Back to GetFilings.com
1
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, 1996 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. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of August 31, 1996 was $43,409,713.
Number of shares of Common Stock outstanding at August 31, 1996:
Class A Common Stock............ 15,515,727
Class B Common Stock............ 1,835,883
----------
Total........................... 17,351,610
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 are incorporated by reference from the Baldwin
Technology Company, Inc. Proxy Statement for the 1996 Annual Meeting of
Stockholders to be held on November 19, 1996 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.)
2
TABLE OF CONTENTS PAGE
----
Item 1. Business................................................... 1
Item 2. Properties................................................. 6
Item 3. Legal Proceedings.......................................... 7
Item 4. Submission of Matters to a Vote of Security Holders........ 7
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters........................................ 8
Item 6. Selected Financial Data.................................... 9
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 10
Item 8. Financial Statements and Supplementary Data................ 15
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 37
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........................................................ 38
CAUTIONARY STATEMENT -- This Form 10-K may contain statements which constitute
"forward-looking" information as that term is defined in the Private Securities
Litigation Reform Act of 1995 or by the Securities and Exchange Commission
("SEC") in its rules, regulations and releases. Baldwin Technology Company, Inc.
(the "Company") cautions investors that any such forward-looking statements made
by the Company are not guarantees of future performance and that actual results
may differ materially from those in the forward-looking statements. Some of the
factors that could cause actual results to differ materially from estimates
contained in the Company's forward-looking statements are set forth in Exhibit
99 to this Report on Form 10-K for the year ended June 30, 1996.
3
PART I
ITEM 1.BUSINESS
Baldwin Technology Company, Inc. ("Baldwin" or the "Company") is the 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 quality of printed products
and increase the productivity and 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, web control and press protection 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
largest share of its business is in offset (lithography) printing. Offset
printing is the largest segment of the domestic printing market and is used
primarily for printing books, magazines, business forms, catalogs, greeting
cards, packaging and newspapers. The Company's products are designed to improve
the printing process in terms of both quality of the finished product as well as
its cost efficiency.
Although offset printing represents a significant segment of the U.S.
commercial printing industry, it is not as dominant in 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 200 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 or material
handling 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 a long life cycle as the Company continually
upgrades and refines its product
1
4
lines to meet customer needs and changes in printing press technology. The
Company's products help printers address increasingly demanding print quality,
environmental and safety issues while enhancing productivity. Nearly all of the
Company's products also significantly limit paper waste, which is especially
important given the high cost of paper. The Company's sales have historically
increased 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
$500,000. Baldwin's principal products are:
ACCESSORIES AND CONTROLS.
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, Chill Roll Cleaner and Guide Roll Cleaner, which all reduce paper
waste, volatile organic compound ("VOC") emissions and press downtime, as well
as improve productivity, print quality and safety of operation for the press
operator. In 1995, IMPACT(TM), a patented automated blanket and press cylinder
cleaning system was introduced and won the Graphic Arts Technical Foundation
Intertech Award. In the fiscal years ended June 30, 1996, 1995 and 1994, net
sales of Cleaning Systems represented approximately 27.8%, 30.2% and 32.6% 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 and Spray
Dampening Systems. In the fiscal years ended June 30, 1996, 1995 and 1994, net
sales of Fountain Solution Control Systems represented approximately 13.3%,
13.2% and 12.6% of the Company's net sales, respectively.
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.
OTHER ACCESSORY AND CONTROL EQUIPMENT.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 and paper and allow for the use of recyclable ink containers.
Other products include Ultra-Violet and Infra-Red Dryers for sheet-fed presses
and Gluing Systems. In the fiscal years ended June 30, 1996, 1995 and 1994, net
sales of these products represented approximately 12.0%, 10.3% and 9.8% of the
Company's net sales, respectively.
MATERIAL HANDLING.
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, 1996,
1995 and 1994, net sales of Web Handling Systems represented approximately
13.8%, 14.3% and 12.9% of the Company's net sales, respectively.
2
5
MATERIAL HANDLING/STACKING SYSTEMS.Baldwin's Material Handling/Stacking
Systems automate the handling of the printed product. The efficient counting,
stacking, packing and compressing of printed materials helps to increase press
utilization and productivity, reduce and control waste and decrease pressroom
labor requirements.
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.
NEWSPAPER INSERTER EQUIPMENT AND MAILING MACHINE SYSTEMS.The Company's
Newspaper Inserter Equipment collates and inserts sections and advertising
material into newspapers. Rising newsprint costs in the printing industry have
increased pressure on printers to reduce other costs, particularly labor costs.
When manual processes are replaced by newspaper inserters, payback periods as
low as six months have been realized by some purchasers of this equipment. The
Company's Mailing Machine Systems fold, label and prepare newspapers for
mailing.
PRE-PRESS.
