Good day, ladies and gentlemen, and welcome to the Nordson Corporation webcast for fourth quarter and fiscal year 2013 conference call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Jim Jaye, Director of Investor Relations. You may begin. James R. Jaye: Thank you, Nicole, and good morning. This is Jim Jaye, Nordson's Director of Investor Relations, and I'm here today 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, Thursday, December 12, 2013, on Nordson's fourth quarter and full year results. Our conference call is being broadcast live on our web page at www.nordson.com/investors and will be available there for 14 days. There will be a telephone replay of our conference call available until December 19 by calling (404)537-3406. You will need to reference ID# 17282893. 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'd now like to turn the call over to Mike Hilton for an overview of our 2013 fourth quarter and full year results and a bit about our first quarter 2014 outlook. Go ahead, Mike. Michael F. Hilton: Thank you, Jim, and good morning, everyone, and thank you for attending Nordson's fourth quarter 2013 conference call. At a high level, our fourth quarter looked a lot like our third quarter. Our global team delivered solid results in a slow macroeconomic environment any comparison to a particularly strong period of demand a year ago. Sales and diluted earnings per share for the quarter were within our range of guidance. I'm pleased to report that our fourth quarter results helped us achieve record full year revenue for the third consecutive year. Full year operating results, earnings and cash flow were solid even as we continued making strategic investments that will drive our future success. We also returned approximately $71 million directly to our shareholders during the year through dividends and share repurchase. I congratulate our global team on a job well done this year as they remained focused on meeting our customers' needs at the highest level, executing on a variety of continuous improvement initiatives and integrating recent acquisitions. Looking forward to the first quarter of 2014, our most recent 12 week order rates are positive in all segments and most geographies. In a few moments, I'll share additional comments about the current business trends and our outlook, but I'll first turn the call over to Greg Thaxton, our Chief Financial Officer, who'll provide more detailed commentary on our fourth quarter and full year financial results, as well as some comments on our guidance for the first quarter of 2014. Greg? Gregory A. Thaxton: Thank you, and good morning to everyone. As Mike described, we delivered solid fourth quarter results given the macro-environment and challenging prior year comparisons, with sales in the quarter of $411 million, a decrease of 6% over the prior year fourth quarter. Fourth quarter sales included a 4% increase related to the first year effect of the Kreyenborg acquisition, a 9% decrease in organic volume and a negative 1% impact related to unfavorable effects of currency translation as compared to the same period a year ago. Looking at sales performance for the quarter by segment, Adhesive Dispensing sales volume increased 3% as compared to the prior year fourth quarter, with all of the increase coming from the first year effect of the Kreyenborg acquisition. Helping to offset a 5% organic volume decrease where organic volume growth and product line serving rigid packaging and general product assembly markets, was offset by softness in product line serving disposable hygiene and plastics end markets during the quarter. On a geographic basis, we did see organic growth in Japan within this segment. Sales volume in the Advanced Technology segment decreased 14% in the quarter from the prior year fourth quarter, a period in which this segment delivered organic growth of 26%. Strength in medical end markets and niche applications for surface treatment systems during this year's fourth quarter was offset by softness in electronics end markets. Organic volume growth in the U.S. and Europe was offset by softness in other geographies. Within the Industrial Coating segment, sales volume in the quarter decreased 11% compared to the prior year fourth quarter, a period in which this segment delivered organic growth of 39%. Against this very strong period of a year ago, volume decreased in most product lines serving this consumer durable goods markets. Most geographies also were soft with the exception of Japan and the Americas. Total company gross margin in the fourth quarter was 55%, the same level as the year ago. Excluding a nonrecurring charge of approximately $1 million related to the step-up in the value of inventory acquired in the Kreyenborg transaction, gross margin was 56% and consistent with the level delivered in the third quarter of fiscal 2013. As we move down the income statement, you will see the impact of negative leverage due to lower sales as compared to the prior year's fourth quarter. For the fourth quarter of 2013, operating profit was $87 million and operating margin was 21% or 22% without the impact of Kreyenborg, and equal to our guidance. Looking at operating performance on a segment basis, Adhesive Dispensing delivered operating margin of 27% in the quarter or 28% excluding the Kreyenborg acquisition, a level equal to the fourth quarter a year ago and sequentially higher than any other quarter during fiscal 2013. Within the Advanced Technology segment, operating margin for the quarter was 21%. Consistent with my previous comments on total company margins, the decline in revenue from year-to-year is impacting this segment's margins. In the Industrial Coating segment, operating margin improved over last year's fourth quarter level to 17%. This strong performance, given lower volume in the quarter compared to the prior year, reflects the ongoing effect of continuous improvement initiatives and a more favorable sales mix. On a sequential basis, we are encouraged by sales and operating margin improvements we are seeing in portions of the business. From the third to the fourth quarter of fiscal 2013, excluding the fourth quarter Kreyenborg acquisition, Adhesive Dispensing sales grew 5% and a 58% incremental margin on the sales increase improved operating margin by 2 percentage points to 28%. During the same period, Industrial Coating sales grew 16% and operating margin improved by 3 percentage points to 17%, with incremental margins of 36% on the increased volume. Though we did not see the same pattern within Advanced Technology, this is not atypical given the more seasonal nature of some of the segment's semiconductor related end markets. We did continue to see solid customer bidding and quoting activity in the Advanced Technology segment during the period and order rates there have been positive over the last 12 weeks. I'll also mention that we continue to execute on our acquisition strategy in this segment, Advanced Technology, during the fourth quarter. Specifically, we acquired assets used to manufacture a plastic molded stock cut product line. This product line is an ideal fit with our existing line of highly engineered fittings, luers and connectors for fluid management applications in the medical industry and fills the gap in our product offering. Continuing down the income statement, reported net income for the quarter was $60 million and GAAP diluted earnings per share are $0.92, which includes $0.01 from the Kreyenborg acquisition and a negative $0.04 per share impact from currency as compared to the prior year's fourth quarter. As in previous quarters, we've included an earnings per share reconciliation schedule in our press release to reconcile between GAAP earnings and normalized earnings per share to exclude certain items. The current quarter's earnings per share include a $0.01 charge for short-term purchase accounting related to the step-up in value of inventory from the Kreyenborg acquisition. The current quarter's EBITDA was $103 million. Cash flow from operations in the fourth quarter was $74 million. Fourth quarter free cash flow before dividends was $61 million or 102% of net income, again representing strong cash conversion. We have included a table with our press release reconciling net income to free cash flow before dividends. We continued our disciplined and balanced approach to capital deployment during the quarter where we returned value directly to shareholders during the quarter through dividends and share repurchases totaling $16 million. From a balance sheet perspective, we remain very liquid with net debt at 1.6x trailing 12 month EBITDA as of the end of the fourth quarter, and we have approximately $288 million available from cash in our current revolving credit facility. I'll provide a few comments on our full year results, where sales for fiscal 2013 were a record $1.5 billion, an increase of 9% compared to fiscal year 2012. Total sales volume increased by 10%, most all due to the first year effect of acquisitions, with less than 1% organic growth. This volume growth was offset by a negative 1% impact related to unfavorable effects of currency translation compared to the prior year. Operating profit for the year was $324 million. Net income was $222 million and GAAP diluted earnings per share were $3.42, where currency impacts as compared to the prior year reduced full year earnings per share by $0.09. Full year EBITDA was $380 million, a slight increase over the prior year. And free cash before dividends was $225 million or 101% of net income, again reflective of strong cash conversion. Dividends paid in fiscal 2013 were $41 million and share repurchases were $30 million. I'll add a couple of comments relative to the balance sheet that might be useful as you look at changes from the prior year. With regards to inventory, the increase of $29 million over the prior year mainly relates to fiscal 2013 acquired inventory. And looking at other assets, this increase year-to-year is associated mainly with intangible assets and goodwill from acquisitions. Before moving onto our outlook for first quarter of 2014, let me provide