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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended June 30, 1994 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)
65 ROWAYTON AVENUE, ROWAYTON, CONNECTICUT 06853
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-838-7470
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
on Which Registered
CLASS A COMMON STOCK AMERICAN STOCK EXCHANGE
PAR VALUE $.01
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
Aggregate market value of the voting stock held by non-affiliates of
the registrant as of August 31, 1994 was $77,999,779.
Number of shares of Common Stock outstanding at August 31, 1994:
Class A Common Stock 15,936,230
Class B Common Stock 1,865,000
----------
Total 17,801,230
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 are incorporated by reference from the Baldwin
Technology Company, Inc. Proxy Statement for the 1994 Annual Meeting of
Stockholders to be held on November 17, 1994 into Part III of this Form 10-K.
(A definitive proxy statement will be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year covered by this
Form 10-K.)
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TABLE OF CONTENTS
PAGE
----
Item 1. Business 1
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 38
Item 10. Directors, Executive Officers and Key Employees of the
Registrant 38
Item 11. Executive Compensation 38
Item 12. Security Ownership of Certain Beneficial Owners and
Management 38
Item 13. Certain Relationships and Related Transactions 38
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 39
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PART I
ITEM 1. BUSINESS
Baldwin Technology Company, Inc. ("Baldwin" or the "Company") is a
leading international manufacturer of material handling, accessory, control and
pre-press equipment for the printing industry. The Company offers its
customers a broad range of products designed to enhance the productivity and
increase the cost-efficiency of printing presses while addressing the
environmental concerns and safety issues involved in the printing process.
Baldwin's products include cleaning systems, fountain solution and ink control
systems, press and web control systems, web and material handling systems,
newspaper inserter equipment and automated imposition and plate exposure
equipment.
The Company sells its products both to printers to upgrade the
quality and capability of existing presses and to printing press manufacturers
which incorporate the Company's products with their own equipment for sale to
printers. The Company has product development and manufacturing facilities, as
well as sales and service operations, in its three major sectors: the Americas,
Europe and Asia Pacific.
INDUSTRY OVERVIEW
Baldwin operates in a highly fragmented market. The Company defines
its business as that of providing material handling, accessory, control and
pre-press equipment for the printing industry. The Company believes that it
produces the most complete line of material handling, accessory, control and
pre-press equipment for the printing industry.
The Company's products are used by printers engaged in all printing
processes including lithography, gravure, letterpress and flexography. The
Company's products are designed to improve the printing processes in terms of
both quality of the finished product as well as the efficiency. The largest
share of its business is in offset printing. Offset printing is the largest
segment of the domestic printing market and is used primarily for printing
magazines, business forms, catalogs, greeting cards, packaging and newspapers.
Although offset printing represents a significant segment of the U.S.
commercial printing industry, it is not currently the most significant segment
of the international printing market. The Company believes that the future
growth of this international market will be attributable in large part to the
increased use of offset printing. The Company has established operations in
each of its three major sectors to take advantage of growth opportunities in
these markets. Baldwin's worldwide operations enable it to closely monitor new
product developments in different printing markets and to introduce new
products, or adapt existing ones, to meet the printing requirements of specific
local markets throughout the world.
PRINCIPAL PRODUCTS
The Company manufactures and sells more than 150 different products
to printers and printing press manufacturers. The Company's product
development is focused on the needs of the printer. Typically, it takes a new
product several years after its introduction to make a significant contribution
to the Company's net sales. Initially, after the introduction of a new
product, the Company's marketing efforts usually focus on printers. With the
exception of the Company's Kansa and Misomex product lines, as a product
progresses through its life cycle, the percentage of sales to printing press
manufacturers generally increases as the product's acceptance by the industry
increases and printers begin to specify certain of the Company's products as
part of their accessory equipment package when ordering new presses. The
Company's Kansa and Misomex product lines are primarily marketed to printers.
Historically, the Company's products have had
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a long life cycle as the Company continually upgrades and refines its product
lines to meet customer needs and changes in printing press technology. The
Company's product lines have expanded about equally through both internal
product development and acquisitions of product lines and companies.
The Company's products range in price from under $100 to
approximately $325,000. Baldwin's principal products are:
CLEANING SYSTEMS. The Company's first Cleaning Systems product was
the Press Washer which cleaned the ink train of an offset press. Additional
Cleaning Systems products include the Automatic Blanket Cleaner, Newspaper
Blanket Cleaner and Chill Roll Cleaner and more recently the Guide Roll
Cleaner, which all reduce paper waste, volatile organic compound ("VOC")
solvent usage and press downtime, as well as improve productivity, print
quality and safety of operation for the press operator. In the fiscal years
ended June 30, 1994, 1993 and 1992, net sales of Cleaning Systems represented
approximately 32.6%, 37.8% and 37.6% of the Company's net sales, respectively.
FOUNTAIN SOLUTION CONTROL SYSTEMS. Fountain Solution Control Systems
control the supply, temperature, cleanliness, chemical composition and certain
other characteristics of water used in the offset printing process. Among the
most important of these products are the Company's Refrigerated Circulators,
which circulate and control the fountain solution within the printing press.
In the fiscal years ended June 30, 1994, 1993 and 1992, net sales of Fountain
Solution Control Systems represented approximately 12.6%, 11.7% and 14.8% of
the Company's net sales, respectively.
INK CONTROL SYSTEMS. The Company's Ink Control Systems control and
regulate many aspects of the ink feed system on a printing press. These
products include Ink Agitators, Ink Mixers and Ink Level Systems which reduce
wasted ink, paper and VOC solvent usage and allow for the use of recycled ink
containers.
IN-LINE FINISHING SYSTEMS. The Company's In-line Finishing products
allow printers to perform automatically, at press speeds, functions which
previously required special handling in the bindery. These functions include
numbering, perforating, gluing and cutting.
MATERIAL HANDLING/STACKING SYSTEMS. Baldwin's Material
Handling/Stacking Systems automate the handling of the printed product.
Counting, stacking, book-packing and compressing printed materials help to
increase press utilization and productivity, reduce and control waste and
decrease pressroom labor requirements.
WEB CONTROL AND PRESS PROTECTION SYSTEMS. The Company's Web Control
Systems improve print quality by precisely controlling the flow of paper
through a web offset press while also reducing waste and increasing press
productivity. The Company's Press Protection Systems, designed in response to
the increasing number of web leads used in printing today's colorful
newspapers, provide an auto-arming electronic package offering high quality
press protection in the event of a web break.
WEB HANDLING SYSTEMS. The Company's Web Handling Systems, produced
by its Enkel and Amal subsidiaries, unwind, rewind and splice paper and other
materials supplied to presses in webs and also control the tension and position
of web materials. This equipment eliminates unnecessary press stoppages and
allows a more efficient flow of printed work. In the fiscal years ended June
30, 1994, 1993 and 1992, net sales of Web Handling Systems represented
approximately 12.9%, 11.6% and 8.9% of the Company's net sales, respectively.
NEWSPAPER INSERTER EQUIPMENT AND MAILING MACHINE SYSTEMS. The
Company's Newspaper Inserter Equipment collates and inserts sections and
advertising
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material into newspapers. Its Mailing Machine Systems fold, label and prepare
newspapers for mailing.
AUTOMATED IMPOSITION, PLATE EXPOSURE AND PLOTTING AND CUTTING
SYSTEMS. The Company's Automated Imposition and Plate Exposure Systems are
used by printers to automate a labor intensive operation that results in the
high quality and accuracy of images on plates used in the offset printing
process. The Company's Plotting and Cutting systems are widely used in the
packaging and corrugated carton industries and are designed to plot, cut,
crease and mill a wide range of materials. In the fiscal years ended June 30,
1994, 1993 and 1992, net sales of Automated Imposition and Plate Exposure
Systems represented approximately 14.0%, 12.8% and 12.8% of the Company's net
sales, respectively.
WORLDWIDE OPERATIONS
The Company believes that it is the only manufacturer of material
handling, accessory, control and pre-press equipment for the printing industry
which has complete product development, manufacturing and marketing facilities
in three major sectors: the Americas, Europe and Asia Pacific.
The following table sets forth the percentages of the Company's net
sales attributable to its three sectors in the fiscal years ended June 30,
1994, 1993 and 1992:
YEAR ENDED JUNE 30,
------------------------
1994 1993 1992
---- ---- ----
Americas 42.5% 36.9% 31.9%
Europe 29.5 35.1 37.9
Asia Pacific 28.0 28.0 30.2
---- ----- -----
Total 100.0% 100.0% 100.0%
====== ====== ======
In its Americas sector, the Company operates in North, Central and
South America through its four U.S. subsidiaries. In its European sector, the
Company operates through its German subsidiary, which was established in 1972,
and through its other operating subsidiaries in Sweden, the Netherlands and
England. In its Asia Pacific sector, the Company operates through its
subsidiaries in Japan (established in 1968), Hong Kong, China and Australia.
All of the Company's subsidiaries are wholly owned.
For additional information relating to the Company's operations in its
three principal sectors, see Note 6 of Notes to Consolidated Financial
Statements of the Company.
ACQUISITION STRATEGY
An important element of the Company's growth strategy is to make
strategic acquisitions of companies and product lines in related business
areas. The Company's acquisition strategy involves (i) acquiring new material
handling, accessory, control and pre-press products for the printing industry
which can be sold through the Company's own, or the acquired entity's,
distribution network and which can benefit from the Company's manufacturing
expertise and financial support; (ii) entering new end-user market segments or
extending existing markets; and (iii) acquiring companies which contribute new
products to the Company or which help the Company manufacture and sell its
products outside the United States. After it makes an acquisition, the Company
typically supports the existing management of the acquired entity and
participates actively with that management in implementing operational
strategies with a view to enhancing the entity's sales, productivity and
operating results.
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MARKETING, SALES AND SUPPORT
MARKETING. The Company markets its products in almost all developed
countries throughout the world. Although Baldwin markets a similar line of
products in each of these countries, its product mix and distribution channels
vary from country to country. The Company has 100 direct sales representatives
in its three principal markets and approximately 185 dealers worldwide. The
Company markets its products to printing press manufacturers and to printers.
Baldwin estimates that for the fiscal year ended June 30, 1994 approximately
41% of its net sales were to printing press manufacturers and approximately 59%
of its net sales were directly to printers.
In its Americas sector, the Company markets its products primarily
through direct sales representatives. In its European sector, the Company
utilizes both direct sales representatives and an extensive dealer network. In
its Asia Pacific sector, the Company markets its products through direct sales
representatives in Japan, Hong Kong, China and Australia and through dealers
throughout the rest of Asia.
SUPPORT. The Company is committed to after-sales service and support
of its products throughout the world. Baldwin employs approximately 113
service technicians, who are complemented by product engineers, to provide
field service for the Company's products on a global basis.
BACKLOG. The Company's backlog was $58,455,000 as of June 30, 1994,
$56,088,000 as of June 30, 1993 and $53,191,000 as of June 30, 1992. Backlog
represents product orders which Baldwin has received from its customers under
valid contracts or purchase orders.
CUSTOMERS. The Company has a diverse customer base. In the fiscal
year ended June 30, 1994 no customer accounted for 10% of the Company's net
sales. In the fiscal year ended June 30, 1993, one customer accounted for
11.3% of the Company's net sales. The ten largest customers of Baldwin
accounted for less than 41% of the Company's net sales for the fiscal year
ended June 30, 1994. Sales of Baldwin's products are not seasonal. However,
its sales have traditionally been greater in the second six months of its
fiscal year than in the first six months of its fiscal year.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company believes its research and development effort has been an
important factor in establishing and maintaining its leadership position in the
field of material handling, accessory, control and pre-press equipment for the
printing industry. Baldwin has devoted substantial efforts to adapt its
products to almost all models and sizes of printing presses in use worldwide.
The Company has product development facilities at each of its
manufacturing locations. This decentralized approach to research and
development permits the Company to react quickly to meet the needs of its
customers.
Baldwin employs approximately 149 persons whose primary function is
new product development or modification of existing products. The Company's
total expenditures for research, development and engineering for the fiscal
years ended June 30, 1994, 1993 and 1992 were $15,409,000, $16,711,000 and
$16,970,000, respectively, representing approximately 8% of the Company's net
sales in each year.
PATENTS
The Company owns and licenses a number of patents and patent
applications relating to a substantial number of Baldwin's products. These
products represented a substantial portion of the Company's net sales in the
fiscal year ended June 30, 1994. The Company's patents expire at different
times through June, 2009; however, the expiration of patents in the near future
is not expected
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to have a material adverse effect on the Company's sales. The Company has also
relied upon and intends to continue to rely upon unpatented proprietary
technology, including the proprietary engineering required to adapt its
products to a wide range of models and sizes of printing presses. The Company
believes its rights under, and interests in, its patents and patent
applications, as well as its proprietary technology, are sufficient for its
business as currently conducted.
MANUFACTURING
The Company conducts its manufacturing operations through a number of
operating subsidiaries in each of its three sectors. In North America, the
Company's Baldwin Americas Corporation has subsidiaries with manufacturing
facilities located on the East Coast, in the Midwest and on the West Coast.
