<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended June 30, 1995 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 Identification No.)
incorporation or organization)
65 ROWAYTON AVENUE, ROWAYTON, CONNECTICUT 06853
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 203-838-7470
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of Each Class Name of Each Exchange
on Which Registered
<S> <C>
CLASS A COMMON STOCK AMERICAN STOCK EXCHANGE
PAR VALUE $.01
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
Aggregate market value of the voting stock held by non-affiliates of
the registrant as of August 31, 1995 was $86,270,412.
Number of shares of Common Stock outstanding at August 31, 1995:
<TABLE>
<S> <C>
Class A Common Stock . . . . . . 15,847,827
Class B Common Stock . . . . . . 1,835,883
----------
Total . . . . . . . . . . . . . . 17,683,710
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 are incorporated by reference from the Baldwin
Technology Company, Inc. Proxy Statement for the 1995 Annual Meeting of
Stockholders to be held on November 16, 1995 into Part III of this Form 10-K.
(A definitive proxy statement will be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year covered by this
Form 10-K.)
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<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
----
<S> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . 6
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters . . 7
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . 14
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Item 10. Directors, Executive Officers and Key Employees of the Registrant . . . . . . 37
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . 37
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . 37
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . 37
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
Baldwin Technology Company, Inc. ("Baldwin" or the "Company") is the
leading international manufacturer of material handling, accessory, control and
pre-press equipment for the printing industry. The Company offers its customers
a broad range of products designed to enhance the quality of printed products
and increase the productivity and cost-efficiency of printing presses while
addressing the environmental concerns and safety issues involved in the
printing process. Baldwin's products include cleaning systems, fountain
solution and ink control systems, press and web control systems, web and
material handling systems, newspaper inserter equipment and automated
imposition and plate exposure equipment.
The Company sells its products both to printers to upgrade the quality
and capability of existing presses and to printing press manufacturers which
incorporate the Company's products with their own equipment for sale to
printers. The Company has product development and manufacturing facilities, as
well as sales and service operations, in its three major sectors: the Americas,
Europe and Asia Pacific.
INDUSTRY OVERVIEW
Baldwin operates in a highly fragmented market. The Company defines
its business as that of providing material handling, accessory, control and
pre-press equipment for the printing industry. The Company believes that it
produces the most complete line of material handling, accessory, control and
pre-press equipment for the printing industry.
The Company's products are used by printers engaged in all printing
processes including lithography, gravure, letterpress and flexography. The
largest share of its business is in offset (lithography) printing. Offset
printing is the largest segment of the domestic printing market and is used
primarily for printing books, magazines, business forms, catalogs, greeting
cards, packaging and newspapers. The Company's products are designed to improve
the printing process in terms of both quality of the finished product as well
as its cost efficiency.
Although offset printing represents a significant segment of the U.S.
commercial printing industry, it is not as dominant in the international
printing market. The Company believes that the future growth of this
international market will be attributable in large part to the increased use of
offset printing. The Company has established operations in each of its three
major sectors to take advantage of growth opportunities in these markets.
Baldwin's worldwide operations enable it to closely monitor new product
developments in different printing markets and to introduce new products, or
adapt existing ones, to meet the printing requirements of specific local
markets throughout the world.
PRINCIPAL PRODUCTS
The Company manufactures and sells more than 150 different products to
printers and printing press manufacturers. The Company's product development is
focused on the needs of the printer. Typically, it takes a new product several
years after its introduction to make a significant contribution to the
Company's net sales. Initially, after the introduction of a new product, the
Company's marketing efforts usually focus on printers. With the exception of
the Company's Kansa and Misomex product lines, as a product progresses through
its life cycle, the percentage of sales to printing press manufacturers
generally increases as the product's acceptance by the industry increases and
printers begin to specify certain of the Company's products as part of their
accessory or material handling equipment package when ordering new presses. The
Company's Kansa and Misomex product lines are primarily marketed to printers.
Historically, the Company's products have had a long life cycle as the Company
continually upgrades and refines its product lines to meet customer needs and
changes in printing press technology. The Company's products help printers
address increasingly demanding print quality, environmental and safety issues
while enhancing productivity.
1
<PAGE> 4
Nearly all of the Company's products also significantly limit paper waste,
which is especially important given the recent dramatic increases in paper
prices. Vision, a new press control package has been specifically engineered to
achieve a virtually seamless mechanical, electrical and electronic integration
of auxiliary equipment with the press system. Its patented control technology
and equipment are designed to maximize sellable press hours, environmental
efficiency and waste reduction while reducing downtime. The Company's sales
have historically increased about equally through both internal product
development and acquisitions of product lines and companies.
The Company's products range in price from under $100 to approximately
$500,000. Baldwin's principal products are:
CLEANING SYSTEMS. The Company's first Cleaning Systems product was
the Press Washer which cleaned the ink train of an offset press. Additional
Cleaning Systems products include the Automatic Blanket Cleaner, Newspaper
Blanket Cleaner, Chill Roll Cleaner and Guide Roll Cleaner, which all reduce
paper waste, volatile organic compound ("VOC") emissions and press downtime, as
well as improve productivity, print quality and safety of operation for the
press operator. Most recently, IMPACT, a patented automated blanket and press
cylinder cleaning system was introduced and won a Graphic Arts Technical
Foundation Intertech Award. In the fiscal years ended June 30, 1995, 1994 and
1993, net sales of Cleaning Systems represented approximately 30.2%, 32.6% and
37.8% of the Company's net sales, respectively.
FOUNTAIN SOLUTION CONTROL SYSTEMS. Fountain Solution Control Systems
control the supply, temperature, cleanliness, chemical composition and certain
other characteristics of water used in the offset printing process. Among the
most important of these products are the Company's Refrigerated Circulators,
which circulate and control the fountain solution within the printing press. In
the fiscal years ended June 30, 1995, 1994 and 1993, net sales of Fountain
Solution Control Systems represented approximately 13.2%, 12.6% and 11.7% of
the Company's net sales, respectively.
INK CONTROL SYSTEMS. The Company's Ink Control Systems control and
regulate many aspects of the ink feed system on a printing press. These
products include Ink Agitators, Ink Mixers and Ink Level Systems which reduce
wasted ink and paper and allow for the use of recycled ink containers. In the
fiscal years ended June 30, 1995, 1994 and 1993, net sales of Ink Control
Systems represented approximately 10.3%, 9.8% and 9.3% of the Company's net
sales, respectively.
IN-LINE FINISHING SYSTEMS. The Company's In-line Finishing products
allow printers to perform automatically, at press speeds, functions which
previously required special handling in the bindery. These functions include
numbering, perforating, gluing and cutting.
MATERIAL HANDLING/STACKING SYSTEMS. Baldwin's Material
Handling/Stacking Systems automate the handling of the printed product. The
efficient counting, stacking, packing and compressing of printed materials
helps to increase press utilization and productivity, reduce and control waste
and decrease pressroom labor requirements.
WEB CONTROL AND PRESS PROTECTION SYSTEMS. The Company's Web Control
Systems improve print quality by precisely controlling the flow of paper
through a web offset press while also reducing waste and increasing press
productivity. The Company's Press Protection Systems, designed in response to
the increasing number of web leads used in printing today's colorful
newspapers, provide an auto-arming electronic package offering high quality
press protection in the event of a web break.
WEB HANDLING SYSTEMS. The Company's Web Handling Systems, produced by
its Enkel and Amal subsidiaries, unwind, rewind and splice paper and other
materials supplied to presses in webs and also control the tension and position
of web materials. This equipment eliminates unnecessary press stoppages and
allows a more efficient flow of printed work. In the fiscal years ended June
30, 1995, 1994 and 1993, net sales of Web Handling Systems represented
approximately 14.3%, 12.9% and 11.6% of the Company's net sales, respectively.
2
<PAGE> 5
NEWSPAPER INSERTER EQUIPMENT AND MAILING MACHINE SYSTEMS. The
Company's Newspaper Inserter Equipment collates and inserts sections and
advertising material into newspapers. Rising newsprint costs in the printing
industry have increased pressure on printers to reduce other costs,
particularly labor costs. When manual processes are replaced by newspaper
inserters, payback periods as low as six months have been realized by some
purchasers of this equipment. The Company's Mailing Machine Systems fold, label
and prepare newspapers for mailing.
AUTOMATED IMPOSITION, PLATE EXPOSURE AND PLOTTING AND CUTTING SYSTEMS.
The Company's Automated Imposition and Plate Exposure Systems are used by
printers to automate a labor intensive operation that results in the high
quality and accuracy of images on plates used in the offset printing process.
The Company's recently introduced Laserstepper is designed to expose both film
images and digital information directly onto printing plates. The Laserstepper
technology allows printers to intermix conventional film and digital data
within the page, or page by page, on the plate. Furthermore, the technology
allows the printer to upgrade to more efficient digital platemaking
technologies without losing the flexibility to work with conventional input.
Printers can thus sharpen their competitive edge in traditional markets while
developing the digital capabilities needed for future success. The Platesetter
is designed to image plates directly from digital data offering continuous
"hands-off" plate production of large amounts of digital data. In addition to
accommodating both film and plate as well as different plate sizes, it handles
oversize plates, a key advantage in today's market. The Company's Plotting and
Cutting systems are widely used in the packaging and corrugated carton
industries and are designed to plot, cut, crease and mill a wide range of
materials. In the fiscal years ended June 30, 1995, 1994 and 1993, net sales of
Automated Imposition and Plate Exposure Systems represented approximately
11.7%, 14.0% and 12.8% of the Company's net sales, respectively.
WORLDWIDE OPERATIONS
The Company believes that it is the only manufacturer of material
handling, accessory, control and pre-press equipment for the printing industry
which has complete product development, manufacturing and marketing facilities
in three major sectors: the Americas, Europe and Asia Pacific.
The following table sets forth the percentages of the Company's net
sales attributable to its three sectors in the fiscal years ended June 30,
1995, 1994 and 1993:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Americas . . . . . . . . . . . . . . . . . . . . . 42.2% 42.5% 36.9%
Europe . . . . . . . . . . . . . . . . . . . . . . 29.8 29.5 35.1
Asia Pacific . . . . . . . . . . . . . . . . . . . 28.0 28.0 28.0
----- ----- -----
Total . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
In its Americas sector, the Company operates in North, Central and
South America through its U.S. subsidiaries. In its European sector, the
Company operates through its subsidiaries in Germany, Sweden, Italy, the
Netherlands and England. In its Asia Pacific sector, the Company operates
through its subsidiaries in Japan, Hong Kong, China and Australia. All of the
Company's subsidiaries are wholly owned.
For additional information relating to the Company's operations in its
three principal sectors, see Note 5 -- Notes to Consolidated Financial
Statements of the Company.
3
<PAGE> 6
ACQUISITION STRATEGY
An important element of the Company's growth strategy is to make
strategic acquisitions of companies and product lines in related business
areas. The Company's acquisition strategy involves (i) acquiring new material
handling, accessory, control and pre-press products for the printing industry
which can be sold through the Company's own, or the acquired entity's,
distribution network and which can benefit from the Company's manufacturing
expertise and financial support; (ii) entering new end-user market segments or
extending existing markets; and (iii) acquiring companies which contribute new
products to the Company. After it makes an acquisition, the Company typically
supports the existing management of the acquired entity and participates
actively with that management in implementing operational strategies with a
view to enhancing the entity's sales, productivity and operating results.
MARKETING, SALES AND SUPPORT
MARKETING. The Company markets its products in almost all developed
countries throughout the world. Although Baldwin markets a similar line of
products in many of these countries, its product mix and distribution channels
vary from country to country. The Company has 123 sales representatives in its
three principal markets and approximately 338 dealers worldwide. The Company
markets its products to printing press manufacturers and to printers. For the
fiscal year ended June 30, 1995 approximately 44% of the Company's net sales
were to printing press manufacturers and approximately 56% of its net sales
were directly to printers.
In its Americas and European sectors, the Company markets its products
both through direct sales representatives and an extensive dealer network. In
its Asia Pacific sector, the Company markets its products through direct sales
representatives in Japan, Hong Kong, China and Australia and through dealers
throughout the rest of Asia.
SUPPORT. The Company is committed to after-sales service and support
of its products throughout the world. Baldwin employs approximately 100 service
technicians, who are complemented by product engineers, to provide field
service for the Company's products on a global basis.
BACKLOG. The Company's backlog was $71,866,000 as of June 30, 1995,
$58,455,000 as of June 30, 1994 and $56,088,000 as of June 30, 1993. Backlog
represents product orders which Baldwin has received from its customers under
valid contracts or purchase orders.
CUSTOMERS. The Company has a diverse customer base. In the fiscal
years ended June 30, 1995 and 1994, no customer accounted for 10% of the
Company's net sales. The ten largest customers of Baldwin accounted for less
than 43% of the Company's net sales for the fiscal year ended June 30, 1995.
Sales of Baldwin's products are not seasonal. However, its sales have
traditionally been greater in the second six months of its fiscal year than in
the first six months of its fiscal year.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company believes its research and development efforts have been an
important factor in establishing and maintaining its leadership position in the
field of material handling, accessory, control and pre-press equipment for the
printing industry. In 1995, the Company was awarded a prestigious Intertech
Award from the Graphic Arts Technical Foundation (see Principal Products -
Cleaning Systems). This is the Company's sixth such award since the Intertech
Award was established in 1978 to recognize technologies that are predicted to
have a major impact on the graphic communications industry, but are not yet in
widespread use in the marketplace. Baldwin has devoted substantial efforts to
adapt its products to almost all models and sizes of printing presses in use
worldwide.
4
<PAGE> 7
The Company has product development facilities at each of its
manufacturing locations. This decentralized approach to research and
development permits the Company to react quickly to meet the needs of its
customers.
Baldwin employs approximately 167 persons whose primary function is
new product development or modification of existing products. The Company's
total expenditures for research, development and engineering for the fiscal
years ended June 30, 1995, 1994 and 1993 were $17,296,000, $15,409,000 and
$16,711,000, respectively, representing approximately 8% of the Company's net
sales in each year.