some comments on recent order trends. As we typically do, we provided our most recent order 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 the Kreyenborg acquisition included in both years. Looking at orders for the 12 weeks ending December 8, 2013, they are up 5% as compared to the same 12 weeks in the prior year. Within the Adhesive Dispensing segments, orders over the last 12 weeks increased 3% compared to the same period in the prior year. Order rates increased in segment product lines serving rigid packaging and general product assembly end markets and were flat in disposable hygiene and polymer processing markets. Orders were up in all regions, except Europe. Keep in mind that orders and portions of our recently acquired polymer product lines can have longer lead times than our legacy product lines. In the Advanced Technology segment, orders over the latest 12 weeks are up 10% compared to the same period in the prior year. Orders for product lines serving electronics and medical end markets were strong as were all regions, except the Americas and Japan. Within the Industrial Coating segment, the latest 12 week orders are up 8% as compared to the prior year. We are seeing solid activity in consumer durable markets such as construction, appliances, lawn and garden and transportation, and we did see order growth in all regions except the Americas. We are pleased with the recent strength in order rates compared to the prior year. While order rates for both parts and systems are up versus the prior year, system order rates are driving a larger portion of the order growth rate in all segments. This is encouraging as we begin 2014. However, as we discuss our first quarter outlook, keep in mind that systems generally have longer lead times which can impact the timing of shipments. Backlog at the end of the fourth quarter was up 23% compared to the end of the fourth quarter a year ago. The increase was due to the first year effect of the Kreyenborg acquisition. Organic backlog decreased by $1 million from the prior year. Let me now turn to the outlook for the first quarter of fiscal 2014. Note that this outlook includes the forecast for the Kreyenborg acquisition. We're forecasting sales to be in the range of $362 million to $375 million, an increase of 4% to 8% as compared to the first quarter a year ago. This range is inclusive of organic volume down 1% to up 3%, 6% growth from the first year effect of acquisitions and a negative 1% currency translation effect based on the current exchange rate environment. At the midpoint of our revenue forecast, we expect gross margin to be 55% and operating margin is forecasted to be approximately 16%, inclusive of a $1.5 million short-term purchase accounting charge related to the step-up in value of inventory acquired in the Kreyenborg acquisition. We are estimating first quarter interest expense of about $3.7 million and an effective tax rate of approximately 30%, resulting in first quarter forecasted diluted earnings in the range of $0.55 per share to $0.63 per share. This estimate includes a $0.02 per share charge related to the previously mentioned inventory step-up. In addition to this first quarter outlook, the following fiscal 2014 full year data points may be helpful for modeling purposes. In addition to the $1.5 million short-term purchase accounting charge in quarter 1, we expect additional charges totaling approximately $1 million in the second quarter related to purchase accounting for acquired inventory. For our effective tax rate, we are forecasting the full year rate to be about 30%, assuming the continuation of the R&D tax credit. If this tax law were to not be extended for 2014, this would impact our effective tax rate by about 50 basis points. For capital spending in 2014, we're forecasting normal maintenance capital spending to be in line with 2013 or between $45 million to $50 million, about 3% of 2013 sales. This is higher than what I would expect we would spend in future years as we invest in equipment and information system projects that will drive productivity and efficiency throughout the organization. This spending forecast does not include any spending or cash proceeds for that matter associated with our facility consolidation initiatives. In summary, we delivered solid fourth quarter performance. For the full year, we delivered record sales, continued to generate strong levels of free cash flow and continued our strategic investment initiatives to position the company for long-term growth. Our current order rates are strong and while the timing of shipments of these orders is impacting our first quarter outlook, the increase in systems orders is an encouraging sign as we begin 2014. Michael F. Hilton: Thank you, Greg. Before taking your questions, I'd like to provide some additional comments on our recent performance and first quarter outlook. We continued to deliver value to our customers with best-in-class technology surrounded by direct global service and support. Our team's focus resulted in another solid year for Nordson despite much slower macroeconomic growth than many forecasters initially anticipated. The fundamentals of our business remain intact and as Greg mentioned, we returned $71 million to shareholders during the year through dividends and share repurchase. I'd characterize 2013 as a year of investment. Throughout the year, we continued to execute on a variety of strategic initiatives that will position us for further success. In terms of technology, we introduced a steady stream of innovative new products during the year that are being well received in the marketplace. Among our highlights is the new Freedom system, which is the next-generation Adhesive Dispensing equipment for the rigid packaging industry. Other new products gaining traction this year include a number of electronics products such as the Spectrum II, high-speed dispensing system, Jade X-ray system, PECO xMOD dispensing valves. Then in our powder systems area, ColorMax 2 powder coating system is gaining traction as is the new line of bioprocessing fittings in our medical component space. All of these products are helping our customers to become more productive and efficient. I'd also like to give an update on the specific investments we called out this year related to our Advanced Technology segment. As planned, we are beginning to manufacture several product lines for electronics applications in our Xuzhou, China factory and we have increased our sales, service and engineering capabilities in the region. This capability should enable us to penetrate more local and mid-tier manufacturers throughout the region. We also described the proprietary new technology investment during the year. I'm pleased to report that this investment has gone as planned, resulting in product prototypes that are handful of leading customers. These prototypes are performing well and we anticipate formal production and revenue to begin in the back half of fiscal 2014, at which time we should be able to provide more detail. We also continued to execute on our acquisition strategy during the year. The Kreyenborg acquisition adds leading products to our polymer processing offering. And we also added a product line to our medical offering, as Greg mentioned. We're making solid progress on leveraging and fully integrating these and other recent acquisitions into Nordson. Throughout the organization, continuous improvement remained fundamental to how we run the business. We continue to focus on customer segmentation, low-cost country sourcing, heightened application of Lean Six Sigma tools and benchmarking and implementation of best practices. Finally, I'm also pleased with our efforts to invest in our team and organizational capability. Specifically, we increased training programs for our emerging leaders worldwide during the year and we remained focused on other talent development programs. We also executed on our mission of giving back to the communities we operate in, providing $8.7 million to our charitable cause efforts during the year while our employees also volunteered thousands of hours through our time and talent program. Looking ahead, at the macro level, the consensus among most economists at this time is that GDP growth in 2014 should be considerably better than 2013, yet the magnitude and pace of improvement are uncertain. Most regions are expected to grow. The current environment includes modest inflation, low interest rates, low energy prices and strong corporate balance sheets with high level of cash for investment. At the same time, China's ongoing transition to a consumption based economy may continue to be a challenge. In the U.S., the Fed is expected to begin tapering its asset purchase programs in 2014, which could have a dampening effect. And in Europe, the recovery still has not broadly gained full momentum. Specific to Nordson, our current order rates are positive in all segments and most geographies. The good news that the order rates for both parts and systems are up, with systems orders driving the largest part of the total increase. Overall, we continue to feel good about opportunities in the diverse spaces where we operate. In consumer and non-durable goods, end markets demand for rigid and flexible packaging and disposable hygiene products continue to grow, especially in emerging markets. In the electronics markets, semiconductor capital spending forecasts for the year are positive, led by continued strong demand for smartphones and tablets. In the medical space, demographic trends play to our strengths in dispensing devices and fluid management. And in consumer durable goods markets, we see customer investment related to building and construction, appliances, lawn and garden and transportation applications. Our model of global direct sales and service, application expertise and differentiated technology positions us to seize these opportunities more readily than our competitors. We continue to complement these growth opportunities by executing on our enterprisewide and business-specific continuous improvement initiatives. At this time, let's turn to your questions.

