<PAGE> 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)
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 5
<TABLE>
NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING
(OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY)
COMBINED BALANCE SHEETS
<CAPTION>
MARCH 31, 1994 DECEMBER 31, 1994
(AUDITED) (UNAUDITED)
L000'S L000'S
-------------------------------------
<S> <C> <C>
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.
</TABLE>
5
<PAGE> 6
<TABLE>
NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING
(OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY)
COMBINED STATEMENTS OF OPERATIONS
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MARCH 31, DECEMBER 31,
1994 1993 1994
(AUDITED) (UNAUDITED) (UNAUDITED)
L000'S L000'S L000'S
----------------------------------------------
<S> <C> <C> <C>
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.
</TABLE>
6
<PAGE> 7
<TABLE>
NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING
(OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY)
COMBINED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<CAPTION>
COMMON STOCK AND RETAINED CUMULATIVE TOTAL
ADDITIONAL EARNINGS TRANSLATION SHAREHOLDER'S
CAPITAL ADJUSTMENT EQUITY
L000'S L000'S L000'S L000'S
------------------------------------------------------------------
<S> <C> <C> <C> <C>
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.
</TABLE>
7
<PAGE> 8
<TABLE>
NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING
(OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY)
COMBINED STATEMENTS OF CASH FLOWS
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MARCH 31, DECEMBER 31,
1994 1993 1994
(AUDITED) (UNAUDITED) (UNAUDITED)
L000'S L000'S L000'S
----------------------------------------------
<S> <C> <C> <C>
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.
</TABLE>
8
<PAGE> 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
<PAGE> 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
<PAGE> 11
NEXUS CONTINENTAL EUROPE AND NORTHERN IRELAND PHOTOFINISHING
(OPERATIONS OWNED BY NEXUS PHOTO LIMITED, A UK COMPANY)
NOTES TO THE COMBINED FINANCIAL STATEMENTS
<TABLE>
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:
<CAPTION>
Year ended March 31, 1994 L000 %
------------------------- ---- -
<S> <C> <C>
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
====== ====
</TABLE>
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
<PAGE> 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.
<TABLE>
E ACCOUNTS RECEIVABLE
<CAPTION>
March 31, 1994 L000
-------------- ----
<S> <C>
Gross accounts receivable 2,379
Provision against accounts receivable (526)
-----
1,853
=====
</TABLE>
<TABLE>
F ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<CAPTION>
March 31, 1994 L000
-------------- ----
<S> <C>
Accounts payable 2,428
Accrued expenses 1,864
Payroll taxes 601
-----
4,893
=====
</TABLE>
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.
<TABLE>
Future minimum lease payments relating to operating leases are as
follows:
<CAPTION>
L000
----
<S> <C>
1995 169
1996 124
1997 86
1998 84
1999 29
</TABLE>
12
<PAGE> 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
<PAGE> 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
<PAGE> 15
<TABLE>
NASHUA CORPORATION AND
NEXUS CONTINENTAL EUROPE AND
NORTHERN IRELAND PHOTOFINISHING
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1994
(IN THOUSANDS)
<CAPTION>
HISTORICAL PRO FORMA
-----------------------------------------------------------------
NASHUA NEXUS PHOTO COMBINED
(NOTE 1) (NOTE 1) ADJUSTMENTS (NOTE 2) COMPANIES
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
15
<PAGE> 16
<TABLE>
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)
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------------------------------------
NASHUA NEXUS PHOTO COMBINED
(NOTE 1) (NOTE 1) ADJUSTMENTS (NOTE 2) COMPANIES
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
16
<PAGE> 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
<PAGE> 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.
<TABLE>
Excess of purchase price over the fair value of the acquired
assets is calculated as follows (in thousands):
<S> <C>
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
=======
</TABLE>
18
<PAGE> 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
<PAGE> 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
