Company Quick10K Filing
Price143.01 EPS6
Shares58 P/E25
MCap8,323 P/FCF22
Net Debt1,127 EBIT478
TTM 2019-10-31, in MM, except price, ratios
10-K 2020-10-31 Filed 2020-12-18
10-Q 2020-07-31 Filed 2020-09-04
10-Q 2020-04-30 Filed 2020-06-05
10-Q 2020-01-31 Filed 2020-03-05
10-K 2019-10-31 Filed 2019-12-13
10-Q 2019-07-31 Filed 2019-09-05
10-Q 2019-04-30 Filed 2019-06-06
10-Q 2019-01-31 Filed 2019-03-07
10-K 2018-10-31 Filed 2018-12-14
10-Q 2018-07-31 Filed 2018-09-04
10-Q 2018-04-30 Filed 2018-06-04
10-Q 2018-01-31 Filed 2018-03-05
10-K 2017-10-31 Filed 2017-12-15
10-Q 2017-07-31 Filed 2017-09-05
10-Q 2017-04-30 Filed 2017-06-09
10-Q 2017-01-31 Filed 2017-03-06
10-K 2016-10-31 Filed 2016-12-15
10-Q 2016-07-31 Filed 2016-09-06
10-Q 2016-04-30 Filed 2016-06-08
10-Q 2016-01-31 Filed 2016-03-07
10-K 2015-10-31 Filed 2015-12-15
10-Q 2015-07-31 Filed 2015-09-04
10-Q 2015-04-30 Filed 2015-06-04
10-Q 2015-01-31 Filed 2015-03-06
10-K 2014-10-31 Filed 2014-12-15
10-Q 2014-07-31 Filed 2014-09-04
10-Q 2014-04-30 Filed 2014-06-04
10-Q 2014-01-31 Filed 2014-03-07
10-K 2013-10-31 Filed 2013-12-16
10-Q 2013-07-31 Filed 2013-09-05
10-Q 2013-04-30 Filed 2013-06-04
10-Q 2013-01-31 Filed 2013-03-07
10-K 2012-10-31 Filed 2012-12-17
10-Q 2012-07-31 Filed 2012-09-05
10-Q 2012-04-30 Filed 2012-06-05
10-Q 2012-01-31 Filed 2012-03-06
10-K 2011-10-31 Filed 2011-12-16
10-Q 2011-07-31 Filed 2011-09-09
10-Q 2011-04-30 Filed 2011-06-03
10-Q 2011-01-31 Filed 2011-03-11
10-K 2010-10-31 Filed 2010-12-17
10-Q 2010-07-31 Filed 2010-09-08
10-Q 2010-04-30 Filed 2010-06-08
10-Q 2010-01-31 Filed 2010-03-11
8-K 2020-11-23
8-K 2020-08-19
8-K 2020-05-20
8-K 2020-05-08
8-K 2020-03-27
8-K 2020-02-25
8-K 2020-02-19
8-K 2019-12-31
8-K 2019-12-11
8-K 2019-12-09
8-K 2019-11-26
8-K 2019-08-20
8-K 2019-06-10
8-K 2019-05-20
8-K 2019-04-30
8-K 2019-02-26
8-K 2019-02-26
8-K 2019-02-20
8-K 2018-12-12
8-K 2018-09-11
8-K 2018-08-20
8-K 2018-06-22
8-K 2018-05-21
8-K 2018-05-17
8-K 2018-02-27
8-K 2018-02-22
8-K 2018-01-01

NDSN 10K Annual Report

Part I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part II
Item 5. Market for The Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Note 1 - Significant Accounting Policies
Note 2 - Recently Issued Accounting Standards
Note 3 - Acquisitions
Note 4 - Assets Held for Sale
Note 6 - Goodwill and Intangible Assets
Note 7 - Retirement, Pension and Other Postretirement Plans
Note 8 - Income Taxes
Note 9 - Bank Lines of Credit
Note 10 - Long - Term Debt
Note 11 - Leases
Note 12 - Fair Value Measurements
Note 13 - Derivative Financial Instruments
Note 14 - Capital Shares
Note 15 - Stock - Based Compensation
Note 16 - Operating Segments and Geographic Area Data
Note 17 - Supplemental Information for The Statement of Cash Flows
Note 18 - Quarterly Financial Data (Unaudited)
Note 19 - Contingencies
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Part IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10 - K Summary
EX-4.M ndsn-20201031xexx4m.htm
EX-21 ndsn-20201031xexx21.htm
EX-23 ndsn-20201031xexx23.htm
EX-31.1 ndsn-20201031xexx311.htm
EX-31.2 ndsn-20201031xexx312.htm
EX-32.1 ndsn-20201031xexx321.htm
EX-32.2 ndsn-20201031xexx322.htm

Nordson Earnings 2020-10-31

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin


Washington, D.C.  20549
(Mark One)
For the fiscal year ended October 31, 2020
For the transition period from            to           
Commission file number   0-7977
(Exact name of Registrant as specified in its charter)
(State of incorporation)
28601 Clemens Road Westlake, Ohio
(Address of principal executive offices)
(I.R.S. Employer Identification No.)
(Zip Code)
(440) 892-1580
(Registrant’s Telephone Number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on which Registered
Common Shares, without par valueNDSNNasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     Yes      No  x
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, and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes  x    No  
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerxAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  
Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x
The aggregate market value of Common Shares, no par value per share, held by nonaffiliates (based on the closing sale price on the Nasdaq Stock Market) as of April 30, 2020 was approximately $8,999,983,246.
There were 58,094,487 Common Shares outstanding as of November 30, 2020.
Documents incorporated by reference:  
Portions of the Proxy Statement for the 2021 Annual Meeting - Part III of the Form 10-K

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Manufacturing, Raw Materials and Other Resources
Human Capital Resources
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In this annual report, all amounts related to United States dollars and foreign currency and to the number of Nordson Corporation’s common shares, except for per share earnings and dividend amounts, are expressed in thousands. Unless the context otherwise indicates, all references to “we,” “us,” “our,” or the “Company” mean Nordson Corporation.
Unless otherwise noted, all references to years relate to our fiscal year ending October 31.
Item 1.  Business
General Description of Business
Nordson engineers, manufactures and markets differentiated products and systems used for precision dispensing, applying and controlling of adhesives, coatings, polymers, sealants, biomaterials, and other fluids, to test and inspect for quality, and to treat and cure surfaces. These products are supported with extensive application expertise and direct global sales and service. We serve a wide variety of consumer non-durable, consumer durable and technology end markets including packaging, nonwovens, electronics, medical, appliances, energy, transportation, building and construction, and general product assembly and finishing.
Our strategy for long-term growth is based on solving customers’ needs globally. We were incorporated in the State of Ohio in 1954 and are headquartered in Westlake, Ohio. Our products are marketed through a network of direct operations in more than 35 countries. Consistent with this global strategy, approximately 64 percent of our revenues were generated outside the United States in 2020.
We have 7,555 employees worldwide. Principal manufacturing facilities are located in the United States, the People’s Republic of China, Germany, Ireland, Israel, Mexico, the Netherlands, Thailand, and the United Kingdom.
COVID-19 Pandemic Update
In December 2019, a novel strain of coronavirus ("COVID-19") emerged and has since spread to other countries, including the United States. In March 2020, the World Health Organization declared COVID-19 as a pandemic (the "COVID-19 pandemic"). The COVID-19 pandemic has resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business interruptions and other measures.
Throughout the COVID-19 pandemic, we have supported, and continue to support, multiple “critical infrastructure” sectors by manufacturing materials and products needed for medical supply chains, packaging, transportation, energy, communications, and other critical infrastructure industries. We have benefited from our geographical and product diversification as the end markets we serve have remained resilient in response to the COVID-19 pandemic, and we continue to invest in the businesses, people, and strategies necessary to achieve our long-term priorities as we focus on driving profitable growth. We have continued to operate during the COVID-19 pandemic in all our production facilities, having taken the recommended public health measures to ensure worker and workplace safety. As a result, there have been unfavorable impacts on our manufacturing efficiencies. Additionally, we are taking steps to offset cost increases from COVID-19 pandemic-related supply chain disruptions. For more information on how we have modified our business practices during the COVID-19 pandemic, see “Human Capital Resources” below.

We continue to actively monitor the rapidly evolving circumstances and impact of the COVID-19 pandemic, which has negatively disrupted, and may continue to negatively disrupt, our business and results of operations in the future. The full extent of the COVID-19 pandemic on our operations and the markets we serve remains highly uncertain and will depend largely on future developments related to the COVID-19 pandemic, including infection rates increasing or returning in various geographic areas, the ultimate duration of the COVID-19 pandemic, actions by government authorities to contain the outbreak or treat its impact, such as reimposing previously lifted measures or putting in place additional restrictions, and the widespread distribution and acceptance of an effective vaccine, among other things. These developments are constantly evolving and cannot be accurately predicted. See Part I, Item 1A, “Risk Factors” in this report.
Segment Update
As described in Note 16, effective in the second quarter of 2020, we made changes to realign our management team and our operating segments. This realignment will enable us to better serve global customers and markets, to more efficiently leverage technology synergies, to operate divisions of significant size in a consistent and focused way and to position ourselves for our next chapter of profitable growth. The revised segments better reflect how we manage the Company, allocate resources, and assess performance of the businesses.
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We realigned our former three operating segments into two: Industrial Precision Solutions (IPS) and Advanced Technology Solutions (ATS). Existing product lines were unchanged as part of this new structure.
New Chief Financial Officer
On May 8, 2020, we announced that Joseph P. Kelley had been named Executive Vice President and Chief Financial Officer of the Company, effective July 6, 2020. Mr. Kelley succeeded Gregory A. Thaxton, who previously announced his plans to retire. Upon Mr. Kelley’s start date, Mr. Thaxton became Executive Vice President to the Company until he retired on August 28, 2020.
Corporate Purpose and Goals
We strive to be a vital, self-renewing, worldwide organization that, within the framework of ethical behavior and enlightened citizenship, grows and produces wealth for our customers, employees, shareholders, and communities.
We operate for the purpose of creating balanced, long-term benefits for all of our constituencies.
We focus on long-term growth and returns. Each quarter we may not produce increased sales, net income, or earnings per share, or exceed the comparative prior year's quarter. When short-term swings occur, we do not intend to alter our foundational objectives in efforts to mitigate the impact of these temporary occurrences.
In 2020, we launched the next generation of the Nordson Business System – the NBS Next growth framework – to prioritize investments that will drive profitable growth and identify opportunities to simplify our cost structure. Fundamental to this strategy is to select and invest in the best profitable growth opportunities. This data-driven customer and product segmentation approach identifies where we create the greatest value for our customers. Using data in a consistent and disciplined way, leaders across the Company work to define their strategic business priorities.
We drive organic growth by continually introducing new products and technology, providing high levels of customer service and support, capturing rapidly expanding opportunities in emerging geographies, and by leveraging existing technology into new applications. Additional growth comes through the acquisition of companies that serve international growth markets, share our business model characteristics and can leverage our global infrastructure. The primary goals of our acquisition strategy are to complement our current capabilities, diversify our business into new industry sectors and with new customers and expand the scope of the solutions we can offer to our customers.
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 the Human Resources department’s facilitation of employee training, leadership training and the creation of on-the-job growth opportunities. The result is a highly qualified and professional global team capable of meeting corporate objectives. For more information, see "Human Capital Resources" below.
We recognize the value of employee participation in the planning process. Strategic and operating plans are developed by all business units, resulting in a sense of ownership and commitment on the part of employees in accomplishing our objectives.
We are an equal opportunity employer.
