NORDSON CORPORATION Exhibits 13-f
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION-- The consolidated financial statements include the accounts of
the Company and its majority-owned and controlled subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Ownership interests of 20 percent or more in non-controlled affiliates are
accounted for by the equity method. Other investments are recorded at cost.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and notes. Actual amounts could differ from these estimates.
FISCAL YEAR-- The fiscal year for the Company's domestic operations ends on the
Sunday closest to October 31 and contained 52 weeks in 2001, 2000, and 1999. To
facilitate reporting of consolidated accounts, the fiscal year for most of the
Company's international operations ends on September 30.
REVENUE RECOGNITION --Revenues are recognized when customer orders are complete
and shipped. Accruals for the cost of product warranties are maintained for
anticipated future claims. A limited number of the Company's large engineered
systems sales contracts are accounted for using the percentage-of-completion
method. Accordingly, the amount of revenue recognized is based on the ratio of
actual costs incurred to total estimated costs at completion.
SHIPPING AND HANDLING COSTS --Shipping and handling costs are included in cost
of sales.
ADVERTISING COSTS-- Advertising costs are expensed as incurred and amounted to
$5,421,000 in 2001 ($4,973,000 in 2000 and $6,621,000 in 1999).
RESEARCH AND DEVELOPMENT-- Research and development costs are expensed as
incurred and amounted to $27,701,000 in 2001 ($27,222,000 in 2000 and
$29,672,000 in 1999).
EARNINGS PER SHARE-- Basic earnings per share are computed based on the
weighted-average number of common shares outstanding during each year, while
diluted earnings per share are based on the weighted-average number of common
shares and common share equivalents outstanding. Common share equivalents
consist of shares issuable upon exercise of the Company's stock options,
computed using the treasury stock method, as well as nonvested stock and
deferred stock-based compensation.
CASH AND CASH EQUIVALENTS-- Highly liquid instruments with a maturity of 90 days
or less at date of purchase are considered to be cash equivalents. Cash and cash
equivalents are carried at cost.
MARKETABLE SECURITIES-- Marketable securities consist primarily of municipal and
other short-term notes with maturities greater than 90 days at date of purchase.
At October 28, 2001, all contractual maturities were within one year. The
Company's marketable securities are classified as available for sale and
recorded at quoted market prices which approximate cost.
INVENTORIES-- Inventories are valued at the lower of cost or market. Cost has
been determined using the last-in, first-out (LIFO) method for 41 percent of
consolidated inventories at October 28, 2001 (44 percent at October 29, 2000).
The first-in, first-out (FIFO) method is used for all other inventories.
Consolidated inventories would have been $6,472,000 and $7,245,000 higher than
reported at October 28, 2001 and October 29, 2000, respectively, had the Company
used the FIFO method, which approximates current cost, for valuation of all
inventories.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION-- Property, plant and equipment
are carried at cost. Plant and equipment are depreciated for financial reporting
purposes using the straight-line method over the estimated useful lives of the
assets or, in the case of property under capital leases, over the terms of the
leases.
The Company capitalizes costs associated with the development and installation
of internal use software in accordance with Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." Accordingly, 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. The Company capitalizes interest costs on significant capital
projects.
The Company capitalizedapproximately $26.3 million in fiscal 2001, 2000 and 1999
in connection with the acquisition and installation of an enterprise management
system,which is being depreciated over 10 years.
INTANGIBLE ASSETS-- Intangibles, consisting primarily of costs in excess of net
assets of acquired businesses, are amortized using the straight-line method over
the periods of expected benefit. At present, these periods range from five to 35
years. The Company assesses the recoverability of the costs in excess of net
assets of acquired businesses by reviewing for impairment losses when- ever
events or changes in circumstances indicate the carrying amount may not be
recovered through future net undiscounted cash flows generated by the assets.
FOREIGN CURRENCY TRANSLATION-- The financial statements of the Company's
subsidiaries outside the United States, except for those subsidiaries located in
highly inflationary economies, are generally measured using the local currency
as the functional currency. Assets and liabilities of these subsidiaries are
translated at the rates of exchange at the balance sheet dates. Income and
expense items are translated at average monthly rates of exchange. The
20/21
resulting translation adjustments are included in accumulated other
comprehensive income (loss), a separate component of shareholders' equity.
Generally, gains and losses from foreign currency transactions, including
forward contracts, of these subsidiaries and the United States parent are
included in net income. Premiums and discounts on forward contracts are
amortized over the lives of the contracts. Gains and losses from foreign
currency transactions which hedge a net investment in a foreign subsidiary and
from intercompany foreign currency transactions of a long-term investment nature
are included in accumulated other comprehensive income (loss). For subsidiaries
operating in highly inflationary economies, gains and losses from foreign
currency transactions and translation adjustmentsare included in net income.
COMPREHENSIVE INCOME-- Accumulated other comprehensive loss at October 28,
2001consisted of foreign currency translation adjustments of $13,686,000 and a
minimum pension liability adjustment of $4,672,000. Accumulated other
comprehensive loss at October 29, 2000 consisted entirely of foreign currency
translation adjustments.
PRESENTATION-- Certain 2000 and 1999 amounts have been reclassified to conform
with the 2001 presentation.
NOTE 2 -- ACCOUNTING CHANGES
In June 2001, the FASB issued Statements of Financial Accounting Standards No.
141, "Business Combinations," and No. 142, "Goodwill and Other Intangible
Assets," effective for fiscal years beginning after December 15, 2001. No. 141
requires that all business combinations be accounted for by the purchase method.
No. 142 provides that goodwill assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests. Other
intangible assets will continue to be amortized over their useful lives. The
Company will adopt these statements in fiscal 2002. The effect of not amortizing
goodwill is expected to result in an increase to net income in fiscal 2002 of
approximately $11 million, or $0.34 per share. During fiscal 2002, the Company
will perform the required impairment tests of goodwill and has not yet
determined what the effect of these tests will be on the earnings and financial
position of the Company.
