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 December 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission file number 1-9334
BALDWIN TECHNOLOGY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3258160
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
65 Rowayton Avenue, Rowayton, Connecticut 06853
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-838-7470
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
YES X . NO .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at January 31, 1996
Class A Common Stock
$0.01 par value 16,137,827
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 -
December 31, 1995 and June 30, 1995 1
Consolidated Statement of Income -
Three months and six months ended
December 31, 1995 and 1994 2
Consolidated Statement of Changes in
Shareholders' Equity - Six months
ended December 31, 1995 3
Consolidated Statement of Cash Flows -
Six months ended December 31, 1995 and 1994 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 4 Submission of Matters to a Vote of
Security Holders 13
Item 6 Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
December 31, June 30,
1995 1995
ASSETS (Unaudited)
CURRENT ASSETS:
Cash $ 7,695 $ 12,719
Short-term securities 272 470
Accounts receivable trade, net of allowance for
doubtful accounts of $2,629 ($2,897 at June 30, 1995) 48,991 46,478
Notes receivable, trade 12,746 16,916
Inventories 46,524 39,824
Prepaid expenses and other 8,238 8,496
Total current assets 124,466 124,903
MARKETABLE SECURITIES, at cost:
Market $966 ($971 at June 30, 1995) 820 971
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 7,915 2,348
Machinery and equipment 10,448 8,941
Furniture and fixtures 6,057 5,855
Leasehold improvements 1,741 1,734
Capital leases 7,746 7,837
33,907 26,715
Less: Accumulated depreciation and amortization 20,284 19,538
Net property, plant and equipment 13,623 7,177
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS at cost,
less accumulated amortization of $3,604 ($3,243 at
June 30, 1995) 5,319 5,355
GOODWILL, less accumulated amortization of $10,846
($9,734 at June 30, 1995) 65,357 61,477
OTHER ASSETS 9,519 9,887
TOTAL ASSETS $219,104 $209,770
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable $ 10,553 $ 9,188
Current portion of long-term debt 487 160
Accounts payable, trade 16,999 14,895
Notes payable, trade 9,864 12,637
Accrued salaries, commissions, bonus and profit-sharing 8,363 9,680
Customer deposits 6,992 5,410
Accrued and withheld taxes 2,629 2,321
Income taxes payable 3,725 4,389
Restructuring reserve 3,000
Other accounts payable and accrued liabilities 12,676 12,648
Total current liabilities 75,288 71,328
LONG-TERM LIABILITIES:
Long-term debt (Note 4) 36,298 29,868
Other long-term liabilities 9,694 9,686
Total long-term liabilities 45,992 39,554
Total liabilities 121,280 110,882
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 40,287 41,631
Cumulative translation adjustment 2,565 4,174
Less: Treasury stock, at cost:
Class A - 253,856 shares (174,256 at June 30, 1995)
Class B - 164,117 shares (164,117 at June 30, 1995) (2,397) (1,978)
Total shareholders' equity 97,824 98,888
COMMITMENTS ------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $219,104 $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 six months
ended December 31, ended December 31,
1995 1994 1995 1994
Net sales $65,816 $52,713 $118,651 $100,352
Cost of goods sold 44,258 34,849 79,946 66,129
Gross Profit 21,558 17,864 38,705 34,223
Operating expenses:
General and administrative 7,506 5,663 12,966 11,082
Selling 6,691 5,243 12,077 10,003
Engineering 3,580 2,975 6,397 5,691
Research and development 1,748 1,504 2,971 2,843
Restructuring Charge: (Note 3)
Employee terminations 1,500 1,500
Dealer terminations 1,500 1,500
22,525 15,385 37,411 29,619
Operating (loss) income (967) 2,479 1,294 4,604
Other (income) expense
Interest expense 1,080 871 2,018 1,692
Interest income (162) (209) (249) (322)
Other income, net (112) (307) (541) (560)
806 355 1,228 810
(Loss) income before taxes (1,773) 2,124 66 3,794
Provision for income taxes 564 1,062 1,410 1,897
Net (loss) income $(2,337) $ 1,062 $ (1,344) $ 1,897
Net (loss) income per common
and common equivalent share $ (0.13) $ 0.06 $ (0.07) $ 0.11
Weighted average number of
shares outstanding 18,132 18,002 17,981 17,959
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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<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
six months
Stock issued in conjunction
with the acquisition of
Acrotec 350,000 4 2,184
Stock options exercised 30,097 120
Purchase of treasury stock
Translation adjustment
Balance at
December 31, 1995 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 Treasury Stock
Retained Translation --------------
Earnings Adjustment Shares Amount
<S> <C> <C> <C> <C>
