UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended Commission file number
October 3, 1998 1-3246
BELL & HOWELL COMPANY
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-3580106
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5215 Old Orchard Road, Skokie, Illinois 60077-1076
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 470-7100
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
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares of the Registrant's Common Stock, $.001
par value, outstanding as of November 10, 1998 was 23,251,438.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
- - ------ --------------------- ----
Item 1. Financial Statements
Consolidated Statements of Operations for
the Thirteen and Thirty-Nine Weeks Ended
October 3, 1998 and September 27, 1997 ......... 1
Consolidated Balance Sheets - Assets at
October 3, 1998 and January 3, 1998 ............ 2
Consolidated Balance Sheets - Liabilities
and Shareholders' Equity at October 3, 1998
and January 3, 1998 ............................ 3
Consolidated Statements of Cash Flows for
the Thirty-Nine Weeks Ended
October 3, 1998 and September 27, 1997 ......... 4
Notes to the Consolidated Financial
Statements ..................................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ...................................... 8
PART II. OTHER INFORMATION
- - ------- -----------------
Item 1. Legal Proceedings ................................ 15
Item 6. Exhibits and Reports on Form 8-K ................. 15
SIGNATURE PAGE .............................................. 16
<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Statements of Operations
(Dollars and shares in thousands, except per share data)
(Unaudited)
<CAPTION>
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
-------------------- --------------------
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 216,653 $ 205,287 $ 638,150 $ 611,382
Operating costs and expenses:
Cost of sales 132,006 121,852 389,573 375,634
Research and development 9,756 8,957 28,354 27,915
Selling and administrative 50,150 51,739 161,752 151,780
-------- -------- -------- --------
Total operating costs and expenses 191,912 182,548 579,679 555,329
Operating income 24,741 22,739 58,471 56,053
Net interest expense:
Interest (income) (5,251) (5,526) (17,596) (15,883)
Interest expense 11,168 17,036 35,593 49,987
-------- -------- -------- --------
Net interest expense 5,917 11,510 17,997 34,104
Earnings from continuing operations
before income taxes and extraordinary items 18,824 11,229 40,474 21,949
Income tax expense 7,530 4,657 16,190 9,116
-------- -------- -------- --------
Earnings from continuing operations
before extraordinary items 11,294 6,572 24,284 12,833
Earnings (loss) from discontinued operations (45) (95) (1,490) 304
Extraordinary losses -- (9,678) -- (10,650)
-------- -------- -------- --------
Net earnings (loss) $ 11,249 $ (3,201) $ 22,794 $ 2,487
======== ======== ======== ========
Net earnings (loss) per common share:
Basic:
Earnings from continuing operations
before extraordinary items $ 0.48 $ 0.35 $ 1.04 $ 0.70
Earnings (loss) from discontinued operations -- -- (0.07) 0.01
Extraordinary losses -- (0.52) -- (0.58)
-------- -------- -------- --------
Net earnings (loss) per common share $ 0.48 $ (0.17) $ 0.97 $ 0.13
======== ======== ======== ========
Diluted:
Earnings from continuing operations
before extraordinary items $ 0.48 $ 0.35 $ 1.03 $ 0.69
Earnings (loss) from discontinued operations -- -- (0.06) 0.01
Extraordinary losses -- (0.52) -- (0.57)
-------- -------- -------- --------
Net earnings (loss) per common share $ 0.48 $ (0.17) $ 0.97 $ 0.13
======== ======== ======== ========
Average number of common shares and equivalents outstanding:
Basic 23,431 18,683 23,433 18,444
Diluted 23,575 18,908 23,587 18,585
The accompanying Notes to the Consolidated Financial statements
are an integral part of these statements.
