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
July 3, 1999 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 August 10, 1999 was 23,636,443.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
- ------ --------------------- ----
Item 1. Financial Statements
Consolidated Statements of Operations for
the Thirteen and Twenty-Six Weeks Ended
July 3, 1999 and July 4, 1998 ................. 1
Consolidated Balance Sheets - Assets at
July 3, 1999 and January 2, 1999 .............. 2
Consolidated Balance Sheets - Liabilities
and Shareholders' Equity at July 3, 1999 and
January 2, 1999 ............................... 3
Consolidated Statements of Cash Flows for
the Twenty-Six Weeks Ended July 3, 1999 and
July 4, 1998 .................................. 4
Notes to the Consolidated Financial
Statements .................................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ...................................... 9
PART II. OTHER INFORMATION
- ------- ----------------
Item 1. Legal Proceedings ................................ 14
Item 6. Exhibits and Reports on Form 8-K ................. 14
SIGNATURE PAGE .............................................. 15
<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Statements of Operations
(Dollars and shares in thousands, except per share data)
(Unaudited)
<CAPTION>
Thirteen Weeks Twenty-Six Weeks
Ended Ended
---------------------- ---------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 240,353 $ 220,123 $ 456,897 $ 421,497
Operating costs and expenses:
Cost of sales 147,460 133,760 283,361 257,567
Research and development 9,880 9,438 18,499 18,598
Selling and administrative 58,853 55,861 115,926 111,602
-------- -------- -------- --------
Total operating costs and expenses 216,193 199,059 417,786 387,767
Operating income 24,160 21,064 39,111 33,730
Net interest expense:
Interest income (6,388) (6,051) (13,083) (12,345)
Interest expense 12,126 12,086 24,584 24,42
-------- -------- -------- --------
Net interest expense 5,738 6,035 11,501 12,080
Earnings from continuing operations
before income taxes 18,422 15,029 27,610 21,650
Income tax expense 7,369 6,012 11,044 8,660
-------- -------- -------- --------
Earnings from continuing operations 11,053 9,017 16,566 12,990
Earnings (loss) from discontinued operations 955 (719) 518 (1,445)
-------- -------- -------- --------
Net earnings $ 12,008 $ 8,298 $ 17,084 $ 11,545
======== ======== ======== ========
Net earnings per common share:
Basic:
Earnings from continuing operations $ 0.47 $ 0.38 $ 0.71 $ 0.55
Earnings (loss) from discontinued operations 0.04 (0.03) 0.02 (0.06)
-------- -------- -------- --------
Net earnings per common share $ 0.51 $ 0.35 $ 0.73 $ 0.49
======== ======== ======== ========
Diluted:
Earnings from continuing operations $ 0.46 $ 0.38 $ 0.70 $ 0.55
Earnings (loss) from discontinued operations 0.04 (0.03) 0.02 (0.06)
-------- -------- -------- --------
Net earnings per common share $ 0.50 $ 0.35 $ 0.72 $ 0.49
======== ======== ======== ========
Average number of common shares and equivalents outstanding:
Basic 23,600 23,444 23,488 23,433
Diluted 23,949 23,599 23,827 23,595
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>
July 3, January 2,
1999 1999
--------- -----------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,714 $ 18,074
Accounts receivable 192,394 233,667
Inventory 116,129 98,930
Other current assets 10,789 11,803
-------- --------
Total current assets 330,026 362,474
Property, plant and equipment, at cost 446,548 423,482
Accumulated depreciation (295,799) (275,277)
-------- --------
Net property, plant and equipment 150,749 148,205
Long-term receivables 72,383 66,746
Goodwill, net of accumulated amortization 230,814 208,385
Net assets of discontinued operations 11,362 9,230
Other assets 49,590 41,253
-------- --------
Total assets $ 844,924 $ 836,293
======== ========
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>
July 3, January 2,
1999 1999
------------ -------------
(Unaudited) (Audited)
<S> <C> <C>
Current liabilities:
Notes payable $ 6,986 $ 3,776
Current maturities of long-term debt 2,306 3,365
