EX-99.3 4 l24943aexv99w3.htm EX-99.3 EX-99.3
 

EXHIBIT 99.3
NORDSON CORPORATION, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
As at and for the year ended October 31, 2006
On November 16, 2006, Nordson Corporation (“Nordson”) signed a purchase agreement to acquire Dage Holdings Limited and its subsidiaries (“Dage”). The acquisition closed on December 14, 2006 following regulatory approval as well as completion of customary closing conditions. The purchase consideration was approximately $230 million, subject to adjustment (the “Dage acquisition”).
The following unaudited pro forma condensed combined financial information as at and for the year ended October 31, 2006 has been derived by application of pro forma adjustments to audited historical consolidated financial statements included elsewhere in this filing or previously filed with the Securities and Exchange Commission. The unaudited pro forma condensed combined income statement for the year ended October 31, 2006 gives effect to the Dage acquisition as if it had occurred on November 1, 2005. The unaudited pro forma condensed combined balance sheet as at October 31, 2006 gives effect to the Dage acquisition as if it had occurred on October 31, 2006.
Nordson has a fiscal year end of October 31st, whereas, Dage has a fiscal year-end of April 30th. In order to prepare the unaudited pro forma condensed combined statement of income for the year ended October 31, 2006, Dage’s operating results have been aligned to conform to those of Nordson’s fiscal year end. This was done utilizing Dage’s historical financial statements as at and for the year ended April 30, 2006 and Dage’s historical unaudited financial statements as at and for the six-month periods ended October 31, 2005 and October 31, 2006.
The historical financial information of Dage has been prepared in accordance with accounting principles generally accepted in the United Kingdom (“UK GAAP”) and is presented in pounds sterling. For the purposes of presenting the unaudited pro forma condensed combined financial information as at and for the year ended October 31, 2006 the financial information of Dage has been adjusted to conform with US GAAP and translated into US dollars as described within Note 4. The reconciliation between US GAAP as applied by Nordson and UK GAAP as applied by Dage as at and for the year ended October 31, 2006 is based on management’s review of Dage’s summary of significant accounting policies disclosed in the latter’s historical consolidated financial statements. Further review of Dage’s accounting policies and financial statements may result in required revisions to Dage’s policies and classifications to conform to Nordson’s US GAAP accounting policies.
In addition, certain historical balances of Dage have been reclassified to conform to the pro forma combined presentation. Management expects that there could be additional reclassifications upon further review of Dage’s accounting policies and financial statements.
The unaudited pro forma condensed combined financial information includes pro forma adjustments that are (i) directly attributable to the Dage acquisition, and (ii) factually supportable. With respect to the unaudited pro forma condensed combined income statement, only the pro forma events expected to have a continuing impact on the combined results are included. The pro forma condensed combined income statement excludes certain non-recurring items relating to the impact on cost of sales of the increase in fair value of inventory. The pro forma adjustments are described in the notes accompanying the unaudited pro forma condensed combined financial information. The pro forma adjustments are based upon available information and certain assumptions which management believes are reasonable.
The unaudited pro forma condensed combined financial information was prepared using the purchase method of accounting as described in SFAS No. 141 “Business Combinations”, to account for the Dage acquisition. Accordingly, management has adjusted the historical consolidated financial information to give effect to the consideration issued in connection with the Dage acquisition. In the unaudited pro forma condensed combined financial information, Nordson’s cost to acquire Dage has been allocated to the assets acquired and the liabilities assumed based upon management’s preliminary estimate of their respective fair values as at the date of the Dage acquisition. Any difference between the fair value of the consideration and the fair value of the assets acquired and liabilities assumed has been recorded as goodwill. The purchase price allocation adjustments reflected in the unaudited pro forma condensed combined financial information are preliminary, have been made solely for the purpose of preparing this unaudited pro forma condensed combined financial information and are subject to revision based upon final calculations and the resolution of purchase price adjustments pursuant to the purchase agreement as additional information becomes available. The final allocation of the purchase price in the Dage

