Nordson (NDSN) 10-K risk factor changes: FY2018 vs FY2017

In [removed: 2017,] [added: 2018,] approximately [removed: 31] [added: 32] percent of our revenue was generated in the United States, while approximately [removed: 69] [added: 68] percent was generated outside the United States.

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 [added: consummate such acquisitions, complete proposed acquisitions, successfully integrate acquired businesses into our existing operations or expand into new markets.]

Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and [added: those of our third-party service providers and] the confidentiality, availability and integrity of our data.

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 (including but not limited to the [added: European Union’s] General Data Protection Regulation), and elsewhere, are uncertain and evolving.

The majority of our consolidated revenues in [removed: 2017] [added: 2018] were generated in currencies other than the United States dollar, which is our reporting currency.

We cannot predict the effects of exchange rate fluctuations upon our future operating results because of the [added: number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates.]

We might be prohibited from selling our products before we obtain a license, which, if available at all, [added: may require us to pay substantial royalties.]

At October 31, [removed: 2017,] [added: 2018,] we had [removed: $1,582,984] [added: $1,314,091] of total debt and notes payable outstanding, of which [removed: 80] [added: 51] percent was priced at interest rates that float with the market.

A one [removed: percent] [added: percentage point] increase in the interest rate on the floating rate debt in [removed: 2017] [added: 2018] would have resulted in approximately [removed: $11,064] [added: $10,672] of additional interest expense.

In [removed: 2017,] [added: 2018,] approximately [removed: 69] [added: 68] percent of our total sales were generated outside the United States.

| • | risks of [added: political or] economic [removed: instability;] [added: instability, such as Brexit;] |

| • | changes in tax rates, adoption of new tax laws or other additional tax policies, including the implementation of [added: the Tax Cuts and Jobs Act of 2017 and other] proposals to reform United States and foreign tax laws that [removed: could] impact how United States multinational corporations are taxed on foreign earnings; |

| • | 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 [removed: new] [added: current] U.S. presidential administration; and |

The [removed: new] [added: current] U.S. presidential administration has criticized existing trade agreements, and while it is currently unclear what actions the administration may take with respect to existing and proposed trade agreements, or restrictions on trade generally, more stringent export and import controls may be [added: ultimately] imposed in the future.

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.

A cyber-attack or other disruption may also result in financial loss, including potential fines for failure to safeguard data.

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.

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.

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.

Our results could be impacted by 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 withdrawal from or material modifications to North American Free Trade Agreement, the implementation of the United States-Mexico-Canada Agreement, or certain other international trade agreements, or 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.

In March 2017, we completed the acquisition of Vention, a leading designer, developer and manufacturer of minimally invasive interventional delivery devices, catheters and advanced components for the global medical technology market.

Failure to achieve the anticipated benefits of the Vention acquisition could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy and could have an adverse effect on the acquired company’s business, financial condition, operating results and prospects.

In addition, it is possible that the integration process could result in the disruption of our ongoing businesses or cause inconsistencies in standards, controls, procedures, and policies that adversely affect our ability to maintain relationships with customers and employees or to achieve the anticipated benefits of the acquisition.

consummate such acquisitions, complete proposed acquisitions, successfully integrate acquired businesses into our existing operations or expand into new markets.

| --- | --- |

Complying with these laws may cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates.

may require us to pay substantial royalties.

Regulations related to conflict-free minerals may result in additional expenses that could affect our financial condition and business operations.

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC promulgated final rules regarding disclosure of the use of certain minerals, known as conflict minerals, which are mined from the Democratic Republic of the Congo and adjoining countries, as well as procedures regarding a manufacturer’s efforts to prevent the sourcing of such minerals and metals produced from those minerals.

These new disclosure obligations will require continuing due diligence efforts to support our future disclosure requirements.

We incurred and will continue to incur costs associated with complying with such disclosure requirements, including costs associated with canvassing our supply chain to determine the source country of any conflict minerals incorporated in our products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities.

In addition, the implementation of these rules could adversely affect the sourcing, supply, and pricing of materials used in our products.

| • | significant foreign and U.S. taxes on repatriated cash; |

Revenue for undelivered items is deferred and included within accrued liabilities in the [removed: accompanying balance sheet.][added: Consolidated Balance Sheet.]

Revenues deferred in [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] were not material.

[removed: Under a new accounting standard adopted this year (See Note 2 for additional information), a goodwill] [added: 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 [removed: 2017.][added: 2018.]

[removed: In step one, the] [added: The] discounted cash flow method [added: (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.

For [removed: 2017,] [added: 2018,] the discount rates used ranged from [removed: 9] [added: 9.5] percent to 12 percent depending upon the reporting unit's size, end market volatility, and projection risk.

In the application of the guideline public company [removed: method,] [added: method (Market Approach),] fair value is determined using transactional evidence for similar publicly traded equity.

Valuation multiples are derived by dividing latest [removed: twelve month] [added: twelve-month] performance for revenues and EBITDA into total invested capital, which is the sum of traded equity plus interest bearing debt less cash.

Accordingly, the reasonable, implied fair value of each reporting unit is a blend based on the [removed: relative strength] [added: consideration] of [added: both] the [removed: approaches employed.][added: Income and Market approaches.]

In [removed: 2017] [added: 2018, 2017,] and 2016, the results of our annual impairment tests indicated no impairment.

Based on the results shown in the table below and based on our measurement date of August 1, [removed: 2017,] [added: 2018,] our conclusion is that no goodwill was impaired in [removed: 2017.][added: 2018.]

| | | WACC | | | [removed: |] Excess of FV over CV | | | [removed: |] Goodwill | | |

| Industrial Coating Systems Segment | | [removed: | 11% |] [added: 11.5%] | | | [removed: 503%] [added: 488%] | | | $ | 24,058 | |

| Advanced Technology Systems Segment - Electronics Systems | | [removed: | 10% |] [added: 11.0%] | | | [removed: 329%] [added: 564%] | | | $ | [removed: 27,224] [added: 27,916] | |

| Advanced Technology Systems Segment - Fluid Management | | [removed: | 9% |] [added: 10.5%] | | | [removed: 83%] [added: 119%] | | | $ | [removed: 1,092,940] [added: 1,095,969] | |

| Advanced Technology Systems Segment - Test & Inspection | | [removed: | 12% |] [added: 12.0%] | | | [removed: 51%] [added: 141%] | | | $ | [removed: 48,499] [added: 71,050] | |

The weighted-average discount rate used to determine the present value of our domestic pension plan obligations was [removed: 3.80] [added: 4.53] percent at October 31, [removed: 2017] [added: 2018] and [removed: 3.94] [added: 3.80] percent at October 31, [removed: 2016.][added: 2017.]

The weighted-average discount rate used to determine the present value of our various international pension plan obligations was [removed: 2.07] [added: 2.14] percent at October 31, [removed: 2017,] [added: 2018,] compared to [removed: 1.86] [added: 2.07] percent at October 31, [removed: 2016.][added: 2017.]

The expected rate of return (long-term investment rate) on domestic pension assets used to determine net benefit costs was [removed: 6.25] [added: 6.00] percent in [removed: 2017] [added: 2018] and [removed: 6.72] [added: 6.25] percent in [removed: 2016.][added: 2017.]

The average expected rate of return on international pension assets used to determine net benefit costs was [removed: 3.51] [added: 3.91] percent in [removed: 2017] [added: 2018] and [removed: 4.22] [added: 3.51] percent in [removed: 2016.][added: 2017.]

The assumed rate of compensation increases used to determine the present value of our domestic pension plan obligations was [removed: 3.61] [added: 3.90] percent at October 31, [removed: 2017,] [added: 2018,] compared to 3.61 percent at October 31, [removed: 2016.][added: 2017.]

The assumed rate of compensation increases used to determine the present value of our international pension plan obligations was [removed: 3.13] [added: 3.12] percent at October 31, [removed: 2017,] [added: 2018,] compared to [removed: 3.12] [added: 3.13] percent at October 31, [removed: 2016.][added: 2017.]

| Effect on total service and interest cost components in [removed: 2017] [added: 2018] | | $ | [removed: (5,320] [added: (3,660] | ) | | $ | [removed: 6,490] [added: 3,660] | | | $ | [removed: (1,417] [added: (391] | ) | | $ | [removed: 1,766] [added: 391] | |

| Effect on total service and interest cost components in [removed: 2017] [added: 2018] | | $ | [removed: (3,326] [added: (631] | ) | | $ | [removed: 3,326] [added: 760] | | | $ | [removed: (375] [added: (4] | ) | | $ | [removed: 375] [added: 4] | |

| Effect on total service and interest cost components in [removed: 2017] [added: 2018] | | $ | [removed: 4,127] [added: 516] | | | $ | [removed: (2,755] [added: (411] | ) | | $ | [removed: 635] [added: 11] | | | $ | [removed: (511] [added: (8] | ) |

With respect to the domestic postretirement medical plan, the discount rate used to value the benefit plan was [removed: 3.86] [added: 4.56] percent at October 31, [removed: 2017] [added: 2018] and [removed: 4.05] [added: 3.86] percent at October 31, [removed: 2016.][added: 2017.]

The annual rate of increase in the per capita cost of covered benefits (the health care cost trend rate) is assumed to be [removed: 3.70] [added: 3.75] percent in [removed: 2018,] [added: 2019,] decreasing gradually to [removed: 3.23] [added: 3.27] percent in 2026.

For the international postretirement plan, the discount rate used to value the benefit obligation was [removed: 3.52] [added: 3.88] percent at October 31, [removed: 2017] [added: 2018] and [removed: 3.40] [added: 3.52] percent at October 31, [removed: 2016.][added: 2017.]

The annual rate of increase in the per capita cost of covered benefits (the health care cost trend rate) is assumed to be [removed: 6.50] [added: 6.35] percent in [removed: 2018,] [added: 2019,] decreasing gradually to 3.50 percent in 2037.

| Effect on total service and interest cost components in [removed: 2017] [added: 2018] | | $ | [removed: (585] [added: (6,081] | ) | | $ | [removed: 696] [added: 7,000] | | | $ | [removed: (3] [added: (1,212] | ) | | $ | [removed: 3] [added: 1,418] | |

| Effect on total service and interest cost components in [removed: 2017] [added: 2018] | | $ | [removed: 562] [added: 4,648] | | | $ | [removed: (446] [added: (3,266] | ) | | $ | [removed: 10] [added: 553] | | | $ | [removed: (8] [added: (534] | ) |

The change was accounted for as a change in estimate that is inseparable from a change in accounting principle and, accordingly, was accounted for prospectively [added: starting in 2017.]

