| (Mark One) | ||
| [X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
| For the quarterly period ended May 4, 2003 | ||
| OR | ||
| [ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
| For the transition period from to |
Commission file number 0-7977
NORDSON CORPORATION
| Ohio (State of incorporation) |
34-0590250 (I.R.S. Employer Identification No.) |
|
| 28601 Clemens Road Westlake, Ohio (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) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
Yes X No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Shares with no par value as of May 30, 2003: 33,731,239
Page 1
Nordson Corporation
Table of Contents
Part I — FINANCIAL INFORMATION |
3 | |||||
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) |
3 | |||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
3 | |||||
CONDENSED CONSOLIDATED BALANCE SHEET |
4 | |||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
5 | |||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
6 | |||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
13 | |||||
Results of Operations |
13 | |||||
Financial Condition |
14 | |||||
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
15 | |||||
ITEM 4. CONTROLS AND PROCEDURES |
15 | |||||
Part II — Other Information |
16 | |||||
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
16 | |||||
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K |
16 | |||||
SIGNATURES |
17 | |||||
CERTIFICATIONS |
18 | |||||
Page 2
Nordson Corporation
Part I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Statements of Income
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||
| May 4, 2003 | April 28, 2002 | May 4, 2003 | April 28, 2002 | ||||||||||||||
(In thousands, except for per share data) |
|||||||||||||||||
Sales |
$ | 166,679 | $ | 163,526 | $ | 312,002 | $ | 308,483 | |||||||||
Operating costs and expenses: |
|||||||||||||||||
Cost of sales |
73,582 | 75,644 | 139,648 | 140,847 | |||||||||||||
Selling and administrative expenses |
76,053 | 70,180 | 144,172 | 136,544 | |||||||||||||
Restructuring and severance costs |
1,446 | 814 | 1,468 | 814 | |||||||||||||
| 151,081 | 146,638 | 285,288 | 278,205 | ||||||||||||||
Operating profit |
15,598 | 16,888 | 26,714 | 30,278 | |||||||||||||
Other income (expense): |
|||||||||||||||||
Interest expense |
(4,564 | ) | (5,438 | ) | (9,254 | ) | (11,116 | ) | |||||||||
Interest and investment income |
212 | 236 | 503 | 585 | |||||||||||||
Other — net |
827 | (74 | ) | 1,557 | 353 | ||||||||||||
| (3,525 | ) | (5,276 | ) | (7,194 | ) | (10,178 | ) | ||||||||||
Income before income taxes |
12,073 | 11,612 | 19,520 | 20,100 | |||||||||||||
Income taxes |
3,983 | 3,832 | 6,441 | 6,633 | |||||||||||||
Net income |
$ | 8,090 | $ | 7,780 | $ | 13,079 | $ | 13,467 | |||||||||
Average common shares |
33,647 | 33,301 | 33,625 | 33,227 | |||||||||||||
Incremental common shares attributable to
outstanding stock options, nonvested stock, and
deferred stock-based compensation |
151 | 545 | 154 | 394 | |||||||||||||
Average common shares and common share equivalents |
33,798 | 33,846 | 33,779 | 33,621 | |||||||||||||
Basic earnings per share |
$ | 0.24 | $ | 0.23 | $ | 0.39 | $ | 0.41 | |||||||||
Diluted earnings per share |
$ | 0.24 | $ | 0.23 | $ | 0.39 | $ | 0.40 | |||||||||
Dividends per share |
$ | 0.15 | $ | 0.14 | $ | 0.30 | $ | 0.28 | |||||||||
See accompanying notes.
