At this time I would like to welcome everyone to the Nordson Corporation fourth quarter fiscal year 2008 results conference call. (Operator Instructions) I would now like to turn the conference over to James Jaye,

Good morning. This is James Jaye, Director of Corporate Communications for Nordson, with Edward Campbell, Chairman, President, and Chief Executive Officer and Greg Thaxton, Vice President, and Chief Financial Officer. We would like to welcome you to our conference call today, Thursday, December 18, 2008 on Nordson's fourth quarter and fiscal year 2008 results. Our conference call is being broadcast live on our web page at www.nordson.com and will be available for 14 days. There will be a telephone replay of our conference call available until midnight Friday, January 9 by calling 1-800-642-1687. You will need to reference ID number 76441871. Our attorneys have requested we open this call with a cautionary statement under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. During this conference call forward-looking statements may be made regarding our future performance based on Nordson’s current expectations. These statements may involve a number of risks, uncertainties and other factors as discussed in the company's filings with the Securities and Exchange Commission that could cause actual results to differ. After our remarks we will have a question-and-answer session. I would now like to turn the call over to Edward Campbell for an overview of our fourth quarter fiscal year 2008 results and Nordson's future outlook.

Thank you James, and good morning to all of you on the call and thank you for attending Nordson’s conference call discussing our fourth quarter and fiscal year 2008 results. My comments this morning will provide highlights of what turned out to be another very strong quarter and year for Nordson in terms of revenue growth, operational performance, and earnings. In addition I’ll provide some perspective relative to our outlook for the first quarter of fiscal year 2009. Regarding fourth quarter results, we ended the year with a very strong quarter generating record sales of $298 million, up 2.4% from the prior year. And I would add that the prior year’s fourth quarter was a very strong quarter with record sales at the time and total growth of 20% in the quarter, so we were up against very difficult comparisons in each of our segments. Regarding the current year performance, fourth quarter sales volume increased 2.8% of which 0.6 percentage points of this increase represented the first year effective acquisitions and unfavorable currency effects reduced sales by 0.4%. The sudden strengthening of the US dollar against most major currencies which began in August and accelerated with the September financial turmoil impacted our results as currency became a headwind in the quarter. The fourth quarter’s revenue performance included strong results from our two largest segments as well as solid revenue for the industrial coating and automotive segment. Regarding the adhesive dispensing segment, prior year’s fourth quarter performance generated sales growth of 16%, a very impressive growth number for this segment and again establishing a very difficult comparison for the current year. Over this we generated sales growth of 2.3% driven by strong results in our non-woven’s and paperboard converting product lines. The advanced technology segments turned in another solid quarter following…

(Operator Instructions) Your first question comes from the line of Charlie Brady - BMO Capital Markets

Can you just speak in terms of your supplier base and given the liquidity issue, are you reaching out to your suppliers to make sure that they in fact are in a financial situation where they can keep supplying you and how are you addressing that.

We are, we have been proactive in that regard. Obviously the financial well being of anybody in the supply chain and customer chain are things that we’re paying very close attention to and the same kinds of analysis that we would do with regard to customers are things that our purchasing department is taking a close look at and that includes suppliers in places like China. Let me just say that nothing has risen to my level of attention and the investigations have been done. Our folks are on it.

In regards to the orders in the prior 12 weeks, looking at your individual businesses and I know you don’t want to get into that kind of granularity, but are there any particular standouts either generally much worse then the overall trend or maybe not quite as bad doing better then the overall trend.

