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Form 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

[Mark one]
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934

For quarter ended March 31, 2005

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 Identification No.)
incorporation or organization)

2 Trap Falls Road, Suite 402, Shelton, Connecticut 06484
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 203-402-1000

Twelve Commerce Drive, Shelton, Connecticut 06484
---------------------------------------------------------------------
(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 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 [ ]

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).

YES [ ] NO [X]

The number of shares outstanding of each of the issuer's classes of common
stock, as of May 4, 2005 is as follows:

Class Outstanding at May 4, 2005
----- --------------------------
Class A Common Stock
$0.01 par value 12,945,147
Class B Common Stock
$0.01 par value 1,965,419



BALDWIN TECHNOLOGY COMPANY, INC.

INDEX



Page
-----

Part I Financial Information

Item 1 Financial Statements

Consolidated Balance Sheets at March 31, 2005 (unaudited) and June
30, 2004 (unaudited) 1-2

Consolidated Statements of Operations for the three and nine months
ended March 31, 2005 (unaudited) and 2004 (unaudited) 3

Consolidated Statements of Changes in Stockholders' Equity for the
nine months ended March 31, 2005 (unaudited) 4

Consolidated Statements of Cash Flows for the nine months ended
March 31, 2005 (unaudited) and 2004 (unaudited) 5-6

Notes to Consolidated Financial Statements (unaudited) 7-15

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 16-22

Item 3 Quantitative and Qualitative Disclosures About Market Risk 22

Item 4 Controls and Procedures 22-23

Part II Other Information

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 23

Item 6 Exhibits 23

Signatures 24




BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ASSETS



March 31, 2005 June 30, 2004
-------------- -------------

CURRENT ASSETS:
Cash and cash equivalents $ 11,037 $ 12,008
Accounts receivable trade, net of allowance for doubtful
accounts of $2,077 ($2,155 at June 30, 2004) 26,667 24,765
Notes receivable, trade 10,488 12,960
Inventories, net 24,191 24,998
Deferred taxes 473 473
Prepaid expenses and other 3,979 5,448
-------------- -------------
Total Current Assets 76,835 80,652
-------------- -------------
MARKETABLE SECURITIES:
Cost $622 ($586 at June 30, 2004) 686 640
-------------- -------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 1,043 977
Machinery and equipment 3,301 3,314
Furniture and fixtures 4,213 4,149
Capital leases 417 371
-------------- -------------
8,974 8,811
Less: Accumulated depreciation and amortization (4,763) (4,271)
-------------- -------------
Net Property, Plant and Equipment 4,211 4,540
-------------- -------------
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS, at cost
Less accumulated amortization of $4,503 ($4,224 at June 30, 2004) 2,511 2,259

GOODWILL, less accumulated amortization of $3,601 ($3,227 at June 30,
2004) 11,494 11,104

DEFERRED TAXES 12,174 12,151

OTHER ASSETS 4,332 3,925
-------------- -------------
TOTAL ASSETS $ 112,243 $ 115,271
============== =============


The accompanying notes to consolidated financial statements
are an integral part of these statements.

1



BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY



March 31, June 30,
2005 2004
----------- ----------

CURRENT LIABILITIES:
Loans payable $ 2,798 $ 2,757
Current portion of long-term debt 1,079 20,523
Accounts payable, trade 12,003 11,615
Notes payable, trade 9,779 10,840
Accrued salaries, commissions, bonus and profit-sharing 6,540 6,808
Customer deposits 3,782 2,785
Accrued and withheld taxes 1,898 2,184
Income taxes payable 1,720 3,079
Other accounts payable and accrued liabilities 10,917 11,687
----------- ----------
Total Current Liabilities 50,516 72,278
----------- ----------
LONG-TERM LIABILITIES:
Long-term debt 17,150 1,794
Other long-term liabilities 6,664 6,732
----------- ----------
Total long-term liabilities 23,814 8,526
----------- ----------
Total Liabilities 74,330 80,804
----------- ----------
COMMITMENTS AND CONTINGENCIES:

STOCKHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares authorized,
16,575,349 shares issued (16,529,348 shares at June 30, 2004) 166 166
Class B Common Stock, $.01 par, 4,500,000 shares authorized,
2,137,883 shares issued (2,137,883 shares at June 30, 2004) 21 21
Capital contributed in excess of par value 57,065 57,017
Retained deficit (9,651) (12,667)
Accumulated other comprehensive income 3,033 2,651
Less: Treasury stock, at cost: Class A - 3,630,202 shares, Class B - 172,464
shares at March 31, 2005 and June 30, 2004 (12,721) (12,721)
----------- ----------
Total Stockholders' Equity 37,913 34,467
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 112,243 $ 115,271
=========== ==========


The accompanying notes to consolidated financial statements
are an integral part of these statements.

2


BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)



For the three months For the nine months
ended March 31, ended March 31,
-------------------- ----------------------
2005 2004 2005 2004
--------- -------- --------- ---------

Net sales $ 43,673 $ 42,770 $ 124,902 $ 116,724
Cost of goods sold 29,232 29,389 85,663 79,777
--------- -------- --------- ---------
Gross profit 14,441 13,381 39,239 36,947
--------- -------- --------- ---------

Operating expenses:
General and administrative 4,877 4,071 12,827 12,381
Selling 3,364 3,424 10,329 9,401
Engineering and development 4,104 3,724 11,326 10,282
Restructuring charges (338) - (338) 426
--------- -------- --------- ---------
12,007 11,219 34,144 32,490
--------- -------- --------- ---------
Operating income 2,434 2,162 5,095 4,457
--------- -------- --------- ---------

Other expense (income):
Interest expense 462 1,383 1,985 3,738
Interest income (26) (34) (79) (90)
Royalty income, net (280) (1,217) (1,797) (2,767)
Other expense (income), net (95) 648 29 (981)
--------- -------- --------- ---------
61 780 138 (100)
--------- -------- --------- ---------
Income before income taxes 2,373 1,382 4,957 4,557
Provision for income taxes 864 677 1,941 1,949
--------- -------- --------- ---------
Net income $ 1,509 $ 705 $ 3,016 $ 2,608
========= ======== ========= =========

Net income (loss) per share - basic and diluted:
Income per share - basic $ 0.10 $ 0.05 $ 0.20 $ 0.17
--------- -------- --------- ---------
Income per share - diluted $ 0.10 $ 0.05 $ 0.20 $ 0.17
========= ======== ========= =========
Weighted average shares outstanding:
Basic 14,911 15,015 14,895 15,015
========= ======== ========= =========
Diluted 15,274 15,429 15,315 15,229
========= ======== ========= =========


The accompanying notes to consolidated financial statements
are an integral part of these statements.