Accounts payable 71,346 79,553
Accrued expenses 55,306 83,854
Deferred income 155,214 190,008
-------- --------
Total current liabilities 291,158 360,556
Long-term liabilities:
Long-term debt 486,251 445,240
Other liabilities 74,708 59,719
-------- --------
Total long-term liabilities 560,959 504,959
Shareholders' equity:
Common Stock, $.001 par value, 23,876 shares issued
and 23,635 shares outstanding at July 3, 1999,
and 23,516 shares issued and 23,277 shares outstanding
at January 2, 1999 24 24
Capital surplus 148,249 140,819
Notes receivable from executives (1,535) (2,523)
Retained earnings (deficit) (144,113) (161,197)
Cumulative foreign exchange translation adjustments (3,857) (500)
Treasury stock (5,961) (5,845)
-------- --------
Total shareholders' equity (deficit) (7,193) (29,222)
-------- --------
Total liabilities and shareholders' equity $ 844,924 $ 836,293
======== ========
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>
Twenty-Six Weeks Ended
---------------------------
July 3, July 4,
1999 1998
-------- --------
<S> <C> <C>
Operating Activities:
Earnings from continuing operations $ 16,566 $ 12,990
Depreciation and amortization 28,522 27,139
Changes in operating assets and liabilities:
Accounts receivable 44,534 14,116
Inventory (16,066) (9,722)
Other current assets 1,233 (2,638)
Long-term receivables (5,637) 17,806
Income taxes (702) 8,440
Accounts payable (10,104) (7,446)
Accrued expenses (18,300) (1,221)
Deferred income and other long-term liabilities (31,870) (19,762)
Other, net (10,617) (11,380)
------- -------
Net cash provided (used) by continuing operations (2,441) 28,322
Net cash provided (used) by discontinued operations (1,614) 2,100
------- -------
Net cash provided (used) by operating activities (4,055) 30,422
Investing activities:
Expenditures for property, plant and equipment (21,099) (15,794)
Acquisitions (33,548) (5,046)
------- -------
Net cash used by investing activities (54,647) (20,840)
Financing activities:
Proceeds from short-term debt 7,411 7,407
Repayment of short-term debt (3,279) (7,382)
Proceeds from long-term debt 48,534 44,006
Repayment of long-term debt (8,582) (61,109)
Proceeds from Common Stock, net 8,088 990
------- -------
Net cash provided (used) by financing activities 52,172 (16,088)
Effect of exchange rate changes on cash (830) (132)
------- -------
Decrease in cash and cash equivalents (7,360) (6,638)
Cash and cash equivalents, beginning of period 18,074 13,339
------- -------
Cash and cash equivalents, end of period $ 10,714 $ 6,701
======= =======
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 2, 1999.
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 the Company's annual report for the fiscal year ended January
2, 1999.
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 $4,900 at July 3, 1999, and January 2, 1999. The components
of inventory are shown in the table below as of the dates
indicated:
<TABLE>
<CAPTION>
July 3, January 2,
1999 1999
--------- ---------
<S> <C> <C>
Finished products $ 68,612 $ 57,343
Products in process and materials 47,517 41,587
------- -------
Total inventory $116,129 $ 98,930
======= =======
</TABLE>
-5-
<PAGE
Net Earnings per Common Share. Basic net earnings per
common share is computed by dividing net earnings by the weighted
average number of common shares outstanding during the period.
Diluted net earnings 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 per share is shown
in the table below for the periods indicated:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------- ------------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Basic 23,600 23,444 23,488 23,433
Dilutive effect of stock options 349 155 339 162
------ ------ ------ ------
Diluted 23,949 23,599 23,827 23,595
====== ====== ====== ======
</TABLE>
Note 3 - Business Segments
The Company, which is organized on the basis of products and
services, has three reportable business segments, Information
Access, Mail and Messaging Technologies and Imaging. The
accounting policies for each of the segments are described in the
Company's annual report for the fiscal year ended January 2,
1999.