We are committed to contributing approximately five percent of domestic pretax earnings to human welfare services, education and other charitable activities, particularly in communities where we have significant operations.
Principal Products and Uses
We engineer, manufacture and market differentiated products and systems used to dispense, apply and control adhesives, coatings, polymers, sealants, biomaterials, medical components, and other fluids, to test and inspect for quality, and to treat and cure surfaces. Our technology-based systems can be found in manufacturing facilities around the world producing a wide range of goods for consumer durable, consumer non-durable and technology end markets. Equipment ranges from single-use components to manual, stand-alone units for low-volume operations to microprocessor-based automated systems for high-speed, high-volume production lines.
We market our products globally, primarily through a direct sales force, and also through qualified distributors and sales representatives. We have built a worldwide reputation for creativity and expertise in the design and engineering of high-technology application equipment that meets the specific needs of our customers. We create value for our customers by developing solutions that increase uptime, enable faster line speeds and reduce consumption of materials. We serve a broad customer base, both in terms of industries and geographic regions. In 2020, no single customer accounted for ten percent or more of sales.
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The following is a summary of the product lines and markets served by our operating segments:
Industrial Precision Solutions    
This segment combines our legacy Adhesive Dispensing Systems (ADS) and Industrial Coating Systems (ICS) businesses. Industrial Precision Solutions enhances the technology synergies between ADS and ICS to deliver proprietary dispensing and processing technology to diverse end markets. Product lines reduce material consumption, increase line efficiency and enhance product brand and appearance. Components are used for dispensing adhesives, coatings, paint, finishes, sealants and other materials. This segment primarily serves the industrial, consumer durables and non-durables markets.
Nonwovens – Dispensing, coating and laminating systems for applying adhesives, lotions, liquids and fibers to disposable products and continuous roll goods. Key strategic markets include adult incontinence products, baby diapers and child-training pants, feminine hygiene products and surgical drapes, gowns, shoe covers and face masks.
Packaging – Automated adhesive dispensing systems used in the rigid packaged goods industries. Key strategic markets include food and beverage packaging, pharmaceutical packaging, and other consumer goods packaging.
Polymer Processing – Components and systems used in the thermoplastic melt stream in plastic extrusion, injection molding, compounding, polymerization and recycling processes. Key strategic markets include flexible packaging, electronics, medical, building and construction, transportation and aerospace, and general consumer goods.
Product Assembly – Dispensing, coating and laminating systems for the assembly of plastic, metal and wood products, for paper and paperboard converting applications and for the manufacturing of continuous roll goods. Key strategic markets include appliances, automotive components, building and construction materials, electronics, furniture, solar energy, and the manufacturing of bags, sacks, books, envelopes and folding cartons.
Cold Materials – Automated and manual dispensing products and systems used to apply multiple component adhesive and sealant materials in the general industrial and transportation manufacturing industries. Key strategic markets include aerospace, electric battery, appliances, automotive, building and construction, composites, electronics and medical.
Container Coating – Automated and manual dispensing and curing systems used to coat and cure containers. Key strategic markets include beverage containers and food cans.
Curing and Drying Systems – Ultraviolet equipment used primarily in curing and drying operations for specialty coatings, semiconductor materials and paints. Key strategic markets include electronics, containers and durable goods products.
Liquid Finishing – Automated and manual dispensing systems used to apply liquid paints and coatings to consumer and industrial products. Key strategic markets include automotive components, agriculture, construction, metal shelving and drums.
Powder Coating – Automated and manual dispensing systems used to apply powder paints and coatings to a variety of metal, plastic and wood products. Key strategic markets include agriculture and construction equipment, appliances, automotive components, home and office furniture, lawn and garden equipment, pipe coating, and wood and metal shelving.
Advanced Technology Solutions
This segment integrates our proprietary product technologies found in progressive stages of a customer’s production processes, such as surface treatment, precisely controlled dispensing of material and post-dispense test and inspection to ensure quality. Related single-use plastic molded syringes, cartridges, tips, fluid connection components, tubing, balloons and catheters are used to dispense or control fluids in production processes or within customers’ end products. This segment predominantly serves customers in the electronics, medical and related high-tech industrial markets.
Electronics Systems Automated dispensing systems for high-speed, accurate application of a broad range of attachment, protection and coating fluids, and related gas plasma treatment systems for cleaning and conditioning surfaces prior to dispense. Key strategic markets include the breadth of the electronics industry manufacturing supply chain that produces semiconductor, printed circuit board assemblies and electronic components.
Fluid Management – Precision manual and semi-automated dispensers, minimally invasive interventional delivery devices, and highly engineered single-use plastic molded syringes, cartridges, tips, fluid connection components, tubing, balloons, and catheters. Products are used for applying and controlling the flow of adhesives,
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sealants, lubricants, and biomaterials in critical industrial production processes and within medical equipment and related surgical procedures. Key strategic markets include consumer goods, electronics, industrial assembly, and medical.
Test and Inspection Bond testing and automated optical, acoustic microscopy and x-ray inspection systems used in the semiconductor and printed circuit board industries. Key strategic markets include mobile phones, tablets, personal computers, wearable technology, liquid crystal displays, micro hard drives, microprocessors, printed circuit boards, flexible circuits, MEMS and semiconductor packaging.
Manufacturing, Raw Materials and Other Resources
Our production operations include machining, molding and assembly. We manufacture specially designed parts and assemble 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. We have principal manufacturing operations and sources of supply in the United States in Ohio, Georgia, California, Colorado, Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, Rhode Island, Tennessee and Wisconsin; as well as in the People’s Republic of China, Germany, Ireland, Israel, Mexico, the Netherlands, Thailand and the United Kingdom.
Principal materials used to make our products are metals and plastics, typically in sheets, bar stock, castings, forgings, tubing and pellets. We also purchase many electrical and electronic components, fabricated metal parts, high-pressure fluid hoses, packings, seals and other items integral to our products. Suppliers are competitively selected based on cost, quality and service. All significant raw materials that we use are available through multiple sources. We purchase most raw materials and other components on the open market and rely on third parties to provide certain finished goods. While these items are generally available from multiple sources, the cost of products sold may be affected by changes in the market price of raw materials and tariffs on certain raw materials, particularly imports from China, as well as disruptions in availability of raw materials, components and sourced finished goods.
We monitor and investigate alternative suppliers and materials based on numerous attributes including quality, service and price. We currently source raw materials and components from a number of suppliers, but our ongoing efforts to improve the cost effectiveness of our products and services may result in a reduction in the number of our suppliers.
Senior operating management supervises an extensive quality control program for our equipment, machinery and systems, and manufacturing processes.
Natural gas and other fuels are our primary energy sources. However, standby capacity for alternative sources is available if needed.
The COVID-19 pandemic has disrupted the global supply chain to a certain extent. We have not experienced significant supply disruption from third-party component suppliers as a result of the COVID-19 pandemic. However, we have faced and continue to face some supply chain constraints primarily related to logistics, including higher freight rates. In addition, shipments between countries have been more impacted by the COVID-19 pandemic and we have experienced delays due to a variety of factors.
Intellectual Property
We maintain procedures to protect our intellectual property (including patents, trademarks and copyrights) both domestically and internationally. Risk factors associated with our intellectual property are discussed in Part I, Item 1A, "Risk Factors."
Our intellectual property portfolios include valuable patents, trade secrets, know-how, domain names, trademarks and trade names. As of October 31, 2020, we held 564 United States patents and 1,362 foreign patents and had 142 United States patent applications pending and 787 foreign patent applications pending, but there is no assurance that any patent application will be issued. We continue to apply for and obtain patent protection for new products on an ongoing basis.
Patents covering individual products extend for varying periods according to the date of filing or grant and the legal term of patents in various countries where a patent is obtained. Our patent portfolio as of October 31, 2020 had expiration dates ranging from November 2020 to August 2039. The actual protection a patent provides, which can vary from country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in each country. We believe, however, that the duration of our patents generally exceeds the life cycles of the technologies disclosed and claimed in the patents.
We believe our trademarks are important assets and we aggressively manage our brands. We also own a number of trademarks in the United States and foreign countries, including registered trademarks for Nordson, Asymtek, Avalon, Dage, EFD, March, Sonoscan, Value Plastics, Vention, Xaloy and YESTech and various common law trademarks which are important to our
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business, inasmuch as they identify Nordson and our products to our customers. As of October 31, 2020, we had a total of 1,056 trademark registrations in the United States and in various foreign countries.
We rely upon a combination of nondisclosure and other contractual arrangements and trade secret laws to protect our proprietary rights and also enter into confidentiality and intellectual property agreements with our employees that require them to disclose any inventions created during employment, convey all rights to inventions to us, and restrict the distribution of proprietary information.
We protect and promote our intellectual property portfolio and take those actions we deem appropriate to enforce our intellectual property rights and to defend our right to sell our products. Although in the aggregate our intellectual property is important to our operations, we do not believe that the loss of any one patent or trademark, or group of related patents or trademarks would have a material adverse effect on our results of operations or financial position of our overall business.
Seasonal Variation in Business
Generally, the highest volume of sales occurs in the second half of the year due in large part to the timing of customers’ capital spending programs. Accordingly, first quarter sales volume is typically the lowest of the year due to timing of customers’ capital spending programs and customer holiday shutdowns.
Working Capital Practices
No special or unusual practices affect our working capital. We generally require advance payments as deposits on customized equipment and systems and, in certain cases, require progress payments during the manufacturing of these products. We continue to initiate new processes focused on reduction of manufacturing lead times, resulting in lower investment in inventory while maintaining the capability to respond promptly to customer needs.
Competitive Conditions
We operate in a competitive global marketplace and compete with many large, well established and highly competitive manufacturers and service providers. Our business is affected by a range of macroeconomic conditions, including industry capacity changes, global competition and economic conditions in the U.S. and abroad, as well as fluctuations in currency exchange rates. Our equipment is sold in competition with a wide variety of alternative bonding, sealing, finishing, coating, processing, testing, inspecting and fluid control techniques. Potential uses for our equipment include any production processes that require preparation, modification or curing of surfaces; dispensing, application, processing or control of fluids and materials; or testing and inspecting for quality.
Many factors influence our competitive position, including pricing, product quality and service. We maintain a leadership position in our business segments by delivering high-quality, innovative products and technologies, as well as 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 our leadership position. Our worldwide network of direct sales and technical resources also is a competitive advantage. The impact of tariffs over our end markets in Asia could negatively affect our long-term market position in that region.
Compliance with Governmental Regulations
As a U.S. public company that supports manufacturing, designing and servicing highly complex products in regulatory environments, our global operations are subject to a variety of laws, regulations and compliance obligations. We have robust internal controls, quality management systems, and management systems of compliance that govern our internal actions and mitigate our risk of non-compliance. We also have safeguards established to identify non-compliance concerns through internal and external audits and risk assessments, as well as an ethics helpline reporting system.
We are also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the United States and other jurisdictions regarding privacy, data protection and data security, including those related to the collection, storage, use, transmission and protection of personal information and other consumer, customer, vendor or employee data. Such privacy and data protection laws and regulations, including with respect to the European Union’s General Data Protection Regulation (GDPR), the Brazilian General Data Protection Law, and the California Consumer Privacy Act of 2018 (CCPA), and the interpretation and enforcement of such laws and regulations, are continuously developing and evolving and there is significant uncertainty with respect to how compliance with these laws and regulations may evolve and the costs and complexity of future compliance.