</TABLE>
-1-
<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
Assets
<CAPTION>
October 3, January 3,
1998 1998
----------- -----------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,841 $ 13,339
Accounts receivable, less allowance for doubtful
accounts of $6,654 and $7,068, respectively 212,276 198,228
Inventory 109,101 101,756
Other current assets 13,113 11,825
-------- --------
Total current assets 343,331 325,148
Property, plant and equipment, at cost 418,261 391,309
Accumulated depreciation (270,282) (241,655)
-------- --------
Net property, plant and equipment 147,979 149,654
Long-term receivables 57,506 66,625
Goodwill, net of accumulated amortization 210,380 202,730
Net assets of discontinued operations 22,072 20,470
Other assets 39,770 35,227
-------- --------
Total assets $ 821,038 $ 799,854
======== ========
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
-2-
<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Balance Sheets
(Dollars and shares in thousands)
Liabilities and Shareholders' Equity
<CAPTION>
October 3, January 3,
1998 1998
------------ -------------
(Unaudited) (Audited)
<S> <C> <C>
Current liabilities:
Notes payable $ 6,154 $ 3,567
Current maturities of long-term debt 797 919
Accounts payable 65,762 75,089
Accrued expenses 75,548 66,446
Deferred income 180,024 175,504
-------- --------
Total current liabilities 328,285 321,525
Long-term liabilities:
Long-term debt 472,378 497,252
Other liabilities 62,933 45,625
-------- --------
Total long-term liabilities 535,311 542,877
Shareholders' equity:
Common Stock, $.001 par value, 23,490 shares issued and
23,323 shares outstanding at October 3, 1998, and 23,425
shares issued and 23,415 shares outstanding at
January 3, 1998 23 23
Capital surplus 140,242 138,660
Notes receivable from executives (2,500) (1,707)
Retained earnings (deficit) (175,517) (198,311)
Cumulative foreign exchange translation adjustments (624) (2,922)
Treasury stock (4,182) (291)
-------- --------
Total shareholders' equity (deficit) (42,558) (64,548)
Commitments and contingencies -- --
-------- --------
Total liabilities and shareholders' equity $ 821,038 $ 799,854
======== ========
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
-3-
<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<CAPTION>
Thirty-Nine Weeks Ended
---------------------------
Oct. 3, Sept. 27,
1998 1997
-------- --------
<S> <C> <C>
Operating activities:
Earnings from continuing operations
before extraordinary items $ 24,284 $ 12,833
Extraordinary losses -- (10,650)
Depreciation and amortization 39,294 44,799
Debt accretion -- 17,185
Changes in operating assets and liabilities:
Accounts receivable (10,926) (2,517)
Inventory (4,851) (10,588)
Other current assets (204) 1,291
Long-term receivables 9,119 (3,589)
Income taxes 13,865 (1,137)
Accounts payable (10,357) (19,560)
Accrued expenses 3,712 (17,483)
Deferred income and other long-term liabilities 8,270 (1,419)
Other, net (14,492) 2,829
------- -------
Net cash provided by continuing operations 57,714 11,994
Net cash used by discontinued operations (3,092) (29,903)
------- -------
Net cash provided (used) by operating activities 54,622 (17,909)
Investing activities:
Expenditures for property, plant and equipment (26,285) (24,674)
Acquisitions (7,384) (11,421)
------- -------
Net cash used by investing activities (33,669) (36,095)
Financing activities:
Proceeds from short-term debt 11,781 5,144
Repayment of short-term debt (9,484) (8,561)
Proceeds from long-term debt 53,765 86,396
Repayment of long-term debt (78,761) (173,315)
Proceeds from issuances of Common Stock 1,177 139,135
Purchases of Treasury Stock (4,182) (289)
------- -------
Net cash provided (used) by financing activities (25,704) 48,510
Effect of exchange rate changes on cash 253 (380)
------- -------
Increase (decrease) in cash and cash equivalents (4,498) (5,874)
Cash and cash equivalents, beginning of period 13,339 15,500
------- -------
Cash and cash equivalents, end of period $ 8,841 $ 9,626
======= =======
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
-4-
<PAGE>
Bell & Howell Company and Subsidiaries
Notes to the Consolidated Financial Statements
(Dollars and shares in thousands)
Note 1 - Basis of Presentation
The consolidated financial statements include the accounts
of Bell & Howell Company and its subsidiaries (collectively the
"Company") and have been prepared without independent audit,
except for the balance sheet data as of January 3, 1998.
In the opinion of the Company's management, the consolidated
financial statements include all adjustments necessary to present
fairly the information required to be set forth therein, and such
adjustments are of a normal and recurring nature. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The Company's management believes, however, that the disclosures
are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the
Consolidated Financial Statements and the notes thereto included
in Bell & Howell Company's annual report for the fiscal year
ended January 3, 1998.