Sales and earnings information for the Company's reportable
business segments are shown in the following tables for the
periods indicated:
<TABLE>
<CAPTION>
Net Sales
---------------------------------------------------------
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------- -------------------------
July 3, July 4, July 3, July 4,
Business Segments 1999 1998 1999 1998
- ----------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Information Access .............. $ 90,487 $ 79,787 $ 170,506 $ 152,828
Mail and Messaging Technologies . 105,509 97,935 199,966 185,917
Imaging ......................... 44,357 42,401 86,425 82,752
-------- -------- -------- --------
Total ........................... $ 240,353 $ 220,123 $ 456,897 $ 421,497
======== ======== ======== ========
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Earnings From Continuing Operations Before Income Taxes
------------------------------------------------------------
Thirteen Weeks Ended Twenty-Six Weeks Ended
--------------------------- ---------------------------
July 3, July 4, July 3, July 4,
Business Segments 1999 1998 1999 1998
- ----------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Information Access .............. $ 14,977 $ 12,484 $ 23,892 $ 22,314
Mail and Messaging Technologies . 10,633 10,479 17,522 15,392
Imaging ......................... 2,463 1,767 5,537 3,391
-------- -------- -------- --------
Total ......................... 28,073 24,730 46,951 41,097
Corporate expenses .............. (3,913) (3,666) (7,840) (7,367)
Interest expense, net ........... (5,738) (6,035) (11,501) (12,080)
-------- -------- -------- --------
Consolidated .................... $ 18,422 $ 15,029 $ 27,610 $ 21,650
======== ======== ======== ========
</TABLE>
Note 4 - 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 Twenty-Six Weeks Ended
-------------------- ----------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 8,339 $ 5,273 $ 14,991 $ 8,598
Earnings (loss) before income taxes 1,591 (1,198) 863 (2,408)
Income tax expense (benefit) 636 (479) 345 (963)
------- ------- ------- -------
Earnings (loss) from
discontinued operations $ 955 $ (719) $ 518 $ (1,445)
======= ======= ======= ======
</TABLE>
-7-
<PAGE>
Note 5 - 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 Twenty-Six Weeks Ended
-------------------- ----------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Earnings from continuing operations $11,053 $ 9,017 $16,566 $12,990
Earnings (loss) from discontinued operations 955 (719) 518 (1,445)
------ ------ ------ ------
Net earnings 12,008 8,298 17,084 11,545
Other comprehensive income (loss):
Foreign currency translation adjustments (1,312) 295 (3,357) (169)
------ ------ ------ ------
Comprehensive income $10,696 $ 8,593 $13,727 $11,376
====== ====== ====== ======
</TABLE>
The foreign currency translation adjustments do not impact
the Company's income tax expense.
-8-
<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 2, 1999.
Results of Operations
- ---------------------
First Half 1999 Compared to First Half 1998
- -------------------------------------------
The Company's net sales increased $35.4 million, or 8%, to
$456.9 million in the first half of 1999. The increase primarily
resulted from strong sales growth in both the Mail and Messaging
Technologies segment as well as the Publishing Services business
within the Information Access segment.
Information Access net sales increased $17.7 million, or
12%, to $170.5 million in the first half of 1999. Within the
Information Access segment (comprised of the Information and
Learning business and the Publishing Services business), the
Company develops and markets information services and systems
that are focused on the needs of its customers in select vertical
niches, including libraries of all kinds (college and university,
elementary and secondary schools, as well as public) and
transportation and vehicle dealers. Net sales of the Information
and Learning business increased $1.8 million, or 2%, to $92.8
million as a growing electronic subscription base was partially
offset by lower sales of the more traditional microfilm and paper
products. Sales of electronic content increased 9%, with the
electronic subscription base continuing to reflect strong sales
of ProQuest Direct (the Company's internet-based product
offering), which was partially offset by lower CD-ROM/tape
subscriptions as customers migrate to the on-line delivery of
information via the internet. Net sales of the Publishing
Services business increased $15.9 million, or 26%, to $77.7
million due to increased sales of electronic parts catalogs and
ancillary products to automotive dealerships, increased sales of
dealer management systems to powersports dealerships as well as
the acquisition of Alison Associates, Inc., which provides
performance database products to automotive and powersports
manufacturers/dealers. In addition to new system placements, the
Company continued to experience strong sales of additional
software applications and high contract renewal rates related to
previously placed systems.