We are also subject to federal, state, local and foreign environmental, safety and health laws and regulations concerning, among other things, emissions to the air, discharges to land and water and the generation, handling, treatment and disposal of hazardous waste and other materials. Under certain of these laws, we can be held strictly liable for hazardous substance
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contamination of any real property we have ever owned, operated or used as a disposal site or for natural resource damages associated with such contamination. We are also required to maintain various related permits and licenses, many of which require periodic modification and renewal. The operation of manufacturing plants unavoidably entails environmental, safety and health risks, and we could incur material unanticipated costs or liabilities in the future if any of these risks were realized in ways or to an extent that we did not anticipate.
We believe that we operate in compliance, in all material respects, with applicable environmental laws and regulations. Compliance with environmental laws and regulations requires continuing management effort and expenditures. We have incurred, and will continue to incur, costs and capital expenditures to comply with these laws and regulations and to obtain and maintain the necessary permits and licenses. We believe that the cost of complying with environmental laws and regulations will not have a material effect on our earnings, liquidity or competitive position but cannot assure that material compliance-related costs and expenses may not arise in the future. For example, future adoption of new or amended environmental laws, regulations or requirements or newly discovered contamination or other circumstances could require us to incur costs and expenses that may have a material effect, but cannot be presently anticipated.
We believe that policies, practices and procedures have been properly designed to prevent unreasonable risk of material environmental damage arising from our operations. We accrue for estimated environmental liabilities with charges to expense and believe our environmental accrual is adequate to provide for our portion of the costs of all such known environmental liabilities. Compliance with federal, state, local and foreign environmental protection laws during 2020 had no material effect on our capital expenditures, earnings or competitive position. Based upon consideration of currently available information, we believe liabilities for environmental matters will not have a material adverse effect on our financial position, operating results or liquidity, but we cannot assure that material environmental liabilities may not arise in the future.
For a discussion of the risks associated with these laws and regulations, see Part I, Item 1A, "Risk Factors."
Human Capital Resources
Employee Profile
As of October 31, 2020, we had 7,555 full-time and part-time employees, including 137 at our Amherst, Ohio, facility who are represented by a collective bargaining agreement that expires on November 12, 2022.
Health and Safety
The health and safety of our employees is our highest priority, and this is consistent with our operating philosophy. When the pandemic first impacted our employees in China, we began hosting cross-functional global team meetings to proactively manage employee safety. Teams from around the world came together to ensure our employees had access to masks, thermometers, protective gloves and sanitizing supplies in order to protect not only themselves, but their families as well. This Nordson spirit continued as the virus spread around the world. Closely following the recommendations of the World Health Organization, the U.S. Centers for Disease Control and local governments, we took action to ensure our employees were safe:
adjusted work schedules to allow the proper amount of social distance between employees;
increased hygiene, cleaning and sanitizing procedures at all locations;
implemented temperature-taking protocols upon entering facilities;
provided additional personal protective equipment to employees;
enabled employees to work from home where possible;
restricted travel and encouraged quarantine upon return;
developed a special COVID-19 pandemic leave policy that encouraged employees to take time off for illness or caretaking while maintaining steady wages;
established strict protocols and screening for outside guests; and
launched a COVID-19 pandemic intranet site to increase communications and ensure our employees had access to up-to-date and accurate information.
We manufacture products deemed essential to critical infrastructure industries, including health and safety, food and agriculture, and energy, and as a result, all of our production sites have continued to operate during the COVID-19 pandemic. As such, we have invested in creating physically safe work environments for our employees.

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Total Rewards
As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for our employees in order to attract and retain superior talent. These programs not only include base wages and incentives in support of our pay for performance culture, but also health, welfare, and retirement benefits. We focus many programs on employee wellness and have implemented solutions including mental health support access, telemedicine, and healthy weight loss programs. We believe that these solutions have helped us successfully manage healthcare and prescription drug costs for our employee population.
In the U.S., we match contributions to a tax-qualified defined contribution retirement savings plan (the “Savings Plan”) for all eligible employees, in an amount equal to 50 cents for every dollar contributed by the employee until the employee contributions reach six percent of her or his base compensation. All contributions by employees into the Savings Plan are fully vested immediately. Company contributions have a three-year graded vesting schedule and vest at 33 1/3% each year until fully vested after 3 years of employment. We also maintain a non-qualified, unfunded, and unsecured deferred compensation plan for the benefit of eligible management employees whose benefits under the Savings Plan are limited by the benefit restrictions of Section 415 of the Internal Revenue Code. In addition, all eligible non-union employees participate in a Company-sponsored tax-qualified pension plan for U.S.-based salaried employees (the “Salaried Pension Plan”). The Salaried Pension Plan is designed to work together with social security benefits to provide employees with 30 years of service retirement income that is approximately 55% of eligible compensation, subject to the Internal Revenue Code maximum monthly benefit. Participants fully vest in the Salaried Pension Plan after 5 years of service. All eligible union employees participate in a Company-sponsored tax-qualified pension plan for U.S.-based hourly employees (the “Hourly Pension Plan”). The Hourly Pension Plan provides a multiplier for each year of service to supplement employees’ retirement income. We also maintain a supplemental retirement benefit restoration plan (“Excess Defined Benefit Pension Plan”) which is an unfunded, non-qualified plan that is designed to provide retirement benefits to U.S.-based eligible participants as a replacement for those retirement benefits limited by regulations under the Internal Revenue Code.
Together, the Pension Plan and Excess Defined Benefit Pension Plan are intended to provide executive officers with retirement income at a level equivalent to that provided to other employees under the Pension Plan.
We also provide service awards which show appreciation and thanks to longstanding employees with 5 or more years of service. Service milestones are recognized at each five-year increment by presentation of a digital and/or printed certificate with an invitation to select a recognition award via an online catalog.
Our key talent philosophy is to develop talent from within and supplement with external hires. This approach has yielded a deep understanding among our employee base of our business, products, and customers, while adding new employees and ideas in support of our continuous improvement mindset. We believe that our average tenure across the globe – 10.18 years as of the end of the fiscal year 2020 – reflects the strong engagement of our employees and is reflective of our positive workplace culture. Our talent acquisition team uses internal and external resources to recruit highly skilled and talented workers, and we encourage employee referrals for open positions.
Talent development and succession planning for critical roles is a cornerstone of our talent program. Development plans are created and monitored for critical roles to ensure progress is made along the established timelines. Development plans also intersect with our mission, particularly as we strive to be responsible to our communities.
One of our core values—Respect for People—reflects the behavior we strive to include in every aspect of the way we conduct business. Our diversity and inclusion initiatives support our goal that everyone throughout the Company is engaged in creating an inclusive workplace, and we have begun work on building diverse talent pools as part of our recruitment efforts. We strive to promote inclusion through “Inclusive Leadership” training across the Company. With the support of our board of directors, we continue to explore additional diversity and inclusion initiatives.
At Nordson, we have a long and proud history of investing in the communities where we live and work. Through the Nordson Corporation Foundation (the “Foundation”), we give back by providing grants to nonprofits in communities where we have facilities employing more than 100 people. In recent years, we have extended our reach internationally, with giving programs in nine international locations. Since 1989, we have donated more than $113 million to communities where we live and work. In addition, our employees volunteered more than 106,000 hours through our Time ‘N Talent program.

In response to the COVID-19 pandemic, the Foundation donated to Give2Asia to support frontline healthcare workers battling the spread of the novel coronavirus in China. The Foundation also donated $1 million from its assets toward the global COVID-19 pandemic response. These funds were split evenly among communities in the United States and other countries, reflecting the roughly equal split of where our employees work. A donation of $500,000 was split among U.S.-based non-
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profits in the communities where our employees live and work. In Europe, an additional $500,000 was donated to the COVID-19 Solidarity Response Fund, which is co-founded by the United Nations and the World Health Organization.
Available Information
Our annual report to the Securities and Exchange Commission (the "SEC") (Form 10-K), quarterly reports (Form 10-Q) and current reports (Form 8-K) and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge at as soon as reasonably practical after such material is electronically filed with, or furnished to, the SEC. Copies of these reports may also be obtained free of charge by sending written requests to Corporate Communications, Nordson Corporation, 28601 Clemens Road, Westlake, Ohio 44145. The contents of our website are not incorporated by reference herein and are not deemed to be a part of this report.
Item 1A.  Risk Factors
In an enterprise as diverse as ours, a wide range of factors could affect future performance. We discuss in this section some of the risk factors that could materially and adversely affect our business, financial condition, value and results of operations. You should consider these risk factors in connection with evaluating the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause our actual results and financial condition to differ materially from those projected in forward-looking statements.
Risks Related to the COVID-19 pandemic
The COVID-19 pandemic has negatively disrupted, and may continue to have a negative impact, which could be material, on our ability to operate, results of operations, financial condition, liquidity and capital investments.
In March 2020, the World Health Organization categorized the COVID-19 pandemic outbreak as a pandemic, and the President of the United States declared the COVID-19 pandemic outbreak a national emergency. COVID-19 continues to spread and intensify throughout the United States and other countries across the world, and the ultimate duration and severity of its effects are currently unknown. The COVID-19 pandemic has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, social distancing protocols, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures and other measures. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of the COVID-19 pandemic.

The COVID-19 pandemic has negatively disrupted, and may continue to negatively impact, our business. While we have continued to operate during the course of the COVID-19 pandemic in all of our production facilities and have supported multiple “critical infrastructure” sectors by manufacturing materials and products needed for medical supply chains, packaging, transportation, energy, communications, and other critical infrastructure industries, we have experienced unfavorable impacts on our manufacturing efficiencies due to the implementation of worker safety measures and cost increases from COVID-19 pandemic-related supply disruptions. We have invested and will continue to invest significant time and resources in modifying our business practices for the continued health and safety of our employees and in managing the impact of the COVID-19 pandemic on our global business. Our focus on managing and mitigating the impacts of the COVID-19 pandemic on our business, including complying with any new or modified government health regulations, for an unknown period of time may cause us to divert or delay the application of our resources toward other or new initiatives or investments, which may have a material adverse impact on our business and results of operations.

Governments around the world have implemented fiscal stimulus measures to counteract the effects of the COVID-19 pandemic. The magnitude and overall effectiveness of these actions remain uncertain. The full extent to which the COVID-19 pandemic will impact our business going forward will depend on future developments that are highly uncertain and cannot be accurately predicted, including, but not limited to, the duration and severity of the COVID-19 pandemic, actions by government authorities to contain the outbreak or treat its impact, such as reimposing previously lifted measures or putting in place additional restrictions, the widespread distribution and acceptance of an effective vaccine, and the extent and severity of the impact on our customers, operations, and suppliers, all of which are uncertain and cannot be predicted. Our future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand.

Additionally, to the extent the COVID-19 pandemic adversely affects our business, results of operations or financial condition, it may heighten other risks described in this “Risk Factors” section below.
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Risks Related to Economic Conditions
Changes in United States or international economic conditions, including declines in the industries we serve, could adversely affect the profitability of any of our operations.
In 2020, approximately 36 percent of our revenue was generated in the United States, while approximately 64 percent was generated outside the United States. The COVID-19 pandemic and related preventative and mitigation measures implemented by governments around the world have to date negatively impacted the global economy and created significant volatility and disruption of financial markets.
A general sustained slowdown in the global economy or in a particular region or industry or an increase in trade tensions with U.S. trading partners could negatively impact our business, financial condition or liquidity. Our largest markets include consumer non-durable, industrial, medical, electronics, consumer durable and automotive. A slowdown in any of these specific end markets could directly affect our revenue stream and profitability.
A portion of our product sales is attributable to industries and markets, such as the electronics, polymer processing and metal finishing industries, which historically have been cyclical and sensitive to relative changes in supply and demand and general economic conditions. The demand for our products depends, in part, on the general economic conditions of the industries or national economies of our customers. Downward economic cycles in our customers’ industries or countries may reduce sales of some of our products. It is not possible to predict accurately the factors that will affect demand for our products in the future.