Pension and postretirement expenses in [removed: 2018] [added: 2019] are expected to be approximately [removed: $474 higher] [added: $990 lower] than [removed: 2017.][added: 2018.]

[removed: Significant judgment] [added: Judgment] is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income.

[added: Sales in Europe were $530,812, an] increase of 5.3 percent from 2016, with volume increasing 5.5 percent partially offset by unfavorable currency effects of 0.2 percent.

[removed: As a result, our] [added: Our] income tax provision for [removed: 2016] [added: 2017] includes a discrete tax [removed: benefit] [added: expense] of [removed: $2,200] [added: $1,070] related to [removed: 2015.][added: nondeductible acquisition costs.]

Sales volume increased [removed: 8.5] [added: 7.1] percent and [removed: unfavorable] [added: favorable] currency translation effects [removed: reduced] [added: increased] sales by [removed: 1.4] [added: 2.0] percent.

The volume increase consisted of [removed: 6.5] [added: 2.5] percent from organic growth and [removed: 2.0] [added: 4.6] percent from acquisitions.

The increase was the [removed: net] result of a sales volume increase of [removed: 6.9] [added: 1.5] percent [removed: partially offset by unfavorable] [added: and favorable] currency effects that [removed: reduced] [added: increased] sales by [removed: 1.7] [added: 2.8] percent.

The [added: increase in] sales volume [removed: increase] consisted of [removed: 0.7] [added: 1.9] percent from [removed: the WAFO acquisition] [added: organic volume] and [removed: 6.2] [added: 9.4] percent from [removed: organic volume.][added: acquisitions.]

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.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Adhesive Dispensing Systems Segment | | 9.5% | | | 497% | | | $ | 392,740 | |

| Effect on pension obligation as of October 31, 2018 | | $ | (53,084 | ) | | $ | 66,632 | | | $ | (14,279 | ) | | $ | 17,644 | |

| Effect on pension obligation as of October 31, 2018 | | $ | 21,688 | | | $ | (18,104 | ) | | $ | 3,588 | | | $ | (2,944 | ) |

| Effect on postretirement obligation as of October 31, 2018 | | $ | (9,204 | ) | | $ | 11,482 | | | $ | (96 | ) | | $ | 127 | |

| Effect on postretirement obligation as of October 31, 2018 | | $ | 9,316 | | | $ | (7,659 | ) | | $ | 120 | | | $ | (93 | ) |

2018 compared to 2017

Sales – Worldwide sales for 2018 were $2,254,668, an increase of 9.1 percent from 2017 sales of $2,066,982.

We had two acquisitions during 2018, Sonoscan, Inc. (“Sonoscan”), and Cladach Nua Teoranta (“Clada”), which are both included within the Advanced Technology Systems segment.

We had four acquisitions during 2017, ACE Production Technologies, Inc. (“ACE”), Plas-Pak Industries, Inc. (“Plas-Pak), InterSelect GmbH (“InterSelect”), and Vention Medical’s Advanced Technologies business (“Vention”), which are also included within the Advanced Technology Systems segment.

Sales of the Adhesive Dispensing Systems segment were $955,192 in 2018, an increase of $39,173, or 4.3 percent, from 2017 sales of $916,019.

Sales of the Advanced Technology Systems segment were $1,039,366 in 2018, an increase of $141,743 or 15.8 percent, from 2017 sales of $897,623.

Sales of the Industrial Coating Systems segment were $260,110 in 2018, an increase of $6,770, or 2.7 percent, from 2017 sales of $253,340.

Operating profit – Cost of sales were $1,018,703 in 2018, up 9.8 percent from $927,981 in 2017.

Selling and administrative expenses were $734,856 in 2018, compared to $678,861 in 2017.

Of the 0.2 percentage point improvement, 0.7 percentage points is due to lower acquisition transaction costs, offset by 0.5 percentage points due to higher base business costs.

Within the Advanced Technology Systems segment, severance costs of $401 were recorded in Europe.

Severance costs of $520 were recorded in the U.S. due to a Corporate restructuring initiative.

No costs related to severance and restructuring were recorded in the Industrial Coating Systems segment in 2018.

Operating profit as a percentage of sales decreased to 21.9 percent in 2018 compared to 22.1 percent in 2017.

This decline was offset by 0.3 percentage points due to the first year effect of acquisitions, 0.7 percentage points due to lower acquisition transaction costs, and 0.6 percentage points due to favorable foreign currency translation effects.

Of the 0.5 percentage point decline in operating margin, dilution in gross margin of 0.8 percentage points was due to the consolidation of certain facilities in the U.S., and higher severance and restructuring expenses contributed 0.3 percentage points, offset by favorable foreign currency translation effects of 0.6 percentage points.

Of the 2.0 percentage point decline in operating margin, unfavorable product mix contributed 1.2 percentage points, incremental amortization expense contributed 1.1 percentage points, and higher severance and restructuring expenses contributed 0.1 percentage points.

This decline was partially offset by 0.4 percentage points due to favorable foreign currency translation effects.

Of the 2.1 percentage point improvement in operating margin, 1.9 percentage points related to favorable product mix and 0.4 percentage points related to favorable foreign currency translation effects.

This improvement was partially offset by 0.2 percentage points due to unfavorable leverage of our selling and administrative expenses.

Other income in 2018 was $2,154 compared to other expense of $1,934 in 2017.

Included in the prior year’s other expense were foreign currency losses of $686.

Income taxes –

Income tax expense in 2018 was $71,144, or 15.9 percent of pre-tax income, as compared to $124,489, or 29.6 percent of pre-tax income in 2017.

On December 22, 2017, the U.S. Tax Cuts and Jobs Act ("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 will be phased in, resulting in a U.S. statutory federal rate of 23.34 percent for our fiscal year ended October 31, 2018, and 21 percent for subsequent fiscal years.

The statutory tax rate of 23.34 percent was applied to earnings in the current year.

The Act requires us to revalue our existing U.S. deferred tax balance to reflect the lower statutory tax rate and pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred from U.S. taxes.

As a result, during 2018, we recorded 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.

We intend to pay the transition tax in installments over the eight-year period allowable under the Act.

The calculated internal rate of return for the discounted cash flow method was 9 percent, the same as the calculated WACC for total Nordson.

To test the reasonableness of the aggregate fair value, we performed the control premium test, which compares the sum of the implied fair values calculated for our reporting units (net of debt) to the market value of equity.

The control premium was negative 3 percent as of the test date of August 1, 2017 and a slight discount to the market value of equity as of October 31, 2017.

The control premium indicated that the discounted cash flow valuation was reasonable.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Adhesive Dispensing Systems Segment | | | 9% | | | | 489% | | | $ | 394,234 | |

| Effect on pension obligation as of October 31, 2017 | | $ | (56,644 | ) | | $ | 71,919 | | | $ | (14,440 | ) | | $ | 17,356 | |

| Effect on pension obligation as of October 31, 2017 | | $ | 23,174 | | | $ | (14,753 | ) | | $ | 3,261 | | | $ | (3,062 | ) |

| Effect on postretirement obligation as of October 31, 2017 | | $ | (10,504 | ) | | $ | 13,327 | | | $ | (119 | ) | | $ | 159 | |

| Effect on postretirement obligation as of October 31, 2017 | | $ | 10,637 | | | $ | (8,650 | ) | | $ | 150 | | | $ | (115 | ) |

starting in 2017.

Sales in Europe were $530,812, an

On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 was enacted which retroactively reinstated the Federal Research and Development Tax Credit (Federal R&D Tax Credit) as of January 1, 2015, and made it permanent.

The tax rate for 2016 also includes a discrete tax benefit of $6,154 related to dividends paid from previously taxed foreign earnings generated prior to 2015, and a benefit of $2,682 related to the effective settlement of a tax exam.

2016 compared to 2015

Sales – Worldwide sales for 2016 were $1,808,994, an increase of 7.1 percent from 2015 sales of $1,688,666.

We had one acquisition during 2016, LinkTech, which is included within the Advanced Technology Systems segment.

Three acquisitions were made during 2015: Liquidyn GmbH (“Liquidyn”) and MatriX Technologies GmbH (“MatriX”), which were included within the Advanced Technology Systems segment, and WAFO Produktionsgesellschaft GmbH (“WAFO”), which was included in the Adhesives Dispensing Systems segment.

Sales of the Adhesive Dispensing Systems segment were $879,573 in 2016, an increase of $43,507, or 5.2 percent, from 2015 sales of $836,066.

Sales of the Advanced Technology Systems segment were $676,329 in 2016, an increase of $82,471, or 13.9 percent, from 2015 sales of $593,858.

Sales of the Industrial Coating Systems segment were $253,092 in 2016, a decrease of $5,650, or 2.2 percent, from 2015 sales of $258,742.

The increase in sales volume consisted of 14.0 percent from organic growth and 3.4 percent from acquisitions.

Operating profit – Cost of sales were $815,495 in 2016, up 5.3 percent from 2015.

Of the 0.8 percentage point improvement in gross margin, favorable product mix added 1.3 percentage points primarily related to higher sales growth in our Adhesive Dispensing Systems and Advanced Technology Systems segments, which have higher margins relative to our Industrial Coating Systems segment.

Selling and administrative expenses were $594,293 in 2016, compared to $584,823 in 2015.

The 1.7 percentage point improvement is primarily due to leveraging higher sales growth in our Adhesive Dispensing Systems and Advanced Technology Systems segments.

To enhance operational efficiency and customer service within the Advanced Technology Systems segment, a restructuring initiative resulted in severance and restructuring costs of $1,054.

Within the Industrial Coatings Systems segment, a restructuring program to enhance operational efficiency and customer service resulted in severance costs of $1,921.

Operating profit as a percentage of sales increased to 21.5 percent in 2016 compared to 18.8 percent in 2015.