In Europe, the Company has subsidiaries with manufacturing and
assembly facilities in Germany, Sweden and the United Kingdom. These
facilities manufacture and assemble complete lines of products that are in
demand by printers worldwide and by printing press manufacturers in Europe for
shipment throughout the world. The Company also has sales/service facilities
in Germany, Sweden and the United Kingdom. Baldwin's Japanese and Chinese
subsidiaries manufacture and assemble the Company's products and, with sales
support from the Company's Hong Kong and Australian subsidiaries, market them
throughout Asia.
In general, raw materials required by the Company can be obtained from
various sources in the quantities desired. The Company has no long-term supply
contracts and does not consider itself dependent on any individual supplier.
The nature of most operations of the Company is such that there is
little, if any, negative effect upon the environment, and the Company has not
experienced any serious problems in complying with environmental protection
laws and regulations.
COMPETITION
The printing press accessory industry is highly fragmented. Although
the Company believes it produces the most complete line of material handling,
accessory, control and pre-press equipment for the printing industry, numerous
companies manufacture and sell products that compete with one or more of the
Company's products. The Company competes from time to time with printing press
manufacturers who, as a part of their businesses, produce material handling,
accessory and control equipment for the printing industry and who generally
have larger staffs and greater financial resources than the Company.
The Company competes by offering customers a broad product line,
coupled with a well-known reputation for the reliability of its products and
its commitment to service and after-sale support. Some of the Company's
products with patent protection have little or no direct competition. The
Company's ability to compete effectively in the future will depend upon the
continued reliability of its products, after-sale service, ability to keep its
market position as its patents expire and ability to develop new products which
meet the demands of the printing industry.
EMPLOYEES
The Company employs 1,055 persons, 505 of whom are production
employees and approximately 142 of whom are management and administrative
employees. Approximately 34% of the Company's 126 employees in its Baldwin
Graphic Products Division in the United States are represented by the
International Association of Machinists and Aerospace Workers under a contract
which expires on November 9, 1996. Approximately 29 and 27 of the Company's
120 employees at its Misomex AB subsidiary are represented by the Swedish
Industrial Salaried Employees'
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Association and the Swedish Metal Workers' Union, respectively, under contracts
for indefinite terms. At Amal AB in Sweden, 3 employees are represented by
Ledarna (SALF), 28 employees are represented by Lundsorganisationen, Metall and
20 employees are represented by Tjanstemannene Central Organisation, Svenska
Industritjanstemanna Forbundet under contracts with indefinite terms. At
Baldwin Gegenheimer GmbH, a German subsidiary of the Company, approximately 44
of the Company's 224 employees are represented by the IG Metall (Metalworker's
Union) under a contract with indefinite terms. The Company considers relations
with its employees and with its unions to be good.
ITEM 2. PROPERTIES
The Company's facilities are divided among its three sectors and total
approximately 632,000 square feet.
In North America, manufacturing and office space leased by the Company
and its subsidiaries total approximately 280,000 square feet of which space
approximately 8,400 square feet is sublet. An additional 52,800 square feet of
office and manufacturing space is owned by Kansa Corporation, subject to an
Industrial Revenue Bond.
In Europe, the Company has leased facilities totalling approximately
204,000 square feet comprised of office and manufacturing facilities in Germany
(approximately 113,000 square feet), Sweden (approximately 64,000 square feet),
the United Kingdom (approximately 23,000 square feet) and the Netherlands
(approximately 4,000 square feet). In addition, the Company owns manufacturing
facilities in Sweden totalling approximately 61,000 square feet.
In Asia, the Company leases office and manufacturing facilities of
approximately 30,700 square feet in Japan and office facilities aggregating
approximately 2,800 square feet in Hong Kong, Beijing, Melbourne and Sydney.
The Company believes that its facilities are adequate to carry on its
business as currently conducted.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Company is a party
or to which any of its property is subject, other than routine litigation
incidental to the Company's business or which is covered by insurance and which
would not have a material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders since November
18, 1993.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
(a) PRICE RANGE OF CLASS A COMMON STOCK
The Company's Class A Common Stock is traded on the American Stock
Exchange ("AMEX") under the symbol "BLD". The following chart sets forth, for
the calendar periods indicated, the range of closing prices for the Class A
Common Stock on the AMEX, as reported by the AMEX.
1992 HIGH LOW
- - - - - ---- ------ -----
First Quarter 6.50 4.625
Second Quarter 4.875 3.75
Third Quarter 4.25 3.625
Fourth Quarter 4.875 3.5625
1993
- - - - - ----
First Quarter 5.75 4.125
Second Quarter 5.00 3.50
Third Quarter 4.625 3.375
Fourth Quarter 5.375 4.50
1994
- - - - - ----
First Quarter 5.75 4.875
Second Quarter 5.625 4.25
Third Quarter (through September 13) 5.50 4.25
(b) CLASS B COMMON STOCK
The Company's Class B Common Stock has no established public trading
market.
(c) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
As of August 31, 1994, the approximate number of record holders
(excluding those listed under a nominee name) of the Company's Class A and
Class B Common Stock totaled 603 and 26, respectively. The Company believes,
however, that there are in excess of 4,400 beneficial owners of its Class A
Common Stock.
(d) DIVIDENDS
Declarations of dividends depend upon the earnings and financial
position of the Company and are within the discretion of the Company's Board of
Directors. No dividend in cash or property can be declared or paid on shares
of Class B Common Stock unless simultaneously therewith there is declared or
paid, as the case may be, a dividend in cash or property on shares of Class A
Common Stock of at least 105% of the dividend on shares of Class B Common Stock
(see Note 11--Notes to Consolidated Financial Statements). The Company
declared dividends on the Class A Common Stock and the Class B Common Stock for
the fiscal year ended June 30, 1992 in the amounts of $.012 and $.01 per share.
See Note 9--Notes to Consolidated Financial Statements and "Liquidity and
Capital Resources" within "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for restrictions on dividends.
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ITEM 6. SELECTED FINANCIAL DATA
The Company's income statement and balance sheet data as they relate
to the years ended June 30, 1994, 1993, 1992, 1991 and 1990, have been derived
from the Company's audited financial statements (including the Consolidated
Balance Sheet of the Company at June 30, 1994 and 1993 and the related
Consolidated Statement of Income of the Company for the years ended June 30,
1994, 1993 and 1992 appearing elsewhere herein). The following information
should be read in conjunction with the aforementioned financial statements and
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
YEAR ENDED JUNE 30,
------------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net sales $198,055 $215,759 $221,474 $218,767 $180,168
Cost of goods sold (1) 130,051 142,564 147,071 137,150 113,684
-------- -------- -------- -------- --------
Gross profit 68,004 73,195 74,403 81,617 66,484
Selling, general and
administrative expenses(2) 42,068 42,532 41,575 42,901 28,860
Research, development
and engineering
expenses 15,409 16,711 16,970 16,007 13,666
Restructuring charge 880 1,706
-------- -------- -------- -------- --------
Operating income 10,527 13,072 14,152 22,709 23,958
Interest expense 3,694 5,850 7,167 7,737 2,077
Interest income 381 285 483 699 949
Other (income) expense,
net (887) (462) (809) (3,095) (915)
-------- -------- -------- -------- --------
Income from continuing
operations before taxes 8,101 7,969 8,277 18,766 23,745
-------- -------- -------- -------- --------
Provision for income taxes 3,969 4,303 7,507 10,205 11,753
Income from continuing
operations 4,132 3,666 770 8,561 11,992
(Loss) income from
discontinued operations (1,842) (1,683) 154
Loss on disposal of
discontinued operations (5,894)
Extraordinary loss on
extinguishment of debt (1,105)
Cumulative effect of
change in accounting
for income taxes 1,229
-------- -------- -------- -------- --------
Net income (loss) $ 4,132 $ 3,790 $ (6,966) $ 6,878 $ 12,146
======== ======== ======== ======== ========
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YEAR ENDED JUNE 30,
---------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Income (loss) per share
from:
Continuing operations $ 0.23 $ 0.21 $ 0.05 $ 0.50 $ 0.69
Discontinued operations (0.11) (0.10) 0.01
Disposal of discontinued
operations (0.35)
Extinguishment of debt (0.06)
Cumulative effect of
change in accounting
for income taxes 0.07
-------- -------- -------- -------- --------
Net income (loss) per
share $ 0.23 $ 0.22 $ (0.41) $ 0.40 $ 0.70
======== ======== ======== ======== ========
Cash dividends declared
per share
Class A Common Stock $ 0.012 $ 0.09 $ 0.10
======== ======== ========
Class B Common Stock $ 0.01 $ 0.057 $ 0.095
======== ======== ========
Weighted average shares
outstanding 18,015 17,593 17,106 17,378 17,423
======== ======== ======== ======== ========
BALANCE SHEET DATA
(AS OF THE END OF
EACH PERIOD):
Working capital $ 45,098 $ 34,414 $ 34,313 $ 35,245 $ 36,435
Total assets 187,216 188,479 206,936 212,683 142,967
Short-term debt 6,033 16,257 13,828 24,476 9,363
Long-term debt 32,230 25,998 36,668 36,019 1,686
Shareholders' equity 88,080 82,864 85,135 83,114 79,277
(1) Includes all technical service expense, a portion of which was
previously classified as an item of Operating Expenses in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
(2) Includes amortization expense for intangible assets which was
previously classified as an item of Other Income and Expense in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL. The Company does not consider its business to be seasonal;
however, its sales have traditionally been greater in the second six months of
its fiscal year than in the first six months of its fiscal year. The following
schedule shows the Company's net sales for six month periods over the last five
fiscal years to reflect the comparison.
FIRST SIX SECOND SIX
FISCAL YEAR MONTHS MONTHS
- - - - - ----------- ---------- ----------
1994 $ 91,858,000 $106,197,000
1993 104,376,000 111,383,000
1992 108,310,000 113,164,000
1991 106,601,000 112,166,000
1990 82,429,000 97,739,000
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RESULTS OF OPERATIONS
The following tables set forth certain of the items (expressed as a
percentage of net sales) included in the Selected Financial Data and should be
read in connection with the Consolidated Financial Statements of the Company
including the Notes to such Statements, presented elsewhere in this report.
YEAR ENDED JUNE 30,
------------------------------
1994 1993 1992
---- ---- ----
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 65.7 66.1 66.4
Gross profit 34.3 33.9 33.6
Selling, general and administrative expenses 21.2 19.7 18.8
Research, development and engineering expenses 7.8 7.7 7.7
Restructuring Charge .4 .8
Operating income 5.3 6.1 6.3
Interest expense 1.9 2.7 3.2
Interest income .2 .1 .2
Other (income) expense, net (.5) (.2) (.4)
Income from continuing operations before taxes 4.1 3.7 3.7
Provision for income taxes 2.0 2.0 3.4
Income from continuing operations 2.1 1.7 .3
Loss from discontinued operations (.8)
Loss on disposal of discontinued operations (2.6)
Extraordinary (loss) on extinguishment of debt (.5)
Cumulative effect of change in accounting for
income taxes .6
Net income (loss) 2.1% 1.8% (3.1)%
COMPANY'S FISCAL YEAR ENDED JUNE 30, 1994 VERSUS FISCAL YEAR ENDED JUNE 30,
1993
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
consolidated financial statements.
NET SALES. Net sales for the fiscal year ended June 30, 1994
decreased by $17,704,000, or 8.2%, to $198,055,000 from $215,759,000 for the
fiscal year ended June 30, 1993. The decrease in sales for 1994 was due
primarily to product volume. Currency rate fluctuations attributable to the
Company's overseas operations accounted for a decrease of $3,195,000 in net
sales for the current year.
In terms of local currency, sales changes were mixed within the
European Sector. Sales increased in Sweden by 24.4%, increased in the United
Kingdom by 1.5% and decreased in Germany by 17.7%. In the Company's Asia
Pacific Sector, local currency sales decreased 20.4% in Japan but increased in
Australia, Hong Kong and China. In the Americas Sector net sales increased by
4% for the year due to a continued strengthening in the U.S. printing equipment
market.
GROSS PROFIT. Gross profit for the fiscal year ended June 30, 1994
was $68,004,000 (34.3% of net sales), as compared to $73,195,000 (33.9% of net
sales) for the fiscal year ended June 30, 1993, a decrease of $5,191,000 or
7.1%. The primary reason for the decline in gross profit was decreased volume.
Currency rate fluctuations decreased gross profit by $930,000.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $42,068,000 (21.2% of net sales) for the fiscal
year ended June 30, 1994, as compared to $42,532,000 (19.7% of net sales) for
the prior year a decrease of $464,000. Currency rate fluctuations reduced the
10
13
current year's expenses by $711,000. Although the Company continued to
implement cost reduction and control programs during fiscal 1994, the benefits
derived from these actions were largely offset by an increase in bad debt
expense. During fiscal 1994 the Company increased its reserve for bad debts by
approximately $1,300,000 relating to a Japanese customer which filed for
reorganization. Selling expenses increased in fiscal 1994 also, due to
increased trade show expenses, new product introduction costs and a planned
increase in marketing and selling personnel.
INTEREST EXPENSE. Interest expense for the fiscal year ended June 30,
1994 was $3,694,000, as compared to $5,850,000 for the fiscal year ended June
30, 1993. Interest expense decreased primarily as a result of the Company
refinancing its debts at lower interest rates and a reduction in the amount of
outstanding indebtedness. Foreign currency exchange effects reduced interest
expense by $635,000. Interest income was $381,000 and $285,000 for the fiscal
years ended June 30, 1994 and June 30, 1993, respectively. Other income was
$887,000 and $462,000 for the fiscal years ended June 30, 1994 and June 30,
1993, respectively, with the increase primarily due to increased royalty
income.