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
Laserstepper(TM) is designed to expose both film images and digital information
directly onto printing plates. The Laserstepper(TM) technology allows printers
to intermix conventional film and digital data within the page, or page by page,
on the plate. Furthermore, the technology allows the printer to upgrade to more
efficient digital platemaking technologies without losing the flexibility to
work with conventional input. Printers can thus sharpen their competitive edge
in traditional markets while developing the digital capabilities needed for
future success. The Platesetter(TM) is designed to image plates directly from
digital data offering continuous "hands-off" plate production of large amounts
of digital data. In addition to accommodating both film and plate as well as
different plate sizes, it handles oversize plates, a key advantage in today's
market. 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, 1996,
1995 and 1994, net sales of Automated Imposition and Plate Exposure Systems
represented approximately 11.4%, 11.7% and 14.0% 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 its
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, 1996, 1995
and 1994:
YEARS ENDED JUNE 30,
-------------------------------------
1996 1995 1994
----- ----- -----
Americas .............. 40.7% 42.2% 42.5%
Europe ................ 34.7 29.8 29.5
Asia Pacific .......... 24.6 28.0 28.0
----- ----- -----
Total ................. 100.0% 100.0% 100.0%
===== ===== =====
3
6
In its Americas sector, the Company operates in North, Central and South
America through its U.S. subsidiaries. In its European sector, the Company
operates through its subsidiaries in Germany, Sweden, Italy, France, England
and the Netherlands. In its Asia Pacific sector, the Company operates
through its subsidiaries in Japan, 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 4 -- Notes to Consolidated Financial Statements.
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. 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.
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
many of these countries, its product mix and distribution channels vary from
country to country. The Company has 152 employees devoted to marketing and sales
activities in its three principal markets and over 300 dealers worldwide. The
Company markets its products to printing press manufacturers and to printers.
For the fiscal year ended June 30, 1996 approximately 44% of the Company's net
sales were to printing press manufacturers and approximately 56% of its net
sales were directly to printers.
In its Americas and European sectors, the Company markets its products both
through 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 119 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 $69,351,000 as of June 30, 1996, including
$8,444,000 of backlog related to the acquired Acrotec operations, $71,866,000 as
of June 30, 1995 and $58,455,000 as of June 30, 1994. 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 years ended
June 30, 1996, 1995 and 1994, no customer accounted for 10% or more 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, 1996.
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.
4
7
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company believes its research, development and engineering efforts have
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. In 1995, the Company was awarded the prestigious
Intertech Award from the Graphic Arts Technical Foundation (see Principal
Products -- Cleaning Systems). This is the Company's sixth such award since the
Intertech Award was established in 1978 to recognize technologies that are
predicted to have a major impact on the graphic communications industry, but are
not yet in widespread use in the marketplace. 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 205 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, 1996, 1995 and 1994 were $21,022,000, $17,296,000 and
$15,409,000, 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, 1996. The Company's patents expire at different times through
June, 2013; however, the expiration of patents in the near future is not
expected 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 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 England. 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, Italy,
France and England. In Asia, Baldwin has manufacturing and assembly facilities
in Japan and China and sales/service facilities in Japan, Hong Kong, China and
Australia.
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.
5
8
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 1,298 persons, 611 of whom are production employees and
approximately 163 of whom are management and administrative employees.
Approximately 35% of the Company's 138 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. In Europe, employees are represented by various unions, under contracts
with indefinite terms. In Sweden, 49, 30 and 3 of the Company's 134 employees at
its Misomex AB subsidiary are represented by the Swedish Industrial Salaried
Employees' Association, the Swedish Metal Workers' Union and Civilingenior
forb., respectively. At Amal AB, 4, 37 and 23 of the Company's 60 employees are
represented by Ledarna (SALF), Lundsorganisationen, Metall and Tjanstemannene
Central Organisation, and Svenska Industritjanstemanna Forbundet, respectively.
At Acrotec AB's IVT Division, 2, 8 and 13 of the Company's 36 employees
are represented by Ledarna (SALF), Lundsorganisationen, Metall and
Tjanstemannene Central Organisation, and Svenska Industritjanstemanna Forbundet,
respectively. In Germany, at Baldwin Gegenheimer GmbH, approximately 45 of the
Company's 232 employees are represented by the IG Metall (Metalworker's Union).
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 766,000 square feet.
In North America, manufacturing and office space leased by the Company and
its subsidiaries total approximately 329,000 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 194,000
square feet comprised of office and manufacturing facilities in Germany
(approximately 133,000 square feet), Sweden (approximately 29,000 square feet),
Italy (approximately 1,300 square feet), France (approximately 1,800 square
feet), the Netherlands (approximately 600 square feet) and England
(approximately 28,000 square feet of which 1,350 square feet is sublet). In
addition, the Company owns manufacturing facilities in Sweden totalling
approximately 147,000 square feet.
6
9
In Asia, the Company leases office and manufacturing facilities of
approximately 40,000 square feet in Japan and 1,100 square feet in Beijing and
office facilities aggregating approximately 2,500 square feet in Hong Kong,
Shanghai, 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 16,
1995.
7
10
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.
1994 HIGH LOW
- ---- ------ ------
First Quarter ........................... 5.75 4.875
Second Quarter .......................... 5.625 4.25
Third Quarter ........................... 5.875 4.25
Fourth Quarter .......................... 6.625 4.625
1995
- ----
First Quarter ........................... 5.875 4.8125
Second Quarter .......................... 6.125 5.00
Third Quarter ........................... 6.5625 5.125
Fourth Quarter .......................... 6.3125 4.750
1996
- ----
First Quarter ........................... 5.1875 3.375
Second Quarter .......................... 4.25 3.50
Third Quarter (through September 15) .... 3.75 3.00
(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, 1996, 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 499 and 25, respectively. The Company believes, however, that
there are in excess of 4,200 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 9 --
Notes to Consolidated Financial Statements). See Note 7 -- 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.