[Operator Instructions] Our first question comes from the line of Charley Brady of BMO Capital Markets. Charles D. Brady: Could you just give us the breakdown between the parts business and the other pieces for Adhesive Dispensing and the company as a whole? Michael F. Hilton: Yes. On the mix, I think Greg is going to pull that number. While he's doing that, I would say, for the year, overall growth was up modestly. It was up probably on the order of 3% for parts and down probably like 4% for systems. So we had step-up, I would guess, this year in the parts and systems mix. But Greg, do you want to add to specifics? Gregory A. Thaxton: Yes. Charlie, in the quarter, our total parts were about 41% of the total mix, and this is all-in including acquisitions. That's trended down a bit from where, for example, we start the first quarter where we have a higher portion of parts, which was about 45%. We ended the fourth quarter at 41%. And on a full year basis, parts were about 42% of revenue. Charles D. Brady: And then on the system sales, as that starts flowing through, I guess, I'm just trying to understand, and get a better sense of the magnitude of what that might do to margins given that they tend to carry a little margins obviously. What's the magnitude that you might see on a margin headwind if any when those revenues start flowing through the revenue line? Michael F. Hilton: Yes. I would say, in general, the margin impact would be relatively modest, they're really more a function of what's the total volume increase is. And I think as you know, we've got pretty significant volume leverage. So if the volume is up, we're going to see that improvement. There'll be a modest impact on margins, but not significant relative to other things that are going on. Charles D. Brady: Before I hop back on the queue. Just to clarify, on the Adhesive Dispensing business, did I hear you correctly that the organic business ex the acquisition in the quarter, that down 5% if I back out the acquisition? Michael F. Hilton: Yes, that's correct.

