FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ Mark one ]
[ X ] Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For quarter ended March 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission file number 1-9334
BALDWIN TECHNOLOGY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3258160
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
65 Rowayton Avenue, Rowayton, Connecticut 06853
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-838-7470
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days:
YES X . NO .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at April 30, 1996
Class A Common Stock
$0.01 par value 15,590,627
Class B Common Stock
$0.01 par value 1,835,883
Total number of pages in this document 14
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
INDEX
Page
Part I Financial Information
Consolidated Balance Sheet -
March 31, 1996 and June 30, 1995 1
Consolidated Statement of Income -
Three months and nine months ended
March 31, 1996 and 1995 2
Consolidated Statement of Changes in
Shareholders' Equity - Nine months
ended March 31, 1996 3
Consolidated Statement of Cash Flows -
Nine months ended March 31, 1996 and 1995 4-5
Notes to Consolidated Financial Statements 6-7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-13
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K 13
Signature 14
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
March 31, June 30,
1996 1995
ASSETS (Unaudited)
CURRENT ASSETS:
Cash $ 7,892 $ 12,719
Short-term securities 318 470
Accounts receivable trade, net of allowance for
doubtful accounts of $2,593 ($2,897 at June 30, 1995) 50,163 46,478
Notes receivable, trade 10,576 16,916
Inventories 45,919 39,824
Prepaid expenses and other 8,978 8,496
Total current assets 123,846 124,903
MARKETABLE SECURITIES, at cost:
Market $977 ($971 at June 30, 1995) 787 971
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 7,930 2,348
Machinery and equipment 10,347 8,941
Furniture and fixtures 5,890 5,855
Leasehold improvements 1,736 1,734
Capital leases 7,505 7,837
33,408 26,715
Less: Accumulated depreciation and amortization 20,119 19,538
Net property, plant and equipment 13,289 7,177
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS at cost,
less accumulated amortization of $3,766 ($3,243 at
June 30, 1995) 5,353 5,355
GOODWILL, less accumulated amortization of $11,245
($9,734 at June 30, 1995) 64,387 61,477
OTHER ASSETS 9,132 9,887
TOTAL ASSETS $216,794 $209,770
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable $ 11,013 $ 9,188
Current portion of long-term debt 479 160
Accounts payable, trade 15,319 14,895
Notes payable, trade 9,911 12,637
Accrued salaries, commissions, bonus and profit-sharing 8,953 9,680
Customer deposits 8,734 5,410
Accrued and withheld taxes 2,823 2,321
Income taxes payable 3,525 4,389
Restructuring reserve 2,974
Other accounts payable and accrued liabilities 13,694 12,648
Total current liabilities 77,425 71,328
LONG-TERM LIABILITIES:
Long-term debt (Note 4) 35,071 29,868
Other long-term liabilities 9,238 9,686
Total long-term liabilities 44,309 39,554
Total liabilities 121,734 110,882
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,391,683 shares issued
(16,011,586 at June 30, 1995) 164 160
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 57,185 54,881
Retained earnings 41,278 41,631
Cumulative translation adjustment 861 4,174
Less: Treasury stock, at cost:
Class A - 772,556 shares (174,256 at June 30, 1995)
Class B - 164,117 shares (164,117 at June 30, 1995) (4,448) (1,978)
Total shareholders' equity 95,060 98,888
COMMITMENTS ------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $216,794 $209,770
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands of dollars except per share data)
(Unaudited)
For the three months For the nine months
ended March 31, ended March 31,
1996 1995 1996 1995
Net sales $63,812 $55,375 $182,463 $155,727
Cost of goods sold 43,102 36,709 123,048 102,838
Gross Profit 20,710 18,666 59,415 52,889
Operating expenses:
General and administrative 6,747 6,212 19,713 17,294
Selling 6,547 5,125 18,624 15,128
Engineering 3,547 3,092 9,944 8,783
Research and development 1,812 1,332 4,783 4,175
Restructuring Charge: (Note 3)
Employee terminations 1,500
Dealer terminations 1,500
18,653 15,761 56,064 45,380
Operating income 2,057 2,905 3,351 7,509
Other (income) expense
Interest expense 1,056 898 3,074 2,590
Interest income (178) (146) (427) (468)
Other income, net (656) (355) (1,197) (915)
