FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
| | |
þ | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended July January 31, 20052006
OR
| | |
o | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____
Commission file number 0-7977
NORDSON CORPORATION
(Exact name of registrant as specified in its charter)
| | |
Ohio | | 34-0590250 |
(State of incorporation) | | 34-0590250 (I.R.S. Employer Identification No.) |
| | |
28601 Clemens Road | | |
Westlake, Ohio | | 44145 |
(Address of principal executive offices) | | 44145 (Zip Code) |
(440) 892-1580
(Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares with no par value
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesþ Noo
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, (as definedor a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act)
Yes Act. (Check one):
Large accelerated filerþ No Accelerated filero Non-accelerated filero
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yeso Noþ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Shares with nowithout par value as of July 29, 2005: 36,312,314January 31, 2006: 33,467,490
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See accompanying notes.
See accompanying notes.
See accompanying notes.
Nordson Corporation
As of January 31, 2006, there was $8,245,000 of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be amortized over a weighted average period of approximately 1.6 years.
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:
| 11. | | | | | | | |
Quarter ended | | January 31, 2006 | | January 30, 2005 |
|
Expected volatility | | | .276-.282 | | | | .300 | |
Expected dividend yield | | | 1.88-2.00 | % | | | 1.71% | |
Risk-free interest rate | | | 4.44-4.59 | % | | | 3.87-3.88 | % |
Expected life of the option (in years) | | | 5.6-8.8 | | | | 7.00 | |
The weighted-average expected volatility and weighted-average expected dividend yield used to value the 2006 options were .278 and 1.92%, 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 U.S. Treasury issues with a term equal to the expected life of the option being valued.
The weighted average grant date fair value of stock options granted during the first three months of 2006 and 2005 was $11.81 and $12.08, respectively. The total intrinsic value of options exercised during the first three months of 2006 and 2005 was $12,501,000 and $3,087,000, respectively.
Cash received from the exercise of stock options was $12,352,000 for the first quarter of 2006 and $2,239,000 for the first quarter of 2005. The tax benefit realized from tax deductions from exercises was $3,549,000 for the first quarter of 2006 and $55,000 for the first quarter of 2005. The tax benefit increased because of a higher amount of compensation expense related to stock option exercises. In addition, the benefit increased because a higher tax rate was applied to the expense. In the first quarter of 2005, the amount of the benefit could not be determined, so a minimum tax rate was used. This year, it is expected that the Company will be able to utilize more of the benefit to reduce income taxes, so a statutory tax rate was used.
Restricted Stock
The Company may grant restricted stock to employees and directors of the Company. These shares may not be disposed of for a designated period of time (currently six months to five years) defined at the date of grant and are to be returned to the Company if the recipient’s employment terminates during the restriction period. As shares are issued, deferred stock-based compensation equivalent to the fair market value on the date of grant is charged to shareholders’ equity and subsequently amortized over the restriction period. Tax benefits arising from the lapse of restrictions on the stock are recognized when realized and credited to capital in excess of stated value. Upon adoption of FAS 123(R) at the beginning of 2006, the unamortized balance of the deferred stock-based compensation was reclassified to capital in excess of stated value.
The following table summarizes activity related to restricted stock during the first quarter of 2006:
| | | | | | | | |
| | | | | | Weighted-Average |
| | Number of | | Grant Date Fair |
(In thousands, except for per share data) | | Shares | | Value |
|
Nonvested shares at October 30, 2005 | | | 161 | | | $ | 30.17 | |
Granted | | | 5 | | | $ | 38.92 | |
Vested | | | — | | | | — | |
Forfeited | | | — | | | | — | |
|
Nonvested at January 31, 2006 | | | 166 | | | $ | 30.44 | |
|
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Nordson Corporation
As of January 31, 2006, there was approximately $2,577,000 of unrecognized compensation cost related to restricted stock. The cost is expected to be amortized over a weighted average period of 1.8 years. The amount charged to expense related to restricted stock was $458,000 in the first quarter of 2006 and $427,000 in the first quarter of 2005.
