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, 1999
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.)
One Norwalk West, 40 Richards Avenue, Norwalk, Connecticut 06854
(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, 1999
Class A Common Stock
$0.01 par value 14,687,647
Class B Common Stock
$0.01 par value 1,835,883
BALDWIN TECHNOLOGY COMPANY, INC.
INDEX
Page
Part I Financial Information
Consolidated Balance Sheet -
March 31, 1999 and June 30, 1998 1-2
Consolidated Statement of Income -
Three months and nine months ended
March 31, 1999 and 1998 3
Consolidated Statement of Changes in
Shareholders' Equity - Nine months
ended March 31, 1999 4
Consolidated Statement of Cash Flows -
Nine months ended March 31, 1999 and 1998 5-6
Notes to Consolidated Financial Statements 7-8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-15
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K 16
Signatures 17
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(in thousands)
ASSETS
March 31, June 30,
1999 1998
(Unaudited)
CURRENT ASSETS:
Cash $ 11,089 $ 15,054
Short-term securities 327 6,972
Accounts receivable trade, net of allowance for
doubtful accounts of $1,819($1,713 at June 30, 1998) 42,768 39,839
Notes receivable, trade 11,106 13,323
Inventories 36,224 35,166
Prepaid expenses and other 8,573 8,086
Total current assets 110,087 118,440
MARKETABLE SECURITIES:
Cost $683 ($586 at June 30, 1998) 791 738
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 3,073 3,123
Machinery and equipment 6,698 7,210
Furniture and fixtures 5,282 5,539
Leasehold improvements 826 1,028
Capital leases 3,852 5,339
19,731 22,239
Less: Accumulated depreciation and amortization 12,994 15,241
Net property, plant and equipment 6,737 6,998
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS at cost,
less accumulated amortization of $5,721 ($5,410 at
June 30, 1998) 4,468 4,935
GOODWILL, less accumulated amortization of $8,893
($8,033 at June 30, 1998) 31,653 29,394
OTHER ASSETS 16,490 14,523
TOTAL ASSETS $170,226 $175,028
The accompanying notes to consolidated financial statements
are an integral part of these statements.
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, June 30,
1999 1998
(Unaudited)
CURRENT LIABILITIES:
Loans payable $ 3,582 $ 4,481
Current portion of long-term debt 6,286 6,330
Accounts payable, trade 12,514 15,962
Notes payable, trade 10,741 9,707
Accrued salaries, commissions, bonus and profit-sharing 8,718 9,351
Customer deposits 8,207 14,180
Accrued and withheld taxes 2,003 2,282
Income taxes payable 5,888 10,478
Other accounts payable and accrued liabilities 19,239 17,104
Total current liabilities 77,178 89,875
LONG-TERM LIABILITIES:
Long-term debt 20,086 17,072
Other long-term liabilities 6,231 4,624
Total long-term liabilities 26,317 21,696
Total liabilities 103,495 111,571
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,458,849 shares issued
(16,431,683 at June 30, 1998) 165 164
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 57,496 57,359
Retained earnings 19,306 15,168
Cumulative translation adjustment (1,568) (3,423)
Unrealized gain on investments net of $56 of
deferred taxes ($73 at June 30, 1998) 52 79
Less: Treasury stock, at cost:
Class A - 1,670,202 shares (1,102,802 at June 30, 1998)
Class B - 164,117 shares (164,117 at June 30, 1998) (8,740) (5,910)
Total shareholders' equity 66,731 63,457
COMMITMENTS
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $170,226 $175,028
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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,
1999 1998 1999 1998
Net sales $58,048 $60,199 $178,536 $163,864
Cost of goods sold 39,629 41,193 121,099 109,974
Gross Profit 18,419 19,006 57,437 53,890
Operating expenses:
General and administrative 6,208 6,272 18,849 17,837
Selling 4,475 4,430 14,030 13,578
Engineering 3,502 3,310 10,681 9,480
Research and development 1,325 1,408 3,951 3,909
Provision for loss on the
disposition of
Pre-press operations 2,400 2,400
17,910 15,420 49,911 44,804
Operating income 509 3,586 7,526 9,086
Other (income) expense:
Interest expense 603 678 1,744 2,182
Interest income (83) (87) (353) (401)
Other income, net (608) (562) (1,681) (1,759)
(88) 29 (290) 22
Income before income taxes 597 3,557 7,816 9,064
Provision for income taxes 976 1,332 3,678 3,535
Net (loss) income $ (379) $ 2,225 $ 4,138 $ 5,529
Basic (loss) income per share $ (0.02) $ 0.13 $ 0.24 $ 0.32
Diluted (loss) income per share $ (0.02) $ 0.13 $ 0.24 $ 0.32
Weighted average number of
shares:
Basic 16,719 17,157 16,908 17,139
Diluted 16,719 17,531 17,267 17,406
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<TABLE>
BALDWIN TECHNOLOGY COMPANY INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
<CAPTION>
Capital
Class A Class B Contributed Cumulative Unrealized
Common Stock Common Stock in Excess Retained Translation Gain(Loss)on Treasury Stock Comprehensive
Shares Amount Shares Amount of Par Earnings Adjustment Investments Shares Amount Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
June 30, 1998 16,431,683 $164 2,000,000 $20 $57,359 $15,168 $(3,423) $79 (1,266,919) $(5,910)
Net income
for the nine
months ended
March 31, 1999 4,138 $4,138
Translation
adjustment 1,855 1,855
Unrealized loss
on available for
sale securities,
net of tax (27) (27)
Comprehensive
income $5,966
Stock options
exercised 27,166 1 137
Purchase of
treasury stock (567,400) (2,830)
Balance at
March 31, 1999 16,458,849 $165 2,000,000 $20 $57,496 $19,306 $(1,568) $52 (1,834,319) $(8,740)
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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,
1999 1998
Cash Flows from operating activities:
Net income $ 4,138 $5,529