8
11
ITEM 6.SELECTED FINANCIAL DATA
The Company's income statement and balance sheet data as they relate to the
years ended June 30, 1996, 1995, 1994, 1993, and 1992, have been derived from
the Company's audited financial statements (including the Consolidated Balance
Sheet of the Company at June 30, 1996 and 1995 and the related Consolidated
Statement of Income of the Company for the years ended June 30, 1996, 1995 and
1994 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".
YEARS ENDED JUNE 30,
-----------------------------------------------------------
1996 1995 1994 1993 1992
--------- -------- -------- -------- ---------
(IN THOUSANDS)
Income Statement Data:
Net sales .......................... $ 259,301 $222,341 $198,055 $215,759 $ 221,474
Cost of goods sold (1) ............. 173,271 146,727 130,051 142,564 147,071
--------- -------- -------- -------- ---------
Gross profit ....................... 86,030 75,614 68,004 73,195 74,403
--------- -------- -------- -------- ---------
Selling, general and administrative
expenses (2) ..................... 52,799 45,847 42,068 42,532 41,575
Research, development and
engineering expenses ............. 21,022 17,296 15,409 16,711 16,970
Restructuring charge ............... 3,000 880 1,706
--------- -------- -------- -------- ---------
Operating income ................... 9,209 12,471 10,527 13,072 14,152
--------- -------- -------- -------- ---------
Interest expense ................... 4,032 3,436 3,694 5,850 7,167
Interest income .................... 552 577 381 285 483
Other income, net .................. 1,490 1,130 887 462 809
--------- -------- -------- -------- ---------
Income from continuing operations
before taxes ..................... 7,219 10,742 8,101 7,969 8,277
--------- -------- -------- -------- ---------
Provision for income taxes ......... 4,701 5,091 3,969 4,303 7,507
--------- -------- -------- -------- ---------
Income from continuing operations .. 2,518 5,651 4,132 3,666 770
--------- -------- -------- -------- ---------
Loss from discontinued operations .. (1,842)
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) .................. $ 2,518 $ 5,651 $ 4,132 $ 3,790 $ (6,966)
========= ======== ======== ======== =========
(1) Includes all technical service expense, a portion of which ($2,732,000 and
$2,379,000 for the years ended June 30, 1993 and 1992, respectively) was
previously classified as an item of Operating Expense.
(2) Includes amortization expense ($2,499,000 and $2,474,000 for the years ended
June 30, 1993 and 1992, respectively) for intangible assets which was
previously classified as an item of Other Income and Expense.
9
12
YEARS ENDED JUNE 30,
----------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Income Statement Data:
Income (loss) per share from:
Continuing operations ............. $ 0.14 $ 0.32 $ 0.23 $ 0.21 $ 0.05
Discontinued operations ........... (0.11)
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 ....... $ 0.14 $ 0.32 $ 0.23 $ 0.22 $ (0.41)
======== ======== ======== ======== =========
Cash dividends declared per share:
Class A Common Stock .............. $ 0.012
=========
Class B Common Stock .............. $ 0.01
=========
Weighted average shares
outstanding ..................... 17,793 17,939 18,015 17,593 17,106
======== ======== ======== ======== =========
Balance Sheet Data (as of the end
of each period):
Working capital ................... $ 46,050 $ 53,575 $ 45,098 $ 34,414 $ 34,313
Total assets ...................... 217,340 209,770 187,216 188,479 206,936
Short-term debt ................... 10,196 9,348 6,033 16,257 13,828
Long-term debt .................... 33,576 29,868 32,230 25,998 36,668
Shareholders' equity .............. 97,056 98,888 88,080 82,864 85,135
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 such six month periods over the last five
fiscal years to reflect the comparison.
FIRST SIX SECOND SIX
FISCAL YEAR MONTHS MONTHS
- ----------- ------------ ------------
1996.......................................... $118,651,000 $140,650,000
1995.......................................... 100,352,000 121,989,000
1994.......................................... 91,858,000 106,197,000
1993.......................................... 104,376,000 111,383,000
1992.......................................... 108,310,000 113,164,000
For the year ended June 30, 1996, the first six months sales include three
months of sales from the acquired Acrotec entities amounting to $6,574,000 and
the second six months sales include six months of sales from the acquired
Acrotec entities amounting to $15,266,000.
10
13
RESULTS OF OPERATIONS
The following table sets 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 thereto, presented elsewhere in this report.