Directors Deferred Compensation
Non-employee directors may defer all or part of their fees until retirement. The fees may be deferred as cash or as stock equivalent units. Deferred cash amounts are recorded as liabilities. Upon adoption of FAS 123 (R) at the beginning of 2006, deferred amounts of $3,435,000 in stock equivalent units were reclassified from liabilities to capital in excess of stated value. Additional stock equivalent units are earned when common stock dividends are declared.
The following is a summary of the activity during the first quarter of 2006:
| | | | | | | | |
| | | | | | Weighted-Average |
| | Number of | | Grant Date Fair |
(In thousands, except for per share data) | | Shares | | Value |
|
Outstanding at October 30, 2005 | | | 151 | | | $ | 22.74 | |
Granted | | | 2 | | | $ | 40.43 | |
Dividend equivalents | | | 1 | | | $ | 42.32 | |
Distributions | | | (4 | ) | | $ | 19.82 | |
|
Outstanding at January 31, 2006 | | | 150 | | | $ | 23.17 | |
|
The amount charged to expense related to this plan was $80,000 in the first quarter of 2006.
Long-Term Incentive Compensation Plan (LTIP)
Under the long-term incentive compensation plan, executive officers and selected other employees receive cash or stock awards based solely on corporate performance measures over three-year performance periods. Awards vary based on the degree to which corporate performance exceeds predetermined threshold, target and maximum performance levels at the end of a performance period. No payout will occur unless the Company exceeds certain threshold performance objectives.
Under the performance periods originating in 2004 and 2005, awards will be paid in cash based upon the share price of the Company’s Common Shares at a predetermined date subsequent to the end of each three-year performance period. Over each three-year performance period, costs are accrued based upon current performance projections for the three-year period and the percentage of the requisite service that has been rendered, along with changes in value of the Company’s Common Shares. The method of estimating accrual amounts was revised upon adoption of FAS 123 (R), however the cumulative effect of the change was not material. The accruals for these performance periods continue to be classified as liabilities.
Under the performance period originating in 2006, awards will be settled in Common Shares. The amount of compensation expense is based upon current performance projections for the three-year period and the percentage of the requisite service that has been rendered. The calculation is also based upon the weighted-average value of the Company’s Common Stock at the dates of grant ($36.97 per share). These awards are recorded in shareholders’ equity, and the amount recorded at January 31, 2006 was $315,000.
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Nordson Corporation
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | | ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
| | The following is Management’s discussion and analysis of certain significant factors affecting the Company’s financial condition and results of operations for the periods included in the accompanying condensed consolidated financial statements. |
| | Sales |
|
| | Worldwide sales for the first quarter of 2006 were $197.5 million, a 3.8% increase from sales of $190.2 million for the comparable period of 2005. A sales volume increase of 7.2% was partially offset by a decrease of 3.4% due to the effect of the stronger U.S. dollar in 2006. |
|
| | Sales of the Company’s adhesive dispensing segment decreased 1.2% in 2006 from 2005. Volume gains of 3.1% were more than offset by currency effects that reduced sales by 4.3%. Increased sales volume in the packaging, coating and product assembly businesses was partially offset by lower fiber system sales. Advanced technology segment sales were up 23.0% from 2005. The increase can be traced to a volume increase of 24.3%, offset by 1.3% from currency effects. Sales volume for each of the businesses in this segment was up more than 13%. Sales of the finishing and coating segment were down 3.0% from the prior year, mainly due to the effect of the stronger U.S. dollar. Sales volume for this segment was even with 2005, with higher liquid and container sales reduced by lower powder sales. |
|
| | On a geographic basis, first quarter sales volume was up 9.8% in the United States, 5.3% in the Americas, 6.3% in Europe and 14.2% in the Asia Pacific region. These increases were partially offset by a sales volume decrease of 3.7% in Japan resulting from lower powder system sales. |
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Nordson Corporation
SalesOperating Profit
WorldwideThe first quarter gross margin percentage was 57.6% in 2006 compared to 56.0% in 2005. The increase was driven by favorable product mix and productivity improvements, particularly in the Adhesive segment. Unfavorable currency effects reduced the gross margin rate by .4%.