The current significant downturn in the health of the general economy, or any recession, depression or other sustained adverse market event resulting from the COVID-19 pandemic, could have an adverse effect on our revenues and financial performance, resulting in impairment of assets. We cannot predict the strength or duration of the current economic slowdown and instability or the timing of any recovery.
Our results have been and could continue to be impacted by uncertainty in U.S. trade policy, including uncertainty surrounding changes in tariffs, trade agreements or other trade restrictions imposed by the U.S. or other governments.
Our ability to conduct business can be significantly impacted by changes in tariffs, changes or repeals of trade agreements, including the impact of the “United States-Mexico-Canada Agreement” with Mexico and Canada, which replaced the North American Free Trade Agreement, or the imposition of other trade restrictions or retaliatory actions imposed by various governments. Other effects of these changes, including impacts on the price of raw materials, responsive actions from governments and the opportunity for competitors to establish a presence in markets where we participate, could also have significant impacts on our results. We cannot predict what further action may be taken with respect to tariffs or trade relations between the U.S. and other governments, and any further changes in U.S. or international trade policy could have an adverse impact on our business. Further, the level of impact from the COVID-19 pandemic and the reactions of governmental authorities and others thereto may have significant adverse effects on international trade policy.
Significant movements in foreign currency exchange rates or change in monetary policy may harm our financial results.
We are exposed to fluctuations in foreign currency exchange rates, particularly with respect to the euro, the yen, the pound sterling and the Chinese yuan. Any significant change in the value of the currencies of the countries in which we do business against the United States dollar could affect our ability to sell products competitively and control our cost structure, which could have a material adverse effect on our business, financial condition and results of operations. For additional detail related to this risk, see Part II, Item 7A, Quantitative and Qualitative Disclosure About Market Risk.
A significant portion of our consolidated revenues in 2020 were generated in currencies other than the United States dollar, which is our reporting currency. We recognize foreign currency transaction gains and losses arising from our operations in the period incurred. As a result, currency fluctuations between the United States dollar and the currencies in which we do business have caused and will continue to cause foreign currency transaction and translation gains and losses, which historically have been material and could continue to be material. We cannot predict the effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates. We take actions to manage our foreign currency exposure, such as entering into hedging transactions, where available, but we cannot assure that our strategies will adequately protect our consolidated operating results from the effects of exchange rate fluctuations. For example, uncertainty surrounding the impact of the COVID-19 pandemic and the effects of Brexit have caused increased volatility in global currency exchange rates that have resulted in the strengthening of the United States dollar against the foreign currencies in which we conduct business.  Future adverse consequences arising from the COVID-19 pandemic and Brexit may include continued volatility in exchange rates.  Any significant fluctuation in exchange rates may be harmful to our financial condition and results of operations. We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls may limit our ability to convert foreign currencies into United States dollars or to remit dividends and other payments by our foreign subsidiaries or customers located in or conducting business in a country imposing controls. Currency devaluations diminish the United States dollar value
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of the currency of the country instituting the devaluation and, if they occur or continue for significant periods, could adversely affect our earnings or cash flow.
Risks Related to Our Business and Operations
The Company may be subject to risks relating to organizational changes.
We regularly execute organizational changes such as acquisitions, divestitures and realignments to support our growth and cost management strategies. We also engage in initiatives aimed to increase productivity, efficiencies and cash flow and to reduce costs. The Company commits significant resources to identify, develop and retain key employees to ensure uninterrupted leadership and direction. If we are unable to successfully manage these and other organizational changes, the ability to complete such activities and realize anticipated synergies or cost savings as well as our results of operations and financial condition could be materially adversely affected. We cannot offer assurances that any of these initiatives will be beneficial to the extent anticipated, or that the estimated efficiency improvements, incremental cost savings or cash flow improvements will be realized as anticipated or at all.
Political conditions in the U.S. and foreign countries in which we operate could adversely affect us.
We conduct our manufacturing, sales and distribution operations on a worldwide basis and are subject to risks associated with doing business both within and outside the United States. In 2020, approximately 64 percent of our total sales were generated outside the United States. We expect that international operations and United States export sales will continue to be important to our business for the foreseeable future. Both sales from international operations and export sales are subject in varying degrees to risks inherent in doing business outside the United States. Such risks include, but are not limited to, the following:
risks of political or economic instability, such as Brexit;
unanticipated or unfavorable circumstances arising from host country laws or regulations;
threats of war, terrorism or governmental instability;
changes in tax rates, adoption of new tax laws or other additional tax policies, and other proposals to reform United States and foreign tax laws that impact how United States multinational corporations are taxed on foreign earnings;
restrictions on the transfer of funds into or out of a country;
potential negative consequences from changes to taxation policies;
the disruption of operations from labor and political disturbances;
the imposition of tariffs, import or export licensing requirements and other potential changes in trade policies and relations arising from policy initiatives implemented by the U.S. presidential administration;
exchange controls or other trade restrictions including transfer pricing restrictions when products produced in one country are sold to an affiliated entity in another country; and
government responses to the COVID-19 pandemic.
Any of these events could reduce the demand for our products, limit the prices at which we can sell our products, interrupt our supply chain, or otherwise have an adverse effect on our operating performance.
Our international operations also depend upon favorable trade relations between the U.S. and those foreign countries in which our customers, subcontractors and materials suppliers have operations. A protectionist trade environment in either the U.S. or those foreign countries in which we do business, such as a change in the current tariff structures, export compliance or other trade policies, may materially and adversely affect our ability to sell our products in foreign markets. The current U.S. presidential administration has criticized existing trade agreements, and while it remains unclear what actions the current or future administration may take with respect to existing and proposed trade agreements, or restrictions on trade generally, more stringent export and import controls may be ultimately imposed in the future.
Increased information technology (IT) security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions and services.
We have experienced and expect to continue to experience cyber-attacks to our systems and networks. To date, we have not experienced any material breaches or material losses related to cyber-attacks. To conduct our business, we rely extensively on information technology systems, networks and services, some of which are managed, hosted and provided by third-party service providers. Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and those of our third-party service providers and the confidentiality, availability and integrity of our data.  Depending on their nature and scope, such threats could potentially lead to the compromising of
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confidential information, including but not limited to confidential information relating to customer or employee data, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions, which in turn could adversely affect our reputation, competitiveness and results of operations.  A cyber-attack or other disruption may also result in financial loss, including potential fines for failure to safeguard data or losses in connection with any litigation that may result from a cyber-attack. Our insurance coverage may not be adequate to cover all the costs arising from such events.
We have taken steps and incurred costs to further strengthen the security of our computer systems and continue to assess, maintain and enhance the ongoing effectiveness of our information security systems.  While we attempt to mitigate these risks by employing a number of measures, including employee training, comprehensive monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, products, solutions and services remain potentially vulnerable to advanced persistent threats.  The techniques used by criminals to obtain unauthorized access to sensitive data change frequently and often are not recognizable until launched against a target. Accordingly, we may be unable to anticipate these techniques or implement adequate preventative measures. It is therefore possible that in the future we may suffer a criminal attack, unauthorized parties may gain access to personal information in our possession and we may not be able to identify any such incident in a timely manner.
The interpretation and application of data protection laws, including federal, state and international laws, relating to the collection, use, retention, disclosure, security and transfer of personally identifiable data in the U.S., Europe and elsewhere (including but not limited to the European Union’s General Data Protection Regulation, the Brazilian General Data Protection Law and the California Consumer Privacy Act of 2018), are uncertain and evolving. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. In addition, as a result of existing or new data protection requirements, we incur and expect to continue to incur significant ongoing operating costs as part of our significant efforts to protect and safeguard our sensitive data and personal information. These efforts also may divert management and employee attention from other business and growth initiatives. A breach in information privacy could result in legal or reputational risks and could have a negative impact on our revenues and results of operations.
If our intellectual property protection is inadequate, others may be able to use our technologies and tradenames and thereby reduce our ability to compete, which could have a material adverse effect on us, our financial condition and results of operations.
We regard much of the technology underlying our products and the trademarks under which we market our products as proprietary. The steps we take to protect our proprietary technology may be inadequate to prevent misappropriation of our technology, or third parties may independently develop similar technology. We rely on a combination of patents, trademark, copyright and trade secret laws, employee and third-party non-disclosure agreements and other contracts to establish and protect our technology and other intellectual property rights. The agreements may be breached or terminated, and we may not have adequate remedies for any breach, and existing trade secrets, patent and copyright law afford us limited protection. Policing unauthorized use of our intellectual property is difficult. A third party could copy or otherwise obtain and use our products or technology without authorization. Litigation may be necessary for us to defend against claims of infringement or to protect our intellectual property rights and could result in substantial cost to us and diversion of our efforts. Further, we might not prevail in such litigation, which could harm our business.
Our products could infringe on the intellectual property of others, which may cause us to engage in costly litigation and, if we are not successful, could cause us to pay substantial damages and prohibit us from selling our products.
Third parties may assert infringement or other intellectual property claims against us based on their patents or other intellectual property claims, and we may have to pay substantial damages, possibly including treble damages, if it is ultimately determined our products infringe. We may have to obtain a license to sell our products if it is determined that our products infringe upon another party’s intellectual property. We might be prohibited from selling our products before we obtain a license, which, if available at all, may require us to pay substantial royalties. Even if infringement claims against us are without merit, defending these types of lawsuits takes significant time, may be expensive and may divert management attention from other business concerns.
Failure to retain our existing senior management team or the inability to attract and retain qualified personnel could hurt our business and inhibit our ability to operate and grow successfully.
During 2019, we experienced a leadership change with the appointment of a new President and Chief Executive Officer and, in 2020, we appointed a new Chief Financial Officer. Our success will continue to depend to a significant extent on the continued service of our executive management team and the ability to recruit, hire and retain other key management personnel to support our growth and operational initiatives and replace executives who retire or resign. Failure to retain our leadership team and attract and retain other important management and technical personnel could place a constraint on our global growth and
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operational initiatives, possibly resulting in inefficient and ineffective management and operations, which would likely harm our revenues, operations and product development efforts and eventually result in a decrease in profitability.
Risks Related to the Execution of Our Strategy
We continually assess the strategic fit of our existing businesses and may divest or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment, and we cannot be certain that our business, operating results and financial condition will not be materially and adversely affected.
A successful divestiture depends on various factors, including reaching an agreement with potential buyers on terms we deem attractive, as well as our ability to effectively transfer liabilities, contracts, facilities, and employees to any purchaser, identify and separate the intellectual property to be divested from the intellectual property that we wish to retain, reduce fixed costs previously associated with the divested assets or business, and collect the proceeds from any divestitures. These efforts require varying levels of management resources, which may divert our attention from other business operations. If we do not realize the expected benefits of any divestiture transaction, our consolidated financial position, results of operations, and cash flows could be negatively impacted. In addition, divestitures of businesses involve a number of risks, including significant costs and expenses, the loss of customer relationships, and a decrease in revenues and earnings associated with the divested business. Furthermore, divestitures potentially involve significant post-closing separation activities, which could involve the expenditure of material financial resources and significant employee resources. Any divestiture may result in a dilutive impact to our future earnings if we are unable to offset the dilutive impact from the loss of revenue associated with the divestiture, as well as significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial condition.
If we fail to develop new products or enhance existing products, or our customers do not accept the new or enhanced products we develop, our revenue and profitability could be adversely impacted.
