-----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, j19AbZCCmWxprSvnwEy6vgiNn4d17DP/AfZ9Vld0Lp1lfvMhFePGCMN6Hj1fF1ge /mQ7FjcZiX7Vr8OlnTsOUA== 0000950135-95-000786.txt : 199507120000950135-95-000786.hdr.sgml : 19950711 ACCESSION NUMBER: 0000950135-95-000786 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950113 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950328 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASHUA CORP CENTRAL INDEX KEY: 0000069680 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 020170100 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05492 FILM NUMBER: 95523911 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 8-K/A 1 NASHUA CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 January 13, 1995 ------------------------------------------------- Date of Report (Date of earliest event reported) NASHUA CORPORATION ------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-5492-1 02-0170100 - -------------- ------------- ------------------- (State of (Commission (I.R.S. Employer incorporation) File Number) Identification No.) 44 Franklin Street P.O. Box 2002 Nashua, New Hampshire 03061-2002 --------------------------------------------------- (Address of principal executive offices) (603) 880-2323 --------------------------------------------------- (Registrant's telephone number, including area code) 2 AMENDMENT NO. 1 The undersigned registrant hereby amends the following Item 7 of its Current Report on Form 8-K dated January 13, 1995 as set forth in the pages attached hereto: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Business Acquired ----------------------------------------- (1) Report of Independent Auditors (2) Combined Balance Sheets as of March 31, 1994 and December 31, 1994 (unaudited) (3) Combined Statements of Operations for the year ended March 31, 1994 and the nine months ended December 31, 1993 and 1994 (unaudited) (4) Combined Statement of Stockholder's Equity for the year ended March 31, 1994 and the nine months ended December 31, 1994 (unaudited) (5) Combined Statements of Cash Flows for the year ended March 31, 1994 and the nine months ended December 31, 1993 and 1994 (unaudited) (6) Notes to Combined Financial Statements (b) Pro Forma Financial Information ------------------------------- (1) Unaudited Pro Forma Combined Balance Sheet of Nashua Corporation and Nexus Continental Europe and Northern Ireland Photofinishing as of December 31, 1994 (2) Unaudited Pro Forma Combined Statement of Operations of Nashua Corporation and Nexus Continental Europe and Northern Ireland Photofinishing for the year ended December 31, 1994 (3) Notes to Unaudited Pro Forma Combined Financial Statements (c) Exhibits -------- 2.1 Purchase and Sale Agreement by and among Nashua Corporation and subsidiaries and Nexus Photo Limited and subsidiaries. Exhibit to Nashua Corporation Form 8-K dated January 13, 1995, and incorporated herein by reference. 23.1 Consent of Independent Auditors 2 3 SIGNATURES Pursuant to the requirements of the Security 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: March 28, 1995 By /s/ William Luke ----------------------------- ----------------------------- William Luke Vice President-Finance and Chief Financial Officer (principal financial and duly authorized officer) 3 4 REPORT OF INDEPENDENT AUDITORS REPORT TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF NASHUA CORPORATION We have audited the combined financial statements of Nexus Continental Europe and Northern Ireland Photofinishing ("the Acquired Group", as defined in note A to the combined financial statements) for the year ended March 31, 1994. These combined financial statements are the responsibility of the management of the Acquired Group. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in accordance with the basis of preparation stated in note A to the combined financial statements, and in all material respects, the state of affairs of Nexus Continental Europe and Northern Ireland Photofinishing at March 31, 1994 and the results of operations and cash flows for the year then ended, in conformity with generally accepted accounting principles in the United States of America. Ernst & Young, Chartered Accountants Registered Auditor Southampton, England March 24, 1995 4 5 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) COMBINED BALANCE SHEETS
MARCH 31, 1994 DECEMBER 31, 1994 (AUDITED) (UNAUDITED) L000'S L000'S ------------------------------------- ASSETS Current Assets Cash 1,189 2,524 Accounts receivable 1,853 2,591 Inventories Materials and supplies 300 356 Finished goods 1,010 777 ------- ------- 1,310 1,133 Other current assets 731 248 ------- ------- 5,083 6,496 ------- ------- Plant and Equipment Buildings and improvements 747 747 Machinery and equipment 5,942 6,278 ------- ------- 6,689 7,025 Accumulated depreciation (4,855) (5,349) ------- ------- 1,834 1,676 ------- ------- Amounts due from affiliated companies 4,050 5,698 Other assets 2 2 ------- ------- Total Assets 10,969 13,872 ======= ======= LIABILITIES AND SHAREHOLDER'S EQUITY Current Liabilities Accounts payable and accrued expenses 4,893 4,002 Income taxes payable 319 1,050 ------- ------- 5,212 5,052 ------- ------- Amounts due to affiliated companies 492 1,727 ------- ------- Shareholder's Equity Common stock and additional capital 612 612 Retained earnings 4,598 6,424 Cumulative translation adjustment 55 57 ------- ------- 5,265 7,093 ------- ------- Total Liabilities and Shareholder's Equity 10,969 13,872 ======= ======= The accompanying notes are an integral part of the combined financial statements.