Selling and administrative expenses in 2006 were up $1,577,000, or 1.9%, from 2005. Effective in fiscal 2006, the Company adopted the fair value recognition provisions of FAS 123 (R) using the modified prospective transition method, resulting in $982,000 of stock option expense. Under the modified prospective transition method, compensation cost in 2006 includes cost for options granted prior to but not vested as of October 31, 2005 and options granted in fiscal 2006. Compensation expense is being recognized on a straight-line basis over the total requisite service period of each option grant. Prior to 2006, the Company accounted for its stock options under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees.” No stock option expense was reflected in net income, as all options granted under these plans had an exercise price equal to the fair market value of the underlying Common Shares on the date of grant. Results for prior periods have not been restated. The adoption of FAS 123(R) is expected to reduce quarterly earnings per share by approximately $.02 per share in 2006.
Compensation increases and higher employee benefit costs also contributed to the increase in selling and administrative expenses. Currency translation effects reduced selling and administrative costs by 2.6%. Expenses as a percent of sales decreased to 42.7% in 2006 from 43.5% for the first quarter of 2005.
Operating profit, as a percentage of sales, was 14.3% in the first quarter of 2006, up from 12.5% in 2005. Operating profit, as a percent of sales, for the third quarter of 2005 were $201.6 million, a 1.8% increase from sales of $197.9 million for the comparable period of 2004. The increase was attributable to favorable currency effects traced to the weaker U.S dollar.
Sales volume for the Company’s Advanced TechnologyAdhesive segment increased 19% from 2004,16.0% in 2005 to 19.0% in 2006, primarily due to higher sales of the Asymtekgross margins driven by favorable product mix and March Plasma business units. Volume of the Company’s Adhesive Dispensing and Nonwoven Fiber segment decreased 6% from the third quarter of 2004, largely due to lower sales of the nonwovens and coating businesses. The decrease was partially offset by an increase of 4% in shipments to packaging customers. Finishing and Coating segment sales were down 1% from 2004.
On a geographic basis, second quarter sales volume was up 22% in Asia and 8% in the Japan. These increases were offset by sales volume decreases of 7% in Europe and 10% in the Americas region. Volume was flat in the U.S. region.
On a year-to-date basis, 2005 worldwide sales were $599.4 million, up 6.0% from 2004. Sales volume increased 3.3%, while favorable currency effects increased sales by 2.7%. Volume was up 12% inproductivity improvements. For the Advanced Technology segment. Within this segment, the March Plasma and Asymtek businesses were particularly strong. Volume was up 9%operating profit as a percent of sales increased from 16.5% in 2005 to 21.6% in 2006, primarily due to operating costs increasing at a slower rate than revenue. The operating loss in the Finishing and Coating segment driven by higher powder systemwas due to severance and container sales. Volume for the Adhesive Dispensing and Nonwoven Fiber segment decreased 1%. Lower nonwoven and coating sales were partially offset by higher sales within the packaging and product assembly businesses.
Sales volume for the thirty-nine weeks ended July 31, 2005 was up 5%restructuring costs of $1,233,000 recorded in the United States, 4% in Japan, 10% infirst quarter.
During the Americas region and 15% in Asia. European sales volume was down 3%, where there was a large fiber system sale in 2004.
Operating Profit
The gross margin percentage for the thirdfourth quarter of 2005, the Company announced a number of restructuring actions to improve performance and reduce costs in its finishing and coating segment. These actions, which include operational consolidations and approximately 60 personnel reductions, will be substantially completed by the end of the second quarter of fiscal 2006. As a result of these actions, resources will be more effectively aligned with shifting patterns of global demands, enabling the segment to operate both with lower costs and better capability to serve customers in the faster growing emerging markets. The Company expects that total restructuring costs will be approximately $3,200,000 of which $875,000 was 56.5%, down slightlyrecorded in the fourth quarter of 2005 and $1,233,000 was recorded in the first quarter of 2006.