YEARS ENDED JUNE 30,
-----------------------
1996 1995 1994
----- ----- -----
Net sales......................................... 100.0% 100.0% 100.0%
Cost of goods sold................................ 66.8 66.0 65.7
----- ----- -----
Gross profit...................................... 33.2 34.0 34.3
Selling, general and administrative expenses...... 20.4 20.6 21.2
Research, development and engineering expenses.... 8.1 7.8 7.8
Restructuring charge.............................. 1.1
----- ----- -----
Operating income.................................. 3.6 5.6 5.3
----- ----- -----
Interest expense.................................. 1.6 1.6 1.9
Interest income................................... .2 .3 .2
Other income, net................................. .6 .5 .5
----- ----- -----
Income from operations before taxes............... 2.8 4.8 4.1
Provision for income taxes........................ 1.8 2.3 2.0
----- ----- -----
Net income........................................ 1.0% 2.5% 2.1%
===== ===== =====
COMPANY'S FISCAL YEAR ENDED JUNE 30, 1996 VERSUS FISCAL YEAR ENDED JUNE 30, 1995
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, 1996 increased by
$36,960,000, or 16.6%, to $259,301,000 from $222,341,000 for the fiscal year
ended June 30, 1995. Currency rate fluctuations attributable to the Company's
overseas operations decreased net sales for the current period by $2,340,000 and
acquisitions added $20,947,000 to net sales. Product volume was the primary
reason for the $18,353,000 remainder of the increase of which $11,764,000
occurred in the Americas Sector. In terms of local currency, sales changes were
mixed within the European Sector. Sales decreased in Germany by 3.5%, increased
in England by 14.7% and increased in Sweden by 5.6%. Local currency sales in the
Company's Asia Pacific Sector increased 7.1% in Japan. In the Americas Sector,
net sales increased by 12.2% for the year due to a continued strengthening and
improvement in the U.S. printing equipment market.
Gross Profit.Gross profit for the fiscal year ended June 30, 1996 was
$86,030,000 (33.2% of net sales), as compared to $75,614,000 (34.0% of net
sales) for the fiscal year ended June 30, 1995, an increase of $10,416,000 or
13.8%. Gross profit decreased by $751,000 on fluctuations in currency rates and
increased by $8,025,000 due to acquisitions with the remainder of the change due
to volume, product mix and other factors. Gross profit was lower as a percentage
of sales when compared to the prior year due primarily to the sales of products
that contribute lower gross profits, pressure on sales prices and increased
technical service costs.
Selling, General and Administrative Expenses.Selling, general and
administrative expenses were $52,799,000 (20.4% of net sales) for the fiscal
year ended June 30, 1996, as compared to $45,847,000 (20.6% of net sales) for
the prior year, an increase of $6,952,000. Currency rate fluctuations decreased
the current year's expenses by $263,000 and acquisitions added $5,561,000.
Increased sales expenses related to volume increases, additional personnel and
trade shows were primarily responsible for the remainder
11
14
of the increase. Other operating expenses, before restructuring charges (see
Note 3 -- Notes to Consolidated Financial Statements) increased by $3,726,000
over the same period of the prior year. Fluctuations in currency rates decreased
these expenses by $35,000 and acquisitions increased these expenses by
$2,609,000. The remainder of the increase in these expenses relates to increased
engineering personnel and costs associated with the development of new products,
particularly in the Company's pre-press business.
Interest and Other.Interest expense for the fiscal year ended June 30, 1996
was $4,032,000, as compared to $3,436,000 for the fiscal year ended June 30,
1995. Interest expense increased by $357,000 due to acquisitions with the
remainder due primarily to an increase in the amount of outstanding indebtedness
related to the purchase of a manufacturing facility. Foreign currency rate
fluctuations increased interest expense by $16,000. Interest income was $552,000
and $577,000 for the fiscal years ended June 30, 1996 and June 30, 1995,
respectively. Currency rate fluctuations decreased interest income by $74,000
and acquisitions added $142,000 to interest income for the current period. Other
income was $1,490,000 and $1,130,000 for the fiscal years ended June 30, 1996
and June 30, 1995, respectively, and includes foreign currency transaction gains
of $594,000 and $152,000 for the current and prior period, respectively. The
remaining net decrease in other income is primarily due to increased royalty
income offset by currency rate fluctuations which decreased other income by
$200,000 and acquisitions which decreased other income by $92,000 during the
current period.
Income Taxes.The Company's effective tax rate on income before restructuring
charges (see Note 8 -- Notes to Consolidated Statements) was 46.0% for the
fiscal year ended June 30, 1996 as compared to 47.4% for the fiscal year ended
June 30, 1995. Currency rate fluctuations decreased the provision for income
taxes by $339,000 during the current period. The effective rate reflects the
impact of foreign source income which is taxed at substantially higher rates
than domestic income. No tax benefit was recorded on the $3,000,000 charge for
restructuring due to the Company's tax loss carryforward position in Germany.
The decrease from the prior year's effective rate is primarily caused by an
increase in income generated by domestic operations which is taxed at rates
which are generally lower than the rates applied to foreign income (see Note 8
- -- Notes to Consolidated Financial Statements).
Net Income.Net income for the fiscal year ended June 30, 1996 decreased by
$3,133,000 or 55.4% to $2,518,000 from $5,651,000 for the fiscal year ended June
30, 1995. Restructuring charges decreased net income by $3,000,000 and currency
rate fluctuations decreased net income by $398,000 for the current period. Net
income per share was $0.14 and $0.32 for the fiscal years ended June 30, 1996
and 1995, respectively. Net income per share was decreased by $(0.17) for
restructuring charges and the results of the acquired Acrotec operations
decreased net income per share by $(0.02). Weighted average equivalent shares
outstanding during the fiscal years ended June 30, 1996 and June 30, 1995 were
17,792,938 and 17,939,421, respectively.
