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, 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 January 27, 2000
Class A Common Stock
$0.01 par value 13,650,147
Class B Common Stock
$0.01 par value 1,810,883
BALDWIN TECHNOLOGY COMPANY, INC.
INDEX
Page
Part I Financial Information
Item 1 Financial Statements
Consolidated Balance Sheets at
December 31, 1999 and June 30, 1999 1-2
Consolidated Statements of Income
for the three and six months ended
December 31, 1999 and 1998 3
Consolidated Statements of Changes in
Shareholders' Equity for the
Six months ended December 31, 1999 4
Consolidated Statements of Cash Flows
for the six months ended
December 31, 1999 and 1998 5-6
Notes to Consolidated Financial Statements 7-10
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11-18
Item 3 Quantitative and Qualitative Disclosures
About Market Risk 18
Part II Other Information
Item 4 Submission of Matters to a Vote of
Security Holders 19
Item 6 Exhibits and Reports on Form 8-K 19
Signatures 20
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
December 31, June 30,
1999 1999
(Unaudited)
CURRENT ASSETS:
Cash $ 8,010 $ 10,028
Short-term securities 173 645
Accounts receivable trade, net of allowance for
doubtful accounts of $1,865($1,740 at June 30, 1999) 36,808 37,387
Notes receivable, trade 11,400 9,511
Inventories 36,697 31,791
Prepaid expenses and other 11,710 8,821
Total current assets 104,798 98,183
MARKETABLE SECURITIES:
Cost $822 ($681 at June 30, 1999) 808 785
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 3,996 3,060
Machinery and equipment 6,294 6,430
Furniture and fixtures 5,530 5,313
Leasehold improvements 849 834
Capital leases 3,364 3,413
20,033 19,050
Less: Accumulated depreciation and amortization 12,475 12,122
Net property, plant and equipment 7,558 6,928
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS at cost,
less accumulated amortization of $6,303 ($5,912 at
June 30, 1999) 4,301 4,534
GOODWILL, less accumulated amortization of $10,008
($9,103 at June 30, 1999) 31,319 30,900
OTHER ASSETS 14,169 18,025
TOTAL ASSETS $162,953 $159,355
The accompanying notes to consolidated financial statements
are an integral part of these statements.
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, June 30,
1999 1999
(Unaudited)
CURRENT LIABILITIES:
Loans payable $ 3,350 $ 3,893
Current portion of long-term debt 6,488 6,397
Accounts payable, trade 12,621 10,691
Notes payable, trade 13,545 11,387
Accrued salaries, commissions, bonus and profit-sharing 6,039 6,946
Customer deposits 10,148 5,661
Accrued and withheld taxes 2,054 2,271
Income taxes payable 6,933 7,127
Other accounts payable and accrued liabilities 13,633 14,656
Total current liabilities 74,811 69,029
LONG-TERM LIABILITIES:
Long-term debt 12,407 16,515
Other long-term liabilities 6,564 7,271
Total long-term liabilities 18,971 23,786
Total liabilities 93,782 92,815
COMMITMENTS
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,458,849 shares issued
(16,458,849 at June 30, 1999) 165 165
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 57,496
Retained earnings 21,899 20,793
Cumulative translation adjustment 1,114 (2,313)
Unrealized (loss) gain on investments net of $6 of
deferred taxes ($43 at June 30, 1999) (8) 61
Less: Treasury stock, at cost:
Class A - 2,697,702 shares (1,953,502 at June 30, 1999)
Class B - 189,117 shares (164,117 at June 30, 1999) (11,515) (9,682)
Total shareholders' equity 69,171 66,540
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $162,953 $159,355
The accompanying notes to consolidated financial statements
are an integral part of these statements.
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
For the three months For the six months
ended December 31, ended December 31,
1999 1998 1999 1998
Net sales $51,510 $65,169 $ 97,006 $120,488
Cost of goods sold 34,416 44,321 66,377 81,470
Gross Profit 17,094 20,848 30,629 39,018
Operating expenses:
General and administrative 6,914 6,464 11,916 12,641
Selling 4,797 4,986 9,086 9,555
Engineering 2,985 3,776 6,056 7,179
Research and development 1,603 1,442 2,546 2,626
16,299 16,668 29,604 32,001
Operating income 795 4,180 1,025 7,017
Other (income) expense:
Interest expense 468 578 993 1,141
Interest income (82) (110) (169) (270)
Other income, net (752) (411) (1,450) (1,073)
(366) 57 (626) (202)
Income before income taxes 1,161 4,123 1,651 7,219
Provision for income taxes 369 1,526 545 2,702
Net income $ 792 $ 2,597 $ 1,106 $ 4,517
Basic income per share $ 0.05 $ 0.15 $ 0.07 $ 0.27
Diluted income per share $ 0.05 $ 0.15 $ 0.07 $ 0.26
Weighted average number of
shares:
Basic 15,801 16,887 16,012 17,001
Diluted 15,801 17,285 16,012 17,395
The accompanying notes to consolidated financial statements
are an integral part of these statements.
BALDWIN TECHNOLOGY COMPANY INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
<TABLE>
<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, 1999 16,458,849 $165 2,000,000 $20 $57,496 $20,793 $(2,313) $61 (2,117,619) $(9,682)
Net income for the
six months ended
December 31, 1999 1,106 $ 1,106
Translation
adjustment 3,427 3,427
Unrealized loss on
available-for-sale
securities,
net of tax (69) (69)
Comprehensive
income $ 4,464
Purchase of
treasury stock (769,200) (1,833)
Balance at
December 31, 1999 16,458,849 $165 2,000,000 $20 $57,496 $21,899 $ 1,114 $(8) (2,886,819) $(11,515)
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
For the six months
ended December 31,
1999 1998
Cash Flows from operating activities:
Net income $ 1,106 $4,517
Adjustments to reconcile net income to net cash
provided (used) by operating activities -
Depreciation and amortization 1,946 1,793
Accrued retirement pay (1,170) 156
Provision for losses on accounts receivable 1,109 14
Changes in assets and liabilities:
Accounts and notes receivable, net (106) 1,530
Inventories (4,360) (6,952)
Prepaid expenses and other 343 394
Other assets 2,882 54
Customer deposits 4,450 (1,701)
Accrued compensation (1,077) (1,592)
Accounts and notes payable, trade 1,245 (3,370)
Income taxes payable (453) (3,372)
Accrued and withheld taxes (263) 59
Other accounts payable and accrued liabilities (829) (1,237)
Interest payable (38) (89)
Net cash provided (used) by operating activities 4,785 (9,796)
Cash flows from investing activities:
Additions of property, net (1,666) (1,112)
Additions of patents, trademarks and drawings, net (165) (168)
Acquisitions of businesses, net of cash acquired (2,999)
Proceeds from disposition of business 2,287
Net cash used by investing activities (1,831) (1,992)
Cash flows from financing activities:
Long-term borrowings 14,192 14,000
Long-term debt repayment (18,124) (10,097)
Short-term borrowings 700 3,076
Short-term debt repayment (1,714) (4,611)
Principal payments under capital lease
obligations (285) (114)
Other long-term liabilities 963 (97)
Treasury stock purchased (1,833) (2,181)
Stock options exercised 13
Net cash used by financing activities (6,101) (11)
Effects of exchange rate changes 657 1,017
Net decrease in cash and cash equivalents (2,490) (10,782)
Cash and cash equivalents at beginning of year 10,673 22,026
Cash and cash equivalents at end of period $ 8,183 $11,244
The accompanying notes to consolidated financial statements
are an integral part of these statements.
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Supplemental disclosures of cash flow information:
For the six months
ended December 31,
1999 1998
(in thousands)
Cash paid during the period for:
Interest $ 1,031 $ 1,230
Income taxes $ 660 $ 5,693
The Company did not enter into any capital lease agreements for either of
the six month periods ended December 31, 1999 or 1998.
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Company considers all
highly liquid instruments (cash and short term securities) 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 - Organization and Basis of Presentation:
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 accompanying unaudited consolidated financial statements include the
accounts of Baldwin and its subsidiaries and have been prepared in accordance
with generally accepted accounting principles for interim financial information
and in compliance with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These financial
statements reflect all adjustments (consisting of normal recurring adjustments)
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim periods. These financial statements should be
read in conjunction with the consolidated financial statements and related
notes included in the Company's latest annual report on Form 10-K for the year
ended June 30, 1999. Operating results for the three and six month periods
ended December 31, 1999 are not necessarily indicative of the results that may
be expected for the year ending June 30, 2000. All significant intercompany
transactions have been eliminated in consolidation. The Company has
reclassified $54,000 from "Cash flows from investing activities" to "Cash flows
from operating activities" at December 31, 1998 to conform to the current
year's presentation, which represents an increase in cash due to a decrease in
"Other assets".