Net Income
Foreign exchange losses were largely responsible for other expense of $707,000 in 2006. This compares to other income of $483,000 in 2005, when foreign exchange gains were generated.
The Company’s effective tax rate was 33.6% in the first quarter of 2006, up from 56.6%32.5% in the first quarter of 2005. The change was primarily due to a reduction to the extraterritorial income exclusion in 2006.
Net income for the thirdfirst quarter of 2004.2006 was $16.1 million, or $.47 per share on a diluted basis, compared to $14.4 million or $.39 per share on a diluted basis in 2005. This represents a 12% increase in net income and a 21% increase in earnings per share. The year-to-date gross margin percentage also decreased slightly to 56.0% from 56.2% last year. Favorable currency effects added approximately 0.4%higher per share increase is due to the margin rate for bothrepurchase of approximately 10% of the third quarter and year-to-date. Margins were negatively impacted by both product and geographic sales mix, as well as pricing pressuresCompany’s outstanding common shares in the Finishing and Coating segment.
Selling and administrative expenses increased 3.0% and 5.6% for the thirteen and thirty-nine weeks ended July 31, 2005 compared to the comparable periodsfourth quarter of 2004. Currency translation effects accounted for 1.9% of the thirteen-week increase and 2.4% of the year-to date increase, with the balance traced primarily to compensation increases and higher employee benefit costs. An acquisition in the second half of 2004 and the consolidation of a previously unconsolidated subsidiary also contributed to the year-to-date increase. As a percent of sales, these expenses increased to 42.6% from 42.1% for the third quarter but decreased to 42.7% from 42.9% on a year-to-date basis.2005.
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Nordson Corporation
Operating profit, as a percentage of sales, was 13.9% in the third quarter of 2005, compared to 14.6% in the third quarter of 2004. For the first nine months of 2005, operating profit as a percent of sales was 13.3%, even with last year. For the third quarter of 2005 operating profit of the Adhesive Dispensing and Nonwoven Fiber segment as a percent of sales was 19%, compared to 20% in 2004. For the same period, the Finishing and Coating segment generated a slightly larger operating loss in 2005 than it did in 2004. These decreases can be traced to the sales volume declines. Operating profit as a percent of sales for the Advanced Technology segment increased to 22% for the third quarter of 2005 from 20% last year, largely due to the 19% increase in sales volume. Operating profit as a percent of sales on a year-to-date basis was even with the prior year for all three segments. The percentage for the Adhesive Dispensing and Nonwoven Fiber segment was 18%, and the percentage for the Advanced Technology segment was 20%. The Finishing and Coating segment operated at almost a breakeven level both years.
Net Income
Compared to 2004, interest expense decreased $.3 million for the third quarter and $1.3 million for the first nine months as a result of lower borrowing levels. Interest and investment income increased for both periods, due to higher marketable security levels. Other income (expense) decreased $.5 million for the third quarter but increased $.5 million for the year-to-date period. The changes were largely driven by foreign exchange gains and losses. The Company’s effective tax rate was 26.0% in third quarter of 2005 and 30.2% on a year-to-date basis, down from 33.0% last year. The decrease was primarily due to the utilization of $3.9 million of foreign tax credit carryovers, partially offset by $1.5 million in higher foreign and U.S. state income tax provisions and a $.5 million write down of a deferred tax asset (see Note 14). The benefit of the foreign tax credit was reflected through the reduction of a previously established valuation allowance.
Net income for the third quarter of 2005 was $18.6 million or $.50 per share on a diluted basis compared with $17.3 million or $.47 per share on a diluted basis in 2004. Year-to-date net income in 2005 was $50.4 million or $1.36 per share, compared to $43.6 million or $1.20 per share last year.