3


BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)




Class A Class B Capital Accumulated
Common Stock Common Stock Contributed Other Treasury Stock
----------------- ------------------ In Excess Retained Comprehensive -------------------- Comprehensive
Shares Amount Shares Amount of Par Deficit Income Shares Amount Income
---------- ------ ---------- ------ ----------- -------- ------------- ---------- ------ --------------

Balance at
June 30, 2004 16,529,348 $ 166 2,137,883 $ 21 $ 57,017 $(12,667) $ 2,651 (3,802,666) $(12,721)

Net income for the
nine months ended
March 31, 2005 3,016 $ 3,016

Translation
adjustment 405 405

Unrealized gain on
available-for-sale
securities, net of
tax 7 7

Unrealized gain on
forward contracts,
net of tax (30) (30)
-------

Shares issued under
Stock Option Plan 46,001 48

Comprehensive
Income $ 3,398
=======

Balance at ---------- ------ --------- ------ ----------- -------- ------------- ---------- --------
March 31, 2005 16,575,349 $ 166 2,137,883 $ 21 $ 57,065 $ (9,651) $ 3,033 (3,802,666) $(12,721)
========== ====== ========= ====== =========== ======== ============= ========== ========


The accompanying notes to consolidated financial
statements are an integral part of these statements.

4


BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)



For the nine months ended
March 31,
-------------------------
2005 2004
------------ ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,016 $ 2,608
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,210 1,324
Accrued retirement pay 173 225
Provision for losses on accounts receivable 76 86
Write off of fixed assets 80 -
Restructuring charges (338) 424
Deferred income taxes 5 2
Changes in assets and liabilities:
Accounts and notes receivable 1,646 (2,117)
Inventories 1,651 (910)
Prepaid expenses and other 2,001 1,394
Other assets (430) 260
Customer deposits 631 654
Accrued compensation (633) 968
Payments against restructuring charges (469) (1,166)
Accounts and notes payable, trade (1,303) 997
Income taxes payable (1,373) (123)
Accrued and withheld taxes (286) (181)
Other accounts payable and accrued liabilities (457) (100)
Interest payable (95) 77
------------ ----------
Net cash provided by operating activities 5,105 4,422
------------ ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property, plant and equipment (473) (358)
Additions of patents and trademarks (498) (373)
------------ ----------
Net cash (used) by investing activities (971) (731)
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term and short-term borrowings - 22,409
Long-term and short-term debt repayments (5,234) (19,557)
Principal payments under capital lease obligations (93) (70)
Payment of debt financing costs (259) (2,533)
Other long-term liabilities 54 62
Proceeds of stock option exercise 48 -
------------ ----------
Net cash (used) provided by financing activities (5,484) 311
------------ ----------

Effect of exchange rate changes 379 1,412
------------ ----------

Net (decrease) increase in cash and cash equivalents (971) 5,414
Cash and cash equivalents at beginning of period 12,008 6,950
------------ ----------
Cash and cash equivalents at end of period $ 11,037 $ 12,364
============ ==========


The accompanying notes to consolidated financial statements
are an integral part of these statements.

5


BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

Supplemental disclosures of cash flow information:



For the nine months ended
March 31,
-------------------------
2005 2004
-------- --------

Cash paid during the period for:
Interest $ 2,080 $ 3,815
Income taxes $ 3,286 $ 1,924


The accompanying notes to consolidated financial statements
are an integral part of these statements.

6


BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

Baldwin Technology Company, Inc. and its subsidiaries ("Baldwin" or the
"Company") are engaged primarily in the development, manufacture and sale of
accessories and controls for the printing industry.

The accompanying unaudited consolidated financial statements include the
accounts of Baldwin and have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and in compliance with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. These
financial statements reflect all 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 fiscal year ended June 30, 2004.

NOTE 2 - RECENTLY ISSUED ACCOUNTING STANDARDS:

In December 2004, the Financial Accounting Standards Board (FASB)
published Statement of Financial Accounting Standards (SFAS) No. 123 (revised
2004), (SFAS 123(R)) "Share Based Payment". SFAS 123(R) establishes standards
for the accounting for transactions in which an entity exchanges its equity
instruments for goods or services. The statement focuses primarily on accounting
for transactions in which an entity obtains employee services in shared-based
payment transactions. SFAS 123(R) eliminates the ability to account for
share-based compensation transactions using APB Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees", and generally requires that such
transactions be accounted for using a fair-value-based method. The Company
currently accounts for its stock option plans under the recognition and
measurement principals of APB 25. As all previously issued stock option awards
granted under the plans had an exercise price equal to the market value of the
underlying common stock on the date of grant, no compensation costs related to
stock option grants are currently reflected in net income. SFAS 123(R) is
effective as of the annual reporting period that begins after June 15, 2005,
therefore, the effective date for the Company is July 1, 2005. SFAS 123(R)
applies to all awards granted after the required effective date and to awards
modified, repurchased, or cancelled after that date and as a consequence future
employee stock option grants and other stock based compensation plans will be
recorded as expense over the vesting period of the award based on their fair
values at the date the stock based compensation is granted. The effect of
initially applying SFAS 123(R) is to be recognized as of the required effective
date using a modified prospective method. Under the modified prospective method
the Company will recognize stock-based compensation expense from July 1, 2005 as
if the fair value based accounting method had been used to account for all
outstanding unvested employee awards granted, modified or settled in prior
years. The ultimate impact on future years results of operation and financial
position will depend upon the level of stock based compensation granted in
future years. The Company estimates the additional compensation expense
associated with its current outstanding awards will be $165,000 after tax for
fiscal year ending June 30, 2006. The Securities and Exchange Commission's (SEC)
recent adoption of a new rule that amends the compliance dates for SFAS 123R
does not affect the Company's implementation date.

7


On October 22, 2004, the American Jobs Creation Act of 2004 (the Act) was
signed into law. Some of the key relief provisions of the new Act include a
temporary incentive for U.S. multinationals to repatriate foreign earnings, a
new domestic manufacturing deduction, and international tax reforms designed to
improve the global competitiveness of U.S. multinationals. Some of the key
revenue-raising provisions of the Act include repeal of a U.S. export tax
incentive known as the "extraterritorial income exclusion" (ETI), new tax
shelter penalties, restrictions on deferred compensation, and numerous other
provisions aimed at specific transactions. The Company is currently evaluating
the impact of the new law, among other means, for possible repatriation of cash
in the future.