5 6 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED NINE MONTHS ENDED MARCH 31, DECEMBER 31, 1994 1993 1994 (AUDITED) (UNAUDITED) (UNAUDITED) L000'S L000'S L000'S ---------------------------------------------- Net sales 29,345 23,041 21,934 ------- ------- ------- Cost of products sold 16,223 12,444 11,761 Selling, distribution and administrative expenses 11,283 9,265 7,636 Other income (99) (74) (83) Interest expense 49 37 22 Interest income (230) (173) (240) ------- ------- ------- Total costs and expenses 27,226 21,499 19,096 Income from continuing operations before income taxes 2,119 1,542 2,838 Income taxes 1,044 888 1,012 ------- ------- ------- Net income 1,075 654 1,826 ======== ======= ======= The accompanying notes are an integral part of the combined financial statements.
6 7 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) COMBINED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
COMMON STOCK AND RETAINED CUMULATIVE TOTAL ADDITIONAL EARNINGS TRANSLATION SHAREHOLDER'S CAPITAL ADJUSTMENT EQUITY L000'S L000'S L000'S L000'S ------------------------------------------------------------------ Shareholder's equity as of March 31, 1993 612 3,523 - 4,135 Net income (audited) - 1,075 1,075 Exchange rate movement 55 55 ------ ------ ------ ------ Shareholder's equity as of March 31, 1994 (audited) 612 4,598 55 5,265 Net income (unaudited) - 1,826 1,826 Exchange rate movement (unaudited) 2 2 ------ ------ ------ ------ Shareholder's equity as of December 31, 1994 (unaudited) 612 6,424 57 7,093 ====== ====== ====== ====== The accompanying notes are an integral part of the combined financial statements.
7 8 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) COMBINED STATEMENTS OF CASH FLOWS
YEAR ENDED NINE MONTHS ENDED MARCH 31, DECEMBER 31, 1994 1993 1994 (AUDITED) (UNAUDITED) (UNAUDITED) L000'S L000'S L000'S ---------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income 1,075 654 1,826 Adjustments to reconcile net income to cash (used in) provided by operating activities: Depreciation and amortization 645 448 494 Change in operating assets and liabilities: Accounts receivable (527) (538) (738) Inventories (21) (395) 177 Other current assets 316 564 483 Accounts payable (1,092) (758) (891) Income taxes payable (1,215) 729 731 ------ ------ ------ Cash (used in)/provided by operating activities (819) 704 2,082 ------ ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES: Disposal of/(investment in) plant and equipment 540 212 (336) ------ ------ ------ Cash (used in)/provided by investing activities 540 212 (336) ------ ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES: Net change in amounts owed to/by affiliated companies (2,355) (3,676) (413) ------ ------ ------ Cash used in financing activities (2,355) (3,676) (413) ------ ------ ------ Effect of exchange rate changes on cash 62 124 2 ------ ------ ------ Increase/(decrease) in cash (2,572) (2,636) 1,335 Cash at beginning of period 3,761 3,761 1,189 ------ ------ ------ Cash at end of period 1,189 1,125 2,524 ====== ====== ====== Interest paid 49 37 22 ====== ====== ====== Income taxes paid 2,259 159 281 ====== ====== ====== The accompanying notes are an integral part of the combined financial statements.
