<PAGE> 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 March 31, 1995
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.
<TABLE>
<CAPTION>
Class Outstanding at May 3, 1995
- ----------------------------- ----------------------------------
<S> <C>
Common Stock, par value $1.00 6,373,630 shares (excluding 23,940
shares held in treasury)
</TABLE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NASHUA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31, 1995 December 31,
(Unaudited) 1994
-------------- ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 7,625 $ 10,219
Accounts receivable 45,883 40,811
Inventories
Materials and supplies 17,243 15,713
Work in process 4,355 4,942
Finished goods 14,455 13,506
-------- --------
36,053 34,161
Other current assets 24,125 22,971
-------- --------
Total current assets 113,686 108,162
-------- --------
Plant and equipment 139,549 129,590
Accumulated depreciation (61,617) (58,733)
-------- --------
77,932 70,857
Intangible assets 45,231 23,654
Accumulated amortization (6,803) (6,129)
-------- --------
38,428 17,525
Other assets 31,477 31,281
-------- --------
Total assets $261,523 $227,825
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Notes and loans payable $ 150 $ 200
Current maturities of long-term debt 475 450
Accounts payable 35,569 27,374
Accrued expenses 23,894 22,107
Income taxes payable 3,727 11,242
-------- --------
Total current liabilities 63,815 61,373
Long-term debt 80,035 49,166
Other long-term liabilities 24,590 24,590
Common stock and additional capital 18,681 18,667
Retained earnings 78,662 79,744
Cumulative translation adjustment (3,499) (4,928)
Treasury stock, at cost (761) (787)
Commitments and contingencies
-------- --------
Total liabilities and shareholders' equity $261,523 $227,825
======== ========
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
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<PAGE> 3
NASHUA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------
March 31, April 1,
(In thousands, except per share data) 1995 1994
--------- --------
<S> <C> <C>
Net sales $124,325 $112,823
Cost of products sold 95,280 86,672
Research, selling, distribution and
administrative expenses 27,699 24,983
Restructuring charges -- 2,600
Interest expense 1,451 478
Interest income (221) (43)
-------- --------
Income from continuing operations
before income taxes 116 (1,867)
Income taxes (benefit) 46 (709)
-------- --------
Income (loss) from continuing operations 70 (1,158)
Income (loss) from discontinued operations -- (2,295)
-------- --------
Net income (loss) 70 (3,453)
Retained earnings, beginning of period 79,744 82,166
Dividends (1,152) (1,138)
-------- --------
Retained earnings, end of period $ 78,662 $ 77,575
======== ========
Earnings (loss) per common and common
equivalent share:
Income (loss) from continuing operations $ .01 $ (.18)
Income (loss) from discontinued operations -- (.36)
-------- --------
Net income $ .01 $ (.54)
======== ========
Dividends per common share $ .18 $ .18
======== ========
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
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<PAGE> 4
NASHUA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------
March 31, April 1,
1995 1994
-------- -------
<S> <C> <C>
Cash flows from operating activities of continuing operations:
Net income (loss) $ 70 $(3,453)
Adjustments to reconcile net income (loss) to cash
provided by continuing operating activites:
Depreciation and amortization 4,300 3,477
Loss from discontinued operations - 2,295
Net change in working capital 1,117 (1,371)
-------- -------
Cash provided by continuing operating activities 5,487 948
-------- -------
Cash flows from investing activities of continuing operations:
Investment in plant and equipment (4,218) (3,311)
Acquisition of business (25,739) -
-------- -------
Cash used in investing activities (29,957) (3,311)
-------- -------
Cash flows from financing activities of continuing operations:
Proceeds from borrowings 32,200 9,900
Repayment of borrowings (1,356) (1,458)
Dividends paid (1,152) (1,138)
Proceeds and tax benefits from shares issued under
stock option plans 14 178
Purchase and reissuance of treasury stock 26 -
-------- -------
Cash provided by financing activities 29,732 7,482
-------- -------
Cash applied to activities of discontinued operations (7,944) (4,400)
Effect of exchange rate changes on cash 88 (17)
-------- -------
Increase (decrease) in cash and cash equivalents (2,594) 702
Cash and cash equivalents at beginning of period 10,219 5,883
-------- -------
Cash and cash equivalents at end of period $ 7,625 $ 6,585
======== =======
Interest paid $ 3,680 $ 872
======== =======
Income taxes paid $ 6,053 $ 25
======== =======
</TABLE>
The accompanying notes are an integral part of
the condensed consolidated financial statements.
