Purchase of treasury shares
|
|
|
(7,115
|
)
|
|
|
(35,615
|
)
|
|
|
(9,090
|
)
|
Tax benefit from the exercise of stock options
|
|
|
284
|
|
|
|
9,002
|
|
|
|
4,269
|
|
Dividends paid
|
|
|
(24,747
|
)
|
|
|
(24,645
|
)
|
|
|
(23,481
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(161,018
|
)
|
|
|
(102,716
|
)
|
|
|
202,224
|
|
Effect of exchange rate changes on cash
|
|
|
3,306
|
|
|
|
1,217
|
|
|
|
3,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
7,026
|
|
|
|
(19,381
|
)
|
|
|
(17,723
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
11,755
|
|
|
|
31,136
|
|
|
|
48,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
18,781
|
|
|
$
|
11,755
|
|
|
$
|
31,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the
consolidated financial statements.
37
Notes to
Consolidated Financial Statements
In these notes to the consolidated financial statements, all
amounts related to United States dollars and foreign currency
and to the number of Nordson Corporations common shares,
except for per share earnings and dividend amounts, are
expressed in thousands.
|
|
Note 1
|
Significant
accounting policies
|
Consolidation The consolidated financial
statements include the accounts of Nordson Corporation and
majority-owned and controlled subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation. Other investments are recorded at cost.
Use of estimates The preparation of financial
statements in conformity with generally accepted accounting
principles in the United States 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 Our fiscal year ends on
October 31.
Revenue recognition Most of our revenues are
recognized upon shipment, provided that persuasive evidence of
an arrangement exists, the sales price is fixed or determinable,
collectibility is reasonably assured, and title and risk of loss
have passed to the customer. Revenues from contracts with
multiple element arrangements, such as those including
installation or other services, are recognized as each element
is earned based on objective evidence of the relative fair value
of each element. If the installation or other services are
inconsequential to the functionality of the delivered product,
the entire amount of revenue is recognized upon satisfaction of
the criteria noted above. Inconsequential installation or other
services are those that can generally be completed in a short
period of time, at insignificant cost, and the skills required
to complete these installations are not unique to us. If
installation or other services are essential to the
functionality of the delivered product, revenues attributable to
these obligations are deferred until completed. Amounts received
in excess of revenue recognized are included as deferred revenue
within accrued liabilities in the accompanying balance sheets.
Revenues deferred in fiscal years 2009, 2008 and 2007 were not
material.
Shipping and handling costs Amounts billed to
customers for shipping and handling are recorded as revenue.
Shipping and handling expenses are included in cost of sales.
Advertising costs Advertising costs are
expensed as incurred and were $6,512, $9,888 and $8,358 in
fiscal years 2009, 2008 and 2007, respectively.
Research and development Research and
development costs are expensed as incurred and were $25,528,
$33,566 and $35,432 in fiscal years 2009, 2008 and 2007,
respectively.
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 stock
options computed using the treasury stock method, as well as
nonvested (restricted) stock and deferred stock-based
compensation. When a loss is reported the denominator of diluted
earnings per share cannot be adjusted for the dilutive impact of
stock options and awards because doing so will result in
anti-dilution. Therefore, for fiscal year 2009, basic
weighted-average shares outstanding are used in calculating
diluted earnings per share. Options whose exercise price is
higher than the average market price are excluded from the
calculation of diluted earnings per share because the effect
would be anti-dilutive. For fiscal years 2008 and 2007, the
number of options excluded from the calculation of diluted
earnings per share was 189 and 129, respectively, as the effect
would have been anti-dilutive.
Cash and cash equivalents Highly liquid
instruments with maturities 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 short-term notes with maturities greater
than 90 days at date of purchase, and all contractual
maturities were within one year or could be callable within one
year.
38
Notes
to Consolidated Financial
Statements (Continued)
Our marketable securities are classified as available for sale
and are recorded at quoted market prices that approximate cost.
Allowance for doubtful accounts An allowance
for doubtful accounts is maintained for estimated losses
resulting from the inability of customers to make required
payments. The amount of the allowance is determined principally
on the basis of past collection experience and known factors
regarding specific customers. Accounts are written off against
the allowance when it becomes evident that collection will not
occur.
Inventories Inventories are valued at the
lower of cost or market. Cost has been determined using the
last-in,
first-out (LIFO) method for 26 percent of consolidated
inventories at October 31, 2009, and 27 percent at
October 31, 2008. The
first-in,
first-out (FIFO) method is used for all other inventories.
Consolidated inventories would have been $7,783 and $7,728
higher than reported at October 31, 2009 and
October 31, 2008, respectively, had the FIFO method, which
approximates current cost, been used for valuation of all
inventories. LIFO liquidations in fiscal year 2009 increased
cost of goods sold by $85.
Property, plant and equipment and
depreciation Property, plant and equipment are
carried at cost. Additions and improvements that extend the
lives of assets are capitalized, while expenditures for repairs
and maintenance are expensed as incurred. 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. Leasehold improvements are depreciated
over shorter of the lease term or their useful lives. Useful
lives are as follows:
|
|
|
|
|
Land improvements
|
|
|
15-25 years
|
|
Buildings
|
|
|
20-40 years
|
|
Machinery and equipment
|
|
|
3-12 years
|
|
Enterprise management systems
|
|
|
5-10 years
|
|
Internal use software costs are expensed or capitalized
depending on whether they are incurred in the preliminary
project stage, application development stage or the
post-implementation stage. Amounts capitalized are amortized
over the estimated useful lives of the software beginning with
the projects completion. All re-engineering costs are
expensed as incurred. Interest costs on significant capital
projects are capitalized. No interest was capitalized in fiscal
years 2009, 2008 or 2007.
Goodwill and intangible assets Goodwill is
the excess of cost of an acquired entity over the amounts
assigned to assets acquired and liabilities assumed in a
business combination. The majority of goodwill relates to and is
assigned directly to specific reporting units. Goodwill and
indefinite-lived intangible assets consisting of certain
trademarks and trade names are not amortized but are subject to
annual impairment testing at the reporting unit level. Our
annual impairment testing is performed as of July 31.
Testing is done more frequently if an event occurs or
circumstances change that would indicate the fair value of a
reporting unit or other indefinite lived intangible assets is
less than the carrying amount of those assets.
Other amortizable intangible assets, which consist primarily of
patent costs, customer relationships, noncompete agreements,
core/developed technology and a finite-lived trade name, are
amortized over their useful lives. The useful lives for each
major category of amortizable intangible assets are:
|
|
|
|
|
Patent costs
|
|
|
7-19 years
|
|
Customer relationships
|
|
|
5-15 years
|
|
Noncompete agreements
|
|
|
4-16 years
|
|
Core/developed technology
|
|
|
15 years
|
|
Trade name
|
|
|
6 years
|
|
39
Notes
to Consolidated Financial
Statements (Continued)
Environmental remediation costs Losses
associated with environmental remediation obligations are
accrued when such losses are probable and reasonably estimable.
Accruals for estimated losses from environmental remediation
obligations generally are recognized no later than completion of
the remedial feasibility study. Such accruals are adjusted as
further information develops or circumstances change. Costs for
future expenditures for environmental remediation obligations
are not discounted to their present value.
Foreign currency translation The financial
statements of subsidiaries outside the United States 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 income. 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).
Accumulated other comprehensive loss
Accumulated other comprehensive loss at October 31, 2009
and 2008, consisted of:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Translation adjustments
|
|
$
|
40,839
|
|
|
$
|
599
|
|
Pension and postretirement benefit plan adjustments
|
|
|
(96,309
|
)
|
|
|
(41,394
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(55,470
|
)
|
|
$
|
(40,795
|
)
|
|
|
|
|
|
|
|
|
|
Warranties Certain warranties are offered to
customers based on the specific product and terms of the
customer purchase agreement. A typical warranty program requires
repair or replacement of defective products within a specified
time period (generally one year) from the date of delivery or
first use. The estimate for future warranty-related costs is
calculated based on actual historical return rates. Based on
analysis of return rates and other factors, warranty provisions
are adjusted as necessary. The liability for warranty costs is
included in other accrued liabilities in the Consolidated
Balance Sheet.
Following is a reconciliation of the product warranty liability
for fiscal years 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Balance at beginning of year
|
|
$
|
5,336
|
|
|
$
|
5,857
|
|
Accruals for warranties
|
|
|
3,824
|
|
|
|
6,070
|
|
Warranty payments
|
|
|
(4,913
|
)
|
|
|
(6,048
|
)
|
Currency adjustments
|
|
|
340
|
|
|
|
(543
|
)
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
4,587
|
|
|
$
|
5,336
|
|
|
|
|
|
|
|
|
|
|
Presentation Certain amounts for fiscal years
2008 and 2007 have been reclassified to conform to fiscal year
2009 presentation.
40
Notes
to Consolidated Financial
Statements (Continued)
|
|
Note 2
|
Recently issued
accounting standards
|
In June 2009, the Financial Accounting Standards Board (FASB)
issued the Accounting Standards Codification, which establishes
a sole source of U.S. authoritative generally accepted
accounting principles (GAAP). The Codification is meant to
simplify user access to all authoritative accounting guidance by
reorganizing U.S. GAAP pronouncements into approximately
ninety accounting topics within a consistent structure; its
purpose is not to create new accounting and reporting guidance.
The adoption of this guidance did not have an effect on our
consolidated results of operations, financial position or cash
flows.
In September 2006, the FASB issued a standard regarding fair
value measurements. This standard provides a common definition
of fair value and establishes a framework to make the
measurement of fair value in generally accepted accounting
principles more consistent and comparable. It also requires
expanded disclosures to provide information about the extent to
which fair value is used to measure assets and liabilities, the
methods and assumptions used to measure fair value, and the
effect of fair value measures on earnings. In February 2008, the
FASB issued an update that permits a one-year deferral of the
original standard for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at
least annually). As discussed in Note 18, we adopted the
non-deferred portion of the standard as of November 1,
2008. The adoption did not impact our results of operations or
financial position. We will adopt the deferred portion of this
standard effective November 1, 2009.
In February 2007, the FASB issued a standard for reporting the
fair value of financial assets and financial liabilities. This
standard permits entities to choose to measure many financial
instruments and certain other items at fair value and report
unrealized gains and losses on these instruments in earnings. We
did not elect the fair value measurement option for any of our
existing financial instruments other than those that are already
being measured at fair value. As such, the adoption of this
standard on November 1, 2008 did not have an impact on our
results of operations or financial position.
In December 2007, the FASB issued a standard that provides
greater consistency in the accounting and financial reporting of
business combinations. The standard requires the acquiring
entity in a business combination to recognize all assets
acquired and liabilities assumed in the transaction, establishes
the acquisition-date fair value as the measurement objective for
all assets acquired and liabilities assumed, and requires the
acquirer to disclose the nature and financial effect of the
business combination. We must adopt this standard for all
business combinations subsequent to November 1, 2009. The
impact of adoption will depend on the nature and significance of
any future acquisitions.
In December 2007, the FASB issued a pronouncement that
establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. We must adopt this
pronouncement in our fiscal year 2010. The impact of adoption
will depend on future transactions, however we currently believe
the adoption will not have a material effect on our results of
operations or financial position.
41
Notes
to Consolidated Financial
Statements (Continued)
In March 2008, the FASB issued a standard that is intended to
improve transparency in financial reporting by requiring
enhanced disclosures of an entitys derivative instruments
and hedging activities and their effects on the entitys
financial position, financial performance, and cash flows. The
standard applies to all derivative instruments as well as
related hedged items, bifurcated derivatives, and nonderivative
instruments that are designated and qualify as hedging
instruments. Entities with instruments subject to this standard
must provide more robust qualitative disclosures and expanded
quantitative disclosures. As discussed in Note 10, we
adopted this standard in the second quarter of fiscal year 2009.
In December 2008, the FASB issued a standard that enhances the
required disclosures about plan assets in an employers
defined benefit pension or other postretirement plan, including
investment allocations decisions, inputs and valuations
techniques used to measure the fair value of plan assets and
significant concentrations of risks within plan assets. We must
adopt this standard in our fiscal year 2010; we are currently
evaluating its disclosure implications.
In May 2009, the FASB issued a standard that establishes general
standards of accounting for and disclosure of events that occur
after the balance sheet date but before the financial statements
are issued or are available to be issued. The standard requires
the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date. It sets forth the
period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial
statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance
sheet date in its financial statements, and the disclosures that
an entity should make about events or transactions that occurred
after the balance sheet date. As discussed in Note 21, we
adopted this standard in the third quarter of fiscal year 2009.
In October 2009 the FASB issued authoritative guidance on
multiple-deliverable revenue arrangements that addresses the
unit of accounting for arrangements involving multiple
deliverables. The guidance also addresses how arrangement
consideration should be allocated to separate units of
accounting, when applicable, and expands the disclosure
requirements for multiple-deliverable arrangements. We must
adopt this standard in fiscal year 2011 and have not yet
determined the impact of adoption on our results of operations
or financial position.
|
|
Note 3
|
Retirement,
pension and other postretirement plans
|
Retirement plans We have funded contributory
retirement plans covering certain employees. Our 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. We also sponsor unfunded contributory
supplemental retirement plans 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 employees contribution. The expense applicable to
retirement plans for fiscal years 2009, 2008 and 2007 was
approximately $7,703, $9,311 and $7,753, respectively.
Pension and other postretirement plans
Effective October 31, 2007, we adopted the recognition and
disclosure provisions of the FASB standard that requires
employers to recognize the overfunded or underfunded status of
defined benefit post-retirement plans in their balance sheets.
The over- or under-funded status is measured as the difference
between the fair value of plan assets and the benefit obligation
of the plans (the projected benefit obligation for pension plans
and the accumulated post-retirement benefit obligation for other
post-retirement plans). Changes in the funded status of the
plans are recognized in the year in which the change occurs
through accumulated other comprehensive income. Under this
standard, gains and losses, prior service costs and credits, and
any remaining transition amounts that have not yet been
recognized through net periodic benefit cost are recognized in
accumulated other comprehensive income, net of tax effects.
The standard also requires plan assets and obligations to be
measured as of the employers balance sheet date. We
already measured the plan assets and obligations as of the
fiscal year-end date, so this provision did not have an effect
on our consolidated financial statements.
42
Notes
to Consolidated Financial
Statements (Continued)
Pension plans We have various pension plans
covering a portion of our United States and international
employees. Pension plan benefits are generally based on years of
employment and, for salaried employees, the level of
compensation. Actuarially determined amounts are contributed to
United States plans to provide sufficient assets to meet future
benefit payment requirements. We also sponsor an unfunded
supplemental pension plan for certain employees. International
subsidiaries fund their pension plans according to local
requirements.