PATENTS
The Company owns and licenses a number of patents and patent
applications relating to a substantial number of Baldwin's products. These
products represented a substantial portion of the Company's net sales in the
fiscal year ended June 30, 1995. The Company's patents expire at different
times through June, 2012; however, the expiration of patents in the near future
is not expected to have a material adverse effect on the Company's sales. The
Company has also relied upon and intends to continue to rely upon unpatented
proprietary technology, including the proprietary engineering required to adapt
its products to a wide range of models and sizes of printing presses. The
Company believes its rights under, and interests in, its patents and patent
applications, as well as its proprietary technology, are sufficient for its
business as currently conducted.
MANUFACTURING
The Company conducts its manufacturing operations through a number of
operating subsidiaries in each of its three sectors. In North America, the
Company has subsidiaries with manufacturing facilities located on the East
Coast, in the Midwest and on the West Coast.
In Europe, the Company has subsidiaries with manufacturing and
assembly facilities in Germany, Sweden and the United Kingdom. These facilities
manufacture and assemble complete lines of products that are in demand by
printers worldwide and by printing press manufacturers in Europe for shipment
throughout the world. The Company also has sales/service facilities in Germany,
Sweden, the United Kingdom and Italy. In Asia, Baldwin has manufacturing and
assembly facilities in Japan and China and sales/service facilities in Hong
Kong, China and Australia.
In general, raw materials required by the Company can be obtained from
various sources in the quantities desired. The Company has no long-term supply
contracts and does not consider itself dependent on any individual supplier.
The nature of most operations of the Company is such that there is
little, if any, negative effect upon the environment, and the Company has not
experienced any serious problems in complying with environmental protection
laws and regulations.
COMPETITION
The printing press accessory industry is highly fragmented. Although
the Company believes it produces the most complete line of material handling,
accessory, control and pre-press equipment for the printing industry, numerous
companies manufacture and sell products that compete with one or more of the
Company's products. The Company competes from time to time with printing press
manufacturers who, as a part of their businesses, produce material handling,
accessory and control equipment for the printing industry and who generally
have larger staffs and greater financial resources than the Company.
The Company competes by offering customers a broad product line,
coupled with a well-known reputation for the reliability of its products and
its commitment to service and after-sale support. Some of the Company's
products with patent protection have little or no direct competition. The
Company's
5
<PAGE> 8
ability to compete effectively in the future will depend upon the continued
reliability of its products, after-sale service, ability to keep its market
position as its patents expire and ability to develop new products which meet
the demands of the printing industry.
EMPLOYEES
The Company employs 1,109 persons, 532 of whom are production
employees and approximately 147 of whom are management and administrative
employees. Approximately 34% of the Company's 128 employees in its Baldwin
Graphic Products Division in the United States are represented by the
International Association of Machinists and Aerospace Workers under a contract
which expires on November 9, 1996. In Europe, employees are represented by
various unions, under contracts with indefinite terms. In Sweden, 33 and 41 of
the Company's 128 employees at its Misomex AB subsidiary are represented by the
Swedish Industrial Salaried Employees' Association and the Swedish Metal
Workers' Union, respectively, and at Amal AB, 3 employees are represented by
Ledarna (SALF), 35 employees are represented by Lundsorganisationen, Metall and
20 employees are represented by Tjanstemannene Central Organisation, Svenska
Industritjanstemanna Forbundet. In Germany, at Baldwin Gegenheimer GmbH,
approximately 45 of the Company's 232 employees are represented by the IG
Metall (Metalworker's Union) and at Misomex GmbH, 11 of the Company's employees
are represented by the Grosshandel und Lagerei Burufsgenossenschaft. In the
United Kingdom, 2 employees at Misomex U.K. Ltd. are represented by the N.G.A.
The Company considers relations with its employees and with its unions to be
good.
ITEM 2. PROPERTIES
The Company's facilities are divided among its three sectors and total
approximately 630,000 square feet.
In North America, manufacturing and office space leased by the Company
and its subsidiaries total approximately 280,000 square feet of which space
approximately 8,400 square feet is sublet. An additional 52,800 square feet of
office and manufacturing space is owned by Kansa Corporation, subject to an
Industrial Revenue Bond.
In Europe, the Company has leased facilities totalling approximately
202,000 square feet comprised of office and manufacturing facilities in Germany
(approximately 113,000 square feet), Sweden (approximately 64,000 square feet),
the United Kingdom (approximately 20,000 square feet), Italy (approximately
3,000 square feet) and the Netherlands (approximately 2,000 square feet). In
addition, the Company owns manufacturing facilities in Sweden totalling
approximately 61,000 square feet.
In Asia, the Company leases office and manufacturing facilities of
approximately 33,400 square feet in Japan and 1,065 square feet in Beijing and
office facilities aggregating approximately 2,435 square feet in Hong Kong,
Shanghai, Melbourne and Sydney.
The Company believes that its facilities are adequate to carry on its
business as currently conducted.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Company is a party
or to which any of its property is subject, other than routine litigation
incidental to the Company's business or which is covered by insurance and which
would not have a material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders since
November 17, 1994.
6
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
(a) PRICE RANGE OF CLASS A COMMON STOCK
The Company's Class A Common Stock is traded on the American Stock
Exchange ("AMEX") under the symbol "BLD". The following chart sets forth, for
the calendar periods indicated, the range of closing prices for the Class A
Common Stock on the AMEX, as reported by the AMEX.
<TABLE>
<CAPTION>
1993 HIGH LOW
- ---- ---- ---
<S> <C> <C>
First Quarter . . . . . . . . . . . . . . . . . . 5.75 4.125
Second Quarter . . . . . . . . . . . . . . . . . 5.00 3.50
Third Quarter . . . . . . . . . . . . . . . . . . 4.625 3.375
Fourth Quarter . . . . . . . . . . . . . . . . . 5.375 4.50
1994
- ----
First Quarter . . . . . . . . . . . . . . . . . . 5.75 4.875
Second Quarter . . . . . . . . . . . . . . . . . 5.625 4.25
Third Quarter . . . . . . . . . . . . . . . . . . 5.875 4.25
Fourth Quarter . . . . . . . . . . . . . . . . . 6.625 4.625
1995
- ----
First Quarter . . . . . . . . . . . . . . . . . . 5.875 4.8125
Second Quarter . . . . . . . . . . . . . . . . . 6.125 5.00
Third Quarter (through September 22) . . . . . . 6.375 5.25
</TABLE>
(b) CLASS B COMMON STOCK
The Company's Class B Common Stock has no established public trading
market.
(c) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
As of August 31, 1995, the approximate number of record holders
(excluding those listed under a nominee name) of the Company's Class A and
Class B Common Stock totaled 537 and 25, respectively. The Company believes,
however, that there are in excess of 4,200 beneficial owners of its Class A
Common Stock.
(d) DIVIDENDS
Declarations of dividends depend upon the earnings and financial
position of the Company and are within the discretion of the Company's Board of
Directors. No dividend in cash or property can be declared or paid on shares of
Class B Common Stock unless simultaneously therewith there is declared or paid,
as the case may be, a dividend in cash or property on shares of Class A Common
Stock of at least 105% of the dividend on shares of Class B Common Stock (see
Note 10 -- Notes to Consolidated Financial Statements). See Note 8 -- Notes to
Consolidated Financial Statements and "Liquidity and Capital Resources" within
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for restrictions on dividends.
7
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA
The Company's income statement and balance sheet data as they relate
to the years ended June 30, 1995, 1994, 1993, 1992 and 1991, have been derived
from the Company's audited financial statements (including the Consolidated
Balance Sheet of the Company at June 30, 1995 and 1994 and the related
Consolidated Statement of Income of the Company for the years ended June 30,
1995, 1994 and 1993 appearing elsewhere herein). The following information
should be read in conjunction with the aforementioned financial statements and
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales . . . . . . . . . . . . . . . $222,341 $198,055 $215,759 $221,474 $218,767
Cost of goods sold (1) . . . . . . . . 146,727 130,051 142,564 147,071 137,150
-------- -------- -------- -------- --------
Gross profit . . . . . . . . . . . . . 75,614 68,004 73,195 74,403 81,617
-------- -------- -------- -------- --------
Selling, general and administrative
expenses (2) . . . . . . . . . . . 45,847 42,068 42,532 41,575 42,901
Research, development and
engineering expenses . . . . . . . 17,296 15,409 16,711 16,970 16,007
Restructuring charge . . . . . . . . . 880 1,706
-------- -------- -------- -------- --------
Operating income . . . . . . . . . . . 12,471 10,527 13,072 14,152 22,709
-------- -------- -------- -------- --------
Interest expense . . . . . . . . . . . 3,436 3,694 5,850 7,167 7,737
Interest income . . . . . . . . . . . . 577 381 285 483 699
Other income, net . . . . . . . . . . . 1,130 887 462 809 3,095
-------- -------- -------- -------- --------
Income from continuing operations
before taxes . . . . . . . . . . . 10,742 8,101 7,969 8,277 18,766
-------- -------- -------- -------- --------
Provision for income taxes . . . . . . 5,091 3,969 4,303 7,507 10,205
-------- -------- -------- -------- --------
Income from continuing operations . . . 5,651 4,132 3,666 770 8,561
-------- -------- -------- -------- --------
Loss from discontinued operations . . . (1,842) (1,683)
Loss on disposal of discontinued
operations . . . . . . . . . . . . (5,894)
Extraordinary loss on extinguishment
of debt . . . . . . . . . . . . . . (1,105)
Cumulative effect of change in
accounting for income taxes . . . . 1,229
-------- -------- -------- -------- --------
Net income (loss) . . . . . . . . . . . $ 5,651 $ 4,132 $ 3,790 $ (6,966) $ 6,878
======== ======== ======== ======== ========
</TABLE>
8
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<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Income (loss) per share from:
Continuing operations . . . . . . . $ 0.32 $ 0.23 $ 0.21 $ 0.05 $ 0.50
Discontinued operations . . . . . . (0.11) (0.10)
Disposal of discontinued operations . . (0.35)
Extinguishment of debt . . . . . . . . (0.06)
Cumulative effect of change in
accounting for income taxes . . . . 0.07
-------- -------- -------- -------- --------
Net income (loss) per share . . . . . . $ 0.32 $ 0.23 $ 0.22 $ (0.41) $ 0.40
======== ======== ======== ======== ========
Cash dividends declared per share:
Class A Common Stock . . . . . . . . . $ 0.012 $ 0.09
======== ========
Class B Common Stock . . . . . . . . . $ 0.01 $ 0.057
======== ========
Weighted average shares outstanding . . 17,939 18,015 17,593 17,106 17,378
======== ======== ======== ======== ========
BALANCE SHEET DATA (AS OF THE END
OF EACH PERIOD):
Working capital . . . . . . . . . . . . $ 53,575 $ 45,098 $ 34,414 $ 34,313 $ 35,245
Total assets . . . . . . . . . . . . . 209,770 187,216 188,479 206,936 212,683
Short-term debt . . . . . . . . . . . . 9,348 6,033 16,257 13,828 24,476
Long-term debt . . . . . . . . . . . . 29,868 32,230 25,998 36,668 36,019
Shareholders' equity . . . . . . . . . 98,888 88,080 82,864 85,135 83,114
</TABLE>
- --------------
(1) Includes all technical service expense, a portion of which was previously
classified as an item of Operating Expenses in prior financial statement
presentations. (See Note 3 -- Notes to Consolidated Financial Statements).
(2) Includes amortization expense for intangible assets which was previously
classified as an item of Other Income and Expense in prior financial
statement presentations. (See Note 3 -- Notes to Consolidated Financial
Statements).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL. The Company does not consider its business to be seasonal;
however, its sales have traditionally been greater in the second six months of
its fiscal year than in the first six months of its fiscal year. The following
schedule shows the Company's net sales for six-month periods over the last five
fiscal years to reflect the comparison.
<TABLE>
<CAPTION>
FIRST SIX SECOND SIX
FISCAL YEAR MONTHS MONTHS
- ----------- ------------ ------------
<S> <C> <C>
1995 . . . . . . . . . . . . . . . . . . $100,352,000 $121,989,000
1994 . . . . . . . . . . . . . . . . . . 91,858,000 106,197,000
1993 . . . . . . . . . . . . . . . . . . 104,376,000 111,383,000
1992 . . . . . . . . . . . . . . . . . . 108,310,000 113,164,000
1991 . . . . . . . . . . . . . . . . . . 106,601,000 112,166,000
</TABLE>
9
<PAGE> 12
RESULTS OF OPERATIONS
The following tables set forth certain of the items (expressed as a
percentage of net sales) included in the Selected Financial Data and should be
read in connection with the Consolidated Financial Statements of the Company
including the Notes thereto, presented elsewhere in this report.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
Cost of goods sold . . . . . . . . . . . . . . . . 66.0 65.7 66.1
------ ------ ------
Gross profit . . . . . . . . . . . . . . . . . . . 34.0 34.3 33.9
Selling, general and administrative expenses . . . 20.6 21.2 19.7
Research, development and engineering expenses . . 7.8 7.8 7.7
Restructuring Charge . . . . . . . . . . . . . . . .4
------ ------ ------
Operating income . . . . . . . . . . . . . . . . . 5.6 5.3 6.1
------ ------ ------
Interest expense . . . . . . . . . . . . . . . . . 1.6 1.9 2.7
Interest income . . . . . . . . . . . . . . . . . . .3 .2 .1
Other income, net . . . . . . . . . . . . . . . . . .5 .5 .2
------ ------ ------
Income from operations before taxes . . . . . . . . 4.8 4.1 3.7
Provision for income taxes . . . . . . . . . . . . 2.3 2.0 2.0
Income from operations . . . . . . . . . . . . . . 2.5 2.1 1.7
------ ------ ------
Extraordinary loss on extinguishment of debt . . . (.5)
Cumulative effect of change in accounting for
income taxes . . . . . . . . . . . . . . . . . .6
------ ------ ------
Net income . . . . . . . . . . . . . . . . . . . . 2.5% 2.1% 1.8%
====== ====== ======
</TABLE>
COMPANY'S FISCAL YEAR ENDED JUNE 30, 1995 VERSUS FISCAL YEAR ENDED JUNE 30, 1994
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
consolidated financial statements.