Note 2 - Earnings per share:
Basic earnings per share is computed by dividing net income for the
period by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of an entity, and is computed by
dividing net income for the period by the weighted average number of common
shares outstanding plus potentially dilutive common stock equivalents. The
weighted average shares outstanding used to compute diluted income per share
includes zero shares for the three and six month periods ended December 31,
1999 and 398,000 and 394,000 shares for the three and six month periods ended
December 31, 1998 respectively, which represent outstanding options to purchase
the Company's common stock. Options to purchase the Company's common stock in
the amount of 2,159,000 and 1,053,000 were not included in the computation of
diluted earnings per share for the three and six month periods ended December
31, 1999 and 1998 respectively, because the exercise prices were greater than
the average market price of the common stock for the respective periods.
Note 3 - Inventories:
Inventories consist of the following:-
December 31, June 30,
1999 1999
(Unaudited)
Raw material $16,659,000 $12,314,000
In process 12,681,000 12,889,000
Finished goods 7,357,000 6,588,000
$36,697,000 $31,791,000
Inventories increased by $701,000 due to translation effects of
foreign currency from June 30, 1999 to December 31, 1999.
Note 4 - Common Stock:
Stock options:-
On August 10, 1999 the Board of Directors granted non-qualified options
to purchase 57,500 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 $3.19 per share, the fair market value on the date of grant.
On November 16, 1999 the Board of Directors granted non-qualified options
to purchase 50,000 shares of the Company's Class A Common Stock to a certain
executive under the Company's 1996 Stock Option Plan at an exercise price of
$2.25 per share, the fair market value on the date of grant.
On November 17, 1999 under the Company's 1998 Directors Stock Option
Plan, six (6) eligible non-employee Directors were granted non-qualified
options to purchase 3,000 shares each (for a total of 18,000 shares) of the
Company's Class A Common Stock at an exercise price of $2.25 per share, the
fair market value on the date of grant.
Stock repurchase program:-
On August 10, 1999 the Board of Directors terminated the Company's stock
repurchase program. Under the program, the Company spent $13,015,000 to
repurchase 2,821,656 shares of Class A Common Stock and 164,117 shares of Class
B Common Stock over the nine year period since the inception of the program.
On October 13, 1999, the Company repurchased 400,000 shares of Class A
Common Stock of the Company. In addition, on November 3, 1999, the Company
announced that the Board of Directors had approved a new stock repurchase
program (the "New Program"). Under the New Program, the Company is authorized
to utilize up to $5,000,000 to repurchase its Class A Common Stock. In the
aggregate, the Company repurchased 744,200 shares of Class A and 25,000 shares
of Class B Common Stock for $1,833,000 for the six months ended December 31,
1999.
Note 5 Provision for loss on disposition of pre-press operations:
During the third quarter of the fiscal year ended June 30, 1999, the
Company recorded a charge to earnings in the amount of $2,400,000 as a result
of certain unfunded guaranteed pension obligations of the Company's former pre-
press operations. At June 30, 1999, the remaining balance of $860,000 relating
to these potential obligations was included in "Other accounts payable and
accrued liabilities". The Company continues to carry $833,000 relating to
these obligations as a current liability at December 31, 1999, as $27,000,
primarily bond and legal costs associated with these obligations have been
charged against this reserve during the six months ended December 31, 1999.
Note 6 Restructuring charge and related reserves:
A restructuring reserve was charged against earnings for the year ended
June 30, 1999 in the amount of $870,000. The reserve was established in order
to accrue the costs associated with planned workforce reductions at the
Company's German and Japanese operations, and certain costs associated with a
scheduled plant closing in the United States. As of June 30, 1999, $144,000 had
been charged against this reserve and the balance of $726,000 was included in
"Other accounts payable and accrued liabilities". As of December 31, 1999 this
balance has been reduced to $205,000 as $521,000, primarily severance costs,
have been charged against this reserve during the six months ended December
31, 1999.
Note 7 - Business segment information:
The Company's two reportable segments are the Graphic Products and Controls
Group ("GPC"), and the Material Handling Group ("MHG"). The GPC segment includes
products such as cleaning systems, water systems and other equipment designed to
enhance the quality of the printed material and improve the productivity of the
printing process. The MHG segment includes products which handle the materials
supplied to the press and automate the handling of the printed material. The all
other category is comprised of the Print On-Demand Group, which operates in the
short-run digital printing market, and other activities.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies in the Annual Report on Form 10-K
for the fiscal year ended June 30, 1999. A segment's financial performance is
primarily evaluated based on the operating profit of the segment, which includes
inter-segment sales.
The tables below present information about reportable segments for the
three and six month periods ended December 31, 1999, and 1998 (in thousands):
Three months ended Six months ended
December 31, December 31,
(Unaudited) (Unaudited)
Net Sales: 1999 1998 1999 1998
Graphic Products and Controls Group $38,132 $43,141 $70,927 $80,090
Material Handling Group 14,388 21,961 28,177 40,421
All other 103 672 121 888
Total segments 52,623 65,774 99,225 121,399
Inter-segment sales (1,113) (605) (2,219) (911)
Total Net Sales $51,510 $65,169 $97,006 $120,488
Three months ended Six months ended
December 31, December 31,
(Unaudited) (Unaudited)
Operating income (loss): 1999 1998 1999 1998
Graphic Products and Controls Group$ $ 3,435 $ 5,158 $ 4,891 $ 9,333
Material Handling Group (655) 1,075 (586) 1,663
All other (166) 276 (303) 153
Total segments 2,614 6,509 4,002 11,149
Corporate (1,819) (2,329) (2,977) (4,132)
Total operating income 795 4,180 1,025 7,017
Interest expense, net (386) (468) (824) (871)
Royalty income, net 627 636 1,584 1,495
Minority interest (9) (7) (14) (7)
Other income (expense), net 134 (218) (120) (415)
Income before income taxes $ 1,161 $ 4,123 $ 1,651 $ 7,219
Note 8 - Subsequent events:
Sale of trade accounts receivable:- Subsequent to December 31, 1999, the
Company has entered into an agreement with a financing company to sell
approximately $4,100,000 of the pre-petition trade accounts receivable from Goss
Graphic Systems, Inc. ("Goss") for approximately $3,000,000. Such amount has
been reclassified from "trade accounts receivable" to "prepaid expenses and
other" as of December 31, 1999. Consequently, the Company has taken a charge to
earnings as a bad debt in the amount of $1,100,000 for the three months ended
December 31, 1999, which is included in General and Administrative expenses.
Stock options:- On January 31, 2000 the Company's Board of Directors
granted qualified options to purchase 40,000 shares of the Company's Class A
Common Stock to a certain executive under the Company's 1996 Stock Option Plan
at an exercise price of $2.19 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.
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 financial position and consolidated financial statements
of Baldwin Technology Company, Inc.(The "Company"). During the fiscal year ended
June 30, 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 and to
the extent the operation is 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 when 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. 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) changes in foreign currency exchange rates
versus the U.S. Dollar, (iii) changes in the mix of products and services
comprising revenues, (iv) any Year 2000 compliance issues that may arise, (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, 1999, which should be read in conjunction herewith.
Six Months Ended December 31, 1999 vs Six Months Ended December 31, 1998
Consolidated Results
Net sales for the six months ended December 31, 1999 decreased by
$23,482,000, or 19.5%, to $97,006,000 from $120,488,000 for the six months ended
December 31, 1998. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales by $2,445,000 in the current period.
Otherwise, sales would have decreased by $25,927,000, of which $2,243,000
relates to the previously noted divestiture of In-Line. The remaining decrease
is primarily the result of reduced orders received during the second half of the
fiscal year ended June 30, 1999, including lower orders from one of the
Company's largest OEM customers. In terms of local currency, and as compared to
the same period in the prior year, net sales decreased by 83.2% in Australia, by
36.5% in the Americas, by 14.4% in Japan, and by 9.2% in Germany. Sales
increased by 4.3% in Sweden.
Gross profit for the six month period ended December 31, 1999 was
$30,629,000 (31.6% of net sales), as compared to $39,018,000 (32.4% of net
sales) for the six month period ended December 31, 1998, a decrease of
$8,389,000 or 21.5%. Currency rate fluctuations increased gross profit by
$541,000 in the current period. Otherwise gross profit would have decreased by
$8,930,000 in the current period. Gross profit was lower due primarily to
decreased sales volumes, and to continuing pricing pressures in the market.