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NORDSON CORPORATION, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
As at and for the year ended October 31, 2006
acquisition will be determined at a later date and will depend on a number of factors, including the final valuation of the tangible and identifiable intangible assets acquired and liabilities assumed in the acquisition. An independent third-party appraiser has performed a preliminary valuation of these assets as at the closing date of the acquisition, and upon a final valuation the purchase price will be adjusted. Such final adjustments, including increases to depreciation and amortization resulting from the allocation of purchase price to amortizable tangible and intangible assets, may be material. This valuation will be based on the actual net tangible and intangible assets and liabilities that existed as at the closing date of the Dage acquisition.
As a result of the acquisition, Dage will be wholly-owned by Nordson with assets, liabilities and an equity structure that will not be comparable to historical periods.
The unaudited pro forma condensed combined financial information does not include the impacts of any revenue, cost or other operating synergies that may result from the Dage acquisition or any related restructuring costs.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not purport to represent what the results of operations and financial condition would have been had the Dage acquisition actually occurred as at the dates indicated, nor does it project the results of operations for any future period or the financial condition at any future date.
The unaudited pro forma condensed combined financial information should be read in conjunction with Nordson’s historical consolidated financial statements and related notes thereto, Risk Factors, Selected Historical Financial Data and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Nordson’s Annual Report on Form 10-K for the year ended October 31, 2006 which have been previously filed with the Securities and Exchange, and the audited historical consolidated financial statements of Dage for the year ended April 30, 2006 and the unaudited historical consolidated financial statements of Dage for the six months ended October 31, 2006 included elsewhere in this filing.

Page 2

 

Unaudited Pro Forma Condensed Combined Balance Sheet
As at October 31, 2006
(in US dollars in thousands)
                                 
            Dage           Nordson
    Nordson   Holdings           Corporation
    Corporation   Limited   Pro Forma   Combined
    Historical   Historical   Adjustments   Pro Forma
            (unaudited)   (unaudited)   (unaudited)
Assets
                                
Current assets:
                                
Cash and cash equivalents
     48,859       3,001       (42,052 )(a)     9,808  
Marketable securities
     9       —       —       9  
Receivables — net
     190,459       17,484       —       207,943  
Inventories — net
     83,688       14,258       7,722 (g)     105,668  
Deferred income taxes
     19,287       2,411       —       21,698  
Prepaid expenses
     5,002       1,053       —       6,055  
 
                                
Total current assets
     347,304       38,207       (34,330 )     351,181  
 
                                
 
                                
Property, plant and equipment — net
     105,415       2,486       1,036 (d)     108,937  
Goodwill — net
     331,915       14,163       188,843 (f)     534,920  
Intangible assets — net
     8,806       107       42,053 (e)     50,966  
Deferred income taxes
     9,961       —       (9,961 )(j)     —  
Other assets
     19,489       —       —       19,489  
 
                                
TOTAL ASSETS
     822,890       54,962       187,641       1,065,493  
 
                                
 
                                
Liabilities and shareholders’ equity
                                
Current liabilities:
                                
Notes Payable
     15,898       9,363       188,293 (a)     213,554  
Accounts Payable
     38,680       4,508       —       43,188  
Income taxes payable
     10,951       2,173       —       13,124  
Accrued liabilities
     106,842       17,463       —       124,305  
Customer advance payments
     10,015       32       —       10,047  
Current maturities of long-term debt
     54,290       14,195       —       68,485  
Current obligations under capital leases
     4,649       —       —       4,649  
 
                                
Total current liabilities
     241,325       47,734       188,293       477,352  
 
                                
 
                                
Long-term debt
     47,130       —       —       47,130  
Obligations under capital leases
     5,071       —       —       5,071  
Pension and retirement obligations.
     43,022       1,333       193 (h)     44,548  
Deferred income taxes
     —       (175 )     5,225 (j)     5,050  
Other liabilities
     55,814       —       —       55,814  
 
                                
Shareholders’ equity:
                                
Common shares
     12,253       473       (473 )(i)     12,253  
Capital in excess of stated value
     210,690       3,590       (3,590 )(i)     210,690  
Capital redemption reserve
     —       130       (130 )(i)     —  
Retained earnings
     681,018       3,206       (3,206 )(i)     681,018  
Accumulated other comprehensive loss
     (12,518 )     (1,329 )     1,329 (i)     (12,518 )
Common shares in treasury, at cost
     (460,915 )     —       —       (460,915 )
Deferred stock-based compensation
     —       —       —       —  
 
                                
Total shareholders’ equity
     430,528       6,069       (6,069 )     430,528  
 
                                
 