NET SALES. Net sales for the fiscal year ended June 30, 1995
increased by $24,286,000, or 12.3%, to $222,341,000 from $198,055,000 for the
fiscal year ended June 30, 1994. Currency rate fluctuations attributable to the
Company's overseas operations accounted for an increase of $14,073,000 in net
sales for the current year. Product volume was the primary reason for the
remainder of the increase. In terms of local currency, sales changes were mixed
within the European Sector. Sales increased in Germany by 2.2%, increased in
the United Kingdom by 7.9% and decreased in Sweden by 2.3%. In the Company's
Asia Pacific Sector, local currency sales decreased 1.7% in Japan and 25.4% in
Australia but increased by 33% in Hong Kong and 25.9% in China. In the Americas
Sector, net sales increased by 11.8% for the year due to a continued
strengthening and improvement in the U.S. printing equipment market.
GROSS PROFIT. Gross profit for the fiscal year ended June 30, 1995
was $75,614,000 (34.0% of net sales), as compared to $68,004,000 (34.3% of net
sales) for the fiscal year ended June 30, 1994, an increase of $7,610,000 or
11.2%. Currency rate fluctuations increased gross profit by $4,000,000 and the
primary reason for the remainder of the increase in gross profit was due to
increased volume.
10
<PAGE> 13
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $45,847,000 (20.6% of net sales) for the fiscal
year ended June 30, 1995, as compared to $42,068,000 (21.2% of net sales) for
the prior year, an increase of $3,779,000. Currency rate fluctuations increased
the current year's expenses by $2,283,000. The remainder of the increase was
due to marketing expenses related to increased sales volumes and trade show
activity offset by a reduction in bad debt expense.
INTEREST AND OTHER. Interest expense for the fiscal year ended June
30, 1995 was $3,436,000, as compared to $3,694,000 for the fiscal year ended
June 30, 1994. Interest expense decreased primarily as a result of a reduction
in the amount of outstanding indebtedness. Foreign currency exchange effects
increased interest expense by $408,000. Interest income was $577,000 and
$381,000 for the fiscal years ended June 30, 1995 and June 30, 1994,
respectively. Other income was $1,130,000 and $887,000 for the fiscal years
ended June 30, 1995 and June 30, 1994, respectively, with the increase
primarily due to increased royalty income. Foreign currency exchange effects
decreased other income by $29,000 during the current period.
INCOME TAXES. The Company's effective tax rate was 47.4% for the
fiscal year ended June 30, 1995 as compared to 49.0% for the fiscal year ended
June 30, 1994. The effective rate reflects the impact of foreign source income
which is taxed at substantially higher rates than domestic income. The decrease
from the prior year's effective rate is primarily caused by an increase in
income generated by domestic operations which is taxed at rates which are
generally lower than the rates applied to foreign income (see Note 9 -- Notes
to Consolidated Financial Statements). Foreign currency exchange effects
increased the provision for income taxes by $270,000 during the current period.
NET INCOME. Net income for the fiscal year ended June 30, 1995
increased by $1,519,000 or 36.8% to $5,651,000 from $4,132,000 for the fiscal
year ended June 30, 1994. Currency exchange effects increased reported net
income by $148,000 for the current period. Net income per share was $0.32 and
$0.23 for the fiscal years ended June 30, 1995 and 1994, respectively. Weighted
average equivalent shares outstanding during the fiscal years ended June 30,
1995 and June 30, 1994 were 17,939,421 and 18,015,295, respectively.
COMPANY'S FISCAL YEAR ENDED JUNE 30, 1994 VERSUS FISCAL YEAR ENDED JUNE 30, 1993
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
consolidated financial statements.
NET SALES. Net sales for the fiscal year ended June 30, 1994
decreased by $17,704,000, or 8.2%, to $198,055,000 from $215,759,000 for the
fiscal year ended June 30, 1993. The decrease in sales for 1994 was due
primarily to product volume. Currency rate fluctuations attributable to the
Company's overseas operations accounted for a decrease of $3,195,000 in net
sales for the current year. In terms of local currency, sales changes were
mixed within the European Sector. Sales increased in Sweden by 24.4%, increased
in the United Kingdom by 1.5% and decreased in Germany by 17.7%. In the
Company's Asia Pacific Sector, local currency sales decreased 20.4% in Japan
but increased in Australia, Hong Kong and China. In the Americas Sector net
sales increased by 4% for the year due to a continued strengthening in the U.S.
printing equipment market.
GROSS PROFIT. Gross profit for the fiscal year ended June 30, 1994
was $68,004,000 (34.3% of net sales), as compared to $73,195,000 (33.9% of net
sales) for the fiscal year ended June 30, 1993, a decrease of $5,191,000 or
7.1%. The primary reason for the decline in gross profit was decreased volume.
Currency rate fluctuations decreased gross profit by $930,000.
11
<PAGE> 14
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $42,068,000 (21.2% of net sales) for the fiscal
year ended June 30, 1994, as compared to $42,532,000 (19.7% of net sales) for
the prior year a decrease of $464,000. Currency rate fluctuations reduced the
current year's expenses by $711,000. Although the Company continued to
implement cost reduction and control programs during fiscal 1994, the benefits
derived from these actions were largely offset by an increase in bad debt
expense. During fiscal 1994 the Company increased its reserve for bad debts by
approximately $1,300,000 relating to a Japanese customer which filed for
reorganization. Selling expenses increased in fiscal 1994 also, due to
increased trade show expenses, new product introduction costs and a planned
increase in marketing and selling personnel.
INTEREST AND OTHER. Interest expense for the fiscal year ended June
30, 1994 was $3,694,000, as compared to $5,850,000 for the fiscal year ended
June 30, 1993. Interest expense decreased primarily as a result of the Company
refinancing its debts at lower interest rates and a reduction in the amount of
outstanding indebtedness. Foreign currency exchange effects reduced interest
expense by $635,000. Interest income was $381,000 and $285,000 for the fiscal
years ended June 30, 1994 and June 30, 1993, respectively. Other income was
$887,000 and $462,000 for the fiscal years ended June 30, 1994 and June 30,
1993, respectively, with the increase primarily due to increased royalty
income.
INCOME TAXES. The Company's effective tax rate was 49% for the fiscal
year ended June 30, 1994 as compared to 54% for the fiscal year ended June 30,
1993. The effective rate reflects the impact of foreign source income which is
taxed at substantially higher rates than domestic income. The decrease from the
prior year's effective rate is primarily caused by income generated by domestic
operations which is taxed at rates which are generally lower than foreign rates
and the recognition of previously unrecognized deferred tax benefits (see Note
9 -- Notes to Consolidated Financial Statements).
NET INCOME. Net income for the fiscal year ended June 30, 1994
increased to $4,132,000 from $3,790,000 for the fiscal year ended June 30,
1993. Net income for the year ended June 30, 1993 includes an extraordinary
charge on extinguishment of debt of $1,105,000 or $0.06 per share and a benefit
for the cumulative effect of a change in accounting for income taxes of
$1,229,000 or $0.07 per share (see Notes 8 and 9 -- Notes to Consolidated
Financial Statements). Net income per share was $0.23 and $0.22 for the fiscal
years ended June 30, 1994 and 1993, respectively. Weighted average equivalent
shares outstanding during the fiscal years ended June 30, 1994 and June 30,
1993 were 18,015,295 and 17,592,845, respectively.
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.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term debt includes $25,000,000 of 8.17% senior
notes (the "Senior Notes") due October 29, 2000. The Company also has 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.
12
<PAGE> 15
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 June 30, 1995, this ratio was
1.75 to 1.
As reflected in the Consolidated Statement of Cash Flows, the net cash
used by investing activities decreased by $2,956,000 from $4,463,000 at June
30, 1994 to $1,507,000 at June 30, 1995 primarily due to the amortization of
costs associated with the Company's debt refinancing which were capitalized in
the prior fiscal year, as well as a lower, $218,000 ($1,383,000 in 1994),
increase in the recorded amount of prepaid income taxes. The net cash used by
financing activities decreased during the period ended June 30, 1995 as
compared to the period ended June 30, 1994 primarily due to lower net debt
repayments.
The Company's working capital increased by $8,477,000 or 18.8% from
$45,098,000 at June 30, 1994 to $53,575,000 at June 30, 1995. Currency effects
increased working capital by $4,358,000 for the period. The remaining net
increase was largely attributable to increases in trade receivables, primarily
due to the Company's record sales quarter ended June 30, 1995, and inventory
levels which increased in relation to June 30, 1995 order backlog levels of
$71,866,000 ($58,455,000 in 1994). Increases in net trade receivables and
inventories were partially offset by decreases in short-term marketable
securities and, to a lesser extent, increases in trade payables, working
capital loans, customer deposits and other current liabilities.
The Company maintains relationships with foreign and domestic banks
which have extended credit facilities to the Company totaling $36,679,000,
including amounts available under the Revolver. As of June 30, 1995, the
Company had outstanding $10,067,000 under these lines of credit, of which
$879,000 is classified as long-term debt. Total debt levels as reported on the
balance sheet at June 30, 1995 are $1,721,000 higher then they would have been
if June 30, 1994 exchange rates had been used.
Net capital expenditures made to meet the normal business needs of the
Company for the fiscal years ended June 30, 1995 and June 30, 1994, including
commitments for capital lease payments, were $1,863,000 and $1,819,000,
respectively.
The Company believes its cash flow from operations and available bank
lines of credit are sufficient to finance its working capital and other capital
requirements for the near and long-term future.
13
<PAGE> 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Consolidated Balance Sheet at June 30, 1995 and June 30, 1994 . . . . . . . . . . . . . 16
Consolidated Statement of Income for the years ended June 30, 1995, June 30, 1994
and June 30, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Consolidated Statement of Changes in Shareholders' Equity for the years ended
June 30, 1995, June 30, 1994 and June 30, 1993 . . . . . . . . . . . . . . . . . . 19
Consolidated Statement of Cash Flows for the years ended June 30, 1995, June 30,
1994 and June 30, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
14
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
BALDWIN TECHNOLOGY COMPANY, INC.
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of changes in shareholders'
equity and of cash flows present fairly, in all material respects, the financial
position of Baldwin Technology Company, Inc. and its subsidiaries at June 30,
1995 and 1994, and the results of their operations and their cash flows for each
of the three years in the period ended June 30, 1995, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 9 of Notes to Consolidated Financial Statements,
the Company changed its method of accounting for income taxes by adopting FASB
Statement No. 109, "Accounting for Income Taxes", effective July 1, 1992.
PRICE WATERHOUSE LLP
Stamford, Connecticut
August 15, 1995
15
<PAGE> 18
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1995 1994
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,719 $ 9,768
Short-term securities . . . . . . . . . . . . . . . . . . . . . . 470 8,766
Accounts receivable trade, net of allowance for doubtful accounts
of $2,897 ($3,209 at June 30, 1994) . . . . . . . . . . . . . 46,478 31,253
Notes receivable, trade . . . . . . . . . . . . . . . . . . . . . 16,916 12,411
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,824 32,939
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . 8,496 8,263
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 124,903 103,400
-------- --------
MARKETABLE SECURITIES, at cost:
(Market $971 at June 30, 1995 and $1,190 at June 30, 1994) . . . . 971 918
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings . . . . . . . . . . . . . . . . . . . . . . . 2,348 2,284
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . 8,941 8,516
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . 5,855 5,075
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . 1,734 1,615
Capital leases . . . . . . . . . . . . . . . . . . . . . . . . . 7,837 7,295
-------- --------
26,715 24,785
Less: Accumulated depreciation and amortization . . . . . . . . . 19,538 17,172
-------- --------
Net property, plant and equipment . . . . . . . . . . . . . . . . 7,177 7,613
-------- --------
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS,
at cost, less accumulated amortization of $3,243 ($2,584 at
June 30, 1994) . . . . . . . . . . . . . . . . . . . . . . . . . 5,355 6,123
GOODWILL, less accumulated amortization of $9,734 ($7,579 at
June 30, 1994) . . . . . . . . . . . . . . . . . . . . . . . . . 61,477 60,584
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,887 8,578
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $209,770 $187,216
======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
16
<PAGE> 19
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1995 1994
-------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,188 $ 5,891
Current portion of long-term debt . . . . . . . . . . . . . . . . 160 142
Accounts payable, trade . . . . . . . . . . . . . . . . . . . . . 14,895 11,472
Notes payable, trade . . . . . . . . . . . . . . . . . . . . . . 12,637 11,079
Accrued salaries, commissions, bonus and profit-sharing . . . . . 9,680 7,861
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . 5,410 4,139
Accrued and withheld taxes . . . . . . . . . . . . . . . . . . . 2,321 1,742
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . 4,389 4,374
Other accounts payable and accrued liabilities . . . . . . . . . 12,648 11,602
-------- --------
Total current liabilities . . . . . . . . . . . . . . . 71,328 58,302
-------- --------
LONG-TERM LIABILITIES:
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 29,868 32,230
Other long-term liabilities . . . . . . . . . . . . . . . . . . . 9,686 8,604
-------- --------
Total long-term liabilities . . . . . . . . . . . . . . 39,554 40,834
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . 110,882 99,136
-------- --------
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares authorized,
16,011,586 shares issued at June 30, 1995 (16,010,706 at
June 30, 1994) . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . 54,881 54,837
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 41,631 35,980
Cumulative translation adjustment . . . . . . . . . . . . . . . . 4,174 (1,900)
Less: Treasury stock, at cost:
Class A -- 174,256 shares (21,756 at June 30, 1994)
Class B -- 164,117 shares (135,000 at June 30, 1994) . . . . . (1,978) (1,017)
-------- --------
Total shareholders' equity . . . . . . . . . . . . . . . 98,888 88,080
-------- --------
COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . . . . . . . . . . $209,770 $187,216
======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
17
<PAGE> 20
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $222,341 $198,055 $215,759
Cost of goods sold * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,727 130,051 142,564
-------- -------- --------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,614 68,004 73,195
-------- -------- --------
Operating expenses:
General and administrative ** . . . . . . . . . . . . . . . . . . . . . . . 24,614 23,595 24,823
Selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,233 18,473 17,709
Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,055 9,949 10,234
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . 5,241 5,460 6,477
Restructuring charge . . . . . . . . . . . . . . . . . . . . . . . . . . . 880
-------- -------- --------
63,143 57,477 60,123
-------- -------- --------
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,471 10,527 13,072
-------- -------- --------
Other (income) expense:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,436 3,694 5,850
Interest (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (577) (381) (285)
Other (income), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,130) (887) (462)
-------- -------- --------
1,729 2,426 5,103
Income from operations before taxes . . . . . . . . . . . . . . . . . . . . . . 10,742 8,101 7,969
-------- -------- --------
Provision for income taxes:
Domestic:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,456 1,211 104
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 637 298
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,065 2,121 3,901
-------- -------- --------
Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 5,091 3,969 4,303
-------- -------- --------
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,651 4,132 3,666
-------- -------- --------
Extraordinary loss on extinguishment of debt (net of $384 tax benefit --
Notes 2 and 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,105)
Cumulative effect of change in accounting for income taxes (Note 9) . . . . 1,229
--------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,651 $ 4,132 $ 3,790
======== ======== ========
Income per share from:
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.32 $ 0.23 $ 0.21
-------- -------- --------
Extinguishment of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . (0.06)
Cumulative effect of change in accounting for income taxes . . . . . . . . . 0.07
-------- -------- --------
Net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.32 $ 0.23 $ 0.22
======== ======== ========
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . 17,939 18,015 17,593
======== ======== ========
</TABLE>
* Includes all technical service expense, a portion of which was previously
classified as an item of Operating Expenses in prior financial statement
presentations. (See Note 3 -- Notes to Consolidated Financial Statements).