Page 3
Nordson Corporation
Condensed Consolidated Balance Sheet
| May 4, 2003 | November 3, 2002 | |||||||||
(In thousands) |
||||||||||
Assets |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ | 7,613 | $ | 5,872 | ||||||
Marketable securities |
20 | 25 | ||||||||
Receivables |
130,652 | 135,662 | ||||||||
Inventories |
88,199 | 87,100 | ||||||||
Deferred income taxes |
39,725 | 40,264 | ||||||||
Prepaid expenses |
6,546 | 5,650 | ||||||||
Total current assets |
272,755 | 274,573 | ||||||||
Property, plant and equipment — net |
120,760 | 118,773 | ||||||||
Goodwill — net |
328,139 | 327,897 | ||||||||
Other intangible assets — net |
16,326 | 16,283 | ||||||||
Other assets |
22,466 | 26,946 | ||||||||
| $ | 760,446 | $ | 764,472 | |||||||
Liabilities and shareholders’ equity |
||||||||||
Current liabilities: |
||||||||||
Notes payable |
$ | 92,612 | $ | 108,634 | ||||||
Accounts payable |
45,239 | 48,809 | ||||||||
Current maturities of long-term debt |
9,055 | 8,600 | ||||||||
Other current liabilities |
78,338 | 86,604 | ||||||||
Total current liabilities |
225,244 | 252,647 | ||||||||
Long-term debt |
181,603 | 171,314 | ||||||||
Other liabilities |
74,505 | 71,621 | ||||||||
Shareholders’ equity: |
||||||||||
Common shares |
12,253 | 12,253 | ||||||||
Capital in excess of stated value |
124,653 | 123,178 | ||||||||
Retained earnings |
505,626 | 502,631 | ||||||||
Accumulated other comprehensive loss |
(21,807 | ) | (27,318 | ) | ||||||
Common shares in treasury, at cost |
(340,325 | ) | (341,606 | ) | ||||||
Deferred stock-based compensation |
(1,306 | ) | (248 | ) | ||||||
Total shareholders’ equity |
279,094 | 268,890 | ||||||||
| $ | 760,446 | $ | 764,472 | |||||||
See accompanying notes.
Page 4
Nordson Corporation
Condensed Consolidated Statement of Cash Flows
| Twenty-Six Weeks Ended | May 4, 2003 | April 28, 2002 | ||||||||
(In thousands) |
||||||||||
Cash flows from operating activities: |
||||||||||
Net income |
$ | 13,079 | $ | 13,467 | ||||||
Depreciation and amortization |
14,203 | 13,585 | ||||||||
Changes in operating assets and liabilities |
(2,610 | ) | 33,708 | |||||||
Other |
7,356 | 7,085 | ||||||||
Net cash provided by operating activities |
32,028 | 67,845 | ||||||||
Cash flows from investing activities: |
||||||||||
Additions to property, plant and equipment |
(2,257 | ) | (7,180 | ) | ||||||
Proceeds from sale of marketable securities |
5 | 37 | ||||||||
Acquisition of new business |
544 | (282 | ) | |||||||
Net cash used in investing activities |
(1,708 | ) | (7,425 | ) | ||||||
Cash flows from financing activities: |
||||||||||
Repayment of short-term borrowings |
(18,388 | ) | (52,608 | ) | ||||||
Repayment of long-term debt |
— | (8,888 | ) | |||||||
Repayment of capital lease obligations |
(1,948 | ) | (1,872 | ) | ||||||
Issuance of common shares |
1,473 | 9,125 | ||||||||
Purchase of treasury shares |
(25 | ) | (187 | ) | ||||||
Dividends paid |
(10,085 | ) | (9,288 | ) | ||||||
Net cash used in financing activities |
(28,973 | ) | (63,718 | ) | ||||||
Effect of exchange rate changes on cash |
394 | 124 | ||||||||
Increase (decrease) in cash and cash equivalents |
1,741 | (3,174 | ) | |||||||
Cash and cash equivalents: |
||||||||||
Beginning of year |
5,872 | 7,881 | ||||||||
End of quarter |
$ | 7,613 | $ | 4,707 | ||||||
See accompanying notes |
||||||||||
Page 5
Nordson Corporation
Notes to Condensed Consolidated Financial Statements
May 4, 2003
| 1. | Basis of presentation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter ended May 4, 2003 are not necessarily indicative of the results that may be expected for the full fiscal year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended November 3, 2002. Certain prior period amounts have been reclassified to conform to current period presentation. | |
