SECURITIES AND EXCHANGE COMMISSION
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
2020
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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Securities registered pursuant to Section 12(b) of the Act:
Common Shares, without par value
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| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered | ||||||
| Common Shares, without par value | NDSN | Nasdaq Stock Market LLC | ||||||
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
| Large accelerated filer |
| Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||
Emerging growth company | ☐ | ||||||||||
$8,999,983,246.
2020.
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2020.
Vention Acquisition
On
profitable growth. The revised segments better reflect how we manage the Company, allocate resources, and assess performance of the businesses.
Although every
We create benefits for The primary goals of our acquisition strategy are to complement our current capabilities, diversify our business into new industry sectors and with new customers through a Packageand expand the scope 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 commitmentsolutions we can offer to deliver what was promised.
our customers.
Nordson Corporation 4
For more information, see "Human Capital Resources" below.
We drive continuous improvement in all areas of the company through the Nordson Business System (NBS), our collected set of tools and best practices. Rooted in Lean Six Sigma methodologies, the NBS is applied throughout all business units and corporate functions. Closely tied to the NBS are a set of key performance indicators that help define and measure progress toward corporate goals. The NBS is underpinned by our timeless corporate values of customer passion, energy, excellence, integrity and respect for people.
Financial Information About Operating Segments, Foreign and Domestic Operations and Export Sales
In accordance with generally accepted accounting principles, we have reported information about our three operating segments, including information about our foreign and domestic operations. This information is contained in Note 16 of Notes to Consolidated Financial Statements, which can be found in Part II, Item 8 of this Annual Report.
We serve a broad customer base, both in terms of industries and geographic regions. In 2020, no single customer accounted for ten percent or more of sales.
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•Nonwovens – Dispensing, coating and laminating systems for applying adhesives, lotions, liquids and fibers to disposable products and continuous roll goods. 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.
•Packaging – Automated adhesive dispensing systems used in the rigid packaged goods industries. Key strategic markets include food and beverage packaging, pharmaceutical packaging, and other consumer goods packaging.
•Polymer Processing – Components and systems used in the thermoplastic melt stream in plastic extrusion, injection molding, compounding, polymerization and recycling processes. Key strategic markets include flexible packaging, electronics, medical, building and construction, transportation and aerospace, and general consumer goods.
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This segment integrates our proprietary product technologies found in progressive stages of a customer’s production process, such as surface treatment, precisely controlled automated, semi-automated or manual dispensing of material, and post-dispense bond testing, optical inspection and x-ray inspection to ensure quality. Related single-use plastic molded syringes, cartridges, tips, tubing and fluid connection components are used to dispense or control fluids in production processes or within customers’ end products. This segment primarily serves the specific needs of electronics, medical and related high-tech industries.
Electronics Systems - Automated dispensing systems for high-speed, accurate application of a broad range of attachment, protection and coating fluids, and related gas plasma treatment systems for cleaning and conditioning surfaces prior to dispense. Key strategic markets include mobile phones, tablets, personal computers, wearable technology, liquid crystal displays, micro hard drives, microprocessors, printed circuit boards, micro-electronic mechanical systems (MEMS),appliances, automotive components, building and semiconductor packaging.
Fluid Management – Precision manual and semi-automated dispensers, minimally invasive interventional delivery devices, and highly engineered single-use plastic molded syringes, cartridges, tips, fluid connection components, tubing and catheters. Products are used for applying and controlling the flow of adhesives, sealants, lubricants, and biomaterials in critical industrial production processes and within medical equipment and related surgical procedures. Key strategic markets include consumer goods, electronics, industrial assembly, and medical.
Test and Inspection - Bond testing and automated optical and x-ray inspection systems used in the semiconductor and printed circuit board industries. Key strategic markets include mobile phones, tablets, personal computers, wearable technology, liquid crystal displays, micro hard drives, microprocessors, printed circuit boards, MEMS, and semiconductor packaging.
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This segment provides both standard and highly-customized equipment used primarily for applying coatings, paint, finishes, sealants and other materials, and for curing and drying of dispensed material. This segment primarily serves the consumer durables market.
•Cold Materials – Automated and manual dispensing products and systems used to apply multiple component adhesive and sealant materials in the general industrial and transportation manufacturing industries. Key strategic markets include aerospace, alternative energy,electric battery, appliances, automotive, building and construction, composites, electronics and medical.
•Container Coating – Automated and manual dispensing and curing systems used to coat and cure containers. Key strategic markets include beverage containers and food cans.
•Curing and Drying Systems – Ultraviolet equipment used primarily in curing and drying operations for specialty coatings, semiconductor materials and paints. Key strategic markets include electronics, containers and durable goods products.
•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, agriculture, construction, metal shelving and drums.
•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, pipe coating, and wood and metal shelving.
and Other Resources
We purchase most raw materials and other components on the open market and rely on third parties to provide certain finished goods. While these items are generally available from multiple sources, the cost of products sold may be affected by changes in the market price of raw materials and tariffs on certain raw materials, particularly imports from China, as well as disruptions in availability of raw materials, components and sourced finished goods.
"
Nordson Corporation 7
Our backlog of open orders increased to approximately $402,000 at October 31, 2017 from approximately $278,000 at October 31, 2016, inclusive of approximately 28.0 percent organic growth and 17.0 percent growth due to acquisitions. The increase is primarily due to growth within the Advanced Technology Systems segment. The amounts for both years were calculated based upon exchange rates in effect at October 31, 2017. All orderseconomic conditions in the 2017 year-end backlog are expected to be shipped to customersU.S. and abroad, as well as fluctuations in 2018.
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.
currency exchange rates. Our equipment is sold in competition with a wide variety of alternative bonding, sealing, finishing, coating, processing, testing, inspecting and fluid control techniques. Potential uses for our equipment include any production processes that require preparation, modification or curing of surfaces; dispensing, application, processing or control of fluids and materials; or testing and inspecting for quality.
Investments The impact of tariffs over our end markets in research and development are important toAsia could negatively affect our long-term growth, enabling usmarket position in that region.
risk assessments, as well as an ethics helpline reporting system.
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extent the COVID-19 pandemic adversely affects our business, results of operations or financial condition, it may heighten other risks described in this “Risk Factors” section below.
Any
If we fail to develop new products, We cannot predict the strength or our customers do not acceptduration of the new products we develop, our revenuecurrent economic slowdown and profitabilityinstability or the timing of any recovery.
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 leading provider of precision technology solutions forimpacted by uncertainty in U.S. trade policy, including uncertainty surrounding changes in tariffs, trade agreements or other trade restrictions imposed by the industrial equipment market. We also believe that we must continueU.S. or other governments.
Our growth strategy includes acquisitions, and we may not be able to executealso have significant impacts on our acquisition strategyresults. We cannot predict what further action may be taken with respect to tariffs or integrate acquisitions successfully.
Our recent historical growth has depended,trade relations between the U.S. and our future growth is likely to continue to depend,other governments, and any further changes in part on our acquisition strategy and the successful integration of acquired businesses into our existing operations. In March 2017, we completed the acquisition of Vention, a leading designer, developer and manufacturer of minimally invasive interventional delivery devices, catheters and advanced components for the global medical technology market. Failure to achieve the anticipated benefits of the Vention acquisition could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy andU.S. or international trade policy could have an adverse effectimpact on our business. Further, the acquired company’s business, financial condition, operating resultslevel of impact
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 we will be able to successfully identify suitable acquisition opportunities, prevail against competing potential acquirers, negotiate appropriate acquisition terms, obtain financing thatothers thereto may be needed to
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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.
The success of our acquisition strategy 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 management’s 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;
have significant adverse effects on existing business relationships with suppliers or customers;
the risks associated with the assumption of product liabilities, contingent or undisclosed liabilities of acquisition targets; and
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, pre-acquisition potential tax liabilities, acquisition expenses, the amortization of acquisition-acquired assets, or possible future impairments of goodwill or intangible assets associated with the acquisition.
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.
Increased IT security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions and services.
Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. While we attempt to mitigate these risks by employing a number of measures, including employee training, comprehensive monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, products, solutions and services remain potentially vulnerable to advanced persistent threats. Depending on their nature and scope, such threats could potentially lead to the compromising of confidential information, including but not limited to confidential information relating to customer or employee data, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions, which in turn could adversely affect our reputation, competitiveness and results of operations.
The interpretation and application of data protection laws, including federal, state and international laws, relating to the collection, use, retention, disclosure, security and transfer of personally identifiable data in the U.S., Europe (including but not limited to the General Data Protection Regulation), and elsewhere, are uncertain and evolving. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. Complying with these laws may cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.
Significant movements in foreign currency exchange rates or change in monetary policy may harm our financial results.
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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. For example, uncertainty surrounding the announcementimpact of the COVID-19 pandemic and the effects of Brexit and subsequent steps taken by Britain to begin withdrawal from the European Unionhave caused increased volatility in global currency exchange rate fluctuationsrates that have resulted in the strengthening of the United States dollar against the foreign currencies in which we conduct business. Future adverse consequences arising from the COVID-19 pandemic and Brexit may include continued volatility in exchange rates. Any significant fluctuation in exchange rates may be harmful to our financial condition and results of operations. 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
Any impairment
Our total assets reflect substantial intangible assets, primarily goodwill. The goodwill results from our acquisitions and represents the excess of cost over the fair value of the identifiable net assets we acquired. We assess at least annually whether there has been any impairment in the value of our intangible assets. If future operating performance at one or more of our business units were to fall significantly below current levels, if competing or alternative technologies emerge, if market conditions for acquired businesses decline, if significant and prolonged negative industry or economic trends exist, if our stock price and market capitalization declines, or if future cash flow estimates decline,and to reduce costs. The Company commits significant resources to identify, develop and retain key employees to ensure uninterrupted leadership and direction. If we could incur, under current applicable accounting rules, a non-cash chargeare unable to operating earnings for goodwill impairment. Any determination requiringsuccessfully manage these and other organizational changes, the write-off of a significant portion of unamortized intangible assets would negatively affectability to complete such activities and realize anticipated synergies or cost savings as well as our results of operations and equity book value, the effect of whichfinancial condition could be material.
Changesmaterially adversely affected. We cannot offer assurances that any of these initiatives will be beneficial to the extent anticipated, or that the estimated efficiency improvements, incremental cost savings or cash flow improvements will be realized as anticipated or at all.
A cyber-attack or other disruption may also result in financial loss, including potential fines for failure to safeguard data or losses in connection with any litigation that may result from a cyber-attack. Our insurance coverage may not be adequate to cover all the costs arising from such events.
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may require us to pay substantial royalties. Even if infringement claims against us are without merit, defending these types of lawsuits takes significant time, may be expensive and may divert management attention from other business concerns.
•borrow money or guarantee the debts of others;
•use assets as security in other transactions;
•make restricted payments or distributions; and
•sell or acquire assets or merge with or into other companies.
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Failure to retain our existing senior management team or Additionally, the inability to attract and retain qualified personnel could hurt our business and inhibit our ability to operate and grow successfully.
Our success will continue to depend to a significant extentinterest rates on the continued servicesome of our executive management team anddebt is tied to LIBOR. In July 2017, the abilityhead of the United Kingdom’s Financial Conduct Authority announced its intention to recruit, hire and retain other key management personnelphase out the use of LIBOR by the end of 2023. The uncertainty regarding the future of LIBOR, as well as the transition from LIBOR to support our growth and operational initiatives and replace executives who retireanother benchmark rate or resign. Failure to retain our leadership team and attract and retain other important management and technical personnelrates could place a constrainthave adverse impacts on our global growthoutstanding debt and operational initiatives, possibly resulting in inefficientnotes payable that currently use LIBOR as a benchmark rate, and ineffective management and operations, which would likely harm our revenues, operations and product development efforts and eventually result in a decrease in profitability.
The level of returns on pension plan assets and changes in the actuarial assumptions used couldultimately, adversely affect us.
Our operating results may be positively or negatively impacted by the amount of expense we record for our defined benefit pension plans. U.S. GAAP requires that we calculate pension expense using actuarial valuations, which are dependent upon our various assumptions including estimates of expected long-term rate of return on plan assets, discount rates for future payment obligations, and the expected rate of increase in future compensation levels. Our pension expense and funding requirements may also be affected by our actual return on plan assets and by legislation and other government regulatory actions. Changes in assumptions, laws or regulations could lead to variability in operating results and could have a material adverse impact on liquidity.
Regulations related to conflict-free minerals may result in additional expenses that could affect our financial condition and results of operations.
Pursuant to the Dodd-Frank Wall Street Reforminterruption and Consumer Protection Act, the SEC promulgated final rules regarding disclosure of the use of certain minerals, known as conflict minerals, which are mined from the Democratic Republic of the Congo and adjoining countries, as well as procedures regarding a manufacturer’s efforts to prevent the sourcing ofcasualty insurance but such minerals and metals produced from those minerals. These new disclosure obligations will require continuing due diligence efforts to support our future disclosure requirements. We incurred and will continue to incur costs associated with complying with such disclosure requirements, including costs associated with canvassing our supply chain to determine the source country of any conflict minerals incorporated in our products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. In addition, the implementation of these rules could adversely affect the sourcing, supply, and pricing of materials used in our products.
Political conditions in the U.S. and 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 toinsurance may not cover all risks associated with doing business outside the United States. In 2017, approximately 69 percenthazards of our total sales were generated outside the United States.business and is subject to limitations, including deductibles and maximum liabilities covered. We expect that international operations and United States export sales will continue to be important toare potentially at risk if one or more of our business for the foreseeable future. Both 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;
threats of war, terrorism or governmental instability;
significant foreign and U.S. taxes on repatriated cash;
changes in tax rates, adoption of new tax laws or other additional tax policies, including the implementation of proposals to reform United States and foreign tax laws that could impact how United States multinational corporations are taxed on foreign earnings;
restrictions on the transfer of funds into or out of a country;
potential negative consequences from changes to taxation policies;
the disruption of operations from labor and political disturbances;
the imposition of tariffs, import or export licensing requirements and other potential changes in trade policies and relations arising from policy initiatives implemented by the new U.S. presidential administration; and
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.
Nordson Corporation 14
Any of these events could reduce the demand for our products, limit the prices at which we can sell our products, interrupt our supply chain, or otherwise have an adverse effect on our operating performance.
Our international operations also depend upon favorable trade relations between the U.S. and those foreign countries in which our customers, subcontractors and materials suppliers have operations. A protectionist trade environment in either the U.S. or those foreign countries in which we do business, such as a changeinsurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers. In the future, we may not be able to obtain coverage at current tariff structures, export compliance or other trade policies,levels, and our premiums may materially and adversely affect our ability to sell our products in foreign markets. The new U.S. presidential administration has criticized existing trade agreements, and while it is currently unclear what actions the administration may take with respect to existing and proposed trade agreements, or restrictionsincrease significantly on trade generally, more stringent export and import controls may be imposed in the future.
coverage that we maintain.
The insurance that we maintain may not fully cover all potential exposures.
We maintain property, business interruption and casualty insurance but such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We are potentially at risk if one or more of our insurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers. In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.
The following table summarizes ourProperties
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Amherst, Ohio 1, 2 | A manufacturing, laboratory and office complex | 521,000 | ||||||||||||
| A manufacturing, warehouse and office building (leased) |
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Austintown, Ohio 1 | A manufacturing, warehouse and office building (leased) | 207,000 | ||||||||||||
Carlsbad, California2 | Three manufacturing and office buildings (leased) | 181,000 | ||||||||||||
Duluth, Georgia 1 | A manufacturing, laboratory and office building | 176,000 | ||||||||||||
Norwich, Connecticut 2 | A manufacturing, laboratory and office building | 159,000 | ||||||||||||
| A manufacturing building (leased) | 136,000 | ||||||||||||
East Providence, Rhode Island 2 | A manufacturing, warehouse and office building | 116,000 | ||||||||||||
Loveland, Colorado 2 | A manufacturing, warehouse and office building | 115,000 | ||||||||||||
Robbinsville, New Jersey 2 | A manufacturing, warehouse and office building (leased) | 88,000 | ||||||||||||
Salem, New Hampshire 2 | Two manufacturing, warehouse and office buildings (leased) | 83,000 | ||||||||||||
Minneapolis, Minnesota 2 | Two office, laboratory and warehouse buildings (leased) | 69,000 | ||||||||||||
Wixom, Michigan 1 | A manufacturing, warehouse and office building (leased) | 64,000 | ||||||||||||
Vista, California2 | A manufacturing building (leased) | 41,000 | ||||||||||||
Hickory, North Carolina 1 | A manufacturing, warehouse and office building (leased) | 41,000 | ||||||||||||
Marlborough, Massachusetts 2 | An office, laboratory and warehouse building (leased) | 30,000 | ||||||||||||
| Westlake, Ohio | Corporate headquarters | 28,000 | ||||||||||||
Liberty Lake, Washington 2 | A manufacturing, warehouse and office building (leased) | 27,000 | ||||||||||||
Chattanooga, Tennessee 2 | A manufacturing, warehouse and office building (leased) | 25,000 | ||||||||||||
Sunnyvale, California 2 | Two office, laboratory and warehouse buildings (leased) | 24,000 | ||||||||||||
Huntington Beach, California 2 | An office, laboratory and warehouse building (leased) | 21,000 | ||||||||||||
Münster, Germany1 | Two manufacturing, warehouse and office buildings (leased) | 598,000 | ||||||||||||
Shanghai, China 1, 2 | Three manufacturing, warehouse, laboratory and office buildings | 178,000 | ||||||||||||
Lüneburg, Germany 1 | A manufacturing and laboratory building | 129,000 | ||||||||||||
Guaymas, Mexico2 | Three manufacturing, warehouse and office buildings (leased) |
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Chonburi, Thailand 1 | A manufacturing, warehouse and office building | 52,000 | ||||||||||||
Erkrath, Germany1, 2 | An office, laboratory and warehouse building (leased) | 50,000 | ||||||||||||
Boyle, Ireland 2 | A manufacturing, warehouse and office building (leased) |
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Elk Grove, Illinois 2 | A manufacturing, warehouse and office building (leased) |
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| A manufacturing, warehouse and office building (leased) |
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Seongnam-City, South Korea 1, 2 |
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| Three manufacturing, warehouse and office buildings (leased) | 33,000 | ||||||||||||
Pirmasens, Germany1 | A manufacturing, warehouse and office building (leased) |
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Industrial Precision Solutions
3 - Industrial Coating Systems
Solutions
We are involved
Environmental – We have voluntarily agreed with the City of New Richmond, Wisconsin and other Potentially Responsible Parties 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. At October 31, 2017 and 2016, our accrual for the ongoing operation, maintenance and monitoring obligation at the Site was $472 and $516, respectively.
The liability for environmental remediation represents management’s 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 different 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.
Name |
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| Position or Office with The Company and Business Experience During the Past Five (5) Year Period | Name | Age | Officer Since | Position or Office with The Company and Business Experience During the Past Five (5) Year Period | ||||||||||||||||
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Michael F. Hilton |
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| 2010 |
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| Sundaram Nagarajan | Sundaram Nagarajan | 58 | 2019 | President and Chief Executive Officer, 2019 | ||||||||||||||||||||||
| Joseph P. Kelley | Joseph P. Kelley | 48 | 2020 | Executive Vice President, Chief Financial Officer, 2020 | ||||||||||||||||||||||
| Gina A. Beredo | Gina A. Beredo | 46 | 2018 | Executive Vice President, General Counsel and Secretary, 2018 | ||||||||||||||||||||||
| James E. DeVries | James E. DeVries | 61 | 2012 | Executive Vice President, 2012 | ||||||||||||||||||||||
John J. Keane |
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| 2003 |
| Senior Vice President, 2005 | John J. Keane | 59 | 2003 | Executive Vice President, 2005 | ||||||||||||||||
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| Stephen P. Lovass | Stephen P. Lovass | 51 | 2017 | Executive Vice President, 2017 | ||||||||||||||||||||||
Gregory P. Merk |
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| Senior Vice President, 2013 | Gregory P. Merk | 49 | 2006 | Executive Vice President, 2013 | ||||||||||||||||
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Gregory A. Thaxton |
| 56 |
| 2007 |
| Senior Vice President, Chief Financial Officer, 2012 | ||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||
James E. DeVries |
| 58 |
| 2012 |
| Vice President, 2012 | ||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||
Stephen P. Lovass |
| 48 |
| 2017 |
| Vice President, 2017 | ||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||
Shelly M. Peet |
| 52 |
| 2007 |
| Vice President, 2009 | Shelly M. Peet | 55 | 2007 | Executive Vice President, 2009 | ||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||
Jeffrey A. Pembroke |
| 50 |
| 2015 |
| Vice President, 2015 | Jeffrey A. Pembroke | 53 | 2015 | Executive Vice President, 2015 | ||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||
Joseph Stockunas |
| 57 |
| 2015 |
| Vice President, 2015 | Joseph Stockunas | 60 | 2015 | Executive Vice President, 2015 | ||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||
Nordson
|
|
|
On September 5, 2017, we filed a Form 8-K with the Securities & Exchange Commission announcing that Mr. Veillette will retire from the Company, effective December 31, 2017. Upon his retirement, Mr. Veillette will be succeeded by Gina Brickley Beredo who has served as Deputy General CounselScientific, Inc., an automated systems manufacturer for sign-making, specialty graphics and Assistant Secretary since joining the Company in 2013.
packaging.
|
| Dividend |
|
| Common Share Price |
| ||||||
Quarters |
| Paid |
|
| High |
|
| Low |
| |||
2017: |
|
|
|
|
|
|
|
|
|
|
|
|
First |
| $ | .27 |
|
| $ | 116.01 |
|
| $ | 96.05 |
|
Second |
|
| .27 |
|
|
| 127.50 |
|
|
| 112.23 |
|
Third |
|
| .27 |
|
|
| 131.49 |
|
|
| 113.69 |
|
Fourth |
|
| .30 |
|
|
| 130.41 |
|
|
| 107.16 |
|
2016: |
|
|
|
|
|
|
|
|
|
|
|
|
First |
| $ | .24 |
|
| $ | 74.24 |
|
| $ | 51.89 |
|
Second |
|
| .24 |
|
|
| 80.50 |
|
|
| 56.63 |
|
Third |
|
| .24 |
|
|
| 89.42 |
|
|
| 74.49 |
|
Fourth |
|
| .27 |
|
|
| 102.57 |
|
|
| 87.63 |
|
Source: Nasdaq OMX
While we have historically paid dividends to shareholders of our common stock on a quarterly basis, the declaration and payment of future dividends will depend on many factors, including but not limited to, our earnings, financial condition, business development needs and regulatory considerations, and are at the discretion of our board of directors.
Nordson Corporation 19
Company/Market/Peer Group | 2007 |
| 2008 |
| 2009 |
| 2010 |
| 2011 |
| 2012 |
| 2013 |
| 2014 |
| 2015 |
|
| 2016 |
|
| 2017 |
| |||||||||
Nordson Corporation | $ | 100.00 |
| $ | 70.90 |
| $ | 105.80 |
| $ | 160.42 |
| $ | 194.33 |
| $ | 252.55 |
| $ | 311.36 |
| $ | 334.00 |
| $ | 314.64 |
| $ | 448.10 |
| $ | 572.29 |
|
S&P 500 Index | $ | 100.00 |
| $ | 63.90 |
| $ | 70.17 |
| $ | 81.76 |
| $ | 88.37 |
| $ | 101.81 |
| $ | 129.48 |
| $ | 151.84 |
| $ | 159.73 |
| $ | 166.93 |
| $ | 206.38 |
|
S&P MidCap 400 | $ | 100.00 |
| $ | 63.54 |
| $ | 75.09 |
| $ | 95.84 |
| $ | 104.03 |
| $ | 116.63 |
| $ | 155.68 |
| $ | 173.82 |
| $ | 179.77 |
| $ | 191.02 |
| $ | 235.87 |
|
S&P 500 Ind. Machinery | $ | 100.00 |
| $ | 57.23 |
| $ | 76.58 |
| $ | 97.99 |
| $ | 101.38 |
| $ | 121.33 |
| $ | 173.25 |
| $ | 195.37 |
| $ | 195.07 |
| $ | 222.74 |
| $ | 307.08 |
|
S&P MidCap 400 Ind. Machinery | $ | 100.00 |
| $ | 57.90 |
| $ | 71.57 |
| $ | 93.02 |
| $ | 105.80 |
| $ | 115.55 |
| $ | 160.42 |
| $ | 170.00 |
| $ | 142.30 |
| $ | 167.01 |
| $ | 239.53 |
|
Proxy Peer Group | $ | 100.00 |
| $ | 67.28 |
| $ | 72.96 |
| $ | 89.87 |
| $ | 100.94 |
| $ | 115.31 |
| $ | 160.25 |
| $ | 176.57 |
| $ | 169.73 |
| $ | 174.34 |
| $ | 261.11 |
|
| Company/Market/Peer Group | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||
| Nordson Corporation | $ | 100.00 | $ | 121.14 | $ | 157.44 | $ | 194.09 | $ | 208.21 | $ | 196.14 | $ | 279.33 | $ | 356.75 | $ | 348.63 | $ | 450.67 | $ | 560.87 | |||||||||||||
| S&P 500 Index | $ | 100.00 | $ | 108.09 | $ | 124.52 | $ | 158.36 | $ | 185.71 | $ | 195.37 | $ | 204.17 | $ | 252.43 | $ | 270.97 | $ | 309.79 | $ | 339.87 | |||||||||||||
| S&P MidCap 400 | $ | 100.00 | $ | 108.55 | $ | 121.69 | $ | 162.44 | $ | 181.37 | $ | 187.58 | $ | 199.31 | $ | 246.11 | $ | 248.62 | $ | 271.03 | $ | 267.92 | |||||||||||||
| S&P 500 Ind. Machinery | $ | 100.00 | $ | 103.46 | $ | 123.82 | $ | 176.80 | $ | 199.37 | $ | 199.07 | $ | 227.30 | $ | 313.37 | $ | 289.14 | $ | 352.62 | $ | 386.78 | |||||||||||||
| S&P MidCap 400 Ind. Machinery | $ | 100.00 | $ | 113.73 | $ | 124.21 | $ | 172.45 | $ | 182.74 | $ | 152.97 | $ | 179.53 | $ | 257.49 | $ | 252.07 | $ | 299.53 | $ | 320.07 | |||||||||||||
| Peer Group | $ | 100.00 | $ | 113.30 | $ | 128.23 | $ | 177.35 | $ | 193.38 | $ | 188.81 | $ | 193.62 | $ | 292.26 | $ | 299.10 | $ | 383.02 | $ | 414.51 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Number of |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Shares Repurchased |
|
| Maximum Value of |
| ||
|
| Total Number |
|
| Average |
|
| as Part of Publicly |
|
| Shares That May Yet |
| ||||
|
| of Shares |
|
| Price Paid |
|
| Announced Plans |
|
| Be Purchased Under |
| ||||
|
| Repurchased(1) |
|
| per Share |
|
| or Programs(2) |
|
| the Plans or Programs |
| ||||
August 1, 2017 to August 31, 2017 |
|
| 1 |
|
| $ | 108.84 |
|
|
| — |
|
| $ | 118,971 |
|
September 1, 2017 to September 30, 2017 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 118,971 |
|
October 1, 2017 to October 31, 2017 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 118,971 |
|
Total |
|
| 1 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
Nordson Corporation 20
|
| Total Number of Shares Repurchased | Average Price Paid per Share | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs (2) | Maximum Value of Shares That May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||||||||||||
| August 1, 2020 to August 31, 2020 | 1 | (1) | $ | 187.96 | — | $ | 447,703 | ||||||||||||||||
| September 1, 2020 to September 30, 2020 | — | $ | — | — | $ | 447,703 | |||||||||||||||||
| October 1, 2020 to October 31, 2020 | 3 | $ | 198.39 | 3 | $ | 447,104 | |||||||||||||||||
| Total | 4 | 3 | |||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||||
(In thousands except for per-share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Data (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
| $ | 2,066,982 |
|
| $ | 1,808,994 |
|
| $ | 1,688,666 |
|
| $ | 1,704,021 |
|
| $ | 1,542,921 |
|
Cost of sales |
|
| 927,981 |
|
|
| 815,495 |
|
|
| 774,702 |
|
|
| 758,923 |
|
|
| 676,777 |
|
% of sales |
|
| 45 |
|
|
| 45 |
|
|
| 46 |
|
|
| 45 |
|
|
| 44 |
|
Selling and administrative expenses |
|
| 678,861 |
|
|
| 594,293 |
|
|
| 584,823 |
|
|
| 575,442 |
|
|
| 541,169 |
|
% of sales |
|
| 33 |
|
|
| 33 |
|
|
| 35 |
|
|
| 34 |
|
|
| 35 |
|
Severance and restructuring costs |
|
| 2,438 |
|
|
| 10,775 |
|
|
| 11,411 |
|
|
| 2,551 |
|
|
| 1,126 |
|
Long-lived asset impairments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Operating profit |
|
| 457,702 |
|
|
| 388,431 |
|
|
| 317,730 |
|
|
| 367,105 |
|
|
| 323,849 |
|
% of sales |
|
| 22 |
|
|
| 21 |
|
|
| 19 |
|
|
| 22 |
|
|
| 21 |
|
Net income |
|
| 295,802 |
|
|
| 271,843 |
|
|
| 211,111 |
|
|
| 246,773 |
|
|
| 221,817 |
|
% of sales |
|
| 14 |
|
|
| 15 |
|
|
| 13 |
|
|
| 14 |
|
|
| 14 |
|
Financial Data (a) (e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital |
| $ | 240,626 |
|
| $ | 414,032 |
|
| $ | 420,815 |
|
| $ | 301,815 |
|
| $ | 365,269 |
|
Net property, plant and equipment and other non-current assets |
|
| 2,526,167 |
|
|
| 1,675,008 |
|
|
| 1,646,723 |
|
|
| 1,606,274 |
|
|
| 1,449,712 |
|
Total capital (b) |
|
| 2,648,094 |
|
|
| 1,767,369 |
|
|
| 1,724,211 |
|
|
| 1,661,110 |
|
|
| 1,496,681 |
|
Total assets |
|
| 3,414,539 |
|
|
| 2,420,583 |
|
|
| 2,358,314 |
|
|
| 2,278,957 |
|
|
| 2,051,778 |
|
Long-term liabilities |
|
| 1,611,300 |
|
|
| 1,237,437 |
|
|
| 1,407,522 |
|
|
| 1,003,292 |
|
|
| 927,118 |
|
Shareholders’ equity |
|
| 1,155,493 |
|
|
| 851,603 |
|
|
| 660,016 |
|
|
| 904,797 |
|
|
| 887,863 |
|
Return on average total capital — % (c) |
|
| 14 |
|
|
| 16 |
|
|
| 13 |
|
|
| 17 |
|
|
| 18 |
|
Return on average shareholders’ equity — % (d) |
|
| 30 |
|
|
| 37 |
|
|
| 26 |
|
|
| 27 |
|
|
| 29 |
|
Per-Share Data (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares |
|
| 57,533 |
|
|
| 57,060 |
|
|
| 60,652 |
|
|
| 63,656 |
|
|
| 64,214 |
|
Average number of common shares and common share equivalents |
|
| 58,204 |
|
|
| 57,530 |
|
|
| 61,151 |
|
|
| 64,281 |
|
|
| 64,908 |
|
Basic earnings per share |
| $ | 5.14 |
|
| $ | 4.76 |
|
| $ | 3.48 |
|
| $ | 3.88 |
|
| $ | 3.45 |
|
Diluted earnings per share |
|
| 5.08 |
|
|
| 4.73 |
|
|
| 3.45 |
|
|
| 3.84 |
|
|
| 3.42 |
|
Dividends per common share |
|
| 1.11 |
|
|
| 0.99 |
|
|
| 0.90 |
|
|
| 0.76 |
|
|
| 0.63 |
|
Book value per common share |
|
| 20.02 |
|
|
| 14.86 |
|
|
| 11.51 |
|
|
| 14.49 |
|
|
| 13.83 |
|
|
|
|
|
| (In thousands except for per-share amounts) | |||||||||||||||||||||||||||||
Operating Data (a) (e) | 2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||||||||||
| Sales | $ | 2,121,100 | $ | 2,194,226 | $ | 2,254,668 | $ | 2,066,982 | $ | 1,808,994 | |||||||||||||||||||
| Cost of sales | 990,632 | 1,002,123 | 1,018,340 | 927,692 | 813,792 | ||||||||||||||||||||||||
| % of sales | 47 | 46 | 45 | 45 | 45 | ||||||||||||||||||||||||
| Selling and administrative expenses | 693,552 | 708,990 | 733,749 | 672,888 | 597,076 | ||||||||||||||||||||||||
| % of sales | 33 | 32 | 33 | 33 | 33 | ||||||||||||||||||||||||
| Assets held for sale impairment charge | 87,371 | — | — | — | — | ||||||||||||||||||||||||
| % of sales | 4 | — | — | — | — | ||||||||||||||||||||||||
| Operating profit | 349,545 | 483,113 | 502,579 | 466,402 | 398,126 | ||||||||||||||||||||||||
| % of sales | 16 | 22 | 22 | 23 | 22 | ||||||||||||||||||||||||
| Net income | 249,539 | 337,091 | 377,375 | 295,802 | 271,843 | ||||||||||||||||||||||||
| % of sales | 12 | 15 | 17 | 14 | 15 | ||||||||||||||||||||||||
Financial Data (a) (f) | |||||||||||||||||||||||||||||
Net current assets (g) | $ | 657,523 | $ | 533,569 | $ | 533,822 | $ | 240,626 | $ | 414,032 | |||||||||||||||||||
| Net property, plant and equipment and other non-current assets | 2,654,044 | 2,505,252 | 2,536,910 | 2,526,167 | 1,675,008 | ||||||||||||||||||||||||
Total capital (b) | 2,656,693 | 2,674,023 | 2,669,154 | 2,648,094 | 1,767,369 | ||||||||||||||||||||||||
| Total assets | 3,674,656 | 3,516,447 | 3,421,012 | 3,414,539 | 2,420,583 | ||||||||||||||||||||||||
| Long-term liabilities | 1,552,576 | 1,457,776 | 1,619,991 | 1,611,300 | 1,237,437 | ||||||||||||||||||||||||
| Shareholders’ equity | 1,758,991 | 1,581,045 | 1,450,741 | 1,155,493 | 851,603 | ||||||||||||||||||||||||
Return on average total capital — % (c) | 10 | 14 | 15 | 14 | 16 | ||||||||||||||||||||||||
Return on average shareholders’ equity — % (d) | 15 | 23 | 28 | 30 | 37 | ||||||||||||||||||||||||
Per-Share Data (a) | |||||||||||||||||||||||||||||
| Average number of common shares | 57,757 | 57,462 | 57,970 | 57,533 | 57,060 | ||||||||||||||||||||||||
| Average number of common shares and common share equivalents | 58,473 | 58,202 | 58,931 | 58,204 | 57,530 | ||||||||||||||||||||||||
| Basic earnings per share | $ | 4.32 | $ | 5.87 | $ | 6.51 | $ | 5.14 | $ | 4.76 | |||||||||||||||||||
| Diluted earnings per share | 4.27 | 5.79 | 6.40 | 5.08 | 4.73 | ||||||||||||||||||||||||
| Dividends per common share | 1.53 | 1.43 | 1.25 | 1.11 | 0.99 | ||||||||||||||||||||||||
| Book value per common share | 30.29 | 27.45 | 25.00 | 20.02 | 14.86 | ||||||||||||||||||||||||
|
|
|
|
|
|
Company's revenue recognition policy.