** Includes amortization expense for intangible assets which was previously
classified as an item of Other Income and Expense in prior financial
statement presentations. (See Note 3 -- Notes to Consolidated Financial
Statements).
The accompanying notes to consolidated financial statements
are an integral part of these statements.
18
<PAGE> 21
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
CAPITAL
CLASS A CLASS B CONTRIBUTED TREASURY
COMMON STOCK COMMON STOCK IN EXCESS CUMULATIVE STOCK
---------------------- --------------------- OF PAR RETAINED TRANSLATION --------------------
SHARES AMOUNT SHARES AMOUNT VALUE EARNINGS ADJUSTMENTS SHARES AMOUNT
---------- ------ --------- ------ ------- -------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1992 15,901,455 $159 2,000,000 $20 $54,708 $28,058 $5,805 (827,056) $(3,615)
Year ended June 30, 1993:
Net income for the year 3,790
Stock options exercised 99,252 1 335
Sale of treasury stock (248) 800,000 3,448
Translation adjustment (9,338)
Transaction loss on hedge
of net investment in
foreign subsidiaries (259)
---------- ---- --------- --- ------- ------- ------ -------- -------
Balance at June 30, 1993 16,000,707 160 2,000,000 20 54,795 31,848 (3,792) (27,056) (167)
Year ended June 30, 1994:
Net income for the year 4,132
Stock options exercised 9,999 42
Purchase of treasury stock (129,700) (850)
Translation adjustment 1,880
Transaction gain on hedge
of net investment in
foreign subsidiaries 12
---------- ---- --------- --- ------- ------- ------ -------- -------
Balance at June 30, 1994 16,010,706 160 2,000,000 20 54,837 35,980 (1,900) (156,756) (1,017)
Year ended June 30, 1995:
Net income for the year 5,651
Stock options exercised 880 4
Purchase of treasury stock (196,617) (965)
Acquisition of treasury
stock in exchange for
cancellation of note
receivable from former
officer (25,000) (171)
Issuance of common stock
from treasury to officer
under incentive
compensation agreement 40 40,000 175
Translation adjustment 6,074
---------- ---- --------- --- ------- ------- ------ -------- -------
Balance at June 30, 1995 16,011,586 $160 2,000,000 $20 $54,881 $41,631 $4,174 (338,373) $(1,978)
========== ==== ========= === ======= ======= ====== ======== =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
19
<PAGE> 22
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,651 $ 4,132 $ 3,666
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 4,504 4,729 5,189
Accrued retirement pay . . . . . . . . . . . . . . . . . . . . . . . . . 149 152 155
Provision for losses on accounts receivable . . . . . . . . . . . . . . 190 1,589 814
Restructuring charge . . . . . . . . . . . . . . . . . . . . . . . . . . 816
Changes in assets and liabilities:
Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . . (14,003) 3,741 5,750
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,586) 1,639 3,854
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . (262) (3,704) (500)
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,029 612 (316)
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,471 150 745
Accounts and notes payable, trade . . . . . . . . . . . . . . . . . . . . . 2,357 (4,612) (1,079)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . (51) 1,557 (4,216)
Accrued and withheld taxes . . . . . . . . . . . . . . . . . . . . . . . . 394 (163) (223)
Other accounts payable and accrued liabilities . . . . . . . . . . . . . . 793 (1,675) (718)
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31) 353 (50)
-------- -------- --------
Net cash (used) provided by operating activities . . . . . . . . . . (2,395) 8,500 13,887
-------- -------- --------
Cash flows from investing activities:
Additions of property, net . . . . . . . . . . . . . . . . . . . . . . . . (1,331) (1,009) (988)
Additions of patents, trademarks and drawings, net . . . . . . . . . . . . (532) (810) (1,054)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 (2,644) (328)
-------- -------- --------
Net cash used by investing activities . . . . . . . . . . . . . . . . (1,507) (4,463) (2,370)
-------- -------- --------
Cash flows from financing activities:
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 34,722 299
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,390 11,807 10,143
Long-term debt repayment . . . . . . . . . . . . . . . . . . . . . . . . . (4,863) (35,835) (8,448)
Short-term debt repayment . . . . . . . . . . . . . . . . . . . . . . . . . (2,296) (15,301) (7,466)
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . 4 42 336
Principal payments under capital lease obligations . . . . . . . . . . . . . (524) (739) (1,539)
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . (543) 286 22
Treasury stock purchased . . . . . . . . . . . . . . . . . . . . . . . . . (965) (850)
Sale of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
-------- -------- --------
Net cash used by financing activities . . . . . . . . . . . . . . . . (2,797) (5,868) (3,453)
-------- -------- --------
Effect of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . 1,354 689 865
-------- -------- --------
Net (decrease) increase in cash and cash equivalents . . . . . . . . (5,345) (1,142) 8,929
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . 18,534 19,676 10,747
-------- -------- --------
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . $ 13,189 $ 18,534 $ 19,676
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
20
<PAGE> 23
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
--------------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,467 $3,356 $5,900
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,076 $3,471 $8,098
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fiscal year ended June 30, 1995. The Company successfully defended a
patent which, under the terms of the patent purchase agreement with the
patent's inventor, entitles the Company to indemnification of a portion of the
legal fees incurred to defend the patent infringement. Accordingly, the Company
reclassified from patents to long term assets $693,000 of legal fees. These
previously capitalized patent costs will be realized as royalties become
payable to the patent's inventor. At June 30, 1995, other assets included
$548,000 of such costs.
In accordance with the terms of a note receivable from a former
officer, the Company canceled the note in exchange for the collateral which
consisted of 25,000 shares of the Company's Class B Common Stock. The balance
of the note together with interest receivable was $171,000.
Under an incentive compensation agreement with an officer, the Company
issued from treasury 40,000 shares of Class A Common Stock for which the
accrued compensation of $235,000 had been expensed at June 30, 1994.
The Company entered into capital lease agreements of $129,000 during
the year ended June 30, 1995.
Fiscal year ended June 30, 1994. The Company established deferred tax
assets during the current year in a non-cash transaction of $1,200,000.
The Company entered into capital lease agreements of $169,000 for the
year ended June 30, 1994.
Fiscal year ended June 30, 1993. The Company adopted FAS 109,
"Accounting for Income Taxes", effective July 1, 1992. The cumulative effect on
prior years was recorded as a separate component of net income and deferred tax
assets were established in a non-cash transaction of $1,229,000 (See Note 9 --
Notes to Consolidated Financial Statements).
Deferred loan origination costs (see Notes 2 and 8 -- Notes to
Consolidated Financial Statements) of $1,489,000 were expensed net of related
deferred tax liabilities of $384,000 in connection with the Company's debt
refinancing in a non-cash transaction which reduced "Other assets" and "Other
long-term liabilities".
A restructuring charge (see Note 4 -- Notes to Consolidated Financial
Statements) was expensed during the fourth quarter of the fiscal year in a
non-cash transaction of $880,000, recorded as a current liability in "Other
accounts payable and accrued liabilities".
The Company entered into capital lease agreements of $327,000 for the
year ended June 30, 1993.
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.
21
<PAGE> 24
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION OF BUSINESS:
Baldwin Technology Company, Inc. and its subsidiaries ("Baldwin" or
the "Company") are engaged primarily in the development, manufacture and sale
of material handling, accessory, control and pre-press equipment for the
printing industry.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following are the significant accounting policies followed by the
Company:
CONSOLIDATION. The consolidated financial statements include the
accounts of Baldwin and its wholly owned subsidiaries. All significant
intercompany transactions have been eliminated in consolidation.
TRANSLATION OF FOREIGN CURRENCIES. All assets and liabilities of
foreign subsidiaries are translated into dollars at year-end (current) exchange
rates and components of revenue and expense are translated at average rates for
the year. The resulting translation adjustments are included in shareholders'
equity. Gains and losses on foreign currency exchange transactions are
reflected in the statement of income. Net transaction gains, credited to income
for the years ended June 30, 1995, 1994 and 1993 were $152,000, $48,000 and
$140,000, respectively.
INVENTORIES. Inventories are stated at the lower of cost or market.
Cost is determined on the last-in, first-out (LIFO) method for domestic
inventories and the first-in, first-out (FIFO) method for foreign inventories.
If the FIFO method had been used for all inventories, the total stated amount
for inventories would have been $620,000 and $453,000 greater as of June 30,
1995 and 1994, respectively.
PLANT AND EQUIPMENT. The Company depreciates its assets over their
estimated useful lives. Plant and equipment additions are depreciated using
primarily the straight-line method. Repair and maintenance expenditures are
expensed as incurred.
PATENT, TRADEMARKS AND ENGINEERING DRAWINGS. The cost of acquired
patents, trademarks and engineering drawings are being amortized on a
straight-line basis over the estimated useful lives of the related assets.
GOODWILL. Goodwill represents the excess of purchase price over the
fair market value of net assets acquired and is being amortized over 40 years
on a straight-line basis. Goodwill is measured for possible impairment, as of
each balance sheet date, based upon undiscounted future cash flows from the
related operations. Should such undiscounted future cash flows be less than the
carrying value, a charge to operations for the shortfall would be provided.
Goodwill increased $3,135,000 in fiscal 1995 (increased $526,000 in fiscal
1994) due to the impact of foreign exchange fluctuations, primarily on the
portion of goodwill related to the European operations which is predominately
denominated in Swedish Krona.
DEFERRED LOAN ORIGINATION COSTS. At June 30, 1995, these costs were
$2,029,000 less $1,076,000 of accumulated amortization ($1,903,000 less
$628,000 of accumulated amortization at June 30, 1994) and were included in
"Other Assets". Deferred loan origination costs related to the Company's debt
which was refinanced during fiscal 1994 (see Note 8 -- Notes to Consolidated
Financial Statements) were charged off at June 30, 1993.
22
<PAGE> 25
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NET INCOME PER SHARE. Net income per share is based on the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares outstanding for the years ended June 30, 1995,
1994 and 1993 were 125,370, 83,770 and 19,575, respectively.
INVESTMENTS. The Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" for the year ended June 30, 1995. The effect of adoption of this
standard was immaterial.
NOTE 3 -- RECLASSIFICATION:
The Company previously classified a portion of its Technical Service
activities as a net operating expense prior to 1994 in financial statement
presentations. In 1994, Technical Service expense was reclassified for the year
ended June 30, 1993 as a component of Cost of Goods Sold. Technical Service
expense previously recorded as an operating expense in the amount of $2,732,000
for the year ended June 30, 1993 was reclassified to Cost of Goods Sold.
In 1994, the Company reclassified the expense for amortization of
intangible assets, (i.e., patents, engineering drawings and trademarks,
goodwill and deferred loan origination costs), that were previously recorded as
a component of "Other Expense" to "General and Administrative Expense".
Intangible amortization in the amount of $2,499,000 for the year ended June 30,
1993 was reclassified to General and Administrative Expense.
NOTE 4 -- RESTRUCTURING CHARGE:
Historically, the Company has used cost containment and reduction
programs to offset unfavorable changes in business activity due to the economy.
As a result of the European recession the Company established a restructuring
reserve of $880,000 during the fourth quarter of fiscal 1993, related to the
rationalization of its workforce, for which there is no remaining recorded
liability at June 30, 1995. At June 30, 1995, a previously recorded charge for
restructuring in the amount of $351,000, relating to an excess facility
sublease subsidy, is classified as a liability in "Other accrued" and "Other
long-term" liabilities.
NOTE 5 -- BUSINESS SEGMENT INFORMATION:
The Company operates primarily in the printing industry. The Company,
through its subsidiaries, operates in three geographic sectors: the Americas,
Europe and Asia Pacific. For the year ended June 30, 1995, the Company adopted
a revised allocation process that provides that corporate general and
administrative costs and assets are reflected as corporate expenses and assets
unless such costs or assets are associated with a business segment. The effects
of the revised allocation methodology, was to decrease previously reported
segment operating profit and general corporate expenses by $1,337,000 for the
year ended June 30, 1994 and $2,710,000 for the year ended June 30, 1993.