Balance at June 30, 1995 $41,631 $4,174 (338,373 $(1,978)
Net loss for the six months (1,344)
Stock issued in conjunction
with the acquisition of
Acrotec
Stock options exercised
Purchase of treasury stock (79,600) (419)
Translation adjustment (1,609)
Balance at
December 31, 1995 $40,287 $2,565 (417,973) $(2,397)
</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 six months
ended December 31,
1995 1994
Cash Flows from operating activities:
(Loss) income from operations $(1,344) $ 1,897
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 2,303 2,267
Accrued retirement pay 236 371
Provision for losses on accounts receivable (41) 72
Restructuring charge 3,000
Changes in assets and liabilities net of
effects from subsidiary purchase -
Accounts and notes receivable, net 6,042 (8,372)
Inventories (3,370) (3,134)
Prepaid expenses and other 1,152 518
Customer deposits (41) 2,053
Accrued compensation (1,073) (1,447)
Accounts and notes payable, trade (82) (2,094)
Income taxes payable (619) (1,451)
Accrued and withheld taxes 295 (124)
Other accounts payable and accrued liabilities (2,344) 377
Interest payable 76 67
Net cash provided (used) by operating activities 4,190 (9,000)
Cash flows from investing activities:
Acquisitions of subsidiaries, net of cash acquired (4,798)
Additions of property, net (5,189) (723)
Additions of patents, trademarks and drawings, net (171) (181)
Other assets (441) 471
Net cash used by investing activities (10,599) (433)
Cash flows from financing activities:
Long-term borrowings 10,334 2,000
Long-term debt repayment (6,683) (1,296)
Short-term borrowings 3,545 2,558
Short-term debt repayment (4,584) (324)
Principal payments under capital lease
obligations (220) (280)
Other long-term liabilities (474) 27
Treasury stock purchased (419) (236)
Stock options exercised 120 4
Net cash provided by financing activities 1,619 2,453
Effects of exchange rate changes (432) 86
Net decrease in cash and
cash equivalents (5,222) (6,894)
Cash and cash equivalents at beginning of year 13,189 18,534
Cash and cash equivalents at end of period $ 7,967 $ 11,640
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 CASH FLOWS
(Unaudited)
Supplemental disclosures of cash flow information:
For the six months
ended December 31,
1995 1994
(in thousands)
Cash paid during the period for:
Interest $ 1,942 $ 1,759
Income taxes $ 2,074 $ 3,401
Supplemental schedule of non-cash investing and financing activities:
For the six months ended December 31, 1995:
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, recorded as a current
liability in "Other accounts payable and accrued liabilities". See Note 3
in Notes to Consolidated Financial Statements.
The Company entered into capital lease agreements of $49,315 for the six
months ended December 31, 1995.
For the six months ended December 31, 1994:
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 December 31, 1994, other assets included $628,000 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.
The Company entered into capital lease agreements of $47,989 for the six
months ended December 31, 1994.
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Company considers all
highly liquid instruments with original maturities of three months or less
to be cash equivalents.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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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 six month periods ended December
31, 1995 are not necessarily indicative of the results that may be expected
for the year ending June 30, 1996.
All significant intercompany transactions have been eliminated in
consolidation. Net income per share is based on the weighted average
number of common shares and common stock equivalents outstanding during
the period. For the three and six month periods ended December 31, 1995
and 1994, net income was divided by the total of the weighted average
number of common shares outstanding and common stock equivalents, in order
to calculate net income per share. Common stock equivalents for the three
month periods ended December 31, 1995 and 1994 consisted of 116,228 shares
and 140,252 shares, respectively, for stock options. The weighted average
number of common and common equivalent shares outstanding for the three
month periods ended December 31, 1995 and 1994 were 18,132,011 and
18,001,699, respectively. Common stock equivalents for the six month
periods ended December 31, 1995 and 1994 consisted of 137,277 shares
and 122,718 shares, respectively, for stock options. For the six month
periods ended December 31, 1995 and 1994 the weighted average number of
common and common equivalent shares were 17,980,517 and 17,958,722,
respectively. Common stock equivalents calculated for fully diluted
earnings per share were not materially different from those calculated
for primary.