In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 143, "Accounting
for Asset Retirement Obligations." No. 143 requires entities to
record the fair value of a liability for an asset retirement obligation
in the period in which it is incurred. When a liability is initially
recorded, the entity capitalizes a cost by increasing the carrying
amount of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost
is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for
its recorded amount or incurs a gain or loss upon settlement. The Company is
required to adopt FAS 143 in fiscal 2003 and has not yet determined the impact
of adoption on its consolidated financial position or results of operations.
In October 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." No. 144, which supersedes No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," provides a single accounting model for long-lived assets to be disposed of.
Although retaining many of the fundamental recognition and measurement
provisions of No. 121, this Statement significantly changes the criteria that
would have to be met to classify an asset as held-for-sale. This distinction is
important because assets held-for-sale are stated at the lower of their fair
values or carrying amounts, and depreciation is no longer recognized. The
Company is required to adopt No. 144 in fiscal 2003 and has not yet determined
the impact of adoption on its consolidated financial position or results of
operations.
In 2001, the Company adopted Securities and Exchange Commission Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements," which
summarizes the staff's views regarding the application of generally accepted
accounting principles to selected revenue recognition issues. This Bulletin did
not have a material effect on the financial statements of the Company.
In 2001, the Company adopted Financial Accounting Standards Board
Statement No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities" (No. 138), which amended Statement
No. 133, "Accounting and Reporting Standards for Derivative
Instruments and Hedging Activities" (No. 133). No. 133 requires an
entity to measure all derivatives at fair value and to recognize them
on the balance sheet as an asset or liability, depending on the entity's
rights or obligations under the applicable derivative contract. This
Statement did not have a material effect on the financial statements
of the Company.
NOTE 3-- RETIREMENT, PENSION AND OTHER
POSTRETIREMENT PLANS
RETIREMENT PLANS-- The parent company and certain subsidiaries have funded
contributory retirement plans covering certain employees. The Company's
contributions are primarily determined by the terms of the plans subject to the
limitation that they shall not exceed the amounts deductible for income tax
purposes. The Company also sponsors unfunded contributory supplemental
retirement plans for certain employees. Generally, benefits under these plans
vest gradually over a period of approximately five years from date of
employment, and are based on the employee's contribution. The expense applicable
to retirement plans for 2001, 2000 and 1999 was approximately $4,254,000,
$3,326,000 and $3,913,000, respectively.
PENSION AND OTHER POSTRETIREMENT PLANS-- The Company has various pension plans
which cover substantially all employees. Pension plan benefits are generally
based on years of employment and, for salaried employees, the level of
compensation. The Company contributes actuarially determined amounts to domestic
plans to provide sufficient assets to meet future benefit payment requirements.
The Company also sponsors an unfunded supplemental pension plan for certain
employees. The Company's international subsidiaries fund their pension plans
according to local requirements.
The Company also has an unfunded postretirement benefit plan covering most of
its domestic employees. The plan provides medical and life insurance benefits.
The plan is contributory, with retiree contributions adjusted annually, and
contains other cost-sharing features such as deductibles and coinsurance.
A reconciliation of the benefit obligations, plan assets, accrued benefit cost
and the amount recognized in financial statements for these plans is as follows:
PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS
--------------------------- -----------------------------
2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year $ 99,972 $ 104,460 $ 16,208 $ 13,306
Service cost 3,369 3,604 743 643
Interest cost 7,120 6,688 1,339 1,110
Foreign currency exchange rate change (226) (1,883) -- --
Actuarial loss (gain) 6,282 (6,856) 3,897 2,130
Curtailment (401) -- (1,104) (348)
Benefits paid from plan assets (4,436) (6,041) (1,071) (633)
- -----------------------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year $ 111,680 $ 99,972 $ 20,012 $ 16,208
- -----------------------------------------------------------------------------------------------------------------------------
Change in plan assets:
Beginning fair value of plan assets $ 77,046 $ 74,604 $ -- $ --
Actual return on plan assets (10,080) 4,267 -- --
Company contributions 10,038 5,233 1,071 633
Foreign currency exchange rate change (33) (1,017) -- --
Benefits paid from plan assets (4,436) (6,041) (1,071) (633)
- -----------------------------------------------------------------------------------------------------------------------------
Ending fair value of plan assets $ 72,535 $ 77,046 $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------
Reconciliation of accrued cost:
Funded status of the plan $ (39,145) $ (22,926) $ (20,012) $ (16,208)
Unrecognized actuarial loss (gain) 16,730 (8,022) 4,138 1,446
Unamortized prior service cost 2,126 3,015 -- --
Unrecognized net transition obligation 860 1,301 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Accrued benefit cost $ (19,429) $ (26,632) $ (15,874) $ (14,762)
- -----------------------------------------------------------------------------------------------------------------------------
Reconciliation of amount recognized in financial statements:
Prepaid benefit cost $ -- $ 1,334 $ -- $ --
Accrued benefit liability (29,113) (28,223) (15,874) (14,762)
Intangible asset 2,000 257 -- --
Accumulated other comprehensive income 7,684 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total amount recognized in financial statements $ (19,429) $ (26,632) $ (15,874) $ (14,762)
- -----------------------------------------------------------------------------------------------------------------------------
22/23
The projected benefit obligation, accumulated benefit obligation and fair value
of plan assets for pension plans with accumulated benefit obligations in excess
of plan assets were $104,170,000, $93,565,000 and $66,761,000, respectively as
of October 28, 2001, and $88,398,000, $76,264,000 and $64,924,000 as of October
29, 2000.
Net pension and other postretirement benefit costs include the following
components:
PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS
----------------------------------- ------------------------------------
2001 2000 1999 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
(In thousands)
Service cost $ 3,369 $ 3,604 $ 3,733 $ 743 $ 643 $ 620
Interest cost 7,120 6,688 6,482 1,339 1,110 923
Expected return on plan assets (7,509) (6,585) (6,100) -- -- --
Amortization and deferrals 548 650 397 101 -- --
Curtailment 318 -- -- -- (348) --
Termination benefit cost -- -- 825 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total benefit cost $ 3,846 $ 4,357 $ 5,337 $ 2,183 $ 1,405 $ 1,543
- -------------------------------------------------------------------------------------------------------------------------------
For pensions, the actuarial value of projected benefit obligations at the end of
2001 and 2000 was determined using a weighted-average discount rate of 6.9 and
7.1 percent, respectively, and a rate of increase in future compensation levels
of 5.2 and 3.9 percent, respectively. Plan assets consist primarily of stocks
and bonds. The expected long-term rate of return on plan assets was 9.5 percent
for 2001, 2000 and 1999.
