UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended Commission file number
September 27, 1997 33-59994
BELL & HOWELL COMPANY
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-3875177
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5215 Old Orchard Road, Skokie, Illinois 60077-1076
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 470-7660
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares of the Registrant's Common Stock, $.001
par value, outstanding as of November 7, 1997 was 23,408,387.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
- ------ --------------------- ----
Item 1. Financial Statements
Consolidated Statements of Operations for
the Thirteen and Thirty-Nine Weeks Ended
September 28, 1996 and September 27, 1997 ...... 1
Consolidated Balance Sheets - Assets at
December 28, 1996 and September 27, 1997 ....... 2
Consolidated Balance Sheets - Liabilities
and Shareholders' Equity at December 28, 1996
and September 27, 1997 ......................... 3
Consolidated Statements of Cash Flows
for the Thirty-Nine Weeks Ended
September 28, 1996 and September 27,1997 ....... 4
Notes to the Consolidated Financial
Statements ..................................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ...................................... 8
PART II. OTHER INFORMATION
- ------- -----------------
Item 1. Legal Proceedings ................................ 14
Item 6. Exhibits and Reports on Form 8-K ................. 14
SIGNATURE PAGE .............................................. 15
<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Statements of Operations
(Dollars and shares in thousands, except per share data)
(Unaudited)
<CAPTION>
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
--------------------- ---------------------
Sept. 28, Sept. 27, Sept. 28, Sept. 27,
1996 1997 1996 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 218,840 $ 211,722 $ 633,905 $ 629,890
Operating costs and expenses:
Cost of sales 140,995 127,817 410,407 392,537
Research and development 9,492 9,344 25,946 29,166
Selling and administrative 47,971 51,411 145,500 149,920
-------- -------- -------- -------
Total operating costs and expenses 198,458 188,572 581,853 571,623
Operating income 20,382 23,150 52,052 58,267
Net interest expense:
Interest (income) (5,410) (5,526) (13,676) (15,883)
Interest expense 15,832 17,605 46,840 51,694
-------- -------- -------- --------
Net interest expense 10,422 12,079 33,164 35,811
Earnings before income taxes
and extraordinary items 9,960 11,071 18,888 22,456
Income tax expense 5,137 4,594 8,868 9,319
-------- -------- -------- --------
Earnings before extraordinary items 4,823 6,477 10,020 13,137
Extraordinary losses -- (9,678) (2,585) (10,650)
-------- -------- -------- --------
Net earnings (loss) $ 4,823 (3,201) $ 7,435 $ 2,487
======== ======== ======== ========
Net earnings (loss) per common share:
Primary:
Earnings before extraordinary items $ 0.26 $ 0.34 $ 0.54 $ 0.71
Extraordinary losses -- (0.51) (0.14) (0.58)
-------- -------- -------- --------
Net earnings (loss) per common share $ 0.26 (0.17) $ 0.40 $ 0.13
======== ======== ======== ========
Fully Diluted:
Earnings before extraordinary items $ 0.26 $ 0.34 $ 0.54 $ 0.70
Extraordinary losses -- (0.51) (0.14) (0.57)
------- -------- -------- --------
Net earnings (loss) per common share $ 0.26 (0.17) $ 0.40 $ 0.13
======== ======== ======== ========
Average number of common shares and
equivalents outstanding:
Primary 18,545 18,908 18,584 18,585
Fully Diluted 18,571 18,951 18,591 18,700
The accompanying Notes to the Consolidated Financial statements
are an integral part of these statements.