Adjustments to reconcile net income to net cash
used by operating activities -
Depreciation and amortization 2,644 2,829
Accrued retirement pay 435 458
Provision for losses on accounts receivable 14 67
Provision for loss on the disposition of
Pre-press operations 2,400
Changes in assets and liabilities:
Accounts and notes receivable, net 1,086 (9,057)
Inventories (4,276) (8,675)
Prepaid expenses and other (357) (691)
Customer deposits (4,993) 4,809
Accrued compensation (744) 385
Accounts and notes payable, trade (3,476) 3,104
Income taxes payable (4,739) (1,502)
Accrued and withheld taxes (290) (140)
Other accounts payable and accrued liabilities (109) 450
Interest payable 277 301
Net cash used by operating activities (7,990) (2,133)
Cash flows from investing activities:
Proceeds from disposition of business 2,751 5,925
Additions of property, net (1,563) (1,420)
Additions of patents, trademarks and drawings, net (229) (254)
Acquisitions of businesses, net of cash acquired (2,999)
Other assets 8 (314)
Net cash (used) provided by investing activities (2,032) 3,937
Cash flows from financing activities:
Long-term borrowings 16,704 9,806
Long-term debt repayment (13,657) (12,746)
Short-term borrowings 3,908 2,457
Short-term debt repayment (5,136) (4,566)
Principal payments under capital lease
obligations (193) (194)
Other long-term liabilities (188) 277
Treasury stock purchased (2,830)
Stock options exercised 138 174
Net cash used by financing activities (1,254) (4,792)
Effects of exchange rate changes 666 (674)
Net decrease in cash and cash equivalents (10,610) (3,662)
Cash and cash equivalents at beginning of year 22,026 13,453
Cash and cash equivalents at end of period $11,416 $ 9,791
The accompanying notes to consolidated financial statements
are an integral part of these statements.
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Supplemental disclosures of cash flow information:
For the nine months
ended March 31,
1999 1998
(in thousands)
Cash paid during the period for:
Interest $ 1,467 $ 1,881
Income taxes $ 8,508 $ 5,333
The Company did not enter into any capital lease agreements for the nine
months ended March 31, 1999. The Company entered into capital lease agreements
totaling $77,826 for the nine months ended March 31, 1998.
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.
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, and control 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, 1999 are not
necessarily indicative of the results that may be expected for the year ending
June 30, 1999. All significant intercompany transactions have been eliminated
in consolidation.
Note 2 - Earnings per share:
In fiscal 1998, the Company adopted Financial Accounting Standards Board
Statement No. 128, "Earnings per Share" (FAS 128). FAS 128 applies to entities
with publicly held common stock or potential common stock and is effective for
financial statements issued for periods ending after December 15, 1997. The
weighted average number of shares outstanding used to compute basic earnings
per share amounted to 16,719,000 and 16,908,000 for the three and nine month
periods ended March 31, 1999 as compared to 17,157,000 and 17,139,000 for the
three and nine month periods ended March 31, 1998, respectively. The weighted
average number of shares outstanding used to compute diluted earnings per share
amounted to 16,719,000 and 17,267,000 for the three and nine month periods
ended March 31, 1999 as compared to 17,531,000 and 17,406,000 for the three and
nine month periods ended March 31, 1998, respectively, which include the
weighted average shares of potentially dilutive securities, primarily
outstanding options to purchase the Company's common stock, of zero and 359,000
shares for the 1999 periods ended, and 374,000 and 267,000 for the 1998 periods
ended, respectively. The Company incurred a net loss for the three months
ended March 31, 1999. Therefore any potentially dilutive securities are
excluded from the computation of diluted earnings per share as the effect would
be anti-dilutive.
Note 3 - Inventories:
Inventories consist of the following:-
March 31, June 30,
1999 1998
Raw material $12,713,000 $14,158,000
In process 15,105,000 11,732,000
Finished goods 8,406,000 9,276,000
$36,224,000 $35,166,000
Inventories increased by $460,000 due to translation effects of foreign
currency from June 30, 1998 to March 31, 1999.
Note 4 - Common Stock:
Stock Options:-
At the Annual Meeting of Stockholders held on November 12, 1998, the
Stockholders approved the adoption of the Baldwin Technology Company, Inc. 1998
Non-Employee Directors' Stock Option Plan (the "1998 Plan") which provides for
the issuance of options to purchase up to an aggregate of 250,000 shares of the
Company's Class A Common Stock to non-employee Directors of the Company. Under
the 1998 Plan, each year, each eligible Director would receive a grant of
options to purchase 3,000 shares of the Company's Class A Common Stock. The
options would be granted at the fair market value on the date of grant, and
would vest one-third per year on each succeeding anniversary of the date of
grant. The 1990 Directors' Stock Option Plan (the "1990 Plan") was terminated
in connection with the approval of the 1998 Plan, provided however, that
outstanding options under the 1990 Plan will continue to be subject to the
terms thereof.
Pursuant to the adoption of the 1998 Plan, on November 13, 1998, six (6)
eligible non-employee Directors of the Company were automatically granted non-
qualified options to purchase 3,000 shares each (for a total of 18,000 shares)
of Class A Common Stock at an exercise price of $5.50 per share, the fair
market value on the date of grant.