For other postretirement benefits, the discount rate used in determining the
accumulated postretirement benefit obligation at the end of 2001 and 2000 was
7.25 percent and 7.5 percent, respectively. The annual rate of increase in the
per capita cost of covered benefits (the health care cost trend rate) was
assumed to be 7.5 percent in 2002, decreasing gradually to 5.0 percent in 2007.
The health care cost trend rate assumption has a significant effect on the
amounts reported. For example, a one percentage point change in the assumed
health care cost trend rate would have the following effects:
1% POINT 1% POINT
INCREASE DECREASE
- -------------------------------------------------------------------
Effect on total service and
interest cost components in 2001 $ 423,000 $ (330,000)
Effect on postretirement obligation
as of October 28, 2001 $3,415,000 $(2,723,000)
- -------------------------------------------------------------------
NOTE 4 -- INCOME TAXES
Income tax expense includes the following:
2001 2000 1999
- -------------------------------------------------------------------------------
(In thousands)
Current:
U.S. federal $ (1,161) $ 16,163 $ 8,351
State and local 821 1,261 860
Foreign 12,038 13,086 14,265
- -------------------------------------------------------------------------------
Total current 11,698 30,510 23,476
Deferred:
U.S. federal 1,864 (2,429) 405
State and local 468 (137) 207
Foreign (924) 832 (156)
- -------------------------------------------------------------------------------
Total deferred 1,408 (1,734) 456
- -------------------------------------------------------------------------------
$ 13,106 $ 28,776 $ 23,932
- -------------------------------------------------------------------------------
The reconciliation of the United States statutory federal income tax rate to the
worldwide consolidated effective tax rate follows:
2001 2000 1999
- -------------------------------------------------------------------------------
Statutory federal
income tax rate 35.00% 35.00% 35.00%
Foreign Sales Corporation
exemption -- (3.68) (3.72)
Foreign tax rate variances,
net of foreign tax credits (7.38) 1.40 3.01
State and local taxes, net
of federal income tax
benefit 3.37 .83 1.32
Amounts related to
prior years .25 .42 (2.17)
Other - net 3.51 .53 .06
- -------------------------------------------------------------------------------
Effective tax rate 34.75% 34.50% 33.50%
- -------------------------------------------------------------------------------
Earnings before income taxes of international operations were $25,699,000,
$32,580,000 and $30,466,000 in 2001, 2000 and 1999, respectively. Deferred
income taxes are not provided on undistributed earnings of international
subsidiaries which are intended to be permanently invested in those operations.
These undistributed earnings aggregated approximately $51,426,000 and
$51,567,000 at October 28, 2001 and October 29, 2000, respectively. Should these
earnings be distributed, applicable foreign tax credits would substantially
offset U.S. taxes due upon the distribution. Significant components of the
Company's deferred tax assets and liabilities are as follows:
2001 2000
- -----------------------------------------------------------------------------
(In thousands)
Deferred tax assets:
Sales to international subsidiaries and
related consolidation adjustments $12,941 $14,657
Employee benefits 19,909 17,582
Other accruals not currently deductible
for taxes 14,315 9,104
Inventory adjustments 3,600 2,412
Translation of foreign currency
accounts 2,910 3,244
Other - net 342 729
- -----------------------------------------------------------------------------
Total deferred tax assets 54,017 47,728
Deferred tax liabilities:
Depreciation 11,296 6,035
Other - net 1,431 1,267
- -----------------------------------------------------------------------------
Total deferred tax liabilities 12,727 7,302
- -----------------------------------------------------------------------------
Net deferred tax assets $41,290 $40,426
- -----------------------------------------------------------------------------
NOTE 5 -- INCENTIVE COMPENSATION PLAN
The Company has an incentive cash compensation plan for executive officers.
Participants in the plan and payments under the plan are approved by a committee
appointed by the Board of Directors. Members of the committee are directors and
are not active officers of the Company. Amounts paid under the plan are based on
a percentage of the base salary of each participant. Compensation expense
attributable to the plan was $242,000 in 2001, $1,870,000 in 2000, and
$2,018,000 in 1999.
24/25
NOTE 6 -- DETAILS OF BALANCE SHEET
2001 2000
- ----------------------------------------------------------------------------
(In thousands)
Receivables:
Accounts $ 156,562 $ 175,400
Notes 7,242 15,308
Other 8,036 3,488
- ----------------------------------------------------------------------------
171,840 194,196
Allowance for doubtful accounts (4,018) (2,825)
- ----------------------------------------------------------------------------
$ 167,822 $ 191,371
- ----------------------------------------------------------------------------
Inventories:
Finished goods $ 56,106 $ 38,732
Work-in-process 15,517 30,433
Raw materials and finished parts 67,563 65,757
- ----------------------------------------------------------------------------
$ 139,186 $ 134,922
- ----------------------------------------------------------------------------
Property, plant and equipment:
Land $ 3,662 $ 3,102
Land improvements 2,793 2,774
Buildings 76,200 64,853
Machinery and equipment 156,815 142,278
Enterprise management
system 26,300 25,718
Construction-in-progress 13,937 12,377
Leased property under
capitalized leases 13,135 12,167
- ----------------------------------------------------------------------------
292,842 263,269
Accumulated depreciation
and amortization (159,510) (136,359)
- ----------------------------------------------------------------------------
$ 133,332 $ 126,910
- ----------------------------------------------------------------------------
Intangible assets:
Costs in excess of net assets of
acquired businesses $ 389,894 $ 126,186
Other 8,079 5,379
- ----------------------------------------------------------------------------
397,973 131,565
Accumulated amortization (54,867) (37,802)
- ----------------------------------------------------------------------------
$ 343,106 $ 93,763
- ----------------------------------------------------------------------------
Accrued liabilities:
Salaries and other compensation $ 22,896 $ 29,392
Pension and retirement 2,856 3,464
Taxes other than income taxes 4,787 5,316
Other 40,865 27,133
- ----------------------------------------------------------------------------
$ 71,404 $ 65,305
- ----------------------------------------------------------------------------
NOTE 7 -- LEASES
The Company has lease commitments expiring at various dates, principally for
manufacturing, warehouse and office space, automobiles and office equipment.