Selling, general and administrative expenses amounted to $21,002,000 (21.7%
of net sales), for the six month period ended December 31, 1999 as compared to
$22,196,000 (18.4% of net sales) for the same period in the prior year, a
decrease of $1,194,000 or 5.4%. Currency rate fluctuations increased these
expenses by $271,000 in the current period. Otherwise, selling, general and
administrative expenses would have decreased by $1,465,000. Selling expenses
decreased by $586,000 which primarily related to reduced sales commissions
resulting from lower sales volumes and lower trade show costs, while general and
administrative expenses decreased by $879,000 due primarily to reduced incentive
compensation costs as a result of the lower profitability of the Company, and
expenses of the previously noted divestiture of In-Line. Excluding the
$1,100,000 bad debt charge (see "Liquidity and Capital Resources") in the
current period, general and administrative expenses would have decreased by
$1,979,000 or 15.7% when compared to the same period in the prior year.
Engineering and research and development expenses decreased by $1,203,000
over the same period in the prior year. Currency rate fluctuations increased
these expenses by $143,000 in the current period. Otherwise, these expenses
would have decreased by $1,346,000. The decrease in these expenses relates
primarily to reduced costs in Germany and the United States attributable to
reduced personnel costs associated with the planned workforce reductions which
began during the fiscal year ended June 30, 1999, and the expenses of the
previously noted divestiture of In-Line. As a percentage of net sales,
engineering and research and development expenses increased by 0.8% to 8.9% for
the six months ended December 31, 1999 compared to 8.1% for the same period in
the prior year.
Interest expense for the six month period ended December 31, 1999 was
$993,000 as compared to $1,141,000 for the six month period ended December 31,
1998. This decrease was primarily due to lower long-term debt levels during the
period, a portion of which was replaced by lower rate short-term borrowings.
Currency rate fluctuations decreased interest expense by $48,000 in the current
period. Interest income amounted to $169,000 and $270,000 for the six month
periods ended December 31, 1999 and December 31, 1998, respectively. This
reduction in interest income is primarily due to decreased cash balances during
the period. Currency rate fluctuations increased interest income by $12,000 in
the current period.
Other income and expense includes net foreign currency transaction losses
of $291,000 and $74,000 for the six months ended December 31, 1999 and 1998
respectively. Currency rate fluctuations increased other income by $115,000 in
the current period.
The Company's effective tax rate on income before taxes was 33.0% for the
six month period ended December 31, 1999 as compared to 37.4% for the six month
period ended December 31, 1998. Currency rate fluctuations increased the
provision for income taxes by $109,000 in the current period. The decrease in
the current period's effective tax rate is primarily due to increased income in
tax jurisdictions for which there are tax loss carryforwards available.
The Company's net income amounted to $1,106,000 for the six month period
ended December 31, 1999, as compared to $4,517,000 for the six month period
ended December 31, 1998. This decrease of $3,411,000 or 75.5%, is primarily due
to the previously noted overall reduction in sales volumes and related gross
profit and the $1,100,000 bad debt charge in the current period. Currency rate
fluctuations increased net income by $193,000 in the current period. Net income
per share amounted to $0.07 basic and diluted for the six months ended December
31, 1999, as compared to $0.27 basic and $0.26 diluted for the six months ended
December 31, 1998.
Segment Results
Graphic Products and Controls Group
Net sales for the six months ended December 31, 1999 decreased by
$9,163,000, or 11.4%, to $70,927,000 from $80,090,000 for the six months ended
December 31, 1998. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales for the current period by $2,520,000,
otherwise, net sales would have decreased by $11,683,000 in the current period.
This decrease is primarily the result of reduced sales levels of on-press
accessories and controls in the United States and Europe and post-press
equipment in Asia.
Operating income amounted to $4,891,000 (6.9% of net sales) for the six
months ended December 31, 1999, as compared to $9,333,000 (11.7% of net sales)
for the same period in the prior year, a decrease of $4,442,000. Currency rate
fluctuations increased the current year's operating income by $262,000,
otherwise operating income would have decreased by $4,704,000. This decrease is
primarily the result of the overall decrease in sales levels discussed above,
coupled with continuing pricing pressures in the market.
Material Handling Group
Net sales for the six months ended December 31, 1999 decreased by
$12,244,000, or 30.3%, to $28,177,000 from $40,421,000 for the six months
ended December 31, 1998. Currency rate fluctuations attributable to the
Company's overseas operations decreased net sales for the current period by
$355,000, otherwise net sales would have decreased by $11,889,000. This
decrease is primarily the result of reduced orders, including one of the
Company's largest OEM customers and the effect of the disposition on In-line
during the prior year, which further reduced net sales by $2,243,000.
Operating loss amounted to $586,000 (2.1% of net sales) for the six months
ended December 31, 1999, as compared to operating income of $1,663,000 (4.1% of
net sales) for the same period in the prior year, a decrease of $2,249,000.
Currency rate fluctuations decreased the current year's operating profit by
$47,000. The remaining decrease is primarily the result of decreased sales
levels, as well as the $1,100,000 bad debt charge in the current period for the
sale of the pre-petition accounts receivable from Goss.
Three Months Ended December 31, 1999 vs Three Months Ended December 31, 1998
Consolidated Results
Net sales for the three months ended December 31, 1999 decreased by
$13,659,000, or 21.0%, to $51,510,000 from $65,169,000 for the three months
ended December 31, 1998. Currency rate fluctuations attributable to the
Company's overseas operations increased net sales by $660,000 in the current
period. Otherwise, sales would have decreased by $14,319,000, of which $891,000
relates to the previously noted divestiture of In-Line. The remaining decrease
is primarily the result of reduced orders received during the second half of the
fiscal year ended June 30, 1999, including lower orders from one of the
Company's largest OEM customers. In terms of local currency, and as compared to
the same period in the prior year, net sales decreased by 89.1% in Australia, by
37.4% in the Americas, by 12.7% in Sweden, and by 11.5% in Japan. Sales
increased by 20.9% in the United Kingdom.
Gross profit for the three month period ended December 31, 1999 was
$17,094,000 (33.2% of net sales), as compared to $20,848,000 (32.0% of net
sales) for the three month period ended December 31, 1998, a decrease of
$3,754,000 or 18.0%. Currency rate fluctuations increased gross profit by
$83,000 in the current period. Otherwise gross profit would have decreased by
$3,837,000 in the current period. Gross profit was lower due primarily to
decreased sales volumes.
Selling, general and administrative expenses amounted to $11,711,000 (22.7%
of net sales), for the three month period ended December 31, 1999 as compared to
$11,450,000 (17.6% of net sales) for the same period in the prior year, an
increase of $261,000 or 2.3%. Currency rate fluctuations increased these
expenses by $5,000 in the current period. Otherwise, selling, general and
administrative expenses would have increased by $256,000. Selling expenses
decreased by $179,000 which primarily related to reduced sales commissions
resulting from lower sales volumes and lower trade show costs, while general and
administrative expenses increased by $435,000 due primarily to the additional
$1,100,000 bad debt charge in the current period for the sale of the
pre-petition accounts receivable from Goss, which was partially offset by
reduced incentive compensation costs as a result of the lower profitability of
the Company, and expenses of In-Line.
Engineering and research and development expenses decreased by $630,000 over
the same period in the prior year. Currency rate fluctuations increased these
expenses by $9,000 in the current period. Otherwise, these expenses would have
decreased by $639,000. The decrease in these expenses relates primarily to
personnel cost reductions associated with the planned workforce reductions which
began during the fiscal year ended June 30, 1999, to the previously noted
divestiture of In-Line and reduced costs in Japan attributable to reduced
subcontracting and consulting costs. As a percentage of net sales, engineering
and research and development expenses increased by 0.9% to 8.9% for the three
months ended December 31, 1999 compared to 8.0% for the same period in the prior
year.
Interest expense for the three month period ended December 31, 1999 was
$468,000 as compared to $578,000 for the three month period ended December 31,
1998. This decrease was primarily due to lower long-term debt levels during the
current period, a portion of which was replaced by lower rate short-term
borrowings. Currency rate fluctuations decreased interest expense by $33,000 in
the current period. Interest income amounted to $82,000 and $110,000 for the
three month periods ended December 31, 1999 and December 31, 1998, respectively.
This reduction in interest income is primarily due to decreased cash balances
during the period. Currency rate fluctuations increased interest income by
$5,000 in the current period.
Other income and expense includes net foreign currency transaction gains and
(losses) of $62,000 and $(159,000) for the three months ended December 31, 1999
and 1998 respectively. Currency rate fluctuations increased other income by
$95,000 in the current period.
