Good day, ladies and gentlemen. And welcome to the Nordson Corporation Webcast for the Third Quarter Fiscal Year 2012 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, today’s conference call is being recorded. I’d now like to turn the conference over to your host, Mr. Jim Jaye, Director of Investor Relations. Please go ahead.

Thank you, Alley. This is Jim Jaye, and I’m here with Mike Hilton, our President and Chief Executive Officer; and Greg Thaxton, our Senior Vice President and Chief Financial Officer. We’d like to welcome you to our conference call today, Tuesday, August 21, 2012 on Nordson’s third quarter results. Our conference call is being broadcast live on our webpage at www.nordson.com/investors and will be available for 14 days. There will be a telephone replay of our conference call available until midnight Tuesday, August 28th by calling 1-404-537-3406. You will need to reference ID number 16713095. During this conference call forward-looking statement maybe 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’d now like to turn the call over to Mike for an overview of our 2012 third quarter results and a bit about Nordson’s future outlook. Please go ahead, Mike.

Thank you, Jim, and good morning, everyone. And thank you for attending Nordson’s third quarter 2012 conference call. In addition to our comments on the third quarter, we will also provide some perspective on our outlook for the fourth quarter of fiscal 2012. Let me begin by thanking Nordson’s global team for continuing to serve our customers at the highest level and for delivering an outstanding quarter. Third quarter sales, operating profit, net income and diluted earnings per share were records levels for any quarter in Nordson’s history, where strong organic sales volume at all segments and geographies help drive this record performance. Our customers continue to respond to our value proposition of best-in-class technology, applications expertise and global support. Acquisitions did add 10 percentage points of growth in the quarter. These acquisitions include Verbruggen and Value Plastics, both completed in fiscal year 2011, and the EDI and Xaloy acquisitions completed during this year’s third quarter. These two recent acquisitions along with Verbruggen provide Nordson’s with a very strong platform in global plastics processing, a space we think has good growth and profitability characteristics. Integration efforts are on track and we are very excited about the opportunities for these businesses going forward and the new team members that have come with them. I would also like to add a few comments regarding Sealant Equipment acquisition, which we completed on August 1st. Sealant Equipment is a leader in the engineering and manufacturing of meter, mix and dispense equipment and valves which apply 1-part, 2-part and 3-part adhesive, sealant and lubricating materials. This acquisition provides us with broader presence in cold materials equipment market, especially in the general industry applications. It’s an excellent complement to what we already do in this space and we see significant opportunities to leverage Nordson’s global infrastructure to grow the business beyond its current largely North American footprint. I’ll share some comments about current business trends but before that let me turn the call over to Greg Thaxton, our Chief Financial Officer, who will provide more detailed commentary on our third quarter financial results, as well as some comments on our guidance for the fourth quarter of 2012. Greg?