INCOME TAXES. The Company's effective tax rate was 49% for the fiscal
year ended June 30, 1994 as compared to 54% for the fiscal year ended June 30,
1993. The effective rate reflects the impact of foreign source income which is
taxed at substantially higher rates than domestic income. The decrease from
the prior year's effective rate is primarily caused by income generated by
domestic operations which is taxed at rates which are generally lower than
foreign rates and the recognition of previously unrecognized deferred tax
benefits (see Note 10--Notes to Consolidated Financial Statements).
NET INCOME. Net income for the fiscal year ended June 30, 1994
increased to $4,132,000 from $3,790,000 for the fiscal year ended June 30,
1993. Net income for the year ended June 30, 1993 includes an extraordinary
charge on extinguishment of debt of $1,105,000 or $0.06 per share and a benefit
for the cumulative effect of a change in accounting for income taxes of
$1,229,000 or $0.07 per share (see Notes 9 and 10--Notes to Consolidated
Financial Statements). Net income per share was $0.23 and $0.22 for the fiscal
years ended June 30, 1994 and 1993, respectively. Weighted average equivalent
shares outstanding during the fiscal years ended June 30, 1994 and June 30,
1993 were 18,015,295 and 17,592,845, respectively.
COMPANY'S FISCAL YEAR ENDED JUNE 30, 1993 VERSUS FISCAL YEAR ENDED JUNE 30,
1992
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
consolidated financial statements.
NET SALES. Net sales for the fiscal year ended June 30, 1993
decreased by $5,715,000, or 2.6%, to $215,759,000 from $221,474,000 for the
fiscal year ended June 30, 1992. Currency rate fluctuations attributable to
the Company's overseas operations accounted for an increase of $6,184,000 in
net sales for the current year, substantially all of which was in the Asia
Pacific Sector. The overall decrease in sales for 1993 was due primarily to
product volume.
In terms of local currency, the Company's European Sector net sales
decreased 9.6% as a result of a slowdown in that sector's German printing
equipment market. The sector's Swedish, Dutch and British markets either
increased or equalled prior year sales. In the Company's Asia Pacific Sector,
local currency sales decreased 15.9% due to the economic slowdown in the
Japanese market. Domestic net sales increased by 13.5% for the year due to a
strengthening in the U.S. printing equipment market experienced throughout the
Company's Americas Sector.
11
14
GROSS PROFIT. Gross profit for the fiscal year ended June 30, 1993
was $73,195,000 (33.9% of net sales), as compared to $74,403,000 (33.6% of net
sales) for the fiscal year ended June 30, 1992, a decrease of $1,208,000 or
1.6%. Currency rate fluctuations favorably impacted margins by $1,887,000, but
the effect was offset by lower sales levels.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $42,532,000 (19.7% of net sales) for the fiscal
year ended June 30, 1993, as compared to $41,575,000 (18.8% of net sales) for
the prior year. Currency rate fluctuations added $463,000 to the current
year's expenses. The remaining increase was due to increased bad debt
allowances which offset the benefits of cost reduction and control programs.
Total operating expenses for the year ended June 30, 1993 include a
restructuring charge (see Note 5--Notes to Consolidated Financial Statements)
of $880,000 relating to workforce rationalization and were impacted unfavorably
by $997,000 due to currency rate fluctuations.
INTEREST EXPENSE. Interest expense for the fiscal year ended June 30,
1993 was $5,850,000, as compared to $7,167,000 for the fiscal year ended June
30, 1992. Decreased interest expense, which is primarily related to
acquisition financing, is mainly due to reductions in outstanding indebtedness
and declining interest rates. Foreign currency exchange effects were minimal.
Interest income was $285,000 and $483,000 for the fiscal years ended June 30,
1993 and June 30, 1992, respectively.
INCOME TAXES. The Company's effective tax rate was 54% for the fiscal
year ended June 30, 1993 as compared to 90.7% for the fiscal year ended June
30, 1992. The effective rate reflects the impact of foreign source income
which is taxed at substantially higher rates than domestic income. The
decrease from the prior year's effective rate is primarily caused by income
generated by domestic operations which is taxed at rates which are generally
lower than foreign rates and the benefit of previously unrecognized deferred
taxes (see Note 10--Notes to Consolidated Financial Statements).
INCOME FROM CONTINUING OPERATIONS. Income from continuing operations
for the fiscal year ended June 30, 1993 increased to $3,666,000 from $770,000
for the fiscal year ended June 30, 1992. Income per share from continuing
operations was $0.21 and $0.05 for the fiscal years ended June 30, 1993 and
1992, respectively. Weighted average equivalent shares outstanding during the
fiscal years ended June 30, 1993 and June 30, 1992 were 17,592,845 and
17,105,750, respectively.
NET LOSS OR INCOME. Net income for the year ended June 30, 1993 of
$3,790,000 or $0.22 per share includes the extraordinary charge on
extinguishment of debt of $1,105,000 or $0.06 per share and a benefit for the
cumulative effect of a change in accounting for income taxes of $1,229,000 or
$0.07 per share (see Notes 9 and 10--Notes to Consolidated Financial
Statements) and increased by $328,000 due to currency rate fluctuations. For
the year ended June 30, 1992, the net loss of $6,966,000 or $0.41 per share
included the net loss from discontinued operations (see Note 3--Notes to
Consolidated Financial Statements) of $1,842,000 or $0.11 per share as well as
the loss on disposal of the discontinued operations of $5,894,000 or $0.35 per
share.
IMPACT OF INFLATION
The Company's results are affected by the impact of inflation on
manufacturing and operating costs. Historically, the Company has used selling
price adjustments, cost containment programs and improved operating
efficiencies to offset the otherwise negative impact of inflation on its
operations.
12
15
LIQUIDITY AND CAPITAL RESOURCES
On October 29, 1993, the Company completed the refinancing of it's
long-term debt with the issuance of $25,000,000 of 8.17% senior notes (the
"Senior Notes") due October 29, 2000. The Senior Notes require the payment of
interest only for the first three years with equal annual principal repayments
of $6,250,000 in each of years four through seven. The proceeds of the Senior
Notes along with approximately $5,000,000 in available cash were used to retire
all of the Company's indebtedness under a Credit Agreement with a syndicate of
banks dated September 27, 1990.
In November, 1993, the Company entered into a three-year $20,000,000
Revolving Credit Agreement (the "Revolver") with NationsBank of North Carolina
as Agent. The Senior Notes and the Revolver require the Company to maintain
certain financial covenants and have certain restrictions regarding the payment
of dividends, limiting them throughout the terms of the Senior Notes and the
Revolver to $3,000,000 plus 50% of the Company's net income after June 30,
1993. In addition, the Company was required to pledge certain of the shares of
it's domestic subsidiaries as collateral for both the Senior Notes and the
Revolver.
Both the Senior Notes and the Revolver require the Company to maintain
a ratio of current assets to current liabilities (as those terms are defined in
the agreements) of not less than 1.4 to 1. At June 30, 1994, this ratio was
1.77 to 1.
The net cash used by investing activities increased by $2,093,000 from
$2,370,000 at June 30, 1993 to $4,463,000 at June 30, 1994 primarily due to the
capitalization of $1,203,000 of costs associated with the Company's debt
refinancing as well as a $1,383,000 increase in the recorded amount of prepaid
income taxes. The net cash used by financing activities increased during the
period ended June 30, 1994 as compared to the period ended June 30, 1993
primarily due to the differential between sales and purchases of treasury
stock.
The Company's working capital increased by $10,684,000 or 31% from
$34,414,000 at June 30, 1993 to $45,098,000 at June 30, 1994. The net increase
was largely attributable to decreases in loans payable and the current-portion
of long-term debt which resulted from the Company's debt refinancing.
Currency effects increased working capital by $1,242,000 for the period.
Decreases in net trade receivables and inventories were partially offset by
increases in other current assets which increased primarily due to officer
loans of $2,145,000 and royalties receivable of $527,000 for the period. The
net decrease in current assets was more than offset by the decrease in current
liabilities for the period. Decreases in trade payables more than offset the
decreases in cash and short-term securities.
The Company maintains relationships with foreign and domestic banks
which have extended credit facilities to the Company totaling $32,600,000,
including amounts available under the Revolver. As of June 30, 1994, the
Company had outstanding $9,253,000 under these lines of credit, of which
$3,362,000 is classified as long-term debt. Total debt levels as reported on
the balance sheet at June 30, 1994 are $299,000 higher then they would have
been if June 30, 1993 exchange rates had been used.
Net capital expenditures made to meet the normal business needs of the
Company for the fiscal years ended June 30, 1994 and June 30, 1993, including
commitments for capital lease payments, were $1,819,000 and $2,042,000,
respectively.
13
16
The Company believes its cash flow from operations and available bank
lines of credit are sufficient to finance its working capital and other capital
requirements for the near and long-term future.
14
17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants 16
Consolidated Balance Sheet at June 30, 1994 and June 30, 1993 17
Consolidated Statement of Income for the years ended June 30, 1994,
June 30, 1993 and June 30, 1992 19
Consolidated Statement of Changes in Shareholders' Equity for the
years ended June 30, 1994, June 30, 1993 and June 30, 1992 20
Consolidated Statement of Cash Flows for the years ended June 30,
1994, June 30, 1993 and June 30, 1992 21
Notes to Consolidated Financial Statements 23
15
18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
BALDWIN TECHNOLOGY COMPANY, INC.
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of changes in shareholders' equity
and of cash flows present fairly, in all material respects, the financial
position of Baldwin Technology Company, Inc. and its subsidiaries at June 30,
1994 and 1993, and the results of their operations and their cash flows for
each of the three years in the period ended June 30, 1994, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 10 of Notes to Consolidated Financial Statements, the
Company changed its method of accounting for income taxes by adopting FASB
Statement No. 109, "Accounting for Income Taxes", effective July 1, 1992.
PRICE WATERHOUSE LLP
Stamford, Connecticut
August 19, 1994
16
19
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
ASSETS
JUNE 30, JUNE 30,
1994 1993
-------- --------
CURRENT ASSETS:
Cash $ 9,768 $ 12,859
Short-term securities 8,766 6,817
Accounts receivable trade, net of allowance for
doubtful accounts of $3,209 ($1,831 at
June 30, 1993) 31,253 34,455
Notes receivable, trade 12,411 12,799
Inventories 32,939 33,907
Prepaid expenses and other 8,263 4,383
-------- --------
Total current assets 103,400 105,220
-------- --------
MARKETABLE SECURITIES, at cost:
(Market $1,190 at June 30, 1994 and $932 at June 30,
1993) 918 849
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 2,284 2,119
Machinery and equipment 8,516 8,334
Furniture and fixtures 5,075 4,818
Leasehold improvements 1,615 1,574
Capital leases 7,295 7,001
-------- --------
24,785 23,846
Less: Accumulated depreciation and amortization 17,172 14,782
-------- --------
Net property, plant and equipment 7,613 9,064
-------- --------
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS, at cost,
less accumulated amortization of $2,584 ($1,975 at
June 30, 1993) 6,123 5,924
GOODWILL, less accumulated amortization of $7,579
($5,786 at June 30, 1993) 60,584 61,831
OTHER ASSETS 8,578 5,591
-------- --------
TOTAL ASSETS $187,216 $188,479
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
17
20
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND SHAREHOLDERS' EQUITY
JUNE 30, JUNE 30,
1994 1993
-------- --------
CURRENT LIABILITIES:
Loans payable $ 5,891 $ 9,069
Current portion of long-term debt 142 7,188
Accounts payable, trade 11,472 12,655
Notes payable, trade 11,079 13,489
Accrued salaries, commissions, bonus and profit-sharing 7,861 7,538
Customer deposits 4,139 3,447
Accrued and withheld taxes 1,742 1,859
Income taxes payable 4,374 2,676
Other accounts payable and accrued liabilities 11,602 12,885
-------- --------
Total current liabilities 58,302 70,806
-------- --------
LONG-TERM LIABILITIES:
Long-term debt 32,230 25,998
Other long-term liabilities 8,604 8,811
-------- --------
Total long-term liabilities 40,834 34,809
-------- --------
Total liabilities 99,136 105,615
-------- --------
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,010,706 shares issued at June 30,
1994 (16,000,707 at June 30, 1993) 160 160
Class B Common Stock, $.01 par, 4,500,000 shares
authorized, 2,000,000 shares issued 20 20
Capital contributed in excess of par value 54,837 54,795
Retained earnings 35,980 31,848
Cumulative translation adjustment (1,900) (3,792)
Less: Treasury stock, at cost:
Class A--21,756 shares (21,056 at June 30, 1993)
Class B--135,000 shares (6,000 at June 30, 1993) (1,017) (167)
-------- --------
Total shareholders' equity 88,080 82,864
-------- --------
COMMITMENTS
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $187,216 $188,479
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
18
21
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED JUNE 30,
-----------------------------------
1994 1993 1992
------ ------ ------
Net sales $198,055 $215,759 $221,474
Cost of goods sold * 130,051 142,564 147,071
-------- -------- --------
Gross profit 68,004 73,195 74,403
-------- -------- --------
Operating expenses:
General and administrative ** 23,595 24,823 23,165
Selling 18,473 17,709 18,410
Engineering 9,949 10,234 10,131
Research and development 5,460 6,477 6,839
Restructuring charge (Note 5) 880 1,706
-------- -------- --------
57,477 60,123 60,251
-------- -------- --------
Operating income 10,527 13,072 14,152
-------- -------- --------
Other (income) expense:
Interest expense 3,694 5,850 7,167
Interest (income) (381) (285) (483)
Other expense (income), net (887) (462) (809)
-------- -------- --------
2,426 5,103 5,875
-------- -------- --------
Income from continuing operations before taxes 8,101 7,969 8,277
-------- -------- --------
Provision for income taxes:
Domestic:
Federal 1,211 104 68
State 637 298 257
Foreign 2,121 3,901 7,182
-------- -------- --------
Total income taxes 3,969 4,303 7,507
-------- -------- --------
Income from continuing operations 4,132 3,666 770
-------- -------- --------
Discontinued operations: (Note 3)
Loss from discontinued operations (1,842)
Loss on disposal of discontinued operations (5,894)
--------
Total loss from discontinued operations (7,736)
--------
Extraordinary loss on extinguishment of debt
(net of $384 tax benefit--Notes 1 and 9) (1,105)
--------
Cumulative effect of change in accounting for
income taxes (Note 10) 1,229
-------- -------- --------
Net income (loss) $ 4,132 $ 3,790 $ (6,966)
======== ======== ========
Income (loss) per share from:
Continuing operations $ 0.23 $ 0.21 $ 0.05
-------- -------- --------
Discontinued operations (0.11)
Disposal of discontinued operations (0.35)
--------
Total discontinued operations (0.46)
--------
Extinguishment of Debt (0.06)
--------
Cumulative effect of change in accounting
for income taxes 0.07
--------
Net income (loss) per share $ 0.23 $ 0.22 $ (0.41)
======== ======== ========
Weighted average shares outstanding 18,015 17,593 17,106
======== ======== ========
* Includes all technical service expense, a portion of which was
previously classified as an item of Operating Expenses in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
** Includes amortization expense for intangible assets which was
previously classified as an item of Other Income and Expense in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
The accompanying notes to consolidated financial statements
are an integral part of these statements.
