8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 27, 2004

NASHUA CORPORATION

(Exact name of registrant as specified in its charter)

Massachusetts
(State or other jurisdiction
of incorporation) 1-05492
(Commission File Number) 02-0170100
(IRS Employer
Identification No.)

11 Trafalgar Square, 2nd Floor
Nashua, New Hampshire 03063
(Address of principal executive offices and zip code)

(603)880-2323
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1 Press Release Dated October 27, 2004

Item 2.02 — Results of Operations and Financial Condition

     On October 27, 2004, Nashua Corporation announced its financial results for the third quarter ended October 1, 2004. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

     The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 — Financial Statements and Exhibits

(c)     Exhibits

          The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

Exhibit Number	Description
99.1	Press Release dated October 27, 2004

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		NASHUA CORPORATION
Date: October 28, 2004	By	/s/ John L. Patenaude
		John L. Patenaude           Vice President-Finance, Chief           Financial Officer and Treasurer

EX-99.1

Exhibit 99.1

Contact: Andy Albert/John Patenaude
Nashua Corporation
847-318-1710/603-880-2145 Rich Coyle
Citigate Sard Verbinnen
212-687-8080

NASHUA REPORTS THIRD QUARTER 2004 RESULTS

     NASHUA, N.H., October 27, 2004 — Nashua Corporation (NYSE: NSH), a manufacturer and marketer of labels, thermal specialty papers and imaging products, today announced financial results for the third quarter ended October 1, 2004.

     Net sales for the third quarter of 2004 were $72.1 million, compared to $74.1 million for the third quarter of 2003. Gross margin for the third quarter of 2004 was $13.8 million, or 19.1%, compared to $14.0 million, or 18.9%, reported for the third quarter of 2003. Pre tax income for the third quarter of 2004 was $2.7 million compared to $1.2 million for the third quarter of 2003. The results for the third quarter of 2004 include a non-cash pre tax gain of $0.9 million related to the previously announced transfer of retiree death benefits to Minnesota Life, interest income of $0.3 million related to interest due from the Internal Revenue Service on a 1993 interest issue, and an expense of $0.2 million in connection with cash compensation to the Company’s directors in lieu of stock options. Net income for the third quarter of 2004 was $1.7 million, or $0.28 per share, compared to $0.7 million or $0.12 per share in the third quarter of 2003. Earnings before interest, taxes, depreciation and amortization, also known as, and hereinafter referred to as EBITDA, was $4.7 million for the third quarter of 2004, compared to $3.5 million for the third quarter of 2003.

     For the nine months ended October 1, 2004, net sales were $216.0 million, compared to $213.7 million for the first nine months of 2003. Gross margin for the first nine months of 2004 was $41.3 million, or 19.1%, compared to $40.0 million, or 18.7%, for the first nine months of 2003. Pre tax income for the first nine months of 2004 was $5.7 million, compared to $1.7 million for the first nine months of 2003. Net income was $3.5 million, or $0.59 per share, for the first nine months of 2004, compared to $1.0 million, or $0.17 per share, for the first nine months of 2003. EBITDA was $12.3 million for the first nine months of 2004, compared to $8.5 million for the same period in 2003.

     Commenting on the third quarter performance, Andrew Albert, Chairman, President and Chief Executive Officer of Nashua Corporation said, “Our business continues to operate well overall, and I’m pleased that Nashua again has generated healthy increases in both pre tax and net income. Sales efforts remained focused on pursuing higher margin business, overall margins increased, and the effectiveness of our ongoing cost containment initiatives resulted in improvements on the bottom line.

     “As we move into the fourth quarter, we are continuing our focus on delivering high quality and value added products to our customers. At the same time, we are following through on our strategy to deliver profitable growth by operating with a disciplined approach to our business that encompasses pursuing higher-margin opportunities on one hand, while concentrating on cost containment initiatives on the other. As the third quarter demonstrated, we continue to opportunistically address legacy issues in a manner that benefits Nashua financially and invest in technology and equipment to lower our cost structure and enhance customer relationships,” Albert said.