Additionally, the FASB issued SFAS No. 151 related to inventory costs and
SFAS No. 153 related to exchanges of non-monetary assets. Adoption of these
amendments to Accounting Research Bulletin No. 43 and Accounting Principles
Board Opinion No. 29 are not expected to have a material effect on the Company's
results of operations and financial position.

NOTE 3 - REVOLVING CREDIT FACILITY:

On September 15, 2004, the Company amended its primary source of outside
financing, the revolving credit agreement (the "Maple Credit Agreement") with
Maple Bank GmbH ("Maple"). The amendment increased the size of the facility to
$28,000,000 from $20,000,000, extended the maturity date of the loan to October
2008, and reduced the interest rates and annual fees associated with the
Agreement. The credit facility is collateralized by substantially all of the
accounts and notes receivable of the Company and a portion of the Company's
inventory up to a maximum amount of $10,000,000. Borrowings under the credit
facility are subject to a borrowing base and bear interest at a rate equal to
the three-month Eurodollar rate (as defined in the Maple Credit Agreement) plus
(i) 5.125% for loans denominated in U.S. Dollars or (ii) 5.525% for loans
denominated in Euros. The interest rate will be reduced by 0.50% or whole
increments thereof for each whole increment of Disclosed EBITDA (as defined in
the Credit Agreement) that equals or exceeds $1,250,000 for any fiscal quarter.
In no event however, may the interest rate be less than 7.625% for EURO based
borrowings and 7.5% for dollar-based borrowings. Additionally, the amendment
granted to the lender an option to acquire a maximum of $5,000,000 of equity
securities (as defined in the amendment) should the Company choose to issue any
such securities. The amended credit agreement does not require the Company to
meet any financial covenants, except for the limitation on annual capital
expenditures; however, it contains a material adverse effect clause, which
provides that Maple would not be obligated to fund any loan, convert or continue
any loan as a LIBOR loan or issue any new letters of credit in the event of a
material adverse effect. Management does not anticipate that such an event will
occur; however, there can be no assurance that such an event will not occur.

8




JUNE 30, 2004 MARCH 31, 2005
--------------------------------- -----------------------------
CURRENT LONG-TERM CURRENT LONG-TERM
-------------- --------------- ------------ -------------

Revolving Credit Facility due October 1, 2008,
interest rate 5.525% plus three-month
Eurodollar rate (2.153% at March 31)............ $ -- $ -- $ -- $ 15,885,000
Revolving Credit Facility due August 15,
2005, interest rate 10.00% plus three-
month Eurodollar rate........................... 18,497,000 -- -- --
Revolving Credit Facility due August 15,
2005, interest rate 11.50% plus three-
month Eurodollar rate........................... 970,000 -- -- --
Term Loan payable by foreign subsidiary
due December 8, 2006, interest rate 1.5%........ 919,000 1,379,000 933,000 933,000
Note payable by foreign subsidiary
through 2008, interest rate 5.95%............... 120,000 389,000 127,000 318,000
Notes payable by foreign subsidiary
through February 2007, interest rates
ranging from 4.58% to 4.67%..................... 17,000 26,000 19,000 14,000
-------------- --------------- ------------ -------------
$ 20,523,000 $ 1,794,000 $ 1,079,000 $ 17,150,000
============== =============== ============ =============


The Company maintains relationships with both foreign and domestic banks,
which combined have extended short and long term credit facilities to the
Company totaling $34,074,000, including $28,000,000 available under the Maple
Credit Agreement. As of March 31, 2005, the Company had $22,409,000 outstanding
under these credit facilities with $17,267,000 (including letters of credit)
outstanding under the Maple Credit Agreement.

NOTE 4 - NET INCOME (LOSS) PER SHARE:

Basic net income per share includes no dilution and is computed by
dividing net income available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted net income per share
reflects the potential dilution of securities that could share in the earnings
of an entity. The weighted average shares outstanding used to compute diluted
net income per share include 363,000 and 420,000 additional shares,
respectively, for the three and nine months ended March 31, 2005 and 414,000 and
215,000 additional shares for the three and nine months ended March 31, 2004,
which represent potentially dilutive securities. Outstanding options to purchase
841,000 and 559,000 shares of the Company's common stock for the nine months
ended March 31, 2005 and 2004, respectively, are not included in the above
calculation to compute diluted net income per share as they have an
anti-dilutive effect.

NOTE 5 - OTHER COMPREHENSIVE INCOME:

Accumulated Other Comprehensive Income ("AOCI") is comprised of various
items which affect equity that result from recognized transactions and other
economic events other than transactions with owners in their capacity as owners.
AOCI is included in stockholders' equity in the consolidated balance sheets and
consists of cumulative translation adjustments, unrealized gains and losses on
available-for-sale securities and unrealized gains and losses on derivative
instruments. AOCI consists of the following:

9





March 31, 2005 June 30, 2004
--------------------- ---------------------

Cumulative translation adjustments $ 3,130,000 $ 2,725,000
Unrealized gain on investments,
net of deferred taxes of $26,000
($22,000 at June 30, 2004) 38,000 31,000
Unrealized gain (loss) on forward
Contracts, net of tax (35,000) (5,000)
Minimum pension liability, net of tax (100,000) (100,000)
--------------------- ---------------------
$ 3,033,000 $ 2,651,000
===================== =====================


NOTE 6 - INVENTORIES:

Inventories consist of the following:



March 31, 2005 June 30, 2004
--------------------- ---------------------
(Unaudited)

Raw materials $ 12,249,000 $ 12,309,000
In process 4,470,000 4,130,000
Finished goods 7,472,000 8,559,000
--------------------- ---------------------
$ 24,191,000 $ 24,998,000
===================== =====================


Foreign currency translation effects increased inventories by $845,000
from June 30, 2004 to March 31, 2005.

NOTE 7 - DERIVATIVES:

During the nine months ended March 31, 2005, the Company had currency
futures contracts that qualified as cash flow hedges; accordingly, the gain or
loss on these cash flow hedges was recorded in AOCI and will be recognized when
the hedged items affect earnings. In addition, during the quarter the Company
entered into a currency futures contract that qualified as a fair value hedge;
accordingly the gain was recorded in other income expense. The change in fair
value had no material impact on earnings for the quarter and nine months ended
March 31, 2005.