I think what you see as you go across the businesses, those businesses that are associated with large portions of spare parts or selling consumable components that are used once and disposed, our packaging business, other businesses that are related to consumer non-durables like non-woven’s, those are all if you will, large businesses that are doing well but then within businesses, we see bright spots that would include things like life sciences continuing on without impact. In a number of our businesses we have a number of projects surrounding solar that despite energy prices where they are today, those seem to be going forward without any deceleration. Also in technology markets we’re seeing some areas like LEDs and low cost computers and a variety of spots where either there is something about the economics in our customers’ world or alternatively where we’ve been able to gain share. Examples would be in some of the corrugated or folding carton markets that we’ve been able to gain share. New technology to automate the high-speed application of labels on packages. We continue to be able to win with some of our technology driven activities but I guess another area that’s been interesting is within technology, smart phones for example. The shift away from a traditional cell phone to those that can do all the things that we’re now dependent upon like emails and other web browsing. The investment in the technology to make those phones or the investments to move to the next generation of architectures for things like memory continue to make progress and they’re offsetting broader declines where we see, is it sort of a general description, we see a lot of organizations that are taking advantage of the Christmas shutdowns that are traditional. In certain industries and geographies you see more of those being extended. You see customers saying that they’re going to wait until after the holidays before they make any judgments on various investment projects. In Asia where Chinese New Year is a very big period of time, you sort of get that, let’s wait until after the Chinese New Year before we make a decision whether we’re going to proceed with various projects. So the counterforce to a lot of the good things we’re doing is that general wait and see attitude.

Just regarding the cash flow and sort of preference, now we’ve got a share repurchase, a new one in place, preference I’m assuming is to share repurchase relative to acquisitions right now.

The share repurchases that we have historically done have had as a base load if you will, the offset to the dilution that might otherwise occur from employee benefit plans. And then we have been opportunistic over time, and this dates back over multiple years, to buying on [dps]. Either to do what I just described, offset those benefit programs, but we exhausted the other program in the early days of 2009 and so what we have is just simply a replacement in capability. There’s no change in strategy to be inferred by the establishment of a new program.

Your next question comes from the line of John Franzreb - Sidoti & Company

I might have missed this number but you said you’re pulling back the capital budget, did you say what the CapEx plans were for the year ahead?

We had in fiscal 2008 about $15 million of operating capital and I would anticipate in 2009 we’re going to be below that number. I’d estimate around $12 million.

And that’s your base maintenance level spending there?

Right.

I might add that would also be in that some capital associated with new products particularly in our plastic components businesses where there is a certain amount of investment required to introduce new molded products.

I was just wondering given the difficult operating environment you’re kind of painting there, are there any covenants that we need to worry about in your debt structure that may be stressed anytime in the near-term.

We have very traditional bank covenants and I might mention that we have a very attractive revolving credit agreement that doesn’t expire until the middle of 2012 and it has, the principal component is the ratio of debt to EBITDA, 3.5:1 and we’re just over one I think right now.

Right.

Adhesive dispensing, I guess I’m a little surprised about the magnitude of the order drop-off given that that business is supposed to be more stable of the three, could you just talk a bit about what your customers are telling you about their spending plans for the balance of calendar 2009, not so much with what we’re seeing in the near-term, but what kind spending ramp you expect to see or don’t expect to see next year.

My observation, and we’ve reached out to our frontline sales people to get a very comprehensive looking of what they’re hearing from customers and if I could generalize, I would say across all of Nordson’s businesses, there are no 12-month plans that are operative right now. I think as you can imagine, I imagine everybody on this call would share the same sets of questions about what kind of global economy are we going to be looking into six, eight months from now and I think you can have a wide array of opinions. So there’s not a lot of visibility. I would say that what we do see within adhesive segment to come back to your specific question, is that obviously the purchasing of spare parts is continuing. There is on new capital programs, they are really tied to the specifics of customer plants in the consumer non-durable areas like packaging and non-woven and some of the paper products and so on. We’re beginning to hear things about new discipline on tangible paybacks in terms of the returns they get for new equipment and some of the new products we’ve introduced have been very helpful in that but frankly as the new methodologies get approved its added steps in the selling and evaluation and improvement sequences. I would say as a general notion approvals are occurring at higher levels in organizations with less delegated authority down to frontlines that you might see in more normal times. I also frankly have some questions of ourselves in that we did do a very good job of driving sales in the fourth quarter of 2008 and while we don’t have and won’t ever have crisp answers as to whether there’s a degree of the softness that we see in orders in the 2009 outlook, whether some of those actually got sold due to great performance by our frontline people at the end of 2008. But as a general notion the softness that we’re seeing is in systems businesses, its in areas that are away from the consumer, non-durables and they tend to be directionally projects where customers are changing the manufacturing process as we sell them new methodologies to manufacture their products and that whole change is one that’s being confronted with greater caution by customers.