A reconciliation of the benefit obligations, plan assets,
accrued benefit cost and the amount recognized in financial
statements for pension plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
153,006
|
|
|
$
|
172,144
|
|
|
$
|
44,695
|
|
|
$
|
58,618
|
|
Service cost
|
|
|
4,177
|
|
|
|
5,389
|
|
|
|
1,315
|
|
|
|
2,099
|
|
Interest cost
|
|
|
11,897
|
|
|
|
10,605
|
|
|
|
2,625
|
|
|
|
2,895
|
|
Participant contributions
|
|
|
|
|
|
|
|
|
|
|
142
|
|
|
|
213
|
|
Plan amendments
|
|
|
|
|
|
|
829
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange rate change
|
|
|
|
|
|
|
|
|
|
|
4,823
|
|
|
|
(6,328
|
)
|
Actuarial (gain) loss
|
|
|
67,033
|
|
|
|
(29,083
|
)
|
|
|
10,827
|
|
|
|
(9,943
|
)
|
Benefits paid
|
|
|
(11,147
|
)
|
|
|
(6,878
|
)
|
|
|
(2,796
|
)
|
|
|
(2,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
224,966
|
|
|
$
|
153,006
|
|
|
$
|
61,631
|
|
|
$
|
44,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning fair value of plan assets
|
|
$
|
104,790
|
|
|
$
|
138,650
|
|
|
$
|
24,590
|
|
|
$
|
30,372
|
|
Actual return on plan assets
|
|
|
14,284
|
|
|
|
(41,332
|
)
|
|
|
2,029
|
|
|
|
236
|
|
Company contributions
|
|
|
5,429
|
|
|
|
14,350
|
|
|
|
3,413
|
|
|
|
2,402
|
|
Participant contributions
|
|
|
|
|
|
|
|
|
|
|
142
|
|
|
|
213
|
|
Foreign currency exchange rate change
|
|
|
|
|
|
|
|
|
|
|
1,455
|
|
|
|
(5,774
|
)
|
Benefits paid
|
|
|
(11,147
|
)
|
|
|
(6,878
|
)
|
|
|
(2,796
|
)
|
|
|
(2,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending fair value of plan assets
|
|
$
|
113,356
|
|
|
$
|
104,790
|
|
|
$
|
28,833
|
|
|
$
|
24,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at end of year
|
|
$
|
(111,610
|
)
|
|
$
|
(48,216
|
)
|
|
$
|
(32,798
|
)
|
|
$
|
(20,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in financial statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent asset
|
|
$
|
|
|
|
$
|
8
|
|
|
$
|
298
|
|
|
$
|
1,225
|
|
Accrued benefit liability
|
|
|
(10,428
|
)
|
|
|
(809
|
)
|
|
|
(1,196
|
)
|
|
|
(1,882
|
)
|
Pension and retirement obligations
|
|
|
(101,182
|
)
|
|
|
(47,415
|
)
|
|
|
(31,900
|
)
|
|
|
(19,448
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amount recognized in financial statements
|
|
$
|
(111,610
|
)
|
|
$
|
(48,216
|
)
|
|
$
|
(32,798
|
)
|
|
$
|
(20,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
Notes
to Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Amounts recognized in accumulated other comprehensive (gain)
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial (gain) loss
|
|
$
|
121,865
|
|
|
$
|
59,617
|
|
|
$
|
9,499
|
|
|
$
|
(879
|
)
|
Prior service cost (credit)
|
|
|
2,631
|
|
|
|
3,235
|
|
|
|
70
|
|
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive (gain) loss
|
|
$
|
124,496
|
|
|
$
|
62,852
|
|
|
$
|
9,569
|
|
|
$
|
(769
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts expected to be recognized during next fiscal year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net actuarial (gain) loss
|
|
$
|
6,180
|
|
|
$
|
497
|
|
|
$
|
391
|
|
|
$
|
(26
|
)
|
Amortization of prior service cost (credit)
|
|
|
580
|
|
|
|
1,209
|
|
|
|
53
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,760
|
|
|
$
|
1,706
|
|
|
$
|
444
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the changes in accumulated other
comprehensive (gain) loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Balance at beginning of year
|
|
$
|
62,852
|
|
|
$
|
40,780
|
|
|
$
|
(769
|
)
|
|
$
|
7,241
|
|
Net (gain) loss arising during the year
|
|
|
64,730
|
|
|
|
23,892
|
|
|
|
10,008
|
|
|
|
(8,518
|
)
|
Prior service cost (credit) arising during the year
|
|
|
|
|
|
|
829
|
|
|
|
|
|
|
|
|
|
Net gain (loss) recognized during the year
|
|
|
(2,483
|
)
|
|
|
(2,016
|
)
|
|
|
(268
|
)
|
|
|
(233
|
)
|
Prior service (cost) credit recognized during the year
|
|
|
(603
|
)
|
|
|
(633
|
)
|
|
|
(49
|
)
|
|
|
(55
|
)
|
Exchange rate effect during the year
|
|
|
|
|
|
|
|
|
|
|
647
|
|
|
|
796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
124,496
|
|
|
$
|
62,852
|
|
|
$
|
9,569
|
|
|
$
|
(769
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information regarding the accumulated benefit obligation is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
For all plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation
|
|
$
|
213,238
|
|
|
$
|
146,621
|
|
|
$
|
49,195
|
|
|
$
|
35,406
|
|
For plans with benefit obligations in excess of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
|
|
|
224,966
|
|
|
|
151,648
|
|
|
|
55,881
|
|
|
|
24,143
|
|
Accumulated benefit obligation
|
|
|
213,238
|
|
|
|
145,263
|
|
|
|
47,402
|
|
|
|
20,654
|
|
Fair value of plan assets
|
|
|
113,356
|
|
|
|
103,424
|
|
|
|
26,731
|
|
|
|
5,990
|
|
44
Notes
to Consolidated Financial
Statements (Continued)
Net pension benefit costs include the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Service cost
|
|
$
|
4,177
|
|
|
$
|
5,389
|
|
|
$
|
5,273
|
|
|
$
|
1,315
|
|
|
$
|
2,099
|
|
|
$
|
1,961
|
|
Interest cost
|
|
|
11,897
|
|
|
|
10,605
|
|
|
|
9,964
|
|
|
|
2,625
|
|
|
|
2,895
|
|
|
|
2,519
|
|
Expected return on plan assets
|
|
|
(11,982
|
)
|
|
|
(11,642
|
)
|
|
|
(10,163
|
)
|
|
|
(1,210
|
)
|
|
|
(1,470
|
)
|
|
|
(1,361
|
)
|
Amortization of prior service cost (credit)
|
|
|
603
|
|
|
|
633
|
|
|
|
544
|
|
|
|
49
|
|
|
|
55
|
|
|
|
50
|
|
Special termination benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
Amortization of net actuarial (gain) loss
|
|
|
854
|
|
|
|
2,016
|
|
|
|
3,019
|
|
|
|
(19
|
)
|
|
|
233
|
|
|
|
424
|
|
Settlement loss
|
|
|
1,629
|
|
|
|
|
|
|
|
|
|
|
|
287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefit cost
|
|
$
|
7,178
|
|
|
$
|
7,001
|
|
|
$
|
8,637
|
|
|
$
|
3,047
|
|
|
$
|
3,812
|
|
|
$
|
3,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost for fiscal year 2009 included
settlement losses of $1,916 due to lump sum retirement payments.
The weighted average assumptions in the following table
represent the rates used to develop the actuarial present value
of projected benefit obligation for the year listed and also the
net periodic benefit cost for the following year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
International
|
|
|
2009
|
|
2008
|
|
2007
|
|
2009
|
|
2008
|
|
2007
|
|
Discount rate
|
|
|
5.50
|
%
|
|
|
8.00
|
%
|
|
|
6.25
|
%
|
|
|
4.78
|
%
|
|
|
5.87
|
%
|
|
|
5.00
|
%
|
Expected return on plan assets
|
|
|
8.51
|
|
|
|
8.48
|
|
|
|
8.48
|
|
|
|
4.85
|
|
|
|
5.04
|
|
|
|
4.99
|
|
Rate of compensation increase
|
|
|
3.30
|
|
|
|
3.30
|
|
|
|
3.30
|
|
|
|
2.86
|
|
|
|
3.45
|
|
|
|
3.36
|
|
The amortization of prior service cost is determined using a
straight-line amortization of the cost over the average
remaining service period of employees expected to receive
benefits under the plans.
In determining the expected return on plan assets, we consider
both historical performance and an estimate of future long-term
rates of return on assets similar to those in our plans. We
consult with and consider the opinions of financial and other
professionals in developing appropriate return assumptions.
45
Notes
to Consolidated Financial
Statements (Continued)
Economic assumptions have a significant effect on the amounts
reported. The effect of a one percent change in the discount
rate, expected return on assets and compensation increase is
shown in the table below. Bracketed numbers represent decreases
in expense and obligation amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
International
|
|
|
1% Point
|
|
1% Point
|
|
1% Point
|
|
1% Point
|
|
|
Increase
|
|
Decrease
|
|
Increase
|
|
Decrease
|
|
Discount rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
(1,114
|
)
|
|
$
|
2,414
|
|
|
$
|
(716
|
)
|
|
$
|
294
|
|
Effect on pension obligation as of October 31, 2009
|
|
$
|
(28,806
|
)
|
|
$
|
35,401
|
|
|
$
|
(9,273
|
)
|
|
$
|
11,920
|
|
Expected return on assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
(1,435
|
)
|
|
$
|
1,435
|
|
|
$
|
(219
|
)
|
|
$
|
226
|
|
Effect on pension obligation as of October 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation increase:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
1,701
|
|
|
$
|
(1,337
|
)
|
|
$
|
263
|
|
|
$
|
(530
|
)
|
Effect on pension obligation as of October 31, 2009
|
|
$
|
13,776
|
|
|
$
|
(11,402
|
)
|
|
$
|
4,477
|
|
|
$
|
(4,291
|
)
|
The allocation of pension plan assets as of October 31,
2009 and 2008, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Asset Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
70
|
%
|
|
|
70
|
%
|
|
|
18
|
%
|
|
|
18
|
%
|
Debt securities
|
|
|
29
|
|
|
|
28
|
|
|
|
9
|
|
|
|
11
|
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
5
|
|
Insurance contracts
|
|
|
|
|
|
|
|
|
|
|
64
|
|
|
|
63
|
|
Other
|
|
|
1
|
|
|
|
2
|
|
|
|
5
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our investment objective for defined benefit plan assets is to
meet the plans benefit obligations, while minimizing the
potential for future required plan contributions.
United States plans comprise 80 percent of the worldwide
pension assets. The investment strategies focus on asset class
diversification, liquidity to meet benefit payments and an
appropriate balance of long-term investment return and risk.
Target ranges for asset allocations are determined by matching
the actuarial projections of the plans future liabilities
and benefit payments with expected long-term rates of return on
the assets, taking into account investment return volatility and
correlations across asset classes. The target allocation is 65
to 75 percent equity securities and 25 to 35 percent
debt securities. Plan assets are diversified across several
investment managers and are generally invested in liquid funds
that are selected to track broad market equity and bond indices.
Investment risk is carefully controlled with plan assets
rebalanced to target allocations on a periodic basis and
continual monitoring of investment managers performance
relative to the investment guidelines established with each
investment manager.
International plans comprise 20 percent of the worldwide
pension assets. Asset allocations are developed on a
country-specific basis. Our investment strategy is to cover
pension obligations with insurance contracts or to employ
independent managers to invest the assets.
46
Notes
to Consolidated Financial
Statements (Continued)
At October 31, 2009 and 2008, the pension plans did not
have any investment in our common shares.
Contributions to pension plans in fiscal year 2010 are estimated
to be approximately $28,354.
Retiree pension benefit payments, which reflect expected future
service, are anticipated to be paid as follows:
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
United States
|
|
|
International
|
|
|
2010
|
|
$
|
23,515
|
|
|
$
|
2,127
|
|
2011
|
|
|
6,994
|
|
|
|
1,591
|
|
2012
|
|
|
7,676
|
|
|
|
2,128
|
|
2013
|
|
|
8,473
|
|
|
|
1,914
|
|
2014
|
|
|
9,265
|
|
|
|
2,199
|
|
2015-2019
|
|
|
61,137
|
|
|
|
13,965
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
117,060
|
|
|
$
|
23,924
|
|
|
|
|
|
|
|
|
|
|
The anticipated pension benefit amount for fiscal year 2010
includes a lump sum payment from an unfunded supplemental
pension plan.
Other postretirement plans We have an
unfunded postretirement benefit plan covering the majority of
our United States employees. Employees hired after
January 1, 2002, are not eligible to participate in this
plan. The plan provides medical and life insurance benefits. The
plan is contributory, with retiree contributions in the form of
premiums that are adjusted annually, and contains other
cost-sharing features, such as deductibles and coinsurance. We
also sponsor an unfunded, non-contributory postretirement
benefit plan that provides medical and life insurance benefits
for certain international employees. A measurement date of
October 31 is used for all postretirement plans.
47
Notes
to Consolidated Financial
Statements (Continued)
A reconciliation of the benefit obligations, accrued benefit
cost and the amount recognized in financial statements for other
postretirement plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
36,606
|
|
|
$
|
40,743
|
|
|
$
|
416
|
|
|
$
|
837
|
|
|
|
|
|
Service cost
|
|
|
589
|
|
|
|
937
|
|
|
|
23
|
|
|
|
46
|
|
|
|
|
|
Interest cost
|
|
|
2,926
|
|
|
|
2,324
|
|
|
|
35
|
|
|
|
43
|
|
|
|
|
|
Participant contributions
|
|
|
880
|
|
|
|
818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amendment
|
|
|
(1,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange rate change
|
|
|
|
|
|
|
|
|
|
|
58
|
|
|
|
(139
|
)
|
|
|
|
|
Actuarial (gain) loss
|
|
|
15,391
|
|
|
|
(5,967
|
)
|
|
|
77
|
|
|
|
(369
|
)
|
|
|
|
|
Benefits paid
|
|
|
(2,169
|
)
|
|
|
(2,249
|
)
|
|
|
(4
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
52,858
|
|
|
$
|
36,606
|
|
|
$
|
605
|
|
|
$
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning fair value of plan assets
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
Company contributions
|
|
|
1,289
|
|
|
|
1,431
|
|
|
|
4
|
|
|
|
2
|
|
|
|
|
|
Participant contributions
|
|
|
880
|
|
|
|
818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
(2,169
|
)
|
|
|
(2,249
|
)
|
|
|
(4
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending fair value of plan assets
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at end of year
|
|
$
|
(52,858
|
)
|
|
$
|
(36,606
|
)
|
|
$
|
(605
|
)
|
|
$
|
(416
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in financial statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued benefit liability
|
|
$
|
(2,669
|
)
|
|
$
|
(1,594
|
)
|
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
Postretirement obligations
|
|
|
(50,189
|
)
|
|
|
(35,012
|
)
|
|
|
(601
|
)
|
|
|
(414
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amount recognized in financial statements
|
|
$
|
(52,858
|
)
|
|
$
|
(36,606
|
)
|
|
$
|
(605
|
)
|
|
$
|
(416
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Amendment noted in the preceding table relates to changes in
life insurance benefits and participant contributions.