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Business Segment Highlights

     Nashua’s Label segment, which prints and converts product for the grocery, food service, retail, transportation, entertainment, and general industrial markets, reported net sales for the third quarter of 2004 of $25.9 million, gross margin was $5.0 million, or 19.3%, and pre tax income was $2.1 million. Net sales for the third quarter of 2003 were $25.6 million, gross margin was $4.4 million, or 17.2%, and pre tax income was $1.5 million.

     “Sales in our Label Products segment were slightly higher in the third quarter of 2004 as compared to the third quarter of 2003. Our margins increased significantly — by 2.1 percentage points — driven in part by improved manufacturing performance,” said Albert. “The enhanced performance continues to be fueled by our investments in equipment, together with contributions from new thermal paper products developed by Nashua’s Specialty Coated operation. Investments in technology that improve our service and support capabilities have been well received by customers, and we believe are giving Nashua a competitive advantage. We expect to continue to make investments that will enhance our productivity, profitability and response capabilities. Label Products has driven its positive 2004 results by focusing on sales that provide reasonable margins, product development, and a lower cost structure.”

     During the third quarter of 2004, Label Products committed to purchase insertion equipment for Radio Frequency Identification, or RFID, inlets, which is scheduled for delivery by the end of the year. The largest part of Nashua’s Label Products segment is the automatic identification market for the distribution and logistics industries. RFID is the anticipated progression of bar coding due to its broad product and inventory applications. Nashua has committed personnel and capital to develop RFID offerings to prepare for what we perceive to be a significant market opportunity.

     The Company’s Specialty Paper segment, which includes Nashua’s paper coating and converting businesses, reported net sales in the third quarter of 2004 of $41.7 million, compared to $44.4 million in the third quarter of 2003. Gross margin for the third quarter of 2004 was $7.7 million, or 18.5% compared to $8.6 million, or 19.3%, for the third quarter of 2003. Pre tax income for the third quarter of 2004 was $1.6 million, compared to $1.5 million in the third quarter of 2003.

     “A disciplined approach to cost containment resulted in a profitable quarter for the Specialty Paper segment, which experienced a decline in both sales and margins,” said Albert. “The sales decrease resulted mainly from the absence of revenues from the cut sheet paper and transparencies distribution business (which was sold in 2003), from the decline in sales of mature dry gum and heat seal products, and from the temporary loss of a major retail customer whose business has now returned to Nashua. These declines were partially offset by an increase in sales of wide format products used in architectural and engineering services, and growth in our higher margin financial and fraud prevention products.

     “Margins were negatively impacted by reduced production volume in our Coated operations and by the Converted operations’ difficulty in passing along paper mill price increases to customers,” stated Albert. “The segment’s profitability was improved as a result of reduced manufacturing and operating cost structure, which offset the sales and volume decline. Increased thermal coating volume, passing along price increases to customers, and constantly improving our cost structure — while continuing to emphasize value added products — remain the segment’s key objectives.”

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     Nashua’s Imaging Supplies, or Toner, segment reported net sales of $5.5 million for the third quarter of 2004 compared to $5.4 million in the third quarter of 2003. Gross margin for the third quarter of 2004 was $1.1 million, or 19.3%, compared to $1.1 million, or 19.4%, for the third quarter of 2003. Pre tax income in the third quarter of 2004 was $28,000, compared to $92,000 in the third quarter of 2003.

     “Toner’s performance for the third quarter of 2004 remained essentially unchanged from the third quarter of 2003,” said Albert. “While sales were slightly higher than the same period last year, margins were flat due to increased manufacturing costs, partially driven by material price increases and electricity cost. While slightly profitable for the third quarter, contributions from new product introductions were offset by lower sales of high-speed Xerox-compatible toners.”

Guidance

     In discussing the outlook for the remainder of 2004, Albert said, “If we achieve anticipated annual sales in the range between $287 million and $295 million, we expect net income for the fiscal year 2004 to be between $4.0 million, or $0.67 per share, and $4.4 million, or $0.73 per share. The above guidance does not include any potential valuation impact to the Company’s tax assets associated with the recent enactment of the tax law which creates a domestic manufacturing deduction, any further resolution of legacy issues, or further cost containment measures.”