On August 11, 1998 the Board of Directors granted non-qualified options
to purchase 200,000 shares of the Company's Class A Common Stock to certain
executives and key personnel under the Company's 1996 Stock Option Plan at an
exercise price of $5.50 per share, the fair market value on the date of grant.
The options granted are otherwise identical with regard to restrictions to the
options previously granted under this plan.
Note 5 - Provision for loss on the disposition of Pre-press operations:
In June 1997, the Company sold all of the outstanding shares of its
former Pre-press operations to Kaber Imaging, Inc. (the "Purchaser"). The
Company recorded a loss on this disposition in the amount of $42,407,000 in the
fiscal year ended June 30, 1997. As a result of the original purchase of the
former Pre-press operations by the Company in July 1990, the Company was
obligated to guarantee certain unfunded pension liabilities. In conjunction
with the sale of the Pre-press operation in June 1997, the Purchaser
contractually agreed to have the Company removed from this guarantee obligation
and further, to reimburse the Company for any claims brought against the
Company regarding these pension liabilities. As a result of the Purchaser's
and the former Pre-press operations' recent bankruptcy filings, the Company
will be required to fulfill its guarantee obligation with respect to these
pension liabilities. Therefore, the Company has recorded a charge to earnings
in the current period in the amount of $2,400,000, the estimated amount of
these obligations, and has included such amount as a current liability in other
accounts payable and accrued liabilities.
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 factors
which have affected the Company's financial position and consolidated financial
statements. During the three months ended March 31, 1999, the Company recorded
a charge to earnings in the amount of $2,400,000 which is the result of a
guarantee obligation which the Company will be required to pay and is related
to certain pension liabilities associated with the Company's former Pre-press
operations. This charge to earnings has negatively impacted the results of
operations for the three and nine months ended March 31, 1999, as well as the
working capital of the Company at March 31, 1999, and is expected to negatively
impact cash flow in the near future as it is expected that the obligation will
be required to be paid within the next three months.
During the nine months ended March 31, 1999, the Company acquired a
ninety percent (90%) interest in a distributor of consumables in Europe,
increased its ownership of a U.S. subsidiary from 80% to 100%, and divested its
former U.S. In-Line Finishing division ("In-Line"). As a result, the revenues
and corresponding expenses attributable to each of the operations associated
with these transactions is included in these consolidated financial statements
only for the period owned by the Company. None of these transactions either
individually or in the aggregate has had or is expected to have a material
impact on the financial statements taken as a whole. However, certain items
may be affected more than others, and the effects of these transactions on
these items are discussed below.
Forward-looking Statements
Except for the historical information contained herein, the following
statements and certain other statements contained herein are based on current
expectations. Such statements are forward-looking statements that involve a
number of risks and uncertainties. Baldwin Technology Company, Inc. (the
"Company") cautions investors that any such forward-looking statements made by
the Company are not guarantees of future performance and that actual results
may differ materially from those in the forward-looking statements. Some of
the factors that could cause actual results to differ materially include, but
are not limited to the following (i) the ability to obtain, maintain, and
defend challenges against, valid patent protection on certain technology,
primarily as it relates to the Company's cleaning systems, (ii) material
changes in foreign currency exchange rates versus the U.S. Dollar, (iii)
changes in the mix of products and services comprising revenues, (iv) the
Company's or its vendors' or customers' ability to resolve the Year 2000
compliance issues, (v) a decline in the rate of growth of the installed base of
printing press units and the timing of new press orders, (vi)general economic
conditions, either domestically or in foreign locations, (vii) the ultimate
realization of certain trade receivables and the status of ongoing business
levels with one of the Company's large OEM customers, and (viii) competitive
market influences. Additional factors are set forth in Exhibit 99 to Form 10-K
for the year ended June 30, 1998, which should be read in conjunction herewith.
Nine Months Ended March 31, 1999 vs Nine Months Ended March 31, 1998
Net sales for the nine months ended March 31, 1999 increased by
$14,672,000, or 9.0%, to $178,536,000 from $163,864,000 for the nine months
ended March 31, 1998. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales by $205,000 in the current period. In
terms of local currency, and as compared to the same period in the prior year,
sales increased by 0.3% in Germany, by 33.8% in Sweden, by 25.5% in France, by
20.1% in the United Kingdom, and by 20.7% in the Americas. In Japan, sales
decreased by 17.9%.
Gross profit for the nine month period ended March 31, 1999 was
$57,437,000 (32.2% of net sales), as compared to $53,890,000 (32.9% of net
sales) for the nine month period ended March 31, 1998, an increase of
$3,547,000 or 6.6%. Currency rate fluctuations increased gross profit by
$8,000 in the current period. Gross profit was slightly lower as a percentage
of net sales when compared to the prior year due primarily to increased sales
of lower margin material handling equipment and, to a lesser extent, to
decreased sales volumes in Japan.
Selling, general and administrative expenses amounted to $32,879,000
(18.4% of net sales), for the nine month period ended March 31, 1999 as
compared to $31,415,000 (19.2% of net sales) for the same period in the prior
year, an increase of $1,464,000 or 4.7%. Currency rate fluctuations increased
these expenses by $86,000 in the current period. Otherwise, selling, general
and administrative expenses would have increased by $1,378,000. Selling
expenses increased by $407,000 which primarily related to increased sales
commissions resulting from higher sales volumes and higher advertising and
trade show costs, particularly in Europe. General and administrative expenses
increased by $971,000 due primarily to increased compensation costs, including
increased accrued incentive compensation in Europe, and to expenses associated
with the previously noted divestiture of In-Line. As a percentage of net
sales, however, selling general and administrative expenses decreased by 0.8%.