48
Notes
to Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive (gain)
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial (gain) loss
|
|
$
|
24,731
|
|
|
$
|
10,105
|
|
|
$
|
(146
|
)
|
|
$
|
(216
|
)
|
|
|
|
|
Prior service cost (credit)
|
|
|
(3,440
|
)
|
|
|
(3,084
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive (gain) loss
|
|
$
|
21,291
|
|
|
$
|
7,021
|
|
|
$
|
(146
|
)
|
|
$
|
(216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts expected to be recognized during next fiscal year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net actuarial (gain) loss
|
|
$
|
1,738
|
|
|
$
|
508
|
|
|
$
|
(5
|
)
|
|
$
|
(10
|
)
|
|
|
|
|
Amortization of prior service cost (credit)
|
|
|
(1,010
|
)
|
|
|
(830
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
728
|
|
|
$
|
(322
|
)
|
|
$
|
(5
|
)
|
|
$
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the changes in accumulated other
comprehensive (gain) loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
7,021
|
|
|
$
|
12,985
|
|
|
$
|
(216
|
)
|
|
$
|
128
|
|
|
|
|
|
Net (gain) loss arising during the year
|
|
|
15,391
|
|
|
|
(5,967
|
)
|
|
|
77
|
|
|
|
(369
|
)
|
|
|
|
|
Prior service cost (credit) arising during the year
|
|
|
(1,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) recognized during the year
|
|
|
(765
|
)
|
|
|
(827
|
)
|
|
|
11
|
|
|
|
(2
|
)
|
|
|
|
|
Prior service (cost) credit recognized during the year
|
|
|
1,009
|
|
|
|
830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate effect during the year
|
|
|
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
21,291
|
|
|
$
|
7,021
|
|
|
$
|
(146
|
)
|
|
$
|
(216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49
Notes
to Consolidated Financial
Statements (Continued)
Net postretirement benefit costs include the following
components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Service cost
|
|
$
|
589
|
|
|
$
|
937
|
|
|
$
|
1,127
|
|
|
$
|
23
|
|
|
$
|
46
|
|
|
$
|
46
|
|
Interest cost
|
|
|
2,926
|
|
|
|
2,324
|
|
|
|
2,420
|
|
|
|
35
|
|
|
|
43
|
|
|
|
42
|
|
Amortization of prior service cost (credit)
|
|
|
(1,009
|
)
|
|
|
(830
|
)
|
|
|
(725
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net actuarial (gain) loss
|
|
|
765
|
|
|
|
827
|
|
|
|
1,188
|
|
|
|
(11
|
)
|
|
|
2
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefit cost
|
|
$
|
3,271
|
|
|
$
|
3,258
|
|
|
$
|
4,010
|
|
|
$
|
47
|
|
|
$
|
91
|
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average assumptions in the following table
represent the rates used to develop the actuarial present value
of projected benefit obligation for the year listed and also the
net periodic benefit cost for the following year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
International
|
|
|
2009
|
|
2008
|
|
2007
|
|
2009
|
|
2008
|
|
2007
|
|
Discount rate
|
|
|
5.50
|
%
|
|
|
8.00
|
%
|
|
|
6.25
|
%
|
|
|
6.75
|
%
|
|
|
7.70
|
%
|
|
|
5.25
|
|
Health care cost trend rate
|
|
|
8.25
|
|
|
|
9.00
|
|
|
|
9.00
|
|
|
|
7.50
|
|
|
|
8.50
|
|
|
|
9.20
|
|
Rate to which health care cost trend rate is assumed to decline
(ultimate trend rate)
|
|
|
4.50
|
|
|
|
4.50
|
|
|
|
5.00
|
|
|
|
4.80
|
|
|
|
4.80
|
|
|
|
4.80
|
|
Year the rate reaches the ultimate trend rate
|
|
|
2015
|
|
|
|
2015
|
|
|
|
2011
|
|
|
|
2013
|
|
|
|
2013
|
|
|
|
2013
|
|
The discount rate and the health care cost trend rate
assumptions have a significant effect on the amounts reported.
For example, a one-percentage point change in the discount rate
and the assumed health care cost trend rate would have the
following effects:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
International
|
|
|
1% Point
|
|
1% Point
|
|
1% Point
|
|
1% Point
|
|
|
Increase
|
|
Decrease
|
|
Increase
|
|
Decrease
|
|
Discount rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
(376
|
)
|
|
$
|
444
|
|
|
$
|
(12
|
)
|
|
$
|
11
|
|
Effect on postretirement obligation as of
October 31, 2009
|
|
$
|
(6,286
|
)
|
|
$
|
7,801
|
|
|
$
|
(118
|
)
|
|
$
|
157
|
|
Health care trend rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in fiscal
year 2009
|
|
$
|
447
|
|
|
$
|
(371
|
)
|
|
$
|
15
|
|
|
$
|
(7
|
)
|
Effect on postretirement obligation as of
October 31, 2009
|
|
$
|
7,297
|
|
|
$
|
(5,978
|
)
|
|
$
|
153
|
|
|
$
|
(117
|
)
|
50
Notes
to Consolidated Financial
Statements (Continued)
Contributions to postretirement plans in fiscal year 2010 are
estimated to be approximately $2,673.
Retiree postretirement benefit payments are anticipated to be
paid as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
|
With Medicare
|
|
|
Without Medicare
|
|
|
|
|
Fiscal Year
|
|
Part D Subsidy
|
|
|
Part D Subsidy
|
|
|
International
|
|
|
2010
|
|
$
|
2,669
|
|
|
$
|
2,949
|
|
|
$
|
4
|
|
2011
|
|
|
2,787
|
|
|
|
3,103
|
|
|
|
4
|
|
2012
|
|
|
2,751
|
|
|
|
3,122
|
|
|
|
5
|
|
2013
|
|
|
2,751
|
|
|
|
3,178
|
|
|
|
5
|
|
2014
|
|
|
2,836
|
|
|
|
3,315
|
|
|
|
9
|
|
2015-2019
|
|
|
15,868
|
|
|
|
19,157
|
|
|
|
116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
29,662
|
|
|
$
|
34,824
|
|
|
$
|
143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense includes the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
$
|
14,370
|
|
|
$
|
25,528
|
|
|
$
|
23,832
|
|
State and local
|
|
|
858
|
|
|
|
960
|
|
|
|
375
|
|
Foreign
|
|
|
13,581
|
|
|
|
28,441
|
|
|
|
20,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
28,809
|
|
|
|
54,929
|
|
|
|
44,613
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
|
7,281
|
|
|
|
6,392
|
|
|
|
418
|
|
State and local
|
|
|
906
|
|
|
|
1,269
|
|
|
|
1,811
|
|
Foreign
|
|
|
(4,132
|
)
|
|
|
(306
|
)
|
|
|
(1,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
4,055
|
|
|
|
7,355
|
|
|
|
417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
32,864
|
|
|
$
|
62,284
|
|
|
$
|
45,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign income tax expense includes a benefit related to the
utilization of loss carryforwards of $5, $376 and $451 in fiscal
years 2009, 2008 and 2007, respectively. Fiscal year 2009
expense includes a benefit of $2,752 related to remeasurement of
unrecognized tax benefits and a benefit of $531 related to an
adjustment to a prior tax year. Fiscal year 2007 expense amount
includes a benefit of $900 related to settlement of tax issues
from prior years.
51
Notes
to Consolidated Financial
Statements (Continued)
On November 1, 2007 we adopted the provisions of a FASB
pronouncement regarding the accounting for uncertainty in income
taxes. The cumulative effects of adopting this pronouncement
have been recorded as a decrease of $200, net of tax, in the
November 1, 2007 balance of retained earnings. The total
unrecognized tax benefits at the time of adoption were $5,188,
of which $4,704 would impact the effective tax rate, if
recognized. At October 31, 2009 and 2008, total
unrecognized tax benefits were $3,969 and $7,685, respectively.
The amounts that, if recognized, would impact the effective tax
rate were $3,485 and $7,201 at October 31, 2009 and 2008,
respectively. A reconciliation of the beginning and ending
amount of unrecognized tax benefits for fiscal years 2009 and
2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Balance at beginning of year
|
|
$
|
7,685
|
|
|
$
|
5,188
|
|
Additions based on tax positions related to the current year
|
|
|
515
|
|
|
|
1,016
|
|
Additions for tax positions of prior years
|
|
|
|
|
|
|
2,366
|
|
Reductions for tax positions of prior years
|
|
|
(3,267
|
)
|
|
|
(885
|
)
|
Settlements
|
|
|
(964
|
)
|
|
|
|
|
Lapse of statute of limitations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
3,969
|
|
|
$
|
7,685
|
|
|
|
|
|
|
|
|
|
|
At October 31, 2009 and 2008, we had accrued interest
expense related to unrecognized tax benefits of $374 and $641,
respectively. We include interest accrued related to
unrecognized tax benefits in interest expense. Penalties, if
incurred, would be recognized as other income (expense).
We are subject to United States Federal income tax as well as
income taxes in numerous state and foreign jurisdictions. We are
subject to Internal Revenue Service (IRS) examinations for 2007
through 2009 tax years; tax years prior to 2007 are no longer
subject to IRS examination. Generally, major state jurisdiction
tax years remain open to examination for tax years after 2004;
major foreign jurisdiction tax years remain open to examination
for tax years after 2005. We do not anticipate a significant
change to the total amount of unrecognized tax benefits within
the next twelve months.
The principal items accounting for the difference in income
taxes computed at the U.S. statutory rate and the income
tax shown in the Consolidated Statements of Income for fiscal
years 2009, 2008, and 2007 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Tax at statutory rate of 35%
|
|
$
|
(44,517
|
)
|
|
$
|
62,926
|
|
|
$
|
47,503
|
|
Impact of goodwill charge
|
|
|
79,064
|
|
|
|
|
|
|
|
|
|
Domestic Production Deduction
|
|
|
(1,134
|
)
|
|
|
(1,741
|
)
|
|
|
(803
|
)
|
Foreign tax rate variances, net of foreign tax credits
|
|
|
1,279
|
|
|
|
(2,824
|
)
|
|
|
1,103
|
|
State and local taxes, net of federal income tax benefit
|
|
|
1,160
|
|
|
|
1,499
|
|
|
|
1,461
|
|
Amounts related to prior years
|
|
|
(3,283
|
)
|
|
|
1,525
|
|
|
|
(2,248
|
)
|
Extraterritorial income exclusion
|
|
|
|
|
|
|
|
|
|
|
(657
|
)
|
Other net
|
|
|
295
|
|
|
|
899
|
|
|
|
(1,329
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
32,864
|
|
|
$
|
62,284
|
|
|
$
|
45,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The extraterritorial income exclusion allows a portion of
certain income from export sales of goods manufactured in the
United States to be excluded from taxable income. The
extraterritorial income exclusion was repealed after
December 31, 2006 by the American Jobs Creation Act of 2004
(the AJCA). The Domestic Production Deduction, enacted by the
AJCA, allows a deduction with respect to income from certain
United States manufacturing activities.
52
Notes
to Consolidated Financial
Statements (Continued)
In December 2006, Congress passed and the President signed the
Tax Relief and Health Care Act, which provided retroactive
reinstatement of a research credit. The fiscal year 2007 impact
from this Act was an additional tax benefit of $500.
In October 2008, Congress passed and the President signed the
Tax Extenders and AMT Relief Act of 2008, which provided
retroactive reinstatement of a research credit. The fiscal year
2008 impact from this Act was an additional tax benefit of $800,
all of which was recorded in the fourth quarter.
Earnings before income taxes of international operations, which
are calculated before intercompany profit elimination entries,
were $(149,044), $91,372 and $52,125 in fiscal years 2009, 2008
and 2007, respectively. Deferred income taxes are not provided
on undistributed earnings of international subsidiaries that are
intended to be permanently invested in those operations. These
undistributed earnings aggregated approximately $258,416 and
$232,945 at October 31, 2009 and 2008, respectively. Should
these earnings be distributed, applicable foreign tax credits
would substantially offset United States taxes due upon the
distribution.
Significant components of deferred tax assets and liabilities
are as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Sales to international subsidiaries and related consolidation
adjustments
|
|
$
|
6,657
|
|
|
$
|
7,556
|
|
Employee benefits
|
|
|
91,985
|
|
|
|
55,938
|
|
Other accruals not currently deductible for taxes
|
|
|
8,252
|
|
|
|
13,006
|
|
Tax credit and loss carryforwards
|
|
|
7,116
|
|
|
|
4,488
|
|
Inventory adjustments
|
|
|
3,302
|
|
|
|
3,370
|
|
Translation of foreign currency accounts
|
|
|
|
|
|
|
988
|
|
Other net
|
|
|
113
|
|
|
|
311
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
117,425
|
|
|
|
85,657
|
|
Valuation allowance
|
|
|
(7,810
|
)
|
|
|
(4,549
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
109,615
|
|
|
|
81,108
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
61,232
|
|
|
|
60,054
|
|
Translation of foreign currency accounts
|
|
|
355
|
|
|
|
|
|
Other net
|
|
|
153
|
|
|
|
849
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
61,740
|
|
|
|
60,903
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
47,875
|
|
|
$
|
20,205
|
|
|
|
|
|
|
|
|
|
|
At October 31, 2009, we had $552 of tax credit
carryforwards that will expire in fiscal years 2010 through
2017. We also had $4,014 Federal, $66,248 state and $9,261
foreign operating loss carryforwards, of which $72,172 will
expire in fiscal years 2010 through 2029, and $7,351 of which
has an indefinite carryforward period. The net change in the
valuation allowance was an increase of $3,261 in fiscal year
2009 and a decrease of $913 in fiscal year 2008. The valuation
allowance of $7,810 at October 31, 2009, relates primarily
to tax credits and loss carryforwards that may expire before
being realized. At October 31, 2009 the valuation allowance
includes $523 relating to loss carryforwards recorded in
purchase accounting. Under current accounting rules, a reversal
of a valuation allowance that was recorded in purchase
accounting reduces goodwill. In fiscal year 2008, a reversal of
approximately $643 of valuation allowance was recorded to
goodwill.
53
Notes
to Consolidated Financial
Statements (Continued)
|
|
Note 5
|
Incentive
compensation plans
|
We have two incentive compensation plans for executive officers.