| 2. | Revenue recognition. Most of the Company’s revenues are recognized upon shipment, provided that persuasive evidence of an arrangement exists, the sales price is fixed or determinable, collectibility is reasonably assured, and title and risk of loss have passed to the customer. A limited number of the Company’s large engineered systems sales contracts are accounted for using the percentage-of-completion method. The amount of revenue recognized in any accounting period is based on the ratio of actual costs incurred through the end of the period to total estimated costs at completion. The remaining revenues are recognized upon delivery. | |
| 3. | 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. Actual amounts could differ from these estimates. | |
| 4. | Significant changes and events. At the end of March 2003 the Company acquired full ownership interest in land and a building owned by a partnership that leased office and manufacturing space to the Company. The real estate is located in Duluth, Georgia and serves as the worldwide headquarters for the Company’s adhesives businesses. As a result, the Company assumed $10.7 million of debt owed by the partnership and real estate with a net book value of $10.3 million. Prior to March the Company leased the property under an operating lease with a partnership in which the Company was a partner. | |
| 5. | Inventories. Inventories consisted of the following: |
| May 4, 2003 | November 3, 2002 | ||||||||
(In thousands) |
|||||||||
Finished goods |
$ | 48,497 | $ | 48,463 | |||||
Work-in-process |
12,916 | 11,471 | |||||||
Raw materials and finished parts |
54,336 | 57,437 | |||||||
| 115,749 | 117,371 | ||||||||
Obsolescence reserve |
(20,428 | ) | (23,149 | ) | |||||
LIFO reserve |
(7,122 | ) | (7,122 | ) | |||||
| $ | 88,199 | $ | 87,100 | ||||||
| During the first six months of fiscal 2003 the Company disposed of approximately $5.3 million of inventory that had been reserved for in fiscal 2002. |
Page 6
Nordson Corporation
| 6. | Goodwill and Other Intangible Assets. Changes in the carrying amount of goodwill for the two quarters ended May 4, 2003 by operating segment are as follows: |
| Adhesive Dispensing | Advanced | |||||||||||||||
| & Nonwoven Fiber | Costing & | Technology | ||||||||||||||
| Systems | Finishing Systems | Systems | Total | |||||||||||||
(In thousands) |
||||||||||||||||
Balance at November 3, 2002 |
$ | 27,622 | $ | 3,278 | $ | 296,997 | $ | 327,897 | ||||||||
Currency effect |
198 | 47 | 16 | 261 | ||||||||||||
Other change |
(14 | ) | (5 | ) | — | (19 | ) | |||||||||
Balance at May 4, 2003 |
$ | 27,806 | $ | 3,320 | $ | 297,013 | $ | 328,139 | ||||||||
| Information regarding the Company’s intangible assets subject to amortization is as follows: |
| May 4, 2003 | ||||||||||||||||
| Carrying | Accumulated | |||||||||||||||
| Amount | Amortization | Net Book Value | ||||||||||||||
(In thousands) |
||||||||||||||||
Core/Developed Technology |
$ | 10,400 | $ | 1,619 | $ | 8,781 | ||||||||||
Non-Compete Agreements |
3,935 | 1,208 | 2,727 | |||||||||||||
Patent Costs |
2,236 | 1,180 | 1,056 | |||||||||||||
Other |
6,499 | 5,198 | 1,301 | |||||||||||||
Total |
$ | 23,070 | $ | 9,205 | $ | 13,865 | ||||||||||
| November 3, 2002 | ||||||||||||||||
| Carrying | Accumulated | |||||||||||||||
| Amount | Amortization | Net Book Value | ||||||||||||||
(In thousands) |
||||||||||||||||
Core/Developed Technology |
$ | 10,400 | $ | 1,446 | $ | 8,954 | ||||||||||
Non-Compete Agreements |
3,585 | 1,098 | 2,487 | |||||||||||||
Patent Costs |
2,227 | 1,064 | 1,163 | |||||||||||||
Other |
5,811 | 4,593 | 1,218 | |||||||||||||
Total |
$ | 22,023 | ||||||||||||||