Engineering and research and development expenses increased by $1,243,000
over the same period of the prior year. Currency rate fluctuations increased
these expenses by $36,000 in the current period. Otherwise, these expenses
would have increased by $1,207,000. The increase in these expenses relates
primarily to increased engineering costs in the Americas and Japan attributable
to design efforts to make the Company's products less costly to manufacture,
install and support, as well as to increase the efficiency of processing of new
orders. Engineering and research and development expenses were 8.2% of net
sales for the nine months ended March 31, 1999 and 1998.
Interest expense for the nine month period ended March 31, 1999 was
$1,744,000 as compared to $2,182,000 for the nine month period ended March 31,
1998. This decrease was primarily due to lower long-term debt levels
outstanding in the current period, which were replaced by short-term borrowings
during December 1998 and March 1999. Currency rate fluctuations increased
interest expense by $44,000 in the current period. Interest income amounted to
$353,000 and $401,000 for the nine month periods ended March 31, 1999 and March
31, 1998, respectively. Currency rate fluctuations increased interest income
by $4,000 in the current period.
Other income and expense includes net foreign currency transaction
(losses) and gains of $(168,000) and $178,000 for the nine months ended March
31, 1999 and 1998 respectively. Currency rate fluctuations increased other
income by $19,000 in the current period.
The Company's effective tax rate on income before taxes was 47.1% for the
nine month period ended March 31, 1999 as compared to 39.0% for the nine month
period ended March 31, 1998. This increase is primarily the result of the
$2,400,000 special charge related to the former Pre-press operations, which is
not deductible currently for income tax purposes. Otherwise, the Company's
effective tax rate on income before income taxes would have been 36.0% in the
current nine month period. Currency rate fluctuations decreased the provision
for income taxes by $49,000 in the current period. The decrease in the current
period's effective tax rate (excluding the effect of the special charge) is
primarily due to increased income in tax jurisdictions for which there are
available tax loss carryforwards.
Net income for the nine month period ended March 31, 1999 decreased by
$1,391,000 or 25.2% to $4,138,000 from $5,529,000 for the nine month period
ended March 31, 1998. This decrease is primarily due to the previously
mentioned special charge. Net income per share amounted to $0.24 basic and
diluted for the nine months ended March 31, 1999, as compared to $0.32 basic
and diluted for the nine months ended March 31, 1998. This decrease in income
per share is primarily the result of the effect of the special charge, which
amounted to $(0.14) per share basic and diluted in the current nine month
period. Currency rate fluctuations decreased net income by $86,000 in the
current period.
Three Months Ended March 31, 1999 vs Three Months Ended March 31, 1998
Net sales for the three months ended March 31, 1999 decreased by
$2,151,000, or 3.6%, to $58,048,000 from $60,199,000 for the three months ended
March 31, 1998. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales by $1,619,000 in the current period.
Otherwise, sales would have decreased by $3,770,000, of which $1,640,000
relates to the previously noted divestiture of In-Line. In terms of local
currency, and as compared to the same period in the prior year, sales decreased
by 14.2% in Germany, by 15.3% in Sweden, and by 21.9% in Japan. Sales
increased by 22.5% in France, by 9.6% in the United Kingdom, and by 4.5% in the
Americas.
Gross profit for the three month period ended March 31, 1999 was
$18,419,000 (31.7% of net sales), as compared to $19,006,000 (31.6% of net
sales) for the three month period ended March 31, 1998, a decrease of $587,000
or 3.1%. Currency rate fluctuations increased gross profit by $444,000 in the
current period. Otherwise gross profit would have decreased by $1,031,000 in
the current period. Gross profit was lower due primarily to decreased sales
volumes in Japan and Europe.
Selling, general and administrative expenses amounted to $10,683,000
(18.4% of net sales), for the three month period ended March 31, 1999 as
compared to $10,702,000 (17.8% of net sales) for the same period in the prior
year, a decrease of $19,000 or 0.2%. Currency rate fluctuations increased
these expenses by $217,000 in the current period. Otherwise, selling, general
and administrative expenses would have decreased by $236,000. Selling expenses
decreased by $62,000 which primarily related to the previously noted
divestiture of In-Line as well as decreased sales commissions resulting from
lower sales volumes and lower trade show costs, while general and
administrative expenses decreased by $174,000 due primarily to the previously
noted divestiture of In-Line as well as decreased compensation costs primarily
related to incentive compensation. As a percentage of net sales, however,
selling general and administrative expenses increased by 0.6%.
Engineering and research and development expenses increased by $109,000
over the same period in the prior year. Currency rate fluctuations increased
these expenses by $125,000 in the current period. Otherwise, these expenses
would have decreased by $16,000. The decrease in these expenses relates
primarily to the previously noted divestiture of In-Line which was partially
offset by increased engineering costs in the Americas and Japan attributable to
design efforts to make the Company's products less costly to manufacture,
install and support. As a percentage of net sales, engineering and research
and development expenses increased by 0.5% to 8.3% for the three months ended
March 31, 1999 compared to 7.8% for the same period in the prior year.
Interest expense for the three month period ended March 31, 1999 was
$603,000 as compared to $678,000 for the three month period ended March 31,
1998. This decrease was primarily due to lower long-term debt levels
outstanding in the current period, which was replaced by short-term borrowings
during March. Currency rate fluctuations increased interest expense by $20,000
in the current period. Interest income amounted to $83,000 and $87,000 for the
three month periods ended March 31, 1999 and March 31, 1998, respectively.