The Compensation Committee of the board of directors, composed
of independent directors, approves participants in the plans and
payments under the plans.
Annual payouts under the management incentive compensation plan
are based on corporate and individual performance and are
calculated as a percentage of base salary for each executive
officer. There was no compensation expense attributable to this
plan in fiscal year 2009. The amounts for fiscal years 2008 and
2007 were $4,472 and $3,621, respectively.
Under the long-term incentive compensation plan, executive
officers receive stock payouts based solely on corporate
performance measures over three-year performance periods.
Payouts vary based on the degree to which corporate performance
equals or exceeds predetermined threshold, target and maximum
performance levels at the end of a performance period. No payout
will occur unless certain pre-determined performance objectives
are met. There was $4,209 credited to expense attributable to
all LTIP performance periods for executive officers for fiscal
year 2009. For fiscal years 2008 and 2007, the amounts charged
to expense were $4,029 and $4,140, respectively.
54
Notes
to Consolidated Financial
Statements (Continued)
|
|
Note 6
|
Details of
balance sheet
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Receivables:
|
|
|
|
|
|
|
|
|
Accounts
|
|
$
|
180,248
|
|
|
$
|
212,202
|
|
Notes
|
|
|
6,548
|
|
|
|
9,487
|
|
Other
|
|
|
8,133
|
|
|
|
6,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194,929
|
|
|
|
227,880
|
|
Allowance for doubtful accounts
|
|
|
(3,728
|
)
|
|
|
(3,067
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
191,201
|
|
|
$
|
224,813
|
|
|
|
|
|
|
|
|
|
|
Inventories:
|
|
|
|
|
|
|
|
|
Finished goods
|
|
$
|
63,289
|
|
|
$
|
69,731
|
|
Work-in-process
|
|
|
11,607
|
|
|
|
13,853
|
|
Raw materials and finished parts
|
|
|
46,263
|
|
|
|
55,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,159
|
|
|
|
138,895
|
|
Obsolescence and other reserves
|
|
|
(15,740
|
)
|
|
|
(13,133
|
)
|
LIFO reserve
|
|
|
(7,783
|
)
|
|
|
(7,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
97,636
|
|
|
$
|
118,034
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
7,392
|
|
|
$
|
8,023
|
|
Land improvements
|
|
|
2,328
|
|
|
|
2,993
|
|
Buildings
|
|
|
115,309
|
|
|
|
106,145
|
|
Machinery and equipment
|
|
|
200,300
|
|
|
|
195,298
|
|
Enterprise management system
|
|
|
36,716
|
|
|
|
35,811
|
|
Construction-in-progress
|
|
|
2,749
|
|
|
|
15,340
|
|
Leased property under capitalized leases
|
|
|
16,306
|
|
|
|
19,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
381,100
|
|
|
|
383,410
|
|
Accumulated depreciation and amortization
|
|
|
(262,809
|
)
|
|
|
(249,567
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
118,291
|
|
|
$
|
133,843
|
|
|
|
|
|
|
|
|
|
|
Accrued liabilities:
|
|
|
|
|
|
|
|
|
Salaries and other compensation
|
|
$
|
28,772
|
|
|
$
|
39,628
|
|
Pension and retirement
|
|
|
12,339
|
|
|
|
3,244
|
|
Taxes other than income taxes
|
|
|
7,740
|
|
|
|
7,806
|
|
Other
|
|
|
43,434
|
|
|
|
45,795
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
92,285
|
|
|
$
|
96,473
|
|
|
|
|
|
|
|
|
|
|
55
Notes
to Consolidated Financial
Statements (Continued)
We have lease commitments expiring at various dates, principally
for manufacturing, warehouse and office space, automobiles and
office equipment. Many leases contain renewal options and some
contain purchase options and residual guarantees.
Rent expense for all operating leases was approximately $11,801,
$12,353 and $10,815 in fiscal years 2009, 2008 and 2007,
respectively.
Amortization of assets recorded under capital leases is recorded
in depreciation expense.
Assets held under capitalized leases and included in property,
plant and equipment are as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Transportation equipment
|
|
$
|
15,337
|
|
|
$
|
16,150
|
|
Other
|
|
|
969
|
|
|
|
3,650
|
|
|
|
|
|
|
|
|
|
|
Total capitalized leases
|
|
|
16,306
|
|
|
|
19,800
|
|
Accumulated amortization
|
|
|
(9,286
|
)
|
|
|
(9,108
|
)
|
|
|
|
|
|
|
|
|
|
Net capitalized leases
|
|
$
|
7,020
|
|
|
$
|
10,692
|
|
|
|
|
|
|
|
|
|
|
At October 31, 2009, future minimum lease payments under
noncancelable capitalized and operating leases are as follows:
|
|
|
|
|
|
|
|
|
|
|
Capitalized
|
|
|
Operating
|
|
|
|
Leases
|
|
|
Leases
|
|
|
Fiscal year ending:
|
|
|
|
|
|
|
|
|
2010
|
|
$
|
5,243
|
|
|
$
|
10,628
|
|
2011
|
|
|
2,894
|
|
|
|
6,234
|
|
2012
|
|
|
754
|
|
|
|
2,818
|
|
2013
|
|
|
246
|
|
|
|
1,816
|
|
2014
|
|
|
25
|
|
|
|
1,090
|
|
Later years
|
|
|
|
|
|
|
8,475
|
|
|
|
|
|
|
|
|
|
|
Total minimum lease payments
|
|
|
9,162
|
|
|
$
|
31,061
|
|
|
|
|
|
|
|
|
|
|
Less amount representing executory costs
|
|
|
1,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net minimum lease payments
|
|
|
8,037
|
|
|
|
|
|
Less amount representing interest
|
|
|
1,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present value of net minimum lease payments
|
|
|
7,020
|
|
|
|
|
|
Less current portion
|
|
|
4,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term obligations at October 31, 2009
|
|
$
|
2,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56
Notes
to Consolidated Financial
Statements (Continued)
Bank lines of credit and notes payable are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Available bank lines of credit:
|
|
|
|
|
|
|
|
|
Domestic banks
|
|
$
|
|
|
|
$
|
50,000
|
|
Foreign banks
|
|
|
48,433
|
|
|
|
62,470
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
48,433
|
|
|
$
|
112,470
|
|
|
|
|
|
|
|
|
|
|
Outstanding notes payable:
|
|
|
|
|
|
|
|
|
Domestic bank debt
|
|
$
|
|
|
|
$
|
30,000
|
|
Foreign bank debt
|
|
|
1,287
|
|
|
|
12,061
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,287
|
|
|
$
|
42,061
|
|
|
|
|
|
|
|
|
|
|
Weighted-average interest rate on notes payable
|
|
|
4.9
|
%
|
|
|
3.2
|
%
|
Unused bank lines of credit
|
|
$
|
47,146
|
|
|
$
|
70,409
|
|
|
|
|
|
|
|
|
|
|
A summary of long-term debt is as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Revolving credit agreement
|
|
$
|
88,000
|
|
|
$
|
170,000
|
|
Senior notes, due
2005-2011
|
|
|
18,550
|
|
|
|
22,840
|
|
Senior notes, due 2013
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,550
|
|
|
|
242,840
|
|
Less current maturities
|
|
|
4,290
|
|
|
|
4,290
|
|
|
|
|
|
|
|
|
|
|
Long-term maturities
|
|
$
|
152,260
|
|
|
$
|
238,550
|
|
|
|
|
|
|
|
|
|
|
Revolving credit agreement This $400,000
revolving credit agreement is with a group of banks and expires
in fiscal year 2012. Payment of quarterly commitment fees is
required. The weighted average interest rate for borrowings
under this agreement was 0.53 percent at October 31,
2009.
Senior notes, due
2005-2011
These fixed rate notes with a group of insurance companies had
an original weighted-average life of 6.5 years at the time
of issuance in 2001. The weighted-average interest rate at
October 31, 2009 was 7.33 percent.
Senior note, due 2013 This note is payable in
one installment and has a fixed interest rate of
4.98 percent.
Annual maturities The annual maturities of
long-term debt for the five fiscal years subsequent to
October 31, 2009, are as follows: $4,290 in 2010; $14,260
in 2011; $88,000 in 2012, $50,000 in 2013 and $0 in 2014.
57
Notes
to Consolidated Financial
Statements (Continued)
|
|
Note 10
|
Financial
instruments
|
Effective February 1, 2009, we adopted a FASB standard that
amends and expands the disclosure requirements regarding
derivative instruments and hedging activities by providing
additional information about objectives for using derivative
instruments, as well as how derivative instruments and related
hedged items affect financial position and results of operations.
We operate internationally and enter into intercompany
transactions denominated in foreign currencies. Consequently, we
are subject to market risk arising from exchange rate movements
between the dates foreign currency transactions occur and the
dates they are settled. We regularly use foreign currency
forward contracts to reduce our risks related to most of these
transactions. These contracts usually have maturities of
90 days or less and generally require us to exchange
foreign currencies for U.S. dollars at maturity, at rates
stated in the contracts. These contracts are not designated as
hedging instruments. Accordingly, the changes in the fair value
of the hedges of balance sheet positions are recognized in each
accounting period in Other net on the
Consolidated Statement of Income together with the transaction
gain or loss from the hedged balance sheet position. A gain of
$3,817 was recognized from changes in fair value of these
contracts in fiscal year 2009. A loss of $2,033 was recognized
from changes in fair value of these contracts in fiscal year
2008, and a gain of $862 was recognized from changes in fair
value of these contracts in fiscal year 2007. We do not use
financial instruments for trading or speculative purposes.
At October 31, 2009, we had outstanding forward exchange
contracts that mature at various dates through
January 2010. The following table summarizes, by currency,
forward exchange contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sell
|
|
|
Buy
|
|
|
|
Notional
|
|
|
Fair Market
|
|
|
Notional
|
|
|
Fair Market
|
|
|
|
Amounts
|
|
|
Value
|
|
|
Amounts
|
|
|
Value
|
|
|
October 31, 2009 contract amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro
|
|
$
|
7,663
|
|
|
$
|
7,698
|
|
|
$
|
178,983
|
|
|
$
|
181,831
|
|
British pound
|
|
|
491
|
|
|
|
493
|
|
|
|
12,015
|
|
|
|
11,997
|
|
Japanese yen
|
|
|
2,876
|
|
|
|
2,911
|
|
|
|
20,862
|
|
|
|
21,342
|
|
Others
|
|
|
8,678
|
|
|
|
8,580
|
|
|
|
26,143
|
|
|
|
26,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
19,708
|
|
|
$
|
19,682
|
|
|
$
|
238,003
|
|
|
$
|
241,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2008 contract amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro
|
|
$
|
8,236
|
|
|
$
|
7,701
|
|
|
$
|
124,764
|
|
|
$
|
123,846
|
|
British pound
|
|
|
429
|
|
|
|
402
|
|
|
|
12,557
|
|
|
|
12,491
|
|
Japanese yen
|
|
|
6,338
|
|
|
|
6,598
|
|
|
|
13,786
|
|
|
|
13,765
|
|
Others
|
|
|
4,173
|
|
|
|
3,911
|
|
|
|
18,308
|
|
|
|
18,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
19,176
|
|
|
$
|
18,612
|
|
|
$
|
169,415
|
|
|
$
|
168,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the fair value of foreign currency
forward contracts in the consolidated balance sheet at
October 31, 2009. These contracts were not designated as
hedging instruments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability Derivatives
|
|
Asset Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
|
|
|
|
|
Balance sheet
|
|
|
|
location
|
|
Fair value
|
|
|
location
|
|
Fair value
|
|
|
Receivables
|
|
$
|
4,028
|
|
|
Accrued liabilities
|
|
$
|
345
|
|
58
Notes
to Consolidated Financial
Statements (Continued)
We also use foreign denominated fixed-rate debt and intercompany
foreign currency transactions of a long-term investment nature
to hedge the value of investment in wholly-owned subsidiaries.
For hedges of the net investment in foreign operations, realized
and unrealized gains and losses are shown in the cumulative
translation adjustment account included in total comprehensive
income. For fiscal years 2009 and 2008, a net gain of $1,202 and
a net loss of $4,840, respectively, were included in the
cumulative translation adjustment account related to foreign
denominated fixed-rate debt designated as a hedge of net
investment in foreign operations.
We are exposed to credit-related losses in the event of
nonperformance by counterparties to financial instruments. These
financial instruments include cash deposits and forward exchange
contracts. We periodically monitor the credit ratings of these
counterparties in order to minimize our exposure. Our customers
represent a wide variety of industries and geographic regions.
As of October 31, 2009, there were no significant
concentrations of credit risk.
The carrying amounts and fair values of financial instruments,
other than receivables and accounts payable, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
Amount
|
|
|
Value
|
|
|
Amount
|
|
|
Value
|
|
|
Cash and cash equivalents
|
|
$
|
18,781
|
|
|
$
|
18,781
|
|
|
$
|
11,755
|
|
|
$
|
11,755
|
|
Marketable securities
|
|
|
43
|
|
|
|
43
|
|
|
|
5
|
|
|
|
5
|
|
Notes payable
|
|
|
(1,287
|
)
|
|
|
(1,287
|
)
|
|
|
(42,061
|
)
|
|
|
(42,061
|
)
|
Long-term debt
|
|
|
(156,550
|
)
|
|
|
(159,706
|
)
|
|
|
(242,840
|
)
|
|
|
(240,757
|
)
|
Forward exchange contracts (net)
|
|
|
3,683
|
|
|
|
3,683
|
|
|
|
(134
|
)
|
|
|
(134
|
)
|
We used the following methods and assumptions 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.
|
|
|
|
Forward exchange contracts are estimated using quoted exchange
rates of comparable contracts.
|
Preferred We have authorized 10,000
Series A convertible preferred shares without par value. No
preferred shares were outstanding in fiscal years 2009, 2008 or
2007.
Common We have 80,000 authorized common
shares without par value. In March 1992, the shareholders
adopted an amendment to the articles of incorporation, which,
when filed with the Secretary of State for the State of Ohio,
would increase the number of authorized common shares to
160,000. At October 31, 2009 and 2008, there were 49,011
common shares issued. At October 31, 2009 and 2008, the
number of outstanding common shares, net of treasury shares, was
33,678 and 33,708, respectively.
59
Notes
to Consolidated Financial
Statements (Continued)
|
|
Note 12
|
Stock-based
compensation
|
The amended and restated 2004 long-term performance plan,
approved by shareholders in 2008, provides for the granting of
stock options, stock appreciation rights, nonvested (restricted)
stock, stock purchase rights, stock equivalent units, restricted
stock units, cash awards and other stock- or performance-based
incentives. The number of common shares available for grant is
2.5 percent of the number of common shares outstanding as
of the first day of each fiscal year. At the end of fiscal year
2009, there were 842 shares available for grant in fiscal
year 2010.
