FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ Mark one ]
[ X ] Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For quarter ended September 30, 1995
OR
[ ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission file number 1-9334
BALDWIN TECHNOLOGY COMPANY, INC
(Exact name of registrant as specified in its charter)
Delaware 13-3258160
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
65 Rowayton Avenue, Rowayton, Connecticut 06853
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-838-7470
(Former name, former address and former fiscal year, if changed
since last report.)
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
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 .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at October 31, 1995
Class A Common Stock
$0.01 par value 16,197,827
Class B Common Stock
$0.01 par value 1,835,883
Total number of pages in this document 10
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
INDEX
Page
Part I Financial Information
Consolidated Balance Sheet -
September 30, 1995 and June 30, 1995 1
Consolidated Statement of Income -
Three months ended
September 30, 1995 and 1994 2
Consolidated Statement of Changes in
Shareholders' Equity - Three months
ended September 30, 1995 3
Consolidated Statement of Cash Flows -
Three Months ended
September 30, 1995 and 1994 4-5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-8
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 10
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
(Unaudited)
September 30, June 30,
1995 1995
ASSETS
CURRENT ASSETS:
Cash $ 12,271 $ 12,719
Short-term securities 966 470
Accounts receivable trade, net of allowance for
doubtful accounts of $2,622 ($2,897 at June 30, 1995) 41,925 46,478
Notes receivable, trade 11,756 16,916
Inventories 41,188 39,824
Prepaid expenses and other 6,889 8,496
Total current assets 114,995 124,903
MARKETABLE SECURITIES, at cost:
Market $936 ($971 at June 30, 1995) 847 971
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 6,484 2,348
Machinery and equipment 9,134 8,941
Furniture and fixtures 5,773 5,855
Leasehold improvements 1,718 1,734
Capital leases 7,722 7,837
30,831 26,715
Less: Accumulated depreciation and amortization 19,627 19,538
Net property, plant and equipment 11,204 7,177
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS at cost,
less accumulated amortization of $3,420 ($3,243 at
June 30, 1995) 5,326 5,355
GOODWILL, less accumulated amortization of $10,214
($9,734 at June 30, 1995) 61,359 61,477
OTHER ASSETS 9,425 9,887
TOTAL ASSETS $203,156 $209,770
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable $ 9,754 $ 9,188
Current portion of long-term debt 453 160
Accounts payable, trade 13,340 14,895
Notes payable, trade 9,392 12,637
Accrued salaries, commissions, bonus and profit-sharing 8,079 9,680
Customer deposits 5,495 5,410
Accrued and withheld taxes 1,982 2,321
Income taxes payable 3,487 4,389
Other accounts payable and accrued liabilities 10,919 12,648
Total current liabilities 62,901 71,328
LONG-TERM LIABILITIES:
Long-term debt 33,207 29,868
Other long-term liabilities 9,386 9,686
Total long-term liabilities 42,593 39,554
Total liabilities 105,494 110,882
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,041,683 shares issued
(16,011,586 at June 30, 1995) 160 160
Class B Common Stock, $.01 par, 4,500,000 shares
authorized, 2,000,000 shares issued 20 20
Capital contributed in excess of par value 55,001 54,881
Retained earnings 42,624 41,631
Cumulative translation adjustment 1,942 4,174
Less: Treasury stock, at cost:
Class A - 193,856 shares (174,256 at June 30, 1995)
Class B - 164,117 shares (164,117 at June 30, 1995) (2,085) (1,978)
Total shareholders' equity 97,662 98,888
COMMITMENTS ------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $203,156 $209,770
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 1 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)
(Unaudited)
For the three months
ended September 30,
1995 1994
Net sales $52,835 $47,639
Cost of goods sold 35,688 31,280
Gross Profit 17,147 16,359
Operating expenses:
General and administrative 5,460 5,419
Selling 5,386 4,760
Engineering 2,817 2,716
Research and development 1,223 1,339
14,886 14,234
Operating income 2,261 2,125
Other (income) expense
Interest expense 938 821
Interest income (87) (113)
Other income, net (429) (253)
422 455
Income before taxes 1,839 1,670
Provision for income taxes 846 835
Net income $ 993 $ 835
Net income per common and
common equivalent share $ 0.06 $ 0.05
Weighted average number of
shares outstanding 17,829 17,916
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 2 -
<PAGE>
<TABLE>
BALDWIN TECHNOLOGY COMPANY INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
(PART 1 OF 2 PART TABLE)
<CAPTION>
Capital
Class A Class B Contributed
Common Stock Common Stock in Excess