Nordson Corporation 22
Discount rates are 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. For 2017,2020, the discount rates used ranged from 97.0 percent to 128.8 percent depending upon the reporting unit's size, end market volatility, and projection risk. The calculated internal rate
To test the reasonableness of the aggregate fair value, we performed the control premium test, which compares the sum of the implied fair values calculated for our reporting units (net of debt) to the market value of equity. The control premium was negative 3 percent as of the test date of August 1, 2017Income and a slight discount to the market value of equity as of October 31, 2017. The control premium indicated that the discounted cash flow valuation was reasonable.
Market approaches.
|
| WACC |
|
| Excess of FV over CV |
|
| Goodwill |
| |||
Adhesive Dispensing Systems Segment |
|
| 9% |
|
|
| 489% |
|
| $ | 394,234 |
|
Industrial Coating Systems Segment |
|
| 11% |
|
|
| 503% |
|
| $ | 24,058 |
|
Advanced Technology Systems Segment - Electronics Systems |
|
| 10% |
|
|
| 329% |
|
| $ | 27,224 |
|
Advanced Technology Systems Segment - Fluid Management |
|
| 9% |
|
|
| 83% |
|
| $ | 1,092,940 |
|
Advanced Technology Systems Segment - Test & Inspection |
|
| 12% |
|
|
| 51% |
|
| $ | 48,499 |
|
| WACC | Excess of FV over CV | Goodwill | |||||||||||||||
| Industrial Precision Solutions Segment - Adhesives | 7.0% | 648% | $ | 393,491 | |||||||||||||
| Industrial Precision Solutions Segment - Industrial Coating Systems | 8.8% | 584% | $ | 24,058 | |||||||||||||
Advanced Technology Solutions Segment - Electronics Systems | 7.8% | 343% | $ | 27,962 | |||||||||||||
Advanced Technology Solutions Segment - Fluid Management | 7.8% | 145% | $ | 1,176,613 | |||||||||||||
| Advanced Technology Solutions Segment - Test & Inspection | 8.5% | 218% | $ | 79,790 | |||||||||||||
2019.
Nordson Corporation 23
|
| United States |
|
| International |
| ||||||||||
|
| 1% Point Increase |
|
| 1% Point Decrease |
|
| 1% Point Increase |
|
| 1% Point Decrease |
| ||||
Discount rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in 2017 |
| $ | (5,320 | ) |
| $ | 6,490 |
|
| $ | (1,417 | ) |
| $ | 1,766 |
|
Effect on pension obligation as of October 31, 2017 |
| $ | (56,644 | ) |
| $ | 71,919 |
|
| $ | (14,440 | ) |
| $ | 17,356 |
|
Expected return on assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in 2017 |
| $ | (3,326 | ) |
| $ | 3,326 |
|
| $ | (375 | ) |
| $ | 375 |
|
Compensation increase: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in 2017 |
| $ | 4,127 |
|
| $ | (2,755 | ) |
| $ | 635 |
|
| $ | (511 | ) |
Effect on pension obligation as of October 31, 2017 |
| $ | 23,174 |
|
| $ | (14,753 | ) |
| $ | 3,261 |
|
| $ | (3,062 | ) |
| United States | International | ||||||||||||||||||||||
| 1% Point Increase | 1% Point Decrease | 1% Point Increase | 1% Point Decrease | ||||||||||||||||||||
| Discount rate: | |||||||||||||||||||||||
| Effect on total net periodic pension cost in 2020 | $ | (7,315) | $ | 9,402 | $ | (1,591) | $ | 1,723 | |||||||||||||||
| Effect on pension obligation as of October 31, 2020 | $ | (79,095) | $ | 98,884 | $ | (16,979) | $ | 20,430 | |||||||||||||||
| Expected return on assets: | |||||||||||||||||||||||
| Effect on total net periodic pension cost in 2020 | $ | (4,289) | $ | 4,289 | $ | (398) | $ | 398 | |||||||||||||||
| Compensation increase: | |||||||||||||||||||||||
| Effect on total net periodic pension cost in 2020 | $ | 6,433 | $ | (5,628) | $ | 538 | $ | (507) | |||||||||||||||
| Effect on pension obligation as of October 31, 2020 | $ | 32,766 | $ | (29,256) | $ | 3,628 | $ | (3,366) | |||||||||||||||
by 2040.
|
| United States |
|
| International |
| ||||||||||
|
| 1% Point Increase |
|
| 1% Point Decrease |
|
| 1% Point Increase |
|
| 1% Point Decrease |
| ||||
Discount rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in 2017 |
| $ | (585 | ) |
| $ | 696 |
|
| $ | (3 | ) |
| $ | 3 |
|
Effect on postretirement obligation as of October 31, 2017 |
| $ | (10,504 | ) |
| $ | 13,327 |
|
| $ | (119 | ) |
| $ | 159 |
|
Health care trend rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on total service and interest cost components in 2017 |
| $ | 562 |
|
| $ | (446 | ) |
| $ | 10 |
|
| $ | (8 | ) |
Effect on postretirement obligation as of October 31, 2017 |
| $ | 10,637 |
|
| $ | (8,650 | ) |
| $ | 150 |
|
| $ | (115 | ) |
| United States | International | ||||||||||||||||||||||
| 1% Point Increase | 1% Point Decrease | 1% Point Increase | 1% Point Decrease | ||||||||||||||||||||
| Discount rate: | |||||||||||||||||||||||
Effect on total net postretirement benefit cost components in 2020 | $ | (604) | $ | 711 | $ | (2) | $ | 2 | |||||||||||||||
| Effect on postretirement obligation as of October 31, 2020 | $ | (11,184) | $ | 13,899 | $ | (84) | $ | 111 | |||||||||||||||
| Health care trend rate: | |||||||||||||||||||||||
Effect on total net postretirement benefit cost components in 2020 | $ | 431 | $ | (345) | $ | 7 | $ | (5) | |||||||||||||||
| Effect on postretirement obligation as of October 31, 2020 | $ | 11,019 | $ | (9,100) | $ | 103 | $ | (80) | |||||||||||||||
In the fourth quarter of 2016, we adopted a change in the method to be used to estimate the service and interest cost components of net periodic benefit cost for defined benefit pension plans. Historically, for the vast majority of our plans, the service and interest cost components were estimated using a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Beginning in 2017, we used a spot rate approach by applying the specific spot rates along the yield curve to the relevant projected cash flows in the estimation of the service and interest components of benefit cost, resulting in a more precise measurement. This change did not affect the measurement of total benefit obligations. The change was accounted for as a change in estimate that is inseparable from a change in accounting principle and, accordingly, was accounted for prospectively
Nordson Corporation 24
starting in 2017. The reductions in service and interest costs for 2017 associated with this change were $1,200 and $3,100, respectively.
2020.
2017
Sales – Worldwide sales for 2017 were $2,066,982, an increase of 14.3 percent from 2016 sales of $1,808,994. Sales volume increased 14.8 percent and unfavorable currency translation effects reduced sales by 0.5 percent. The volume increase consisted of 7.9 percent from organic growth and 6.9 percent from acquisitions. 2019
Sales
Sales of the Advanced Technology Systems segment were $897,623 in 2017, an increase of $221,294 or 32.70.6 percent growth from 2016 sales of $676,329. The increase was the result of a sales volume increase of 33.4 percent partially offset by unfavorable currency effects that reduced sales by 0.7 percent. The sales volume increase consisted of 15.1 percent from organic volume and 18.3 percent from the first-year effect of acquisitions. Within the segment, sales volume, inclusive of acquisitions, increased in all geographic regions. Organic volume increased in most product lines, and was driven by demand in electronics and medical end markets.
Sales of the Industrial Coating Systems segment were $253,340 in 2017, an increase of $248, or 0.1 percent, from 2016 sales of $253,092. The increase was the result of a sales volume increase of 0.8 percent partially offset by unfavorable currency effects that reduced sales by 0.7 percent. Within this segment, sales volume increased in Europe, Japan and the Americas regions. Sales volume increased in most product lines, and was driven by demand for liquid and UV curing, powder coating and container product lines serving industrial end markets.
Nordson Corporation 25
increase$571,596, a decrease of 5.38.1 percent from 2016, with2018, due to unfavorable currency effects of 4.8 percent and volume increasing 5.5decreasing 3.8 percent partially offset by unfavorable currency effects of 0.2 percent. Thea 0.5 percent increase in sales volume consisted of 2.2 percent from organic volume and 3.3 percent from acquisitions. Sales in Japan were $147,189, an increase$126,756, a decrease of 20.621.6 percent from 2016,2018, with volume increasing 24.5decreasing 22.9 percent partially offset by unfavorablea 0.7 percent increase from acquisitions and favorable currency effects of 3.90.6 percent. The increase in sales volume consisted of 23.1 percent from organic volume and 1.4 percent from acquisitions. Sales in the Asia Pacific region were $594,298, an increase$569,830, a decrease of 12.73.6 percent from the prior year, with volume increasing 13.2 percent partially offset2018. The decrease was driven by unfavorable currency effects of 0.5 percent. The2.3 percent and lower volume of 1.9 percent, partially offset by a 0.6 percent increase in sales volume consisted of 12.3 percent from organic growth and 0.9 percent from acquisitions.
It is estimated that the effect of pricing on 2017 total sales was not material relative to 2016.
Operating profit –
Selling and administrative expenses were $678,861 in 2017, compared to $594,293 in 2016. The 14.2 percentage point increase includes 6.1 percent primarily in support of higher sales growth, 6.1 percent related to the first year effect of acquisitions and 2.5 percent of corporate charges related to acquisition transaction costs, offset by 0.5 percentage points due to currency translation effects.
Severance and restructuring costs of $2,438 were recorded in 2017. Within the Adhesives Dispensing Systems segment, restructuring initiatives to optimize operations in the U.S. and Belgium and consolidate certain polymer processing product line facilities in the U.S. resulted in severance and restructuring costs of $2,618. Within the Advanced Technology Systems segment, costs of $180 were reversed during 2017 related to a 2015 restructuring initiative. No costs related to severance and restructuring were recorded in the Industrial Coating Systems segment in 2017. Additional costs related to these initiatives are not expected to be material in future periods. All severance and restructuring costs are included in selling and administrative expenses in the Consolidated Statements of Income.
2018.
For the Adhesive Dispensing Systems segment, operating profit as a percentage of sales increased to 27.7 percent in 2017 compared to 26.1 percent in 2016. Of the 1.6 percentage point improvement in operating margin, favorable product mix added 0.7 percentage points due to increased sales to consumer non-durable, disposable hygiene and rigid packaging end markets, lower severance and restructuring expenses added 0.6 percentage points, favorable foreign currency translation effects added 0.2 percentage points and favorable leverage of selling and administrative expenses added 0.1 percentage points.
For the Advanced Technology Systems segment, operating profit as a percentage of sales increased to 25.4 percent in 2017 compared to 23.6 percent in 2016. Of the 1.8 percentage point improvement in operating margin, favorable leverage of our selling and administrative expenses due to higher sales contributed 5.6 percentage points, favorable product mix added 0.4 percentage points, and lower severance and restructuring expenses contributed 0.2 percentage points. These increases were partially offset by 4.0 percentage points due to the first year effect of acquisitions, 0.3 percentage points due to unfavorable currency translation effects, and 0.1 percentage points due to short term purchase price accounting charges for acquired inventory.
Nordson Corporation 26
For the Industrial Coating Systems segment, operating profit as a percentage of sales increased to 17.4 percent in 2017 compared to 17.2 percent in 2016. Of the 0.2 percentage point improvement in operating margin, lower severance and restructuring expenses added 0.8 percentage points and favorable leverage of our selling and administrative expenses added 0.4 percentage points. These increases were offset by 0.7 percentage points related to unfavorable product mix and 0.3 percentage points related to unfavorable foreign currency translation effects.
Interest and other income (expense) - costs.
Income taxes – $2,512.
2018.
On December 18, 2015,reflect the Protecting Americans from Tax Hikestransition tax on previously deferred foreign earnings. The net tax effect of these discrete items resulted in a decrease of $21,464 in income tax expense for 2018, or 4.8 percent.
Net income – period expense in the year incurred.
2016 compared to 2015
Sales – Worldwide sales for 2016 were $1,808,994, an increase of 7.1 percent from 2015 sales of $1,688,666. Sales volume increased 8.5 percent and unfavorable currency translation effects reduced sales by 1.4 percent. The volume increase consisted of 6.5 percent from organic growth and 2.0 percent from acquisitions. We had one acquisition during 2016, LinkTech, which is included within the Advanced Technology Systems segment. Three acquisitions were made during 2015: Liquidyn GmbH (“Liquidyn”) and MatriX Technologies GmbH (“MatriX”), which were included within the Advanced Technology Systems segment, and WAFO Produktionsgesellschaft GmbH (“WAFO”), which was included in the Adhesives Dispensing Systems segment. As used throughout this Form 10-K, geographic regions include the Americas (Canada, Mexico and Central and South America), Asia Pacific (excluding Japan), Europe, Japan, and the United States.
Sales of the Advanced Technology Systems segment were $676,329 in 2016, an increase of $82,471, or 13.9 percent, from 2015 sales of $593,858. The increase was the result of a sales volume increase of 14.7 percent partially offset by unfavorable currency effects that reduced sales by 0.8 percent. The sales volume increase consisted of 10.1 percent from organic volume and 4.6 percent from the first-year effect of acquisitions. Within the segment, sales volume, inclusive of acquisitions, increased in all geographic regions, and was most pronounced in Japan and Asia Pacific. Growth was driven by increased demand for test and inspection and automated dispensing solutions serving electronics end markets as well continued strength in fluid management product lines serving medical and industrial end markets.
Sales of the Industrial Coating Systems segment were $253,092 in 2016, a decrease of $5,650, or 2.2 percent, from 2015 sales of $258,742. The decrease was the result of a sales volume decrease of 0.6 percent and unfavorable currency effects that reduced sales by 1.6 percent. Within this segment, sales volume increased in the Americas and Asia Pacific regions, and was offset by decreases in the United States, Europe and Japan. Growth inas cold materialmaterials product lines serving automotive end markets was offset by softness in powder coatingproduct lines serving nonwoven end markets as well as liquid and container product lines serving industrial end markets.
Nordson Corporation 27
Sales outside the United States accounted for 70.6 percent of our sales in 2016, as compared to 68.6 percent in 2015. On a geographic basis, sales in the United States were $531,117, an increase of 0.2 percent from 2015. The increase in sales volume consisted of 0.4 percent from acquisitions, offset by an organic volume decline of 0.2 percent. In the Americas region, sales were $124,657, a decrease of 3.6 percent from 2015, with volume increasing 2.5 percent offset by unfavorable currency effects of 6.1 percent. The increase in sales volume consisted of 1.7 percent from organic volume and 0.8 percent from acquisitions. Sales in Europe were $503,869, an increase of 8.9 percent from 2015, with volume increasing 12.3 percent partially offset by unfavorable currency effects of 3.4 percent. The increase in sales volume consisted of 9.2 percent from organic volume and 3.1 percent from acquisitions. Sales in Japan were $122,054, an increase of 13.2 percent from 2015, with volume increasing 2.2 percent and favorable currency effects of 11.0 percent. The increase in sales volume consisted of 1.9 percent from organic volume and 0.3 percent from acquisitions. Sales in the Asia Pacific region were $527,297, an increase of 14.9 percent from the prior year, with volume increasing 17.4 percent partially offset by unfavorable currency effects of 2.5 percent. The increase in sales volume consisted of 14.0 percent from organic growth and 3.4 percent from acquisitions.
It is estimated that the effect of pricing on 2016 total sales was not material relative to 2015.
Operating profit – Cost of sales were $815,495 in 2016, up 5.3 percent from 2015. Gross profit, expressed as a percentage of sales, increased to 54.9 percent in 2016 from 54.1 percent in 2015. Of the 0.8 percentage point improvement in gross margin, favorable product mix added 1.3 percentage points primarily related to higher sales growth in our Adhesive Dispensing Systems and Advanced Technology Systems segments, which have higher margins relative to our Industrial Coating Systems segment. The 0.5 percentage point offset is primarily due to unfavorable currency translation effects.
Selling and administrative expenses were $594,293 in 2016, compared to $584,823 in 2015. The 1.6 percent increase includes 2.9 percent primarily in support of higher sales growth, offset by 1.3 percent due to currency translation effects.
Selling and administrative expenses as a percentage of sales decreased to 32.9 percent in 2016 from 34.6 percent in 2015. The 1.7 percentage point improvement is primarily due to leveraging higher sales growth in our Adhesive Dispensing Systems and Advanced Technology Systems segments.
Severance and restructuring costs of $10,775 were recorded in 2016. Within the Adhesives Dispensing Systems segment, restructuring initiatives to optimize operations in the U.S. and Belgium and consolidate certain polymer processing product line facilities in the U.S. resulted in severance and restructuring costs of $7,800. To enhance operational efficiency and customer service within the Advanced Technology Systems segment, a restructuring initiative resulted in severance and restructuring costs of $1,054. Within the Industrial Coatings Systems segment, a restructuring program to enhance operational efficiency and customer service resulted in severance costs of $1,921. Additional costs related to these initiatives are not expected to be material in future periods. All severance and restructuring costs are included in selling and administrative expenses in the Consolidated Statements of Income.
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 margins. Operating margins for each segment were unfavorably impacted by a stronger dollar primarily against the British Pound and Chinese Yuan during 2016 as compared to 2015.
Operating
For the Adhesive Dispensing Systems segment, operating profit as a percentage of sales increased to 26.1 percent in 2016 compared to 23.4 percent in 2015. Of the 2.7 percentage point improvement in operating margin, favorable leverage of our selling and administrative expenses contributed 2.0 percentage points, favorable product mix added 1.2 percentage points due to increased sales to consumer non-durable, disposable hygiene, general product assembly and rigid packaging end markets, and lower severance and restructuring expense added 0.1 percentage points. The 0.6 percentage point offset is primarily due to unfavorable currency translation effects.
For the Advanced Technology Systems segment, operating profit as a percentage of sales increased to 23.6 percent in 2016 compared to 20.4 percent in 2015. Of the 3.2 percentage point improvement in operating margin, favorable leverage of our selling and administrative expenses contributed 2.2 percentage points, favorable product mix added 0.90.4 percentage points, and lower severance and restructuring expenses contributed 0.3 percentage points. The 0.2These improvements were offset by 0.5 percentage point offset is primarily duepoints related to unfavorable foreign currency translation effects.
Nordson Corporation 28
Interest and other income (expense) - Interest expense in 2016 was $21,322, an increase of $3,218, or 17.8 percent, from 2015. The increase was due to higher average borrowing levels between periods, offset by reversals of interest accruals related to the effective settlement of a tax exam. Other income in 2016 was $657 compared to $678 in 2015. Included in the current year’s other income were a litigation settlement of $800 and $2,004 of foreign currency gains. These gains were partially offset by $1,530 of charges primarily related to the reversal of an indemnification asset resulting from the effective settlement of a tax exam. Significant items in 2015 were proceeds from a favorable litigation settlement of $1,608 and loss on disposal of fixed assets of $653.
Income taxes – Income tax expense in 2016 was $96,651, or 26.2 percent of pre-tax income, as compared to $89,751, or 29.8 percent of pre-tax income in 2015.
On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 was enacted which retroactively reinstated the Federal Research and Development Tax Credit (Federal R&D Tax Credit) as of January 1, 2015, and made it permanent. As a result, our income tax provision for 2016 includes a discrete tax benefit of $2,200 related to 2015. The tax rate for 2016 also includes a discrete tax benefit of $6,154 related to dividends paid from previously taxed foreign earnings generated prior to 2015, and a benefit of $2,682 related to the effective settlement of a tax exam.
Net income – Net income was $271,843, or $4.73 per diluted share, in 2016, compared to net income of $211,111, or $3.45 per diluted share, in 2015. This represents a 28.8 percent increase in net income and a 37.1 percent increase in diluted earnings per share. The percentage change in earnings per share is more than the percentage change in net income due to a lower number of shares outstanding in the current year as a result of share repurchases.
expenses.
2019.
Cash of $547,829 was provided by financing activities in 2017, compared to cash of $210,280 used in 2016. Net proceeds$1.53 per share from long-term debt and short-term borrowings provided $602,221 in 2017, compared to net short and long-term repayments of $130,217 in 2016. The increase in net proceeds is primarily due to our new $705,000 term loan facility used for the Vention acquisition during the second quarter of 2017, partially offset by current year repayments.$1.43 per share. Issuance of common shares related to employee benefit plans generated $14,086$50,853 of cash in 2017,2020, up from $11,476$26,020 in 2016. This increase was the result of higher stock option exercises. In 2017 cash of $3,216 was used for the purchase of treasury shares, down from $33,421 in 2016. Dividend payments were $63,840 in 2017, up from $56,436 in 2016 due to an increase in the annual dividend to $1.11 per share from $0.99 per share.
2019.
The increase of $10,568 in accrued liabilities was primarily due to higher compensation-related accruals.Note 4 for further discussion. Current maturities of long-term debt increased $288,494decreased $130,695 primarily asdriven by a resultpayment of the $326,460 reclassification from long-term debt to current maturities related to$100,000 on our 2015Term Loan Agreement and 2017 term loan facilities, certain ofa $25,000 payment on notes issued under our 2012 senior notes, and ouragreement with New York Life credit facility, partially offset by
which matured in July 2020.
$27,400 in repayments
|
| Payments Due by Period |
| ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| Less than |
|
| 1-3 |
|
| 4-5 |
|
| After 5 |
| Payments Due by Period | ||||||||||||||||||||||||||||||||
|
| Total |
|
| 1 Year |
|
| Years |
|
| Years |
|
| Years |
| Total | Less than 1 Year | 1-3 Years | 4-5 Years | After 5 Years | |||||||||||||||||||||||||||||
Long-term debt (1) |
| $ | 1,586,813 |
|
| $ | 326,587 |
|
| $ | 658,800 |
|
| $ | 373,978 |
|
| $ | 227,448 |
| |||||||||||||||||||||||||||||
Debt (1) | Debt (1) | $ | 1,109,256 | $ | 38,043 | $ | 519,927 | $ | 401,286 | $ | 150,000 | ||||||||||||||||||||||||||||||||||||||
Interest payments on long-term debt (1) |
|
| 45,148 |
|
|
| 11,173 |
|
|
| 15,628 |
|
|
| 10,366 |
|
|
| 7,981 |
| Interest payments on long-term debt (1) | 88,678 | 19,709 | 34,345 | 19,720 | 14,904 | |||||||||||||||||||||||
Capital lease obligations (2) |
|
| 19,358 |
|
|
| 6,353 |
|
|
| 6,849 |
|
|
| 1,501 |
|
|
| 4,655 |
| Capital lease obligations (2) | 17,820 | 6,226 | 6,987 | 1,651 | 2,956 | |||||||||||||||||||||||
Operating leases (2) |
|
| 74,117 |
|
|
| 17,337 |
|
|
| 23,500 |
|
|
| 15,560 |
|
|
| 17,720 |
| Operating leases (2) | 139,407 | 18,821 | 32,172 | 24,428 | 63,986 | |||||||||||||||||||||||
Contributions related to pension and postretirement benefits (3) |
|
| 25,000 |
|
|
| 25,000 |
|
|
| — |
|
|
| — |
|
|
| — |
| Contributions related to pension and postretirement benefits (3) | 46,521 | 46,521 | — | — | — | |||||||||||||||||||||||
Purchase obligations (4) |
|
| 74,425 |
|
|
| 72,751 |
|
|
| 1,674 |
|
|
| — |
|
|
| — |
| Purchase obligations (4) | 78,620 | 74,767 | 3,853 | — | — | |||||||||||||||||||||||
Total obligations |
| $ | 1,824,861 |
|
| $ | 459,201 |
|
| $ | 706,451 |
|
| $ | 401,405 |
|
| $ | 257,804 |
| Total obligations | $ | 1,480,302 | $ | 204,087 | $ | 597,284 | $ | 447,085 | $ | 231,846 | ||||||||||||||||||
|
|
(1)In February 2015,October 2020, we increased, amended, restated and extended the term of the unsecured $200,000 private shelf facility agreement with New York Life Investment Management LLC. The facility has a three-year term and expires in October 2023. The interest rate on each borrowing is fixed based upon the market rate at the borrowing date or is variable based upon the LIBOR rate. At October 31, 2020, there was no outstanding balance under this facility.