Of the 2.7 percentage point improvement in operating margin, favorable leverage of our selling and administrative expenses contributed 1.8 percentage points, favorable product mix added 1.3 percentage points primarily related to higher sales growth in our Adhesives Dispensing Systems and Advanced Technology Systems segments, which have higher margins relative to our Industrial Coating Systems segment, and lower severance and restructuring expenses contributed 0.1 percentage points.

Of the 2.7 percentage point improvement in operating margin, favorable leverage of our selling and administrative expenses contributed 2.0 percentage points, favorable product mix added 1.2 percentage points due to increased sales to consumer non-durable, disposable hygiene, general product assembly and rigid packaging end markets, and lower severance and restructuring expense added 0.1 percentage points.

The 0.6 percentage point offset is primarily due to unfavorable currency translation effects.

The 0.2 percentage point offset is primarily due to unfavorable currency translation effects.

Of the 1.2 percentage point improvement in operating margin, favorable product mix added 2.3 percentage points, primarily related to sales of engineered systems for which margins vary depending on the type of customer application, and favorable leverage of our selling and administrative expenses contributed 0.2 percentage points.

The remaining 1.3 percentage point offset was primarily due to severance and restructuring expenses and unfavorable currency translation effects.

Other income in 2016 was $657 compared to $678 in 2015.

These gains were partially offset by $1,530 of charges primarily related to the reversal of an indemnification asset resulting from the effective settlement of a tax exam.

Significant items in 2015 were proceeds from a favorable litigation settlement of $1,608 and loss on disposal of fixed assets of $653.

Income taxes – Income tax expense in 2016 was $96,651, or 26.2 percent of pre-tax income, as compared to $89,751, or 29.8 percent of pre-tax income in 2015.

Net income – Net income was $271,843, or $4.73 per diluted share, in 2016, compared to net income of $211,111, or $3.45 per diluted share, in 2015.

As a result of the use of foreign exchange contracts on a routine basis to reduce the risks related to most of our transactions denominated in foreign currencies, as of October 31, [removed: 2017,] [added: 2018,] we did not have material foreign currency exposure.

Note [removed: 13] [added: 12] to the financial statements contains additional information about our foreign currency transactions and the methods and assumptions used to record these transactions.

Nordson Corporation [removed: 33][added: 32]

| At October 31, [removed: 2016] [added: 2018] | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | Fair | | |

| | | [removed: 2017] [added: 2019] | | | | [removed: 2018] [added: 2020] | | | | [removed: 2019] [added: 2021] | | | | [removed: 2020] [added: 2022] | | | | [removed: 2021] [added: 2023] | | | | Thereafter | | | | Value | | | | Value | | |

| Average interest rate on total borrowings outstanding during the year | | | [removed: 2.9] [added: 3.5] | % | | | [removed: 2.9] [added: 3.5] | % | | | [removed: 3.0] [added: 3.6] | % | | | [removed: 3.0] [added: 3.7] | % | | | [removed: 3.1] [added: 3.7] | % | | | [removed: 3.1] [added: 3.8] | % | | | [removed: 2.9] [added: 3.5] | % | | | | |

The weighted average interest rate of this debt was [removed: 2.3] [added: 3.2] percent at October 31, [removed: 2017] [added: 2018] and [removed: 1.6] [added: 2.3] percent at October 31, [removed: 2016.][added: 2017.]

A one percent increase in interest rates would have resulted in additional interest expense of approximately [removed: $11,064] [added: $10,672] on the variable rate notes payable and long-term debt in [removed: 2017.][added: 2018.]

| Annual repayments of long-term debt | | $ | 28,734 | | | $ | 68,738 | | | $ | 38,187 | | | $ | 30,791 | | | $ | 130,796 | | | $ | 346,652 | | | $ | 643,898 | | | $ | 622,283 | |

| Annual repayments of long-term debt | | $ | 38,093 | | | $ | 26,586 | | | $ | 28,734 | | | $ | 68,738 | | | $ | 38,187 | | | $ | 158,239 | | | $ | 358,577 | | | $ | 367,990 | |

Nordson Corporation 34

[removed: We are headquartered in Westlake, Ohio, and our] [added: Our] products are marketed through a network of direct operations in more than 35 countries.

Consistent with this global strategy, approximately [removed: 69] [added: 68] percent of our revenues were generated outside the United States in [removed: 2017.][added: 2018.]

We have [removed: 7,532] [added: 7,536] employees worldwide.

Principal manufacturing facilities are located in the United States, the People’s Republic of China, Germany, Ireland, Israel, Mexico, the Netherlands, [removed: Thailand] [added: Thailand,] and the United Kingdom.

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, [removed: shareholders] [added: shareholders,] and communities.

Although every quarter may not produce increased sales, net [removed: income and] [added: income, or] earnings per share, or exceed the comparative prior year's quarter, we [removed: do] expect to produce long-term gains.

We engineer, manufacture and market differentiated products and systems used to dispense, apply and control adhesives, coatings, polymers, sealants, biomaterials, [added: medical components,] and other fluids, to test and inspect for quality, and to treat and cure surfaces.

| | • | 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 [added: 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.] |

| | • | 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 mobile phones, tablets, personal computers, wearable technology, liquid crystal displays, micro hard drives, microprocessors, printed circuit boards, [added: flexible circuits,] micro-electronic mechanical systems (MEMS), and semiconductor packaging. |

| | • | 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, [removed: tubing] [added: tubing, balloons,] and catheters. Products are used for applying and controlling the flow of adhesives, 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 [removed: optical] [added: 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, [added: flexible circuits,] MEMS, and semiconductor packaging. |

This segment primarily serves the [added: industrial capital equipment and] consumer durables [removed: market.][added: markets.]

We have principal manufacturing operations and sources of supply in the United States in Ohio, Georgia, California, Colorado, Connecticut, [added: Illinois,] Massachusetts, Michigan, Minnesota, New Jersey, [removed: North Carolina,] Rhode Island, Tennessee, [removed: Washington] and Wisconsin; as well as in the People’s Republic of China, Germany, Ireland, Israel, Mexico, the Netherlands, Thailand and the United Kingdom.

As of October 31, [removed: 2017,] [added: 2018,] we held [removed: 597] [added: 545] United States patents and [removed: 1,413] [added: 1,405] foreign patents and had [removed: 218] [added: 193] United States patent applications pending and [removed: 868] [added: 856] foreign patent applications pending, but there is no assurance that any patent application will be issued.

Our [removed: current] patent portfolio [removed: has] [added: as of October 31, 2018 had] expiration dates ranging from November [removed: 2017] [added: 2018] to April [removed: 2042.][added: 2038.]

As of October 31, [removed: 2017,] [added: 2018,] we had a total of [removed: 2,428] [added: 884] trademark registrations in the United States and in various foreign countries.

In [removed: 2017,] [added: 2018,] no single customer accounted for ten percent or more of sales.

Our backlog of open orders [removed: increased to] [added: were relatively consistent at] approximately [removed: $402,000] [added: $394,000] at October 31, [removed: 2017 from] [added: 2018 and] approximately [removed: $278,000] [added: $397,000] at October 31, [removed: 2016,] [added: 2017,] inclusive of approximately [removed: 28.0] [added: three] percent [added: decline in] organic [removed: growth and 17.0] [added: growth, offset by two] percent growth due to acquisitions.

The amounts for both years were calculated based upon exchange rates in effect at October 31, [removed: 2017.][added: 2018.]

All orders in the [removed: 2017] [added: 2018] year-end backlog are expected to be shipped to customers in [removed: 2018.][added: 2019.]

For example, future adoption of new or amended environmental laws, regulations or requirements or newly discovered contamination or other circumstances [removed: that] could require us to incur costs and expenses that may have a material effect, but cannot be presently anticipated.

Compliance with federal, state, local and foreign environmental protection laws during [removed: 2017] [added: 2018] had no material effect on our capital expenditures, earnings or competitive position.

As of October 31, [removed: 2017,] [added: 2018,] we had [removed: 7,532] [added: 7,536] full-time and part-time employees, including [removed: 140] [added: 134] at our Amherst, Ohio, facility who are represented by a collective bargaining agreement that expires on October 31, [removed: 2019 and 32 at our New Castle, Pennsylvania facility who are represented by a collective bargaining agreements that expired on August 31, 2017.][added: 2019.]

We were incorporated in the State of Ohio in 1954 and are headquartered in Westlake, Ohio.

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 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.

Vention Acquisition

On March 31, 2017, we completed the acquisition of Vention Medical’s Advanced Technologies (“Vention”) business by means of a merger.

Vention is a leading designer, developer and manufacturer of minimally invasive interventional delivery devices, catheters and advanced components for the global medical technology market.

Pursuant to the terms of the merger agreement governing the acquisition, we acquired Vention, excluding all of the outstanding capital stock of Vention Medical, Inc. (“Vention Medical”), and certain subsidiaries of Vention Medical that were sold to a third party prior to the effective time of the merger, on a cash-free and debt-free basis for an aggregate purchase price of $716.5 million, subject to certain adjustments (including a customary working capital adjustment), resulting in a transaction with an approximate enterprise value of $705 million.

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

In accordance with generally accepted accounting principles, we have reported information about our three operating segments, including information about our foreign and domestic operations.

This information is contained in Note 16 of Notes to Consolidated Financial Statements, which can be found in Part II, Item 8 of this Annual Report.

| --- | --- | --- |

| | | 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. |

The increase is primarily due to growth within the Advanced Technology Systems segment.

Research and Development

Investments in research and development are important to our long-term growth, enabling us to keep pace with changing customer and marketplace needs through the development of new products and new applications for existing products.

We place strong emphasis on technology developments and improvements through internal engineering and research teams.

Research and development expenses were $52,462 in 2017, compared with $46,247 in 2016 and $46,689 in 2015.

As a percentage of sales, research and development expenses were 2.5, 2.6 and 2.8 percent in 2017, 2016 and 2015, respectively.

As previously announced, our New Castle, Pennsylvania facility will be closing, and the parties to the collective bargaining agreement, which expired on August 31, 2017, agreed it shall remain in effect until the planned facility closure, at which point the collective bargaining agreement shall immediately expire.

No work stoppages have been experienced at any of our facilities during any of the periods covered by this report.

At October 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] our accrual for the ongoing operation, maintenance and monitoring obligation at the Site was [removed: $472] [added: $439] and [removed: $516,] [added: $472,] respectively.

