Nordson Corporation 10-K/Quarter End 11-2-2003


x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o

The aggregate market value of Common Stock, no par value per share, held by nonaffiliates (based on the closing sale price on the Nasdaq) as of May 2, 2003 was approximately $617,614,000.

There were 34,602,416 shares of Common Shares outstanding as of December 12, 2003.

Founded in 1954, Nordson Corporation (the Company) designs, manufactures and markets precision dispensing systems that apply adhesives, sealants and coatings to a broad range of consumer and industrial products during manufacturing operations, helping customers meet quality, productivity and environmental targets. The Company also manufactures technology-based systems for curing and surface treatment processes.

Nordson products are used in a diverse range of industries, including appliance, automotive, bookbinding, container, converting, electronics, food and beverage, furniture, medical, metal finishing, nonwovens, packaging, semiconductor and other diverse industries.

The Company’s formula for long-term growth is based on a customer-driven strategy that is global in scope. Headquartered in Westlake, Ohio, Nordson markets its products through a network of direct operations in 30 countries throughout North America, Europe, Japan, Asia, Latin America and Australia. Consistent with this strategy, more than 50 percent of the Company’s revenues are generated outside the United States.

Nordson has nearly 3,500 employees worldwide and has principal manufacturing facilities in Ohio, Georgia, Alabama, California, Rhode Island, China, Germany, The Netherlands, and the United Kingdom.

Nordson Corporation strives to be a vital, self-renewing, worldwide organization which, within the framework of ethical behavior and enlightened citizenship, grows and produces wealth for its customers, employees, shareholders and communities.

Nordson operates for the purpose of creating balanced, long-term benefits for all of our constituencies: customers, employees, shareholders and communities.

Our corporate goal for growth is to double the value of the Company over a moving five-year period, with the primary measure of value set by the market for Company shares.

While external factors may impact value, the achievement of this goal will rest with earnings growth, capital and human resource efficiency, and positioning for the future.

Nordson does not expect every quarter to produce increased sales, earnings and earnings per share, or to exceed the comparative prior year’s quarter. We do expect to produce long-term gains. When short-term swings occur, we do not intend to alter our basic objectives in efforts to mitigate the impact of these natural occurrences.

Growth is achieved by seizing opportunities within existing markets, investing in new products and pursuing new markets. This strategy is augmented by the acquisition of companies that can serve multinational industrial markets.

We create benefits for our customers through a Package of Values^TM, which includes carefully engineered, durable products; strong service support; the backing of a well-established worldwide company with financial and technical strengths; and a corporate commitment to deliver what was promised.

We strive to provide genuine customer satisfaction; it is the foundation upon which we continue to build our business.

Complementing our business strategy is the objective to provide opportunities for employee self-fulfillment, growth, security, recognition and equitable compensation.

This goal is met through employee training and the creation of on-the-job growth opportunities. The result is a highly qualified and professional management team capable of meeting corporate objectives.

We recognize the value of employee participation in the planning process. Strategic and operating plans are developed by all business units and divisions, resulting in a sense of ownership and commitment on the part of employees in accomplishing company objectives.

Nordson is committed to contributing an average of five percent of domestic pretax earnings to human services, health, education and other charitable activities, particularly in communities where the Company has major facilities.

Financial Information About Operating Segment, Foreign and Domestic Operations, and Export Sales

In accordance with Statement of Financial Accounting Standards No. 131, “Disclosure about Segments of an Enterprise and Related Information,” Nordson has reported information about the Company’s three operating segments. This information is contained in Note 16 of Notes to Consolidated Financial Statements that can be found in Part II, Item 8 of this document.

Nordson offers a full range of equipment that moves and dispenses liquid and powder coatings, adhesives and sealants and many high-performance compounds. Nordson also produces technology-based systems for curing and surface treatment processes. Equipment ranges from manual, stand-alone units for low-volume operations to microprocessor-based automated systems for high-speed, high-volume production lines.

A summary of the Company’s various products and examples of their uses are as follows:


•	*Packaging* — Automated adhesive dispensing systems that seal corrugated cases and paperboard cartons, apply product labels and stabilize pallets.


•	*Product Assembly* — Adhesive and sealant dispensing systems for bonding or sealing plastic, metal and wood products.
•	*Web Coating* — Laminating and coating systems used to manufacture continuous-roll goods in the nonwovens, textile, paper and flexible-packaging industries.
•	*Nonwovens* — Systems for producing nonwoven fiber fabrics; equipment for applying adhesives, lotions, liquids and fibers to disposable nonwoven products.
•	*Automotive* — Adhesive and sealant dispensing systems for bonding and sealing window glass, body panels and structural components used on automobiles and trucks.


•	*Powder Coating* — Automated and manual spray systems used to apply powder paints and coatings to decorate and protect plastic, metal and wood products.


•	*Liquid Finishing* — Automated and manual spray systems that apply liquid paints and coatings to consumer and industrial products.
•	*Container* — Systems used to dispense and cure coatings used in the manufacture of metal and plastic containers.


•	*Asymtek* — Automated dispensing systems for high-speed, accurate application of a broad range of attachment, protection and coating fluids to semiconductor packages, printed circuit boards and electronic assemblies.


•	*UV Curing* — Drying and curing systems for graphic arts, finishing and product assembly operations.
•	*March Plasma Systems* — Systems for cleaning and modifying surfaces during the assembly of semiconductor devices, printed circuit boards, medical instruments and electronic products.
•	*EFD, Inc.* — Manual and automated dispensing units for the low-pressure application of fluid materials for the electronics, medical and automotive industries.

Nordson markets its products in the United States and fifty-six other countries, primarily through a direct sales force and also through qualified distributors. Nordson has built a worldwide reputation for its creativity and expertise in the design and engineering of high-technology application equipment that meets the specific needs of its customers.

Nordson’s production operations include machining and assembly. The Company finishes specially designed parts and assembles components into finished equipment. Many components are made in standard modules that can be used in more than one product or in combination with other components for a variety of models. The Company has principal manufacturing operations in Amherst, Ohio; Norcross, Swainsboro and Dawsonville, Georgia; Talladega, Alabama; Carlsbad, California; East Providence, Rhode Island; Shanghai, China; Luneburg, Germany; Maastricht, The Netherlands; and Slough, U.K.

Principal materials used to make Nordson products are metals and plastics, typically in sheets, bar stock, castings, forgings, and tubing. Nordson also purchases many electrical and electronic components, fabricated metal parts, high-pressure fluid hoses, packings, seals and other items integral to its products. Suppliers are competitively selected based on cost and quality. All significant raw materials that Nordson uses are available through multiple sources.

Nordson’s senior operating executives supervise an extensive quality control program for Nordson equipment, machinery and systems.

Natural gas and other fuels are primary energy sources for Nordson. However, standby capacity for alternative sources is available if needed.

The Company maintains procedures to protect patents and trademarks both domestically and internationally. However, Nordson’s business is not materially dependent upon any one or more of the patents, or on patent protection in general.

No special or unusual practices affect Nordson’s working capital. However, the Company generally requires advance payments as deposits on customized equipment and systems and, in certain cases, requires progress payments during the manufacturing of these products. The Company initiated a number of new business processes focused on reduction of manufacturing lead times. These initiatives have resulted in lower investment in inventory while maintaining the capability to respond promptly to customer needs.

The Company serves a broad customer base, both in terms of industries and geographic regions. The loss of a single or few customers would not have a material adverse effect on the Company’s business. In 2003, no single customer accounted for five percent or more of sales.

The Company’s backlog of orders increased to $61.2 million at November 2, 2003 from $45.4 million at November 3, 2002. All orders in the 2003 year-end backlog are expected to be shipped to customers in fiscal 2004.

Nordson’s business neither includes nor depends upon a significant amount of governmental contracts or sub-contracts. Therefore, no material part of the Company’s business is subject to renegotiation or termination at the option of the government.

Nordson equipment is sold in competition with a wide variety of alternative bonding, sealing, caulking, finishing and coating techniques. Any production process that requires the application of material to a substrate or surface is a potential use for Nordson equipment.

Many factors influence the Company’s competitive position, including pricing, product quality and service. Nordson enjoys a leadership position in the competitive industrial application systems business by delivering high-quality, innovative products and technologies, as well as after-the-sale service and technical support. Working with customers to understand their processes and developing the application solutions that help them meet their production requirements also contributes to Nordson’s leadership position. Nordson’s worldwide network of direct sales and technical resources also is a competitive advantage.

Risk factors associated with Nordson’s competitive position include the development and commercial acceptance of alternative processes or materials and the growth of local competitors serving specific markets.

Investments in research and development are important to Nordson’s long-term growth because they enable the Company to keep pace with changing customer and marketplace needs, and they help to sustain sales improvements year after year. The Company places strong emphasis on technology developments and improvements through its internal engineering and research teams. Research and development expenses were approximately $22,341,000 in fiscal 2003, compared with approximately $26,554,000 in fiscal 2002 and $27,701,000 in fiscal 2001.

Compliance with federal, state and local environmental protection laws during fiscal 2003 had no material effect on the Company’s capital expenditures, earnings, or competitive position. The Company also does not anticipate a material effect in 2004.

As of November 2, 2003, Nordson had 3,483 full-time and part-time employees, including 154 at the Company’s Amherst, Ohio facility represented by a collective bargaining agreement that expires on October 31, 2004. No material work stoppages have been experienced at any of the Company’s facilities.


(1)	Adhesive Dispensing and Nonwoven Fiber Systems

(2)	Coating and Finishing Systems

(3)	Advanced Technology Systems

The facilities listed above have adequate, suitable and sufficient capacity (production and non-production) to meet present and foreseeable demand for the Company’s products.

Several of these properties are pledged as security for industrial revenue bonds and mortgage notes payable.

Other properties at international subsidiary locations and at branch locations within the United States are leased. Lease terms do not exceed 25 years and generally contain a provision for cancellation with some penalty at an earlier date.

In addition, the Company leases equipment under various operating and capitalized leases. Information about leases is reported in Note 7 of Notes to Consolidated Financial Statements that can be found in Part II, Item 8 of this document.

The Company has been identified as a potentially responsible party (PRP) at a Wisconsin municipal landfill and has voluntarily agreed with other PRP’s to share costs associated with (1) a feasibility study and remedial investigation (“FS/RI”) for the site and (2) providing clean drinking water to the affected residential properties through completion of the FS/RI phase of the project. The FS/RI is expected to be completed in 2005. The Company is committing $700,000 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. Against this commitment, the Company has made payments of $325,000 through the end of 2003. The remaining amount of $375,000 is recorded in accrued liabilities in the November 2, 2003 Consolidated Balance Sheet. The total cost of the Company’s share for site remediation cannot be determined at this time, because the FS/RI is not expected to be completed until 2005. However, based upon current information, the Company does not expect that the costs associated with remediation will have a material effect on its financial condition or results of operations.

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 will have a material adverse effect on its financial condition or results of operations. The Company is not involved in any other legal proceedings that would be required to be disclosed pursuant to Item 103 of Regulation S-K.

The Company’s common shares are listed on The Nasdaq Stock Market’s National Market under the symbol NDSN. As of December 12, 2003, there were approximately 2,397 registered shareholders. The table below is a summary of dividends paid per common share, the range of market prices, and average price-earnings ratios with respect to common shares, during each quarter of 2003 and 2002. The price-earnings ratios reflect average market prices relative to trailing four-quarter earnings.

The Company’s annual report to the Securities and Exchange Commission (Form 10-K), quarterly reports and proxy statements are available at www.nordson.com. Copies of these reports may also be obtained free of charge by sending written requests to Barbara Price, Manager of Shareholder Relations, Nordson Corporation, 28601 Clemens Road, Westlake, Ohio 44145.


(b)	In 2002, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” and as a result no longer amortizes goodwill. Amounts represent net income without goodwill amortization.


(c)	Net income plus interest on long-term obligations net of income taxes as a percentage of total assets less current liabilities.


(f)	2002 includes an inventory write-down of $11.4 million, which is included in cost of sales.

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 on-going 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 are discussed below. On a regular basis, the Company reviews critical accounting policies with the Audit Committee of the Board of Directors.

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. Revenues from contracts with multiple element arrangements, such as those including both installation and services, are recognized as each element is earned based on objective evidence of the relative fair value of each element. Amounts received in excess of revenue recognized are included as deferred revenue in the accompanying balance sheets. Revenues deferred in 2003 were not material. 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. Cost estimates are updated on a quarterly basis. During 2003 and 2002, the Company recognized approximately $5 million and $20 million, respectively, of revenue under the percentage-of-completion method. The remaining revenues are recognized upon delivery.

Goodwill — Goodwill represents the excess of purchase price over the fair value of tangible and identifiable intangible net assets acquired. At November 2, 2003, goodwill represented approximately 43 percent of the Company’s total assets. The majority of the goodwill resulted from the acquisition of EFD, Inc. in 2001. In 2002, the Company adopted FASB Statement No. 142, “Goodwill and Other Intangible Assets,” which provides that goodwill should not be amortized but instead be tested for impairment annually at the reporting unit level. In accordance with No. 142, the Company completed a transitional goodwill impairment test that resulted in no impairment loss being recognized. Goodwill is tested for impairment on an annual basis and more often if indications of impairment exist. The estimated fair value of a reporting unit is determined by applying appropriate discount rates to estimated future cash flows and terminal value amounts for the reporting units. The results of the Company’s analyses indicated that no reduction of goodwill is required. In 2001, goodwill amortization was $15,446,000 ($11,243,000 on an after-tax basis, or $.34 per share).

Inventories — Inventories are valued at the lower of cost or market. Cost has been determined using the last-in, first-out method for 39 percent of the Company’s consolidated inventories at November 2, 2003, with the first-in, first-out method used for the remaining inventory. On an ongoing basis, the Company tests its inventory for technical obsolescence, as well as for future demand and changes in market conditions. The Company has historically maintained inventory reserves to reflect those conditions when the cost of inventory is not expected to be recovered. In the face of difficult economic conditions that accelerated the technical obsolescence of certain inventory and impacted the demand outlook for other inventory, the Company recognized an inventory write-down of $11.4 million in the fourth quarter of 2002 ($7.6 million on an after-tax basis, or $.23 per share). The addition of $11.4 million to the inventory obsolescence reserve brought the reserve balance to $23.1 million. During 2003, approximately $21.3 million of inventory was disposed of and charged against the reserve, and $2.2 million was added to the reserve. After a currency effect of $.5 million, the balance in the inventory obsolescence reserve was $4.5 million at November 2, 2003.

Pension Plans and Other Postretirement Medical Plan — The measurement of liabilities related to the Company’s pension plans and postretirement medical plan is based on management’s assumptions related to future factors including interest rates, return on pension plan assets, compensation increases and health care cost trend rates.

The weighted-average discount rate (based on AA quality fixed income investments) used to determine the present value of the Company’s aggregate pension plan obligation was 5.9 percent at November 2, 2003, compared to 6.5 percent at November 3, 2002. The average expected rate of return (long-term investment rate) on pension assets was decreased to 8.1 percent in 2003 from 8.6 percent in 2002. The assumed rate of compensation increases was reduced from 3.7 percent in 2002 to 3.3 percent in 2003 to reflect an inflationary outlook consistent with the discount and long-term investment yield assumptions.

Annual expense amounts are determined based on the discount rate used at the end of the prior year. Differences between actual and assumed investment returns on pension plan assets result in actuarial gains or losses which are amortized into expense over a period of years.

With respect to the postretirement medical plan, the discount rate used to value the benefit obligation was 6.25 percent at November 2, 2003, a decrease from 6.75 at November 3, 2002. The annual rate of increase in the per capita cost of covered benefits (the health care trend rate) is assumed to be 7.8 percent in 2004, decreasing gradually to 5.0 percent in 2008. 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:

Employees hired after January 1, 2002 are not eligible to participate in the postretirement medical plan.

The overall effect of the assumption changes above will be to increase pension and postretirement expenses in fiscal 2004 by approximately $2 million.

Financial Instruments — Assets, liabilities and commitments that are to be settled in cash and are denominated in foreign currencies are sensitive to changes in currency exchange rates. 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 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.

Warranties — The Company provides customers with a product warranty that requires the Company to repair or replace defective products within a specified period of time (generally one year) for the date of sale. An accrual is recorded for expected warranty costs for products shipped through the end of each accounting period. In determining the amount of the accrual, the Company relies primarily on historical warranty claims by product sold. At November 2, 2003, the warranty accrual was $3.0 million, while warranty costs for 2003 were $2.9 million.

Long-Term Incentive Compensation Plans (LTIP) — Under these plans, officers are awarded LTIP units if predetermined performance targets are met over a three-year period. The value of these units is based upon the share price of the Company’s stock at the end of the third year of each plan. Over the period of each plan, costs are accrued based on progress against performance targets along with changes in value of the Company’s stock. At November 2, 2003, the accrued liability for the 2002 and 2003 plans amounted to $4.1 million. The portion of these costs recognized in the income statement was $2.7 million for 2003 and $1.4 million for 2002. At this time, it is estimated that costs to be recognized in the 2004 income statement for the 2002 and 2003 plans as well as the plan commencing in 2004 will be $6.1 million.

Worldwide sales for 2003 were $667.3 million, an increase of 3 percent from 2002 sales of $647.8 million. A sales volume decline of 3 percent was more than offset by a 6 percent increase in revenue traced to favorable currency effects.

Sales within the adhesive segment increased 3 percent, with a 7 percent increase from currency effects offset by a 4 percent decline in volume. A drop-off in shipments of large engineered systems used in the production of nonwoven fabrics and in the assembly of durable goods accounted for virtually the entire volume decline. Advanced technology segment sales increased 7 percent, with volume up 4 percent and favorable currency effects contributing an additional 3 percent. Improved activity related to sales of plasma treatment systems and manual fluid dispensing systems to the electronics and medical industries as well as sales of U.V. curing systems to the graphic arts industry accounted for the higher volume within this segment. Coating and finishing segment revenue was down 1 percent in 2003. Sales volume was down 6 percent, offset by a 5 percent increase from favorable currency effects. The volume decline was influenced by lower engineered system sales in North America. It is estimated that the effect of pricing on total revenue was neutral relative to the prior year.

Nordson’s sales outside the United States accounted for 63 percent of total 2003 sales, compared with 57 percent for 2002. Sales volume decreased 11 percent in North America and 4 percent in Europe. Offsetting these decreases were increases of 17 percent in both Japan and the Pacific South regions. Volume was up in all segments in Japan, while Advanced Technology was primarily responsible for the increase in the Pacific South region.

Gross margins, expressed as a percentage of sales, were 54.8 percent in 2003 compared to 52.1 percent in 2002. In 2002, the Company recognized a pre-tax inventory write-down of $11.4 million. Excluding the effect of this write-down, the 2003 gross margin rate improved by 1.0 percent over 2002. Favorable currency effects accounted for approximately a 1.1 percent increase in the gross margin rate with the effect of product mix offsetting a portion of this improvement.

Selling and administrative expenses increased by 4.8 percent over 2002. Currency translation effects accounted for a 4.4 percent increase, with the balance of the increase traced to compensation adjustments and higher employee benefit costs. Selling and administrative expenses, excluding severance and restructuring costs, amounted to 44.2 percent of sales in 2003 compared to 43.5 percent of sales in 2002.

In light of the difficult economic environment over the last three years, the Company embarked on a number of cost reduction initiatives. Consistent with these initiatives, the Company recognized $2.0 million ($1.4 million on an after-tax basis, or $.04 per share) of severance and restructuring costs in 2003. No additional restructuring costs are expected in 2004.

Operating profit margins, expressed as a percentage of sales, were 10.3 percent in 2003 compared to 8.2 percent in 2002. Segment operating profit margins in 2003 and 2002, excluding corporate costs not allocated to segments were as follows:

The lower adhesive segment operating margin in 2003 compared to 2002 is traced primarily to absorption of fixed operating expenses related to a direct distribution organization in an environment where sales volume declined. In addition, higher initial manufacturing costs were incurred associated with the introduction of a new family of products. Operating margin increases in both the coating and finishing and the advanced technology segments are due to improved manufacturing cost absorption. The restructuring initiatives conducted over the last three years impacted all segments favorably.

In 2003, the Company recorded a charge of $375,000 in other expense. We have been identified as a potentially responsible party (PRP) at a Wisconsin municipal landfill and has voluntarily agreed with other PRP’s to share costs associated with (1) a feasibility study and remedial investigation (“FS/RI”) for the site and (2) providing clean drinking water to the affected residential properties through completion of the FS/RI phase of the project. The FS/ RI is expected to be completed in 2005. The Company is committing $700,000 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. Against this commitment, the Company has made payments of $325,000 through the end of 2003. The remaining amount of $375,000 is recorded in accrued liabilities in the November 2, 2003 Consolidated Balance Sheet.