Your next question comes from the line of Matt Summerville - KeyBanc

With respect to the order declines in advance tech, would you say that that is in fact centered on more the capital intensive larger dollar purchases versus consumables and if so can you give us a sense just how well the consumables piece of that business is holding up and then if you can provide similar color to the adhesive business with regards to what you’re seeing on the replacement parts side.

First of all the assumption that’s behind your question on advance tech is exactly correct. The plastic consumables businesses that sell both to material suppliers that in turn sell on to their customers or our direct sales to end users that use our plastic dispensing components are holding up very well and have positive comparisons in the most recent periods, or not down, depending upon the sub unit. And we’re very encouraged by that of course and these are high gross margin, operating margin business units. With regard to those areas that are soft within advance tech, they are the larger systems and they tend to be sold in, those that have been sold into areas that are, if you will, more traditional aspects of technology markets. You know, the non-smart cell phone activities, those customers, the contract manufactures in Asia are taking very extended shutdowns over the New Year holidays and up to Chinese New Year. Those shutdowns and the lack in some of the traditional cell phones as an example are causing the need to make capacity or capability investments slower then we’ve seen in prior periods. And I mentioned earlier some of the bright spots that we’re seeing that offset some of those areas. With regard to the spare part components in the adhesive businesses, which is a big part of that segment, those are holding up well. They vary somewhat by customer to customer. In some cases as customers are anticipating in durable good end markets like kitchen cabinets, if I could use that for an example, some of those areas might be suffering from extended shutdowns, manufacturers of doors and windows and some of those markets are very soft. And they would be down big percentages offsetting some of the stability that we would see in the non-durable areas.

With regards to what you’ve contemplated in terms of cost reduction measures, you kind of laid out the framework I believe back in August when you reported Q3 for what you intended to do, given the degradation you’ve seen in just general across the businesses as measured by orders in the most recent 12 weeks, is there more you think you need to do there and then can you remind us how much of the anticipated savings you anticipate capturing in fiscal 2009 versus fiscal 2010.

First of all, with regard to whether we need to do more, that’s a dynamic issue and there are levels of activity that would cause us to reexamine where Nordson is but we are not at that point today. We have announced a series of actions and the implementation of those actions are well on their way. Of the, and what we announced was a gross reduction in cost of $30 million and a net reduction of $25 million that would be fully realized in the full fiscal 2010. But I would tell you that of the gross $30 we are basically $20 million through that by the end of this calendar year. So that starting in January our continuing month-to-month operating results will be reflective of two-thirds of the total work that we need to do. There are some other systematic things that we will do to take cost out, some of those are related to the real estate changes that are implied by the things that we’ve just talked about. I’ll also mention that the original $30 million that we talked about did not contemplate a wage freeze that we have put in place here in recent days. As a matter of fact internal announcement only went out today. And so that will on an annual rate add another $6 million or so. The duration for which this wage freeze extends, I think we will wait and see but that is a step that we’ve taken here most recently beyond those that we previously announced.

Going back over the last 12 weeks in terms of orders can you give us a little bit of color in terms of what you’re enter versus exit rate was. I guess what I’m trying to get a better feel for is more of the current tempo you’re seeing in regards to order activity.