10-K 1 [removed: ndsn-10k_20171031.htm] [added: ndsn-10k_20181031.htm] 10-K

For the fiscal year ended October 31, [removed: 2017][added: 2018]

[added: |] Common Shares, without par value [added: | Nasdaq Stock Market LLC |]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] 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 [removed: and post] such files).

See [removed: definition] [added: the definitions] of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange [removed: Act.][added: Act:]

| Non-accelerated filer | ☐ [removed: (Do not check if smaller reporting company)] | Smaller reporting company | ☐ |

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, [removed: 2017] [added: 2018] was approximately [removed: $7,182,626,437.][added: $7,441,507.]

There were [removed: 57,745,608] [added: 57,927,038] Common Shares outstanding as of November 30, [removed: 2017.][added: 2018.]

Documents incorporated by reference: Portions of the Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting - Part III [added: of the Form 10-K]

| | | [Seasonal Variation in Business](#SEASONAL_VARIATION_IN_BUSINESS) | [removed: 7] [added: 8] |

| [PART II](#PART_II) | | | [removed: 19] [added: 18] |

| Item 5. | | [Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#ITEM_5_MARKET_FOR_COMPANYS_COMMON_EQUITY) | [removed: 19] [added: 18] |

| | | [Market Information and Dividends](#MARKET_INFORMATION_DIVIDENDS) | [removed: 19] [added: 18] |

| | | [Performance Graph](#PERFORMANCE_GRAPH) | [removed: 20] [added: 18] |

| Item 6. | | [Selected Financial Data](#ITEM_6_SELECTED_FINANCIAL_DATA) | [removed: 21] [added: 20] |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#ITEM_7_MANAGEMENTS_DISCUSSION_ANALYSIS_F) | [removed: 22] [added: 21] |

| | | [Critical Accounting Policies and Estimates](#CRITICAL_ACCOUNTING_POLICIES_ESTIMATES) | [removed: 22] [added: 21] |

| Item 7A. | | [Quantitative and Qualitative Disclosures About Market Risk](#ITEM_7A_QUANTITATIVE_QUALITATIVE_DISCLOS) | [removed: 33] [added: 32] |

| Item 8. | | [Financial Statements and Supplementary Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR) | [removed: 35] [added: 33] |

| | | [Consolidated Statements of Income](#CONSOLIDATED_STATEMENTS_INCOME) | [removed: 35] [added: 33] |

| | | [Consolidated Statements of Comprehensive Income](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN) | [removed: 36] [added: 34] |

| | | [Consolidated Balance Sheets](#CONSOLIDATED_BALANCE_SHEETS) | [removed: 37] [added: 35] |

| | | [Consolidated Statements of Shareholders’ Equity](#CONSOLIDATED_STATEMENTS_SHAREHOLDERS_EQU) | [removed: 38] [added: 36] |

| | | [Consolidated Statements of Cash Flows](#CONSOLIDATED_STATEMENTS_CASH_FLOWS) | [removed: 39] [added: 37] |

| | | [Notes to Consolidated Financial Statements](#NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMEN) | [removed: 40] [added: 38] |

| | | [Management’s Report on Internal Control Over Financial Reporting](#MANAGEMENTS_REPORT_ON_INTERNAL_CONTROL_O) | [removed: 70] [added: 67] |

| | | [Report of Independent Registered Public Accounting Firm](#REPORT_INDEPENDENT_REGISTERED_PUBLIC_ACC) | [removed: 71] [added: 68] |

| | | [Report of Independent Registered Public Accounting Firm](#Report_of_Independent) | [removed: 72] [added: 69] |

| Item 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC) | [removed: 73] [added: 70] |

| Item 9A. | | [Controls and Procedures](#ITEM_9A_CONTROLS_PROCEDURES) | [removed: 73] [added: 70] |

| Item 9B. | | [Other Information](#ITEM_9B_OR_INFORMATION) | [removed: 73] [added: 70] |

| [PART III](#PART_III) | | | [removed: 74] [added: 71] |

| Item 10. | | [Directors, Executive Officers and Corporate Governance](#ITEM_10_DIRECTORS_EXECUTIVE_FICERS_CORPO) | [removed: 74] [added: 71] |

| Item 11. | | [Executive Compensation](#ITEM_11_EXECUTIVE_COMPENSATION) | [removed: 74] [added: 71] |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ITEM_12_SECURITY_OWNERSHIP_CERTAIN_BENEF) | [removed: 74] [added: 71] |

| | | [Equity Compensation Table](#EQUITY_COMPENSATION_TABLE) | [removed: 74] [added: 71] |

| Item 13. | | [Certain Relationships and Related Transactions, and Director Independence](#ITEM_13_CERTAIN_RELATIONSHIPS_RELATED_TR) | [removed: 74] [added: 71] |

| Item 14. | | [Principal Accountant Fees and Services](#ITEM_14_PRINCIPAL_ACCOUNTANT_FEES_SERVIC) | [removed: 75] [added: 72] |

| [PART IV](#PART_IV) | | | [removed: 76] [added: 73] |

| Item 15. | | [Exhibits and Financial Statement Schedule](#Item_15_Exhibits_and_Financial) | [removed: 76] [added: 73] |

| --- | --- |

| (Title) | (Name of exchange on which registered) |

(Check one):

| | | [Financial Information About Operating Segments, Foreign and Domestic Operations and Export Sales](#FINANCIAL_INFORMATION_ABOUT_OPERATING_SE) | 5 |

| | | [Research and Development](#RESEARCH_DEVELOPMENT) | 8 |

The following table summarizes our principal properties as of October 31, [removed: 2017:][added: 2018:]

| Chippewa Falls, Wisconsin 1 | | Three manufacturing, [removed: warehouse,] [added: warehouse] and office buildings (leased) | | 151,000 |

| Swainsboro, [removed: Georgia1] [added: Georgia 1] | | A manufacturing building (leased) | | 136,000 |

| [removed: Youngstown, Ohio 1] [added: Spokane, Washington 2] | | A manufacturing, warehouse and office building (leased) | | [removed: 58,000] [added: 27,000] |

| Huntington Beach, California 2 | | An office, laboratory and warehouse building [added: (leased)] | | 21,000 |

| [removed: Spokane, Washington 2] [added: Chonburi, Thailand 1] | | A manufacturing, warehouse and office building | | [removed: 18,000] [added: 52,000] |

| Ventura, California 2 | | [removed: A] [added: Two] manufacturing, warehouse and office [removed: building] [added: buildings] (leased) | | 11,000 |

| Shanghai, China [removed: 1,] [added: 1,2,] 3 | | [removed: Four] [added: Three] manufacturing, warehouse and office buildings (leased) | | [removed: 311,000] [added: 160,000] |

| Münster, [removed: Germany1] [added: Germany 1] | | Four manufacturing, warehouse and office [removed: building] [added: buildings] (leased) | | [removed: 112,000] [added: 215,000] |

| Shanghai, China 1, 2, 3 | | [removed: Two office,] [added: Three manufacturing, warehouse,] laboratory and [removed: engineering] [added: office] buildings | | [removed: 110,000] [added: 178,000] |

| [removed: Chonburi, Thailand1] [added: Galway, Ireland 2] | | [removed: A manufacturing, warehouse] [added: An office, laboratory] and [removed: office] [added: warehouse] building [added: (leased)] | | [removed: 52,000] [added: 36,000] |

| Tokyo, Japan 1, 2, 3 | | [removed: Three] [added: Four] office, laboratory and warehouse buildings (leased) | | [removed: 49,000] [added: 75,700] |

| Munich, Germany 2 | | [removed: Three] [added: An] office, laboratory and warehouse buildings (leased) | | [removed: 29,000] [added: 43,000] |

| [removed: Munich, Germany 2] [added: Selangos, Malaysia 1, 3] | | [removed: An office,] [added: A] laboratory and [removed: warehouse] [added: office] building (leased) | | [removed: 21,000] [added: 17,000] |

| Singapore 1, 2, 3 | | Two warehouse and office buildings (leased) | | [removed: 16,000] [added: 22,000] |

Information about leases is reported in Note [removed: 11] [added: 10] of Notes to Consolidated Financial Statements that can be found in Part II, Item 8 of this document.

| Boulder, Colorado 2 | | Two office and laboratory buildings (leased) | | 21,000 |

| Billerbeck, Germany 1 | | An office and warehouse building (leased) | | 16,000 |

| Lagny Sur Marne, France 1, 3 | | An office building (leased) | | 6,000 |

| Segrate, Italy 1, 3 | | An office, laboratory and warehouse building (leased) | | 5,000 |

Our executive officers as of October 31, [removed: 2017,] [added: 2018,] were as follows:

| Michael F. Hilton | | [removed: 63] [added: 64] | | 2010 | | President and Chief Executive Officer, 2010 |

| John J. Keane | | [removed: 56] [added: 57] | | 2003 | | [removed: Senior] [added: Executive] Vice President, 2005 |

| Gregory P. Merk | | [removed: 46] [added: 47] | | 2006 | | [removed: Senior] [added: Executive] Vice President, 2013 |

| Gregory A. Thaxton | | [removed: 56] [added: 57] | | 2007 | | [removed: Senior] [added: Executive] Vice President, Chief Financial Officer, 2012 |

| James E. DeVries | | [removed: 58] [added: 59] | | 2012 | | [added: Executive] Vice President, 2012 |

| Stephen P. Lovass | | [removed: 48] [added: 49] | | 2017 | | [added: Executive] Vice President, 2017 |

| Shelly M. Peet | | [removed: 52] [added: 53] | | 2007 | | [added: Executive] Vice President, 2009 |

| Jeffrey A. Pembroke | | [removed: 50] [added: 51] | | 2015 | | [added: Executive] Vice President, 2015 |

| Joseph Stockunas | | [removed: 57] [added: 58] | | 2015 | | [added: Executive] Vice President, 2015 |

| [removed: Robert E. Veillette] [added: Gina A. Beredo] | | [removed: 65] [added: 44] | | [removed: 2007] [added: 2018] | | [added: Executive] Vice President, General Counsel and Secretary, [removed: 2007] [added: 2018] |

Prior to joining the Company, Mr. Lovass served as President for one of the global sensors and controls businesses for [removed: Danahar] [added: Danaher] Corporation, a publicly-traded, international Fortune 200, diversified science and technology company from 2012 to 2016.