Stock options Nonqualified or incentive stock
options may be granted to our employees and directors.
Generally, options granted to employees may be exercised
beginning one year from the date of grant at a rate not
exceeding 25 percent per year for executive officers and
20 percent per year for other employees and expire
10 years from the date of grant. Vesting accelerates upon
the occurrence of events that involve or may result in a change
of control. Option exercises are satisfied through the issuance
of treasury shares on a
first-in,
first-out basis. We recognized compensation expense of $3,026,
$3,066 and $3,259 for fiscal years 2009, 2008 and 2007,
respectively.
Following is a summary of stock options for fiscal year 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
Aggregate
|
|
|
|
|
|
|
Number of
|
|
|
Exercise Price Per
|
|
|
Intrinsic
|
|
|
Weighted-Average
|
|
|
|
Options
|
|
|
Share
|
|
|
Value
|
|
|
Remaining Term
|
|
|
Outstanding at October 31, 2008
|
|
|
1,645
|
|
|
$
|
36.75
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
392
|
|
|
$
|
28.74
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(101
|
)
|
|
$
|
30.25
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(137
|
)
|
|
$
|
37.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at October 31, 2009
|
|
|
1,799
|
|
|
$
|
35.30
|
|
|
$
|
31,488
|
|
|
|
5.8 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested at October 31, 2009 or expected to vest
|
|
|
1,750
|
|
|
$
|
35.25
|
|
|
$
|
30,716
|
|
|
|
5.7 years
|
|
Exercisable at October 31, 2009
|
|
|
1,094
|
|
|
$
|
33.23
|
|
|
$
|
21,390
|
|
|
|
4.3 years
|
|
Summarized information on currently outstanding options follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise Price
|
|
|
$20 $25
|
|
$26 $30
|
|
$31 $39
|
|
$40 $56
|
|
Number outstanding
|
|
|
173
|
|
|
|
787
|
|
|
|
423
|
|
|
|
416
|
|
Weighted-average remaining contractual life, in years
|
|
|
2.0
|
|
|
|
5.8
|
|
|
|
5.6
|
|
|
|
7.6
|
|
Weighted-average exercise price
|
|
$
|
23.06
|
|
|
$
|
28.21
|
|
|
$
|
38.05
|
|
|
$
|
51.02
|
|
Number exercisable
|
|
|
173
|
|
|
|
437
|
|
|
|
337
|
|
|
|
147
|
|
Weighted-average exercise price
|
|
$
|
23.06
|
|
|
$
|
27.78
|
|
|
$
|
37.99
|
|
|
$
|
50.46
|
|
As of October 31, 2009, there was $5,710 of total
unrecognized compensation cost related to nonvested stock
options. That cost is expected to be amortized over a weighted
average period of approximately 1.9 years.
60
Notes
to Consolidated Financial
Statements (Continued)
The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options that have no
vesting restrictions and are fully transferable. Option
valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. The
fair value of each option grant was estimated at the date of
grant using the Black-Scholes option-pricing model with the
following assumptions:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Expected volatility
|
|
|
.404-.408
|
|
|
|
.261-.336
|
|
Expected dividend yield
|
|
|
1.36
|
%
|
|
|
1.41-1.46
|
%
|
Risk-free interest rate
|
|
|
1.58-1.76
|
%
|
|
|
2.89-3.62
|
%
|
Expected life of the option (in years)
|
|
|
5.4-6.2
|
|
|
|
5.3-6.1
|
|
The weighted-average expected volatility used to value the
fiscal year 2009 options was .405. The weighted-average expected
volatility and weighted-average expected dividend yield used to
value the fiscal year 2008 options were .262 and
1.41 percent, respectively.
Historical information was the primary basis for the selection
of the expected volatility, expected dividend yield and the
expected lives of the options. The risk-free interest rate was
selected based upon yields of United States Treasury issues with
terms equal to the expected life of the option being valued.
The weighted average grant date fair value of stock options
granted during fiscal years 2009, 2008 and 2007 was $10.62,
$14.10 and $15.83, respectively.
The total intrinsic value of options exercised during fiscal
years 2009, 2008 and 2007 was $2,024, $30,589 and $13,892,
respectively. Cash received from the exercise of stock options
for fiscal years 2009, 2008 and 2007 was $2,986, $16,135 and
$9,264, respectively. The tax benefit realized from tax
deductions from exercises for fiscal years 2009, 2008 and 2007
was $285, $9,002 and $4,269, respectively.
Stock appreciation rights We 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 fiscal years 2009, 2008
and 2007.
Nonvested (restricted) stock We may grant
nonvested (restricted) stock to our employees and directors.
These shares may not be disposed of for a designated period of
time (generally six months to five years) defined at the date of
grant. For employee recipients, shares are forfeited on a
pro-rata basis in the event employment is terminated as a
consequence of the employee recipients retirement,
disability or death prior to the lapse of any restrictions.
Termination for any other reason prior to the lapse of any
restrictions results in forfeiture of the shares. For
non-employee directors, restrictions lapse upon the retirement,
disability or death of the non-employee director. Termination of
service as a director for any other reason prior to the lapse of
any restrictions results in a pro-rata forfeiture of shares.
As shares are issued, deferred stock-based compensation
equivalent to the fair 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.
61
Notes
to Consolidated Financial
Statements (Continued)
The following table summarizes fiscal year 2009 activity related
to nonvested stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
Number of
|
|
|
Grant Date Fair
|
|
|
|
Shares
|
|
|
Value Per Share
|
|
|
Nonvested at October 31, 2008
|
|
|
52
|
|
|
$
|
42.79
|
|
Granted
|
|
|
13
|
|
|
$
|
29.47
|
|
Vested
|
|
|
(41
|
)
|
|
$
|
40.69
|
|
Forfeited
|
|
|
(1
|
)
|
|
$
|
52.91
|
|
|
|
|
|
|
|
|
|
|
Nonvested at October 31, 2009
|
|
|
23
|
|
|
$
|
38.49
|
|
|
|
|
|
|
|
|
|
|
As of October 31, 2009, there was $272 of unrecognized
compensation cost related to nonvested stock. The cost is
expected to be amortized over a weighted average period of
1.1 years. The amount charged to expense related to
nonvested stock was $507, $886 and $1,403 in fiscal years 2009,
2008 and 2007, respectively.
Employee stock purchase rights We may grant
stock purchase rights to our 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 fiscal years 2009, 2008 and 2007.
Deferred directors compensation Non-employee
directors may defer all or part of their compensation until
retirement. Compensation may be deferred as cash or as stock
equivalent units. Deferred cash amounts are recorded as
liabilities. Additional stock equivalent units are earned when
common stock dividends are declared.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
Number of
|
|
|
Grant Date Fair
|
|
|
|
Shares
|
|
|
Value Per Share
|
|
|
Outstanding at October 31, 2008
|
|
|
118
|
|
|
$
|
28.46
|
|
Deferrals
|
|
|
6
|
|
|
$
|
39.99
|
|
Restricted stock units vested
|
|
|
6
|
|
|
$
|
48.77
|
|
Dividend equivalents
|
|
|
3
|
|
|
$
|
35.58
|
|
Distributions
|
|
|
(6
|
)
|
|
$
|
18.74
|
|
|
|
|
|
|
|
|
|
|
Outstanding at October 31, 2009
|
|
|
127
|
|
|
$
|
30.51
|
|
|
|
|
|
|
|
|
|
|
The following is a summary of the activity related to deferred
director compensation during fiscal year 2009:
The amount charged to expense related to this plan was $333,
$305 and $365 in fiscal years 2009, 2008 and 2007, respectively.
Long-Term Incentive Compensation Plan Under
the Long-Term Incentive Compensation Plan (LTIP), executive
officers and selected other key employees receive cash or stock
awards based solely on corporate performance measures over
three-year performance periods. Awards vary based on the degree
to which corporate performance exceeds predetermined threshold,
target and maximum performance levels at the end of a
performance period. No payout will occur unless certain
threshold performance objectives are exceeded.
For the fiscal year
2007-2009,
the fiscal year
2008-2010
and the fiscal year
2009-2011
performance periods, payouts, if any, will be in common shares.
The amount of compensation expense is based upon current
performance projections for each three-year period and the
percentage of the requisite service that has been rendered. The
calculations are also based upon the value of our common shares
on the date of grant. This value was $26.45 per share for both
the executive officer and the selected other employees groups
for fiscal year 2009 and was $50.74 per share for both the
executive officer and the selected other employees groups for
fiscal year 2008. The values of our common shares on the date of
grant were $46.74 and $53.77 for the executive officer group and
$46.88 per share for the selected other employees. These
performance-based equity grants are recorded in
shareholders equity. As performance did not meet the
threshold, there will be no payout for the fiscal year
2007-2009
performance period. There was no cumulative amount recorded in
62
Notes
to Consolidated Financial
Statements (Continued)
shareholders equity at October 31, 2009. The amount
at October 31, 2008 was $9,483. There was $5,014 credited
to expense attributable to all LTIP performance periods for
executive officers and selected other employees for fiscal year
2009. For fiscal years 2008 and 2007, the amounts charged to
expense were $4,762 and $3,131, respectively.
Shares reserved for future issuance At
October 31, 2009, there were 74,542 of common shares
reserved for future issuance through the exercise of outstanding
options or rights.
|
|
Note 13
|
Severance and
restructuring costs
|
In September 2008, a cost reduction program that involved a
combination of non-workforce related efficiencies and workforce
reductions primarily in North America and Europe was announced.
In response to the continuing economic crisis, additional cost
reduction actions were taken in fiscal year 2009. It is
anticipated that the total severance and related costs of these
actions will be approximately $23,000 of which $5,561 occurred
in fiscal year 2008 and $16,396 occurred in fiscal year 2009.
The remainder will occur in fiscal year 2010. The severance
costs are recorded in the Corporate segment.
In March 2007, we announced that the Adhesive Dispensing Systems
segment manufacturing operation located in Talladega, Alabama
would be closed and production activities would be moved to
other facilities that are closer to supplier locations. Total
severance costs were $493 and were recorded over the future
service period of April 2007 through March 2008.
In April 2006, we realigned the management of the Adhesive
Dispensing Systems segment. These actions better positioned the
segment to achieve growth objectives.
In October 2005, we began a number of restructuring actions to
improve performance and reduce costs in the Industrial Coating
Systems segment. These actions, which included operational
consolidations and personnel reductions, were completed in the
fourth quarter of fiscal year 2006. As a result of these
actions, resources are more effectively aligned with shifting
patterns of global demands, enabling the segment to operate both
with lower costs and better capability to serve customers in the
faster growing emerging markets.
The following table summarizes activity in the severance and
restructuring accruals during fiscal years 2007, 2008 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adhesive
|
|
|
Adhesive
|
|
|
Industrial
|
|
|
|
|
|
|
Cost Reduction
|
|
|
Dispensing
|
|
|
Dispensing
|
|
|
Coating
|
|
|
|
|
|
|
Actions - 2008
|
|
|
Systems -
|
|
|
Systems-
|
|
|
Systems -
|
|
|
|
|
|
|
and 2009
|
|
|
2007 Action
|
|
|
2006 Action
|
|
|
2005 Action
|
|
|
Total
|
|
|
Accrual balance at October 31, 2006
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31
|
|
|
$
|
49
|
|
|
$
|
80
|
|
Additions/adjustments to accrual
|
|
|
|
|
|
|
433
|
|
|
|
(23
|
)
|
|
|
(1
|
)
|
|
|
409
|
|
Payments
|
|
|
|
|
|
|
(30
|
)
|
|
|
(8
|
)
|
|
|
(48
|
)
|
|
|
(86
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual balance at October 31, 2007
|
|
|
|
|
|
|
403
|
|
|
|
|
|
|
|
|
|
|
|
403
|
|
Additions/adjustments to accrual
|
|
|
5,561
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
5,621
|
|
Payments
|
|
|
(1,053
|
)
|
|
|
(463
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,516
|
)
|
Currency effects
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual balance at October 31, 2008
|
|
|
4,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,483
|
|
Additions/adjustments to accrual
|
|
|
16,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,396
|
|
Payments
|
|
|
(18,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,732
|
)
|
Currency effects
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual balance at October 31, 2009
|
|
$
|
2,228
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
Notes
to Consolidated Financial
Statements (Continued)
Business acquisitions have been accounted for as purchases, with
the acquired assets and liabilities recorded at estimated fair
value on the dates of acquisition. The cost in excess of the net
assets of the business acquired is included in goodwill.
Operating results after the respective dates of acquisitions are
included in the Consolidated Statement of Income.
Fiscal year 2008 acquisitions
On October 1, 2008, we acquired certain assets of Wachter
Paul & Co., Dosier-Klebetechnik, a Swiss distributor
of our EFD product line.
On August 1, 2008, we acquired 100 percent of the
outstanding shares of MLT Systems Holdings (Pty) Ltd. and its
subsidiary, MLT Application Systems (Pty) Ltd. (MLT) of Cape
Town, South Africa. MLT was the exclusive distributor of our
products in South Africa since 1989. The amount of goodwill
resulting from the purchase of MLT was $535.
On May 26, 2008, we acquired the remaining 51 percent
interest in our South Korea joint venture. Purchase accounting
was applied to the acquisition of the remaining interest, with
the $2,485 difference between the purchase price and the
carrying value of our investment recorded as goodwill. The joint
venture was previously consolidated in accordance with current
accounting standards. The wholly-owned subsidiary operates as
Nordson Korea.
Fiscal year 2007 acquisition Dage Holdings,
Limited
On December 14, 2006, we acquired 100 percent of the
outstanding shares of Dage Holdings, Limited (Dage), a leading
manufacturer of testing and inspection equipment used in the
semiconductor and printed circuit board industries headquartered
in the United Kingdom. The purchase of Dage fits our strategy of
acquiring companies with above-average growth in markets
currently served. The fair values of long-lived tangible and
intangible assets were based on appraised values. Cash and
existing lines of credit were used for the purchase.
The allocation of the purchase price and goodwill are shown in
the table below.
|
|
|
|
|
Fair values:
|
|
|
|
|
Assets acquired
|
|
$
|
49,489
|
|
Liabilities assumed
|
|
|
(33,196
|
)
|
Intangible assets subject to amortization
|
|
|
32,105
|
|
Intangible assets not subject to amortization
|
|
|
9,651
|
|
Goodwill
|
|
|
172,365
|
|
|
|
|
|
|
Purchase price
|
|
|
230,414
|
|
Less cash acquired
|
|
|
(3,222
|
)
|
|
|
|
|
|
Net cash paid
|
|
$
|
227,192
|
|
|
|
|
|
|
The intangible assets subject to amortization include customer
relationships of $14,561 and patents of $17,544 that are being
amortized over 10 to 15 years. The intangible assets not
subject to amortization consist primarily of trademarks and
trade names. None of the goodwill related to the purchase of
Dage is tax deductible.