Thank you, Mike, and good morning to everyone. As Mike noted, our financial results for the third quarter were outstanding. Sales in the quarter were $380 million, an increase of 22% over the prior year’s third quarter. This growth included a 16% increase in organic volume and as Mike noted, a 10% increase related to the first year effective acquisitions. This total sales volume growth of 26% over the prior year’s third quarter is offset by a negative 4% impact from the effects of currency translation related primarily to the euro again as compared to the prior year. Looking at segment performance, Adhesive Dispensing sales volume increased 21% as compared to the prior year’s third quarter. Organic volume increased by 4% while the first year effective acquisitions accounted for the remainder. The organic volume growth was driven by those product lines serving consumer non-durable end markets offsetting the softness in general assembly product lines serving consumer durable end markets. This was also the case for our European adhesives business highlighting the general stability of the consumer non-durable end markets. Organic sales volume in the Advanced Technology Segments was up 33% over the prior year’s third quarter and the first year effective acquisitions added 6% to sales growth. Strong demand for dispensing and test and inspection equipment serving electronics end markets, especially mobile device applications along with continued penetration of a variety of niche markets drove the increase. Within the Industrial Coating Segments sales volume increased 12% compared to the prior year. Sales of powder coating and cold material product lines for durable goods applications drove the improvement. Growth in this segment was strongest in the U.S. and Japan. Moving down the income statement, gross margin in the quarter was 59%, including acquisitions and the associated short-term purchase accounting charges for acquired inventory. Operating margin improved to 26% in the quarter, 1 percentage point higher than the previous year’s third quarter. Operating margin in the quarter, excluding the fiscal year 2012 acquisitions, short-term purchase accounting charges and associated transaction fees was 28% in line with our guidance reflecting the continuing strength of our underlying base business. As a point of clarification, transaction costs associated with the 2012 acquisitions are reported as corporate expenses and were approximately $1.8 million in the quarter, short-term purchase accounting charges related to inventory totaled $1.7 million and are reflected in the adhesives segment results. Looking at operating performance on a segment basis, Adhesive Dispensing delivered another quarter of very strong performance, with operating margin of 30% or 33% excluding the EDI and Xaloy acquisitions, and the short-term purchase accounting charges. Within Advanced Technology outstanding topline growth, solid execution and operating efficiencies drove operating margin to 33% in the quarter, an improvement of 5 percentage points over the same period a year ago. With this segments typically seasonality, we do expect to see moderation in both sales and operating margin given the volume leverage within this segment. Industrial Coating Systems delivered operating margin of 14% in the quarter. On a sequential basis operating profit, excluding one-time charges in both quarters expanded at nearly twice the rate of sales, reflecting nice volume leverage within the business. Continuing down the income statement, reported net income for the quarter was $67 million and diluted earnings per share were $1.03. As in previous quarters, we’ve included an earnings per share reconciliations schedule in our press release to reconcile between GAAP earnings and normalized earnings per share to exclude certain one-time items. Diluted earnings per share in the current quarter include a $0.01 per share discrete tax benefit, a $0.02 per share charge for short-term purchase accounting related to the step-up in value of inventory from the EDI and Xaloy acquisitions, and a $0.02 per share charge for acquisition related costs. The EDI and Xaloy acquisitions including the short-term purchase accounting charges, transaction fees and financing cost were dilutive to earnings per share by $0.02 in the quarter. The current quarter’s EBITDA was a record $107 million and third quarter free cash flow before dividends was $72 million or 108% of net income reflecting very strong cash conversion. From a balance sheet perspective even with the completed acquisitions, we remained very liquid with net debt to trailing 12-month EBITDA of less than two times at the end of the third quarter and remaining capacity under our existing credit facilities of approximately $180 million, along with our strong cash generation provides adequate liquidity for strategic investments. Before moving on to the outlook for our fourth quarter, I’ll provide comments on recent order trends. As we typically do, we provided our most recent audit data both on a segment and geographic basis with our press release. These orders are for the latest 12 weeks as compared to the same 12 weeks of the prior year on a currency neutral basis and with fiscal 2011 acquisitions included in both years and fiscal 2012 acquisitions not owned for the full 12-week period excluded. Looking at orders for the 12 weeks ending August 12, 2012, they’re up 15% compared to the same 12 weeks in the prior year. Within the Adhesive Dispensing Segments orders over the last 12 weeks increased 7% from the prior year, driven by solid growth from all product lines. Advanced Technology orders over the latest 12 weeks are up 22% from the prior year. Demand for automated and semi-automated dispensing solutions serving mobile consumer electronic devices, as well as demand for fluid management components for healthcare and medical markets, along with ongoing penetration of other niche markets drove the increase. Orders improved in every geography as compared to the prior year within this segment. Within the Industrial Coating Systems, the latest 12-week orders were up 23% compared to the prior year. We generated double-digit order growth in every product line with growth strongest in Japan, U.S. and Asia Pacific. Let me now turn to the outlook for the fourth quarter, which includes the impacts of the EDI, Xaloy and Sealant Equipment acquisitions. We are forecasting sales to be in the range of $408 million to $422 million, an increase of 23% to 27% as compared to the fourth quarter a year ago. This range is inclusive of organic volume up 11% to 15%, 16% growth from the first year effective acquisitions and a negative 4% currency translation impact based on current exchange rates. We expect gross margin of between 56% to 57% in the quarter, inclusive of $2.5 million of short-term purchase accounting charges for acquired inventory. Operating margin is forecasted to be approximately 23% for the quarter at the midpoint of our sales range or 24% excluding the impact of short-term purchase accounting charges. Excluding fiscal 2012 acquisitions and associated charges, and non-recurring charges included in the prior year’s fourth quarter normalized operating margin as forecasted at 26% for the current year’s fourth quarter as compared to 25% in the prior year’s fourth quarter, reflecting the positive impact of the sales volume leverage. We are estimating an effective tax rate for the fourth quarter of approximately 30.5%, resulting and forecasted diluted earnings per share in the range of $0.96 per share to $1.04 per share. This estimate includes $0.01 per share related to the gain on sale of a facility as a result of our previously mentioned adhesives footprint consolidation initiative and a $0.03 per share charge for short-term purchase accounting related to our recent acquisitions. In summary, we delivered excellent third quarter performance as our global team continued to deliver at very high level and current order rates are driving our outlook for a very strong fourth quarter.