222 397 1,450 1,207
Income before taxes 1,835 2,508 1,901 6,302
Provision for income taxes 844 1,254 2,254 3,151
Net income (loss) $ 991 $ 1,254 $ (353) $ 3,151
Net income (loss) per common
and common equivalent share $ 0.06 $ 0.07 $ (0.02) $ 0.18
Weighted average number of
shares outstanding 17,783 17,932 17,915 17,938
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 2 -<PAGE>
<TABLE>
BALDWIN TECHNOLOGY COMPANY INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
(PART 1 OF 2 PART TABLE)
<CAPTION>
Capital
Class A Class B Contributed
Common Stock Common Stock in Excess
Shares Amount Shares Amount of Par
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1995 16,011,586 $160 2,000,000 $20 $54,881
Net loss for the nine months
Stock issued in conjunction
with the acquisition of
Acrotec 350,000 4 2,184
Stock options exercised 30,097 120
Treasury stock purchased
Translation adjustment
Balance at March 31, 1996 16,391,683 $164 2,000,000 $20 $57,185
</TABLE>
<TABLE>
BALDWIN TECHNOLOGY COMPANY INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
(PART 2 OF 2 PART TABLE)
<CAPTION>
Cumulative
Retained Translation Treasury Stock
Earnings Adjustment Shares Amount
<S> <C> <C> <C> <C>
Balance at June 30, 1995 $41,631 $4,174 (338,373) $(1,978)
Net loss for the nine months (353)
Stock issued in conjunction
with the acquisition of
Acrotec
Stock options exercised
Treasury stock purchased (598,300) (2,470)
Translation adjustment (3,313)
Balance at March 31, 1996 $41,278 $ 861 (936,673) $(4,448)
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
(Unaudited)
For the nine months
ended March 31,
1996 1995
Cash Flows from operating activities:
(Loss) income from operations $ (353) $ 3,151
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 3,526 3,488
Accrued retirement pay 138 151
Provision for losses on accounts receivable 36 62
Restructuring charge 3,000
Changes in assets and liabilities net of
effects from subsidiary purchase -
Accounts and notes receivable, net 5,627 (10,169)
Inventories (3,298) (7,380)
Prepaid expenses and other 256 279
Customer deposits 1,909 2,367
Accrued compensation (251) (242)
Accounts and notes payable, trade (1,138) 2,465
Income taxes payable (899) (1,626)
Accrued and withheld taxes 528 38
Other accounts payable and accrued liabilities (1,647) (69)
Interest payable 636 481
Net cash provided (used) by operating activities 8,070 (7,004)
Cash flows from investing activities:
Acquisitions of subsidiaries, net of cash acquired (4,798)
Additions of property, net (5,567) (882)
Additions of patents, trademarks and drawings, net (379) (274)
Other assets (181) 433
Net cash used by investing activities (10,925) (723)
Cash flows from financing activities:
Long-term borrowings 10,334 2,000
Long-term debt repayment (7,777) (3,335)
Short-term borrowings 7,021 4,566
Short-term debt repayment (7,465) (1,096)
Principal payments under capital lease
obligations (323) (372)
Other long-term liabilities (827) (23)
Treasury stock purchased (2,470) (263)
Stock options exercised 120 4
Net cash (used) provided by financing activities (1,387) 1,481
Effects of exchange rate changes (737) 657
Net decrease in cash and
cash equivalents (4,979) (5,589)
Cash and cash equivalents at beginning of year 13,189 18,534
Cash and cash equivalents at end of period $ 8,210 $ 12,945
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 4 -<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Supplemental disclosures of cash flow information:
For the nine months
ended March 31,
1996 1995
(in thousands)
Cash paid during the period for:
Interest $ 2,438 $ 2,109
Income taxes $ 3,118 $ 4,834
Supplemental schedule of non-cash investing and financing activities:
For the nine months ended March 31, 1996:
The Company acquired the capital stock of Acrotec AB and subsidiaries
(Acrotec) in a purchase transaction for consideration of $7,848,000
($5,660,000 in cash and 350,000 shares of the Company's Class A Common
Stock). The fair value of the acquired assets excluding goodwill was
$16,915,000 and the liabilities assumed were $12,539,000. The excess
of the purchase price over the net assets acquired of $3,472,000 was
recorded as goodwill.
A restructuring charge was expensed during the second quarter of the
fiscal year in a non-cash transaction of $3,000,000. The change in the
related liability is recorded as a change in "Other accounts payable
and accrued liabilities" for cash flow purposes. See Note 3 in Notes
to Consolidated Financial Statements.