</TABLE>
-1-
<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
Assets
<CAPTION>
December 28, September 27,
1996 1997
------------ ------------
(Audited) (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,500 $ 9,626
Accounts receivable, less allowance for
doubtful accounts of $5,294 and $5,716,
respectively 186,862 194,590
Inventory 139,831 166,540
Other current assets 11,826 10,658
-------- --------
Total current assets 354,019 381,414
Property, plant and equipment, at cost 363,015 386,514
Accumulated depreciation (207,287) (236,597)
-------- --------
Net property, plant and equipment 155,728 149,917
Long-term receivables 54,707 58,296
Goodwill, net of accumulated amortization 189,868 196,491
Other assets 42,464 38,301
-------- --------
Total assets $ 796,786 $ 824,419
======== ========
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Balance Sheets
(Dollars and shares in thousands)
Liabilities and Shareholders' Equity
<CAPTION>
December 28, September 27,
1996 1997
------------ -------------
(Audited) (Unaudited)
<S> <C> <C>
Current liabilities:
Notes payable $ 8,397 $ 4,083
Current maturities of long-term debt 1,667 970
Accounts payable 93,135 60,025
Accrued expenses 78,308 61,678
Deferred income 171,698 173,151
Accrued income taxes 1,143 148
-------- --------
Total current liabilities 354,348 300,055
Long-term liabilities:
Long-term debt 548,281 492,421
Other liabilities 61,049 61,318
-------- --------
Total long-term liabilities 609,330 553,739
Shareholders' equity:
Common Stock, $.001 par value, 18,359 shares
issued and 18,309 shares outstanding at
December 28, 1996, and 23,419 shares issued
and 23,408 shares outstanding at
September 27, 1997 18 23
Capital surplus 1,402 138,508
Notes receivable from executives (1,444) (1,733)
Retained earnings (deficit) (165,851) (163,364)
Cumulative foreign exchange translation adjustments 616 (2,518)
Treasury stock (1,633) (291)
-------- --------
Total shareholders' equity (deficit) (166,892) (29,375)
Commitments and contingencies -- --
-------- --------
Total liabilities and shareholders' equity $ 796,786 $ 824,419
======== ========
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
-3-
<PAGE>
<TABLE>
Bell & Howell Company and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<CAPTION>
Thirty-Nine Weeks
Ended
-----------------------------
Sept. 28, Sept. 27,
1996 1997
-------- --------
<S> <C> <C>
Operating Activities:
Net earnings $ 7,435 $ 2,487
Depreciation and amortization 35,560 45,802
Debt accretion 17,928 17,185
Changes in operating assets and liabilities:
Accounts receivable 4,840 (8,277)
Inventory (43,071) (20,755)
Other current assets 1,675 1,625
Long-term receivables 6,006 (3,589)
Income taxes (756) (1,137)
Accounts payable (981) (34,307)
Accrued expenses (3,507) (17,194)
Deferred income and other long-term liabilities (8,207) (2,562)
Other, net (81) 2,930
------- -------
Net cash provided (used) by operating activities 16,841 (17,792)
Investing activities:
Expenditures for property, plant and equipment (30,440) (24,791)
Acquisitions (62,568) (11,421)
------- -------
Net cash used by investing activities (93,008) (36,212)
Financing activities:
Proceeds from short-term debt 11,409 5,144
Repayment of short-term debt (16,058) (8,561)
Proceeds from long-term debt 235,384 86,396
Repayment of long-term debt (155,359) (173,315)
Proceeds from Common Stock, net (112) 138,846
------- -------
Net cash provided by financing activities 75,264 48,510
Effect of exchange rate changes on cash 13 (380)
------- -------
Increase (decrease) in cash and cash equivalents (890) (5,874)
Cash and cash equivalents, beginning of period 7,262 15,500
------- -------
Cash and cash equivalents, end of period $ 6,372 $ 9,626
======= =======
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
-4-
<PAGE>
Bell & Howell Company and Subsidiaries
Notes to the Consolidated Financial Statements
(Dollars and shares in thousands, except per share data)
Note 1 - Basis of Presentation
The consolidated financial statements include the accounts
of Bell & Howell Company and its subsidiaries (collectively the
"Company") and have been prepared without independent audit,
except for the balance sheet data as of December 28, 1996.
In the opinion of the Company's management, the consolidated
financial statements include all adjustments necessary to present
fairly the information required to be set forth therein, and such
adjustments are of a normal and recurring nature. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The Company's management believes, however, that the disclosures
are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the
Consolidated Financial Statements and the notes thereto included
in Bell & Howell Company's annual report for the fiscal year
ended December 28, 1996.
Note 2 - Significant Accounting Policies
Net Earnings per Common Share. Net earnings per common
share are determined by dividing net earnings by the weighted
average number of common shares outstanding during the period.
If dilutive, stock options are included as common stock
equivalents.
Inventory. The Company uses the last-in, first-out (LIFO)
method of valuing the majority of its domestic inventory. Use of
the LIFO method is predicated on a determination of inventory
quantities and costs at the end of each fiscal year, and
therefore interim determinations of LIFO inventory values and
results of operations are by necessity based on management's
estimates of expected year-end inventory quantities and costs.
The excess of replacement cost over the LIFO values of inventory
was $4,489 at December 28, 1996, and September 27, 1997.