Use of Non-GAAP Measures

     EBITDA is presented as supplemental information that management of Nashua believes may be useful to some investors in evaluating the Company because it is widely used as a measure of evaluating a company’s operating performance, as well as to evaluate its operating cash flow. EBITDA is used by management in the computation of ratios utilized for financing purposes and for planning and forecasting in future periods. EBITDA is calculated by adding net interest expense, income tax expense, depreciation and amortization back into net income. EBITDA should not be considered a substitute either for net income, as an indicator of Nashua’s operating performance, or for cash flow, as a measure of Nashua’s liquidity. In addition, because all companies may not calculate EBITDA in exactly the same manner, the presentation here may not be comparable to other similarly titled measures of other companies.

About Nashua

     Nashua Corporation manufactures and markets a wide variety of specialty imaging products and services to industrial and commercial customers to meet various print application needs. The Company’s products include thermal coated papers, pressure-sensitive labels, copier papers, bond, point of sale, ATM and wide format papers, entertainment tickets, as well as toners, developers, and ribbons for use in imaging devices. Additional information about Nashua Corporation can be found at www.nashua.com.

Forward-looking Statements

     This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including earnings, revenue and profitability projections. When used in this press release, the words “should,” “will,” “anticipates,” “predict” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to, the Company’s future capital needs and resources,

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fluctuations in customer demand, intensity of competition from other vendors, timing and acceptance of new product introductions, delays or difficulties in programs designed to increase sales and profitability, general economic and industry conditions, the settlement of various tax issues, the resolution of certain litigation matters and other risks set forth in the Company’s filings with the Securities and Exchange Commission, and the information set forth herein should be read in light of such risks. In addition, any forward-looking statements represent the Company’s estimates only as of the date of this press release and should not be relied upon as representing the Company’s estimates as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so, even if its estimates change.

Third Quarter 2004 Earnings Results

NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS

Periods ended October 1 and September 26, respectively	Three Months						Nine Months
In thousands, except per share amounts (Unaudited)	2004			2003			2004			2003
Net sales	$	72,120		$	74,075		$	215,977		$	213,699
Cost of products sold		58,340			60,051			174,639			173,656
Gross margin	$	13,780		$	14,024		$	41,338		$	40,043
Gross margin %		19.1	%		18.9	%		19.1	%		18.7	%
Selling, distribution and administrative expenses		11,319			11,792			33,858			35,287
Research		526			563			1,582			1,879
Loss from equity investment		117			164			416			304
Interest expense, net 1		28			339			660			968
Net gain on settlement/curtailment of post-retirement plans 2		(923	)		—			(923	)		(47	)
Income before income taxes		2,713			1,166			5,745			1,652
Income tax provision		1,044			469			2,204			661
Net income	$	1,669		$	697		$	3,541		$	991
Basic earnings per share:
Net income per common share	$	0.28		$	0.12		$	0.59		$	0.17
Average common shares		6,027			5,888			5,995			5,859
Diluted earnings per share:
Net income per common share assuming dilution	$	0.27		$	0.12		$	0.58		$	0.17
Average common and potential common shares		6,146			6,020			6,109			5,994

¹ Net interest expense for the three and nine months ended October 1, 2004 includes interest income of $300,000 related to interest due from the Internal Revenue Service on a 1993 interest issue resolved in favor of Nashua.

² Net gain on settlement/curtailment of post-retirement plans for the three and nine months ended October 1, 2004 of $923,000 represents a one-time, non-cash pretax gain representing the difference between the removal of the retiree death benefit liability and the premium paid to Minnesota Life to assume the liability.