Foreign Currency Effects
In the aggregate, average exchange rates for the thirdfirst quarter and first nine months of 20052006 used to translate international sales and operating results into U.S. dollars compared favorablyunfavorably with average exchange rates existing during the comparable 2004 periods.2005 period. It is not possible to precisely measure the impact on operating results arising from foreign currency exchange rate changes, because of changes in selling prices, sales volume, product mix and cost structure in each country in which the Company operates. However, if transactions for the thirdfirst quarter 20052006 were translated at exchange rates in effect during the thirdfirst quarter of 2004,2005, sales would have been approximately $4.0$6.4 million lowerhigher while third-party costs and expenses would have been approximately $2.6$4.1 million lower. If the 2005 year-to-date transactions were translated at exchange rates in effect during 2004, sales would have been approximately $15.4 million lower and third party costs would have been approximately $10.0 million lower.
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Nordson Corporationhigher.
Financial Condition
During the first three quarters of 2005, net assets increased $28.9 million. This increase is primarily the result of net income partially offset by dividend payments and purchases of treasury shares.
Cash and cash equivalents increased $52.8$6.5 million fromin the 2004 year-end.first quarter of 2006. Cash provided by operations was $80.8 million, net proceeds from the sale of marketable securities were $13.7$15.3 million, and cash generated by the exercise of stock options amounted to $3.4was $12.4 million. Cash was used for dividend payments of $17.4 million; capital expenditures of $10.7 million;$5.5 million, repayment of short-term borrowings and long-term debt of $13.1 million, and for capital lease obligationsexpenditures of $8.8 million; purchase$4.5 million. Available lines of treasury stock of $7.4 million; funding of a deferred compensation obligation of $4.1 million; and $.6 million forcredit continue to be adequate to meet additional cash requirements over the acquisition of a company (see Note 15). Capital expenditures included $2.8 million to purchase a building in Dawsonville, Georgia used for manufacturing and office space. This building was previously leased.next year.
Receivables and accounts payable decreased and inventories increased as a result of the traditionally lower level of business activity in the Company’s thirdfirst fiscal quarter compared to its fourth fiscal quarter. In 2005,The increase in prepaid expenses relates largely to annual insurance premiums paid in the first quarter of the year. Other current liabilities decreased as a result of bonus and profit sharing payments during the first quarter. The decrease was offset by a reclassification of a portion of the pension liability from other long-term liabilities reflected higher deferred tax liabilities and anto other current liabilities.
Cash provided by operations in the first quarter of 2006 was up $7.6 million from the first quarter of 2005. The increase in deferred compensation, as compared to 2004 year-end. Other current liabilities increasedwas primarily due to higher income taxes payablethe impact of changes in working capital. The overall increase in cash and customer advanced payments.
On August 26,cash equivalents in 2006 was less than 2005, Nordson Corporation agreeddue to repurchase 3,657,667 sharesthe sale of its common stock from Russell L. Bauknight, trustee of numerous trusts established by Evan W. Nord. The Company agreed to repurchase the shares at an August 26, 2005 market price, which has been reduced for the fiscal year 2005 fourth-quarter cash dividend payment on those shares. The transaction will settle on September 7, 2005 for a cash purchase price of $34.09 per share. These shares represent approximately 10.1 percent of the Company’s outstanding shares. They will be held in treasury by the corporation to be used for corporate purposes. Funds for the purchase will come from cash, marketable securities and previously existing bank credit facilities. Available linesin the first quarter of credit continue to be adequate to meet additional cash requirements over the next year.2005.
Critical Accounting Policies
The Company’s consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company’s management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, the Company evaluates the accounting policies and estimates it uses to prepare financial statements. The Company bases its estimates on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates used by management.
Certain accounting policies that require significant management estimates and are deemed critical to the Company’s results of operations or financial position were discussed in Item 7 of the 10-K for the year ended October 31, 2004.30, 2005. During the first halfquarter of 20052006 there were no material changes in these policies.