Note 2 - Significant Accounting Policies
Inventory. The Company uses the last-in, first-out (LIFO)
method of valuing the majority of its domestic inventory. Use of
the LIFO method is predicated on a determination of inventory
quantities and costs at the end of each fiscal year, and
therefore interim determinations of LIFO inventory values and
results of operations are by necessity based on management's
estimates of expected year-end inventory quantities and costs.
The excess of replacement cost over the LIFO values of inventory
was $4,064 at October 3, 1998, and January 3, 1998. The
components of inventory are shown in the table below as of the
dates indicated:
<TABLE>
<CAPTION>
October 3, January 3,
1998 1998
--------- ---------
<S> <C> <C>
Finished products $ 57,931 $ 61,342
Products in process and materials 51,170 40,414
------- -------
Total inventory $109,101 $101,756
======= =======
</TABLE>
-5-
<PAGE>
Net Earnings (Loss) per Common Share. Basic net earnings
(loss) per common share is computed by dividing net earnings
(loss) by the weighted average number of common shares
outstanding during the period. Diluted net earnings (loss) per
common share is computed by dividing net earnings by the weighted
average number of common shares outstanding during the period,
and assumes the issuance of additional common shares for all
dilutive stock options outstanding during the period. A
reconciliation of the weighted average number of common shares
and equivalents outstanding in the calculation of basic and
diluted earnings (loss) per share is shown in the table below for
the periods indicated:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------- ----------------------
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Basic 23,431 18,683 23,433 18,444
Dilutive effect of stock options 144 225 154 141
------ ------ ------ ------
Diluted 23,575 18,908 23,587 18,585
====== ====== ====== ======
</TABLE>
Note 3 - Discontinued Operations
In December 1997, the Company adopted a plan to divest its
postal contracting business, and accordingly the operating
results and net assets of this business have been segregated from
continuing operations. The Consolidated Statements of Operations
separately reflect the earnings (loss) of the postal contracting
business, which includes an allocation of the Company's interest
expense. The Consolidated Balance Sheets separately reflect the
net assets of the postal contracting business as a non-current
asset.
Results from discontinued operations are shown in the table
below for the periods indicated:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------- ------------------------
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 20,350 $ 6,435 $ 28,948 $ 18,508
Earnings (loss) before income taxes (75) (158) (2,483) 507
Income tax expense (benefit) (30) (63) (993) 203
------- ------- ------- -------
Earnings (loss) from
discontinued operations $ (45) $ (95) $ (1,490) $ 304
======= ======= ======= =======
</TABLE>
-6-
<PAGE>
Note 4 - Extraordinary Losses
The extraordinary losses of $10,650 ($16,641 pretax) in 1997
were comprised of the debt repurchase premiums and write-off of
unamortized debt issuance costs associated with the repurchases
of $97,945(accreted value) of the 11 1/2% Senior Discount
Debentures, $8,300 of the 9 1/4% Senior Notes and $2,100 of the
10 3/4% Senior Subordinated Notes.
Note 5 - Comprehensive Income
In June of 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income", which is effective for
financial statements for reporting periods beginning after
December 15, 1997. This statement requires the disclosure of
comprehensive income. The components of comprehensive income for
the Company include net earnings and unrealized gains and losses
relating to the translation of foreign currency balance sheets.
Comprehensive income is shown in the table below for the periods
indicated:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------- ------------------------
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net earnings (loss) $ 11,249 $ (3,201) $ 22,794 $ 2,487
Other comprehensive income (loss):
Foreign currency translation adjustments 2,467 (1,171) 2,298 (3,134)
------- ------- ------- -------
Comprehensive income (loss) $ 13,716 $ (4,372) $ 25,092 $ (647)
======= ======= ======= =======
</TABLE>
The foreign currency translation adjustments do not impact
the Company's income tax expense.
-7-
<PAGE>
Item 2.
- - ------
Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
This section should be read in conjunction with the
Consolidated Financial Statements of Bell & Howell Company and
Subsidiaries (collectively the "Company") and the notes thereto
included in the annual report for the year ended January 3, 1998.
Results of Operations
- - ---------------------
Nine Months Year-to-Date 1998 Compared to Nine Months
- - -----------------------------------------------------
Year-to-Date 1997
- - -----------------
The Company's net sales increased $26.8 million, or 4%, to
$638.2 million in the first nine months of 1998. The increase
resulted from strong sales growth in both the transportation and
vehicle business within the Information Access segment as well as
the Information Distribution segment. This was partially offset
by a stronger U.S. dollar and, within Information Access, lower
sales of production scanners and the impact of a strategic shift
from a direct retail sales channel to a more profitable wholesale
sales channel in the corporate portion of the education and
library business.