8 9 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) NOTES TO THE COMBINED FINANCIAL STATEMENTS A. BASIS OF PREPARATION The accompanying combined financial statements present the operations of Nexus Continental Europe and Northern Ireland Photofinishing ("the Acquired Group"). The Acquired Group includes mail-order photofinishing operations in France, Belgium, the Netherlands and Spain, and a wholesale film processing business in Northern Ireland. Until May 15, 1994 the Acquired Group existed as a number of separate subsidiaries, either direct or indirect, of Colourcare Holdings Limited ("CHL"), in turn owned by London International Group plc ("LIG"). On that date, these subsidiaries, together with a number of other subsidiaries not included within the Acquired Group, were acquired by Nexus Photo Limited ("Nexus"), a company formed by the management of CHL. The Acquired Group operates in one industry segment, the supply of photographic developing and processing services. These combined financial statements are presented as if the Acquired Group had existed as an entity separate from Nexus, and previously LIG, during the periods presented and include financial information directly related to the Acquired Group's operations. On January 13, 1995, the assets and certain liabilities of the Acquired Group were acquired by Nashua Corporation and subsidiaries ("Nashua") and have been incorporated into Nashua companies from that date. Liabilities and obligations not acquired by Nashua include any litigation, tax liabilities and past service liabilities relating to former or current employees. As noted above, the entities within the Acquired Group existed as separate subsidiaries of CHL and subsequently Nexus and, therefore, the Acquired Group did not exist as a legal group in isolation. The financial statements of the Acquired Group, therefore, have been prepared by combining the financial statements of each entity in the Acquired Group and then reversing the effects of any trading between those entities. The entities which are aggregated to form the Acquired Group are as follows: Freeprint Limited Colourcare International (Northern Ireland) Limited and its subsidiaries Colourcare International BV Colourcare France SA Colourcare International SL 9 10 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) NOTES TO THE COMBINED FINANCIAL STATEMENTS B. SIGNIFICANT ACCOUNTING POLICIES Concentration of credit risk: The Acquired Group provides photofinishing products and services to customers throughout Europe and Northern Ireland. No individual customer accounted for more than 10% of the Acquired Group's revenues. Accordingly, no significant concentration of accounts receivable existed at March 31, 1994 or December 31, 1994 Inventory: Inventories are carried at the lower of cost or market. Depreciation: Depreciation is provided by charges to operations at rates calculated to write-off the cost or valuation of each asset, other than leasehold land, evenly over its expected useful life, as follows: Buildings and improvements 50 years or lease term (if less) Machinery and equipment 3 to 10 years Expenditures for maintenance, repairs and renewals are charged to expense; major improvements are capitalized. Revenue Recognition: Revenue is recognized when the processing of a film is complete. Marketing Costs: Marketing expenditures are deferred and expensed over a period of up to 12 months at a rate which is dependent upon a calculation of the profile of responses from the advertising concerned, which generally approximates four months. Translation of foreign currency: Assets and liabilities of foreign operations are translated at year end exchange rates, and statement of operations accounts are translated at average exchange rates. Resulting translation adjustments are recorded separately as a movement in the equity of the Acquired Group ("exchange rate movements"). Unaudited interim financial statements: In the opinion of management, the unaudited financial statements as of December 31, 1994 and for the nine month periods ended December 31, 1993 and 1994 include all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the Acquired Group's financial position, results of operations and cash flows in accordance with generally accepted accounting principles. 10 11 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) NOTES TO THE COMBINED FINANCIAL STATEMENTS C. INCOME TAX Income tax is provided at the statutory rate ruling in each country of operation. For the year ended March 31, 1994, the provision was adjusted by the extent to which the income tax charge provided in the financial statements in the previous year varied from the amount finally agreed by the taxation authorities in each country. In prior years, the Acquired Group recorded a tax benefit from losses of a related company (which was part of LIG but not the Acquired Group). However, during 1994, the tax benefit was utilized elsewhere within LIG and thus did not inure to the Acquired Group. The reconciliation from the statutory rate in the United Kingdom to the effective rate for the year ended March 31, 1994 is as follows:
Year ended March 31, 1994 L000 % ------------------------- ---- - Tax at U.K. statutory rate 699 33.0 Underprovision in prior years 151 7.1 Effect of foreign (non-U.K.) for rates 26 1.2 Other 168 8.0 ------ ---- Total charge 1,044 49.3 ====== ====
The Acquired Group had no material deferred tax assets or liabilities at March 31, 1994. D. RELATED PARTY TRANSACTIONS ALLOCATION OF MANAGEMENT CHARGES For the year ended March 31, 1994, the Acquired Group benefitted from services provided by its immediate parent organization, Colourcare International Limited ("CIL"), CHL and LIG. An allocation of these costs has been made based on an assessment of the extent to which they benefitted the Acquired Group. Management believes this to be a reasonable allocation. The total of these fees for the year ended March 31, 1994 was L1,039,000 and is classified in "Selling, distribution and administrative expenses" in the accompanying statement of operations. The total for the nine months ended December 31, 1993 was L792,000. Similar costs have been allocated to the Acquired Group for the nine months ended December 31, 1994 based on the same methodology. The allocation in this period included costs from CIL, CHL and LIG from April 1, 1994 to May 15, 1994 and from Nexus and CIL (which was acquired by Nexus) from May 16, 1994 to December 31, 1994. The total cost allocated in this period was L562,000. 11 12 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) NOTES TO THE COMBINED FINANCIAL STATEMENTS INTEREST INCOME/EXPENSE ON BALANCES WITH AFFILIATED COMPANIES All material amounts due to and due from affiliated companies are in the nature of financing rather than trading. Interest has been credited or charged on all balances with affiliated companies at variable rates which fluctuate in proportion to the London Inter-Bank Official Rate ("LIBOR"). This method of allocation is reasonable and there would not have been a material impact on the net income if the Acquired Group obtained these services from external rather than affiliated sources. E ACCOUNTS RECEIVABLE
March 31, 1994 L000 -------------- ---- Gross accounts receivable 2,379 Provision against accounts receivable (526) ----- 1,853 =====
F ACCOUNTS PAYABLE AND ACCRUED EXPENSES
March 31, 1994 L000 -------------- ---- Accounts payable 2,428 Accrued expenses 1,864 Payroll taxes 601 ----- 4,893 =====
G LEASES AND OTHER FINANCIAL COMMITMENTS The Acquired Group occupies certain premises and uses certain equipment under operating lease agreements expiring at various dates through 1999. Total rent expense charged to operations was L233,000 for the year ended March 31, 1994. Future minimum lease payments relating to operating leases are as follows:
L000 ---- 1995 169 1996 124 1997 86 1998 84 1999 29
12 13 NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING (OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY) NOTES TO THE COMBINED FINANCIAL STATEMENTS H PENSIONS The companies within the Acquired Group have the following pension arrangements at March 31, 1994: (i) The employees of Freeprint Limited and Colourcare International (Northern Ireland) Limited were members of the London International UK Pension Scheme ("the LIG scheme"), a defined benefit scheme (see below). (ii) Colourcare France SA did not operate a company pension scheme. Contributions were paid to the State and charged to operations as incurred. (iii) There were only 12 employees in Colourcare International BV at March 31, 1994, most of whom were ineligible to join the company pension scheme. There were no pension arrangements of the employees of Colourcare International SL. Amounts funded by the companies whose employees are members of the LIG scheme are determined on the basis of independent actuarial valuations using the projected unit method. The pension charge to the Acquired Group for the year to March 31, 1994 in respect of the LIG scheme was L163,000 and represented the actual contribution to the scheme. The amount of the unfunded obligation attributed to the Acquired Group at March 31, 1994 is not material. As discussed in Note A, Nashua did not acquire any pension obligaitons of the Acquired Group. 