23
<PAGE> 26
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A summary of the results by geographic sector is as follows (in
thousands):
<TABLE>
<CAPTION>
ADJUSTMENTS
THE ASIA AND
AMERICAS EUROPE PACIFIC ELIMINATIONS CONSOLIDATED
-------- ------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1995
Sales to unaffiliated
customers . . . . . . . . . . . . . . . $93,747 $66,248 $62,441 $ (95) $222,341
Transfers between
geographic areas . . . . . . . . . . . 4,419 9,338 224 (13,981) 0
------- ------- ------- -------- --------
Total revenue . . . . . . . . . . $98,166 $75,586 $62,665 $(14,076) $222,341
======= ======= ======= ======== ========
Operating profit . . . . . . . . . . . . $ 8,337 $ 997 $ 7,187 $ (132) $ 16,389
======= ======= ======= ========
General corporate expenses . . . . . . . (2,788)
Interest expense, net . . . . . . . . . . (2,859)
--------
Income from operations
before taxes . . . . . . . . . . . . . $ 10,742
========
Identifiable assets . . . . . . . . . . . $73,217 $76,420 $54,874 0 $204,511
======= ======= ======= ========
Corporate assets . . . . . . . . . . . . 5,259
--------
Total assets . . . . . . . . . . . $209,770
========
Total liabilities . . . . . . . . $35,884 $46,575 $28,423 0 $110,882
======= ======= ======= ======== ========
YEAR ENDED JUNE 30, 1994
Sales to unaffiliated
customers . . . . . . . . . . . . . . . $84,113 $58,456 $55,486 $198,055
Transfers between
geographic areas . . . . . . . . . . . 3,381 8,938 1,917 $(14,236) 0
------- ------- ------- -------- --------
Total revenue . . . . . . . . . . $87,494 $67,394 $57,403 $(14,236) $198,055
======= ======= ======= ======== ========
Operating profit . . . . . . . . . . . . $ 6,206 $ 2,692 $ 5,282 $ 194 $ 14,374
======= ======= ======= ========
General corporate expenses . . . . . . . (2,960)
Interest expense, net . . . . . . . . . . (3,313)
--------
Income from operations
before taxes . . . . . . . . . . . . . $ 8,101
========
Identifiable assets . . . . . . . . . . . $69,610 $71,634 $40,474 0 $181,718
======= ======= ======= ========
Corporate assets . . . . . . . . . . . . 5,498
--------
Total assets . . . . . . . . . . . $187,216
========
Total liabilities . . . . . . . . $35,586 $40,112 $23,438 0 $ 99,136
======= ======= ======= ======== ========
</TABLE>
24
<PAGE> 27
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
ADJUSTMENTS
THE ASIA AND
AMERICAS EUROPE PACIFIC ELIMINATIONS CONSOLIDATED
-------- ------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1993
Sales to unaffiliated
customers . . . . . . . . . . . . . . . $79,644 $75,763 $60,352 $215,759
Transfers between
geographic areas . . . . . . . . . . . 5,169 7,455 2,556 $(15,180) 0
------- ------- ------- -------- --------
Total revenue . . . . . . . . . . . $84,813 $83,218 $62,908 $(15,180) $215,759
======= ======= ======= ======== ========
Operating profit . . . . . . . . . . . . $ 4,941 $ 2,722 $ 8,914 $ (46) $ 16,531
======= ======= ======= ========
General corporate expenses . . . . . . . (2,997)
Interest expense, net . . . . . . . . . . (5,565)
--------
Income from operations
before taxes . . . . . . . . . . . . . $ 7,969
========
Identifiable assets . . . . . . . . . . . $59,545 $70,842 $60,715 $ (4,522) $186,580
======= ======= ======= ========
Corporate assets . . . . . . . . . . . . 1,899
--------
Total assets . . . . . . . . . . . $188,479
========
Total liabilities . . . . . . . . . $43,247 $62,343 $29,720 $(29,695) $105,615
======= ======= ======= ======== ========
</TABLE>
In the fiscal years ended June 30, 1995 and June 30, 1994, no customer
accounted for 10% of the Company's net sales. In the fiscal year ended June 30,
1993 one customer accounted for 11.3% of the Company's net sales.
NOTE 6 -- INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, 1995
---------------------------------------------------
DOMESTIC FOREIGN TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Raw materials . . . . . . . . . . . . . . $ 8,880,000 $ 9,017,000 $17,897,000
In process . . . . . . . . . . . . . . . 2,839,000 7,763,000 10,602,000
Finished goods . . . . . . . . . . . . . 6,419,000 4,906,000 11,325,000
----------- ----------- -----------
$18,138,000 $21,686,000 $39,824,000
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1994
---------------------------------------------------
DOMESTIC FOREIGN TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Raw materials . . . . . . . . . . . . . . $ 7,283,000 $ 6,708,000 $13,991,000
In process . . . . . . . . . . . . . . . 4,472,000 5,560,000 10,032,000
Finished goods . . . . . . . . . . . . . 4,347,000 4,569,000 8,916,000
----------- ----------- -----------
$16,102,000 $16,837,000 $32,939,000
=========== =========== ===========
</TABLE>
Foreign inventories increased $2,299,000 (increased $671,000 in 1994)
due to translation rates in effect at June 30, 1995 when compared to rates at
June 30, 1994.
25
<PAGE> 28
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- LOANS PAYABLE:
<TABLE>
<CAPTION>
SHORT-TERM INDEBTEDNESS AT JUNE 30, 1995: RATE AMOUNT
- ----------------------------------------- --------------- ----------
<S> <C> <C>
Foreign subsidiary . . . . . . . . . . . . . . . . . . . . 6.78% (average) $9,188,000
==========
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INDEBTEDNESS AT JUNE 30, 1994: RATE AMOUNT
- ----------------------------------------- --------------- ----------
<S> <C> <C>
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . 6.59% (average) $5,891,000
==========
</TABLE>
The maximum amount of loans payable to banks outstanding during the
year ended June 30, 1995 was $10,746,000 ($16,193,000 in 1994). Average rates
are weighted by month and reflect the monthly amount of short-term borrowings
in use and the respective rates of interest therein. Bank loans increased by
$1,203,000, (increased by $316,000 in 1994), due to translation rates in effect
at June 30, 1995 when compared to rates at June 30, 1994.
NOTE 8 -- LONG-TERM DEBT:
<TABLE>
<CAPTION>
JUNE 30, 1995 JUNE 30, 1994
---------------------- ----------------------
CURRENT LONG-TERM CURRENT LONG-TERM
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Notes payable in equal annual
installments from October, 1997
through October, 2000, interest
rates 8.17% . . . . . . . . . . . . . . . . . $25,000,000 $25,000,000
Note payable November, 1996 interest
rate (1.25% over LIBOR) 7.31% . . . . . . . . 750,000 3,250,000
Note payable by foreign subsidiary
March, 1999, interest rate 3.8% . . . . . . . 3,503,000 3,006,000
Industrial revenue bond payable in
annual installments through
November, 1999, interest rate
9% . . . . . . . . . . . . . . . . . . . . . . $112,000 268,000 $ 78,000 453,000
Notes payable by foreign subsidiary
through 2002, interest rates 7%
11.25% and 12.95% . . . . . . . . . . . . . . 48,000 347,000 45,000 363,000
Notes payable through October, 1999,
interest rates 5.5% to 7.75% . . . . . . . . . 19,000 158,000
-------- ----------- -------- -----------
$160,000 $29,868,000 $142,000 $32,230,000
======== =========== ======== ===========
</TABLE>
Notes payable, denominated in currencies other than the U.S. dollar,
increased by $518,000, (increased by $299,000 in 1994), due to translation
rates in effect at June 30, 1995 when compared to rates at June 30, 1994.
26
<PAGE> 29
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The industrial revenue bond is collateralized by the building and
specific equipment as outlined in the indenture relating thereto. Approximately
$395,000 of the loans included above are collateralized by assets of a foreign
subsidiary of the Company. The notes payable from October, 1997 through
October, 2000 (the "Senior Notes") and note payable November, 1996 (the
"Revolver", a $20,000,000 credit facility) are collateralized by a pledge of
the capital stock of the Company's domestic subsidiaries. During fiscal year
1994 the Company refinanced its long-term debt through the issuance of
$25,000,000 of seven-year, 8.17% unsecured Senior Notes privately placed with
an institutional lender. The Senior Notes require payment of interest only for
the first three years with equal annual principal repayments in years four
through seven. The Senior Notes and the Revolver require the Company to
maintain certain financial covenants and have certain restrictions regarding
the payments of dividends, limiting them to $3,000,000 plus 50% of the
Company's net income after June 30, 1993. In addition, both the Senior Notes
and the Revolver require the Company to maintain a ratio of current assets to
current liabilities (as these terms are defined in the agreements) of not less
than 1.4 to 1. At June 30, 1995, this ratio was 1.75 to 1. In conjunction with
the refinancing, the Company applied approximately $5,000,000 of cash reflected
on the June 30, 1993 balance sheet to a reduction of its long-term debt. During
fiscal year 1993, the Company expensed all previously deferred loan origination
costs in connection with the refinanced debt in the amount of $1,105,000 (after
tax benefits of $384,000). The charge is classified as an extraordinary item in
the Consolidated Statement of Income.
Maturities of long-term debt in each fiscal year succeeding June 30,
1995 are as follows:
<TABLE>
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . $ 160,000
1997 . . . . . . . . . . . . . . . . . . . 910,000
1998 . . . . . . . . . . . . . . . . . . . 6,400,000
1999 . . . . . . . . . . . . . . . . . . . 9,827,000
2000 . . . . . . . . . . . . . . . . . . . 6,287,000
2001 and thereafter . . . . . . . . . . . 6,444,000
-----------
$30,028,000
===========
</TABLE>
At June 30, 1995, the Company had available lines of credit of
$36,679,000 upon which $10,067,000 had been drawn and of which $879,000 is
included in long-term debt. Only the Revolver has associated commitment fees.
The commitment fees, which are calculated quarterly, are equal to between
one-quarter and one-half of one percent per annum of the unused portion of the
Revolver. Commitment fees for the year ended June 30, 1995 and the seven
months ended June 30, 1994 were $67,000 and $29,000, respectively.
NOTE 9 -- TAXES ON INCOME:
The Company adopted FAS 109, "Accounting for Income Taxes", effective
July 1, 1992. The cumulative effect on prior years of the adoption of this new
accounting principle was a benefit of $1,229,000 reported as a separate
component of net income, and a corresponding deferred tax asset. The Company
has not recognized the benefit of any unused net operating loss carryforwards
as the result of adopting FAS 109. The Company had previously been accounting
for income taxes under FAS 96, "Accounting for Income Taxes".
27
<PAGE> 30
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income from operations before taxes and the provision for income taxes
are comprised of:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
---------------------------------------------------
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
Income from operations before taxes:
Domestic . . . . . . . . . . . . . . . . $ 8,897,000 $ 6,656,000 $3,429,000
Foreign . . . . . . . . . . . . . . . . . 1,845,000 1,445,000 4,540,000
----------- ----------- ----------
$10,742,000 $ 8,101,000 $7,969,000
=========== =========== ==========
Provision for income taxes:
Currently payable:
Domestic . . . . . . . . . . . . . . . $ 2,026,000 $ 3,048,000 $ 402,000
Foreign . . . . . . . . . . . . . . . . 2,960,000 2,475,000 4,632,000
----------- ----------- ----------
4,986,000 5,523,000 5,034,000
----------- ----------- ----------
Deferred (prepaid):
Domestic . . . . . . . . . . . . . . . . (1,200,000)
Foreign . . . . . . . . . . . . . . . . . 105,000 (354,000) (731,000)
----------- ----------- ----------
105,000 (1,554,000) (731,000)
----------- ----------- ----------
Total income tax expense . . . . . . . . . $ 5,091,000 $ 3,969,000 $4,303,000
=========== =========== ==========
</TABLE>
Income tax benefits allocated to currently payable taxes from the
domestic and foreign extraordinary loss on extinguishment of debt were $9,000
and $375,000, respectively, for the year ended June 30, 1993.
Income tax benefits allocated to foreign prepaid taxes due to the
cumulative effect of adopting FAS 109 were $1,229,000 for the year ended June
30, 1993.
Deferred income taxes are provided on temporary differences between
the financial reporting basis and tax basis of the Company's assets and
liabilities. The principal temporary differences which give rise to deferred
tax assets and liabilities at June 30, 1995 are as follows:
<TABLE>
<CAPTION>
DEFERRED TAX
-------------------------------
ASSETS LIABILITIES TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Foreign tax credit carryforwards . . . . . $ 2,981,000
Foreign net operating loss carryforwards . 9,662,000
Inventories . . . . . . . . . . . . . . . . 1,896,000
Pension . . . . . . . . . . . . . . . . . . 1,518,000
Other, individually less than 5% of
"Net Deferred Tax Asset" . . . . . . . . 1,745,000 $851,000
----------- --------
Net Deferred Tax Asset and Liability . . . $17,802,000 $851,000 $16,951,000
=========== ========
Valuation Allowance . . . . . . . . . . . . (13,313,000)
-----------
Total Net Deferred Tax Assets . . . . . $ 3,638,000
===========
</TABLE>
At June 30, 1995, the Company has foreign tax credit carryforwards for
tax purposes of $2,981,000, which expire from fiscal 1996 to fiscal 1998. At
June 30, 1995, net operating loss carryforwards of $31,717,000 are available to
reduce future foreign taxable income ($1,032,000, $2,888,000 and $4,539,000 of
which expire in fiscal years 1996, 1997 and 1998, respectively and the
remainder of which have indefinite carryforward periods).
28
<PAGE> 31
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company has not had to provide for income taxes on $10,265,000 of
cumulative undistributed earnings of subsidiaries outside the United States
because of the Company's intention to reinvest those earnings. In the event
that earnings were remitted, the tax effect on the results of operations after
considering available tax credits would not be significant.