Many leases contain renewal options and some contain purchase options.
The Company has an operating lease for office and manufacturing space owned by a
partnership in which the Company is a partner. The lease ends in 2010 and
contains a renewal option and an annual option to purchase the property at fair
market value. Future annual minimum lease payments range from $777,000 to
$1,009,000 and approximate market rates.
Rent expense for all operating leases was approximately $10,697,000 in 2001,
$10,776,000 in 2000, and $9,603,000 in 1999.
Assets held under capitalized leases and included in property, plant and
equipment are as follows:
2001 2000
- ------------------------------------------------------------------------------
(In thousands)
Transportation equipment $ 12,755 $ 11,862
Other 380 305
- ------------------------------------------------------------------------------
Total capitalized leases 13,135 12,167
Accumulated amortization (6,010) (5,561)
- ------------------------------------------------------------------------------
Net capitalized leases $ 7,125 $ 6,606
- ------------------------------------------------------------------------------
At October 28, 2001, future minimum lease payments under non- cancelable
capitalized and operating leases are as follows:
CAPITALIZED OPERATING
LEASES LEASES
- ------------------------------------------------------------------------------
(In thousands)
Fiscal year ending:
2002 $ 4,438 $ 8,915
2003 2,941 6,993
2004 1,448 5,650
2005 260 4,788
2006 16 4,102
Later years -- 10,915
- ------------------------------------------------------------------------------
Total minimum lease payments 9,103 $ 41,363
---------
Less amount representing
executory costs 1,020
- ------------------------------------------------------------
Net minimum lease payments 8,083
Less amount representing interest 958
- ------------------------------------------------------------
Present value of net minimum
lease payments 7,125
Less current portion 3,430
- ------------------------------------------------------------
Long-term obligations at
October 28, 2001 $ 3,695
- ------------------------------------------------------------
NOTE 8 -- NOTES PAYABLE
Bank lines of credit and notes payable are summarized as follows:
2001 2000
- ------------------------------------------------------------------------------
(In thousands)
Available bank lines of credit:
Domestic banks $360,130 $445,218
Foreign banks 72,427 83,019
- ------------------------------------------------------------------------------
Total $432,557 $528,237
- ------------------------------------------------------------------------------
Notes payable:
Domestic bank debt $162,000 $ 62,469
Foreign bank debt 32,834 29,056
Other 130 172
- ------------------------------------------------------------------------------
Total $194,964 $ 91,697
- ------------------------------------------------------------------------------
Weighted-average interest rate
on notes payable 3.8% 4.6%
Unused bank lines of credit $237,593 $436,712
- ------------------------------------------------------------------------------
Included in the domestic available amount above is a $350,000,000 revolving
credit agreement with a group of banks. This facility consists of two parts: a
$100 million, 364-day facility that can be extended for one year and a $250
million, five-year facility. Payment of commitment fees is required. Other lines
of credit obtained by the Company can generally be withdrawn at the option of
the banks and do not require material compensating balances or commitment fees.
Other notes payable include promissory notes issued in connection with a
business acquisition and an equipment purchase.
NOTE 9 -- LONG-TERM DEBT
The long-term debt of the Company is as follows:
2001 2000
- ------------------------------------------------------------------------------
(In thousands)
Senior note, due 2007 $ 50,000 $ 50,000
Senior notes, due 2006-2011 100,000 --
Five-year term loan 40,000 --
Industrial revenue bonds--
Gwinnett County, Georgia 4,800 5,400
Industrial revenue bonds--
City of Westlake, Ohio 850 1,700
Acquisition financing notes 5,130 2,780
Leasehold improvements financing note 1,878 1,848
- ------------------------------------------------------------------------------
202,658 61,728
Less current maturities 14,580 4,230
- ------------------------------------------------------------------------------
Total $188,078 $ 57,498
- ------------------------------------------------------------------------------
SENIOR NOTE, DUE 2007-- This note is payable in one installment and bears
interest at a fixed rate of 6.78 percent.
SENIOR NOTES, DUE 2006-2011-- These notes with a group of insurance companies
have a weighted-average, fixed-interest rate of 7.02 percent and an original
weighted-average life of 6.5 years.
FIVE-YEAR TERM NOTES -- These notes are payable in five annual installments of
$8,000,000 from 2002 extending through 2006 with interest payable quarterly. The
interest rate was 8.02 percent at October 28, 2001.
INDUSTRIAL REVENUE BONDS -- GWINNETT COUNTY, GEORGIA-- These bonds were issued
in connection with the acquisition and renovation of the Norcross Manufacturing
Facility in Gwinnett County, Georgia. These bonds are due in annual installments
of $600,000 through 2009, with interest payable quarterly. The tax-free interest
rate varies weekly and was 2.2 percent at October 28, 2001. The bonds are
secured by a $5,036,000 standby letter of credit.
INDUSTRIAL REVENUE BONDS -- CITY OF WESTLAKE, OHIO-- These bonds were issued in
connection with the construction of the Company's world headquarters in
Westlake, Ohio. The bonds are due in annual installments of $850,000 extending
through 2002 with interest payable quarterly. The tax-free interest rate varies
weekly and was 2.25 percent at October 28, 2001. The bonds are secured by a
$886,000 standby letter of credit.
ACQUISITION FINANCING NOTES-- These unsecured notes were issued in connection
with recent business acquisitions and mature in 2002. Interest is payable at
variable rates with a weighted-average rate of 2.98 percent at October 28, 2001.
LEASEHOLD IMPROVEMENTS FINANCING NOTE-- This note partially funded the leasehold
improvements for a new sales and demonstration facility in Japan. The
principal balance is Japanese (Y)200 million and is payable in one installment
in 2006. Interest, payable at a fixed rate of 3.10 percent, was converted to a
variable rate through an interest rate swap. The variable rate is reset
semi-annually, and at October 28, 2001 the Company's effective borrowing rate
was negative .29 percent.