Nordson Corporation 30
mature between September 2018 and September 2026. The interest rate on each borrowing is fixed based upon the market rate at the borrowing date or is variable based upon the LIBOR rate. At October 31, 2017, the amount outstanding under this facility was at fixed rates of 2.21 percent and 2.56 percent and at variable rates of 2.49 percent and 2.60 percent.This agreement 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 covenants at October 31, 2017, and the amount we could borrow would not have been limited by any debt covenants.
facility.
In April 2015, we entered into a $200,000 term loan facility with a group of banks. $100,000 is due in April 2018 and has a weighted average interest rate of 2.24 percent and $100,000 is due in April 2020 and has a weighted average interest rate of 2.34 percent. This loan was used to pay down $100,000 of our previous 364-day unsecured credit facility and $100,000 of our revolving credit facility. We were in compliance with all covenants at October 31, 2017.
In October 2015, we entered into a €70,000 agreement with Bank of America Merrill Lynch International Limited. The term of
See Note 10 for additional information.
|
|
|
|
|
|
We believe that the combination of present capital resources, cash from operations and unused financing sources are more than adequate to meet cash requirements for 2018.2021. There are no significant restrictions limiting the transfer of funds from international subsidiaries to the parent company.
Other loan agreements exist with no remaining borrowing capacity, but factor into debt covenant calculations that affect future borrowing capacity. In July 2012, we entered into a note purchase agreement with a group of insurance companies under which we sold $200,000 of senior notes. The notes mature between July 2017 and July 2025 and bear interest at fixed rates between 2.62 percent and 3.13 percent. As of April 2015, we entered into a $200,000 term loan facility with PNC Bank. $100,000 is due in April 2018 and has a weighted average interest rate of 2.24 percent, and $100,000 is due in April 2020 and has a weighted average interest rate of 2.34 percent. In July 2015, we entered into a Note Purchase Agreement under which $100,000 of senior unsecured notes were
Nordson Corporation 31
purchased primarily by a group of insurance companies. The notes consist of two tranches, Series A and B at $50,000 each, maturing in July 2025 and July 2027, and bearing interest at fixed rates of 2.89 percent and 3.19 percent, respectively. In October 2015, we entered into a €70,000 three year term loan agreement with Bank of America Merrill Lynch International in London. This agreement was amended in September 2016 to extend the term by one year and increase the principal balance. The balance of this loan at October 31, 2017 was €10,467. The interest rate is variable based on the LIBOR rate plus applicable margin based on our leverage ratio, and the weighted average interest rate was 1.00 percent at October 31, 2017. In March 2017, we entered into a $705,000 term loan facility with a group of banks. The Term Agreement provides for terms loans in three tranches: $200,000 due in October 2018, $200,000 due in March 2020 and $305,000 due in March 2022. The weighted average interest rate for borrowings under this agreement was 2.33 percent at October 31, 2017.
Respective to all of these loans are two primary covenants, the leverage ratio that restricts indebtedness (net of cash) to a maximum 3.50 times consolidated four-quarter trailing EBITDA and the interest coverage ratio that requires four-quarter trailing EBITDA to be at minimum 3.0 times consolidated trailing four-quarter interest expense. (Debt, EBITDA, and interest expense are as defined in respective credit agreements.)
Regarding expectations for 2018, we are optimistic about longer term growth opportunities in the diverse consumer durable, non-durable, medical, electronics and industrial end markets we serve. For the first quarter of 2018, sales are expected to increase 30 percent to 34 percent compared to the first quarter a year ago. This growth includes organic volume up 15 percent to 19 percent, 11 percent growth from the first year effect of acquisitions, and a positive currency effect of 4 percent based on the current exchange rate environment. The short cycle nature of our end markets does not provide much visibility beyond a fiscal quarter, however, we do expect growth rates to moderate beyond our first quarter, particularly when considering our challenging comparisons to the prior year. We move forward with caution given continued slow growth in emerging markets, expectations for global GDP indicating a low-growth macroeconomic environment, tax reform and trade agreement implications, and marketplace effects of political instability in certain areas of the world.
Though the pace of improvement in the global economy remains unclear, our growth potential has been demonstrated over time from our capacity to build and enhance our core businesses by entering emerging markets and pursuing market adjacencies. We drive value for our customers through our application expertise, differentiated technology, and direct sales and service support. Our priorities also are focused on operational efficiencies by employing continuous improvement methodologies in our business processes. We expect our efforts will continue to provide more than sufficient cash from operations for meeting our liquidity needs and paying dividends to common shareholders, as well as enabling us to invest in the development of new applications and markets for our technologies. Cash from operations havehas been 1615 to 1824 percent of revenues over the past five years, resulting in more than sufficient cash for our ordinary business requirements. We believe cash provided from operations,which when combined with our available borrowing capacity and ready access to capital markets, is expected to be more than adequate to fund our liquidity needs withinover the next year.
With respect to contractual spending, the table above presents our financial obligations as $1,824,861, of which $459,201 is payable in 2018. In August 2015, the board of directors approved a $200,000 common share repurchase program that addeddebt capacity, to the board’s December 2014 approval authorizing management at its discretion to repurchase up to $300,000 of common shares, thereby increasing the total repurchase authorization to $500,000. Approximately $118,971 remained available for share repurchases as of October 31, 2017. The repurchase program2020, we had an unused, $850,000 multicurrency revolving credit facility. This credit facility is funded using cash from operationsunsecured and proceeds from borrowings under our credit facilities. Timing and actual numberexpires in February 2024.
recently issued accounting standards.
Factors of this report.
currencies.
Nordson Corporation 33
At October 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
| Fair |
| ||
|
| 2018 |
|
| 2019 |
|
| 2020 |
|
| 2021 |
|
| 2022 |
|
| Thereafter |
|
| Value |
|
| Value |
| ||||||||
Annual repayments of long-term debt |
| $ | 26,586 |
|
| $ | 28,734 |
|
| $ | 68,738 |
|
| $ | 38,187 |
|
| $ | 30,791 |
|
| $ | 127,448 |
|
| $ | 320,484 |
|
| $ | 324,965 |
|
Average interest rate on total borrowings outstanding during the year |
|
| 2.9 | % |
|
| 3.0 | % |
|
| 3.0 | % |
|
| 3.1 | % |
|
| 3.1 | % |
|
| 3.1 | % |
|
| 2.9 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At October 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
| Fair |
| ||
|
| 2017 |
|
| 2018 |
|
| 2019 |
|
| 2020 |
|
| 2021 |
|
| Thereafter |
|
| Value |
|
| Value |
| ||||||||
Annual repayments of long-term debt |
| $ | 38,093 |
|
| $ | 26,586 |
|
| $ | 28,734 |
|
| $ | 68,738 |
|
| $ | 38,187 |
|
| $ | 158,239 |
|
| $ | 358,577 |
|
| $ | 367,990 |
|
Average interest rate on total borrowings outstanding during the year |
|
| 2.9 | % |
|
| 2.9 | % |
|
| 3.0 | % |
|
| 3.0 | % |
|
| 3.1 | % |
|
| 3.1 | % |
|
| 2.9 | % |
|
|
|
|
| At October 31, 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total Value | Fair Value | |||||||||||||||||||||||||||||||||||||||
| Annual repayments of long-term debt | $ | 38,043 | $ | 30,643 | $ | 130,643 | $ | 110,643 | $ | 85,643 | $ | 150,000 | $ | 545,615 | $ | 608,752 | |||||||||||||||||||||||||||||||
| Average interest rate on total borrowings outstanding during the year | 3.6 | % | 3.7 | % | 3.7 | % | 3.8 | % | 3.9 | % | 4.0 | % | 3.6 | % | |||||||||||||||||||||||||||||||||
| At October 31, 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total Value | Fair Value | |||||||||||||||||||||||||||||||||||||||
| Annual repayments of long-term debt | $ | 68,738 | $ | 38,187 | $ | 30,791 | $ | 130,796 | $ | 110,801 | $ | 235,851 | $ | 615,164 | $ | 647,982 | |||||||||||||||||||||||||||||||
| Average interest rate on total borrowings outstanding during the year | 3.5 | % | 3.6 | % | 3.7 | % | 3.7 | % | 3.8 | % | 3.9 | % | 3.5 | % | |||||||||||||||||||||||||||||||||
2020.
Years ended October 31, 2017, 2016 and 2015 |
| 2017 |
|
| 2016 |
|
| 2015 |
| |||||||||||||||||||||||
| Years ended October 31, 2020, 2019 and 2018 | Years ended October 31, 2020, 2019 and 2018 | |||||||||||||||||||||||||||||||
(In thousands except for per-share amounts) |
|
|
|
|
|
|
|
|
|
|
|
| (In thousands except for per-share amounts) | 2020 | 2019 | 2018 | ||||||||||||||||
Sales |
| $ | 2,066,982 |
|
| $ | 1,808,994 |
|
| $ | 1,688,666 |
| Sales | $ | 2,121,100 | $ | 2,194,226 | $ | 2,254,668 | |||||||||||||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
| Operating costs and expenses: | |||||||||||||||||||
Cost of sales |
|
| 927,981 |
|
|
| 815,495 |
|
|
| 774,702 |
| Cost of sales | 990,632 | 1,002,123 | 1,018,340 | ||||||||||||||||
Selling and administrative expenses |
|
| 678,861 |
|
|
| 594,293 |
|
|
| 584,823 |
| Selling and administrative expenses | 693,552 | 708,990 | 733,749 | ||||||||||||||||
Severance and restructuring costs |
|
| 2,438 |
|
|
| 10,775 |
|
|
| 11,411 |
| ||||||||||||||||||||
| Assets held for sale impairment charge | Assets held for sale impairment charge | 87,371 | 0 | 0 | ||||||||||||||||||||||||||||
|
|
| 1,609,280 |
|
|
| 1,420,563 |
|
|
| 1,370,936 |
| 1,771,555 | 1,711,113 | 1,752,089 | |||||||||||||||||
Operating profit |
|
| 457,702 |
|
|
| 388,431 |
|
|
| 317,730 |
| Operating profit | 349,545 | 483,113 | 502,579 | ||||||||||||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): | |||||||||||||||||||
Interest expense |
|
| (36,601 | ) |
|
| (21,322 | ) |
|
| (18,104 | ) | Interest expense | (32,160) | (47,145) | (49,576) | ||||||||||||||||
Interest and investment income |
|
| 1,124 |
|
|
| 728 |
|
|
| 558 |
| Interest and investment income | 1,681 | 1,844 | 1,384 | ||||||||||||||||
Other - net |
|
| (1,934 | ) |
|
| 657 |
|
|
| 678 |
| Other - net | (17,577) | (6,708) | (5,868) | ||||||||||||||||
|
|
| (37,411 | ) |
|
| (19,937 | ) |
|
| (16,868 | ) | (48,056) | (52,009) | (54,060) | |||||||||||||||||
Income before income taxes |
|
| 420,291 |
|
|
| 368,494 |
|
|
| 300,862 |
| Income before income taxes | 301,489 | 431,104 | 448,519 | ||||||||||||||||
Income tax provision: |
|
|
|
|
|
|
|
|
|
|
|
| Income tax provision: | |||||||||||||||||||
Current |
|
| 124,961 |
|
|
| 100,248 |
|
|
| 87,651 |
| Current | 65,906 | 95,031 | 105,093 | ||||||||||||||||
Deferred |
|
| (472 | ) |
|
| (3,597 | ) |
|
| 2,100 |
| Deferred | (13,956) | (1,018) | (33,949) | ||||||||||||||||
|
|
| 124,489 |
|
|
| 96,651 |
|
|
| 89,751 |
| 51,950 | 94,013 | 71,144 | |||||||||||||||||
Net income |
| $ | 295,802 |
|
| $ | 271,843 |
|
| $ | 211,111 |
| Net income | $ | 249,539 | $ | 337,091 | $ | 377,375 | |||||||||||||
Average common shares |
|
| 57,533 |
|
|
| 57,060 |
|
|
| 60,652 |
| Average common shares | 57,757 | 57,462 | 57,970 | ||||||||||||||||
Incremental common shares attributable to outstanding stock options, restricted stock and deferred stock-based compensation |
|
| 671 |
|
|
| 470 |
|
|
| 499 |
| Incremental common shares attributable to outstanding stock options, restricted stock and deferred stock-based compensation | 716 | 740 | 961 | ||||||||||||||||
Average common shares and common share equivalents |
|
| 58,204 |
|
|
| 57,530 |
|
|
| 61,151 |
| Average common shares and common share equivalents | 58,473 | 58,202 | 58,931 | ||||||||||||||||
Basic earnings per share |
| $ | 5.14 |
|
| $ | 4.76 |
|
| $ | 3.48 |
| Basic earnings per share | $ | 4.32 | $ | 5.87 | $ | 6.51 | |||||||||||||
Diluted earnings per share |
| $ | 5.08 |
|
| $ | 4.73 |
|
| $ | 3.45 |
| Diluted earnings per share | $ | 4.27 | $ | 5.79 | $ | 6.40 | |||||||||||||
Dividends declared per common share |
| $ | 1.11 |
|
| $ | 0.99 |
|
| $ | 0.90 |
| Dividends declared per common share | $ | 1.53 | $ | 1.43 | $ | 1.25 | |||||||||||||
Years ended October 31, 2017, 2016 and 2015 |
| 2017 |
|
| 2016 |
|
| 2015 |
| |||||||||||||||||||||||
| Years ended October 31, 2020, 2019 and 2018 | Years ended October 31, 2020, 2019 and 2018 | |||||||||||||||||||||||||||||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
| (In thousands) | 2020 | 2019 | 2018 | ||||||||||||||||
Net income |
| $ | 295,802 |
|
| $ | 271,843 |
|
| $ | 211,111 |
| Net income | $ | 249,539 | $ | 337,091 | $ | 377,375 | |||||||||||||
Components of other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
| Components of other comprehensive income (loss), net of tax: | |||||||||||||||||||
Foreign currency translation adjustments |
|
| 22,697 |
|
|
| (8,693 | ) |
|
| (45,154 | ) | Foreign currency translation adjustments | 12,910 | 3,710 | (28,619) | ||||||||||||||||
Pension and postretirement benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
| Pension and postretirement benefit plans: | |||||||||||||||||||
Prior service credit arising during the year |
|
| — |
|
|
| 1,831 |
|
|
| — |
| ||||||||||||||||||||
Net actuarial gain (loss) arising during the year |
|
| 2,641 |
|
|
| (22,482 | ) |
|
| (7,588 | ) | ||||||||||||||||||||
| Prior service (cost) credit arising during the year | Prior service (cost) credit arising during the year | (6) | (148) | (45) | ||||||||||||||||||||||||||||
| Net actuarial loss arising during the year | Net actuarial loss arising during the year | (21,607) | (63,138) | (7,783) | ||||||||||||||||||||||||||||
Amortization of prior service cost |
|
| (210 | ) |
|
| 92 |
|
|
| (303 | ) | Amortization of prior service cost | (232) | (322) | (322) | ||||||||||||||||
Amortization of actuarial loss |
|
| 7,972 |
|
|
| 6,724 |
|
|
| 10,146 |
| Amortization of actuarial loss | 12,767 | 6,946 | 10,536 | ||||||||||||||||
Settlement loss recognized |
|
| 712 |
|
|
| 111 |
|
|
| 1,369 |
| Settlement loss recognized | 1,931 | 385 | 200 | ||||||||||||||||
Curtailment (gain) loss recognized |
|
| — |
|
|
| (1,144 | ) |
|
| 43 |
| ||||||||||||||||||||
Total pension and postretirement benefit plans |
|
| 11,115 |
|
|
| (14,868 | ) |
|
| 3,667 |
| Total pension and postretirement benefit plans | (7,147) | (56,277) | 2,586 | ||||||||||||||||
Total other comprehensive income (loss) |
|
| 33,812 |
|
|
| (23,561 | ) |
|
| (41,487 | ) | Total other comprehensive income (loss) | 5,763 | (52,567) | (26,033) | ||||||||||||||||
| Reclassification due to adoption of ASU 2018-02 | Reclassification due to adoption of ASU 2018-02 | 0 | 0 | (18,846) | ||||||||||||||||||||||||||||
Total comprehensive income |
| $ | 329,614 |
|
| $ | 248,282 |
|
| $ | 169,624 |
| Total comprehensive income | $ | 255,302 | $ | 284,524 | $ | 332,496 | |||||||||||||
October 31, 2017 and 2016 |
| 2017 |
|
| 2016 |
| ||||||||||||||||
| October 31, 2020 and 2019 | October 31, 2020 and 2019 | |||||||||||||||||||||
(In thousands) |
|
|
|
|
|
|
|
| (In thousands) | |||||||||||||
Assets |
|
|
|
|
|
|
|
| Assets | |||||||||||||
Current assets: |
|
|
|
|
|
|
|
| Current assets: | 2020 | 2019 | |||||||||||
Cash and cash equivalents |
| $ | 90,383 |
|
| $ | 67,239 |
| Cash and cash equivalents | $ | 208,293 | $ | 151,164 | |||||||||
Receivables - net |
|
| 505,087 |
|
|
| 428,560 |
| Receivables - net | 471,873 | 530,765 | |||||||||||
Inventories - net |
|
| 264,266 |
|
|
| 220,361 |
| Inventories - net | 277,033 | 283,399 | |||||||||||
Prepaid expenses |
|
| 28,636 |
|
|
| 29,415 |
| ||||||||||||||
| Prepaid expenses and other current assets | Prepaid expenses and other current assets | 43,798 | 45,867 | |||||||||||||||||||
| Assets held for sale | Assets held for sale | 19,615 | 0 | |||||||||||||||||||
Total current assets |
|
| 888,372 |
|
|
| 745,575 |
| Total current assets | 1,020,612 | 1,011,195 | |||||||||||
Property, plant and equipment - net |
|
| 346,411 |
|
|
| 273,129 |
| Property, plant and equipment - net | 358,618 | 398,895 | |||||||||||
| Operating right of use lease assets | Operating right of use lease assets | 122,125 | 0 | |||||||||||||||||||
Goodwill |
|
| 1,589,210 |
|
|
| 1,107,137 |
| Goodwill | 1,713,354 | 1,614,739 | |||||||||||
Intangible assets - net |
|
| 547,180 |
|
|
| 260,302 |
| Intangible assets - net | 407,586 | 445,575 | |||||||||||
Deferred income taxes |
|
| 11,020 |
|
|
| 10,681 |
| Deferred income taxes | 9,831 | 11,261 | |||||||||||
Other assets |
|
| 32,346 |
|
|
| 23,759 |
| Other assets | 42,530 | 34,782 | |||||||||||
|
| $ | 3,414,539 |
|
| $ | 2,420,583 |
| $ | 3,674,656 | $ | 3,516,447 | ||||||||||
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
| Liabilities and shareholders' equity | |||||||||||||
Current liabilities: |
|
|
|
|
|
|
|
| Current liabilities: | |||||||||||||
Notes payable |
| $ | — |
|
| $ | 2,141 |
| ||||||||||||||
Accounts payable |
|
| 86,016 |
|
|
| 75,130 |
| Accounts payable | $ | 70,949 | $ | 85,139 | |||||||||
Income taxes payable |
|
| 22,310 |
|
|
| 22,762 |
| Income taxes payable | 7,841 | 15,601 | |||||||||||
Accrued liabilities |
|
| 173,366 |
|
|
| 162,798 |
| Accrued liabilities | 167,883 | 161,655 | |||||||||||
Customer advance payments |
|
| 34,654 |
|
|
| 26,175 |
| Customer advance payments | 42,323 | 41,131 | |||||||||||
Current maturities of long-term debt |
|
| 326,587 |
|
|
| 38,093 |
| ||||||||||||||
Current obligations under capital leases |
|
| 4,813 |
|
|
| 4,444 |
| ||||||||||||||
| Current maturities of long - term debt | Current maturities of long - term debt | 38,043 | 168,738 | |||||||||||||||||||
| Operating lease liability - current | Operating lease liability - current | 16,918 | 0 | |||||||||||||||||||
| Finance lease liability | Finance lease liability | 5,984 | 5,362 | |||||||||||||||||||
| Liabilities held for sale | Liabilities held for sale | 13,148 | 0 | |||||||||||||||||||
Total current liabilities |
|
| 647,746 |
|
|
| 331,543 |
| Total current liabilities | 363,089 | 477,626 | |||||||||||
Long-term debt |
|
| 1,256,397 |
|
|
| 942,771 |
| Long-term debt | 1,067,952 | 1,075,404 | |||||||||||
Obligations under capital leases |
|
| 9,693 |
|
|
| 9,714 |
| ||||||||||||||
| Operating lease liability - noncurrent | Operating lease liability - noncurrent | 109,317 | 0 | |||||||||||||||||||
| Finance lease liability - noncurrent | Finance lease liability - noncurrent | 10,470 | 9,513 | |||||||||||||||||||
Pension obligations |
|
| 111,666 |
|
|
| 130,376 |
| Pension obligations | 165,529 | 158,506 | |||||||||||
Postretirement obligations |
|
| 73,589 |
|
|
| 70,397 |
| Postretirement obligations | 85,249 | 86,368 | |||||||||||
Deferred income taxes |
|
| 134,090 |
|
|
| 61,836 |
| Deferred income taxes | 66,995 | 83,564 | |||||||||||
Other liabilities |
|
| 25,865 |
|
|
| 22,343 |
| ||||||||||||||
| Other long-term liabilities | Other long-term liabilities | 47,064 | 44,421 | |||||||||||||||||||
Shareholders' equity: |
|
|
|
|
|
|
|
| Shareholders' equity: | |||||||||||||
Preferred shares, no par value; 10,000 shares authorized; |
|
|
|
|
|
|
|
| Preferred shares, no par value; 10,000 shares authorized; | |||||||||||||
none issued |
|
| — |
|
|
| — |
| ||||||||||||||
| NaN issued | NaN issued | 0 | 0 | |||||||||||||||||||
Common shares, no par value; 160,000 shares authorized; |
|
|
|
|
|
|
|
| Common shares, no par value; 160,000 shares authorized; | |||||||||||||
98,023 shares issued at October 31, 2017 and 2016 |
|
| 12,253 |
|
|
| 12,253 |
| ||||||||||||||
| 98,023 shares issued at October 31, 2020 and 2019 | 98,023 shares issued at October 31, 2020 and 2019 | 12,253 | 12,253 | |||||||||||||||||||
Capital in excess of stated value |
|
| 412,785 |
|
|
| 376,625 |
| Capital in excess of stated value | 534,684 | 483,116 | |||||||||||
Retained earnings |
|
| 2,164,597 |
|
|
| 1,932,635 |
| Retained earnings | 2,908,738 | 2,747,650 | |||||||||||
Accumulated other comprehensive loss |
|
| (134,435 | ) |
|
| (168,247 | ) | Accumulated other comprehensive loss | (226,118) | (231,881) | |||||||||||
Common shares in treasury, at cost |
|
| (1,299,707 | ) |
|
| (1,301,663 | ) | Common shares in treasury, at cost | (1,470,566) | (1,430,093) | |||||||||||
Total shareholders' equity |
|
| 1,155,493 |
|
|
| 851,603 |
| Total shareholders' equity | 1,758,991 | 1,581,045 | |||||||||||
|
| $ | 3,414,539 |
|
| $ | 2,420,583 |
| $ | 3,674,656 | $ | 3,516,447 | ||||||||||
Years ended October 31, 2017, 2016 and 2015 |
| 2017 |
|
| 2016 |
|
| 2015 |
| |||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Number of common shares in treasury |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year |
|
| 40,716 |
|
|
| 40,665 |
|
|
| 35,588 |
|
Shares issued under company stock and employee benefit plans |
|
| (438 | ) |
|
| (421 | ) |
|
| (318 | ) |
Purchase of treasury shares |
|
| 30 |
|
|
| 472 |
|
|
| 5,395 |
|
Balance at end of year |
|
| 40,308 |
|
|
| 40,716 |
|
|
| 40,665 |
|
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 |
| $ | 376,625 |
|
| $ | 348,986 |
|
| $ | 328,605 |
|
Shares issued under company stock and employee benefit plans |
|
| 8,913 |
|
|
| 5,952 |
|
|
| 1,458 |
|
Tax benefit from stock option and restricted stock transactions |
|
| 7,079 |
|
|
| 3,476 |
|
|
| 3,661 |
|
Stock-based compensation |
|
| 20,168 |
|
|
| 18,211 |
|
|
| 15,262 |
|
Balance at end of year |
| $ | 412,785 |
|
| $ | 376,625 |
|
| $ | 348,986 |
|
Retained earnings |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year |
| $ | 1,932,635 |
|
| $ | 1,717,228 |
|
| $ | 1,560,966 |
|
Net income |
|
| 295,802 |
|
|
| 271,843 |
|
|
| 211,111 |
|
Dividends paid ($1.11 per share in 2017, $0.99 per share in 2016, and $0.90 per share in 2015) |
|
| (63,840 | ) |
|
| (56,436 | ) |
|
| (54,849 | ) |
Balance at end of year |
| $ | 2,164,597 |
|
| $ | 1,932,635 |
|
| $ | 1,717,228 |
|
Accumulated other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year |
| $ | (168,247 | ) |
| $ | (144,686 | ) |
| $ | (103,199 | ) |
Foreign currency translation adjustments |
|
| 22,697 |
|
|
| (8,693 | ) |
|
| (45,154 | ) |
Settlement and curtailment loss (gain) recognized, net of tax of $(299) in 2017, $332 in 2016 and $(491) in 2015 |
|
| 712 |
|
|
| (1,033 | ) |
|
| 1,412 |
|
Defined benefit and OPEB activity - prior service cost, net of tax of $75 in 2017, $(558) in 2016 and $191 in 2015 |
|
| (210 | ) |
|
| 1,923 |
|
|
| (303 | ) |
Defined benefit and OPEB activity - actuarial gain (loss), net of tax of $(4,628) in 2017, $8,642 in 2016 and $(1,242) in 2015 |
|
| 10,613 |
|
|
| (15,758 | ) |
|
| 2,558 |
|
Balance at end of year |
| $ | (134,435 | ) |
| $ | (168,247 | ) |
| $ | (144,686 | ) |
Common shares in treasury, at cost |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year |
| $ | (1,301,663 | ) |
| $ | (1,273,765 | ) |
| $ | (893,828 | ) |
Shares issued under company stock and employee benefit plans |
|
| 5,342 |
|
|
| 5,735 |
|
|
| 4,359 |
|
Purchase of treasury shares |
|
| (3,386 | ) |
|
| (33,633 | ) |
|
| (384,296 | ) |
Balance at end of year |
| $ | (1,299,707 | ) |
| $ | (1,301,663 | ) |
| $ | (1,273,765 | ) |
Total shareholders' equity |
| $ | 1,155,493 |
|
| $ | 851,603 |
|
| $ | 660,016 |
|
| Years ended October 31, 2020, 2019 and 2018 | |||||||||||||||||||||||||||||||||||
| (In thousands, except for per share data) | Common Shares | Additional Paid-in- Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Shares in Treasury, at cost | TOTAL | |||||||||||||||||||||||||||||
| October 31, 2017 | $ | 12,253 | $ | 412,785 | $ | 2,164,597 | $ | (134,435) | $ | (1,299,707) | $ | 1,155,493 | |||||||||||||||||||||||
| Shares issued under company stock and employee benefit plans | — | 12,220 | — | — | 6,591 | 18,811 | |||||||||||||||||||||||||||||
| Stock-based compensation | — | 21,550 | — | — | — | 21,550 | |||||||||||||||||||||||||||||
| Purchase of treasury shares (180,735 shares) | — | — | — | — | (24,012) | (24,012) | |||||||||||||||||||||||||||||
| Dividends declared ($1.25 per share) | — | — | (72,443) | — | — | (72,443) | |||||||||||||||||||||||||||||
| Net income | — | — | 377,375 | — | — | 377,375 | |||||||||||||||||||||||||||||
| Reclassification due to adoption of ASU 2018-02 | — | — | 18,846 | (18,846) | — | — | |||||||||||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | (28,619) | — | (28,619) | |||||||||||||||||||||||||||||
| Defined benefit pension and post-retirement plans adjustment | — | — | — | 2,586 | — | 2,586 | |||||||||||||||||||||||||||||
| October 31, 2018 | $ | 12,253 | $ | 446,555 | $ | 2,488,375 | $ | (179,314) | $ | (1,317,128) | $ | 1,450,741 | |||||||||||||||||||||||
| Shares issued under company stock and employee benefit plans | — | 18,475 | — | — | 7,545 | 26,020 | |||||||||||||||||||||||||||||
| Stock-based compensation | — | 18,086 | — | — | — | 18,086 | |||||||||||||||||||||||||||||
| Purchase of treasury shares (998,004 shares) | — | — | — | — | (120,510) | (120,510) | |||||||||||||||||||||||||||||
| Dividends declared ($1.43 per share) | — | — | (82,145) | — | — | (82,145) | |||||||||||||||||||||||||||||
| Net income | — | — | 337,091 | — | — | 337,091 | |||||||||||||||||||||||||||||
| Impact of adoption of ASU 2014-09 | — | — | 4,329 | — | — | 4,329 | |||||||||||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | 3,710 | — | 3,710 | |||||||||||||||||||||||||||||
| Defined benefit pension and post-retirement plans adjustment | — | — | — | (56,277) | — | (56,277) | |||||||||||||||||||||||||||||
| October 31, 2019 | $ | 12,253 | $ | 483,116 | $ | 2,747,650 | $ | (231,881) | $ | (1,430,093) | $ | 1,581,045 | |||||||||||||||||||||||
| Shares issued under company stock and employee benefit plans | — | 38,712 | — | — | 12,141 | 50,853 | |||||||||||||||||||||||||||||
| Stock-based compensation | — | 12,856 | — | — | — | 12,856 | |||||||||||||||||||||||||||||
| Purchase of treasury shares (384,498 shares) | — | — | — | — | (52,614) | (52,614) | |||||||||||||||||||||||||||||
| Dividends declared ($1.53 per share) | — | — | (88,347) | — | — | (88,347) | |||||||||||||||||||||||||||||
| Net income | — | — | 249,539 | — | — | 249,539 | |||||||||||||||||||||||||||||
| Impact of adoption of ASU 2016-02 | — | — | (104) | — | — | (104) | |||||||||||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | 12,910 | — | 12,910 | |||||||||||||||||||||||||||||
| Defined benefit pension and post-retirement plans adjustment | — | — | — | (7,147) | — | (7,147) | |||||||||||||||||||||||||||||
| October 31, 2020 | $ | 12,253 | $ | 534,684 | $ | 2,908,738 | $ | (226,118) | $ | (1,470,566) | $ | 1,758,991 | |||||||||||||||||||||||
Years ended October 31, 2017, 2016 and 2015 |
| 2017 |
|
| 2016 |
|
| 2015 |
| |||||||||||||||||||||||
| Years ended October 31, 2020, 2019 and 2018 | Years ended October 31, 2020, 2019 and 2018 | |||||||||||||||||||||||||||||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
| (In thousands) | |||||||||||||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from operating activities: | 2020 | 2019 | 2018 | ||||||||||||||||
Net income |
| $ | 295,802 |
|
| $ | 271,843 |
|
| $ | 211,111 |
| Net income | $ | 249,539 | $ | 337,091 | $ | 377,375 | |||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation |
|
| 45,947 |
|
|
| 41,243 |
|
|
| 37,707 |
| Depreciation | 56,323 | 55,454 | 52,959 | ||||||||||||||||
Amortization |
|
| 44,907 |
|
|
| 29,061 |
|
|
| 27,487 |
| Amortization | 56,979 | 54,790 | 55,448 | ||||||||||||||||
Provision for losses on receivables |
|
| 4,030 |
|
|
| 1,867 |
|
|
| 1,014 |
| Provision for losses on receivables | 2,165 | 2,254 | 1,185 | ||||||||||||||||
Deferred income taxes |
|
| (472 | ) |
|
| (3,597 | ) |
|
| 2,100 |
| Deferred income taxes | (13,956) | (1,018) | (33,949) | ||||||||||||||||
Tax benefit from the exercise of stock options |
|
| (7,079 | ) |
|
| (3,476 | ) |
|
| (3,661 | ) | ||||||||||||||||||||
Non-cash stock compensation |
|
| 20,168 |
|
|
| 18,211 |
|
|
| 15,262 |
| Non-cash stock compensation | 12,856 | 18,086 | 21,550 | ||||||||||||||||
Loss on sale of property, plant and equipment |
|
| 188 |
|
|
| 859 |
|
|
| 376 |
| Loss on sale of property, plant and equipment | 484 | 953 | 830 | ||||||||||||||||
| Impairment loss on assets held for sale | Impairment loss on assets held for sale | 87,371 | 0 | 0 | ||||||||||||||||||||||||||||
Other non-cash |
|
| 2,770 |
|
|
| 2,973 |
|
|
| 56 |
| Other non-cash | 3,729 | (669) | 1,359 | ||||||||||||||||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| Changes in operating assets and liabilities: | |||||||||||||||||||
Receivables |
|
| (46,152 | ) |
|
| (41,247 | ) |
|
| (37,179 | ) | Receivables | 50,098 | (39,992) | 10,236 | ||||||||||||||||
Inventories |
|
| (19,667 | ) |
|
| 1,784 |
|
|
| (14,208 | ) | Inventories | 5,785 | (23,117) | 5,532 | ||||||||||||||||
Prepaid expenses |
|
| 4,737 |
|
|
| (8,667 | ) |
|
| 1,799 |
| Prepaid expenses | 1,978 | (2,024) | (4,046) | ||||||||||||||||
Other assets |
|
| (3,429 | ) |
|
| 7,773 |
|
|
| 1,733 |
| ||||||||||||||||||||
Accounts payable |
|
| 4,805 |
|
|
| 7,296 |
|
|
| (1,261 | ) | Accounts payable | (10,673) | 654 | (2,671) | ||||||||||||||||
Income taxes payable |
|
| 7,522 |
|
|
| (2,684 | ) |
|
| 15,616 |
| Income taxes payable | (7,816) | (3,832) | (2,718) | ||||||||||||||||
Accrued liabilities |
|
| (5,629 | ) |
|
| 23,328 |
|
|
| 5,817 |
| Accrued liabilities | 6,360 | (14,027) | 2,134 | ||||||||||||||||
Customer advance payments |
|
| 5,163 |
|
|
| 3,631 |
|
|
| (1,062 | ) | Customer advance payments | (619) | 2,193 | 5,047 | ||||||||||||||||
Other liabilities |
|
| 2,266 |
|
|
| (17,739 | ) |
|
| 2,830 |
| ||||||||||||||||||||
Other |
|
| (6,204 | ) |
|
| (1,301 | ) |
|
| (3,586 | ) | ||||||||||||||||||||
| Other net | Other net | 1,818 | (3,903) | 14,367 | ||||||||||||||||||||||||||||
Net cash provided by operating activities |
|
| 349,673 |
|
|
| 331,158 |
|
|
| 261,951 |
| Net cash provided by operating activities | 502,421 | 382,893 | 504,638 | ||||||||||||||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from investing activities: | |||||||||||||||||||
Additions to property, plant and equipment |
|
| (71,558 | ) |
|
| (60,851 | ) |
|
| (62,087 | ) | Additions to property, plant and equipment | (50,535) | (64,244) | (89,790) | ||||||||||||||||
Proceeds from sale of property, plant and equipment |
|
| 4,007 |
|
|
| 1,300 |
|
|
| 597 |
| Proceeds from sale of property, plant and equipment | 840 | 1,285 | 458 | ||||||||||||||||
Acquisition of businesses, net of cash acquired |
|
| (805,943 | ) |
|
| (42,650 | ) |
|
| (75,565 | ) | Acquisition of businesses, net of cash acquired | (142,414) | (12,486) | (50,586) | ||||||||||||||||
Equity investments |
|
| (4,470 | ) |
|
| — |
|
|
| (1,480 | ) | ||||||||||||||||||||
| Other | Other | (2,000) | (844) | 0 | ||||||||||||||||||||||||||||
Net cash used in investing activities |
|
| (877,964 | ) |
|
| (102,201 | ) |
|
| (138,535 | ) | Net cash used in investing activities | (194,109) | (76,289) | (139,918) | ||||||||||||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities: | |||||||||||||||||||
Proceeds from short-term borrowings |
|
| 6,017 |
|
|
| 13,456 |
|
|
| 59,870 |
| Proceeds from short-term borrowings | 0 | 0 | 996 | ||||||||||||||||
Repayment of short-term borrowings |
|
| (8,149 | ) |
|
| (12,059 | ) |
|
| (164,716 | ) | Repayment of short-term borrowings | 0 | 0 | (1,006) | ||||||||||||||||
Proceeds from long-term debt |
|
| 841,536 |
|
|
| 261,161 |
|
|
| 719,534 |
| Proceeds from long-term debt | 165,734 | 186,635 | 585,661 | ||||||||||||||||
Repayment of long-term debt |
|
| (237,183 | ) |
|
| (392,775 | ) |
|
| (289,202 | ) | Repayment of long-term debt | (319,550) | (254,473) | (854,538) | ||||||||||||||||
Repayment of capital lease obligations |