Note 2 - Inventories:
Inventories consist of the following:-
December 31, June 30,
1995 1995
Raw material $22,489,000 $17,897,000
In process 14,046,000 10,602,000
Finished goods 9,989,000 11,325,000
$46,524,000 $39,824,000
Inventories decreased $559,000 due to translation effects of exchange
from June 30, 1995 to December 31, 1995. Inventories acquired in the
October 2, 1995 purchase of Acrotec AB and Subsidiaries amounted to
$3,889,000 and at December 31, 1995 these inventories were $4,149,000.
- 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 December 31, 1995, no charges had been made
against the restructuring reserve and the $3,000,000 reserve was included
in "Other accounts payable and accrued liabilities".
Note 4 - Debt Refinancing:
As of December 31, 1995, the Company refinanced it's $20,000,000 revolving
credit agreement (the "Revolver") with NationsBank of North Carolina,
as Agent. In connection with the refinancing, certain of the related
financial covenants were amended including a covenant regarding the
payment of dividends. Future payments of dividends are limited to
$5,500,000 plus 50% of the Company's net income after June 30, 1995.
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 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.
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<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.
Six Months Ended December 31, 1995 vs. Six Months
Ended December 31, 1994.
Net sales for the six months ended December 31, 1995 increased by
$18,299,000 (18.2%) to $118,651,000 from $100,352,000 for the six months
ended December 31, 1994. Currency rate fluctuations attributable to the
Company's overseas operations increased net sales by $2,406,000 for the
current period and acquisitions added $6,574,000 to sales. Product
volume increases were primarily responsible for the remainder of the change.
In terms of local currency, sales increased throughout the European Sector.
Sales were up 12.9% in Germany, 10.8% in the United Kingdom and 2.8% in
Sweden. Local currency Asian Sector sales declined 10.5% in Japan and in-
creased in Australia by A$3,174,000 from A$516,000. In the Americas Sector,
net sales increased by 11.6%.
Gross profit for the six month period ended December 31, 1995 was
$38,705,000 (32.6% of net sales) as compared to $34,223,000 (34.1% of net
sales) for the six month period ended December 31, 1994, an increase of
$4,482,000 or 13.1%. Gross profit increased by $767,000 on fluctuations
in currency rates, by $2,703,000 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 and increased
technical service costs in the European and Asia Pacific Sectors.
Selling, general and administrative expenses were $25,043,000 (21.1%
of net sales) for the six month period ended December 31, 1995 as compared
to $21,085,000 (21.0% of net sales) for the same period of the prior year,
an increase of $3,958,000 or 18.8% in these expenses of which, $541,000
was due to currency rate fluctuations and $1,787,000 was due to acquisitions.
Increased expenses related to sales volume, trade shows and personnel were
primarily responsible for selling expense increases while general and ad-
ministrative 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
$834,000 over the same period of the prior year of which $223,000 was due
to currency rate fluctuations and $955,000 was due to acquisitions with
the remaining decrease primarily related to decreased engineering and
contract related research costs.
Interest expense for the six month period ended December 31, 1995 was
$2,018,000 as compared to $1,692,000 for the six month period ended December
31, 1994. Currency rate fluctuations increased interest expense by
$130,000 and acquisitions added $186,000 for the current period. Interest
income was $249,000 and $322,000 for the six month periods ended December
31, 1995 and December 31, 1994, respectively. Currency rate fluctuations
increased interest income by $24,000 and acquisitions increased interest in-
come by $56,000 for the current period. Other income decreased marginally
and included foreign currency transaction (losses) gains of $(8,000) and
$57,000 for the six month periods ended December 31, 1995 and 1994,
respectively. The effects of currency rate fluctuations decreased other
income by $50,000. Acquisitions increased other income by $27,000 with
the remainder due 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 six month period ended December 31, 1995, as compared to 50% for the
six month period ended December 31, 1994. Currency rate fluctuations
decreased the provision for income taxes by $70,000 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 six month period ended December 31, 1995 was
$(1,344,000) versus net income of $1,897,000 for the six month period
ended December 31, 1994, or $(0.07) and $0.11 per share, respectively.