-5-
<PAGE>
Note 3 - Public Equity Offering, New Credit Agreement,
Debt Redemptions
In September 1997, the Company completed a public offering
of 5,026 shares of Common Stock (which were issued at a price of
$28.625 per share) and entered into a New Credit Agreement which
provides a revolving credit facility of $600,000. The net
proceeds of the equity offering together with borrowings under
the new credit facility were used to purchase $82,347 (accreted
value) of the 11 1/2% Senior Discount Debentures pursuant to a
tender offer, purchase $8,300 of the 9 1/4% Senior Notes, and
repayment of all amounts due under the Company's former credit
agreement.
Note 4 - Extraordinary Losses
The extraordinary losses of $10,650 ($16,641 pretax) in the
first nine months of 1997 were comprised of the debt repurchase
premium and write-off of unamortized debt issuance costs
associated with the repurchase of $97,945 (accreted value) of the
11 1/2% Senior Discount Debentures, $8,300 of the 9 1/4% Senior
Notes and $2,100 of the 10 3/4% Senior Subordinated Notes.
The extraordinary losses of $2,585 ($4,039 pretax) in the
first nine months of 1996 were comprised of the debt repurchase
premium and write-off of unamortized debt issuance costs
associated with the repurchase of $34,158 (accreted value) of the
11 1/2% Senior Discount Debentures and $17,920 of the 10 3/4%
Senior Subordinated Notes.
Note 5 - Foreign Postal Contracts
The Company is a subcontractor to the same general
contractor on two contracts to provide mail automation systems to
foreign postal authorities. The scope and performance of these
contracts and the Company's ability to be compensated for
additional services are currently being negotiated, the
resolution of which may adversely impact contract loss reserves
recorded to date.
-6-
<PAGE>
Note 6 - Liquidation and Dissolution of Holding Company Structure
In October 1997, the stockholders of Bell & Howell Company
(the "Holding Company") approved a plan (the "Plan") to simplify
the corporate structure of the Holding Company and its
subsidiaries (collectively the "Company"). Although the Plan
includes the liquidation and dissolution of the Holding Company,
it does not affect the business operations of the Company or the
relative interests of the Holding Company stockholders.
Essentially all of the Company's assets and operations are
owned by and carried on through Bell & Howell Operating Company
("BHOC"), which is a wholly-owned subsidiary of the Holding
Company. Upon completion of the Plan, each stockholder of the
Holding Company will receive newly issued shares of BHOC Common
Stock on a share-for-share basis (and the Holding Company Common
Stock will be canceled), the BHOC Common Stock will replace
Holding Company Common Stock on the New York Stock Exchange, all
current officers and directors of the Holding Company will be
elected to identical positions of BHOC and the name of BHOC will
be changed to "Bell & Howell Company".
-7-
<PAGE>
Item 2.
- ------
Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
This section should be read in conjunction with the
Consolidated Financial Statements of Bell & Howell Company and
Subsidiaries (collectively the "Company") and the notes thereto
included in the annual report for the year ended December 28, 1996.
Results of Operations
- ---------------------
Nine Months Year-to-Date 1997 Compared to Nine Months
- -----------------------------------------------------
Year-to-Date 1996
- -----------------
The Company's net sales decreased $4.0 million, or 1%, to
$629.9 million in the first nine months of 1997 as continued
strong sales growth within Information Access (particularly for
the transportation & vehicle and education & library markets), as
well as the high volume mailing portion of Mail Processing was
more than offset by lower revenues in the postal contracting
portion of Mail Processing due to shipments of significant
one-time contracts to postal authorities in 1996.