|
| (5,287 | ) |
|
| (5,059 | ) |
|
| (5,240 | ) | Repayment of capital lease obligations | (7,605) | (4,859) | (5,333) | ||||||||||||||||
Payment of debt issuance costs |
|
| (3,214 | ) |
|
| (99 | ) |
|
| (1,557 | ) | Payment of debt issuance costs | 0 | (1,742) | (1,826) | ||||||||||||||||
Issuance of common shares |
|
| 14,086 |
|
|
| 11,476 |
|
|
| 5,372 |
| Issuance of common shares | 50,853 | 26,020 | 18,811 | ||||||||||||||||
Purchase of treasury shares |
|
| (3,216 | ) |
|
| (33,421 | ) |
|
| (383,851 | ) | Purchase of treasury shares | (52,614) | (120,510) | (24,012) | ||||||||||||||||
Tax benefit from the exercise of stock options |
|
| 7,079 |
|
|
| 3,476 |
|
|
| 3,661 |
| ||||||||||||||||||||
Dividends paid |
|
| (63,840 | ) |
|
| (56,436 | ) |
|
| (54,849 | ) | Dividends paid | (88,347) | (82,145) | (72,443) | ||||||||||||||||
Net cash provided by (used in) financing activities |
|
| 547,829 |
|
|
| (210,280 | ) |
|
| (110,978 | ) | ||||||||||||||||||||
| Net cash used in financing activities | Net cash used in financing activities | (251,529) | (251,074) | (353,690) | ||||||||||||||||||||||||||||
Effect of exchange rate changes on cash |
|
| 3,606 |
|
|
| (1,706 | ) |
|
| (4,484 | ) | Effect of exchange rate changes on cash | 346 | (44) | (5,735) | ||||||||||||||||
Increase in cash and cash equivalents |
|
| 23,144 |
|
|
| 16,971 |
|
|
| 7,954 |
| Increase in cash and cash equivalents | 57,129 | 55,486 | 5,295 | ||||||||||||||||
Cash and cash equivalents at beginning of year |
|
| 67,239 |
|
|
| 50,268 |
|
|
| 42,314 |
| Cash and cash equivalents at beginning of year | 151,164 | 95,678 | 90,383 | ||||||||||||||||
Cash and cash equivalents at end of year |
| $ | 90,383 |
|
| $ | 67,239 |
|
| $ | 50,268 |
| Cash and cash equivalents at end of year | $ | 208,293 | $ | 151,164 | $ | 95,678 | |||||||||||||
We have also elected to apply the practical expedient to expense sales commissions as they are incurred as the amortization period resulting from capitalizing the costs is one year or less. These costs are recorded within Selling, general and administrative expenses in our Consolidated Statements of Income.
for allocating resources. Refer to Note 16 for details on our operating segments.
As a percentage of sales, research and development expenses were 3.0, 2.7 and 2.6 percent in 2020, 2019 and 2018, respectively.
Nordson Corporation 40
|
| ||||
|
| ||||
Buildings | 20-40 years | ||||
| Machinery and equipment | 3-18 years | ||||
Enterprise management systems | 5-13 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 project’s completion. All re-engineering costs are expensed as incurred. Interest costs on significant capital projects are capitalized. NoNaN interest was capitalized in 2017, 20162020, 2019 or 2015.
2018.
| Patent/technology costs |
| ||||
Customer relationships | 14 years | ||||
Noncompete agreements |
| ||||
Trade names | 15 years | ||||
|
| Cumulative |
|
| Pension and |
|
| Accumulated |
| |||
|
| translation |
|
| postretirement benefit |
|
| other comprehensive |
| |||
|
| adjustments |
|
| plan adjustments |
|
| loss |
| |||
Balance at October 31, 2016 |
| $ | (51,120 | ) |
| $ | (117,127 | ) |
| $ | (168,247 | ) |
Pension and postretirement plan changes, net of tax of $(4,852) |
|
| — |
|
|
| 11,115 |
|
|
| 11,115 |
|
Currency translation losses |
|
| 22,697 |
|
|
| — |
|
|
| 22,697 |
|
Balance at October 31, 2017 |
| $ | (28,423 | ) |
| $ | (106,012 | ) |
| $ | (134,435 | ) |
| Cumulative translation adjustments | Pension and postretirement benefit plan adjustments | Accumulated other comprehensive loss | |||||||||||||||
| Balance at October 31, 2019 | $ | (53,332) | $ | (178,549) | $ | (231,881) | |||||||||||
| Pension and postretirement plan changes, net of tax of $(2,404) | — | (7,147) | (7,147) | ||||||||||||||
| Currency translation losses | 12,910 | — | 12,910 | ||||||||||||||
| Balance at October 31, 2020 | $ | (40,422) | $ | (185,696) | $ | (226,118) | |||||||||||
Nordson Corporation 41
2017 2016 Balance at beginning of year $ 11,770 $ 10,537 Accruals for warranties 11,394 14,487 Warranty assumed from acquisitions 75 — Warranty payments (10,090 ) (12,575 ) Currency adjustments 228 (679 ) Balance at end of year $ 13,377 $ 11,770 to the Consolidated Financial Statements. Consolidated Financial Statements. Consolidated Financial Statements. Employee Other severance one-time charges costs Total Accrual Balance at October 31, 2016 $ 4,576 $ 104 $ 4,680 Charged to expense (243 ) 2,642 2,399 Cash payments (209 ) (1,566 ) (1,775 ) Non cash utilization — (488 ) (488 ) Accrual Balance at October 31, 2017 $ 4,124 $ 692 $ 4,816 Employee Lease Other severance termination one-time charges charges costs Total Accrual Balance at October 31, 2016 $ 1,136 $ 143 $ 497 $ 1,776 Charged to expense (133 ) — 172 $ 39 Cash payments (525 ) (143 ) (540 ) (1,208 ) Accrual Balance at October 31, 2017 $ 478 $ — $ 129 $ 607 Assets acquired: Cash $ 3,313 Receivables 26,742 Inventories 14,279 Prepaid expenses 3,079 Property, plant and equipment 34,319 Goodwill 434,625 Intangible assets 286,000 Other assets 343 Total assets acquired $ 802,700 Liabilities assumed: Current liabilities 19,130 Deferred tax liabilities 64,531 Total liabilities assumed $ 83,661 Net assets acquired $ 719,039 Twelve Months Ended October 31, 2017 October 31, 2016 Sales $ 2,132,417 $ 1,939,525 Net income 294,891 260,991 Diluted earnings per share 5.07 4.54 2017 2016 Receivables: Accounts $ 491,224 $ 415,311 Notes 5,121 7,971 Other 18,533 10,813 514,878 434,095 Allowance for doubtful accounts (9,791 ) (5,535 ) $ 505,087 $ 428,560 Inventories: Raw materials and component parts $ 105,424 $ 85,802 Work-in-process 45,743 36,681 Finished goods 152,923 134,602 304,090 257,085 Obsolescence and other reserves (33,140 ) (29,324 ) LIFO reserve (6,684 ) (7,400 ) $ 264,266 $ 220,361 Property, plant and equipment: Land $ 10,598 $ 9,914 Land improvements 4,292 4,020 Buildings 190,611 169,995 Machinery and equipment 424,006 372,479 Enterprise management system 52,936 50,051 Construction-in-progress 49,713 25,873 Leased property under capitalized leases 25,715 24,231 757,871 656,563 Accumulated depreciation and amortization (411,460 ) (383,434 ) $ 346,411 $ 273,129 Accrued liabilities: Salaries and other compensation $ 73,234 $ 67,257 Pension and retirement 4,768 4,046 Taxes other than income taxes 7,663 5,955 Other 87,701 85,540 $ 173,366 $ 162,798 Advanced Technology Solutions segments. Adhesive Dispensing Systems Advanced Technology Systems Industrial Coating Systems Total Balance at October 31, 2016 $ 385,733 $ 697,346 $ 24,058 $ 1,107,137 Acquisition — 470,248 — 470,248 Currency effect 6,562 5,263 — 11,825 Balance at October 31, 2017 $ 392,295 $ 1,172,857 $ 24,058 $ 1,589,210 Adhesive Dispensing Systems Advanced Technology Systems Industrial Coating Systems Total Balance at October 31, 2015 $ 385,975 $ 672,342 $ 24,058 $ 1,082,375 Acquisition — 25,169 — 25,169 Currency effect (242 ) (165 ) — (407 ) Balance at October 31, 2016 $ 385,733 $ 697,346 $ 24,058 $ 1,107,137 October 31, 2017 Carrying Amount Accumulated Amortization Net Book Value Customer relationships $ 480,536 $ 102,033 $ 378,503 Patent/technology costs 150,581 48,669 101,912 Trade name 93,281 28,366 64,915 Noncompete agreements 11,142 9,298 1,844 Other 1,384 1,378 6 Total $ 736,924 $ 189,744 $ 547,180 October 31, 2016 Carrying Amount Accumulated Amortization Net Book Value Customer relationships $ 207,493 $ 71,608 $ 135,885 Patent/technology costs 97,640 37,873 59,767 Trade name 85,271 22,140 63,131 Noncompete agreements 9,855 8,347 1,508 Other 1,400 1,389 11 Total $ 401,659 $ 141,357 $ 260,302 Year Amounts 2018 $ 54,806 2019 $ 54,548 2020 $ 53,999 2021 $ 48,532 2022 $ 44,484 United States International 2017 2016 2017 2016 Change in benefit obligation: Benefit obligation at beginning of year $ 409,459 $ 361,039 $ 91,396 $ 90,615 Service cost 12,456 11,490 2,378 2,448 Interest cost 12,844 15,932 1,537 2,294 Participant contributions — — 85 115 Plan amendments — 173 — (3,050 ) Settlements (1,548 ) — (1,309 ) — Curtailments — — — (6,790 ) Foreign currency exchange rate change — — 4,896 (7,675 ) Actuarial loss 9,351 31,781 (7,602 ) 15,749 Benefits paid (11,746 ) (10,956 ) (2,620 ) (2,310 ) Benefit obligation at end of year $ 430,816 $ 409,459 $ 88,761 $ 91,396 Change in plan assets: Beginning fair value of plan assets $ 333,867 $ 295,320 $ 35,604 $ 37,473 Actual return on plan assets 29,620 23,280 612 2,205 Company contributions 19,041 26,223 3,165 3,793 Participant contributions — — 85 115 Settlements (1,548 ) — (1,309 ) — Other — — — (145 ) Foreign currency exchange rate change — — 1,967 (5,527 ) Benefits paid (11,746 ) (10,956 ) (2,620 ) (2,310 ) Ending fair value of plan assets $ 369,234 $ 333,867 $ 37,504 $ 35,604 Funded status at end of year $ (61,582 ) $ (75,592 ) $ (51,257 ) $ (55,792 ) Amounts recognized in financial statements: Noncurrent asset $ — $ — $ 64 $ — Accrued benefit liability (1,201 ) (1,000 ) (36 ) (8 ) Long-term pension and retirement obligations (60,381 ) (74,592 ) (51,285 ) (55,784 ) Total amount recognized in financial statements $ (61,582 ) $ (75,592 ) $ (51,257 ) $ (55,792 ) United States International 2017 2016 2017 2016 Amounts recognized in accumulated other comprehensive (gain) loss: Net actuarial loss $ 124,917 $ 134,586 $ 27,134 $ 35,090 Prior service cost (credit) (184 ) (139 ) (3,279 ) (3,445 ) Accumulated other comprehensive loss $ 124,733 $ 134,447 $ 23,855 $ 31,645 Amounts expected to be recognized during next fiscal year: Amortization of net actuarial loss $ 8,672 $ 9,336 $ 2,074 $ 2,558 Amortization of prior service cost (credit) (23 ) 47 (313 ) (304 ) Total $ 8,649 $ 9,383 $ 1,761 $ 2,254 United States International 2017 2016 2017 2016 Balance at beginning of year $ 134,447 $ 114,663 $ 31,645 $ 29,726 Net (gain) loss arising during the year 515 28,167 (6,867 ) 8,255 Prior service cost (credit) arising during the year — 173 — (3,050 ) Net loss recognized during the year (9,537 ) (8,480 ) (2,605 ) (1,723 ) Prior service (cost) credit recognized during the year (44 ) (76 ) 302 203 Settlement loss (648 ) — (363 ) (160 ) Curtailment gain — — — 1,526 Exchange rate effect during the year — — 1,743 (3,132 ) Balance at end of year $ 124,733 $ 134,447 $ 23,855 $ 31,645 United States International 2017 2016 2017 2016 For all plans: Accumulated benefit obligation $ 420,035 $ 397,350 $ 76,032 $ 77,166 For plans with benefit obligations in excess of plan assets: Projected benefit obligation 430,816 409,459 83,289 90,852 Accumulated benefit obligation 420,035 397,350 70,985 77,121 Fair value of plan assets 369,234 333,867 32,325 35,533 United States International 2017 2016 2015 2017 2016 2015 Service cost $ 12,456 $ 11,490 $ 10,851 $ 2,378 $ 2,448 $ 2,816 Interest cost 12,844 15,932 15,037 1,537 2,294 2,561 Expected return on plan assets (20,784 ) (19,666 ) (18,316 ) (1,338 ) (1,501 ) (1,589 ) Amortization of prior service cost (credit) 44 76 121 (302 ) (203 ) (90 ) Amortization of net actuarial loss 9,537 8,480 9,742 2,605 1,723 2,285 Settlement loss 648 — 516 363 160 1,319 Curtailment (gain) loss — — 68 — (1,526 ) — Total benefit cost $ 14,745 $ 16,312 $ 18,019 $ 5,243 $ 3,395 $ 7,302 Consolidated Financial Statements United States International 2017 2016 2015 2017 2016 2015 Assumptions used to determine benefit obligations at October 31: Discount rate 3.80 % 3.94 % 4.39 % 2.07 % 1.86 % 2.81 % Rate of compensation increase 3.61 3.61 3.50 3.13 3.12 3.22 Assumptions used to determine net benefit costs for the years ended October 31: Discount rate - benefit obligation 3.94 4.39 4.29 1.86 2.81 2.94 Discount rate - service cost 4.31 4.39 4.29 1.55 2.81 2.94 Discount rate - interest cost 3.20 4.39 4.29 1.66 2.81 2.94 Expected return on plan assets 6.25 6.72 6.76 3.51 4.22 4.39 Rate of compensation increase 3.61 3.50 3.49 3.12 3.22 3.19 United States International 2017 2016 2017 2016 Asset Category Equity securities 13 % 15 % — % — % Debt securities 48 31 — — Insurance contracts — — 56 59 Pooled investment funds 39 53 42 39 Other — 1 2 2 Total 100 % 100 % 100 % 100 % United States International Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash $ 959 $ 959 $ — $ — $ 566 $ 566 $ — $ — Money market funds 3,615 3,615 — — — — — — Equity securities: Basic materials 2,129 2,129 — — — — — — Consumer goods 3,776 3,776 — — — — — — Financial 6,147 6,147 — — — — — — Healthcare 3,940 3,940 — — — — — — Industrial goods 2,459 2,459 — — — — — — Technology 3,815 3,815 — — — — — — Utilities 793 793 — — — — — — Mutual funds 20,698 20,698 — — — — — — Fixed income securities: U.S. Government 57,789 9,372 48,417 — — — — — Corporate 112,112 — 112,112 — — — — — Other 6,566 — 6,566 — — — — — Other types of investments: Insurance contracts — — — — 21,037 — — 21,037 Real estate collective funds at NAV 21,699 — — — — — — — Pooled investment funds at NAV 121,724 — — — 15,901 — — — Other 1,013 1,013 — — — — — — $ 369,234 $ 58,716 $ 167,095 $ — $ 37,504 $ 566 $ — $ 21,037 United States International Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash $ 896 $ 896 $ — $ — $ 798 $ 798 $ — $ — Money market funds 2,471 2,471 — — — — — — Equity securities: Basic materials 2,144 2,144 — — — — — — Consumer goods 3,457 3,457 — — — — — — Financial 5,930 5,930 — — — — — — Healthcare 3,344 3,344 — — — — — — Industrial goods 2,671 2,671 — — — — — — Technology 3,490 3,490 — — — — — — Utilities 857 857 — — — — — — Mutual funds 27,220 27,220 — — — — — — Fixed income securities: U.S. Government 38,466 6,888 31,578 — — — — — Corporate 63,077 — 63,077 — — — — — Other 3,403 — 3,403 — — — — — Other types of investments: Insurance contracts — — — — 20,927 — — 20,927 Real estate collective funds at NAV 20,402 — — — — — — — Pooled investment funds at NAV 155,247 — — — 13,879 — — — Other 792 792 — — — — — — $ 333,867 $ 60,160 $ 98,058 $ — $ 35,604 $ 798 $ — $ 20,927 •Money market funds - Money market funds are public investment vehicles that are valued with a net asset value of one dollar. This is a quoted price in an active market and is classified as Level 1. •Equity securities - Common stocks and mutual funds are valued at the closing price reported on the active market on which the individual securities are traded and are classified as Level 1. •Fixed income securities - U.S. Treasury bills reflect the closing price on the active market in which the securities are traded and are classified as Level 1. Securities of U.S. agencies are valued using bid evaluations and are classified as Level 2. Corporate fixed income securities are valued using evaluated prices, such as dealer quotes, bids and offers and are therefore classified as Level 2. •Insurance contracts - Insurance contracts are investments with various insurance companies. The contract value represents the best estimate of fair value. These contracts do not hold any specific assets. These investments are classified as Level 3. •Real estate collective funds – These funds are valued using the net asset value of the underlying properties. Net asset value is calculated using a combination of key inputs, such as revenue and expense growth rates, terminal capitalization rates and discount rates. •Pooled investment funds - These are public investment vehicles valued using the net asset value. The net asset value is based on the value of the assets owned by the plan, less liabilities. These investments are not quoted on an active exchange. Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Insurance contracts Total Beginning balance at October 31, 2016 $ 20,927 $ 20,927 Actual return on plan assets: Assets held, end of year (412 ) (412 ) Assets sold during the period — - Purchases 2,330 2,330 Sales (2,502 ) (2,502 ) Foreign currency translation 694 694 Ending balance at October 31, 2017 $ 21,037 $ 21,037 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Insurance contracts Total Beginning balance at October 31, 2015 $ 20,432 $ 20,432 Actual return on plan assets: Assets held, end of year 1,683 1,683 Assets sold during the period — - Purchases 2,799 2,799 Sales (2,140 ) (2,140 ) Foreign currency translation (1,847 ) (1,847 ) Ending balance at October 31, 2016 $ 20,927 $ 20,927 Year United States International 2018 $ 14,476 $ 1,837 2019 15,604 2,861 2020 16,839 2,652 2021 18,061 3,035 2022 19,529 2,633 2023-2027 116,207 16,442 United States International 2017 2016 2017 2016 Change in benefit obligation: Benefit obligation at beginning of year $ 71,904 $ 68,315 $ 623 $ 524 Service cost 752 849 20 16 Interest cost 2,307 2,923 20 23 Participant contributions 503 446 — — Foreign currency exchange rate change — — 24 (14 ) Actuarial (gain) loss 2,212 1,818 (81 ) 81 Benefits paid (2,532 ) (2,447 ) (7 ) (7 ) Benefit obligation at end of year $ 75,146 $ 71,904 $ 599 $ 623 Change in plan assets: Beginning fair value of plan assets $ — $ — $ — $ — Company contributions 2,029 2,001 7 7 Participant contributions 503 446 — — Benefits paid (2,532 ) (2,447 ) (7 ) (7 ) Ending fair value of plan assets $ — $ — $ — $ — Funded status at end of year $ (75,146 ) $ (71,904 ) $ (599 ) $ (623 ) Amounts recognized in financial statements: Accrued benefit liability $ (2,148 ) $ (2,123 ) $ (8 ) $ (7 ) Long-term postretirement obligations (72,998 ) (69,781 ) (591 ) (616 ) Total amount recognized in financial statements $ (75,146 ) $ (71,904 ) $ (599 ) $ (623 ) United States International 2017 2016 2017 2016 Amounts recognized in accumulated other comprehensive (gain) loss: Net actuarial (gain) loss $ 20,124 $ 18,786 $ (342 ) $ (265 ) Prior service credit (142 ) (306 ) — — Accumulated other comprehensive (gain) loss $ 19,982 $ 18,480 $ (342 ) $ (265 ) Amounts expected to be recognized during next fiscal year: Amortization of net actuarial (gain) loss $ 995 $ 917 $ (20 ) $ (17 ) Amortization of prior service cost (credit) (99 ) (164 ) — — Total $ 896 $ 753 $ (20 ) $ (17 ) United States International 2017 2016 2017 2016 Balance at beginning of year $ 18,480 $ 17,079 $ (265 ) $ (379 ) Net (gain) loss arising during the year 2,212 1,818 (82 ) 81 Net gain (loss) recognized during the year (874 ) (684 ) 17 25 Prior service credit recognized during the year 164 267 — — Exchange rate effect during the year — — (12 ) 8 Balance at end of year $ 19,982 $ 18,480 $ (342 ) $ (265 ) United States International 2017 2016 2015 2017 2016 2015 Service cost $ 752 $ 849 $ 979 $ 20 $ 16 $ 29 Interest cost 2,307 2,923 2,946 20 23 35 Amortization of prior service credit (164 ) (267 ) (438 ) — — — Amortization of net actuarial (gain) loss 874 684 1,104 (17 ) (24 ) — Total benefit cost $ 3,769 $ 4,189 $ 4,591 $ 23 $ 15 $ 64 United States International 2017 2016 2015 2017 2016 2015 Assumptions used to determine benefit obligations at October 31: Discount rate 3.86 % 4.05 % 4.50 % 3.52 % 3.40 % 4.35 % Health care cost trend rate 3.70 3.63 3.72 6.50 6.13 6.31 Rate to which health care cost trend rate is assumed to decline (ultimate trend rate) 3.23 3.24 3.27 3.50 3.50 3.50 Year the rate reaches the ultimate trend rate 2026 2026 2025 2037 2031 2031 Assumption used to determine net benefit costs for the years ended October 31: Discount rate - benefit obligation 4.03 % 4.50 % 4.40 % 3.40 % 4.35 % 4.25 % Discount rate - service cost 4.48 4.50 4.40 3.56 4.35 4.25 Discount rate - interest cost 3.27 4.50 4.40 3.20 4.35 4.25 United States International 1% Point Increase 1% Point Decrease 1% Point Increase 1% Point Decrease Health care trend rate: Effect on total service and interest cost components in 2017 $ 562 $ (446 ) $ 10 $ (8 ) Effect on postretirement obligation as of October 31, 2017 $ 10,637 $ (8,650 ) $ 150 $ (115 ) $2,800. Year United States International 2018 $ 2,148 $ 8 2019 2,397 8 2020 2,592 9 2021 2,827 9 2022 3,066 9 2023-2027 18,330 59 2017 2016 2015 Current: U.S. federal $ 54,878 $ 44,156 $ 36,875 State and local 3,731 2,256 1,623 Foreign 66,352 53,836 49,153 Total current 124,961 100,248 87,651 Deferred: U.S. federal 3,596 (2,334 ) 4,950 State and local 1,164 563 1,031 Foreign (5,232 ) (1,826 ) (3,881 ) Total deferred (472 ) (3,597 ) 2,100 $ 124,489 $ 96,651 $ 89,751 year incurred. 2017 2016 2015 Statutory federal income tax rate 35.00 % 35.00 % 35.00 % Domestic Production Deduction (1.48 ) (1.43 ) (1.47 ) Foreign tax rate variances, net of foreign tax credits (4.69 ) (4.59 ) (3.25 ) State and local taxes, net of federal income tax benefit 0.76 0.50 0.43 Amounts related to prior years 0.03 (1.20 ) (1.04 ) Tax benefit from previously taxed dividends paid — (1.67 ) — Other – net — (0.38 ) 0.16 Effective tax rate 29.62 % 26.23 % 29.83 % these basis differences because of the multiple methods by which these differences could reverse and the impact of withholding, U.S. state and local taxes and currency translation considerations. 2017 2016 2015 Balance at beginning of year $ 3,336 $ 6,258 $ 5,812 Additions based on tax positions related to the current year 529 522 288 Additions for tax positions of prior years 621 310 331 Reductions for tax positions of prior years (150 ) (140 ) (28 ) Settlements — (3,091 ) — Lapse of statute of limitations (555 ) (523 ) (145 ) Balance at end of year $ 3,781 $ 3,336 $ 6,258 2017 2016 Deferred tax assets: Employee benefits $ 84,109 $ 93,837 Other accruals not currently deductible for taxes 28,579 16,861 Tax credit and loss carryforwards 23,976 11,111 Inventory adjustments 8,778 7,915 Total deferred tax assets 145,442 129,724 Valuation allowance (14,891 ) (8,304 ) Total deferred tax assets 130,551 121,420 Deferred tax liabilities: Depreciation and amortization 252,489 171,209 Other - net 1,132 1,366 Total deferred tax liabilities 253,621 172,575 Net deferred tax liabilities $ (123,070 ) $ (51,155 ) Bank lines of credit 2017 2016 Maximum borrowings available under bank lines of credit (all foreign banks) $ 75,041 $ 61,519 Outstanding borrowings / notes payable (all foreign bank debt) — 2,141 Weighted-average interest rate on notes payable — 4.35 % Unused bank lines of credit $ 75,041 $ 59,378 2017 2016 Revolving credit agreement, due 2020 $ 249,138 $ 244,680 Senior notes, due 2018-2025 172,600 200,000 Senior notes, due 2019-2027 100,000 100,000 Term loan, due 2018-2020 200,000 200,000 Term loan, due 2018-2022 705,000 — Euro loan, due 2019 12,191 79,389 Private shelf facility, due 2018-2026 146,666 157,222 Development loans, due 2018-2026 1,218 1,344 Other — 11 1,586,813 982,646 Less current maturities 326,587 38,093 Less unamortized debt issuance costs(1) 3,829 1,782 Long-term maturities $ 1,256,397 $ 942,771 2020, and the amount we could borrow under the facility would not have been limited by any debt covenants. all covenants at October 31, 2020 We were in compliance with all covenants at October 31, 2020. facility. 2025. expense on the Consolidated Statement of Cash Flows. As of October 31, 2020, we had no material leases that had yet to commence. 2017 2016 Transportation equipment $ 17,594 $ 15,991 Other 8,121 8,240 Total capitalized leases 25,715 24,231 Accumulated amortization (11,408 ) (10,235 ) Net capitalized leases $ 14,307 $ 13,996 Capitalized Leases Operating Leases Year: 2018 $ 6,353 $ 17,337 2019 4,463 13,324 2020 2,386 10,176 2021 884 8,381 2022 617 7,179 Later years 4,655 17,720 Total minimum lease payments 19,358 $ 74,117 Less amount representing executory costs 1,833 Net minimum lease payments 17,525 Less amount representing interest 3,019 Present value of net minimum lease payments 14,506 Less current portion 4,813 Long-term obligations at October 31, 2017 $ 9,693 Total Level 1 Level 2 Level 3 Assets: Foreign currency forward contracts (a) $ 3,249 $ — $ 3,249 $ — Total assets at fair value $ 3,249 $ — $ 3,249 $ — Liabilities: Deferred compensation plans (b) $ 11,004 $ — $ 11,004 $ — Foreign currency forward contracts (a) 2,959 — 2,959 — Total liabilities at fair value $ 13,963 $ — $ 13,963 $ — The fair values of our foreign currency forward contract assets and liabilities are included in Prepaid expenses and other current assets and Accrued liabilities, respectively in the Consolidated Balance Sheets. Sell Buy Notional Amounts Fair Market Value Notional Amounts Fair Market Value October 31, 2017 contract amounts: Euro $ 144,611 $ 141,720 $ 78,253 $ 76,892 Pound sterling 45,252 45,242 54,204 54,658 Japanese yen 24,904 24,349 28,358 27,401 Australian dollar 193 191 8,185 7,904 Hong Kong dollar — — 100,131 100,114 Singapore dollar 794 791 12,681 12,642 Others 5,413 5,312 51,930 50,688 Total $ 221,167 $ 217,605 $ 333,742 $ 330,299 October 31, 2016 contract amounts: Euro $ 107,860 $ 105,635 $ 51,377 $ 50,495 Pound sterling 36,692 36,125 37,473 36,302 Japanese yen 31,844 31,000 23,998 23,185 Australian dollar 380 380 8,096 8,095 Hong Kong dollar 1,702 1,702 79,516 79,411 Singapore dollar 1,031 995 12,062 11,735 Others 1,863 1,832 32,511 32,066 Total $ 181,372 $ 177,669 $ 245,033 $ 241,289 2017 2016 Carrying Amount Fair Value Carrying Amount Fair Value Notes payable — — 2,141 2,141 Long-term debt (including current portion) 1,582,984 1,587,920 980,864 992,060 Foreign currency forward contracts (net) 290 290 (39 ) (39 ) Note 14 — Capital shares 2018. Number Total Average Year of Shares Amount per Share 2017 — $ — $ — 2016 447 $ 31,877 $ 71.37 2015 5,360 $ 381,598 $ 71.19 Number of Options Weighted˗Average Exercise Price Per Share Aggregate Intrinsic Value Weighted˗Average Remaining Term Outstanding at October 31, 2016 1,881 $ 58.41 Granted 381 $ 107.68 Exercised (316 ) $ 45.13 Forfeited or expired (24 ) $ 81.92 Outstanding at October 31, 2017 1,922 $ 70.08 $ 108,823 6.4 years Vested at October 31, 2017 or expected to vest 1,905 $ 69.84 $ 108,294 6.4 years Exercisable at October 31, 2017 999 $ 54.23 $ 72,357 4.7 years Range of Exercise Price $14 - $28 $29 - $65 $66 - $125 Number outstanding 139 516 1,267 Weighted-average remaining contractual life, in years 1.6 4.1 7.9 Weighted-average exercise price $ 21.50 $ 49.83 $ 83.66 Number exercisable 139 516 344 Weighted-average exercise price $ 21.50 $ 49.83 $ 74.09 2017 2016 2015 Expected volatility 26.0%-29.2% 29.1%-30.4% 30.3%-39.5% Expected dividend yield 0.91%-1.17% 1.54% 1.06%-1.10% Risk-free interest rate 1.89%-2.06% 1.78%-1.90% 1.57%˗1.85% Expected life of the option (in years) 5.4-6.2 5.4-6.2 5.4˗6.1 grant Number of Shares Weighted˗Average Grant Date Fair Value Per Share Restricted at October 31, 2016 60 $ 73.56 Granted 28 $ 109.04 Forfeited (4 ) $ 72.25 Vested (26 ) $ 74.08 Restricted at October 31, 2017 58 $ 90.38 Number of Units Weighted˗Average Grant Date Fair Value Restricted share units at October 31, 2016 0 $ — Granted 10 $ 97.43 Vested (10 ) $ 97.43 Restricted share units at October 31, 2017 0 $ — Number of Shares Weighted˗Average Grant Date Fair Value Per Share Outstanding at October 31, 2016 99 $ 41.72 Restricted stock units vested 6 $ 97.60 Dividend equivalents 1 $ 115.54 Distributions (5 ) $ 26.89 Outstanding at October 31, 2017 101 $ 46.74 Performance share incentive awards— Executive officers and selected other key employees are eligible to receive common share-based incentive awards. Payouts, in the form of unrestricted common shares, vary based on the degree to which corporate financial performance exceeds predetermined threshold, target and maximum performance goals over three-year performance periods. No payout will occur unless threshold performance is achieved. rights 2018. Adhesive Dispensing Systems Advanced Technology Systems Industrial Coating Systems Corporate Total Year ended October 31, 2017 Net external sales $ 916,019 $ 897,623 $ 253,340 $ — $ 2,066,982 Depreciation and amortization 29,118 49,535 5,559 6,642 90,854 Operating profit (loss) 253,580 (a) 228,062 (b) 43,991 (67,931 ) 457,702 Identifiable assets (e) 794,699 1,718,844 120,458 790,940 (d) 3,424,941 Expenditures for long-lived assets 35,310 21,135 9,108 6,005 71,558 Year ended October 31, 2016 Net external sales $ 879,573 $ 676,329 $ 253,092 $ — $ 1,808,994 Depreciation and amortization 28,294 29,649 5,041 7,320 70,304 Operating profit (loss) 229,143 (a) 159,531 (b) 43,511 (c) (43,754 ) 388,431 Identifiable assets (e) 751,153 1,080,711 140,169 463,642 (d) 2,435,675 Expenditures for long-lived assets 17,407 18,967 17,357 7,120 60,851 Year ended October 31, 2015 Net external sales $ 836,066 $ 593,858 $ 258,742 $ — $ 1,688,666 Depreciation and amortization 28,097 25,430 4,973 6,694 65,194 Operating profit (loss) 195,902 (a) 120,940 (b) 41,458 (c) (40,570 ) 317,730 Identifiable assets (e) 734,145 1,021,221 130,421 484,722 (d) 2,370,509 Expenditures for long-lived assets 12,880 36,182 5,112 7,913 62,087 We have significant sales and long-lived assets in the following geographic areas: 2017 2016 2015 Net external sales United States $ 647,657 $ 531,117 $ 529,893 Americas 147,026 124,657 129,325 Europe 530,812 503,869 462,565 Japan 147,189 122,054 107,797 Asia Pacific 594,298 527,297 459,086 Total net external sales $ 2,066,982 $ 1,808,994 $ 1,688,666 Long-lived assets United States $ 216,352 $ 209,959 $ 187,212 Americas 1,552 1,730 1,735 Europe 98,921 23,943 21,231 Japan 5,939 6,408 5,876 Asia Pacific 23,647 31,089 33,886 Total long-lived assets $ 346,411 $ 273,129 $ 249,940 2017 2016 2015 Total profit for reportable segments $ 457,702 $ 388,431 $ 317,730 Interest expense (36,601 ) (21,322 ) (18,104 ) Interest and investment income 1,124 728 558 Other-net (1,934 ) 657 678 Income before income taxes $ 420,291 $ 368,494 $ 300,862 2017 2016 2015 Total assets for reportable segments $ 3,424,941 $ 2,435,675 $ 2,370,509 Customer advance payments 34,654 26,175 22,884 Eliminations (45,056 ) (41,267 ) (35,079 ) Total consolidated assets $ 3,414,539 $ 2,420,583 $ 2,358,314 2017 2016 2015 Cash operating activities: Interest paid $ 36,450 $ 23,423 $ 17,312 Income taxes paid 118,096 102,592 72,175 Non-cash investing and financing activities: Capitalized lease obligations incurred $ 6,509 $ 5,639 $ 5,562 Capitalized lease obligations terminated 670 1,033 672 Shares acquired and issued through exercise of stock options 170 212 445 First Second Third Fourth 2017: Sales $ 407,470 $ 496,137 $ 589,438 $ 573,938 Gross margin 225,138 275,512 326,265 312,088 Net income 49,988 64,523 101,456 79,835 Earnings per share: Basic 0.87 1.12 1.76 1.38 Diluted 0.86 1.11 1.74 1.37 2016: Sales $ 372,220 $ 437,592 $ 489,899 $ 509,283 Gross margin 196,907 248,405 273,220 274,967 Net income 41,161 70,601 84,214 75,867 Earnings per share: Basic 0.72 1.24 1.48 1.33 Diluted 0.72 1.23 1.46 1.31 our screws and barrels product line. Refer to Note 4 for additional information. Consolidated Financial Statements 2020. 2020. 