The net loss due to restructuring charges was $(0.17) per share.
Currency rate fluctuations increased the net loss by $83,000 and
acquisitions increased the net loss by $173,000 or $(0.01) per share
for the current period. Weighted average equivalent shares
outstanding during the six month periods ended December 31, 1995 and
December 31, 1994 were 17,980,517 and 17,958,722, respectively.
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<PAGE>
Three Months Ended December 31, 1995 vs. Three Months
Ended December 31, 1994.
Net sales for the three months ended December 31, 1995 increased
by $13,103,000 (24.9%) to $65,816,000 from $52,713,000 for the three
months ended December 31, 1994. Currency rate fluctuations attributable
to the Company's overseas operations increased net sales by $738,000
while acquisitions added $6,574,000 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 were up 5.3% in Germany, flat
in the United Kingdom and up 2.8% in Sweden. Local currency Asian Sector
sales decreased 12.2% in Japan. In the Americas Sector, net sales
increased 20.4% for the period.
Gross profit for the three month period ended December 31, 1995
was $21,558,000 (32.8% of net sales) as compared to $17,864,000 (33.9%
of net sales) for the three month period ended December 31, 1994, an
increase of $3,694,000 or 20.7%. Gross profit increased by $259,000
due to currency rate fluctuations and by $2,703,000 from 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 and increased technical service costs
in the European and Asia Pacific Sectors.
Selling, general and administrative expenses were $14,197,000
(21.6% of net sales) for the three month period ended December 31,
1995 as compared to $10,906,000 (20.7% of net sales) for the same
period of the prior year, an increase of $3,291,000 or 30.2% in these
expenses of which currency rate fluctuations increased these expenses
by $237,000 and $1,787,000 was due to acquisitions in the current
period. Increased expenses related to sales volume, trade shows and
personnel were primarily responsible for selling expense increases
while general and administrative 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 $849,000 or 19.0% over the same
period of the prior year of which $86,000 was due to currency rate
fluctuations and $955,000 was due to acquisitions with the remaining
decrease primarily related to decreased engineering expenses.
Interest expense for the three month period ended December 31,
1995 was $1,080,000 as compared to $871,000 for the three month period
ended December 31, 1994. Currency rate fluctuations increased
interest expense by $62,000 and acquisitions added $186,000 for the
current period. Interest income was $162,000 and $209,000 for the
three month periods ended December 31, 1995 and December 31, 1994,
respectively. Other income decreased primarily due to foreign
currency transaction losses of ($158,000) and ($46,000) for the three
month periods ended December 31, 1995 and 1994, respectively.
Currency rate fluctuations decreased other income by $35,000 and
acquisitions increased other income by $27,000 for the period.
The Company's effective tax rate was 46% on income before
restructuring charges (See Note 3 - Notes to Consolidated Financial
Statements) for the three month period ended December 31, 1995, as
compared to 50% for the three month period ended December 31, 1994.
Currency rate fluctuations decreased the provision for income taxes by
$73,000 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.
- 10 -
Net (loss) for the three month period ended December 31, 1995 was
$(2,337,000) versus net income of $1,062,000 for the three month
period ended December 31, 1994, or $(0.13) and $0.06 per share,
respectively. The net loss due to restructuring charges was $(0.17)
per share. Currency rate fluctuations increased the net loss by
$87,000 and acquisitions increased the net loss by $173,000 or $(0.01)
per share for the current period. Weighted average equivalent shares
outstanding during the three month periods ended December 31, 1995 and
December 31, 1994 were 18,132,011 and 18,001,699, respectively.