Thank you, Greg. Before taking your questions I’d like to point out a few other highlights from the third quarter and also provide additional comments on our current order rates and outlook. On a day-to-day basis our global team continues to get the job done better than almost anyone. I’d like to call out some initiatives we have completed that will help drive superior performance. During the quarter, we opened our newly expanded center of excellence for Advanced Technology in Suzhou, China. In addition to greater manufacturing capability to serve the region, this facility features testing and laboratory capabilities, a full training and demonstration center and will serve as a base for enhanced sales and aftermarket service support for this region, production capability will ramp up over the next nine to 12 months. We also completed the consolidation of our Adhesive Dispensing facilities where we have consolidated from four separate facilities to two, one of the vacant buildings has been sold and we will realize a gain in the fourth quarter of about $1 million on proceeds of $5 million and the other is on the market now. We’ve also continued to fund organic strategic initiatives including a variety of innovative new products in each of our segments that are meeting customer needs and helping drive organic growth. We also continued to invest resources to drive growth in emerging markets. As previously mentioned, we completed the EDI and Xaloy acquisitions during the third quarter, and the Sealant Equipment acquisition at the beginning of the fourth quarter. We are clearly executing in the spaces we have previously identified as attractive acquisition opportunities. We welcome these new employees to Nordson. We look forward to the continued growth and success of these businesses. We recently completed our annual strategic planning process and I’m very pleased with the many opportunities for a long-term growth and performance improvement we have before us. Moving on to our outlook, our recent order rates are strong as Greg noted, supporting a forecast for an excellent fourth quarter and record year for revenue and profitability. At the same time, we are not immune to macro economic trends over longer-term. While most economists continued to project growth going forward, many have softened their outlook and you’ve seen several investor companies lowering their near-term expectations. The European economy remains very fragile and is impacting global growth opportunities, especially in certain emerging markets like China. The specter of a fiscal cliff in the U.S. would raise considerable additional concerns but we have proven we can react quickly if needed. The near-term effect of uncertainty has been expressed by many of our customers but is unlikely to impact our fourth quarter given our strong backlog and current order rates. While we continued to monitor these various factors, our overall long-term view is positive. We remain strongly positioned to deliver profitable growth. Our winning model includes best-in-class technology, direct global sales and service, applications know-how, significant recurring revenue drive from parts and consumables and excellent positions in the consumer non-durable spaces, rapid growth opportunities associated with mobile and other electronic devices, and multiple avenues for expansion. While we are not immune from the macro environment, I’m confident in our ability to outperform our competitors in any scenario that plays out. At this time, let us turn to your questions.

(Operator Instructions) Our first question comes from Christopher Glynn of Oppenheimer. Please go ahead.

Thanks. Good morning.

Good morning.

Question on the Coatings business, 2Q orders very strong, third quarter also very strong, didn’t seem to see the backlog conversion there. That matter more of mismatch between the different comps for orders in revenues or more lead time thing, looking like a kind of a huge fourth quarter for Coatings?

Do you want to comment?

Yeah. Chris, I think it is -- as a bit of background in this segment. We do have larger dollar orders within this portfolio and some of those can be longer lead time items. So, I think what you’re seeing in this particular quarter is the result of few orders that are larger dollar systems orders that have longer lead times associated with them.

Okay. And then the ATS operating margin was that just all volume leverage or any mix strength and as a corollary, do you need to build more structural cost in that segment at this point?

Yeah. I’d say most of what you’re seeing there in improvement is significant leverage around our systems business and in particular, so it is largely volume leverage. And we have been investing really in that business over the last three or four quarters, both resources and capability. We did mentioned the build out in Suzhou and where we’re at as the physical facility is there and we will be building up our product capability and product line capability as I mentioned over the next nine to 12 months. Beyond that, there might be very modest tweaks here or there to expand capability but largely we can run with additional resources if we need to and we can flex up and down pretty effectively there. So, probably, not a lot of additional capital required.

Yeah. Chris, this is Greg. The only thing I’d add to that is, as we have been doing and we’ll continue to do, the investment there is largely about adding resource capability in the emerging markets. And specifically, we have stepped up over this last year and we’ll continue some technology investment in each of the key product lines within that business.

Great. Thanks.

Our next question comes from John Franzreb of Sidoti & Company. Please go ahead.

Good morning, guys.

Good morning, John.

Good morning, John.

Last quarter you cautioned about the sustainability of the Advanced Technology order book due to product rollouts. This quarter was a great quarter. Could you talk a little bit about the sustainability of AT orders going into the fourth quarter, a little bit color there would be helpful?

Yeah. If you look at sort of our typical order pattern for the company, but in particular for that business it tends to be fairly weak in the first quarter given the holiday periods and pick up and be strong in the second and third quarter. And then as we get into this period of time start to decline again as most purchases are made for the various rollouts and holiday season. So, we typically would be in a period now where orders would start to decline going forward in that typical seasonal pattern. Sometimes our orders peak in the second quarter versus the third quarter. This year they are kind of peaking in the third quarter as a function of customer rollouts of new devices and particularly in the mobile space that has a big impact on timing. So orders were strong this quarter with rollouts and their continued strength at the beginning of this quarter, but we would expect them to decline in the normal seasonal pattern though going forward.

Okay. And in Industrial Coatings, last quarter you said that the order book is largely driven by mid to larger sized customers, that some of the smaller customers have been on the sidelines. I guess, A, had the smaller customers returned and B, kind of on the heels of, I guess, the backlog number? And Greg, we kind of mentioned about longer lead times, it’s the largest backlog number since, I don’t know, I’m looking back down to 2001, should we be thinking about that backlog differently in the composition of it?

So the first question is really around the smallest customers? And the answer is, no, there really an add back in the mix at this point yet. Most of them have interest in doing projects, but really can’t get the financing to support that. So that’s not changed. That’s primarily U.S. and European phenomenon there. So there is really sort of mid-tier and larger tier that’s driving growth. From an order standpoint, I’d say there is not a fundamental shift in the sort of delivery times in the business. It’s just as, if you get sort of lumpy sizable orders that come in, some could stretch out over the period of time that we are talking about here.

