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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
MAY 20, 1996
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Date of Report (Date of earliest event reported)
NASHUA CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-5492-1 02-0170100
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(State of (Commission (I.R.S. Employer
Incorporation) File Number) Identification No.)
44 Franklin Street
P.O. Box 2002
Nashua, New Hampshire 03061-2002
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(Address of principal executive offices)
(603) 880-2323
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 20, 1996, the Company completed the sale of its Tape Products Division,
a division which manufactures and sells tape products, such as duct tape and
masking tape for various industrial and consumer uses, to The Kendall Company
and received $28 million for the division's net assets. Chemical Securities,
Inc. assisted Nashua with bid solicitation from several prospective buyers. On
May 24, the Company and its indirect wholly-owned subsidiary Cerion
Technologies Inc. ("Cerion"), a manufacturer of precision-machined aluminum
disk substrates for use in computer storage devices, completed the initial
public stock offering of 3,840,000 shares of common stock, of which 2,225,000
shares were offered by Nashua and 1,615,000 shares by Cerion. In conjunction
with the offering, the underwriter exercised its over-allotment option and
purchased 576,000 additional shares of Cerion's common stock from Nashua. The
initial public offering price of Cerion Technologies common stock was $13 per
share. The initial public offering price was determined by negotiations among
the company, Cerion and William Blair and Company L.L.C., as representative of
the underwriters. As a result of the sale by Nashua of the original 2,225,000
shares and the over-allotment of 576,000 shares, Nashua Corporation will
receive approximately $36 million in gross proceeds. Nashua will continue to
own 37 percent of Cerion's common stock. The Company has agreed that, subject
to certain exceptions, for a period of 180 days following May 24, 1996,
without the prior written consent of William Blair and Company L.L.C., it will
not offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of any Cerion common stock or securities convertible or exchangeable
into or exercisable for Cerion common stock or in any other manner transfer all
or a portion of the economic consequences associated with the ownership of any
such common stock, or file or cause to be filed any registration statement with
the Securities and Exchange Commission related to any of the foregoing.
Additionally, on May 31, 1996, Cerion Technologies repaid a $10 million note
payable to Nashua. Approximately $57 million of the net proceeds from these
transactions will be used for the repayment of debt.
ITEM 7. PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(A) Pro-Forma Financial Information
1. Unaudited Pro Forma Balance Sheet of Nashua Corporation as of
March 29, 1996.
2. Unaudited Pro Forma Statements of Operations of Nashua
Corporation for the year ended December 31, 1995 and for the
three month period ended March 29, 1996.
3. Notes to Unaudited Pro Forma Financial Information.
(B) Exhibits
1.1 Underwriting agreement dated May 23, 1996 between William Blair
and Company, L.L.C. and Cerion Technologies, Nashua Corporation
and Cerion Holdings, Inc.
2.1 Asset Purchase Agreement by and between Nashua Corporation and
The Kendall Company dated as of April 17, 1996.
99.1 Promissory Note dated March 29, 1996 made by Cerion Technologies,
Inc. to the Company. Exhibit to the Cerion Technology Inc.
registration statement on Form S-1 (No. 333-02590) as amended
dated April 26, 1996 incorporated herein by reference.
99.2 Press release, dated May 20, 1996, announcing completion of sale
of Nashua Tape Division.
99.3 Press release, dated May 24, 1996, announcing commencement of
initial public offering of Cerion common stock.
99.4 Press release, dated May 28, 1996, announcing underwriters'
exercise of over allotment option for Cerion common stock.
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NASHUA CORPORATION
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On May 20, 1996, the Company completed the sale of its Tape Products Division
and received $28 million for the division's net assets. On May 24, the Company
and Cerion Technologies Inc. completed the initial public stock offering of
3,840,000 shares of common stock, of which 2,225,000 shares were offered by
Nashua and 1,615,000 shares by Cerion. In conjunction with the offering, the
underwriter exercised its over-allotment option and purchased 576,000 additional
shares of Cerion's common stock from Nashua. The initial public offering price
of Cerion Technologies common stock was $13 per share. As a result of the sale
by Nashua of the original 2,225,000 shares and the over-allotment of 576,000
shares, Nashua Corporation will receive approximately $36 million in gross
proceeds. Nashua will continue to own 37 percent of Cerion's common stock. The
Company has agreed that, subject to certain exceptions, for a period of 180 days
following May 24, 1996, without prior written consent of William Blair and
Company L.L.C., it will not offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of any Cerion common stock or securities
convertible or exchangeable into or exercisable for Cerion common stock or in
any other manner transfer all or a portion of the economic consequences
associated with the ownership of any such common stock or file or cause to be
filed any registration statement with the Securities and Exchange Commission
relating to any of the foregoing. Additionally, on May 31, 1996, Cerion
Technologies repaid a $10 million note payable to Nashua. A majority of the net
proceeds from these transactions will be used for the repayment of debt.