Interest expense of $18.1 million decreased $3.6 million from 2002, due to lower borrowing levels and lower interest rates. Other income increased $714,000 in 2002 to $1,055,000 in 2003, mainly due to currency gains of $558,000 in 2003. The Company’s effective tax rate was 33.00 percent for both 2003 and 2002. Net income in 2003 was $35.2 million, or $1.04 per share on a diluted basis compared with $22.1 million, or $.66 per share on a diluted basis, in 2002. As noted above, 2002 included a pre-tax inventory write-down of $11.4 million, or $.23 per share.

In 2002, the Company adopted Financial Accounting Standard Board (FASB) Statements No. 141, “Business Combinations,” and No. 142, “Goodwill and Other Intangible Assets.” No. 141 requires that all business combinations be accounted for by the purchase method and that certain acquired intangible assets be recognized as assets apart from goodwill. No. 142 provides that goodwill should not be amortized but instead be tested for impairment annually at the reporting unit level. In accordance with No. 142, the Company completed a transitional goodwill impairment test that resulted in no impairment loss being recognized. The annual impairment test completed in 2003 indicated that no write-down was required. In 2001, goodwill amortization was $15,446,000 ($11,243,000 on an after-tax basis, or $.34 per share).

In 2002, the Company adopted FASB Statement of Financial 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 value 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. There was no impact on the Company’s consolidated financial position or results of operations as a result of the adoption of No. 143.

In 2002, the Company adopted FASB Statement of Financial 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. There was no impact on the Company’s consolidated financial position or results of operations as a result of the adoption of No. 144.

In 2003, the Company adopted FASB Statement No. 145, “Rescission of Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” This Statement eliminates the requirement that gains and losses on the early extinguishment of debt be classified as extraordinary items. It also provides guidance with respect to the accounting for gains and losses on capital leases that were modified to become operating leases. There was no impact on the Company’s consolidated financial position or results of operations as a result of the adoption of No. 145.

In June 2002, the FASB issued Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. During 2003, the Company recognized expense of $2.0 million related to severance payments to approximately 70 people in the Coating and Finishing and Advanced Technology segments in North America.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others.” This interpretation addresses the disclosures to be made by a guarantor in its interim and annual financial statements regarding its obligations under guarantees and clarifies the requirements related to the recognition of liabilities by a guarantor for obligations undertaken in issuing guarantees. The initial recognition and measurement provisions of the interpretation are applicable to guarantees issued or modified after December 31, 2002 and did not have a material effect on the Company’s financial statements. The disclosure requirements are effective for financial statements for periods ending after December 31, 2002 and are applicable for all outstanding guarantees subject to the interpretation. The Company has issued guarantees to two banks to support the short-term borrowing facilities of an unconsolidated Korean affiliate. One guarantee is for Korean Won Three Billion (approximately $2,535,000) secured by land and building and expires on July 31, 2004. The other guarantee is for $2,300,000 and expires on October 31, 2004. Under these arrangements, the Company could be required to fulfill obligations of the affiliate if the affiliate does not make required payments. No amount is recorded in the Company’s financial statements related to these guarantees.

In December 2002, the FASB issued Statement No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure an Amendment of FASB Statement No. 123.” No. 148 amends No. 123 to provide alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation. In addition, No. 148 amends the disclosure requirements of No. 123 to require more prominent disclosures in both annual and interim financial statements regarding the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The alternative methods of transition of No. 148 are effective for fiscal years ending after December 15, 2002. The disclosure provision of No. 148 is effective for interim periods beginning after December 15, 2002.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities.” This Interpretation addresses consolidation by business enterprises of variable interest entities, which possess certain characteristics. The interpretation requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities and results of operations of the variable interest entity must be included in the consolidated financial statements with those of the business enterprise. This interpretation applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. For variable interest entities created prior to January 31, 2003, this interpretation is effective for the first year or interim period beginning after March 15, 2004. The Company has not yet determined the impact of adoption on its consolidated financial position or results of operations.

In April 2003, the FASB issued Statement No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” No. 149 amends No. 133 by requiring that contracts with comparable characteristics be accounted for similarly and clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003 and must be applied prospectively. The adoption of No. 149 had no effect on the Company’s financial condition or results of operations.

In May 2003, the FASB issued Statement No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” No. 150 establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It must be applied prospectively by reporting the cumulative effect of a change in accounting principle for financial instruments created before the issuance date of No. 150 and still existing at the beginning of the interim period of adoption. The adoption of No. 150 had no effect on the Company’s financial condition or results of operations.

Worldwide sales for 2002 were $647.8 million, down 11 percent from 2001 sales of $731.4 million. Sales volume decreased 12 percent, which was offset by favorable currency effects of 1 percent due to the weaker dollar.

Sales volume in the Company’s adhesive dispensing systems segment decreased 4 percent. Increases in packaging sales volume were more than offset by lower sales of nonwoven systems in North America. Advanced technology segment volume was down 29 percent, primarily due to the continuing global slowdown in the semiconductor and electronics industries. Coating and finishing systems segment sales volume was down 13 percent, influenced significantly by lower engineered systems sales in North America. It is estimated that the effect of pricing on total revenues was neutral relative to the prior year.

Nordson’s sales outside the United States accounted for 57 percent of total 2002 sales, compared with 54 percent for 2001. Sales volume decreased in all four of Nordson’s geographic regions. Volume decreased 17 percent in North America, 3 percent in Europe, 15 percent in Japan and 9 percent in the Pacific South region. The slowdown in advanced technology and capital goods sectors was felt across all of these regions.

Gross margins, before restructuring charges and inventory write-downs, expressed as a percentage of sales were 53.8 percent in 2002, compared with 54.0 percent in 2001. A change in the mix of products sold, pricing pressures and higher indirect costs caused the lower margins. The Company recognized a fourth quarter inventory write-down of $11.4 million ($7.6 million on an after-tax basis, or $.23 per share). Gross margins, including restructuring charges and inventory write-downs, were 52.1 percent in 2002, down from 53.9 percent in 2001.

Selling and administrative expenses, excluding goodwill amortization and severance and restructuring costs, were 43.5 percent of sales in 2002 and 41.8 percent in 2001. Spending for 2002 decreased 7.9 percent as a result of the Company’s organizational restructuring and facility consolidations. As a result of adopting FASB Statement No. 142 at the beginning of 2002, the Company no longer amortizes goodwill. Goodwill amortization was $15,446,000 in 2001.

As a result of the continuing economic slowdown during 2002, the Company recognized $2.7 million ($1.8 million on an after-tax basis, or $.05 per share) of restructuring charges, consisting of severance and other costs associated with the combination of certain businesses. Of the total amount, $.2 million is included in cost of sales.

Worldwide operating profits, expressed as a percentage of sales before the effects of non-recurring charges, were 10.4 percent in 2002, compared with 10.1 percent for 2001. Segment operating profit percentages in 2002 and 2001, excluding corporate expenses that are not allocated to segments, were as follows:

Interest expense of $21.7 million decreased $7.8 million from 2001, primarily due to lower borrowing levels. Other income decreased $5.5 million from 2001, which included a gain of $5.1 million on the sale of real estate. Nordson’s effective tax rate was 33.00 percent in 2002 compared with a rate of 34.75 percent in 2001.

The Company has been identified as a potentially responsible party (PRP) at a Wisconsin municipal landfill and has voluntarily agreed with other PRP’s to share costs associated with a feasibility study and remedial investigation (“FS/ RI”) for the site, with the Company committing up to $325,000 toward the FS/ RI. This amount has been recorded in the Company’s financial statements.

Net income in 2002 was $22.1 million, or $.66 per share on a diluted basis compared with $24.6 million, or $.74 per share on a diluted basis, in 2001. Excluding goodwill amortization, net income for 2001 was $35.9 million, or $1.08 per share. Included in 2002 were inventory write-downs of $11.4 million, or $.23 per share.

Cash generated by operations in 2003 was $87.5 million, compared to $130.4 million in 2002. The Company generated $7.2 million of cash in 2003 through continued focus on management of operating working capital. Further improvements were achieved in inventory turnover and days sales outstanding in accounts receivable. An increase in accounts receivable due to higher fourth quarter sales resulted in a use of cash of $6.9 million for the year, compared to 2002 when receivables decreased by over $32 million. Inventory reductions generated over $12.5 million of cash in 2003 compared to $41.6 million in 2002. An increase in accrued liabilities generated $5.8 million of cash. This increase was largely due to higher incentive compensation accruals. A reduction in deferred taxes in 2003 related to the 2002 inventory write-down impacted cash from operating activities favorably by $7.6 million.

Cash used by investing activities was $6.8 million in 2003. Capital expenditures, which were concentrated on information systems and production equipment, were $7.6 million.

Cash used in financing activities in 2003 was $80.6 million. The Company repaid $64.8 million of notes payable and long-term debt in 2003, bringing the debt to equity ratio down from 1.1 at November 3, 2002 to .80 at November 2, 2003. Dividend payments to shareholders totaled $20.4 million in 2003, increasing 6 percent on a per-share basis from 2002. Issuance of common stock, primarily related to the exercise of stock options, generated $8.9 million of cash.

In 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, real estate with a net book value of $10.3 million, cash and other current liabilities. Prior to March, the Company leased the property under an operating lease with a partnership in which the Company was a partner.

The following table summarizes the Company’s obligations as of November 2, 2003:

Nordson has various lines of credit with both domestic and foreign banks. At November 2, 2003, these lines totaled $317 million, of which $258 million was unused. Included in the total amount of $317 million is a $250 million facility with a group of banks that expires in 2006. There are three covenants that the Company must meet under this facility. The first covenant limits the amount of additional debt the Company can incur. At the end of 2003, the Company could have incurred approximately $95 million of debt under this covenant. The second covenant requires EBIT (as defined in the credit agreement) to be at least three times interest expense. The actual interest coverage was 4.35 for 2003. The final covenant requires the Company’s shareholders’ equity to be at least $237 million at the end of 2003. Actual shareholders’ equity was $300 million. The Company was in compliance with all debt covenants at November 2, 2003.

The Company has issued guarantees to two banks to support the short-term borrowing facilities of an unconsolidated Korean affiliate. One guarantee is for Korean Won Three Billion (approximately $2,535,000) secured by land and building and expires on July 31, 2004. The other guarantee is for $2,300,000 and expires on October 31, 2004. Under these arrangements, the Company could be required to fulfill obligations of the affiliate if the affiliate does not make required payments. No amount is recorded in the Company’s financial statements related to these guarantees.

The Company believes that the combination of present capital resources, internally generated funds, and unused financing sources are more than adequate to meet cash requirements for 2004. There are no significant restrictions limiting the transfer of funds from international subsidiaries to the parent Company.

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. 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 will be funded using the Company’s working capital. No shares were purchased under this program in 2003.

Sales volume for the fourth quarter of 2003 increased one percent from 2002, compared to decreases for the first three quarters. In addition, backlog at the end of 2003 was up close to $16 million from the beginning of the year. The Company’s new product and business development programs, aided by a rebound in the global manufacturing sector and the weakening dollar provides optimism for 2004.

The impact of changes in foreign currency exchange rates on sales and operating results cannot be precisely measured because of fluctuating selling prices, sales volume, product mix and cost structures in each country where Nordson operates. As a rule, a weakening of the U.S. dollar relative to foreign currencies has a favorable effect on sales and net income, while a strengthening of the U.S. dollar has a detrimental effect.

In 2003 compared with 2002, the U.S. dollar was generally weaker against foreign currencies. If 2002 exchange rates had been in effect during 2003, sales would have been approximately $37.7 million lower and third-party costs would have been approximately $22.4 million lower. In 2002 compared with 2001, the U.S. dollar was also generally weaker against foreign currencies. If 2001 exchange rates had been in effect during 2002, sales would have been approximately $2.2 million lower and third-party costs would have been approximately $1.5 million lower. These effects on reported sales do not include the impact of local price adjustments made in response to changes in currency exchange rates.

The Company operates internationally and enters into transactions denominated in foreign currencies. Consequently, the Company is subject to market risk arising from exchange rate movements between the dates foreign currencies are recorded and the dates they are settled. Nordson regularly uses foreign exchange contracts to reduce its risks related to most of these transactions. These contracts, primarily Euro and Yen, usually have maturities of 90 days or less, and generally require the Company to exchange foreign currencies for U.S. dollars at maturity, at rates stated in the contracts. Gains and losses from changes in the market value of these contracts offset foreign exchange losses and gains, respectively, on the underlying transactions. The balance of transactions denominated in foreign currencies are designated as hedges of the Company’s net investments in foreign subsidiaries or are intercompany transactions of a long-term investment nature. As a result of the Company’s use of foreign exchange contracts on a routine basis to reduce the risks related to nearly all of the Company’s transactions denominated in foreign currencies as of November 2, 2003, the Company did not have a material foreign currency risk related to its derivatives or other financial instruments.

Note 10 to the financial statements contains additional information about the Company’s foreign currency transactions and the methods and assumptions used by the Company to record these transactions.

The Company finances a portion of its operations with short-term and long-term borrowings and is subject to market risk arising from changes in interest rates for most of its long-term debt.

The tables that follow present principal cash flows and related weighted-average interest rates by expected maturity dates of fixed-rate, long-term debt.

The tables that follow present principal cash flows and related weighted-average interest rates by expected maturity dates of variable-rate, long-term debt.

Included in the table above is long-term debt in the amount of Japanese Yen 200 million. This debt was converted from fixed rate to variable rate through an interest rate swap agreement, as disclosed in Note 10 to the Company’s financial statements. The weighted-average interest rate of the Company’s variable-rate debt was .97% at the end of fiscal 2003, compared to 1.3% at the end of 2002. A 1% increase in interest rates would have resulted in approximately $157,000 of additional interest expense in fiscal 2003.

The company also has variable-rate notes payable. The weighted average interest rate of this debt was 2.5% at the end of 2003, compared to 3.0% at the end of 2002. A 1% increase in interest rates would have resulted in additional interest expense of approximately $834,000 on the notes payable in fiscal 2003.

Inflation affects profit margins because the ability to pass cost increases on to customers is restricted by the need for competitive pricing. Although inflation has been modest in recent years and has had no material effect on the years covered by these financial statements, Nordson continues to seek ways to minimize the impact of inflation. It does so through focused efforts to raise its productivity.

The Five-Year Summary in Item 6 documents Nordson’s historical financial trends. Over this period, the world’s economic conditions fluctuated significantly. Nordson’s solid performance is attributed to the Company’s participation in diverse geographic and industrial markets and its long-term commitment to develop and provide quality products and worldwide service to meet customers’ changing needs.

Safe Harbor Statements Under the Private Securities Litigation Reform Act of 1995

Statements in this report pertaining to future periods 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.

The accompanying notes are an integral part of the consolidated financial statements.

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 in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes. Actual amounts could differ from these estimates.

Fiscal year — The fiscal year for the Company’s domestic operations ends on the Sunday closest to October 31 and contained 52 weeks in 2003, 53 weeks in 2002 and 52 weeks in 2001. To facilitate reporting of consolidated accounts, the fiscal year for most of the Company’s international operations ends on September 30.

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. Revenues from contracts with multiple element arrangements, such as those including both installation and services, are recognized as each element is earned based on objective evidence of the relative fair value of each element. Revenues deferred in 2003 were not material. Amounts received in excess of revenue recognized are included as deferred revenue in the accompanying balance sheets. 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. Cost estimates are updated on a quarterly basis. During 2003 and 2002, the Company recognized approximately $5 million and $20 million, respectively, of revenue under the percentage-of-completion method. The remaining revenues are recognized upon delivery.

Shipping and handling costs — The Company records amounts billed to customers for shipping and handling as revenue. Shipping and handling expenses are included in cost of sales.

Advertising costs — Advertising costs are expensed as incurred and amounted to $4,195,000 in 2003 ($3,780,000 in 2002 and $5,421,000 in 2001).

Research and development — Research and development costs are expensed as incurred and amounted to $22,341,000 in 2003 ($26,554,000 in 2002 and $27,701,000 in 2001).

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. Options whose exercise price is higher than the average market price are excluded from the calculation of diluted earnings per share because the effect would be
anti-dilutive.

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 November 2, 2003, all contractual maturities were within one year or could be callable within one year. The Company’s marketable securities are classified as available for sale and recorded at quoted market prices that approximate cost.

Allowance for doubtful accounts — The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The amount of the allowance is determined principally on the basis of past collection experience and known factors regarding specific customers. Accounts are written off against the allowance when it becomes evident that collection will not occur.

Inventories — Inventories are valued at the lower of cost or market. Cost has been determined using the last-in, first-out (LIFO) method for 39 percent of consolidated inventories at November 2, 2003 and 38 percent at November 3, 2002. The first-in, first-out (FIFO) method is used for all other inventories. Liquidations decreased cost of goods sold by $63,000 in 2003 and increased cost of sales by $573,000 in 2002. Consolidated inventories would have been $8,790,000 and $7,122,000 higher than reported at November 2, 2003 and November 3, 2002, 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. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Plant and equipment are depreciated for financial reporting purposes using the straight-line method over the estimated useful lives of the assets or, in the case of property under capital leases, over the terms of the leases. Leasehold improvements are depreciated over the term of the lease or their useful lives, which is shorter. Useful lives are as follows:

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. No interest was capitalized in 2003.

Goodwill and intangible assets — As discussed in Notes 2 and 17, the Company adopted FASB Statements No. 141 and No. 142 at the beginning of 2002. Goodwill assets are no longer amortized but are subject to impairment testing. Prior to 2002, goodwill was amortized using the straight-line method over the periods of expected benefit, which ranged from five to 35 years. Other intangible assets, which consist primarily of core/developed technology, non-compete agreements and patent costs, continue to be amortized over their useful lives. At present, these lives range from five to 30 years.

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 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 adjustments are included in net income.

Comprehensive income — Accumulated other comprehensive loss at November 2, 2003 consisted of net foreign currency translation adjustment credits of $2,508,000 offset by a minimum pension liability adjustment of $22,804,000. Accumulated other comprehensive loss at November 3, 2002 consisted of net foreign currency translation adjustment debits of $10,147,000 and a minimum pension liability adjustment of $17,171,000.

Warranties — The Company offers warranty to its customers depending on the specific product and terms of the customer purchase agreement. Most of the Company’s product warranties are customer specific. A typical warranty program requires that the Company repair or replace defective products within a specified time period from the date of sale. The Company records an estimate for future warranty-related costs based on actual historical return rates. Based on analysis of return rates and other factors, the adequacy of the Company’s warranty provisions are adjusted as necessary. The liability for warranty costs is included in other current liabilities in the Consolidated Balance Sheet.

Following is reconciliation (in thousands of dollars) of the product warranty liability for 2003:

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others.” This interpretation addresses the disclosures to be made by a guarantor in its interim and annual financial statements regarding its obligations under guarantees and clarifies the requirements related to the recognition of liabilities by a guarantor for obligations undertaken in issuing guarantees. The initial recognition and measurement provisions of the interpretation are applicable to guarantees issued or modified after December 31, 2002 and did not have a material effect on the Company’s financial statements. The disclosure requirements, including those related to product warranties, are effective for financial statements for periods ending after December 31, 2002 and are applicable for all outstanding guarantees subject to the interpretation. As discussed in Note 9, the Company has issued guarantees to two banks to support the short-term borrowing facilities of an unconsolidated Korean affiliate.

The Company accounts for its stock option plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees.” No stock option expense is reflected in net income, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The table in Note 12 shows pro forma information regarding net income and earnings per share as if the Company had accounted for stock options granted since 1996 under the fair value method.

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 2003, 2002 and 2001 was approximately $4,084,000, $3,712,000 and $4,254,000, respectively.

Pension and other postretirement plans — The Company has various pension plans that 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. Employees hired after January 1, 2002 are not eligible to participate in this plan. The plan provides medical and life insurance benefits. The plan is contributory; with retiree contributions 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:

Benefit obligations exceeded plan assets for all pension plans at November 2, 2003 and November 3, 2002.

Net pension and other postretirement benefit costs include the following components:

For pensions, the actuarial value of projected benefit obligations at the end of 2003 and 2002 was determined using a weighted-average discount rate of 5.9 and 6.5 percent, respectively, and a rate of increase in future compensation levels of 3.3 and 3.7 percent, respectively. The expected long-term rate of return on plan assets was 8.1 percent for 2003 and 8.6 percent for 2002.

Plan assets consist primarily of stocks and bonds. At November 2, 2003, the domestic pension plans held 135,000 shares of the Company’s stock with a market value of $3,741,000. At November 3, 2002, they held 200,000 shares of the Company’s stock with a market value of $5,182,000. The plans received dividends on the Company’s stock of $75,000 in 2003 and $114,000 in 2002.

For other postretirement benefits, the discount rate used in determining the accumulated postretirement benefit obligation at the end of 2003 and 2002 was 6.25 percent and 6.75 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 7.8 percent in 2004, decreasing gradually to 5.0 percent in 2008.

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:

The reconciliation of the United States statutory federal income tax rate to the worldwide consolidated effective tax rate follows:

The extraterritorial income exclusion allows a portion of certain income from export sales of goods manufactured in the U.S. to be excluded from taxable income. The FSC Repeal and Extraterritorial Income Exclusion Act of 2000 replaced the foreign sales corporation exemption with the extraterritorial income exclusion.