Information Access net sales increased $8.7 million, or 3%,
to $356.6 million in the first nine months of 1998. Within the
Information Access businesses, the Company provides database
publishing services to select vertical markets including the
transportation and vehicle, and education and library markets,
and also provides imaging solutions and components to financial
institutions, governmental agencies and other paper intensive
industries. Net sales to the transportation and vehicle market
increased $9.5 million, or 11%, to $94.6 million due to increased
sales of electronic parts catalogs and ancillary products to
automotive dealerships. In addition to new systems placements,
the Company continued to experience strong sales of additional
software applications and high contract renewal rates related to
previously placed systems. Net sales to the education and
library market increased $1.0 million, or 1%, to $136.8 million
due to a growing electronic subscription base, which continued to
-8-
<PAGE>
reflect strong sales of ProQuest Direct (the Company's
internet-based product offering), and high renewal rates on
existing products. While the sales comparison to the prior year
is adversely impacted as the Company curtailed its direct sales
efforts to the corporate market (and now more profitably serves
corporate libraries through resellers like Dow Jones), sales of
electronic content in the core North American education and
library market increased 23% over the prior year, as customers
increasingly demand electronic information solutions including
on-line delivery. Net sales of microfilm and paper products to
the education and library market increased modestly versus the
prior year as increased pricing more than offset lower unit
volumes. Imaging Solutions and Components net sales decreased
$1.8 million, or 1%, to $125.2 million as increased
electronic/micrographic service revenues were more than offset by
the aforementioned lower sales of production scanners resulting
from a softer overall imaging market and a modified strategy
related to the level of inventory maintained in the distribution
channel.
Information Distribution net sales increased $18.1 million,
or 7%, to $281.6 million in the first nine months of 1998, as
increased sales of high volume inserting equipment and increased
service revenues were partially offset by the impact of a U.S.
Postal regulatory change which spurred sorting equipment sales in
the first nine months of 1997. Order intake increased 20%, which
has resulted in the aforementioned sales growth and a substantial
increase in the backlog of 46% from the beginning of the year.
Service revenues (which are primarily annuity-based and represent
45% of segment sales) increased $8.7 million, or 7%, to $125.9
million due to both an expanded customer base and increased
pricing.
The Company's cost of sales increased $13.9 million, or 4%,
to $389.6 million in the first nine months of 1998, with the
gross profit (net sales less cost of sales) percentage increasing
by .4 percentage points to 39.0%. The higher gross profit
percentage in 1998 resulted from a more profitable
product/channel mix, improved manufacturing/service productivity,
and increased pricing.
-9-
<PAGE>
Research and development expense of $28.4 million increased
slightly over the prior year as the Company continued to invest
in new product offerings. Such investment primarily related to
the development of new electronic products for the education and
library market, new technology platforms for the transportation
and vehicle market, enhanced versions of production scanners, and
new mail processing systems that are more electronic and software
oriented. The Company has continually positioned itself to take
advantage of new product/technology opportunities (with an
increased emphasis on software solutions) in each of its
businesses.
Selling and administrative expense increased $10.0 million,
or 7%, to $161.8 million in the first nine months of 1998
reflecting the Company's increased investment in sales and
marketing resources (which reflects an increase in the sales
force in the education and library business to capitalize on the
sales growth opportunities of internet-based products), as well
as increased distribution costs associated with the higher sales
volumes.
Operating income increased $2.4 million, or 4%, to $58.5
million, while EBITDA (defined as operating income plus
depreciation and amortization) increased $3.8 million, or 4%, to
$97.4 million in the first nine months of 1998.
Information Access operating income increased $1.0 million,
or 2%, to $45.3 million in the first nine months of 1998, as the
higher sales volumes (despite the lower sales of production
scanners) and improved gross profit percentage (reflecting a more
profitable product mix with a greater proportion of revenues
related to software and publishing and a lower proportion related
to the sale of hardware), were partially offset by increased
operating expenses, which included severance costs related to
reducing the expense infrastructure. Information Access EBITDA
increased $2.9 million, or 4%, to $79.3 million in the first nine
months of 1998.