Currency rate fluctuations increased interest income by $5,000 in the current
period.
Other income and expense includes net foreign currency transaction
(losses) and gains of $(94,000) and $78,000 for the three months ended March
31, 1999 and 1998 respectively. Currency rate fluctuations increased other
income by $6,000 in the current period.
The Company's effective tax rate on income before taxes was 163.5% for
the three month period ended March 31, 1999 as compared to 37.4% for the three
month period ended March 31, 1998. This increase is primarily the result of
the $2,400,000 special charge, which is not deductible currently for income tax
purposes. Otherwise, the Company's effective tax rate on income before income
taxes would have been 32.6% in the current three month period. Currency rate
fluctuations increased the provision for income taxes by $32,000 in the current
period. The decrease in the current period's effective tax rate (excluding the
effect of the special charge) is primarily due to increased income in tax
jurisdictions for which there are available tax loss carryforwards.
The Company's net loss amounted to $(379,000) for the three month period
ended March 31, 1999, as compared to net income of $2,225,000 for the three
month period ended March 31, 1998. This decrease of $2,604,000 or 117.0%, is
primarily due to the previously noted special charge. Net loss per share
amounted to $(0.02) basic and diluted for the three months ended March 31,
1999, as compared to net income per share of $0.13 basic and diluted for the
three months ended March 31, 1998. This decrease in income per share is
primarily the result of the effect of the special charge, which amounted to
$(0.14) per share basic and diluted in the current three month period.
Currency rate fluctuations increased net income by $49,000 in the current
period.
Liquidity and Capital Resources at March 31, 1999
Liquidity and Working Capital
The Company's long-term debt includes $12,500,000 of 8.17% senior notes
(the "Senior Notes") due October 29, 2000. The Company also maintains a
Revolving Credit Agreement (the "Revolver") with NationsBank, N.A., as agent
which matures on December 31, 2000.
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 $1,000,000 plus 50% of the Company's net income after January 1,
1997. 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 1.40 to 1.00. At March 31, 1999, this ratio
was 1.59 to 1.00.
The Company's working capital increased from $31,436,000 at March 31,
1998, to $32,909,000 at March 31, 1999, an increase of $1,473,000 or 4.7%.
Currency rate fluctuations increased working capital by $508,000. The
remaining increase was primarily due to decreases in accounts, notes, and loans
payable, and customer deposits associated with lower incoming orders. These
increases in working capital were partially offset by increases in income taxes
payable, and other accrued liabilities particularly the $2,400,000 special
charge for the previously divested Pre-press operation.
The Company's working capital increased by $4,344,000 or 15.2% from
$28,565,000 at June 30, 1998 to $32,909,000 at March 31, 1999. Currency rate
fluctuations increased working capital by $2,292,000 in the current period.
The primary reasons for the remaining increase in working capital were
increases in inventory due to the Company delaying shipments to a large OEM
customer, increases in accounts receivable, payments of accrued incentive
compensation, decreases in trade accounts payable, short term loans and
customer deposits associated with lower incoming orders, and payments of income
taxes. These increases in working capital were partially offset by a decrease
in cash and short term securities, a portion of which were used to purchase
treasury stock, and increases in trade notes payable, and other accrued
liabilities, particularly the $2,400,000 special charge for the previously
divested Pre-press operation.
Net cash used by investing activities amounted to $2,032,000 for the nine
months ended March 31, 1999 as compared to net cash provided by investing
activities of $3,937,000 for the nine months ended March 31, 1998. This
difference is primarily due to the fact that the prior period included the
collection of proceeds from the disposition of the Company's former Pre-press
operations, while the current period included payments for the previously noted
acquisitions, the effect of which is partially offset by the proceeds from the
disposition of In-Line.
Net cash used by financing activities amounted to $1,254,000 for the nine
months ended March 31, 1999 as compared to $4,792,000 for the nine months ended
March 31, 1998. The decrease in cash used by financing activities was
primarily due to the increased borrowings under the Revolver, which were used
to fund increases in working capital and the purchase of treasury stock by the
Company.
The Company maintains relationships with foreign and domestic banks which
have extended credit facilities to the Company. As of March 31, 1999, these
credit facilities total $37,191,000 including amounts available under the
Revolver. The Company had outstanding $16,123,000 under these lines of credit,
of which $12,540,000 is classified as long-term debt. Total debt levels as
reported on the balance sheet at March 31, 1999 are $251,000 higher than they
would have been if June 30, 1998 exchange rates had been used.
Net capital expenditures made to meet the normal business needs of the
Company for the nine months ended March 31, 1999 and March 31, 1998, including
commitments for capital lease payments, were $1,792,000 and $1,674,000,
respectively.
At March 31, 1999 the Company's balance sheet includes approximately
$9,400,000 of trade receivables related to one large OEM customer. Offsetting
these receivables is approximately $2,800,000 in advance payments (customer
deposits) received from this customer. Due to a slow-down in payments, the
Company has notified this customer that future shipments of the Company's
equipment and systems will require payment in full prior to shipment. Although
only 10% of the Company's total trade receivables from this customer are more
than 90 days overdue, the Company believes it was prudent to take this action
at this time. At March 31, 1999, the Company has not established any
additional allowance for doubtful accounts regarding the receivables from this
customer.
Of the Company's $63,000,000 in backlog at March 31, 1999, approximately
$10,000,000 represents orders from this OEM customer which is supported by an
inventory balance at the end of the quarter of approximately $5,500,000. For
the nine months ended March 31, 1999, this customer represented approximately
13% of the Company's total net sales.