                                
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
     822,890       54,962       187,641       1,065,493  
 
                                

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Unaudited Pro Forma Condensed Combined Statement of Income
For the year ended October 31, 2006
(in US dollars in thousands except for per share amounts)
                                 
            Dage             Nordson  
    Nordson     Holdings             Corporation  
    Corporation     Limited     Pro Forma     Combined  
    Historical     Historical     Adjustments     Pro Forma  
            (unaudited)     (unaudited)     (unaudited)  
 
                                
Net Sales
     892,221       57,552       —       949,773  
 
                                
Operating costs and expenses:
                                
Cost of Sales
     379,800       25,514       614 (d)     405,928  
Selling and administrative expenses
     362,179       22,165       2,343 (d)/(e)/(h)     386,687  
Severance and restructuring costs
     2,627       —       —       2,627  
 
                        
 
     744,606       47,680       2,874       795,159  
 
                        
Operating profit
     147,615       9,872               157,487  
 
                                
Other income/(expense):
                                
Interest expense
     (12,017 )     (1,486 )     (10,686 )(b)     (24,189 )
Interest and investment income
     1,867       125       (2,140 )(c)     (148 )
Other — net
     (1,031 )     —       —       (1,031 )
 
                        
 
     (11,181 )     (1,361 )     (12,825 )     (25,368 )
 
                        
Income before income taxes
     136,434       8,511       (15,699 )     129,246  
 
                                
Income tax provision:
                                
Current
    39,719       3,159       (5,499 )(k)     37,379  
Deferred
     (952 )     (614 )     —       (1,566 )
 
                        
 
     38,767       2,544       (5,499 )     35,812  
 
                        
Income from continuing operations
     97,667       5,967       (10,200 )     93,434  
 
                        
 
                                
Average common shares
     33,365                       33,365  
Incremental common shares attributable to outstanding stock options, nonvested stock and deferred stock-based compensation
     815                       815  
 
                            
Average common shares and common share equivalents
     34,180                       34,180  
 
                            
 
                                
Basic earnings per share from continuing operations
   $ 2.93                     $ 2.80  
 
                                
Diluted earnings per share from continuing operations
   $ 2.86                     $ 2.73  

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Notes to Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars in thousands except for per share amounts)
 
(1)   Sources and Uses of Funds
 
    Set forth below are the estimated sources and uses of funds reflected in the Dage acquisition.
                         
Sources   US$’000     Uses     US$’000  
Existing revolving credit facility
     188,293     Cash Price     229,573  
Cash
     42,052     Transaction Fees     772 (a)
 
                    
     Total Sources
     230,345          Total Uses     230,345  
 
                    
 
(a)   Transaction fees include an estimated accrual of $345,000 in respect of fees that have not yet been billed.
 
(2)   Purchase Price
 
    The estimated purchase price and the allocation of the estimated purchase price discussed below are preliminary as noted in the introduction above. The actual purchase price will be determined once the actual contractual closing adjustment and the actual transaction-related costs of Nordson have been determined. The following is a preliminary estimate of the purchase price of Dage:
         
    US$’000  
Cash paid
     229,573  
Transaction fees
     772  
 
      
Total estimated preliminary purchase price
     230,345  
 
      
Under the purchase price method of accounting, the total estimated purchase price as shown in the table above is allocated to the fair value of assets and liabilities acquired, including identifiable intangible assets, based on a preliminary independent valuation analysis with the residual being recorded as goodwill. The allocation of the preliminary purchase price on a pro forma basis and the estimated useful lives associated with these assets is as follows:
             
      Fair Value      
      US$’000     Useful economic life
Customer Relationships
    14,910     15 years
Trademarks/Tradenames
    9,650     Indefinite
Domain name
    20     Indefinite
Technology
    17,580     10 — 15 years
Property, plant and equipment
    3,522     2 — 15 years
Inventory
    21,980     Not applicable
Pension liability
    (1,526 )   Not applicable
Other assets/liabilities
    (23,878 )   Not applicable
Deferred tax liability on acquisition
    (15,186 )   Not applicable
Goodwill
    203,273     Indefinite
 
           
Total purchase price
    230,345      
 
           

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Notes to Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars in thousands except for per share amounts)
Below is a summary of the pro forma fair value adjustments arising on the preliminary purchase price allocation:
         