2020. /s/ Sundaram Nagarajan December We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. Report of Independent Registered Public Accounting Firm In our opinion, the consolidated financial statements Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first reporting column) Equity compensation plans approved by security holders 1,922 $ 70.08 2,900 Equity compensation plans not approved by security holders — — — Total 1,922 $ 70.08 2,900 Contents Schedules 2020 2020 2019 2020 2020 2020. Description 2-a 2-b (3) Articles of Incorporation and By-Laws 3-a 3-a-1 3-b (4) Instruments Defining the Rights of Security Holders, including indentures 4-e 4-k 10-b-2 10-b-3 10-c-2 10-g-1 10-g-2 10-g-3 10-g-4 10-g-5 10-g-6 10-g-7 10-h (23) 31.2 32.1 32.2 99-a Description * 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. By: /s/ Director, President and Chief Executive Officer (Principal Executive Officer) December /s/ December /s/ December /s/ Director December /s/ Arthur L. George, Jr. Director December Arthur L. George, Jr. /s/ Frank M. Jaehnert Director December Frank M. Jaehnert /s/ Director December /s/ Jennifer A. Parmentier Director December Mary G. Puma /s/ Victor L. Richey, Jr. Director December Victor L. Richey, Jr. Balance at Balance Beginning Charged to Currency at End of Year Expense Deductions Effects of Year Allowance for Doubtful Accounts 2015 $ 4,487 1,014 773 (226 ) $ 4,502 2016 $ 4,502 1,867 945 111 $ 5,535 2017 $ 5,535 4,030 349 575 $ 9,791 Inventory Obsolescence and Other Reserves 2015 $ 26,744 9,487 6,741 (1,260 ) $ 28,230 2016 $ 28,230 6,719 6,096 471 $ 29,324 2017 $ 29,324 8,888 4,530 (542 ) $ 33,140 Warranties— We offer warranties to our customers depending on the specific product and terms of the customer purchase agreement. A typical warranty program requires that we repair or replace defective products within a specified time period (generally one year) measured from the date of delivery or first use. We record an estimate for future warranty-related costs based on actual historical return rates. Based on analysis of return rates and other factors, the adequacy of our warranty provisions areis adjusted as necessary. The liability for warranty costs is included in accrued liabilities in the Consolidated Balance Sheet.Following is a reconciliation of the product warranty liability for 20172020 and 2016:2019: 2020 2019 Balance at beginning of year $ 11,006 $ 12,195 Accruals for warranties 11,662 9,670 Warranty payments (12,330) (10,881) Currency adjustments 212 22 Balance at end of year $ 10,550 $ 11,006 Nordson Corporation 43Note 2 — Recently issued accounting standards New accounting guidance adopted:In April 2015, the FinancialOn November 1, 2019, we adopted Accounting Standards Board (FASB) issued a newUpdate (ASU) 2016-02, Accounting Standards Codification (ASC) 842, “Leases.” This standard regarding the presentation of debt issuance costs. Under this standard, a company is required to present unamortized debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of that debt liability, rather than as a separate asset. The recognition and measurement guidance for debt issuance costs are not affected by this new standard. In August 2015, the FASB issued an amendment to this standard, which added clarification to the presentation of debt issuance costs. This amendment allows debt issuance costs related to line-of-credit arrangements to be presented as an asset and subsequently amortized ratably over the term of the line-of-credit agreement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We adopted this standard during the first quarter of 2017, and applied this standard retrospectively to 2016. The new guidance only impacted presentation on our consolidated balance sheet and did not affect our results of operations or other financial statement disclosures. Refer to Note 10 for the impact on our Consolidated Balance Sheet at October 31, 2016.In May 2015, the FASB issued a new standard regarding the disclosures for investments that calculate net asset value per share (or its equivalent). Under the new guidance, investments measured at net asset value (“NAV”), as a practical expedient for fair value, are excluded from the fair value hierarchy. Removing investments measured using the practical expedient from the fair value hierarchy is intended to eliminate the diversity in practice that currently exists with respect to the categorization of these investments. We adopted this standard in 2017. The new guidance only impacted the presentation of certain pension related assets that use NAV as a practical expedient. Refer to Note 7 for additional information.In October 2016, the FASB issued a new standard which requires companies to recognize in the income statement the income tax effects of intercompany sales or transfer of assets, other than inventory, as income tax expense (or benefit) in the period the sale or transfer occurs. It would have been effective for us beginning in 2019; however, we early adopted this guidance in the first quarter of 2017, and it did not have a material impact on our consolidated financial statements.In January 2017, the FASB issued a new standard which eliminates Step 2 from the goodwill impairment test in order to simplify the subsequent measurement of any goodwill impairment charge. It will be effective for us beginning in 2021. Early adoption is permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017, and the prospective transition method should be applied. We adopted this standard, prospectively, in the fourth quarter of 2017. The adoption did not have an impact on our consolidated financial statements as we did not record any goodwill impairment charges.Nordson Corporation 42New accounting guidance issued and not yet adopted:In May 2014, the FASB issued a new standard regarding revenue recognition. Under this standard, a company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard implements a five-step process for customer contract revenue recognition that focuses on transfer of control. In August 2015, the FASB issued a standard to delay the effective date by one year. The new standard is effective for us beginning November 1, 2018. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet selected a transition method; however, we are currently anticipating using the modified retrospective method, but will base the final decision on the results of our assessment once complete. Our initial analysis of identifying revenue streams and evaluating a representative sample of contracts and other agreements with our customers is substantially complete. We are in the process of assessing the impact of the new standard, if any, on our business processes, systems and controls. We will finalize our evaluation of potential differences that may result from applying the new standard to our contracts with customers in 2018 and provide updates on our progress in future filings.In February 2016, the FASB issued a new standard which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve12 months. Leases will continueWe elected to use the transition option, classifiedreassessed for leases that commenced before the effective date. As we have not reassessed such conclusions, we did not adopt the practical expedient to use hindsight to determine the likelihood of whether a lease will be extended or terminated, to separate non-lease components within our lease portfolios, or whether a purchase option will be exercised. There was not a material cumulative-effect adjustment to our beginning retained earnings for the adoption of this standard. Upon adoption, we recognized operating right-of-use assets and lease liabilities in our Consolidated Balance Sheet of $130,538 and $134,853 as either financing orof November 1, 2019, respectively, and operating with classification affectingright-of-use assets and lease liabilities were $122,125 and $126,235 as of October 31, 2020, respectively. Adoption of the new standard did not have a material impact on our Consolidated Statements of Income and Cash Flows. Refer to Note 11 for further discussion of leases. In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326),” which changes the impairment model for most financial instruments. Prior guidance required the recognition measurementof credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. The new standard requires the use of a current expected credit loss model to immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. The standard does not prescribe a specific method to make an estimate, so the application requires judgment and presentationshould consider historical information, current information, and reasonable and supportable forecasts, and includes estimates of expensesprepayment. We adopted the new standard on November 1, 2020 with no material impact to the Consolidated Financial Statements.In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and cash flows arising fromOther Internal-Use Software (Subtopic 350-40),” a lease. It will be effectivenew standard which makes a number of changes meant to help entities evaluate the accounting for us beginningfees paid by a customer in 2020.a cloud computing arrangement (hosting arrangement), by providing guidance in determining when the arrangement includes a software license. We are currently assessingadopted the new standard on November 1, 2020 with no material impact this standard will have on our consolidated financial statements.In March 2016,August 2018, the FASB issued a new standard which simplifiesremoves, modifies, and adds certain disclosure requirements on fair value measurements. The guidance removes disclosure requirements pertaining to the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly. In addition, the amendment clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The guidance adds disclosure requirements for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period as well as the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. We adopted the new standard on November 1, 2020 with no material impact to the Consolidated Financial Statements.New accounting guidance issued and not yet adopted:In August 2018, the FASB issued a new standard which addresses defined benefit plans. The amendments modify the following disclosure requirements for share-based payment transactions. This guidance requiresemployers that excess tax benefits and tax deficienciessponsor defined benefit pension or other postretirement plans: the amounts in accumulated other comprehensive income expected to be recognized as income tax expense orcomponents of net period benefit incost over the income statement rather than additional paid-in capital. Additionally, the excess tax benefits will be classified along with other income tax cash flows as an operating activity, rather than a financing activity, on the statementnext fiscal year, amount and timing of cash flows. Further, the update allows an entity to make a policy election to recognize forfeitures as they occur or estimate the number of awardsplan assets expected to be forfeited. Itreturned to the employer, related party disclosure about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan, and the effects of a 1.00 percent point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligations for postretirement health care benefits are removed. A disclosure requirement was added for the explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. Additionally, the standard clarifies disclosure requirements surrounding the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets and the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. The standard will be effective for us beginning in 2018 and should be applied prospectively, with certain cumulative effect adjustments.November 1, 2021. Early adoption is permitted. We are currently assessing the impact this standard will have on our consolidated financial statements.Nordson Corporation 44In March 2017,December 2019, the FASB issued a newASU 2019-12, “Income Taxes (ASC 740) – Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC 740 by clarifying and amending existing guidance. The standard which requires the presentation of the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. All other components of net periodic benefit cost will be presented below operating income. Additionally, only the service cost component will be eligible for capitalization in assets. It will be effective for us beginning in 2019.November 1, 2021. Early adoption is permitted.permitted, including adoption in any interim period for which financial statements have not yet been issued. Depending on the amendment, adoption may be applied on the retrospective, modified retrospective or prospective basis. We are currently assessing the impact of this standard will have on our consolidated financial statements.Note 3 — Severance and restructuring costsDuring the fourth quarter of 2016, we implemented an initiative within our Adhesive Dispensing Systems segment to consolidate certain polymer processing product line facilities in the U.S. This initiative is designed to improve customer experience, accelerate growth, optimize performance and realize synergies for sustained long term success. Costs of $2,399 and $5,565 were recognized relating to this initiative during 2017 and 2016, respectively. Payments of $1,775 and $624 related to these actions were paid during 2017 and 2016, respectively. Total costs for this action to-date have been $7,964, which consisted primarily of severance costs. Additional costs related to this initiative are not expected to be material in future periods. Cash payments related to this initiative are expected to be paid during 2018.The following table summarizes severance and restructuring activity during 2017 related to this action: During the second half of 2015, we implemented initiatives across each of our segments to optimize operations and to enhance operational efficiency and customer service. Costs of $39 costs were recognized during 2017 related to these initiatives. Costs of $5,210 were recognized during 2016 related to these initiatives, which consisted primarily of severance costs.Nordson Corporation 43Within the Adhesives Dispensing Systems segment, restructuring initiatives to optimize operations in the U.S. and Belgium resulted in costs of $219 and $2,235 during 2017 and 2016, respectively. Payments of $360 and $7,586 related to these actions were paid during 2017 and 2016, respectively.Within the Advanced Technology Systems segment, a restructuring initiative to enhance operational efficiency and customer service resulted in costs of $1,054 during 2016. Costs of $180 related to severance were reversed in 2017. Payments of $503 and $3,144 related to these actions were paid during 2017 and 2016, respectively.Within the Industrial Coating Systems segment, a restructuring program to enhance operational efficiency and customer service resulted in severance costs of $1,921 during 2016. Payments of $345 and $1,844 related to these actions were paid during 2017 and 2016, respectively.Total costs for these actions to-date have been $16,660, which include $12,459 of severance costs, $759 of fixed asset impairment charges, $1,383 of lease termination costs, and $2,059 of other one-time restructuring costs.The following table summarizes severance and restructuring activity during 2017 related to actions initiated in 2015:Additional costs related to these initiatives are not expected to be material in future periods. The remainder of the cash payments related to these initiatives are expected to be paid through 2019. Other severance and restructuring costs unrelated to these initiatives are not considered material. All severance and restructuring costs are included in selling and administrative expenses in the Consolidated Statements of Income.Note 4 — AcquisitionsBusiness acquisitions have been accounted for using the acquisition method, 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 since the respective dates of acquisitions are included in the Consolidated Statement of Income.20172020 acquisitionsOn March 31, 2017,September 1, 2020, we completedacquired 100 percent of the acquisitionoutstanding shares of Vention Medical’s Advanced Technologies business (“Vention”vivaMOS Ltd. ("vivaMOS"), a Salem, New Hampshire leading designer, developer and manufacturerfabricator of minimally invasive interventional delivery devices, catheters and advanced componentshigh-end large-area complementary metal–oxide–semiconductor (CMOS) image sensors for the global medical technology market. This is a highly complementary business that adds significant scale and enhances strategic capabilitieswide range of our existing medical platform.X-ray applications. We acquired VentionvivaMOS for an aggregate purchase price of $705,000,$17,154 net of $3,313 of cash and other closing adjustments of $10,726. The acquisition was funded primarily through a new term loan facility, as well as throughapproximately $158, utilizing cash and borrowings on our credit facility. The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. We determined the estimated fair values based on independent appraisals, discounted cash flow analyses, quoted market prices, replacement cost analyses and estimates made by management.Based on the fair value of the assets acquired and the liabilities assumed, we recordedidentifiable intangible assets of $286,000 consisting primarily of $240,000 of customer relationships (amortized over 14 years), $2,000 of tradenames (amortized over 6 years), and $44,000 of technology, consisting of $36,000 (amortized over 14 years) and $8,000 (amortized over 10 years). The fair value of the identifiable intangible assets were estimated by applying income and market approaches. The fair value measurement is based on significant inputs that are not observable in the market and thus represents a fair value measurement categorized within Level 3 of the fair value hierarchy with various assumptions about growth rates and margins, discount rates, and financial multiples of entities considered to be similar to Vention.As a result of the acquisition, we recognized $434,625 of goodwill, of which $37,200 is tax deductible. Goodwill represents the value we expect to achieve through the expansion of our existing medical platform. This acquisition is being reported in our Advanced Technology Systems segment. As of October 31, 2017, the purchase price allocations are considered preliminary as we complete ourNordson Corporation 44assessments of income taxes. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date:The transaction was accounted for under the acquisition method of accounting and, accordingly, the results of Vention’s operations, including $94,515 in sales and net income of $7,820, are included in our Consolidated Statements of Income from the date of acquisition. As of October 31, 2017, we incurred $14,671 of corporate charges related to Vention acquisition transaction costs which have been included within selling and administrative expenses in our Consolidated Statements of Income.The following unaudited pro forma financial information for 2017 and 2016 assumes the Vention acquisition occurred as of the beginning of 2016 and is based on our historical financial statements and those of Vention. 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 Vention been effected on the date indicated, nor are they necessarily indicative of our future results of operations.The most significant pro forma adjustments included within the unaudited pro forma financial information presented in the table above relate to acquisition transaction costs, amortization of intangible assets, depreciation of property, plant and equipment, charges related to the fair value adjustment of acquisition-date inventory and interest expense associated with the new term loan facility.Also on March 31, 2017, we entered into a $705,000 term loan facility with a group of banks. The Term Loan Agreement provides for the following term loans in three tranches: $200,000 due in October 2018, $200,000 due in March 2020, and $305,000 due in March 2022. The weighted average interest rate for borrowings under this agreement was 2.33% at October 31, 2017. Borrowings under this agreement were used for the single purpose of acquiring Vention. We were in compliance with all covenants at October 31, 2017.Pro forma sales and results of operations for the following 2017, 2016 and 2015 acquisitions, had they occurred at the beginning of the applicable fiscal year ended October 31, are not material and, accordingly, are not provided.On February 16, 2017, we purchased 100 percent of the outstanding shares of InterSelect GmbH (“InterSelect”), a German designer and manufacturer of selective soldering systems used in a variety of automotive, aerospace and industrial electronics assembly applications. We acquired InterSelect for an aggregate purchase price of $5,432, net of cash acquired of $492.hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $3,548$14,394 and identifiable intangible assets of $1,879$4,040 were recorded. The identifiable intangible assets consist primarily of $1,109 of customer relationships (amortized over 9 years), $348 of tradenames (amortized over 12 years), and $422$3,900 of technology (amortized over 9 years). Goodwill associated with this acquisition is not tax deductible. This acquisition is being reported in our Advanced Technology Systems segment.Nordson Corporation 45On February 1, 2017, we purchased 100 percent of the outstanding shares of Plas-Pak Industries, Inc. (“Plas-Pak”), a Norwich, Connecticut designer and manufacturer of injection molded, single-use plastic dispensing products. Plas-Pak’s broad product offering includes two-component (2K) cartridges for industrial and commercial do-it-yourself adhesives, dial-a-dose calibrated syringes for veterinary and animal health applications, and specialty syringes for pesticide, dental and other markets. We acquired Plas-Pak for an aggregate purchase price of $70,798, net of cash acquired of $543. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $24,995 and identifiable intangible assets of $33,800 were recorded. The identifiable intangible assets consist primarily of $23,700 of customer relationships (amortized over 17 years), $4,100 of tradenames (amortized over 12 years), $5,000 of technology (amortized over 910 years) and $1,000 of non-compete agreements (amortized over 5 years). Goodwill associated with this acquisition is tax deductible. This acquisition is being reported in our Advanced Technology Systems segment.On January 3, 2017, we purchased certain assets of ACE Production Technologies, Inc. (“ACE”), a Spokane, Washington based designer and manufacturer of selective soldering systems used in a variety of automotive and industrial electronics assembly applications. We acquired the assets for an aggregate purchase price of $13,761. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $6,383 and identifiable intangible assets of $5,010 were recorded. The identifiable intangible assets consist primarily of $2,800 of customer relationships (amortized over 7 years), $1,000 of tradenames (amortized over 11 years), $1,100 of technology (amortized over 7 years) and $110 of non-compete agreements (amortized over 3 years). Goodwill associated with this acquisition is tax deductible. This acquisition is being reported in our Advanced Technology Systems segment.2016 acquisitionOn September 1, 2016, we purchased 100 percent of the outstanding shares of LinkTech Quick Couplings, Inc. (“LinkTech”), a Ventura, California designer, manufacturer and distributor of highly engineered precision couplings and fittings. We acquired LinkTech for an aggregate purchase price of $43,348, net of cash acquired of $36. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $25,867 and identifiable intangible assets of $14,610 were recorded. The identifiable intangible assets consist primarily of $8,600 of customer relationships (amortized over 11 years), $2,800 of tradenames (amortized over 12 years), $2,300 of technology (amortized over 8 years) and $910 of non-compete agreements (amortized over 5 years). Goodwill associated with this acquisition is tax deductible. This acquisition is being reported in our Advanced Technology Systems segment. 2015 acquisitionsOn June 15, 2015, we purchased 100 percent of the outstanding shares of Liquidyn, a German based manufacturer of micro dispensing systems, including micro dispensing pneumatic valves, controllers, and process equipment used in the electronics, automobile, medical, packaging, furniture and aerospace markets. We acquired Liquidyn for an aggregate purchase price of $14,565, net of cash acquired of $657. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $10,487 and identifiable intangible assets of $3,991 were recorded. The identifiable intangible assets consist primarily of $1,285 of customer relationships (amortized over 6 years), $1,049 of tradenames (amortized over 11 years), $1,421 of technology (amortized over 5 years) and $236 of non-compete agreements (amortized over 2 years). Goodwill associated with this acquisition is not tax deductible. This acquisition is being reported in our Advanced Technology Systems segment.On August 3, 2015, we purchased 100 percent of the outstanding shares of WAFO, a German based manufacturer and refurbisher of screws and barrels for the synthetic material and rubber industries. We acquired WAFO for an aggregate purchase price of $7,429, net of cash acquired of $236. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $3,463 and identifiable intangible assets of $1,708 were recorded. The identifiable intangible assets consist of $635 of customer relationships (amortized over 5 years), $679 of tradenames (amortized over 10 years), $142 of technology (amortized over 3 years) and $252 of non-compete agreements (amortized over 3 years). Goodwill associated with this acquisition is not tax deductible. This acquisition is being reported in our Adhesive Dispensing Systems segment.On September 1, 2015, we purchased 100 percent of the outstanding shares of MatriX, a German based developer of automated in-line and off-line x-ray tools and solutions used for inspection applications. We acquired MatriX for an aggregate purchase price of $53,759, net of cash acquired of $966 and debt assumed of $481. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $32,439 and identifiable intangible assets of $16,382 were recorded. The identifiable intangible assets consist of $6,485 of customer relationships (amortized over 8 years), $4,046 of tradenames (amortized over 11 years), $5,328 of technology (amortized over 6 years) and $523$140 of non-compete agreements (amortized over 3 years). Goodwill associated with this acquisition is not tax deductible. This acquisition is being reported in our Advanced Technology SystemsSolutions segment and the results of vivaMOS are not material to our Consolidated Financial Statements. As of October 31, 2020, the purchase price allocation remains preliminary as we complete our assessments of intangible assets and income taxes.On June 1, 2020, we acquired 100 percent of the outstanding shares of Fluortek, Inc. ("Fluortek"), a precision plastic extrusion manufacturer that provides custom dimensioned tubing to the medical device industry. We acquired Fluortek for an aggregate purchase price of$125,260, net of cash and other closing adjustments of approximately $515, utilizing cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, property, plant and equipment and working capital – net of $19,843, goodwill of $76,047 and identifiable intangible assets of $29,370 were recorded. The identifiable intangible assets consist primarily of $19,700 of customer relationships (amortized over 12 years), $7,400 of technology (amortized over 10 years), $1,500 of tradenames (amortized over 10 years), and $770 of non-compete agreements (amortized over 5 years). Goodwill associated with this acquisition is tax deductible. This acquisition is being reported in our Advanced Technology Solutions segment and the results for Fluortek are not material to the our Consolidated Financial Statements. As of October 31, 2020, the purchase price allocation remains preliminary as we complete our assessment of income taxes.2019 acquisitionOn July 1, 2019, we purchased certain assets of Optical Control GmbH & Co. KG (“Optical”), a Nuremberg, Germany designer and developer of high speed, fully automatic counting systems utilizing x-ray technology. This transaction was not material to our Consolidated Financial Statements. We recorded the acquisition of Optical based on the fair value of the assets acquired and the liabilities assumed. Goodwill associated with this acquisition is tax deductible. This acquisition is being reported in our Advanced Technology Solutions segment.2018 acquisitionsOn October 17, 2018, we purchased 100 percent of the outstanding shares of Cladach Nua Teoranta (“Clada”), a Galway, Ireland designer and developer primarily focused on medical balloons and balloon catheters. Clada’s technologies are used in key applications such as angioplasty and the treatment of vascular disease. We acquired Clada for an aggregate purchase price of $5,236 which included an earn-out liability of $1,131. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $3,776 and identifiable intangible assets of $697 were recorded. Goodwill associated with this acquisition is not tax deductible. This acquisition is being reported in our Advanced Technology Solutions segment.On January 2, 2018, we purchased 100 percent of the outstanding shares of Sonoscan, Inc. (“Sonoscan”), an Elk Grove Village, Illinois leading designer and manufacturer of acoustic microscopes and sophisticated acoustic micro imaging systems used in a variety of microelectronic, automotive, aerospace and industrial electronic assembly applications. We acquired Sonoscan for an aggregate purchase price of $46,018, net of $655 of cash. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $22,775 and identifiable intangible assets of $7,910 were recorded. Goodwill associated with this acquisition is tax deductible. This acquisition is being reported in our Advanced Technology Solutions segment.Nordson Corporation 45Note 4 — Assets Held for SaleIn the fourth quarter of 2020, we committed to a plan to sell our screws and barrels product line within the Adhesives reporting unit under our Industrial Precision Solutions operating segment and determined that it met the criteria to be classified as held for sale. Therefore, these assets and liabilities have been presented as held for sale in the Consolidated Balance Sheet as of October 31, 2020. Assets and liabilities classified as held for sale are measured at the lower of carrying value or fair value less costs to sell. We entered into a letter of intent to sell the screws and barrels product line in October 2020. In December 2020, we entered into a definitive agreement with the buyer.Before measuring the fair value less costs to sell of the disposal group as a whole, we first reviewed individual assets and liabilities to determine if any fair value adjustments were required and concluded no individual asset impairments were required. Then, based on the definitive agreement entered into by us and the buyer, we determined the fair value of the disposal group to be equal to the selling price, less costs to sell. Based on this review, we recorded a non-cash, assets held for sale impairment charge of $87,371.The assets and liabilities of the screws and barrels product line classified as held for sale at October 31, 2020 were as follows:2020 Receivables - net $ 14,327 Inventories - net 9,854 Prepaid expenses and other current assets 696 Property, plant and equipment - net 58,950 Other assets 23,159 Impairment on carrying value (87,371) Assets held for sale $ 19,615 Accounts payable $ 4,625 Accrued liabilities 3,352 Other liabilities 5,171 Liabilities held for sale $ 13,148 The pending transaction is subject to customary closing conditions and is expected to close no later than the third quarter of 2021.Excluding the non-cash, assets held for sale impairment charge of $87,371 recorded in the fourth quarter of 2020, the operating results of the screws and barrels product line were not material to our Consolidated Financial Statements for any period presented.Nordson Corporation 46Note 5 — Details of Consolidated Balance Sheet 2020 2019 Receivables: Accounts $ 445,360 $ 506,318 Notes 4,592 3,980 Other 30,966 30,268 480,918 540,566 Allowance for doubtful accounts (9,045) (9,801) $ 471,873 $ 530,765 Inventories: Raw materials and component parts $ 94,630 $ 102,044 Work-in-process 44,403 42,904 Finished goods 183,860 183,973 322,893 328,921 Obsolescence and other reserves (41,315) (39,377) LIFO reserve (4,545) (6,145) $ 277,033 $ 283,399 Property, plant and equipment: Land $ 8,816 $ 10,468 Land improvements 4,611 4,390 Buildings 253,621 256,195 Machinery and equipment 464,171 489,864 Enterprise management system 56,103 53,020 Construction-in-progress 29,897 34,944 Leased property under capitalized leases 32,590 29,528 849,809 878,409 Accumulated depreciation and amortization (491,191) (479,514) $ 358,618 $ 398,895 Accrued liabilities: Salaries and other compensation $ 52,260 $ 57,773 Pension and retirement 10,282 9,993 Taxes other than income taxes 13,346 8,606 Customer commissions 9,158 9,030 Other 82,837 76,253 $ 167,883 $ 161,655 Note 6 — Goodwill and intangible assetsWe account for goodwill and other intangible assets in accordance with the provisions of ASC 350 and account for business combinations using the acquisition method of accounting and accordingly, the assets and liabilities of the entities acquired are recorded at their estimated fair values at the acquisition date. 