-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sNmbQ5L7P6EFETTUEWjdGcP5u9ksEP/LIuJwcuIsmqWJeve7GZ5T1nUpL8eVI6nW VULz0rblFV+C2jvTgYWyQQ== 0000950135-94-000330.txt : 19940512 0000950135-94-000330.hdr.sgml : 19940512 ACCESSION NUMBER: 0000950135-94-000330 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940401 FILED AS OF DATE: 19940509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASHUA CORP CENTRAL INDEX KEY: 0000069680 STANDARD INDUSTRIAL CLASSIFICATION: 2670 IRS NUMBER: 020170100 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05492 FILM NUMBER: 94526666 BUSINESS ADDRESS: STREET 1: 44 FRANKLIN ST STREET 2: PO BOX 2002 CITY: NASHUA STATE: NH ZIP: 03061-2002 BUSINESS PHONE: 6038802323 MAIL ADDRESS: STREET 1: 44 FRANKLIN STREET STREET 2: P.O. BOX 2002 CITY: NASHUA STATE: NH ZIP: 03061-2002 10-Q 1 NASHUA CORPORATION FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 1, 1994 ------------------------------ OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1984 For the transition period from ____________________ to ____________________ Commission file number 1-5492-1 ---------- NASHUA CORPORATION - - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 02-0170100 - - --------------------------------------- ------------------------------- (State of incorporation) (I.R.S. Employer Identification Number) 44 Franklin Street P.O. Box 2002 Nashua, New Hampshire 03061-2002 - - --------------------------------------- ------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (603) 880-2323 ---------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 3, 1994 ----------------------------- ------------------------------------------------- Common Stock, par value $1.00 6,331,330 shares (excluding 23,830 shares held in treasury)
2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ----------------------------- NASHUA CORPORATION AND SUBSIDIARIES ----------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS ------------------------------------- (In thousands)
April 1, 1994 December 31, ASSETS: (Unaudited) 1993 ------- ------------- ------------ Cash and cash equivalents $ 6,585 $ 5,883 Accounts receivable 37,079 47,657 Inventories Materials and supplies 10,867 11,793 Work in process 3,007 4,875 Finished goods 12,778 17,000 -------- -------- 26,652 33,668 Other current assets 16,739 22,573 Net current assets of discontinued operations 18,661 - -------- -------- Total current assets 105,716 109,781 -------- -------- Plant and equipment 124,516 164,742 Accumulated depreciation (58,829) (93,509) -------- -------- 65,687 71,233 Other assets 30,739 38,051 Net non-current assets of discontinued operations 13,644 - -------- -------- Total assets $215,786 $219,065 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: Notes and loans payable $ 6,350 $ 2,900 Current maturities of long-term debt 2,500 2,500 Accounts payable 28,159 29,951 Accrued expenses 39,348 48,669 Income taxes payable 273 2,033 -------- -------- Total current liabilities 76,630 86,053 Long-term debt 25,334 20,342 Other long-term liabilities 25,240 19,547 Common stock and additional capital 17,764 17,586 Retained earnings 77,575 82,166 Cumulative translation adjustment (5,972) (5,844) Treasury stock, at cost (785) (785) Commitments and contingencies -------- -------- Total liabilities and shareholders' equity $215,786 $219,065 ======== ========
The accompanying notes are an integral part of the condensed consolidated financial statements. -2- 3 NASHUA CORPORATION AND SUBSIDIARIES ----------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS --------------------------------------------------------------------- (Unaudited) ----------- (In thousands, except per share data)
Three Months Ended ------------------- (Restated) April 1, April 2, 1994 1993 -------- -------- Net sales $112,823 $116,199 Cost of products sold 86,672 87,934 Research, selling, distribution and administrative expenses 24,983 25,979 Restructuring and other unusual charges 2,600 - Interest expense 478 670 Interest income (43) (90) --------- -------- Income (loss) from continuing operations before income taxes (1,867) 1,706 Income taxes (benefit) (709) 674 --------- -------- Income (loss) from continuing operations (1,158) 1,032 Income (loss) from discontinued operations (2,295) 1,607 --------- -------- Net income (loss) (3,453) 2,639 Retained earnings, beginning of period 82,166 105,880 Dividends (1,138) (1,136) --------- -------- Retained earnings, end of period $ 77,575 $107,383 ========= ======== Earnings(loss) per common and common equivalent share: Income (loss) from continuing operations $ (.18) $ .17 Income (loss) from discontinued operations (.36) .25 --------- -------- Net income (loss) $ (.54) $ .42 ========= ======== Dividends per common share $ .18 $ .18 ========= ========
The accompanying notes are an integral part of the condensed consolidated financial statements. -3- 4 NASHUA CORPORATION AND SUBSIDIARIES ----------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- (Unaudited) -----------
