-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hm8F7JmnvWaRKe6mxeZ1LtlS1q8JwkB1C1w4DBbgwcR89DmZXi7cZ58dTuM2QD/f C0egZg41Uh8MBV1iFel4JA== 0000950135-98-003295.txt : 19980515 0000950135-98-003295.hdr.sgml : 19980515 ACCESSION NUMBER: 0000950135-98-003295 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980403 FILED AS OF DATE: 19980514 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-05492 FILM NUMBER: 98620856 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 1 FORM 10-Q ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------------------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended APRIL 3, 1998 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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) (IRS Employer Identification No.) 44 FRANKLIN STREET 03061-2002 NASHUA, NEW HAMPSHIRE (Zip Code) (Address of principal executive offices) 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, 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. AS OF MAY 6, 1998, THE COMPANY HAD 6,707,723 SHARES OF COMMON STOCK, EXCLUDING 24,074 SHARES IN TREASURY, PAR VALUE $1 PER SHARE, OUTSTANDING. -1- 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
NASHUA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) April 3, 1998 December 31, ASSETS: (Unaudited) 1997 - ------- ------------- ------------ Cash and cash equivalents $ 8,593 $ 3,736 Accounts receivable 16,831 14,915 Inventories Materials and supplies 4,192 6,196 Work in process 2,359 3,650 Finished goods 7,166 4,791 -------- -------- 13,717 14,637 Other current assets 10,564 12,362 Net current assets of discontinued operations 615 120 -------- -------- Total current assets 50,320 45,770 -------- -------- Plant and equipment 79,667 81,020 Accumulated depreciation (39,282) (40,605) -------- -------- 40,385 40,415 -------- -------- Intangible assets 2,058 2,010 Accumulated amortization (1,116) (1,081) -------- -------- 942 929 -------- -------- Investment in unconsolidated affiliate 7,261 7,524 Other assets 11,640 10,930 Net non-current assets of discontinued operations 34,142 41,194 -------- -------- Total assets $144,690 $146,762 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: Current maturities of long-term debt $ 2,611 $ 511 Accounts payable 11,776 12,595 Accrued expenses 11,534 13,772 -------- -------- Total current liabilities 25,921 26,878 -------- -------- Long-term debt 3,405 3,489 Other long-term liabilities 20,841 21,373 -------- -------- Total long-term liabilities 24,246 24,862 -------- -------- Common stock and additional capital 19,137 18,845 Retained earnings 76,144 76,935 Treasury stock, at cost (758) (758) -------- -------- Total shareholders' equity 94,523 95,022 -------- -------- Commitments and contingencies -------- -------- Total liabilities and shareholders' equity $144,690 $146,762 ======== ========
The accompanying notes are an integral part of the condensed consolidated financial statements. 3
NASHUA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED) (In thousands, except per share data) Three Months Ended ----------------------- April 3, March 28, 1998 1997 -------- --------- Net sales $44,486 $44,431 Cost of products sold 34,735 34,230 ------- ------- Gross margin 9,751 10,201 Research, selling, distribution and administrative expenses 10,492 11,564 Equity in net (income) loss of Cerion Technologies 263 (25) Interest expense 113 57 Interest income (8) (177) ------- ------- Loss from continuing operations before income tax benefit (1,109) (1,218) Income tax benefit (466) (377) ------- ------- Loss from continuing operations (643) (841) Loss from discontinued operation (148) (552) ------- ------- Net loss (791) (1,393) Retained earnings, beginning of period 76,935 78,328 ------- ------- Retained earnings, end of period 76,144 76,935 ======= ======= Earnings per share: Loss from continuing operations $ (0.10) $ (0.13) Loss from discontinued operation (0.02) (0.09) ------- ------- Net loss per common share $ (0.12) $ (0.22) ======= ======= Average common shares 6,391 6,378 ======= ======= Net loss per common share from continuing operations assuming dilution $ (0.10) $ (0.13) ======= ======= Net loss per common share assuming dilution $ (0.12) $ (0.22) ======= ======= Average common and potential common shares 6,391 6,378 ======= =======
The accompanying notes are an integral part of the condensed consolidated financial statements. 4
NASHUA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three Months Ended ----------------------- April 3, March 28, 1998 1997 -------- --------- Cash flows from operating activities of continuing operations: Net loss $ (791) $(1,393) Adjustments to reconcile net loss to cash provided by (used in) continuing operating activities: Depreciation and amortization 1,737 1,780 Equity in net (income) loss of Cerion Technologies 263 (25) Loss from discontinued operations 148 552 Net change in working capital and other assets (3,210) (8,783) ------- ------- Cash used in continuing operating activities (1,853) (7,869) ------- ------- Cash flows from investing activities of continuing operations: Investment in plant and equipment (2,007) (1,491) Retirement of fixed assets -- 173 ------- ------- Cash used in investing activities of continuing operations (2,007) (1,318) ------- ------- Cash flows from financing activities of continuing operations: Proceeds from borrowings 2,100 -- Repayment of borrowings (84) (137) Proceeds and tax benefits from shares issued under stock option plans 292 -- ------- ------- Cash provided by (used in) financing activities of continuing operations 2,308 (137) ------- ------- Proceeds from the sale of discontinued operation 6,000 -- Cash provided by activities of discontinued operation 409 3,708 Effect of exchange rate changes on cash 5 (134) ------- ------- Increase (decrease) in cash and cash equivalents 4,857 (5,750) Cash and cash equivalents at beginning of period 3,736 20,018 ------- ------- Cash and cash equivalents at end of period $ 8,593 $14,268 ======= ======= Interest paid $ 102 $ 42 ======= ======= Income taxes paid $ 51 $ 1,663 ======= =======