Earnings before income taxes of international operations, which are calculated before intercompany profit elimination entries, were $25,992,000, $27,038,000 and $25,699,000 in 2003, 2002 and 2001, respectively. Deferred income taxes are not provided on undistributed earnings of international subsidiaries that are intended to be permanently invested in those operations. These undistributed earnings aggregated approximately $69,618,000 and $57,491,000 at November 2, 2003 and November 3, 2002, 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:

At November 2, 2003, the Company had $11,415,000 of tax credit carryforwards. Of that total, $8,125,000 will expire in years 2004 through 2007, $934,000 will expire in years 2021 through 2023, and $2,356,000 has no expiration date. The net change in the valuation allowance was $508,000 in 2003 and $7,617,000 in 2002. The valuation allowance of $8,125,000 at November 2, 2003 relates to tax credits that may expire before being realized.

The Company has two incentive compensation plans for executive officers. The Compensation Committee of the Board of Directors, composed of independent directors, approves participants in the plans and payments under the plans.

The annual cash bonus plan awards are based upon corporate and individual performance and are calculated as a percentage of base salary for each executive officer. In making awards under the bonus plan for any particular year, the Committee may, however, choose to modify targets, change payment levels or otherwise exercise discretion to reflect the external economic environment and individual or Company performance. Compensation expense attributable to this plan was $3,684,000 in 2003, $1,100,000 in 2002, and $242,000 in 2001.

Under the long-term incentive compensation plan, officers receive cash awards based solely on corporate performance targets over three-year performance periods. Cash awards vary if predetermined threshold, target and maximum performance levels are achieved at the end of a performance period. No payout will occur unless the Company achieves certain threshold performance objectives. The Committee may, however, choose to modify targets, change payment levels or otherwise exercise discretion to reflect the external economic environment and individual or Company performance. Compensation expense attributable to this plan was $2,653,000 in 2003, $1,406,000 in 2002, and zero in 2001.

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.

Rent expense for all operating leases was approximately $10,154,000 in 2003, $10,611,000 in 2002, and $10,697,000 in 2001.

Assets held under capitalized leases and included in property, plant and equipment are as follows:

At November 2, 2003, future minimum lease payments under non-cancelable capitalized and operating leases are as follows:

Included in the domestic available amount above is a $250 million revolving credit agreement with a group of banks that began in 2001 and expires in 2006. 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.

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 had an original weighted-average life of 6.5 years at the time of issuance in 2001.

Five-year term loan — This loan is payable in five annual installments of $8,000,000 beginning on October 31, 2001 with interest payable quarterly. The interest rate, which can be adjusted based on the Company’s performance, was 8.02 percent at November 2, 2003.

Floating rate option notes — As discussed in Note 14, during 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. These notes were issued to finance the land and building by the partnership. The notes are payable in annual installments through 2010, with interest payable monthly at a variable rate determined weekly. The interest rate was 1.14 percent at November 2, 2003. The notes are secured by a $10,527,000 irrevocable letter of credit.

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 1.15 percent at November 2, 2003. The bonds are secured by a $3,780,000 standby letter of credit.

Leasehold improvements financing note — This note partially funded the leasehold improvements for a sales and demonstration facility in Japan built in 1996. The principal balance is Japanese ¥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 November 2, 2003 the Company’s effective borrowing rate was negative .29 percent.

Annual maturities — The annual maturities of long-term debt for the five fiscal years subsequent to November 2, 2003 are as follows: $9,097,000 in 2004; $13,434,000 in 2005; $47,352,000 in 2006; $55,541,000 in 2007; and $25,602,000 in 2008.

Guarantees — The Company has issued guarantees to two banks to support the short-term borrowing facilities of an unconsolidated Korean affiliate. One guarantee is for Korean Won Three Billion (approximately $2,535,000) secured by land and building and expires on July 31, 2004. The other guarantee is for $2,300,000 and expires on October 31, 2004. Under these arrangements, the Company could be required to fulfill obligations of the affiliate if the affiliate does not make required payments. No amount is recorded in the Company’s financial statements related to these guarantees.

The Company enters into foreign currency forward contracts, which are derivative financial instruments, to reduce the risk of foreign currency exposures resulting from receivables, payables, intercompany receivables, intercompany payables and loans denominated in foreign currencies. The maturities of these contracts are usually less than 90 days. Forward contracts are marked to market each accounting period, and the resulting gains or losses are included in other income (expense) in the Consolidated Statement of Income. A loss of $105,000 was recognized from changes in fair value of these contracts for the year ended November 2, 2003. Gains of $130,000 and $146,000 were recognized for the years ended November 3, 2002 and October 28, 2001.

At November 2, 2003, the Company had outstanding forward exchange contracts that mature at various dates through January 2004. The following table summarizes, by currency, the Company’s forward exchange contracts at November 2, 2003 and November 3, 2002:

The Company also uses foreign denominated fixed-rate debt and intercompany foreign currency transactions of a long-term investment nature to hedge 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 November 2, 2003 and November 3, 2002, a net gain of $2,360,000 and a net loss of $308,000, 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 entered into an interest-rate swap which converts a Japanese ¥200 million leasehold improvement note from fixed rate debt to variable rate debt. The swap has been designated as a fair-value hedge. This derivative qualified for the short-cut method. The swap is recorded with a fair market value of $73,000 in other assets in the November 2, 2003 Consolidated Balance Sheet and $71,000 in the November 3, 2002 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 November 2, 2003, 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:

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.

Preferred — The Company has authorized 10,000,000 Series A convertible preferred shares without par value. No preferred shares were outstanding in 2003, 2002, or 2001.

Common — 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. At November 2, 2003 and November 3, 2002, there were 49,011,000 common shares issued. At November 2, 2003 and November 3, 2002, the number of outstanding common shares, net of treasury shares, was 34,035,000 and 33,614,000, respectively. Treasury shares are reissued using the first-in, first-out method.

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 2004, there were 1,191,000 shares available for grant in 2004.

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 that 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.

As discussed in Note 2, the Company accounts for its stock option plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees.” No stock option expense is reflected in net income, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table shows pro forma information regarding net income and earnings per share as if the Company had accounted for 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.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. 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 2003, 2002 and 2001.

Limited stock appreciation rights that become exercisable upon the occurrence of events that involve or may result in a change of control of the Company have been granted with respect to 5,955,000 shares.

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 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 2003, there were 58,000 restricted shares granted at a weighted-average fair value of $23.41 per share (4,488 and $24.17 in 2002 and 11,850 and $27.60 in 2001). Net amortization was $575,000 in 2003 ($294,000 in 2002 and $316,000 in 2001).

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 2003, 2002, and 2001.

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 November 2, 2003, there were 87,549,000 shares reserved for future issuance through the exercise of outstanding options or rights, including 81,055,000 shares under the shareholder rights plan.

During 2003, the Company recognized severance and restructuring costs of $2.0 million ($1.4 million after tax, or $.04 per share), primarily related to severance payments to approximately 70 people in the Coating and Finishing and Advanced Technology segments in North America. At November 2, 2003, $183,000 was unpaid.

In the face of difficult economic conditions during 2002 that accelerated the technical obsolescence of certain inventory and impacted the demand for other inventory, the Company recognized an inventory write-down in the fourth quarter of 2003 of $11.4 million ($7.6 million on an after-tax basis, or $.23 per share). This amount was recorded in cost of sales. The addition of $11.4 million to the inventory obsolescence reserve brought the reserve balance to $23.1 million. During 2003, approximately $21.3 million of inventory was disposed of and charged against the reserve, leaving a balance of $1.8 million in this reserve at November 2, 2003.

Also, during 2002, the Company recognized severance and restructuring costs of $2.7 million ($1.8 million on an after-tax basis, or $.05 per share). Of this amount, $2.5 million related to workforce reduction actions involving approximately 130 people. This amount was recorded below selling and administrative expenses in the Consolidated Statement of Income. The remaining amount of $.2 million related to the combination of two of the Company’s businesses and was included in cost of sales. Of the total amount, $.7 million was unpaid at November 3, 2002 and paid in 2003. Total severance, restructuring and inventory write-down costs in 2002 were $14.1 million ($9.4 million on an after-tax basis, or $.28 per share).

During 2001, the Company recognized severance and restructuring costs of $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. 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, $1.0 million was unpaid at November 3, 2002 and paid in 2003.

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 goodwill. Operating results of acquisitions are included in the Consolidated Statement of Income from the respective dates of acquisition.

In February 2002, the Company acquired a distributor of EFD equipment for $1,223,000.

Assuming these acquisitions had taken place at the beginning of 2001, pro forma results would not have been materially different.

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 cost of this acquisition was $281,183,000, with the majority of the purchase financed with short-term credit facilities. Internally generated cash flow of the Company and EFD, Inc. are being 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 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. Segment operating profit excludes severance and restructuring charges, inventory write-downs, goodwill amortization, general corporate expenses, interest income (expense), investment income (net) and other income (expense). These items 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.

Nordson products are used in a diverse range of industries, including appliance, automotive, bookbinding, circuit board assembly, electronics, food and beverage, furniture, medical, metal finishing, nonwoven products, packaging, semiconductor and telecommunications. Nordson sells its products primarily through a direct, geographically dispersed sales force.

No single customer accounted for more than 5 percent of the Company’s sales in 2003, 2002, or 2001.


(a)	Includes $2.0 million of severance and restructuring charges in 2003, $14.1 million of severance and restructuring charges and inventory write-downs in 2002 and $14.0 million of severance and other restructuring charges in 2001. Also includes $15.4 million of goodwill amortization 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:


(a)	Net external sales in the United States for 2003, 2002 and 2001 were $246.6 million, $280.3 million, and $339.5 million, respectively.


(b)	Long-lived assets in the United States for 2003, 2002 and 2001 were $94.0 million, $98.7 million, and $112.7 million, respectively.

A reconciliation of total segment operating income to total consolidated income before income taxes is as follows:

A reconciliation of total assets for reportable segments to total consolidated assets is as follows:

In 2002, the Company adopted FASB Statements No. 141, “Business Combinations,” and No. 142, “Goodwill and Other Intangible Assets.” No. 141 requires that all business combinations be accounted for by the purchase method and that certain acquired intangible assets be recognized as assets apart from goodwill. No. 142 provides that goodwill should not be amortized but instead be tested for impairment annually at the reporting unit level. In accordance with No. 142, the Company completed a transitional goodwill impairment test that resulted in no impairment loss being recognized. Goodwill is tested for impairment on an annual basis and more often if indications of impairment exist. Estimates of future cash flows, discount rates and terminal value amounts are used to determine the estimated fair value of the reporting units. The results of the Company’s analyses indicated that no reduction of goodwill is required. Goodwill amortization expense for 2001 was $15,446,000 ($11,243,000 after-tax, or $.34 per share).

The following table reflects the consolidated results adjusted as though the adoption of No. 142 occurred as of the beginning of fiscal 2001:

Changes in the carrying amount of goodwill for 2003 by operating segment are as follows:

Information regarding the Company’s intangible assets subject to amortization is as follows:

At November 2, 2003, $2,152,000 of intangible assets related to a minimum pension liability for the Company’s pension plans were not subject to amortization. The amount at November 3, 2002 was $2,461,000.

Amortization expense for 2003 and 2002 was $1,369,000 and $1,201,000, respectively. Estimated amortization expense for each of the five succeeding fiscal years is as follows:

Domestic operations report results using four 13-week quarters, except for the fourth quarter of 2002, which contained 14 weeks. International subsidiaries report results using calendar quarters. The sum of the per-share amounts for the four quarters of 2002 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 2003, the Company recognized severance and restructuring pre-tax charges of $22,000 in the first quarter ($15,000 after tax), $1,446,000 in the second quarter ($969,000 after-tax), $157,000 in the third quarter ($105,000 after-tax), and $403,000 in the fourth quarter ($270,000 after-tax).

During 2002, the Company recognized severance and restructuring pre-tax charges of $1,005,000 in the second quarter ($673,000 after-tax), $736,000 in the third quarter ($493,000 after-tax) and $949,000 in the fourth quarter ($636,000 after-tax). During the fourth quarter, the Company recognized a pre-tax charge of $11,388,000 ($7,630,000 after-tax) related to inventory write-downs.

The Company is involved in pending or potential litigation regarding environmental, product liability, patent, contract, employee and other matters arising from the normal course of business. Including the environmental matter discussed below, it is the Company’s opinion, after consultation with legal counsel, that resolutions of these matters are not expected to result in a material effect on its financial condition, quarterly or annual operating results, and cash flows.

Environmental — The Company has been identified as a potentially responsible party (PRP) at a Wisconsin municipal landfill and has voluntarily agreed with other PRP’s to share costs associated with (1) a feasibility study and remedial investigation (“FS/ RI”) for the site and (2) providing clean drinking water to the affected residential properties through completion of the FS/ RI phase of the project. The FS/ RI is expected to be completed in 2005. The Company is committing $700,000 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. Against this commitment, the Company has made payments of $325,000 through the end of 2003. The remaining amount of $375,000 is recorded in accrued liabilities in the November 2, 2003 Consolidated Balance Sheet. The total cost of the Company’s share for site remediation cannot be determined at this time, because the FS/ RI is not expected to be completed until 2005. However, based upon current information, the Company does not expect that the costs associated with remediation will have a material effect on its financial condition or results of operations.

We have audited the accompanying consolidated balance sheets of Nordson Corporation as of November 2, 2003 and November 3, 2002, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended November 2, 2003. Our audits also included the financial statement schedules listed in the Index at Item 15(a)(2) and (d). These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Nordson Corporation at November 2, 2003 and November 3, 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended November 2, 2003 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedules, when taken as a whole, present fairly in all material respects the information set forth therein.

As discussed in Notes 2 and 17 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142 in fiscal 2002.

An evaluation was performed under the supervision and with the participation of the Company’s management, including its Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, of the effectiveness of the Company’s disclosure controls and procedures as of November 2, 2003. Based on that evaluation, the Company’s management, including its CEO and CFO, have concluded that the Company’s disclosure controls and procedures are effective to ensure 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. There have been 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 fiscal year ended November 2, 2003 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company incorporates herein by reference the information appearing under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” of the Company’s definitive Proxy Statement for the 2004 Annual Meeting. Information regarding the Company’s audit committee financial expert is incorporated by reference to the caption “Election of Directors” of the definitive Proxy Statement for the 2004 Annual Meeting.

Executive officers of the Company serve for a term of one year from date of election to the next organizational meeting of the Board of Directors and until their respective successors are elected and qualified, except in the case of death, resignation or removal. Information concerning executive officers of the Company is contained in Part I of this report under the caption “Executive Officers of the Company.”

The Company has adopted a code of ethics for all employees and directors, including the principal executive officer, other executive officers, principal finance officer and other finance personnel. A copy of the code of ethics is available free of charge on the Company’s website at www.nordson.com. All material changes to the code will be posted to the website.

The Company incorporates herein by reference the information appearing under the caption “Compensation of Directors,” and information pertaining to compensation of executive officers appearing under the captions “Summary Compensation Table,” “Option/ SAR Grants in Last Fiscal Year,” “Long-Term Incentive Compensation,” “Aggregated Option/ SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/ SAR,” “Salaried Employees’ Pension Plan,” and “Excess Defined Benefit Pension Plan and Excess Defined Contribution Retirement Plan” in the Company’s definitive Proxy Statement for the 2004 Annual Meeting.

The Company incorporates herein by reference the information appearing under the caption “Ownership of Nordson Common Shares” in the Company’s definitive Proxy Statement for the 2004 Annual meeting. The Equity Compensation Table is included under Item 5.

The Company incorporates herein by reference the information appearing under the caption “Agreements with Officers and Directors” in the Company’s definitive Proxy Statement for the 2004 Annual Meeting. There are no other transactions that require disclosure pursuant to Item 404 of Regulation S-K.

William D. Ginn, a director of the Company, is Of Counsel to Thompson Hine LLP, a law firm that has in the past provided and continues to provide legal services to the Company.

The Company incorporates herein by reference the information appearing under the caption “Independent Auditors” in the Company’s definitive Proxy Statement for the 2004 Annual Meeting.

No other consolidated financial statement schedules are presented because the schedules are not required, because the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements, including the notes thereto.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	By: /s/ PETER S. HELLMAN

	Peter S. Hellman
	Executive Vice President, Chief Financial and
	Administrative Officer

	/s/ NICHOLAS D. PELLECCHIA

	Nicholas D. Pellecchia
	Vice President, Finance and Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


*	Indicates management contract or compensatory plan, contract or arrangement in which one or more directors and/or executive officers of Nordson Corporation may be participants

59 EX-4.B 3 l04976aexv4wb.txt EX-4-B SECOND RESTATED RIGHTS AGREEMENT Exhibit 4-b - -------------------------------------------------------------------------------- NORDSON CORPORATION AND NATIONAL CITY BANK, RIGHTS AGENT SECOND RESTATED RIGHTS AGREEMENT Dated as of May 21, 2003 - -------------------------------------------------------------------------------- TABLE OF CONTENTS