(In thousands) Three Months Ended ------------------------------ April 1, 1994 April 2, 1993 ------------- ------------- Cash flows from operating activities: Net income (loss) $ (3,453) $ 2,639 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization 3,963 5,884 Net change in working capital (671) (1,161) --------- -------- Cash provided by (used in) operating activities (161) 7,362 --------- -------- Cash flows from investing activities: Investment in plant and equipment (4,810) (5,135) --------- -------- Cash used in investing activities (4,810) (5,135) --------- -------- Cash flows from financing activities: Proceeds from borrowings 9,900 8,200 Repayment of borrowings (1,458) (14,087) Dividends paid (1,138) (1,136) Proceeds and tax benefits from shares issued under stock option plans 178 42 --------- -------- Cash provided by (used in) financing activities 7,482 (6,981) --------- -------- Cash applied to activities of discontinued operations (1,792) (113) Effect of exchange rate changes on cash (17) 12 --------- -------- Increase (decrease) in cash and cash equivalents 702 (4,855) Cash and cash equivalents at beginning of period 5,883 12,212 --------- -------- Cash and cash equivalents at end of period $ 6,585 $ 7,357 ========= ======== Interest paid $ 945 $ 1,226 ========= ======== Income taxes paid $ 25 $ 614 ========= ========
The accompanying notes are an integral part of the condensed consolidated financial statements. -4- 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------------- Earnings Per Common and Common Equivalent Share ----------------------------------------------- Earnings per common and common equivalent share is computed based on the total of the weighted average number of common shares and the weighted average number of common equivalent shares outstanding during the period.
Three Months Ended -------------------- April 1, April 2, 1994 1993 -------- -------- Common shares outstanding 6,322,513 6,310,152 Common share equivalents 30,414 25,978
Stock Options ------------- At April 1, 1994 options for 484,885 shares of common stock were outstanding. Stock options for an additional 226,135 shares may be awarded under the Company's 1987 Stock Option Plan and stock options for an additional 232,000 shares may be awarded under the Company's 1993 Stock Incentive Plan. Restructuring and Other Unusual Charges --------------------------------------- As part of the first quarter, the Company recorded a $5.7 million pretax charge relating to the Company's early retirement program, of which $2.6 million was included in continuing operations. The total charge is greater than the $3.5 million previously indicated due to the higher-than-expected level of participation. In addition, as discussed below, the Company has entered into agreements to sell the thin-film disk, oxide disk and head disk assembly operations. Based on the progress-to-date, the Company continues to expect to realize annualized savings in personnel, facilities and other costs (exclusive of the oxide, diskette and thin-film manufacturing businesses) of more than $8.0 million pretax by the end of 1994. Segments -------- As part of the Company's restructuring actions, the Office Supplies and Coated Products segments were combined into a new segment, the Commercial Products Group. These two segments were combined as they share similar customers, technologies and industry risks. The remaining operation from the Computer Products Group, Precision Technologies, will be reported separately. Discontinued Operations ----------------------- In the first quarter, the Company entered into separate agreements to sell its thin-film disk operation and certain assets of its oxide disk and head disk assembly operation. As a result, the Company is classifying these businesses as discontinued operations. In the fourth quarter of 1993, the Company recorded restructuring and other unusual charges which included the write-down of the assets of these operations to their net realizable values. As such, no loss on disposal of the discontinued operations was recorded in the first quarter of 1994. The agreement to sell the net assets of the thin-film disk operation to an investor group includes the retention of a minimum of $10 million of accounts receivable upon closing, an additional contingent -5- 6 cash payment of up to $5 million based on 1994 operating results and a $5 million subordinated three year note. The oxide disk and head disk assembly operation sale of inventory and fixed assets approximates net book value. Both of these transactions are expected to close during the second quarter. The results of operations for the thin-film disk, oxide disk and head disk assembly operations have been reported separately as discontinued operations in the condensed consolidated statement of operations and are summarized as follows:
Three Months Ended ---------------------------------- (In thousands) April 1, 1994 April 2, 1993 ------------- ------------- Net sales $19,243 $ 27,832 ======= ======== Income (loss) before income taxes $(3,279) $ 2,657 Income taxes (benefit) (984) 1,050 ------- -------- Income (loss) from discontinued operations $(2,295) $ 1,607 ======= ========
Income (loss) before taxes for the three months ended April 1, 1994 includes a $3.1 million charge relating to the Company's early retirement program. The net assets of the discontinued operations in the April 1, 1994 condensed consolidated balance sheet include: (In thousands) Accounts receivable $13,996 Inventories 5,492 Deferred tax assets 5,283 Accounts payable (3,020) Accrued expenses (3,925) Other 835 ------- Net current assets of discontinued operations $18,661 ======= Plant and equipment, net $ 6,605 Deferred tax assets 6,783 Other 256 ------- Net non-current assets of discontinued operations $13,644 =======