ANNUAL MATURITIES-- The annual maturities of long-term debt for the five years
subsequent to October 28, 2001 are as follows: $14,580,000 in 2002; $8,600,000
in 2003; $8,600,000 in 2004; $12,890,000 in 2005; and $54,768,000 in 2006.
GUARANTEES-- No guarantees were issued at October 28, 2001. Subsequent to
year-end, the Company issued $4,318,000 of guarantees to support the
term-borrowing facilities of an unconsolidated affiliate. At October 29, 2000,
the Company had issued $3,520,000 of similar guarantees.
26/27
NOTE 10 -- FINANCIAL INSTRUMENTS
The Company enters into foreign currency forward contracts, which are derivative
financial instruments, to reduce the risk of foreign currency exposures
resulting from the collection of intercompany receivables, payables and loans
denominated in foreign currencies. The maturities of these contracts are usually
less than 90 days. Forward contracts are marked to market each accounting
period, and the resulting gains or losses are included in other income (expense)
on the Consolidated Statement of Income. Gains of $146,000, $248,000 and
$562,000 were recognized from changes in the fair value of these contracts for
the years ended October 28, 2001, October 29, 2000 and October 31, 1999,
respectively.
At October 28, 2001 the Company had outstanding forward exchange contracts that
mature at various dates through December 2001. The following table summarizes,
by currency, the Company's forward exchange contacts at October 28, 2001 and
October 29, 2000:
SELL BUY
NOTIONAL FAIR MARKET NOTIONAL FAIR MARKET
AMOUNTS VALUE AMOUNTS VALUE
- -------------------------------------------------------------------------------
(In thousands)
October 28, 2001 contract amounts:
Euro $ 9,302 $ 9,339 $14,620 $14,726
British pound 14,603 14,723 4,549 4,572
Japanese yen 7,733 8,372 10,199 10,639
Others 1,495 1,491 8,534 8,428
- ------------------------------------------------------------------------------
Total $33,133 $33,925 $37,902 $38,365
- ------------------------------------------------------------------------------
SELL BUY
NOTIONAL FAIR MARKET NOTIONAL FAIR MARKET
AMOUNTS VALUE AMOUNTS VALUE
- --------------------------------------------------------------------------------
(In thousands)
October 29, 2000 contract amounts:
Euro $15,386 $15,271 $ 2,577 $ 2,540
British pound 8,340 8,636 558 574
Japanese yen 9,729 9,380 467 462
Others 6,917 6,899 7,196 7,146
- --------------------------------------------------------------------------------
Total $40,372 $40,186 $10,798 $10,722
- --------------------------------------------------------------------------------
The Company also uses foreign denominated fixed-rate debt and intercompany
foreign currency transactions of a long-term investment nature to protect the
value of its investment in its 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 the years ended October 28, 2001 and October 29, 2000,
net gains of $1,914,000 and $6,322,000, 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.
The Company has an interest-rate swap that it has designated as a fair-value
hedge. This derivative qualified for the short-cut method. The swap is recorded
with a fair market value of $204,000 in other assets in the Consolidated Balance
Sheet.
The Company is exposed to credit-related losses in the event of non-performance
by counterparties to financial instruments. The Company uses major banks
throughout the world for cash deposits, forward exchange contracts and interest
rate swaps. The Company's customers represent a wide variety of industries and
geographic regions. As of October 28, 2001, there were no significant
concentrations of credit risk. The Company does not use financial instruments
for trading or speculative purposes.
The carrying amounts and fair values of the Company's financial instruments,
other than receivables and accounts payable, are as follows:
2001
CARRYING AMOUNT FAIR VALUE
- ------------------------------------------------------------------------------
(In thousands)
Cash and cash equivalents $ 7,881 $ 7,881
Marketable securities 62 62
Notes payable (194,964) (194,964)
Long-term debt (202,658) (211,144)
Forward exchange contracts 254 278
2000
CARRYING AMOUNT FAIR VALUE
- ------------------------------------------------------------------------------
(In thousands)
Cash and cash equivalents $ 785 $ 785
Marketable securities 30 30
Notes payable (91,697) (91,697)
Long-term debt (61,728) (58,936)
Forward exchange contracts 108 210
Interest rate swaps -- 448
The following methods and assumptions were used by the Company in estimating the
fair value of financial instruments:
- - Cash, cash equivalents and notes payable are valued at their carrying amounts
due to the relatively short period to maturity of the instruments.
- - Marketable securities are valued at quoted market prices.
- - Long-term debt is valued by discounting future cash flows at
currently available rates for borrowing arrangements with similar
terms and conditions.
- - The fair value of forward exchange contracts is estimated using quoted
exchange rates of comparable contracts.
- - The fair value of interest rate swaps is estimated using valuation techniques
based on discounted future cash flows.
NOTE 11 -- CAPITAL SHARES
PREFERRED-- The Company has authorized 10,000,000 Series A convertible preferred
shares without par value. No preferred shares were outstanding in 2001, 2000,
or1999.
COMMON-- On August 1, 2000, the Board of Directors declared a 2-for-1 stock
split on the Company's common stock, paid in the form of a 100 percentstock
dividend on September 12, 2000, for all shares outstanding on August 25, 2000.
Accordingly, all per-share amounts, common stock and common stock equivalents
outstanding used in the calculation of per-share amounts and stock option
information have been adjusted retroactively to reflect the stock split.
The Company has 80,000,000 authorized common shares without par value. In March
1992, the shareholders adopted an amendment to the Company's articles of
incorporation which, when filed with the State of Ohio, would increase the
number of authorized common shares to 160,000,000. During 2001 and 2000, there
were 49,011,000 common shares issued. At October 28, 2001 and October 29, 2000,
the number of outstanding common shares, net of treasury shares, was 33,138,000
and 32,449,000, respectively. Treasury shares are reissued using the first-in,
first-out method.
