NASHUA REPORTS 2Q 2006 RESULTS

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Nashua Reports Second Quarter 2006 Results
NASHUA, NH — — August  2006 — Nashua Corporation, a manufacturer and marketer of labels, thermal specialty papers and imaging products, today announced financial results for the second quarter ended June 30, 2006.Net sales for the second quarter of 2006 were $65.5 million, compared to $67.3 million for the second quarter of 2005. Gross margin for the second quarter of 2006 was $9.5 million, or 14.5%, compared to $11.4 million, or 17%, for the second quarter of 2005. Loss from continuing operations before income taxes was $1.6 million in the second quarter of 2006 compared to income from continuing operations before income taxes of $0.5 million in the second quarter of 2005. Loss from continuing operations was $1.0 million in the second quarter of 2006, or $0.16 per share, compared to income from continuing operations of $0.3 million, or $0.05 per share, in the second quarter of 2005. Net income for the second quarter of 2005, which included income of $1.1 million, or $0.18 per share, from discontinued operations related to the exit of the toner business and the settlement of tax issues with the Internal Revenue Service, was $1.4 million or $0.23 per share. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $0.2 for the second quarter of 2006 compared to $2.5 million for the second quarter of 2005.Net sales for the six months ended June 30, 2006, were $130.3 million, compared to $135 million for the first half of 2005. Gross margin for the first half of 2006 was $19.2 million, or 14.8%, compared to $21.9 million, or 16.2%, for the first half of 2005. Loss from continuing operations before income taxes for the first six months of 2006 was $2.5 million, compared to loss from continuing operations before income taxes of $0.2 million in the first half of 2005. Loss from continuing operations for the first half of 2006 was $1.5 million, or $0.25 per share, compared to a loss from continuing operations of $0.1 million, or $0.02 per share, for the first half of 2005. Net loss, including discontinued operations, was $0.5 million, or $0.09 per share, for the first half of 2006 compared to a net loss of $0.2 million, or $0.04 per share, for the first half of 2005. EBITDA was $2.1 million for the first six months of 2006 compared to $4.0 million for the same period in 2005.Commenting on the Company’s second quarter performance, Thomas Brooker, President and Chief Executive Officer of Nashua, said, “The declines in sales, margin and net income in the second quarter are disappointing and reflect intense competition in the industry and the effect of actions taken by Nashua to position the Company to deliver improved performance. The decline in income in the second quarter resulted partially from costs associated with the consolidation of Label manufacturing operations into Florida, Tennessee and Nebraska facilities. This project is expected to be completed by the end of the third quarter. In addition, we incurred incremental one-time costs associated with the consolidation of our coated paper manufacturing into a smaller space at the Merrimack, New Hampshire facility and severance and incremental pension costs associated with the Company’s defined benefit plans. Liquidation of assets of Nashua’s previously-owned toner business continued during the second quarter, enabling the Company to reduce bank debt by approximately $5 million since December 31, 2005.”Nashua entered into a non-binding letter of intent for the sale of the Merrimack, New Hampshire facilities and currently is negotiating a purchase and sale agreement as well as a lease agreement for space in Merrimack. There is no guarantee that the sale will close. Also, Nashua has entered into a purchase and sale agreement for the sale of Company property in Nashua, New Hampshire for $2.0 million, which is expected to close in the fourth quarter of 2006. 

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August 25, 2006 at 9:41 AM