Shares Amount Shares Amount of Par
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1995 16,011,586 $160 2,000,000 $20 $54,881
Net income for the three months
Stock options exercised 30,097 120
Purchase of treasury stock
Translation adjustment
Balance at
September 30, 1995 16,041,683 $160 2,000,000 $20 $55,001
</TABLE>
<TABLE>
BALDWIN TECHNOLOGY COMPANY INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
(PART 2 OF 2 PART TABLE)
<CAPTION>
Cumulative Treasury Stock
Retained Translation --------------------
Earnings Adjustment Shares Amount
-------- ----------- --------- --------
<S> <C> <C> <C> <C>
Balance at June 30, 1995 $41,631 $4,174 (338,373) $(1,978)
Net income for the three
months 993
Stock options exercised
Purchase of treasury stock (19,600) (107)
Translation adjustment (2,232)
-------- ---------- --------- --------
Balance at September 30,
1995 $42,624 $ 1,942 (357,973) $(2,085)
-------- ---------- --------- --------
-------- ---------- --------- --------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 3 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
(Unaudited)
For the three months
ended September 30,
1995 1994
Cash Flows from operating activities:
Income from operations $ 993 $ 835
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 1,061 1,161
Accrued retirement pay 70 85
Provision for losses on accounts receivable (9) 19
Changes in assets and liabilities net of
effects from subsidiary purchase -
Accounts and notes receivable, net 6,053 (6,556)
Inventories (1,874) (1,845)
Prepaid expenses and other 1,412 384
Customer deposits 92 1,877
Accrued compensation (1,286) (208)
Accounts and notes payable, trade (2,739) (1,861)
Income taxes payable (858) (604)
Accrued and withheld taxes (331) (127)
Other accounts payable and accrued liabilities (1,931) (144)
Interest payable 404 503
Net cash provided (used) by
operating activities 1,057 (6,481)
Cash flows from investing activities:
Additions of property, net (4,490) (356)
Additions of patents, trademarks and drawings, net (99) (70)
Other assets (144) 158
Net cash used by investing activities (4,733) (268)
Cash flows from financing activities:
Long-term borrowings 4,779 1,000
Long-term debt repayment (788) (1,198)
Short-term borrowings 1,671 984
Short-term debt repayment (894)
Stock options exercised 120 4
Principal payments under capital lease
obligations (74) (129)
Treasury stock purchased (107) (236)
Other long-term liabilities (510) 26
Net cash provided by financing activities 4,197 451
Effects of exchange rate changes (473) 162
Net increase (decrease) in cash and
cash equivalents 48 (6,136)
Cash and cash equivalents at beginning of year 13,189 18,534
Cash and cash equivalents at end of period $13,237 $12,398
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 4 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Supplemental disclosures of cash flow information:
For the three months
ended September 30,
1995 1994
(in thousands)
Cash paid during the period for:-
Interest $ 335 $ 318
Income taxes $1,748 $1,450
Supplemental schedule of non-cash investing and financing activities:
For the three months ended September 30, 1995:-
- ---------------------------------------------
There were no significant non-cash transactions for the three
months ended September 30, 1995.
The Company entered into capital lease agreements of $14,629 for
the three months ended September 30, 1995.
For the three months ended September 30, 1994:-
- ---------------------------------------------
During the quarter ended September 30, 1994, the Company wrote off
accounts receivable, related to a Japanese customer that had filed for
reorganization, of approximately $700,000 against the allowance for
doubtful accounts. This action was taken based upon the terms of the
reorganization settlement.
The Company entered into capital lease agreements of $47,715 for
the three months ended September 30, 1994.
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Company considers
all highly liquid instruments with original maturities of three months
or less to be cash equivalents.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 5 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - General:
Baldwin Technology Company, Inc. (Baldwin, or the Company) is
engaged primarily in the development, manufacture and sale of material
handling, accessory, control and pre-press equipment for the printing
industry.
The consolidated financial statements include the accounts of
Baldwin and its subsidiaries and reflect all adjustments (consisting of
only normal recurring adjustments) which are, in the opinion of
management, necessary to present a fair statement of the results for the
interim periods. Operating results for the three month period ended
September 30, 1995 are not necessarily indicative of the results that
may be expected for the year ending June 30, 1996.