Prior to joining [removed: Danahar,] [added: Danaher,] Mr. Lovass served as a Senior Vice President and Corporate Officer for Gerber Scientific.

[removed: Upon his retirement, Mr. Veillette will be succeeded by Gina Brickley] [added: Ms.] Beredo [removed: who has] served as Deputy General Counsel and Assistant Secretary since joining the Company in 2013.

Effective January 1, 2018, Ms. Beredo was appointed Executive Vice President, General Counsel and Secretary.

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.

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Vice President, 2006 |

On September 5, 2017, we filed a Form 8-K with the Securities & Exchange Commission announcing that Mr. Veillette will retire from the Company, effective December 31, 2017.

Nordson Corporation 18

As of November 30, [removed: 2017,] [added: 2018,] there were [removed: 1,466 registered] [added: 1,406 record] shareholders.

The following is a graph that compares the 10-year cumulative return, calculated on a dividend-reinvested basis, from investing $100 on November 1, [removed: 2007] [added: 2008] 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, ATU, B, [removed: CLC,] DCI, ENTG, ESL, FLIR, GGG, GTLS, IEX, ITT, [added: KEYS,] LECO, ROP, TER, WTS, and WWD.

[removed: ][added: ]

| Company/Market/Peer Group | [removed: 2007 | | |] 2008 | | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | | 2016 | | | 2017 | | [added: | 2018 | |]

| August 1, [removed: 2017] [added: 2018] to August 31, [removed: 2017] [added: 2018] | | | [removed: 1] [added: —] | | | $ | [removed: 108.84] [added: —] | | | | — | | | $ | 118,971 | |

| | (2) | In December 2014, the board of directors authorized a [removed: new] $300,000 common share repurchase program. [removed: This program replaced the $200,000 program approved by the board in August 2013.] In August 2015, the board of directors authorized the repurchase of up to an additional $200,000 of the Company’s common shares. [removed: This new authorization added capacity to] [added: In August 2018,] the [removed: board’s December 2014 authorization to] [added: board of directors authorized the] repurchase [removed: $300,000] of [added: an additional $500,000 of the Company’s common] shares. Approximately [removed: $118,971] [added: $600,032 of the total $1,000,000 authorized] remained available for share repurchases at October 31, [removed: 2017.] [added: 2018.] Uses for repurchased shares include the funding of benefit programs including stock [added: options, restricted stock and 401(k) matching. 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.] |

Nordson Corporation [removed: 20][added: 18]

| Nordson Corporation | $ | 100.00 | | $ | 149.23 | | $ | 226.27 | | $ | 274.10 | | $ | 356.22 | | $ | 439.17 | | $ | 471.10 | | $ | 443.80 | | $ | 632.04 | | $ | 807.21 | | $ | 788.83 | |

| S&P 500 Index | $ | 100.00 | | $ | 109.80 | | $ | 127.94 | | $ | 138.29 | | $ | 159.32 | | $ | 202.61 | | $ | 237.60 | | $ | 249.95 | | $ | 261.23 | | $ | 322.96 | | $ | 346.68 | |

| S&P MidCap 400 | $ | 100.00 | | $ | 118.18 | | $ | 150.84 | | $ | 163.74 | | $ | 183.57 | | $ | 245.03 | | $ | 273.58 | | $ | 282.95 | | $ | 300.65 | | $ | 371.23 | | $ | 375.02 | |

| S&P 500 Ind. Machinery | $ | 100.00 | | $ | 133.81 | | $ | 171.21 | | $ | 177.14 | | $ | 211.99 | | $ | 302.70 | | $ | 341.34 | | $ | 340.82 | | $ | 389.16 | | $ | 536.52 | | $ | 495.05 | |

| S&P MidCap 400 Ind. Machinery | $ | 100.00 | | $ | 123.61 | | $ | 160.67 | | $ | 182.73 | | $ | 199.57 | | $ | 277.07 | | $ | 293.61 | | $ | 245.77 | | $ | 288.44 | | $ | 413.70 | | $ | 404.98 | |

| Peer Group | $ | 100.00 | | $ | 108.45 | | $ | 133.57 | | $ | 150.02 | | $ | 171.39 | | $ | 238.19 | | $ | 262.44 | | $ | 252.27 | | $ | 259.12 | | $ | 388.10 | | $ | 399.03 | |

| September 1, 2018 to September 30, 2018 | | | 25 | | | $ | 144.63 | | | | 24 | | | $ | 615,471 | |

| October 1, 2018 to October 31, 2018 | | | 121 | | | $ | 127.33 | | | | 121 | | | $ | 600,032 | |

| Total | | | 146 | | | | | | | | 145 | | | | | |

The table below is a summary of dividends paid per common share and the range of high and low sales prices during each quarter of 2017 and 2016.

| | | Dividend | | | | Common Share Price | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Quarters | | Paid | | | | High | | | | Low | | |

| 2017: | | | | | | | | | | | | |

| First | | $ | .27 | | | $ | 116.01 | | | $ | 96.05 | |

| Second | | | .27 | | | | 127.50 | | | | 112.23 | |

| Third | | | .27 | | | | 131.49 | | | | 113.69 | |

| Fourth | | | .30 | | | | 130.41 | | | | 107.16 | |

| 2016: | | | | | | | | | | | | |

| First | | $ | .24 | | | $ | 74.24 | | | $ | 51.89 | |

| Second | | | .24 | | | | 80.50 | | | | 56.63 | |

| Third | | | .24 | | | | 89.42 | | | | 74.49 | |

| Fourth | | | .27 | | | | 102.57 | | | | 87.63 | |

Source: Nasdaq OMX

| Nordson Corporation | $ | 100.00 | | $ | 70.90 | | $ | 105.80 | | $ | 160.42 | | $ | 194.33 | | $ | 252.55 | | $ | 311.36 | | $ | 334.00 | | $ | 314.64 | | $ | 448.10 | | $ | 572.29 | |

| S&P 500 Index | $ | 100.00 | | $ | 63.90 | | $ | 70.17 | | $ | 81.76 | | $ | 88.37 | | $ | 101.81 | | $ | 129.48 | | $ | 151.84 | | $ | 159.73 | | $ | 166.93 | | $ | 206.38 | |

| S&P MidCap 400 | $ | 100.00 | | $ | 63.54 | | $ | 75.09 | | $ | 95.84 | | $ | 104.03 | | $ | 116.63 | | $ | 155.68 | | $ | 173.82 | | $ | 179.77 | | $ | 191.02 | | $ | 235.87 | |

| S&P 500 Ind. Machinery | $ | 100.00 | | $ | 57.23 | | $ | 76.58 | | $ | 97.99 | | $ | 101.38 | | $ | 121.33 | | $ | 173.25 | | $ | 195.37 | | $ | 195.07 | | $ | 222.74 | | $ | 307.08 | |

| S&P MidCap 400 Ind. Machinery | $ | 100.00 | | $ | 57.90 | | $ | 71.57 | | $ | 93.02 | | $ | 105.80 | | $ | 115.55 | | $ | 160.42 | | $ | 170.00 | | $ | 142.30 | | $ | 167.01 | | $ | 239.53 | |

| Proxy Peer Group | $ | 100.00 | | $ | 67.28 | | $ | 72.96 | | $ | 89.87 | | $ | 100.94 | | $ | 115.31 | | $ | 160.25 | | $ | 176.57 | | $ | 169.73 | | $ | 174.34 | | $ | 261.11 | |

| September 1, 2017 to September 30, 2017 | | | — | | | $ | — | | | | — | | | $ | 118,971 | |

| October 1, 2017 to October 31, 2017 | | | — | | | $ | — | | | | — | | | $ | 118,971 | |

| Total | | | 1 | | | | | | | | — | | | | | |

| --- | --- | --- |

| | | options, restricted stock and 401(k) matching. 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. |

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Sales | | $ | [removed: 2,066,982] [added: 2,254,668] | | | $ | [removed: 1,808,994] [added: 2,066,982] | | | $ | [removed: 1,688,666] [added: 1,808,994] | | | $ | [removed: 1,704,021] [added: 1,688,666] | | | $ | [removed: 1,542,921] [added: 1,704,021] | |

| Cost of sales | | | [removed: 927,981] [added: 1,018,703] | | | | [removed: 815,495] [added: 927,981] | | | | [removed: 774,702] [added: 815,495] | | | | [removed: 758,923] [added: 774,702] | | | | [removed: 676,777] [added: 758,923] | |

| % of sales | | | 45 | | | | 45 | | | | [removed: 46] [added: 45] | | | | [removed: 45] [added: 46] | | | | [removed: 44] [added: 45] | |

| Selling and administrative expenses | | | [removed: 678,861] [added: 734,856] | | | | [removed: 594,293] [added: 678,861] | | | | [removed: 584,823] [added: 594,293] | | | | [removed: 575,442] [added: 584,823] | | | | [removed: 541,169] [added: 575,442] | |

| % of sales | | | 33 | | | | 33 | | | | [removed: 35] [added: 33] | | | | [removed: 34] [added: 35] | | | | [removed: 35] [added: 34] | |

| Severance and restructuring costs | | | [removed: 2,438] [added: 6,552] | | | | [removed: 10,775] [added: 2,438] | | | | [removed: 11,411] [added: 10,775] | | | | [removed: 2,551] [added: 11,411] | | | | [removed: 1,126] [added: 2,551] | |

| Operating profit | | | [removed: 457,702] [added: 494,557] | | | | [removed: 388,431] [added: 457,702] | | | | [removed: 317,730] [added: 388,431] | | | | [removed: 367,105] [added: 317,730] | | | | [removed: 323,849] [added: 367,105] | |

| % of sales | | | 22 | | | | [removed: 21] [added: 22] | | | | [removed: 19] [added: 21] | | | | [removed: 22] [added: 19] | | | | [removed: 21] [added: 22] | |

| Net income | | | [removed: 295,802] [added: 377,375] | | | | [removed: 271,843] [added: 295,802] | | | | [removed: 211,111] [added: 271,843] | | | | [removed: 246,773] [added: 211,111] | | | | [removed: 221,817] [added: 246,773] | |

| % of sales | | | [removed: 14] [added: 17] | | | | [removed: 15] [added: 14] | | | | [removed: 13] [added: 15] | | | | [removed: 14] [added: 13] | | | | 14 | |