The Company's effective tax rate on income before taxes was 31.8% for the
three month period ended December 31, 1999 as compared to 37.0% for the three
month period ended December 31, 1998. Currency rate fluctuations increased the
provision for income taxes by $73,000 in the current period. The decrease in the
current period's effective tax rate is primarily due to increased income in tax
jurisdictions for which there are tax loss carryforwards available.
The Company's net income amounted to $792,000 for the three month period
ended December 31, 1999, as compared to $2,597,000 for the three month period
ended December 31, 1998. This decrease of $1,805,000 or 69.5%, is primarily due
to the $1,100,000 bad debt charge taken in the current period for the sale of
the pre-petition accounts receivable from Goss and the previously noted overall
reduction in sales volumes and gross profit on the reduced volumes. Currency
rate fluctuations increased net income by $129,000 in the current period. Net
income per share amounted to $0.05 basic and diluted for the three months ended
December 31, 1999, as compared to $0.15 basic and diluted for the three months
ended December 31, 1998.
Segment Results
Graphic Products and Controls Group
Net sales for the three months ended December 31, 1999 decreased by
$5,009,000, or 11.6%, to $38,132,000 from $43,141,000 for the three months ended
December 31, 1998. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales for the current period by $656,000,
otherwise, net sales would have decreased by $5,665,000 in the current period.
This decrease is primarily the result of reduced sales levels of on-press
accessories and controls in Europe and post-press equipment in Asia.
Operating income amounted to $3,435,000 (9.0% of net sales) for the three
months ended December 31, 1999, as compared to $5,158,000 (12.0% of net sales)
for the same period in the prior year, a decrease of $1,723,000. Currency rate
fluctuations increased the current year's operating income by $136,000,
otherwise operating income would have decreased by $1,859,000. This decrease is
primarily the result of the overall decrease in sales levels discussed above,
coupled with continuing pricing pressures in the market.
Material Handling Group
Net sales for the three months ended December 31, 1999 decreased by
$7,573,000, or 34.5%, to $14,388,000 from $21,961,000 for the three months ended
December 31, 1998. Currency rate fluctuations attributable to the Company's
overseas operations decreased net sales for the current period by $222,000,
otherwise net sales would have decreased by $7,351,000. This decrease is
primarily the result of reduced orders, including one of the Company's
largest OEM customers and the effect of the disposition of In-line during the
prior year which further reduced net sales by $932,000.
Operating loss amounted to $655,000 (4.6% of net sales) for the three months
ended December 31, 1999, as compared to operating income of $1,075,000 (4.9% of
net sales) for the same period in the prior year, a decrease of $1,730,000.
Currency rate fluctuations decreased the current year's operating profit by
$33,000. The remaining decrease is primarily the result of the $1,100,000 bad
debt charge in the current period for the sale of the pre-petition accounts
receivable from Goss.
Liquidity and Capital Resources at December 31, 1999
Liquidity and Working Capital
The Company's long-term debt includes $6,250,000 of 8.17% senior notes (the
"Senior Notes") due October 29, 2000. The Company also maintains a $25,000,000
Revolving Credit Agreement (the "Revolver") with Bank of America, N.A., as agent
which matures on December 31, 2000. The Company and its lenders have recently
agreed to extend the maturity date of the Revolver by 90 days to March 31, 2001.
Accordingly, the Company continues to classify such amounts due under the
Revolver as non-current.
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. The Company also was required to pledge certain of the shares of its
domestic subsidiaries as collateral.
Both the Senior Notes and the Revolver require the Company to maintain a
current ratio and a fixed charges ratio, as those terms are defined in the
agreements, of not less than 1.40 to 1.00 and 1.15 to 1.00, respectively. At
December 31, 1999, these ratio were 1.59 to 1.00 and 1.04 to 1.00, respectively.
The Company has received a waiver of the fixed charges ratio requirement for the
six months ended December 31, 1999.
The Company's working capital increased by $833,000 or 2.9% from $29,154,000
at June 30, 1999 to $29,987,000 at December 31, 1999. Currency rate fluctuations
increased working capital by $1,372,000 in the current period. Otherwise,
working capital would have decreased by $539,000. The primary reasons for the
decrease in working capital were decreases in cash and accounts receivable and
increases in customer deposits, which were significantly offset by increases
in inventories and prepaid expenses and decreases in loans payable and other
accrued liabilities due mainly to reductions in accrued incentive compensation
costs due to the lower profitability of the Company.
Net cash used by investing activities amounted to $1,831,000 for the six
months ended December 31, 1999 as compared to $1,992,000 for the six months
ended December 31, 1998 and resulted from normal additions to property, plant
and equipment, which included investments in the expansion of certain existing
facilities in the current period, as well as additions to patents. Additionally,
the prior period included net cash used for acquisitions of businesses.
Net cash used by financing activities amounted to $6,101,000 for the six
months ended December 31, 1999 as compared to $11,000 for the six months ended
December 31, 1998. The increase in cash used by financing activities was
primarily due to the net repayments of long-term debt.
The Company maintains relationships with foreign and domestic banks which
have extended credit facilities to the Company. As of December 31, 1999, these
credit facilities total $37,317,000 including amounts available under the
Revolver. The Company had outstanding $15,455,000 under these lines of credit,
of which $11,089,000 is classified as long-term debt. Total debt levels as
reported on the balance sheet at December 31, 1999 are $386,000 higher than they
would have been if June 30, 1999 exchange rates had been used.
At December 31, 1999, excluding the $4,100,000 of pre-petition accounts
receivable which were sold, the Company's balance sheet included approximately
$1,681,000 of trade receivables related to one large OEM customer, Goss Graphic
Systems, Inc. ("Goss"). On July 30, 1999, Goss filed for bankruptcy protection
under a prearranged Chapter 11 proceeding in the U.S. Bankruptcy Court. Goss'
European and Asian subsidiaries are not included in this proceeding, and
furthermore, the Company continues to receive timely payments from the foreign
subsidiaries of Goss. The pre-petition accounts receivable from Goss of
approximately $4,100,000 were sold subsequent to December 31, 1999 pursuant to
an agreement between the Company and a third party for approximately $3,000,000.
The Company has therefore, reclassified these receivables from trade accounts
receivable to "prepaid expenses and other" as of December 31, 1999. Furthermore,
the Company has taken a charge to earnings for the three months ended December
31, 1999 in the amount of $1,100,000 as a bad debt, included in General and
Administrative expenses.
Of the Company's $68,263,000 in backlog at December 31, 1999, approximately
$9,328,000 represented orders from Goss which were supported by an inventory
balance of approximately $1,989,000. For the three and six months ended December
31, 1999, Goss represented less than 10% 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 inability of programming code in existing computer systems to properly
recognize dates and related potential date sensitive problems are referred to as
the Year-2000 situation. The Year-2000 situation could potentially have an
adverse 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 undertaken projects to update and replace all 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 was
approximately $2,500,000 consisting of the cost of purchasing and installing
hardware and software, including certain systems, whose scheduled replacement
had been accelerated due to the Year-2000 situation. The majority of such costs
were incurred during fiscal 1999.
As of the date of this filing, the Company has not incurred any significant
business interruptions as a result of the Year-2000 situation. However, while no
such occurrence has developed as of the date of this filing, Year-2000 problems
may surface throughout calendar year 2000. Therefore, there is no assurance that
the Company will not be negatively impacted by the Year-2000 situation in the
future. The Company will continue to monitor this situation and expeditiously
remediate any issues that may arise.
Based on the Company's readiness efforts, the Company currently does not
reasonably foresee any material Year-2000 issues, and therefore the costs
associated with potential Year-2000 issues that may arise during calendar year
2000 are not expected to have a material adverse effect on either the financial
condition or results of operations of the Company. However, there is no
uarantee that the Company will not incur significant business interruptions due
to the Year-2000 situation, whether due to the Company's own Year-2000 problems
or that of its customers or suppliers.
Euro Conversion
Effective January 1, 1999, the "euro" has become the new common currency for
11 countries of the European Community ("EC") (including Germany and France
where the Company has operations). Other member states (including the United
Kingdom and Sweden where the Company also has operations) may join in future
years. 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 for the
affected countries.
Management currently believes that the costs associated with implementing
and completing the euro conversion, as well as business and market implications,
if any, associated with the euro conversion, will not be material to its results
of operations or financial condition in any year or 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.
Item 3: Quantitative and Qualitative Disclosures About Market Risk:
A discussion of market risk exposures is included in Part II Item 7A,
"Quantitative and Qualitative Disclosures About Market Risk" of the Company's
Annual Report on Form 10-K for the year ended June 30, 1999. There have been no
material changes during the six months ended December 31, 1999.
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, 1999.