Innovation is critical to our success. We believe that we must continue to enhance our existing products and to develop and manufacture new products with improved capabilities in order to continue to be a leading provider of precision technology solutions. We also believe that we must continue to make improvements in our productivity in order to maintain our competitive position. Difficulties or delays in research, development or production of new or enhanced products or failure to gain market acceptance of new or enhanced products and technologies may reduce future sales and adversely affect our competitive position. We continue to invest in the development and marketing of new or enhanced products. There can be no assurance that we will have sufficient resources to make such investments, that we will be able to make the technological advances necessary to maintain competitive advantages or that we can recover major research and development expenses. If we fail to make innovations, launch products with quality problems or the market does not accept our new products, our financial condition, results of operations, cash flows and liquidity could be adversely affected. In addition, as new or enhanced products are introduced, we must successfully manage the transition from older products to minimize disruption in customers’ ordering patterns, avoid excessive levels of older product inventories and ensure that we can deliver sufficient supplies of new products to meet customers’ demands.
Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully.
Our recent historical growth has depended, and our future growth is likely to continue to depend, in part on our acquisition strategy and the successful integration of acquired businesses into our existing operations. We intend to continue to seek additional acquisition opportunities both to expand into new markets and to enhance our position in existing markets throughout the world. We cannot assure we will be able to successfully identify suitable acquisition opportunities, prevail against competing potential acquirers, negotiate appropriate acquisition terms, obtain financing that may be needed to consummate such acquisitions, complete proposed acquisitions, successfully integrate acquired businesses into our existing operations or expand into new markets. In addition, we cannot assure that any acquisition, once successfully integrated, will perform as planned, be accretive to earnings, or prove to be beneficial to our operations and cash flow.
The success of our acquisition strategy is subject to other risks and uncertainties, including:
our ability to realize operating efficiencies, synergies or other benefits expected from an acquisition, and possible delays in realizing the benefits of the acquired company or products;
diversion of management’s time and attention from other business concerns;
difficulties in retaining key employees, customers or suppliers of the acquired business;
difficulties in maintaining uniform standards, controls, procedures and policies throughout acquired companies;
adverse effects on existing business relationships with suppliers or customers;
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the risks associated with the assumption of product liabilities or contingent or undisclosed liabilities of acquisition targets; and
the ability to generate future cash flows or the availability of financing.
In addition, an acquisition could adversely impact our operating performance as a result of the incurrence of acquisition-related debt, pre-acquisition potential tax liabilities, acquisition expenses, the amortization of acquisition-acquired assets, or possible future impairments of goodwill or intangible assets associated with the acquisition.
We may also face liability with respect to acquired businesses for violations of environmental laws occurring prior to the date of our acquisition, and some or all of these liabilities may not be covered by environmental insurance secured to mitigate the risk or by indemnification from the sellers from which we acquired these businesses. We could also incur significant costs, including, but not limited to, remediation costs, natural resources damages, civil or criminal fines and sanctions and third-party claims, as a result of past or future violations of, or liabilities, associated with environmental laws.
Any impairment in the value of our intangible assets, including goodwill, would negatively affect our operating results and total capitalization.
Our total assets reflect substantial intangible assets, primarily goodwill. The goodwill results from our acquisitions and represents the excess of cost over the fair value of the identifiable net assets we acquired. We assess at least annually whether there has been any impairment in the value of our intangible assets. If future operating performance at one or more of our business units were to fall significantly below current levels, if competing or alternative technologies emerge, if market conditions for acquired businesses decline, if significant and prolonged negative industry or economic trends exist, if our stock price and market capitalization declines, or if future cash flow estimates decline, we could incur, under current applicable accounting rules, a non-cash charge to operating earnings for goodwill impairment. Any determination requiring the write-off of a significant portion of unamortized intangible assets would negatively affect our results of operations and equity book value, the effect of which could be material.
Risks Related to Legal, Compliance and Regulatory Matters
Changes in United States and international tax law may have a material adverse effect on our business, financial condition and results of operations.
We are subject to income taxes in the United States and various foreign jurisdictions. Changes in applicable domestic or foreign tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our business, financial condition and profitability by increasing our tax liabilities. Our future results of operations could be adversely affected by changes in our effective tax rate as a result of a change in the mix of earnings in jurisdictions with differing statutory tax rates, changes in our overall profitability, changes in tax legislation and rates, changes in generally accepted accounting principles and changes in the valuation of deferred tax assets and liabilities. The U.S. federal government may adopt changes to international trade agreements, tariffs, taxes and other government rules and regulations.  While we cannot predict what changes will actually occur with respect to any of these items, such changes could affect our business and results of operations.
We may be exposed to liabilities under the Foreign Corrupt Practices Act (FCPA), which could have a material adverse effect on our business.
We are subject to compliance with various laws and regulations, including the FCPA, UK Bribery Act and similar worldwide anti-bribery and anti-corruption laws, which generally prohibit companies and their intermediaries from engaging in bribery or making other improper payments to private or public parties for the purpose of obtaining or retaining business or gaining an unfair business advantage. The FCPA also requires proper record keeping and characterization of such payments in our reports filed with the SEC. Our employees are trained and required to comply with these laws, and we are committed to legal compliance and corporate ethics. Violations of these laws could result in severe criminal or civil sanctions and financial penalties and other consequences that may have a material adverse effect on our business, reputation, financial condition or results of operations. 
The level of returns on pension plan assets and changes in the actuarial assumptions used could adversely affect us.
Our operating results may be positively or negatively impacted by the amount of expense we record for our defined benefit pension plans. U.S. GAAP requires that we calculate pension expense using actuarial valuations, which are dependent upon our various assumptions including estimates of expected long-term rate of return on plan assets, discount rates for future payment obligations, and the expected rate of increase in future compensation levels. Our pension expense and funding requirements may also be affected by our actual return on plan assets and by legislation and other government regulatory actions. Changes in
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assumptions, laws or regulations could lead to variability in operating results and could have a material adverse impact on liquidity.
Risks Related to Our Capital Structure
Our inability to comply with our existing credit facilities’ restrictive covenants or to access additional sources of capital could impede growth or the repayment or refinancing of existing indebtedness.
The limits imposed on us by the restrictive covenants contained in our credit facilities could prevent us from making acquisitions or cause us to lose access to these facilities.
Our existing credit facilities contain restrictive covenants that limit our ability to, among other things:
borrow money or guarantee the debts of others;
use assets as security in other transactions;
make restricted payments or distributions; and
sell or acquire assets or merge with or into other companies.
In addition, our credit facilities require us to meet financial ratios, including a “Leverage Ratio” and an “Interest Coverage Ratio,” both as defined in the credit facilities.
These restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs and could otherwise restrict our financing activities.
Our ability to comply with the covenants and other terms of our credit facilities will depend on our future operating performance. If we fail to comply with such covenants and terms, we may be in default and the maturity of the related debt could be accelerated and become immediately due and payable. We may be required to obtain waivers from our lenders in order to maintain compliance under our credit facilities, including waivers with respect to our compliance with certain financial covenants. If we are unable to obtain necessary waivers and the debt under our credit facilities is accelerated, we would be required to obtain replacement financing at prevailing market rates.
We may need new or additional financing in the future to expand our business or refinance existing indebtedness. If we are unable to access capital on satisfactory terms and conditions, we may not be able to expand our business or meet our payment requirements under our existing credit facilities. Our ability to obtain new or additional financing will depend on a variety of factors, many of which are beyond our control. We may not be able to obtain new or additional financing because we have substantial debt or because we may not have sufficient cash flow to service or repay our existing or future debt. In addition, depending on market conditions and our financial performance, neither debt nor equity financing may be available on satisfactory terms or at all. Finally, as a consequence of worsening financial market conditions, our credit facility providers may not provide the agreed credit if they become undercapitalized.
Changes in interest rates could adversely affect us.
Any period of interest rate increases may adversely affect our profitability. At October 31, 2020, we had $1,105,995 of total debt and notes payable outstanding, of which 51 percent was priced at interest rates that float with the market. A one percentage point increase in the interest rate on the floating rate debt in 2020 would have resulted in approximately $6,535 of additional interest expense. A higher level of floating rate debt would increase the exposure to changes in interest rates. For additional detail related to this risk, see Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk. Additionally, the interest rates on some of our debt is tied to LIBOR. In July 2017, the head of the United Kingdom’s Financial Conduct Authority announced its intention to phase out the use of LIBOR by the end of 2023.  The uncertainty regarding the future of LIBOR, as well as the transition from LIBOR to another benchmark rate or rates could have adverse impacts on our outstanding debt and notes payable that currently use LIBOR as a benchmark rate, and ultimately, adversely affect our financial condition and results of operations.  
General Risk Factors
The insurance that we maintain may not fully cover all potential exposures.
We maintain property, business interruption and casualty insurance but such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We are potentially at risk if one or more of our insurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers. In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.
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Our business and operating results may be adversely affected by natural disasters or other catastrophic events beyond our control.
While we have taken precautions to prevent production and service interruptions at our global facilities, severe weather conditions such as hurricanes or tornadoes, as well as major earthquakes, wildfires and other natural disasters, as well as cyberterrorism, in areas in which we have manufacturing facilities or from which we obtain products may cause physical damage to our properties, closure of one or more of our manufacturing or distribution facilities, lack of an adequate work force in a market, temporary disruption in the supply of inventory, disruption in the transport of products and utilities, and delays in the delivery of products to our customers. Any of these factors may disrupt our operations and adversely affect our financial condition and results of operations.
Item 1B.  Unresolved Staff Comments
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Item 2.  Properties
Our principal owned and leased properties (defined as greater than 20,000 square feet or related to a principal operation) as of October 31, 2020 were as follows:
LocationDescription of PropertyApproximate
Square Feet
Amherst, Ohio 1, 2
A manufacturing, laboratory and office complex521,000 
Chippewa Falls, Wisconsin 1
A manufacturing, warehouse and office building (leased)295,000 
Austintown, Ohio 1
A manufacturing, warehouse and office building (leased)207,000 
Carlsbad, California 2
Three manufacturing and office buildings (leased)181,000 
Duluth, Georgia 1
A manufacturing, laboratory and office building176,000 
Norwich, Connecticut 2
A manufacturing, laboratory and office building159,000 
Swainsboro, Georgia 1
A manufacturing building (leased)136,000 
East Providence, Rhode Island 2
A manufacturing, warehouse and office building116,000 
Loveland, Colorado 2
A manufacturing, warehouse and office building115,000 
Robbinsville, New Jersey 2
A manufacturing, warehouse and office building (leased)88,000 
Salem, New Hampshire 2
Two manufacturing, warehouse and office buildings (leased)83,000 
Minneapolis, Minnesota 2
Two office, laboratory and warehouse buildings (leased)69,000 
Wixom, Michigan 1
A manufacturing, warehouse and office building (leased)64,000 
Vista, California 2
A manufacturing building (leased)41,000 
Hickory, North Carolina 1
A manufacturing, warehouse and office building (leased)41,000 
Marlborough, Massachusetts 2
An office, laboratory and warehouse building (leased)30,000 
Westlake, OhioCorporate headquarters28,000 
Liberty Lake, Washington 2
A manufacturing, warehouse and office building (leased)27,000 
Chattanooga, Tennessee 2
A manufacturing, warehouse and office building (leased)25,000 
Sunnyvale, California 2
Two office, laboratory and warehouse buildings (leased)24,000 
Huntington Beach, California 2
An office, laboratory and warehouse building (leased)21,000 
Münster, Germany 1
Two manufacturing, warehouse and office buildings (leased)598,000 
Shanghai, China 1, 2
Three manufacturing, warehouse, laboratory and office buildings178,000 
Lüneburg, Germany 1
A manufacturing and laboratory building129,000 
Guaymas, Mexico 2
Three manufacturing, warehouse and office buildings (leased)89,000 
Tokyo, Japan 1, 2
Four office, laboratory and warehouse buildings (leased)75,700 
Bangalore, India 1, 2
A manufacturing, warehouse and office building56,000 
Maastricht, Netherlands 1, 2
A manufacturing, warehouse and office building54,000 
Chonburi, Thailand 1
A manufacturing, warehouse and office building52,000 
Erkrath, Germany 1, 2
An office, laboratory and warehouse building (leased)50,000 
Boyle, Ireland 2
A manufacturing, warehouse and office building (leased)47,000 
Deurne, Netherlands 2
A manufacturing, warehouse and office building (leased)46,000 
Suzhou, China 2
A manufacturing, warehouse and office building (leased)42,000 
Elk Grove, Illinois 2
A manufacturing, warehouse and office building (leased)40,000 
Aylesbury, U.K. 1, 2
A manufacturing, warehouse and office building (leased)36,000 
Galway, Ireland 2
An office, laboratory and warehouse building (leased)36,000 
Seongnam-City, South Korea 1, 2
An office, laboratory and warehouse building (leased)35,000 
Shanghai, China 1, 2
Three manufacturing, warehouse and office buildings (leased)33,000 
Pirmasens, Germany 1
A manufacturing, warehouse and office building (leased)32,000 
Sao Paulo, Brazil 1, 2
An office, laboratory and warehouse building (leased)23,000 
El Marques, Mexico 1, 2
A warehouse and office building (leased)22,000 
Singapore 1
Two warehouse and office buildings (leased)22,000 
Katzrin, Israel 2
An office, laboratory and warehouse building (leased)20,000 
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Business Segment - Property Identification Legend
1 - Industrial Precision Solutions
2 - Advanced Technology Solutions
The facilities listed have adequate, suitable and sufficient capacity (production and nonproduction) to meet present and foreseeable demand for our products.
