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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
NOVEMBER 4, 1997
Date of Report (Date of Earliest Event Reported)
NASHUA CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
1-5492-1 02-0170100
(Commission File Number) (I.R.S. Employer Identification No.)
44 FRANKLIN STREET
NASHUA, NEW HAMPSHIRE 03060
(Address of Principal Executive Offices)
(603)880-2323
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5 - OTHER EVENTS
On November 4, 1997, Nashua Corporation issued the following press release:
NASHUA CORPORATION TO FOCUS ON U.S. PHOTO,
LABEL AND IMAGING SUPPLIES BUSINESSES
Company To Sell Specialty Coated Products And International
Photofinishing Businesses; Announces Third Quarter Results
Nashua, NH, November 4, 1997 -- Nashua Corporation (NYSE: NSH)
today announced that the Company intends to strategically focus its
resources on growing its U.S. photofinishing, imaging supplies, and label
businesses. The Company plans to sell its specialty coated products
division and its international photofinishing businesses in Canada,
Northern Ireland and the United Kingdom, and has retained BT Alex. Brown
to assist in this process. These businesses had 1996 revenues of $52
million and $69 million respectively. When realized, a portion of the
proceeds from the sale of assets will be reinvested in growing the three
retained businesses, and a portion is expected to be returned to
shareholders via a special dividend or through share repurchases.
"Today's announcement is the culmination of a previously announced
strategic review of the Company's options and opportunities, with the
goal of maximizing value for our shareholders," said Gerald G. Garbacz,
Chief Executive Officer and President of Nashua.
He continued: "Our Board of Directors and management agreed that
our shareholders will be best served by Nashua becoming a more focused
company in areas where substantial opportunities exist to allow us to
achieve leadership in niche markets. We believe that the label, imaging
supplies and U.S. photo businesses each have opportunities which will
enable them to realize significantly increased growth and profitability
over the next several years. Our concentration on a smaller portfolio of
businesses, coupled with overhead reductions to be implemented throughout
1998, should increase Nashua's profitability and yield substantially
improved returns on invested capital. While we have made progress over
the last year and a half, stabilizing the Company's financial position,
strengthening our operational management and improving our customer
focus, we clearly need to do more. Today's announcement is further
evidence of our commitment to deliver value to our shareholders and to
get Nashua firmly back on a path toward profitable growth."
BUSINESSES TO BE DIVESTED
The Specialty Coated Products Division applies a broad range of
chemical coatings to paper. Products range from papers coated for thermal
printers and fax machines to carbonless and ink jet papers. The division
has one plant in Merrimack, New Hampshire, and currently employs
approximately 220 people. It is expected that this unit will continue to
supply thermal paper to the Label Division for the foreseeable future.
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Nashua through its brand names including York, Truprint, Belmont
and Scot is the photofinishing market segment leader in Northern Ireland,
Canada and the U.K. Nashua's international photofinishing facilities are
located in Belfast, Northern Ireland; Saskatoon, Saskatchewan; and
Telford and Newton Abbot, England. Collectively, these businesses employ
approximately 800 people.
BUSINESSES TO BE RETAINED
Nashua Corporation intends to grow three core businesses: U.S.
photofinishing, label and imaging supplies.
U.S. PHOTOFINISHING
The U.S. Photo Group, operating under the York Photo brand, is the
country's largest direct marketer of film processing. In 1996, the
Company introduced York FotoFloppy images on disk, expanding the way
photographs are used. Customers can view, edit and organize their
digitized photos from a 3 1/2 inch floppy disk loaded onto their personal
computer. More recently, York introduced an Internet-based service for
retrieving of images from York-processed film. Last month, Nashua's U.S.
Photo Group began testing a new service in conjunction with its strategic
relationship with Fuji Photo U.S. through which Nashua offers directly to
consumers a premium mail order film processing service under the brand
name Fuji Direct. 1996 revenues for this business were $78 million.
LABEL
Nashua has long been recognized as a leader in the
pressure-sensitive label business, producing products for use in data
processing, information transfer and product identification. Operating
out of Omaha, Nebraska, Nashua's label operation significantly upgraded
capabilities through the addition of five state-of-the-art presses in
1997. The Omaha facility also has laminating capability to service both
internal requirements and the label converting industry. 1996 revenues
were $70 million.
IMAGING SUPPLIES
The Imaging Supplies Division provides competitive, independently
produced toners, remanufactured laser printer cartridges and other
imaging-related supplies to customers, with a particular emphasis on high
quality Xerox and Ricoh compatible toners. 1996 revenues for this
division were $97 million. Nashua has accelerated its introduction of new
toner and cartridge products in 1997 and has expanded its manufacturing
capabilities with a fully-integrated production line capable of
fulfilling world-class technical requirements. Nashua has recently
completed distribution agreements with several leading firms which
service the office equipment marketplace. Nashua also announced a series
of steps to simplify its imaging product offerings and pricing structure
and to enhance its ability to service its independent dealer network by
outsourcing order processing and small- order logistics. This outsourcing
is expected to improve performance and reduce Imaging's annual operating
expenses by over $1 million when fully implemented in the second quarter
of 1998.
