<PAGE> 1
FORM 10-Q
-----------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
JUNE 27, 1997
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) (I.R.S. 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 AUGUST 1, 1997, THE COMPANY HAD 6,630,945 SHARES OF COMMON STOCK,
EXCLUDING 24,050 SHARES IN TREASURY, PAR VALUE $1 PER SHARE, OUTSTANDING.
-1-
<PAGE> 2
NASHUA CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
--------
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Operations and Retained Earnings
Three Months Ended June 27, 1997 and June 28, 1996 3
Consolidated Statements of Operations and Retained Earnings
Six Months Ended June 27, 1997 and June 28, 1996 4
Consolidated Balance Sheets
June 27, 1997 and December 31, 1996 5
Consolidated Statements of Cash Flows
Six Months Ended June 27, 1997 and June 28, 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1.
NASHUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three months Three months
ended June 27, ended June 28,
1997 1996
-------------- --------------
<S> <C> <C>
Net sales $80,487 $103,601
Cost of products sold 58,902 72,964
------- --------
Gross margin 21,585 30,637
Research, selling, distribution and administrative expenses 22,839 29,992
Restructuring and unusual charges 3,004 7,000
Equity in net income of Cerion Technologies (3) (385)
Gain on disposition of Cerion Technologies stock - (31,962)
Gain on Cerion Technologies public stock offering - (7,353)
Net interest expense (income) (122) 861
------- --------
25,718 (1,847)
Income (loss) from continuing operations before income taxes (4,133) 32,484
Provision for income taxes (benefit) (2,192) 13,826
------- --------
Income (loss) from continuing operations (1,941) 18,658
Income from discontinued operation, net of taxes - 318
Gain on disposal of discontinued operation, net of taxes - 8,434
------- --------
Income (loss) before extraordinary loss (1,941) 27,410
Extraordinary loss on extinguishment of debt, net of tax benefit - (1,257)
------- --------
Net income (loss) (1,941) 26,153
Retained earnings, beginning of period 84,364 59,529
------- --------
Retained earnings, end of period $82,423 $ 85,682
======= ========
Earnings (loss) per common and common equivalent share:
Income (loss) from continuing operations $ (.30) $ 2.91
Income from discontinued operation:
Income from discontinued operation - .05
Gain on disposal of discontinued operation - 1.32
------- --------
- 1.37
Income (loss) before extraordinary loss (.30) 4.28
Extraordinary loss on extinguishment of debt - (.20)
------- --------
Net income (loss) $ (.30) $ 4.08
======= ========
Average common and common equivalent shares 6,386 6,411
======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 4
NASHUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For the six For the six
months ended months ended
June 27, 1997 June 28, 1996
------------- -------------
<S> <C> <C>
Net sales $155,663 $205,098
Cost of products sold 115,513 148,261
-------- --------
Gross margin 40,150 56,837
Research, selling, distribution and administrative expenses 43,985 58,756
Restructuring and unusual charges 3,004 7,000
Equity in net income of Cerion Technologies (28) (385)
Gain on disposition of Cerion Technologies stock - (31,962)
Gain on Cerion Technologies public stock offering - (7,353)
Net interest expense (income) (276) 2,278
-------- --------
46,685 28,334
Income (loss) from continuing operations before income taxes (6,535) 28,503
Provision for income taxes (benefit) (3,201) 12,085
-------- --------
Income (loss) from continuing operations (3,334) 16,418
Income from discontinued operation, net of taxes - 524
Gain on disposal of discontinued operation, net of taxes - 8,434
-------- --------
Income (loss) before extraordinary loss (3,334) 25,376
Extraordinary loss on extinguishment of debt, net of tax benefit - (1,257)
-------- --------
Net income (loss) (3,334) 24,119
Retained earnings, beginning of period 85,757 61,563
-------- --------
Retained earnings, end of period $ 82,423 $ 85,682
======== ========
Earnings (loss) per common and common equivalent share:
Income (loss) from continuing operations $ (.52) $ 2.57
Income from discontinued operation:
Income from discontinued operation - .08
Gain on disposal of discontinued operation - 1.32
-------- --------
- 1.40
Income (loss) before extraordinary loss (.52) 3.97
Extraordinary loss on extinguishment of debt - (.20)
-------- --------
Net income (loss) $ (.52) $ 3.77
======== ========
Average common and common equivalent shares 6,384 6,397
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 5
NASHUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS
June 27, December 31,