(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
or until their respective 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
Akira Hara 12,683,909 137,117
Ralph R. Whitney, Jr. 12,432,299 388,727
John T. Heald, Jr. 12,642,649 178,377
Class B
Akira Hara 13,430,830 260,000
Ralph R. Whitney, Jr. 13,430,830 260,000
John T. Heald, Jr. 13,430,830 260,000
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.28 Ninth Amendment and Waiver to Amended and Restated Revolving
Credit Agreement by and among Baldwin Americas Corporation and
Baldwin Technology Limited (as "Borrowers") and Baldwin
Technology Company, Inc., together with the Borrowers (as
"Credit Parties") and Bank of America, N.A. (as "Agent") and
BankBoston, together with Agent (as "Lenders") (filed
herewith).
10.29 Employment agreement dated January 19, 2000 and effective as
of January 31, 2000 between Baldwin Technology Company, Inc.
and James M. Rutledge (filed herewith).
10.30 Separation agreement dated November 17, 1999 and effective as
of January 31, 2000 between Baldwin Technology Company, Inc.
and William J. Lauricella (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 December 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\ James M. Rutledge
Vice President, Chief Financial
Officer and Treasurer
Dated: February 1, 2000
<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> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-2000
<CASH> 8010
<SECURITIES> 173
<RECEIVABLES> 50073
<ALLOWANCES> 1865
<INVENTORY> 36697
<CURRENT-ASSETS> 104798
<PP&E> 20033
<DEPRECIATION> 12475
<TOTAL-ASSETS> 162953
<CURRENT-LIABILITIES> 74811
<BONDS> 0
0
0
<COMMON> 185
<OTHER-SE> 68986
<TOTAL-LIABILITY-AND-EQUITY> 162953
<SALES> 51510
<TOTAL-REVENUES> 51510
<CGS> 34416
<TOTAL-COSTS> 34416
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 468
<INCOME-PRETAX> 1161
<INCOME-TAX> 369
<INCOME-CONTINUING> 792
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 792
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
NINTH AMENDMENT AND WAIVER TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS NINTH AMENDMENT AND WAIVER TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "Amendment Agreement") is made and entered into, effective as of
this __th day of ________, 2000, by and among 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"), BANK OF AMERICA, N.A., successor in
interest to NationsBank, N.A., as Agent ("Bank of America" or the "Agent"),
BANK OF AMERICA, N.A., as a Lender, and BANKBOSTON, N.A. (successor in
interest to Bank of Boston Connecticut), as a 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 heretofore or hereafter amended, modified, supplemented,
amended and restated or replaced, the "Credit Agreement"), pursuant to which
the Lenders have agreed to make certain revolving credit loans to the
Borrowers;
WHEREAS, the parties hereto desire to further amend the Credit Agreement in
the manner herein set forth;
WHEREAS, the Borrowers have (i) informed the Agent that they have violated
Section 8.1(d) of the Credit Agreement for the four-quarter period ended on
December 31, 1999, which violation constitutes an Event of Default under
Section 9.1(c) of the Credit Agreement (the "Violation") and (ii) requested
that the Agent and the Lenders waive the Violation (the "Waiver");
WHEREAS, the Borrowers have requested that the Agent and the Lenders make
certain amendments to the Credit Agreement (the "Amendments"); and
WHEREAS, in consideration for the Borrowers' acknowledgment and acceptance
of the terms of this Amendment Agreement, the Agent and Lenders are willing
to grant the Waiver for the four-quarter period ended on December 31, 1999
and make the Amendments;
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. Waiver Action. Agent and Lenders hereby grant to Borrowers the Waiver
subject to the following conditions:
(a) The Waiver is limited as specified herein and shall not constitute an
amendment or modification of the Credit Agreement or any other Loan Document.
(b) The Waiver is granted only for the specific instance and for the time
period specified herein and in no event shall constitute a waiver for any
period other than the Borrowers' four quarter period ended December 31, 1999
or in any manner create a course of dealing or otherwise impair the future
ability of the Agent and the Lenders to declare a Default or Event of Default
under or otherwise enforce the terms of the Credit Agreement.
3. Credit Agreement Amendments. Subject to the conditions hereof, the Credit
Agreement is hereby amended, effective as of the date hereof, as follows:
(a) The definition of "Revolving Credit Termination Date" in Section 1.1 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) March
31, 2001, or (ii) any other date upon which the Total Commitment shall
terminate in accordance with the terms hereof."
4. 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.
(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 cancelllation or loss
of any major contract; 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.
5. Conditions Precedent. The effectiveness of this Amendment Agreement is
subject to the receipt by the Agent of (a) five (5) counterparts of this
Amendment Agreement duly executed by all signatories hereto and (b) all fees
payable by the Borrowers to the Agent and the Lenders on or before the date
hereof.
6. 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.
7. 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.
8. 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.
9. Credit Agreement and Other Loan Documents. All references in any of the
Loan Documents to the "Credit Agreement" shall mean the Credit Agreement as
amended hereby.
10. Reimbursement. The Borrowers agree to reimburse the Agent and the
Lenders for all costs and out-of-pocket expenses, including attorneys' fees,
incurred in connection with the preparation, execution, and delivery of this
Amendment Agreement.
[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 AND CREDIT PARTIES:
BALDWIN AMERICAS CORPORATION, as Borrower and Credit Party
By: ____________________________________________
Name:__________________________________________
Title: ___________________________________________
BALDWIN TECHNOLOGY LIMITED, as Borrower and Credit Party
By: ____________________________________________
Name:__________________________________________
Title: ___________________________________________
BALDWIN TECHNOLOGY COMPANY, INC., as Credit Party
By:_____________________________________________
Name: __________________________________________
Title:___________________________________________
AGENT:
BANK OF AMERICA, N.A., successor in interest to NationsBank, N.A., as Agent for
the Lenders
By: ____________________________________________
Name:__________________________________________
Title:___________________________________________
SIGNATURE PAGE 1 OF 2
LENDERS:
BANK OF AMERICA, N.A., successor in interest to NationsBank, N.A., as Lender
By: ___________________________________________
Name:_________________________________________
Title:__________________________________________
BANKBOSTON, N.A., successor in interest to Bank of Boston Connecticut, as Lender
By: ____________________________________________
Name:__________________________________________
Title:___________________________________________
SIGNATURE PAGE 2 OF 2
2
2
Doc. No.309979
3
January 19, 2000
Mr. James M. Rutledge
86 Graenest Ridge Road
Wilton, CT 06897
Dear Mr. Rutledge:
This Agreement sets forth the terms of your employment with Baldwin
Technology Company, Inc., a Delaware corporation (the "Company"), and is
effective as of January 31, 2000, and if not extended or unless sooner
terminated, shall expire on January 31, 2003.
1. DUTIES. During the term of
your employment hereunder, you shall be employed as the Chief Financial Officer
of the Company, and you shall direct and manage the financial business, affairs
and property of the Company subject to the direction of the Chief Executive
Officer of the Company (the "Chief Executive Officer"). You shall also be a
member of the Baldwin Management Committee ("BMC").
2. COMPENSATION. As compensation for your services during the term of your
employment hereunder:
A. Salary. You shall be paid a salary at the annual rate of two hundred
thousand dollars ($200,000) (hereinafter referred to as your "base salary"),
payable in appropriate installments to conform with regular payroll dates for
salaried personnel of the Company.
B. Reviews and Adjustments. On or about January 31, 2001 and each
succeeding January 31 during the term of your employment hereunder, your
performance shall be reviewed by the Chief Executive Officer and your
attainment of mutually agreed-upon objectives evaluated; your base salary for
the ensuing twelve (12) months commencing on such January 31 may be adjusted,
subject to approval by the Compensation Committee of the Board of Directors of
the Company, in accordance with your level of performance. In no case, however,
will any such adjustment to your salary ever be a negative amount unless you
expressly agree to such a reduction.
C. Incentive Compensation. During the term of your employment hereunder,
and at such other times subsequent thereto as are otherwise set forth herein,
you shall be paid annually, within three (3) months of the end of each fiscal
year, beginning with the fiscal year ending June 30, 2000, incentive
compensation in an amount determined for such fiscal year under the Company's
Executive and Key Person Cash Incentive Program (the "Incentive Program") as in
effect at that time.