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THIRD QUARTER RESULTS
The Company also announced a net loss of $3.1 million, or $.48 per
share, for the third quarter ended September 26, 1997, on sales of $86.9
million, compared with net income of $.5 million, or $.08 per share, on
sales of $100.9 million for the same period in 1996. The weak financial
results produced a lower estimated tax rate for the year, reducing the
tax benefit generated by the operating loss in the quarter. As a result,
approximately one-half of the loss, or $.20 per share, is attributable to
the change in the tax rate. The third quarter loss also includes a
one-time pretax charge of approximately $900,000, or $.10 per share,
related to the sale of excess real estate in Nashua, N.H.
For the nine months ended September 26, 1997, Nashua reported a
net loss of $6.4 million, or $1.00 per share, on sales of $242.6 million,
compared with net income of $24.7 million, or $3.85 per share, on sales
of $306 million for the comparable 1996 period. Results for the first
nine months of 1997 include the previously described, one-time pretax
charge of approximately $900,000, or $.10 per share, and the impact of
the change in the tax rate of approximately $.20 per share, as well as
restructuring and unusual charges of $3 million, or $.24 per share,
during the second quarter of 1997 for costs associated with restructuring
certain distribution channels and aligning the workforce with current
levels of demand.
Results for the first nine months of 1996 included $39.3 million
of pretax gains on the initial public offering of Cerion Technologies'
stock and an $8.4 million after-tax gain on the sale of the Tape Products
Division. The results for the first nine months of 1996 also included a
$7 million charge to write-off goodwill in Nashua's mainland European
photo business, which was sold in the fourth quarter of 1996, and an
after-tax charge of $1.3 million associated with prepayment of debt.
Nashua reported a decline in the Commercial Products Group's sales
in the third quarter of 1997 compared with the same period in 1996 due to
lower sales in the Imaging Supplies Division. Although the Imaging
Supplies Division's laser printer cartridges sales improved from the
prior year, those gains were more than offset by lower sales of dry
toner, copier paper, diskettes and certain discontinued product lines.
The Label Products Division reported higher sales versus the third
quarter of 1996, as well as improved profitability, due to increased
volume of its higher margin products. Third quarter sales in the
Specialty Coated Products Division were flat with the comparable 1996
period while profitability improved versus the same quarter one year ago.
Efforts to enhance productivity, control expenses and reduce costs in all
three business units of the Commercial Products Group resulted in
operating profits in the third quarter of 1997, compared to a small
operating loss in the third quarter of 1996, despite the lower revenues.
Revenues for Nashua's Photo Group declined substantially in the
third quarter of 1997 versus the same period in 1996, excluding sales
from the mainland European photo business which was sold in the fourth
quarter of 1996. This decrease was attributable to continued volume
softness during the traditionally stronger summer months, partly offset
by higher prices. The lower volume, combined with increased expenses
resulting from the development of new products and marketing programs,
produced an operating loss in the third quarter of 1997 compared with
operating income a year ago.
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Combined revenues for the businesses being divested were $34.5
million and $89.2 million for the three and nine months ended September
26, 1997 and $35.0 million and $93.3 million, respectively, for the
comparable periods in 1996. Combined operating losses for these
businesses were $.3 million and $.7 million, respectively, for the third
quarter of 1997 and the first nine months of 1997 compared with operating
income of $1.1 million and $2.4 million, respectively, for the same
periods in 1996.
In the third quarter of 1997, the Company's 37 percent investment
in Cerion Technologies made no contribution to operating income. In the
same period in 1996, Nashua's investment in Cerion produced a loss of $.2
million.
The Company also indicated that, due principally to the weakness
in the Photofinishing Group, it expects to record a loss from operations
in the fourth quarter. The Company recorded a loss of $.07 per share in
the comparable period a year ago. Additionally, Nashua indicated that it
plans to take a pretax charge in the fourth quarter primarily to provide
for costs associated with reducing the size of certain overhead
activities as the Company sells non-strategic assets during 1998.
This press release contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995.
When used in this press release, the words "prospects," "expects,"
"intends," "will," "plans," "should" and similar expressions are intended
to identify such forward-looking statements. Such forward- looking
statements are subject to risks and uncertainties which could cause
actual results to differ materially from those anticipated. Such risks
and uncertainties include, but are not limited to, fluctuations in
customer demand, intensity of competition and promotional activity from
other vendors, general economic and industry conditions, delays or
difficulties in launching new initiatives designed to increase sales and
return Nashua Corporation to profitability, and other risks detailed in
Nashua Corporation's filings with the Securities and Exchange Commission.