Our next question comes from Liam Burke of Janney Capital. Liam D. Burke: Mike, could you give us some color on the acquired plastics business? Obviously, they have lower operating margins, which you're addressing and can do. But could you flip over and talk about the end market demand there and what that looks like? Michael F. Hilton: Yes, let me comment there. I think if you look at sort of total plastics consumption for the year, it was actually up. I think earlier in the year, it was up around 6%. It trended -- the growth for the year trended down probably a few points off of that. The issue that we've kind of faced is investment versus demand and some strong investment in '11 and '12, particularly in an area that we've talked about before at the biaxial film area, which really has created an issue for us in the short term. As an example, we expected volumes to be up particularly with systems orders for plastics this year, and they're actually down and we had sort of the same impact negatively on incremental margins that we have in our core business. That said, the long run, we expect the growth rate of the plastics to be 1 to 2 points above our typical rigid packaging space. And I would say, most recently, we were over what I call a case show, which is a 3 year, once every 3 year show in Europe around sort of the whole plastics business. And I would say, the environment was upbeat and encouraging. And I'd say, even in the biaxial film area, we're starting to see customers talk about new orders. In the interim, we've been looking at pushing the development of new products in areas beyond that biaxial film and taking advantage of a solid plastic injection market. So I'd say we've got a little bit of phasing from an investment standpoint, but ultimately long-term demand is going to be better than our core adhesives business. Liam D. Burke: Great. And you touched on local manufacturing in ATS to address the lower to midtier market in China. Could you step back and give us where you are in the different businesses on the tiering strategy you have? Michael F. Hilton: Yes. I would say, we're probably in the seventh -- sixth or seventh year in our Adhesives business. It's been very successful for us in terms of capturing a part of the market that was growing. As well as some of that end market and consolidating and moving up to the more fully featured top-of-the-line products. So that's been a very successful strategy for us. I'd say in the Coatings business, we're probably in the year 2 to 3 -- year 2 and 3 in that business and we've gotten some good traction on our products that have been tailored, particularly for markets in Asia and in that case more tailored towards China. I'd say, in the electronics space, we have not yet launched that sort of tiered product and that's really the part of the reason that we're building out the capability that we have been building out in Xuzhou as to enable us to do that. But it's also to allow us to be more responsive to the customers that we already have there. So I think 2014 is a year where we'll be launching sort of the midtier products and would expect to get some traction on those by the end of the year.