-9-
<PAGE>
Mail and Messaging Technologies net sales increased $14.0
million, or 8%, to $200.0 million in the first half of 1999.
Within the Mail and Messaging Technology segment, the Company
develops and markets a complete range of high volume mail
processing systems and services which increasingly utilize
proprietary software to expand the capabilities and improve the
efficiency and effectiveness of customers' mailing operations.
The higher sales in 1999 resulted from increased shipments of
high volume inserting and sorting equipment as well as increased
service and software revenues. Service and software revenues
(which are primarily annuity-based and represent 52% of segment
sales) increased $12.1 million, or 13%, to $104.0 million due to
both an expanded customer base and increased pricing.
Imaging net sales increased $3.7 million, or 4%, to $86.4
million in the first half of 1999. Within the Imaging segment,
the Company develops and markets imaging systems and components
that enable its customers to effectively file and access their
documents and records, with a focus on financial institutions,
governmental agencies, and other paper intensive industries. The
increased sales in 1999 resulted from increased electronic
service revenues and greater shipments of production scanners
which were partially offset by lower sales of micrographic
equipment/service. Service revenues (which are primarily
annuity-based and represent 39% of segment sales) increased $4.8
million, or 17%, to $33.3 million due to both an expanded
customer base and increased pricing.
The Company's cost of sales increased $25.8 million, or 10%,
to $283.4 million in the first half of 1999, with the gross
profit (net sales less cost of sales) percentage decreasing by .9
percentage points to 38.0%. The lower gross profit percentage in
1999 resulted from a less profitable product mix, which was
partially offset by increased pricing and improved
manufacturing/service productivity.
Research and development expense of $18.5 million in the
first half of 1999 is essentially constant with the prior year as
the Company continued to invest significantly in new product
offerings. The Company continually seeks to take advantage of
new product/technology opportunities (with an increased emphasis
on internet capabilities and software solutions) in each of its
businesses. The Company's research and development expenditures
include expenses primarily for database and software development,
information delivery systems, production scanners and other
electronic devices for the Information Access and Imaging
segments, as well as for new mail processing systems that are
more electronic and software driven and stand-alone software
solutions for the Mail and Messaging Technologies segment.
-10-
<PAGE>
Selling and administrative expense increased $4.3 million,
or 4%, to $115.9 million in the first half of 1999 reflecting the
Company's increased investment in sales and marketing resources
(which reflects an increase in the sales force in the Information
and Learning 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 $5.4 million, or 16%, to $39.1
million, while EBITDA (defined as operating income plus
depreciation and amortization) increased $6.8 million, or 11%, to
$67.4 million in the first half of 1999.
Information Access operating income increased $1.6 million,
or 7%, to $23.9 million in the first half of 1999, as the benefit
of the higher sales volume was partially offset by the impact of
significant investments related to ProQuest Direct for new
product development costs, and to provide additional data center
capacity to accommodate future sales growth opportunities.
Information Access EBITDA increased $2.5 million, or 6%, to $45.2
million in the first half of 1999.
Mail and Messaging Technologies operating income increased
$2.1 million, or 14%, to $17.5 million in the first half of 1999,
as the increased sales and leveraged operating costs and expenses
drove the profitability improvement. Mail and Messaging
Technologies EBITDA increased $2.5 million, or 13%, to $21.3
million in the first half of 1999.
Imaging operating income increased $2.1 million, or 63%, to
$5.5 million in the first half of 1999, reflecting the increased
sales and leveraged operating costs and expenses. Imaging
EBITDA increased $2.2 million, or 35%, to $8.4 million in the
first half of 1999.
Corporate expenses increased $.4 million, or 6%, to $7.8
million in the first half of 1999 as productivity improvements
were more than offset by inflationary/other cost increases.