All significant intercompany transactions have been eliminated in
consolidation. Net income per share is based on the weighted average
number of common shares and common stock equivalents outstanding during
the period. For the three month periods ended September 30, 1995 and
1994, net income was divided by the total of the weighted average number
of common shares outstanding and common stock equivalents, which
consisted of 158,326 shares for stock options (105,184 shares in 1994),
in order to calculate net income per share. The weighted average number
of common equivalent shares outstanding for the three month periods
ended September 30, 1995 and 1994 were 17,829,023 and 17,915,744
respectively. Common stock equivalents calculated for fully diluted
earnings per share were not significantly different from those
calculated for primary earnings per share.
Note 2 - Inventories:
Inventories consist of the following:-
September 30, June 30,
1995 1995
------------ -----------
Raw material $19,475,000 $17,897,000
In process 12,751,000 10,602,000
Finished goods 8,962,000 11,325,000
----------- -----------
$41,188,000 $39,824,000
----------- -----------
----------- -----------
Inventories decreased $510,000 due to translation effects of exchange
from June 30, 1995 to September 30, 1995.
- 6 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position
and consolidated financial statements.
Three Months Ended September 30, 1995 vs Three Months
Ended September 30, 1994
- -----------------------------------------------------
Net sales for the three months ended September 30, 1995 increased by
$5,196,000, or 10.9% to $52,835,000 from $47,639,000 for the three
months ended September 30, 1994. Currency rate fluctuations
attributable to the Company's overseas operations accounted for an
increase of $1,979,000 in net sales for the current period. Product
volume accounted for the remainder of the change. In terms of local
currency, sales were up throughout the European Sector. Sales were up
21.8% in Germany, were up 3.0% in Sweden and were up 26.4% in the United
Kingdom. Local currency Asian Sector sales were down 8.8% in Japan,
down 32.3% in China and were down 46.9% in Hong Kong. Sales in
Australia were up A$ 3,180,000 from A$ 60,000 in September 30, 1994. In
the Americas Sector, net sales increased 1.9%.
Gross profit for the three month period ended September 30, 1995 was
$17,147,000 (32.5% of net sales), as compared to $16,359,000 (34.3% of
net sales) for the three month period ended September 30, 1994, an
increase of $788,000 or 4.8%. Currency rate fluctuations increased
gross profit by $508,000 with the remainder due to volume changes,
product mix and other factors. Gross profit was lower as a percentage
of sales when compared to the prior year due primarily to decreased
sales in Japan and sales of products that contribute lower gross profit
in the remainder of the Asia Pacific Sector.
Selling, general and administrative expenses were $10,846,000 (20.5% of
net sales), for the three month period ended September 30, 1995 as
compared to $10,179,000 (21.4% of net sales) for the same period of the
prior year. The increase of $667,000 or 6.6% in these expenses includes
currency rate fluctuations which increased these expenses by $304,000 in
the current period. Other operating expenses decreased $152,000 over
the same period of the prior year after currency rate fluctuations of
$137,000, which increased other operating expenses, were removed.
Interest expense for the three month period ended September 30, 1995 was
$938,000 as compared to $821,000 for the three month period ended
September 30, 1994. Increased interest expense resulted from higher
levels of working capital related indebtedness in Europe and an increase
in long term debt incurred to purchase a previously leased manufacturing
facility in Sweden. Currency rate fluctuations increased interest
expense by $68,000 for the current period. Interest income was $87,000
and $113,000 for the three month periods ended September 30, 1995 and
September 30, 1994, respectively. Other income and expense includes net
foreign currency transaction gains of $150,000 and $103,000 for the
three months ended September 30, 1995 and 1994, respectively. Currency
rate fluctuations decreased other income by $15,000 for the current
period.
The Company's effective tax rate on income before taxes was 46% for the
three month period ended September 30, 1995, as compared to 50% for the
three month period ended September 30, 1994. The difference in
effective rates is due primarily to increased domestic income. The
current period's effective rate reflects the impact of foreign source
income which is generally taxed at substantially higher rates than
domestic income.
Net income for the three month period ended September 30, 1995 increased
by 18.9% to $993,000 from $835,000 for the three month period ended
September 30, 1994, or to $0.06 and $0.05 per share, respectively.
Currency rate fluctuations increased net income by $4,000 for the
current period. Weighted average equivalent shares outstanding during
the three month periods ended September 30, 1995 and September 30, 1994
were 17,829,023 and 17,915,744, respectively.