And our next question comes from the line of Christopher Glynn from Oppenheimer.

So backlog looked pretty good and suggests that the revenue guidance may be conservative for the first quarter. I'm wondering if there's a mix shift to longer lead time business or other thoughts on how to translate backlog to 1Q revenues? Michael F. Hilton: Yes. I'd make a couple of comments. There's a little bit of that in there in terms of particularly in the polymer side, where there's some longer lead items. I would say also, if you look at the order rates are solid and encouraging. Our organic backlog is actually down slightly from where it was last year, so that factors in. And I'd also say that we've had some larger systems sort of pushed to the second quarter in terms of customer delivery dates. We always have some of that movement quarter-to-quarter, but I'd say there has been some a few larger orders that got pushed out that might total $4 million or $5 million of impact. So that's kind of a combination that's sort of affecting our guidance for the first quarter.

Okay. And then in terms of 1Q EPS, it's about flat year-over-year at the midpoint. I'm wondering, could you offer for high-level thoughts on prospects for full year EPS growth or any comments on magnitude potential there? Michael F. Hilton: Yes. I would say -- let's start with what do you think the macro is going to look like for the full year. I think, coming into this year, most people were saying that the global GDP was going to be 3 plus. And really as we've seen it play out, it's going to be 2 minus. And that's sort of our fiscal year. And I think, the particular surprise in all that was softness in emerging markets. I mean, still growth but not near where they were historically. If you look at the kind of consensus now, we typically hone in on IHS global insight, they're projecting 2014 to be in the 2.9% range, pretty close to 3%, with improvement in the U.S. and Europe and some improvement in emerging markets. And that will be a fairly robust scenario for us and if that plays out, we should see the volume come back. And I think, the fact that we're starting to see systems orders come back, in particular, is encouraging. And I think, as you know, we've got pretty significant leverage from a volume perspective, incremental margins tend to run from maybe a low 30% to a high of 60-plus percent. I think, Greg made some comments just on the sequential basis. So if we see that volume come through, I think, we would expect a nice uptick in performance. Of course, we've stood here last year and said the same thing and we didn't see that materialize, I think, people are a little bit more encouraged, I think, this year that the headwinds aren't there, but it's not it's still a little uncertain in the short-term.

Okay. And I'll just close with a housekeeping item. What did you just say for the first quarter tax rate? Gregory A. Thaxton: Yes, about 30%.

Our next question comes from the line of Mark Douglass of Longbow Research.

Looking at the orders improved massively sequentially, would you say that the sign -- the broader electronic space turning or is related to more isolated near-term projects? Michael F. Hilton: Okay, Mark, you were a little garbled there, so I'm not quite -- you're asking something about the electronics orders and I didn't quite catch it, you are a little garbled. Could you repeat that?

Sure. The orders improved sequentially pretty massively, is that a sign of a broader electronic space turning positive or is this still little choppy environment, maybe due to [indiscernible] near-term projects? Michael F. Hilton: Yes, I would say it's still in the category of little choppy. I think, if you look at what sort of the industry pundits said going into last year, they expect that actually the year to turn midyear and ultimately be modestly positive. We haven't really seen that play out in a broad way yet. Their forecasts for the next 2 years is significantly positive, so read that as kind of high single digits to double digits. That would be a nice upside for us. I'd say, we're seeing some signs here and there of an incremental order in the more traditional space basis. But we haven't really seen that turn in a big way yet.

Okay. Looking at the Adhesives organic growth, they're running pretty flat a little bit positive last few years. Is that really just a digestion period after really strong recovery in 2010 and '11? Do you anticipate, there's going to be hope of a little better pickup here in '14? Michael F. Hilton: Yes. I think, we do anticipate '14 to be better. I would say, we were really a little surprised this year that it didn't take off, even in a slower environment, little bit more. And I think, as we mentioned on a couple of calls earlier, what we saw is from a consumer nondurable standpoint, in particular in the food and beverage space, very modest consumption, in the first part of the year was actually down on an actual consumption basis and the second part of the year was up very modestly. And that, I think, has really factored in general the level of consumption on the consumer nondurable's piece. It didn't really tick up with the global GDP as it would typically do, and we really didn't see the growth investments coming through. And I'd also say, given the uncertainty, some of the projects that we had in place that were sort of enhancements, so technology-driven enhancements for our customers to improve cost or productivity or throughput didn't come through at the rate, we would have expected. I think, that's really more about uncertainty in the global recovery. So I think, as we see a little more clarity on the global recovery, in particular, a bounce back in the emerging markets and U.S. and European on better footing, we have see both of those things coming through. But I think, that's probably one thing that surprised us a little bit was that sort of food and beverage in particular actual consumption being flattish to down for the year.