Unrealized net gains (losses) included in AOCI are as follows:



(in thousands) March 31, 2005 March 31, 2004
- ------------------------------------- -------------- ----------------
(Unaudited)

Balance at beginning of period $ (5,000) $ (4,000)
Additional gains, net (49,000) -
Amounts reclassified to earnings, net 19,000 34,000
-------------- ----------------
Balance at end of period $ (35,000) $ 30,000
============== ================


The unrealized net loss of $35,000 at March 31, 2005 represents net gains
on currency futures contracts, which expire at various times through May 30,
2005, and were reclassified to earnings during that period.

NOTE 8 -- GOODWILL AND OTHER INTANGIBLE ASSETS:

The changes in the carrying amount of goodwill for the nine months ended
March 31, 2005 are as follows:

10





Accumulated
(in thousands) Gross Carrying Amount Amortization Net Book Value
- ------------------------------- --------------------- ------------------ ------------------

Balance as of July 1, 2004 $ 14,620,000 $ 3,516,000 $ 11,104,000
Effects of currency translation 475,000 85,000 390,000
--------------------- ------------------ ------------------
Balance as of March 31, 2005 $ 15,095,000 $ 3,601,000 $ 11,494,000
===================== ================== ==================


Intangible assets subject to amortization are comprised of the following:



As of March 31, 2005
-------------------------------------- As of June 30, 2004
Accumulated ----------------------------------------------------
(in thousands) Gross Carrying Amount Amortization Gross Carrying Amount Accumulated Amortization
- -------------------------- --------------------- ------------- --------------------- ------------------------

Intangible Assets:
Patents and trademarks $ 7,014,000 $ 4,503,000 $ 6,483,000 $ 4,224,000
Other 993,000 757,000 923,000 668,000
--------------------- ------------- --------------------- ------------------------
Total $ 8,007,000 $ 5,260,000 $ 7,406,000 $ 4,892,000
===================== ============= ===================== ========================


Amortization expense associated with these intangible assets was $102,000
and $348,000, respectively, for the three and nine months ended March 31, 2005
and $136,000 and $410,000, respectively, for the three and nine months ended
March 31, 2004. The other category is included in "Other assets" on the
accompanying consolidated balance sheets.

NOTE 9 -- RESTRUCTURING CHARGES AND RELATED RESERVES:

The following table details the components of the restructuring charges
and the remaining reserve balances as of March 31, 2005 and June 30, 2004
related to the March 2000 Plan.

Activity related to the March 2000 Plan in the nine months ended March 31,
2005 was as follows:



Remaining
Charges Reserve
Remaining Reserve Payments Reserve Against March
June 30, 2004 Reserve Release Against Reserve Recharacterization Reserve 31, 2005
----------------- --------------- --------------- ------------------ -------- ---------

Facility lease termination
costs.........................
$ 792,000 $ (338,000) $ (286,000) $ (108,000) $(60,000) $ 0
----------------- --------------- --------------- ------------------ -------- ---------
Total program.................. $ 792,000 $ (338,000) $ (286,000) $ (108,000) $(60,000) $ 0
================= =============== =============== ================== ======== =========


The recharacterization of facility lease termination costs relates to the
assumption of the pre-existing lease obligation by the lessor of the Company's
new office space. The value of this incentive has been recharacterized as a
deferred credit and will be amortized on a straight line basis over the life of
the new lease. The reserve release relates to previously accrued expenses which
will not be incurred due to the relocation of the Company's corporate offices.
Charges against reserve relate to write-off of leasehold improvements associated
with the Company's former corporate offices.

The following table details the components of the restructuring charges
and the remaining reserve balances as of December 31, 2004 and June 30, 2004
related to the August 2002 Plan.

11


Activity related to the August 2002 Plan in the nine months ended March
31, 2005 was as follows:



Remaining Payments Remaining
Reserve Against Reserve
June 30, 2004 Reserve March 31, 2005
------------- ---------- --------------

Severance................................................. $ 151,000 $ (62,000) $ 89,000
Facility lease termination costs.......................... 158,000 (94,000) 64,000
Other costs............................................... 32,000 (27,000) 5,000
------------- ---------- --------------
Total program............................................. $ 341,000 $ (183,000) $ 158,000
============= ========== ==============


Severance and lease termination costs will be paid through October 2006.

NOTE 10 - BUSINESS SEGMENT INFORMATION:

Operating segments are defined as material components of an enterprise
about which separate information is available that is evaluated regularly by the
chief operating decision maker, or decision-making group, in deciding how to
allocate resources and assess performance. The Company has one segment, which is
Accessories and Controls.

The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2004. An operating
segment's financial performance is primarily evaluated based on operating
profit.

The tables below present information about reported segments for the three
and nine months ended March 31, 2005 and 2004.



For the three months For the nine months
ended March 31, ended March 31,
------------------------- -----------------------
(in thousands) 2005 2004 2005 2004
- ---------------------------- -------- -------- -------- ---------
(Unaudited) (Unaudited)

Net Sales:
Accessories and Controls $ 43,673 $ 42,770 $124,902 $ 116,724
-------- -------- -------- ---------
Total Net Sales $ 43,673 $ 42,770 $124,902 $ 116,724
======== ======== ======== =========


Foreign currency translation effects increased net sales by $1,121,000 and
$5,805,000, respectively, for the three and nine months ended March 31, 2005.



For the three months For the nine months
ended March 31, ended March 31,
------------------------- -----------------------
(in thousands) 2005 2004 2005 2004
- ---------------------------------------------- ------- -------- -------- ---------
(Unaudited) (Unaudited)

Operating income (loss):
Accessories and Controls $ 5,216 $ 3,910 $ 11,621 $ 10,017
Corporate (2,782) (1,748) (6,526) (5,560)
------- -------- -------- ---------
Total operating income (loss) 2,434 2,162 5,095 4,457
Interest expense, net (436) (1,349) (1,906) (3,648)
Royalty income, net 280 1,217 1,797 2,767
Other income (expense), net 95 (648) (29) 981
------- -------- -------- ---------
Income (loss) from continuing operations
before income taxes $ 2,373 $ 1,382 $ 4,957 $ 4,557
======= ======== ======== =========


Included in operating income are restructuring reserve release of
($338,000) for the three and nine months ended March 31, 2005 and restructuring
charges of zero and $425,000,

12



respectively, for the three and nine months ended March 31, 2004 related to
accessories and controls.