13 14 NASHUA CORPORATION AND NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS On January 13, 1995, certain subsidiaries of Nashua Corporation ("Nashua") acquired the Continental European and Northern Ireland-based Film Processing Operations ("Nexus Photo") of Nexus Photo Limited, ("Nexus"), a U.K. Company. Under the terms of the agreement, Nashua paid $21,872,000 and assumed certain third-party trade liabilities to acquire the assets, both tangible and intangible, including fixed assets, inventories, trade receivables, tradenames, trademarks and goodwill of Nexus Photo. Excluded liabilities and obligations include any litigation, tax liabilities and past service liabilities for former or current employees. In addition, Nashua acquired certain other photofinishing equipment from Nexus for $3,683,000. The transactions were financed with operating cash and $20,682,000 of additional borrowing under a new revolving credit facility. The following unaudited pro forma combined financial statements were prepared by Nashua to illustrate the effects of the acquisition accounted for under the purchase method of accounting. The accompanying unaudited pro forma combined financial statements do not reflect any cost savings or operating synergies Nashua expects to achieve from the combination. The Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 1994 includes the historical results of Nashua for the year ended December 31, 1994 and the historical results of Nexus Photo for the twelve months ended December 31, 1994. The combined historical amounts have been adjusted by giving effect to assumptions and adjustments as described in the accompanying Notes to Unaudited Pro Forma Combined Financial Statements, including adjustments to reflect the impact of the acquisition as though it had occurred at the beginning of the period presented. The Unaudited Pro Forma Combined Balance Sheet as of December 31, 1994 has been prepared based on the balance sheet of Nashua as of December 31, 1994 and the balance sheet of Nexus Photo as of December 31, 1994. The historical amounts have been adjusted to give effect to the acquisition using the purchase method of accounting as though the transaction had occurred as of the balance sheet date presented, as further described in the accompanying Notes to Unaudited Pro Forma Combined Financial Statements. The following unaudited pro forma financial information may not necessarily reflect the results of operations or the financial position of Nashua and Nexus Photo, which would have actually resulted had the acquisition occurred as of the date and for the periods indicated, or of future earnings or future financial position of the combined companies. The unaudited pro forma financial information should be read in conjunction with the accompanying Notes to Unaudited Pro Forma Combined Financial Statements, and Nashua Corporation's Annual Report on Form 10-K. 14 15 NASHUA CORPORATION AND NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING UNAUDITED PRO FORMA COMBINED BALANCE SHEET DECEMBER 31, 1994 (IN THOUSANDS)
HISTORICAL PRO FORMA ----------------------------------------------------------------- NASHUA NEXUS PHOTO COMBINED (NOTE 1) (NOTE 1) ADJUSTMENTS (NOTE 2) COMPANIES ----------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents $ 10,219 $ 3,950 $ (3,565) [A] $ 4,800 (5,804) [B] Accounts receivable 40,811 12,972 (8,917) [A] 44,866 Inventories 34,161 1,773 35,934 Other current assets 22,971 388 177 [B] 23,536 ------------------------------------------ -------- 108,162 19,083 (18,109) 109,136 Plant and equipment 70,857 2,623 2,311 [B] 79,474 3,683 [B] Other assets 48,806 3 8,670 [B] 66,312 8,833 [B] ------------------------------------------ -------- Total Assets $227,825 $ 21,709 $ 5,388 $254,922 ========================================== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes and loans payable $ 200 $ 200 Current maturities of long-term debt 450 450 Accounts payable and accrued expenses 49,481 $ 8,965 $ (3,070) [A] 55,896 520 [C] Income taxes payable 11,242 1,643 (1,643) [A] 11,242 ------------------------------------------ -------- 61,373 10,608 (4,193) 67,788 Long-term debt 49,166 20,682 [D] 69,848 Other long-term liabilities 24,590 24,590 ------------------------------------------ -------- 135,129 10,608 16,489 162,226 Shareholders' Equity Common stock and additional capital 18,667 958 (958) [A] 18,667 Retained earnings 79,744 10,054 (10,054) [A] 79,744 Cumulative translation adjustment (4,928) 89 (89) [A] (4,928) Treasury stock, at cost (787) (787) ------------------------------------------ -------- 92,696 11,101 (11,101) 92,696 ------------------------------------------ -------- Total Liabilities and Shareholders' Equity $227,825 $ 21,709 $ 5,388 $254,922 ========================================== ======== See Accompanying Notes To Unaudited Pro Forma Combined Financial Statements