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 forsubject to annual impairment annually attesting. Our annual impairment testing is performed as of August 1. Testing is done more frequently if an event occurs or circumstances change that would indicate the fair value of a reporting unit level, or more often if indicationsis less than the carrying amount of impairment exist.those assets. We assess the fair value of reporting units on a non-recurring basis using a combination of two valuation methods, a market approach and an income approach, to estimate the fair value of our reporting units. The implied fair value of our reporting units is determined based on significant unobservable inputs; accordingly, these inputs fall within Level 3 of the fair value hierarchy.Our reporting units are the Adhesive Dispensing Systems segment, the Industrial Coating Systems segment and one level below the Advanced Technology Systems segment. In the fourth quarter of each year, we estimate a reporting unit’s fair value usingquantitative analysis that uses a combination of the discounted cash flow method of the Income Approach and the guideline public company method of the Market Approach, and compare the result against the reporting unit’s carrying value of net assets. In accordance withThe implied fair value of our reporting units is determined based on significant unobservable inputs, as discussed below; accordingly, these inputs fall within Level 3 of the new accounting standard (Referfair value hierarchy. The discounted cash flow method (Income Approach) uses assumptions for revenue growth, operating margin, and working capital turnover that are based on management’s strategic plans temperedNordson Corporation 47by performance trends and reasonable expectations about those trends. 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 (WACC) methodology and growth rate. For each reporting unit, a sensitivity analysis is performed to vary the discount and terminal growth rates in order to provide a range of reasonableness for detecting impairment. Discount rates are 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.In the application of the guideline public company method (Market Approach), fair value is determined using transactional evidence for similar publicly traded equity. The comparable company guideline group is determined based on relative similarities to each reporting unit since exact correlations are not available. An indication of fair value for each reporting unit is based on the placement of each reporting unit within a range of multiples determined for its comparable guideline company group. Valuation multiples are derived by dividing latest twelve-month performance for revenues and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) into total invested capital, which was prospectively adopted effective August 1, 2017, an is the sum of traded equity plus interest bearing debt less cash. These multiples are applied against the revenue and EBITDA of each reporting unit. While the implied indications of fair value using the guideline public company method yield meaningful results, the discounted cash flow method of the income approach includes management’s thoughtful projections and insights as to what the reporting units will accomplish in the near future. Accordingly, the reasonable, implied fair value of each reporting unit is a blend based on the consideration of both the Income and Market approaches.An impairment charge is recorded for the amount by which the carrying value of the reporting unit exceeds the fair value of the reporting unit, as calculated in the quantitative analysis described above. WeBased on our annual impairment tests in 2020, 2019 and 2018, the fair value of each reporting unit exceeded its carrying value, and accordingly we did not record any goodwill impairment charges using the newly adopted accounting standard in 2017. Prior to the adoption of this new standard, the measurementNordson Corporation 47of an impairment (Step 22020, 2019 or 2018. Our reporting units include components of the impairment test) would have been calculated by determiningIndustrial Precision Solutions and the implied fair value of a reporting unit’s goodwill by allocating the fair value of the reporting unit to all other assets and liabilities of that unit based on their relative fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities would have been the implied fair value of goodwill. We did not record any goodwill impairment charges using Step 2 of the impairment test in 2016 or 2015.Changes in the carrying amount of goodwill during 20172020 by operating segment: Industrial Precision Solutions Advanced Technology Solutions Total Balance at October 31, 2019 $ 411,461 $ 1,203,278 $ 1,614,739 Acquisitions — 90,441 90,441 Other (453) (453) Currency effect 4,854 3,773 8,627 Balance at October 31, 2020 $ 415,862 $ 1,297,492 $ 1,713,354 The Other activity above reflects an allocation of goodwill to the disposal group classified as held for sale. See Note 4, Assets Held for Sale.Changes in the carrying amount of goodwill during 20162019 by operating segment:Industrial Precision Solutions Advanced Technology Solutions Total Balance at October 31, 2018 Balance at October 31, 2018 $ 413,049 $ 1,194,969 $ 1,608,018 Acquisition — 9,225 9,225 Currency effect (1,588) (916) (2,504) Balance at October 31, 2019 Balance at October 31, 2019 $ 411,461 $ 1,203,278 $ 1,614,739 Accumulated impairment losses, which were recorded in 2009, were $232,789 at October 31, 20172020 and October 31, 2016.2019. Of these losses, $229,173 related to the Advanced Technology SystemsSolutions segment and $3,616 related to the Industrial Coating SystemsPrecision Solutions segment.Nordson Corporation 48Information regarding intangible assets subject to amortization:October 31, 2020 Carrying
AmountAccumulated
AmortizationNet Book
ValueCustomer relationships $ 483,568 $ 193,617 $ 289,951 Patent/technology costs 153,555 76,934 76,621 Trade name 74,240 34,693 39,547 Noncompete agreements 9,908 8,444 1,464 Other 1,403 1,400 3 Total $ 722,674 $ 315,088 $ 407,586 October 31, 2019 Carrying
AmountAccumulated
AmortizationNet Book
ValueCustomer relationships $ 480,007 $ 173,996 $ 306,011 Patent/technology costs 154,735 71,663 83,072 Trade name 96,655 41,303 55,352 Noncompete agreements 11,540 10,406 1,134 Other 1,400 1,394 6 Total $ 744,337 $ 298,762 $ 445,575 Amortization expense for 2017, 20162020, 2019 and 20152018 was $44,907, $29,061$56,979, $54,790 and $27,487$55,448 respectively.Nordson Corporation 48Estimated amortization expense for each of the five succeeding years:Year Amounts 2021 $ 50,576 2022 $ 46,685 2023 2023 $ 45,697 2024 2024 $ 40,815 2025 2025 $ 39,115 Note 7 — Retirement, pension and other postretirement plansRetirement 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 three years from date of employment, and are based on the employee’s contribution. The expense applicable to retirement plans for 2017, 20162020, 2019 and 20152018 was approximately $19,259, $17,194$20,265, $22,573 and $15,747,$22,634, respectively.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.Nordson Corporation 49A 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 2020 2019 2020 2019 Change in benefit obligation: Benefit obligation at beginning of year $ 551,997 $ 425,605 $ 97,990 $ 87,227 Service cost 20,635 14,587 2,099 1,933 Interest cost 15,824 18,304 1,025 1,670 Participant contributions — — 83 83 Plan amendments — — 0 186 Settlements (4,992) 0 0 (3,018) Foreign currency exchange rate change — — 2,814 106 Actuarial loss 47,788 107,662 2,729 11,852 Benefits paid (15,484) (14,161) (1,891) (2,049) Benefit obligation at end of year $ 615,768 $ 551,997 $ 104,849 $ 97,990 Change in plan assets: Beginning fair value of plan assets $ 448,931 $ 361,073 $ 39,640 $ 39,617 Actual return on plan assets 41,712 76,700 3,697 707 Company contributions 40,083 25,319 3,365 3,696 Participant contributions — — 83 83 Settlements (4,992) 0 0 (3,018) Foreign currency exchange rate change — — 582 604 Benefits paid (15,484) (14,161) (1,891) (2,049) Ending fair value of plan assets $ 510,250 $ 448,931 $ 45,476 $ 39,640 Funded status at end of year $ (105,518) $ (103,066) $ (59,373) $ (58,350) Amounts recognized in financial statements: Noncurrent asset $ 3,162 $ 2,171 $ 3,321 $ 1,375 Accrued benefit liability (5,211) (6,435) (634) (21) Long-term pension obligations Long-term pension obligations (103,469) (98,802) (62,060) (59,704) Total amount recognized in financial statements $ (105,518) $ (103,066) $ (59,373) $ (58,350) United States International 2020 2019 2020 2019 Amounts recognized in accumulated other comprehensive (gain) loss: Net actuarial loss $ 192,593 $ 178,390 $ 32,097 $ 33,826 Prior service credit (16) (100) (2,137) (2,342) Accumulated other comprehensive loss $ 192,577 $ 178,290 $ 29,960 $ 31,484 Amounts expected to be recognized during next fiscal year: Amortization of net actuarial loss $ 14,297 $ 13,591 $ 3,049 $ 2,945 Amortization of prior service credit (81) (84) (299) (288) Total $ 14,216 $ 13,507 $ 2,750 $ 2,657 Nordson Corporation 50The following table summarizes the changes in accumulated other comprehensive loss:United States International 2020 2019 2020 2019 Balance at beginning of year $ 178,290 $ 130,627 $ 31,484 $ 20,460 Net loss arising during the year 30,743 54,304 305 12,737 Prior service cost arising during the year — — 0 186 Net gain recognized during the year (14,032) (6,702) (2,972) (1,696) Prior service credit recognized during the year 84 61 290 303 Settlement loss (2,508) 0 0 (470) Exchange rate effect during the year — — 853 (36) Balance at end of year $ 192,577 $ 178,290 $ 29,960 $ 31,484 Information regarding the accumulated benefit obligation is as follows:United States International 2020 2019 2020 2019 For all plans: Accumulated benefit obligation $ 571,036 $ 513,861 $ 96,252 $ 83,439 For plans with benefit obligations in excess of plan assets: Projected benefit obligation 553,403 491,816 92,775 86,534 Accumulated benefit obligation 508,671 453,681 85,189 73,293 Fair value of plan assets 444,723 386,580 30,797 27,769 Net periodic pension benefit costs include the following components:United States International 2020 2019 2018 2020 2019 2018 Service cost $ 20,635 $ 14,587 $ 13,052 $ 2,099 $ 1,933 $ 2,048 Interest cost 15,824 18,304 14,797 1,025 1,670 1,656 Expected return on plan assets (24,667) (23,341) (21,964) (1,273) (1,592) (1,512) Amortization of prior service cost (credit) (84) (61) (22) (290) (303) (316) Amortization of net actuarial loss 14,032 6,702 9,479 2,972 1,696 2,115 Settlement loss 2,508 0 0 0 470 252 Total benefit cost $ 28,248 $ 16,191 $ 15,342 $ 4,533 $ 3,874 $ 4,243 Net periodic pension cost for 20172020, 2019 and 2018 included a settlement loss of $1,011$2,508, $470 and $252, respectively, due to lump sum retirement payments.Netpayments.The components of net periodic pension cost for 2016other than service cost are included a settlement lossin Other – net in our Consolidated Statements of $160 dueIncome.Nordson Corporation 51Notes to lump sum retirement payments and a curtailment gain of $1,526 due to a plan amendment allowing participants to elect a new defined contribution plan or a new defined benefit plan.The weighted average assumptions used in the valuation of pension benefits were as follows:United States International 2020 2019 2018 2020 2019 2018 Assumptions used to determine benefit obligations at October 31: Discount rate 2.85 % 3.25 % 4.53 % 1.01 % 1.26 % 2.14 % Rate of compensation increase 4.00 4.00 3.90 2.69 3.12 3.12 Assumptions used to determine net benefit costs for the years ended October 31: Discount rate - benefit obligation 3.25 4.53 3.80 1.26 2.14 2.07 Discount rate - service cost 3.56 4.70 4.01 1.12 1.82 1.76 Discount rate - interest cost 2.78 4.15 3.31 1.05 1.90 1.83 Expected return on plan assets 5.75 6.00 6.00 3.22 3.96 3.91 Rate of compensation increase 4.00 3.90 3.61 3.12 3.12 3.13 Nordson Corporation 51The 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.The discount rate reflects the current rate at which pension liabilities could be effectively settled at the end of the year. The discount rate used considers a yield derived from matching projected pension payments with maturities of a portfolio of available bonds that receive the highest rating given from a recognized investments ratings agency. The changes in the discount rates in 20172020, 2019, and 20162018 are due to changes in yields for these types of investments as a result of the economic environment.In determining the expected return on plan assets using the calculated value of 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. The rate of compensation increase is based on managements’management’s estimates using historical experience and expected increases in rates.Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when they exceed the accounting corridor, which is set at 10%10 percent of the greater of the plan assets or benefit obligations. Gains or losses outside of the corridor are subject to amortization over an average employee future service period that differs by plan. If substantially all of the plan’s participants are no longer actively accruing benefits, the average life expectancy is used.In the fourth quarter of 2016, we adopted a change in the method to be used to estimate the service and interest cost components of net periodic benefit cost for defined benefit pension plans. Historically, for the vast majority of our plans, the service and interest cost components were estimated using a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Beginning in 2017, we used a spot rate approach by applying the specific spot rates along the yield curve to the relevant projected cash flows in the estimation of the service and interest components of benefit cost, resulting in a more precise measurement. This change did not affect the measurement of total benefit obligations. The change was accounted for as a change in estimate that is inseparable from a change in accounting principle and, accordingly, was accounted for prospectively starting in 2017. The reductions in service and interest costs for 2017 associated with this change in estimate were $1,200 and $3,100, respectively.The allocation of pension plan assets as of October 31, 20172020 and 20162019 is as follows: United States International 2020 2019 2020 2019 Asset Category Equity securities 11 % 11 % — % — % Debt securities 49 53 — — Insurance contracts — — 54 54 Pooled investment funds 39 35 44 45 Other 1 1 2 1 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.Our United States plans comprise 9192 percent of the Company's worldwide pension assets. In general, 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 dynamically 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. For 2017,2020, the target in “return-seeking assets” is 3530 percent and 6570 percent in fixed income.income assets. Plan assets are diversified across several investment managers and are invested in liquid funds that are selected to track broad market 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.Nordson Corporation 52Our international plans comprise 98 percent of the Company's 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.Nordson Corporation 52In accordance with the adoption of a new accounting standard, as described in Note 2, certain investments that were measured at NAV (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the total pension plan assets.The fair values of our pension plan assets at October 31, 20172020 by asset category are in the table below:United States International Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash $ 1,331 $ 1,331 $ — $ — $ 759 $ 759 $ — $ — Money market funds 5,059 5,059 — — — — — — Equity securities: Basic materials 1,750 1,750 — — — — — — Consumer goods 5,024 5,024 — — — — — — Financial 4,745 4,745 — — — — — — Healthcare 4,518 4,518 — — — — — — Industrial goods 3,588 3,588 — — — — — — Technology 5,706 5,706 — — — — — — Utilities 685 685 — — — — — — Mutual funds 24,266 24,266 — — — — — — Fixed income securities: U.S. Government 71,855 8,267 63,588 — — — — — Corporate 173,046 — 173,046 — — — — — Other 6,673 — 6,673 — — — — — Other types of investments: Insurance contracts — — — — 24,496 — — 24,496 Other 845 845 — — — — — — Total investments in the fair value hierarchy Total investments in the fair value hierarchy $ 309,091 $ 65,784 $ 243,307 $ — $ 25,255 $ 759 $ — $ 24,496 Investments measured at Net Asset Value: Investments measured at Net Asset Value: Real estate collective funds Real estate collective funds 38,996 — Pooled investment funds Pooled investment funds 162,163 20,221 Total Investments at Fair Value Total Investments at Fair Value $ 510,250 $ 45,476 Nordson Corporation 53The fair values of our pension plan assets at October 31, 20162019 by asset category are in the table below:United States International Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash $ 1,208 $ 1,208 $ — $ — $ 441 $ 441 $ — $ — Money market funds 5,566 5,566 — — — — — — Equity securities: Basic materials 2,318 2,318 — — — — — — Consumer goods 4,412 4,412 — — — — — — Financial 6,120 6,120 — — — — — — Healthcare 4,460 4,460 — — — — — — Industrial goods 3,152 3,152 — — — — — — Technology 5,064 5,064 — — — — — — Utilities 937 937 — — — — — — Mutual funds 19,674 19,674 — — — — — — Fixed income securities: U.S. Government 83,025 13,094 69,931 — — — — — Corporate 151,607 — 151,607 — — — — — Other 5,051 — 5,051 — — — — — Other types of investments: Insurance contracts — — — — 21,245 — — 21,245 Other 1,101 1,101 — — — — — — Total investments in the fair value hierarchy Total investments in the fair value hierarchy $ 293,695 $ 67,106 $ 226,589 $ — $ 21,686 $ 441 $ — $ 21,245 Investments measured at Net Asset Value: Investments measured at Net Asset Value: Real estate collective funds Real estate collective funds 33,917 — Pooled investment funds Pooled investment funds 121,319 17,954 Total Investments at Fair Value Total Investments at Fair Value $ 448,931 $ 39,640 Nordson Corporation 53These investment funds did not own a significant number of shares of Nordson Corporation common stock for any year presented.The inputs and methodology used to measure fair value of plan assets are consistent with those described in Note 12. Following are the valuation methodologies used to measure these assets:Nordson Corporation 54The following tables present an analysis of changes during the years ended October 31, 20172020 and 20162019 in Level 3 plan assets, by plan asset class, for U.S. and international pension plans using significant unobservable inputs to measure fair value:Fair Value Measurements
Using Significant Unobservable
Inputs (Level 3)Insurance
contractsTotal Beginning balance at October 31, 2019 Beginning balance at October 31, 2019 $ 21,245 $ 21,245 Actual return on plan assets: Assets held, end of year 1,739 1,739 Assets sold during the period 0 0 Purchases 2,462 2,462 Sales (1,495) (1,495) Foreign currency translation 545 545 Ending balance at October 31, 2020 Ending balance at October 31, 2020 $ 24,496 $ 24,496 Fair Value Measurements
Using Significant Unobservable
Inputs (Level 3)Insurance
contractsTotal Beginning balance at October 31, 2018 Beginning balance at October 31, 2018 $ 21,645 $ 21,645 Actual return on plan assets: Assets held, end of year 913 913 Assets sold during the period 0 0 Purchases 2,431 2,431 Sales (4,102) (4,102) Foreign currency translation 358 358 Ending balance at October 31, 2019 Ending balance at October 31, 2019 $ 21,245 $ 21,245 Contributions to pension plans in 20182021 are estimated to be approximately $22,800.Nordson Corporation 54Retiree pension benefit payments, which reflect expected future service, are anticipated to be paid as follows:Year United States International 2021 $ 23,045 $ 3,488 2022 20,262 3,042 2023 21,686 3,069 2024 23,213 3,527 2025 25,209 3,721 2026-2030 150,280 19,949 Other postretirement plans- We sponsor an unfunded postretirement health care benefit plan covering certain of our United States employees. Employees hired after January 1, 2002, are not eligible to participate in this plan. For eligible retirees under the age of 65 who enroll in the plan, the plan is contributory in nature, with retiree contributions in the form of premiums that are adjusted annually. For eligible retirees age 65 and older who enroll in the plan, the plan delivers a benefit in the form of a Health Reimbursement Account (HRA), which retirees use for eligible reimbursable expenses, including premiums paid for purchase of a Medicare supplement plan or other out-of-pocket medical expenses such as deductibles or co-pays.Nordson Corporation 55A 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 2020 2019 2020 2019 Change in benefit obligation: Benefit obligation at beginning of year $ 88,660 $ 72,010 $ 454 $ 512 Service cost 666 545 15 16 Interest cost 2,345 2,984 13 19 Participant contributions 611 684 — — Foreign currency exchange rate change — — (5) (1) Actuarial (gain) loss (2,024) 15,101 (26) (86) Benefits paid (2,613) (2,664) (6) (6) Benefit obligation at end of year $ 87,645 $ 88,660 $ 445 $ 454 Change in plan assets: Beginning fair value of plan assets $ 0 $ 0 $ 0 $ 0 Company contributions 2,002 1,980 6 6 Participant contributions 611 684 — — Benefits paid (2,613) (2,664) (6) (6) Ending fair value of plan assets $ 0 $ 0 $ 0 $ 0 Funded status at end of year $ (87,645) $ (88,660) $ (445) $ (454) Amounts recognized in financial statements: Accrued benefit liability $ (2,835) $ (2,740) $ (6) $ (6) Long-term postretirement obligations (84,810) (85,920) (439) (448) Total amount recognized in financial statements $ (87,645) $ (88,660) $ (445) $ (454) United States International 2020 2019 2020 2019 Amounts recognized in accumulated other comprehensive (gain) loss: Net actuarial (gain) loss $ 25,614 $ 28,992 $ (466) $ (482) Prior service credit 0 (16) — — Accumulated other comprehensive (gain) loss $ 25,614 $ 28,976 $ (466) $ (482) Amounts expected to be recognized during next fiscal year: Amortization of net actuarial (gain) loss $ 1,388 $ 1,674 $ (39) $ (37) Amortization of prior service credit Amortization of prior service credit 0 (16) — — Total $ 1,388 $ 1,658 $ (39) $ (37) Nordson Corporation 55 56The following table summarizes the changes in accumulated other comprehensive (gain) loss: United States International 2020 2019 2020 2019 Balance at beginning of year $ 28,976 $ 14,483 $ (482) $ (423) Net (gain) loss arising during the year (2,024) 15,101 (26) (86) Net gain (loss) recognized during the year (1,355) (634) 36 28 Prior service credit recognized during the year 17 26 — — Exchange rate effect during the year — — 6 (1) Balance at end of year $ 25,614 $ 28,976 $ (466) $ (482) Net postretirement benefit costs include the following components: United States International 2020 2019 2018 2020 2019 2018 Service cost $ 666 $ 545 $ 709 $ 15 $ 16 $ 20 Interest cost 2,345 2,984 2,557 13 19 20 Amortization of prior service credit (17) (26) (99) — — — Amortization of net actuarial (gain) loss 1,355 634 1,079 (36) (28) (20) Total benefit cost (credit) Total benefit cost (credit) $ 4,349 $ 4,137 $ 4,246 $ (8) $ 7 $ 20 The weighted average assumptions used in the valuation of postretirement benefits were as follows: United States International 2020 2019 2018 2020 2019 2018 Assumptions used to determine benefit obligations at October 31: Discount rate 2.84 % 3.27 % 4.56 % 2.94 % 3.03 % 3.88 % Health care cost trend rate 3.40 3.62 3.75 4.22 4.00 6.35 Rate to which health care cost trend rate is assumed to incline/decline (ultimate trend rate) 3.17 3.24 3.27 4.05 4.05 3.50 Year the rate reaches the ultimate trend rate 2026 2026 2026 2040 2040 2037 Assumption used to determine net benefit costs for the years ended October 31: Discount rate benefit obligation 3.27 % 4.56 % 3.86 % 3.03 % 3.88 % 3.52 % Discount rate service cost 3.61 4.77 4.11 3.05 3.90 3.54 Discount rate interest cost 2.79 4.18 3.39 2.88 3.80 3.40 The weighted average health care trend rates reflect expected increases in the Company’s portion of the obligation.Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when they exceed the accounting corridor, which is set at 10%10 percent of the greater of the plan assets or benefit obligations. Gains or losses outside of the corridor are subject to amortization over an average employee future service period that differs by plan. If substantially all of the plan’s participants are no longer actively accruing benefits, the average life expectancy is used.Similar to the changes in the discount rate approach discussed for the pension plans above, beginning in 2017 we elected to use an approach that discounts the individual expected cash flows underlying interest and service costs using the applicable spot rates derived from the yield curve used to determine the benefit obligation to the relevant projected cash flows.The Company has accounted for this change in estimate that is inseparable from a change in accounting principle on a prospective basis starting in fiscal year 2017. The reductions in service and interest costs for 2017 associated with this change in estimate were $100 and $500, respectively.Nordson Corporation 56A one-percentage point change in the assumed health care cost trend rate would have the following effects. Bracketed numbers represent decreases in expense and obligation amounts.United States International 1% Point
Increase1% Point
Decrease1% Point
Increase1% Point
DecreaseHealth care trend rate: Effect on total net postretirement benefit cost components in 2020 $ 431 $ (345) $ 7 $ (5) Effect on postretirement obligation as of October 31, 2020 $ 11,019 $ (9,100) $ 103 $ (80) Contributions to postretirement plans in 20182021 are estimated to be approximately $2,200.Nordson Corporation 57Retiree postretirement benefit payments are anticipated to be paid as follows:Year United States International 2021 $ 2,835 $ 6 2022 3,047 6 2023 3,238 6 2024 3,444 6 2025 3,623 6 2026-2030 20,133 46 Note 8 — Income taxesIncome tax expense includes the following:2020 2019 2018 Current: U.S. federal $ 19,265 $ 40,012 $ 39,837 State and local 984 3,429 1,734 Foreign 45,657 51,590 63,522 Total current 65,906 95,031 105,093 Deferred: U.S. federal (10,143) 1,470 (32,829) State and local (1,023) 633 891 Foreign (2,790) (3,121) (2,011) Total deferred (13,956) (1,018) (33,949) $ 51,950 $ 94,013 $ 71,144 Earnings before income taxes of domestic operations, which are calculated after intercompany profit eliminations, were $181,840, $156,723$120,054, $222,435 and $140,044$192,643 in 2017, 20162020, 2019 and 2015,2018, respectively.Our income tax provision for 2017 includes2020 included a discrete tax expensebenefit of $1,070$15,661 due to our share-based payment transactions. Income before taxes in 2020 included a non-cash, assets held for sale impairment charge of $87,371 related to nondeductible acquisition costs.On December 18, 2015,our commitment to sell our screws and barrels product line within the Protecting Americans from Tax Hikes ActAdhesives reporting unit under our Industrial Precision Solutions segment and the tax benefit of 2015the impairment was enacted which retroactively reinstated$15,254. A portion of the Federal Research and Development Tax Credit (Federal R&D Tax Credit) as of January 1, 2015, and made it permanent. As a result, ourimpairment charge did not have related tax benefits.Our income tax provision for 2016 includes2019 included a discreteprovisional tax benefit of $2,200 related$4,866 to 2015. The tax rate for 2016 also includes a discrete tax benefitreflect the adjustment to the provisional amounts recognized in 2018 due to changes in interpretations and assumptions and the finalization of $6,154 related to dividends paid from previously taxed foreign earnings generated prior to 2015, and a benefit of $2,682estimates related to the U.S. Tax Cuts and Jobs Act ("the Act"). We are paying the transition tax in installments over the eight-year period allowable under the Act. The remaining transition tax is included in other long-term liabilities in the Consolidated Balance Sheet at October 31, 2020.Other provisions of the Act became effective settlementfor us in 2019. The Foreign-Derived Intangible Income provision generates a deduction against our U.S. taxable income for U.S. earnings derived offshore that utilize intangibles held in the U.S. Conversely, the Global Intangible Low-Taxed Income (“GILTI”) provision requires us to subject to U.S. taxation a portion of our foreign subsidiary earnings that exceed an allowable return. We elected to treat any GILTI inclusion as a tax exam.On December 19, 2014,period expense in the Tax Increase Prevention Act of 2014 was enacted which retroactively reinstated the Federal Research and Development Tax Credit (Federal R&D Tax Credit) from January 1, 2014 to December 31, 2014 and extended certain other tax provisions. As a result, our income tax provision for 2015 included discrete tax benefits of $2,486 primarily related to 2014.Nordson Corporation 57 58A reconciliation of the U.S. statutory federal rate to the worldwide consolidated effective tax rate follows: 2020 2019 2018 Statutory federal income tax rate 21.00 % 21.00 % 23.34 % Transition tax Transition tax 0 1.46 6.16 Tax rate change deferred tax remeasurement Tax rate change deferred tax remeasurement — 0 (10.94) Share-based and other compensation Share-based and other compensation (4.15) (0.55) (1.45) Domestic production deduction Domestic production deduction — 0 (0.82) Foreign tax rate variances, net of foreign tax credits 1.51 1.16 (0.46) State and local taxes, net of federal income tax benefit (0.01) 0.74 0.45 Amounts related to prior years (0.04) (0.55) (0.21) Foreign-Derived Intangible Income Deduction Foreign-Derived Intangible Income Deduction (0.95) (1.51) — Global Intangible Low-Taxed Income net of foreign tax credits Global Intangible Low-Taxed Income net of foreign tax credits 0.97 0.85 — Other – net (1.10) (0.79) (0.21) Effective tax rate 17.23 % 21.81 % 15.86 % The Domestic Production Deduction, enacted by the American Jobs Creation Act of 2004, allows a deduction with respect to income from certain United States manufacturing activities.Earnings before income taxes of international operations, which are calculated before intercompany profit elimination entries, were $238,451, $211,771$181,435, $208,669 and $160,818$255,877 in 2017, 20162020, 2019 and 2015,2018, respectively. Deferred income taxes are not provided on undistributed earnings of international subsidiaries that are intended to be permanently invested in their operations. These undistributed earnings represent the post-income tax earnings under U.S. GAAP not adjusted for previously taxed income which aggregated approximately $1,026,793$1,045,389 and $757,501$1,101,736 at October 31, 20172020 and 2016,2019, respectively. Should these earnings be distributed, applicable foreign tax credits, distributions of previously taxed income, and utilization of other attributes would substantially offset taxes due upon the distribution. It is not practical to estimate the amount of additional taxes that might be payable on such undistributed earnings.At October 31, 20172020 and 2016,2019, total unrecognized tax benefits were $3,781$6,717 and $3,336,$2,909, respectively. The amounts that, if recognized, would impact the effective tax rate were $3,273$5,998 and $2,775$2,429 at October 31, 20172020 and 2016,2019, respectively. During 2016,2020, unrecognized tax benefits related primarily to foreigndomestic positions and, as recognized, a substantial portion of the gross unrecognized tax benefits were offset against assets recorded in the Consolidated Balance Sheet. A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2017, 20162020, 2019 and 20152018 is as follows: 2020 2019 2018 Balance at beginning of year $ 2,909 $ 2,891 $ 3,781 Additions based on tax positions related to the current year 370 370 310 Additions for tax positions of prior years 4,068 547 40 Reductions for tax positions of prior years 0 0 (120) Settlements (137) 0 0 Lapse of statute of limitations (493) (899) (1,120) Balance at end of year $ 6,717 $ 2,909 $ 2,891 At October 31, 20172020 and 2016,2019, we had accrued interest and penalty expense related to unrecognized tax benefits of $623$2,179 and $541,$593, 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 examination in the U.S. by the Internal Revenue Service (IRS) for the 20142017 through 20172020 tax years; tax years prior to the 20142017 year are closed to further examination by the IRS. Generally, major state and foreign jurisdiction tax years remain open to examination for tax