The accompanying notes are an integral part of the condensed consolidated financial statements. 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE The Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share" for the Company's year ended December 31, 1997 financial statements. As the Company has recorded net losses for the three month periods ended April 3, 1998 and March 28, 1997, any common stock equivalents would be antidilutive; therefore, Basic Earnings per Share and Diluted Earnings per Share are equivalent under FAS 128. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 132 In February 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits". This statement will be effective for fiscal years beginning after December 15, 1997. SFAS 132 amends FASB Statements No. 87, 88 and 106 in that it revises employers' disclosures about pension and postretirement benefit plans. RECLASSIFICATION Certain amounts from the prior year have been reclassified to conform to the current year presentation. STOCK OPTIONS At April 3, 1998, options for 807,820 shares of common stock were outstanding. Stock options for an additional 58,075 shares may be awarded under the Company's 1996 Stock Incentive Plan. SUBSEQUENT EVENTS The process of selling Nashua's entire photofinishing business was completed on April 9, 1998. Net after tax proceeds on the disposal of the Company's photofinishing business are estimated to be $42 million which the Company expects will result in a small gain to be recognized in the second quarter of 1998. On April 6, 1998, the Company sold its United Kingdom-based Microsharp imaging technology operation and expects to realize a small gain from the transaction in the second quarter of 1998. The Company's United States-based projection screen development, now called Nashua Projection Systems, is continuing the process of qualifying its products for rear projection applications. 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, 1997. 6 In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position as of April 3, 1998, the results of operations for the three month periods ended April 3, 1998 and March 28, 1997 and cash flows for the three month periods ended April 3, 1998 and March 28, 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CORPORATE MATTERS The process of selling Nashua's entire photofinishing business was completed on April 9, 1998. Net after tax proceeds on the disposal of the Company's photofinishing business are estimated to be $42 million which the Company expects will result in a small gain to be recognized in the second quarter of 1998. On April 6, 1998, the Company sold its United Kingdom-based Microsharp imaging technology operation and expects to realize a small gain from the transaction in the second quarter of 1998. The Company's United States-based projection screen development, now called Nashua Projection Systems, is continuing the process of qualifying its products for rear projection applications. RESULTS OF OPERATIONS Net sales for the first quarter of 1998 were $44.5 million, compared with $44.4 million in the first quarter of 1997. Sales growth in the Label and Specialty Coated Products divisions offset the sales decline in the Imaging Supplies Division. In the first quarter of 1998, the Company reported a net loss of $.8 million ($.12 per share), compared to a net loss of $1.4 million ($.22 per share) in the first quarter of 1997. Net loss from continuing operations of $.6 million ($.10 per share) in 1998 improved $.2 million over the prior year first quarter loss of $.8 million ($.13 per share). Pretax loss from continuing operations improved from a $1.2 million loss in 1997 to a $1.1 million loss in 1998, the result of $.6 million savings from reduced administrative expenses and lower expenses in the development of the Microsharp screen technology offset by $.2 million higher net interest expense and $.3 million loss from the Company's investment in Cerion Technology. In the first quarter of 1998, sales increased over the prior year period in thermal paper and labels, label roll stock and remanufactured laser printer cartridges. The sales gains were offset by lower toner sales which reflected the loss of a substantial non-U.S. customer at the end of the first quarter of 1997 and reduced shipments in the current quarter to the Imaging Supplies Division's dealer network. The reduced shipments for the quarter resulted from the outsourcing of the division's order entry and logistics operations, which lowered dealer's ongoing inventory requirements. Research, selling, distribution and administrative expenses for the first quarter of 1998 decreased 9.3 percent or $1.1 million versus the same period of 1997. Research expense decreased $.3 million due to the reduced spending for the Microsharp screen technology and headcount reductions. Selling and distribution expense decreased less than 1 percent and was primarily due to the impact of lower sales in the Commercial Products Group. Administrative expenses decreased $.7 million primarily due to the elimination of the NCPG group structure subsequent to the first quarter of 1997 and lower professional fees. 7 Net restructuring and other unusual charges of $4.3 million were recorded in the full year of 1997 related to the sale of excess real estate in Nashua, NH and other business unit and functional realignments in Corporate and the Commercial Products Group. Details of the charges related to continuing operations and the activity recorded during the first quarter of 1998 follows.