- 7 -
<PAGE>
Liquidity and Capital Resources at September 30, 1995
- -----------------------------------------------------
Liquidity and Working Capital
- -----------------------------
The Company's long-term debt includes $25,000,000 of 8.17% senior notes
(the "Senior Notes") due October 29, 2000 and a three-year $20,000,000
Revolving Credit Agreement (the "Revolver") with NationsBank of North
Carolina, as Agent, which matures in November, 1996. The Senior Notes
and the Revolver require the Company to maintain certain financial
covenants and have certain restrictions regarding the payment of
dividends, limiting them throughout the terms of the Senior Notes and
the Revolver to $3,000,000 plus 50% of the Company's net income after
June 30, 1993. In addition, the Company was required to pledge certain
of the shares of its domestic subsidiaries as collateral for both the
Senior Notes and the Revolver.
Both the Senior Notes and the Revolver require the Company to maintain
a ratio of current assets to current liabilities (as those terms are
defined in the agreements) of not less than 1.4 to 1. At September 30,
1995, this ratio was 1.83 to 1.
Net cash used by investing activities increased by $4,465,000 from
$268,000 at September 30, 1994 to $4,733,000 at September 30, 1995
primarily due to the purchase of a previously leased Swedish
manufacturing facility for SEK 28,400,000 ($4,100,000). Net cash
provided by financing activities increased by $3,746,000 to $4,197,000
at September 30, 1995 from $451,000 at September 30, 1994 primarily due
to the difference in long term debt borrowing and repayment activity of
which SEK 18,400,000 ($2,647,000) relates to financing the above
building purchase with the remainder related to increased working
capital requirements.
The Company's working capital increased from $46,996,000 at September
30, 1994, to $52,094,000 at September 30, 1995, an increase of
$5,098,000 or 10.8%. Currency rate fluctuations increased working
capital by $2,544,000. The remainder of the increase was due primarily
to the effects of increases in inventories and trade receivables, the
effects of which were offset in part by increases in bank loans and
trade accounts payable. The Company's working capital decreased by
$1,481,000 or 2.8% from $53,575,000 at June 30, 1995 to $52,094,000 at
September 30, 1995. Currency rate fluctuations decreased working
capital by $2,085,000. Decreases in receivables, net of inventory
increases, were more than offset by decreases in trade accounts and
other payables.
The Company maintains relationships with foreign and domestic banks
which have extended credit facilities to the Company totaling
$35,636,000, including amounts available under the Revolver. As of
September 30, 1995, the Company had outstanding $12,140,000 under these
lines of credit, of which $2,386,000 is classified as long-term debt.
Total debt levels as reported on the balance sheet at September 30, 1995
are $570,000 lower then they would have been if June 30, 1995 exchange
rates had been used.
Net capital expenditures made to meet the normal business needs of the
Company for the three months ended September 30, 1995 and September 30,
1994, including commitments for capital lease payments, were $489,000
and $426,000, respectively.
The Company believes its cash flow from operations and bank lines of
credit are sufficient to finance its working capital and other capital
requirements for the near and long-term future.
Impact of Inflation
- -------------------
The Company's results are affected by the impact of inflation on
manufacturing and operating costs. Historically, the Company has used
selling price adjustments, cost containment programs and improved
operating efficiencies to offset the otherwise negative impact of
inflation on its operations.
- 8 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K. There were no reports on
Form 8-K filed for the three months ended
September 30, 1995.
- 9 -
<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.
BALDWIN TECHNOLOGY COMPANY, INC.
BY: /s/William J. Lauricella
------------------------
Treasurer and
Chief Financial Officer
Dated: November 2, 1995
- 10 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS IN THE COMPANY'S CURRENT REPORT ON FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH UNAUDITED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 12,271
<SECURITIES> 966
<RECEIVABLES> 56,303
<ALLOWANCES> 2,622
<INVENTORY> 41,188
<CURRENT-ASSETS> 114,995
<PP&E> 30,831
<DEPRECIATION> 19,627
<TOTAL-ASSETS> 203,156
<CURRENT-LIABILITIES> 62,901
<BONDS> 0
<COMMON> 180
0
0
<OTHER-SE> 97,482
<TOTAL-LIABILITY-AND-EQUITY> 203,156
<SALES> 52,835
<TOTAL-REVENUES> 52,835
<CGS> 35,688
<TOTAL-COSTS> 14,886
<OTHER-EXPENSES> (429)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 938
<INCOME-PRETAX> 1,839
<INCOME-TAX> 846
<INCOME-CONTINUING> 993
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 993
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