Information Distribution operating income increased $1.8
million, or 8%, to $24.1 million in the first nine months of
1998, as the increased sales and improved gross profit percentage
(also reflecting a more profitable product mix with an emphasis
on software and service), were partially offset by increased
-10-
<PAGE>
operating expenses which included increased research and
development costs for more technologically advanced mail
processing systems/software. Information Distribution EBITDA
increased $1.3 million, or 5%, to $28.6 million in the first nine
months of 1998.
Corporate expenses increased $0.4 million, or 4%, to $10.9
million in the first nine months of 1998 as productivity
improvements were more than offset by inflationary/other cost
increases.
Net interest expense decreased $16.1 million, or 47%, to
$18.0 million in the first nine months of 1998, primarily
reflecting the impact of the Company's public offering of 5.0
million shares of Common Stock in September 1997, the proceeds of
which, together with borrowings under the Company's Credit
Agreement, were used to redeem debt outstanding. Net interest
income of Bell & Howell Financial Services Company, the Company's
financing subsidiary, increased $1.2 million to $7.3 million in
the first nine months of 1998, primarily due to continued growth
in the lease receivables portfolio.
Income tax expense increased in the first nine months of
1998 as a result of a higher level of pretax profit in the
current year, which was partially offset by a reduced income tax
rate related to the favorable settlement of certain prior year
tax exposures.
As a result of changing market and competitive dynamics
within global government postal markets, as well as a review of
its future strategic focus, in December 1997 the Company adopted
a plan to divest its postal contracting business. Accordingly,
the operating results of this business have been segregated from
the Company's continuing operations, and are separately reported
as a discontinued operation in the financial statements. Net
sales for this business increased $10.4 million to $28.9 million
in the first nine months of 1998, with a net loss of $1.5 million
in the first nine months of 1998 versus net income of $0.3
million in the prior year.
The extraordinary losses of $10.7 million ($16.6 million
pretax) in the first nine months of 1997 were comprised of the
debt repurchase premiums and write-off of unamortized debt
-11-
<PAGE>
issuance costs associated with the repurchases of $97.9 million
(accreted value) of the 11 1/2% Senior Discount Debentures, $8.3
million of the 9 1/4% Senior Notes and $2.1 million of the 10
3/4% Senior Subordinated Notes.
Cash provided by continuing operations increased $45.7
million to $57.7 million in the first nine months of 1998,
resulting from the aforementioned EBITDA increase and decreased
working capital requirements in the current year. Cash used by
discontinued operations improved $26.8 million to $3.1 million in
the first nine months of 1998 primarily due to reduced investment
requirements and claims received related to international postal
contracts. As a result of the improved cash flow from
operations, which more than offset continued investments in
capital expenditures/acquisitions, debt (net of cash and cash
equivalents) decreased by $17.9 million to $470.5 million in the
first nine months of 1998.
Impact of the Year 2000
Over the past few years, the Company has been assessing the
impact on its products and computer systems of Year 2000 (Y2K)
related issues. The Company's Y2K compliance plans include:
inventorying affected technology and assessing the impact of the
Y2K issue; developing solution plans; modification/replacement,
testing and certification; and developing contingency plans as
appropriate.
The Company relies on third party suppliers for many systems,
products and services. The Company has a comprehensive supplier
compliance program in place, as the Company could be adversely
impacted if these suppliers do not make the necessary changes to
their own systems/products in a timely manner.
A substantial portion of the Company's Y2K initiatives are
planned to be completed in 1998, with remaining project work
expected to be completed in 1999. Based on projects completed to
date, and assuming that remaining issues can be addressed as
planned, management believes that future costs relating to the
Y2K issue will not have a material adverse impact upon the
consolidated operations or financial condition of the Company.
-12-
<PAGE>
EURO
On January 1, 1999, eleven of fifteen member countries of
the European Union are scheduled to establish fixed conversion
rates between their existing currencies ("legacy currencies") and
one common currency - the euro. The euro will then trade on
currency exchanges and may be used in business transactions. The
conversion to the euro will eliminate currency exchange rate risk
between the member countries. Beginning in January 2002, new
euro-denominated bills and coins will be issued, and legacy
currencies will be withdrawn from circulation. The Company's
operating subsidiaries affected by the euro conversion have
established plans to address the issues raised by the euro
currency conversion. Management believes that future costs
related to the euro conversion will not have a material adverse
impact upon the consolidated operations or financial condition of
the Company.