NOTE 12 -- COMPANY STOCK PLANS
LONG-TERM PERFORMANCE PLAN-- The Company's long-term performance plan, adopted
in 1993, provides for the granting of stock options, stock appreciation rights,
restricted stock, stock purchase rights, stock equivalent units, cash awards,
and other stock or performance-based incentives. The number of common shares
available for grant of awards is 3.0 percent of the number of common shares
outstanding as of the first day of each fiscal year, plus up to an additional
0.5 percent, consisting of shares available, but not granted, in prior years. At
the beginning of fiscal 2002, there were 1,160,000 shares available for grant in
2002.
STOCK OPTIONS-- The Company may grant non-qualified or incentive stock options
to employees and directors of the Company. Generally, the options may be
exercised beginning one year from the date of grant at a rate not exceeding 25
percent per year, and the options expire 10 years from the date of grant.
Vesting accelerates upon the occurrence of events which involve or may result in
a change of control of the Company.
The Company uses the intrinsic value method to account for employee stock
options. No compensation expense has been recognized because the exercise price
of the Company's stock options equals the market price of the underlying common
shares on the date of grant. Tax benefits arising from the exercise of
non-qualified stock options are recognized when realized and credited to capital
in excess of stated value.
Summarized transactions are as follows:
WEIGHTED-
AVERAGE
EXERCISE
NUMBER OF PRICE
OPTIONS PER SHARE
- -----------------------------------------------------------------------------
Outstanding at November 1, 1998 4,916,442 $25.38
Granted 928,880 $22.63
Exercised (236,682) $16.41
Forfeited (125,726) $27.82
- -----------------------------------------------------------------------------
Outstanding at October 31, 1999 5,482,914 $25.25
Granted 904,256 $22.33
Exercised (346,336) $16.35
Forfeited (332,498) $26.14
- -----------------------------------------------------------------------------
Outstanding at October 29, 2000 5,708,336 $25.27
Granted 836,300 $28.51
Exercised (338,493) $22.84
Forfeited (208,151) $26.40
- -----------------------------------------------------------------------------
Outstanding at October 28, 2001 5,997,992 $25.82
- -----------------------------------------------------------------------------
Exercisable at October 28, 2001 3,854,220 $26.16
- -----------------------------------------------------------------------------
Summarized information on currently outstanding options follows:
RANGE OF EXERCISE PRICE
$20 - $25 $26 - $30 $31 - $35
- --------------------------------------------------------------------------
Number outstanding 2,687,232 3,210,259 100,501
Weighted-average remaining
contractual life, in years 7.7 5.1 5.2
Weighted-average
exercise price $22.99 $28.00 $31.88
- --------------------------------------------------------------------------
Number exercisable 1,476,350 2,327,646 50,224
Weighted-average
exercise price $23.27 $27.87 $31.88
- --------------------------------------------------------------------------
28/29
Pro forma information regarding net income and earnings per share has been
determined as if the Company had accounted for employee stock options granted
since 1996 under the fair value method. Under this method, the estimated fair
value of the options is amortized to expense over the options' vesting period.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option-pricing model.
Pro forma and weighted-average assumption information follows:
2001 2000 1999
- -------------------------------------------------------------------------------
(In thousands except for per-share amounts)
Net income:
As reported $24,610 $54,632 $47,506
Pro forma $21,200 $50,876 $43,572
Diluted earnings per share:
As reported $.74 $1.67 $1.42
Pro forma $.64 $1.58 $1.31
Weighted-average fair value
of options granted during
the year $8.43 $7.20 $7.60
- -------------------------------------------------------------------------------
Risk-free interest rate 3.91-4.57% 5.57-5.94% 5.91-6.17%
Expected life of option,
in years 7 7 7
Expected dividend yield 1.62% 1.50% 1.35%
Expected volatility .25 .24 .23
- -------------------------------------------------------------------------------
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
STOCK APPRECIATION RIGHTS-- The Company may grant stock appreciation rights to
employees. A stock appreciation right provides for a payment equal to the excess
of the fair market value of a common share when the right is exercised, over its
value when the right was granted. There were no stock appreciation rights
outstanding during 2001, 2000, and 1999.
Limited stock appreciation rights that become exercisable upon the occurrence of
events which involve or may result in a change of control of the Company have
been granted with respect to 5,998,000 shares.
RESTRICTED STOCK-- The Company may grant restricted stock to employees. These
shares may not be disposed of for a designated period of time defined at the
date of grant and are to be returned to the Company if the recipient's
employment terminates during the restriction period. As shares are issued,
deferred stock-based compensation equivalent to the market value on the date of
grant is charged to shareholders' equity and subsequently amortized over the
restriction period. Tax benefits arising from the lapse of restrictions on the
stock are recognized when realized and credited to capital in excess of stated
value. In 2001, there were 11,850 restricted shares granted at a weighted
average fair value of $27.60 per share (26,812 and $22.19 in 2000 and 11,888 and
$25.58 in 1999). Net amortization was $316,000 in 2001 ($354,000 in 2000 and
$225,000 in 1999).
EMPLOYEE STOCK PURCHASE RIGHTS-- The Company may grant stock purchase rights to
employees. These rights permit eligible employees to purchase a limited number
of common shares at a discount from fair market value. No stock purchase rights
were outstanding during 2001, 2000, and 1999.
EMPLOYEE STOCK OWNERSHIP PLAN-- The Company sponsored an Employee Stock
Ownership Plan (ESOP) covering all domestic employees. Company contributions
were discretionary and funded annually by a combination of cash and shares of
the Company's common stock. Allocations to the participants' accounts were made
on December 31 on the basis of their compensation for the year. Each participant
vested in his account at a rate of 20 percent per year from date of employment.
Distribution of a participant's account occurs at retirement, death, or
termination of employment.
The ESOP was merged into the Company's domestic retirement plan in fiscal year
2000. ESOP compensation expense was $167,000 in the first two months of 2000,
and $1,325,000 in 1999. Contributions to the plan were $1,167,000,and $1,063,000
in 2000, and 1999, respectively. The number of allocated ESOP shares outstanding
was 868,000 at October 29, 2000.