19
22
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES)
CAPITAL
CLASS A CLASS B CONTRIBUTED
COMMON STOCK COMMON STOCK IN EXCESS
---------------------- -------------------- OF PAR
SHARES AMOUNT SHARES AMOUNT VALUE
----------- -------- ---------- -------- ---------
Balance at June 30, 1991 15,279,797 $153 2,000,000 $20 $51,095
Year ended June 30, 1992:
Net loss for the year
Dividends
Dividends reinvested 112 1
Stock issued in connection with:
Japan Minority Interest 200,000 2 2,024
Kansa Corporation Acquisition 160,000 1 983
Stock options exercised 261,546 3 605
Translation adjustment
Transaction loss on hedge of net
investment in foreign subsidiaries
---------- ---- --------- --- -------
Balance at June 30, 1992 15,901,455 159 2,000,000 20 54,708
Year ended June 30, 1993:
Net income for the year
Stock options exercised 99,252 1 335
Sale of treasury stock (248)
Translation adjustment
Transaction loss on hedge of net
investment in foreign subsidiaries
---------- ---- --------- --- -------
Balance at June 30, 1993 16,000,707 160 2,000,000 20 54,795
Year ended June 30, 1994:
Net income for the year
Stock options exercised 9,999 42
Purchase of treasury stock
Translation adjustment
Transaction gain on hedge of net
investment in foreign subsidiaries
---------- ---- --------- --- -------
Balance at June 30, 1994 16,010,706 $160 2,000,000 $20 $54,837
========== ==== ========= === =======
TREASURY
CUMULATIVE STOCK
RETAINED TRANSLATION --------------------
EARNINGS ADJUSTMENTS SHARES AMOUNT
-------- ----------- -------- --------
Balance at June 30, 1991 $35,221 $240 (827,056) $(3,615)
Year ended June 30, 1992:
Net loss for the year (6,966)
Dividends (197)
Dividends reinvested
Stock issued in connection with:
Japan Minority Interest
Kansa Corporation Acquisition
Stock options exercised
Translation adjustment 5,976
Transaction loss on hedge of net
investment in foreign subsidiaries (411)
------- ------- -------- -------
Balance at June 30, 1992 28,058 5,805 (827,056) (3,615)
Year ended June 30, 1993:
Net income for the year 3,790
Stock options exercised
Sale of treasury stock 800,000 3,448
Translation adjustment (9,338)
Transaction loss on hedge of net
investment in foreign subsidiaries (259)
------- ------- -------- -------
Balance at June 30, 1993 31,848 (3,792) (27,056) (167)
Year ended June 30, 1994:
Net income for the year 4,132
Stock options exercised
Purchase of treasury stock (129,700) (850)
Translation adjustment 1,880
Transaction gain on hedge of net
investment in foreign subsidiaries 12
------- ------- -------- -------
Balance at June 30, 1994 $35,980 $(1,900) (156,756) $(1,017)
======= ======= ======== =======
The accompanying notes to consolidated financial statements
are an integral part of these statements.
20
23
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
FOR THE YEAR ENDED JUNE 30,
-------------------------------------
1994 1993 1992
----- ------ ------
Cash flows from operating activities:
Income from continuing operations $ 4,132 $ 3,666 $ 770
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,729 5,189 6,637
Accrued retirement pay 152 155 616
Provision for losses on accounts receivable 1,589 814 83
Restructuring charge 816 1,706
Changes in assets and liabilities net of
effects from acquisitions of
subsidiaries:
Accounts and notes receivable 3,741 5,750 10,287
Inventories 1,639 3,854 759
Prepaid expenses and other (3,704) (500) 3,687
Customer deposits 612 (316) 294
Accrued compensation 150 745 (540)
Accounts and notes payable, trade (4,612) (1,079) 477
Income taxes payable 1,557 (4,216) (916)
Accrued and withheld taxes (163) (223) (586)
Other accounts payable and accrued
liabilities (1,675) (718) (675)
Interest payable 353 (50) (87)
-------- -------- --------
Net cash provided by continuing
operations 8,500 13,887 22,512
-------- -------- --------
Operating loss from
discontinued operations (1,842)
-------- -------- --------
Net cash provided by operating
activities 8,500 13,887 20,670
-------- -------- --------
Cash flows from investing activities:
Acquisition of subsidiaries, net of
cash acquired (743)
Additions of property, net (1,009) (988) (2,237)
Additions of patents, trademarks and
drawings, net (810) (1,054) (454)
Other assets (2,644) (328) 364
-------- -------- --------
Net cash used by investing
activities (4,463) (2,370) (3,070)
-------- -------- --------
Cash flows from financing activities:
Long-term borrowings 34,722 299 583
Short-term borrowings 11,807 10,143 9,497
Long-term debt repayment (35,835) (8,448) (14,447)
Short-term debt repayment (15,301) (7,466) (12,136)
Stock options exercised 42 336 607
Principal payments under capital lease
obligations (739) (1,539) (1,466)
Other long-term liabilities 286 22 661
Treasury stock purchased (850)
Dividends paid (197)
Sale of treasury stock 3,200
-------- -------- --------
Net cash (used) provided by
financing activities (5,868) (3,453) (16,898)
-------- -------- --------
Effect of exchange rate changes 689 865 1,030
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents (1,142) 8,929 1,732
Cash and cash equivalents at beginning
of year 19,676 10,747 9,015
-------- -------- --------
Cash and cash equivalents at end of year $ 18,534 $ 19,676 $ 10,747
======== ======== ========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
21
24
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
FOR THE YEAR ENDED JUNE 30,
----------------------------
1994 1993 1992
------ ------ ------
(IN THOUSANDS)
Cash paid during the period for:
Interest $3,356 $5,900 $7,254
Income taxes $3,471 $8,098 $7,679
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
FISCAL YEAR ENDED JUNE 30, 1994. The Company established deferred tax assets
during the current year in a non-cash transaction of $1,200,000.
The Company entered into capital lease agreements of $169,000 during the year
ended June 30, 1994.
FISCAL YEAR ENDED JUNE 30, 1993. The Company adopted FAS 109, "Accounting for
Income Taxes", effective July 1, 1992. The cumulative effect on prior years
was recorded as a separate component of net income and deferred tax assets were
established in a non-cash transaction of $1,229,000 (See Note 10--Notes to
Consolidated Financial Statements).
Deferred loan origination costs (see Notes 1 and 9--Notes to Consolidated
Financial Statements) of $1,489,000 were expensed net of related deferred tax
liabilities of $384,000 in connection with the Company's debt refinancing in a
non-cash transaction which reduced "Other assets" and "Other long-term
liabilities".
A restructuring charge (see Note 5--Notes to Consolidated Financial Statements)
was expensed during the fourth quarter of the fiscal year in a non-cash
transaction of $880,000, recorded as a current liability in "Other accounts
payable and accrued liabilities".
The Company entered into capital lease agreements of $327,000 and $1,472,000
for the years ended June 30, 1993 and 1992, respectively.
DISCLOSURE OF ACCOUNTING POLICY:
For purposes of the statement of cash flows, the Company considers all highly
liquid instruments with original maturities of three months or less to be cash
equivalents.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
22
25
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION OF BUSINESS:
Baldwin Technology Company, Inc. and its subsidiaries ("Baldwin" or
the "Company") are engaged primarily in the development, manufacture and sale
of material handling, accessory, control and pre-press equipment for the
printing industry.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following are the significant accounting policies followed by the
Company:
CONSOLIDATION. The consolidated financial statements include the
accounts of Baldwin and its wholly owned subsidiaries. All significant
intercompany transactions have been eliminated in consolidation.
TRANSLATION OF FOREIGN CURRENCIES. All assets and liabilities of
foreign subsidiaries are translated into dollars at year-end (current) exchange
rates and components of revenue and expense are translated at average rates for
the year. The resulting translation adjustments are included in shareholders'
equity. Gains and losses on foreign currency exchange transactions are
reflected in the statement of income. Net transaction gains, credited to
income for the years ended June 30, 1994, 1993 and 1992 were $48,000, $140,000
and $264,000, respectively.
INVENTORIES. Inventories are stated at the lower of cost or market.
Cost is determined on the last-in, first-out (LIFO) method for domestic
inventories and the first-in, first-out (FIFO) method for foreign inventories.
If the FIFO method had been used for all inventories, the total stated amount
for inventories would have been $453,000 and $261,000 greater as of June 30,
1994 and 1993, respectively.
PLANT AND EQUIPMENT. The Company depreciates its assets over their
estimated useful lives. Plant and equipment additions are depreciated using
primarily the straight-line method. Repair and maintenance expenditures are
expensed as incurred.
PATENT, TRADEMARKS AND ENGINEERING DRAWINGS. The cost of acquired
patents, trademarks and engineering drawings are being amortized on a
straight-line basis over the estimated useful lives of the related assets.
GOODWILL. Goodwill represents the excess of purchase price over the
fair market value of net assets acquired and is being amortized over 40 years
on a straight-line basis. Goodwill is measured for possible impairment, as of
each balance sheet date, based upon undiscounted future cash flows from the
related operations. Should such undiscounted future cash flows be less than
the carrying value, a charge to operations for the shortfall would be provided.
Goodwill increased $526,000 in fiscal 1994 (decreased $10,924,000 in fiscal
1993) due to the impact of foreign exchange fluctuations, primarily on the
portion of goodwill related to the European operations which is predominately
denominated in Swedish Krona.
DEFERRED LOAN ORIGINATION COSTS. At June 30, 1994, these costs were
$1,903,000 less $628,000 of accumulated amortization ($700,000 less $336,000 of
accumulated amortization at June 30, 1993) and were included in "Other Assets".
Deferred loan origination costs related to the Company's debt which was
23
26
refinanced during fiscal 1994 (see Note 9--Notes to Consolidated Financial
Statements) were charged off at June 30, 1993.
NET INCOME PER SHARE. Net income per share is based on the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares outstanding for the years ended June 30,
1994, 1993 and 1992 were 83,770, 19,575 and 304,052, respectively.
NOTE 3--DISCONTINUED OPERATIONS:
During the fourth quarter of fiscal 1992, the Company adopted a formal
plan to discontinue operations of its thermographic and forms handling
business. The Company completed the disposition of it's thermographic and
forms handling business in fiscal 1993.
The fiscal 1992 provision of $5,894,000 for loss on disposal of
discontinued operations includes a provision to dispose of all assets,
anticipated phase-out losses from operations until final disposition, accruals
of employee benefit and severance costs, settlement of lease obligations and
other anticipated expenses.