Net interest expense decreased $.6 million, or 5%, to $11.5
million in the first half of 1999, primarily reflecting lower
borrowings as the excess of the Company's operating cash flows
over capital expenditure/acquisition costs have been used to
reduce debt outstanding. Net interest income of Bell & Howell
Financial Services Company, the Company's financing subsidiary
remained constant at $5.1 million in the first half of 1999.
Income tax expense increased in the first half of 1999 as a
result of a higher level of pretax profit with the income tax
rate remaining constant with the prior year.
-11-
<PAGE>
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 $6.4 million to $15.0 million
in the first half of 1999, with earnings of $.5 million in the
first half of 1999 versus a loss of $1.4 million in the prior
year.
Cash used by continuing operations was $2.4 million in the
first half of 1999, versus cash provided by operations of $28.3
million in the prior year. Although EBITDA increased $6.8
million over the prior year, such increase was more than offset
by increased working capital requirements and increased income
tax payments related to the Company's improved profitability.
Cash used by discontinued operations was $1.6 million in the
first half of 1999 versus cash provided by discontinued
operations of $2.1 million in the prior year as significant
collections from international postal contracts were received in
the first half of 1998. As a result of the cash used by
operations, capital expenditures/acquisitions and seasonal
working capital requirements, debt (net of cash and cash
equivalents) increased by $50.5 million, to $484.8 million in the
first half of 1999.
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 resultant solution plans;
modification/replacement and testing/certification of systems
and software; and developing contingency plans as appropriate.
The Company relies on third party suppliers for 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.
The Company has identified its products and services that
either are currently Y2K compliant or will be modified or
upgraded to become Y2K compliant. The Company has developed
plans to provide its customers with such modifications and
upgrades. The completion of these plans could be adversely
-12-
<PAGE>
affected if these customers do not provide the Company with
sufficient timeframes in which to make such modifications and
upgrades.
The Company has also identified its products that are not
currently Y2K compliant, nor will be modified or upgraded to
become Y2K compliant. These products and services are at the end
of their natural product life cycle and for most of the affected
customers, newer Y2K compliant replacement products and services
have been offered. For those products and services that will not
be Y2K compliant, the Company provided notice to customers of its
intent not to provide ongoing support of such products or
services after 1999.
A substantial portion of the Company's Y2K initiatives have
been completed to date, with remaining project work expected to
be completed in the second half of 1999. Based on such
initiatives, and assuming that remaining issues can be addressed
as planned, management believes that future costs relating to Y2K
will not have a material adverse impact upon the consolidated
operations or financial condition of the Company. However,
preoccupation with Y2K initiatives in the market in general could
potentially impact customer purchase decisions, which could
adversely affect the Company's sales in the second half of fiscal
1999.
Recently Issued Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities.
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, the effective date of which was postponed until
fiscal 2001 per Statement of Financial Accounting Standards
No. 137.
-13-
<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
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the thirteen weeks
ended July 3, 1999.
-14-
<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: August 10, 1999 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
-15-
<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> 6-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JUL-03-1999
<CASH> 10,714
<SECURITIES> 0
<RECEIVABLES> 204,241
<ALLOWANCES> 11,847
<INVENTORY> 116,129
<CURRENT-ASSETS> 330,026
<PP&E> 446,548
<DEPRECIATION> 295,799
<TOTAL-ASSETS> 844,924
<CURRENT-LIABILITIES> 291,158
<BONDS> 486,251
0
0
<COMMON> 24
<OTHER-SE> (7,217)
<TOTAL-LIABILITY-AND-EQUITY> 844,924
<SALES> 456,897
<TOTAL-REVENUES> 456,897
<CGS> 283,361
<TOTAL-COSTS> 417,786
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,501
<INCOME-PRETAX> 27,610
<INCOME-TAX> 11,044
<INCOME-CONTINUING> 16,566
<DISCONTINUED> 518
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,084
<EPS-BASIC> .73
<EPS-DILUTED> .72
</TABLE>