As discussed in Note 17, impairment charges related to the
Dage goodwill and trademark and trade name assets were recorded
in fiscal year 2009.
64
Notes
to Consolidated Financial
Statements (Continued)
Pro forma financial information
The following unaudited pro forma financial information for
fiscal year 2007 assumes the acquisition occurred as of the
beginning of the year, after giving effect to certain
adjustments, including amortization of intangible assets,
interest expense on acquisition debt and income tax effects. The
pro forma results have been prepared for comparative purposes
only and are not necessarily indicative of the results of
operations which may occur in the future or that would have
occurred had the acquisition of Dage been effected on the date
indicated, nor are they necessarily indicative of our future
results of operations.
|
|
|
|
|
Sales
|
|
$
|
999,601
|
|
Net income
|
|
$
|
88,781
|
|
Basic earnings per share
|
|
$
|
2.65
|
|
Diluted earnings per share
|
|
$
|
2.60
|
|
Other fiscal year 2007 acquisitions
On April 1, 2007, we acquired 100 percent of the
partnership interest of PICO Dosiertechnik GmbH & Co.
KG and 100 percent of the outstanding shares of PICO Dostec
GmbH (Picodostec), a leading manufacturer of piezoelectric
technology dispensing systems that dispense adhesives and other
performance materials at very high speeds in an extremely
accurate manner. Picodostecs products are used
predominately in the electronics, medical device, packaging,
pharmaceutical, food, chemical and automotive industries.
On April 30, 2007, we acquired 100 percent of the
outstanding shares of YESTech, Inc., a leading provider of
Automated Optical Inspection (AOI) and X-Ray inspection systems
used in the production of printed circuit board assemblies and
semiconductor packages.
On August 23, 2007, we acquired 100 percent ownership
in TAH Industries, a manufacturer of motionless mixer dispensing
systems for two-component adhesives and sealants. TAH
specializes in the design and production of disposable plastic
mixers and cartridge dispense systems, meter mix dispense valves
and accessories. Their products are used primarily in the
dental, construction, automotive, life science, food, DIY,
marine and aerospace industries.
The combined purchase price was $100,822 ($98,800 net of
cash acquired). The purchase price allocation and the goodwill
are shown in the table below.
|
|
|
|
|
Fair values:
|
|
|
|
|
Assets acquired
|
|
$
|
28,464
|
|
Liabilities assumed
|
|
|
(14,954
|
)
|
Intangible assets subject to amortization
|
|
|
17,140
|
|
Intangible assets not subject to amortization
|
|
|
4,240
|
|
Goodwill
|
|
|
65,932
|
|
|
|
|
|
|
Purchase price
|
|
|
100,822
|
|
Less cash acquired
|
|
|
(2,022
|
)
|
|
|
|
|
|
Net cash paid
|
|
$
|
98,800
|
|
|
|
|
|
|
The fair values of long-lived tangible and intangible assets
were based on appraised values. The intangible assets subject to
amortization include customer relationships of $9,680,
non-compete agreements of $1,760 and patents of $5,700 that are
being amortized over four to 15 years. The intangible
assets not subject to amortization consist of trademarks and
trade names. The tax-deductible amount of goodwill related to
Picodostec, YESTech and TAH acquisitions was $30,835. Assuming
these acquisitions had taken place at the beginning of fiscal
year 2007, proforma results would not have been materially
different.
65
Notes
to Consolidated Financial
Statements (Continued)
As discussed in Note 17, impairment charges related to the
goodwill and trademark and trade name assets for these
acquisitions were recorded in fiscal year 2009.
All fiscal year 2007 acquisitions are reported in the Advanced
Technology Systems segment.
|
|
Note 15
|
Supplemental
information for the statement of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Cash operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
7,986
|
|
|
$
|
17,633
|
|
|
$
|
21,506
|
|
Income taxes paid
|
|
|
24,893
|
|
|
|
45,089
|
|
|
|
40,362
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized lease obligations incurred
|
|
$
|
3,257
|
|
|
$
|
6,886
|
|
|
$
|
8,508
|
|
Capitalized lease obligations terminated
|
|
|
2,376
|
|
|
|
1,024
|
|
|
|
1,149
|
|
Shares acquired and issued through exercise of stock options
|
|
|
73
|
|
|
|
4,682
|
|
|
|
6,192
|
|
Non-cash assets and liabilities of businesses acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
|
|
$
|
|
|
|
$
|
1,082
|
|
|
$
|
30,664
|
|
Property, plant and equipment
|
|
|
|
|
|
|
112
|
|
|
|
14,151
|
|
Intangibles and other long-term assets
|
|
|
|
|
|
|
4,271
|
|
|
|
301,778
|
|
Long-term debt and other liabilities
|
|
|
|
|
|
|
(766
|
)
|
|
|
(21,348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
4,699
|
|
|
$
|
325,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 16
|
Operating
segments and geographic area data
|
We conduct business across three primary operating segments:
Adhesive Dispensing Systems, Advanced Technology Systems, and
Industrial Coating Systems. The composition of segments and
measure of segment profitability is consistent with that used by
our chief operating decision maker. The primary measure used by
the chief operating decision maker for purposes of making
decisions about allocating resources to the segments and
assessing performance is operating profit, which equals sales
less cost of sales and certain operating expenses. Items below
the operating profit line of the Consolidated Statement of
Income (interest and investment income, interest expense and
other income/expense) are excluded from the measure of segment
profitability reviewed by our chief operating decision maker and
are not presented by operating segment. In addition, the measure
of segment operating profit that is reported to and reviewed by
the chief operating decision maker excludes severance and
restructuring costs associated with the cost reduction program
that began in September 2008. The accounting policies of the
segments are generally the same as those described in
Note 1, Significant Accounting Policies.
No single customer accounted for five percent or more of sales
in fiscal years 2009, 2008 or 2007.
66
Notes
to Consolidated Financial
Statements (Continued)
The following table presents information about our reportable
segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adhesive
|
|
|
Advanced
|
|
|
Industrial
|
|
|
|
|
|
|
|
|
|
Dispensing
|
|
|
Technology
|
|
|
Coating
|
|
|
Corporate
|
|
|
Total
|
|
|
Year ended October 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net external sales
|
|
$
|
460,746
|
|
|
$
|
248,827
|
|
|
$
|
109,592
|
|
|
$
|
|
|
|
$
|
819,165
|
|
Depreciation
|
|
|
9,087
|
|
|
|
7,294
|
|
|
|
3,300
|
|
|
|
6,629
|
|
|
|
26,310
|
|
Operating profit
|
|
|
127,589
|
|
|
|
(214,373
|
)(a)
|
|
|
(7,303
|
)(a)
|
|
|
(33,720
|
)(b)
|
|
|
(127,807
|
)
|
Identifiable
assets(c)
|
|
|
226,904
|
|
|
|
451,300
|
|
|
|
50,072
|
|
|
|
168,686
|
(d)
|
|
|
896,962
|
|
Expenditures for long-lived assets
|
|
|
1,922
|
|
|
|
7,097
|
|
|
|
857
|
|
|
|
2,638
|
|
|
|
12,514
|
|
Year ended October 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net external sales
|
|
$
|
580,711
|
|
|
$
|
367,366
|
|
|
$
|
176,752
|
|
|
$
|
|
|
|
$
|
1,124,829
|
|
Depreciation
|
|
|
9,391
|
|
|
|
7,613
|
|
|
|
3,897
|
|
|
|
5,539
|
|
|
|
26,440
|
|
Operating profit
|
|
|
145,390
|
(e)
|
|
|
61,764
|
|
|
|
11,015
|
|
|
|
(27,831
|
)(b)
|
|
|
190,338
|
|
Identifiable
assets(c)
|
|
|
248,782
|
|
|
|
700,767
|
|
|
|
69,897
|
|
|
|
149,819
|
(d)
|
|
|
1,169,265
|
|
Expenditures for long-lived assets
|
|
|
5,320
|
|
|
|
14,278
|
|
|
|
3,285
|
|
|
|
3,503
|
|
|
|
26,386
|
|
Year ended October 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net external sales
|
|
$
|
509,568
|
|
|
$
|
300,719
|
|
|
$
|
183,362
|
|
|
$
|
|
|
|
$
|
993,649
|
|
Depreciation
|
|
|
8,890
|
|
|
|
5,737
|
|
|
|
3,987
|
|
|
|
5,170
|
|
|
|
23,784
|
|
Operating profit
|
|
|
118,206
|
(e)
|
|
|
40,480
|
|
|
|
17,615
|
|
|
|
(24,159
|
)
|
|
|
152,142
|
|
Identifiable
assets(c)
|
|
|
257,121
|
|
|
|
685,381
|
|
|
|
73,061
|
|
|
|
196,772
|
(d)
|
|
|
1,212,335
|
|
Expenditures for long-lived assets
|
|
|
13,548
|
|
|
|
9,097
|
|
|
|
3,669
|
|
|
|
4,703
|
|
|
|
31,017
|
|
|
|
|
(a) |
|
Includes goodwill and long-lived asset impairments of $239,427
in the Advanced Technology segment and $3,616 in the Industrial
Coating segment. |
|
|
|
(b) |
|
Includes $16,396 of severance and restructuring charges in
fiscal year 2009 and $5,561 in fiscal year 2008. |
|
(c) |
|
Includes notes and accounts receivable net of customer advance
payments and allowance for doubtful accounts, inventories net of
reserves, property, plant and equipment net of accumulated
depreciation and goodwill. |
|
(d) |
|
Corporate assets are principally cash and cash equivalents,
deferred income taxes, investments, capital leases, headquarter
facilities, the major portion of our domestic enterprise
management system, and intangible assets. |
|
(e) |
|
Includes $60 of severance and restructuring charges in fiscal
year 2008 and $410 in fiscal year 2007. |
67
Notes
to Consolidated Financial
Statements (Continued)
We have significant sales and long-lived assets in the following
geographic areas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net external sales
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
235,295
|
|
|
$
|
315,553
|
|
|
$
|
304,834
|
|
Americas
|
|
|
59,900
|
|
|
|
76,860
|
|
|
|
73,564
|
|
Europe
|
|
|
295,952
|
|
|
|
431,583
|
|
|
|
363,385
|
|
Japan
|
|
|
81,944
|
|
|
|
110,891
|
|
|
|
98,233
|
|
Asia Pacific
|
|
|
146,074
|
|
|
|
189,942
|
|
|
|
153,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net external sales
|
|
$
|
819,165
|
|
|
$
|
1,124,829
|
|
|
$
|
993,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-lived assets
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
79,675
|
|
|
$
|
89,618
|
|
|
$
|
87,076
|
|
Americas
|
|
|
1,703
|
|
|
|
1,571
|
|
|
|
1,936
|
|
Europe
|
|
|
15,329
|
|
|
|
18,695
|
|
|
|
22,844
|
|
Japan
|
|
|
3,257
|
|
|
|
3,457
|
|
|
|
3,085
|
|
Asia Pacific
|
|
|
18,327
|
|
|
|
20,502
|
|
|
|
17,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-lived assets
|
|
$
|
118,291
|
|
|
$
|
133,843
|
|
|
$
|
132,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of total segment operating income to total
consolidated income before income taxes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Total profit (loss) for reportable segments
|
|
($
|
127,807
|
)
|
|
$
|
190,338
|
|
|
$
|
152,142
|
|
Interest expense
|
|
|
(7,771
|
)
|
|
|
(16,714
|
)
|
|
|
(21,542
|
)
|
Interest and investment income
|
|
|
492
|
|
|
|
1,250
|
|
|
|
1,505
|
|
Other-net
|
|
|
7,895
|
|
|
|
4,914
|
|
|
|
3,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
($
|
127,191
|
)
|
|
$
|
179,788
|
|
|
$
|
135,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of total assets for reportable segments to
total consolidated assets is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Total assets for reportable segments
|
|
$
|
896,962
|
|
|
$
|
1,169,265
|
|
|
$
|
1,212,335
|
|
Customer advance payments
|
|
|
8,807
|
|
|
|
7,521
|
|
|
|
10,564
|
|
Eliminations
|
|
|
(15,095
|
)
|
|
|
(10,117
|
)
|
|
|
(11,059
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated assets
|
|
$
|
890,674
|
|
|
$
|
1,166,669
|
|
|
$
|
1,211,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 17
|
Goodwill and
other intangible assets
|
Goodwill is the excess of purchase price over the fair value of
tangible and identifiable intangible net assets acquired in
various business combinations. Goodwill is not amortized but is
tested for impairment annually at the reporting unit level, or
more often if indications of impairment exist. The number of
reporting units tested for goodwill impairment increased in
fiscal year 2009 as we tested one level below one of our three
operating segments as a result of the impact of the global
economic downturn. For fiscal year 2009, reporting units are the
Adhesive Dispensing Systems segment, the Industrial Coating
Systems segment, and one level below the operating segment for
the Advanced Technology Systems segment.
68
Notes
to Consolidated Financial
Statements (Continued)
The goodwill impairment test is a two-step process. In the first
step, performed in the fourth quarter of each year, we calculate
a fair value using a discounted cash flow valuation methodology
and compare the result against the carrying value for net assets
of each reporting unit. If the carrying value of a reporting
unit exceeds its fair value, then a second step is performed to
determine if goodwill is impaired. In the second step, a
hypothetical purchase price allocation of the reporting
units assets and liabilities is performed using the fair
value calculated in step one. The difference between the fair
value of the reporting unit and the hypothetical fair value of
assets and liabilities is the implied goodwill amount.
Impairment is recorded if the carrying value of the reporting
units goodwill is higher than its implied goodwill. Based
upon results of step one in fiscal year 2009, the second step of
the goodwill impairment test was performed and we recognized an
impairment charge related to a reduction in the carrying value
of goodwill in the amount of $232,789, relating to six reporting
units as follows: Dage $166,916, Picodostec $7,530, YESTech
$26,149, March Plasma Systems $16,449, UV Curing $12,129, and
Industrial Coating Systems $3,616.