ii INDEX OF DEFINED TERMS

iii SECOND RESTATED RIGHTS AGREEMENT This Agreement, dated as of May 21, 2003, between Nordson Corporation, an Ohio corporation (the "Company"), and National City Bank, a national banking association organized and existing under the laws of the United States (the "Rights Agent"), amends and restates the Restated Rights Agreement, dated as of November 7, 1997, between the Company and the Rights Agent. The Board of Directors of the Company has authorized and declared a dividend consisting of one right (a "Right") for each Common Share with a par value of $1.00 of the Company outstanding on September 9, 1988 (the "Record Date"), and has authorized the issuance of one Right in respect of each Common Share of the Company issued between the Record Date and the earlier of the occurrence of a Shares Acquisition Date, the Expiration Date, or the Final Expiration Date (as such terms are hereinafter defined), including Common Shares that are treasury shares as of the Record Date and subsequently become outstanding. Each Right initially represents the right to purchase one Common Share of the Company. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: (a) An "Acquiring Person" means any Person that, together with all Affiliates and Associates of such Person, is the Beneficial Owner of 15% or more of the Common Shares of the Company then outstanding; provided that, (w) an Acquiring Person 1 shall not include the Company, any Subsidiary, any employee benefit plan or employee stock ownership plan of the Company or of any Subsidiary, or any Person organized, appointed, or established by the Company or any Subsidiary for or pursuant to the terms of any such plan, (x) a Person shall not be deemed to have become an Acquiring Person solely as a result of a reduction in the number of Common Shares outstanding, unless subsequent to such reduction such Person, or any Affiliate or Associate of such Person, becomes the Beneficial Owner of any additional Common Shares other than as a result of a stock dividend, stock split, or similar transaction effected by the Company in which all shareholders are treated equally, (y) for purposes of determining whether Eric T. Nord or Evan W. Nord, together with each of their Affiliates or Associates, is the Beneficial Owner of 15% or more of the Common Shares then outstanding, the Common Shares then held by the Walter G. Nord Trust, by the Nord Family Foundation, and by the Eric and Jane Nord Foundation shall be excluded; for purposes of determining whether the Walter G. Nord Trust, the Nord Family Foundation, or the Eric and Jane Nord Foundation, together with each of their Affiliates and Associates, is the Beneficial Owner of 15% or more of the Common Shares then outstanding, the Common Shares then held by Eric T. Nord and by Evan W. Nord shall be excluded; for purposes of determining whether the Nord Family Foundation, together with its Affiliates and Associates, is the Beneficial Owner of 15% or more of the Common Shares then outstanding, the Common Shares then held by the Eric and Jane Nord Foundation will be excluded; and, for purposes of determining whether the Eric and Jane Nord Foundation, together with its Affiliates and Associates, is the Beneficial Owner of 15% or more of the Common Shares then outstanding, the Common Shares then held by the Nord Family Foundation will be excluded, and (z) a Person will 2 not be deemed to be an Acquiring Person if the Person becomes the Beneficial Owner of more than 15% of the Common Shares inadvertently and, as soon as practicable after the Person learns about such beneficial ownership, divests a sufficient number of Common Shares so that the Person ceases to be the Beneficial Owner of more than 15% of the Common Shares. (b) An "Affiliate" and "Associate" have the respective meanings given them in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date hereof. (c) A Person is deemed to be the "Beneficial Owner" of, and is deemed to "beneficially own," any securities: (i) that such Person, or any of such Person's Affiliates or Associates, beneficially owns, directly or indirectly; (ii) that such Person, or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement, or understanding (whether or not in writing), upon the exercise of any conversion right, exchange right, other right, warrant, or option, or otherwise, except that a Person is not deemed to be the "Beneficial Owner" of, or to "beneficially own," (A) securities tendered pursuant to a tender offer or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange or (B) securities issuable upon exercise of these Rights; 3 (iii) that such Person, or any of such Person's Affiliates or Associates, has the right, directly or indirectly, to vote or dispose of pursuant to any agreement, arrangement, or understanding (whether or not in writing), except that a Person is not deemed to be the Beneficial Owner of, or to "beneficially own," any security under this subparagraph (iii) if the agreement, arrangement, or understanding to vote such security (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iv) that are beneficially owned, directly or indirectly, by any other Person with whom or which such Person, or any of such Person's Affiliates or Associates, has any agreement, arrangement, or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in subparagraph (iii) of this paragraph (c)), or disposing of any securities of the Company. Notwithstanding the foregoing, (x) a Person shall not be deemed to be the Beneficial Owner of, or to "beneficially own," any security if such beneficial ownership arises solely as a result of such Person's status as a "clearing agency," as defined in Section 3(a)(23) of the Exchange Act, and (y) a Person engaged in business as an underwriter of securities shall not be deemed to be the Beneficial Owner of, or to "beneficially own," any securities acquired through such Person's participation in good faith in an underwriting syndicate 4 pursuant to an agreement to which the Company is a party until expiration of 40 calendar days after the date on which such securities are acquired. (d) A "Business Day" means any day other than a Saturday, Sunday, or a day on which banking institutions in the State of Ohio are authorized or obligated by law or executive order to close. (e) The "close of business" on any given date means 5:00 P.M., Cleveland time, on such date. (f) "Common Shares" means the Common Shares with a par value of $1.00 of the Company and any shares other than Common Shares issued in a subdivision, combination, or reclassification of the Common Shares, for which an adjustment is made under Section 11(a)(i). (g) "Exercise Price" means the exercise price per share set forth in Section 11(a)(ii). (h) "Flip-in Event" means an event described in Section 11(a)(ii). (i) "Issuance" includes the issuance of authorized but unissued shares and the transfer of treasury shares. (j) A "Person" means any individual, corporation, business trust, partnership, or other organization. (k) "Preferred Shares" means Series B Convertible Preferred Shares of the Company with the express terms set forth in Exhibit A to this Agreement. (l) "Purchase Price" means the purchase price per share set forth in Section 7(b). 5 (m) The "Shares Acquisition Date" means the first date of public announcement by the Company or an Acquiring Person (by press release, filing made with the Securities and Exchange Commission, or otherwise) that a Person has become an Acquiring Person. (n) A "Subsidiary" means any corporation or other entity of which a majority of the voting power of the voting equity securities or other equity interests is owned, directly or indirectly, by the Company. Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment and hereby certifies that it complies with the requirements of the National Association of Securities Dealers Inc. and the New York Stock Exchange, Inc. (the "NYSE") governing transfer agents and registrars. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable. Any actions that may be taken by the Rights Agent pursuant to the terms of this Agreement may be taken by any such Co-Rights Agent. Section 3. Issue of Right Certificates. (a) Until the close of business on (i) the 20th calendar day after the occurrence of a Shares Acquisition Date or (ii) any earlier date designated by the Board of Directors of the Company (the earlier of these dates being herein referred to as the "Distribution Date"), the Rights will be evidenced (subject to the provisions of Section 3(b)) by the certificates for Common Shares registered in the names of the holders of the Common Shares (which certificates for Common Shares shall also be deemed to be Right certificates) and not by separate Right 6 certificates, and the Rights will be transferable only in connection with the transfer of the Common Shares on the transfer books of the Company maintained by the Company or its appointed transfer agent. As soon as practicable after the Distribution Date, the Rights Agent will send, by first-class, insured, postage prepaid mail, to each record holder of Common Shares as of the close of business on the Distribution Date at the address of such holder shown on the records of the Company, a Right certificate, in substantially the form of Exhibit B hereto ("Right Certificate"), evidencing one Right for each Common Share held of record as of the close of business on the Distribution Date. As of the close of business on the Distribution Date, the Rights will be evidenced solely by such Right Certificates. (b) As soon as practicable after the date of this Agreement, the Company will send a copy of a Summary of Rights to Purchase Common Shares, in substantially the form attached hereto as Exhibit C (the "Summary of Rights") to each record holder of Common Shares. Until the Distribution Date (or the earlier redemption or expiration of the Rights), the Rights will be evidenced by the certificates for the associated Common Shares. Until the Distribution Date (or the earlier redemption or expiration of the Rights), the surrender for transfer of any of the certificates for outstanding Common Shares, with or without a copy of the Summary of Rights, shall also constitute the surrender for transfer of the Rights associated with the Common Shares represented by such certificate. (c) Rights shall be issued in respect of all Common Shares issued or surrendered for transfer or exchange after the Record Date but prior to the earlier of the occurrence of a Shares Acquisition Date, the Expiration Date, or the Final Expiration Date 7 (as such terms are defined in Section 7). Certificates representing Common Shares issued or surrendered for transfer or exchange after the Record Date but prior to the earlier of the Distribution Date, the Expiration Date, or the Final Expiration Date shall have impressed on, printed on, written on, or otherwise affixed to them the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Restated Rights Agreement between Nordson Corporation and a Rights Agent, as amended from time to time (the "Restated Rights Agreements"), the terms of which are hereby incorporated in this certificate by reference and a copy of which is on file at the principal executive offices of Nordson Corporation. Under certain circumstances, as set forth in the Restated Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Nordson Corporation will mail to the holder of this certificate a copy of the Restated Rights Agreement (as in effect on the date of mailing) without charge promptly after receipt of a written request therefor. Under certain circumstances, Rights that are or were beneficially owned by an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Restated Rights Agreement) and any subsequent holder of such Rights may become null and void. Until the Distribution Date, the Rights associated with the Common Shares represented by certificates containing the foregoing legend shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the surrender for transfer of the Rights associated with the Common Shares represented by such certificate. Section 4. Form of Right Certificates. (a) Each Right Certificate (and the forms of assignment and of election to purchase shares to be printed on the reverse of the Right Certificate) shall be substantially the same as Exhibit B hereto and may have such marks of identification or designation and such legends, summaries, or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, as may be required to comply with any applicable law, with any rule or regulation made pursuant thereto, or with any rule or regulation of any stock 8 exchange on which the Rights may from time to time be listed or of any association on which the Rights may from time to time be authorized for quotation, or to conform to usage. Subject to the provisions of Section 21, the Right Certificates, whenever issued, shall be dated as of the Record Date and, on their face, shall entitle the holders thereof to purchase such number of Common Shares of the Company as shall be set forth therein (or, at the close of business on the 20th calendar day following the occurrence of a Shares Acquisition Date, two Common Shares of the Company) at the Purchase Price per share (or, at the close of business on the 20th calendar day following the occurrence of a Shares Acquisition Date, at the Exercise Price per share); the number of such Common Shares, the Purchase Price, and the Exercise Price shall be subject to adjustment as provided in this Agreement. (b) Notwithstanding any other provisions of this Agreement, any Right Certificate issued pursuant to Section 3 or Section 21 that represents Rights beneficially owned by (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) that becomes a transferee after the Acquiring Person became an Acquiring Person, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) that becomes a transferee prior to or concurrently with the Acquiring Person's becoming an Acquiring Person and that either (A) holds an equity interest in such Acquiring Person (or any such Associate or Affiliate) or has any continuing agreement, arrangement, or understanding with such Acquiring Person (or any such Associate or Affiliate) regarding the transferred Rights or (B) receives such Rights pursuant to a transfer that the Board of Directors of the Company has determined is part of a plan, arrangement, or understanding 9 that has as a primary purpose or effect the avoidance of Section 7(e), any Right Certificate issued at any time to any nominee of an Acquiring Person, of any Associate or Affiliate of an Acquiring Person, or of any such transferee, and any Right Certificate issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement, or adjustment of any other Right Certificate referred to in this sentence, shall contain the following legend: The Rights represented by this Right Certificate are or were beneficially owned by a Person who was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Restated Rights Agreement). Accordingly, this Right Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of the Restated Rights Agreement. Section 5. Countersignature and Registration. (a) The Right Certificates shall be executed on behalf of the Company by its Chairman of the Board, Chief Executive Officer, President, or any Vice President, either manually or by facsimile signature, and have affixed thereto the Company's seal or a facsimile thereof attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who has signed any of the Right Certificates ceases to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates may nevertheless be countersigned by the Rights Agent, issued, and delivered with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the date such Right Certificate is signed, is a proper officer of the Company to sign such Right 10 Certificate, although at the date of the execution of this Agreement such person was not such an officer. (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept books for registration and transfer of the Right Certificates. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates, and the date of each of the Right Certificates. Section 6. Transfer, Split Up, Combination, and Exchange of Right Certificates; Mutilated, Destroyed, Lost, or Stolen Right Certificates. (a) Subject to the provisions of Section 4(b), Section 7(e), and Section 13, any Right Certificate may, at any time after the close of business on the Distribution Date and at or prior to the close of business on the earlier of the Expiration Date or the Final Expiration Date, be transferred, split up, combined, or exchanged for another Right Certificate or Right Certificates entitling the registered holder to purchase the same number of Common Shares (or Preferred Shares or other securities) as the Right Certificate surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine, or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined, or exchanged at the principal office of the Rights Agent or such other office as the Rights Agent may designate from time to time for that purpose. Neither the Rights Agent nor the Company shall be obligated to take any action with respect to the transfer of any such surrendered Right Certificate until the registered holder has completed and signed the 11 certificate contained in the form of assignment on the reverse side of such Right Certificate and has provided such additional evidence of the identity of the Beneficial Owner or former Beneficial Owner, or the Affiliates or Associates of the Beneficial Owner or former Beneficial Owner, as the Company has reasonably requested. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e), and Section 13, countersign and deliver to the person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination, or exchange of Right Certificates. (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction, or mutilation of a Right Certificate, and, in case of the loss, theft, or destruction of a Right Certificate, of indemnity or security reasonably satisfactory to them and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and, in case of the mutilation of a Right Certificate, upon surrender to the Rights Agent and cancellation of the mutilated Right Certificate, the Company shall make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed, or mutilated. Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) Subject to Section 7(e), the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein), in whole or in part, at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights 12 Agent at its principal office or such other office as the Rights Agent may designate from time to time for that purpose, together with payment of the aggregate Purchase Price with respect to the total number of Common Shares (or Preferred Shares or other securities) as to which such surrendered Rights are being exercised, at or prior to the close of business on the earlier of (i) October 31, 2007 (the "Final Expiration Date"), or (ii) the date on which the Rights are redeemed as provided in Section 22 (such earlier date being herein referred to as the "Expiration Date"). (b) Each Right shall initially represent the right to purchase one Common Share, subject to adjustment as provided in Section 11. The Purchase Price for each Common Share upon the exercise of one of the Rights shall initially be $175.00, subject to adjustment from time to time as provided in Section 11, and shall be payable in lawful money of the United States of America in accordance with Section 7(c). (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment of the Purchase Price for the Common Shares (or Preferred Shares or other securities) to be purchased and an amount equal to any applicable transfer tax, in cash or by certified check or bank draft payable to the order of the Company, the Rights Agent shall, subject to Section 19(k), promptly (i) requisition from the Company's transfer agent certificates for the total number of Common Shares (or Preferred Shares or other securities) to be purchased, and the Company hereby irrevocably authorizes and directs its transfer agent to comply with all such requests, (ii) if the Company has elected to cause the total number of Common Shares (or Preferred Shares or other securities) issuable upon exercise of the Rights to be deposited with a depositary agent, requisition 13 from the depositary agent depositary receipts representing such number of Common Shares (or Preferred Shares or other securities) as are to be purchased (in which case the Company hereby authorizes and directs its transfer agent to deposit with the depositary agent certificates for the Common Shares (or Preferred Shares or other securities) represented by such receipts), and the Company hereby authorizes and directs the depositary agent to comply with all such requests, (iii) when appropriate, requisition from the Company's transfer agent certificates for the total number the Common Shares (or Preferred Shares or other securities) to be purchased in accordance with Section 11(a)(ii), and the Company hereby authorizes and directs its transfer agent to comply with all such requests, (iv) when appropriate, requisition from the Company the amount of cash to be paid in accordance with Section 11(a)(iii) or in lieu of the issuance of fractional shares in accordance with Section 13, (v) promptly after the receipt of such certificates or depositary receipts, cause them to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder, and (vi) when appropriate, promptly after receipt deliver such cash to or upon the order of the registered holder of such Right Certificate. In the event the Company is obligated to issue Common Shares (or Preferred Shares or other securities) or to pay cash pursuant to Section 11(a)(iii), the Company will make all arrangements necessary so that such Common Shares (or Preferred Shares or other securities) and cash are available for issuance and payment by the Rights Agent, as and when appropriate. (d) In case the registered holder of any Right Certificate exercises less than all of the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the 14 registered holder of such Right Certificate or to his duly authorized assign, subject to the provisions of Section 13. (e) Notwithstanding anything in this Agreement to the contrary, any Rights that are or were at any time on or after the earlier of the Distribution Date or the date on which any Person becomes an Acquiring Person beneficially owned by (i) the Acquiring Person or any Associate or Affiliate of the Acquiring Person, (ii) a transferee of the Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person became an Acquiring Person, or (iii) a transferee of the Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming an Acquiring Person and who either (A) holds an equity interest in such Acquiring Person (or any such Associate or Affiliate) or has any continuing agreement, arrangement, or understanding with such Acquiring Person (or any such Associate or Affiliate) regarding the transferred Rights or (B) receives such Rights pursuant to a transfer that the Board of Directors of the Company has determined is part of a plan, arrangement, or understanding that has as a primary purpose or effect the avoidance of this Section 7(e), shall become null and void when such Person becomes an Acquiring Person, and no holder of such Rights shall have any right with respect to such Rights under any provision of this Agreement from and after such Person becomes an Acquiring Person. The Company shall use all reasonable efforts to insure that the provisions of this Section 7(e) and of Section 4(b) are complied with, but shall have no liability to any holder of Rights or any other Person as a result of its failure properly to make any determinations with respect to an Acquiring Person or its Affiliates, Associates, or transferees in accordance with this Section 7(e). 15 (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder of Rights upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder has (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner or former Beneficial Owner, or the Affiliates or Associates of the Beneficial Owner or former Beneficial Owner, as the Company may reasonably request. Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination, or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall cancel and retire, any Right Certificate purchased or acquired by the Company otherwise than upon the exercise of the Right Certificate. The Rights Agent shall deliver all cancelled Right Certificates to the Company or shall, at the written request of the Company, destroy such cancelled Right Certificates and deliver a certificate of destruction thereof to the Company. Section 9. Reservation and Availability of Shares. (a) The Company will cause to be reserved and kept available out of Common Shares that have been authorized by the Company's shareholders but are unissued, or that are held in the 16 Company's treasury, a number of Common Shares that will be sufficient to permit the exercise in full of all of the outstanding Rights. (b) In the event that, notwithstanding Section 9(a), the number of authorized and unissued Common Shares and Common Shares held in the Company's treasury is not sufficient to permit the exercise in full of all of the outstanding Rights, including the exercise in full of all of the outstanding Rights following any adjustment under Section 11, at any time after the Distribution Date, the Company shall promptly (i) file an amendment to the Company's articles of incorporation which creates the Preferred Shares and authorizes a number of Preferred Shares that, together with authorized and unissued Common Shares and Common Shares held in the Company's treasury, is sufficient to permit the exercise in full of all of the outstanding Rights and (ii) make the Preferred Shares available in place of Common Shares to permit the exercise of the Rights. Under such circumstances, all rights and obligations of the Company and the Rights Agent with respect to the Common Shares shall apply with respect to Preferred Shares. (c) Unless the Common Shares of the Company have been theretofore listed on the NYSE or another national securities exchange, the Company shall, as soon as practicable following the Distribution Date, use its best efforts to cause transactions in the Rights to be quoted in the National Association of Securities Dealers Inc. Automated Quotation System ("NASDAQ") and, if Preferred Shares or other securities are to be made available in place of Common Shares to be issued upon exercise of the Rights, shall use its best efforts, as soon as practicable after the Rights become exercisable, to cause transactions in the Preferred Shares or other securities issuable upon 17 exercise of the Rights to be quoted in NASDAQ. In the event that the Common Shares are listed on the NYSE or another national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all Common Shares (or Preferred Shares or other securities) reserved for such issuance upon exercise of the Rights to be listed on the NYSE or such other exchange upon official notice of issuance. (d) The Company shall (i) prepare and file, as soon as practicable following the occurrence of a Shares Acquisition Date, a registration statement under the Securities Act of 1933 (the "Securities Act") on an appropriate form with respect to the Rights and the securities purchasable upon exercise of the Rights, (ii) use its best efforts to cause such registration statement to become effective as soon as practicable after such filing, and (iii) use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of the exercise of all of the Rights, the Expiration Date, or the Final Expiration Date. The Company will also take such action as may be appropriate to comply with the securities laws of each state in which holders of the Rights reside. The Company may temporarily suspend, for a period of time not to exceed 90 days, the exercisability of the Rights in order to prepare and file such registration statement. Upon any such suspension, the Company shall issue a public announcement and notice to the Rights Agent stating that the exercisability of the Rights has been temporarily suspended, and the Company shall issue a public announcement and notice to the Rights Agent at such time as the suspension is no longer in effect. Notwithstanding any provision of this Agreement to the contrary, 18 the Rights shall not be exercisable in any jurisdiction in which any requisite registration or qualification has not been obtained or any requisite notice of exemption has not been filed. (e) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Common Shares (or Preferred Shares or other securities) delivered upon exercise of Rights are, at the time of delivery of the certificates therefor (subject to payment of the Purchase Price or the Exercise Price, as the case may be), duly and validly authorized and issued, fully paid and nonassessable, freely tradeable, free and clear of any liens, encumbrances or other adverse claims, and not subject to any rights of call or first refusal. (f) The Company further covenants and agrees that it will pay, when due and payable, any and all federal and state transfer taxes and charges that may be payable in respect of the issuance, delivery, or transfer of the Right Certificates or of any Common Shares (or Preferred Shares or other securities) upon exercise of the Rights. The Company shall not, however, be required (i) to pay any transfer tax that may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or any issuance, delivery, or transfer of certificates for the Common Shares (or Preferred Share or other securities, as the case may be) in a name other than that of, the registered holder of the Right Certificate evidencing the Rights surrendered for exercise or (ii) to issue or deliver any certificates for a number of Common Shares (or Preferred Shares or other securities) upon the exercise of any Rights until any such tax has been paid or until it has been established to the Company's satisfaction that no such tax is due. Any such tax shall be payable by the holder of such Right Certificate at the time of surrender. 19 Section 10. Common Share Record Date. Each Person in whose name any certificate for a number of Common Shares (or Preferred Shares or other securities) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such Common Shares (or Preferred Shares or other securities) represented by such certificate on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (or Exercise Price, as the case may be) and any applicable transfer tax was made. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a shareholder of the Company with respect to shares for which the Rights shall be exercisable, including the right to vote, to receive dividends or other distributions, or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. Section 11. Adjustment of Purchase Price, and Exercise Price Number and Type of Shares, or Number of Rights. The Purchase Price and the Exercise Price, the number and type of shares covered by each of the Rights, and the number of Rights outstanding is subject to adjustment from time to time as provided in this Section 11. (a) (i) In the event the Company at any time after the date of this Agreement (A) declares a dividend on the Common Shares payable in Common Shares, (B) subdivides the outstanding Common Shares, (C) combines the outstanding Common Shares into a smaller number of shares, or (D) issues any shares other than Common Shares in a reclassification of the Common Shares 20 (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), the Purchase Price and the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, or reclassification, shall be proportionately adjusted (except as otherwise provided in this Section 11(a) and Section 7(e)) so that the holder of any Rights exercised after such time shall be required to pay the same aggregate Purchase Price or Exercise Price, as the case may be, as such holder would be required to pay if such Rights had been exercised immediately prior to such date, and the number of Common Shares or the number and kind of shares other than Common Shares, as the case may be, issuable on such date shall be proportionately adjusted (except as otherwise provided in this Section 11(a) and Section 7(e)) so that such holder would be entitled to receive the same aggregate number of Common Shares or the same number and kind of shares other than Common Shares, as the case may be, that such holder would have owned and been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification if such Rights had been exercised immediately prior to such date. If an event occurs that would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii). (ii) In the event that a Shares Acquisition Date occurs (a "Flip-in Event"), proper provision shall be made so that, from and after the close of business on the 20th calendar day after such Flip-in Event has occurred, each holder of a 21 Right (except as provided in Section 7(e)) shall thereafter have the right to receive, upon exercise of each of the Rights held by such holder in accordance with the terms of this Agreement, two Common Shares for an Exercise Price of $1.00 per Common Share. The number of such Common Shares and the Exercise Price shall be subject to adjustment as provided in this Section 11. (iii) In the event the number of authorized but unissued Common Shares of the Company and Common Shares held in the Company's treasury is not sufficient to permit the exercise in full of all of the outstanding Rights in accordance with paragraph (ii) of this Section 11(a), the Company shall apportion among all of the outstanding Rights, on a pro rata basis, the Common Shares available for delivery upon exercise of the Rights and, upon exercise of each Right, shall deliver to the holder thereof (A) the number or fraction of Common Shares apportioned to the Right and (B) the number or fraction of Preferred Shares equal to the balance of the Common Shares otherwise deliverable to the holder upon exercise of the Right. If the number of Common Shares and Preferred Shares that are authorized and unissued or held in the Company's treasury is not sufficient to permit the exercise in full of all of the outstanding Rights, the Company shall apportion among all of the outstanding Rights, on a pro rata basis, the Common Shares and Preferred Shares available for delivery upon exercise of the Rights and, upon exercise of each Right, shall deliver to the holder thereof (x) the number or fraction of Common Shares and Preferred Shares apportioned to the Right and (y) cash in an amount equal to the product of the balance of the Common Shares otherwise deliverable to the holder upon exercise of the Right multiplied by the 22 excess of the market price per Common Share at the close of business on the 20th calendar day following the occurrence of the Flip-in Event over the Exercise Price, as adjusted pursuant to the provisions of this Section 11. To the extent any legal or contractual restrictions prevent the Company from paying the full amount of the cash payable in accordance with the foregoing sentence, the Company shall pay to holders of the Rights on a pro rata basis all of the funds that are not then restricted. The Company shall continue to make payments to holders of the Rights on a pro rata basis as funds become available until such amount has been paid in full. (b) In case the Company fixes a record date for the issuance of rights or warrants to all holders of Common Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Common Shares (or shares having the same rights, privileges, and preferences as the Common Shares ("equivalent common shares") or securities convertible into Common Shares or equivalent common shares) at a price per Common Share or per equivalent common share (or having a conversion price per share, if a security convertible into Common Shares or equivalent common shares) less than the current market price (as defined in Section 11(d)) per Common Share on such record date, the Purchase Price and the Exercise Price to be in effect after such record date shall be determined by multiplying the Purchase Price and the Exercise Price in effect immediately prior to such record date by a fraction the numerator of which is the number of Common Shares outstanding on such record date plus the number of Common Shares that the aggregate offering price of the total number of Common Shares or equivalent preferred shares so to be offered (or the aggregate initial 23 conversion price of the convertible securities so to be offered) would purchase at such market price and the denominator of which is the number of Common Shares outstanding on such record date plus the number of additional Common Shares or equivalent common shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case any part of such subscription price is paid in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. Common Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed, and, in the event such rights or warrants are not so issued, the Purchase Price and the Exercise Price shall be adjusted to be the Purchase Price and the Exercise Price that would then be in effect if such record date had not been fixed. (c) In case the Company fixes a record date for the making of a distribution to all holders of Common Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) or evidences of indebtedness or assets (other than a regular periodic cash dividend at a rate per share not in excess of 150% of the last quarterly cash dividend per share theretofore paid or a dividend payable in Common Shares, but including any dividend payable in shares other than Common Shares) or subscription rights or warrants (excluding those referred to in Section 11(b)), the Purchase Price and the Exercise Price to be in effect after such record date shall be determined by multiplying the Purchase Price and the Exercise Price in effect immediately prior to such record date by a fraction the 24 numerator of which is the market price (as defined in Section 11(d)) per Common Share on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the assets (in the case of regular periodic cash dividends at a rate per share in excess of 150% of the last quarterly cash dividend per share theretofore paid, only that portion in excess of 150% of such quarterly cash dividend per share) or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one Common Share and the denominator of which shall be such market price per Common Share. Such adjustments shall be made successively whenever such a record date is fixed, and, in the event such distribution is not so made, the Purchase Price and the Exercise Price shall be adjusted to be the Purchase Price and the Exercise Price that would then be in effect if such record date had not been fixed. (d) For the purpose of any computation under Section 11(a), (b), or (c) hereof, the "market price" of a Common Share on any date of determination shall be deemed to be the average of the daily closing prices per Common Share for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date, except that, in the event the "market price" per Common Share is determined during the period following the announcement by the issuer of such Common Share of (A) a dividend or distribution on such Common Share payable in Common Shares or securities convertible into Common Shares or (B) any subdivision, combination, or reclassification of such Common Shares and prior to the expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution or the record date for such subdivision, combination, or reclassification, the "market price" shall, in each such case, be 25 appropriately adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Common Shares are not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if no sale price is quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Common Shares are not reported by NASDAQ or such other system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares selected by the Board of Directors of the Company, except that if on any such date no market maker is making a market in the Common Shares the closing price on such date shall be the value of a Common Share on such date as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the Common Shares are listed or admitted to trading is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities exchange, a Business Day. If the Common Shares are not publicly held or not so listed or traded, "market price" per Common Share shall mean the value per Common Share as determined 26 in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent. (e) No adjustment in the Purchase Price and the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price and the Exercise Price, except that any adjustments that by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a Common Share, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction that mandates such adjustment and (ii) the date of the expiration of the right to exercise any of the Rights. (f) If, as a result of an adjustment made pursuant to Section 11(a), the holder of any of the Rights exercised after such adjustment becomes entitled to receive upon exercise of the Rights any shares of the Company other than Common Shares, the number of such other shares so receivable shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Shares contained in Section 11, and the provisions of Sections 7, 9, 10, and 13 with respect to the Common Shares shall apply on like terms to any such other shares. (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price and the Exercise Price shall evidence the right to purchase, at the adjusted Purchase Price and (at the close of business on the 20th calendar day following the occurrence of a Shares Acquisition Date) the adjusted Exercise Price, the 27 number of Common Shares purchasable from time to time upon exercise of the Rights, all subject to further adjustment as provided in this Agreement. (h) Upon each adjustment of the Purchase Price and the Exercise Price as a result of the calculations made in Sections 11(b) and (c), each of the Rights outstanding immediately prior to the making of such adjustment shall, unless the Company has exercised its election as provided in Section 11(i), thereafter evidence the right to purchase, at the adjusted Purchase Price or the adjusted Exercise Price, as the case may be, that number of Common Shares (calculated to the nearest ten-thousandth) obtained by (i) multiplying (x) the number of Common Shares purchasable upon exercise of one of the Rights immediately prior to this adjustment by (y) the Purchase Price or the Exercise Price, as the case may be, in effect immediately prior to such adjustment and (ii) dividing the product so obtained by the Purchase Price or the Exercise Price, as the case may be, in effect immediately after such adjustment. (i) The Company may elect, on or after the date of any adjustment of the Purchase Price and the Exercise Price, to adjust the number of Rights, in substitution for any adjustment in the number of Common Shares purchasable upon the exercise of one of the Rights. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of Common Shares for which one of the Rights was exercisable immediately prior to such adjustment. Each of the Rights held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest ten-thousandth) obtained by dividing the Purchase Price and the Exercise Price in effect immediately prior to the adjustment by the Purchase Price and the Exercise Price in effect immediately after the adjustment. The Company shall make a 28 public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment to be made. This record date may be the date on which the Purchase Price and the Exercise Price are adjusted or any day thereafter but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been issued, the Company shall, upon each adjustment of the number of Rights pursuant to this Section 11(i) and as promptly as practicable, cause to be distributed to holders of Right Certificates on such record date Right Certificates evidencing, subject to Section 13, the additional Rights to which such holders are entitled as a result of such adjustment or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof if required by the Company, new Right Certificates evidencing all the Rights to which such holders are entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed, and countersigned in the manner provided for in this Agreement (and may bear, at the option of the Company, the adjusted Purchase Price and the adjusted Exercise Price) and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement. (j) Notwithstanding any adjustment or change in the Purchase Price and the Exercise Price or the number of Common Shares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price and the Exercise Price per Common Share and the number of Common Shares that were expressed in the initial Right Certificates issued under this Agreement. 29 (k) Before taking any action that would cause an adjustment reducing the Purchase Price or the Exercise Price below the then stated capital, if any, of a Common Share issuable upon exercise of the Rights, the Company shall take any corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Common Shares at such adjusted Purchase Price or such adjusted Exercise Price. (l) In any case in which this Section 11 requires that an adjustment in the Purchase Price and the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Rights exercised after such record date the number of Common Shares (or Preferred Shares or other securities) issuable upon such exercise over and above the number of Common Shares (or Preferred Shares or other securities) issuable upon such exercise on the basis of the Purchase Price or the Exercise Price, as the case may be, in effect prior to such adjustment, except that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional Common Shares (or Preferred Shares or other securities) upon the occurrence of the event requiring such adjustment. (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reduction in the Purchase Price and the Exercise Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that the Board of Directors of the Company in its discretion determines to be advisable. 30 Section 12. Certificates of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Sections 11 and 13, the Company shall promptly (a) prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Common Shares a copy of such certificate, and (c) mail a brief summary thereof to each holder of a Right Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing Common Shares) in accordance with Section 25. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment contained in such certificate. Section 13. Fractional Rights and Fractional Shares. (a) Prior to the occurrence of a Shares Acquisition Date, the Company shall not be required to issue fractions of Rights or to distribute Right Certificates that evidence fractional Rights. In lieu of such fractional Rights, the Company may pay to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the market value of one of the Rights. For the purposes of this Section 13(a), the market value of one of the Rights shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with 31 respect to securities listed or admitted to trading on the NYSE or, if the Rights are not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if no sale price is quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by NASDAQ or any such other system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights, the market value of one of the Rights shall be the value of the Rights on such date as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent. (b) The Company shall not be required to issue fractions of a Common Share upon exercise of the Rights or to distribute certificates that evidence fractional Common Shares. In lieu of fractional shares, the Company may pay to the registered holders of Right Certificates at the time such Right Certificates are exercised an amount in cash equal to the same fraction of the market price of a Common Share on the date of exercise. For purposes of this Section 14(b), the market price of a Common Share shall be determined in accordance with Section 11(d). (c) The holder of Rights by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional Common Shares upon exercise of the Rights. Section 14. Rights of Action. All rights of action in respect of this Agreement are vested in the respective registered holders of the Right Certificates (and, 32 prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of any other Common Shares), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action, or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement. Section 15. Agreement of Rights Holders. Holders of the Rights by accepting the Rights consent and agree with the Company and the Rights Agent and with other holders of Rights that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares; (b) after the Distribution Date, the Right Certificates will be transferable only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent or such other office as the Rights Agent may designate from time to time for that purpose, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed; and 33 (c) the Company and the Rights Agent may, subject to Section 6(a), Section 7(e), and Section 7(f), deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Share certificate) is registered as the absolute owner of such Right Certificate and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Share certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be required to be affected by any notice to the contrary. Section 16. Right Certificate Holder Not Deemed a Shareholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends, or be deemed for any purpose the holder of the number of Common Shares (or Preferred Shares or other securities) that may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained in this Agreement or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a shareholder of the Company or any right to vote in the election of directors or upon any matter submitted to shareholders at any meeting thereof, to give or withhold consent to any corporate action, to receive notice of meetings or other actions affecting shareholders (except as provided in Section 23), to receive dividends or subscription rights, or otherwise, until the Rights evidenced by such Right Certificate have been exercised in accordance with the provisions of this Agreement. Section 17. Concerning the Rights Agent. (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it under this Agreement and, from time to time on demand of the Rights Agent, to reimburse it for 34 or pay its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties under this Agreement. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense incurred without negligence, bad faith, or willful misconduct on the part of the Rights Agent as a result of anything done or omitted to be done by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises. (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered, or omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate for Common Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed, and, if necessary, verified or acknowledged by the proper person or persons. Section 18. Merger or Consolidation or Change of Name of Rights Agent. (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any 35 of the parties to this Agreement, provided such corporation is eligible for appointment as a successor Rights Agent under the provisions of Section 20. In case at the time such successor Rights Agent succeeds to the agency created by this Agreement any of the Right Certificates have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor so countersigned; in case at that time any of the Right Certificates have not been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and, in all such cases, such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. (b) In case at any time the name of the Rights Agent is changed and at such time any of the Right Certificates have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; in case at that time any of the Right Certificates have not been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and, in all such cases, such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. Section 19. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance of the Right Certificates, shall be bound: (a) The Rights Agent may consult with legal counsel, and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in 36 accordance with such opinion, regardless of whether such counsel is also counsel to the Company. (b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect of such fact or matter is specifically prescribed in this Agreement) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, any Vice President, the Treasurer, or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or omitted in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent shall be liable under this Agreement only for its own negligence, bad faith, or willful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify such statements or recitals, but all such statements and recitals are and shall be deemed to have been made only by the Company. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery of this Agreement (except the due execution of this Agreement by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except the 37 countersignature of the Right Certificates by the Rights Agent); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11 or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Common Shares or Preferred Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any Common Shares or Preferred Shares will, when issued, be validly authorized and issued, fully paid, and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties under this Agreement from any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer, or the Secretary of the Company and to apply to such officers for advice or instructions in connection with its duties, and 38 it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with any such instructions. (h) The Rights Agent and any shareholder, director, officer, or employee of the Rights Agent may buy, sell, or deal in any of the Rights or other securities of the Company, become pecuniarily interested in any transaction in which the Company may be interested, contract with or lend money to the Company, or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement. Nothing in this Agreement shall preclude the Rights Agent from acting in any other capacity for the Company or for any other Person. (i) The Rights Agent may execute and exercise any of the rights or powers vested in it by this Agreement or perform any duty under this Agreement either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect, or misconduct of any such attorney or agent or for any loss to the Company resulting from any such act, default, neglect, or misconduct, provided reasonable care was exercised in the selection and continued employment of such attorney or agent. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of its rights under this Agreement if there are reasonable grounds for believing that the repayment of such funds, or adequate indemnification against such risk or liability, is not reasonably assured to it. 39 (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 or 2 of such certificate, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first obtaining instructions from the Company, as provided in Section 19(g). Section 20. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Company and to each transfer agent of the Common Shares by registered or certified mail and to the holders of the Right Certificates by first class mail. If the Rights Agent resigns, is removed or otherwise becomes incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such registration or incapacity by the resigning or incapacitated Rights Agent or by the holder of any of the Rights (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right may apply to any court of competent jurisdiction for the appointment of a successor Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of any state of the United States so long as such corporation is authorized to do business as a banking institution, is in good standing, is authorized to exercise corporate trust powers, is subject to supervision or examination by 40 federal or state authorities, and has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties, and responsibilities as if it had been originally named as Rights Agent without further act or deed, but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it under this Agreement and execute and deliver any further assurance, conveyance, act, or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice of the appointment in writing with the predecessor Rights Agent and each transfer agent of the Common Shares. Failure to give any notice provided for in this Section 20 or any defect in such notice shall, however, not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 21. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Right Certificates to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board of Directors of the Company to reflect any adjustment or change in the Purchase Price and the Exercise Price, in the number, kind, or class of shares or other securities or property purchasable upon exercise of the Rights, or in any other provision of this Agreement made in accordance with Section 11, Section 25, or any other provision of this Agreement. Section 22. Redemption. (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the close of business on the 20th calendar day following the occurrence of a Shares Acquisition Date or (ii) the 41 close of business on the Final Expiration Date, redeem all but not less than all of the Rights then outstanding at a redemption price of $.01 for each of the Rights, adjusted to reflect any stock split, stock dividend, or similar transaction occurring after the date of this Agreement (such redemption price being hereinafter referred to as the "Redemption Price"). Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be exercisable upon the occurrence of a Flip-in Event pursuant to Section 11(a)(ii) prior to the expiration of the Company's right of redemption pursuant to this Section 22(a). (b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, and without any further action and without any notice, the right to exercise the Rights shall terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. Within 10 days after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the holders of the then outstanding Rights by mailing such notice to each such holder at the last address of such holder as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Shares. Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption shall state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire, or purchase for value any Rights at any time in any manner other than as specifically set forth in this Section 22 or in connection with the repurchase of Common Shares prior to the Distribution Date. 42 Section 23. Notice of Certain Events. In case the Company proposes at any time following the Distribution Date (a) to pay any dividend payable in shares of any class to the holders of Common Shares or to make any other distribution to the holders of Common Shares (other than a regular periodic cash dividend at a rate per share not in excess of 150% of the last cash quarterly dividend per share theretofore paid), (b) to offer to the holders of Common Shares rights or warrants to subscribe for or to purchase any additional Common Shares, shares of any other class, or any other securities, rights, or options, (c) to effect any reclassification of the Common Shares (other than a reclassification involving only the subdivision of outstanding Common Shares), (d) to effect any transaction which would constitute a Flip-over Event, or (e) to effect the liquidation, dissolution, or winding up of the Company, the Company shall, in each such case, give to each holder of Rights, in accordance with Section 24, a notice of such proposed action specifying the record date for the purposes of such dividend or distribution, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the Common Shares, if any such date is to be fixed. Such notice shall be so given, in the case of any action described in clause (a) or (b) above, at least 20 days prior to the record date for determining holders of the Common Shares for purposes of such action and, in the case of any such other action, at least 20 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Shares, whichever is the earlier. In case any of the events set forth in Section 11(a)(ii) of this Agreement occurs, the Company shall, in any such case, as soon as practicable thereafter give to each holder of Rights, in accordance with Section 24, a 43 notice of the occurrence of such event specifying the event and the consequences of the event to holders of Rights under Section 11(a)(ii). Section 24. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if personally delivered or sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: Nordson Corporation 28601 Clemens Road Westlake, Ohio 44145 Attention: General Counsel Subject to the provisions of Section 20, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if personally delivered or sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: National City Bank Corporate Trust Administration 629 Euclid Avenue, Rm. 635 Cleveland, Ohio 44114 Attention: Ms. Sharon Boughter Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to or on the holder of any Right Certificate shall be sufficiently given or made if personally delivered or sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. 44 Section 25. Supplements and Amendments. The Company may from time to time, with the approval of its Board of Directors, supplement or amend this Agreement without the approval of any holders of Rights in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained in this Agreement that may be defective or inconsistent with any other provision in this Agreement, and (iii), prior to the close of business on the 20th calendar day following the occurrence of a Shares Acquisition Date, to make any other change in the provisions of this Agreement that the Board of Directors of the Company deems to be consistent with the purposes of this Agreement and not adverse to the interests of the Company and its shareholders. Upon the delivery of a certificate from an appropriate officer of the Company that states that the proposed supplement or amendment is in compliance with the terms of this Section 25, the Rights Agent shall execute such supplement or amendment unless the Rights Agent determines in good faith that such supplement or amendment would adversely affect its interests under this Agreement. Notwithstanding anything to the contrary in this Agreement, prior to the close of business on the 20th calendar day following the occurrence of a Shares Acquisition Date, the interests of the holders of Rights shall be deemed to be coincident with the interests of the holders of Common Shares. Section 26. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns. Section 27. Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number of Common Shares outstanding at any particular time, including the purpose of determining the particular 45 percentage of such outstanding Common Shares of which any Person is the Beneficial Owner, shall be made in accordance with the provisions of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement. The Board of Directors of the Company shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or the Company or as may be necessary or advisable in the administration of this Agreement, including the right and power (i) to interpret the provisions of this Agreement and (ii) to make all determinations deemed necessary or advisable for the administration of this Agreement. All such actions, calculations, interpretations, and determinations (including, for the purpose of clause (ii) below, all omissions with respect to the foregoing) that are done or made by the Board of Directors in good faith shall (i) be final, conclusive, and binding on the Company, the Rights Agent, the holders of Right Certificates, and all other parties and (ii) not subject the Board of Directors to any liability to the holders of Right Certificates. Section 28. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent, and the registered holders of Rights (and, prior to the Distribution Date, the registered holders of Common Shares) any legal or equitable right, remedy, or claim under this Agreement, but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent, and the registered holders of Rights (and, prior to the Distribution Date, the registered holders of Common Shares). Section 29. Severability. If any term, provision, covenant, or restriction of or in this Agreement is held by a court of competent jurisdiction or other 46 authority to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of or in this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated, except that, notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant, or restriction is held by such court or authority to be invalid, void, or unenforceable and the Board of Directors of the Company determines in its good faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 22 hereof shall be reinstated and shall not expire until the close of business on the 20th day following the date of such determination by the Board of Directors. Section 30. Governing Law. This Agreement and each Right Certificate issued under it shall be deemed to be a contract made under the laws of the State of Ohio and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. Section 31. Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 32. Descriptive Headings. Descriptive headings of the Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Agreement. 47 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. NORDSON CORPORATION By:__________________________ Name: Robert E. Veillette Title: Secretary NATIONAL CITY BANK As Rights Agent By: _________________________ Name: _______________________ Title: ______________________ 48 Exhibit A "EXPRESS" TERMS OF SERIES B CONVERTIBLE PREFERRED SHARES A series of Serial Preferred Shares is created with the following "express" terms: A. Designation. The shares of such series are designated as "Series B Convertible Preferred Shares" without par value; (the "Series B Preferred Shares"). B. Authorized Number of Shares; Fractional Shares. The authorized number of Series B Preferred Shares is ______________. Series B Preferred Shares may be issued in fractions of a share that shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions, and have the benefit of all other rights of holders of Series B Preferred Shares. C. Dividends and Distributions. (1) Dividends and other distribution shall be declared and paid on the Series B Preferred Shares at the same time that dividends or other distributions are declared and paid on the Common Shares. The amount per share and kind of the dividends or other distributions on the Series B Preferred Shares shall be the same as the amount per share and kind of the dividends or other distributions on the Common Shares. (2) Dividends on Series B Preferred Shares shall not accrue or be cumulative. D. Conversion. Each Series B Preferred Share is convertible, at the option of the holder, into one Common Share, provided that, at the time of conversion, there is a sufficient number of authorized but unissued Common Shares, or Common Shares held in the Company's treasury, to permit the conversion of all Series B Preferred Shares then outstanding. Liquidation, Dissolution, or Winding Up. Upon liquidation, dissolution, or winding up of the Company, holders of Series B Preferred Shares shall have the same rights and shall be treated the same as holders of Common Shares with respect to distributions by the Company. E. Conversion on Merger, Consolidation, etc. In case the Company enters into any merger, consolidation, combination, or other transaction in which Common Shares are exchanged or changed into other shares or securities, cash, or A-1 other property, each Series Preferred Share shall in any such case at the same time be similarly exchanged or changed in an amount per share equal to the aggregate amount of shares, securities, cash, or other property (payable in kind), as the case may be, into which or for which each Common Share is changed or exchanged. F. Redemption. The outstanding Series B Preferred Shares shall not be redeemable. G. Voting Rights. Each holder of Series B Preferred Shares shall be entitled to one vote for each share held and, except as otherwise provided by law, the holders of Series B Preferred Shares and the holders of Common Shares shall vote together as one class. A-2 Exhibit B FORM OF RIGHT CERTIFICATE Certificate No. R - ______________ Rights NOT EXERCISABLE AFTER OCTOBER 31, 2007, OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 FOR EACH OF THE RIGHTS ON THE TERMS SET FORTH IN THE RESTATED RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RESTATED RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RESTATED RIGHTS AGREEMENT.] * RIGHT CERTIFICATE This certifies that _____________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions, and conditions of the Second Restated Rights Agreement dated as of May 21, 2003 (the "Restated Rights Agreement"), between Nordson Corporation, an Ohio corporation (the "Company"), and National City Bank, a national banking association organized and existing under the laws of the United States, (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Restated Rights Agreement) and prior to 5:00 P.M. Cleveland time, on October 31, 2007, at the principal office of the Rights Agent, or of its successor as Rights Agent, or at such other office as the Rights Agent or its successor may designate from time to time for that purpose, one fully paid and non-assessable Common Share with a par value of - -------- * The portion of the legend in brackets shall be inserted only if applicable. B-1 $1.00 (the "Common Shares") of the Company, at a purchase price of $175 per Common Share (the "Purchase Price"), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate, the number of Common Shares that may be purchased upon exercise of the Rights, and the Purchase Price per Common Share set forth above, are the numbers and Purchase Price as of October 31, 1997, based on the Common Shares as constituted at such date, and are subject to adjustment as provided in the Restated Rights Agreement. If the Rights evidenced by this Right Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Restated Rights Agreement), (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person became an Acquiring Person, or (iii), under certain circumstances specified in the Restated Rights Agreement, a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming an Acquiring Person, such Rights shall, when the Acquiring Person becomes an Acquiring Person, become null and void and thereafter no holder hereof shall have any right with respect to such Rights. At the close of business on the 20th calendar day following the occurrence of a Shares Acquisition Date, each Right becomes the right to purchase two Common Shares at an Exercise Price of $1.00 per share, subject to adjustment in accordance with the Restated Rights Agreement. As provided in the Restated Rights Agreement, the Purchase Price, the Exercise Price, and the number of Common Shares or kind of other securities that may be B-2 purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events. This Right Certificate is subject to all of the terms, provisions, and conditions of the Restated Rights Agreement, which terms, provisions, and conditions are hereby incorporated by reference and made a part of this Right Certificate. Reference is hereby made to the Restated Rights Agreement for a full description of the rights, limitations of rights, obligations, duties, and immunities of the Rights Agent, the Company, and the holders of the Right Certificates. Copies of the Restated Rights Agreement are on file at the office of the Rights Agent mentioned above. This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent or such other office as the Rights Agent may designate from time to time for that purpose, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Common Shares as the Right evidenced by the Right Certificate or Right Certificates surrendered entitled such holder to purchase. If this Right Certificate is exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. Subject to the provisions of the Restated Rights Agreement, the Rights evidenced by this Right Certificate may be redeemed by the Company at its option at a redemption price of $.01 for each of the Rights. The Company is not required to issue fractional Common Shares upon the exercise of any Rights evidenced hereby, but in lieu thereof may make a cash payment, as provided in the Restated Rights Agreement. B-3 No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose to be the holder of the Common Shares or any other securities of the Company that may at any time be issuable on the exercise hereof, nor shall anything contained in the Restated Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote in the election of directors or upon any matter submitted to shareholders at any meeting thereof, to give or withhold consent to any corporate action, to receive notice of meetings or other actions affecting shareholders (except as provided in the Restated Rights Agreement), or to receive dividends or subscription rights or otherwise, until the Rights evidenced by this Right Certificate have been exercised as provided in the Restated Rights Agreement. This Right Certificate shall not be valid or obligatory for any purpose until it has been countersigned by the Rights Agent. WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of _______________. ATTEST: NORDSON CORPORATION _______________________ By: _________________________ Secretary Title: Countersigned: _______________________ By ____________________ B-4 [Reverse Side of Right Certificate] FORM OF ASSIGNMENT (To be executed by the registered holder if the holder desires to transfer the Right certificate) FOR VALUE RECEIVED ________________________________________ hereby sells, assigns, and transfers unto ________________________________________________________________________________ ________________________________________________________________________________ (Please print name and address of transferee) this Right Certificate, together with all right, title, and interest therein, and does hereby irrevocably constitute and appoint ___________________ as attorney, to transfer the Right Certificate on the books of Nordson Corporation, with full power of substitution. Dated: ___________________________ ____________________________________ Signature Signature Guaranteed: B-5 CERTIFICATE (Applicable to Form of