Recently Issued Financial Accounting Standards
In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." The Company is currently evaluating the impact of
this standard on its financial statements and is required to
adopt this new standard beginning with its fiscal 1998 annual
financial statements. This statement establishes standards for
the way companies are to report information about operating
segments. It also establishes standards for related disclosures
about products and services, geographic areas, and major
customers.
In February 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 132,
"Employers' Disclosures about Pensions and Other Postretirement
Benefits." This statement revises employers' disclosures about
pension and other postretirement benefit plans, and will govern
the Company's disclosures related to its benefit plans beginning
with the fiscal 1998 annual financial statements.
In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities".
-13-
<PAGE>
This statement provides a comprehensive standard for the
recognition and measurement of derivatives and hedging
activities. The Company is currently evaluating the impact of
this standard on its financial statements and is required to
adopt this new standard beginning with its fiscal 2000 financial
statements.
-14-
<PAGE>
Part II. Other Information
- - ------- -----------------
Item 1. Legal Proceedings.
- - ------ -----------------
The Company is involved in various legal proceedings
incidental to its business. Management believes that the outcome
of such proceedings will not have a material adverse effect upon
the consolidated operations or financial condition of the
Company.
Item 6. Exhibits and Reports on Form 8-K.
- - ------ --------------------------------
(a) Exhibits:
Index Number Description
------------ -----------
(27.1) Financial Data Schedule
(27.2) Restated Financial Data Schedule
Q3 - 1997
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the thirteen weeks
ended October 3, 1998.
-15-
<PAGE>
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.
Date: November 10, 1998 BELL & HOWELL COMPANY
/s/ James P. Roemer
--------------------------
James P. Roemer
Chairman of the Board
of Directors, President and
Chief Executive Officer
/s/Nils A. Johansson
--------------------------
Nils A. Johansson
Executive Vice President,
Chief Financial Officer
and Director
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S BALANCE SHEET AND STATEMENT
OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> OCT-03-1998
<CASH> 8,841
<SECURITIES> 0
<RECEIVABLES> 218,900
<ALLOWANCES> 6,654
<INVENTORY> 109,101
<CURRENT-ASSETS> 343,331
<PP&E> 418,261
<DEPRECIATION> 270,282
<TOTAL-ASSETS> 821,038
<CURRENT-LIABILITIES> 328,285
<BONDS> 472,378
0
0
<COMMON> 23
<OTHER-SE> (42,581)
<TOTAL-LIABILITY-AND-EQUITY> 821,038
<SALES> 638,150
<TOTAL-REVENUES> 638,150
<CGS> 389,573
<TOTAL-COSTS> 579,679
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,997
<INCOME-PRETAX> 40,474
<INCOME-TAX> 16,190
<INCOME-CONTINUING> 24,284
<DISCONTINUED> (1,490)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,794
<EPS-PRIMARY> 0.97
<EPS-DILUTED> 0.97
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> SEP-27-1997<F1>
<CASH> 9,626
<SECURITIES> 0
<RECEIVABLES> 189,980
<ALLOWANCES> 5,716
<INVENTORY> 112,473
<CURRENT-ASSETS> 317,062
<PP&E> 368,541
<DEPRECIATION> 228,476
<TOTAL-ASSETS> 809,625
<CURRENT-LIABILITIES> 285,261
<BONDS> 492,421
0
0
<COMMON> 23
<OTHER-SE> ( 29,398)
<TOTAL-LIABILITY-AND-EQUITY> 809,625
<SALES> 611,382
<TOTAL-REVENUES> 611,382
<CGS> 375,634
<TOTAL-COSTS> 555,329
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,104
<INCOME-PRETAX> 21,949
<INCOME-TAX> 9,116
<INCOME-CONTINUING> 12,833
<DISCONTINUED> 304
<EXTRAORDINARY> (10,650)
<CHANGES> 0
<NET-INCOME> 2,487
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
<FN>
<F1>RESTATEMENT REFLECTED HEREIN IS THE RESULT OF
RECLASSIFICATIONS TO PRIOR PERIODS' FINANCIAL STATEMENTS TO
CONFORM TO THE CURRENT PERIOD PRESENTATION.
</FN>
</TABLE>