Changes in the carrying amount of goodwill during fiscal year
2009 by operating segment follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adhesive
|
|
|
Advanced
|
|
|
Industrial
|
|
|
|
|
|
|
Dispensing
|
|
|
Technology
|
|
|
Coating
|
|
|
Total
|
|
|
Balance at October 31, 2008
|
|
$
|
32,886
|
|
|
$
|
535,502
|
|
|
$
|
3,545
|
|
|
$
|
571,933
|
|
Adjustments
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
Impairments
|
|
|
|
|
|
|
(229,173
|
)
|
|
|
(3,616
|
)
|
|
|
(232,789
|
)
|
Currency effect
|
|
|
956
|
|
|
|
1,583
|
|
|
|
71
|
|
|
|
2,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 31, 2009
|
|
$
|
33,850
|
|
|
$
|
307,912
|
|
|
$
|
|
|
|
$
|
341,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information regarding intangible assets subject to amortization
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2009
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Net Book Value
|
|
|
Patent costs
|
|
$
|
20,983
|
|
|
$
|
5,242
|
|
|
$
|
15,741
|
|
Customer relationships
|
|
|
25,402
|
|
|
|
5,689
|
|
|
|
19,713
|
|
Noncompete agreements
|
|
|
5,935
|
|
|
|
4,223
|
|
|
|
1,712
|
|
Core/developed technology
|
|
|
2,788
|
|
|
|
1,888
|
|
|
|
900
|
|
Trade name
|
|
|
890
|
|
|
|
|
|
|
|
890
|
|
Other
|
|
|
638
|
|
|
|
620
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
56,636
|
|
|
$
|
17,662
|
|
|
$
|
38,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2008
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Net Book Value
|
|
|
Patent costs
|
|
$
|
20,882
|
|
|
$
|
3,628
|
|
|
$
|
17,254
|
|
Customer relationships
|
|
|
24,166
|
|
|
|
3,330
|
|
|
|
20,836
|
|
Noncompete agreements
|
|
|
5,766
|
|
|
|
3,318
|
|
|
|
2,448
|
|
Core/developed technology
|
|
|
2,788
|
|
|
|
1,654
|
|
|
|
1,134
|
|
Other
|
|
|
1,117
|
|
|
|
1,063
|
|
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
54,719
|
|
|
$
|
12,993
|
|
|
$
|
41,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69
Notes
to Consolidated Financial
Statements (Continued)
Indefinite-lived intangible assets are trademarks and trade
names associated with Dage, Picodostec, YESTech and TAH
Industries. Indefinite-lived intangible assets are not subject
to amortization and need to be tested for impairment annually or
more often if indications of impairment exist. Testing is
performed at the component level with which the asset is
associated. The impairment test consists of a comparison of the
fair value of the intangible asset with its carrying amount. If
the carrying amount of an intangible asset exceeds its fair
value, an impairment charge is recognized in an amount equal to
that excess. After an impairment charge is recognized, the
adjusted carrying amount of the intangible asset becomes its new
accounting basis. Subsequent reversal of a previously recognized
impairment charge is prohibited.
The common valuation technique for trademark and trade names is
the relief from royalty method. The theory is that
these assets relieve the owner from having to pay a hypothetical
royalty attributable to an exclusive license for selling
products under the trademark or trade name. The value of the
hypothetical exclusive license is based upon the present value
of a stream of hypothetical royalty payments, using assumptions
for revenue growth (the same as for goodwill testing), discount
rates (slightly more risk premium than for goodwill testing),
royalty rates (based on market data), and tax amortization
benefits (based upon statutory guidance).
The conclusion of this testing resulted in impairment charges
totaling $8,282 as follows by reporting unit: Dage $5,365,
Picodostec $157, YESTech $350, and TAH Industries $2,410. The
charge for the TAH trade name is due to our branding program,
under which TAH product lines are being integrated into and
marked as Nordson EFD over the next several years.
Accordingly, the TAH trade name has been converted to a
finite-lived asset.
At October 31, 2009 and 2008, $3,170 and $12,148,
respectively, of trademark and trade name intangible assets were
not subject to amortization.
Amortization expense for fiscal years 2009 and 2008 was $5,100
and $5,797, respectively. Estimated amortization expense for
each of the five succeeding fiscal years follows:
|
|
|
|
|
Fiscal Year
|
|
Amounts
|
|
2010
|
|
$
|
5,371
|
|
2011
|
|
$
|
4,919
|
|
2012
|
|
$
|
4,349
|
|
2013
|
|
$
|
3,948
|
|
2014
|
|
$
|
3,358
|
|
|
|
Note 18
|
Fair value
measurements
|
In the first quarter of fiscal year 2009, we adopted a FASB
statement regarding fair value measurements with respect to
financial instruments. This standard provides a common
definition of fair value and establishes a framework to make the
measurement of fair value in generally accepted accounting
principles more consistent and comparable. It also requires
expanded disclosures to provide information about the extent to
which fair value is used to measure assets and liabilities, the
methods and assumptions used to measure fair value, and the
effect of fair value measures on earnings. The adoption did not
impact our results of operations or financial position. In
February 2008, the FASB issued an update that permits a one-year
deferral of the original standard for all non-financial assets
and non-financial liabilities, except those that are recognized
or disclosed at fair value in the financial statements on a
recurring basis (at least annually).
The inputs to the valuation techniques used to measure fair
value are classified into the following categories:
Level 1: Quoted market prices in active markets for
identical assets or liabilities.
Level 2: Observable market based inputs or unobservable
inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by
market data.
70
Notes
to Consolidated Financial
Statements (Continued)
The following table presents the classification of our financial
assets and liabilities measured at fair value on a recurring
basis at October 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rabbi
trust(a)
|
|
$
|
13,126
|
|
|
$
|
|
|
|
$
|
13,126
|
|
|
$
|
|
|
Forward exchange
contracts(b)
|
|
|
4,028
|
|
|
|
|
|
|
|
4,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
17,154
|
|
|
$
|
|
|
|
$
|
17,154
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation
plans(c)
|
|
$
|
20,057
|
|
|
$
|
20,057
|
|
|
$
|
|
|
|
$
|
|
|
Forward exchange
contracts(b)
|
|
|
345
|
|
|
|
|
|
|
|
345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value
|
|
$
|
20,402
|
|
|
$
|
20,057
|
|
|
$
|
345
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
We maintain a rabbi trust that serves as an investment to shadow
our deferred compensation plan liability. The investment assets
of the trust consist of life insurance policies for which we
recognize income or expense based upon changes in cash surrender
value. |
|
(b) |
|
We enter into foreign currency forward contracts to reduce the
risk of foreign currency exposures resulting from receivables,
payables, intercompany receivables, intercompany payables and
loans denominated in foreign currencies. The maturities of these
contracts are usually less than 90 days. Foreign exchange
contracts are valued using market exchange rates. |
|
(c) |
|
Senior management and other highly compensated employees may
defer up to 100 percent of their salary and incentive
compensation into various non-qualified deferred compensation
plans. Deferrals can be allocated to various market performance
measurement funds. Changes in the value of compensation deferred
under these plans are recognized each period based on the fair
value of the underlying measurement funds. |
We had no financial assets and liabilities measured at fair
value on a non-recurring basis as of October 31, 2009.
|
|
Note 19
|
Quarterly
financial data (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
Fiscal year 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
186,608
|
|
|
$
|
188,840
|
|
|
$
|
206,273
|
|
|
$
|
237,444
|
|
Gross margin
|
|
|
107,237
|
|
|
|
102,883
|
|
|
|
121,737
|
|
|
|
137,069
|
|
Net income (loss)
|
|
|
11,156
|
|
|
|
13,843
|
|
|
|
23,979
|
|
|
|
(209,033
|
)
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
.33
|
|
|
|
.41
|
|
|
|
.71
|
|
|
|
(6.22
|
)
|
Diluted
|
|
|
.33
|
|
|
|
.41
|
|
|
|
.71
|
|
|
|
(6.22
|
)
|
Fiscal year 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
244,689
|
|
|
$
|
294,116
|
|
|
$
|
288,362
|
|
|
$
|
297,662
|
|
Gross margin
|
|
|
139,859
|
|
|
|
165,873
|
|
|
|
162,439
|
|
|
|
162,264
|
|
Net income
|
|
|
21,339
|
|
|
|
33,049
|
|
|
|
32,370
|
|
|
|
30,746
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
.63
|
|
|
|
.99
|
|
|
|
.95
|
|
|
|
.91
|
|
Diluted
|
|
|
.62
|
|
|
|
.97
|
|
|
|
.93
|
|
|
|
.90
|
|
The sum of the per-share amounts for the four quarters of fiscal
years 2009 and 2008 do not equal the annual per-share amounts
due to differences in the average number of shares outstanding
during the respective periods.
71
Notes
to Consolidated Financial
Statements (Continued)
Pre-tax goodwill and long-lived asset impairments of $243,043
were recognized in the fourth quarter of fiscal year 2009.
During the first quarter of fiscal year 2009, a gain of $5,036
related to the sale of real estate was recorded. Pretax
severance and restructuring costs of $8,064, $5,054, $977 and
$2,301 were recognized in the first, second, third and fourth
quarters, respectively, of fiscal year 2009.
Pretax severance and restructuring costs of $92, $(32), $240 and
$5,321 were recognized in the first, second, third and fourth
quarters, respectively, of fiscal year 2008.
We are involved in pending or potential litigation regarding
environmental, product liability, patent, contract, employee and
other matters arising from the normal course of business.
Including the environmental matter discussed below, it is our
opinion, after consultation with legal counsel, that resolutions
of these matters are not expected to result in a material effect
on our financial condition, quarterly or annual operating
results or cash flows.
Environmental We have voluntarily agreed with the
City of New Richmond, Wisconsin and other Potentially
Responsible Parties (PRPs) to share costs associated with the
remediation of the City of New Richmond municipal landfill (the
Site) and constructing a potable water delivery
system serving the impacted area down gradient of the Site.
The Feasibility Study / Remedial Investigation for
this project was completed and approved by the Wisconsin
Department of Natural Resources (WDNR) in September 2006. In the
fourth quarter of fiscal year 2007, the PRPs signed an
Environmental Repair Contract with the WDNR. At that time, the
estimated cost to us for Site remediation, constructing a
potable water delivery system and ongoing operation, maintenance
and monitoring (OM&M) at the Site and the impacted area
down gradient of the Site over the statutory monitoring period
of 30 years was $3,008. At October 31, 2007, we
recorded $1,858 in other current liabilities, and the remaining
amount of $1,150 was classified as long-term. During fiscal year
2008, $1,858 was paid in fulfillment of our obligation to fund a
portion of the estimated cost of site remediation, construction
of the potable water delivery system and one year of OM&M.
During fiscal year 2009, an additional payment of $265 was made,
leaving a balance for the remaining OM&M obligation of
$885. This amount was reported in other long-term liabilities at
October 31, 2009.
During fiscal year 2008, agreements were reached with seven
insurance companies that resulted in reimbursement to us of
$1,863 for costs related to this remediation project. The
reimbursements are recorded as offsets to selling and
administrative expenses.
The liability for environmental remediation represents
managements best estimate of the probable and reasonably
estimable undiscounted costs related to known remediation
obligations. The accuracy of our estimate of environmental
liability is affected by several uncertainties such as
additional requirements that may be identified in connection
with remedial activities, the complexity and evolution of
environmental laws and regulations, and the identification of
presently unknown remediation requirements. Consequently, our
liability could be greater than our current estimate. However,
we do not expect that the costs associated with remediation will
have a material adverse effect on our financial condition or
results of operations.
|
|
Note 21
|
Subsequent
events
|
Effective with the third quarter of fiscal year 2009, we adopted
a FASB statement that establishes general standards of
accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued.
The adoption did not impact our financial position or results of
operations. We evaluated all events or transactions that
occurred after October 31, 2009 through December 18,
2009, the date we issued these financial statements. During this
period we did not have any material recognizable or
non-recognizable subsequent events.
72
Managements
Report on Internal Control Over Financial Reporting
The management of Nordson Corporation is responsible for
establishing and maintaining adequate internal control over
financial reporting.
Using criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework, Nordsons management assessed
the effectiveness of our internal control over financial
reporting as of October 31, 2009.
Based on our assessment, management concluded that our internal
control over financial reporting was effective as of
October 31, 2009.
Nordsons independent auditors, Ernst & Young
LLP, have issued an audit report on the effectiveness of our
internal control over financial reporting as of October 31,
2009. This report is included herein.
|
|
|
/s/ Edward
P. Campbell
|
|
/s/ Gregory
A. Thaxton
|
|
|
|
Chairman of the Board, President and
|
|
Vice President, Chief Financial Officer
|
Chief Executive Officer
|
|
December 18, 2009
|
December 18, 2009
|
|
|
73
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Nordson Corporation
We have audited Nordson Corporations internal control over
financial reporting as of October 31, 2009, based on
criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (the COSO criteria). Nordson
Corporations management is responsible for maintaining
effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting included in the accompanying
Managements Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the
companys internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Nordson Corporation maintained, in all material
respects, effective internal control over financial reporting as
of October 31, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheet of Nordson Corporation and
subsidiaries as of October 31, 2009 and 2008, and the
related consolidated statements of income, shareholders
equity, and cash flows for each of the three years in the period
ended October 31, 2009 of Nordson Corporation and our
report dated December 18, 2009 expressed an unqualified
opinion thereon.
Cleveland, Ohio
December 18, 2009
74
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Nordson Corporation
We have audited the accompanying consolidated balance sheets of
Nordson Corporation and subsidiaries as of October 31, 2009
and 2008, and the related consolidated statements of income,
shareholders equity, and cash flows for each of the three
years in the period ended October 31, 2009. Our audits also
included the financial statement schedule listed in the Index at
Item 15(a)(2) and (c). These financial statements and
schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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 and subsidiaries at
October 31, 2009 and 2008, and the consolidated results of
their operations and their cash flows for each of the three
years in the period ended October 31, 2009, in conformity
with U.S. generally accepted accounting principles. Also,
in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the
information set forth therein.
As discussed in Note 3 to the consolidated financial
statements, the Company adopted the recognition and measurement
date provisions, respectively, originally issued in FASB
Statement No. 158, Employers Accounting for
Defined Benefit Pension and Other Post Retirement Plans, an
amendment to FAS 87, 88, 106 and 132(R) (codified in
FASB ASC Topic 715, Compensation Retirement
Benefits) effective October 31, 2007.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
effectiveness of Nordson Corporations internal control
over financial reporting as of October 31, 2009, based on
criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated December 18, 2009
expressed an unqualified opinion thereon.
Cleveland, Ohio
December 18, 2009
75
|
|
Item 9.
|
Changes
in and Disagreements With Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
(a) Evaluation of disclosure controls and
procedures. Our management, with the participation of the
principal executive officer (chairman, president and chief
executive officer) and the principal financial officer (vice
president, chief financial officer), has reviewed and evaluated
our disclosure controls and procedures (as defined in the
Securities Exchange Act
Rule 13a-15e)
as of October 31, 2009. Based on that evaluation, our
management, including the principal executive and financial
officers, has concluded that our disclosure controls and
procedures were effective as of October 31, 2009 in
ensuring that information required to be disclosed in the
reports that we file or submit under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms and
is accumulated and communicated to our management, including the
principal executive officer and the principal financial officer,
as appropriate to allow timely decisions regarding required
disclosure.