Assignment) The undersigned hereby certifies by checking the appropriate boxes that: (1) this Right Certificate [ ] is [ ] is not being sold, assigned, and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Restated Rights Agreement); (2) after due inquiry and to the best knowledge of the undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was, or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: __________________________ ________________________________ Signature Notice The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Right Certificate in every particular, without any alteration or change whatsoever. B-6 FORM OF ELECTION TO PURCHASE (To be executed if the holder desires to exercise the Right Certificate) To Nordson Corporation: The undersigned hereby irrevocably elects to exercise ________________ Rights represented by this Right Certificate to purchase the Common Shares or other securities issuable upon the exercise of such Rights and requests that certificates therefor be issued in the name of: ________________________________________________________________________________ (Please print name and address) ________________________________________________________________________________ Please insert social security or other identifying number:____________________________________________________ If such number of Rights are not all of the Rights evidenced by this Right Certificate, a new Right Certificate for the balance of such Rights shall be registered in the name of and delivered to: ________________________________________________________________________________ (Please print name and address) ________________________________________________________________________________ Please insert social security or other identifying number:____________________________________________________ Dated: _________________________________ __________________________________ Signature (Signature must conform in all respects to name of the holder as specified on the face of this Right Certificate) Signature Guaranteed: B-7 CERTIFICATE (Applicable to Form of Election to Purchase) The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Restated Rights Agreement); (2) after due inquiry and to the best knowledge of the undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was, or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: _______________________, 19___ ____________________________________ Signature Notice The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the fact of this Right Certificate in every particular, without any alteration or change whatsoever. B-8 Exhibit C SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES The Board of Directors of Nordson Corporation in August 1988 declared a dividend consisting of rights to purchase Common Shares of Nordson. One of the rights was distributed to the holder of each Common Share outstanding on September 9, 1988, the record date for the distribution. Rights have been and will continue to be distributed with Common Shares issued by Nordson after the record date but before the expiration of the rights or the occurrence of a "flip-in" event, as described below. When the rights become exercisable, the holder of each of the rights will be entitled to purchase one Common Share of Nordson for $175. The rights will become exercisable (1) at the close of business on the earlier of the 20th calendar day after a public announcement that a person or group has become the beneficial owner of 15% or more of the outstanding Common Shares (a "shares acquisition date") or (2) any earlier date designated by Nordson's Board of Directors. Until the rights become exercisable, they will trade with the Common Shares, and any transfer of Common Shares will also constitute a transfer of the associated rights. When the rights become exercisable, they will begin to trade separate and apart from the Common Shares. At that time, separate certificates representing the rights will be mailed to holders. Twenty days after a "shares acquisition date", each of the rights will "flip-in" and become the right to purchase two Common Shares of Nordson for $1.00 per share. Upon the occurrence of a "flip-in" event, rights held by a person or group that beneficially owns 15% or more of the outstanding Common Shares, and rights held by certain transferees from any such person or group, will become void. The exercise price, and the number of Common Shares of Nordson to be purchased upon exercise of the rights, are subject to adjustment from time to time to prevent dilution. The Board of Directors may redeem the rights for $.01 each at any time before the 20th calendar day after a "shares acquisition date" or the earlier expiration of the rights. Eric T. Nord and Evan W. Nord are trustees of the Walter G. Nord Trust and the Nord Family Foundation, and Eric T. Nord is trustee of the Eric and Jane Nord Foundation. For purposes of determining the percentage of Common Shares deemed to be beneficially owned by them, Common Shares held by the Walter G. Nord Trust, by the Nord Family Foundation, or by the Eric and Jane Nord Trust will not be attributed to either Eric T. Nord or Evan W. Nord, and Common Shares held by Eric T. Nord or Evan W. Nord will not be attributed to the Walter G. Nord Trust, the Nord Family Foundation, or the Eric and Jane Nord Foundation. Similarly, Common Shares held by the Nord Family Foundation will not be attributed to the Eric and Jane Nord Foundation, and Common Shares held by the Eric and Jane Nord Foundation will not be attributed to the Nord Family Foundation. The terms of the rights are set forth in a Second Restated Rights Agreement between Nordson and National City Bank, as rights agent (the "Restated Rights Agreement"). The provisions of the Restated Rights Agreement may be amended by the Board of Directors to cure any ambiguity or correct any defect or inconsistency. Prior to the close of business on the 20th calendar day following the occurrence of a "shares acquisition date", the Restated Rights Agreement may also be amended to make any other change that the Board of Directors deems to be consistent with the purposes of the Restated Rights Agreement and not adverse to the interests of the Company and its shareholders. A copy of the Restated Rights Agreement has been filed with the Securities and Exchange Commission. A copy of the Restated Rights Agreement is available from Nordson free of charge. This summary of the rights is not complete and is qualified in its entirety by reference to the Restated Rights Agreement. B-2 EX-10.A 4 l04976aexv10wa.txt EX-10A 1995 MGMNT INCENTIVE COMP PLAN AS AMEND '97 Exhibit 10A NORDSON CORPORATION 1995 MANAGEMENT INCENTIVE COMPENSATION PLAN AS AMENDED (FY 1997) 1. PLAN OBJECTIVES The objectives of the Plan are to advance the interests of the corporation and its shareholders by providing executive officers incentive opportunities and to attract, retain and motivate outstanding personnel by: a. Providing compensation opportunities that are competitive with those of other corporations of comparable size and value in similar businesses. b. Focusing key executives' attention on the accomplishment of specifically identified Corporate objectives. c. Establishing incentive pay opportunities appropriate for various levels of individual performance. 2. DEFINITIONS For purposes of the Plan, the following definitions shall control: a. "CORPORATION" - Nordson Corporation, its Divisions and subsidiaries. b. "BOARD" - The Board of Directors of Nordson Corporation. c. "COMMITTEE" - The Compensation Committee appointed by the Board consisting of non-employee Directors. d. "INCENTIVE AWARD" - Awards made by the Committee under this Plan. All awards will be paid in cash. e. "PLAN" - The 1995 Management Incentive Compensation Plan as adopted by the Board. f. "PLAN YEAR" - The Corporation's fiscal year. 3. ADMINISTRATION OF THE PLAN The Plan will be administered by the Committee. The Committee is authorized to interpret the Plan and to establish and amend guidelines necessary for Plan administration. Decisions and determinations of the Committee shall be binding on all persons claiming rights under the Plan. The Committee can amend the 1995 Bonus Plan to the extent necessary to treat the compensation payable pursuant to the 1995 Bonus Plan as qualified performance-based compensation exempt from the non-deductible limitation of Section 162(m) of the Internal Revenue Code. 4. DESCRIPTION OF THE PLAN At the end of each fiscal year the Committee establishes the base salary for executive officers ("Officers") of the Corporation to be in effect the following fiscal year, taking into consideration individual performance, competitive position and salary practices of "peer group" companies. The Committee may also adjust base salaries of Officers from time to time to reflect bona fide promotions or changes in responsibilities. In addition to their base salary, the Officers are also eligible for a cash bonus, the amount of which is established in accordance with the Plan. The Plan provides for the establishment by the Committee of target award levels of Incentive Awards based on the Corporation's performance against specific predetermined performance goals. Performance goals are established on a consolidated basis for Corporate performance for each Plan Year. At the beginning of each Plan Year, the Chief Executive Officer shall submit to the Committee recommendations for the Plan Year which shall include proposed participants and target award levels, and the Committee shall approve or modify these recommendations on or before the 90th day of such Plan Year. As soon as practicable after the end of the Plan Year, each participant's Incentive Award will be determined based on performance against the pre-established performance objectives, and the Committee will certify achievement and approve the awards before payment is made. 5. PARTICIPANTS Participants will be selected by the Committee each year from among the Officers of the Corporation. Directors who are employees of the Corporation will be eligible for inclusion. a. Awards under this Plan may be made only to Officers of the Corporation who are in a position to make significant contributions to the financial success of the Corporation. b. The Chief Executive Officer of the Corporation shall recommend to the Committee, in writing, the Officers who are to be participants under the Plan for each Plan Year. c. Participants for each Plan Year shall be those Officers occupying eligible positions as set forth in Exhibit 1, which exhibit may be amended from time to time with approval of the Committee. d. Employees who are promoted or hired into an eligible position set forth on Exhibit 1 (as amended from time to time) will participate in the Plan for such first year based on their base pay earnings (pro-rated) at the Corporation for the Plan Year and at the target award level associated with the position. e. If, during the Plan Year, a participant shifts between eligible positions set forth on Exhibit 1 (as amended from time to time), the target award level for such participant for such Plan Year will be the average of the target award levels associated with each position held by the participant during the Plan Year based on the number of days in the year that the participant held each position. f. In the event of termination of employment during a Plan Year by reason of disability, retirement within the provisions of the Retirement Plan or other policies of the Corporation, plant closing or divestiture of a business unit, the participant shall earn a pro-rata amount based on the time employed prior to termination during the Plan Year and upon the Corporation's actual performance against established targets during the entire Plan Year. g. In the event of a death of a participant during the Plan Year, the participant's beneficiary under the Corporation's Pension Plan shall receive a pro-rata amount based on the time employed prior to death during the Plan Year and upon the Corporation's actual performance against established targets during the entire Plan Year. h. In the event of termination of employment during a Plan Year for any other reason, participation in the Plan will be as determined by the Committee. 6. TARGET AWARD LEVELS a. The target award levels of annual Incentive Awards, expressed as percentages (not to exceed 150%) of each participant's base salary earnings during the Plan Year, will be recommended by the CEO to the Committee for approval, provided that the maximum annual dollar award to any participant for the Plan Year which began on October 31, 1994 will be $950,000 and the maximum dollar award for each subsequent Plan Year will be 107% of the immediately preceding Plan Year. For example, the maximum annual dollar award for the 1996 Plan Year is $1,016,500, and for the 1997 Plan Year is $1,087,655. Carrying this example forward, the maximum award for the 2005 Plan Year would be $1,868,794. b. Target award levels shall be established by the Committee for each Plan Year as stated in Section 4. 7. PERFORMANCE FACTORS For each Plan Year, two Company performance goals have been established, and are used in a formula for calculating individual Incentive Awards. These are as follows- a. Return on Average Invested Capital (ROAIC), comprising a 50% weighting in the award calculation, with 8% ROAIC meriting a 0% performance factor, 12% ROAIC meriting a 75% performance factor, 16% ROAIC and above meriting a 150% performance factor; and b. Profitability, measured by Earnings Per Share (EPS), comprising a 50% weighting in the award calculation, with an EPS equal to or less than the previous year meriting a 0% performance factor, a 7.5% increase in EPS meriting a 50% performance factor, a 15% increase in EPS meriting a 100% performance factor, and a 20% or higher increase in Earnings Per Share over the previous year meriting a 150% performance factor. Weighted average performance factors will be determined for participants by the extent of the Corporation's achievement of each of the performance goals for the year. Intermediate points will be determined by interpolation. 8. CALCULATION OF AWARDS The Incentive Award of a participant for any Plan Year shall be calculated by multiplying the base salary earnings of the participant for the Plan Year (B) times the target award level (TA, expressed as a % of base salary) times the sum of the Return on Average Invested Capital performance factor (ROAIC-PF) multiplied by .5 and the Profitability performance factor (EPS-PF), multiplied by .5. Otherwise expressed: Incentive Award = B x TA x (ROAIC-PFx.5 + EPS-PFx.5) 9. PAYMENTS OF AWARDS a. Incentive Awards shall be earned and payable in the local currency of the participants and shall be paid in cash not later than the first payroll date in January following the Plan Year in which the Incentive Award was earned. b. The Committee will have the authority and responsibility to reduce the actual Incentive Award payable to a participant by up to a maximum of 20% of the calculated Incentive Award, based upon an individual participant's performance. c. In the event of the death of a participant, any amounts shall be paid as soon as practicable after the end of the Plan Year to the participant's designated beneficiary as provided in Article 5g. d. If termination is by reason of disability or retirement within the provisions of the Retirement Plan or other policies of the Corporation, the date of payment shall be made as determined by the Chief Executive Officer. 10. COMMUNICATION OF THE PLAN After performance results are known and the Committee certifies achievement, the Chief Executive Officer, or his designee, shall communicate to each participant the specific performance factors, the Incentive Award levels, and the manner in which awards will be paid. 11. TERM OF THE PLAN The Plan will remain in effect until terminated by the Committee. EX-10.A.1 5 l04976aexv10waw1.txt EX-10A-1 1995 MGMNT INCENTIVE COMP PLAN EXHIBIT 10A-1 NORDSON CORPORATION 1995 MANAGEMENT INCENTIVE COMPENSATION PLAN ELIGIBLE POSITIONS FOR 2003 PLAN YEAR o President and Chief Executive Officer o Executive Vice President o Sr. Vice President o Vice President(s) o Vice President - Finance and Controller o Vice President - Human Resources EX-10.D 6 l04976aexv10wd.txt EX-10D EXCESS DEFINED RETIREMENT PLAN Exhibit 10D NORDSON CORPORATION EXCESS DEFINED CONTRIBUTION RETIREMENT PLAN The Nordson Corporation Excess Defined Contribution Retirement Plan ("Plan"), originally established effective as of November 1, 1985, by Nordson Corporation to supplement the retirement benefits of certain salaried employees, designated by the Compensation Committee of the Board of Directors (the "Compensation Committee") as permitted by Section 3(36) of the Employee Retirement Income Security Act of 1974 ("ERISA"), and amended and restated in its entirety effective as of November 1, 1987, is hereby further amended as restated effective as of January 1, 1988. ARTICLE I DEFINITIONS 1.1 Definitions. The following words and phrases shall have the meanings indicated, unless a different meaning is plainly required by the context: (a) The term "Company" shall mean Nordson Corporation, an Ohio corporation, its corporate successors and the surviving corporation resulting from any merger of Nordson Corporation with any other corporation or corporations. (b) The term "Employee" shall mean any person employed by the Company on a salaried basis who is designated by the Compensation Committee to participate in the Plan and who has not waived participation in the Plan. (c) The term "Plan" shall mean the excess defined contribution retirement Plan as set forth herein, together with all amendments hereto, which Plan shall be called the "Nordson Corporation Excess Defined Contribution Retirement Plan." (d) The term "Employees' Savings Trust Plan" shall mean the Nordson Employees' Savings Trust Plan in effect on the date of an Employee's retirement, death or other termination of employment. (e) The term "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. Reference to a section of the Code shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section. (f) The term "Non-Union ESOP" shall mean the Nordson Corporation Non-Union Employees Stock Ownership Plan and Trust in effect on the date of an Employee's retirement, death, or other termination of employment. 1.2 Additional Definitions. All other words and phrases used herein shall have the meanings given them in the Employees' Savings Trust Plan, unless a different meaning is clearly required by the context. ARTICLE II EXCESS RETIREMENT BENEFIT 2.1 Eligibility. An Employee who is a Participant in the Employees' Savings Trust Plan and or the Non-Union ESOP whose benefits under either Plan have been limited by Section 401(a)(17), Section 401(k)(3), Section 401(m), Section or 402(g)(1) or Section 415 of the Code, including limitations on tax-deferred and employer-matching contributions, shall be eligible for an excess retirement benefit determined by Section 2.2. In addition, in the event that the Tax Deferred Contributions of an eligible Employee under the Employees' Savings Trust Plan are limited by the provisions of Section 401(a)(17), Section 401(k)(3), Section 415 or 402(g)(1) of the Code, such eligible Employee may elect to defer payment of that portion of his compensation that otherwise could have been made as Tax Deferred Contributions but for these limitations. The deferred payment election shall be made in writing by the eligible Employee and delivered to the Company prior to the beginning of a Plan Year. The election shall be irrevocable until the first day of the next Plan Year. Nothwithstanding any of the foregoing, any reference in Section 2.1 and 2.2 hereunder to the limitations imposed by Section 402(g)(1) of the Code shall automatically include any amendments to such limitation to reflect cost of living increases. 2.2 Amount. The excess retirement benefit payable to an eligible Employee or his beneficiary shall be an amount equal to the sum of: (a) the amount, if any, of the limited contributions an eligible Employee elected to defer in Section 2.1; , (b) an amount that, when added to the vested interest of such Employee in Employer Matching Contributions under the Employees' Savings Trust Plan, equals the value his vested interest in Employer Matching Contributions would have been on the date distribution commences under the Employees' Savings Trust Plan if the limitations of Section 401(a)(17), Section 401(k)(3), Section 401(m), Section 415, or Section 402(g)(1) of the Code had not been in effect; plus (c) an amount, if any, equal to the value of the vested interest an eligible Employee would have been entitled to receive under the Non-Union ESOP if the limitations of Section 401(a)(17) or Section 415 of the Code had not been in effect. In determining the value that an eligible Employees' interest under the Employees' Savings Trust Plan would have been if the limitations of Section 401(a)(17), Section 401(k)(3), Section 401(m), Section 415, or Section 402(g)(1) of the Code, as applicable, had not been in effect as described in (a) and (b) above, it shall be assumed that: (i) his Tax Deferred Contributions and his Employer Matching Contributions under the Employees' Savings Trust Plan were deposited on the dates such contributions otherwise would have been made to the Employees' Savings Trust Plan and held in the guaranteed income contract maintained as part of the Guaranteed Fund that holds the largest amount of assets from the Employees' Savings Trust Plan for such year; and (ii) the interest rate actually paid with respect to such guaranteed income contract under the Guaranteed Fund for the Employees' Savings Trust Plan was paid with respect to the contributions that would otherwise have been made under the Plan; and (iii) such interest was reinvested in the Guaranteed Fund for the Employees' Savings Trust Plan for the Employees' Savings Trust Plan on the date and in the same manner as actual interest under the Guaranteed Fund. In determining the value that an eligible Employee's interest under the Non-Union ESOP would have been if the limitations of Section 401(a)(17) and Section 415 of the Code had not been in effect as described in (c) above, it shall be assumed that his Employer contributions under the Non-Union ESOP, if any, were deposited on the dates such contributions otherwise would have been made to the Non-Union ESOP, and invested and reinvested in Company stock in the same manner and at the same time as the actual assets under the Non-Union ESOP during such period. 2.3 Payments. All payments under the Plan to an eligible Employee or his beneficiary shall be made by the Company from its general assets. The payment of the excess retirement benefits hereunder shall be made at such time and in either a lump sum or equal monthly installments over a two (2) year period as determined by and in the sole discretion of the Compensation Committee of the Board of Directors. The payment of excess retirement benefits hereunder that are attributable to amounts described in Section 2.2 (a) and (b) hereof shall be payable in cash, whereas payment of any excess retirement benefits hereunder that are attributable to amounts described in Section 2.2 (c) hereof shall be payable only in shares in Company stock. 2.4 Withdrawals. An Employee, upon demonstration of financial hardship to and approval by the Compensation Committee, may withdraw from a Plan an amount in cash not to exceed the lesser of $5,000.00 or fifty (50%) percent of the Employee's benefit in the Plan which is attributable to amounts described in Section 2.2(a) and (b) hereof. An Employee shall be limited to one withdrawal in any one Plan Year as such is defined in the Employees' Savings Trust Plan. The term "financial hardship" shall mean any extraordinary or unforeseeable need for funds arising from events beyond the Employee's control. ARTICLE III ADMINISTRATION The Compensation Committee shall be responsible for the general administration of the Plan, for carrying out its provisions, for carrying out its provisions, and for determining the amount of any required excess benefit payments, and shall have powers necessary to administer and carry out the Plan. Actions taken and decisions made by the Compensation Committee shall be final and binding upon all interested parties. In accordance with the provisions of Section 503 of ERISA, the Compensation Committee shall provide a procedure for handling claims for benefits under the Plan. The procedure shall be in accordance with regulations issued by the Secretary of Labor and provide adequate written notice within a reasonable period of time with respect to a claim denial. The procedure shall also provide for a reasonable opportunity for a full and fair review by the Compensation Committee of any claim denial. The Compensation Committee shall be the "administrator" for purposes of ERISA. ARTICLE IV AMENDMENT AND TERMINATION The Company reserves the right to amend or terminate the Plan at any time by action of its Board of Directors. No such action shall however adversely affect any Employee or his beneficiary who is receiving excess retirement benefits under the Plan, unless an equivalent benefit is provided under another Plan or program sponsored by the Company. ARTICLE V MISCELLANEOUS 5.1 Non-Alienation of Retirement Rights or Benefits. An Employee or beneficiary is not permitted to assign, transfer, alienate or otherwise encumber the right to receive payments under the Plan. Any attempt to do so or to permit the payments to be subject to garnishment, attachment or levy of any kind will permit the Company to make payments directly to and for the benefit of the Employee, his beneficiary or any other person. Each such payment may be made without the intervention of a guardian. The receipt of the payee shall constitute a complete acquittance to the Company with respect to the payment. The Company shall have no responsibility for the proper application of any payment. 5.2 Incapacity. The Company shall be permitted to make payments in the same manner as provided for in Section 5.1 if in the judgment of the Compensation Committee, an Employee or his beneficiary is incapable of attending to his financial affairs. 5.3 Plan Non-Contractual. This Plan shall not be construed as a commitment or agreement on the part of any person employed by the Company to continue his employment with the Company, nor shall it be construed as a commitment on the part of the Company to continue the employment or the annual rate of compensation of any such person for any period. All Employees shall remain subject to discharge to the same extent as if the Plan had never been established. 5.4 Interest of Employee. The obligation of the Company under the Plan to provide an Employee or his beneficiary with an excess retirement benefit merely constitutes the unsecured promise of the Company to make payments as provided herein. No person shall have any interest in, or a lien or prior claim upon, any property of the Company. 5.5 Controlling Status. No Employee or beneficiary shall be eligible for a benefit under the Plan unless such Employee is an Employee on the date of his retirement, death, or other termination of employment. 5.6 Claims of Other Persons. The provisions of the Plan shall in no event be construed as giving any person, firm or corporation any legal or equitable right as against the Company, its officers, employees, or directors, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan. 5.7 No Competition. The right of any Employee or his beneficiary to an excess retirement benefit will be terminated, or, if payment thereof has begun, all further payments will be discontinued and forfeited in the event the Employee or his beneficiary at any time subsequent to the effective date hereof: (a) wrongfully discloses any secret process or trade secret of the Company or any of its subsidiaries, or (b) becomes involved directly or indirectly as an officer, trustee, employee, consultant, partner, or substantial shareholder, on his own account or in any other capacity, in a business venture that within the two-year period following his retirement or termination of employment, the Compensation Committee determines to be competitive with the Company. 5.8 Severability. The invalidity or unenforceability of any particular provision of the Plan shall not effect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted therefrom. 5.9 Governing Law. The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Ohio. EXECUTED this _________ day of _____________________, 1992. NORDSON CORPORATION By: ------------------------------------ Title: EX-10.E 7 l04976aexv10we.txt EX-10E EXCESS DEFINED BENEFIT PLAN Exhibit 10E NORDSON CORPORATION EXCESS DEFINED BENEFIT PENSION PLAN Nordson Corporation hereby establishes, effective November 1, 1985, the Nordson Corporation Excess Defined Benefit Pension Plan ("Plan") to supplement the pension benefits of certain salaried employees designated by the Compensation Committee of the Board of Directors or its designee eligible to participate in the Plan in accordance with the terms hereof, as permitted by Section 3(36) of the Employee Retirement Income Security Act of 1974 ("ERISA"). ARTICLE I DEFINITIONS 1.1 Definitions. The following words and phrases shall have the meanings indicated, unless a different meaning is plainly required by the context: (a) The term "Beneficiary" shall mean an Employee's beneficiary or contingent annuitant. (b) The term "Company" shall mean Nordson Corporation, an Ohio corporation, its corporate successors and the surviving corporation resulting from any merger of Nordson Corporation with any other corporation or corporations. (c) The term "Employee" shall mean any person employed by the Company on a salaried basis who is designated by the Compensation Committee of the Board of Directors or its designee to participate in the Plan and who has not waived participation in the Plan. (d) The term "Plan" shall mean the excess defined benefit pension plan as set forth herein, together with all amendments hereto, which Plan shall be called the "Nordson Corporation Excess Defined Benefit Pension Plan." (e) The term "Salaried Pension Plan" shall mean the Nordson Corporation Salaried Employees Pension Plan in effect on the date of an employee's retirement, death, or other termination of employment. 1.2 Additional Definitions. All other words and phrases used herein shall have the meanings given them in the Salaried Pension Plan, unless a different meaning is clearly required by the context. ARTICLE II EXCESS PENSION BENEFIT 2.1 Eligibility. An Employee who is retired, dies, or otherwise terminates his employment with the Company under conditions which make such Employee or Beneficiary eligible for a benefit under the Salaried Pension Plan, and whose benefits under the Salaried Pension Plan are limited by Section 415 of the Internal Revenue Code of 19~4, as amended ("Code"), shall be eligible for an excess pension benefit determined by Section 2.2. 2.2 Amount. Subject to the provisions of Article III, the monthly excess pension benefit payable to an Employee or Beneficiary shall be such an amount which, when added to the monthly pension payable (before any reduction applicable to an optional method of payment) under the Salaried Pension Plan to such person, equals the monthly pension benefit that would have been payable (before any reduction applicable to an optional method of payment) under the Salaried Pension Plan to such person if the limitations of Section 415 of the Code were not in effect. 2.3 Payments. All payments under the Plan to an Employee or Beneficiary shall be made by the Company from its general assets. The terms of payment of the excess pension benefit shall be identical to those specified in the Salaried Pension Plan for the type of benefit the Employee or Beneficiary receives under the Salaried Pension Plan. ARTICLE III OPTIONAL METHODS OF PAYMENT Payment of the excess pension benefit to an Employee or Beneficiary shall be made in accordance with the terms and provisions of any method of payment under the Salaried Pension Plan whether by option or by operation of law, applicable to such Employee or Beneficiary. The amount of the excess pension benefit payable to an Employee or Beneficiary shall be reduced to reflect any such optional method of payment. In making the determination and reductions provided for in this Article III, the Company may rely upon calculations made by the independent actuaries for the Salaried Pension Plan, who shall apply the assumptions then in use in connection with the Salaried Pension Plan. ARTICLE IV ADMINISTRATION The Company shall be responsible for the general administration of the Plan, for carrying out its provisions, and for making any required excess benefit payments. The Company shall have any powers as may be necessary to administer and carry out the provisions of the Plan. Actions taken and decisions made by the Company shall be final and binding upon all interested parties. In accordance with the provisions of Section 503 of ERISA, the Company shall provide a procedure for handling claims of Employees and Beneficiary for benefits under the Plan. The procedure shall be in accordance with regulations issued by the Secretary of Labor and provide adequate written notice within a reasonable period of time with respect to a claim denial. The procedure shall also provide for a reasonable opportunity for a full and fair review by the Company of any claim denial. The Company shall be the "administrator" for purposes of ERISA. ARTICLE V AMENDMENT AND TERMINATION The Company reserves the right to amend or terminate the Plan at any time by action of its Board of Directors. No such action shall, however, adversely affect any Employee or Beneficiary who is receiving excess pension benefits under the Plan, unless an equivalent benefit is provided under the Salaried Pension Plan or another plan sponsored by the Company. ARTICLE VI MISCELLANEOUS 6.1 Non-Alienation of Retirement Rights or Benefits. Employees or Beneficiaries are not permitted to assign, transfer, alienate or otherwise encumber the right to receive payments under the Plan. Any attempt to do so or to permit the payments to be subject to garnishment, attachment or levy of any kind will permit the Company to make payments directly to and for the benefit of the Employee, Beneficiary or any other person. Each such payment may be made without the intervention of a guardian. The receipt of the payee shall constitute a complete acquittance to the Company with respect to any payments, and the Company shall have no responsibility for the proper application of any payment. 6.2 Incapacity. The Company shall be permitted to make payments in the same manner as provided for in Section 6.1 if in the judgment of the Company an Employee or Beneficiary is incapable of attending to his financial affairs. 6.3 Plan Non-Contractual. This Plan shall not be construed as a commitment or agreement on the part of any person employed by the Company to continue his employment with the Company, nor shall it be construed as a commitment on the part of the Company to continue the employment or the annual rate of compensation of any such person for any period. All Employees shall remain subject to discharge to the same extent as if the Plan had never been established. 6.4 Interest of Employee. The obligation of the Company under the Plan to provide an Employee or Beneficiary with an excess pension benefit merely constitutes the unsecured promise of the Company to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of the Company. 6.5 Controlling Status. No Employee or Beneficiary shall be eligible for a benefit under the Plan unless the Employee is an Employee on the date of his retirement, death, or other termination of employment. 6.6 Claims of Other Persons. The provisions of the Plan shall in no event be construed as giving any person, firm or corporation any legal or equitable right against the Company, its officers, employees, or directors, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan. 6.7 No Competition. The right of any Employee or Beneficiary to an excess pension benefit will be terminated, or, if payment thereof has begun, all further payments will be discontinued and forfeited in the event the Employee or Beneficiary at any time subsequent to the effective date hereof: (i) wrongfully discloses any secret process or trade secret of the Company or any of its subsidiaries, or (ii) becomes involved, directly or indirectly as an officer, trustee, employee, consultant, partner, or substantial shareholder, on his own account or in any other capacity, in a business venture that within the two-year period following the retirement or termination of employment of the Employee, the Company's Board of Directors determines to be competitive with the Company. 6.8 Severability. The invalidity or unenforceability of any particular provision of the Plan shall not effect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom. 6.9 Governing Law. The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Ohio. EXECUTED this __________ day of ____________________, 198_. NORDSON CORPORATION By: ------------------------------------ Title: EX-21 8 l04976aexv21.txt EX-21 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 NORDSON CORPORATION SUBSIDIARIES OF THE REGISTRANT The following table sets forth the subsidiaries of the Registrant (each of which is included in the Registrant's consolidated financial statements), and the jurisdiction under the laws of which each subsidiary was organized.