Balance Current Current Balance (In thousands) Dec. 31, Period Period April 3, 1997 Provision Charges 1998 -------- --------- ------- -------- Provisions for severance related to workforce reductions $1,913 $ - $674 $1,239 Provisions for assets to be sold or discarded 750 - 174 576 Other 365 - 118 247 ------ ----- ---- ------ Total $3,028 $ - $966 $2,062 ====== ===== ==== ======
All charges, excluding asset write-downs, are principally cash in nature and are expected to be funded from operations. The estimated annual effective income tax benefit of 42 percent for the first quarter of 1998 is higher than the U.S. statutory rate principally due to the unfavorable impact of state income taxes. LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION Working capital increased $5.5 million from December 31, 1997, primarily due to the $6.0 million increase in cash from the sale of the Northern Ireland photofinishing operation. The Company expects that a portion of the proceeds will be reinvested in the continuing businesses with the remainder distributed to shareholders. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In August and September 1996, two individual plaintiffs initiated lawsuits in the Circuit Court of Cook County, Illinois against the Company, Cerion, certain directors and officers of Cerion, and the Company's underwriter, on behalf of classes consisting of all persons who purchased the common stock of Cerion between May 24, 1996 and July 9, 1996. These two complaints were consolidated. In March 1997, the same individual plaintiffs joined by a third plaintiff filed a Consolidated Amended Class Action Complaint (the "Consolidated Complaint"). The Consolidated Complaint alleged that, in connection with Cerion's initial public offering, the defendants issued materially false and misleading statements and omitted the disclosure of material facts regarding, in particular, certain significant customer relationships. In October 1997, the Court, on motion by the defendants, dismissed the Consolidated Complaint. The plaintiffs filed a Second Amended Consolidated Complaint alleging substantially similar claims as the Consolidated Complaint seeking damages and injunctive relief. On May 6, 1998, the Court, on motion by the defendants, dismissed with prejudice the Second Amended Consolidated Complaint. Under Illinois law, the plaintiffs would ordinarily have thirty days in which to file a notice of appeal of the Court's ruling. ITEM 5. OTHER INFORMATION FACTORS WHICH MAY AFFECT FUTURE RESULTS This report may contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. When used in this report, the words "believe," "expects," "to be" and similar expressions are intended to identify such forward-looking statements. Any such forward-looking statements and the Company's future results of operations and financial condition are subject to risks and uncertainties which could cause actual results to differ materially from those anticipated and from past results. Such risks and uncertainties include, but are not limited to, fluctuations in customer demand, intensity of competition from other vendors, timing and acceptance of new product introductions, general economic and industry conditions, delays or difficulties in programs designed to increase sales and return the Company to profitability, the possibility of a final award of material damages in the patent litigation brought against the Company by Ricoh Company, Ltd. and the Cerion securities litigation and other risks detailed in the Company's filings with the Securities and Exchange Commission. 8 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27.01 Financial Data Schedule for the period ended April 3, 1998. 27.02 Restated Financial Data Schedule for the period ended March 28, 1997 27.03 Restated Financial Data Schedule for the period ended December 31, 1996 27.04 Restated Financial Data Schedule for the period ended December 31, 1995 (b) Reports on Form 8-K On March 26, 1998, the Company filed a Form 8-K regarding the sale of its Northern Ireland film processing operation. On April 21, 1998, the Company filed a Form 8-K regarding the sale of its photofinishing subsidiaries in the United States, United Kingdom and Canada and its photofinishing operation in Northern Ireland. 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 14, 1998 By: /s/ John L. Patenaude ---------------------------- ------------------------------------ John L. Patenaude Vice President-Finance, Chief Financial Officer and Treasurer (principal financial and duly authorized officer) EX-27.01 2 FDS FOR 1ST QTR 1998
5 1,000 U.S. DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 APR-03-1998 1 8,593 0 16,831 0 13,717 50,320 79,667 39,282 144,690 25,921 0 0 0 19,137 75,386 144,690 44,486 44,486 34,735 45,227 0 0 113 (1,109) (466) (643) (148) 0 0 (791) (.12) (.12)
EX-27.02 3 RESTATED FDS FOR 1ST QTR 1997
5 1,000 U.S. DOLLARS 3-MOS DEC-31-1997 JAN-01-1997 MAR-28-1997 1 14,268 0 16,881 0 13,183 54,003 81,870 38,114 158,099 34,041 0 0 0 18,754 83,607 158,099 44,431 44,431 34,230 45,794 0 0 57 (1,218) (377) (841) (552) 0 0 (1,393) (.22) (.22)
EX-27.03 4 RESTATED FDS FOR FY 1996
5 1,000 U.S. DOLLARS YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 1 20,018 0 20,112 0 16,668 72,165 118,577 58,459 176,689 50,992 0 0 0 18,754 83,163 176,689 218,310 218,310 169,933 224,215 0 0 2,604 32,922 13,347 19,575 (2,558) (1,257) 0 24,194 3.79 3.78
EX-27.04 5 RESTATED FDS FOR FY 1995
5 1,000 U.S. DOLLARS YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 1 8,390 0 25,074 0 18,135 82,058 91,645 39,934 218,856 50,271 0 0 0 18,681 60,812 218,856 273,062 273,062 230,178 280,801 0 0 5,500 (28,996) (8,118) (20,878) 6,147 0 0 (14,731) (2.31) (2.31)
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