COMPANY'S FISCAL YEAR ENDED JUNE 30, 1995 VERSUS FISCAL YEAR ENDED JUNE 30, 1994
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, 1995 increased by
$24,286,000, or 12.3%, to $222,341,000 from $198,055,000 for the fiscal year
ended June 30, 1994. Currency rate fluctuations attributable to the Company's
overseas operations accounted for an increase of $14,073,000 in net sales for
the current year. Product volume was the primary reason for the remainder of the
increase. In terms of local currency, sales changes were mixed within the
European Sector. Sales increased in Germany by 2.2%, increased in the United
Kingdom by 7.9% and decreased in Sweden by 2.3%. In the Company's
12
15
Asia Pacific Sector, local currency sales decreased 1.7% in Japan and 25.4% in
Australia but increased by 33% in Hong Kong and 25.9% in China. In the Americas
Sector, net sales increased by 11.8% for the year due to a continued
strengthening and improvement in the U.S. printing equipment market.
Gross Profit.Gross profit for the fiscal year ended June 30, 1995 was
$75,614,000 (34.0% of net sales), as compared to $68,004,000 (34.3% of net
sales) for the fiscal year ended June 30, 1994, an increase of $7,610,000 or
11.2%. Currency rate fluctuations increased gross profit by $4,000,000 and the
primary reason for the remainder of the increase in gross profit was due to
increased volume.
Selling, General and Administrative Expenses.Selling, general and
administrative expenses were $45,847,000 (20.6% of net sales) for the fiscal
year ended June 30, 1995, as compared to $42,068,000 (21.2% of net sales) for
the prior year, an increase of $3,779,000. Currency rate fluctuations increased
the current year's expenses by $2,283,000. The remainder of the increase was due
to marketing expenses related to increased sales volumes and trade show activity
offset by a reduction in bad debt expense.
Interest and Other.Interest expense for the fiscal year ended June 30, 1995
was $3,436,000, as compared to $3,694,000 for the fiscal year ended June 30,
1994. Interest expense decreased primarily as a result of a reduction in the
amount of outstanding indebtedness. Foreign currency exchange effects increased
interest expense by $408,000. Interest income was $577,000 and $381,000 for the
fiscal years ended June 30, 1995 and June 30, 1994, respectively. Other income
was $1,130,000 and $887,000 for the fiscal years ended June 30, 1995 and June
30, 1994, respectively, with the increase primarily due to increased royalty
income. Foreign currency exchange effects decreased other income by $29,000
during the current period.
Income Taxes.The Company's effective tax rate was 47.4% for the fiscal year
ended June 30, 1995 as compared to 49.0% for the fiscal year ended June 30,
1994. 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 an increase in income
generated by domestic operations which is taxed at rates which are generally
lower than the rates applied to foreign income (see Note 8 -- Notes to
Consolidated Financial Statements). Foreign currency exchange effects increased
the provision for income taxes by $270,000 during the current period.
Net Income.Net income for the fiscal year ended June 30, 1995 increased by
$1,519,000 or 36.8% to $5,651,000 from $4,132,000 for the fiscal year ended June
30, 1994. Currency exchange effects increased reported net income by $148,000
for the current period. Net income per share was $0.32 and $0.23 for the fiscal
years ended June 30, 1995 and 1994, respectively. Weighted average equivalent
shares outstanding during the fiscal years ended June 30, 1995 and June 30, 1994
were 17,939,421 and 18,015,295, respectively.
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.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term debt includes $25,000,000 of 8.17% senior notes (the
"Senior Notes") due October 29, 2000. The Company also has a three-year
$20,000,000 Revolving Credit Agreement (the "Revolver") with NationsBank of
North Carolina, National Association, as Agent, which matures in December, 1998.
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
13
16
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 its domestic subsidiaries as collateral for
both the Senior Notes and the Revolver.
Both the Senior Notes and the Revolver require the Company to maintain a
ratio of current assets to current liabilities (as those terms are defined in
the agreements) of not less than 1.4 to 1. At June 30, 1996, this ratio was 1.59
to 1.
As reflected in the Consolidated Statement of Cash Flows, the net cash used
by investing activities for the year ended June 30, 1996 was $12,086,000 as
compared to $1,507,000 for the year ended June 30, 1995. This increase was
primarily due to the acquisition of Acrotec AB and its subsidiaries, net of
acquired cash and the purchase of a previously leased Swedish manufacturing
facility for SEK 28,840,000 ($4,364,000). The net cash used by financing
activities was $4,911,000 for the year ended June 30, 1996 as compared to
$2,797,000 for the year ended June 30, 1995 primarily due to the increased
purchase of treasury stock during the current period.
The Company's working capital decreased by $7,525,000 or 14.0% from
$53,575,000 at June 30, 1995 to $46,050,000 at June 30, 1996. Currency rate
fluctuations decreased working capital by $3,792,000 and acquisitions, net of
cash acquired, added $4,912,000 to working capital for the current period. Cash
used to finance the Acrotec acquisition and to purchase the Swedish
manufacturing facility were primarily responsible for the remainder of the
change in working capital.
The Company maintains relationships with foreign and domestic banks which
have extended credit facilities to the Company totaling $39,698,000, including
amounts available under the Revolver. As of June 30, 1996, the Company had
outstanding $11,571,000 under these lines of credit, of which $1,867,000 is
classified as long-term debt. Total debt levels as reported on the balance sheet
at June 30, 1996 are $1,279,000 lower then they would have been if June 30, 1995
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, 1996 and June 30, 1995, including
commitments for capital lease payments, were $2,177,000 and $1,863,000,
respectively.