15 16 NASHUA CORPORATION AND NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
HISTORICAL PRO FORMA ---------------------------------------------------------------- NASHUA NEXUS PHOTO COMBINED (NOTE 1) (NOTE 1) ADJUSTMENTS (NOTE 2) COMPANIES ---------------------------------------------------------------- Net Sales $478,571 $43,198 $521,769 Cost of products sold 361,933 23,773 $ 945 [E] 386,651 Selling, distribution and administrative expenses 95,101 14,769 1,166 [F] 111,036 Research and development expenses 9,604 9,604 Restructuring charges 2,600 2,600 Interest expense 2,451 50 1,448 [G] 3,949 Interest and other income (585) (619) 254 [H] (629) 321 [I] ------------------------------------------ -------- Total costs and expenses 471,104 37,973 4,134 513,211 ------------------------------------------ -------- Income from continuing operations before income taxes 7,467 5,225 (4,134) 8,558 Income taxes (benefit) 3,025 1,788 (1,577) [J] 3,236 ------------------------------------------ -------- Income from continuing operations $ 4,442 $ 3,437 $(2,557) $ 5,322 ========================================== ======== Earnings per common and common equivalent share: Income from continuing operations $ 0.70 $ 0.84 ======== ======== Average outstanding common shares plus common equivalents 6,360 6,360 ======== ======== See Accompanying Notes To Unaudited Pro Forma Combined Financial Statements
16 17 NASHUA CORPORATION AND NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS 1. Basis of Presentation The unaudited pro forma combined financial statements are presented to give effect to the acquisition of the Continental European and Northern Ireland-based Film Processing Operations ("Nexus Photo") of Nexus Photo Limited ("Nexus") by Nashua Corporation ("Nashua"). Under the terms of the agreement, Nashua paid $21,872,000 and assumed certain third-party trade liabilities to acquire the assets, both tangible and intangible, including fixed assets, inventories, trade receivables, tradenames, trademarks and goodwill of Nexus Photo. In addition to the cash paid by Nashua, the agreement requires Nashua to pay royalties to Nexus for sales made by Nexus Photo to a certain wholesaler from the date of purchase through January 12, 1996. The agreement with this wholesaler is a new customer relationship for Nexus Photo, and therefore, given the lack of historical data, no adjustment to reflect these royalty payments has been made in the accompanying unaudited pro forma financial statements. Management estimates the royalties will not exceed $1,250,000. In addition to the acquisition of Nexus Photo, Nashua acquired certain equipment from Nexus which was not previously part of, or used, by Nexus Photo. For this equipment, referred to as the "Scandinavian and U.K. Equipment," Nashua paid $3,683,000. This equipment is not included in the historical financial statements of Nexus Photo. The Unaudited Pro Forma Combined Statement of Operations includes the historical results of Nashua for the year ended December 31, 1994, as well as the historical results of Nexus Photo for the twelve months ended DecemberE31, 1994. The operating results of Nexus Photo for the twelve months ended December 31, 1994 consist of the results of this operation for the period January 1, 1994 to May 15, 1994, during which period Nexus Photo was owned and operated by Colourcare Holdings Limited (a subsidiary of London International Group), and the period May 16, 1994 to December 31, 1994, during which period Nexus Photo was owned and operated by Nexus. The Unaudited Pro Forma Consolidated Statement of Operations includes the effect of the acquisition by Nashua as though the transaction had occurred at the beginning of the period presented. The Unaudited Pro Forma Combined Balance Sheet is based upon the historical balance sheets of Nashua and Nexus Photo as of December 31, 1994. The historical amounts have been adjusted to reflect the acquisition as though it had occurred as of the balance sheet date presented. The financial information of Nexus Photo included in the unaudited pro forma combined financial statements has been derived from financial statements prepared in accordance with United States generally accepted accounting principles and stated in U.K. pounds sterling. These statements have been translated to U.S. dollars at the December 31, 1994 rate of L1 : $1.565 for the Unaudited Pro Forma Combined Balance Sheet, and L1 : $1.5298 for the Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 1994. The unaudited pro forma combined financial statements should be read in conjunction with the historical financial statements of Nashua and Nexus Photo. 