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Nordson Corporation
Outlook
Sales volume for the fourthsecond quarter of 20052006 is expected to increase about 1% from11% to 13% compared to the fourthsecond quarter of 2004,2005. The effect of the stronger U.S. dollar should reduce reported sales by about 4%, resulting in sales of approximately $230 million. This would resulta 7% to 9% increase in earnings per sharesales. The increase reflects continued strength in the advanced technology segment. Gross margins for the fourthsecond quarter are estimated to be 55% to 56%, approximately equal to 2005. Operating expenses should increase approximately 5%, including the effect of $.62stock option expense and restructuring charges related to $.68, compared to $.53 last year. Full year earningsthe Finishing segment. Earnings per share are expected to be in the $1.98range of $.55 to $2.04 range, up from $1.73 in 2004.$.60 for the quarter.
Safe Harbor Statements Under The Private Securities Litigation Reform Act Of 1995
StatementsThe statements in the paragraphs titled “Financial Condition” and “Outlook” that refer to anticipated trends, events or occurrences in, or expectations for, the future (generally indicated by the use of phrases such as “Nordson expects” or “Nordson believes” or words of similar import or by references to “risks”) are “forward-looking statements” intended to qualify for the protection afforded by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and involve risks and uncertainties. Consequently, the Company’s actual results could differ materially from the expectations expressed in the forward-looking statements. Factors that could cause the Company’s actual results to differ materially from the expected results include, but are not limited to: deferral of orders, customer-requested delays in system installations, currency exchange rate fluctuations, a sales mix different from assumptions and significant changes in local business conditions in geographic regions in which the Company conducts business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information regarding the Company’s financial instruments that are sensitive to changes in interest rates and foreign currency exchange rates was disclosed in the Form 10-K filed by the Company on January 14, 2005.13, 2006. The information disclosed has not changed materially during fiscalin the interim period since October 30, 2005.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was performed under the supervision andThe Company’s management with the participation of the Company’s management, including its principal executive officer (Chairman and Chief Executive Officer, or CEO,Officer) and principal financial officer (President, Chief Financial Officer, or CFO, of the effectiveness ofand Administrative Officer), has reviewed and evaluated the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act Rule 13a-15e) as of JulyJanuary 31, 2005.2006. Based on that evaluation, the Company’s management, including its CEOprincipal executive and CFO, havefinancial officers, has concluded that the Company’s disclosure controls and procedures arewere effective to ensureas of January 31, 2006 in ensuring that information required to be disclosed in the reports that the Company files or submits 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. forms and is accumulated and communicated to the Company’s management, including its principal executive officer and its principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
There have beenwere no changes in the Company’s internal controls over financial reporting or in other factors identified in connection with this evaluation that occurred during the quarter ended JulyJanuary 31, 20052006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Nordson Corporation
Part II – Other Information
ITEM 1. LEGAL PROCEEDINGS
The Company has been identified as a potentially responsible party (PRP) at a Wisconsin municipal landfill and has voluntarily agreed with the City of New Richmond, Wisconsin and other PRP’sPotentially Responsible Parties to share costs associated with (1) a feasibility study and remedial investigation (“FS/RI”) for the siteCity of New Richmond municipal landfill and (2) providing clean drinking water to the affected down gradient residential properties through completion of the FS/RI phase of the project. The FS/RI is expected to be completed in 2005.fiscal 2006. The Company has committed $909,000$1,079,000 towards completing the FS/RI phase of the project and providing clean drinking water. This amount has been recorded in the Company’s financial statements.statements in selling and administrative expenses. Against this commitment, the Company has made payments of $829,000$922,000 through the thirdfirst quarter of 2005.2006. The remaining amount of $80,000$157,000 is recorded in accruedother current liabilities in the JulyJanuary 31, 20052006 Consolidated Balance Sheet. The total cost of the Company’s share for remediation efforts will not be ascertainable until the FS/RI is completed and a remediation plan is approved by the Wisconsin Department of Natural Resources, which is anticipated to occur later in fiscal 2006. However, based upon current information, the Company does not expect that the costs associated with remediation will have a material adverse effect on its financial condition or results of operations.