The total income tax expense allocated to operations exceeded the
computed "expected" tax (determined by applying the United States Federal
statutory income tax rate of 34% to income from operations before taxes) by
$1,439,000, $1,215,000 and $1,594,000 for the years ended June 30, 1995, 1994
and 1993. The reasons for the difference are as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
----------------------------------------
1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
Computed "expected" tax . . . . . . . . . . . . . . . . $3,652,000 $ 2,754,000 $ 2,709,000
State income taxes, net of federal income
tax benefit . . . . . . . . . . . . . . . . . . . . . 376,000 420,000 197,000
Foreign income taxed at higher than the U.S.
statutory rate . . . . . . . . . . . . . . . . . . . 985,000 1,795,000 3,083,000
Recognition of previously unrecognized tax
benefits . . . . . . . . . . . . . . . . . . . . . . (1,200,000) (2,038,000)
Goodwill write-off not deductible for taxes . . . . . . 233,000 232,000 234,000
Foreign Sales Corporation . . . . . . . . . . . . . . . (228,000) (55,000)
Other reconciling items, individually less
than 5% of the "expected" tax . . . . . . . . . . . . 73,000 23,000 118,000
---------- ----------- -----------
Total income tax expense . . . . . . . . . . . . . $5,091,000 $ 3,969,000 $ 4,303,000
========== =========== ===========
</TABLE>
NOTE 10 -- COMMON STOCK:
The holders of the Company's Class A Common Stock, voting as a
separate class, are entitled to elect 25% of the members of the Board of
Directors. Holders of Class B Common Stock, voting as a separate class, are
entitled to elect the remaining Directors, so long as the number of outstanding
shares of Class B Common Stock is equal to at least 12.5% of the number of
outstanding shares of both classes of Common Stock as of the record date of the
Company's Annual Meeting. If the number of outstanding shares of Class B Common
Stock is less than 12.5% of the total number of outstanding shares of both
classes of Common Stock as of the record date of the Annual Meeting, the
holders of Class A Common Stock, voting as a separate class, continue to elect
a number of Directors equal to 25% of the total number of Directors
constituting the entire Board of Directors and the remaining directors are
elected by the holders of both classes of Common Stock, with the holders of
Class A Common Stock having one vote per share and the holders of Class B
Common Stock having ten votes per share. As of June 30, 1995, the number of
outstanding shares of Class B Common Stock constituted 10.4% (10.4% in 1994) of
the total number of outstanding shares of both classes of Common Stock.
The Class A Common Stock has no conversion rights; however, Class B
Common Stock is convertible into Class A Common Stock on a one-for-one basis.
In addition, no dividend in cash or property may be declared or paid on shares
of Class B Common Stock without a dividend being declared or paid on shares of
Class A Common Stock of at least 105% of that on the Class B Common Stock.
29
<PAGE> 32
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company's stock repurchase program authorization for $5,000,000
for Class A Common Stock and 500,000 shares of Class B Common Stock was
increased to $8,000,000 for Class A Common Stock in August of 1995. As of June
30, 1995, 1,019,256 shares of Class A Common Stock (880,356 in 1994) and
164,117 shares of Class B Common Stock (135,000 in 1994) had been repurchased
for $5,625,000 ($4,724,000 in 1994) under this program.
NOTE 11 -- STOCK OPTIONS:
The 1986 Stock Option Plan, as amended and restated (the "1986 Plan"),
allows for the granting, at fair market value at the date of grant, of
incentive stock options, non-qualified stock options, and tandem stock
appreciation rights (SARS) for up to a total of 2,220,000 and 590,000 shares of
Class A and Class B Common Stock, respectively. Options to purchase shares of
the Company's Class B Common Stock are granted at a price per share of no less
than 125% of the fair market value of a share of Class A Common Stock on the
date of grant. All options become exercisable in three equal annual
installments commencing on the second anniversary of the date of grant.
Unexercised options terminate no later than ten years from the date of grant
and canceled shares become available for future grants.
The 1990 Directors' Stock Option Plan (the "1990 Plan") provides for
the granting, at fair market value at the date of grant, of up to 100,000
shares of the Company's Class A and Class B Common Stock as non-qualified stock
options to members of the Company's Board of Directors who are not employees
("Eligible Directors") of the Company or any of its subsidiaries. Grants are
made on the third business day subsequent to each Annual Meeting of
Stockholders, including the 1990 meeting, to each Eligible Director for 1,000
shares of Class A and Class B Common Stock in proportion to the number of
shares of each such class then outstanding. Restrictions under the 1990 Plan
are similar to those of the 1986 Plan except with regard to the exercise date,
which is twelve months after the date of grant, and termination of options,
which is generally nine months after termination of service as a director.
<TABLE>
<CAPTION>
OPTION PRICE
THE 1986 PLAN CLASS A CLASS B RANGE
- ------------- --------- -------- -------------
<S> <C> <C> <C>
Outstanding at June 30, 1993 . . . . . . . . 885,000 290,000 $4.00 - $9.94
Granted . . . . . . . . . . . . . . . . . . . 310,000 $3.88 - $3.94
Canceled . . . . . . . . . . . . . . . . . . (175,001) (115,000) $4.00 - $9.94
Exercised . . . . . . . . . . . . . . . . . . (9,999) $4.00
--------- --------
Outstanding at June 30, 1994 . . . . . . . . 1,010,000 175,000 $3.88 - $9.94
--------- --------
Granted . . . . . . . . . . . . . . . . . . . 100,000 100,000 $4.88 - $6.09
Canceled . . . . . . . . . . . . . . . . . . (156,667) $3.94 - $9.94
Exercised . . . . . . . . . . . . . . . . . .
--------- --------
Outstanding at June 30, 1995 . . . . . . . . 953,333 275,000 $3.88 - $9.84
--------- --------
Exercisable at June 30, 1995 . . . . . . . . 349,989 133,332 $4.00 - $9.84
========= ========
Available for future option grants at
June 30, 1995 . . . . . . . . . . . . . . . 716,668 315,000
========= ========
</TABLE>
30
<PAGE> 33
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
OPTION PRICE
THE 1990 PLAN TOTAL CLASS A CLASS B RANGE
- ---------------------- ------ ------- ------- -------------
<S> <C> <C> <C> <C>
Outstanding at June 30, 1993 . . . . . . . . 12,000 10,576 1,424 $3.75 - $5.94
Granted . . . . . . . . . . . . . . . . . . . 4,000 3,556 444 $4.88 - $6.09
Canceled . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . .
------ ------ -----
Outstanding at June 30, 1994 . . . . . . . . 16,000 14,132 1,868 $3.75 - $6.09
------ ------ -----
Granted . . . . . . . . . . . . . . . . . . . 5,000 4,485 515 $5.00 - $6.25
Canceled . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . (880) (880) $3.75
------ ------ -----
Outstanding at June 30, 1995 . . . . . . . . 20,120 17,737 2,383 $3.75 - $6.25
------ ------ -----
Exercisable at June 30, 1995 . . . . . . . . 15,120 13,252 1,868 $3.75 - $6.09
====== ====== =====
Available for future option grants at
June 30, 1995 . . . . . . . . . . . . . . . 79,000
======
</TABLE>
On March 29, 1990, the Board of Directors of the Company granted stock
options to purchase 1,000 shares each of the Company's Class A Common Stock to
two non-employee Directors at $9.75 per share, which become exercisable the
same as options granted under the Company's 1986 Plan and terminate five years
after the date of grant. During the year ended June 30, 1994 these shares
became exercisable and on March 29, 1995, these options expired.
NOTE 12 -- SUPPLEMENTAL COMPENSATION:
Subsidiaries within the Company's Americas Sector maintain profit
sharing, savings and retirement plans. Amounts expensed under these plans were
as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
-------------------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Baldwin Technology Corporation ("BTC")
and Baldwin Graphic Systems ("BGS") . . . $647,000 $446,000 $543,000
Kansa Corporation . . . . . . . . . . . . . 192,000 176,000 132,000
Enkel Corporation . . . . . . . . . . . . . 52,000 114,000 92,000
Misomex of North America, Inc. . . . . . . 19,000 41,000 44,000
-------- -------- --------
Total expense . . . . . . . . . . . . $910,000 $777,000 $811,000
======== ======== ========
</TABLE>
Company contributions to the BTC/BGS and Kansa plans are discretionary
and are subject to approval by their respective Boards. The Enkel plan requires
a company contribution equal to the total participant contribution which may
not exceed 15% of the total compensation paid to the employees of Enkel. The
Misomex of North America plan requires contributions as determined by their
Board of Directors.
31
<PAGE> 34
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Certain subsidiaries within the Company's European Sector maintain
pension plans. Amounts expensed under these plans were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
-------------------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Baldwin Gegenheimer GmbH. . . . . . . . . . $426,000 $287,000 $335,000
Misomex AB . . . . . . . . . . . . . . . . 246,000 280,000 344,000
Amal AB . . . . . . . . . . . . . . . . . . 64,000 57,000 82,000
Baldwin Graphics B.V. . . . . . . . . . . . 23,000 52,000 23,000
Misomex U.K. . . . . . . . . . . . . . . . 103,000 84,000 89,000
-------- -------- --------
Total expense . . . . . . . . . . . . $862,000 $760,000 $873,000
======== ======== ========
</TABLE>
The amount of expense relating to the European pension plans is
determined based upon, among other things, the age, salary and years of service
of employees within the plans. The Company's German, British, Swedish (Amal AB)
and Netherlands subsidiaries make annual contributions to the plans equal to
the amounts accrued for pension expense.
In Germany, at Baldwin Gegenheimer GmbH, there is an additional
pension plan covering five employees, four of whom are retired. This defined
benefit plan provides for benefits, at maturity age, in lump sum payments on
retirement or death or as a disability pension in case of disability. This plan
is partially funded by insurance contracts. In Sweden, at Misomex AB, (as
listed above), there are two defined benefit pension plans, one covering 18
retired employees and the other covering 78 employees, 22 of whom are retired.
The unfunded recorded liability related to the Misomex AB plan at June 30, 1995
was $3,360,000 ($3,453,000 in 1994). The recorded liability is sufficient to
cover obligations earned under the plan.
The following table sets forth the components of net pension costs of
the defined benefit plans:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
-------------------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service Cost -- benefits earned during
the period . . . . . . . . . . . . . . . $ 29,000 $ 77,000 $ 94,000
Interest on projected benefit obligation . 235,000 258,000 362,000
Annual return on plan assets . . . . . . . 11,000 9,000 7,000
Net amortization and deferrals . . . . . . (229,000) (93,000) (100,000)
--------- -------- ---------
Net pension cost . . . . . . . . . . $ 46,000 $251,000 $ 363,000
========= ======== =========
</TABLE>
32
<PAGE> 35
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table sets forth the funded status of the above defined
benefit pension plans:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
-------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation . . . . . . . . . . . . . . . . $ 1,706,000 $ 2,176,000
=========== ===========
Accumulated benefit obligation . . . . . . . . . . . . . $ 2,959,000 $ 3,083,000
=========== ===========
Plan assets at fair value . . . . . . . . . . . . . . . . $ 419,000 $ 379,000
Projected benefit obligation . . . . . . . . . . . . . . 3,076,000 3,575,000
----------- -----------
Plan assets less than projected benefit obligation . . . (2,657,000) (3,196,000)
Unrecognized transition asset . . . . . . . . . . . . . . . . 379,000 337,000
Unrecognized actuarial gain . . . . . . . . . . . . . . . . . (2,198,000) (1,366,000)
----------- -----------
Accrued pension costs . . . . . . . . . . . . . . . . . . $ 4,476,000 $ 4,225,000
=========== ===========
Actuarial assumptions:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . 3% to 8.5% 3% to 8%
Rate of increase in compensation levels . . . . . . . . . . . 5% to 7% 5% to 7%
Expected rate of return on plan assets . . . . . . . . . . . . 7% 7%
</TABLE>
There is one retirement plan within the Company's Asia Pacific Sector.
The Company's Japanese subsidiary maintains a non-contributory retirement plan
covering all employees, excluding directors (the "Japanese Retirement
Program"). Amounts expensed under the program are determined based on
participating employees' salary and length of service. The Japanese Retirement
Program is fully accrued and partially funded through insurance contracts.
Expense relating to this program was $391,000, $325,000 and $296,000 for the
years ended June 30, 1995, 1994 and 1993, respectively.
Officers and key employees of the Company participate in various
incentive compensation plans. Amounts expensed under such plans were
$2,437,000, $2,090,000 and $2,367,000 for the years ended June 30, 1995, 1994
and 1993, respectively.
The Company adopted FAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", as of July 1, 1992 and FAS 112, "Employer's
Accounting for Postemployment Benefits", as of July 1, 1994, the effects of
which were immaterial.
33
<PAGE> 36
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 -- COMMITMENTS:
Future minimum annual lease payments under capital leases, which
consist of buildings, and machinery and equipment with accumulated depreciation
amounting to $6,495,000 at June 30, 1995 and $5,606,000 at June 30, 1994,
together with the present value of the minimum lease payments are as follows at
June 30, 1995.
<TABLE>
<CAPTION>
FISCAL YEAR ENDING JUNE 30, AMOUNT
- --------------------------- ----------
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 663,000
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 387,000
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 345,000
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 327,000
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 322,000
2001 and thereafter . . . . . . . . . . . . . . . . . . . . 10,000
----------
Total minimum lease payments . . . . . . . . . . . . . . . 2,054,000
Less -- Amount representing interest . . . . . . . . . . . (660,000)
----------
Present value of minimum lease payments . . . . . . . . . . $1,394,000
==========
</TABLE>
At June 30, 1995, $982,000 ($1,238,000 at June 30, 1994) is included
in other long-term liabilities representing the long-term portion of the
present value of minimum lease payments.
Rental expense amounted to approximately $5,179,000, $4,672,000 and
$4,409,000 for the years ended June 30, 1995, 1994 and 1993, respectively.
Aggregate future annual rentals under noncancellable leases for periods of more
than one year at June 30, 1995 are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING JUNE 30, AMOUNT
- --------------------------- -----------
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,700,000
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,871,000
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,468,000
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,925,000
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,603,000
2001 and thereafter . . . . . . . . . . . . . . . . . . . . $13,539,000
</TABLE>
NOTE 14 -- RELATED PARTIES:
On July 1, 1990, the Company, through each of its subsidiaries,
Baldwin Americas Corporation (BAM), Baldwin Europe Consolidated Inc. (BEC) and
Baldwin Asia Pacific Corporation (BAP) entered into consulting agreements with
Polestar Limited ("Polestar"), a corporation wholly owned by Wendell M. Smith,
Chairman of the Board and Chief Executive Officer. The consulting agreements
have terms of one year, but are automatically extended for additional one-year
terms unless either party gives prior notice of termination. Under the
consulting agreements, Polestar is obligated to provide certain management
services outside the United States and will receive compensation equal to 2% of
the annual consolidated after-tax profits of BAM, BEC and BAP and their
respective subsidiaries, in each case, not to exceed $150,000. For the years
ended June 30, 1995, 1994 and 1993 the aggregate compensation expensed under
these agreements was $125,000, $84,000 and $147,000, respectively.