Other ----- These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1993. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position as of April 1, 1994, the results of operations for the three-month periods ended April 1, 1994 and April 2, 1993, and cash flows for the three-month periods ended April 1, 1994 and April 2, 1993. -6- 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- Net sales of $112.8 million for the first quarter of 1994 decreased 2.9 percent due to lower revenues in all groups. In the first quarter of 1994, a loss from continuing operations of $1.2 million was incurred compared with income from continuing operations of $1.0 million in the first quarter of 1993. The loss was in part due to a $2.6 million pretax charge relating to the Company's early retirement program and a $.9 million pretax charge relating to costs incurred on a potential acquisition of a non-U.S. photofinishing business. The Commercial Products Group's first quarter sales decreased 2.2 percent to $78.1 million compared to the first quarter of 1993, primarily attributable to lower diskette and copier paper volume. The lower volumes were partially offset by higher sales of duct tape and facsimile paper and the inclusion of sales by Nashua Express which was acquired in July 1993. The group had an operating loss of $2.4 million in 1994 compared with operating income of $.8 million for the same period last year. The loss was a result of weak Nashua Express sales, high product development and process improvement-related costs in the remanufactured laser cartridge business unit and the aforementioned $2.6 million charge relating to the early retirement program. Net sales decreased 4.5 percent in the Photofinishing Group to $31.4 million compared to the first quarter last year. Higher order volume in the U.K. was more than offset by promotional pricing and lower volume in the U.S. Operating income for the first quarter of 1994 remained essentially unchanged at $2.6 million from the first quarter last year as higher volume and improved productivity in the U.K. offset the price and volume declines in the U.S. Precision Technologies' first quarter sales declined 3.3 percent to $3.3 million compared to the same period in 1993 due to reduced sales to Nashua's thin-film disk operation, reported as part of discontinued operations. A small operating loss was incurred compared to a small operating profit in the first quarter last year due to lower prices on disk substrates. Administrative expense for the first quarter remained flat compared to the first quarter in 1993. Selling and distribution expense as a percentage of sales decreased due to lower copier paper, diskette and toner sales, which, in general, have a higher associated selling and distribution expense. Research and development expense increased 38.6 percent compared to the first quarter last year due to increased spending on remanufactured laser cartridge development programs. The estimated annual effective income tax rate of 38 percent for the first quarter of 1994 is higher than the U.S. statutory rate of 35 percent primarily due to the unfavorable impact of non-deductible goodwill. Working capital increased by $5.4 million to $29.1 million from December 31, 1993 as liabilities were funded, in part, by a $5 million increase in long-term debt. At April 1, 1994 borrowings under the $27 million revolving credit facility, which are subject to covenant restrictions, were $10 million. -7- 8 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS -------------------------- As reported in the Company's Form 8-K dated January 25, 1994, Nashua has received a final ruling with respect to the arbitration of claims associated with the Company's sale of its international office systems business to Gestetner PLC in 1990. As a result of this ruling, Nashua has paid Gestetner $1.8 million including interest. In January 1994, Nashua settled allegations in Harry E. Aine's Complaint with the United States International Trade Commission that Nashua had infringed U.S. patent RE 32,464 for an immaterial amount. In April 1994, Ricoh Company, Ltd. and Ricoh Corporation ("Ricoh") filed a Complaint with the United States District Court, District of New Hampshire, alleging Nashua's infringement of U.S. patents 4,611,730 and 4,878,603 relating to certain toner cartridges for Ricoh copiers. The Complaint seeks damages and injunctive relief. The products involved constitute an insignificant amount of Nashua's sales. The Company believes it has substantial defenses and intends to defend the action vigorously. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ----------------------------------------- (a) Exhibits None. (b) Reports on Form 8-K On January 25, 1994, the Company filed a report on Form 8-K including the Press Release issued regarding the resolution of the Office Systems business sale arbitration. On February 2, 1994, the Company filed a report on Form 8-K including the Press Release issued regarding its fourth quarter and year-end results, including the Company's restructuring plans. -8- 9 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 thereunto duly authorized. NASHUA CORPORATION ------------------------- (Registrant) Date: May 6, 1994 By: /s/ W. Luke ---------------- ----------------------- W. Luke Vice President-Finance (principal financial and duly authorized officer) -9- -----END PRIVACY-ENHANCED MESSAGE-----