The operating (loss) of the thermographic and forms handling
operations comprised the following for the year ended June 30, 1992:
1992
-------
Net Sales $ 2,013
Cost of Sales and Expenses 3,915
-------
(Loss) before income taxes (1,902)
Income tax (benefit) (60)
-------
(Loss) from discontinued operations $(1,842)
=======
A summary of the net liabilities of the thermographic and forms
handling equipment business at June 30, 1992 is as follows:
JUNE 30, 1992
-------------
Current Assets $3,292,000
Other Assets 3,009,000
----------
6,301,000
----------
Current Liabilities 7,427,000
Other Liabilities 143,000
----------
7,570,000
----------
Discontinued Operations Reserve $1,269,000
==========
NOTE 4--RECLASSIFICATION:
The Company previously classified a portion of it's Technical Service
activities as a net operating expense prior to 1994 in financial statement
presentations. In 1994, technical Service expense was reclassified for all
periods presented as a component of Cost of Goods Sold. Technical Service
expenses previously recorded as operating expenses in the amounts of
$2,732,000, $2,379,000, $1,724,000 and $730,000 for the periods ended June 30,
1993, 1992, 1991 and 1990, respectively, were reclassified to Cost of Goods
Sold.
During the year, the Company reclassified the expense for amortization
of intangible assets, (i.e., patents, engineering drawings and trademarks,
goodwill and deferred loan origination costs), that were previously recorded as
a component of "Other Expense" to "General and Administrative Expense".
Intangible amortization in the amounts of $2,499,000, $2,474,000, $2,528,000
and $1,051,000 for the periods ended June 30, 1993, 1992, 1991 and 1990,
respectively, were reclassified to General and Administrative Expense.
24
27
NOTE 5--RESTRUCTURING CHARGE:
Historically, the Company has used cost containment and reduction
programs to offset unfavorable changes in business activity due to the economy.
As a result of the deepening recession in parts of Europe, the Company
established a restructuring reserve of $880,000 during the fourth quarter of
fiscal 1993 related to the rationalization of its workforce. During the fourth
quarter of fiscal 1992, a restructuring charge of $1,706,000 was accrued to
cover the costs of consolidating certain facilities and product lines in order
to reduce excess manufacturing capacity and reduce certain administrative
costs. The Company has classified the recorded liabilities as current in
"Other accrued liabilities".
At June 30, 1994, there were no remaining accrued liabilities for the
restructuring reserve established for the year ended June 30, 1993 for
workforce rationalization. The remaining $764,000 liability established for
the restructuring reserve for the year ended June 30, 1992 relates to excess
facility sublease subsidy and relocation costs of certain facilities in the
amounts of $454,000 and $310,000, respectively.
NOTE 6--BUSINESS SEGMENT INFORMATION:
The Company operates primarily in the printing industry. The Company,
through its subsidiaries, operates in three geographic sectors: the Americas,
Europe and Asia Pacific.
A summary of the results by geographic sector is as follows (in
thousands):
ADJUST-
MENTS
AND
THE ASIA ELIMI-
AMERICAS EUROPE PACIFIC NATIONS CONSOLIDATED
-------- ------ ------- ------- ------------
YEAR ENDED JUNE 30, 1994
Sales to unaffiliated
customers $84,113 $58,456 $55,486 $198,055
Transfers between
geographic areas 3,381 8,938 1,917 $(14,236) 0
------- ------- ------- -------- --------
Total revenue $87,494 $67,394 $57,403 $(14,236) $198,055
======= ======= ======= ======== ========
Operating profit $ 9,696 $ 1,207 $ 4,808 $ 15,711
======= ======= ======= ========
General corporate
expenses (4,297)
Interest expense, net (3,313)
--------
Income from continuing
operations before taxes $ 8,101
========
Identifiable assets $67,259 $69,174 $39,881 $ 0 $176,314
======= ======= ======= ========
Corporate assets 10,902
--------
Total assets $187,216
========
Total liabilities $35,586 $40,112 $23,438 $ 0 $ 99,136
======= ======= ======= ======== ========
25
28
ADJUST-
MENTS
AND
THE ASIA ELIMI-
AMERICAS EUROPE PACIFIC NATIONS CONSOLIDATED
-------- ------ ------- ------- ------------
YEAR ENDED JUNE 30, 1993
Sales to unaffiliated
customers $79,644 $75,763 $60,352 $215,759
Transfers between
geographic areas 5,169 7,455 2,556 $(15,180) 0
------- ------- ------- -------- --------
Total revenue $84,813 $83,218 $62,908 $(15,180) $215,759
======= ======= ======= ======== ========
Operating profit $ 8,706 $ 2,373 $ 8,142 $ 19,221
======= ======= ======= ========
General corporate
expenses (5,687)
Interest expense, net (5,565)
--------
Income from continuing
operations before taxes $ 7,969
========
Identifiable assets $57,421 $69,377 $57,236 $ (4,522) $179,512
======= ======= ======= ========
Corporate assets 8,967
--------
Total assets $188,479
========
Total liabilities $43,247 $62,343 $29,720 $(29,695) $105,615
======= ======= ======= ======== ========
YEAR ENDED JUNE 30, 1992
Sales to unaffiliated
customers $70,662 $83,970 $66,842 $221,474
Transfers between
geographic areas 4,568 7,230 2,223 $(14,021) 0
------- ------- ------- -------- --------
Total revenue $75,230 $91,200 $69,065 $(14,021) $221,474
======= ======= ======= ======== ========
Operating profit $ 2,274 $ 8,436 $10,471 $ 21,181
======= ======= ======= ========
General corporate
expenses (6,220)
Interest expense, net (6,684)
--------
Income from
continuing
operations before
taxes $ 8,277
========
Identifiable assets $61,455 $93,586 $51,576 $ (5,096) $201,521
======= ======= ======= ========
Corporate assets 5,415
--------
Total assets $206,936
========
Total liabilities $44,057 $69,928 $30,188 $(22,372) $121,801
======= ======= ======= ======== ========
No customer accounted for 10% of the Company's net sales in the fiscal
year ended June 30, 1994. In the fiscal year ended June 30, 1993 one customer
accounted for 11.3% of the Company's net sales. In the fiscal year ended June
30, 1992 one customer accounted for 10.9% of the Company's net sales.
26
29
NOTE 7--INVENTORIES:
Inventories consist of the following:
JUNE 30, 1994
--------------------------------------------
DOMESTIC FOREIGN TOTAL
---------- --------- ---------
Raw materials $ 7,283,000 $ 6,708,000 $13,991,000
In process 4,472,000 5,560,000 10,032,000
Finished goods 4,347,000 4,569,000 8,916,000
----------- ----------- -----------
$16,102,000 $16,837,000 $32,939,000
=========== =========== ===========
JUNE 30, 1993
--------------------------------------------
DOMESTIC FOREIGN TOTAL
---------- --------- ---------
Raw materials $ 7,152,000 $ 6,513,000 $13,665,000
In process 4,792,000 6,174,000 10,966,000
Finished goods 4,258,000 5,018,000 9,276,000
----------- ----------- -----------
$16,202,000 $17,705,000 $33,907,000
=========== =========== ===========
Foreign inventories increased $671,000 (decreased $2,338,000 in 1993)
due to translation rates in effect at June 30, 1994 when compared to rates at
June 30, 1993.
NOTE 8--LOANS PAYABLE:
Short-term indebtedness at June 30, 1994: Rate Amount
- - - - - ----------------------------------------- ------ --------
Foreign subsidiary 6.59% (average) $5,891,000
==========
Short-term indebtedness at June 30, 1993: Rate Amount
- - - - - ----------------------------------------- ------ --------
U.S. subsidiaries 6.97% (average) $3,728,000
Foreign subsidiaries 8.45% (average) 5,341,000
----------
$9,069,000
==========
27
30
NOTE 9--LONG-TERM DEBT:
JUNE 30, 1994 JUNE 30, 1993
--------------------------- ---------------------------
CURRENT LONG-TERM CURRENT LONG-TERM
--------- ----------- --------- -----------
Notes payable in equal annual
installments from October,
1997 through October, 2000,
interest rates 8.17% $25,000,000
Note payable November, 1997
interest rate (1.25% over
LIBOR) 5.875% 3,250,000
Note payable by foreign
subsidiary March, 1999,
interest rate 3.8% 3,006,000
Notes payable by foreign
subsidiary through
June, 1997, interest
rate (2.75% over
LIBOR) 10.66% $3,859,000 $16,712,000
Note payable through
June, 1997, interest
rate (60% fixed at
10.82%, 40% at 2.75%
over LIBOR) 8.92%
(average) 8,288,000
Industrial revenue
bonds payable in
annual installments
through November,
1999, interest rates
9% to 11% 78,000 453,000 73,000 531,000
Notes payable by
foreign subsidiary
through 2002,
interest rates 8%
8.7% and 12.9% 45,000 363,000 45,000 408,000
Notes payable through
April, 1995, interest
rates 6% 3,168,000
Notes payable through
October, 1999,
interest rates 5.5%
to 7.75% 19,000 158,000 43,000 59,000
-------- ----------- ---------- -----------
$142,000 $32,230,000 $7,188,000 $25,998,000
======== =========== ========== ===========
Notes payable, denominated in currencies other than the U.S. dollar,
increased by $299,000, (decreased by $2,656,000 in 1993), due to translation
rates in effect at June 30, 1994 when compared to rates at June 30, 1993.
The industrial revenue bonds are collateralized by the building and
specific equipment as outlined in the indenture relating thereto.
Approximately $408,000 of the loans included above are collateralized by assets
of a foreign subsidiary of the Company. The notes payable from October, 1997
through October, 2000 (the "Senior Notes") and note payable November, 1997 (the
"Revolver", a $20,000,000 credit facility) are collateralized by a pledge of
the capital stock of the Company's domestic subsidiaries. The Company
refinanced its long-term debt through the issuance of $25,000,000 of
seven-year, 8.17% unsecured Senior Notes privately placed with an institutional
lender. The Senior Notes require payment of interest only for the first three
years with equal annual principal repayments in years four through seven. The
Senior Notes and the Revolver require the Company to maintain certain financial
covenants and have certain restrictions regarding the payments of dividends,
limiting them to $3,000,000 plus 50% of the Company's net income after June 30,
1993. In addition, both the Senior notes and the Revolver require the Company
to maintain a ratio of current assets to current liabilities (as these terms
are defined in the agreements) of not less than 1.4 to 1. At June 30, 1994,
this ratio was 1.77 to 1. In
28
31
conjunction with the refinancing, the Company applied approximately $5,000,000
of cash reflected on the June 30, 1993 balance sheet to a reduction of its
long-term debt. The Company expensed all previously deferred loan origination
costs in connection with the refinanced debt in the amount of $1,105,000 (after
tax benefits of $384,000). The charge is classified as an extraordinary item
in the Consolidated Statement of Income.
Maturities of long-term debt in each fiscal year succeeding June 30,
1994 are as follows:
1995 $ 142,000
1996 147,000
1997 157,000
1998 9,663,000
1999 9,422,000
2000 and thereafter 12,841,000
-----------
$32,372,000
===========
At June 30, 1994, the Company had available lines of credit of
$32,600,000 upon which $9,253,000 had been drawn and of which $3,362,000 is
included in long-term debt. Only the Revolver has associated commitment fees
with that line of credit. The commitment fees, which are calculated quarterly,
are equal to between one-quarter and one-half of one percent per annum of the
unused portion of the Revolver. Commitment fees for the seven months ended
June 30, 1994 were $29,000.
NOTE 10--TAXES ON INCOME:
The Company adopted FAS 109, "Accounting for Income Taxes", effective
July 1, 1992. The cumulative effect on prior years of the adoption of this new
accounting principle was a benefit of $1,229,000 reported as a separate
component of net income, and a corresponding deferred tax asset. The Company
has not recognized the benefit of any unused net operating loss carryforwards
as the result of adopting FAS 109. The Company had previously been accounting
for income taxes under FAS 96, "Accounting for Income Taxes".
Income from continuing operations before taxes and the provision for
income taxes allocated to continuing operations are comprised of:
FOR THE YEAR ENDED JUNE 30,
----------------------------------------------
1994 1993 1992
-------- -------- --------
Income (loss) from continuing
operations before taxes:
Domestic $6,656,000 $3,429,000 $(1,373,000)
Foreign 1,445,000 4,540,000 9,650,000
---------- ---------- -----------
$8,101,000 $7,969,000 $ 8,277,000
========== ========== ===========
Provision for income taxes:
Currently payable:
Domestic $3,048,000 $ 402,000 $ 325,000
Foreign 2,475,000 4,632,000 7,884,000
---------- ---------- -----------
5,523,000 5,034,000 8,209,000
---------- ---------- -----------
Deferred (prepaid):
Domestic (1,200,000)
Foreign (354,000) (731,000) (702,000)
---------- ---------- -----------
(1,554,000) (731,000) (702,000)
---------- ---------- -----------
Total income tax expense
allocated to continuing operations $3,969,000 $4,303,000 $ 7,507,000
========== ========== ===========
29
32
Income tax benefits allocated to currently payable taxes from the
domestic and foreign extraordinary loss on extinguishment of debt were $9,000
and $375,000, respectively, for the year ended June 30, 1993. Income tax
benefits allocated to currently payable taxes from domestic discontinued
operations amounted to $60,000 for the year ended June 30, 1992.
Income tax benefits allocated to foreign prepaid taxes due to the
cumulative effect of adopting FAS 109 were $1,229,000 for the year ended June
30, 1993.
Deferred income taxes are provided on temporary differences between
the financial reporting basis and tax basis of the Company's assets and
liabilities. The opening balance of the valuation allowance was decreased by
$1,200,000 during the current year due to the improvement in domestic earnings.
