<b>Nashua Corp. Reports Difficult Quarter</B>

Nashua Corp. announced financial results for the fourth quarter and year. The results represent the consolidated results of Nashua and Rittenhouse Paper Co., which was acquired this past April.

Nashua also announced that the Board of Directors at its regular meeting on February 27, named seven incumbents and Mark E. Schwarz -- President, Newcastle Partners -- for election at the Company's 2001 annual meeting. In addition to Schwarz, the nominees include: Andrew B. Albert, Sheldon A. Buckler, Avrum Gray, John M. Kucharski, George R. Mrkonic, Jr., Peter J. Murphy, and James F. Orr III.

For the fourth quarter, sales rose to $67.1 million, a 60% increase compared with fourth-quarter 1999 sales of $42.0 million, reflecting the inclusion of the Rittenhouse business. Gross margin for the quarter was $12.4 million, or 18.5% as a percentage of revenue, compared with $9.9 million, or 23.7%, reported the same quarter a year earlier.

For the year, sales increased 48% to $253.1 million from $170.8 million in 1999. Gross margin for the full year was $50.8 million, or 20.1% as a percentage of sales, compared with last year's $41.0 million, or 24%. Net income from continuing operations rose to $5.4 million, or $0.95 per share versus a net loss of $0.4 million, or $0.07 per share, a year ago. The year-end results include an $18.6 million pretax gain resulting from the annuitization of a certain portion of the company's pension obligation and unusual income of $1.0 million related to the reversal of a loss accrual related to the final settlement of patent litigation.

Andrew Albert, Nashua's chairman and CEO, said, "The year 2000 was a year of transition for Nashua as we successfully acquired and began integrating Rittenhouse's operations and reshaping our core businesses in Paper, Label and Toner. However, with continued margin pressures caused by higher costs for raw materials, start-up costs for certain products, underutilized toner capacity, environmental and other Label related charges, and increased competition, the combined company turned in a less than satisfactory financial performance. It was a year that underscores the need to continue to change our business."

The Specialty Paper segment reported fourth-quarter sales of $38.2 million compared with $16.0 million a year ago. Gross margins for the quarter were $7.1 million, or 18.5%, compared with $3.0 million, or 18.6%, for the same period in 1999.

Albert commented, "Overall, this segment performed well in 2000. In the fourth quarter, our Merrimack coating operation continued to perform well, however, there was weakness in our paper converting performance. Paper converting is Nashua's most commoditized business and therefore highly susceptible to the extremely competitive market conditions that prevailed throughout the industry. As part of the overall business consolidation, we've decided to close our DeKalb, Illinois facility by April 1, and transfer manufacturing to our Tennessee plant. We anticipate that this move will save approximately $1 million on an annualized basis."

The Label segment reported fourth-quarter sales of $29.2 million compared with $20.5 million for the same period last year. Gross margins for the quarter were $5.0 million, or 17%, compared with $4.1 million, or 20.1%, for the same period last year.

The Imaging Supplies segment reported fourth-quarter sales of $4.7 million compared with $10.0 million for the same period last year. Gross margins for the quarter were $0.3 million, or 6.1% compared with $2.8 million, or 28.3% for the same period last year. Fourth-quarter sales for the prior year included $1.9 million related to the laser remanufactured cartridge business, which was discontinued in 2000.