Nashua Corporation assumes no obligation to update the information
contained in this press release.
Nashua Corporation markets specialty imaging products and services
to consumers and commercial customers. The Company provides direct
marketing and wholesale photo products and services, thermal papers,
pressure-sensitive labels and specialty papers, as well as copier, ink
jet and laser printer supplies.
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NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
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<TABLE>
<CAPTION>
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Periods ended September 26 and 27, respectively Three Months Nine Months
Dollars in millions, except per share amounts (Unaudited) 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales .................................................. $ 86.9 $100.9 $242.6 $306.0
Cost of products sold (a) .................................. 63.0 71.9 178.6 224.8
------ ------ ------ ------
Gross margin ............................................... 23.9 29.0 64.0 81.2
Gross margin % ............................................. 27.5% 28.7% 26.4% 26.5%
Research, selling, distribution and
administrative expenses (a) ................................ 25.7 28.2 69.7 82.2
Restructuring and unusual charges .......................... 0.9 -- 3.9 7.0
Equity in net (income) loss of Cerion Technologies ......... -- 0.2 -- (0.2)
Gain on disposition of Cerion Technologies stock ........... -- -- -- (32.0)
Gain on Cerion Technologies public stock offering .......... -- -- -- (7.3)
Interest (income) expense, net ............................. (0.1) (0.1) (0.4) 2.2
------ ------ ------ ------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES (BENEFIT) ....................................... (2.6) 0.7 (9.2) 29.3
Income taxes (benefit) ..................................... 0.5 0.2 (2.8) 12.3
------ ------ ------ ------
INCOME (LOSS) FROM CONTINUING OPERATIONS .............. (3.1) 0.5 (6.4) 17.0
Income from discontinued operation ......................... -- -- -- 0.6
Gain on disposal of discontinued operation ................. -- -- -- 8.4
------ ------ ------ ------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS ............... (3.1) 0.5 (6.4) 26.0
Extraordinary loss on extinguishment of debt ............... -- -- -- (1.3)
------ ------ ------ ------
NET INCOME (LOSS) ..................................... $ (3.1) $ 0.5 $ (6.4) $ 24.7
====== ====== ====== ======
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Income (loss) from continuing operations .................. $(0.48) $ 0.08 $(1.00) $ 2.65
INCOME FROM DISCONTINUED OPERATION:
Income from discontinued operation ....................... -- -- -- 0.08
Gain on disposal of discontinued operation ............... -- -- -- 1.32
------ ------ ------ ------
-- -- -- 1.40
Income (loss) before extraordinary loss .................... (0.48) 0.08 (1.00) 4.05
------ ------ ------ ------
Extraordinary loss on extinguishment of debt ............... -- -- -- (0.20)
------ ------ ------ ------
NET INCOME (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE ........................................... $(0.48) $ 0.08 $(1.00) $ 3.85
====== ====== ====== ======
AVERAGE COMMON AND COMMON EQUIVALENT SHARES ................ 6,386 6,413 6,384 6,400
====== ====== ====== ======
</TABLE>
(a) Beginning in the fourth quarter of 1996, postage expenses relating to
prepaid photo mailers, which previously were treated as selling expenses, have
been reclassified to cost of products sold. The cost of products sold and
selling expenses for the three and nine month periods ended September 27, 1996
have been adjusted by $3.2 million and $7.9 million, respectively.