34
<PAGE> 37
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On November 30, 1993, the Company entered into a loan and pledge
agreement and promissory note with Gerald A. Nathe, President and Director of
the Company and on March 11, 1994, the Company entered into loan and pledge
agreements and promissory notes with D. John Youngman, Vice President and
Director and William J. Lauricella, Chief Financial Officer and Treasurer of
the Company. The loans were made in order to enable the Company's officers to
purchase shares of the Company's Common Stock from non-employee shareholders.
Mr. Nathe was loaned $1,817,321 to purchase 315,144 shares of the Company's
Common Stock and Mr. Youngman and Mr. Lauricella were each loaned $164,063 to
purchase 25,000 shares each of the Company's Common Stock. All of the shares
purchased have been pledged as collateral for the demand promissory notes and
each of the notes are interest bearing, with interest payable on the
anniversary dates at LIBOR rates plus 1.25% reset on the first day of each
succeeding January, April, July and October. The maximum amount of the notes
outstanding, including interest, during the year ended June 30, 1995 were
$1,918,662, $170,744 and $174,212 for Mr. Nathe, Mr. Youngman and Mr.
Lauricella, respectively. On May 18, 1995, Mr. Nathe repaid $317,321 of his
outstanding note and on November 17, 1994, the Company exchanged the note it
held from Mr. Youngman for its collateralized shares.
The Company employs the firm of Morgan, Lewis & Bockius as its legal
counsel. Samuel B. Fortenbaugh III, a Director of the Company, is a partner in
the firm. In the fiscal years ended June 30, 1995, 1994, and 1993, the Company
incurred legal fees of approximately $200,000, $252,000 and $151,000,
respectively, payable to Morgan, Lewis & Bockius.
On July 1, 1990, Baldwin Technology Corporation and Baldwin Graphic
Systems, Inc., two subsidiaries of BAM, entered into an agreement with Harold
W. Gegenheimer, Chairman Emeritus, guaranteed by the Company, to replace
various prior agreements including royalty and employment agreements,
retirement plans and bonus arrangements. The new agreement guarantees a
compensation amount of $200,000 per year. Simultaneously, a separate agreement
was made with Mr. Gegenheimer and the Company whereby the Company was released
from certain prior agreements, as noted above, and agreed to pay a minimum
guaranteed amount of compensation of $200,000 per year, not to exceed $350,000
per year, based on one and one-half percent (1.5%) of the Company's annual net
after tax profits. The amount expensed under these two agreements was $400,000
for each of the years ended June 30, 1995, 1994 and 1993.
35
<PAGE> 38
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 -- QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for fiscal 1995 and fiscal 1994
are as follows (in thousands except per share data):
<TABLE>
<CAPTION>
QUARTER
-----------------------------------------------------
FISCAL 1995 FIRST SECOND THIRD FOURTH
- ----------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . $47,639 $52,713 $55,375 $66,614
Costs and expenses
Cost of goods sold . . . . . . . . . . . . . . . . . . . 31,280 34,849 36,709 43,889
Operating expenses . . . . . . . . . . . . . . . . . . . 14,234 15,385 15,761 17,763
Interest, net . . . . . . . . . . . . . . . . . . . . . 708 662 752 737
Other (income) . . . . . . . . . . . . . . . . . . . . (253) (307) (355) (215)
------- ------- ------- -------
Income before taxes . . . . . . . . . . . . . . . . . . . . 1,670 2,124 2,508 4,440
Provision for income taxes . . . . . . . . . . . . . . . . 835 1,062 1,254 1,940
------- ------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 835 $ 1,062 $ 1,254 $ 2,500
======= ======= ======= =======
Net income per share . . . . . . . . . . . . . . . . . . . $ 0.05 $ 0.06 $ 0.07 $ 0.14
======= ======= ======= =======
Weighted average shares outstanding . . . . . . . . . . . . 17,916 18,002 17,932 17,944
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
QUARTER
-----------------------------------------------------
FISCAL 1994 FIRST SECOND THIRD FOURTH
- ----------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . $46,412 $45,446 $49,403 $56,794
Costs and expenses
Cost of goods sold . . . . . . . . . . . . . . . . . . . 30,219 30,592 33,626 35,614
Operating expenses . . . . . . . . . . . . . . . . . . . 13,927 13,665 13,898 15,987
Interest, net . . . . . . . . . . . . . . . . . . . . . 983 850 769 711
Other (income) expense . . . . . . . . . . . . . . . . . (74) (421) (439) 47
------- ------- ------- -------
Income before taxes . . . . . . . . . . . . . . . . . . . . 1,357 760 1,549 4,435
Provision for income taxes . . . . . . . . . . . . . . . . 727 395 821 2,026
------- ------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 630 $ 365 $ 728 $ 2,409
======= ======= ======= =======
Net income per share . . . . . . . . . . . . . . . . . . $ 0.04 $ 0.02 $ 0.04 $ 0.13
======= ======= ======= =======
Weighted average shares outstanding . . . . . . . . . . . . 17,974 18,072 18,053 17,973
======= ======= ======= =======
</TABLE>
36
<PAGE> 39
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16 -- SUBSEQUENT EVENT:
On August 15, 1995 the Board of Directors granted non-qualified
options to purchase 350,000 shares of Class A Common Stock and 195,000 shares
of Class B Common Stock to certain executives under the Company's 1986 Plan.
The options were granted at the fair market value on the day of grant ($5.38
and $6.72, respectively) and the terms thereof are otherwise identical with
regard to restrictions on options previously granted as described in Note 11 --
Notes to Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no Form 8-K filed within 24 months prior to the date of
the most recent financial statements reporting a change of accountants and/or
reporting a disagreement on any matter of accounting principle or financial
statement disclosure.
PART III
ITEMS 10, 11, 12 AND 13.
Information required under these items is contained in the Company's
1995 Proxy Statement, which will be filed with the Securities and Exchange
Commission within 120 days after the close of the Company's fiscal year end;
accordingly, this information is therefore incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial statements required by Item 14 are listed in the
index included in Item 8 of Part II.
(a) (2) The following is a list of financial statement schedules
filed as part of this Report:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants on Financial Statement Schedules . . . . 42
Schedule VIII -- Valuation and Qualifying Accounts . . . . . . . . . . . . 43
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(a) (3) The following is a list of all exhibits filed as part of this
Report:
37
<PAGE> 40
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation of the Company as filed with the
Secretary of State of the State of Delaware on November 4, 1986. Filed
as Exhibit 3.1 to the Company's registration statement (No. 33-10028)
on Form S-1 and incorporated herein by reference.
3.2 Certificate of Amendment of the Certificate of Incorporation of the
Company as filed with the Secretary of State of the State of Delaware
on November 21, 1988. Filed as Exhibit 3.2 to the Company's
Registration Statement (No. 33-26121) on Form S-1 and incorporated
herein by reference.
3.3 Certificate of Amendment of the Certificate of Incorporation of the
Company as filed with the Secretary of State of the State of Delaware
on November 20, 1990. Filed as Exhibit 3.3 to the Company's Report on
Form 10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
3.4 By-Laws of the Company. Filed as Exhibit 3.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and incorporated
herein by reference.
10.1 Baldwin Technology Company, Inc. Amended and Restated 1986 Stock
Option Plan. Filed as Exhibit 10.2 to the Company's Registration
Statement (No. 33-31163) on Form S-1 and incorporated herein by
reference.
10.2 Amendment to the Baldwin Technology Company, Inc. Amended and Restated
1986 Stock Option Plan. Filed as Exhibit 10.2 to the Company's Report
on Form 10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.3 Baldwin Technology Company, Inc. 1990 Directors' Stock Option Plan.
Filed as Exhibit 10.3 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by reference.
10.4 Baldwin Technology Corporation Profit Sharing Plan, as amended and
restated. Filed as Exhibit 10.2 to the Company's Registration
Statement (No. 33-10028) on Form S-1 and incorporated herein by
reference.
10.5 Baldwin Technology Corporation Executive and Key Person Bonus Plan.
Filed as Exhibit 10.4 to the Company's Registration Statement (No.
33-10028) on Form S-1 and incorporated herein by reference.
10.6 Agreement effective as of July 1, 1990 between Baldwin Technology
Corporation, Baldwin Graphic Systems, Inc. and Harold W. Gegenheimer,
as guaranteed by Baldwin Technology Company, Inc. Filed as Exhibit
10.6 to the Company's Report on Form 10-K for the fiscal year ended
June 30, 1991 and incorporated herein by reference.
10.7 Agreement effective as of July 1, 1990 between Baldwin Technology
Company, Inc. and Harold W. Gegenheimer. Filed as Exhibit 10.7 to the
Company's Report on Form 10-K for the fiscal year ended June 30, 1991
and incorporated herein by reference.
10.8 Consulting Agreements dated as of January 1, 1990 between each of
Baldwin Americas Corporation, Baldwin Asia Pacific Corporation and
Baldwin Europe Consolidated Inc., and Polestar, Ltd. filed as Exhibit
10.8 on the Company's Form 10-K dated September 25, 1990 and
incorporated herein by reference.
38
<PAGE> 41
10.9* Employment Agreement dated as of July 1, 1990 between the Company and
Wendell M. Smith filed as Exhibit 10.9 to the Company's Form 10-K
dated September 25, 1990 and incorporated herein by reference.
10.10 License Agreement between Baldwin Technology Corporation and Hans
Jacobs Moestue, as assigned to Moestue Limited. Filed as Exhibit 10.15
to the Company's Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.11* Employment Agreement dated as of November 16, 1988 between
Baldwin-Japan Limited and Akira Hara. Filed as Exhibit. 10.22 to the
Company's Registration Statement (No. 33-26121) on Form S-1 and
incorporated herein by reference.
10.12 Stock Purchase Agreement dated as of April 13, 1990 between RZ
Corporation, The Dyson-Kissner-Moran Corporation and the Company.
Filed as Exhibit 1 to the Company's Form 8-K dated April 26, 1990 and
incorporated herein by reference.
10.13 Amendment No. 1 to the Company's Form 8-K (as filed on April 13, 1990)
and dated October 9, 1990 for the acquisition of Misomex AB and
subsidiaries and Misomex of North America, Inc.--Exhibits (a) and (b)
incorporated herein by reference.
10.14 Assignment of Stock Purchase Agreement dated May 27, 1990 between the
Company and Misomex Acquisition Company. Filed as Exhibit 2 to the
Company's Form 8-K dated August 13, 1990 and incorporated herein by
reference.
10.15 Assignment of Stock Purchase Agreement dated May 28, 1990 between the
Company and Misomex Acquisition AB. Filed as Exhibit 3 to the
Company's Form 8-K dated August 13, 1990 and incorporated herein by
reference.
10.16 Agreement and Plan of Merger dated as of April 26, 1989 among Enkel
Corporation, Bengt Kuller, Enkel Acquisition Corporation and the
Company. Filed as Exhibit I to the Company's report on Form 8-K dated
May 7, 1989 and incorporated herein by reference.
10.17 Baldwin Technology Company, Inc. Dividend Reinvestment Plan. Filed as
Exhibit 10.49 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
10.18 Baldwin Technology Company, Inc. Employee Stock Ownership Plan. Filed
as Exhibit 10.50 to the Company's Report on Form 10-K for the fiscal
year ended June 30, 1991 and incorporated herein by reference.
10.19 Consulting Agreement dated as of June 30, 1989 between Baldwin Asia
Pacific Corporation and A-PLUS LTD. Filed as Exhibit 10.51 to the
Company's Report on Form 10-K for the fiscal year ended June 30, 1991
and incorporated herein by reference.
10.20 Baldwin Technology Company, Inc. Worldwide Employee Stock Ownership
Plan. Filed as Exhibit 10.52 to the Company's Report on Form 10-K for
the fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.21* Employment Agreement effective as of August 5, 1993 between Baldwin
Technology Company, Inc. and Gerald A. Nathe filed as Exhibit 10.22 to
the Company's Report on Form 10-K for the fiscal year ended June 30,
1994 and incorporated herein by reference.
39
<PAGE> 42
10.22 8.17% Senior Note Agreement dated October 29, 1993 between Baldwin
Technology Company, Inc. and its subsidiaries Baldwin Americas
Corporation and Baldwin Technology Ltd. and John Hancock Mutual Life
Insurance Company, John Hancock Variable Life Insurance Company and
John Hancock Life Insurance Company filed as Exhibit 10.23 to the
Company's Report on Form 10-K for the fiscal year ended June 30, 1994
and incorporated herein by reference.
10.23 $20,000,000 Revolving Credit Agreement dated November, 1993 between
Baldwin Technology Company, Inc. and its subsidiaries Baldwin Americas
Corporation and Baldwin Technology Ltd. and NationsBank of North
Carolina, National Association filed as Exhibit 10.24 to the Company's
Report on Form 10-K for the fiscal year ended June 30, 1994 and
incorporated herein by reference.
21. List of Subsidiaries of Registrant (filed herewith).
23. Consent of Price Waterhouse LLP (filed herewith).
27. Financial Data Schedule (filed herewith).
28. Post-effective Amendment to the Company's previously filed Form S 8's,
Nos. 33-20611 and 33-30455 filed as Exhibit 28 to the Company's Report
on Form 10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the last
quarter of the period covered by this report.