| Working capital | | $ | [removed: 240,626] [added: 533,822] | | | $ | [removed: 414,032] [added: 240,626] | | | $ | [removed: 420,815] [added: 414,032] | | | $ | [removed: 301,815] [added: 420,815] | | | $ | [removed: 365,269] [added: 301,815] | |

| Net property, plant and equipment and other non-current assets | | | [removed: 2,526,167] [added: 2,536,910] | | | | [removed: 1,675,008] [added: 2,526,167] | | | | [removed: 1,646,723] [added: 1,675,008] | | | | [removed: 1,606,274] [added: 1,646,723] | | | | [removed: 1,449,712] [added: 1,606,274] | |

| Total capital (b) | | | [removed: 2,648,094] [added: 2,669,154] | | | | [removed: 1,767,369] [added: 2,648,094] | | | | [removed: 1,724,211] [added: 1,767,369] | | | | [removed: 1,661,110] [added: 1,724,211] | | | | [removed: 1,496,681] [added: 1,661,110] | |

| Total assets | | | [removed: 3,414,539] [added: 3,421,012] | | | | [removed: 2,420,583] [added: 3,414,539] | | | | [removed: 2,358,314] [added: 2,420,583] | | | | [removed: 2,278,957] [added: 2,358,314] | | | | [removed: 2,051,778] [added: 2,278,957] | |

| Long-term liabilities | | | [removed: 1,611,300] [added: 1,619,991] | | | | [removed: 1,237,437] [added: 1,611,300] | | | | [removed: 1,407,522] [added: 1,237,437] | | | | [removed: 1,003,292] [added: 1,407,522] | | | | [removed: 927,118] [added: 1,003,292] | |

| Shareholders’ equity | | | [removed: 1,155,493] [added: 1,450,741] | | | | [removed: 851,603] [added: 1,155,493] | | | | [removed: 660,016] [added: 851,603] | | | | [removed: 904,797] [added: 660,016] | | | | [removed: 887,863] [added: 904,797] | |

| Return on average total capital — % (c) | | | [removed: 14] [added: 15] | | | | [removed: 16] [added: 14] | | | | [removed: 13] [added: 16] | | | | [removed: 17] [added: 13] | | | | [removed: 18] [added: 17] | |

| Return on average shareholders’ equity — % (d) | | | [removed: 30] [added: 28] | | | | [removed: 37] [added: 30] | | | | [removed: 26] [added: 37] | | | | [removed: 27] [added: 26] | | | | [removed: 29] [added: 27] | |

| Average number of common shares | | | [removed: 57,533] [added: 57,970] | | | | [removed: 57,060] [added: 57,533] | | | | [removed: 60,652] [added: 57,060] | | | | [removed: 63,656] [added: 60,652] | | | | [removed: 64,214] [added: 63,656] | |

| Average number of common shares and common share equivalents | | | [removed: 58,204] [added: 58,931] | | | | [removed: 57,530] [added: 58,204] | | | | [removed: 61,151] [added: 57,530] | | | | [removed: 64,281] [added: 61,151] | | | | [removed: 64,908] [added: 64,281] | |

| Basic earnings per share | | $ | [removed: 5.14] [added: 6.51] | | | $ | [removed: 4.76] [added: 5.14] | | | $ | [removed: 3.48] [added: 4.76] | | | $ | [removed: 3.88] [added: 3.48] | | | $ | [removed: 3.45] [added: 3.88] | |

| Diluted earnings per share | | | [removed: 5.08] [added: 6.40] | | | | [removed: 4.73] [added: 5.08] | | | | [removed: 3.45] [added: 4.73] | | | | [removed: 3.84] [added: 3.45] | | | | [removed: 3.42] [added: 3.84] | |

| Dividends per common share | | | [removed: 1.11] [added: 1.25] | | | | [removed: 0.99] [added: 1.11] | | | | [removed: 0.90] [added: 0.99] | | | | [removed: 0.76] [added: 0.90] | | | | [removed: 0.63] [added: 0.76] | |

| Book value per common share | | | [removed: 20.02] [added: 25.00] | | | | [removed: 14.86] [added: 20.02] | | | | [removed: 11.51] [added: 14.86] | | | | [removed: 14.49] [added: 11.51] | | | | [removed: 13.83] [added: 14.49] | |

| (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 [added: the last] five [added: quarterly] accounting periods. |

| (d) | Net income as a percentage of average quarterly shareholders’ equity over [added: the last] five [added: quarterly] accounting periods. |

| (e) | Certain amounts for the years [removed: 2013] [added: 2014] through 2016 have been adjusted to reflect the retrospective application of our reclassification of debt issuance costs upon the adoption of a new accounting [removed: standard, as described] [added: standard] in [removed: Note 2 to the Consolidated Financial Statements.] [added: 2017.] |

Nordson Corporation [removed: 21][added: 20]

| Long-lived asset impairments | | | — | | | | — | | | | — | | | | — | | | | — | |

| Years ended October 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Sales | | $ | [removed: 2,066,982] [added: 2,254,668] | | | $ | [removed: 1,808,994] [added: 2,066,982] | | | $ | [removed: 1,688,666] [added: 1,808,994] | |

| Cost of sales | | | [removed: 927,981] [added: 1,018,703] | | | | [removed: 815,495] [added: 927,981] | | | | [removed: 774,702] [added: 815,495] | |

| | | | [removed: 1,609,280] [added: 1,760,111] | | | | [removed: 1,420,563] [added: 1,609,280] | | | | [removed: 1,370,936] [added: 1,420,563] | |

| Operating profit | | | [removed: 457,702] [added: 494,557] | | | | [removed: 388,431] [added: 457,702] | | | | [removed: 317,730] [added: 388,431] | |

| Interest expense | | | [removed: (36,601] [added: (49,576] | ) | | | [removed: (21,322] [added: (36,601] | ) | | | [removed: (18,104] [added: (21,322] | ) |

| Interest and investment income | | | [removed: 1,124] [added: 1,384] | | | | [removed: 728] [added: 1,124] | | | | [removed: 558] [added: 728] | |

| Other - net | | | [removed: (1,934] [added: 2,154] | [removed: )] | | | [removed: 657] [added: (1,934] | [added: )] | | | [removed: 678] [added: 657] | |

| | | | [removed: (37,411] [added: (46,038] | ) | | | [removed: (19,937] [added: (37,411] | ) | | | [removed: (16,868] [added: (19,937] | ) |

| Income before income taxes | | | [removed: 420,291] [added: 448,519] | | | | [removed: 368,494] [added: 420,291] | | | | [removed: 300,862] [added: 368,494] | |

| Current | | | [removed: 124,961] [added: 105,093] | | | | [removed: 100,248] [added: 124,961] | | | | [removed: 87,651] [added: 100,248] | |

| Deferred | | | [removed: (472] [added: (33,949] | ) | | | [removed: (3,597] [added: (472] | ) | | | [removed: 2,100] [added: (3,597] | [added: )] |

| | | | [removed: 124,489] [added: 71,144] | | | | [removed: 96,651] [added: 124,489] | | | | [removed: 89,751] [added: 96,651] | |

| Net income | | $ | [removed: 295,802] [added: 377,375] | | | $ | [removed: 271,843] [added: 295,802] | | | $ | [removed: 211,111] [added: 271,843] | |

| Average common shares | | | [removed: 57,533] [added: 57,970] | | | | [removed: 57,060] [added: 57,533] | | | | [removed: 60,652] [added: 57,060] | |

| Incremental common shares attributable to outstanding stock options, restricted stock and deferred stock-based compensation | | | [removed: 671] [added: 961] | | | | [removed: 470] [added: 671] | | | | [removed: 499] [added: 470] | |

| Average common shares and common share equivalents | | | [removed: 58,204] [added: 58,931] | | | | [removed: 57,530] [added: 58,204] | | | | [removed: 61,151] [added: 57,530] | |

| Basic earnings per share | | $ | [removed: 5.14] [added: 6.51] | | | $ | [removed: 4.76] [added: 5.14] | | | $ | [removed: 3.48] [added: 4.76] | |

| Diluted earnings per share | | $ | [removed: 5.08] [added: 6.40] | | | $ | [removed: 4.73] [added: 5.08] | | | $ | [removed: 3.45] [added: 4.73] | |

| Dividends declared per common share | | $ | [removed: 1.11] [added: 1.25] | | | $ | [removed: 0.99] [added: 1.11] | | | $ | [removed: 0.90] [added: 0.99] | |

| Foreign currency translation adjustments | | | [removed: 22,697] [added: (28,619] | [added: )] | | | [removed: (8,693] [added: 22,697] | [removed: )] | | | [removed: (45,154] [added: (8,693] | ) |

| Prior service [added: (cost)] credit arising during the year | | | [removed: —] [added: (45] | [added: )] | | | [removed: 1,831] [added: —] | | | | [removed: —] [added: 1,831] | |

| Net actuarial gain (loss) arising during the year | | | [removed: 2,641] [added: (7,783] | [added: )] | | | [removed: (22,482] [added: 2,641] | [removed: )] | | | [removed: (7,588] [added: (22,482] | ) |

| Amortization of prior service [removed: cost] [added: (cost) credit] | | | [removed: (210] [added: (322] | ) | | | [removed: 92] [added: (210] | [added: )] | | | [removed: (303] [added: 92] | [removed: )] |

| Amortization of actuarial loss | | | [removed: 7,972] [added: 10,536] | | | | [removed: 6,724] [added: 7,972] | | | | [removed: 10,146] [added: 6,724] | |

| Settlement loss recognized | | | [removed: 712] [added: 200] | | | | [removed: 111] [added: 712] | | | | [removed: 1,369] [added: 111] | |

| Curtailment (gain) loss recognized | | | — | | | | [removed: (1,144] [added: —] | [removed: )] | | | [removed: 43] [added: (1,144] | [added: )] |

| Total pension and postretirement benefit plans | | | [removed: 11,115] [added: 2,586] | | | | [removed: (14,868] [added: 11,115] | [removed: )] | | | [removed: 3,667] [added: (14,868] | [added: )] |

| Total other comprehensive income (loss) | | | [removed: 33,812] [added: (26,033] | [added: )] | | | [removed: (23,561] [added: 33,812] | [removed: )] | | | [removed: (41,487] [added: (23,561] | ) |