- - 11 -
<PAGE>
Liquidity and Capital Resources at December 31, 1995
Liquidity and Working Capital
The Company's long-term debt includes $25,000,000 of 8.17%
senior notes (the "Senior Notes") due October 29, 2000 and a three-
year $20,000,000 Revolving Credit Agreement (the "Revolver") with
NationsBank of North Carolina, as Agent, which matures in 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 to $3,000,000 plus 50% of the Company's net income after June
30, 1993 and to $5,500,000 plus 50% of the Company's net income after
June 30, 1995 for the Revolver. 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
December 31, 1995, this ratio was 1.65 to 1.
Net cash used by investing activities increased by
$10,166,000 from $433,000 at December 31, 1994 to $10,599,000 at
December 31, 1995 primarily due to the purchase of a previously leased
Swedish manufacturing facility for SEK 28,840,000 ($4,335,000) and the
purchase of Acrotec AB and Subsidiaries, net of cash acquired, of
$4,798,000. Net cash provided by financing activities decreased by
$834,000 to $1,619,000 at December 31, 1995 from $2,453,000 at
December 31, 1994 primarily due to the difference in debt borrowing
and repayment activity. The decrease of short term loans required for
working capital was partially offset by increased long-term debt
requirements of which SEK 18,400,000 ($2,766,000) relates to financing
the above building.
The Company's working capital decreased from $49,877,000 at
December 31, 1994, to $49,178,000 at December 31, 1995, a decrease of
$699,000 or 1.4%. Currency rate fluctuations increased working
capital by $733,000 and acquisitions, net of cash acquired, added
$4,912,000 to the current period's working capital. The remainder of
the decrease was due primarily to increases in trade payables and
accrued compensation which more than offset inventory increases. The
Company's working capital decreased by $4,397,000 or 8.2% from
$53,575,000 at June 30, 1995 to $49,178,000 at December 31, 1995.
Currency rate fluctuations decreased working capital by $2,412,000 and
acquisitions, net of cash acquired, added $4,912,000 to the current
period's working capital. Decreases in cash, used for the Acrotec
acquisition and the purchase of the Swedish manufacturing facility,
and decreases in receivables, net of inventory increases, were more
than offset by decreases in other accounts payable and accrued
compensation.
The Company maintains relationships with foreign and
domestic banks which have extended credit facilities to the Company
totaling $41,329,000, including amounts available under the Revolver.
As of December 31, 1995, the Company had outstanding $14,694,000 under
these lines of credit, of which $4,141,000 is classified as long-term
debt. Total debt levels as reported on the balance sheet at December
31, 1995 are $591,000 lower then they would have been if June 30, 1995
exchange rates had been used and include $3,045,000 of debt of the
acquired entities.
Net capital expenditures made to meet the normal business
needs of the Company for the six months ended December 31, 1995 and
December 31, 1994, including commitments for capital lease payments,
were $1,025,000 and $904,000, 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 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on
November 16, 1995.
(c) A brief description of matters voted upon and the results
of the voting follows:
Proposal 1 - To elect two Class II Directors to serve for
three-year terms and one Class III Director to serve for
a one-year term or until their successors are elected and qualify.
SCHEDULE OF VOTES CAST FOR EACH DIRECTOR
Total Vote For Total Vote Withheld
Each Director From Each Director
Class A
M. Richard Rose 14,795,034 140,383
Class A & B
Gerald A. Nathe 31,658,794 146,773
Judith G. Hyers 31,656,684 148,883
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 December 31, 1995.
- 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: February 14, 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>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 7,695
<SECURITIES> 272
<RECEIVABLES> 64,366
<ALLOWANCES> 2,629
<INVENTORY> 46,524
<CURRENT-ASSETS> 124,466
<PP&E> 33,907
<DEPRECIATION> 20,284
<TOTAL-ASSETS> 219,104
<CURRENT-LIABILITIES> 75,288
<BONDS> 0
<COMMON> 184
0
0
<OTHER-SE> 97,640
<TOTAL-LIABILITY-AND-EQUITY> 87,824
<SALES> 118,651
<TOTAL-REVENUES> 118,651
<CGS> 79,946
<TOTAL-COSTS> 79,946
<OTHER-EXPENSES> 37,411
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,018
<INCOME-PRETAX> 66
<INCOME-TAX> 1,410
<INCOME-CONTINUING> (1,344)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (1,344)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
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