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..................................... 17
Consolidated Balance Sheet at June 30, 1996 and June 30, 1995......... 18
Consolidated Statement of Income for the years ended June 30, 1996,
June 30, 1995 and June 30, 1994..................................... 20
Consolidated Statement of Changes in Shareholders' Equity for the
years ended June 30, 1996, June 30, 1995 and June 30, 1994.......... 21
Consolidated Statement of Cash Flows for the years ended June 30,
1996, June 30, 1995 and June 30, 1994............................... 22
Notes to Consolidated Financial Statements............................ 24
15
18
This page intentionally left blank
16
19
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, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended June 30, 1996, 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.
PRICE WATERHOUSE LLP
Stamford, Connecticut
August 9, 1996
17
20
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
ASSETS
June 30, June 30,
1996 1995
-------- --------
CURRENT ASSETS:
Cash ................................ $ 9,781 $ 12,719
Short-term securities ............... 13 470
Accounts receivable trade, net of
allowance for doubtful accounts of
$2,503 ($2,897 at June 30, 1995) .. 53,894 46,478
Notes receivable, trade ............. 9,827 16,916
Inventories ......................... 42,049 39,824
Prepaid expenses and other .......... 8,724 8,496
-------- --------
Total current assets ............ 124,288 124,903
-------- --------
MARKETABLE SECURITIES:
(Cost $742 at June 30, 1996 and
$971 at June 30, 1995) ......... 984 971
--------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings .................. 7,995 2,348
Machinery and equipment ............. 10,176 8,941
Furniture and fixtures .............. 5,746 5,855
Leasehold improvements .............. 1,280 1,734
Capital leases ...................... 7,192 7,837
-------- --------
32,389 26,715
Less: Accumulated depreciation and
amortization ...................... 19,075 19,538
-------- --------
Net property, plant and equipment ... 13,314 7,177
-------- --------
PATENTS, TRADEMARKS AND ENGINEERING
DRAWINGS, at cost, less
accumulated amortization of $3,957
($3,243 at June 30, 1995) ....... 5,414 5,355
GOODWILL, less accumulated
amortization of $12,218 ($9,734
at June 30, 1995) .................. 64,381 61,477
OTHER ASSETS .......................... 8,959 9,887
-------- --------
TOTAL ASSETS .......................... $217,340 $209,770
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
18
21
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, June 30,
1996 1995
-------- --------
CURRENT LIABILITIES
Loans payable........................................ $ 9,704 $ 9,188
Current portion of long-term debt.................... 492 160
Accounts payable, trade.............................. 17,500 14,895
Notes payable, trade................................. 10,793 12,637
Accrued salaries, commissions, bonus and
profit-sharing..................................... 9,769 9,680
Customer deposits.................................... 6,686 5,410
Accrued and withheld taxes........................... 2,780 2,321
Income taxes payable................................. 5,557 4,389
Other accounts payable and accrued liabilities....... 14,957 12,648
-------- --------
Total current liabilities...................... 78,238 71,328
-------- --------
LONG-TERM LIABILITIES:
Long-term debt....................................... 33,576 29,868
Other long-term liabilities.......................... 8,470 9,686
-------- --------
Total long-term liabilities.................... 42,046 39,554
-------- --------
Total liabilities.............................. 120,284 110,882
-------- --------
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,391,683 shares issued at June 30,
1996 (16,011,586 at June 30, 1995)................. 164 160
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........... 57,185 54,881
Retained earnings.................................... 44,149 41,631
Cumulative translation adjustment.................... 49 4,174
Unrealized gain on investments net of $124,000 of
deferred taxes (none at June 30, 1995)............. 118
Less: Treasury stock, at cost:
Class A -- 818,156 shares (174,256 at June 30,
1995)
Class B -- 164,117 shares (164,117 at June 30,
1995)............................................ (4,629) (1,978)
-------- --------
COMMITMENTS............................................