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.
Year 2000 Compliance
The Company is aware of the issues associated with the limitations of
programming code in existing computer systems whereby the computer systems may
not properly recognize date sensitive information as the year 2000 approaches.
The inability to properly recognize dates and related potential date sensitive
problems are referred to as the Year-2000 situation.
The Year-2000 situation has a potential impact on the Company's internal
information systems infrastructure, Company products which either contain or
utilize digital devices and the internal information systems of suppliers to
the Company.
The Company has completed a study, utilizing external consultants, to
evaluate the Company's internal information systems infrastructure as it
relates to the Year-2000 situation and it has identified processes which
require updating to operate properly after the year 1999. The Company has
undertaken projects to update and replace all currently known non-compliant
internal information systems and processes to ensure that the Year-2000
situation will not have a detrimental impact on the internal operations of the
Company. The cost to update and replace these systems is expected to be
approximately $2,400,000 consisting of the cost of purchasing and installing
hardware and software, the majority of which will be incurred through Fiscal
1999. The cost of Year-2000 compliance is not projected to have a significant
negative impact on the Company's financial results in subsequent fiscal years.
A review is ongoing for those products of the Company that utilize
microprocessors in the operation of the products which could be adversely
affected by the Year-2000 date change. At the present time, no Company
products have been identified where Year-2000 non-compliance would have a
detrimental impact on the operation of the products.
The Company is surveying its suppliers and service providers to determine
potential exposure from external, non-compliant sources. No exposures have
been identified, to date, from external sources. However, the Company is
seeking additional vendors as a precaution to protect the Company from a
potential inability of a vendor to supply material to the Company.
The Company has or is addressing its Year-2000 exposures. Should an
unforeseeable Year-2000 situation arise that poses a severe threat to the
Company, however, the Company expects to be able to revert to PC and manual
backup internal processes until the situation can be resolved. The Company
maintains service and engineering personnel which would be able to remediate
any unforeseen Year-2000 non-compliance situations related to a product of the
Company which would require immediate resolution. The Company does not utilize
single source providers or vendors and as such, may change to other providers
and vendors in the case of non-compliance.
Euro Conversion
Effective January 1, 1999, the "euro" has become the new common currency
for 11 European countries (including Germany, France and the Netherlands where
the Company has operations). Other member states (including the United Kingdom
and Sweden where the Company also has operations) may join in years to come.
Beginning January 1, 1999, transactions in the euro became possible, with the
national currencies continuing to circulate until January 1, 2002, when the
euro will become the functional currency for these 11 countries. During the
transition period from January 1, 1999 to January 1, 2002, payments can be made
using either the euro or the national currencies at fixed exchange rates.
Beginning January 1, 1999, the Company began conducting business with
customers in both the euro and the respective national currency. Systems and
processes that are initially impacted by this dual currency requirement are
customer billing and receivables, payroll and cash management activities
including cash collections and disbursements. To accomplish compliance, the
Company is making the necessary systems and process changes and is also working
with its financial institutions on various cash management issues. The Company
currently expects to have new systems and processes in place by July, 2000 to
accommodate the recording of all business transactions in the euro.
Management currently believes that the external costs associated with
implementing and completing the euro conversion will not be material in any
year and in the aggregate. Also, management currently believes that the
business and market implications, if any, of the euro conversion will not be
material to its results of operations or financial condition in any year and in
the aggregate. The competitive impact of increased cross-border price
transparency however, is uncertain, both with respect to products sold by the
Company, as well as products, and services purchased by the Company.
The Company's ongoing efforts with regard to the Year 2000 compliance and
euro conversion, and those of its significant customers and suppliers
(including financial institutions) may, at some time in the future, reveal as
yet unidentified or not fully understood issues that may not be addressable in
a timely fashion, or that may cause unexpected competitive or market effects,
all contrary to the foregoing statements. These issues, if not resolved
favorably, could have a material adverse effect on the Company's results of
operations or financial condition in any year.
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.
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.25 Sixth Amendment to Amended and Restated Revolving Credit
Agreement and First Amendment to Loan Documents between
Baldwin Americas Corporation and Baldwin Technology Limited
(as "Borrowers") and Baldwin Technology Company, Inc.,
together with the Borrowers (as "Credit Parties") and
NationsBank N.A. and BankBoston (as "Lenders") (filed
herewith).
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for
the three months ended March 31, 1999.
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
Vice President, Chief Financial
Officer and Treasurer
Dated: May 3, 1999
<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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 11089
<SECURITIES> 327
<RECEIVABLES> 55693
<ALLOWANCES> 1819
<INVENTORY> 36224
<CURRENT-ASSETS> 110087
<PP&E> 19731
<DEPRECIATION> 12994
<TOTAL-ASSETS> 170226
<CURRENT-LIABILITIES> 77178
<BONDS> 0
0
0
<COMMON> 185
<OTHER-SE> 66546
<TOTAL-LIABILITY-AND-EQUITY> 170226
<SALES> 178536
<TOTAL-REVENUES> 178536
<CGS> 121099
<TOTAL-COSTS> 121099
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1744
<INCOME-PRETAX> 7816
<INCOME-TAX> 3678
<INCOME-CONTINUING> 4138
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4138
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
SIXTH AMENDMENT TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
AND FIRST AMENDMENT TO LOAN DOCUMENTS
THIS SIXTH AMENDMENT TO AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT AND FIRST AMENDMENT TO LOAN DOCUMENTS (this "Amendment
Agreement") is made and entered into as of this 31st day of December, 1998,
by andamong BALDWIN AMERICAS CORPORATION, a Delaware corporation ("BAM"),
BALDWIN TECHNOLOGY LIMITED, a Bermuda corporation ("BTL"and together with BAM,
the "Borrowers"), BALDWIN TECHNOLOGY COMPANY, INC., a Delaware corporation
("Baldwin" and together with the Borrowers, the "Credit Parties"), EACH OF THE
GUARANTORS PARTY HERETO (the "Guarantors"), NATIONSBANK, N.A., a national
banking association (formerly known as NationsBank of North Carolina, National
Association), as Agent (the "Agent") for the lenders (the "Lenders") party to
the Credit Agreement (defined below), NATIONSBANK, N.A., as Lender
("NationsBank"), and BANKBOSTON, N.A.(successor by merger to Bank of Boston
Connecticut) as Lender ("BankBoston").