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. Information about leases is reported in Note 11 of Notes to Consolidated Financial Statements that can be found in Part II, Item 8 of this document.
Item 3.  Legal Proceedings
See Note 19, “Contingencies” in the accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Item 4.  Mine Safety Disclosures
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Information About Our Executive Officers
Our executive officers as of October 31, 2020, were as follows:
NameAgeOfficer SincePosition or Office with The Company and Business Experience During the Past Five (5) Year Period
Sundaram Nagarajan582019President and Chief Executive Officer, 2019
Joseph P. Kelley482020Executive Vice President, Chief Financial Officer, 2020
Gina A. Beredo462018Executive Vice President, General Counsel and Secretary, 2018
James E. DeVries612012Executive Vice President, 2012
John J. Keane592003Executive Vice President, 2005
Stephen P. Lovass512017Executive Vice President, 2017
Gregory P. Merk492006Executive Vice President, 2013
Shelly M. Peet552007Executive Vice President, 2009
Jeffrey A. Pembroke532015Executive Vice President, 2015
Joseph Stockunas602015Executive Vice President, 2015
Effective August 1, 2019, Mr. Nagarajan was appointed President and Chief Executive Officer and as a member of the Board of Directors of the Company. Prior to becoming our President and Chief Executive Officer, Mr. Nagarajan served as Executive Vice President, Automotive OEM Segment, with Illinois Tool Works Inc. (NYSE: ITW), a global manufacturer of a diversified range of industrial products and equipment, since 2015. Prior to that, Mr. Nagarajan served as Executive Vice President, Welding Segment, with Illinois Tool Works from 2010 to 2015. Mr. Nagarajan has served as a member of the Board of Directors of Sonoco Products Company (NYSE: SON) since 2015.
Effective July 6, 2020, Joseph P. Kelley was appointed as Executive Vice President, Chief Financial Officer of the Company. Mr. Kelley succeeded Gregory A. Thaxton, who stepped down from his role as Chief Financial Officer of the Company effective July 6, 2020 and was employed as an Executive Vice President of the Company until his retirement on August 28, 2020. Mr. Kelley served as Chief Financial Officer of Materion Corporation, (NYSE: MTRN), an advanced materials company, since 2015. Throughout his career, he served in roles of increasing financial responsibility at Materion, Avient Corporation (formerly known as PolyOne Corporation) (NYSE: AVNT), a specialty chemicals company, and Lincoln Electric (Nasdaq: LECO), a global manufacturer.
Effective January 1, 2018, Ms. Beredo was appointed Executive Vice President, General Counsel and Secretary.  Ms. Beredo served as Deputy General Counsel and Assistant Secretary since joining the Company in 2013.  Prior to joining the Company, Ms. Beredo served as Chief Litigation Counsel and Director of Compliance & Ethics at American Greetings Corporation, formerly traded on the NYSE.  Prior to joining American Greetings, Ms. Beredo was an associate at BakerHostetler LLP.
On November 28, 2016, Mr. Lovass was elected as Corporate Vice President.  Prior to joining the Company, Mr. Lovass served as President for one of the global sensors and controls businesses for Danaher Corporation (NYSE: DHR), an international Fortune 200, diversified science and technology company, from 2012 to 2016.  Prior to joining Danaher, Mr. Lovass served as a Senior Vice President and Corporate Officer for Gerber Scientific, Inc., an automated systems manufacturer for sign-making, specialty graphics and packaging.
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Item 5.  Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information and Dividends
(a) Our common shares are listed on the Nasdaq Global Select Market under the symbol NDSN. As of November 30, 2020, there were 1,303 record shareholders.
While we have historically paid dividends to shareholders of our common stock on a quarterly basis, the declaration and payment of future dividends will depend on many factors, including but not limited to, our earnings, financial condition, business development needs and regulatory considerations, and are at the discretion of our board of directors.
Performance Graph
The following is a graph that compares the 10-year cumulative return, calculated on a dividend-reinvested basis, from investing $100 on November 1, 2010 in Nordson common shares, the S&P 500 Index, the S&P MidCap 400 Index, the S&P 500 Industrial Machinery Index, the S&P MidCap 400 Industrial Machinery Index and our Proxy Peer Group, which includes: AIN, AME, B, DCI, ENTG, EPAC, FLIR, GDI, GGG, GTLS, IEX, ITT, KEYS, LECO, NATI, ROP, TER, WTS, and WWD.
Company/Market/Peer Group20102011201220132014201520162017201820192020
Nordson Corporation$100.00 $121.14 $157.44 $194.09 $208.21 $196.14 $279.33 $356.75 $348.63 $450.67 $560.87 
S&P 500 Index$100.00 $108.09 $124.52 $158.36 $185.71 $195.37 $204.17 $252.43 $270.97 $309.79 $339.87 
S&P MidCap 400$100.00 $108.55 $121.69 $162.44 $181.37 $187.58 $199.31 $246.11 $248.62 $271.03 $267.92 
S&P 500 Ind. Machinery$100.00 $103.46 $123.82 $176.80 $199.37 $199.07 $227.30 $313.37 $289.14 $352.62 $386.78 
S&P MidCap 400 Ind. Machinery$100.00 $113.73 $124.21 $172.45 $182.74 $152.97 $179.53 $257.49 $252.07 $299.53 $320.07 
Peer Group$100.00 $113.30 $128.23 $177.35 $193.38 $188.81 $193.62 $292.26 $299.10 $383.02 $414.51 
Source: Zack’s Investment Research
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(b)Use of Proceeds. Not applicable.
(c)Issuer Purchases of Equity Securities
Total Number
of Shares
Price Paid
per Share
Total Number of
Shares Repurchased
as Part of Publicly
Announced Plans
or Programs (2)
Maximum Value of
Shares That May Yet
Be Purchased Under
the Plans or Programs (2)
August 1, 2020 to August 31, 2020
$187.96 — $447,703 
September 1, 2020 to September 30, 2020— $— — $447,703 
October 1, 2020 to October 31, 2020$198.39 $447,104 
(1) Includes shares tendered for taxes related to vesting of restricted stock.
(2) In December 2014, the board of directors authorized a $300,000 common share repurchase program. In August 2015, the board of directors authorized the repurchase of up to an additional $200,000 of the Company’s common shares. In August 2018, the board of directors authorized the repurchase of an additional $500,000 of the Company’s common shares. Under the current authorization, the Company may repurchase shares on an annual basis sufficient to offset dilution of the compensation plans. Approximately $447,104 of the total $1,000,000 authorized remained available for share repurchases at October 31, 2020. Uses for repurchased shares include the funding of benefit programs including stock options and restricted stock. Shares purchased are treated as treasury shares until used for such purposes. The repurchase program is being funded using cash from operations and proceeds from borrowings under our credit facilities.

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Item 6. Selected Financial Data
(In thousands except for per-share amounts)
Operating Data (a) (e)
Sales$2,121,100 $2,194,226 $2,254,668 $2,066,982 $1,808,994 
Cost of sales990,632 1,002,123 1,018,340 927,692 813,792 
% of sales47 46 45 45 45 
Selling and administrative expenses693,552 708,990 733,749 672,888 597,076 
% of sales33 32 33 33 33 
Assets held for sale impairment charge87,371 — — — — 
% of sales4 — — — — 
Operating profit349,545 483,113 502,579 466,402 398,126 
% of sales16 22 22 23 22 
Net income249,539 337,091 377,375 295,802 271,843 
% of sales12 15 17 14 15 
Financial Data (a) (f)
Net current assets (g)
$657,523 $533,569 $533,822 $240,626 $414,032 
Net property, plant and equipment and other non-current assets2,654,044 2,505,252 2,536,910 2,526,167 1,675,008 
Total capital (b)
2,656,693 2,674,023 2,669,154 2,648,094 1,767,369 
Total assets3,674,656 3,516,447 3,421,012 3,414,539 2,420,583 
Long-term liabilities1,552,576 1,457,776 1,619,991 1,611,300 1,237,437 
Shareholders’ equity1,758,991 1,581,045 1,450,741 1,155,493 851,603 
Return on average total capital — % (c)
10 14 15 14 16 
Return on average shareholders’ equity — % (d)
15 23 28 30 37 
Per-Share Data (a)
Average number of common shares57,757 57,462 57,970 57,533 57,060 
Average number of common shares and common share equivalents58,473 58,202 58,931 58,204 57,530 
Basic earnings per share$4.32 $5.87 $6.51 $5.14 $4.76 
Diluted earnings per share4.27 5.79 6.40 5.08 4.73 
Dividends per common share1.53 1.43 1.25 1.11 0.99 
Book value per common share30.29 27.45 25.00 20.02 14.86 
(a)See accompanying Notes to Consolidated Financial Statements.
(b)Notes payable, plus current portion of long-term debt, plus long-term debt, minus cash and marketable securities, plus shareholders’ equity.
(c)Net income plus after-tax interest expense on borrowings as a percentage of the average of quarterly borrowings (net of cash) plus shareholders’ equity over the last five quarterly accounting periods.
(d)Net income as a percentage of average quarterly shareholders’ equity over the last five quarterly accounting periods.
(e)Certain amounts for the years 2016 through 2018 have been adjusted to reflect the retrospective application of our reclassification of certain pension costs upon the adoption of a new accounting standard in 2019.
(f)Certain amounts for 2016 have been adjusted to reflect the retrospective application of our reclassification of debt issuance costs upon the adoption of a new accounting standard in 2017.
(g)Net current assets equal total current assets less total current liabilities. The 2020 increase was driven primarily by the decrease in current maturities of long-term debt.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
In this annual report, all amounts related to United States dollars and foreign currency and to the number of Nordson Corporation’s common shares, except for per share earnings and dividend amounts, are expressed in thousands. Unless the context otherwise indicates, all references to “we,” “us,” “our,” or the “Company” mean Nordson Corporation.
Unless otherwise noted, all references to years relate to our fiscal year ending October 31.