Current assets: 1997 1996
(Unaudited)
---------- ------------
<S> <C> <C>
Cash and cash equivalents $ 10,758 $ 20,018
Accounts receivable 20,022 20,112
Inventories:
Materials and supplies 5,385 6,676
Work in process 3,203 2,498
Finished goods 9,368 7,494
-------- --------
Total inventories 17,956 16,668
Other current assets 20,967 15,367
-------- --------
Total current assets 69,703 72,165
-------- --------
Property, plant and equipment, at cost 117,231 118,577
Accumulated depreciation (58,633) (58,459)
-------- --------
Net property, plant and equipment 58,598 60,118
-------- --------
Other assets:
Intangible assets, net of amortization ($11,332 in 1997 and
$10,483 in 1996) 23,384 25,123
Investment in unconsolidated affiliate 7,246 7,218
Other assets 11,785 12,065
-------- --------
Total other assets 42,415 44,406
-------- --------
Total assets $170,716 $176,689
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 662 $ 811
Accounts payable 26,403 22,678
Accrued expenses 23,284 24,880
Income taxes payable 428 2,623
-------- --------
Total current liabilities 50,777 50,992
-------- --------
Long-term debt 1,788 2,044
Other long-term liabilities 20,126 21,736
-------- --------
Total long-term liabilities 21,914 23,780
-------- --------
Stockholders' Equity:
Common stock and additional paid-in capital 18,845 18,754
Retained earnings 82,423 85,757
Cumulative translation adjustment (2,486) (1,837)
Treasury stock, at cost (757) (757)
-------- --------
Total stockholders' equity 98,025 101,917
-------- --------
Commitments and contingencies
Total liabilities and stockholders' equity $170,716 $176,689
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
NASHUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six months ended Six months ended
June 27, 1997 June 28, 1996
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(3,334) $24,119
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 6,652 9,130
Income from discontinued operation - (524)
Extraordinary loss on extinguishment of debt - 1,257
Gain on disposal of discontinued operation - (8,434)
Equity in net income of Cerion Technologies (28) (385)
Gain on disposition of Cerion Technologies stock - (31,962)
Gain on Cerion Technologies public stock offering - (7,353)
Restructuring and unusual charges 3,004 7,000
Change in working capital and other, net (10,247) 18,740
------- -------
Cash provided by (used in) operating activities (3,953) 11,588
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in plant, property and equipment (5,363) (6,723)
Retirement of fixed assets 427 -
Proceeds from repayment of Cerion Technologies note - 11,142
Proceeds from sale of Cerion Technologies stock, net - 33,080
------- -------
Cash provided by (used in) investing activities (4,936) 37,499
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 877
Repayment of borrowings (405) (62,984)
Proceeds and tax benefits from shares issued
under stock option plans 91 12
Purchase and reissuance of treasury stock - (4)
Extinguishment of debt - (952)
------- -------
Cash used in financing activities (314) (63,051)
------- -------
Proceeds from the sale of discontinued operation - 28,000
Cash provided by activities of discontinued operations - 554
Effects of exchange rate changes on cash (57) (2)
------- -------
Increase (decrease) in cash and cash equivalents (9,260) 14,588
Cash and cash equivalents at beginning of period 20,018 8,390
------- -------
Cash and cash equivalents at end of period $10,758 $22,978
======= =======
Cash paid for interest $ 127 $ 2,405
======= =======
Cash paid for income taxes $ 2,408 $ 85
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE> 7
NASHUA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The financial statements have been prepared in accordance with the
requirements of Form 10-Q and consequently do not include all
disclosures required by Form 10-K. Additional information may be
obtained by referring to the Company's Form 10-K for the year ended
December 31, 1996.
The financial information as of and for the periods ended June 27, 1997
and June 28, 1996 is unaudited and reflects all adjustments which are,
in the opinion of management, necessary for fair presentation. All such
adjustments are of a normal recurring nature. The results for interim
periods are not necessarily indicative of the results to be expected
for the fiscal year.
Earnings Per 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. The average common and common equivalent
shares for the quarter ended June 27, 1997 and June 28, 1996 were
6,386,000 and 6,411,000 shares, respectively and the six months ended
June 27, 1997 and June 28, 1996 were 6,384,000 and 6,397,000 shares,
respectively.