| Total comprehensive income | | $ | [removed: 329,614] [added: 332,496] | | | $ | [removed: 248,282] [added: 329,614] | | | $ | [removed: 169,624] [added: 248,282] | |

| October 31, [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Cash and cash equivalents | | $ | [removed: 90,383] [added: 95,678] | | | $ | [removed: 67,239] [added: 90,383] | |

| Receivables - net | | | [removed: 505,087] [added: 491,423] | | | | [removed: 428,560] [added: 505,087] | |

| Inventories - net | | | [removed: 264,266] [added: 264,477] | | | | [removed: 220,361] [added: 264,266] | |

| Prepaid expenses | | | [removed: 28,636] [added: 32,524] | | | | [removed: 29,415] [added: 28,636] | |

| Total current assets | | | [removed: 888,372] [added: 884,102] | | | | [removed: 745,575] [added: 888,372] | |

| Property, plant and equipment - net | | | [removed: 346,411] [added: 386,666] | | | | [removed: 273,129] [added: 346,411] | |

| Goodwill | | | [removed: 1,589,210] [added: 1,608,018] | | | | [removed: 1,107,137] [added: 1,589,210] | |

| Intangible assets - net | | | [removed: 547,180] [added: 499,741] | | | | [removed: 260,302] [added: 547,180] | |

| Deferred income taxes | | | [removed: 11,020] [added: 9,780] | | | | [removed: 10,681] [added: 11,020] | |

| Selling and administrative expenses | | | 741,408 | | | | 681,299 | | | | 605,068 | |

| Years ended October 31, 2018, 2017 and 2016 | | 2018 | | | | 2017 | | | | 2016 | | |

| Reclassification due to adoption of new accounting standard (Note 2) | | | (18,846 | ) | | | — | | | | — | |

| | | $ | 3,421,012 | | | $ | 3,414,539 | |

| | | $ | 3,421,012 | | | $ | 3,414,539 | |

| Years ended October 31, 2018, 2017 and 2016 | | 2018 | | | | 2017 | | | | 2016 | | |

| Net income | | | 377,375 | | | | 295,802 | | | | 271,843 | |

| Reclassification due to adoption of new accounting standard (Note 2) | | | 18,846 | | | | — | | | | — | |

| Foreign currency translation adjustments | | | (28,619 | ) | | | 22,697 | | | | (8,693 | ) |

| Reclassification due to adoption of new accounting standard (Note 2) | | | (18,846 | ) | | | — | | | | — | |

| Years ended October 31, 2018, 2017 and 2016 | | 2018 | | | | 2017 | | | | 2016 | | |

| Net income | | $ | 377,375 | | | $ | 295,802 | | | $ | 271,843 | |

| Net cash provided by operating activities | | | 504,638 | | | | 356,752 | | | | 334,634 | |

| Net cash provided by (used in) financing activities | | | (353,690 | ) | | | 540,750 | | | | (213,756 | ) |

Research and development — Investments in research and development are important to our long-term growth, enabling us to keep pace with changing customer and marketplace needs through the development of new products and new applications for existing products.

We place strong emphasis on technology developments and improvements through internal engineering and research teams.

As a percentage of sales, research and development expenses were 2.6, 2.5 and 2.6 percent in 2018, 2017 and 2016, respectively.

| Reclassification due to adoption of new accounting standard (Note 2) | | | — | | | | (18,846 | ) | | | (18,846 | ) |

| Balance at October 31, 2018 | | $ | (57,042 | ) | | $ | (122,272 | ) | | $ | (179,314 | ) |

| | | 2018 | | | | 2017 | | |

As a result, net excess tax benefits of $9,498 were recognized as a reduction of income tax expense during 2018.

The cash flow classification requirements of this new standard were applied retrospectively.

As a result, excess tax benefits of $9,498 were reported as net cash provided by operating activities in 2018 and $7,079 and $3,476 of excess tax benefits were reclassified from net cash used in financing activities to net cash provided by operating activities in 2017 and 2016, respectively.

This new standard also requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the statements of cash flows on a retrospective basis.

Previously, this activity was included in operating activities.

The impact of this change was immaterial to the statements of cash flows.

Additionally, we elected to continue to estimate forfeitures rather than account for them as they occur.

In February 2018, the FASB issued a new standard which gives entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act (“the Act”) into retained earnings.

The guidance allows entities to reclassify from accumulated other comprehensive income to retained earnings stranded tax effects resulting from the Act's new federal corporate income tax rate.

The guidance also allows entities to elect to reclassify other stranded tax effects that relate to the Act but do not directly relate to the change in the federal tax rate (e.g., state taxes, changing from a worldwide tax system to a territorial system).

Tax effects that are stranded in accumulated other comprehensive income for other reasons (e.g., prior changes in tax law, a change in valuation allowance) may not be reclassified.

This standard is effective for us beginning November 1, 2019; with early adoption permitted.

As a result, we reclassified $18,846 of stranded tax effects from accumulated other comprehensive income to retained earnings.

In March 2018, the FASB issued amendments which incorporate various Securities and Exchange Commission (“SEC”) paragraphs pursuant to the issuance of the December 2017 SEC Staff Accounting Bulletin No. 118 (“SAB 118”), Income Tax Accounting Implications of the Tax Cuts and Jobs Act, effective immediately.

The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Act in the period of enactment.

SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate.

We have accounted for the tax effects of the Act under the guidance of SAB 118, on a provisional basis.

Our accounting for certain income tax effects is incomplete, but we have determined reasonable estimates for those effects and have recorded provisional amounts in our Consolidated Financial Statements.

We adopted the standard beginning November 1, 2018 using the modified retrospective method.

We have established our accounting policy, provided training to our reporting units and completed our evaluation of the new standard, including the impact on our business processes, systems, and controls as well as differences in the timing and/or method of revenue recognition for our contracts.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Selling and administrative expenses | | | 678,861 | | | | 594,293 | | | | 584,823 | |

| Severance and restructuring costs | | | 2,438 | | | | 10,775 | | | | 11,411 | |

| Tax benefit from the exercise of stock options | | | (7,079 | ) | | | (3,476 | ) | | | (3,661 | ) |

| Net cash provided by operating activities | | | 349,673 | | | | 331,158 | | | | 261,951 | |

| Tax benefit from the exercise of stock options | | | 7,079 | | | | 3,476 | | | | 3,661 | |

| Net cash provided by (used in) financing activities | | | 547,829 | | | | (210,280 | ) | | | (110,978 | ) |

| --- | --- |

| Balance at October 31, 2016 | | $ | (51,120 | ) | | $ | (117,127 | ) | | $ | (168,247 | ) |

In April 2015, the Financial Accounting Standards Board (FASB) issued a new standard regarding the presentation of debt issuance costs.

Under this standard, a company is required to present unamortized debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of that debt liability, rather than as a separate asset.

The recognition and measurement guidance for debt issuance costs are not affected by this new standard.

In August 2015, the FASB issued an amendment to this standard, which added clarification to the presentation of debt issuance costs.

This amendment allows debt issuance costs related to line-of-credit arrangements to be presented as an asset and subsequently amortized ratably over the term of the line-of-credit agreement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.

The new guidance only impacted presentation on our consolidated balance sheet and did not affect our results of operations or other financial statement disclosures.

Refer to Note 10 for the impact on our Consolidated Balance Sheet at October 31, 2016.

In May 2015, the FASB issued a new standard regarding the disclosures for investments that calculate net asset value per share (or its equivalent).

Under the new guidance, investments measured at net asset value (“NAV”), as a practical expedient for fair value, are excluded from the fair value hierarchy.

Removing investments measured using the practical expedient from the fair value hierarchy is intended to eliminate the diversity in practice that currently exists with respect to the categorization of these investments.

We adopted this standard in 2017.

The new guidance only impacted the presentation of certain pension related assets that use NAV as a practical expedient.

In October 2016, the FASB issued a new standard which requires companies to recognize in the income statement the income tax effects of intercompany sales or transfer of assets, other than inventory, as income tax expense (or benefit) in the period the sale or transfer occurs.

It would have been effective for us beginning in 2019; however, we early adopted this guidance in the first quarter of 2017, and it did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued a new standard which eliminates Step 2 from the goodwill impairment test in order to simplify the subsequent measurement of any goodwill impairment charge.

Early adoption is permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017, and the prospective transition method should be applied.

In August 2015, the FASB issued a standard to delay the effective date by one year.

We have not yet selected a transition method; however, we are currently anticipating using the modified retrospective method, but will base the final decision on the results of our assessment once complete.

Our initial analysis of identifying revenue streams and evaluating a representative sample of contracts and other agreements with our customers is substantially complete.

We are in the process of assessing the impact of the new standard, if any, on our business processes, systems and controls.

We will finalize our evaluation of potential differences that may result from applying the new standard to our contracts with customers in 2018 and provide updates on our progress in future filings.

It will be effective for us beginning in 2018 and should be applied prospectively, with certain cumulative effect adjustments.

Note 3 — Severance and restructuring costs

During the fourth quarter of 2016, we implemented an initiative within our Adhesive Dispensing Systems segment to consolidate certain polymer processing product line facilities in the U.S. This initiative is designed to improve customer experience, accelerate growth, optimize performance and realize synergies for sustained long term success.

Costs of $2,399 and $5,565 were recognized relating to this initiative during 2017 and 2016, respectively.

Payments of $1,775 and $624 related to these actions were paid during 2017 and 2016, respectively.

Total costs for this action to-date have been $7,964, which consisted primarily of severance costs.

Additional costs related to this initiative are not expected to be material in future periods.

Cash payments related to this initiative are expected to be paid during 2018.

| | | severance | | | | one-time | | | | | | |

| | | charges | | | | costs | | | | Total | | |

| | (a) | Evaluation of disclosure controls and procedures. Our management, with the participation of the principal executive officer (president and chief executive officer) and the principal financial officer [removed: (senior] [added: (executive] vice president and chief financial officer), has reviewed and evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act Rule 13a-15e) as of October 31, [removed: 2017.] [added: 2018.] Based on that evaluation, our management, including the principal executive and financial officers, has concluded that our disclosure controls and procedures were effective as of October 31, [removed: 2017] [added: 2018] in ensuring that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to our management, including the principal executive officer and the principal financial officer, as appropriate to allow timely decisions regarding required disclosure. |

| | (c) | Changes in internal control over reporting. There were no changes in our internal controls over financial reporting that occurred during the fourth quarter of [removed: 2017] [added: 2018] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. |

Nordson Corporation [removed: 73][added: 70]

The information required by this Item is incorporated by reference to the captions “Election of Directors Whose Terms Expire in [removed: 2021”] [added: 2022”] and “Section 16(a) Beneficial Ownership Reporting Compliance” of our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders.