Critical Accounting Policies and Estimates
Our 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 management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate the accounting policies and estimates that are used to prepare financial statements. We base our 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 our results of operations or financial position are discussed below. On a regular basis, critical accounting policies are reviewed with the Audit Committee of the board of directors.
Revenue recognition A contract exists when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable.  Revenue is recognized when performance obligations under the terms of the contract with a customer are satisfied. Generally, our revenue results from short-term, fixed-price contracts and is recognized as of a point in time when the product is shipped or at a later point when the control of the product transfers to the customer. Refer to Note 1 to the Consolidated Financial Statements for further discussion regarding the Company's revenue recognition policy.
Business combinations – The acquisitions of our businesses are accounted for under the acquisition method of accounting. The amounts assigned to the identifiable assets acquired and liabilities assumed in connection with acquisitions are based on estimated fair values as of the date of the acquisition, with the remainder, if any, recorded as goodwill. The fair values are determined by management, taking into consideration information supplied by the management of the acquired entities, and other relevant information. Such information typically includes valuations obtained from independent appraisal experts, which management reviews and considers in its estimates of fair values. The valuations are generally based upon future cash flow projections for the acquired assets, discounted to present value. The determination of fair values requires significant judgment by management, particularly with respect to the value of identifiable intangible assets. This judgment could result in either a higher or lower value assigned to amortizable or depreciable assets. The impact could result in either higher or lower amortization and/or depreciation expense.
Goodwill – Goodwill is the excess of purchase price over the fair value of tangible and identifiable intangible net assets acquired in various business combinations. Goodwill is not amortized but is tested for impairment annually at the reporting unit level, or more often if indications of impairment exist. Our reporting units are one level below the Industrial Precision Solutions segment, and one level below the Advanced Technology Solutions segment. 
We test goodwill in accordance with Accounting Standards Codification (ASC) 350. Goodwill impairment charge is recorded for the amount by which the carrying value of the reporting unit exceeds the fair value of the reporting unit, as calculated in the quantitative analysis described below. We did not record any goodwill impairment charges in 2020. We use an independent valuation specialist to assist with refining our assumptions and methods used to determine fair values using these methods. To test for goodwill impairment, we estimate the fair value of each of our reporting units using a combination of the Income Approach and the Market Approach.
The discounted cash flow method (Income Approach) uses assumptions for revenue growth, operating margin, and working capital turnover that are based on management’s strategic plans tempered by performance trends and reasonable expectations about those trends. Terminal value calculations employ a published formula known as the Gordon Growth Model Method that essentially captures the present value of perpetual cash flows beyond the last projected period assuming a constant Weighted Average Cost of Capital (WACC) methodology and growth rate. For each reporting unit, a sensitivity analysis is performed to vary the discount and terminal growth rates in order to provide a range of reasonableness for detecting impairment. Discount rates are developed using a WACC methodology. The WACC represents the blended average required rate of return for equity and debt capital based on observed market return data and company specific risk factors. For 2020, the discount rates used ranged from 7.0 percent to 8.8 percent depending upon the reporting unit's size, end market volatility, and projection risk.
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In the application of the guideline public company method (Market Approach), fair value is determined using transactional evidence for similar publicly traded equity. The comparable company guideline group is determined based on relative similarities to each reporting unit since exact correlations are not available. An indication of fair value for each reporting unit is based on the placement of each reporting unit within a range of multiples determined for its comparable guideline company group. Valuation multiples are derived by dividing latest twelve-month performance for revenues and EBITDA into total invested capital, which is the sum of traded equity plus interest bearing debt less cash. These multiples are applied against the revenue and EBITDA of each reporting unit. While the implied indications of fair value using the guideline public company method yield meaningful results, the discounted cash flow method of the income approach includes management’s thoughtful projections and insights as to what the reporting units will accomplish in the near future. Accordingly, the reasonable, implied fair value of each reporting unit is a blend based on the consideration of both the Income and Market approaches.
In 2020, 2019, and 2018, the results of our annual impairment tests indicated no impairment.
The excess of fair value (FV) over carrying value (CV) was compared to the carrying value for each reporting unit. Based on the results shown in the table below and based on our measurement date of August 1, 2020, our conclusion is that no goodwill was impaired in 2020. Potential events or circumstances, such as a sustained downturn in global economies, could have a negative effect on estimated fair values.
WACCExcess of
FV over CV
Industrial Precision Solutions Segment - Adhesives7.0%648%$393,491 
Industrial Precision Solutions Segment - Industrial Coating Systems8.8%584%$24,058 
Advanced Technology Solutions Segment - Electronics
Advanced Technology Solutions Segment - Fluid
Advanced Technology Solutions Segment - Test & Inspection8.5%218%$79,790 
Pension plans and postretirement medical plans - The measurement of liabilities related to our pension plans and postretirement medical plans is based on management’s assumptions related to future factors, including interest rates, return on pension plan assets, compensation increases, mortality and turnover assumptions, and health care cost trend rates.
The weighted-average discount rate used to determine the present value of our domestic pension plan obligations was 2.85 percent at October 31, 2020 and 3.25 percent at October 31, 2019. The weighted-average discount rate used to determine the present value of our various international pension plan obligations was 1.01 percent at October 31, 2020, compared to 1.26 percent at October 31, 2019. The discount rates used for all plans were determined by using quality fixed income investments with a duration period approximately equal to the period over which pension obligations are expected to be settled.
In determining the expected return on plan assets, we consider both historical performance and an estimate of future long-term rates of return on assets similar to those in our plans. We consult with and consider the opinions of financial and actuarial experts in developing appropriate return assumptions. The expected rate of return (long-term investment rate) on domestic pension assets used to determine net benefit costs was 5.75 percent in 2020 and 6.00 percent in 2019. The average expected rate of return on international pension assets used to determine net benefit costs was 3.22 percent in 2020 and 3.96 percent in 2019.
The assumed rate of compensation increases used to determine the present value of our domestic pension plan obligations was 4.00 percent at both October 31, 2020 and October 31, 2019. The assumed rate of compensation increases used to determine the present value of our international pension plan obligations was 2.69 percent at October 31, 2020, compared to 3.12 percent at October 31, 2019.
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 that are amortized into expense over a period of years.
Economic assumptions have a significant effect on the amounts reported. The effect of a one percent change in the discount rate, expected return on assets and compensation increase is shown in the table below. Bracketed numbers represent decreases in expense and obligation amounts.
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United StatesInternational
1% Point
1% Point
1% Point
1% Point
Discount rate:
Effect on total net periodic pension cost in 2020
$(7,315)$9,402 $(1,591)$1,723 
Effect on pension obligation as of October 31, 2020
$(79,095)$98,884 $(16,979)$20,430 
Expected return on assets:
Effect on total net periodic pension cost in 2020
$(4,289)$4,289 $(398)$398 
Compensation increase:
Effect on total net periodic pension cost in 2020
$6,433 $(5,628)$538 $(507)
Effect on pension obligation as of October 31, 2020
$32,766 $(29,256)$3,628 $(3,366)
With respect to the domestic postretirement medical plan, the discount rate used to value the benefit obligation was 2.84 percent at October 31, 2020 and 3.27 percent at October 31, 2019. The annual rate of increase in the per capita cost of covered benefits (the health care cost trend rate) is assumed to be 3.40 percent in 2021, decreasing gradually to 3.17 percent by 2026.
For the international postretirement medical plan, the discount rate used to value the benefit obligation was 2.94 percent at October 31, 2020 and 3.03 percent at October 31, 2019. The annual rate of increase in the per capita cost of covered benefits (the health care cost trend rate) is assumed to be 4.22 percent in 2021 to 4.05 percent by 2040.
The discount rate and the health care cost trend rate assumptions have a significant effect on the amounts reported. For example, a one-percentage point change in the discount rate and the assumed health care cost trend rate would have the following effects. Bracketed numbers represent decreases in expense and obligation amounts.
United StatesInternational
1% Point
1% Point
1% Point
1% Point
Discount rate:
Effect on total net postretirement benefit cost
components in 2020
$(604)$711 $(2)$
Effect on postretirement obligation as of October 31, 2020
$(11,184)$13,899 $(84)$111 
Health care trend rate:
Effect on total net postretirement benefit cost
components in 2020
$431 $(345)$$(5)
Effect on postretirement obligation as of October 31, 2020
$11,019 $(9,100)$103 $(80)
Employees hired after January 1, 2002, are not eligible to participate in the domestic postretirement medical plan.
Pension and postretirement expenses in 2021 are expected to be approximately $5,500 lower than 2020.
Income taxes – Income taxes are estimated based on income for financial reporting purposes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain changes in valuation allowances. We provide valuation allowances against deferred tax assets if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Management believes the valuation allowances are adequate after considering future taxable income, allowable carryforward periods and ongoing prudent and feasible tax planning strategies. In the event we were to determine that we would be able to realize the deferred tax assets in the future in excess of the net recorded amount (including the valuation allowance), an adjustment to the valuation allowance would increase income in the period such determination was made. Conversely, should we determine that we would not be able to realize all or part of the net deferred tax asset in the future, an adjustment to the valuation allowance would be expensed in the period such determination was made.
Further, at each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year. Significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective income tax rates. As a result, our actual effective income tax rates and related income tax liabilities may differ materially from our estimated effective tax rates and related income tax liabilities. Any resulting differences are recorded in the period they become known.
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2020 compared to 2019
We had two acquisitions during 2020, Fluortek, Inc. and vivaMOS Ltd. which are both included within the Advanced Technology Solutions segment. Refer to Note 3 to the Consolidated Financial Statements for further discussion. As used throughout this Form 10-K, geographic regions include the Americas (Canada, Mexico and Central and South America), Asia Pacific (excluding Japan), Europe, Japan, and the United States.
Worldwide sales for 2020 were $2,121,100, a decrease of 3.3 percent from 2019 sales of $2,194,226. The decrease consisted of a 3.7 percent decline in sales volume and unfavorable currency translation effects which decreased sales by 0.2 percent partially offset by 0.6 percent growth from acquisitions.
Sales outside the United States accounted for 64.4 percent of total sales in 2020, as compared to 65.4 percent in 2019. On a geographic basis, sales in the United States were $755,642, a decrease of 0.4 percent from 2019. The decrease in sales consisted of a 1.1 percent decrease in sales volume partially offset by a 0.7 percent increase from acquisitions. In the Americas region, sales were $141,473, a decrease of 15.6 percent from 2019, with volume decreasing 14.8 percent and unfavorable currency effects of 3.8 percent partially offset by a 3.0 percent increase from acquisitions. Sales in Europe were $536,636, a decrease of 6.1 percent from 2019. The decrease in sales consisted of a 6.4 percent volume decrease and unfavorable currency effects of 0.1 percent partially offset by a 0.4 percent increase from acquisitions. Sales in Japan were $126,601, a decrease of 0.1 percent from 2019, with volume decreasing 2.1 percent partially offset by favorable currency effects of 1.8 percent and a 0.2 percent increase from acquisitions. Sales in the Asia Pacific region were $560,748, a decrease of 1.6 percent from 2019, with volume decreasing 1.7 percent and unfavorable currency effects of 0.1 percent. partially offset by a 0.2 percent increase from acquisitions.
Cost of sales were $990,632 in 2020, down 1.1 percent from $1,002,123 in 2019. Gross profit, expressed as a percentage of sales, decreased to 53.3 percent in 2020 from 54.3 percent in 2019. Of the 1.0 percentage point decrease in gross margin, unfavorable product mix contributed 0.8 of a percentage point, higher costs and adjustments related to cost structure simplification actions contributed 0.2 of a percentage point, unfavorable currency translation effects contributed 0.1 of a percentage point, and an inventory step-up related to acquisitions contributed 0.1 of a percentage point. These were partially offset by 0.2 of a percentage point due to the first year effect of acquisitions. Severance costs were incurred in both of our segments as part of cost structure simplification actions made to improve operational efficiencies.