(b) Managements report on internal control over
financial reporting. The Report of Management on Internal
Control over Financial Reporting and the Report of Independent
Registered Public Accounting Firm thereon are set forth in
Part II, Item 8 of this Annual Report on
Form 10-K.
(c) Changes in internal control over reporting.
There were no changes in our internal controls over financial
reporting that occurred during the fourth quarter of the fiscal
year ended October 31, 2009 that have materially affected,
or are reasonably likely to materially affect, our internal
control over financial reporting.
|
|
Item 9B.
|
Other
Information
|
None.
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
The information required by this Item is incorporated by
reference to the captions Election of Directors and
Section 16(a) Beneficial Ownership Reporting
Compliance of our definitive Proxy Statement for the 2010
Annual Meeting of Shareholders. Information regarding Audit
Committee financial experts is incorporated by reference to the
caption Election of Directors of our definitive
Proxy Statement for the 2010 Annual Meeting of Shareholders.
Our executive officers 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 is contained in
Part I of this report under the caption Executive
Officers of the Company.
We have adopted a code of ethics for all employees and
directors, including the principal executive officer, other
executive officers, principal finance officer and other finance
personnel. A copy of the code of ethics is available free of
charge on our Web site at
http://www.nordson.com/Corporate/Governance/.
We intend to satisfy our disclosure requirement under
Item 5.05 of
Form 8-K
regarding any amendment to or waiver of a provision of our code
of ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or
controller or persons performing similar functions and that
relates to any element of the code of ethics definition
enumerated in Item 406(b) of
Regulation S-K
by posting such information on our Web site.
76
|
|
Item 11.
|
Executive
Compensation
|
The information required by this Item is incorporated by
reference to the captions Directors Compensation for
Fiscal Year 2009, Summary Compensation for Fiscal
Year 2009, Grants of Plan-Based Awards for Fiscal
Year 2009, Option Exercises and Stock Vested for
Fiscal Year 2009, Pension Benefits for Fiscal Year
2009, Nonqualified Deferred Compensation for Fiscal
Year 2009 and Potential Payments Upon Termination or
Change of Control in our definitive Proxy Statement for
the 2010 Annual Meeting of Shareholders.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The information required by this Item is incorporated by
reference to the caption Ownership of Nordson Common
Shares in our definitive Proxy Statement for the 2010
Annual Meeting of Shareholders.
Equity
Compensation Table
The following table sets forth information regarding equity
compensation plans in effect as of October 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
|
|
remaining available for
|
|
|
|
|
|
|
|
|
|
future issuance under
|
|
|
|
Number of securities to be
|
|
|
Weighted-average
|
|
|
equity compensation plans
|
|
|
|
issued upon exercise of
|
|
|
exercise price of
|
|
|
(excluding securities
|
|
|
|
outstanding options,
|
|
|
outstanding options,
|
|
|
reflected in first reporting
|
|
Plan category
|
|
warrants and rights
|
|
|
warrants and rights
|
|
|
column)
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,799
|
|
|
$
|
35.30
|
|
|
|
842
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,799
|
|
|
$
|
35.30
|
|
|
|
842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The number of Common Shares available for grant is
2.5 percent of the number of Common Shares outstanding as
of the first day of each fiscal year.
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
The information required by this Item is incorporated by
reference to the caption Review of Transactions with
Related Persons in our definitive Proxy Statement for the
2010 Annual Meeting of Shareholders.
William D. Ginn, a director of Nordson, is a retired partner
with the law firm of Thompson Hine LLP. Thompson Hine LLP has in
the past provided and continues to provide legal services to us.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
The information required by this Item is incorporated by
reference to the caption Independent Auditors in our
definitive Proxy Statement for the 2010 Annual Meeting of
Shareholders.
77
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedule
|
(a)(1).
Financial Statements
The financial statements listed in the accompanying index to
financial statements are included in Part II, Item 8.
(a)(2)
and (c). Financial Statement Schedule
Schedule II Valuation and Qualifying Accounts and Reserves
for each of the three years in the period ending
October 31, 2009.
No other 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 (b). Exhibits
The exhibits listed on the accompanying index to exhibits are
filed as part of this Annual Report on
Form 10-K.
78
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: December 18, 2009
By:
/s/ Gregory
A. Thaxton
Gregory A. Thaxton
Vice President, Chief Financial Officer
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/ Edward
P. Campbell
Edward
P. Campbell
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
|
|
December 18, 2009
|
|
|
|
/s/ Gregory
A. Thaxton
Gregory
A. Thaxton
Vice President, Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
|
|
December 18, 2009
|
|
|
|
/s/ Randolph
W. Carson
Randolph
W. Carson
Director
|
|
December 18, 2009
|
|
|
|
/s/ William
D. Ginn
William
D. Ginn
Director
|
|
December 18, 2009
|
|
|
|
/s/ Stephen
R. Hardis
Stephen
R. Hardis
Director
|
|
December 18, 2009
|
|
|
|
/s/ Dr. David
W. Ignat
Dr. David
W. Ignat
Director
|
|
December 18, 2009
|
|
|
|
/s/ Joseph
P. Keithley
Joseph
P. Keithley
Director
|
|
December 18, 2009
|
|
|
|
/s/ William
P. Madar
William
P. Madar
Director
|
|
December 18, 2009
|
79
Signatures Continued
|
|
|
|
|
|
|
|
|
|
/s/ Michael
J. Merriman, Jr.
Michael
J. Merriman, Jr.
Director
|
|
December 18, 2009
|
|
|
|
/s/ Mary
G. Puma
Mary
G. Puma
Director
|
|
December 18, 2009
|
|
|
|
/s/ William
L. Robinson
William
L. Robinson
Director
|
|
December 18, 2009
|
|
|
|
/s/ Benedict
P. Rosen
Benedict
P. Rosen
Director
|
|
December 18, 2009
|
80
Schedule II
Valuation and Qualifying Accounts and Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
Assumed
|
|
|
|
|
|
|
|
Balance
|
|
|
Beginning
|
|
from
|
|
Charged to
|
|
|
|
Currency
|
|
at End
|
|
|
of Year
|
|
Acquisitions
|
|
Expense
|
|
Deductions
|
|
Effects
|
|
of Year
|
|
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
$
|
3,665
|
|
|
|
229
|
|
|
|
1,147
|
|
|
|
1,089
|
|
|
|
350
|
|
|
$
|
4,302
|
|
Fiscal 2008
|
|
$
|
4,302
|
|
|
|
|
|
|
|
413
|
|
|
|
1,393
|
|
|
|
(255
|
)
|
|
$
|
3,067
|
|
Fiscal 2009
|
|
$
|
3,067
|
|
|
|
|
|
|
|
1,998
|
|
|
|
1,654
|
|
|
|
317
|
|
|
$
|
3,728
|
|
Inventory Obsolescence and Other Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
$
|
8,576
|
|
|
|
2,156
|
|
|
|
2,896
|
|
|
|
2,252
|
|
|
|
989
|
|
|
$
|
12,365
|
|
Fiscal 2008
|
|
$
|
12,365
|
|
|
|
60
|
|
|
|
5,492
|
|
|
|
3,092
|
|
|
|
(1,692
|
)
|
|
$
|
13,133
|
|
Fiscal 2009
|
|
$
|
13,133
|
|
|
|
|
|
|
|
5,654
|
|
|
|
4,234
|
|
|
|
1,187
|
|
|
$
|
15,740
|
|
Warranty Accrual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
$
|
4,917
|
|
|
|
603
|
|
|
|
5,702
|
|
|
|
5,845
|
|
|
|
480
|
|
|
$
|
5,857
|
|
Fiscal 2008
|
|
$
|
5,857
|
|
|
|
|
|
|
|
6,070
|
|
|
|
6,048
|
|
|
|
(543
|
)
|
|
$
|
5,336
|
|
Fiscal 2009
|
|
$
|
5,336
|
|
|
|
|
|
|
|
3,824
|
|
|
|
4,913
|
|
|
|
340
|
|
|
$
|
4,587
|
|
81
NORDSON
CORPORATION
Index to
Exhibits
(Item 15(a) (3))
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
(3)
|
|
Articles of Incorporation and By-Laws
|
3-a
|
|
1989 Amended Articles of Incorporation (incorporated herein by
reference to
Exhibit 3-a
to Registrants Annual Report on
Form 10-K
for the year ended October 30, 2005)
|
3-b
|
|
1998 Amended Regulations (incorporated herein by reference to
Exhibit 3-b
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2004)
|
(4)
|
|
Instruments Defining the Rights of Security Holders, including
indentures
|
4-a
|
|
$400 million Credit Agreement between Nordson Corporation
and various financial institutions (incorporated herein by
reference to Exhibit 10.1 to Registrants
Form 8-K
dated July 16, 2007)
|
4-b
|
|
$100 million Senior Note Purchase Agreement between Nordson
Corporation and various insurance companies (incorporated herein
by reference to
Exhibit 4-c
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2006)
|
4-c
|
|
Note Purchase and Private Shelf Agreement dated
February 22, 2008 (incorporated herein by reference to
Exhibit 10.1 to Registrants
Form 8-K
dated February 25, 2008)
|
(10)
|
|
Material Contracts
|
10-a
|
|
Amended and Restated Nordson Corporation 2004 Management
Incentive Compensation Plan (incorporated herein by reference to
Exhibit 10.1 to Registrants
Form 8-K
dated February 25, 2008)*
|
10-b
|
|
Nordson Corporation Deferred Compensation Plan (incorporated
herein by reference to
Exhibit 10-b
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2006)*
|
10-b-1
|
|
Nordson Corporation 2005 Deferred Compensation Plan
(incorporated herein by reference to
Exhibit 10-1
to Registrants
Form 10-Q
for the quarter ended January 30, 2005)*
|
10-b-2
|
|
Nordson Corporation 2005 Deferred Compensation Plan (as Amended
and Restated Effective January 1, 2009) (incorporated
herein by reference to
Exhibit 10.01-a
to Registrants
Form 8-K
dated December 16, 2008)*
|
10-c
|
|
Indemnity Agreement (incorporated herein by reference to
Exhibit 10-c
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2007)*
|
10-d
|
|
Restated Nordson Corporation Excess Defined Contribution
Retirement Plan*
|
10-d-1
|
|
First Amendment to Nordson Corporation Excess Defined
Contribution Retirement Plan (incorporated herein by reference
to
Exhibit 10-d-1
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2006)*
|
10-d-2
|
|
Nordson Corporation 2005 Excess Defined Contribution Benefit
Plan (incorporated herein by reference to
Exhibit 10-d-2
to Registrants Annual Report on
Form 10-K
for the year ended October 30, 2005)*
|
10-d-3
|
|
Nordson Corporation 2005 Excess Defined Contribution Retirement
Plan (as Amended and Restated Effective January 1, 2009)
(incorporated herein by reference to
Exhibit 10.01-c
to Registrants
Form 8-K
dated December 16, 2008)*
|
10-e
|
|
Nordson Corporation Excess Defined Benefit Pension Plan*
|
10-e-1
|
|
Second Amendment to Nordson Corporation Excess Defined Benefit
Pension Plan (incorporated herein by reference to
Exhibit 10-e-1
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2006)*
|
10-e-2
|
|
Nordson Corporation 2005 Excess Defined Benefit Pension Plan
(incorporated herein by reference to
Exhibit 10-2
to Registrants
Form 10-Q
for the quarter ended January 30, 2005)*
|
10-e-3
|
|
Nordson Corporation 2005 Excess Defined Benefit Pension Plan (as
Amended and Restated Effective January 1, 2009)
(incorporated herein by reference to
Exhibit 10.01-b
to Registrants
Form 8-K
dated December 16, 2008)*
|
82
Index to
Exhibits Continued
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
10-f
|
|
Employment Agreement between the Registrant and Edward P.
Campbell (incorporated herein by reference to
Exhibit 10-f
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2004)*
|
10-g
|
|
Nordson Corporation 1993 Long-Term Performance Plan, as amended
March 12, 1998 Agreement (incorporated herein by reference
to
Exhibit 10-g
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2008)*
|
10-g-1
|
|
Amended and Restated Nordson Corporation 2004 Long-Term
Performance Plan (incorporated herein by reference to
Exhibit 10.2 to Registrants
Form 8-K
dated February 25, 2008)*
|
10-h
|
|
Nordson Corporation Assurance Trust Agreement (incorporated
herein by reference to
Exhibit 10-h
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2004)*
|
10-h-1
|
|
Employment Agreement (Change in Control) between the Registrant
and Edward P. Campbell (incorporated herein by reference to
Exhibit 10-h-1
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2004)*
|
10-h-2
|
|
Amended Employment Agreement (Change in Control) between the
Registrant and Edward P. Campbell (incorporated herein by
reference to Exhibit 10.3 to Registrants
Form 8-K
dated December 16, 2008)*
|
10-h-3
|
|
Supplemental Pension and Severance Benefits Arrangement with
Edward P. Campbell between the Registrant and Edward P. Campbell
(incorporated herein by reference to Exhibit 10.4 to
Registrants
Form 8-K
dated December 16, 2008)*
|
10-h-4
|
|
Form of Employment Agreement (Change in Control) between the
Registrant and Officers excluding Edward P. Campbell
(incorporated herein by reference to
Exhibit 10-h-2
to Registrants Annual Report on
Form 10-K
for the year ended October 31, 2004)*
|
10-h-5
|
|
Form of Change in Control Retention Agreement between the
Registrant and Executive Officers (incorporated herein by
reference to Exhibit 10.2 to Registrants
Form 8-K
dated December 16, 2008)*
|
10-i
|
|
Stock Redemption Agreement between the Registrant and
Russell L. Bauknight dated August 26, 2005 (incorporated
herein by reference to
Exhibit 10-i
to Registrants Annual Report on
Form 10-K
for the year ended October 30, 2005)
|
10-j
|
|
Compensation Committee Rules of the Nordson Corporation 2004
Long Term Performance Plan governing directors deferred
compensation (incorporated herein by reference to
Exhibit 10-3
to Registrants
Form 10-Q
for the quarter ended January 30, 2005)*
|
10-l
|
|
Stock Purchase Agreement between John Greasley, Nordson
Corporation and Dage Holdings Limited (incorporated herein by
reference to Exhibit 99.3(b) to Registrants
Form 8-K
dated December 19, 2006)
|
(21)
|
|
Subsidiaries of the Registrant
|
(23)
|
|
Consent of Independent Registered Public Accounting Firm
|
31.1
|
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934 by the Chief Executive Officer,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934 by the Chief Financial Officer,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
|
Certification of CEO pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
32.2
|
|
Certification of CFO pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
(99)
|
|
Additional Exhibits
|
99-a
|
|
Form S-8
Undertakings (Nos.
33-18309 and
33-33481)
|
*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.
83