Other assets included $267,000 of previously capitalized patent costs
unrealized as royalties at March 31, 1996. See comments below for
March 31, 1995.
The Company entered into capital lease agreements of $80,927 for the
nine months ended March 31, 1996.
For the nine months ended March 31, 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 March 31, 1995, other
assets included $591,000 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 was $235,000.
During the quarter ended March 31, 1995, the Company reclassified
$279,000 of prepaid taxes previously classified as a current asset to
long term other assets.
The Company entered into capital lease agreements of $77,767 for the
nine months ended March 31, 1995.
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.
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BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - General:
Baldwin Technology Company, Inc. (Baldwin, or the Company) is
engaged primarily in the development, manufacture and sale of material
handling, accessory, control and pre-press equipment for the printing
industry.
The consolidated financial statements include the accounts of
Baldwin and its subsidiaries and reflect all adjustments (consisting
of only normal recurring adjustments) which are, in the opinion of
management, necessary to present a fair statement of the results for
the interim periods. Operating results for the three month and nine
month periods ended March 31, 1996 are not necessarily indicative of
the results that may be expected for the year ending June 30, 1996.
All significant intercompany transactions have been eliminated in
consolidation. Net income per share is based on the weighted average
number of common shares and common stock equivalents outstanding
during the period. For the three and nine month periods ended March
31, 1996 and 1995, net income (loss) was divided by the total of the
weighted average number of common shares outstanding and common stock
equivalents, in order to calculate net income (loss) per share.
Common stock equivalents for the three month periods ended March 31,
1996 and 1995 consisted of 18,476 shares and 117,965 shares,
respectively, for stock options. The weighted average number of
common and common equivalent shares outstanding for the three month
periods ended March 31, 1996 and 1995 were 17,783,312 and 17,932,228,
respectively. Common stock equivalents for the nine month periods
ended March 31, 1996 and 1995 consisted of 97,676 shares and 121,134
shares, respectively, for stock options. For the nine month periods
ended March 31, 1996 and 1995 the weighted average number of common
and common equivalent shares were 17,914,971 and 17,937,880,
respectively. Common stock equivalents calculated for fully diluted
earnings per share were not materially different from those calculated
for primary earnings per share.
Note 2 - Inventories:
Inventories consist of the following:-
March 31, June 30,
1996 1995
Raw material $20,470,000 $17,897,000
In process 17,854,000 10,602,000
Finished goods 7,595,000 11,325,000
$45,919,000 $39,824,000
Inventories decreased $1,092,000 due to translation effects of
exchange from June 30, 1995 to March 31, 1996. Inventories acquired
in the October 2, 1995 purchase of Acrotec AB and Subsidiaries
amounted to $3,889,000 and at March 31, 1996 Acrotec inventories were
$4,306,000.
- 6 -
Note 3 - Restructuring:
A restructuring reserve was charged to income for the quarter
ended December 31, 1995 in the amount of $3,000,000. The reserve was
established in order to accrue the costs associated with a planned
workforce rationalization of the Company's German operations as well
as to accrue for dealer claims associated with changes made to the
European dealer network and distribution system. At March 31, 1996,
payments of $26,000 had been made for severence against the
restructuring reserve and the remaining reserve was $2,974,000.
Note 4 - Debt Refinancing:
As of December 31, 1995, the Company refinanced it's $20,000,000
revolving credit agreement (the "Revolver") with NationsBank, National
Association, as Agent. In connection with the refinancing, certain of
the related financial covenants were amended.
Note 5 - Common Stock:
On November 21, 1995, five (5) eligible non-employee Directors of
the Company were automatically granted non-qualified options for a
total of 4,490 shares of Class A Common Stock and 510 shares of Class
B Common Stock under the Company's 1990 Directors' Stock Option Plan
at $5.50 and $6.875, respectively, the fair market values on the date
of grant. Restrictions, as described in the Company's 1991 Proxy
Statement, are similar to the 1986 Stock Option Plan, as amended and
restated (the "1986 Plan"), with the exception of the dates of
exercise, vesting and termination.
On October 30, 1995 the Compensation and Stock Option Committee
of the Board of Directors granted non-qualified options to purchase
41,000 shares of the Company's Class A Common Stock to certain
executives under the Company's 1986 Plan. The options were granted at
the fair market value on the date of grant ($5.63) and are otherwise
identical with regard to restrictions on options previously granted.