(in thousands) March 31, 2005 June 30, 2004
- ---------------------------------- -------------- -------------
(Unaudited)

Identifiable assets:
Accessories and Controls $ 98,986 $ 100,956
Corporate 13,257 14,315
-------------- -------------
Total identifiable assets $ 112,243 $ 115,271
============== =============


NOTE 11 - STOCK OPTIONS:

On January 1, 2003, the Company adopted the disclosure provisions of FASB
Statement No. 148 ("SFAS 148"), "Accounting for Stock-Based Compensation -
transition and disclosure," which amended FASB Statement No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation" to provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation, effective as of the
beginning of the fiscal year. Baldwin continues to apply the provisions of
Accounting Principals Board Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued to Employees," in accounting for stock-based compensation. In accordance
with APB 25, compensation costs for stock options is recognized in income based
on the excess, if any, of the quoted market price over the exercise price of the
stock on the date of grant. The exercise prices of all stock options equals the
fair market value of the shares subject to such options on the date of grant,
therefore no compensation expense is recorded.

The pro forma net income and income per share information have been
determined for employee stock plans under the fair value method using the
Black-Scholes option-pricing model at the date of grant. The following table
illustrates the effect on net income and income (loss) per share if the Company
had applied the fair value recognition provisions of SFAS 123 for the three and
nine months ended March 31, 2005 and 2004:



For the three months For the nine months
ended March 31, ended March 31,
-------------------- -------------------
(in thousands) 2005 2004 2005 2004
- ----------------------------------------------------- -------- ------ ------- -------
(Unaudited) (Unaudited)

Net income (loss) as reported $ 1,509 $ 705 $ 3,016 $ 2,608
Less: Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects (13) (26) (39) (77)
-------- ------ ------- -------
Pro forma net income (loss) $ 1,496 $ 679 $ 2,977 $ 2,531
======== ====== ======= =======
Income (loss) per share:
Basic and diluted - as reported $ 0.10 $ 0.05 $ 0.20 $ 0.17
======== ====== ======= =======
Basic and diluted - pro forma $ 0.10 $ 0.05 $ 0.20 $ 0.17
======== ====== ======= =======


13



NOTE 12 - CUSTOMERS:

During the three and nine months ended March 31, 2004 and March 31, 2005,
one customer accounted for more than ten (10%) percent of the Company's net
sales. Koenig und Bauer Aktiengesellschaft ("KBA") accounted for approximately
17% of the Company's net sales for the three and nine months ended March 31,
2005 and approximately 16% of the Company's net sales for the three and nine
months ended March 31, 2004.

NOTE 13 - WARRANTY COSTS:

The Company's standard contractual warranty provisions are to repair or
replace, at the Company's option, product that is proven to be defective. The
Company estimates its warranty costs as a percentage of revenues on a product by
product basis, based on actual historical experience within the Company. Hence,
the Company accrues estimated warranty costs at the time of sale. In addition,
should the Company become aware of a specific potential warranty claim, a
specific charge is recorded and accounted for separate from the percent of
revenue discussed above.



Warranty Amount
----------------------
(in thousands) 2005 2004
- ------------------------------------------ ------- -------

Warranty reserve at June 30, 2004 and 2003 $ 2,714 $ 1,665
Additional warranty expense accruals 3,215 2,952
Payments against reserve (3,343) (2,634)
Effects of currency rate fluctuations 144 125
------- -------
Warranty reserve at March 31, 2005 and 2004 $ 2,730 $ 2,108
======= =======


NOTE 14 - LEGAL PROCEEDINGS AND SETTLEMENTS:

On November 14, 2002, the Dusseldorf Higher Regional Court ("DHRC")
announced its judgment in favor of Baldwin in a patent infringement dispute
against its competitor, technotrans AG ("Technotrans"). Technotrans filed an
appeal of the DHRC ruling with the German Supreme Court in Karlsruhe.
Technotrans also filed to invalidate the Company's patent with the Federal
Patent Court in Munich, Germany. On July 21, 2004, the German Federal Patent
Court upheld the validity of the Company's patent. Technotrans has also appealed
that judgment to the German Supreme Court in Karlsruhe. That court has not yet
reached a decision on either of those appeals. No amounts have been recorded in
the consolidated financial statements with regard to the potential contingent
gain from the DHRC judgment; however, the Company is considering a claim for
damages based on the favorable rulings in both the patent infringement case and
the patent validity confirmation.

NOTE 15 -- PENSIONS AND OTHER POSTRETIREMENT BENEFITS:

The following table sets forth the components of net periodic benefit
costs for the Company's defined benefit plans for the three and nine months
ended March 31, 2005 and 2004:

14





Pension Benefits
-----------------------------------------------------------
For the three months ended For the nine months ended
March 31, March 31,
-------------------------- -------------------------
(in thousands) 2005 2004 2005 2004
- ------------------------------------- --------- --------- --------- ---------
(Unaudited)

Service cost $ 67,000 $ 57,000 $ 201,000 $ 180,000
Interest cost 15,000 16,000 45,000 47,000
Expected return on plan assets (1,000) (1,000) (3,000) (3,000)
Amortization of transition obligation 3,000 4,000 9,000 11,000
Amortization of net gain - (6,000) - (20,000)
--------- --------- --------- ---------
Net periodic benefit cost $ 84,000 $ 70,000 $ 252,000 $ 215,000
========= ========= ========= =========


During the nine months ended March 31, 2005 and 2004 the Company made
contributions to the plans of $173,000 and $144,000, respectively.

15



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 consolidated financial statements of Baldwin.

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) material changes in foreign currency exchange rates
versus the U.S. Dollar, (iii) changes in the mix of products and services
comprising revenues, (iv) a decline in the rate of growth of the installed base
of printing press units and the timing of new press orders, (v) general economic
conditions, either domestically or in foreign locations, (vi) the ultimate
realization of certain trade receivables and the status of ongoing business
levels with the Company's large OEM customers and (vii) competitive market
influences. Additional factors are set forth in Exhibit 99 to the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2004, which should
be read in conjunction herewith.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For further information regarding the Company's critical accounting
policies, please refer to the Management's Discussion and Analysis section of
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
2004. For the three and nine month period ended March 31, 2005 there has been no
change in critical accounting policies.

THREE MONTHS ENDED MARCH 31, 2005 VS. THREE MONTHS ENDED MARCH 31, 2004

CONSOLIDATED RESULTS

Net sales for the three months ended March 31, 2005 increased by
$903,000, or 2.1%, to $43,673,000 from $42,770,000 for the three months ended
March 31, 2004. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales by $1,121,000; in the current period,
otherwise, net sales would have decreased by $218,000.

The net sales decrease was primarily due to lower shipments in the
newspaper market in Europe, particularly in Germany and the U.K. and lower
commercial market shipments in the U.S. Partially offsetting these declines were
higher cleaning systems shipments in both the commercial and newspaper markets
in Asia, primarily Japan.