I’ll tell you when the liquidity markets shut down on whatever that day was, September 17, we were having positive order comparisons to last year, and it happened quite suddenly when large commercial paper borrowers were unable to roll their paper and treasury rates went negative and it was a sudden stop and we saw a dramatic change. It turns out that our 12-week order rate that we’re sharing with you is after that date so the 12-week orders that we have shared with you encompass a period that is inclusive of when all of that started. I would tell you that the first few weeks of the 12-week period thus being September were not as severe as the average overall. My own sense is that we’re probably in all of our markets seeing a December that is worse if you will then September. I think that, and incorporated into our forecast is a weak January. My personal view is that these stimulus actions and its not one but collectively, there is enormous monetary and fiscal stimulus out there that is tremendous in its force and while there is very little monetary movement right now, there will be a point when it starts to go and I think when it goes it will go very quickly. I am no expert in terms of when I think this is going to happen but I do expect that these actions will have at some point a very significant effect and it could occur very quickly in the new year.

This relates to pension expense, what do you anticipate your pension expense being in fiscal 2009 versus 2008 as it pertains to the P&L and then any major change in cash pension expense as well, or cash outflow regarding pension.

In terms of the question on expense, we won’t see a significant deviation or fluctuation if you will from what we incurred in the current year. That’s driven by on the one hand, yes, there’s a change in the value of the assets but there’s also a change in the discount rate assumption. So generally speaking its not a significant change from what we saw in fiscal 2008. And we also won’t see a funding requirement in 2009 of any significance either.

Your next question comes from the line of Walt Liptak – Barrington Research

If we could go back to the cost take-out and understand that you don’t have a second round of actions that you’re doing yet, my understanding is that your manufacturing operations are already pretty leaned out and I guess the question is if you needed to take more costs out if this slowdown continues well into 2009 are there costs that you can take out.

We do have flexibility and I think we have shown our ability after the 2001 weakness that we saw in our businesses and the actions that we’ve taken now. There’s always cost that we can take out. We are reluctant to take cost out because frankly we think that the organizations are filled with, if you will, effective operations and talented people and we would frankly look at a variety of other methodologies to reduce cost beyond simply reducing headcount. But we think that we have methodologies that can be in place. I would mention that we have really clamped down on both capital spending and any hiring. I personally approve all expenditures that are being made and hiring that’s being done and just the normal attrition produces savings as well.

I wonder if you could help with this one, given the cost savings that you’ll get from the actions that are done plus the revenue declines I wonder if you can calibrate the under absorption that you might be looking at over the next couple of quarters, I guess as a negative leverage number.

Well clearly its there and I would also tell you that we’re not going to, we’re going to let the demand from our customers drive the velocity of production to our facilities so to the extent that we are producing less this year then we did last year, there will be negative absorption. You see the gross margin for the quarter that we forecasted 55% from the say 57% numbers that we’ve had in recent quarters. That’s driven by that absorption. But some of the costs that we have taken out offset some of that of course and so we’re looking very keenly at any kind of discretionary spending that can offset that absorption. But we’re well aware of it and some of the actions that we’ve taken address those issues and we think we always have capability to do things. We’re just going to do it judiciously.

The gross margin that you mentioned, so none of that decline is related to pricing.

That is correct. I’m sure here or there, somewhere there might be a pricing action taken but on the other hand we’re very conscious of pricing relative to what’s happening in exchange rates, any other thing that would influence the whole profit equation and we have raised prices in this fiscal year at the beginning of the year in a variety of places and our forecast is reflective of both the benefits of those price increases as well as the absorption issue that you raised.

Do you also do a January price increase, or when do you typically raise prices or has that already passed?

We traditionally raise prices, if there is a traditional, at the beginning of the fiscal year so that would be November 1 but in recent quarters as we’ve had fairly dramatic movements in both directions, in currencies, we’ve had movements in raw material cost, there have been opportunities to introduce new products and that creates a new opportunity to address the value equation. We have been more dynamic in adjusting pricing in our businesses around the world in the last year and probably have been for quite a long time before that.