D. Supplemental Retirement Benefit. On the first day of each month that
you are still performing services under the terms of this Agreement, the Company
shall accrue for your benefit a supplemental retirement benefit (the
"Supplemental Retirement Benefit") in the amount of four thousand two hundred
($4,200.00).The sum of all such monthly accruals of Supplemental Retirement
Benefit shall constitute the "Aggregate Supplemental Retirement Benefit". The
Aggregate Supplemental Retirement Benefit, to the extent
vested, is to be paid to you in equal monthly installments, over a ten (10) year
period beginning at such times as are set forth in this Agreement. Wherever so
used in this Agreement, the term "Monthly Supplemental Retirement Benefit"
shall mean the Aggregate Supplemental Retirement Benefit divided by
one-hundred-twenty (120) months. The Aggregate Supplemental Retirement
Benefit will vest, in each case assuming you are then employed by the Company,
as follows: as of January 31, 2001 it shall be vested to the extent of 20%,
as of January 31, 2002 it shall be vested to the extent of 40%, as of January
31, 2003 it shall be vested to the extent of 60%, as of January 31, 2004 it
shall be vested to the extent of 80%, as of January 31, 2005 it shall be
vested to the extent of 100% so that as of the latter date the full amount of
the Aggregate Supplemental Retirement Benefit shall be due and payable in the
instances set forth elsewhere in this Agreement.
3. Stock and Loans. In order to permit you (but only if you, in your sole
discretion so elect) to purchase shares of the Company's Class B Common Stock,
par value $.01 per share (the "Class B Stock"), that may become available from
time to time, you shall be eligible, to the extent allowable under the Company's
various loan covenants or any other legal restrictions under which the Company
may operate, to obtain loans from the Company in the aggregate principal amount
of up to twice your then-current base salary which shall be used by you to
purchase such shares of Class B Stock. Any loans made under this section shall
(i) not exceed one million dollars ($1,000,000.00) in the aggregate, (ii) bear
interest, payable annually, at a rate equal to the Company's borrowing rate (as
adjusted on the first day of each calendar quarter) on its U.S. short-term
banking facilities, (iii) require pledging by you to the Company of all shares
of Class B Stock purchased using the proceeds of any such loans (until sold in
part or in full as described herein), and (iv) require repayment by you within
six (6) months of the last day of your employment by the Company, except in
case of your death, in which instance repayment shall be within twelve (12)
months of the date of your death. Notwithstanding anything to the contrary
contained in this Paragraph 3, if at any time you sell any of such shares of
Class B Stock while any amount of any said loan remains unpaid, you shall,
within five (5) days of receipt of the funds from such sale, pay to the
Company, in repayment of part or all, as the case may be, of any said loan,
an amount equal to (a) that amount (the "Principal Repayment") equal to the
product of (i) the aggregate unpaid amount of all such loans, multiplied by
(ii) a fraction, the numerator of which is the number of shares of the Class B
Stock sold and the denominator of which is the number of shares of Class B Stock
purchased using the proceeds of all such loans (provided, however that the
Principal Repayment shall not exceed the unpaid balance of all such loans), plus
(b) any accrued but unpaid interest on the amount of the Principal Repayment to
the date of such repayment.
4. INSURANCE. During the term of your employment hereunder, the Company,
subject to your insurability, shall (i) pay the premiums on a contract or
contracts of life insurance on your life providing for an aggregate death
benefit of five hundred thousand dollars ($500,000), which contract or contracts
will be owned by you, your spouse or such other party as may be designated by
you; (ii) purchase key person term life insurance on your life in the aggregate
amount of one million dollars ($1,000,000), which contract or contracts will be
owned by the Company; provided, however, that upon your death if there are any
loans outstanding between you and the Company pursuant to Section 3 of this
Agreement, the Company agrees to pay to your survivors or estate an amount equal
to theunpaid balance of such loans, up to but not exceeding five hundred
thousand dollars ($500,000), of the death benefits received by the Company
from such key person term life insurance policy.
5. REIMBURSEMENT OF EXPENSES. In addition to the compensation provided for
herein, the Company shall reimburse to you, or pay directly, in accordance with
the policies of the Company as in effect at the time, all reasonable expenses
incurred by you in connection with the business of the Company, and its
subsidiaries and affiliates, including but not limited to business-class
travel if overseas, reasonable accommodations, and entertainment, subject to
documentation in accordance with the Company's policy.
6. EXTENT OF SERVICES.
A. In General. During the term of your employment hereunder, you shall
devote your best and full-time efforts to the business and affairs of the
Company.
B. Limitation on Other Services. During the term of your employment
hereunder, you shall not undertake employment with, or participate in the
conduct of the business affairs of, any other person, corporation, or entity,
except at the direction or with written approval of the Board of Directors of
the Company.
C. Personal Investments. Nothing herein shall preclude you from having,
making, or managing personal investments which do not involve your active
participation in the affairs of the entities in which you so invest, but, unless
approved in writing by the Board of Directors of the Company, during the term of
your employment hereunder, you shall not have more than a one percent (1%)
ownership interest in any entity which is directly competitive with any business
conducted by the Company at that time. The phrase "conducted by the Company" as
used in this Paragraph 6C and in Paragraph 13 hereof shall mean the business
conducted by the Company or by any corporation or other entity in which the
Company owns fifty percent (50%) or more of the stock or equity interests
(either voting or non-voting) in such other entity (a "Subsidiary").
7. LOCATION. Your duties hereunder shall be performed for the Company
worldwide, with substantial time in the Company's current offices in Norwalk,
Connecticut. This location may change in the future.
8. VACATION; OTHER BENEFITS.
A. Vacation. During the term of your employment hereunder, you shall be
entitled to a vacation or vacations, with pay, in accordance with the Company's
vacation policy as in effect at the time. Your yearly vacation accrual will be
three (3) weeks of annual vacation per year in year one and all subsequent years
until your time with the Company eventually triggers a larger annual accrual
beyond three (3) weeks per year. You may accumulate up to twelve (12) weeks
vacation, but not more than three (3) weeks from any single prior year. Any
such accumulated vacation may be used in any subsequent year or years (but no
more than two (2) weeks of such accumulated vacation in any one year) in
addition to the vacation to which you are entitled for each such year.
B. The Company's Benefit Plans. During the term of your employment
hereunder, you shall be eligible for inclusion, to the extent permitted by
law, as a full-time employee of the Company, in any and all (i) pension, profit
sharing, savings, and other retirement plans and programs as in effect at the
time, (ii) life and health (medical, dental, hospitalization, short-term and
long-term disability) insurance plans and programs as in effect at the time,
(iii) stock option and stock purchase plans and programs as in effect at
the time, (iv) accidental death and dismemberment protection plans and programs
as in effect at the time, (v) travel accident insurance plans and programs as in
effect at the time, and (vi) other plans and programs sponsored by the Company
or any Subsidiary for employees or executives generally as in effect at the
time, including any and all plans and programs that supplement any or all of the
foregoing types of plans or programs.
C. Automobile. During the term of your employment hereunder, the Company
shall provide an automobile for your use pursuant to the Company's written
policy on company autos as in effect at that time.
9. TERMINATION OF EMPLOYMENT.
In the event your employment is terminated for any of the reasons set forth
under this Paragraph 9, the Company shall pay to you or your legal
representative, estate or heirs, as the case may be, the following amounts,
which are in addition to the amounts stipulated under any subparagraph of this
Paragraph 9:
(i) A single lump sum payment, not later than the last day of your
employment, of:
(a) Any accrued but unpaid salary set forth in Paragraph 2A (as
adjusted by Paragraph 2B) hereof, including salary in respect of any accrued and
accumulated vacation, due to you at the date of such termination; and
(b) Any amounts owing, but not yet paid, pursuant to Paragraph 5
hereof.
(ii) Any accrued but unpaid incentive compensation as set forth in Paragraph
2C hereof due to you at the date of such termination for the fiscal year ending
on or immediately prior to the date of such termination which shall be paid
within three (3) months of the end of such fiscal year.
A. Termination by the Company Without Cause. The Company may, without
cause, terminate your employment hereunder at any time upon ten (10) or more
days' written notice to you. In the event your employment is terminated under
this Paragraph 9A, the Company shall pay to you the following:
(i) A single lump sum payment, not later than the last day of your
employment, of severance pay in an amount equal to your then current annual
base salary as defined in Paragraph 2A (as adjusted by Paragraph 2B) hereof;
(ii) A single lump sum payment of any incentive compensation set forth
in Paragraph 2C hereof earned in the fiscal year of the termination of your
employment, which incentive compensation shall be determined on the basis of the
Company's operations through June 30 of such fiscal year, and shall be pro-rated
through the last day of your employment, and shall be paid within three (3)
months of such June 30;
(iii) To the extent vested, the Monthly Supplemental Retirement
Benefit with the first payment beginning on the first day of the month
immediately succeeding the last day of employment;
(iv) Continuation of medical benefits for a period of six (6) months;
and
(v) Executive outplacement services for a period of six (6) months.