The European Union (“EU”) has adopted two Directives to facilitate the recycling of electrical and electronic equipment sold in the EU. The first of these is the Waste Electrical and Electronic Equipment (“WEEE”) Directive which directs EU Member States to enact laws, regulations, and administrative provisions to ensure that producers of electrical and electronic equipment provide for the financing of the collection, treatment, recovery and environmentally sound disposal of WEEE from products placed on the market after August 13, 2005 and from products in use prior to that date that are being replaced. In accordance with the WEEE directive, the Company has identified and labeled its products that are affected by the regulations.regulations adopted by Member States. The Company also has developed a strategy to support recycling of the electrical and electronic equipment and has created a section on its Website to provide customers with information on how to return WEEE-labeled products for proper recycling.
The second of these Directives is the Restriction on the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (“RoHS”) Directive. The RoHS Directive addresses the restriction on use of certain hazardous substances such as mercury, lead, cadmium, and hexavalent cadmium in electrical and electronic equipment placed on the market after July 1, 2006. The Company has made the decisioncommitted to design all of its future products to meet the standards established by the RoHS standards.Directive.
As of JulyJanuary 31, 2005,2006, EU Member States continue to develop legislation to implement these Directives. TheCosts incurred in the first quarter of 2006 were not material, but the future cost to the Company to comply with the Directives and Member States’ legislation will not be quantifiable until Member States have fully implemented the Directives.
In addition, the Company is involved in various other legal proceedings arising in the normal course of business. Based on current information, the Company does not expect that the ultimate resolution of pending and threatened legal proceedings, including the environmental matter described above, will have a material adverse effect on its financial condition, results of operations or cash flows.
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Nordson Corporation
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table summarizes common stock repurchased by the Company during the third quarter of 2005:
| | | | | | | | | | | | | | | | |
| | | | | | | | | | Total Number of | | Maximum Number |
| | | | | | | | | | Shares Purchased | | of Shares that |
| | Total Number | | Average | | as Part of Publicly | | May Yet Be Purchased |
| | of Shares | | Price Paid | | Announced Plans | | Under the Plans |
| | Purchased | | per Share | | or Programs * | | or Programs |
|
May 2, 2005 to May 29, 2005 | | | 52,000 | | | $ | 31.72 | | | | 52,000 | | | | 1,874,000 | |
May 30, 2005 to June 26, 2005 | | | 102,000 | | | $ | 30.76 | | | | 102,000 | | | | 1,772,000 | |
June 27, 2005 to July 31, 2005 | | | — | | | | | | | | — | | | | 1,772,000 | |
| | | | | | | | | | | | | | | | |
Total | | | 154,000 | | | | | | | | 154,000 | | | | | |
| | | | | | | | | | | | | | | | |
* In October 2003, the Board of Directors authorized the Company to repurchase up to two million shares of the Company’s common stock on the open market through October 2006.market. Expected uses for repurchased shares include the funding of benefit programs including stock options, restricted stock and 401(k) matching. Shares purchased will be treated as treasury shares until used for such purposes. The repurchase program iswill be funded using the Company’s working capital.
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Nordson Corporation During the first quarter of 2006, no shares were purchased under this program or otherwise. There are 1,772,000 shares that may yet be purchased under this program.
ITEM 6. EXHIBITS
Exhibit Number:
| 31.1 | | Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 by the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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| 31.2 | | Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 by the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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| 32.1 | | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
| 32.2 | | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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Nordson Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | |
Date: September 6, 2005March 13, 2006 | | Nordson Corporation |
| | |
| | By: /s/ PETER S. HELLMAN |
| | |
| | Peter S. Hellman |
| | President, Chief Financial and |
| | Administrative Officer |
| | (Principal Financial Officer) |
| | |
| | /s/ NICHOLAS D. PELLECCHIA |
| | |
| | Nicholas D. Pellecchia |
| | Vice President, Finance and Controller |
| | (Principal Accounting Officer) |
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