In February 1997, the Financial Accounting Standards Board issued
"Statement of Financial Accounting Standards No. 128, Earnings per
Share (SFAS 128)." This Statement will be effective for both interim
and annual periods ending after December 15, 1997. SFAS 128 replaces
APB Opinion 15 and related interpretations (APB 15). SFAS 128
simplifies the computation of earnings per share (EPS) by replacing the
presentation of primary earnings per share with a presentation of basic
EPS. Basic EPS includes no dilution and is computed by dividing net
income by the weighted-average number of common shares outstanding for
the period. Diluted EPS reflects the potential dilution of securities
that could share in the earnings of an entity, similar to fully diluted
EPS under APB 15.
The Company has recorded net losses for the three and six month periods
ended June 27, 1997, therefore, any common stock equivalents would be
antidilutive; therefore, earnings per common and common equivalent
share as presented on the consolidated statements of operations and
retained earnings is equivalent to Basic Earnings per Share and Diluted
Earnings per Share under SFAS 128.
In June of 1997, the Financial Accounting Standards Board issued
"Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income (SFAS 130) and No. 131, Disclosures about Segments
of an Enterprise and Related Information (SFAS 131)." In accordance
with these statements, the Company plans to implement SFAS 130 which
requires presentation of certain information related to comprehensive
income and SFAS 131 which requires that certain additional information
related to operating segments be reported during fiscal year 1998.
-7-
<PAGE> 8
NASHUA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock Options
At June 27, 1997, options for 759,780 shares of common stock were
outstanding. Stock options for an additional 277,575 shares may be
awarded under the Company's 1996 Stock Incentive Plan.
Restructuring Charges
In the second quarter of 1997, the Company recorded a restructuring and
unusual charge of $3 million. Included in this amount are charges of
$2.2 million relating to salary and benefit continuation costs recorded
in connection with a workforce reduction affecting the Company's
Commercial Products Group and the restructuring of certain distribution
channels. The remaining $.8 million relates to assets to be sold or
discarded and other costs associated with this restructuring effort.
Reclassification
Beginning in the fourth quarter of 1996, postage expenses relating to
prepaid photo mailers, which were treated as selling expenses, have
been reclassified to cost of products sold. The costs of products sold
and selling expenses for the second quarter of 1996 have been adjusted
by $2.5 million and for the first six months of 1996 have been adjusted
by $4.6 million to reflect the change.
Commitments and Contingencies
In respect to patent litigation brought by Ricoh Company, Ltd., the
Federal District Court for New Hampshire decided on March 31, 1997 to
enjoin the Company from manufacturing, using or selling its NT-50 and
NT-6750 toner cartridges in the United States. Sales of these products
in 1996 amounted to less than one percent of the Company's total sales.
The Court left the subject of damages, if any, to subsequent
proceedings. The Company disagrees with the Court's decision to enjoin
the Company and has filed a notice of appeal.
-8-
<PAGE> 9
NASHUA CORPORATION AND SUBSIDIARIES
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
I. RESULTS OF OPERATIONS
Sales and operating income (loss) by industry segment are shown in the
accompanying table on page 12.
THREE MONTHS ENDED JUNE 27, 1997 VERSUS
THREE MONTHS ENDED JUNE 28, 1996
In the second quarter of 1997, the Company reported a net loss of $1.9 million
($.30 per share), including a restructuring and unusual charge of $3.0 million,
compared to net income of $26.1 million ($4.08 per share) for the second quarter
of 1996. Net sales reported decreased 22% to $80.5 million from $103.6 million
in the same period a year ago. Excluding sales related to the mainland European
photo business and Cerion Technologies Inc. ("Cerion"), the comparable sales
decrease was 9% from $88.1 million in the same period a year ago. The pretax
loss from continuing operations reported for the second quarter of 1997 was $4.1
million compared to pretax income from continuing operations of $32.5 million a
year ago. In the second quarter of 1997 the pretax loss from continuing
operations was $1.1 million, excluding the restructuring and unusual charge of
$3.0 million, whereas, the pretax loss from continuing operations in second
quarter of 1996 was $.2 million, excluding Cerion gains and equity income and
restructuring and unusual charges. Results in 1996 included an unusual charge of
$7.0 million for the write-down of goodwill related to the Company's mainland
European photo business, $39.3 million in gains on the initial public offering
of Cerion stock, an $8.4 million after-tax gain on the sale of the Tape Products
Division and an extraordinary after-tax charge of $1.3 million associated with
prepayment of debt.
During the second quarter of 1997, the Company recorded a restructuring and
unusual charge of $3.0 million associated with restructuring certain
distribution channels and aligning the workforce to current levels of demand
principally within the Commercial Products Group. Below are details of the
charges related to continuing operations and the activity recorded during the
second quarter of 1997.