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. $217,340 $209,770
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
19
22
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
For the years ended June 30,
----------------------------------
1996 1995 1994
-------- -------- --------
Net sales.................................................. $259,301 $222,341 $198,055
Cost of goods sold.......................................... 173,271 146,727 130,051
-------- -------- --------
Gross profit............................................... 86,030 75,614 68,004
-------- -------- --------
Operating expenses:
General and administrative............................... 27,428 24,614 23,595
Selling.................................................. 25,371 21,233 18,473
Engineering.............................................. 13,896 12,055 9,949
Research and development................................. 7,126 5,241 5,460
Restructuring charge..................................... 3,000
-------- -------- --------
76,821 63,143 57,477
-------- -------- --------
Operating income........................................... 9,209 12,471 10,527
-------- -------- --------
Other (income) expense:
Interest expense......................................... 4,032 3,436 3,694
Interest (income)........................................ (552) (577) (381)
Other (income), net...................................... (1,490) (1,130) (887)
-------- -------- --------
1,990 1,729 2,426
-------- -------- --------
Income from operations before taxes........................ 7,219 10,742 8,101
-------- -------- --------
Provision for income taxes:
Domestic:
Federal................................................ 288 1,456 1,211
State.................................................. 772 570 637
Foreign................................................ 3,641 3,065 2,121
-------- -------- --------
Total income taxes................................... 4,701 5,091 3,969
-------- -------- --------
Net income................................................. $ 2,518 $ 5,651 $ 4,132
======== ======== ========
Net income per share....................................... $ 0.14 $ 0.32 $ 0.23
======== ======== ========
Weighted average shares outstanding........................ 17,793 17,939 18,015
======== ======== ========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
20
23
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES)
Class A Class B Capital
Common Stock Common Stock in Excess
-------------------------- ------------------------ of Par
Shares Amount Shares Amount Value
---------- ------ ------ ------ ---------
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
Year ended June 30, 1995:
Net income for the year
Stock options exercised 800 4
Purchase of treasury stock
Acquisition of treasury stock
in exchange for cancellation
of note receivable from
former officer
Issuance of common stock from
treasury to officer under
incentive compensation agreement 40
Translation adjustment
---------- ---- --------- --- -------
Balance at June 30, 1995 16,011,586 160 2,000,000 20 54,881
Year Ended June 30, 1996:
Net income for the year
Stock issued in conjunction with
the acquisition of Acrotec 350,000 4 2,184
Stock options exercised 30,097 120
Purchase of treasury stock
Unrealized gain on available
for sale securities, net of tax
Translation and adjustment
---------- ---- --------- --- -------
Balance at June 30, 1996 16,391,683 $164 2,000,000 $20 $57,185
========== ==== ========= === =======
Treasury
Cumulative Unrealized Stock
Retained Translation Gain on -----------------------
Earnings Adjustments Investments Shares Amount
---------- ----------- ----------- -------- --------
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)
Year ended June 30, 1995:
Net income for the year 5,651
Stock options exercised
Purchase of treasury stock (196,617) (965)
Acquisition of treasury stock
in exchange for cancellation
of note receivable from
former officer (25,000) (171)
Issuance of common stock from
treasury to officer under
incentive compensation agreement 40,000 175
Translation adjustment 6,074
------- ------- ---- -------- -------
Balance at June 30, 1995 41,631 4,174 (338,373) (1,978)
Year Ended June 30, 1996:
Net income for the year 2,518
Stock issued in conjunction with
the acquisition of Acrotec
Stock options exercised
Purchase of treasury stock (643,900) (2,651)
Unrealized gain on available
for sale securities, net of tax $118
Translation adjustment (4,125)
------- ------- ---- -------- -------
Balance at June 30, 1996 $44,149 $ 49 $118 (982,273) $(4,629)
======= ======= ==== ======== =======
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
(In thousands)
For the years ended June 30,
---------------------------------
1996 1995 1994
-------- -------- --------
Cash flows from operating activities:
Income from operations .......................................... $ 2,518 $ 5,651 $ 4,132
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ............................... 4,801 4,504 4,729
Accrued retirement pay ...................................... (289) 149 152
Provision for losses on accounts receivable ................. 95 190 1,589
Restructuring charge ........................................ 3,000
Changes in assets and liabilities:
Accounts and notes receivable ................................. 904 (14,003) 3,741
Inventories ................................................... 643 (4,586) 1,639
Prepaid expenses and other .................................... 568 (262) (3,704)
Customer deposits ............................................. (103) 1,029 612
Accrued compensation .......................................... 176 1,471 150
Accounts and notes payable, trade ............................. 2,803 2,357 (4,612)
Income taxes payable .......................................... 1,824 (51) 1,557
Accrued and withheld taxes .................................... 545 394 (163)
Other accounts payable and accrued liabilities ................ (2,520) 793 (1,675)
Interest payable .............................................. 18 (31) 353
-------- -------- --------
Net cash provided (used) by operating activities .......... 15,283 (2,395) 8,500
-------- -------- --------
Cash flows from investing activities:
Acquisition of subsidiaries, net of cash acquired ............ (5,137)
Additions or property, net .................................... (5,924) (1,331) (1,009)
Additions of patents, trademarks and drawings, net ............ (617) (532) (810)
Other assets .................................................. (408) 356 (2,644)
-------- -------- --------
Net cash used by investing activities ..................... (12,086) (1,507) (4,463)
-------- -------- --------
Cash flows from financing activities:
Long-term borrowings .......................................... 11,101 2,000 34,722
Short-term borrowings ......................................... 8,665 4,390 11,807
Long-term debt repayment ...................................... (9,970) (4,863) (35,935)
Short-term debt repayment ..................................... (10,062) (2,296) (15,301)
Stock options exercised ....................................... 120 4 42
Principal payments under capital lease obligations ............ (427) (524) (739)
Other long-term liabilities ................................... (1,687) (543) 286
Treasury stock purchased ...................................... (2,651) (965) (850)
-------- -------- --------
Net cash used by financing activities ..................... (4,911) (2,797) (5,868)
-------- -------- --------
Effect of exchange rate changes ............................... (1,681) 1,354 689
-------- -------- --------
Net decrease in cash and cash equivalents ................. (3,395) (5,345) (1,142)
Cash and cash equivalents at beginning of year .................. 13,189 18,534 19,676
-------- -------- --------
Cash and cash equivalents at end of year ........................ $ 9,794 $ 13,189 $ 18,534
======== ======== ========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
22
25
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
FOR THE YEARS ENDED JUNE 30,
----------------------------
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
Cash paid during the period for:
Interest ................................. $4,014 $3,467 $3,356
Income taxes ............................. $5,869 $5,076 $3,471
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES;
Fiscal year ended June 30, 1996. The Company acquired the capital stock
of Acrotec AB and its subsidiaries (Acrotec) in a purchase transaction for
consideration of $7,848,000 ($5,660,000 in cash and 350,000 shares of the
Company's Class A Common Stock). The fair value of the acquired assets
excluding goodwill was $16,915,000 and the liabilities assumed were
$12,539,000. The excess of the purchase price over the net assets acquired of
$3,472,000 was recorded as goodwill.