40
<PAGE> 43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
--------------------------------
(REGISTRANT)
By: WENDELL M. SMITH
----------------------------
WENDELL M. SMITH
(CHIEF EXECUTIVE OFFICER)
Dated: September 26, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
WENDELL M. SMITH Chairman of the Board, Chief September 26, 1995
- ---------------------------------------- Executive Officer and Director
(Wendell M. Smith)
GERALD A. NATHE President and Director September 26, 1995
- ----------------------------------------
(Gerald A. Nathe)
AKIRA HARA Vice President and Director September 26, 1995
- ----------------------------------------
(Akira Hara)
WILLIAM J. LAURICELLA Treasurer and Chief
- ---------------------------------------- Financial Officer September 26, 1995
(William J. Lauricella)
HELEN P. OSTER Secretary September 26, 1995
- ----------------------------------------
(Helen P. Oster)
WARREN W. SMITH Chief Accounting Officer September 26, 1995
- ----------------------------------------
(Warren W. Smith)
JUDITH A. BOOTH Director September 26, 1995
- ----------------------------------------
(Judith A. Booth)
SAMUEL B. FORTENBAUGH III Director September 26, 1995
- ----------------------------------------
(Samuel B. Fortenbaugh III)
JUDITH G. HYERS Director September 26, 1995
- ----------------------------------------
(Judith G. Hyers)
M. RICHARD ROSE Director September 26, 1995
- ----------------------------------------
(M. Richard Rose)
RALPH R. WHITNEY, JR. Director September 26, 1995
- ----------------------------------------
(Ralph R. Whitney, Jr.)
</TABLE>
41
<PAGE> 44
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders of
BALDWIN TECHNOLOGY COMPANY, INC.
Our audits of the consolidated financial statements of Baldwin
Technology Company, Inc. and its subsidiaries referred to in our report dated
August 15, 1995 appearing on page 15 in this Annual Report on Form 10-K also
included an audit of the Financial Statement Schedule listed in Item 14(a) (2)
of this Form 10-K.
In our opinion, this Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Stamford, Connecticut
August 15, 1995
42
<PAGE> 45
SCHEDULE VIII
BALDWIN TECHNOLOGY COMPANY, INC
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
--------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year ended June 30,
1995
Allowance for
doubtful accounts
(deducted from
accounts receivable) . . . . . . $ 3,209 $ 190 $ 502 $ 2,897
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) . . . . . . . . . $15,665 $ 2,352(2) $13,313
Year ended June 30,
1994
Allowance for
doubtful accounts
(deducted from
accounts receivable) . . . . . . $ 1,831 $1,589(1) $ 211 $ 3,209
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) . . . . . . . . . $16,537 $328 $ 1,200(2) $15,665
Year ended June 30,
1993
Allowance for
doubtful accounts
(deducted from
accounts receivable) . . . . . . $ 1,099 $ 814 $ 82 $ 1,831
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) . . . . . . . . . $16,537(3) $16,537
</TABLE>
- ------------------------
(1) The amount expensed is primarily due to a potential bad debt in the
Company's Asia Pacific Sector where the debtor has filed a plan of
reorganization.
(2) The reduction in the amount of the valuation allowance is the result
of improved earnings in the Company's domestic operations. See Note 9
-- Notes to Consolidated Financial Statements.
(3) Amount recorded is a result of adoption of FASB Statement No. 109,
Accounting for Income Taxes.
43
<PAGE> 46
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation of the Company as filed with the
Secretary of State of the State of Delaware on November 4, 1986. Filed
as Exhibit 3.1 to the Company's registration statement (No. 33-10028)
on Form S-1 and incorporated herein by reference.
3.2 Certificate of Amendment of the Certificate of Incorporation of the
Company as filed with the Secretary of State of the State of Delaware
on November 21, 1988. Filed as Exhibit 3.2 to the Company's
Registration Statement (No. 33-26121) on Form S-1 and incorporated
herein by reference.
3.3 Certificate of Amendment of the Certificate of Incorporation of the
Company as filed with the Secretary of State of the State of Delaware
on November 20, 1990. Filed as Exhibit 3.3 to the Company's Report on
Form 10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
3.4 By-Laws of the Company. Filed as Exhibit 3.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and incorporated
herein by reference.
10.1 Baldwin Technology Company, Inc. Amended and Restated 1986 Stock
Option Plan. Filed as Exhibit 10.2 to the Company's Registration
Statement (No. 33-31163) on Form S-1 and incorporated herein by
reference.
10.2 Amendment to the Baldwin Technology Company, Inc. Amended and Restated
1986 Stock Option Plan. Filed as Exhibit 10.2 to the Company's Report
on Form 10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.3 Baldwin Technology Company, Inc. 1990 Directors' Stock Option Plan.
Filed as Exhibit 10.3 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by reference.
10.4 Baldwin Technology Corporation Profit Sharing Plan, as amended and
restated. Filed as Exhibit 10.2 to the Company's Registration
Statement (No. 33-10028) on Form S-1 and incorporated herein by
reference.
10.5 Baldwin Technology Corporation Executive and Key Person Bonus Plan.
Filed as Exhibit 10.4 to the Company's Registration Statement (No.
33-10028) on Form S-1 and incorporated herein by reference.
10.6 Agreement effective as of July 1, 1990 between Baldwin Technology
Corporation, Baldwin Graphic Systems, Inc. and Harold W. Gegenheimer,
as guaranteed by Baldwin Technology Company, Inc. Filed as Exhibit
10.6 to the Company's Report on Form 10-K for the fiscal year ended
June 30, 1991 and incorporated herein by reference.
10.7 Agreement effective as of July 1, 1990 between Baldwin Technology
Company, Inc. and Harold W. Gegenheimer. Filed as Exhibit 10.7 to the
Company's Report on Form 10-K for the fiscal year ended June 30, 1991
and incorporated herein by reference.
10.8 Consulting Agreements dated as of January 1, 1990 between each of
Baldwin Americas Corporation, Baldwin Asia Pacific Corporation and
Baldwin Europe Consolidated Inc., and Polestar, Ltd. filed as Exhibit
10.8 on the Company's Form 10-K dated September 25, 1990 and
incorporated herein by reference.
<PAGE> 47
10.9* Employment Agreement dated as of July 1, 1990 between the Company and
Wendell M. Smith filed as Exhibit 10.9 to the Company's Form 10-K
dated September 25, 1990 and incorporated herein by reference.
10.10 License Agreement between Baldwin Technology Corporation and Hans
Jacobs Moestue, as assigned to Moestue Limited. Filed as Exhibit 10.15
to the Company's Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.11* Employment Agreement dated as of November 16, 1988 between
Baldwin-Japan Limited and Akira Hara. Filed as Exhibit. 10.22 to the
Company's Registration Statement (No. 33-26121) on Form S-1 and
incorporated herein by reference.
10.12 Stock Purchase Agreement dated as of April 13, 1990 between RZ
Corporation, The Dyson-Kissner-Moran Corporation and the Company.
Filed as Exhibit 1 to the Company's Form 8-K dated April 26, 1990 and
incorporated herein by reference.
10.13 Amendment No. 1 to the Company's Form 8-K (as filed on April 13, 1990)
and dated October 9, 1990 for the acquisition of Misomex AB and
subsidiaries and Misomex of North America, Inc.--Exhibits (a) and (b)
incorporated herein by reference.
10.14 Assignment of Stock Purchase Agreement dated May 27, 1990 between the
Company and Misomex Acquisition Company. Filed as Exhibit 2 to the
Company's Form 8-K dated August 13, 1990 and incorporated herein by
reference.
10.15 Assignment of Stock Purchase Agreement dated May 28, 1990 between the
Company and Misomex Acquisition AB. Filed as Exhibit 3 to the
Company's Form 8-K dated August 13, 1990 and incorporated herein by
reference.
10.16 Agreement and Plan of Merger dated as of April 26, 1989 among Enkel
Corporation, Bengt Kuller, Enkel Acquisition Corporation and the
Company. Filed as Exhibit I to the Company's report on Form 8-K dated
May 7, 1989 and incorporated herein by reference.
10.17 Baldwin Technology Company, Inc. Dividend Reinvestment Plan. Filed as
Exhibit 10.49 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
10.18 Baldwin Technology Company, Inc. Employee Stock Ownership Plan. Filed
as Exhibit 10.50 to the Company's Report on Form 10-K for the fiscal
year ended June 30, 1991 and incorporated herein by reference.
10.19 Consulting Agreement dated as of June 30, 1989 between Baldwin Asia
Pacific Corporation and A-PLUS LTD. Filed as Exhibit 10.51 to the
Company's Report on Form 10-K for the fiscal year ended June 30, 1991
and incorporated herein by reference.
10.20 Baldwin Technology Company, Inc. Worldwide Employee Stock Ownership
Plan. Filed as Exhibit 10.52 to the Company's Report on Form 10-K for
the fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.21* Employment Agreement effective as of August 5, 1993 between Baldwin
Technology Company, Inc. and Gerald A. Nathe filed as Exhibit 10.22 to
the Company's Report on Form 10-K for the fiscal year ended June 30,
1994 and incorporated herein by reference.
<PAGE> 48
10.22 8.17% Senior Note Agreement dated October 29, 1993 between Baldwin
Technology Company, Inc. and its subsidiaries Baldwin Americas
Corporation and Baldwin Technology Ltd. and John Hancock Mutual Life
Insurance Company, John Hancock Variable Life Insurance Company and
John Hancock Life Insurance Company filed as Exhibit 10.23 to the
Company's Report on Form 10-K for the fiscal year ended June 30, 1994
and incorporated herein by reference.
10.23 $20,000,000 Revolving Credit Agreement dated November, 1993 between
Baldwin Technology Company, Inc. and its subsidiaries Baldwin Americas
Corporation and Baldwin Technology Ltd. and NationsBank of North
Carolina, National Association filed as Exhibit 10.24 to the Company's
Report on Form 10-K for the fiscal year ended June 30, 1994 and
incorporated herein by reference.
21. List of Subsidiaries of Registrant (filed herewith).
23. Consent of Price Waterhouse LLP (filed herewith).
27. Financial Data Schedule (filed herewith).
28. Post-effective Amendment to the Company's previously filed Form S 8's,
Nos. 33-20611 and 33-30455 filed as Exhibit 28 to the Company's Report
on Form 10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT Jurisdiction
Baldwin Americas Corporation Delaware
Baldwin Europe Consolidated Inc. Delaware
Baldwin Asia Pacific Corporation Delaware
Baldwin Technology Limited Bermuda
SUBSIDIARIES OF BALDWIN AMERICAS CORPORATION
Baldwin Technology Corporation Connecticut
Misomex of North America, Inc. Delaware
Enkel Corporation Delaware
Baldwin Graphic Systems, Inc. Delaware
SUBSIDIARIES OF BALDWIN TECHNOLOGY CORPORATION
Kansa Corporation Kansas
SUBSIDIARIES OF ENKEL CORPORATION
Enkel International Sales Corporation Illinois
Enkel Foreign Sales Corporation US Virgin Island
SUBSIDIARIES OF BALDWIN EUROPE CONSOLIDATED INC.
Baldwin Europe Consolidated BV Netherlands
Baldwin Technology France SA France
SUBSIDIARIES OF BALDWIN EUROPE CONSOLIDATED BV
Baldwin Graphic Equipment BV Netherlands
Baldwin German Capital Holding GmbH Germany
Baldwin U.K. Holding Limited United Kingdom
BS Holding AB Sweden
Misomex Italia Italy
SUBSIDIARIES OF BALDWIN GERMAN CAPITAL HOLDING GMBH
Baldwin Gegenheimer GmbH Germany
Misomex GmbH Germany
Baldwin Auslandsbeteiligungs Holding GmbH Germany
SUBSIDIARIES OF BALDWIN U.K. HOLDING LIMITED
Misomex U.K. Limited United Kingdom
Misomex Engineering Limited United Kingdom
SUBSIDIARIES OF B S HOLDING AB
Amal AB Sweden
Misomex AB Sweden
SUBSIDIARIES OF BALDWIN GEGENHEIMER GMBH
Baldwin Gegenheimer Ltd. United Kingdom
SUBSIDIARIES OF BALDWIN AUSLANDSBETEILIGUNGS HOLDING GMBH
Baldwin Hungaria Ltd. Hungary
Graphics Financing Ireland Ireland
<PAGE> 2
SUBSIDIARIES OF MISOMEX U.K. LIMITED
Dale Graphics U.K. Ltd. United Kingdom
SUBSIDIARIES OF MISOMEX AB
AB Estomatic Sweden
Misomex Marketing AB Sweden
Opme Oy Finland
SUBSIDIARIES OF GRAPHICS FINANCING IRELAND
Altoste Limited Ireland
SUBSIDIARIES OF BALDWIN ASIA PACIFIC CORPORATION
Baldwin Asia Pacific Ltd. Hong Kong
Baldwin Japan Ltd. Japan
Baldwin Printing Control Equipment (Beijing)
Company, Ltd. China
BAP VC Limited British Virgin
Islands
SUBSIDIARIES OF BALDWIN ASIA PACIFIC LTD
Baldwin Graphic Equipment Pty. Ltd. Australia
Baldin Printing Controls Ltd. Hong Kong
SUBSIDIARIES OF BALDWIN JAPAN LTD.
Baldwin Japan Trading Ltd. Japan
Kansai Baldwin Sales Ltd. Japan
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on Form S-8 (No.
33-20611 and No. 33-30455) and the Registration Statements on Form S-3 (No.
33-33104, No. 33-42265 and No. 33-41586) of Baldwin Technology Company, Inc.
of our report dated August 15, 1995 appearing on page 15 of this Annual Report
on Form 10-K. We also consent to the incorporation by reference of our report
on the Financial Statement Schedule, which appears on page 42 of this Form
10-K.
PRICE WATERHOUSE LLP
Stamford, Connecticut
September 27, 1995
<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-K and is
qualified in its entirety by reference to such Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 12,719
<SECURITIES> 470
<RECEIVABLES> 49,375
<ALLOWANCES> 2,897
<INVENTORY> 39,824
<CURRENT-ASSETS> 124,903
<PP&E> 26,715
<DEPRECIATION> 19,538
<TOTAL-ASSETS> 209,770
<CURRENT-LIABILITIES> 71,328
<BONDS> 0
<COMMON> 180
0
0
<OTHER-SE> 98,708
<TOTAL-LIABILITY-AND-EQUITY> 209,770
<SALES> 222,341
<TOTAL-REVENUES> 222,341
<CGS> 146,727
<TOTAL-COSTS> 146,727
<OTHER-EXPENSES> 61,246
<LOSS-PROVISION> 190
<INTEREST-EXPENSE> 3,436
<INCOME-PRETAX> 10,742
<INCOME-TAX> 5,091
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,651
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