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<PAGE> 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, as applicable, the
weighted average number of common equivalent shares outstanding during
the period.
<TABLE>
<Caption
Three Months Ended
-------------------------
March 31, April 1,
1995 1994
--------- ---------
<S> <C> <C>
Common shares outstanding 6,372,953 6,322,513
Common share equivalents 434 30,414
</TABLE>
Stock Options
At March 31, 1995, options for 403,054 shares of common stock were outstanding.
Stock options for an additional 248,740 shares may be awarded under the
Company's 1987 Stock Option Plan and stock options for an additional 224,000
shares may be awarded under the Company's 1993 Stock Incentive Plan.
Acquisition
On January 13, 1995, the Company acquired certain photofinishing operations
from Nexus Photo Ltd. The acquisition includes mail-order photofinishing
operations in France, Belgium, The Netherlands and Spain, and a wholesale film
processing business in Northern Ireland. The following unaudited pro forma data
summarize the consolidated results of operations for the periods indicated as
if the operations had been combined at the beginning of the periods presented,
after giving effect to certain pro forma ajustments. The pro forma data do not
purport to be indicative of the results which would actually have been attained
if the combination had been in effect for the periods indicated or which may be
attained in the future.
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
(In thousands, except per share data) March 31, April 1,
1995 1994
--------- ---------
<S> <C> <C>
Net sales $126,219 $122,149
Income (loss) from continuing operations 253 (1,176)
Net income (loss) 253 (3,471)
Earnings per common and common equivalent share:
Income (loss) from continuing operations $ .04 $ (.19)
Net income (loss) $ .04 $ (.55)
</TABLE>
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, 1994.
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<PAGE> 6
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
March 31, 1995, the results of operations for the three-month periods ended
March 31, 1995 and April 1, 1994, and cash flows for the three-month periods
ended March 31, 1995 and April 1, 1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales of $124.3 million for the first quarter of 1995 were up 10 percent,
with increased revenue in all three groups. The Company generated an after-tax
profit of $70,000 from continuing operations during the period compared with a
net loss from continuing operations of $1.2 million in the first quarter of
1994. Included in the results of continuing operations for the first quarter of
1994 were pretax charges of $.9 million related to a potential acquisition of a
non-U.S. photofinishing business and a restructuring charge of $2.6 million
associated with the Company's early retirement program.
The Commercial Products Group's first quarter sales increased 6 percent to
$83.1 million compared to the first quarter of 1994. Higher sales of labels,
toner, copier paper and remanufactured laser printer cartridges were partially
offset by lower carbonless and facsimile paper sales. Additionally, price
increases were implemented in a number of product areas to offset higher raw
materials costs. The group's operating profit increased from $.2 million
before restructuring charges in 1994 to $1.1 million in 1995 due primarily to
the volume improvements and, to a lesser extent, selected price increases.
Net sales increased 16 percent in the Photofinishing Group to $36.4 million
compared to the first quarter last year, reflecting the January 1995
acquisition of a mail-order photofinishing business in Europe and a wholesale
processing operation in Northern Ireland, as well as weakness in the U.S.
dollar versus the British pound. Volume decreased from last year's level in
the U.S. and U.K. mail-order businesses, which was only partially offset by
higher average prices. Business in both countries was hurt by unfavorable
weather, and volume in the U.S. was further affected by aggressive discounting
by a mail-order competitor and delayed delivery of promotional mailings due to
the large mail volume immediately preceding this year's postage increase. The
operating profit for the first quarter of 1995 of $.7 million compared
unfavorably to last year by $1.9 million as a result of the lower U.S. and U.K.
sales volume, the impact of the U.S. postage increase and the timing of the
completion of the European acquisition which occurred after the peak holiday
volume period.