Information Access net sales increased $15.8 million, or 5%,
to $347.9 million in the first nine months of 1997. Within the
Information Access businesses, the Company provides access to
information in select vertical markets including the
transportation & vehicle and education & library markets, and
also provides imaging solutions and components to financial
institutions, governmental agencies and other paper intensive
industries. Net sales to the transportation & vehicle market
increased $10.2 million, or 14%, to $85.1 million due to
increased sales of electronic parts catalogs and ancillary
products to automotive dealerships, and continued strong sales of
dealer management systems and electronic parts catalogs to
powersports dealerships. In addition to increased new systems
placements, the Company continued to experience strong sales of
additional product applications and high contract renewal rates
related to previously placed systems. Net sales to the education
& library market increased $12.8 million, or 10%, to $135.8
million due to a growing electronic subscription base, which
continued to reflect strong sales of ProQuest Direct (the
Company's on-line electronic product offering), high renewal
rates on existing products, and the acquisition of DataTimes
Corporation (in September 1996) which added complementary
information content, technology and distribution to the Company's
electronic product offerings. Sales of electronic content
increased 32% over the prior year as customers increasingly
-8-
<PAGE>
demand electronic information solutions and its newer form of
on-line delivery. Net sales of microfilm and paper products to
the education & library market declined slightly versus the prior
year as increased pricing was offset by lower unit volumes. Net
sales in the Imaging Solutions and Components business decreased
$7.2 million, or 5%, to $127.0 million as increased sales of
production scanners and imaging software systems were more than
offset by the impact of divesting certain low margin product
lines in Canada and France. Excluding the impact of the divested
product lines, Imaging Solutions and Components' net sales in the
first nine months of 1997 would have increased by 5% over the
prior year.
Mail Processing net sales decreased $19.8 million, or 7%, to
$282.0 million in the first nine months of 1997. Excluding the
impact of a stronger dollar in 1997, sales of high volume mailing
systems increased $24.8 million, or 10%, to $263.4 million
reflecting strong market demand for inserting and sorting
systems. Sales of commercial sorting equipment (which represents
16% of high volume mailing systems sales) increased $4.1 million,
or 22%, to $23.4 million as the U.S. Postal Service guidelines
governing the operating requirements to qualify for certain
financial incentives to properly address, bar code and presort
mail have created a more favorable environment for customers to
invest in advanced sorting technology. Service revenues (which
are primarily annuity based and represent 45% of high volume
mailing systems sales) continue to increase, due to both an
expanded customer base and increased pricing. Sales of
customized mail automation equipment and contractual engineering
services to governmental postal authorities decreased $37.8
million to $18.6 million in the first nine months of 1997,
primarily as a result of shipments of significant one-time
contracts to postal authorities in the first nine months of 1996.
In its government postal contracting business, the Company is a
subcontractor to the same general contractor on two contracts to
provide mail automation systems to foreign postal authorities.
The scope and performance of these contracts and the Company's
ability to be compensated for additional services are currently
being negotiated, the resolution of which may adversely impact
contract loss reserves recorded to date.
The Company's cost of sales decreased $17.9 million, or 4%,
to $392.5 million in the first nine months of 1997, with the
gross profit (net sales less cost of sales) percentage increasing
by 2.4 percentage points to 37.7%. The higher gross profit
percentage in 1997 resulted from a shift in sales mix (as the
growth rate in higher gross profit percentage Information Access
revenues exceeded the growth rate in lower gross profit
percentage Mail Processing revenues), and additionally reflects
both improved manufacturing productivity and increased pricing.
Research and development expense increased $3.2 million, or
12%, to $29.2 million in the first nine months of 1997 as the
Company continued to increase its investment in new product
offerings. Such increase primarily related to increased
-9-
<PAGE>
costs to develop new electronic products for the education &
library market, to develop a new technology platform for the
powersports market and to develop enhanced versions of production
scanners. The Company has continually positioned itself to take
advantage of new product/technology opportunities (with an
increased emphasis on software solutions and electronic products)
in each of its businesses.
Selling and administrative ("S&A") expense increased $4.4
million, or 3%, to $149.9 million in the first nine months of
1997 reflecting the Company's increased investment in sales and
marketing resources. The ratio of selling and administrative
expense to net sales of 23.8% in the first nine months of 1997
increased by 0.8 percentage points versus the prior year as
various expense leveraging initiatives were offset by the result
of the aforementioned shift in sales mix (as the growth rate in
higher S&A expense percentage Information Access revenues
exceeded the growth rate in lower S&A expense percentage Mail
Processing revenues).
EBITDA (defined as operating income plus depreciation and
amortization) increased $11.8 million, or 14%, to $96.8 million
in the first nine months of 1997 resulting from the increased
sales to the transportation & vehicle and education & library
markets, as well as increased high volume mailing systems sales,
and leveraged operating costs and expenses. Operating income
increased $6.2 million, or 12%, to $58.3 million in the first
nine months of 1997.