The Company shall have no further obligation to you under this Agreement and you
shallhave no further obligation to the Company under this Agreement except as
provided in Paragraph 12 and Paragraph 13 hereof.
B. Termination by the Company With Cause. The Company may, for cause,
terminate your employment hereunder at any time by written notice to you. In
the event your employment is terminated under this Paragraph 9B, you shall
forfeit the incentive compensation set forth in Paragraph 2C hereof for the
fiscal year in which such termination or resignation occurs. In the event your
employment is terminated under this paragraph 9B, the Company shall pay to you,
to the extent vested, the Monthly Supplemental Retirement Benefit as set forth
in Paragraph 2D with the first payment beginning on the first day of the month
immediately succeeding the month in which you attain the age of 55. The Company
shall have no further obligation to you under this Agreement and you shall
have no further obligation to the Company under this Agreement except as
provided in Paragraph 12 and Paragraph 13 hereof. For purposes of this
Agreement, the term "cause" shall mean (1) a failure by you to remedy, within
ten (10) days of the Company's written notice to you, either (a) a continuing
neglect in the performance of your duties under this Agreement, or (b) any
action taken by you that seriously prejudices the interests of the Company, or
(2) your conviction of a felony.
C. TERMINATION BY MUTUAL CONSENT. You may terminate your
employment hereunder at any time with the written consent of the Company. In the
event your employment is terminated pursuant to this paragraph 9C, the Company
shall pay to you the following:
(i) A single lump sum payment, of any incentive compensation set forth
in Paragraph 2C hereof earned in the fiscal year of the termination of your
employment, which incentive compensation shall be determined on the basis of the
Company's operations through June 30 of such fiscal year, and shall be pro-rated
through the last day of your employment, and shall be paid within three (3)
months of such June 30; and
(ii) To the extent vested, the Monthly Supplemental Retirement Benefit
as set forth in Paragraph 2D with the first monthly payment beginning on the
first day of the month immediately succeeding the last day of employment.
The Company shall have no further obligation to you under this Agreement and you
shall have no further obligation to the Company under this Agreement except as
provided in Paragraph 12 and Paragraph 13 hereof.
D. DISABILITY. If you should suffer a Permanent Disability at any time,
the Company may terminate your employment hereunder upon ten (10) or more days'
prior written notice to you. For purposes of this Agreement, a "Permanent
Disability" shall be deemed to have occurred only when you are qualified for
benefits under the Company's Long Term Disability Insurance Policy. In the
event of the termination of your employment hereunder by reason of Permanent
Disability, the Company shall pay to you or your legal representative:
(i) In conformity with regular payroll dates for salaried personnel of
the Company, an amount equal to fifty percent (50%) of the base salary you were
receiving at the date of such termination under Paragraph 2A hereof (as adjusted
by Paragraph 2B hereof), payable until you attain the age of 65 or die,
whichever occurs first; provided, however, that the amount payable under this
Paragraph 9D(i) shall be reduced to the extent of any payments made to you
through any Company-sponsored group long term disability plan and also to the
extent of any payments made to you under any other long term disability
insurance policy (the "Supplemental LTD Policy") where the premiums for said
Supplemental LTD Policy have either been paid by the Company or reimbursed to
you by the Company.
(ii) Any incentive compensation set forth in Paragraph 2C hereof earned
in the fiscal year in which the termination of your employment occurs, which
incentive compensation shall be determined on the basis of the Company's
operations through June 30 of such fiscal year, and shall be pro-rated through
the last day of your employment, and shall be paid within three (3) months of
such June 30;
(iii) Upon your attainment of age 65 or your death, whichever
occurs first, to the extent vested, the Monthly Supplemental Retirement Benefit
as set forth in Paragraph 2D with the first monthly payment beginning on the
first day of the month immediately succeeding the month in which you attained
the age of 65 or died. The Company shall have no further obligation to you under
this Agreement and you shall have no further obligation to the Company under
this Agreement except as provided in Paragraph 12 and Paragraph 13 hereof.
E. Termination by Death. In the event of the termination of your
employment by reason of death, at any time, the Company shall pay to your legal
representative, estate or heirs:
(i) Any incentive compensation set forth in Paragraph 2C hereof earned
in the fiscal year in which the termination of your employment occurs, which
incentive compensation shall be determined on the basis of the Company's
operations through June 30 of such fiscal year, and shall be pro-rated through
the last day of your employment, and
shall be paid within three (3) months of such June 30;
(ii) To the extent vested, the Monthly Supplemental Retirement Benefit
as set forth in Paragraph 2D with the first monthly payment beginning on the
first day of the month immediately succeeding the last day of your employment.
The Company shall have no further obligation to you under this Agreement and you
shall have no further obligation to the Company under this Agreement except as
provided in Paragraph 12 and Paragraph 13 hereof.
F. Termination Upon Expiration of Agreement. If not previously terminated,
this Agreement and your employment with the Company shall be automatically
extended for additional three-year periods, unless and until either party
notifies the other, in writing, one year prior to the expiration of the
then-current term of this Agreement. After the expiration of this agreement,
the Company shall pay to you the Monthly Supplemental Retirement
Benefit as set forth in Paragraph 2D hereof, with the first monthly payment
beginning on the first day of the month immediately succeeding the month in
which you shall have attained the age of 55. The Company shall have no further
obligation to you under this Agreement and you shall have no further obligation
to the Company under this Agreement except as provided in Paragraph 12 and
Paragraph 13 hereof.
G. Events. If any of the following described events occurs during the
term of your employment hereunder, you may terminate your employment hereunder
by written notice to the Company either prior to, or not more than six (6)
months after the happening of such event. In such event, your employment
hereunder will be terminated effective as of the later of ten (10) days after
the notice or ten (10) days after the event, and the
Company shall make to you the same payments that the Company would have been
obligated to make to you under Paragraph 9A hereof if the Company had terminated
your employment hereunder effective on such date. The events, the occurrence of
which shall permit you to terminate your employment hereunder under this
Paragraph 9G, are as follows:
(i) Any merger or consolidation by the Company with or into any
other entity or any sale by the Company of substantially all of its assets;
provided, however, that such event shall not be deemed to have occurred under
this clause if consummation of the transaction would result in at least fifty
(50%) percent of the total voting power represented by the voting securities of
the Company outstanding immediately after such transaction being beneficially
owned by holders of outstanding voting securities of the Company immediately
prior to the transaction.
(ii) Any change of a majority of the directors of the Company
occurring within any thirteen (13) month period.
(iii) The adoption by the Company of any plan of liquidation
providing for the distribution of all or substantially all of its assets.
(iv) A material diminution in your duties, or the assignment to
you of duties that are materially inconsistent with your duties or that
materially impair your ability to function as the Chief Financial Officer of the
Company if such diminution or assignment has not been cured within thirty (30)
days after written notice thereof has been given by you to the Company.
10. SOURCE OF PAYMENTS. All payments provided for hereunder shall be paid from
the general funds of the Company. The Company may, but shall not be required
to, make any investment or investments whatsoever, including the purchase of a
life insurance contract or contracts on your life, to provide it with funds to
satisfy its obligations hereunder; provided, however, that neither you nor your
beneficiary or beneficiaries, nor any other person, shall have any right, title,
or interest whatsoever in or to any such investments or contracts. If the
Company shall elect to purchase a life insurance contract or contracts on your
life to provide the Company with funds to satisfy its obligations hereunder, the
Company shall at all times be the sole and complete owner and beneficiary
of such contract or contracts, and shall have the unrestricted right to use all
amounts and to exercise all options and privileges thereunder without the
knowledge or consent of you, your beneficiary or beneficiaries, or any other
person, it being expressly agreed that neither you, any such beneficiary or
beneficiaries, nor any other person shall have any right, title,
or interest whatsoever in or to any such contract or contracts unless expressly
provided otherwise in this Agreement.
11. ENFORCEMENT OF RIGHTS. Nothing in this Agreement, and no action taken
pursuant to its terms, shall create or be construed to create a trust or escrow
account of any kind, or a fiduciary relationship between the Company and you,
your beneficiary or beneficiaries, or any other person. You, your beneficiary
or beneficiaries, and any other person or persons claiming a right to any
payments or interests hereunder shall rely solely on the unsecured promise of
the Company, and nothing herein shall be construed to give you, your
beneficiary or beneficiaries, or any other person or persons, any right, title,
interest, or claim in or to any specific asset, fund, reserve, account, or
property of any kind whatsoever owned by the Company or in which it may have any
right, title, or interest now or in the future, but you or your beneficiary or
beneficiaries shall have the right to enforce a claim for benefits hereunder
against the Company in the same manner as any unsecured creditor.