The principal temporary differences which give rise to deferred tax assets and
liabilities at June 30, 1994 are as follows:
DEFERRED TAX
-----------------------------
ASSETS LIABILITIES TOTAL
----------- ----------- -----------
Foreign tax credit carryforwards $ 8,360,000
Foreign net operating loss carryforwards 6,554,000
Inventories 1,752,000
Pension 1,201,000
Other, individually less than 5% of
"Net Deferred Tax Asset" 2,315,000 $1,097,000
----------- ----------
Net Deferred Tax Asset and Liability $20,182,000 $1,097,000 $19,085,000
=========== ==========
Valuation Allowance 15,665,000
-----------
Total Net Deferred Tax Assets $ 3,420,000
===========
At June 30, 1994, the Company has foreign tax credit carryforwards for
book purposes of $8,360,000 and for tax purposes of $7,291,000, which expire
from fiscal 1995 to fiscal 1999. At June 30, 1994, net operating loss
carryforwards of $21,263,000 are available to reduce future foreign taxable
income ($370,000 of which expire from fiscal 1998 to fiscal 1999, $2,649,000 of
which expire from fiscal 2000 to fiscal 2002 and the remainder of which have an
indefinite carryforward period).
It has not been necessary to provide for income taxes on $8,451,000 of
cumulative undistributed earnings of subsidiaries outside the United States
because of the Company's intention to reinvest those reserves. In those
instances where the Company expects to remit earnings, the tax effect on the
results of operations after considering available tax credits would not be
significant.
The total income tax expense allocated to continuing operations was
more than the computed "expected" tax (determined by applying the United States
Federal statutory income tax rate of 34% to income from continuing operations
before taxes) by $1,215,000, $1,594,000 and $4,693,000 for the years ended June
30, 1994, 1993 and 1992. The reasons for the difference are as follows:
30
33
FOR THE YEAR ENDED JUNE 30,
--------------------------------------------
1994 1993 1992
-------- -------- --------
Computed "expected" tax $2,754,000 $2,709,000 $2,814,000
State income taxes, net of federal
income tax benefit 420,000 197,000 170,000
Foreign income taxed at higher than
the U.S. statutory rate 1,795,000 3,083,000 2,776,000
Unrecognized deferred tax benefit 1,627,000
Recognition of previously
unrecognized tax benefits (1,200,000) (2,038,000)
Goodwill write-off not deductible
for taxes 232,000 234,000 226,000
Other reconciling items,
individually less than 5% of
the "expected" tax (32,000) 118,000 (106,000)
---------- ---------- ----------
Total income tax expense $3,969,000 $4,303,000 $7,507,000
========== ========== ==========
NOTE 11--COMMON STOCK:
The holders of the Company's Class A Common Stock, voting as a
separate class, are entitled to elect 25% of the members of the Board of
Directors. Holders of Class B Common Stock, voting as a separate class, are
entitled to elect the remaining Directors, so long as the number of outstanding
shares of Class B Common Stock is equal to at least 12.5% of the number of
outstanding shares of both classes of Common Stock as of the record date of the
Company's Annual Meeting. If the number of outstanding shares of Class B
Common Stock is less than 12.5% of the total number of outstanding shares of
both classes of Common Stock, the holders of Class A Common Stock, voting as a
separate class, continue to elect a number of Directors equal to 25% of the
total number of Directors constituting the entire Board of Directors and the
remaining directors are elected by the holders of both classes of Common Stock,
with the holders of Class A Common stock having one vote per share and the
holders of Class B Common Stock having ten votes per share. As of June 30,
1994, the number of outstanding shares of Class B Common Stock constituted
10.4% (11.1% in 1993) of the total number of outstanding shares of both classes
of Common Stock.
The Class A Common Stock has no conversion rights; however, Class B
Common Stock is convertible into Class A Common Stock on a one-for-one basis.
In addition, no dividend in cash or property may be declared or paid on shares
of Class B Common Stock without a dividend being declared or paid on shares of
Class A Common Stock of at least 105% of that on the Class B Common Stock.
Dividends declared during the year ended June 30, 1992 totaled $197,000.
In November, 1992, the Company sold 800,000 shares of its Class A
Common Stock, which were held as treasury stock at June 30, 1992, for $4.00 per
share. Prior to that sale, these shares were registered under the Securities
Act of 1933, as amended, by means of a Registration Statement on Form S-2. The
Company prepaid existing long-term indebtedness with the proceeds.
The Company's stock repurchase program authorization for $4,000,000
for Class "A" Common Stock and 500,000 shares of Class "B" Common Stock was
increased to $5,000,000 for Class "A" Common Stock in July of 1994. As of June
30, 1994, 880,356 shares of Class "A" Common Stock (826,056 in 1993) and
135,000 shares of Class B Common Stock (6,000) had been repurchased for
$4,724,000 ($3,663,000 in 1993) under this program.
31
34
NOTE 12--STOCK OPTIONS:
The 1986 Stock Option Plan, as amended, allows for the granting, at
fair market value at the date of grant, of incentive stock options,
non-qualified stock options, and tandem stock appreciation rights (SARS) for up
to a total of 2,220,000 and 590,000 shares of Class A and Class B Common Stock,
respectively. Options to purchase shares of the Company's Class B Common Stock
are granted at a price per share of no less than 125% of the fair market value
of a share of Class A Common Stock on the date of grant. All options become
exercisable in three equal annual installments commencing on the second
anniversary of the date of grant. Unexercised options terminate no later than
ten years from the date of grant.
OPTION PRICE
1986 STOCK OPTION PLAN CLASS A CLASS B RANGE
- - - - - ---------------------- ------- ------- ------------
Outstanding at June 30, 1992 839,000 290,000 $3.98 - $9.94
Granted 315,000 $5.50
Canceled (105,000) $3.98 - $9.94
Exercised* (164,000) $3.98
--------- -------
Outstanding at June 30, 1993 885,000 290,000 $4.00 - $9.94
--------- -------
Granted 310,000 $3.88 - $3.94
Canceled (175,001) (115,000) $4.00 - $9.94
Exercised (9,999) $4.00
--------- -------
Outstanding at June 30, 1994 1,010,000 175,000 $3.88 - $9.94
========= =======
Exercisable at June 30, 1994 253,333 74,999 $4.00 - $9.94
========= =======
* A portion of the consideration received upon exercise of these options
was 64,748 shares of the Company's Class A Common Stock.
The 1990 Directors' Stock Option Plan provides for the granting, at
fair market value at the date of grant, of up to 100,000 shares of the
Company's Class A and Class B Common Stock as non-qualified stock options to
members of the Company's Board of Directors who are not employees ("Eligible
Directors") of the Company or any of its subsidiaries. Grants are made on the
third business day subsequent to each Annual Meeting of Stockholders, including
the 1990 meeting, to each Eligible Director for 1,000 shares of Class A and
Class B Common Stock in proportion to the number of shares of each such class
then outstanding. Restrictions under the Directors' Stock Option Plan are
similar to those of the 1986 Stock Option Plan, as amended, except with regard
to the exercise date, which is twelve months after the date of grant, and
termination of options, which is generally nine months after termination of
service as a director. During the year ended June 30, 1994, 3,556 and 444
(3,532 and 468 in 1993) shares of Class A and Class B Common Stock were granted
at exercise prices of $4.88 and $6.09, ($4.50 and $5.63 in 1993) respectively.
During fiscal 1993, 881 Class A and 119 of Class B options with option prices
of $4.75 and $5.94, respectively, were canceled. At June 30, 1994, options for
10,695 and 1,305 shares of Class A and Class B Common Stock, respectively, were
exercisable at option prices between $3.75 to $5.94.
On March 29, 1990, the Board of Directors of the Company granted stock
options to purchase 1,000 shares each of the Company's Class A Common Stock to
two non-employee Directors at $9.75 per share, which become exercisable the
same as options granted under the Company's 1986 Stock Option Plan and
terminate five years after the date of grant. During the year ended June 30,
1994 these shares became exercisable.
32
35
NOTE 13--SUPPLEMENTAL COMPENSATION:
Subsidiaries within the Company's Americas Sector maintain profit
sharing, savings and retirement plans. Amounts expensed under these plans were
as follows:
FOR THE YEAR ENDED JUNE 30,
--------------------------------------
1994 1993 1992
------ ------ ------
Baldwin Technology Corporation ("BTC")
and Baldwin Graphic Systems ("BGS") $446,000 $543,000 $385,000
Kansa Corporation 176,000 132,000 70,000
Enkel Corporation 114,000 92,000 19,000
Misomex of North America, Inc. 41,000 44,000
-------- -------- --------
Total expense $777,000 $811,000 $474,000
======== ======== ========
Company contributions to the BTC/BGS and Kansa plans are discretionary
and are subject to approval by their respective Boards. The Enkel plan
requires a company contribution equal to the total participant contribution
which may not exceed 15% of the total compensation paid to the employees of
Enkel. The Misomex of North America plan requires contributions as determined
by their Board of Directors.
Certain subsidiaries within the Company's European Sector maintain
pension plans. Amounts expensed under these plans were as follows:
FOR THE YEAR ENDED JUNE 30,
-------------------------------------
1994 1993 1992
------ ------ ------
Baldwin Gegenheimer GmbH. $287,000 $335,000 $407,000
Misomex--AB 280,000 344,000 506,000
Amal--AB 57,000 82,000
Baldwin Graphics--B.V. 52,000 23,000
Misomex--U.K. 84,000 89,000
-------- -------- --------
Total expense $760,000 $873,000 $913,000
======== ======== ========
The amount of expense relating to the European pension plans is
determined based upon, among other things, the age, salary and years of service
of employees within the plans. The Company's German, British, Swedish Amal AB
and Netherlands subsidiaries make annual contributions to the plans equal to
the amounts accrued for pension expense.
In Germany, at Baldwin Gegenheimer GmbH, there is an additional
pension plan covering five employees, three of whom are retired. This defined
benefit plan provides for benefits, at maturity age, in lump sum payments on
retirement or death or as a disability pension in case of disability. This
plan is partially funded by insurance contracts. In Sweden, at Misomex AB, (as
listed above), there are two defined benefit pension plans, one covering 21
retired employees and the other covering 122 employees, 65 of whom are retired.
The unfunded, but recorded, liability related to the Misomex AB plan at June
30, 1994 was $3,453,000 ($3,617,000 in 1993). The recorded liability is
sufficient to cover obligations earned under the plan.
33
36
The following table sets forth the components of net pension costs of
the defined benefit plans for the year ended June 30,
1994 1993
-------- --------
Service Cost - benefits earned during the period $ 77,000 $ 94,000
Interest on projected benefit obligation 258,000 362,000
Annual return on plan assets 9,000 7,000
Net amortization and deferrals (93,000) (100,000)
-------- --------
Net pension cost $251,000 $363,000
======== ========
The following table sets forth the funded status of the above defined
benefit pension plans for the year ended June 30,
1994 1993
---------- ----------
Actuarial present value of:
Vested benefit obligation $2,176,000 $2,100,000
Accumulated benefit obligation $3,083,000 $2,931,000
========== ==========
Plan assets at fair value $ 379,000 $ 107,000
Projected benefit obligation 3,575,000 3,447,000
---------- ----------
Plan assets less than projected
benefit obligation (3,196,000) (3,340,000)
Unrecognized transition asset 337,000 324,000
Unrecognized actuarial gain (1,366,000) (1,279,000)
---------- ----------
Accrued pension costs $4,225,000 $4,295,000
========== ==========
Actuarial assumptions
Discount rate 3% to 8% 3% to 10%
Rate of increase in compensation levels 5% to 7% 6.5% to 7%
Expected rate of return on plan assets 7% 7.5%
There is one retirement plan within the Company's Asia Pacific Sector.
The Company's Japanese subsidiary maintains a non-contributory retirement plan
covering all employees, excluding directors (the "Japanese Retirement
Program"). Amounts expensed under the program are determined based on
participating employees' salary and length of service. The Japanese Retirement
Program is fully accrued and partially funded through insurance contracts.
Expense relating to this program was $325,000, $296,000 and $118,000 for the
years ended June 30, 1994, 1993 and 1992, respectively.
Officers and key employees of the Company participate in various
incentive compensation plans. Amounts expensed under such plans were
$2,090,000, $2,367,000 and $1,209,000 for the years ended June 30, 1994, 1993
and 1992, respectively.
The Company adopted FAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", as of July 1, 1992, the effect of which was
immaterial.
34
37
NOTE 14--COMMITMENTS:
Future minimum annual lease payments under capital leases, which
consist of buildings, and machinery and equipment with accumulated depreciation
amounting to $5,606,000 at June 30, 1994 and $4,761,000 at June 30, 1993,
together with the present value of the minimum lease payments are as follows at
June 30, 1994.
FISCAL YEAR ENDING JUNE 30, AMOUNT
- - - - - --------------------------- ----------
1995 $ 794,000
1996 520,000
1997 332,000
1998 321,000
1999 338,000
2000 and thereafter 312,000
-----------
Total minimum lease payments 2,617,000
Less--Amount representing interest (866,000)
-----------
Present value of minimum lease payments $ 1,751,000
===========
At June 30, 1994, $1,238,000 ($1,614,000 at June 30, 1993) is included
in other long-term liabilities representing the long-term portion of the
present value of minimum lease payments.
Rental expense amounted to approximately $4,672,000, $4,409,000 and
$4,893,000 for the years ended June 30, 1994, 1993 and 1992, respectively.