Information Access EBITDA increased $10.2 million, or 16%,
to $75.9 million in the first nine months of 1997. This increase
resulted from the higher sales volumes, an improved gross profit
percentage reflecting a sales mix emphasizing the Company's more
profitable products (i.e., a greater proportion of revenues
related to software and publishing and a lower proportion of
revenues related to the sale of hardware) which more than offset
increased research and development costs associated with new
product offerings. Information Access operating income increased
$5.0 million, or 13%, to $44.3 million in the first nine months
of 1997.
Mail Processing EBITDA increased $2.2 million, or 8%, to
$31.0 million in the first nine months of 1997 as a result of the
higher sales of high volume mailing systems and leveraged
operating costs and expenses. Mail Processing operating income
increased $1.7 million, or 7%, to $24.4 million in the first nine
months of 1997.
Corporate expenses (excluding depreciation and amortization)
increased $0.6 million, or 6%, to $10.1 million in the first nine
months of 1997 as productivity improvements were more than offset
by inflationary/other cost increases.
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<PAGE>
Net interest expense increased $2.6 million, or 8%, to $35.8
million in the first nine months of 1997, primarily reflecting
the increased debt (resulting from acquisitions in 1996 and the
increased inventory investment related to postal contracts),
which was partially offset by the impact of the repurchases in
1996 and 1997 of portions of the 11 1/2% Senior Discount
Debentures and the 10 3/4% Senior Subordinated Notes, which were
redeemed with bank borrowings. Net interest income of Bell &
Howell Financial Services Company, the Company's financing
subsidiary, increased $1.1 million to $6.2 million in the first
nine months of 1997, primarily due to continued growth in the
lease receivables portfolio.
In September 1997, the Company completed a public offering
of 5.0 million shares of Common Stock (which were issued at a
price of $28.625 per share) and entered into a New Credit
Agreement which provides a revolving credit facility of $600.0
million. The net proceeds of the equity offering together with
borrowings under the new credit facility were used to purchase
$82.3 million (accreted value) of the 11 1/2% Senior Discount
Debentures pursuant to a tender offer, purchase $8.3 million of
the 9 1/4% Senior Notes, and repayment of all amounts due under
the Company's former credit agreement. In the fourth quarter of
1997, the Company redeemed the remaining 11 1/2% Senior Discount
Debentures ($130.9 million in accreted value at September 27,
1997), the remaining $71.7 million of the 9 1/4% Senior Notes,
and the remaining $55.0 million of the 10 3/4% Senior
Subordinated Notes.
Income tax expense increased in the first nine months of
1997 as a result of a higher level of pretax profit in the
current year.
The extraordinary losses of $10.7 million ($16.6 million
pretax) in the first nine months of 1997 were comprised of the
debt repurchase premium and write-off of unamortized debt
issuance costs associated with the repurchase of $97.9 million
(accreted value) of the 11 1/2% Senior Discount Debentures, $8.3
million of the 9 1/4% Senior Notes, and $2.1 million of the
10 3/4% Senior Subordinated Notes. The extraordinary losses of
$2.6 million ($4.0 million pretax) in the first nine months of
1996 were comprised of the debt repurchase premium and write-off
of unamortized debt issuance costs associated with the repurchase
of $34.2 million (accreted value) of the 11 1/2% Senior Discount
Debentures and $17.9 million of the 10 3/4% Senior Subordinated
Notes.
Cash used by operations was $17.8 million in the first nine
months of 1997 versus cash provided by operations of $16.8
million in the first nine months of 1996. Although EBITDA
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<PAGE>
increased by $11.8 million in the first nine months of 1997, the
Company's working capital investment increased in the current
year related to the timing of receivable collections and vendor
disbursements. The Company operates with a reduced net working
capital level principally as a result of substantial customer
prepayments for annual service contracts in each of its business
segments and prepaid subscriptions in the Information Access
business segment.
Debt (net of cash and cash equivalents) decreased by $55.0
million to $487.8 million in the first nine months of 1997 as the
proceeds from the public equity offering were partially offset by
the cash used by operations (which reflects the seasonal nature
of the Company's cash collections and disbursements), capital
expenditures/acquisitions and continued interest accretion on the
11 1/2% Senior Discount Debentures.
Recently Issued Financial Accounting Standards
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
"Earnings per Share." The standard establishes new methods for
computing and presenting earnings per share ("EPS") and replaces
the presentation of primary and fully-diluted EPS with basic and
diluted EPS. The Company is required to adopt the new standard
for periods ending after December 15, 1997. The new methods
under this standard do not have a material impact on the
Company's current earnings per share amounts.