    US$’000  
 
        
Purchase price adjustment:
        
Historical carrying value of net assets (b)
     5,801  
Fair value adjustment for intangible assets not subject to amortization
     9,563  
Fair value adjustment for intangible assets subject to amortization
     32,490  
Fair value adjustment for property, plant and equipment
     1,036  
Fair value adjustment for inventory
     7,722  
Fair value adjustment for pension liability
     (193 )
Net increase in goodwill
     189,110  
Net deferred tax liability on fair value adjustments
     (15,186 )
 
      
 
     230,345  
 
      
 
(b)   Management believes the historical carrying amounts approximate fair value for these items except for intangible assets, property, plant and equipment and inventory.
The final allocation of the purchase price will be determined at a later date and is dependent on a number of factors, including the final evaluation of the fair value of our tangible and identifiable intangible assets acquired and liabilities assumed. An independent third-party appraiser has performed a preliminary valuation of these assets and upon a final valuation, the purchase price allocation will be adjusted. Such final adjustments, including increases to depreciation and amortization resulting from the allocation of purchase price to amortizable tangible and intangible assets, may be material.
(3)   Pro Forma Adjustments
  a.   Reflects existing cash and cash equivalents used to fund the Dage acquisition.
 
  b.   Reflects the increased interest as at October 31, 2006 on the debt being incurred to finance the acquisition described in footnote 1 above. Interest expense on the revolving credit facility of $188,293 was estimated at $10,686 for the year using an interest rate of 5.675%, the interest rate on the revolving credit facility on the date of the drawdown. A 1/8% change in the interest rate on our pro forma indebtedness would change pro forma interest expense by approximately $235. The unaudited pro forma condensed combined statement of income does not assume reduction in interest based on anticipated principal repayments.
 
  c.   Records interest income of $2,140 lost as a result of the liquidation of cash and cash equivalents of $42,052 assuming a current yield of 5.088%.
 
  d.   Records the book value of Dage’s property, plant and equipment at its preliminary estimated value.
                                         
                            Estimated    
    Historical   Preliminary   Increase   Useful   Annual
    Amount, net   Fair Value   (Decrease)   Life (in years)   Depreciation
    US$’000   US$’000                   US$’000
Land and buildings
     40       966       926       9 — 15       87  
Plant and Machinery
     2,446       2,556       111       2 — 15       614  
 
                                        
Total pro forma adjustments
                     1,036               700  
 
                                        
Depreciation expense has been calculated using a straight-line method over the estimated useful life.

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Notes to Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars in thousands except for per share amounts)
  e.   Records identifiable intangible assets at their preliminary estimated fair values.
                                         
            Preliminary           Estimated    
    Historical   Fair   Increase   Useful   Annual
    Amount, net   Value   (Decrease)   Life (in years)   Amortization
    US$’000   US$’000                   US$’000
Trademarks/Tradenames
     107       9,650       9,543     Indefinite     —  
Customer relationships
             14,910       14,910       15       994  
Domain name
             20       20     Indefinite     —  
Technology — Bond Testers
             14,880       14,880       15       992  
Technology — X-Ray
             2700       2,700       10       270  
 
                                        
Total pro forma adjustments
                     42,053               2,256  
 
                                        
      Fair values for technology, trademarks, domain name and customer relationships have been estimated using the income approach. Amortization expense has been calculated using the straight-line method over the estimated useful life.
 
  f.   Eliminates goodwill recorded in the historical financial statements of Dage and records the preliminary fair value of goodwill resulting from the pro forma allocation of the purchase price. Goodwill resulting from the acquisition is not amortized. It will be assessed for impairment at least annually in accordance with FASB Statement No. 142, Goodwill and Other Intangible Assets.
 
  g.   Records the fair value of inventory. The pro forma condensed combined income statement excludes the impact on cost of sales of the increase in fair value of inventory as this is a non-recurring item.
 
  h.   Records the fair value of the defined benefit pension plan on the balance sheet and eliminates the annual amortization of actuarial losses in the income statement.
 
  i.   Eliminates Dage’s historical shareholders’ equity.
 
  j.   Records the net deferred tax liability related to the step up in the fair values of assets acquired (including identifiable intangible assets) and liabilities assumed and reclassifies net non-current deferred tax assets recorded in Nordson’s historical financial statements:
         