SHAREHOLDER RIGHTS PLAN-- In August 1988, the Board of Directors declared a
dividend of one common share purchase right for each common share outstanding on
September 9, 1988. Rights are also distributed with common shares issued by the
Company after that date. The rights may only be exercised if a party acquires 15
percent or more of the Company's common shares. The exercise price of each right
is $87.50 per share. The rights trade with the shares until the rights become
exercisable, unless the Board of Directors sets an earlier date for the
distribution of separate right certificates.
If a party acquires at least 15 percent of the Company's common shares (a
"flip-in" event), each right then becomes the right to purchase two common
shares of the Company for $.50 per share.
The rights may be redeemed by the Company at a price of $.005 per right at any
time prior to a "flip-in" event, or expiration of the rights on October 31,
2007.
SHARES RESERVED FOR FUTURE ISSUANCE-- At October 28, 2001, there were 84,700,000
shares reserved for future issuance through the exercise of outstanding options
or rights, including 78,558,000 shares under the shareholder rights plan.
NOTE 13 -- SEVERANCE AND RESTRUCTURING COSTS
Total 2001 severance and restructuring costs were $14.0 million ($9.2 million on
an after-tax basis, or $.28 per share). Of this amount, $13.3 million related to
workforce reduction actions including reductions of approximately 400 people
initiated in 2001. This amount was recorded below selling and administrative
expenses in the Consolidated Statement of Income. The remaining amount of $.7
million related to inventory write-offs associated with the combination of
certain businesses was included in cost of sales. Of the total amount, $7.6
million is unpaid at October 28, 2001.
During 2000, Nordson recognized non-recurring pre-tax charges of $9.0 million
($5.9 million on an after-tax basis or $.18 per share). Of this amount, $7.5
million was paid in 2000, and the remainder was paid in 2001. The charges
consist of severance payments and were recorded below selling and administrative
expenses in the Consolidated Statement of Income.
During the fourth quarter of 1999, Nordson recognized non-recurring pre-tax
charges of $3.0 million ($2.0 million on an after-tax basis or $.06 per share).
The charges consist of severance payments and supplemental pension obligations
and were recorded below selling and administrative expenses in the Consolidated
Statement of Income.
NOTE 14 -- ACQUISITIONS
Business acquisitions have been accounted for as purchases, with the acquired
assets and liabilities recorded at their estimated fair value at the dates of
acquisition. The cost in excess of the net assets of the business acquired is
included in intangible assets.
On October 30, 2000, the Company completed the acquisition of EFD, Inc., a
privately held East Providence, Rhode Island-based manufacturer of precision,
low-pressure, industrial dispensing valves and components. The majority of the
purchase was financed with short-term credit facilities. Internally generated
cash flow of the Company and EFD, Inc. will be used to pay down this debt. The
acquisition was accounted for using the purchase method of accounting. EFD, Inc.
is now a wholly owned subsidiary of the Company.
The following unaudited pro forma data summarize the results of operations of
the Company and EFD, Inc. as if the acquisition had occurred at the beginning of
fiscal 2000 and 1999.
2000 1999
- -------------------------------------------------------------------------------
(In thousands except for per-share information)
Results of operations:
Net sales $801,892 $754,646
Net income $54,056 $44,757
Basic earnings per share $1.67 $1.35
Diluted earnings per share $1.65 $1.34
- -------------------------------------------------------------------------------
In January 1999 and March 1999, the Company acquired manufacturers of systems
that use gas plasma technology. In July 1999, the Company acquired a
manufacturer of cold adhesive application equipment and verification systems,
and in September 1999, a manufacturer of ultraviolet curing lamps. Assuming the
acquisitions had taken place at the beginning of 1999, pro forma results for
1999 would not be materially different.
The cost of acquisitions amounted to $281,183,000 in 2001 and $29,213,000 in
1999. Operating results of these acquisitions are included in the Consolidated
Statement of Income from the respective dates of acquisition.
NOTE 15-- SUPPLEMENTAL INFORMATION FOR THE STATEMENT
OF CASH FLOWS
2001 2000 1999
- ------------------------------------------------------------------------
(In thousands)
Cash operating activities:
Interest paid $ 26,282 $ 12,010 $ 9,417
Income taxes paid 11,373 27,764 28,501
- ------------------------------------------------------------------------
Noncash investing and
financing activities:
Capitalized lease
obligations incurred $ 4,954 $ 4,179 $ 5,757
Capitalized lease
obligations terminated 654 954 1,102
Shares acquired and
issued through exercise
of stock options 4,086 1,660 2,098
- ------------------------------------------------------------------------
Noncash assets and liabilities
of businesses acquired:
Working capital $ 11,285 $ -- $ 4,901
Property, plant and
equipment 6,378 -- 1,032
Intangibles and other 262,688 -- 21,279
Long-term debt and
other liabilities -- -- (588)
- ------------------------------------------------------------------------
$280,351 $ -- $ 26,624
- ------------------------------------------------------------------------
30/31
NOTE 16-- OPERATING SEGMENTS AND GEOGRAPHIC AREA DATA
The Company conducts business across three primary businesses: adhesive
dispensing and nonwoven fiber, coating and finishing, and advanced technology.
The composition of segments and measure of segment profitability is consistent
with that used by the Company's management. The primary measurement focus is
operating profit, which equals sales less operating costs and expenses.
Operating profit excludes interest income (expense), investment income (net) and
other income (expense). Items below the operating income line in the
Consolidated Statement of Income are not presented by segment, since they are
excluded from the measure of segment profitability reviewed by the Company's
chief operating decision maker. The accounting policies of the segments are
generally the same as those described in Note 1, Significant Accounting
Policies.
End markets for Nordson products include food and beverage, metal furniture,
appliances, electronic components, disposable nonwovens products and automotive
components. Nordson sells its products primarily through a direct,
geographically dispersed sales force.
No single customer accounted for more than 5.0 percent of the Company's sales in
2001, 2000, or 1999.