years after 2011.2014. Within the next twelve months, it is reasonably possible that certain statute of limitations periods would expire, which could result in a minimal decrease in our unrecognized tax benefits.Nordson Corporation 58 59Significant components of deferred tax assets and liabilities are as follows: 2020 2019 Deferred tax assets: Employee benefits $ 70,838 $ 73,025 Other accruals not currently deductible for taxes 16,207 16,294 Tax credit and loss carryforwards 20,268 18,074 Inventory adjustments 8,757 5,269 Total deferred tax assets 116,070 112,662 Valuation allowance (22,233) (15,301) Total deferred tax assets 93,837 97,361 Deferred tax liabilities: Depreciation and amortization 150,591 169,009 Other - net 410 655 Total deferred tax liabilities 151,001 169,664 Net deferred tax liabilities $ (57,164) $ (72,303) At October 31, 2017,2020, we had $5,493$8,565 of tax credit carryforwards, $921 of which $27 will expireexpires in 2022,2028 and $5,466$7,644 of which has an indefinite carryforward period. We also had $21,929 Federal, $78,320$58,559 state, and $13,174$24,394 foreign operating loss carryforwards, and $20,149a $24,227 capital loss carryforward, of which $120,950$88,613 will expire in 20182021 through 2037,2040, and $12,622$18,567 of which has an indefinite carryforward period. The net change in the valuation allowance was an increase of $6,587$6,932 in 20172020 and a increase of $1,537$439 in 2016.2019. The valuation allowance of $14,891$22,233 at October 31, 2017,2020, related primarily to tax credits and loss carryforwards that may expire before being realized. We continue to assess the need for valuation allowances against deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized.Note 9 — Notes payableBank lines of credit and notes payable are summarized as follows:2020 2019 Maximum borrowings available under bank lines of credit (all foreign banks) $ 74,766 $ 79,930 Unused bank lines of credit $ 74,766 $ 79,930 Note 10 — Long-term debtA summary of long-term debt is as follows:2020 2019 Senior notes, due 2021-2025 $ 109,900 $ 140,800 Senior notes, due 2021-2027 85,714 92,857 Senior notes, due 2023-2030 350,000 350,000 Term loan, due 2022-2024 255,000 505,000 Euro loan, due 2023 308,642 128,219 Private shelf facility 0 30,556 Development loans 0 951 1,109,256 1,248,383 Less current maturities 38,043 168,738 Less unamortized debt issuance costs 3,261 4,241 Long-term maturities $ 1,067,952 $ 1,075,404 Nordson Corporation 59 60Notes to Consolidated Financial Statements —(Continued)Revolving credit agreement— This $600,000In April 2019, we entered into a $850,000 unsecured multi-currency revolving credit agreement isfacility with a group of banks, which amended, restated and expiresextended our existing syndicated revolving credit agreement that was scheduled to expire in February 2020. Payment of quarterly fees is required. The interest rate is variable based upon the LIBOR rate. The weighted average interest rateThis facility has a five-year term and includes a $75,000 subfacility for borrowingsswing-line loans. It expires in April 2024. At October 31, 2020 and October 31, 2019, we had 0 balances outstanding under this agreement was 2.24 percentfacility. We were in compliance with all covenants at October 31, 2017.Senior notes, due 2018-20252021-2025 — These unsecured fixed-rate notes entered into in 2012 with a group of insurance companies had a remaining weighted-average life of 4.112.33 years. The weighted-average interest rate at October 31, 20172020 was 3.023.07 percent.Senior notes, due 2019-20272021-2027 — These unsecured fixed-rate notes entered into in 2015 with a group of insurance companies had a remaining weighted-average life of 6.243.91 years. The weighted-average interest rate at October 31, 20172020 was 3.043.06 percent.Senior notes, due 2023-2030 —These unsecured fixed-rate notes entered in 2019 with a group of insurance companies had a remaining weighted-average life of 5.04 years. The weighted-average interest rate at October 31, 2020 was 3.90 percent.Term loan, due 2018-20202022-2024 — In 2015,April 2019, we entered into a $200,000amended, restated and extended the term of our existing $605,000 term loan facility with a group of banks. The interest rate is variable based upon the LIBOR rate. $100,000At October 31, 2020, $255,000 was outstanding under this facility. The Term Loan Agreement provides for the following term loans due in two tranches: $50,000 is due in three years with a weighted-average interest rate of 2.24 percentSeptember 2022, and $100,000$205,000 is due in five years with a weighted-averageMarch 2024. The weighted average interest rate of 2.34 percent.Term loan, due 2018-2022 — In 2017, we entered into a $705,000 term loan facilityfor borrowings under this agreement was 0.83 percent at October 31, 2020. We were in compliance with a group of banks. The interest rate is variable based upon the LIBOR rate. $200,000 is due in 18 months with a weighted-average interest rate of 2.25 percent, $200,000 is due in three years with a weighted-average interest rate of 2.35 percent and $305,000 is due in five years with a weighted-average interest rate of 2.38 percent.Euro loan, due 20192023 — This Euro denominatedIn March 2020 we amended, restated and extended the term of our existing term loan was entered into in 2015facility with Bank of America Merrill Lynch International Limited. It can be extended by one year at the end of the third and fourth anniversaries. The loan was amended in 2016 to extend the term by one year and increase the principal amount. The interest rate is variable based uponon the EUR LIBOREURIBOR rate. The Term Loan Agreement provides for the following term loans due in two tranches: €115,000 is due in March 2023 and an additional €150,000 that was drawn down in March 2020 is due in March 2023. The weighted average interest rate at October 31, 20172020 was 1.000.71 percent.Private shelf facility— In 2011,October 2020, we entered into a $150,000 three-year Private Shelf Noteamended, restated and extended the term of the unsecured $200,000 private shelf facility agreement with New York Life Investment Management LLC (NYLIM).LLC. The amount of the facility was increased to $180,000has a three-year term and expires in 2015, and then increased to $200,000 in 2016. Borrowings under the agreement may be for up to 12 years and are unsecured.October 2023. The interest rate on each borrowing is fixed based upon the market rate at the borrowing date or is variable based upon the LIBOR rate. At October 31, 2017, the amount2020, there was no outstanding balance under this facility was at fixed rates of 2.21 percent and 2.56 percent and at variable rates of 2.49 percent and 2.60 percent.Development loans, due 2018-2026 — These fixed-rate loans with the State of Ohio and Cuyahoga County, Ohio were issued in 2011 in connection with the construction of our corporate headquarters building and are payable in monthly installments over 15 years beginning in 2011. The interest rate on the State of Ohio loan is 3.00 percent, and the interest rate on the Cuyahoga County loan is 3.50 percent.Annual maturities— The annual maturities of long-term debt for the five years subsequent to October 31, 2017,2020, are as follows: $326,587$38,043 in 2018; $40,9242021; $80,642 in 2019; $617,8762022; $439,285 in 2020; $38,1872023; $315,643 in 20212024 and $335,791$85,643 in 2022.Note 11 — LeasesWe review new contracts to determine if the contracts include a lease. To the extent a lease agreement includes an extension option that is reasonably certain to be exercised, we have recognized those amounts as part of the right-of-use assets and lease commitments expiringliabilities. We combine lease and non-lease components, such as common area maintenance, in the calculation of the lease assets and related liabilities. As most lease agreements do not provide an implicit rate, we use an incremental borrowing rate (IBR) based on information available at various dates, principallythe lease commencement date in determining the present value of lease payments and to help classify the lease as operating or financing. We calculate the IBR based on a bond yield curve which considers secured borrowing rates based on our credit rating and current economic environment, as well as other publicly available data.We lease certain manufacturing facilities, warehouse space, machinery and equipment, and vehicles. We often have options to renew lease terms for manufacturing, warehousebuildings and office space, automobilesother assets. We evaluate renewal and office equipment. Many leases contain renewaltermination options and some contain purchase options and residual guarantees.Rentat the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. Leases with an initial term of 12 months or less (short-term leases) are not recorded on the Consolidated Balance Sheet. Lease expense for all operating leases was approximately $17,938, $18,047is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments occur. Variable payments for leases primarily relate to future rates or amounts, miles, or other quantifiable usage factors which are not determinable at the time the lease agreement commences. Finance lease assets are recorded in Property, plant, and $15,721 in 2017, 2016 and 2015, respectively.Amortization of assets recorded under capital leases isequipment – net on the Consolidated Balance Sheet with related amortization recorded in depreciation expense.Nordson Corporation 60 61Additional lease information is summarized below for the twelve months ended October 31, 2020:October 31, 2020 Finance Leases Operating Leases Amortization of right of use assets $ 7,087 $ — Interest 350 — Lease cost(1)7,437 21,489 Short-term and variable lease cost(1)1,478 3,011 Total lease cost $ 8,915 $ 24,500 (1) Lease costs are recorded in both Cost of sales and Selling and administrative expenses on the Consolidated Statements of Income.Supplemental cash flow information is summarized below for the twelve months ended October 31, 2020:Cash outflows for leases $ 7,605 $ 20,918 Weighted average remaining lease term (years) 4.65 10.47 Weighted average discount rate 2.39% 1.70% The following table reconciles the undiscounted cash flows for five years and thereafter to the operating and finance lease liabilities recognized on the Consolidated Balance Sheet as of October 31, 2020. The reconciliation excludes short-term leases that are not recognized on the Consolidated Balance Sheet.Year: Finance Leases Operating Leases 2021 $ 6,226 $ 18,821 2022 4,332 17,367 2023 2,655 14,805 2024 999 13,163 2025 652 11,265 Later years 2,956 63,986 Total minimum lease payments 17,820 139,407 Amounts representing interest 1,366 13,172 Present value of minimum lease payments $ 16,454 $ 126,235 Rental expense for operating leases during the fiscal years ended October 31, 2019 and October 31, 2018 was $22,061 and $19,131, respectively.Assets held under capitalized finance leases and included in property, plant and equipment are as follows:Atduring the fiscal years ended October 31, 2017, future minimum lease payments under non-cancelable capitalized2020 and operating leases are as follows:Note 12 — Fair value measurementsThe inputs to the valuation techniques used to measure fair value are classified into the following categories:Level 1: Quoted market prices in active markets for identical assets or liabilities.Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.Level 3: Unobservable inputs that are not corroborated by market data.The following table presentstables present the classification of our assets and liabilities measured at fair value on a recurring basis at October 31, 2017:
basis:(a)We enter into foreign currency forward contracts to reduce the risk of foreign currency exposures resulting from receivables, payables, intercompany receivables, intercompany payables and loans denominated in foreign currencies. Foreign exchange contracts are valued using market exchange rates. These foreign exchange contracts are not designated as hedges.Nordson Corporation 61 62in the value of compensation deferred under these plans are recognized each period based on the fair value of the underlying measurement funds.Notes to Consolidated Financial Statements —(Continued)October 31, 2020 Total Level 1 Level 2 Level 3 Assets: Foreign currency forward contracts (a)$ 2,700 $ — $ 2,700 $ — Total assets at fair value $ 2,700 $ — $ 2,700 $ — Liabilities: Deferred compensation plans (b)$ 12,304 $ — $ 12,304 $ — Foreign currency forward contracts (a)5,937 — 5,937 — Total liabilities at fair value $ 18,241 $ — $ 18,241 $ — October 31, 2019 Total Level 1 Level 2 Level 3 Assets: Foreign currency forward contracts (a)$ 5,042 $ — $ 5,042 $ — Total assets at fair value $ 5,042 $ — $ 5,042 $ — Liabilities: Deferred compensation plans (b)$ 11,850 $ — $ 11,850 $ — Foreign currency forward contracts (a)2,381 — 2,381 — Total liabilities at fair value $ 14,231 $ — $ 14,231 $ — (a)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. Foreign exchange contracts are valued using market exchange rates. These foreign exchange contracts are not designated as hedges.(b)Executive officers and other highly compensated employees may defer up to 100 percent of their salary and annual cash incentive compensation and for executive officers, up to 90 percent of their long-term 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.Fair value disclosures related to goodwill and indefinite-lived intangible assets are disclosed in Note 6.The carrying amounts and fair values of financial instruments, other than cash and cash equivalents, receivables, and accounts payable, are shown in the table below. The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these instruments.2020 2019 Carrying
AmountFair Value Carrying
AmountFair Value Long-term debt (including current portion) $ 1,105,995 $ 1,170,073 $ 1,244,142 $ 1,278,142 We used the following methods and assumptions in estimating the fair value of financial instruments:•Long-term debt is valued by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy. The carrying amount of long-term debt is shown net of unamortized debt issuance costs as described in Note 10.Note 13 — FinancialDerivative financial instrumentsWe 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 under U.S. GAAP. Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in “other“Other – net” on the Consolidated Statement of Income together with the transaction gain or loss from the related balance sheet position. In 2017,2020, we recognized net gainslosses of $329$5,899 on foreign currency forward contracts and net lossesgains of $1,015$4,367 from the change in fair value of balance sheet positions. In 2016,2019, we recognized net gains of $2,317$2,373 on foreign currency forward contracts and net losses of $312$2,231 from the change in fair value of balance sheet positions. In 2015,2018, weNordson Corporation 63recognized net losses of $3,866$3,151 on foreign currency forward contracts and net gains of $3,862$4,284 from the change in fair value of balance sheet positions.The following table summarizes, by currency, the contracts outstanding at October 31, 20172020 and 2016:2019:Notional Amounts Sell Buy October 31, 2020 contract amounts: October 31, 2020 contract amounts: Euro $ 127,849 $ 259,510 Pound sterling 36,943 71,380 Japanese yen 23,262 41,133 Australian dollar 179 9,084 Hong Kong dollar 59,459 81,199 Singapore dollar 1,102 17,350 Others 6,985 73,310 Total $ 255,779 $ 552,966 October 31, 2019 contract amounts: October 31, 2019 contract amounts: Euro $ 264,661 $ 107,598 Pound sterling 32,600 48,867 Japanese yen 29,397 51,217 Australian dollar 168 7,767 Hong Kong dollar 189 135,862 Singapore dollar 1,108 15,684 Others 4,485 66,349 Total $ 332,608 $ 433,344 We also use 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 2017 and 2016, net losses of $760 and net gains of $2,439, 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.Nordson Corporation 62We are exposed to credit-related losses in the event of nonperformance by counterparties to financial instruments. These financial instruments include cash deposits and foreign currency forward 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, 20172020 and 2016,2019, there were no significant concentrations of credit risk.The carrying amounts and fair values of financial instruments, other than receivables and accounts payable, are shown in the table below. The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these instruments.We used the following methods and assumptions in estimating the fair value of financial instruments:Notes payable are valued at their carrying amounts due to the relatively short period to maturity of the instruments.Long-term debt is valued by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy. The carrying amount of long-term debt is shown net of unamortized debt issuance costs as described in Note 10.Foreign currency forward contracts are estimated using quoted exchange rates, which are considered to be Level 2 inputs under the fair value hierarchy.Preferred— We have authorized 10,000 Series A convertible preferred shares without par value. NoNaN preferred shares were outstanding in 2017, 20162020, 2019 or 2015.Common— We have 160,000 authorized common shares without par value. At October 31, 20172020 and 2016,2019, there were 98,023 common shares issued. At October 31, 20172020 and 2016,2019, the number of outstanding common shares, net of treasury shares, was 57,71558,081 and 57,307,57,600, respectively.Common shares repurchased as part of publicly announced programs during 2017, 20162020, 2019 and 20152018 were as follows:Year Number
of SharesTotal
AmountAverage
per Share2020 303 38,138 $ 125.70 2019 949 114,790 $ 121.01 2018 145 18,939 $ 130.21 Note 15 — Stock-based compensationDuring the 20132018 Annual Meeting of Shareholders, our shareholders approved the Amended and Restated 2012 Stock Incentive and Award Plan (the “2012 Plan”). The 2012 Plan provides for the granting of stock options, stock appreciation rights, restricted stock,shares, restricted share units, performance shares, stock purchase rights, stock equivalent units, cash awards and other stock or performance-based incentives. A maximum of 2,9004,525 common shares isare available for grant under the 2012 Plan.Nordson Corporation 63Stock 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 yearNordson Corporation 64and expire 10 years from the date of grant. For grants made prior to November 2012, vesting ceasesVesting accelerates upon retirement, death and disability, and unvested shares are forfeited. For grants made during or after November 2012,a qualified termination in connection with a change in control. In the event of termination of employment due to early retirement or normal retirement at age 65, options granted within 12 months prior to termination are forfeited, and vesting continues post retirement for all other unvested options granted. In the event of disability or death, all unvested stock options granted within 12 months prior to termination (or at any time prior to December 28, 2017) fully vest. Termination for any other reason results in forfeiture of unvested options and vested options in certain circumstances. The amortized cost of options is accelerated if the retirement eligibility date occurs before the normal vesting date. Option exercises are satisfied through the issuance of treasury shares on a first-in, first-out basis. We recognized compensation expense related to stock options of $9,326, $7,874$10,087, $10,067 and $8,772$9,964 for 2017, 20162020, 2019 and 2015,2018, respectively.The following table summarizes activity related to stock options during 2017:2020:Number of
OptionsWeighted˗Average
Exercise Price
Per ShareAggregate
Intrinsic
ValueWeighted˗Average
Remaining
TermOutstanding at October 31, 2019 1,787 $ 97.74 Granted 391 $ 166.38 Exercised (644) $ 78.91 Forfeited or expired (47) $ 145.52 Outstanding at October 31, 2020 1,487 $ 122.45 $ 105,536 7.0 years Expected to vest 845 $ 141.28 $ 44,065 8.1 years Exercisable at October 31, 2020 632 $ 96.79 $ 61,104 5.5 years Summarized information on currently outstanding options follows:Range of Exercise Price $43 - $90 $91 - $140 $141 - $190 Number outstanding 279 844 364 Weighted-average remaining contractual life, in years 4.0 7.1 9.1 Weighted-average exercise price $ 70.40 $ 120.56 $ 166.66 Number exercisable 279 352 1 Weighted-average exercise price $ 70.40 $ 117.43 $ 165.21 As of October 31, 2017,2020, there was $6,638$11,294 of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be amortized over a weighted average period of approximately 1.61.7 years.The Black-Scholes option valuation model was developed for use in estimatingused to estimate 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:2020 2019 2018 Expected volatility 24.5%-30.5% 24.1%-24.5% 24.0%-26.7% Expected dividend yield 0.87%-1.16% 1.04% 0.97% Risk-free interest rate 0.44%-1.69% 2.84%-2.95% 2.09%-2.20% Expected life of the option (in years) 5.3-6.3 5.3-6.2 5.4-6.2 The weighted-average expected volatility used to value options granted in 2017, 20162020, 2019 and 20152018 was 29.125.4 percent, 29.624.3 percent and 34.325.0 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 2017, 20162020, 2019 and 20152018 was $28.86, $18.23$38.57, $31.74 and $24.63,$31.42, respectively.Nordson Corporation 64The total intrinsic value of options exercised during 2017, 20162020, 2019 and 20152018 was $22,317, $17,271$65,783, $31,881 and $10,406,$35,696, respectively.Cash received from the exercise of stock options for 2017, 20162020, 2019 and 20152018 was $14,086, $11,476$50,853, $26,020 and $5,372,$18,811, respectively. The tax benefit realized from tax deductions from exercises for 2017, 2016 and 2015 was $6,685, $3,476 and $3,661, respectively.Nordson Corporation 65Restricted shares and restricted share units— We may grant restricted shares and/or restricted share units to our employees and directors. These shares or units may not be transferred for a designated period of time (generally one to three years) defined at the date of grant.For employee recipients, in the event of termination of employment due to early retirement, with consent of the Company, restricted shares granted within 12 months prior to termination are forfeited, and other restricted shares vest on a pro-rata basis. In the event of termination of employment due to normal retirement at age 65, restricted shares granted within 12 months prior to termination are forfeited, and, for other restricted shares, the restriction period will lapse and the shares will vest and be transferable. RestrictionsFor restricted shares granted within 12 months prior to termination (or at any time prior to December 28, 2017), the restrictions lapse in the event of a recipient’s disability or death. Termination for any other reason prior to the lapse of any restrictions results in forfeiture of the shares.For non-employee directors, all restrictions lapse in the event of disability or death. Termination of service as a director for any other reason within one year of date of grant results in a pro-rata vesting of shares or units.As shares or units are issued, deferred stock-based compensation equivalent to the fair market value on the date of grant is expensed over the vesting period. Tax benefits arising from the lapse of restrictions are recognized when realized and credited to capital in excess of stated value.The following table summarizes activity related to restricted shares during 2017:2020:Number of
SharesWeighted˗Average
Grant Date Fair
Value Per ShareRestricted at October 31, 2019 Restricted at October 31, 2019 66 $ 126.83 Granted 27 $ 170.94 Forfeited (7) $ 135.43 Vested (28) $ 121.01 Restricted at October 31, 2020 Restricted at October 31, 2020 58 $ 148.75 As of October 31, 2017,2020, there was $2,829$4,292 of unrecognized compensation cost related to restricted shares. The cost is expected to be amortized over a weighted average period of 1.92.0 years. The amount charged to expense related to restricted shares was $2,127, $1,963$3,956, $3,608 and $1,840$2,610 in 2017, 20162020, 2019 and 2015,2018, respectively. These amounts included common share dividends of $64, $60,$87, $84, and $51$70 in 2017, 20162020, 2019 and 2015,2018, respectively.The following table summarizes activity related to restricted share units in 2017:2020:Number of
UnitsWeighted˗Average Grant Date Fair
ValueRestricted share units at October 31, 2019 Restricted share units at October 31, 2019 0 $ — Granted 7 $ 160.68 Vested (7) $ 160.68 Restricted share units at October 31, 2020 Restricted share units at October 31, 2020 0 $ — As of October 31, 2017,2020, there was no0 remaining expense to be recognized related to outstanding restricted share units. The amountamounts charged to expense related to restricted share units during 2017, 2016in 2020, 2019 and 2015 was2018 were $1,181, $1,052 and $1,011, $974 and $972, respectively.Deferred directors’ compensation — Non-employee directors may defer all or part of their cash and equity-based compensation until retirement. Cash compensation may be deferred as cash or as share equivalent units. Deferred cash amounts are recorded as liabilities, and share equivalent units are recorded as equity. Additional share equivalent units are earned when common share dividends are declared.Nordson Corporation 65The following table summarizes activity related to director deferred compensation share equivalent units during 2017:The amount charged to expense related to director deferred compensation was $106, $158 and $91 in 2017, 2016 and 2015, respectively.achieved.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 grant date fair value determined using the closing market price of our common shares at the grant date, reduced by the implied value of dividends not to be paid. The per share values were $103.75$160.02, $133.01, and $104.49$184.04 for 2017, $67.69 per share2020; $120.12 and $138.53 for 20162019; and $76.48 per share$123.45 and $138.53 for 2015.2018. The amounts chargedamount credited to expense for executive officers and selected other key employees in 2017, 20162020 was $2,732, and 2015the amounts charged to expense in 2019 and 2018 were $7,398, $7,083$2,989 and $3,459,$7,635, respectively. The cumulative amount recorded in shareholders’ equity at October 31, 2017,2020, and 20162019 was $12,820$1,557 and $10,951,$10,459, respectively.Nordson Corporation 66Deferred compensation— Our executive officers and other highly compensated employees may elect to defer up to 100 percent of their base pay and cash incentive compensation and, for executive officers, up to 90 percent of their share-based performance incentive award payout each year. Additional share units are credited for quarterly dividends paid on our common shares. Expense related to dividends paid under this plan was $264, $219$276, $300 and $179$273 for 2017, 20162020, 2019 and 2015,2018, respectively.Deferred directors’ compensation — Non-employee directors may defer all or part of their cash and equity-based compensation until retirement. Cash compensation may be deferred as cash or as share equivalent units. Deferred cash amounts are recorded as liabilities, and share equivalent units are recorded as equity. Additional share equivalent units are earned when common share dividends are declared.The following table summarizes activity related to director deferred compensation share equivalent units during 2020:Number of
SharesWeighted˗Average
Grant Date Fair
Value Per ShareOutstanding at October 31, 2019 114 $ 55.52 Restricted stock units vested 5 $ 161.09 Dividend equivalents 1 $ 169.43 Outstanding at October 31, 2020 120 $ 60.81 The amount charged to expense related to director deferred compensation was $175, $154 and $127 in 2020, 2019 and 2018, respectively.Shares reserved for future issuance— At October 31, 2017,2020, there were 2,7812,032 of common shares reserved for future issuance through the exercise of outstanding options or rights.Note 16 — Operating segments and geographic area dataWe conduct business in three2 primary operating segments: Adhesive Dispensing Systems,Industrial Precision Solutions and Advanced Technology Systems, and Industrial Coating Systems.Solutions. 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. The accounting policies of the segments are generally the same as those described in Note 1, Significant Accounting Policies.Effective in the second quarter of 2020, we made changes to realign our management team and our operating segments. This realignment will enable us to better serve global customers and markets, to more efficiently leverage technology synergies, to operate divisions of significant size in a consistent and focused way and to position ourselves for our next chapter of profitable growth. The revised operating segments better reflect how we manage the Company, allocate resources, and assess performance of the businesses.We realigned our former 3 operating segments into 2: Industrial Precision Solutions and Advanced Technology Solutions. Existing product lines were unchanged as part of this new structure.Industrial Precision Solutions: This segment combines our former Adhesive Dispensing Systems (ADS) and Industrial Coating Systems (ICS) businesses. IPS enhances the technology synergies between ADS and ICS to deliver proprietary dispensing and processing technology to diverse end markets. Product lines reduce material consumption, increase line efficiency and enhance product brand and appearance. Components are used for dispensing adhesives, coatings, paint, finishes, sealants and other materials. This segment primarily serves the industrial, consumer durables and non-durables markets.Advanced Technology Solutions: This segment integrates our proprietary product technologies found in progressive stages of a customer’s production processes, such as surface treatment, precisely controlled dispensing of material and post-dispense test and inspection to ensure quality. Related single-use plastic molded syringes, cartridges, tips, fluid connection components, tubing, balloons and catheters are used to dispense or control fluids in production processes or within customers’ end products. This segment predominantly serves customers in the electronics, medical and related high-tech industrial markets.The financial information presented herein reflects the impact of the preceding changes and prior periods have been revised to reflect these changes.No single customer accounted for 10 percent or more of sales in 2017, 20162020, 2019 or 2015.Nordson Corporation 66 67The following table presents information about our reportable segments:(a)Includes $2,618, $7,800 and $7,972 of severance and restructuring costs in 2017, 2016 and 2015, respectively.(b)Includes $(180), $1,054 and $3,060 of severance and restructuring costs in 2017, 2016 and 2015, respectively.Industrial Precision Solutions Advanced Technology Solutions Corporate Total Year ended October 31, 2020 Net external sales $ 1,143,423 $ 977,677 $ 0 $ 2,121,100 Depreciation and amortization 38,939 64,543 9,820 113,302 Operating profit (loss) 208,028 191,602 (50,085) 349,545 Identifiable assets (b)882,946 1,849,391 948,048 (a) 3,680,385 Property, plant and equipment expenditures 18,798 31,737 0 50,535 Year ended October 31, 2019 Net external sales $ 1,208,376 $ 985,850 $ 0 $ 2,194,226 Depreciation and amortization 38,333 62,836 9,075 110,244 Operating profit (loss) 329,054 205,609 (51,550) 483,113 Identifiable assets (b)997,460 1,740,259 782,188 (a) 3,519,907 Property, plant and equipment expenditures 30,400 26,010 7,834 64,244 Year ended October 31, 2018 Net external sales $ 1,215,302 $ 1,039,366 $ 0 $ 2,254,668 Depreciation and amortization 37,763 62,594 8,050 108,407 Operating profit (loss) 315,048 244,880 (57,349) 502,579 Identifiable assets (b)951,784 1,713,404 763,734 (a) 3,428,922 Property, plant and equipment expenditures 55,457 16,205 18,128 89,790
(a)Corporate assets are principally cash and cash equivalents, deferred income taxes, leases, headquarter facilities, the major portion of our enterprise management system, and intangible assets. Includes assets held for sale, see Note 4.(c)Includes $1,921 and $379 of severance and restructuring costs in 2016 and 2015, respectively.