    US$’000
Increase in value of property, plant and equipment
     1,036  
Increase in value of inventory
     7,722  
Increase in value of pension liability
     (193 )
Increase in value of trademarks
     9,543  
Fair value of other identifiable intangible assets
     32,510  
 
        
 
     50,619  
UK statutory tax rate
     30.0 %
 
        
Net deferred tax liabilities resulting from purchase price allocation
     15,186  
Reclass of non-current deferred tax asset
     (9,961 )
 
        
Total pro forma adjustment
     5,225  
 
        
  k.   Reflects the federal and state income tax effect of the pro forma adjustments. Income tax effects have been calculated using a statutory tax rate of 35% for adjustments originating in the US and 30% for adjustments originating in the UK. The pro forma combined tax expense does not reflect the amounts that would have resulted had Nordson and Dage filed consolidated income tax returns during the period presented.

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Notes to Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars in thousands except for per share amounts)
(4)   UK GAAP to US GAAP adjustments
The following tables show a reconciliation of the historical profit and loss account and balance sheet of Dage for the unaudited period ended October 31, 2006, prepared in accordance with UK GAAP and in pounds sterling, to the statement of income and balance sheet prepared in accordance with US GAAP and in U.S. Dollars included in the unaudited pro forma combined condensed financial information.
The UK GAAP to US GAAP adjustments represent the significant adjustments that are required to present the financial position and operations of Dage under US GAAP (in thousands). This should be read in conjunction with “Note 27 — Summary of significant differences between UK GAAP and US GAAP” of the audited financial statements of Dage Holdings Limited for the year ended April 30, 2006 and “Note 10 — Summary of Significant differences between UK GAAP and US GAAP” of the unaudited financial statements of Dage Holdings Limited for the six months ended October 31, 2006 included elsewhere in this filing.

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Notes to Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars in thousands except for per share amounts)
                                                                         
                                                                    Dage Holdings  
    Dage Holdings Limited             Adjustment 2:             Adjustment 4:             Dage Holdings Limited as             Limited as at  
    as at Oct 31, 2006 UK     Adjustment 1:     Goodwill     Adjustment 3:     Compensated     Adjustment 6:     at Oct 31, 2006 US GAAP     Currency     Oct 31, 2006 US GAAP  
    GAAP (£ ’000)     Pensions     amortisation     Derivatives     absences     Reclassification     (£’000)     translation     ($’000)  
Assets
                                                                        
Current assets:
                                                                        
Cash and cash equivalents
     1,573                                               1,573       0.5242       3,001  
Marketable securities
     —                                               —       0.5242       —  
Receivables — net
     9,165                                               9,165       0.5242       17,484  
Inventories — net
     7,360                                       114       7,474       0.5242       14,258  
Deferred income taxes
     1,264                                               1,264       0.5242       2,411  
Prepaid expenses
     552                                               552       0.5242       1,053  
                   
Total current assets
     19,914       —       —       —       —       114       20,028       0.5242       38,207  
                   
 
                                                                        
Property, plant and equipment — net
     1,303                                               1,303       0.5242       2,486  
Goodwill — net
     5,082               2,342                               7,424       0.5242       14,163  
Intangible assets — net
     56                                               56       0.5242       107  
Deferred income taxes
     —                                               —       0.5242       —  
Other assets
     —                                               —       0.5242       —  
                   
TOTAL ASSETS
     26,355       —       2,342       —       —       114       28,811       0.5242       54,962  
                   
 
                                                                        
Liabilities and shareholders’ equity
                                                                        
Current liabilities:
                                                                        
Notes Payable
     4,908                                               4,908       0.5242       9,363  
Accounts Payable
     2,363                                               2,363       0.5242       4,508  
Income taxes payable
     1,139                                               1,139       0.5242       2,173  
Accrued liabilities
     8,994                       71       89               9,154       0.5242       17,463  
Customer advance payments
     17                                               17       0.5242       32  
Current maturities of long-term debt
     7,441                                               7,441       0.5242       14,195  
Current obligations under capital leases
     —                                               —       0.5242       —  
                   
Total current liabilities
     24,862       —       —       71       89       —       25,022       0.5242       47,734  
                   
 
                                                                        