- 7 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
position and consolidated financial statements.
Nine Months Ended March 31, 1996 vs. Nine Months
Ended March 31, 1995.
Net sales for the nine months ended March 31, 1996 increased by
$26,736,000 or 17.2% to $182,463,000 from $155,727,000 for the nine
months ended March 31, 1995. Currency rate fluctuations attributable
to the Company's overseas operations increased net sales for the
current period by $2,301,000 and acquisitions added $12,143,000 to net
sales. Product volume was the primary reason for the $12,292,000
remainder of the increase of which $9,832,000 occurred in the Americas
Sector. In terms of local currency, sales changes were mixed within
the European Sector. Sales were down 0.25% in Germany, were up 14.4%
in the United Kingdom and were up 7.1% in Sweden. Local currency
Asian Sector sales were down 6.8%. In the Americas Sector, net sales
increased 14.4%.
Gross profit for the nine month period ended March 31, 1996 was
$59,415,000 (32.6% of net sales) as compared to $52,889,000 (34% of
net sales) for the nine month period ended March 31, 1995, an increase
of $6,526,000 or 12.3%. Gross profit increased by $510,000 on
fluctuations in currency rates, by $4,411,000 due to acquisitions with
the remainder due to volume changes, product mix and other factors.
Gross profit was lower as a percentage of sales when compared to the
prior year due primarily to sales of products that contribute lower
gross profits, pressure on sales prices and increased technical
service costs in the European and Asia Pacific Sectors.
Selling, general and administrative expenses were $38,337,000
(21.0% of net sales) for the nine month period ended March 31, 1996 as
compared to $32,422,000 (20.8% of net sales) for the same period of
the prior year, an increase of $5,915,000 or 18.2% in these expenses
of which $359,000 was due to currency rate fluctuations and $3,393,000
was due to acquisitions. Increased expenses related to sales volume,
trade shows and personnel were primarily responsible for selling
expense increases while general and administrative expenses increased
due primarily to personnel and legal expenses in the current period.
Other operating expenses, before restructuring charges (See Note 3,
Notes to Consolidated Financial Statements) increased by $1,769,000
over the same period of the prior year of which $197,000 was due to
currency rate fluctuations and $1,618,000 was due to acquisitions with
the remaining decrease primarily related to decreased engineering and
contract related research costs.
Interest expense for the nine month period ended March 31, 1996
was $3,074,000 as compared to $2,590,000 for the nine month period
ended March 31, 1995. Currency rate fluctuations increased interest
expense by $121,000 and acquisitions added $338,000 for the current
period. Interest income was $427,000 and $468,000 for the nine month
periods ended March 31, 1996 and March 31, 1995, respectively.
Currency rate fluctuations decreased interest income by $6,000 and
acquisitions increased interest income by $103,000 for the current
period. Other income and expense includes foreign currency
transaction gains of $418,000 and $204,000 for the nine month periods
ended March 31, 1996 and 1995, respectively. The effects of currency
rate fluctuations decreased other income by $136,000. Acquisitions
increased other income by $31,000 with the remaining increase due
primarily to increased royalty income for the current period.
- 8 -
The Company's effective tax rate was 46% on income before
restructuring charges (See Note 3 - Notes to Consolidated Financial
Statements) for the nine month period ended March 31, 1996, as
compared to 50% for the nine month period ended March 31, 1995.
Currency rate fluctuations decreased the provision for income taxes by
$135,000 for the current period. The difference in effective rates
results primarily from increased domestic income. The current
period's effective rate reflects the impact of foreign source income
which is generally taxed at significantly higher rates than domestic
income. No tax benefit was recorded on the $3,000,000 charge for
restructuring due to the Company's tax loss carryforward position in
Germany.
Net (loss) for the nine month period ended March 31, 1996 was
$(353,000) versus net income of $3,151,000 for the nine month period
ended March 31, 1995, or $(0.02) and $0.18 per share, respectively.
The net loss due to restructuring charges was $(0.17) per share.
Currency rate fluctuations increased the net loss by $159,000 and
acquisitions increased the net loss by $912,000 or $(0.05) per share
for the current period. Weighted average equivalent shares
outstanding during the nine month periods ended March 31, 1996 and
March 31, 1995 were 17,914,971 and 17,937,880, respectively.