(b)Operating segment identifiable assets include 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, capital leases, headquarter facilities, the major portion of our enterprise management system, and intangible assets. Amounts for the years 2015 and 2016 have been adjusted to reflect the retrospective application of our reclassification of debt issuance costs upon the adoption of a new accounting standard, as described in Note 2.(e)Operating segment identifiable assets include 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.2020 2019 2018 Net external sales United States $ 755,642 $ 758,383 $ 720,832 Americas 141,473 167,661 158,837 Europe 536,636 571,596 622,108 Japan 126,601 126,756 161,771 Asia Pacific 560,748 569,830 591,120 Total net external sales $ 2,121,100 $ 2,194,226 $ 2,254,668 Long-lived assets United States $ 329,390 $ 286,894 $ 279,437 Americas 2,307 1,948 2,158 Europe 69,854 44,041 41,663 Japan 22,733 6,169 5,492 Asia Pacific 56,459 59,843 57,916 Total long-lived assets $ 480,743 $ 398,895 $ 386,666 Long-lived assets includes property, plant and equipment - net and operating right of use lease assets, which were recorded as a result of the new lease standard as codified in ASC 842 and excludes amounts held for sale, see Note 4. The increase in 2020 was driven primarily by the recording of the operating right of use lease assets.Nordson Corporation 67 68A reconciliation of total segment operating profit to total consolidated income before income taxes is as follows:2020 2019 2018 Total profit for reportable segments $ 349,545 $ 483,113 $ 502,579 Interest expense (32,160) (47,145) (49,576) Interest and investment income 1,681 1,844 1,384 Other-net (17,577) (6,708) (5,868) Income before income taxes $ 301,489 $ 431,104 $ 448,519 A reconciliation of total assets for reportable segments to total consolidated assets is as follows:2020 2019 2018 Total assets for reportable segments $ 3,680,385 $ 3,519,907 $ 3,428,922 Customer advance payments 42,323 41,131 38,997 Eliminations (48,052) (44,591) (46,907) Total consolidated assets $ 3,674,656 $ 3,516,447 $ 3,421,012 Note 17 — Supplemental information for the statement of cash flows2020 2019 2018 Cash operating activities: Interest paid $ 31,095 $ 50,578 $ 42,305 Income taxes paid 80,849 104,326 87,879 Note 18 — Quarterly financial data (unaudited)First Second Third Fourth 2020: 2020: Sales $ 494,916 $ 529,478 $ 538,181 $ 558,525 Gross margin 263,194 289,598 280,808 296,868 Net income 52,004 92,079 86,981 18,475 Earnings per share: Basic 0.90 1.60 1.51 0.32 Diluted 0.89 1.58 1.49 0.31 2019: 2019: Sales $ 497,910 $ 551,119 $ 559,746 $ 585,451 Gross margin 268,976 301,529 302,623 318,975 Net income 48,567 91,923 93,928 102,673 Earnings per share: Basic 0.84 1.60 1.64 1.79 Diluted 0.83 1.58 1.62 1.76 The sum of the per-share amounts for the four quarters may not always equal the annual per-share amounts due to differences in the average number of shares outstanding during the respective periods. The sum of other amounts for the four quarters may not always equal the annual amounts due to rounding.During the fourth quarter of 2017,2020, we recorded pre-tax severance and restructuring costsa non-cash, assets held for sale impairment charge of $1,017 and we recorded pre-tax acquisition costs of $391$87,371 related to the acquisitiondisposal of Vention.Nordson Corporation 68During the thirdfirst quarter of 2017,2019, we recorded pre-tax severance and restructuring costs of $703 and we recorded pre-tax acquisition costs of $865 related to Vention.During the second quarter of 2017, we recorded pre-tax severance and restructuring costs of $491 and we recorded pre-tax acquisition costs of $13,415 related Vention. As a result, our income tax provision for the second quarter included a discrete tax expense of $2,600 related to nondeductible acquisition costs.During the first quarter of 2017, we recorded pre-tax severance and restructuring costs of $227.During the fourth quarter of 2016, we recorded pre-tax severance and restructuring costs of $6,411.During the third quarter of 2016, we recorded pre-tax severance and restructuring costs of $1,714 and we recorded other expense of $2,722$4,866 related to the reversalAct. Refer to Note 8 for additional information.Nordson Corporation 69Notes to the effective settlement of a tax exam.During the second quarter of 2016, we recorded pre-tax severance and restructuring costs of $1,633. Additionally, we recorded other income of $800 related to a favorable litigation settlement and a $1,192 favorable adjustment to unrecognized tax benefits related to the effective settlement of a tax exam. Furthermore, our income tax provision for the second quarter included a discrete tax benefit of $1,136 related to the effective settlement of a tax exam.During the first quarter of 2016, we recorded pre-tax severance and restructuring costs of $1,017.On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 was enacted which retroactively reinstated the Federal Research and Development Tax Credit (Federal R&D Tax Credit) as of January 1, 2015, and made it permanent. As a result, our income tax provision for the three months ended January 31, 2016 includes a discrete tax benefit of $2,025 primarily related to 2015. Additionally, our income tax provision for the first quarter included a discrete tax benefit of $6,184 related to dividends paid from previously taxed foreign earnings.Note 19 — ContingenciesWe 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 litigation and environmental mattermatters discussed below, it is our opinion, after consultation with legal counsel, we do not believe that resolutionslosses in excess of these matters are not expected to result inthe amounts we have accrued would have a material adverse effect on our financial condition, quarterly or annual operating results or cash flows.Class Action LitigationOn February 22, 2019, a former employee, Mr. Ortiz, filed a purported class action lawsuit in the San Diego County Superior Court, California, against Nordson Asymtek, Inc. and Nordson Corporation, alleging various violations of the California Labor Code. Plaintiff seeks, among other things, an unspecified amount for unpaid wages, actual, consequential and incidental losses, penalties, and attorneys’ fees and costs. Following mediation in June 2020, the parties agreed to settle the lawsuit, subject to the execution of a written settlement agreement and court approval. If the court approves of the settlement on the agreed upon terms, the class action lawsuit will be resolved. Management believes, based on currently available information, that the ultimate outcome of the proceeding described above will not have a material adverse effect on the Company’s financial condition or results of operations.EnvironmentalWe have voluntarily agreed with the City of New Richmond, Wisconsin and other Potentially Responsible Parties to share costs associated with the remediation of the City of New Richmond municipal landfill (the “Site”) and the construction of a potable water delivery system serving the impacted area down gradient of the Site. At October 31, 20172020 and October 31, 2016,2019, our accrual for the ongoing operation, maintenance and monitoring obligation at the Site was $472$360 and $516,$401, respectively. The liability for environmental remediation represents management’s 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.Nordson Corporation 69 70Management’s Report on Internal Control Over Financial ReportingThe 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 (2013 framework), Nordson’s management assessed the effectiveness of our internal control over financial reporting as of October 31, 2017.We completed the acquisitions of ACE Production Technologies,Fluortek, Inc. (“ACE”), Plas-Pak Industries, Inc. (“Plas-Pak”), InterSelect GmbH (“InterSelect”Fluortek”) and Vention Medical’s Advanced TechnologiesvivaMOS Ltd. (“Vention”vivaMOS”) on January 3, 2017, FebruaryJune 1, 2017, February 16, 20172020, and March 31, 2017, respectively.September 1, 2020, respectively. As permitted by SEC guidance, the scope of our evaluation of internal control over financial reporting as of October 31, 20172020 did not include the internal control over financial reporting of ACE, Plas-Pak, InterSelectFluortek and Vention.vivaMOS. The results of ACE, Plas-Pak, InterSelectFluortek and VentionvivaMOS are included in our consolidated financial statements from the date each business was acquired. The combined total assets of ACE, Plas-Pak, InterSelectFluortek and VentionvivaMOS represented 26four percent of our total assets at October 31, 2017.2020. The combined net sales and net income of ACE, Plas-Pak, InterSelectFluortek and VentionvivaMOS represented 6less than one percent of our consolidated net sales and 4less than one percent of our net income for 2017.Based on our assessment, management concluded that our internal control over financial reporting was effective as of October 31, 2017.The independent registered public accounting firm, Ernst & Young LLP, has also audited the effectiveness of our internal control over financial reporting as of October 31, 2017.2020. Their report is included herein./s/ Michael F. Hilton/s/ Gregory A. Thaxton/s/ Joseph P. Kelley President and Chief Executive Officer SeniorExecutive Vice President, Chief Financial OfficerChief Executive OfficerDecember 15, 201715, 2017December 18, 2020 Nordson Corporation 70 71Report of Independent RegisteredRegistered Public Accounting FirmTheTo the Shareholders and the Board of Directors and Shareholders of Nordson CorporationOpinion on Internal Control over Financial ReportingWe have audited Nordson Corporation’s internal control over financial reporting as of October 31, 2017,2020, based on criteria established in Internal Control—Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Nordson Corporation’sCorporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 31, 2020, based on the COSO criteria.As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Fluortek Inc. and vivaMOS Ltd., which are included in the 2020 consolidated financial statements of the Company and constituted a combined four percent of total assets as of October 31, 2020 and less than one percent of consolidated sales and consolidated net income for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Fluortek Inc. and vivaMOS Ltd.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows, for each of the three years in the period ended October 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated December 18, 2020 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s 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 Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’sCompany’s 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).PCAOB. 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.Definition and Limitations of Internal Control Over Financial ReportingA company’s 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 company’s 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 company’s 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.As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of ACE Production Technologies, Inc., Plas-Pak Industries, Inc., InterSelect GmbH and Vention Medical’s Advanced Technologies, which are included in the 2017 consolidated financial statements of /s/ Ernst & Young LLPCleveland, OhioDecember 18, 2020Nordson Corporation and on a combined basis constituted 26%72/s/ Ernst & Young LLPErnst & Young LLPCleveland, OhioDecember 15, 2017Nordson Corporation 71TheTo the Shareholders and the Board of Directors and Shareholders of Nordson CorporationOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Nordson Corporation (the Company) as of October 31, 20172020 and 2016, and2019, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended October 31, 2017. Our audits also included2020, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). These financial statements and schedule are the responsibility of the Company's 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. referred to above present fairly, in all material respects, the consolidated financial position of Nordson Corporationthe Company at 20172020 and 2016,2019, and the consolidated results of its operations and its cash flows for each of the three years in the period ended October 31, 2017,2020, 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.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), Nordson Corporation’sthe Company’s internal control over financial reporting as of October 31, 2017,2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 15, 201718, 2020 expressed an unqualified opinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MatterThe critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.Nordson Corporation 73/s/ Ernst & Young LLPErnst & Young LLPValuation of Goodwill Description of the Matter At October 31, 2020, the Company had $1,713,354 thousand of goodwill. As discussed in Note 6 to the consolidated financial statements, the Company evaluates the carrying amount of goodwill for impairment annually as of August 1, and between annual evaluations if an event occurs or circumstances change that would indicate the fair value of a reporting unit is less than the carrying amount of those assets. The Company performed a quantitative impairment test for all reporting units in fiscal 2020. As part of the quantitative impairment test, the Company estimated the fair value of each reporting unit using a combination of valuation techniques including the discounted cash flow method, a form of the income approach, and the guideline public company method, a form of the market approach.Auditing management’s annual goodwill impairment assessment relating to goodwill was complex due to the use of valuation methodologies in the determination of the estimated fair values of the reporting units. These fair value estimates are impacted by assumptions such as the selection of comparable guideline companies and the related valuation multiples, as well as discount rates, revenue growth rates, and operating margins which are affected by expectations about future market or economic conditions.Cleveland, OhioDecember 15, 2017We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment process whereby the Company develops assumptions that are used as inputs to the annual goodwill impairment test. This included controls over management's review of the valuation models and the assumptions, described above.To test the implied fair value of the Company’s reporting units, we performed audit procedures that included, among others, assessing the valuation methodologies, testing the assumptions, and testing the completeness and accuracy of the underlying data. We involved our internal valuation specialists in assessing the fair value methodologies applied and evaluating the reasonableness of certain assumptions selected by management. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions. We tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company. We also assessed the appropriateness of the disclosures in the consolidated financial statements./s/ Ernst & Young LLPWe have served as the Company’s auditor since 1956.Cleveland, OhioDecember 18, 2020Nordson Corporation 72 74Item 9. Changes in and Disagreements with AccountantsAccountants on Accounting and Financial DisclosureItem 9A. Controls and Procedures(a)Evaluation of disclosure controls and procedures. Our management, with the participation of the principal executive officer (president and chief executive officer) and the principal financial officer (senior vice president and 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, 2017. 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, 2017 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 SEC's 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.
(a)Evaluation of disclosure controls and procedures. Our management, with the participation of the principal executive officer (president and chief executive officer) and the principal financial officer (executive vice president and 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, 2020. 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, 2020 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 SEC's 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)Management’s 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.
(b)Management’s 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 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.(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 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Item 9B. Other InformationNone.Nordson Corporation 73 75Item 10. Directors, Executive Officers and Corporate GovernanceThe information required by this Item is incorporated by reference to the captions “Election“Proposal 1: Election of Directors Whose Terms Expire in 2021”2024” and “Section"Security Ownership of Nordson Common Shares by Directors, Director Nominees, Executive Officers, and Large Beneficial Owners—Delinquent Section 16(a) Beneficial Ownership Reporting Compliance”Reports” of our definitive Proxy Statement for the 20182021 Annual Meeting of Shareholders. Information regarding the Audit Committee and Audit Committee financial experts is incorporated by reference to the caption “Election“Committees of Directors Whose Terms Expire in 2021”the Board of Directors” of our definitive Proxy Statement for the 20182021 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.“Information about Our Executive Officers.”We have adopted a code of ethics and business conduct for all employees and directors, including the principal executive officer, other executive officers, principal financefinancial 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/en/our-company/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 and business conduct 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.Item 11. Executive CompensationThe information required by this Item is incorporated by reference to the “Executive Compensation Discussion and Analysis” section of the definitive Proxy Statement for the 20182021 Annual Meeting of Shareholders, along with the sections captioned “Directors Compensation,” “Summary Compensation Table,for Fiscal Year 2020,” “Grants of Plan-Based Awards,” “Outstanding Equity Awards at October 31, 2017,2020,” “Stock Option Exercises and Stock Vested Tables,” “Pension Benefits, Table,” “Nonqualified Deferred Compensation” andCompensation,” “Potential Benefits Upon Termination”Termination or Change of Control,” “CEO Pay Ratio,” "Risks Related to Executive Compensation Policies and Practices," "Compensation Committee Report" and "Compensation Committee Interlocks and Insider Participation" in our definitive Proxy Statement for the 20182021 Annual Meeting of Shareholders.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this Item is incorporated by reference to the caption “Security Ownership of Nordson Common Shares by Directors, Director Nominees, Executive Officers and Large Beneficial Owners” in our definitive Proxy Statement for the 20182021 Annual Meeting of Shareholders.Equity Compensation TableThe following table sets forth information regarding equity compensation plans in effect as of October 31, 2017:2020:Plan category Number of securities to
be issued upon exercise
of outstanding options,
warrants and rightsWeighted-average
exercise price of
outstanding options,
warrants and rightsNumber of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
first reporting column)Equity compensation plans approved bysecurity holders1,787 $ 97.74 1,888 Equity compensation plans not approved bysecurity holders— — — Total 1,787 $ 97.74 1,888 Nordson Corporation 76Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by this Item is incorporated by reference to the captions “Corporate Governance—Director Independence” and “Corporate Governance—Review of Transactions with Related Persons” in our definitive Proxy Statement for the 2021 Annual Meeting of Shareholders.Item 14. Principal Accountant Fees and ServicesThe information required by this Item is incorporated by reference to the caption “Review“Proposal 2: Ratify the Appointment of Transactions with Related Persons”Independent Registered Public Accounting Firm—Fees Paid to Ernst & Young LLP” and the caption “Proposal 2: Ratify the Appointment of Independent Registered Public Accounting Firm—Pre-Approval of Audit and Non-Audit Services” in our definitive Proxy Statement for the 20182021 Annual Meeting of Shareholders.Nordson Corporation 74 77Item 14. Principal Accountant Fees and ServicesThe information required by this Item is incorporated by reference to the caption “Fees Paid to Ernst & Young LLP” in our definitive Proxy Statement for the 2018 Annual MeetingTable of Shareholders.Nordson Corporation 75PARTItem 15. Exhibits and Financial Statement Schedule(a) 1. Financial StatementsThe following financial statements are included in Part II, Item 8:Consolidated Statements of Income for each of the three years in the period ended October 31, 2017Consolidated Statements of Comprehensive Income for each of the three years in the period ended October 31, 2017Consolidated Balance Sheets as of October 31, 20172020 and October 31, 2016Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended October 31, 2017Consolidated Statements of Cash Flows for each of the three years in the period ended October 31, 2017Notes to Consolidated Financial Statements(a) 2. Financial Statement ScheduleSchedule II Valuation and Qualifying Accounts and Reserves for each of the three years in the period ended October 31, 2017.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. ExhibitsThe exhibits listed on the accompanying index to exhibits are filed as part of this Annual Report on Form 10-K.Nordson Corporation 76 78ExhibitNumberDescription(2)ExhibitNumber(2) Plan of Acquisition, Reorganization or Arrangement 4-b4-g4-h4-i4-j4-l (10)Material Contracts10-b-1Material Contracts Nordson Corporation 77Index to Exhibits(Item 15(a) (3))ExhibitNumberDescription10-c10-c-110-d-110-d-1 10-d-2Nordson Corporation 2005 Excess Defined Contribution Benefit Plan*10-d-310-e-1Nordson Corporation 79ExhibitNumberDescription 10-e 10-e-1 10-e-2 10-e-210-e-310-h-110-iNordson Corporation 78Index to Exhibits(Item 15(a) (3))ExhibitNumberDescription10-j10-m10-n10-o10-p10-q10-r10-s10-u(21)31.131.1 Nordson Corporation 80101ExhibitNumber101 The following financial information from Nordson Corporation’s Annual Report on Form 10-K for the year ended October 31, 2017,2020, formatted in inline Extensible Business Reporting Language (XBRL)(iXBRL): (i) the Consolidated Statements of Income for the years ended October 31, 2017, 20162020, 2019 and 2015,2018, (ii) the Consolidated Statements of Comprehensive Income for the years ended October 31, 2017, 20162020, 2019 and 20152018, (iii) the Consolidated Balance Sheets at October 31, 20172020 and 2016,2019, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the years ended October 31, 2017, 20162020, 2019 and 2015,2018, (v) the Consolidated Statements of Cash Flows for the years ended October 31, 2017, 20162020, 2019 and 2015,2018, and (vi) the Notes to Consolidated Financial Statements.104 The cover page from Nordson Corporation’s Annual Report on Form 10-K for the year ended October 31, 2020, formatted in inline Extensible Business Reporting Language (iXBRL) (included in Exhibit 101). *Nordson Corporation may be participants.**Certain exhibits and schedules have been omitted and the Registrant agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request. 79** Schedules and attachments to this exhibit have been omitted pursuant to Regulation S-K, Item 601(a)(5). The Registrant will provide a copy of any omitted schedule to the Securities and Exchange Commission or its staff upon request.Item 16. Form 10-K SummaryNone.Nordson Corporation 80 81SignaturesPursuant 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 CORPORATIONNORDSON CORPORATION Date: December 15, 201718, 2020Gregory A. ThaxtonGregory A. ThaxtonSeniorExecutive Vice President, Chief Financial OfficerNordson Corporation 81 82POWER OF ATTORNEYKNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Gregory A. ThaxtonJoseph P. Kelley as his or her true and lawful attorney-in-fact and agent with full power to act alone, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.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.SignaturesTitleDateSignatures Title Date /s/ Michael F. HiltonSundaram Nagarajan15, 2017Michael F. HiltonGregory A. ThaxtonSeniorExecutive Vice President, Chief Financial Officer (Principal Financial Officer) (Principal Accounting Officer)15, 2017Gregory A. ThaxtonJoseph P. KeithleyChairmanChair of the Board15, 2017Joseph P. KeithleyLee C. Banks15, 2017Lee C. Banks/s/ Randolph W. CarsonDirectorDecember 15, 2017Randolph W. Carson15, 201715, 2017Michael J. Merriman, Jr.15, 2017Michael J. Merriman, Jr.Director December 18, 2020 Jennifer A. Parmentier /s/ Mary G. Puma 15, 201715, 2017Nordson Corporation 82 83Schedule II – Valuation and QualifyingQualifying Accounts and ReservesBalance at
Beginning
of YearCharged to
ExpenseDeductions Currency
EffectsBalance
at End
of YearAllowance for Doubtful Accounts 2018 $ 9,791 1,185 1,189 (207) $ 9,580 2019 $ 9,580 2,254 1,840 (193) $ 9,801 2020 $ 9,801 2,165 3,074 153 $ 9,045 Inventory Obsolescence and Other Reserves 2018 $ 33,140 13,041 8,930 294 $ 37,545 2019 $ 37,545 10,623 8,720 (71) $ 39,377 2020 $ 39,377 24,767 23,255 426 $ 41,315 Nordson Corporation 83 84