<TABLE>
<CAPTION>
Balance Current Current Balance
March 28, Period Period June 27,
(In thousands) 1997 Provision Charges 1997
--------- --------- ------- --------
<S> <C> <C> <C> <C>
Provisions for severance related to
workforce reductions $ 600 $ 2,208 $ (350) $2,458
Provisions for assets to be sold or discarded 3,210 159 (1,707) 1,662
Other 2,075 637 (930) 1,782
------ ------- -------- ------
Total $5,885 $ 3,004 $ (2,987) $5,902
====== ======= ======== ======
</TABLE>
The current period provision for workforce reductions includes amounts for
salary and benefit continuation for certain employees as part of the
Commercial Products Group restructuring. Management anticipates that such
actions will be completed within a year and that total estimated savings in
personnel and operating costs resulting from the restructuring and unusual
charge of $3.0 million will be approximately $5.0 million annually.
-9-
<PAGE> 10
NASHUA CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
THREE MONTHS ENDED JUNE 27, 1997 VERSUS
THREE MONTHS ENDED JUNE 28, 1996 (CONTINUED)
The Commercial Products Group's second quarter sales decreased 19% to $43.2
million from $53.1 million during the same quarter a year ago. The sales
decrease was primarily related to the Imaging Supplies Division which
experienced lower volumes related to lower demand for dry toner, laser printer
cartridges and copier paper. The pretax impact of lower sales volumes were
partially offset by improvements in productivity and lower manufacturing costs
during the quarter.
The Photo Group's second quarter sales decreased 13% to $37.3 million from $43.0
million during the same quarter a year ago. Excluding sales from the mainland
European photo business which was sold in the fourth quarter of 1996, the Photo
Group's sales slightly improved from the same period a year ago. Higher prices
in the U.S. and favorable currency effects were partially offset by lower unit
volumes. Additionally, higher marketing expenses driven by new product
development and marketing initiatives resulted in lower operating income for the
second quarter of 1997 compared to the same quarter of 1996, excluding the
unusual charge of $7.0 million related to the write-down of goodwill of the
mainland European photo business.
SIX MONTHS ENDED JUNE 27, 1997 VERSUS
SIX MONTHS ENDED JUNE 28, 1996
During the first six months of 1997, the Company reported a net loss of $3.3
million ($.52 per share), including a restructuring and unusual charge of $3.0
million, compared to net income of $24.1 million ($3.77 per share) a year ago.
Net sales reported decreased 24% to $155.7 million from $205.1 million in the
same period a year ago. Excluding sales related to the mainland European photo
business and Cerion, the comparable sales decrease was 9% from $170.7 million in
the same period a year ago. The pretax loss from continuing operations reported
for the six months was $6.5 million compared to pretax income from continuing
operations of $28.5 million in the same period a year ago. In the first six
months of 1997 the pretax loss from continuing operations was $3.5 million,
excluding the restructuring and unusual charge of $3.0 million, whereas, the
pretax loss from continuing operations in the first six months of 1996 was $4.2
million, excluding Cerion gains and equity income and restructuring and unusual
charges. Results in 1996 included an unusual charge of $7.0 million for the
write-down of goodwill related to the Company's mainland European photo
business, $39.3 million in gains on the initial public offering of Cerion stock,
an $8.4 million after-tax gain on the sale of the Tape Products Division and an
extraordinary after-tax charge of $1.3 million associated with prepayment of
debt.
During the first six months, the Commercial Products Group's year-to-date sales
decreased 17% to $87.7 million from $105.8 million for the same period a year
ago. The sales decrease was primarily related to the Imaging Supplies Division
which experienced lower volumes which was related to lower demand for dry toner,
laser printer cartridges and copier paper. The Commercial Product Group's
operating profit, excluding restructuring and unusual charge, increased from an
operating loss of $2.8 million in the first six months of 1996 to an operating
profit of $1.4 million. The increase was due to improved productivity and lower
manufacturing costs.
During the first six months, the Photo Group's sales decreased 15% to $68.0
million from $80.0 million for the same period a year ago. On a comparable
basis, excluding sales from the mainland European photo business which was sold
in the fourth quarter of 1996, sales were slightly higher versus the same period
a year ago which was primarily the result of favorable currency effects. The
Photo Group's operating loss, excluding restructuring and unusual charge, for
the first six months of 1997 decreased to an operating loss of $1 million
compared to an operating loss of $0.5 million in the first six months of 1996.