Third Quarter 2004 Earnings Results

NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET

	(Unaudited)
	October 1			December 31
Dollars in thousands	2004			2003
Assets
Cash and cash equivalents	$	1,219		$	1,183
Accounts receivable		35,507			31,665
Inventories		26,245			22,735
Other current assets		5,248			5,205
Total current assets		68,219			60,788
Plant and equipment, net		38,846			40,777
Goodwill, net of amortization		31,516			31,471
Intangibles, net of amortization		1,585			1,781
Other assets		13,029			16,859
Total assets	$	153,195		$	151,676
Liabilities and Shareholders’ Equity
Accounts payable	$	19,100		$	20,474
Accrued expenses		12,117			14,368
Current maturities of long-term debt		3,400			3,400
Current maturities of notes payable		710			250
Total current liabilities		35,327			38,492
Long-term debt		27,650			24,200
Notes payable		250			960
Other long-term liabilities		24,188			26,827
Total long-term liabilities		52,088			51,987
Common stock and additional capital		21,460			20,418
Retained earnings		57,018			53,477
Accumulated other comprehensive loss:
Minimum pension liability adjustment a		(12,698	)		(12,698	)
Total shareholders’ equity		65,780			61,197
Total liabilities and shareholders’ equity	$	153,195		$	151,676

^a Our minimum pension liability adjustment represents an increase in our minimum pension liability resulting from a decline in the fair market values of equities held by company-sponsored pension plans.

Third Quarter 2004 Earnings Results

NASHUA CORPORATION
RECONCILIATION OF NET INCOME TO EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION

Periods ended October 1 and September 26, respectively	Three Months				Nine Months
In thousands (Unaudited)	2004		2003		2004		2003
Net income	$	1,669	$	697	$	3,541	$	991
Add back:
Interest expense, net		28		339		660		968
Income tax provision		1,044		469		2,204		661
Depreciation on fixed assets		1,885		1,885		5,558		5,565
Amortization of intangible assets		112		117		328		359
Earnings before interest, taxes, depreciation and amortization	$	4,738	$	3,507	$	12,291	$	8,544

Third Quarter 2004 Earnings Results

NASHUA CORPORATION SELECTED FINANCIAL DATA

Periods ended October 1 and September 26, respectively	Three Months						Nine Months
Dollars in thousands (Unaudited)	2004			2003			2004			2003
NET SALES
Label Products	$	25,903		$	25,639		$	77,668		$	74,721
Specialty Paper Products		41,689			44,423			124,094			126,063
Imaging Supplies		5,491			5,423		$	17,663			17,107
Reconciling Items:
Eliminations		(963	)		(1,410	)		(3,448	)		(4,194	)
Other(a)		—			—			—			2
Net sales	$	72,120		$	74,075		$	215,977		$	213,699
PRETAX INCOME
Label Products	$	2,057		$	1,544		$	5,978		$	4,119
Specialty Paper Products		1,646			1,514			5,013			3,807
Imaging Supplies		28			92			45			74
Reconciling Items:
Other income (loss) a		(2	)		(1	)		(23	)		(2	)
Unallocated corporate expenses		(1,911	)		(1,644	)		(5,531	)		(5,425	)
Interest expense, net		(28	)		(339	)		(660	)		(968	)
Net gain on settlement/curtailment of post-retirement plans		923			—			923			47
Total pretax income	$	2,713		$	1,166		$	5,745		$	1,652
DEPRECIATION AND AMORTIZATION
Label Products	$	645		$	581		$	1,883		$	1,768
Specialty Paper Products		923			974			2,704			2,846
Imaging Supplies		328			340			1,005			1,038
Reconciling Item:
Corporate		101			107			294			272
Total Depreciation and Amortization	$	1,997		$	2,002		$	5,886		$	5,924
INVESTMENT IN PLANT AND EQUIPMENT
Label Products	$	750		$	338		$	1,368		$	1,573
Specialty Paper Products		958			368			1,870			861
Imaging Supplies		117			114			252			277
Reconciling Item:
Corporate		56			174			188			574
Total Investment in plant and equipment	$	1,881		$	994		$	3,678		$	3,285

^a Represents other operating activity which falls below the quantitative threshold for a reportable segment.