Long-term debt
                                                     —       0.5242       —  
Obligations under capital leases
                                                     —       0.5242       —  
Pension and retirement obligations
     560       139                                       699       0.5242       1,333  
Deferred Income Tax
     191       (234 )             (21 )     (27 )             (91 )     0.5242       (175 )
Other liabilities
                                                     —       0.5242       —  
 
                                                                        
Shareholders’ equity:
                                                                        
Common shares
     248                                               248       0.5242       473  
Capital in excess of stated value
     1,882                                               1,882       0.5242       3,590  
Capital Redemption Reserve
     68                                               68       0.5242       130  
Retained earnings
     (968 )     304       2,342       (50 )     (62 )     114       1,680       0.5242       3,206  
Accumulated other comprehensive loss
     (488 )     (209 )                                     (697 )     0.5242       (1,329 )
Common shares in treasury, at cost
                                                     —       0.5242       —  
Deferred stock-based compensation
                                                     —       0.5242       —  
                   
Total shareholders’ equity
     742       95       2,342       (50 )     (62 )     114       3,182       0.5242       6,070  
                   
 
                                                                        
                   
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
     26,355       —       2,342       —       —       114       28,811       0.5242       54,963  
                   

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Notes to Unaudited Pro Forma Condensed Combined Financial Information
(in US dollars in thousands except for per share amounts)
                                                                         
    Dage Holdings                                             Dage Holdings             Dage Holdings  
    Limited for the                                             Limited for the             Limited for the  
    year ending October             Adjustment 2:             Adjustment 4:             year ending October             year ending October  
    31, 2006 UK GAAP     Adjustment 1:     Goodwill     Adjustment 3:     Compensated     Adjustment 6:     31, 2006 US GAAP     Currency     31, 2006 US GAAP  
    (£’000)     Pensions     amortisation     Derivatives     absences     Reclassification     (£’000)     translation     ($’000)  
 
Sales
     31,832                                               31,832       0.5531       57,552  
 
                                                                        
Operating costs and expenses:
                                                                        
Cost of Sales
     14,489                               11       (388 )     14,112       0.5531       25,514  
Selling and administrative expenses
     12,108       83       (468 )     71       78       388       12,260       0.5531       22,165  
Severance and restructuring costs
     —                                               —       0.5531       —  
                   
 
     26,597       83       (468 )     71       89       —       26,372       0.5531       47,680  
                   
Operating profit
     5,235       (83 )     468       (71 )     (89 )     —       5,460       0.5531       9,872  
 
                                                                        
Other income/(expense):
                                                                        
Interest expense
     (822 )                                             (822 )     0.5531       (1,486 )
Interest and investment income
     69                                               69       0.5531       125  
Other — net
                                                     —       0.5531       —  
                   
 
     (753 )     —       —       —       —       —       (753 )     0.5531       (1,361 )
                   
Income from continuing operations before income taxes
     4,482       (83 )     468       (71 )     (89 )     —       4,707       0.5531       8,511  
 
                                                                        
Income tax provision:
                                                                        
Current
     1,747                                               1,747       0.5531       3,159  
Deferred
     (267 )     (25 )             (21 )     (27 )             (340 )     0.5531       (614 )
                   
 
     1,480       (25 )           (21 )     (27 )     —       1,407       0.5531       2,544  
                   
Income from continuing operations
     3,002       (58 )     468       (50 )     (62 )     —       3,300       0.5531       5,967  
                   
 
(1)   Adjustment to recognize a minimum pension liability under US GAAP and to amortize actuarial gains and losses through the income statement over the expected remaining working lives of participating employees.
 
(2)   Adjustment to reinstate amortization of goodwill incurred from November 1, 2001.
 
(3)   Adjustment to recognize the fair value of forward contracts held by Dage. Changes in fair value are recognized in the income statement.
 
(4)   Adjustment to accrue for earned and unpaid vacation for Dage employees under US GAAP.
 
(5)   Adjustments to reclassify commission expense of £1.6 million from cost of sales to selling and administrative expenses and to reclassify certain manufacturing expenses amounting to £1.2 million from selling and administrative expenses to cost of sales (with a net impact on inventory of £0.1 million) in order to align to Nordson’s accounting policies.
 
(6)   The balance sheet is converted to U.S. Dollars using the closing rate as at October 31, 2006 of $1:£0.5242. The income statement is converted to U.S. Dollars using the average exchange rate for the period presented of $1: £0.5531.

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