The increased operating loss was primarily due to lower volumes and pricing in
the U.K. business and higher marketing expenses.
The Company's estimated annual effective tax rate for the first six months of
1997 was 49% compared to 42% for the same period a year ago. The estimated
annual effective income tax benefit is higher than the U.S. statutory rate
primarily due to the unfavorable impact of non-deductible goodwill and state
income taxes.
-10-
<PAGE> 11
NASHUA CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
II. CASH FLOWS AND LIQUIDITY
During the first six months of the year, the Company's operations used $4
million of cash compared to cash provided from operations of $11.6 million last
year. The change year-to-year is primarily related to a decrease in depreciation
and amortization and a use of cash from changes in working capital.
Working capital changes are attributed to an increase in inventory of $1.3
million and other current assets of $5.6 million which relates to an income tax
benefit and seasonal increases in deferred marketing expenses within the Photo
Group. Additionally, income taxes payable decreased $2.2 million which was
offset by an increase in accounts payable of $3.7 million.
-11-
<PAGE> 12
NASHUA CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
(Dollars in millions, except per share amounts)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
6/27/97 6/28/96 6/27/97 6/28/96
------- ------- ------- -------
Industry Segment Data
- ---------------------
<S> <C> <C> <C> <C>
Net sales:
Commercial Products Group $ 43.2 $ 53.1 $ 87.7 $105.8
Photo Group 37.3 43.0 68.0 80.0
Cerion Technologies - 7.5 - 19.3
------ ------ ------ ------
Net sales $ 80.5 $103.6 $155.7 $205.1
====== ====== ====== ======
Operating income (loss):
Commercial Products Group (a) $ (2.0) $ (0.1) $ (1.4) $ (2.8)
Photo Group (a)(b) 0.1 (6.4) (1.2) (7.5)
Cerion Technologies (c) - 41.7 - 44.9
Corporate expense, including interest (2.2) (2.7) (3.9) (6.1)
------ ------ ----- ------
Total operating income (loss) (4.1) 32.5 (6.5) 28.5
Provision for income taxes (benefit) (2.2) 13.8 (3.2) 12.1
------ ------ ----- ------
Income (loss) from continuing operations (1.9) 18.7 (3.3) 16.4
Income from discontinued operation - 0.3 - 0.6
Gain on disposal of discontinued operation - 8.4 - 8.4
------ ------ ------ ------
Income (loss) before extraordinary loss (1.9) 27.4 (3.3) 25.4
Extraordinary loss on extinguishment of debt - (1.3) - (1.3)
------ ------ ------ ------
Net income (loss) $ (1.9) $ 26.1 $ (3.3) $ 24.1
====== ====== ====== ======
Net income (loss) per share $(0.30) $ 4.08 $(0.52) $ 3.77
====== ====== ====== ======
</TABLE>
(a) Operating income for the three and six months ended June 27, 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 three and six months ended June 28, 1996 included an
unusual charge of $7 million.
(c) Operating income for the three and six months ended June 28, 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 and income of $.4 million
recorded under the equity method of accounting.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In respect to patent litigation brought by Ricoh Company, Ltd., the Federal
District Court for New Hampshire decided on March 31, 1997 to enjoin the Company
from manufacturing, using or selling its NT-50 and NT-6750 toner cartridges in
the United States. Sales of these products in 1996 amounted to less than one
percent of the Company's total sales. The Court left the subject of damages, if
any, to subsequent proceedings. The Company disagrees with the Court's decision
to enjoin the Company and has filed a notice of appeal.
The Company references its first quarter Form 10-Q in respect to a shareholder
consolidated amended complaint filed against Cerion, the Company and other named
defendants on March 24, 1997 in the Circuit Court in Cook County, Illinois
relating to the initial public stock offering of Cerion in May 1996 ("Cerion
Litigation"). There were no material developments in the second quarter.
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", "anticipates", "should" 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 Litigation and other risks detailed in the
Company's filings with the Securities and Exchange Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) REPORTS ON FORM 8-K
On April 9, 1997, the Company filed a Form 8-K concerning a
ruling in the patent litigation suit brought by Ricoh Company,
Ltd.
-13-
<PAGE> 14
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: August 11, 1997 /s/ Daniel M. Junius
----------------------------------------
Daniel M. Junius
Vice President-Finance,
Chief Financial Officer and Treasurer
(principal financial and duly authorized officer)
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> DEC-31-1996
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0
0
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