W I T N E S S E T H:
WHEREAS, the Credit Parties, the Lenders and the Agent have entered into
that certain Amended and Restated Revolving Credit Agreement dated as of
December 31, 1995 (as thereafter and hereafter amended, modified,
supplemented, amended and restated or replaced, the "Credit Agreement") and
certain other Loan Documents (as described in more detail in Schedule I hereof,
the "Amended Loan Documents"), pursuant to which the Lenders have agreed to make
certain revolving credit loans to the Borrowers; and
WHEREAS, the parties hereto desire to further amend the Credit Agreement in
the manner herein set forth;
WHEREAS, the parties hereto desire to amend the Amended Loan Documents in
the manner herein set forth;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. The term "Credit Agreement" or "Agreement" (as the case
may be) as used herein and in the Loan Documents shall mean the Credit Agreement
as hereby amended and modified, and as further amended, modified, supplemented,
amended and restated or replaced from time to time as permitted thereby. Unless
the context otherwise requires, all terms used herein without definition shall
have the definitions provided therefor in the Credit Agreement.
2. Credit Agreement Amendments. Subject to the conditions hereof, the
Credit Agreement is hereby amended, effective as of the date hereof, as follows:
(a) The first recital on page 1 of the Credit Agreement is hereby
amended by deleting the dollar amount of "$20,000,000" in the last line
thereof and inserting in lieu thereof the dollar amount of "$25,000,000."
(b) The definition of "Revolving Credit Termination Date" in Section
1.1 of the Credit Agreement is hereby deleted in its entirety and the
following is inserted in replacement thereof:
"Revolving Credit Termination Date" means the earlier to occur of
(i) December 31, 2000, or (ii) any other date upon which the Total
Commitment shall terminate in accordance with the terms hereof;
(c) The definition of "Total Commitment" in Section 1.1 of the Credit
Agreement is hereby amended by deleting the dollar amount of "$20,000,000"
and inserting in lieu thereof the dollar amount of "$25,000,000."
(d) Exhibit A to the Credit Agreement is hereby deleted in its
entirety and a new Exhibit A is added in replacement thereof in the form
attached hereto as Annex I.
3. Amendments to Amended Loan Documents. Subject to the conditions
hereof, each of the Loan Documents listed on Schedule 1 hereof is hereby
amended, effective as of the date hereof, to delete the dollar amount of
"$20,000,000" in each and every place such dollar amount appears and insert
in lieu thereof the dollar amount of "$25,000,000."
4. Guarantors. Each Guarantor has joined in the execution of this
Amendment Agreement for the purpose of (i) consenting and agreeing to the
amendments to the Credit Agreement and the Amended Loan Documents contained
herein and (ii) confirming and ratifying its guarantee of payment of all the
Obligations pursuant to the Guaranty to which it is party and as may be
amended hereby.
5. Representations and Warranties. Each Credit Party hereby
certifies that:
(a) The representations and warranties made by each Credit Party
in Article VI of the Credit Agreement are true on and as of the date
hereof, with the same effect as though such representations and
warranties were made on the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier
date or schedules referred to therein have changed due to the sale of
Misomex of North America, Inc.
(b) There has been no material change in the condition, financial
or otherwise, of Baldwin, any Borrower or any of their respective
Subsidiaries since the date of the most recent financial reports of
Baldwin and the Borrowers received by each Lender under Section 7.1 of
the Credit Agreement;
(c) The business and properties of each Credit Party and any of
their respective Subsidiaries are not, and since the date of the most
recent financial reports of Baldwin and the Borrowers received by
each Lender under Section 7.1 of the Credit Agreement have not been,
adversely affected in any substantial way as the result of any fire,
explosion, earthquake, accident, strike, lockout, combination of
workmen, flood, embargo, riot, activities of armed forces, war or acts
of God or the public enemy, or cancellation or loss of any major
contracts; and
(d) No event has occurred and no condition exists which, upon the
effectiveness of the amendments contemplated hereby, will constitute a
Default or an Event of Default on the part of any Credit Party under
the Credit Agreement or any other Loan Document either immediately or
with the lapse of time or the giving of notice, or both.