Yeah. John, this is Greg. But I wouldn’t characterize it as something that we see as a structural shift in that business or the composition of that business. What I would say is, we have more systems orders typically in this time of year relative to sort of our consumables and so that has an impact as well.

Do you feel capacity constrained at all?

We are not capacity constrained, no.

Okay. Thank you very much guys.

Our next question comes from Matt Summerville with KeyBanc. Please go ahead.

Good morning.

How are you, Matt?

Couple of questions. First, I guess, just the order tempo that you experienced throughout the quarter, can you sort of comment on that, if you came in plus 15, was that more of front-end loaded, back-end loaded and are you seeing in dollar terms, are you in fact seeing your Advanced Tech business? Are you seeing that seasonal peak or are you expecting to see that seasonal peak, I just want to be clear on that.

Yeah. What I would say is the orders were pretty solid throughout the quarter. We are in that period of time where things probably in the last week or so, or two are starting to decline in the normal pattern that we would see and it would be a fairly steady decline from here throughout the rest of the fourth quarter and into the first part of the first quarter is typically what we see. So it looks at this point that we’re seeing that and we probably turn the corner a bit on the orders, probably a little later than we might typically see in this quarter but typically -- but still within this quarter.

Do you get the sense of the infrastructure is in place or still getting put into place on the part of your customers to support a very robust pipeline of new products coming to market?

I’d say on the mobile side there is a lot of change over time and the frequency of change is pretty quick, think of that is less than a year. So I’d say this is pretty typical of what we’ve seen over the last few years in the mobile side. I’d say the more traditional back-end part of the business is still pretty weak, I mean some signs of improvements, some orders coming in but not as robust as it would be in a typical upswing time period. Most of the sort of industry follower suggests that this year is going to kind of play out as a modestly negative year and then next year should be a pretty solid year. So, I think that’s probably an upside for us in the next year.

As we think about kind of moving into the next calendar year and some of the macro dynamics you brought up, whether it’d be Europe, China was going on here with the election, et cetera? What are your customers telling you about their capital budgets and their ability to get stuff, for lack of a better term approved, heading into year end in the early part of next year? I guess, Mike, what I’m trying to do is gauge kind of your level of concern or confidence in whether or not you have a slower than normal start to the year?

Yeah. So as you know from an order perspective, we’ve got sort of half a quarter visibility. But, I would say from along your lines of your question from a customer perspective, I’d say the folks that are currently buying have projects in the mix. I’d say they are cautious and I’d say, I wouldn’t be surprised if things stretch out a little bit in certain areas. We are not seeing that yet, but I’d say some of our customers are cautious. When you look at the macro environment with recession in Europe trickling over to having an impact in China and growth here in the U.S. is currently in the kind of 1.5% grade. People have money and they have approved projects, so, it wouldn’t be surprised if we saw some delay. It wouldn’t be out of the question to think that the first quarter or so next year looks a lot like the first quarter of this year but we don’t really have any better insight than what we’re giving you around the fourth quarter. But the macro environment, I’d say has created some degree of caution in our customers and we are hearing that pretty much around the globe.

Just to change the topic for one last question here, Mike. Can you spend a moment kind of talking through the global market for cold materials? How big your business is now with what you bought with the small company you closed on August 1st, what you have in your core portfolio? And I guess, how fragmented is the market? How much does this look like from a high level of course, what you -- are you going to be able to do in this market? What you think you can do in plastics processing and what you’ve done in adhesives, can you spend a minute or two on that?

Yeah. I’d say the overall global market for cold materials is probably in excess of $600 million. So it’s a pretty sizable market out there and not surprisingly, growing most rapidly in emerging markets and our business is relatively modest and there is some degree of fragmentation out there and it cuts across a lot of different end markets. So from our perspective, we see good organic growth opportunities, so we see the ability to take the new product lines that we’ve added with Sealant Equipment around the globe. So there’s an opportunity to extend that and there could be further acquisitions down the road. I’d say the opportunity is probably not as large as the plastics processing or the adhesives but it’s a sizable opportunity, particularly outside the auto space. Part of it goes into the auto space but general industry applications that are pretty broad are interesting. So we see opportunities there, but probably not as large as plastics processing or adhesives.

Thanks a lot guys.

Okay.

Our next question comes from Kevin Maczka of BB&T Capital Markets. Please go ahead.

Hi. Good morning.

Good morning, Kevin.

Mike. I guess, I’m trying to square this commentary from you and your customers about all the uncertainty and smaller customers still not being back in the market, everything going on in terms of the macro picture that could create headwinds. But we see Europe orders jump from negative 9 to plus 6…

Yeah.

Can you give a little more specific commentary around Europe?