Okay. That's helpful. Last question is you mentioned a new products are working on, sounds like that they're not talking about what they are exactly, but can you say in what segment we're talking about? And are they brand-new or were they are from some sample based on some legacy products. Michael F. Hilton: Right, so the one we talk about specifically where we called out a significant investment of -- on the order of $1 million a quarter was really in the electronics space. We haven't said too much more about what it does, but it would be something that is new and it wouldn't cannibalize anything else. So it's incremental demand. The way we try to characterize is over the next few years, if it gains traction, it'll be tens of millions of dollars of incremental revenue. But we've also said, it's something new. And whether or not it gets adopted is not a slam dunk. I would say where we're at is that we passed the technical hurdles with -- that were sort of set forth by key customers that are interested in this technology. And as we have mentioned, we've got prototypes out there that they're sampling with good feedback. Now it's a question of market adoption by these critical customers relative to other alternatives they might have. But it's been certainly encouraging at this point in time.

Our next question comes from the line of Jason Ursaner of CJS Securities.

In the tech segment, the weakness you saw during the quarter from the semiconductor back end, was this mainly from the OSATs in terms of excess capacity utilization? And when you're looking at it, is it mainly a demand issue, timing or is it part of the issue you previously talked about with the form factor of new devices not necessarily requiring new or upgraded equipment? Michael F. Hilton: Yes. I would say, if you look at it, there's an element of timing on a year-over-year basis. And I think, we mentioned this in the last quarter, where we saw fairly strong demand throughout the third quarter and into the fourth quarter in the mobile space based on kind of timing of launches. And so, I'd say, we saw that sort of impact this quarter as well because things, as we said, have kind of flattened out. So there's a mobile element of that. I would say that, while you've got normal growth on things like smartphone and tablets, when the supplemental growth that we see that comes from sort of features and form factors hasn't been as robust most recently as we might have seen of a similar period last year. So I think, that's been a factor. And then, everybody anticipated that the -- so traditional back end would step up in the second half of the year. We really haven't seen that yet. I mean, we've seen some orders here and there, but not a consistent trends. So it's been a combination.

Okay. And looking at guidance for Q1, yes, just given the length of time left in the quarter, the backlog you have and the commentary on lead times from system orders picking up, it looks like a relatively wide range for the organic volume trends. So at this point, I guess, what would you say is the most significant factors that would drive you to the higher or lower end of that negative 1% to positive 3% range? Michael F. Hilton: Yes. I think in the short-term, it can be a couple of orders that get completed and out in quarter. And can quite frankly be in the a couple of big orders can be enough to drive that. We're -- you given sort of our best estimate based on sort of the backlog and the current order trends, but some of the bigger projects that we have if they slip or if they come forward can have an impact there, and that's really what's kind of determining at the margin, the range that we're looking at. Gregory A. Thaxton: And Jason, I would add, in some of our more standard products, even the standard systems, the pace of orders as we get through the holidays here and get into the first part of the new year could have an impact as well. Michael F. Hilton: We've got a number -- we had many of our segments where they shut down over the Christmas holidays and things like that. So that can have an impact. So we've given you sort of our best judgment here.

Okay. And in terms of the orders that you did see, the pickup kind of towards the latter part of the 12 week period, is that mostly end of your spending against capital budgets? And how good a read-through do you see that for next year given the capital budgets kind of still need to be set and your customers and you sometimes ship pause earlier in year 2. Those levels get kind of more set? Michael F. Hilton: Yes. I would say the orders are pretty widespread and I would say it's not -- there's a little bit probably of that sort of complete this year's capital budget, but I wouldn't say that's the overriding mix of the orders that we see in place. It's I'd say encouraging in a lot of different ways. And I'd say, as Greg mentioned, the period that we sometimes have a hard time judging is just sort of end the year holiday period to what extent the folks slow things down and how quickly they pick up in the new year. But I would say it's not primarily a capital budgeting situation. There again -- there's a little bit of that, particularly in our Coating business, but that's not that driving force, I don't think. Gregory A. Thaxton: Jason, this is Greg. I'd add, we're going to have that element every year, or so as we read kind of the order trends, the order trends by segment, by product line, there was really nothing unusual in this period to say that it was driven by a capital cycle or a customer's capital cycle.