Precision Technologies recorded net sales of $4.8 million in the first quarter
of 1995, a 47 percent increase over 1994, and generated operating income of $.6
million compared to a small operating loss in 1994. The improved sales and
operating income reflect increases in both price and volume attributable to
Precision Technologies' expanded product offering and the general strength of
the disk drive industry.
Administrative expenses for the first quarter remained flat compared to the
first quarter of 1994, as the inclusion of the European photofinishing
businesses offset cost savings in the remaining operations. Selling expenses
as a percentage of sales increased due to the inclusion of the acquired
photofinishing businesses, which generally have higher selling expenses than
the Company's other businesses. Research and development spending in 1995 was
consistent with the first quarter of 1994, as the Company continues the
increased focus on new product development it began last year.
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<PAGE> 7
In the fourth quarter of 1993, the Company recorded a restructuring charge of
$11.8 million related to the integration and streamlining of the operations of
the Commercial Products Group, including workforce reductions, as well as
consolidation of facilities and the write-down of certain assets. As part of
the restructuring plan, the Company offered certain of its employees an early
retirement program and recorded an additional restructuring charge of $2.6
million in the first quarter of 1994.
The details of the Company's restructuring reserve remaining at December 31,
1994 and the activity recorded in the first quarter of 1995 are as follows:
<TABLE>
<CAPTION>
Balance Balance
Dec. 31, 1995 1995 Mar. 31,
(In thousands) 1994 Provision Charges 1995
-------- --------- ------- --------
<S> <C> <C> <C> <C>
Provisions related to severance costs $1,550 $ -- $ 685 $ 865
Provisions related to employees not terminated 150 -- 55 95
Provision for assets to be sold or discarded 1,250 -- 480 770
------ ---- ----- -----
$2,950 $ -- $1,220 $1,730
====== ==== ====== ======
</TABLE>
As of March 31, 1995 substantially all planned employee reductions have taken
place, and the remaining accrual represents payments to be made in 1995 to
these former employees. The provision for assets to be sold or discarded
represents costs associated with holding vacated portions of certain corporate
and manufacturing facilities during the period until the property can be sold
or otherwise disposed of. There were no material changes during the quarter to
the Company's original estimate of the costs associated with the restructuring
actions.
The estimated annual effective income tax rate of 40.0 percent for the first
quarter of 1995 is higher than the U.S. statutory rate primarily due to the
unfavorable impact of non-deductible goodwill and state income taxes.
Working capital increased $3.1 million to $49.9 million from December 31, 1994.
Increases in accounts receivable, inventories and accounts payable from
December 31, 1994 are primarily attributable to the acquisition of the European
photofinishing business. The Company borrowed $31 million of its $75 million
revolving credit facility during the first quarter of 1995, with approximately
$25.7 million being used to acquire the European photofinishing businesses, and
the remainder to fund tax payments associated with discontinued operations. At
March 31, 1995, borrowings under the $75 million revolving credit facility were
$64 million.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
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<PAGE> 8
(b) Reports on Form 8-K
On January 26, 1995, the Company filed a report on Form 8-K regarding the
acquisition of the Continental European and Northern Ireland-based film
processing operations of Nexus Photo Limited.
On March 28, 1995, the Company filed a report on Form 8-Ka amending its
Form 8-K filed January 26, 1995 to include audited financial statements of
the businesses acquired and pro forma financial information.
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<PAGE> 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 12, 1995 By: /s/ W. Luke
----------------------------------------
W. Luke
Vice President-Finance
(principal financial and duly
authorized officer)
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 7,625
<SECURITIES> 0
<RECEIVABLES> 45,883
<ALLOWANCES> 0
<INVENTORY> 36,053
<CURRENT-ASSETS> 113,686
<PP&E> 139,549
<DEPRECIATION> 61,617
<TOTAL-ASSETS> 261,523
<CURRENT-LIABILITIES> 63,815
<BONDS> 80,035
<COMMON> 6,398
0
0
<OTHER-SE> 86,685
<TOTAL-LIABILITY-AND-EQUITY> 261,523
<SALES> 124,325
<TOTAL-REVENUES> 124,325
<CGS> 95,280
<TOTAL-COSTS> 122,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,451
<INCOME-PRETAX> 116
<INCOME-TAX> 46
<INCOME-CONTINUING> 70
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