Yeah. Let me just address the first part of your question. The small customer piece is not new. That’s really been the last four, five quarters that we really haven’t seen them come back in a big way post the recession. So that’s not new news, it’s just continuing news. So I’d say that’s not changing anything that we’ve seen over the last four or five quarters, it’s just more of a longer term upside I think there. Secondly, I would say, the whole spectrum of uncertainty that’s out there on the macro front as customers questioning when they pull the trigger. Right now, we’ve got approved projects in all of our business that are going forward and in particularly going well in the consumer non-durable space that’s been solid and pretty resilient even in Europe. So what I would say is what you’re seeing is really a pickup in that consumer non-durable piece in Europe after a little bit of a slow start in the beginning of the year and continued strength around the region and then on top of that, very strong technology piece. And on the Coating side, we’ve had approved projects, we talked in the past about the bid list being long and those medium-sized and larger customers are pulling the trigger. Some of those have very attractive paybacks because they are a result of consolidation or expanding capacity or efficiency improvements in their short paybacks and they look pretty good. I think as you go through the next capital budgeting cycle, particularly on our, some of the bigger projects that affect Coatings and part of the Adhesives business, there’s where I think you might have some concern from our customer base about when they pull the trigger. I think there is still pent-up demand from the recession not being fully recovered in certain space like our product assembly business and adhesives had a strong year -- last year was pretty soft, this year particularly in places like Europe. So there’s probably pent-up demand and I’d say the same thing with parts of our coatings business. So, I think those are the ones where there is some concern. And I’d say it’s spilled over into China a little bit this year too, because export opportunities have declined and while most of our customers are supplying domestic demand, some are linked in to export opportunities too. And I think that’s where we’re seeing cautions around the export opportunities. I think there’s hope there that the actions the Chinese government is currently taking will help stimulate demand. But when you have Europe in recession, that’s what people see as kind of limited opportunity and the uncertainty that we get through the election here in the U.S. has just have people express some caution. It hasn’t played out in terms of folks affecting current orders or the latest order trends. So they are still moving ahead with things that are approved. And it’s just a question of whether there is enough clarity to move forward in Q1, Q2 or whether there is some concern. And I’d say all we run at the highlight is there is an expression of some concern right now just because of the uncertainty.

Kevin, this is Greg. Its specific to your point on Europe that speaks largely to the macro of Nordson in Europe. Those order rates are largely driven by again the resiliency of the nondurable end markets but we also did see some improvement in the product line supporting within adhesives and more durable end markets. And I think some of that is that the pent-up demand that had been missing in the orders, so we’re seeing some improvement against albeit if you could say a weak comp of the prior year. But the order rates in Europe are largely adhesive driven. So on the high level, I think we’ve got good positions from a product standpoint, from a niche market standpoint and even within the geography in Europe we’re are more northern focused, more eastern focused and where we participate in the south, a lot of that is re-export business to OEM. So we’ve got a little different mix than maybe some other companies in Europe again not immune to what’s going on underneath it. So that helps and then some of the mix of our business in our other product lines are doing reasonably well. And even in our in our coatings business, the things like the ag business, heavy equipment business is doing pretty well, auto holding and the sort of construction rates stuff is yet to come back.

Got it. Shifting over to tech again, I think Mike, in the past you’ve talked generally about the mix there. Some of the major buckets there, mobile and PCs and other life sciences and other things, the strength we saw this quarter and you’re pretty clear about the seasonality going into Q4. But the strength we saw this quarter, how much of that is driven by new product development cycle in the mobile piece whether it’d be key customers designing and developing new tablets and other handheld devices versus other parts of tech?

Yeah. So if you look at it, we said in the past that the electronics business probably three quarters of that segments and of that kind of mobile historically been a third niche, a third in sort of the traditional back-end of third. Its clearly driven by the mobile into a little bit lesser extent than niche sort of applications. And so, it’s very much linked to the degree of change and innovations gone into handsets, tablets, auxiliaries and support equipment that goes with that and some of the niche applications. We’ve seen some orders for the more traditional back-end but not as robust as you would typically see in a nice upturn scenario and that’s not unexpected for this part of the year. Again I’d say pretty solid growth in, sort of, the medical general assembly, healthcare areas as well to complement then balance that.

Got it. And just finally from me, on the coatings margins, can you just address that a little bit more was there any change in competitive behavior or pricing pressure or mix or anything else that may have weighed on those margins?

Yeah. We do have a pretty significant mix change year-over-year within the businesses. If you look at our five product lines, they are not all at the same level of returns. I would say, mix has changed that’s all accounts for a percent or so of sort of margin impact. And then we’ve had more systems, particularly engineered systems versus standard systems as well really just the functions of the orders that have come through. So, those are two things that contributed. And we mentioned in the last quarter or so, that we were stepping up spending in emerging markets to support growth in a number of our product lines and we’ve continued to do this. So those are sort of three things that have kind of impacted in the near-term.

Okay. Great. Thank you.

All right. Thank you.

Our next question comes from Mark Douglass of Longbow Research. Please go ahead.

Good morning, gentlemen.

Good morning.

Good morning, Mark.

Greg, what its spares parts come in as percentage of sales this quarter?

Yeah. Mark, if we just exclude the acquisition that came in mid quarter just so we are talking kind of the base business. Total parts were at about 43% of revenue and as is typical as we kind of move through the year and have a heavier weighting of systems that is down a few percentage points than what it had been running earlier in the year, but the total company is 43%.

Okay. Then with the acquisitions, is that going to be still relatively stable in kind of the low 40s or do you think it will shift down over a bit more?

No. I don’t -- likely, these acquisitions are more components than system. So it’s going to lever up the -- what we would call parts and consumables portion a little bit.