And these are price increases, not surcharges or raw material cost pass-throughs.

I think we have a few of those, but the predominant thing we do is we just adjust the price.

Your next question is a follow-up from the line of Charlie Brady - BMO Capital Markets

Just in terms of the spare parts business I know overall for the firm its generally been a little less then 40% but can you just remind us what the sort of after market type of business is for the three segments and then relating to R&D spending, you’ve talked about really tightening down the spending I’m wondering what your mind set is on what you’re doing with R&D spend.

On the spare parts, as you saw for the corporation its slightly below 40%. In the adhesive segment its closer to a 50% kind of number. Advance technology would probably be then just slightly ahead of that corporate average and industrial coating then would be below that number to then get you to the average.

And with regard to the R&D spending we have, the focus of our spending on building our businesses is both the traditional development of new products and it would probably in Nordson’s case more tied to the word development then the word research, but its also investments in business development where we are looking to introduce new solutions for customers and it brings a whole variety of things to introduce new technologies, go into new end markets and the like, and those costs are many times they’re not reported in footnotes as R&D but they are every bit investments that we make to drive the future of the business. And our pay plans for our executive team are tied to developing these new markets and to increase the share of our business that is tied to these new applications, new end markets, driven by technology or just driven by a good application development with customers. That’s vital to what we do. There may be some proportion adjustments that we’ve made based upon the performance of some of the initiatives and whether they are now part of the mainstream or not but we clearly have not done anything to gut the future of this organization with the actions that we’ve taken.

Your final question is a follow-up from the line of Matt Summerville - KeyBanc

How are you feeling about your own inventory levels relative to demand and then what do you traditionally do around the holidays as far as any normal shutdowns and if there are such a thing, what are you contemplating in light of this environment if in fact your inventories are out of balance with demand.

We’ve been alert to inventory builds, I actually don’t have data here with me. But its something we’re very much aware of. Our production philosophies are tied to reorder point philosophies that would say, you sell 10 you make 10 rather then you do anything that’s tied to forecasting and so on. And as in various products or sub assemblies and the like, if we see diminished demand for certain things we may even shrink some of those reorder points to be smaller in a proportional way. These things generally work very well on the upside as well as the downside but we’ve alerted our leadership teams to really drill down and pay close attention to this because we have no interest—

And then as far as you have been somewhat acquisitive over the last 24 months, have you performed any necessary impairment tests and if so is there anything that’s come out of that one way or the other.

We do that impairment test as a part of the year-end audit. That work is done shortly before year-end and there is no impairment in the results that we announced yesterday. With regard to shutdowns, our standard practice is we shut down for a week between Christmas and New Year’s and we will do that again this year with no extension beyond that.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Let me summarize if I could, I’d like to leave you with what I think are the take-aways from today’s call. First Nordson had a tremendous 2008 and fourth quarter and it was good by any measure and significantly exceeded expectations including our own. Second we’re now in a recession that is severe, one that is impacting every geographic market and nearly every end market to at least some degree. Third Nordson customers are being impacted and in turn, our order rates from them. Fourth, we believe that year-end holidays and January are going to be an especially weak period of time due to customer extended shutdowns and customer conservatism until after the New Year or the Chinese New Year with a wait and see attitude. And while visibility is difficult I believe that the extraordinary government actions are likely to have an impact before too long in 2009. Fifth I’d like to remind you of Nordson’s bright spots; spare parts, used once and dispensed components, non-durable end markets like packaging and non-woven’s, new technologies and cost savings systems like labeling, LEDs, life science, solar, smart phones, low cost computer components, and advanced memory packaging architectures. And sixth Nordson has started early to deal with these challenges. We have excellent cash flow, excellent liquidity, and cost reductions largely implemented on our way to hitting our $30 million goal. And I thank all of you for your continuing interest in Nordson and I look forward to talking to you all as we proceed through the quarter. And lastly I wish all of you and your families a very Happy Holiday season. Thank you.