The Unaudited Pro Forma Statements of Operations for the three month period
ended March 29, 1996 and the year ended December 31, 1995 include the historical
results of Nashua. The historical results have been adjusted by giving effect to
assumptions and adjustments as described in the accompanying Notes to Unaudited
Pro Forma Financial Information, including adjustments to reflect the impact of
the divestitures as though they had occurred at the beginning of each period
presented.
The Unaudited Pro Forma Balance Sheet as of March 29, 1996 has been prepared
based on the balance sheet of Nashua as of March 29, 1996. The historical
amounts have been adjusted to give effect to the divestitures as though the
transactions had occurred as of the balance sheet date presented, as further
described in the accompanying Notes to Unaudited Pro Forma Financial
Information. In addition, the investment in Cerion Technologies has been
presented using the equity method of accounting.
The following unaudited pro forma financial information may not necessarily
reflect the results of operations or the financial position of Nashua which
would have actually resulted had the divestitures occurred as of the date and
for the periods indicated, or of future earnings or the future financial
position of the Company. The unaudited pro forma financial information should be
read in conjunction with the accompanying Notes to Unaudited Pro Forma Financial
Information and Nashua Corporation's Annual Report on Form 10-K as amended, and
Nashua Corporation's Quarterly Report on Form 10-Q.
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NASHUA CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 29, 1996
(IN THOUSANDS)
HISTORICAL PRO FORMA
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Nashua Adjustments (Note 2) Nashua
------ ----------- -------- ------
ASSETS
Current Assets
Cash and cash equivalents $ 11,064 $ 11,154 [A][B] $ 22,218
Accounts receivable 30,990 (7,394) [B] 23,596
Inventories 15,937 (673) [B] 15,264
Other current assets 31,370 (11,109) [B][D] 20,261
Net current assets of
discontinued operations 7,020 (7,020) [C] -
-------- -------- --------
96,381 (15,042) 81,339
Plant and equipment, net 68,138 (6,686) [B] 61,452
Other assets 52,704 6,879 [E] 59,583
Net non-current assets of
discontinued operations 5,227 (5,227) [C] -
-------- -------- --------
Total Assets $222,450 $(20,076) $202,374
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term
debt $ 8,375 $ (7,130) [F] $ 1,245
Accounts payable and accrued
expenses 57,553 (4,295) [B] 53,258
Income taxes payable 4,588 7,652 [B][G] 12,240
-------- -------- --------
70,516 (3,773) 66,743
Long-term debt 60,475 (49,919) [F] 10,556
Other long-term liabilities 19,352 - 19,352
-------- -------- --------
79,827 (49,919) 29,908
Shareholders' Equity
Common stock and additional capital 18,681 - 18,681
Retained earnings 59,529 33,616 [H] 93,145
Cumulative translation adjustment (5,352) - (5,352)
Treasury stock, at cost (751) - (751)
-------- -------- --------
72,107 33,616 105,723
-------- -------- --------
Total Liabilities and Shareholders'
Equity $222,450 $(20,076) $202,374
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See Accompanying Notes to Unaudited Pro Forma Financial Information.
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NASHUA CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL PRO FORMA
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Nashua Adjustments (Note 2) Nashua
------ ----------- -------- ------
Net Sales $452,196 $(27,530) [I] $424,666
Cost of products sold 336,037 (19,023) [I] 317,014
Selling, distribution and
administrative expenses 105,977 (1,501) [I] 104,476
Research and development expenses 9,238 (739) [I] 8,499
Restructuring charges 16,247 - 16,247
Interest expense 5,532 (4,658) [I][J] 874
Interest and other income (686) - (686)
Income from equity investment - (1,275) [K] (1,275)
-------- -------- --------
Total costs and expenses 472,345 (27,196) 445,149
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Loss from continuing operations
before income taxes (20,149) (334) (20,483)
Income tax benefit (4,679) (196) [L] (4,875)
-------- -------- --------
Loss from continuing operations (15,470) (138) (15,608)
Income from discontinued
operations, net of tax 739 (739) [M] -
-------- -------- --------
Net loss $(14,731) $ (877) $(15,608)
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Earnings per common and
common equivalent share:
Loss from continuing operations $ (2.43) $ (.02) $ (2.45)
Income from discontinued operations .12 (.12) -
-------- -------- --------
Net loss $ (2.31) $ (.14) $ (2.45)
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Average outstanding common shares
plus common equivalents 6,374 6,374
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See Accompanying Notes to Unaudited Pro Forma Financial Information.