In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income." The Company is required to
adopt the new standard for periods ending after fiscal 1997.
This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general
purpose financial statements. The standard requires all items
that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial
statement that is displayed in equal prominence with the other
financial statements. The standard is not expected to have a
material impact on the Company's current presentation of income.
In June 1997, the Financial Accounting Standards Board also
issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." The Company is required to adopt this new standard
for periods ending after fiscal 1997. This statement establishes
standards for the way companies are to report information about
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<PAGE>
operating segments. It also establishes standards for related
disclosures about products and services, geographic areas, and
major customers. The Company is currently evaluating the impact
of this standard on its financial statements.
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<PAGE>
Part II. Other Information
- ------- -----------------
Item 1. Legal Proceedings.
- ------ -----------------
The Company is involved in various legal proceedings
incidental to its business. Management believes that except
for the impact of the resolution of the issues associated
with certain foreign postal contracts (referenced in Note 5 to
the Consolidated Financial Statements), the outcome of such
proceedings will not have a material adverse effect upon
the consolidated operations or financial condition of the
Company.
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibits:
Index Number Description
------------ -----------
(10.11) Revolving Credit Agreement
(11.1) Computation of Earnings
Per Common Share
(27.1) Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the thirteen weeks
ended September 27, 1997.
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<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: November 7, 1997 BELL & HOWELL COMPANY
/s/ James P. Roemer
--------------------------
James P. Roemer
President, Chief Executive
Officer and Director
/s/Nils A. Johansson
--------------------------
Nils A. Johansson
Executive Vice President,
Chief Financial Officer
and Director
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<PAGE>
Exhibit 10.11
Revolving Credit Agreement, dated as of September 22, 1997, among
Bell & Howell Operating Company, the Lenders listed therein, and
Bankers Trust Company incorporated herein by reference to Exhibit
10.11 to Bell & Howell Operating Company's Registration Statement
on Form S-4, as amended, Registration No. 333-36401.
<TABLE>
Exhibit 11.1
Bell & Howell Company and Subsidiaries
Computation of Earnings per Common Share
(Dollars and shares in thousands, except per share data)
(Unaudited)
<CAPTION>
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
-------------------- ---------------------
Sept. 28, Sept. 27, Sept. 28, Sept. 27,
1996 1997 1996 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net earnings (loss):
Earnings before extraordinary items $ 4,823 $ 6,477 $10,020 $ 13,137
Extraordinary losses -- (9,678) (2,585) (10,650)
------ ------ ------ -------
Net earnings (loss) $ 4,823 $(3,201) $ 7,435 $ 2,487
====== ====== ====== =======
Average number of common shares and
equivalents outstanding:
Primary 18,545 18,908 18,584 18,585
Fully diluted 18,571 18,951 18,591 18,700
Net earnings (loss) per common share:
Primary:
Earnings before extraordinary
items $ 0.26 $ 0.34 $ 0.54 $ 0.71
Extraordinary losses -- (0.51) (0.14) (0.58)
------ ------ ------ -------
Net earnings (loss) per common share $ 0.26 $ (0.17) $ 0.40 $ 0.13
====== ====== ====== =======
Fully diluted:
Earnings before extraordinary
items $ 0.26 $ 0.34 $ 0.54 $ 0.70
Extraordinary losses -- (0.51) (0.14) (0.57)
------ ------ ------ -------
Net earnings (loss) per common share $ 0.26 $ (0.17) $ 0.40 $ 0.13
====== ====== ====== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> SEP-27-1997
<CASH> 9626
<SECURITIES> 0
<RECEIVABLES> 200306
<ALLOWANCES> 5716
<INVENTORY> 166540
<CURRENT-ASSETS> 381414
<PP&E> 386514
<DEPRECIATION> (236597)
<TOTAL-ASSETS> 824419
<CURRENT-LIABILITIES> 300055
<BONDS> 492421
0
0
<COMMON> 23
<OTHER-SE> (29398)
<TOTAL-LIABILITY-AND-EQUITY> 824419
<SALES> 629890
<TOTAL-REVENUES> 629890
<CGS> 392537
<TOTAL-COSTS> 571623
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35811
<INCOME-PRETAX> 22456
<INCOME-TAX> 9319
<INCOME-CONTINUING> 13137
<DISCONTINUED> 0
<EXTRAORDINARY> (10650)
<CHANGES> 0
<NET-INCOME> 2487
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