Aggregate future annual rentals under noncancellable leases for periods of more
than one year at June 30, 1994 are as follows:
FISCAL YEAR ENDING JUNE 30, AMOUNT
- - - - - --------------------------- ----------
1995 $ 4,405,000
1996 $ 3,540,000
1997 $ 2,771,000
1998 $ 2,624,000
1999 $ 2,290,000
2000 and thereafter $10,237,000
35
38
NOTE 15--RELATED PARTIES:
On July 1, 1990, the Company, through each of it's subsidiaries,
Baldwin Americas Corporation (BAM), Baldwin Europe Consolidated Inc. (BEC) and
Baldwin Asia Pacific Corporation (BAP) entered into consulting agreements with
Polestar Limited ("Polestar"), a corporation wholly owned by Wendell M. Smith,
Chairman of the Board and Chief Executive Officer. The consulting agreements
have terms of one year, but are automatically extended for additional one-year
terms unless either party gives prior notice of termination. Under the
consulting agreements, Polestar is obligated to provide certain management
services outside the United States and will receive compensation equal to 2% of
the annual consolidated after-tax profits of BAM, BEC and BAP and their
respective subsidiaries, in each case, not to exceed $150,000. For the years
ended June 30, 1994, 1993 and 1992 the aggregate compensation expensed under
these agreements was $84,000, $147,000 and $86,000, respectively.
On November 30, 1993, the Company entered into a loan and pledge
agreement and promissory note with Gerald A. Nathe, President and Director of
the Company and on March 11, 1994, the Company entered into loan and pledge
agreements and promissory notes with D. John Youngman, Vice President and
Director and William J. Lauricella, Chief Financial Officer and Treasurer of
the Company. The loans were made in order to enable the Company's officers to
purchase shares of the Company's Common Stock from non-employee shareholders.
Mr. Nathe was loaned $1,817,321 to purchase 315,144 shares of the Company's
Common Stock and Mr. Youngman and Mr. Lauricella were each loaned $164,063 to
purchase 25,000 shares each of the Company's Common Stock. All of the shares
purchased have been pledged as collateral for the demand promissory notes and
each of the notes are interest bearing, with interest payable on the
anniversary dates at LIBOR rates plus 1.25% reset on the first day of each
succeeding January, April, July and October.
The Company employs the firm of Morgan, Lewis & Bockius as its legal
counsel. Samuel B. Fortenbaugh III, a Director of the Company, is a partner in
this law firm. In the fiscal years ended June 30, 1994, 1993, and 1992, the
Company incurred legal fees of approximately $252,000, $151,000, and $150,000,
respectively, payable to Morgan, Lewis & Bockius.
On July 1, 1990, Baldwin Technology Corporation (BTC) and Baldwin
Graphic Systems, Inc. (BGS), two subsidiaries of BAM, entered into an agreement
with Harold W. Gegenheimer, Chairman Emeritus, guaranteed by the Company, to
replace various prior agreements including royalty and employment agreements,
retirement plans and bonus arrangements. The new agreement guarantees a
compensation amount of $200,000 per year. Simultaneously, a separate agreement
was made with Mr. Gegenheimer and the Company whereby the Company was released
from certain prior agreements, as noted above, and agreed to pay a minimum
guaranteed amount of compensation of $200,000 per year, not to exceed $350,000
per year, based on one and one-half percent (1.5%) of the Company's annual net
after tax profits. The amount expensed under these two agreements was $400,000
for each of the years ended June 30, 1994, 1993 and 1992.
36
39
NOTE 16--QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for fiscal 1994 and fiscal 1993
are as follows (in thousands except per share data):
QUARTER
-------------------------------------------------------
FISCAL 1994 FIRST SECOND THIRD FOURTH
- - - - - ----------- ------- ------ ------- ------
Net sales $46,412 $45,446 $49,403 $56,794
Costs and expenses
Cost of goods sold (1) 30,219 30,592 33,626 35,614
Operating expenses (2) 13,927 13,665 13,898 15,987
Interest, net 983 850 769 711
Other (income) expense (74) (421) (439) 47
------- ------- ------- -------
Income before taxes 1,357 760 1,549 4,435
Provision for income taxes 727 395 821 2,026
------- ------- ------- -------
Net income $ 630 $ 365 $ 728 $ 2,409
======= ======= ======= =======
Income per share from:
Net income per share $ 0.04 $ 0.02 $ 0.04 $ 0.13
======= ======= ======= =======
Weighted average shares
outstanding 17,974 18,072 18,053 17,973
======= ======= ======= =======
QUARTER
----------------------------------------------------
FISCAL 1993 FIRST SECOND THIRD FOURTH
- - - - - ----------- ------- ------ ------- ------
Net sales $50,466 $53,910 $49,101 $62,282
Costs and expenses
Cost of goods sold (1) 33,579 35,550 33,144 40,291
Operating expenses (2) 13,833 14,851 13,880 16,679
Restructuring charge 880
Interest, net 1,584 1,531 1,163 1,287
Other expense (income) 238 (521) (261) 82
------- ------- ------- -------
Income from continuing operations
before taxes 1,232 2,499 1,175 3,063
Provision for income taxes 678 1,374 990 1,261
------- ------- ------- -------
Income from continuing operations 554 1,125 185 1,802
Extraordinary loss on
extinguishment of debt (1,105)
Cumulative effect of change
in accounting for income taxes 1,229
------- ------- ------- -------
Net income $ 1,783 $ 1,125 $ 185 $ 697
======= ======= ======= =======
Income (loss) per share from:
Continuing operations $0.03 $0.07 $0.01 $0.10
Extinguishment of debt (0.06)
Cumulative effect of change in
accounting for income taxes 0.07
------- ------- ------- -------
Net income per share $ 0.10 $ 0.07 $ 0.01 $ 0.04
======= ======= ======= =======
Weighted average shares
outstanding 17,074 17,410 17,957 17,942
======= ======= ======= =======
(1) Includes all technical service expense, a portion of which was
previously classified as an item of Operating Expenses in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
(2) Includes amortization expense for intangible assets which was
previously classified as an item of Other Income and Expense in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
37
40
NOTE 17--SUBSEQUENT EVENT:
On July 26, 1994 the Board of Directors granted non-qualified options
for 100,000 shares of Class A Common Stock and 100,000 shares of Class B Common
Stock to certain executives under the Company's 1986 Stock Option Plan. The
options were granted at the fair market value on the day of grant ($4.90 and
$6.09, respectively) and are otherwise identical with regard to restrictions on
options previously granted as described in Note 12--Notes to Consolidated
Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no Form 8-K filed within 24 months prior to the date of
the most recent financial statements reporting a change of accountants and/or
reporting a disagreement on any matter of accounting principle or financial
statement disclosure.
PART III
ITEMS 10, 11, 12 AND 13.
Information required under these items is contained in the Company's
1994 Proxy Statement, which will be filed with the Securities and Exchange
Commission within 120 days after the close of the Company's fiscal year end;
accordingly, this information is therefore incorporated herein by reference.
38
41
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial statements required by Item 14 are listed in the
index included in Item 8 of Part II.
(a)(2) The following is a list of financial statement schedules filed
as part of this Report:
PAGE
----
Report of Independent Accountants on Financial Statement Schedules 43
Schedule II--Amounts Receivable from Related Parties 44
Schedule VIII--Valuation and Qualifying Accounts 45
Schedule IX--Short-term Borrowings 46
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(a)(3) The following is a list of all exhibits filed as part of this
Report:
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation of the Company as filed
with the Secretary of State of the State of Delaware on
November 4, 1986. Filed as Exhibit 3.1 to the company's
registration statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
3.2 Certificate of Amendment of the Certificate of Incorporation
of the Company as filed with the Secretary of State of the
State of Delaware on November 21, 1988. Filed as Exhibit 3.2
to the Company's Registration Statement (No. 33-26121) on
Form S-1 and incorporated herein by reference.
3.3 Certificate of Amendment of the Certificate of Incorporation
of the Company as filed with the Secretary of State of the
State of Delaware on November 20, 1990. Filed as Exhibit 3.3
to the Company's Report on Form 10-K for the fiscal year ended
June 30, 1991 and incorporated herein by reference.
3.4 By-Laws of the Company. Filed as Exhibit 3.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.1 Baldwin Technology Company, Inc. Amended and Restated 1986
Stock Option Plan. Filed as Exhibit 10.2 to the Company's
Registration Statement (No. 33-31163) on form S-1 and
incorporated herein by reference.
10.2 Amendment to the Baldwin Technology Company, Inc. Amended and
Restated 1986 Stock Option Plan. Filed as Exhibit 10.2 to the
Company's Report on Form 10-K for the fiscal year ended June
30, 1991 and incorporated herein by reference.
10.3 Baldwin Technology Company, Inc. 1990 Directors' Stock Option
Plan. Filed as Exhibit 10.3 to the Company's Report on Form
10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
39
42
10.4 Baldwin Technology Corporation Profit Sharing Plan, as amended
and restated. Filed as Exhibit 10.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.5 Baldwin Technology Corporation Executive and Key Person Bonus
Plan. Filed as Exhibit 10.4 to the Company's Registration
Statement (No. 33-10028) on Form S-1 and incorporated herein
by reference.
10.6 Agreement, effective as of July 1, 1990, between Baldwin
Technology Corporation, Baldwin Graphic Systems, Inc. and
Harold W. Gegenheimer, as guaranteed by Baldwin Technology
Company, Inc. Filed as Exhibit 10.6 to the Company's Report on
Form 10-K for the fiscal year ended June 30, 1991 and
incorporated herein by reference.
10.7 Agreement, effective as of July 1, 1990, between Baldwin
Technology Company, Inc. and Harold W. Gegenheimer. Filed as
Exhibit 10.7 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.8 Consulting Agreement, effective as of July 1, 1991, between
Baldwin Technology Company, Inc. and Judith G. Hyers. Filed
as Exhibit 10.8 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.9 Consulting Agreements dated as of January 1, 1990 between each
of Baldwin Americas Corporation, Baldwin Asia Pacific
Corporation and Baldwin Europe Consolidated Inc., and
Polestar, Ltd. filed as Exhibit 10.8 on the Company's Form
10-K dated September 25, 1990 and incorporated herein by
reference.
10.10 * Employment Agreement dated as of July 1, 1990 between the
Company and Wendell M. Smith filed as Exhibit 10.9 to the
Company's Form 10-K dated September 25, 1990 and incorporated
herein by reference.
10.11 License Agreement between Baldwin Technology Corporation and
Hans Jacobs Moestue, as assigned to Moestue Limited. Filed as
Exhibit 10.15 to the Company's Registration Statement (No.
33-10028) on Form S-1 and incorporated herein by reference.
10.12 * Employment Agreement, dated as of November 16, 1988, between
Baldwin-Japan Limited and Akira Hara. Filed as Exhibit 10.22
to the Company's Registration Statement (No. 33-26121) on
Form S-1 and incorporated herein by reference.
10.13 Stock Purchase Agreement, dated as of April 13, 1990, between
RZ Corporation, The Dyson-Kissner-Moran Corporation and the
Company. Filed as Exhibit 1 to the Company's Form 8-K dated
April 26, 1990 and incorporated herein by reference.
10.14 Amendment No. 1 to the Company's Form 8-K (as filed on April
13, 1990) and dated October 9, 1990 for the acquisition of
Misomex AB and subsidiaries and Misomex of North America,
Inc.--Exhibits (a) and (b) incorporated herein by reference.
10.15 Assignment of Stock Purchase Agreement, dated May 27, 1990,
between the Company and Misomex Acquisition Company. Filed as
Exhibit 2 to the Company's Form 8-K dated August 13, 1990 and
incorporated herein by reference.
40
43
10.16 Assignment of Stock Purchase Agreement dated May 28, 1990,
between the Company and Misomex Acquisition AB. Filed as
Exhibit 3 to the Company's Form 8-K dated August 13, 1990 and
incorporated herein by reference.
10.17 Agreement and Plan of Merger, dated as of April 26, 1989,
among Enkel Corporation, Bengt Kuller, Enkel Acquisition
Corporation and the Company. Filed as Exhibit I to the
Company's report on Form 8-K dated May 7, 1989 and
incorporated herein by reference.
10.18 Baldwin Technology Company, Inc. Dividend Reinvestment Plan.
Filed as Exhibit 10.49 to the Company's Report on Form 10-K
for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.19 Baldwin Technology Company, Inc. Employee Stock Ownership
Plan. Filed as Exhibit 10.50 to the Company's Report on Form
10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.20 Consulting Agreement dated as of June 30, 1989 between Baldwin
Asia Pacific Corporation and A-PLUS LTD. Filed as Exhibit
10.51 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
10.21 Baldwin Technology Company, Inc. Worldwide Employee Stock
Ownership Plan. Filed as Exhibit 10.52 to the Company's
Report on Form 10-K for the fiscal year ended June 30, 1991
and incorporated herein by reference.
10.22 * Employment Agreement, effective as of August 5, 1993 between
Baldwin Technology Company, Inc. and Gerald A. Nathe (filed
herewith).
10.23 8.17% Senior Note Agreement dated October 29, 1993 between
Baldwin Technology Company, Inc. and its subsidiaries Baldwin
Americas Corporation and Baldwin Technology Ltd. and John
Hancock Mutual Life Insurance Company, John Hancock Variable
Life Insurance Company and John Hancock Life Insurance Company
(filed herewith).