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NASHUA CORPORATION BALANCE SHEET
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<TABLE>
<CAPTION>
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(Unaudited)
SEPTEMBER 26, December 31
Dollars in millions 1997 1996
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 9.4 $ 20.0
Accounts receivable 22.0 20.1
Inventories 15.8 16.7
Other current assets 19.9 15.4
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Total current assets 67.1 72.2
Plant and equipment, net 55.6 60.1
Investment in unconsolidated affiliate 7.2 7.2
Other assets 33.8 37.2
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TOTAL ASSETS $163.7 $176.7
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt $ 0.6 $ 0.8
Accounts payable 24.1 22.7
Accrued expenses 23.1 24.9
Income taxes payable 0.5 2.6
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Total current liabilities 48.3 51.0
Long-term debt 1.7 2.0
Other long-term liabilities 20.1 21.7
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Total long-term liabilities 21.8 23.7
Common stock and additional capital 18.8 18.8
Retained earnings 79.3 85.8
Cumulative translation adjustment (3.7) (1.8)
Treasury stock, at cost (0.8) (0.8)
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Total shareholders' equity 93.6 102.0
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $163.7 $176.7
====== ======
</TABLE>
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NASHUA CORPORATION SELECTED FINANCIAL DATA
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<TABLE>
<CAPTION>
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Periods ended September 26 and 27, respectively THREE MONTHS NINE MONTHS
Dollars in millions (Unaudited) 1997 1996 1997 1996
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<S> <C> <C> <C> <C>
NET SALES
Commercial Products Group ............................ $42.6 $ 45.3 $130.3 $151.1
Photo Group .......................................... 44.3 55.6 112.3 135.6
Cerion Technologies .................................. -- -- -- 19.3
----- ------ ------ ------
Net sales ......................................... $86.9 $100.9 $242.6 $306.0
----- ------ ------ ------
OPERATING INCOME (LOSS)
Commercial Products Group(a) ......................... $ 0.4 $ (0.1) $ (1.0) $ (2.9)
Photo Group(a)(b) .................................... (0.5) 3.3 (1.7) (4.1)
Cerion Technologies(c) ............................... -- (0.2) -- 44.7
Corporate expenses, including interest(d) ............ (2.5) (2.3) (6.5) (8.4)
----- ------ ------ ------
Total operating income (loss) ..................... $(2.6) $ 0.7 $ (9.2) $ 29.3
----- ------ ------ ------
Depreciation and amortization ........................ $ 4.1 $ 4.6 $ 10.8 $ 13.7
===== ====== ====== ======
Investment in plant and equipment .................... $ 2.0 $ 2.8 $ 7.4 $ 9.5
===== ====== ====== ======
</TABLE>
(a) Operating loss for the nine months ended September 26, 1997 includes
restructuring and unusual charges of $2.8 million and $.2 million for
Commercial Products Group and Photo Group, respectively.
(b) Operating loss for the nine months ended September 27, 1996 included an
unusual charge of $7 million.
(c) Operating income for the nine months ended September 27, 1996 included
gains of $32 million from the sale of Cerion Technologies stock and $7.3
million from Nashua's interest in the shares sold by Cerion.
(d) Corporate expenses for the three and nine months ended September 26, 1997
include a pretax charge of $.9 million related to the sale of excess real
estate in Nashua, N.H.
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NASHUA CORPORATION PRO FORMA QUARTERLY OPERATING RESULTS
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NOTE: The following unaudited pro forma quarterly operating data (the "Pro Forma
Financial Data") is derived from the historical financial statements of the
Company, excluding gains and losses related to dispositions, restructuring and
other unusual charges, and the operating results of Nashua Express, Specialty
Coated Products, the international photofinishing businesses in Canada, Northern
Ireland, United Kingdom and mainland Europe, the OPC drum product line and the
liquid toner product line. The Pro Forma Financial Data is not meant to be
indicative of future results from operations.
<TABLE>
<CAPTION>
1996 1997
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FIRST SECOND THIRD FOURTH FIRST SECOND THIRD
Dollars in millions (Unaudited) QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $60.4 $62.1 $60.4 $57.3 $53.4 $55.4 $56.9
Gross Margin 11.4 13.9 16.0 14.6 13.4 13.8 14.7
Gross Margin % 18.9% 22.4% 26.4% 25.4% 23.3% 25.0% 25.9%
----- ----- ----- ----- ----- ----- -----
Operating Income (loss) $(4.6) $(2.6) $(0.5) $(0.4) $(2.1) $(1.5) $(1.6)
===== ===== ===== ===== ===== ===== =====
----- ----- ----- ----- ----- ----- -----
Cerion Technologies $ 3.2 $ 2.4 $(0.2) $(0.3) $ -- $ -- $ --
===== ===== ===== ===== ===== ===== =====
NET SALES BY SEGMENT:
Commercial Products Group $42.8 $43.0 $37.1 $38.9 $35.9 $36.2 $35.4
Photo Group 17.6 19.1 23.3 18.4 17.5 19.2 21.5
----- ----- ----- ----- ----- ----- -----
Total Company $60.4 $62.1 $60.4 $57.3 $53.4 $55.4 $56.9
===== ===== ===== ===== ===== ===== =====
OPERATING INCOME (LOSS)
BY SEGMENT:
Commercial Products Group $(2.0) $(0.9) $ 0.4 $ 0.8 $ 0.2 $ 0.5 $ 0.2
Photo Group (0.4) 0.4 1.6 1.1 (0.4) 0.3 (0.1)
Corporate and other,
excluding interest (2.2) (2.1) (2.5) (2.3) (1.9) (2.3) (1.7)
----- ----- ----- ----- ----- ----- -----
Total Company $(4.6) $(2.6) $(0.5) $(0.4) $(2.1) $(1.5) $(1.6)
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</TABLE>
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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
Date: November 20, 1997 By /s/ Paul Buffum
----------------------------
Paul Buffum
Vice President, General
Counsel and Secretary