Information regarding Audit Committee financial experts is incorporated by reference to the caption “Election of Directors Whose Terms Expire in [removed: 2021”] [added: 2022”] of our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders.

The information required by this Item is incorporated by reference to the “Executive Compensation Discussion and Analysis” section of the definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders, along with the sections captioned “Directors Compensation,” “Summary Compensation Table,” “Grants of Plan-Based Awards,” “Outstanding Equity Awards at October 31, [removed: 2017,”] [added: 2018,”] “Stock Option Exercises and Stock Vested Tables,” “Pension Benefits Table,” “Nonqualified Deferred Compensation” and “Potential Benefits Upon Termination” in our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders.

The information required by this Item is incorporated by reference to the caption “Security Ownership of Nordson Common Shares by Directors, Director Nominees, Executive Officers and Large Beneficial Owners” in our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders.

The following table sets forth information regarding equity compensation plans in effect as of October 31, [removed: 2017:][added: 2018:]

| Equity compensation plans approved by security holders | | | [removed: 1,922] [added: 1,885] | | | $ | [removed: 70.08] [added: 85.33] | | | | [removed: 2,900] [added: 2,314] | |

| Total | | | 1,885 | | | $ | 85.33 | | | | 2,314 | |

| Total | | | 1,922 | | | $ | 70.08 | | | | 2,900 | |

The information required by this Item is incorporated by reference to the caption “Review of Transactions with Related Persons” in our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders.

Nordson Corporation [removed: 74][added: 71]

The information required by this Item is incorporated by reference to the caption “Fees Paid to Ernst & Young LLP” [added: and the caption “Pre-Approval of Audit and Non-Audit Services”] in our definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders.

Nordson Corporation [removed: 75][added: 72]

Consolidated Statements of Income for each of the three years in the period ended October 31, [removed: 2017][added: 2018]

Consolidated Statements of Comprehensive Income for each of the three years in the period ended October 31, [removed: 2017][added: 2018]

Consolidated Balance Sheets as of October 31, [removed: 2017] [added: 2018] and October 31, [removed: 2016][added: 2017]

Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended October 31, [removed: 2017][added: 2018]

Consolidated Statements of Cash Flows for each of the three years in the period ended October 31, [removed: 2017][added: 2018]

Schedule II Valuation and Qualifying Accounts and Reserves for each of the three years in the period ended October 31, [removed: 2017.][added: 2018.]

| 3-a | | [1989 Amended Articles of [removed: Incorporation](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex3a_458.htm)] [added: Incorporation (incorporated herein by reference to Exhibit 3-a to Registrant’s Annual Report on Form 10-K for the year ended October 31, 2017)](http://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex3a_458.htm)] |

| 3-a-1 | | [Certificate of Amendment to 1989 Amended Articles of [removed: Incorporation](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex3a1_459.htm)] [added: Incorporation (incorporated herein by reference to Exhibit 3-a-1 to Registrant’s Annual Report on Form 10-K for the year ended October 31, 2017)](http://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex3a1_459.htm)] |

| [removed: 4-e] [added: 4-l] | | [Master Note Purchase [removed: Agreement] [added: Agreement,] dated [removed: July 26, 2012 between] [added: as of June 22, 2018, by and among] Nordson Corporation and the purchasers [removed: listed] [added: named] therein (incorporated herein by reference to Exhibit [removed: 4.2] [added: 4.1] to Registrant’s [removed: Quarterly Report on] Form [removed: 10-Q for the quarter ended July 31, 2012)](http://www.sec.gov/Archives/edgar/data/72331/000119312512380965/d375970dex42.htm)] [added: 8-K dated June 28, 2018)](http://www.sec.gov/Archives/edgar/data/72331/000119312518207814/d495901dex41.htm)] |

| 4-h | | [Second Amended and Restated Credit Agreement dated February 20, 2015 [removed: between] [added: among] Nordson [removed: Corporation and] [added: Corporation,] various financial institutions [added: named therein, and KeyBank, National Association as administrative agent] (incorporated herein by reference to Exhibit 4.1 to Registrant’s Form 8-K dated February 26, 2015)](http://www.sec.gov/Archives/edgar/data/72331/000129993315000304/exhibit1.htm) |

| 4-i | | [$200 million Term Loan Facility Agreement dated April 10, 2015 [removed: between] [added: among] Nordson [removed: Corporation] [added: Corporation, various financial institutions named therein,] and PNC Bank National [removed: Association] [added: Association, as administrative agent] (incorporated herein by reference to Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2015)](http://www.sec.gov/Archives/edgar/data/72331/000156459015004835/ndsn-ex42_20150430363.htm) |

| [removed: 10-b-1] [added: 10-g-7] | | [removed: [Nordson] [added: [Amended and Restated Nordson] Corporation [removed: 2005] [added: Directors’] Deferred Compensation [removed: Plan] [added: Sub-Plan] (incorporated herein by reference to Exhibit [removed: 10-b-1] [added: 10-g-7] to Registrant’s Annual Report on Form 10-K for the year ended October 31, [removed: 2016)*](http://www.sec.gov/Archives/edgar/data/72331/000156459016030237/ndsn-ex10b1_157.htm)] [added: 2017)*](http://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex10g7_457.htm)] |

Nordson Corporation [removed: 77][added: 73]

| [removed: 10-d-1] [added: 10-d-2] | | [removed: [First Amendment to Nordson] [added: [Nordson] Corporation [added: 2005] Excess Defined Contribution [removed: Retirement] [added: Benefit] Plan (incorporated herein by reference to Exhibit [removed: 10-d-1] [added: 10-d-2] to Registrant’s Annual Report on Form 10-K for the year ended October 31, [removed: 2012)*](http://www.sec.gov/Archives/edgar/data/72331/000119312512504725/d388192dex10d1.htm)] [added: 2017)*](http://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex10d2_460.htm)] |

| [removed: 10-d-2] [added: 10-d-1] | | [removed: [Nordson] [added: [First Amendment to Nordson] Corporation [removed: 2005] Excess Defined Contribution [removed: Benefit Plan*](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex10d2_460.htm)] [added: Retirement Plan*](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex10d1_312.htm)] |

| 10-g-2 | | [Nordson Corporation [added: Amended and Restated] 2012 Stock Incentive and Award Plan (incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K dated March [removed: 4, 2013)*](http://www.sec.gov/Archives/edgar/data/72331/000119312513088774/d495750dex101.htm)] [added: 2, 2018)*](http://www.sec.gov/Archives/edgar/data/72331/000119312513088774/d495750dex101.htm)] |

Nordson Corporation [removed: 78][added: 74]

| (21) | | [Subsidiaries of the [removed: Registrant](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex21_10.htm)] [added: Registrant](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex21_13.htm)] |

| (23) | | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex23_20.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex23_12.htm)] |

| 31.1 | | [Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 by the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex311_12.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex311_8.htm)] |

| 31.2 | | [Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 by the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex312_22.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex312_6.htm)] |

| 32.1 | | [Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex321_15.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex321_7.htm)] |

| 32.2 | | [Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/72331/000156459017024983/ndsn-ex322_16.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex322_14.htm)] |

| 101 | | The following financial information from Nordson Corporation’s Annual Report on Form 10-K for the year ended October 31, [removed: 2017,] [added: 2018,] formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Income for the years ended October 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] (ii) the Consolidated Statements of Comprehensive Income for the years ended October 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] (iii) the Consolidated Balance Sheets at October 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the years ended October 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] (v) the Consolidated Statements of Cash Flows for the years ended October 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] and (vi) Notes to Consolidated Financial Statements. |

Nordson Corporation [removed: 79][added: 75]

| 4-e | | [Master Note Purchase Agreement dated July 26, 2012 between Nordson Corporation and the purchasers listed therein](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex4e_313.htm) |

| 4-h-1 | | [Amendment No. 1 dated June 28, 2018, to the Second Amended and Restated Credit Agreement, dated February 20, 2015, among Nordson Corporation, various financial institutions named therein, and KeyBank National Association, as administrative agent (incorporated herein by reference to Exhibit 4.2 to Registrant’s Form 8-K dated June 28, 2018)](http://www.sec.gov/Archives/edgar/data/72331/000119312518207814/d495901dex42.htm) |

| 4-i-1 | | [First Amendment dated June 26, 2018 to the Term Loan Facility Agreement dated April 10, 2015 among Nordson Corporation, various financial institutions named therein and PNC Bank, National Association, as administrative agent (incorporated herein by reference to Exhibit 4.3 to Registrant’s Form 8-K dated June 28, 2018)](http://www.sec.gov/Archives/edgar/data/72331/000119312518207814/d495901dex43.htm) |

| 4-k-1 | | [Second Amendment dated May 17, 2018 to Term Loan Agreement dated as of February 21, 2017, among Nordson Corporation, the lenders party thereto and PNC Bank, National Association, as administrative agent and lender (incorporated herein by reference to Exhibit 10.1 to Registrant’s Form 8-K dated May 23, 2018)](http://www.sec.gov/Archives/edgar/data/72331/000119312518172181/d578826dex101.htm) |

| 4-k-2 | | [Third Amendment dated June 26, 2018 to Term Loan Agreement dated as of February 21, 2017, among Nordson Corporation, various financial institutions named therein and PNC Bank, National Association, as administrative agent (incorporated herein by reference to Exhibit 4.4 to Registrant’s Form 8-K dated June 28, 2018)](http://www.sec.gov/Archives/edgar/data/72331/000119312518207814/d495901dex44.htm) |

| 10-e-1 | | [Second Amendment to Nordson Corporation Excess Defined Benefit Pension Plan*](https://www.sec.gov/Archives/edgar/data/72331/000156459018030928/ndsn-ex10e1_311.htm) |