Our next question comes from the line of Matt Summerville of KeyBanc. Matt J. Summerville: A couple of questions. First, with Adhesive Dispensing, I think last quarter you mentioned orders were up 6%, this quarter volume is down 5%. I guess and I know some of this probably is seasonality. But beyond that, are you -- I guess why aren't you seeing more follow-through in volume in Adhesive yet? Michael F. Hilton: Yes, Matt. So I would say there's obviously like all the businesses at an element of seasonality. And I think, it would comes back to the 2 things I mentioned earlier. If you look at sort of the consumer nondurable space in general and food and beverage in particular, this has not been a robust year globally. It's been relatively weak in the emerging markets and it hasn't been as robust as we might have anticipated in the developed markets. And so when actual consumption is flat plus or minus, people are investing in the system side of the business, and that's what we've seen is. In particular, the hits been around the system side of the business. And then I'd say the second thing that we've got a lots of opportunity bring technology to bear, to create a nice value proposition for customers and kind of the things that we've talked about in the past around recapitalization and we think customer's holding off given the uncertainty. If you think of a period they went through here in the U.S. with all the discussion around the budget and the debt ceiling and that nonsense that was going on, that just had people holding off. And I think, if you look to Europe, other than Germany, things are not back on track yet. And so, I think, it's really been that investment piece in systems that got pushed out. And particularly, in bigger systems, like Greg talked about hygiene related products, they tend to be more costly, bigger systems and we have seen some softness there, for example. Gregory A. Thaxton: And Matt, maybe a little more specific, at the detail level, you talk about the 6% order rate growth last quarter. We did deliver 3% volume growth this quarter. And as we mentioned, not that we've incorporated some of these acquired product lines, they tend to have longer lead times. There is an aspect there as well in terms of the order rate growth versus what gets recognized in revenue in that particular quarter. Michael F. Hilton: Yes. So we would expect, I think in '14, if we see the underlying consumption to go up to see some pickup in investment. Matt J. Summerville: If we just stick with the uses, where are you most optimistic about the business if we sort of look at it in a couple of buckets, whether it be rigid, plastic, nonwoven, product assembly, where do you see a disproportionately better strength in '14? Michael F. Hilton: Well, I would say, if you look at the year, packaging in general, rigid packaging was pretty soft for most of the year, started picking up at the tail end. So I think, we're hopeful that's going to continue to trend in 2014. I would say in general for the year, the whole hygiene business has been relatively soft and I think that's another opportunity to see pickup. The product assembly has been more sporadic, a good quarter, a bad quarter, relatively speaking. But that's like more towards consumer durable and construction activity and there's some signs of hope there. I think on the long-run, the plastic pieces is going to be good. In the short run, the new products will get traction for us and I think, probably more towards the second half of next year. We should see some of the same stuff stepping up, so I think that's probably a later year phenomena on that film piece. But the new products are getting traction now so encouraged by that. So I think, after this past year being pretty sluggish in general and quite frankly, the prior year not being as robust as we would've expected, in general, we're encouraged with that business should step up this year and we should see some new investment there. Now again, we kind of anticipated this past year, when we thought global GDP was going to be 3 plus. So if the GDP aspect is struggle again this year, we'll be impacted. But if it gets back on a better track, which most people anticipate, we should see that play out. Matt J. Summerville: And then just another quick one here. Within the Advanced Tech segment, I saw that a peer of yours is launching something that they refer to as the thermal compression flip chip bonder. Is that something that would compete with your technology? Michael F. Hilton: So there are technologies today which are pre-applied sort of bonded underfills that compete and depending on the sophistication of the application, it could be used. Quite frankly, I'd have to check on this specific application to see if that's one of the sort of traditional pre-applied. I think, we still see good growth opportunity and penetration and the approach that we have given the sophistication of the chips, the size and sophistication of the chips, as well as the stacking aspect. So in general, I don't think we see a big risk or concern there from sort of the pre-molded type of underfill. Now this particular technology referred to, I'd have to go back to our team and understand what that is, because I'm not as familiar with that. Matt J. Summerville: Got it. And then just Greg, real quick, your pension expense was what for the year '13 and what you expect it to be in '14? Gregory A. Thaxton: Yes. We expect it to be about $5 million lower in '14 than it was in '13. Our global pension expense was about $25 million. So we see that moderating back to about $20 million.

Our next question comes from the line of Greg Halter from Great Lakes Review. Gregory W. Halter: Just wondered if you could elaborate on your plans on the capital deployment side relative to dividends, share repurchase and then your outlook on M&A? Michael F. Hilton: Yes. So from a dividend perspective, I think, our base plan is continue to increase dividends and continue the trend that we've had that I think its top 50 years now. I think, we've talked in the past for a long-term goal to get into the payout ratio in the sort of 20% plus range, and we get pretty close to that. I think from a share repurchase standpoint, the #1 goal is to offset dilution and that varies from year-to-year, but it's sort of a $30 million kind of plus number, plus or minus. And so that would be sort of second, so dividends and share repurchase. And say from an acquisition standpoint, we have a pretty robust pipeline, but we've got, quite frankly, a lot of work in the digestion and integration of the things that we've acquired and that's primarily #1 focus is to complete those integrations, deliver on the synergies that we see there and, quite frankly, on the long run, we see more synergies than we anticipated. And then, your future acquisitions, I mean obviously, there are always opportunistic and if something came through that met 1 of the 4 platforms that we're interested in, we would certainly consider that. But I'd say, this year is likely to see more tuck-in type of opportunities like this small stopcock line that we brought into our medical space at the tail end of this year. And then I think on share repurchase, beyond the offsetting dilution, we've been pretty opportunistic in the past. We have a program, $200 million program, that's open that we utilize in a way, hopefully, that's opportunistic. So that's kind of the priorities. I don't think that's really change from where we're at. We may see less investment in acquisitions in the near-term. Gregory W. Halter: And I don't know if I heard or if you gave that, how many shares were repurchased in fiscal '13? Michael F. Hilton: I think, we said about $30 million worth, I don't remember, I don't know what the.. Gregory A. Thaxton: They are pretty modest number of shares in '13. If you went back over the course of the last, say, 2.5 years or so, we probably bought back closer to say 8% of outstanding shares.