Gross profit for the three months ended March 31, 2005 was
$14,441,000 (33.1% of net sales) as compared to $13,381,000 (31.3% of net sales)
for the three months ended March 31, 2004, an increase of $1,060,000 or 8.0%.
Currency rate fluctuations

16


increased gross profit by $442,000 in the current period. Excluding the effects
of currency rate fluctuations, gross profit would have increased by $618,000.
Gross profit as a percentage of sales increased as a result of favorable sales
mix in Japan coupled with lower material costs in Germany. In Japan increased
sales in the newspaper market and a shift to higher margin product sales in the
commercial market favorably impact gross margin.

Selling, general and administrative expenses were $8,241,000 (18.9% of net
sales) for the three months ended March 31, 2005 as compared to $7,495,000
(17.5% of net sales) for the same period in the prior fiscal year, an increase
of $746,000 or 10.0%. Currency rate fluctuations increased these expenses by
$159,000 in the current period. Otherwise, selling, general and administrative
expenses would have increased by $587,000. Selling expenses decreased by
$60,000, which primarily related to a negative currency translation impact of
$87,000. Otherwise, selling expense decreased by $147,000 mainly due to lower
trade show and advertising costs in the current year period partially offset by
higher commissions. General and administrative expenses increased by $735,000,
primarily due to the timing of incentive compensation accruals associated with
the Company's performance.

Engineering and development expenses increased by $382,000 over the three
months ended March 31, 2004. Currency rate fluctuations increased these expenses
by $107,000 in the current period. Excluding the effects of currency rate
fluctuations, engineering and development expenses would have increased by
$275,000 in the current period. This increase related primarily to higher
employee compensation and related costs. As a percentage of net sales,
engineering and development expenses increased to 9.4% for the three months
ended March 31, 2005 compared to 8.7% for the same period in the prior fiscal
year.

The Company released previously established restructuring charges of
$338,000 related to expenses avoided by relocation of its corporate offices to a
new facility for the three months ended March 31, 2005 compared to zero for the
same period in the prior fiscal year.

Interest expense for the three months ended March 31, 2005 was $462,000 as
compared to $1,383,000 for the three months ended March 31, 2004. Currency rate
fluctuations increased interest expense by $5,000 in the current period.
Otherwise, interest expense would have decreased by $916,000. This decrease was
primarily due to lower interest rates in effect for the three months ended March
31, 2005 as a result of the amended credit agreement with Maple Bank GMBH
("Maple"), which was entered into on September 15, 2004 and lower deferred debt
financing cost amortization during the period associated with the Maple loan.
Interest income amounted to $26,000 and $34,000 for the three months ended March
31, 2005 and 2004, respectively.

Net royalty income for the three months ended March 31, 2005 was $280,000
as compared to $1,217,000 for the three months ended March 31, 2004. The
decrease in royalty income in the current period is due to the expiration of a
significant group of patents in February 2005.

Other income (expense), net amounted to income of $95,000 for the three
months ended March 31, 2005 compared to expense of ($648,000) for the three
months ended March 31, 2004. Other income (expense), net, for the three months
ended March 31, 2005 and 2004, respectively, includes: net foreign currency
transaction gains (losses) of $123,000 and ($50,000) attributable to currency
fluctuations; expense of zero and ($542,000) of costs incurred related to the
termination of discussions with respect to a proposed sale of the Company.

The Company recorded an income tax provision of $864,000 for the three
months ended March 31, 2005 as compared to $677,000 for the three months ended
March 31, 2004. The effective tax rate of 36.4% for the three months ended March
31, 2005 was primarily due to

17


greater taxable income in higher tax jurisdictions and in which tax loss
carry-forwards were not available partially offset by the reversal of net
$400,000 of previously recorded contingency which during the quarter was deemed
to be no longer probable. The effective tax rate for the three months ended
March 31, 2004 additionally differs from the statutory rate as no benefit was
recognized for losses incurred in certain countries as the realization of such
benefits was not more likely than not.

The Company's net income amounted to $1,509,000 for the three months ended
March 31, 2005, compared to a net loss of $705,000 for the three months ended
March 31, 2004. Currency rate fluctuations increased net income by $130,000 in
the current period. Net income per share amounted to $0.10 basic and diluted for
the three months ended March 31, 2005, as compared to a net loss of $0.05 basic
and diluted for the three months ended March 31, 2004.

SEGMENT RESULTS

ACCESSORIES AND CONTROLS GROUP

Net sales for the three months ended March 31, 2005 increased by $903,000,
or 2.1%, to $43,673,000 from $42,770,000 for the three months ended March 31,
2004. Currency rate fluctuations attributable to the Company's overseas
operations increased net sales for the current period by $1,121,000; otherwise,
net sales would have decreased by $218,000 in the current period.

The net sales decrease was primarily due to lower shipments in the
newspaper market in Europe, particularly in Germany and the U.K. and lower
commercial market shipments in the U.S. Partially offsetting these declines were
higher cleaning systems shipments in both the commercial and newspaper markets
in Asia, primarily Japan.

Operating income amounted to $5,216,000 (11.9% of net sales) for the three
months ended March 31, 2005, as compared to $3,910,000 (9.1% of net sales) for
the same period in the prior fiscal year, an increase of $1,306,000. Currency
rate fluctuations increased the current fiscal year's operating income by
$177,000. Otherwise, operating income would have increased by $1,129,000 in the
current period. This increase was primarily the result of gross profit
improvement from product sales mix and lower material costs coupled with the
release of restructure reserve.

NINE MONTHS ENDED MARCH 31, 2005 VS. NINE MONTHS ENDED MARCH 31, 2004

CONSOLIDATED RESULTS

Net sales for the nine months ended March 31, 2005 increased by
$8,178,000, or 7.0%, to $124,902,000 from $116,724,000 for the nine months ended
March 31, 2004. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales by $5,805,000 in the current period;
otherwise, net sales would have increased by $2,373,000.

The increase reflects increased sales in Europe, $1,486,000, primarily in
the commercial market for cleaning and spray dampening systems particularly in
Germany and the markets serviced by Sweden. Increased penetration into selected
OEMS and improving market conditions led to the improved revenue. In Asia,
particularly Japan, net sales increased $1,292,000 on increases to the
commercial market segment. In the Americas, particularly the United States sales
were relatively flat.