The following table presents information about Nordson's reportable segments:
ADHESIVE
DISPENSING
AND NONWOVEN COATING AND ADVANCED
FIBER FINISHING TECHNOLOGY CORPORATE TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
(In thousands)
YEAR ENDED OCTOBER 28, 2001
Net external sales $ 430,614 $ 130,911 $ 169,891 $ -- $ 731,416
Depreciation 10,725 3,507 4,336 6,341 24,909
Operating profit 85,139 4,008 31,417 (61,027)(a) 59,537
Identifiable assets(c) 240,409 77,087 82,009 468,903 (b) 868,408
Expenditures for long-lived assets(d) 14,106 2,427 3,199 3,415 23,147
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 29, 2000
Net external sales $ 463,552 $ 145,943 $ 131,073 $ -- $ 740,568
Depreciation 11,562 4,687 3,596 4,431 24,276
Operating profit 114,075 9,479 20,789 (52,891)(a) 91,452
Identifiable assets(c) 257,671 86,033 68,396 230,931 (b) 643,031
Expenditures for long-lived assets(d) 7,320 2,347 3,109 10,869 23,645
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1999
Net external sales $ 443,799 $ 152,866 $ 103,800 $ -- $ 700,465
Depreciation 12,542 4,452 3,256 2,007 22,257
Operating profit 95,378 5,580 9,601 (33,574)(a) 76,985
Identifiable assets(c) 250,206 84,491 57,670 230,663 (b) 623,030
Expenditures for long-lived assets(d) 10,045 3,390 4,165 28,044 45,644
- ---------------------------------------------------------------------------------------------------------------------------------
(a) Includes $3.0 million of severance payments and supplemental pension
obligations in 1999, $9.0 million of severance costs in 2000 and $14.0
million of severance and other restructuring charges in 2001. These charges
were not allocated to reportable segments for management reporting purposes.
(b) Corporate assets are principally cash and cash equivalents, domestic
deferred income taxes, investments, capital leases, headquarter facilities,
the major portion of the Company's domestic enterprise management system
and intangible assets.
(c) Includes notes and accounts receivable net of customer advance payments and
allowance for doubtful accounts, inventories net of reserves and property,
plant and equipment net of accumulated depreciation.
(d) Long-lived assets consist of property, plant and equipment and capital
lease assets.
The Company has significant sales and long-lived assets in the following
geographic areas:
2001 2000 1999
- ------------------------------------------------------------------------------
(In thousands)
Net external sales
North America(a) $357,461 $351,098 $328,573
Europe 220,122 231,712 243,463
Japan 74,979 79,443 68,579
Pacific South 78,854 78,315 59,850
- ------------------------------------------------------------------------------
Total net external sales $731,416 $740,568 $700,465
- ------------------------------------------------------------------------------
Long-lived assets
North America(b) $112,947 $108,311 $106,054
Europe 12,787 10,241 13,281
Japan 4,636 5,392 5,771
Pacific South 2,962 2,966 3,533
- ------------------------------------------------------------------------------
Total long-lived assets $133,332 $126,910 $128,639
- ------------------------------------------------------------------------------
(a) Net external sales in the United States for 2001, 2000 and 1999 were $339.5
million, $330.2 million, and $307.7 million, respectively.
(b) Long-lived assets in the United States for 2001, 2000 and 1999 were $112.7
million, $108.2 million, and $105.9 million, respectively.
A reconciliation of total segment operating income to total consolidated income
before income taxes is as follows:
2001 2000 1999
- ------------------------------------------------------------------------------
(In thousands)
Total profit for reportable
segments $ 59,537 $ 91,452 $ 76,985
Interest expense (29,489) (11,665) (10,244)
Interest and investment income 1,414 984 1,601
Other-net 6,254 2,637 3,096
- ------------------------------------------------------------------------------
Consolidated income before
income taxes $ 37,716 $ 83,408 $ 71,438
- ------------------------------------------------------------------------------
A reconciliation of total assets for reportable segments to total consolidated
assets is as follows:
2001 2000 1999
- ------------------------------------------------------------------------------
(In thousands)
Total assets for reportable
segments $ 868,408 $ 643,031 $ 623,030
Plus: customer advance payments 12,992 9,961 4,752
Eliminations (18,947) (42,952) (35,992)
- ------------------------------------------------------------------------------
Total consolidated assets $ 862,453 $ 610,040 $ 591,790
- ------------------------------------------------------------------------------
NOTE 17-- QUARTERLY FINANCIAL DATA (UNAUDITED)
QUARTER FIRST SECOND THIRD FOURTH
- -------------------------------------------------------------------------------
(In thousands except for per-share amounts)
2001:
Sales $ 175,333 $ 192,825 $ 175,333 $ 187,925
Cost of sales 77,313 85,706 83,661 90,449
Net income 7,526 9,007 5,627 2,450
Earnings per share:
Basic $ .23 $ .28 $ .17 $ .07
Diluted .23 .27 .17 .07
Diluted before
severance and
restructuring costs .23 .30 .19 .31
- -------------------------------------------------------------------------------
2000:
Sales $ 152,888 $ 186,647 $ 184,104 $ 216,929
Cost of sales 66,721 84,653 82,299 98,924
Net income 4,768 12,897 14,967 22,000
Earnings per share:
Basic $ .15 $ .40 $ .47 $ .68
Diluted .15 .40 .46 .67
Diluted before
severance and
restructuring costs .20 .48 .48 .69
- -------------------------------------------------------------------------------
Domestic operations report results using four 13-week quarters. International
subsidiaries report results using calendar quarters. The sum of the per-share
amounts for the four quarters of 2001 and 2000 do not equal the annual per-share
amounts as a result of the timing of treasury stock purchases and the effect of
stock options granted by the Company.
During 2001, the Company recognized severance and restructuring pre-tax charges
of $.1 million in the first quarter ($.1 million after-tax), $1.3 million in the
second-quarter ($.9 million after-tax), $.8 million in the third-quarter ($.5
million after-tax) and $11.8 million in the fourth-quarter ($7.7 million
after-tax).
During 2000, the Company recognized severance and restructuring pre-tax charges
of $2.8 million in the first-quarter ($1.9 million after- tax), $3.9 million in
the second-quarter ($2.6 million after-tax), $1.0 million in the third quarter
($.6 million after-tax) and $1.2 million in the fourth quarter ($.8 million
after-tax).
32/33