60 SUBSIDIARIES OF THE REGISTRANT -- Continued

OWNERSHIP LEGEND (1) Owned by Electron Fusion Devices, Inc. (2) Owned by Nordson Engineering GmbH and Nordson Corporation (3) Owned by Nordson Benelux S.A./N.V. (4) Doing business as Asymtek (5) Owned by Nordson Corporation and J and M Laboratories (6) Owned by Electron Fusion Devices, Inc. 61 EX-23 9 l04976aexv23.txt EX-23 CONSENT OF AUDITORS EXHIBIT 23 NORDSON CORPORATION CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Forms S-8) listed below and the related prospectuses of Nordson Corporation of our report dated December 9, 2003, with respect to the consolidated financial statements of Nordson Corporation included in this Annual Report (Form 10-K) for the year-ended November 2, 2003: - Nordson Corporation 1982 Amended and Restated Stock Appreciation Rights Plan (now entitled 1988 Amended and Restated Stock Appreciation Rights Plan) (No. 2-66776) - Nordson Employees' Savings Trust Plan (No. 33-18309) - Nordson Hourly-Rated Employees' Savings Trust Plan (No. 33-33481) - Nordson Corporation 1993 Long-Term Performance Plan (No. 33-67780) - Nordson Corporation -- Slautterback Corporation 401(k) Profit Sharing Plan (No. 33-73522) /s/ Ernst & Young LLP Cleveland, Ohio January 21, 2004 62 EX-31.1 10 l04976aexv31w1.txt EX-31.1 302 CERT CEO EXHIBIT 31.1 CERTIFICATION PURSUANT TO RULE 13A-14(a)/15D-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Edward P. Campbell, certify that: 1. I have reviewed this annual report on Form 10-K of Nordson Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ EDWARD P. CAMPBELL -------------------------------------- Edward P. Campbell, President and Chief Executive Officer Date: January 21, 2004 63 EX-31.2 11 l04976aexv31w2.txt EX-31.2 302 CERT CFO EXHIBIT 31.2 CERTIFICATION PURSUANT TO RULE 13A-14(a)/15D-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Peter S. Hellman, certify that: 1. I have reviewed this annual report on Form 10-K of Nordson Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ PETER S. HELLMAN -------------------------------------- Peter S. Hellman, Executive Vice President, Chief Financial and Administrative Officer Date: January 21, 2004 64 EX-32.1 12 l04976aexv32w1.txt EX-32.1 906 CERT CEO EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Nordson Corporation (the "Company") on Form 10-K for the year ended November 2, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward P. Campbell, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ EDWARD P. CAMPBELL -------------------------------------- Edward P. Campbell Chief Executive Officer and Director January 21, 2004 65 EX-32.2 13 l04976aexv32w2.txt EX-32.2 906 CERT CFO EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Nordson Corporation (the "Company") on Form 10-K for the year ended November 2, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter S. Hellman, Executive Vice President, Chief Financial and Administrative Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ PETER S. HELLMAN -------------------------------------- Peter S. Hellman Executive Vice President, Chief Financial and Administrative Officer and Director January 21, 2004 66 EX-99.A 14 l04976aexv99wa.txt EX-99A S-8 UNDERTAKINGS Exhibit 99-a For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned Registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into Registrant's Registration Statements on Form S-8 Nos; 33-18309 (Employees Savings Trust Plan); and 33-33481 (Hourly-Rated Employees Savings Trust Plan): Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. EX-99.B 15 l04976aexv99wb.txt EX-99B S-8 UNDERTAKINGS Exhibit 99-b For the purpose of complying with the amendments to the rules governing Form S-8 under the Securities Act of 1933, the undersigned Registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into Registrant's Registration Statement on Form S-8 No. 2-66776 (1979 Stock Option Plan and 1982 Amended and Restated Stock Appreciation Rights Plan (now entitled 1988 Amended and Restated Stock Appreciation Rights Plan)): (a) That, for purposes of determining any liability under the Securities Act of 1933 (the "Act"), each post-effective amendment to this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and that the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) To remove from registration by means of a post-effective amendment of any of the securities being registered which remain unsold at the termination of the offering. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceedings) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 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Ohio		34-0590250
(State of incorporation)		(I.R.S. Employer Identification No.)