Our next question comes from the line of John Franzreb of Sidoti.

A couple of quick ones. European orders were down 3% year-over-year after a couple of good quarters of growth. What markets are responsible for the drop in volume there? Michael F. Hilton: I think, if you look at it, it's fallen in, I think, primarily into our Adhesive area, some of that's traditional adhesive, some of that is sort of I think in our plastics area, OEM related plastics piece. So I think, that's primarily where we saw in the current quarter. That said, on the plastic space, I would say the move from the OEM group, which is in the plastics area, there's a lot of critical OEMs within Europe, largely in Germany and Austria, it was pretty upbeat in terms of opportunities going forward. Now some of those are longer lead time, kind of items as Greg has talked about. But I would say, that was more encouraging at the case show.

Mike, did you say that the large systems orders recovering in the plastics business x biaxial or is that not the case? Michael F. Hilton: No. I'd say in the -- that there are particularly in the areas where we the companies we bought were didn't have sort of a good presence in some of the other film related products that were outside of biax, we introduced new technology and we're getting good traction there, so those are I'd say encouraging. And we had some new technology across the board that we are introducing this year that I think, will gain some traction there. And what I was saying is that the case show and through discussions with OEMs, we're starting to see projects on the list for Biax film. Now they are longer lead time and probably start to have an impact more towards the end of next year and into '15, but that was certainly encouraging after probably 2 years of relative softness. And then I would say, the injection molding side has been pretty strong, not quite the same kinds of investment versus demand issue that we've seen. So that helps sort of accelerate our business and our Kreyenborg business. And I would say, one of the businesses that we acquired as part of Kreyenborg, BKG , was the BKG business which is in the pelletizing business, which support the sort of front end of the plastic pellets and adhesive pellets manufacturing. And that's been fairly robust and continues to be pretty robust. Those are also bigger long lead projects, but that's certainly an encouraging sign.

Okay. In your prepared remarks, forgive me if I don't recall that you said it, but you mentioned a facility consolidation initiatives. It's been sometime since I've seen any restructuring related to facility consolidations. Could you just elaborate on that point and the timeline of those initiatives and just talk about that a little bit? Michael F. Hilton: Yes. So I'd say if you look at this past year, the whole sort of move to Asia for Xuzhou, there's an element in one of the product lines of the facility consolidation. So we're in effect the shutdown now one facility in the U.S. I'd say, if you look at everything that we are doing around our EFD and medical device business, there's some opportunity for a smart way to support growth that also involves some consolidation and we're working through that now, and that's something we'll do this year. And then I would say, one of the things that has come with all of the acquisitions, particularly in the plastic space, is a lot of capability and we need to figure out how to optimize that, not only within the plastic space, but also with our sort of core adhesive business. That's probably not a 2014 kind of thing, but that's something that we've looked at beyond that. So we've got a variety of things that we're looking at, one of which probably hits in 2014 and the others are probably be beyond that. But there's an opportunity to optimize. Gregory A. Thaxton: And we're still finishing up some transaction associated with some of the restructuring we've done over the last year or 2. As Mike mentioned, within the Advanced Technology space, we've vacated 2 U.S. smaller operations and consolidated into 1 facility. We still have a facility in Georgia within adhesive space that we'll be looking to sell in 2014. So we're still wrapping up some transactions associated with some activities that we've completed in the last year. Michael F. Hilton: Yes, there's nothing in that last facility from an operation standpoint, it's just ready for sale.

Got it, got it. I know it's not as a big of discussion as it was in years past, but I couldn't help thinking of you, when they abolished the 1 child rule in China and the whole potential in the diaper business, so could you refresh me on how.... Michael F. Hilton: It's still a big opportunity, John. If you look at the penetration there, still probably only around 30% in terms of amenable market. And over the next 5 years, we think that moves to 60%. So we do see that as a nice growth opportunity for that business. I would say there's been heavy investment over the last 2 to 3 years to kind of support that transition, but I would expect over the next several years to see that continue to support that penetration. And the other thing that we're seeing there is a move more quickly to the more fully featured kind of products that are popular in the West.

We have a follow-up question from Charlie Brady of BMO Capital Markets. Charles D. Brady: Just want to go back on the orders perspective on the 12 week order rate, I know, it's a pro forma for the acquisition, but could we just -- if you strip that out, can you give us a sense of what that existing base business is kind of doing, and particularly in Adhesives without the Kreyenborg acquisition? I'm just trying to understand the order pattern on the base level of the existing business before that dealer rolled in. Michael F. Hilton: I would say it's pretty similar to the number you're seeing there. Charles D. Brady: Okay. Thanks. Okay. Thank you everybody for participating. I'll be around later today if you want to send me an e-mail or call me if I had to take additional questions and happy holidays to everyone, if we don't talk to you. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Have a great day, everyone.