Okay. And then can you talk about in ATS, you mentioned the niche markets several times. Can you go at least what you can in some more detail to what the niche markets entail?

Yeah. For us is, the biggest ones are MEMS devices, LED, solar and then there is a few others. The area that’s really on fire right now is the MEMS devices. So lot of that supports the mobile activity but a lot of it supports industrial automation, healthcare automation, automation actually in the electronics industry. So, that’s probably the hardest, the LED business is improving, but probably not driving it and solar has not done so well. So, it’s largely probably the MEMS applications that are the biggest drivers. And then within that we still see the technology conversion opportunities going on with the underfill continuing to take share over time as the devices get more sophisticated in the geometry shrink.

Okay. That’s still mostly a dispensing application as opposed to…

Mostly in dispensing but what we’ve seen also what’s happening is as we put more components into the mobile devices and as they go vertical, we’re seeing more inspection opportunity. So we didn’t see an uptick in inspection business as well associated with those kinds of activity. It’s really been more the traditional back-end. It’s been kind of where it’s been most of the year with a slight uptick.

Okay. And then finally, given the really strong mobile this year is setting up kind of tough comps, you think there is still opportunity even with that just to grow on what’s looking to be a very strong base?

Yeah. So our crystal ball doesn’t go out forever. The one thing that seems to be going on here though is a pretty fast cycle of innovation, when you at look, sort of, the leading suppliers here and you also have a fairly significant penetration of the smartphone part of the business. And so, if you look at where we like the models, we like smartphones and we like tabs and we like ultrabooks and so forth. So again, the smaller footprint with a more features in it as we like the most. So you are seeing relatively high growth continuing to project, continued for smartphone. So assuming that continues, yeah, because it’s going to be a strong year for this business. But I think the long-term future is good and you run into some timing issues, you could. But I think the opportunity is there because you’ve got sheer penetration on the smartphone. And you also have markets like China, which are opening up in a big way to the smartphone part of the markets, emerging markets in general. So, if you believe that long-term the smartphone pieces continuing to penetrate and you believe the forecast that have a 15%, 20% plus kind of growth for the next few years and we should see that be positive. And we should at some point see the more traditional piece come back, I think most people feel that’s next year and maybe not right at the beginning of next year.

Yeah. And I’d add to that. What might be largely in our dispensing product family, where we benefit from these mobile devices given the smaller geometries and more features being packed into these devices it does spread as well into opportunities and are more broad product offering like test and inspection.

Now the time, you can’t predict the timing on these launches, so you could have some things that look a little whacky quarter-to-quarter but when you do your comparisons, but I think in the long run trend is positive.

Okay. Actually this might be last one. Speaking of share, I mean do you think you are gaining share in the market as well on ATS?

We think we’re doing well with the technology investments that we’ve made.

Okay. Thanks.

Our next question comes from Charlie Brady of BMO Capital Markets. Please go ahead.

Hi, thanks. Good morning, guys.

Good morning, Charlie.

Hey, Mike, with your comment about the ATS electronics being about 75% end market and mobile being a third of that 75%, are smartphones the majority of that third?

I would say the smartphones are a big part. I have to go back and check, Charlie. I’d say the smartphones are a big part and tablets are a growing part of that. More traditional phones don’t have the same functions in there. So, it’s not just the processor that’s in there. It’s the fact that you’re putting two cameras and it’s the fact that you have a gyroscope in. And it’s a fact that you have an accelerometer and it’s the fact we have more chips to handle all the applications. So yeah, that’s a significant part of that mobile piece and tablets are growing. And yes, they really see much of an impact from the Ultrabooks, but that could be an upside if Microsoft 8 comes in and the Ultrabooks take off the way certain folks hope they will, but that’s not got a big impact yet.

Okay. And just going back to Europe for a second and kind of a growth rates you’re seeing there and you commented. Your Southern European exposure is largely exported emerging markets. Can you give us a sense for your European business, maybe a little more granularity in how that breaks down between whether Eastern, Western, Southern and how much really gets -- stuffs gets sold in Europe ends up not in Europe, still somewhere else. It maybe really helping out some of the growth rate relative to what other industrial companies are seeing?

Yeah. Overall European business is about I think 32% from a revenue standpoint. And we said in the past that an about eight points of that 32 points is really gone to OEMs that re-export and largely re-export to emerging markets. So and the -- where they are located is more south and north. And then of the rest of the business, we have a big business in Germany, fairly sizable business in France. Germany tends to support the east, which should be many of these eastern European countries and small business in Russia today. We’ve got a smaller U.K. business. We are in Spain and in Italy, but the bigger proportion of business is in the north.

Yeah. It’s -- the weighting is Germany, France and the U.K. Now Italy again is a big volume market, but that’s the export base.

Okay. And then Mike you’ve made a number of acquisitions particularly in Adhesive Dispensing segment recently in particular. If you look out at that addressable market clearly that’s got larger, do you think if you look at a long-term run organic growth rate for the company and I guess specifically Adhesive Dispensing. Do you think you’ve kind of bump that up to a more sustainable higher organic growth rate because your addressable market is larger and maybe you can just kind of comment on what you think that kind of on a longer term basis?