Gross profit for the nine months ended March 31, 2005 was $39,239,000
(31.4% of net sales) as compared to $36,947,000 (31.6% of net sales) for the
nine months ended March 31,

18


2004, an increase of $2,292,000 or 6.2%. Currency rate fluctuations increased
gross profit by $1,989,000 in the current period. Excluding the effects of
currency rate fluctuation, gross profit would have increased by $303,000. Gross
profit as a percentage of net sales remained constant as volume improvements in
Europe were offset by higher material costs in Japan coupled with unfavorable
absorption and higher material costs for imported products into the United
States.

Selling, general and administrative expenses amounted to $23,156,000
(18.5% of net sales) for the nine months ended March 31, 2005 as compared to
$21,782,000 (18.6% of net sales) for the same period in the prior fiscal year,
an increase of $1,374,000 or 6.3%. Currency rate fluctuations increased these
expenses by $868,000 in the current period. Otherwise, selling, general and
administrative expenses would have increased by $506,000. Selling expenses
increased by $424,000, which primarily related to increased compensation and
travel costs in Europe coupled with higher test installation costs at
prospective customer sites in response to improving market conditions. General
and administrative expenses increased by $82,000 as increased compensation costs
were offset by lower rent, depreciation, insurance and other costs.

Engineering and development expenses increased by $1,044,000 over the same
period in the prior fiscal year. Currency rate fluctuations increased these
expenses by $560,000 in the current period. Excluding the effects of currency
rate fluctuations, engineering and development expenses would have increased by
$484,000 in the current period. This increase related primarily to higher
employee compensation and related costs associated with product management
activities. As a percentage of net sales, engineering and development expenses
remained at approximately 9.0% for the nine months ended March 31, 2005 and
March 31, 2004.

The Company released restructuring reserves of $338,000 for the nine
months ended March 31, 2005 compared to a charge of $426,000 for the same period
in the prior fiscal year. The restructuring charge in the nine months ended
March 31, 2004 of $426,000 primarily represented additional employment
reductions in the United States and the United Kingdom associated with the
August 2002 Plan. The release of restructuring reserves during the nine months
ended March 31, 2005 relate to costs avoided by relocation of the company's
corporate office.

Interest expense for the nine months ended March 31, 2005 was $1,985,000
as compared to $3,738,000 for the nine months ended March 31, 2004. Currency
rate fluctuations increased interest expense by $135,000 in the current period.
Otherwise, interest expense would have decreased by $1,888,000. This decrease
was primarily due to lower interest rates in effect for the nine months ended
March 31, 2005 as a result of the amended credit agreement with Maple, which was
entered into on September 15, 2004 and lower deferred debt financing cost
amortization during the period associated with the Maple loan. Interest income
amounted to $79,000 and $90,000 for the nine months ended March 31, 2005 and
2004, respectively.

Net royalty income for the nine months ended March 31, 2005 was $1,797,000
as compared to $2,767,000 for the nine months ended March 31, 2004. The decrease
relates to the expiration of a group of patents in February 2005.

Other income (expense), net amounted to expense of $29,000 for the nine
months ended March 31, 2005 compared to income of $981,000 for the nine months
ended March 31, 2004. Other income (expense), net, for the nine months ended
March 31, 2005 and 2004, respectively, included: net foreign currency
transaction gains (losses) of $50,000 and $1,562,000. The $1,562,000 in the
prior year nine month period is primarily attributable to currency fluctuations
associated with the Maple loan. During fiscal year 2004 the loan was a

19


dollar based loan recorded on the books of the Company's Netherlands subsidiary
and subject to foreign currency fluctuations. During the quarter ended September
30,2004 the loan was converted from a dollar based loan to a euro based loan.
Additionally included in the nine months ended March 31, 2004 were costs of
($833,000) related to the termination of discussions with respect to a
proposed sale of the Company; and income of $197,000 resulting from the
ineffective portions of derivative financial instruments related to an interest
rate swap which ceased to qualify as a hedge.

The Company recorded an income tax provision of $1,941,000 for the nine
months ended March 31, 2005 as compared to $1,949,000 for the nine months ended
March 31, 2004. The effective tax rate of 39.1% for the nine months ended March
31, 2005 was primarily due to greater taxable income in higher tax jurisdictions
and in which tax loss carry-forwards were not available and the reversal of a
previously established contingent tax liability which is no longer deemed
probable. The effective tax rate for the nine months ended March 31, 2004
differed from the statutory rate as no benefit was recognized for losses
incurred in certain countries as the realization of such benefits was not more
likely than not.

The Company's net income amounted to $3,016,000 for the nine months ended
March 31, 2005, compared to $2,608,000 for the nine months ended March 31, 2004.
Currency rate fluctuations increased net income by $244,000 in the current
period. Net income per share amounted to $0.20 basic and diluted for the nine
months ended March 31, 2005, as compared to net income per share of $0.17 basic
and diluted for the nine months ended March 31, 2004.

SEGMENT RESULTS

ACCESSORIES AND CONTROLS GROUP

Net sales for the nine months ended March 31, 2005 increased by
$8,178,000, or 7.0%, to $124,902,000 from $116,724,000 for the nine months ended
March 31, 2004. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales by $5,805,000 in the current period;
otherwise, net sales would have increased by $2,373,000 in the current period.

Operating income amounted to $11,621,000 (9.3% of net sales) for the nine
months ended March 31, 2005, as compared to $10,017,000 (8.6% of net sales) for
the same period in the prior fiscal year, an increase of $1,604,000. Currency
rate fluctuations increased the current fiscal year's operating income by
$590,000. Otherwise, operating income would have increased by $1,014,000 in the
current period. The increase reflects gross profit improvements coupled with the
release of previously established restructuring reserves. Operating income for
the nine months ended March 31 2005 and 2004 included restructuring reversal and
charges of $(338,000) and $425,000, respectively.

20


LIQUIDITY AND WORKING CAPITAL

Cash flows from operating, investing and financing activities, as
reflected in the nine months ended March 31, 2005 and 2004 in the Consolidated
Statement of Cash Flows, are summarized as follows:



2005 2004
------------ ------------

Cash provided by (used for):
Operating activities $ 5,105,000 $ 4,422,000
Investing activities (971,000) (731,000)
Financing activities (5,484,000) 311,000
Effect of exchange rate changes on cash 379,000 1,412,000
------------ ------------
Net(decrease) increase in cash and cash
equivalents $ (971,000) $ 5,414,000
============ ============


Cash provided by operating activities increased $683,000 during the nine
months ended March 31, 2005 versus the prior year period. Management incentive
compensation plan payments, commensurate with fiscal year 2004 results, of
approximately $1,900,000, and higher income tax payments of $1,362,000,
particularly in Japan and Germany, were offset by timing of collections of notes
receivable, lower interest and restructuring payments and reductions in
inventory levels due to higher shipments during the period.