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NASHUA CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTH PERIOD ENDED MARCH 29, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL PRO FORMA
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Nashua Adjustments (Note 2) Nashua
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Net Sales $101,497 $(11,774) [I] $89,723
Cost of products sold 75,297 (7,098) [I] 68,199
Selling, distribution and
administrative expenses 26,420 (1,012) [I] 25,408
Research and development expenses 2,344 (320) [I] 2,024
Interest expense 1,539 (1,275) [I][J] 264
Interest and other income (122) - (122)
Income from equity investment - (684) [K] (684)
-------- -------- -------
Total costs and expenses 105,478 (10,389) 95,089
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Loss from continuing
operations before income taxes (3,981) (1,385) (5,366)
Income tax benefit (1,741) (588) [L] (2,329)
-------- -------- -------
Loss from continuing
operations (2,240) (797) (3,037)
Income from discontinued
operations, net of tax 206 (206) [M] -
-------- -------- -------
Net loss $ (2,034) $ (1,003) $(3,037)
======== ======== =======
Earnings per common and
common equivalent share:
Loss from continuing
operations $ (.35) $ (.13) $ (.48)
Income from discontinued operations .03 (.03) -
-------- -------- -------
Net loss $ (.32) $ (.16) $ (.48)
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Average outstanding common shares
plus common equivalents 6,374 6,374
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See Accompanying Notes to Unaudited Pro Forma Financial Information.
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NASHUA CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
1. Basis of Presentation
The unaudited pro forma financial information is presented to give effect
to the disposition of the Tape Products Division, a discontinued operation,
the sale of 63% of Cerion Technologies Inc. ("Cerion"), formerly a
wholly-owned subsidiary of Nashua Corporation ("the Company") and the
repayment of a $10 million note from Cerion to Nashua. Under the terms of
the Tape Products Division sales agreement it is expected that the Company
will receive net proceeds before income taxes of approximately $26 million
for the net assets of the business. As a result of the sale of Cerion
common stock by the Company, it is estimated that the Company will receive
$32.6 million based on an initial stock price of $13 per share less the
costs of issuance.
The unaudited pro forma financial information should be read in conjunction
with the historical financial statements of the Company.
2. Adjustments
The following adjustments have been made in the preparation of the
unaudited pro forma financial information:
A. To record an increase in cash required to settle tax liabilities
resulting from gains incurred on the dispositions and sale and
repayment proceeds retained by the Company.
B. To deconsolidate the assets and liabilities of Cerion from the
Company's historical balance sheet.
C. To eliminate the Tape Products Division's net current assets and
net non-current assets from the Company's historical balance
sheet.
D. To record the use of tax assets totaling $11.6 million as
settlement of tax liabilities resulting from the gains incurred
on the dispositions and the tax benefit of $585,000 relating to
the prepayment penalty of debt.
E. To record the investment in Cerion under the equity method of
accounting of $6,879,000 and the repayment of a $10 million note
receivable to the Company from Cerion.
F. To record the prepayment of debt as the result of cash proceeds
from the dispositions.
G. To record the tax liability relating to the Cerion transaction
and the disposition of the Tape Products Division.
H. To record the gain, net of taxes, on the sales of common stock by
both the Company and Cerion, the disposition of the Tape Products
Division, and the $1.5 million prepayment penalty on debt.
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NASHUA CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION (CONTINUED)
I. To deconsolidate the results of operations of Cerion, net of
certain intercompany adjustments as follows:
For the Three Month
For the Year Ended Period Ended
December 31, 1995 March 29, 1996
----------------- --------------
Intercompany sales and cost
of products sold $645,000 $ -
Allocated selling, distribution,
and administrative expenses 227,000 102,000
Allocated research and
development expenses 70,000 42,000
J. To reduce interest expense due to the prepayment of debt from
cash flows generated from the dispositions.
K. To record income of Cerion under the equity method of accounting.
L. To record the income tax benefit due to the deconsolidation of
Cerion, less a reduction in the benefit due to the reduced
interest expense and the recording of the income of Cerion under
the equity method of accounting.
M. To eliminate the net income for the Tape Products Division.
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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: June 4, 1996 By /s/ Daniel M. Junius
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Daniel M. Junius
Vice President-Finance
and Chief Financial Officer
(principal financial and duly
authorized officer)
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