- 9 -
<PAGE>
Three Months Ended March 31, 1996 vs. Three Months
Ended March 31, 1995.
Net sales for the three months ended March 31, 1996 increased by
$8,437,000 or 15.2% to $63,812,000 from $55,375,000 for the three
months ended March 31, 1995. Currency rate fluctuations attributable
to the Company's overseas operations decreased net sales for the
current period by $948,000 while acquisitions added $5,569,000 to net
sales for the current period. Product volume increases were primarily
responsible for the remainder of the change. In terms of local
currency, sales changes were mixed within the European Sector. Sales
were down 23.8% in Germany, were up 22.5% in United Kingdom and were
up 15.5% in Sweden. Local currency Asian Sector sales were flat in
Japan and up by AUS $1,811,000 in the current period from AUS $220,000
in the prior year. In the Americas Sector, net sales increased
$4,709,000 or 19.6% for the current period.
Gross profit for the three month period ended March 31, 1996 was
$20,710,000 (32.5% of net sales) as compared to $18,666,000 (33.7% of
net sales) for the three month period ended March 31, 1995, an
increase of $2,044,000 or 11.0%. Currency rate fluctuations decreased
gross profit by $257,000 and acquisitions added $1,708,000 to gross
profit with the remainder of the increase due primarily to increased
volume changes, product mix and other factors. Gross profit was lower
as a percentage of sales when compared to the prior year due primarily
to sales of products that contribute lower gross profit margins,
pricing pressures and increased technical service costs. Gross profit
margins of the recently acquired Acrotec group were also effected by
low sales volume for the quarter.
Selling, general and administrative expenses were $13,294,000
(20.8% of net sales) for the three month period ended March 31, 1996
as compared to $11,337,000 (20.4% of net sales) for the same period of
the prior year, an increase of $1,957,000 or 17.3% in these expenses.
Currency rate fluctuations decreased these expenses by $182,000 and
acquisitions added $1,606,000 in the current period. The remainder of
the increase was primarily selling expenses related to increased sales
volume and personnel. Other operating expenses increased $935,000 or
21.1% over the same period of the prior year. Currency rate
fluctuations decreased these expenses by $26,000 and acquisitions
added $663,000 for the current period with the remaining increase
primarily related to product design engineering.
Interest expense for the three month period ended March 31, 1996
was $1,056,000 as compared to $898,000 for the three month period
ended March 31, 1995. Currency rate fluctuations decreased interest
expense by $9,000 and acquisitions added $152,000 for the current
period. Interest income was $178,000 and $146,000 for the three month
periods ended March 31, 1996 and March 31, 1995, respectively.
Currency rate fluctuations decreased interest income by $30,000 and
acquisitions increased interest income by $47,000 for the current
period. Other income and expense includes foreign currency
transaction gains of $426,000 and $147,000 for the three month periods
ended March 31, 1996 and 1995, respectively. Currency rate
fluctuations decreased other income by $86,000 and acquisitions added
$6,000 for the period with the remaining change due primarily to
increased royalty income.
The Company's effective tax rate on income before taxes was 46%
for the three month period ended March 31, 1996, as compared to 50%
for the three month period ended March 31, 1995. The difference in
effective rates results primarily from increased domestic source
income. The effective tax rate reflects the impact of foreign source
income which is generally taxed at significantly higher rates than
domestic source income and foreign source losses for which no tax loss
carryback benefit is available. Currency rate fluctuations decreased
the provision for income taxes by $141,000 for the current period.
- 10 -
Net income for the three month period ended March 31, 1996
decreased by $263,000 or 21.0% to $991,000 from $1,254,000 for the
three month period ended March 31, 1995, or to $0.06 from $0.07 per
share, respectively. Currency rate fluctuations decreased net income
by $76,000 and acquisitions decreased net income by $739,000 $(0.04)
for the current period. Weighted average equivalent shares
outstanding during the three month periods ended March 31, 1996 and
March 31, 1995 were 17,783,312 and 17,932,228, respectively.