10.24 $20,000,000 Revolving Credit Agreement dated November, 1993
between Baldwin Technology Company, Inc. and its subsidiaries
Baldwin Americas Corporation and Baldwin Technology Ltd. and
NationsBank of North Carolina, National Association (filed
herewith).
21. List of Subsidiaries of Registrant (filed herewith).
23. Consent of Price Waterhouse (filed herewith).
27. Financial Data Schedule (filed herewith).
28. Post-effective Amendment to the Company's previously filed
Form S-8's, Nos. 33-20611 and 33-30455. Filed as Exhibit 28
to the Company's Report on Form 10-K for the fiscal year ended
June 30, 1991 and incorporated herein by reference.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the last
quarter of the period covered by this report.
41
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(REGISTRANT)
By: WENDELL M. SMITH
------------------------
WENDELL M. SMITH
(CHIEF EXECUTIVE OFFICER)
Dated: September 23, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- - - - - --------- ------- ----
WENDELL M. SMITH
- - - - - ----------------------------
(WENDELL M. SMITH) Chairman of the Board,
Chief Executive
Officer and Director September 23, 1994
GERALD A. NATHE
- - - - - ---------------------------
(GERALD A. NATHE) President and Director September 23, 1994
AKIRA HARA
- - - - - ---------------------------
(AKIRA HARA) Vice President and Director September 23, 1994
D. JOHN YOUNGMAN
- - - - - ---------------------------
(D. JOHN YOUNGMAN) Vice President and Director September 23, 1994
WILLIAM J. LAURICELLA
- - - - - ---------------------------
(WILLIAM J. LAURICELLA) Treasurer and Chief
Financial Officer September 23, 1994
HELEN P. OSTER
- - - - - ---------------------------
(HELEN P. OSTER) Secretary September 23, 1994
WARREN W. SMITH
- - - - - ---------------------------
(WARREN W. SMITH) Chief Accounting Officer September 23, 1994
SAMUEL B. FORTENBAUGH III
- - - - - ---------------------------
(SAMUEL B. FORTENBAUGH III) Director September 23, 1994
JUDITH G. HYERS
- - - - - ---------------------------
(JUDITH G. HYERS) Director September 23, 1994
M. RICHARD ROSE
- - - - - ---------------------------
(M. RICHARD ROSE) Director September 23, 1994
RALPH R. WHITNEY, JR.
- - - - - ---------------------------
(RALPH R. WHITNEY, JR.) Director September 23, 1994
42
45
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders of
BALDWIN TECHNOLOGY COMPANY, INC.
Our audits of the consolidated financial statements of Baldwin
Technology Company, Inc. and its subsidiaries referred to in our report dated
August 19, 1994 appearing on page 16 in this Annual Report on Form 10-K also
included an audit of the Financial Statement Schedules listed in Item 14(a) (2)
of this Form 10-K.
In our opinion, these Financial Statement Schedules present fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Stamford, Connecticut
August 19, 1994
43
46
SCHEDULE II
BALDWIN TECHNOLOGY COMPANY, INC
AMOUNTS RECEIVABLE FROM RELATED PARTIES
(IN THOUSANDS)
BALANCE AT
BEGINNING BALANCE
OF AT END
NAME OF DEBTOR PERIOD ADDITIONS DEDUCTIONS OF PERIOD
- - - - - --------------------- ---------- --------- ------------------------- ----------------
AMOUNTS AMOUNTS NOT
COLLECTED WRITTEN OFF CURRENT CURRENT
--------- ----------- ------- -------
Gerald A. Nathe (1) $0 $1,871 $1,871
D. John Youngman (1) $0 $ 167 $ 167
William J. Lauricella (1) $0 $ 167 $ 167
(1) All notes receivable are payable upon demand and carry interest rates of
LIBOR plus 1.25% which are set quarterly. The notes receivable are
collateralized by, in the case of Mr. Nathe, a pledge of 315,144 shares of the
Company's Common Stock and in the cases of from Mr. Youngman and Mr.
Lauricella, a pledge by each of 25,000 shares of the Company's Common Stock.
Amounts receivable above include interest receivable through June 30, 1994.
See Note 15 - Notes to Consolidated Financial Statements.
44
47
SCHEDULE VIII
BALDWIN TECHNOLOGY COMPANY, INC
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
BALANCE AT CHARGED CHARGED
BEGINNING TO TO BALANCE
OF COSTS AND OTHER AT END
PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
--------- --------- -------- ---------- ---------
Year ended June 30,
1994
Allowance for doubtful
accounts (deducted
from accounts
receivable) $ 1,831 $1,589(1) $ 211 $ 3,209
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) $16,537 $328 $ 1,200(2) $15,665
Year ended June 30,
1993
Allowance for doubtful
accounts (deducted
from accounts
receivable) $ 1,099 $ 814 $ 82 $ 1,831
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) $ 16,537(3) $16,537
Year ended June 30,
1992
Allowance for
doubtful accounts
(deducted from
accounts receivable) $ 1,502 $ 83 $ 486 $ 1,099
(1) The amount expensed is primarily due to a potential bad debt in the
Company's Asia Pacific Sector where the debtor has filed a plan of
reorganization.
(2) The reduction in the amount of the valuation allowance is the result
of improved earnings in the Company's domestic operations. See Note
10 - Notes to Consolidated Financial Statements.
(3) Amount recorded is a result of adoption of FASB Statement No. 109,
Accounting for Income Taxes.
45
48
SCHEDULE IX
BALDWIN TECHNOLOGY COMPANY, INC.
SHORT-TERM BORROWINGS
(IN THOUSANDS)
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
OUT- OUT- INTEREST
CATEGORY OF BALANCE WEIGHTED STANDING STANDING RATE
AGGREGATE AT AVERAGE DURING DURING DURING
SHORT-TERM END OF INTEREST THE THE THE
BORROWINGS PERIOD RATE(1) PERIOD PERIOD(1) PERIOD(1)
---------- -------- -------- ------- --------- ---------
Year ended
June 30, 1994 Banks $5,891 6.59% $16,193 $ 8,920 7.71%
Year ended
June 30, 1993 Banks $9,069 7.84% $15,062 $11,428 8.68%
Year ended
June 30, 1992 Banks $6,505 7.92% $19,131 $12,266 9.63%
(1) Averages are weighted by month for the period of time granted.
Averages reflect the monthly amount of short-term borrowings in use
and the respective rates of interest therein.
46
49
EXHIBIT INDEX
--------------
Exhibit
No. Description
- - - - - ------- -----------
3.1 Restated Certificate of Incorporation of the Company as
filed with the Secretary of State of the State of Delaware
on November 4, 1986. Filed as Exhibit 3.1 to the company's
registration statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
3.2 Certificate of Amendment of the Certificate of Incorporation
of the Company as filed with the Secretary of State of the
State of Delaware on November 21, 1988. Filed as Exhibit 3.2
to the Company's Registration Statement (No. 33-26121) on
Form S-1 and incorporated herein by reference.
3.3 Certificate of Amendment of the Certificate of Incorporation
of the Company as filed with the Secretary of State of the
State of Delaware on November 20, 1990. Filed as Exhibit 3.3
to the Company's Report on Form 10-K for the fiscal year ended
June 30, 1991 and incorporated herein by reference.
3.4 By-Laws of the Company. Filed as Exhibit 3.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.1 Baldwin Technology Company, Inc. Amended and Restated 1986
Stock Option Plan. Filed as Exhibit 10.2 to the Company's
Registration Statement (No. 33-31163) on form S-1 and
incorporated herein by reference.
10.2 Amendment to the Baldwin Technology Company, Inc. Amended
and Restated 1986 Stock Option Plan. Filed as Exhibit 10.2
to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
10.3 Baldwin Technology Company, Inc. 1990 Directors' Stock
Option Plan. Filed as Exhibit 10.3 to the Company's Report
on Form 10-K for the fiscal year ended June 30, 1991 and
incorporated herein by reference.
50
EXHIBIT INDEX (Con't)
-------------
Exhibit
No. Description
- - - - - ------- -----------
10.4 Baldwin Technology Corporation Profit Sharing Plan, as
amended and restated. Filed as Exhibit 10.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.5 Baldwin Technology Corporation Executive and Key Person Bonus
Plan. Filed as Exhibit 10.4 to the Company's Registration
Statement (No. 33-10028) on Form S-1 and incorporated herein
by reference.
10.6 Agreement, effective as of July 1, 1990, between Baldwin
Technology Corporation, Baldwin Graphic Systems, Inc. and
Harold W. Gegenheimer, as guaranteed by Baldwin Technology
Company, Inc. Filed as Exhibit 10.6 to the Company's Report
on Form 10-K for the fiscal year ended June 30, 1991 and
incorporated herein by reference.
10.7 Agreement, effective as of July 1, 1990, between Baldwin
Technology Company, Inc. and Harold W. Gegenheimer. Filed
as Exhibit 10.7 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.8 Consulting Agreement, effective as of July 1, 1991, between
Baldwin Technology Company, Inc. and Judith G. Hyers. Filed
as Exhibit 10.8 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.9 Consulting Agreements dated as of January 1, 1990 between
each of Baldwin Americas Corporation, Baldwin Asia Pacific
Corporation and Baldwin Europe Consolidated Inc., and
Polestar, Ltd. filed as Exhibit 10.8 on the Company's Form
10-K dated September 25, 1990 and incorporated herein by
reference.
10.10 * Employment Agreement dated as of July 1, 1990 between the
Company and Wendell M. Smith filed as Exhibit 10.9 to the
Company's Form 10-K dated September 25, 1990 and
incorporated herein by reference.
10.11 License Agreement between Baldwin Technology Corporation
and Hans Jacobs Moestue, as assigned to Moestue Limited.
Filed as Exhibit 10.15 to the Company's Registration
Statement (No 33-10028) on Form S-1 and incorporated herein
by reference.
10.12 * Employment Agreement, dated as of November 16, 1988,
between Baldwin-Japan Limited and Akira Hara. Filed as
Exhibit 10.22 to the Company's Registration Statement
(No. 33-26121) on Form S-1 and incorporated herein by
reference.
10.13 Stock Purchase Agreement, dated as of April 13, 1990,
between RZ Corporation, The Dyson-Kissner-Moran Corporation
and the Company. Filed as Exhibit 1 to the Company's Form
8-K dated April 26, 1990 and incorporated herein by reference.
10.14 Amendment No. 1 to the Company's Form 8-K (as filed on April
13, 1990) and dated October 9, 1990 for the acquisition of
Misomex AB and subsidiaries and Misomex of North America,
Inc.--Exhibits (a) and (b) incorporated herein by reference.
10.15 Assignment of Stock Purchase Agreement, dated May 27, 1990,
between the Company and Misomex Acquisition Company. Filed as
Exhibit 2 to the Company's Form 8-K dated August 13, 1990 and
incorporated herein by reference.
51
EXHIBIT INDEX (Con't)
-------------
Exhibit
No. Description
- - - - - ------- -----------
10.16 Assignment of Stock Purchase Agreement dated May 28, 1990,
between the Company and Misomex Acquisition AB. Filed as
Exhibit 3 to the Company's Form 8-K dated August 13, 1990
and incorporated herein by reference.
10.17 Agreement and Plan of Merger, dated as of April 26, 1989,
among Enkel Corporation, Bengt Kuller, Enkel Acquisition
Corporation and the Company. Filed as Exhibit I to the
Company's report on Form 8-K dated May 7, 1989 and
incorporated herein by reference.
10.18 Baldwin Technology Company, Inc. Dividend Reinvestment Plan.
Filed as Exhibit 10.49 to the Company's Report on Form 10-K
for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.19 Baldwin Technology Company, Inc. Employee Stock Ownership
Plan. Filed as Exhibit 10.50 to the Company's Report on Form
10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.20 Consulting Agreement dated as of June 30, 1989 between Baldwin
Asia Pacific Corporation and A-PLUS LTD. Filed as Exhibit
10.51 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
10.21 Baldwin Technology Company, Inc. Worldwide Employee Stock
Ownership Plan. Filed as Exhibit 10.52 to the Company's
Report on Form 10-K for the fiscal year ended June 30, 1991
and incorporated herein by reference.
10.22 * Employment Agreement, effective as of August 5, 1993 between
Baldwin Technology Company, Inc. and Gerald A. Nathe (filed
herewith).
10.23 8.17% Senior Note Agreement dated October 29, 1993 between
Baldwin Technology Company, Inc. and its subsidiaries Baldwin
Americas Corporation and Baldwin Technology Ltd. and John
Hancock Mutual Life Insurance Company, John Hancock Variable
Life Insurance Company and John Hancock Life Insurance
Company (filed herewith).
10.24 $20,000,000 Revolving Credit Agreement dated November, 1993
between Baldwin Technology Company, Inc. and its subsidiaries
Baldwin Americas Corporation and Baldwin Technology Ltd. and
NationsBank of North Carolina, National Association (filed
herewith).
21. List of Subsidiaries of Registrant (filed herewith).
23. Consent of Price Waterhouse (filed herewith).
27. Financial Data Schedule (filed herewith).
28. Post-effective Amendment to the Company's previously filed
Form S-8's, Nos. 33-20611 and 33-30455. Filed as Exhibit
28 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.