28601 Clemens Road Westlake, Ohio		44145
(Address of principal executive offices)		(Zip Code)


PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for the Company’s Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Effects of Foreign Currency
Item 8. Financial Statements and Supplementary Data
	Notes to Consolidated Financial Statements
	Report of Independent Auditors
	Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
	Item 9a. Controls and Procedures
PART III
	Item 10. Directors and Executive Officers of the Company
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
	Item 14. Principal Accounting Fees and Services
PART IV
	Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Signatures
Schedule II -- Valuation and Qualifying Accounts and Reserves
Index to Exhibits
EX-4-B Second Restated Rights Agreement
EX-10A 1995 Mgmnt Incentive Comp Plan as Amend '97
EX-10A-1 1995 Mgmnt Incentive Comp Plan
EX-10D Excess Defined Retirement Plan
EX-10E Excess Defined Benefit Plan
EX-21 Subsidiaries of the Registrant
EX-23 Consent of Auditors
EX-31.1 302 Cert CEO
EX-31.2 302 Cert CFO
EX-32.1 906 Cert CEO
EX-32.2 906 Cert CFO
EX-99A S-8 Undertakings
EX-99B S-8 Undertakings


		Approximate
Location	Description of Property	Square Feet

Amherst, Ohio^(1)(2)(3)	A manufacturing, laboratory and office complex located on 52 acres of land		585,000
Norcross, Georgia⁽¹⁾	A manufacturing, laboratory and office building located on 10 acres of land		150,000
Dawsonville, Georgia⁽¹⁾	A manufacturing, laboratory and office building (leased)		143,000
Duluth, Georgia⁽¹⁾	An office and laboratory building		110,000
Carlsbad, California⁽³⁾	Three manufacturing and office buildings (leased)		88,000
East Providence, Rhode Island⁽³⁾	A manufacturing, warehouse, distribution and office complex		75,000
Westlake, Ohio	Corporate headquarters located on 25 acres of land		68,000
Swainsboro, Georgia⁽¹⁾	A manufacturing building		59,000
Atlanta, Georgia⁽¹⁾	A warehouse and office building (leased)		50,000
Branford, Connecticut⁽²⁾	A manufacturing and office building (leased)		46,000
Lincoln, Rhode Island⁽³⁾	A manufacturing building		44,000
Talladega, Alabama⁽¹⁾	A manufacturing and office building (leased)		27,000
St. Petersburg, Florida⁽³⁾	A manufacturing and office building (leased)		26,000
Luneburg, Germany⁽¹⁾	A manufacturing building and laboratory		130,000
Erkrath, Germany⁽¹⁾⁽²⁾	An office, laboratory and warehouse building (leased)		63,000
Maastricht, The Netherlands ^(1)(2)(3)	A manufacturing, warehouse and office building (leased)		60,000
Tokyo, Japan^(1)(2)(3)	An office, laboratory and warehouse building (leased)		42,000
Milano, Italy⁽¹⁾⁽²⁾	An office, laboratory and warehouse building (leased)		41,000
St. Thibault Des Vignes, France ⁽¹⁾⁽²⁾	An office building (leased)		29,000
Shanghai, China⁽¹⁾⁽²⁾	A manufacturing, warehouse and office building (leased)		20,000
Bangalore, India⁽¹⁾⁽²⁾	An office and warehouse building		16,000
Slough, U.K.⁽³⁾	A manufacturing, warehouse and office building (leased)		10,000
Dunstable, U.K.⁽³⁾	An office building		6,000


					Position or Office with The Company and Business
Name	Age		Officer Since		Experience During the Past Five (5) Year Period

Edward P. Campbell		54		1988	President and Chief Executive Officer, 1997
Peter S. Hellman		54		2000	Executive Vice President, Chief Financial and Administrative Officer, 2000
					President and Chief Operating Officer, TRW, Inc. from 1995 through 1999
Donald J. McLane		60		1986	Senior Vice President, 1999 Vice President, 1986
Robert A. Dunn, Jr.		56		1997	Vice President, 1997
Bruce H. Fields		52		1992	Vice President, Human Resources, 1992
Mark G. Gacka		49		1998	Vice President, 1998
Michael Groos		52		1995	Vice President, 1995
John J. Keane		43		2003	Vice President, 2003
					Vice President, Packaging and Product Assembly Systems from 2000 to 2003
					Manager, Business Operations from 1999 to 2000
					Manager, Project Management from 1998 to 1999
Nicholas D. Pellecchia		58		1986	Vice President, Finance and Controller, 1986


	2003		2002^(f)		2001		2000		1999
(In thousands except for per-share amounts)
Operating Data^(a)
Sales	$	667,347		647,756		731,416		740,568		700,465
Cost of sales	$	301,566		310,542		337,129		332,597		318,230
% of sales		45		48		46		45		45
Selling and administrative expenses	$	295,157		281,696		321,395		307,559		302,250
% of sales		44		43		44		42		43
Severance and restructuring costs	$	2,028		2,499		13,355		8,960		3,000
Operating profit	$	68,596		53,019		59,537		91,452		76,985
% of sales		10		8		8		12		11
Net income	$	35,160		22,072		24,610		54,632		47,506
% of sales		5		3		3		7		7
Net income adjusted for goodwill amortization ^(b)	$	35,160		22,072		35,853		57,979		50,844
% of sales		5		3		5		8		7
Financial Data^(a)
Working capital	$	65,708		21,926		6,524		116,230		89,376
Net property, plant and equipment and other non-current assets	$	489,436		489,899		500,276		240,802		250,474
Total invested capital	$	555,144		511,825		506,800		357,032		339,850
Total assets	$	766,806		764,472		862,453		610,040		591,790
Long-term obligations	$	255,035		242,935		243,074		109,809		118,452
Shareholders’ equity	$	300,109		268,890		263,726		247,223		221,398
Return on average invested capital — %^(c)		7		4		6		16		14
Return on average shareholders’ equity — % ^(d)		13		8		10		25		22
Per-Share Data^(a)(e)
Basic earnings per share	$	1.04		0.66		0.75		1.68		1.44
Diluted earnings per share	$	1.04		0.66		0.74		1.67		1.42
Dividends per common share	$	0.605		0.57		0.56		0.52		0.48
Book value per common share	$	8.82		8.00		7.96		7.62		6.76
Average common shares		33,703		33,383		32,727		32,455		33,048
Average common shares and common share equivalents		33,899		33,690		33,050		32,767		33,484


Item 5.	Market for the Company’s Common Equity and Related Stockholder Matters


(a)	See accompanying Notes to Consolidated Financial Statements.


(e)	Amounts adjusted for 2-for-1 stock split effective September 12, 2000.


Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations


	1% Point Increase		1% Point Decrease

Effect on total service and interest cost components in 2003	$	609,000	$	(476,000	)
Effect on postretirement obligation as of November 2, 2003	$	6,083,000	$	(4,828,000	)


Segment	2003			2002

Adhesive Dispensing Systems		19	%		21	%
Coating and Finishing Systems		4	%		—
Advanced Technology Systems		13	%		7	%


											There-		Total		Fair
	2003		2004		2005		2006		2007		after		Value		Value
(In thousands)
Long-term debt, including current portion
Fixed-rate debt	$	8,000	$	8,000	$	12,290	$	44,290	$	54,290	$	47,130	$	174,000	$	182,574
Average interest rate		7.09%		7.04%		7.00%		6.94%		6.99%		7.19%		7.09%



			Common Shares in													Accumulated
			Treasury								Capital in					Other			Deferred
									Common		Excess of		Retained			Comprehensive			Stock-based
			Shares			Amount			Shares		Stated Value		Earnings			Loss			Compensation			Total
(In thousands)
Balance at October 29, 2000				16,562		$	(348,979	)	$	12,253	$	103,142	$	493,273		$	(11,946	)	$	(520	)	$	247,223
	Net income													24,610									24,610
	Translation adjustments																(1,740	)					(1,740	)
	Minimum pension liability adjustment net of taxes of $3,012																(4,672	)					(4,672	)

		Total comprehensive income																					18,198
	Shares issued under company stock and employee benefit plans			(845	)		9,332					11,747								(230	)		20,849
	Amortization of deferred stock-based compensation																			316			316
	Purchase of treasury shares			157			(4,547	)															(4,547	)
	Dividends — $.56 per share													(18,313	)								(18,313	)

Balance at October 28, 2001				15,874			(344,194	)		12,253		114,889		499,570			(18,358	)		(434	)		263,726
	Net income													22,072									22,072
	Translation adjustments																3,539						3,539
	Minimum pension liability adjustment net of taxes of $8,008																(12,499	)					(12,499	)

		Total comprehensive income																					13,112
	Shares issued under company stock and employee benefit plans			(622	)		6,918					8,289								(108	)		15,099
	Amortization of deferred stock-based compensation																			294			294
	Purchase of treasury shares			146			(4,330	)															(4,330	)
	Dividends — $.57 per share													(19,011	)								(19,011	)

Balance at November 3, 2002				15,398			(341,606	)		12,253		123,178		502,631			(27,318	)		(248	)		268,890
	Net income													35,160									35,160
	Translation adjustments																12,655						12,655
	Minimum pension liability adjustment net of taxes of $3,626																(5,633	)					(5,633	)

		Total comprehensive income																					42,182
	Shares issued under company stock and employee benefit plans			(601	)		6,658					8,395								(1,347	)		13,706
	Amortization of deferred stock-based compensation																			575			575
	Purchase of treasury shares			179			(4,867	)															(4,867	)
	Dividends — $.605 per share													(20,377	)								(20,377	)

Balance at November 2, 2003				14,976		$	(339,815	)	$	12,253	$	131,573	$	517,414		$	(20,296	)	$	(1,020	)	$	300,109


Land Improvements			15-25 years
Buildings			20-40 years
Machinery and Equipment			3-12 years
Enterprise Management System			10 years


Balance at November 3, 2002	$	2,767
Accruals for warranties		2,942
Warranty payments		(2,799	)
Currency effect		120

Balance at November 2, 2003	$	3,030



	Pension Benefits									Other Postretirement Benefits

	2003			2002			2001			2003			2002			2001
(In thousands)
Service cost	$	4,305		$	4,111		$	3,369		$	1,026		$	881		$	743
Interest cost		8,301			7,888			7,120			1,931			1,529			1,339
Expected return on plan assets		(7,683	)		(8,203	)		(7,509	)		—			—			—
Amortization of prior service cost		242			224			174			(553	)		(369	)		—
Amortization of transition obligation		130			315			456			—			—			—
Recognized net actuarial loss (gain)		455			267			(82	)		941			396			101
Curtailment		—			513			318			—			—			—

Total benefit cost	$	5,750		$	5,115		$	3,846		$	3,345		$	2,437		$	2,183



								Other Postretirement
		Pension Benefits						Benefits

		2003			2002			2003			2002
(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year		$	127,272		$	111,680		$	23,636		$	20,012
	Service cost		4,305			4,111			1,026			881
	Interest cost		8,301			7,888			1,931			1,529
	Participant contributions		110			—			—			—
	Amendments		—			1,433			—			(5,353	)
	Foreign currency exchange rate change		2,451			981			—			—
	Actuarial loss		12,851			6,146			8,168			7,927
	Curtailment		—			(173	)		—			—
	Benefits paid		(4,980	)		(4,794	)		(1,349	)		(1,360	)

Benefit obligation at end of year		$	150,310		$	127,272		$	33,412		$	23,636

Change in plan assets:
Beginning fair value of plan assets		$	65,844		$	72,535		$	—		$	—
	Actual return on plan assets		9,474			(4,096	)		—			—
	Company contributions		10,662			1,593			1,349			1,360
	Participant contributions		110			—			—			—
	Foreign currency exchange rate change		931			606			—			—
	Benefits paid		(4,980	)		(4,794	)		(1,349	)		(1,360	)

Ending fair value of plan assets		$	82,041		$	65,844		$	—		$	—

Reconciliation of accrued cost:
Funded status of the plan		$	(68,269	)	$	(61,428	)	$	(33,412	)	$	(23,636	)
Unrecognized actuarial loss			45,289			35,738			18,896			11,669
Unamortized prior service cost			1,954			2,145			(4,431	)		(4,984	)
Unrecognized net transition obligation			1,840			558			—			—

Accrued benefit cost		$	(19,186	)	$	(22,987	)	$	(18,947	)	$	(16,951	)

Reconciliation of amount recognized in financial statements:
Accrued benefit liability		$	(58,789	)	$	(53,639	)	$	(18,947	)	$	(16,951	)
Intangible asset			2,152			2,461			—			—
Accumulated other comprehensive income			37,451			28,191			—			—

Total amount recognized in financial statements		$	(19,186	)	$	(22,987	)	$	(18,947	)	$	(16,951	)


		Capitalized		Operating
(In thousands)

Fiscal year ending:
	2004	$	5,087	$	8,793
	2005		3,285		6,780
	2006		1,551		5,286
	2007		311		3,937
	2008		27		2,576
	Later years		—		5,653

Total minimum lease payments			10,261	$	33,025

Less amount representing executory costs			1,128

Net minimum lease payments			9,133
Less amount representing interest			1,134

Present value of net minimum lease payments			7,999
Less current portion			3,893

Long-term obligations at November 2, 2003		$	4,106



		Sell				Buy

		Notional		Fair Market		Notional		Fair Market
		Amounts		Value		Amounts		Value
(In thousands)

November 2, 2003 contract amounts:
	Euro	$	10,782	$	10,691	$	41,398	$	42,106
	British pound		979		998		5,547		5,640
	Japanese yen		4,779		4,934		12,973		12,973
	Others		2,400		2,440		9,632		9,767

	Total	$	18,940	$	19,063	$	69,550	$	70,486

November 3, 2002 contract amounts:
	Euro	$	17,760	$	17,884	$	35,705	$	36,249
	British pound		936		941		2,950		3,028
	Japanese yen		2,993		2,875		13,575		13,282
	Others		1,916		1,931		8,172		8,250

	Total	$	23,605	$	23,631	$	60,402	$	60,809



	2003

	Carrying
	Amount			Fair Value
(In thousands)

Cash and cash equivalents	$	6,945		$	6,945
Marketable securities		27			27
Notes payable		(58,227	)		(58,227	)
Long-term debt		(181,716	)		(193,494	)
Forward exchange contracts		278			278
Interest rate swap		73			73


					Weighted-Average
		Number of			Exercise Price
		Options			Per Share
(In thousands, except for per-share amounts)

Outstanding at October 29, 2000			5,708		$	25.27
	Granted		836		$	28.51
	Exercised		(338	)	$	22.84
	Forfeited or expired		(208	)	$	26.40

Outstanding at October 28, 2001			5,998		$	25.82
	Granted		777		$	23.42
	Exercised		(527	)	$	24.44
	Forfeited or expired		(226	)	$	25.90

Outstanding at November 3, 2002			6,022		$	25.63
	Granted		473		$	26.78
	Exercised		(333	)	$	26.28
	Forfeited or expired		(207	)	$	26.49

Outstanding at November 2, 2003			5,955		$	25.65

Exercisable at October 28, 2001			3,854		$	26.16

Exercisable at November 3, 2002			4,278		$	25.91

Exercisable at November 2, 2003			4,424		$	25.74



	Range of Exercise Price

	$20 - $25		$26 - $30		$31 - $35
(Share amounts in thousands)

Number outstanding		2,916		2,953		86
Weighted-average remaining contractual life, in years		5.8		4.4		3.2
Weighted-average exercise price	$	23.00	$	28.09	$	31.88
Number exercisable		2,191		2,168		65
Weighted-average exercise price	$	23.05	$	28.27	$	31.88


		Adhesive
		Dispensing and		Coating and		Advanced
		Nonwoven Fiber		Finishing		Technology		Corporate			Total
(In thousands)
Year ended November 2, 2003
	Net external sales	$	426,204	$	112,722	$	128,421	$	—		$	667,347
	Depreciation		12,019		4,000		4,731		6,546			27,296
	Operating profit		82,911		3,950		16,622		(34,887	) ^(a)		68,596
	Identifiable assets^(c)		203,634		49,438		55,968		482,185	^(b)		791,225
	Expenditures for long-lived assets ^(d)		4,417		1,133		1,329		684			7,563
Year ended November 3, 2002
	Net external sales	$	413,082	$	114,196	$	120,478	$	—		$	647,756
	Depreciation		11,416		4,447		4,623		7,509			27,995
	Operating profit		84,916		414		8,324		(40,635	) ^(a)		53,019
	Identifiable assets^(c)		205,040		56,343		61,778		459,671	^(b)		782,832
	Expenditures for long-lived assets ^(d)		5,219		1,070		4,222		886			11,397
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



		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	$	8,201	$	13,822


Fiscal Year	Amounts

(In thousands)
2004	$	1,318
2005	$	1,001
2006	$	849
2007	$	777
2008	$	738


(In thousands except for per-share amounts)	First		Second		Third		Fourth

2003:
Sales	$	145,323	$	166,679	$	166,272	$	189,073
Cost of sales		66,066		73,582		74,749		87,169
Net income		4,989		8,090		8,745		13,336
Earnings per share:
Basic	$	.15	$	.24	$	.26	$	.39
Diluted		.15		.24		.26		.39
2002:
Sales	$	144,957	$	163,526	$	160,237	$	179,036
Cost of sales		65,203		75,644		74,463		95,232
Net income		5,687		7,780		7,199		1,406
Earnings per share:
Basic	$	.17	$	.23	$	.21	$	.04
Diluted		.17		.23		.21		.04


Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure


Item 10.	Directors and Executive Officers of the Company


Item 12.	Security Ownership of Certain Beneficial Owners and Management


Item 13.	Certain Relationships and Related Transactions


Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K


/s/ WILLIAM P. MADAR William P. Madar Director and Chairman of the Board		January 21, 2004

/s/ EDWARD P. CAMPBELL Edward P. Campbell Director, President and Chief Executive Officer (Principal Executive Officer)		January 21, 2004

/s/ PETER S. HELLMAN Peter S. Hellman Director, Executive Vice President, Chief Financial and Administrative Officer (Chief Financial Officer)		January 21, 2004

/s/ NICHOLAS D. PELLECCHIA Nicholas D. Pellecchia Vice President, Finance and Controller (Chief Accounting Officer)		January 21, 2004

/s/ DR. GLENN R. BROWN Dr. Glenn R. Brown Director		January 21, 2004

/s/ WILLIAM W. COLVILLE William W. Colville Director		January 21, 2004

/s/ WILLIAM D. GINN William D. Ginn Director		January 21, 2004


/s/ STEPHEN R. HARDIS Stephen R. Hardis Director		January 21, 2004

/s/ DR. DAVID W. IGNAT Dr. David W. Ignat Director		January 21, 2004

/s/ JOSEPH P. KEITHLEY Joseph P. Keithley Director		January 21, 2004

/s/ ERIC T. NORD Eric T. Nord Director		January 21, 2004

/s/ MARY G. PUMA Mary G. Puma Director		January 21, 2004

/s/ WILLIAM L. ROBINSON William L. Robinson Director		January 21, 2004

/s/ BENEDICT P. ROSEN Benedict P. Rosen Director		January 21, 2004


	Balance at									Balance
	Beginning		Charged to				Currency			at End
	of Year		Expense		Deductions		Effects			of Year
(In thousands)
Allowance for Doubtful Accounts
Fiscal 2001	$	2,825		2,289		1,112		16		$	4,018

Fiscal 2002	$	4,018		2,216		2,594		141		$	3,781

Fiscal 2003	$	3,781		1,581		1,462		352		$	4,252


Inventory Obsolescence Reserve
Fiscal 2001	$	8,764		6,399		4,584		(9	)	$	10,570

Fiscal 2002	$	10,570		16,902		4,566		243		$	23,149

Fiscal 2003	$	23,149		2,243		21,281		444		$	4,555


Exhibit
Number		Description

	(3)	Articles of Incorporation and By-Laws
	3-a	1989 Amended Articles of Incorporation (incorporated herein by reference to Exhibit 3-a to Registrant’s Annual Report on Form 10-K for the year-ended October 31, 1999)
	3-b	1998 Amended Regulations (incorporated herein by reference to Exhibit 3-b to Registrant’s Annual Report on Form 10-K for the year-ended November 1, 1998)
	(4)	Instruments Defining the Rights of Security Holders, including indentures
	4-a	Instruments related to Industrial Revenue Bonds (These instruments are not being filed as exhibits to this Annual Report on Form 10-K. The Registrant agrees to furnish a copy of such instruments to the Commission upon request.)
	4-b	Second Restated Rights Agreement between Nordson Corporation and National City Bank, Rights Agent
	4-c	$350 million Credit Agreement between Nordson Corporation and various financial institutions (incorporated herein by reference to Exhibit 4a to Registrant’s Form 10-Q for the quarter-ended July 29, 2001)
	4-d	$100 million Senior Note Purchase Agreement between Nordson Corporation and various insurance companies (incorporated herein by reference to Exhibit 4b to Registrant’s Form 10-Q for the quarter-ended July 29, 2001)
	(10)	Material Contracts
	10-a	Nordson Corporation 1995 Management Incentive Compensation Plan as Amended*
	10-a-1	Nordson Corporation 1995 Management Incentive Compensation Plan Exhibit 1 for 2003 Plan Year*
	10-b	Nordson Corporation Deferred Compensation Plan (incorporated herein by reference to Exhibit 10-b to Registrant’s Annual Report on Form 10-K for the year-ended October 29, 2000)*
	10-c	Indemnity Agreement*
	10-d	Restated Nordson Corporation Excess Defined Contribution Retirement Plan*
	10-d-1	First Amendment to Nordson Corporation Excess Defined Contribution Retirement Plan (incorporated herein by reference to Exhibit 10-e-1 to Registrant’s Annual Report on Form 10-K for the year-ended October 29, 2000)*
	10-e	Nordson Corporation Excess Defined Benefit Pension Plan*
	10-e-1	First Amendment to Nordson Corporation Excess Defined Benefit Pension Plan (incorporated herein by reference to Exhibit 10-f-1 to Registrant’s Annual Report on Form 10-K for the year-ended October 29, 2000)*
	10-e-2	Second Amendment to Nordson Corporation Excess Defined Benefit Retirement Plan (incorporated herein by reference to Exhibit 10-f-2 to Registrant’s Annual Report on Form 10-K for the year-ended October 29, 2000)*
	10-f	Employment Agreement between the Registrant and Edward P. Campbell (incorporated herein by reference to Exhibit 10-k to Registrant’s Annual Report on Form 10-K for the year-ended November 1, 1998)*
	10-g	Nordson Corporation 1993 Long-Term Performance Plan, as amended March 12, 1998 (incorporated herein by reference to Exhibit 10-j-1 to Registrant’s Annual Report on Form 10-K for the year-ended October 29, 2000)*
	10-h	Nordson Corporation Assurance Trust Agreement (incorporated herein by reference to Exhibit 10-q to Registrant’s Annual Report on Form 10-K for the year-ended November 1, 1998)*
	10-h-1	Employment Agreement (Change in Control) between the Registrant and Edward P. Campbell (incorporated herein by reference to Exhibit 10-q-1 to Registrant’s Annual Report on Form 10-K for the year-ended November 1, 1998)*