- 11 -
<PAGE>
Liquidity and Capital Resources at March 31, 1996
Liquidity and Working Capital
The Company's long-term debt includes $25,000,000 of 8.17%
senior notes (the "Senior Notes") due October 29, 2000 and a three-
year $20,000,000 Revolving Credit Agreement (the "Revolver") with
NationsBank, National Association, as Agent, which matures in
December, 1998 (See Note 4 - Notes to Consolidated Financial
Statements). The Senior Notes and the Revolver require the Company to
maintain certain financial covenants and have certain restrictions
regarding the payment of dividends, limiting them throughout the terms
of the Senior Notes and the Revolver to $3,000,000 plus 50% of the
Company's net income after June 30, 1993. In addition, the Company
was required to pledge certain of the shares of its domestic
subsidiaries as collateral for both the Senior Notes and the Revolver.
Both the Senior Notes and the Revolver require the Company
to maintain a ratio of current assets to current liabilities (as those
terms are defined in the agreements) of not less than 1.4 to 1. At
March 31, 1996, this ratio was 1.60 to 1.
Net cash used by investing activities increased by
$10,202,000 from $723,000 at March 31, 1995 to $10,925,000 at March
31, 1996 primarily due to the purchase of a previously leased Swedish
manufacturing facility for SEK 28,840,000 ($4,295,000) and the
purchase of Acrotec AB and Subsidiaries, net of cash acquired, of
$4,798,000. Net cash used by financing activities increased by
$2,868,000 to $1,387,000 at March 31, 1996 from $1,481,000 provided by
financing at March 31, 1995 primarily due to the difference in
treasury stock repurchase activity.
The Company's working capital decreased from $51,964,000 at
March 31, 1995, to $46,421,000 at March 31, 1996, a decrease of
$5,543,000 or 10.7%. Currency rate fluctuations decreased working
capital by $2,402,000 and acquisitions, net of cash acquired, added
$4,912,000 to the current period's working capital. The decrease was
due primarily to cash used to finance the Acrotec acquisition and the
purchase of the Swedish manufacturing facility. The remainder of the
decrease was related to decreases in trade receivables and loans
payable to banks. The Company's working capital decreased by
$7,154,000 or 13.4% from $53,575,000 at June 30, 1995 to $46,421,000
at March 31, 1996. Currency rate fluctuations decreased working
capital by $3,408,000 and acquisitions, net of cash acquired, added
$4,912,000 to the current period's working capital. Cash used to
finance the Acrotec acquisition and the purchase of the Swedish
manufacturing facility were primarily responsible for the change in
working capital. Decreases in receivables, net of inventory
increases, accounted for the remainder of the change. Increases in
customer deposits were largely offset by decreases in other payables.
The Company maintains relationships with foreign and
domestic banks which have extended credit facilities to the Company
totaling $38,136,000, including amounts available under the Revolver.
As of March 31, 1996, the Company had outstanding $14,135,000 under
these lines of credit, of which $3,123,000 is classified as long-term
debt. Total debt levels as reported on the balance sheet at March 31,
1996 are $867,000 lower then they would have been if June 30, 1995
exchange rates had been used and include $3,465,000 of debt of the
acquired entities.
Net capital expenditures made to meet the normal business
needs of the Company for the nine months ended March 31, 1996 and
March 31, 1995, including commitments for capital lease payments, were
$1,651,000 and $1,156,000, respectively.
The Company believes its cash flow from operations and bank
lines of credit are sufficient to finance its working capital and
other capital requirements for the near and long-term future.
- 12 -
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.
BALDWIN TECHNOLOGY COMPANY, INC.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K. There were no reports on Form 8-K
filed for the three months ended March 31, 1996.
- 13 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
BALDWIN TECHNOLOGY COMPANY, INC.
BY s\ William J. Lauricella
Treasurer and
Chief Financial Officer
Dated: May 6, 1996
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS IN THE COMPANY'S CURRENT REPORT ON FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH UNAUDITED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 7892
<SECURITIES> 318
<RECEIVABLES> 63332
<ALLOWANCES> 2593
<INVENTORY> 45919
<CURRENT-ASSETS> 123846
<PP&E> 33408
<DEPRECIATION> 20119
<TOTAL-ASSETS> 216794
<CURRENT-LIABILITIES> 77425
<BONDS> 0
0
0
<COMMON> 184
<OTHER-SE> 94876
<TOTAL-LIABILITY-AND-EQUITY> 216794
<SALES> 63812
<TOTAL-REVENUES> 63812
<CGS> 43102
<TOTAL-COSTS> 43102
<OTHER-EXPENSES> 18653
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1056
<INCOME-PRETAX> 1835
<INCOME-TAX> 844
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