Selling and administrative expenses were $693,552 in 2020, compared to $708,990 in 2019. Of the 2.2 percent decrease, lower base business costs contributed 3.7 percentage points, and favorable currency translation effects contributed 0.2 of a percentage point. These improvements were partially offset by 1.0 percentage point due to higher severance costs, and 0.7 of a percentage point due to the first year effect of acquisitions.
Selling and administrative expenses as a percentage of sales increased to 32.7 percent in 2020 from 32.3 percent in 2019. Of the 0.4 percentage point increase, higher severance costs contributed 0.5 of a percentage point, and the first year effect of acquisitions contributed 0.1 of a percentage point. These increases were partially offset by lower base business costs of 0.2 of a percentage point.
In the fourth quarter of 2020, we committed to a plan to sell our screws and barrels product line within the Adhesives reporting unit under our Industrial Precision Solutions segment and determined that it met the criteria to be classified as held for sale. The decision was part of a strategy to focus resources on core strategies and businesses and the Board of Directors authorized the disposition on October 23, 2020. As a result of this decision, the Company incurred a non-cash, assets held for sale impairment charge of $87,371. Refer to Note 4 to the Consolidated Financial Statements for further discussion.
Operating profit as a percentage of sales decreased to 16.5 percent in 2020 compared to 22.0 percent in 2019. Of the 5.5 percentage point decline in operating margin, the assets held for sale impairment charge contributed 4.1 percentage points, unfavorable absorption due to lower sales volume and unfavorable product mix contributed 0.8 of a percentage point, higher severance costs contributed 0.5 of a percentage point, and the amortization of the step-up of acquired inventory, unfavorable foreign currency translation effects, and the first-year effect of acquisitions combined to contribute a negative impact of 0.3 of a percentage point. This decline was partially offset by 0.2 of a percentage point due to lower base business costs.
Operating capacity for each of our segments can support fluctuations in order activity without significant changes in operating costs. Also, currency translation affects reported operating margins. Operating margins for each segment were unfavorably impacted by a stronger dollar primarily against the Chinese Yuan, Mexican Peso, and Brazilian Real during 2020 as compared to 2019.
Interest expense in 2020 was $32,160, a decrease of $14,985, or 31.8 percent, from 2019. The decrease was due to lower average debt levels and lower variable interest rates compared to the prior year. Other expense in 2020 was $17,577 compared to other expense of $6,708 in 2019. Included in the current year’s other expense were pension costs of $13,683 and $1,532 in foreign currency losses. Included in the prior year’s other expense were pension costs of $7,136. The increased pension costs were principally attributable to increased amortization of net actuarial losses.
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Income tax expense in 2020 was $51,950, or 17.2 percent of pre-tax income, as compared to $94,013, or 21.8 percent of pre-tax income in 2019. The income tax provision for 2020 included a tax benefit of $15,661 due to our share-based payment transactions which reduced the rate 5.2 percentage points.
Net income in 2020 included a non-cash, assets held for sale impairment charge of $87,371 related to our commitment to sell our screws and barrels product line within the Adhesives reporting unit under our Industrial Precision Solutions segment and the tax benefit of the impairment was $15,254. A portion of the impairment charge did not have related tax benefits.
Our income tax provision for 2019 included a provisional tax benefit of $4,866 to reflect the adjustment to the provisional amounts recognized in 2018 due to changes in interpretations and assumptions and the finalization of estimates related to the U.S. Tax Cuts and Jobs Act ("the Act"). We are paying the transition tax in installments over the eight-year period allowable under the Act. The remaining transition tax is included in other long-term liabilities in the Consolidated Balance Sheet at October 31, 2020.
Other provisions of the Act became effective for us in 2019. The Foreign-Derived Intangible Income provision generates a deduction against our U.S. taxable income for U.S. earnings derived offshore that utilize intangibles held in the U.S. Conversely, the Global Intangible Low-Taxed Income (“GILTI”) provision requires us to subject to U.S. taxation a portion of our foreign subsidiary earnings that exceed an allowable return. We elected to treat any GILTI inclusion as a period expense in the year incurred.
Our income tax provision for 2019 also included a tax benefit of $4,615 due to our share-based payment transactions.

Net income was $249,539, or $4.27 per diluted share, in 2020, compared to net income of $337,091, or $5.79 per diluted share, in 2019. This represented a 26.0 percent decrease in net income and a 26.3 percent decrease in diluted earnings per share. The decrease in both net income and diluted earnings per share was due primarily to the non-cash, assets held for sale impairment charge of $87,371.
Industrial Precision Solutions
Sales of the Industrial Precision Solutions segment were $1,143,423 in 2020, a decrease of 5.4 percent, from 2019 sales of $1,208,376. The decrease was the result of a sales volume decrease of 4.8 percent and unfavorable currency effects that decreased sales by 0.6 percent. Growth in product lines serving consumers in the non-durable end markets particularly in the United States, Americas, Europe and Japan regions was offset by weakness in sales of product lines serving industrial markets primarily in the Americas and Europe.
Operating profit as a percentage of sales decreased to 18.2 percent in 2020 compared to 27.2 percent in 2019. Of the 9.0 percentage point decline in operating margin, the assets held for sale impairment charge contributed 7.6 percentage points, unfavorable absorption due to lower sales volume and unfavorable product mix contributed 0.7 of a percentage point, higher severance costs contributed 0.5 of a percentage point, and unfavorable currency translation effects contributed 0.3 of a percentage point. This decline was minimally offset by 0.1 of a percentage point due to lower base business costs.
Advanced Technology Solutions
Sales of the Advanced Technology Solutions segment were $977,677 in 2020, a decrease of 0.8 percent from 2019 sales of $985,850. The decrease was the result of a sales volume decrease of 2.3 percent, partially offset by a 1.4 percent increase from the first-year effect of acquisitions and favorable currency effects that increased sales by 0.1 percent. Sales volume increases in certain medical product lines as well as test and inspection product lines serving electronics end markets were more than offset by weakness in fluid dispense product lines serving industrial end markets. The stable demand in medical is reflective of strength in some product lines, offset by meaningful softness in other medical products more closely tied to elective surgery, which have been reduced as a result of the COVID-19 pandemic.
Operating profit as a percentage of sales decreased to 19.6 percent in 2020 compared to 20.9 percent in 2019. Of the 1.3 percentage point decline in operating margin, unfavorable absorption due to lower sales volume and unfavorable product mix contributed 0.8 of a percentage point, higher severance costs contributed 0.4 of a percentage point, the first year effect of acquisitions contributed 0.3 of a percentage point, and an inventory step-up related to acquisitions contributed 0.2 of a percentage point. This decline was partially offset by 0.4 of a percentage point due to lower base business costs.
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2019 compared to 2018
We had one acquisition during 2019, Optical Control GmbH & Co. KG (“Optical”), which is included within the Advanced Technology Solutions segment. 
Worldwide sales for 2019 were $2,194,226, a decrease of 2.7 percent from 2018 sales of $2,254,668. The decrease was driven by unfavorable currency translation effects of 2.0 percent and a 1.1 percent decline in sales volume, partially offset by 0.4 percent growth from acquisitions.
Sales outside the United States accounted for 65.4 percent of total sales in 2019, as compared to 68.0 percent in 2018. On a geographic basis, sales in the United States were $758,383, an increase of 5.2 percent from 2018. The increase in sales consisted of 4.9 percent from sales volume and 0.3 percent from acquisitions. In the Americas region, sales were $167,661, an increase of 5.6 percent over 2018, with volume increasing 7.2 percent and a 0.2 percent increase from acquisitions partially offset by unfavorable currency effects of 1.8 percent. Sales in Europe were $571,596, a decrease of 8.1 percent from 2018, due to unfavorable currency effects of 4.8 percent and volume decreasing 3.8 percent partially offset by a 0.5 percent increase from acquisitions. Sales in Japan were $126,756, a decrease of 21.6 percent from 2018, with volume decreasing 22.9 percent partially offset by a 0.7 percent increase from acquisitions and favorable currency effects of 0.6 percent. Sales in the Asia Pacific region were $569,830, a decrease of 3.6 percent from 2018. The decrease was driven by unfavorable currency effects of 2.3 percent and lower volume of 1.9 percent, partially offset by a 0.6 percent increase from acquisitions.
Cost of sales were $1,002,123 in 2019, down 1.6 percent from $1,018,340 in 2018. Gross profit, expressed as a percentage of sales, decreased to 54.3 percent in 2019 from 54.8 percent in 2018. Of the 0.5 percentage point decrease in gross margin, unfavorable currency translation effects contributed 0.4 percentage points and unfavorable product mix contributed 0.1 percentage points.
Selling and administrative expenses were $708,990 in 2019, compared to $733,749 in 2018. The 3.4 percent decrease includes 1.6 percentage points due to lower base business costs and 1.8 percentage points due to unfavorable currency translation effects.
Selling and administrative expenses as a percentage of sales decreased to 32.3 percent in 2019 from 32.5 percent in 2018. The 0.2 percentage point improvement is due to lower base business costs.
Operating capacity for each of our segments can support fluctuations in order activity without significant changes in operating costs. Also, currency translation affects reported operating margins. Operating margins for each segment were unfavorably impacted by a stronger dollar primarily against the Euro and British Pound during 2019 as compared to 2018.
Operating profit as a percentage of sales decreased to 22.0 percent in 2019 compared to 22.3 percent in 2018. Of the 0.3 percentage point decline in operating margin, unfavorable leverage of our selling and administrative expenses contributed 1.2 percentage points, and unfavorable foreign currency translation effects contributed 0.4 percentage points.  This decline was offset by 1.2 percentage points due to the first-year effect of acquisitions and 0.1 percentage points due to lower severance costs.
Interest expense in 2019 was $47,145, a decrease of $2,431, or 4.9 percent, from 2018. The decrease was due to lower average debt levels than the prior year. Other expense in 2019 was $6,708 compared to other expense of $5,868 in 2018. Included in the 2019 other expense were pension costs related to the adoption of a new accounting standard of $7,136. Included in the 2018 other expense were pension costs related to the adoption of a new accounting standard, as noted above, of $8,022, foreign currency gains of $1,133 and a non-recurring gain of $2,512.
Income tax expense in 2019 was $94,013, or 21.8 percent of pre-tax income, as compared to $71,144, or 15.9 percent of pre-tax income in 2018.
On December 22, 2017 the Act was enacted.  It reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent.  We have an October 31 fiscal year end; therefore the lower corporate income tax rate was phased in, resulting in a U.S. statutory federal rate of 23.3 percent for our fiscal year ended October 31, 2018, and 21.0 percent for subsequent fiscal years.  The statutory tax rate of 21.0 percent was applied to earnings in 2019.  
Our income tax provision for 2018 included a provisional tax benefit of $49,082 to reflect the revaluation of our tax assets and liabilities at the reduced corporate tax rate. We also recorded a provisional tax expense of $27,618 to reflect the transition tax on previously deferred foreign earnings.  The net tax effect of these discrete items resulted in a decrease of $21,464 in income tax expense for 2018, or 4.8 percent.
Subsequent to the enactment of the Act, the SEC staff issued SAB 118, which provided a measurement period of up to one year after the enactment date for companies to finalize the recognition of the income tax effects of the Act. As of January 31, 2019, our provisional accounting for the effects of the Act was complete. As a result, during 2019 and within the one year measurement period provided by SAB 118, we recorded tax expense of $4,866 to the provisional amounts recognized in 2018 due to changes in interpretations and assumptions and the finalizations of estimates.