The Company utilized $971,000 and $731,000 for investing activities for
the nine months ended March 31, 2005 and 2004 respectively, for additions to
property, plant and equipment and patents and trademarks.

Cash used for financing activities during the quarter and nine months
ended March 31 2005, primarily reflects the Company's utilization of excess cash
to pay down long term debt.

On September 15, 2004, the Company amended its primary source of outside
financing, the revolving credit agreement (the "Maple Credit Agreement") with
Maple Bank GmbH ("Maple"). The amendment increased the size of the facility to
$28,000,000 from $20,000,000, extended the maturity date of the loan to October
2008, and reduced the interest rates and annual fees associated with the Maple
Credit Agreement. The credit facility is collateralized by substantially all of
the accounts and notes receivable of the Company and a portion of the Company's
inventory up to a maximum amount of $10,000,000. Borrowings under the credit
facility are subject to a borrowing base and bear interest at a rate equal to
the three-month Eurodollar rate (as defined in the Maple Credit Agreement) plus
(i) 5.125% for loans denominated in U.S. Dollars or (ii) 5.525% for loans
denominated in Euros. The interest rate will be reduced by 0.50% or whole
increments thereof for each whole increment of Disclosed EBITDA (as defined in
the Maple Credit Agreement) that equals or exceeds $1,250,000 for any fiscal
quarter. In no event however, may the interest rate be less than 7.625% for EURO
based borrowings and 7.5% for dollar-based borrowings. Additionally, the Maple
Credit Agreement granted to Maple an option to acquire a maximum of $5,000,000
of equity securities (as defined in the Maple Credit Amendment) should the
Company choose to issue any such securities. The Maple Credit Agreement does not
require the Company to meet any financial covenants, except for the limitation
on annual capital expenditures; however, it contains a material adverse effect
clause, which provides that Maple would not be obligated to fund any loan,
convert or continue any loan as a LIBOR loan or issue any new letters of credit
in the event of a material adverse effect. Management does not anticipate that
such an event will occur; however, there can be no assurance that such an event
will not occur. Management also expects that as a result of the aforementioned
amendment and full amortization of fiscal year 2004 debt financing costs that
reported interest expense for the full year ending June 30, 2005 will be
approximately $2,500,000 lower than for fiscal year ended June 30, 2004.

The Company maintains relationships with both foreign and domestic banks,
which combined have extended credit facilities to the Company totaling
$34,074,000, including

21


$28,000,000 available under the Maple Credit Agreement. As of March 31, 2005,
the Company had $22,409,000 outstanding under these credit facilities with
$17,267,000 (including letters of credit) under the Maple Credit Agreement.

The Company believes that its cash flows from operations, along with the
available bank lines of credit and alternative sources of borrowings, if
necessary, are sufficient to finance its working capital and other capital
requirements through the term of the Maple Credit Agreement.

At March 31, 2005 and June 30, 2004, the Company did not have any
relationships with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance entities, special purpose
entities or variable interest entities, which would have been established for
the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes. As such, the Company is not exposed to
any financing, liquidity, market or credit risk that could arise if the Company
had engaged in such relationships.

The following summarizes the Company's contractual obligations at March
31, 2005 and the effect such obligations are expected to have on its liquidity
and cash flow in the future:






Total at Fiscal Years ending June 30,
March 31, ----------------------------------------------------------
(in thousands) 2005 2005* 2006 2007 2008 2009 2010**
- ------------------------------------------ --------- ------ ------- ------ ------ -------- --------

Contractual Obligations:
Loans payable $ 2,798 $ - $ 2,798 $ - $ - $ - $ -
Capital lease obligations 205 29 93 41 25 17 -
Long-term debt 18,229 520 1,071 594 127 15,917 -
Non-cancelable operating lease obligations 12,377 1,136 3,987 2,567 1,614 1,282 1,791
--------- ------ ------- ------ ------ -------- --------
Total contractual cash obligations $ 33,609 $1,685 $ 7,949 $3,202 $1,766 $ 17,216 $ 1,791
========= ====== ======= ====== ====== ======== ========


* Includes only the remaining three months of the fiscal year ending June
30, 2005.

** Includes the remaining for the years past 2010.

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 fiscal year ended June 30, 2004. There have
been no material changes during the nine months ended March 31, 2005.

ITEM 4: CONTROLS AND PROCEDURES:

The Company maintains disclosure controls and procedures designed to
ensure that the information required to be disclosed in the reports that the
Company files or submits under the Securities Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.

The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness of
these disclosure controls and procedures as of the end of our fiscal quarter
March 31, 2005, the period covered by this report. Based on that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures are effective. No changes
were made to the Company's internal control over financial reporting during the
fiscal quarter ended March 31, 2005, that have materially affected, or are
reasonably likely to materially effect, the Company's internal control over
financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002 (the "Act") will require the
Company to include an internal control report from management in its annual
report for the year ending

22


June 30, 2007 (assumes the Company maintains non-accelerated filer status) and
in subsequent annual reports thereafter. The internal control report must
include the following: (1) a statement of management's responsibility for
establishing and maintaining adequate internal control over financial reporting,
(2) a statement identifying the framework used by management to conduct the
required evaluation of the effectiveness of the Company's internal control over
financial reporting, (3) management's assessment of the effectiveness of the
Company's internal control over financial reporting as of June 30, 2007 (assumes
continution of current non-accelerated filer status), including a statement as
to whether or not internal control over financial reporting is effective, and
(4) a statement that the Company's independent registered public accounting firm
have issued an attestation report on management's assessment of internal control
over financial reporting.

Management acknowledges its responsibility for establishing and
maintaining internal controls over financial reporting and seeks to continually
improve those controls. In addition, in order to achieve compliance with Section
404 of the Act within the required timeframe, the Company has initiated a
process to document and evaluate its internal controls over financial reporting
during the third quarter of the fiscal year ending June 30, 2005.

PART II: OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by Issuer and Affiliated Purchases

There has been no activity under the Company's stock repurchase program
for the quarter ended March 31, 2005.

ITEM 6. EXHIBITS

(a) Exhibits

31.01 Certification of the Principal Executive Officer pursuant to
Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.02 Certification of the Principal Financial Officer pursuant to
Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.01 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350 (filed herewith).

32.02 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350 (filed herewith).

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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/ Vijay C. Tharani
----------------------
Vice President, Chief Financial
Officer and Treasurer

Dated: May 16, 2005

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