12. INVENTIONS AND CONFIDENTIAL INFORMATION. So long as you shall be
employed by the Company, you agree promptly to make known to the Company the
existence of any and all creations, inventions, discoveries, and improvements
made or conceived by you, either solely or jointly with others, during the term
of this Agreement and for three (3) years thereafter, and to assign to the
Company the full exclusive right to any and all such creations, inventions,
discoveries, and improvements relating to any subject matter with which the
Company is now or shall become concerned, or relating to any other
subject matter if made with the use of the Company's time, materials, or
facilities. To the fullest extent permitted by law, any and all of the
foregoing creations, inventions, discoveries and improvements shall be
considered as "work-made-for-hire" and the Company shall be the owner thereof.
You further agree, without charge to the Company but at its expense, if
requested to do so by the Company, to execute, acknowledge, and
deliver all papers, including applications or assignments for patents,
trademarks, and copyrights relating thereto, as may be considered by the Company
to be necessary or desirable to obtain or assign to the Company any and all
patents, trademarks, or copyrights for any and all such creations, inventions,
discoveries, and improvements in any and all countries, and to vest title
thereto in the Company in all such creations, inventions, discoveries, and
improvements as indicated above conceived during your employment by
the Company, and for three (3) years thereafter. You further agree that you
will not disclose to any third person any trade secrets or proprietary
information of the Company, or use any trade secrets or proprietary information
of the Company in any manner, except in the pursuit of your duties as an
employee of the Company, and that you will return to the Company all materials
(whether originals or copies) containing any such trade secrets or
proprietary information (in whatever medium) on termination of your employment
by the Company. The obligations set forth in this Paragraph 12 shall survive
the termination of your employment hereunder.
13. RESTRICTIVE COVENANT. For a period of three (3) years after the termination
of your employment by the Company, you shall not, in any geographical location
at which there is at that time business conducted by the Company which was
conducted by the Company at the date of such termination, directly or
indirectly, own, manage, operate, control, be employed by, participate in, or
be connected in any manner with, the ownership, management, operation, or
control of, any business similar to or competitive with such business conducted
by the Company without the written consent of the Company;
provided, however, that you may have an ownership interest of up to one percent
(1%) in any entity, notwithstanding that such entity is directly competitive
with any business conducted by the Company at the date of such termination.
14. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement, or the breach or asserted breach thereof, shall be settled by
arbitration to be held in New York, New York in accordance with the rules then
obtaining of the American Arbitration Association, and the judgment upon the
award rendered may be entered in any court having jurisdiction thereof. The
arbitrator shall determine which party shall bear the costs of such arbitration,
including attorneys' fees.
15. NON-ASSIGNABILITY. Your rights and benefits hereunder are personal to you,
and shall not be alienated, voluntarily or involuntarily, assigned or
transferred.
16. BINDING EFFECT. This Agreement shall be binding upon the parties hereto,
and their respective assigns, successors, executors, administrators, and heirs.
In the event the Company becomes a party to any merger, consolidation, or
reorganization, this Agreement shall remain in full force and effect as an
obligation of the Company or its successors in interest. None of the payments
provided for by this Agreement shall be subject to seizure for payment of any
debts or judgments against you or your beneficiary or beneficiaries, nor
shall you or any such beneficiary or beneficiaries have any right to transfer or
encumber any right or benefit hereunder; provided, however, that the
undistributed portion of the Aggregate Supplemental Retirement Benefit shall
at all times be subject to set-off by the Company for debts owed by you to the
Company.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement relating to
your employment by the Company. It may only be changed by written agreement
signed by the party against whom enforcement of any waiver, change,
modification, extension, deletion or revocation is sought.
18. NOTICES. All notices and communications hereunder shall be in writing, sent
by certified or registered mail, return receipt requested, postage prepaid; by
facsimile transmission, time and date of receipt noted thereon; or by
hand-delivery properly receipted. The actual date of receipt as shown by the
receipt therefor shall determine the time at which notice was given. All
payments required hereunder by the Company to you shall be sent postage prepaid,
or, at your election, shall be transferred to you electronically to such bank as
you designate in writing to the Company, including designation of the
applicable electronic address. The foregoing items (other than any electronic
transfer to you) shall be addressed as follows (or to such other address as the
Company or you may designate in writing from time to time):
To you: To the Company:
James M. Rutledge Baldwin Technology Company, Inc.
86 Graenest Ridge Road One Norwalk West
Wilton, CT 06897 40 Richards Avenue
Norwalk, CT 06854
19. LAW TO GOVERN. This Agreement shall be governed by, and construed and
enforced according to, the laws of the State of Connecticut without giving
effect to the principles of conflict of laws.
Very truly yours,
BALDWIN TECHNOLOGY COMPANY, INC.
By:__________________________________
Gerald A. Nathe
Its President
Duly Authorized
AGREED TO AND ACCEPTED:
_________________________________
James M. Rutledge
SEPARATION AGREEMENT
The following sets forth our mutual agreement for the termination of my
employment with Baldwin Technology Company, Inc. ("BTI") and related matters:
1. I will continue to work in my present capacities and with my
present responsibilities at BTI through the earnings release date for Baldwin's
quarter ending December 31, 1999, but no later than February 4, 2000.
During such time Baldwin shall compensate me based upon my current
pay rate and all benefits, perquisites, etc. as provided for in my
employment contract shall be in full effect. Should Baldwin request a
termination date that is earlier than February 4, 2000, it may do so in its
sole determination.
2. BTI shall pay me severance, on a normal weekly payroll basis based
upon my current base pay rate, for the period from my departure through
September 30, 2000. Baldwin will also continue full coverage for all health
and welfare benefits (health coverage based upon "active" not "retired"
status), at current benefit levels, during this period, with appropriate
payroll based contributions by me based upon past company practices.
BTI covenants and warrants that all insurance premiums due prior to
September 30, 2000 whether for health, disability, life, etc. will be paid by
BTI on a timely basis. In the event I should secure new health and/or
dental benefit coverage from a new employer prior to September 30,
2000, I covenant and warrant that I will notify BTI of this event and, at that
time, BTI will be entitled to discontinue health and/or dental benefits
coverage for me and my dependents.
3. I agree to reduce my club dues and financial advisor
reimbursements for FY 2000 to one-half the level provided for in my employment
agreement. I also agree to forego any claim for incentive compensation for
FY 2000.
4. I agree to be available for consultation during the period set
forth in 2 above on the following basis: Up to 1 day per week during February
and March 2000 and up to one day per month during the months of April to
September 2000. All requests for consultation are to be made by the CEO
or CFO of BTI, with reasonable notice, and shall take place at BTI's
offices in Norwalk.
5. I will retain full use of my present company car, with insurance
and maintenance paid by BTI, through September 30, 2000. Gas shall be my
responsibility.
6. My portion of any FY 1999 company contribution to the profit
sharing plan will be made to my plan account.
7. Vested stock options will be treated as per the stock option plan
with the effective termination date as set forth in 1 above.
8. As of December 31, 1999, BTI agrees to repurchase my 25,000 Class
B shares at a fixed price of $2.50 per share, regardless of the actual share
price on that day, with the value of the shares being offset against the
outstanding amount of my loan payable to the company. The company
further agrees to pay to me, on December 31, 1999, the full amount of the
accrual on its books as of December 31, 1999 related to my deferred
compensation arrangement (not to be less than $112,500). Such payment
of deferred compensation is to be grossed-up, by the company, for taxes
at the rate of 40% for federal taxes and 5% for state taxes. I will be
responsible for my portion of the Medicare tax. The after tax proceeds of
this payment of deferred compensation are to be applied against the
balance of my loan payable to the company until fully extinguished.
Attached is a schedule demonstrating, to the best of my knowledge, the
impacts to each party of the settlement of this matter.
9. BTI agrees that it will take such actions as are necessary to
instruct the Equitable Life Insurance Company to release, effective September
30, 2000, BTI's collateral assignment lien against my split-dollar life
insurance policy and, further, BTI agrees to release me from any and all
claims for repayment to BTI of any and all premium payments made by BTI with
respect to this policy (see attached prior agreement). As this action will
result in the imputation of taxable income to me, I agree to pay to BTI any
payroll-related withholding taxes due at that time.
The above constitutes our full and complete agreement and settlement, and
shall act as a release by both parties, of all obligations under my employment
contract dated March 11, 1998, with the exception that the provisions of
Sections 12 and 13 of such employment agreement shall continue in force for the
periods as covered by those sections.
__________________ __________________
William J. Lauricella Date
Agreed:
___________________ ____________________
Gerald A. Nathe Date
Baldwin Technology Company, Inc.