17 18 NASHUA CORPORATION AND NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED) 2. Adjustments The following adjustments have been made in preparation of the unaudited pro forma combined financial statements: A. Adjustment to eliminate assets and liabilities not acquired, (principally cash, amounts due to and from affiliated corporations of Nexus, and any litigation, tax and pension obligations), and elimination of Nexus Photo stockholder's equity at the date of acquisition. B. Adjustment to record the purchase of Nexus Photo and the Scandinavian and U.K. Equipment for cash plus estimated transaction costs ($5,804,000), and borrowings under a new revolving credit agreement ($20,682,000). The following table depicts the calculation of the Company's purchase price, excess of purchase price over the fair value of the acquired assets, and the preliminary allocation to the acquired assets. The fair market value of the acquired assets and the allocation of the purchase price to both tangible and intangible assets are estimates based on the December 31, 1994 Nexus Photo financial information. The actual fair value and allocation of purchase price will be determined at the consummation of the acquisition and may vary from values presented below. Excess of purchase price over the fair value of the acquired assets is calculated as follows (in thousands): Total consideration paid by Nashua $25,555 Estimated transaction costs 931 Assumed liabilities of Nexus Photo 5,895 Accrued severance 520 ------- Total purchase price 32,901 Estimated fair value of the acquired assets of Nexus Photo as of December 31, 1994 24,068 ------- Excess of purchase price over the fair value of the acquired assets $ 8,833 ======= Allocation of purchase price: Cash $ 385 Accounts receivable 4,055 Inventories 1,773 Other current assets 565 Plant and equipment 4,934 Scandinavian and U.K. Equipment 3,683 Goodwill 8,833 Other intangibles 8,673 ------- $32,901 =======
18 19 NASHUA CORPORATION AND NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED) 2. Adjustments (continued) C. Adjustment to record estimated severance costs to be incurred by the Company in connection with the acquisition of Nexus Photo. D. Adjustment to record debt to finance the acquisition through borrowings under a new revolving credit facility. E. Adjustment to record the annual depreciation of the Nexus Photo equipment acquired over a four-year estimated useful life and leasehold improvements over the average remaining lease term of ten years ($1,081,000), (less $1,057,000 of depreciation included in the historical financial statements); and the annual depreciation of the Scandinavian and U.K. equipment over a four-year estimated useful life ($921,000). F. Adjustment to record the annual amortization of the excess of purchase price over fair value of assets acquired over a fifteen-year period ($588,000); and the annual amortization of other intangibles acquired over a fifteen- year period ($578,000). G. Adjustment to record additional interest expense related to acquisition debt at the credit facilities' interest rate of 7%. H. Adjustment to reduce interest income for cash used to acquire Nexus Photo and the Scandinavian and U.K. Equipment. I. Adjustment to eliminate interest income earned by Nexus Photo on amounts due from affiliated corporations of Nexus. J. Adjustment to record tax benefit of additional operating expenses as result of the transaction as noted in adjustments E, F, G, H and I. 19 EX-23.1 2 CONSENT OF INDEPENDENT AUDITORS 1 Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Forms S-8, No. 2-88669, 33-13995, 33-67940, 33-72438) of Nashua Corporation, of our report dated March 24, 1995, with respect to the financial statements of Nexus Continental Europe and Northern Ireland Photofinishing, included in the Current Report (Form 8-K/A dated January 13, 1995) filed with the Securities and Exchange Commission. ERNST & YOUNG Southampton, England March 24, 1995 -----END PRIVACY-ENHANCED MESSAGE-----