Yeah. We said for a while we thought the core adhesives business was kind of in that 5% to 7% kind of growth rate. We thought things like flexible packaging and the plastic processing probably were markets that grew point or two faster than that overall. And so part of the reason, we are interested in that obviously we also felt that it was closely adjacent and within our core competencies to extend there. So, we do think we’ve enhanced the overall growth prospects of that business. And we think there are opportunities not only to grow organically and we talked about some of the business model approaches that we are trying to play out primarily what we do in adhesives. We also think there might be additional opportunities to acquire in that area. So, yeah, we do think we have enhanced the growth prospects of that part of the business and therefore the overall company.

Great. Thank you.

Okay.

Our next question comes from Jason Ursaner of CJS Securities. Please go ahead.

Good morning.

Good morning, Jason.

Greg, you provided some details on the operating margin in the quarter and then excluding all the adjustments you achieve that 28% range. When I look at the fiscal Q4 range though even when I adjust out the accounting charge, it seems to be applying closer to 23.5% operating margin. If you said the gross margin you expect next quarter, could you repeat that. And I guess with part sales staying where they are above 40% and the order growth, what would cause you see the overall margin pressure to that greater magnitude?

Yeah. Jason, what we talked about was or what I mentioned was if I kind of normalized, if you will, the fourth quarter margins by backing out the effective acquisitions, both the results from operations as well as the purchase accounting that comes with it, we would see operating margins in the quarter -- in the fourth quarter of about 26%, that’s up 1 percentage point from normalized margins of year ago. So, in terms of that based business, we’re seeing continued improvement in the performance. Then when you layer in the acquisitions and the purchase accounting, that is what then is driving margins down to that 23% range. And then gross margins in the quarter again are going to be impacted by both the purchase accounting as well as the overall margin dilution, if you will, of the acquisitions coming in at lower gross margins than our base business. We’ve indicated when we made the acquisitions that they were lower EBITDA margins, but close. And then we saw improvement plans currently within the business and synergies we could deliver to get them up to our average over time. So, we’re pleased with what we see in the plans there, but the initial effect is to lower the operating margins. Longer term, we see that improving and an addition to adding the growth opportunities that we see.

And in terms of I guess margin in the base business, are you seeing any margin pressure on the gross margin side or is it relatively consistent with where it has been?

Yeah. It’s relatively consistent. Now, if you look sequentially on the base business, it’s down slightly, maybe 50 basis points, but that’s largely the mix. There’s some segment mix, but as well as the waiting of systems versus parts in the fourth quarter, but that’s a typical seasonal pattern.

Okay. And just I guess focusing more on the acquisitions, can you break down the revenue and operating profit contribution of each of the acquisitions in the quarter?

In the fourth quarter?

In the third quarter.

In the third quarter, well what we talked about was -- I think what we gave you was the what acquisition, the first year effective acquisitions added about 10%. And so first year effect would be pre-ownership what those businesses delivered in that same time period. What we don’t typically do with that is, go beyond that bound to what we would say the product line level and get more granular within that.

I guess I’m asking, if I look at the 10%, is there any seasonality for any of the businesses materially, just because it looks like one would have to be sort of underperforming if I’m taking two months of Verbruggen, a full quarter with Value Plastics and a month of half of EDI and a little bit over a month of Xaloy?

Yeah. And I think that’s part of -- as you’ve got the different acquisitions coming in. I think from a performance, I wouldn’t say that we had an underperformance of any of them. You’ve got partial quarter for some of those coming in, in terms of seasonality from a -- if you look at the two larger, the EDI, the Xaloy, the newer acquisitions. We do see kind of consistent seasonality to what our industrial business has experienced. And that is slightly heavier back half of our fiscal year than the first half. But in terms of performance, no, I wouldn’t suggest there was any underperformance.

And from an order perspective, you’ll have the same, sort of, tail office capital budgets are completed for the year in the holiday season. So we’d expect that same kind of seasonal pattern.

And is Xaloy still on track with management’s expectations for the full year 2012 to get to that under nine times adjusted EBITDA?

Yeah. We’re on track with our plans.

Okay. I guess directionally, could you say whether Value Plastics had solid growth or rather that was declining year-to-year?

No. We commented earlier on sort of the overall healthcare part of our business. So we saw pretty good growth for the year, not as strong as the electronics piece, but probably in the high single digit range for the year, so doing pretty well.

Okay. And Greg, can you talk at all about how much stock you repurchased during the quarter and what you have left on the authorization?

Yeah. We did not -- we were not active post acquisition. So during the quarter, we were not active. And we have -- I think we have about 80 million remaining under the authorization. Let me check that number, Jason, but we were not active in the quarter.

Okay. And with net debt-to-EBITDA still in a pretty reasonable range, you have over 250 million capacity on the various balance sheet items. How should we think about your willingness to use that additional capacity for acquisitions at this point?