6. Conditions Precedent. The effectiveness of this Agreement is
subject to the receipt by the parties hereto of the following:
(a) The Agent shall have received, in form and substance satisfactory
to it:
(i) five (5) counterparts of this Agreement duly executed by
all signatories hereto together with all Annexes and Schedules
hereto;
(ii) executed Amended and Restated Revolving Credit
Notes in the aggregate principal amount of $25,000,000 dated as of
the date hereof;
(iii) two copies of executed Consent and Amendment No. 1 to
Intercreditor and Collateral Agency Agreement;
(iv) five (5) counterparts of a Certificate from the
secretary or assistant secretary of each Credit Party, dated as
of the date hereof, certifying (A) as to the resolutions of the
boards of directors or other appropriate governing body (or of
the appropriate committee thereof) of such Credit Party approving
and adopting the amendments to the Credit Agreement and the
Amended Loan Documents contemplated hereby and this Agreement
and authorizing the execution and delivery hereof, (B) as to the
specimen signatures of officers of each Credit Party executing
this Agreement on behalf of such Credit Party, (C) that the
charter documents and bylaws of each Credit Party are unchanged
since the date last certified by the Secretary of State of its
state of organization or, if changed, attached as certified by
the Secretary of State of its state of organization, and (D) for
each Credit Party, as to a certificate issued as of recent date by
the Secretary of State of the state of its incorporation as to its
corporate good standing therein;
(v) five (5) counterparts of a Certificate from the
secretary or assistant secretary of each Guarantor, dated as of
the date hereof, certifying (A) as to the resolutions of the
boards of directors or other appropriate governing body (or of
the appropriate committee thereof) of such Guarantor consenting to
the amendments to the Credit Agreement and approving and adopting
the Amended Loan Documents contemplated hereby and this Agreement
and authorizing the execution and delivery hereof, (B) as to the
specimen signatures of officers of such Guarantor executing this
Agreement on behalf of such Guarantor, (C) that the charter
documents and bylaws of such Guarantor are unchanged since the
date last certified by the Secretary of State (or other
appropriate governmental authority) of its state of organization
or, if changed, attached as certified by the Secretary of State of
its state of organization, and (D) for each Credit Party, as to a
certificate issued as of recent date by the Secretary of State of
the state of its incorporation as to its corporate good standing
therein;
(vi) copies of all additional agreements, instruments and
documents which the Lender may reasonably request, such documents,
when appropriate, to be certified by appropriate governmental
authorities; and
(vii) all fees payable by the Borrowers to the Agent and
the Lenders on or before the date hereof.
(b) All proceedings of the Credit Parties and the Guarantors
relating to the matters provided for herein shall be satisfactory to
the Lender and its counsel.
7. Entire Agreement. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. None of the terms or conditions of
this Amendment Agreement may be changed, modified, waived or canceled orally
or otherwise, except in accordance with the terms of the Credit Agreement.
8. Full Force and Effect of Agreement. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all of the other
Loan Documents are hereby confirmed and ratified in all respects and shall
remain in full force and effect according to their respective terms.
9. Counterparts. This Amendment Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10. Credit Agreement and Other Loan Documents. All references in any
of the Loan Documents to the "Credit Agreement" or any "Loan Documents" listed
on Schedule I hereto shall mean the Credit Agreement and Amended Loan Documents
as amended hereby.
[Signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
BORROWERS:
BALDWIN AMERICAS CORPORATION
By:
Name:
Title:
BALDWIN TECHNOLOGY LIMITED
By:
Name:
Title:
AGENT:
NATIONSBANK, N.A., as Agent for the Lenders
By:
Name:
Title:
LENDERS:
NATIONSBANK, N.A., as Lender
By:
Name:
Title:
<PAGE>
BANKBOSTON, N.A., as Lender
By:
Name:
Title:
GUARANTORS:
BALDWIN TECHNOLOGY COMPANY, INC.
By:
Name:
Title:
BALDWIN EUROPE CONSOLIDATED, INC.
By:
Name:
Title:
BALDWIN ASIA PACIFIC CORPORATION
By:
Name:
Title:
BALDWIN TECHNOLOGY CORPORATION
By:
Name:
Title:
KANSA CORPORATION
By:
Name:
Title:
BALDWIN GRAPHIC SYSTEMS, INC.
By:
Name:
Title:
BALDWIN ENKEL CORPORATION
By:
Name:
Title:
Schedule I
List of Loan Documents to be Amended
Amended and Restated Pledge Agreement dated as of December 31, 1995 by and
between Baldwin Americas Corporation, Baldwin Technology Limited and
NationsBank, N.A. as Agent
Amended and Restated Guaranty Agreement dated as of December 31, 1995 by and
between Baldwin Technology Company and NationsBank, N.A. as Agent
Amended and Restated Pledge Agreement dated as of December 31, 1995 by and
between Baldwin Technology Company and NationsBank, N.A. as Agent
Amended and Restated Guaranty Agreement dated as of December 31, 1995 by and
between Baldwin Europe Consolidated, Inc., Baldwin Asia Pacific Corporation and
NationsBank, N.A. as Agent
Amended and Restated Guaranty Agreement dated as of December 31, 1995 by and
between Baldwin Technology Corporation, Kansa Corporation, Baldwin Graphic
Systems, Inc., Enkel Corporation (n/k/a Baldwin Enkel Corporation) and
NationsBank, N.A. as Agent
Amended and Restated Pledge Agreement dated as of December 31, 1995 by and
between Baldwin Technology Corporation and NationsBank, N.A. as Agent
Amended and Restated Pledge Agreement dated as of December 31, 1995 by and
between Enkel Corporation (n/k/a Baldwin Enkel Corporation) in favor of
NationsBank, N.A. as Agent
Pledge and Security Agreement dated as of December 31, 1995 by Baldwin
Technology Limited and NationsBank, N.A. as Agent
<PAGE>
Annex I
EXHIBIT A
Applicable Commitment Percentages
Applicable
Committed Commitment
Lender Amount Percentage
NationsBank, National Association $16,250,000 65.00%
BankBoston, N.A. $ 8,750,000 35.00%
$25,000,000 100.00%