I think we have a good pipeline of opportunities. You never know when they are going to come forward. If one of the good opportunities in the four areas that we talked about in terms of areas of interest would come forward, we wouldn’t pass on it at this point in time. We have said in the past our general guideline is, sort of, two times EBITDA, because that gives us access to lowest cost financing. But given our strong performance and cash generation capability, if the right opportunity came up, we wouldn’t shy away from that. That said, we are focused on integrating three acquisitions that we’ve just bought and we’ve put teams and people in place to deliver on the benefits associated with that, the integration we get those folks smoothly into the company continue to deliver on the plans that they’ve laid out. So, we feel good about where we’re at. And we’ve got quite a bit of effort underway to do that. So, we’ve got lot on our plate. But if the right opportunity came up, we wouldn’t shy away from that.

Okay. Great. I appreciate the commentary. Thanks.

Okay.

Our next question comes from Liam Burke of Janney Montgomery Scott. Please go ahead.

Thank you. Good morning, Mike. Good morning, Greg.

Hi Liam.

Mike, you’ve talked a little bit about China in your comments. But one of the strategies you had laid out in the past is the tiering where you’re looking to go deeper into the domestic Chinese market. It looks like activity in Asia Pacific is pretty strong. Can you give us some color on that strategy in China?

Yeah. What I would say is, we are doing really well in our adhesive’s business and we’ve been at that the longest. And we’re at the point now where we’re developing products in the region for those regional opportunities. I would say in this past year and a half that we’ve introduced the line of products in our coatings business, particularly in the powder side that’s getting traction there and I think doing generally well. Our whole Suzhou expansion, which support broad growth in the technology space but really it allows to tap a market that sort of second tier market in the technology space and that’s really kind of 2013 opportunity for us. So, first we are building the capability not just manufacturing but the technical centers and the resource capability on the ground and that’s sort of fiscal ‘13 opportunity. Probably 60% of our customers in China are not state-owned enterprises with largely local demand. So we are pretty focused on capturing local demand but there is an export fees that has clearly declined and made people little bit nervous and that’s contributing to the overall GDP growth rates dipping below 8% in China at the moment and the government again is trying to respond. And there are customers I’d say are just a little bit more cautious but we think there are good opportunities to continue to drive that strategy of tiering in the long run.

And just following on that, do you think there would be any price competition in the space or competitive pricing response as you roll out the strategy?

We feel pretty good about understanding what the specific requirements are and what features customers are going to buy and what cost position that we have. So, I think as we said in the past we could have some mix effects in terms of selling less fully featured products there but with the better cost positions overall we should be in a pretty good shape. And one of the reasons that we continue to step up across all businesses, our technology investment is to continue that train of new products to beat off any particular competitive threats that might be out there. We’re not seeing a lot of high-level pricing pressure. We don’t want to be naïve. And we want to continue to innovate and that’s kind of the approach we are taking.

Thank you.

Okay. Thank you.

Our next question comes from Walt Liptak of Barrington Research. Please go ahead.

Hi. Thanks. Good morning guys.

Good morning, Walt.

Good morning.

I want to go back to the discussion about the adhesive’s business and maybe just start by asking, Greg, at what point do you break out the plastics equipment as its own segment?

Yeah. Well, I don’t know that we’ve -- that there is something that we are -- what we got to balance there is the competitive aspects of getting too granular and like you said down to the product line level. So, I think at this point in our view going forward is that this will be part of the adhesive segment.

Okay. I think the question that I’ve got is related to this. And I think this is what other people are trying to get to is, in May adhesive orders were down 5%. And then you put up a pretty big volume number the 21%. And so I guess the question is, the acquisitions, are they growing significantly faster than adhesives or is it a pick up that you alluded to in Europe in adhesives is that where the growth is coming from?

Just to be clear, part of the impact in terms of the volume numbers that are not having it in last year, having it in this year. So it’s kind of zero versus kind of the base line and that’s affecting sort of the current quarter. One of the reasons we try to gave you sort of order rates without that confusion is just give you a sense of, yeah, the base business is picking up. And if you recall, at the beginning of the year, we thought the first quarter or two would be soft and then adhesives particularly we said, we had a really strong product assembly here last year and it was soft this year. And what we’re seeing now is the growth in the consumer non-durable piece coming back as we projected and then really offsetting a still softer but better product assembly area. And then the acquisitions are, sort of, zero last year and adding now and so that’s distorting the short-term sales numbers in third quarter to an extent.

And Walt, this is Greg. So, what you saw in the -- where you talk about a quarter ago some slight dilution in the order rates for this segment, we delivered about 4% organic growth. And what we talk about then consistent with that 4% organic growth in the quarter, the order growth rates are now 7%. So consistent with Mike comments, we’re seeing again the resiliency of the non-durable end-markets and then some improvements in the general product assembly that’s kind of levering those order growth rates up to that 7%. Again that 4% growth -- core growth if you will, in the third quarter, this 7% order rates that are now leading us into our fourth quarter, exclude the contribution of EDI and Xaloy.

Okay. Got it. Okay. That helps getting to the 4% organic number.

Yeah. So the 21% in the quarter has 16% or so of zero to [here it is acquisition] effect.

Okay. Okay. All right. Thanks a lot guys.

Okay. Hey, Aly, we’re going to have to end our call now, so help us wrap that up please.

Ladies and gentlemen, this does conclude today’s conference. You may all disconnect and have a wonderful day.