A restructuring charge was expensed during the second quarter of the
fiscal year in a non-cash transaction of $3,000,000. The change in the related
liability is recorded as a change in "Other accounts payable and accrued
liabilities" for cash flow purposes. (See Note 3 -- Notes to Consolidated
Financial Statements.)
Other assets includes $267,000 of previously capitalized patent costs
unrealized as royalties at June 30, 1996.
The Company entered into capital lease agreements of $81,000 for the
year ended June 30, 1996.
Fiscal year ended June 30, 1995. The Company successfully defended a
patent which, under the terms of the patent purchase agreement with the
patent's inventor, entitles the Company to indemnification of a portion of the
legal fees incurred to defend the patent infringement. Accordingly, the Company
reclassified from patents to long term assets $693,000 of legal fees. These
previously capitalized patent costs will be realized as royalties become
payable to the patent's inventor. At June 30, 1995, other assets included
$548,000 of such costs.
In accordance with the terms of a note receivable from a former
officer, the Company canceled the note in exchange for the collateral which
consisted of 25,000 shares of the Company's Class B Common Stock. The balance
of the note together with interest receivable was $171,000.
Under an incentive compensation agreement with an officer, the Company
issued from treasury 40,000 shares of Class A Common Stock for which the
accrued compensation of $235,000 had been expensed at June 30, 1994.
The Company entered into capital lease agreements of $129,000 during
the year ended June 30, 1995.
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 for the
year ended June 30, 1994.
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.
23
26
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, 1996, 1995 and 1994 were $594,000, $152,000 and $48,000,
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 $778,000 and $620,000 greater as of June 30, 1996
and 1995, 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 $1,111,000 in fiscal 1996 (increased $3,135,000 in fiscal 1995) 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, 1996, these costs were
$1,794,000 less $1,160,000 of accumulated amortization ($2,029,000 less
$1,076,000 of accumulated amortization at June 30, 1995) and were included in
"Other Assets".
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, 1996, 1995 and
1994 were 73,257, 125,370 and 83,770, respectively.
24
27
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investments. The Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities" for
the year ended June 30, 1995. The effect of adoption of this standard was
immaterial.
Long-lived Assets. The Company intends to adopt Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed of" for the year ended June 30,
1997. The effect of adoption of this standard is not anticipated to have a
material impact on the Company's financial statements.
Stock Options. The Company intends to adopt Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" for the
year ended June 30, 1997 and will elect the disclosure method of accounting for
stock-based compensation.
NOTE 3 -- RESTRUCTURING CHARGE:
Historically, the Company has used cost containment and reduction programs
to offset unfavorable changes in business activity due to the economy. A
restructuring reserve was charged to income for the quarter ended December 31,
1995 in the amount of $3,000,000. The reserve was established in order to accrue
the costs associated with a planned workforce rationalization of the Company's
German operations as well as to accrue for dealer claims associated with changes
made to the European dealer network and distribution system. At June 30, 1996,
payments of $448,000 had been made for severance against the restructuring
reserve and the remaining reserve of $2,552,000 was classified as a liability in
"Other accrued" liabilities. At June 30, 1996, a previously recorded charge for
restructuring in the amount of $263,000, relating to an excess facility sublease
subsidy, is classified as a liability in "Other accrued" and "Other long-term"
liabilities.
NOTE 4 -- 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. For the year ended June 30, 1995, the Company adopted a
revised allocation process that provides that corporate general and
administrative costs and assets are reflected as corporate expenses and assets
unless such costs or assets are associated with a business segment. The effects
of the above revised allocation methodology was to decrease previously reported
segment operating profit and general corporate expenses by $1,337,000 for the
year ended June 30, 1994.
25
28
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the results by geographic sector is as follows (in thousands):
Adjustments
The Asia and
Americas Europe Pacific Eliminations Consolidated
--------- --------- ------- ------------ ------------
YEAR ENDED JUNE 30, 1996
Sales to unaffiliated
customers .............. $ 105,521 $ 89,725 $63,861 $ 194 $259,301
Transfers between
geographic areas ....... 4,131 11,456 1,958 (17,545) 0
--------- --------- ------- -------- --------
Total revenue ........ $ 109,652 $ 101,181 $65,819 $(17,351) $259,301
========= ========= ======= ======== ========
Operating profit ......... $ 9,722 $ (3,852) $ 7,783 $ (206) $ 13,447
========= ========= ======= ========
General corporate
expenses ............... (2,748)
Interest expense, net .... (3,480)
--------
Income from operations
before taxes ........... $ 7,219
========
Identifiable assets ...... $ 71,401 $ 97,738 $43,438 0 $212,577
========= ========= ======= ========
Corporate assets ......... 4,763
--------
Total assets ......... $217,340
========
Total liabilities .... $ 34,213 $ 59,473 $26,598 0 $120,284
========= ========= ======= ======== ========
YEAR ENDED JUNE 30, 1995
Sales to unaffiliated
customers .............. $ 93,747 $ 66,248 $62,441 $ (95) $222,341
Transfers between
geographic areas ....... 4,419 9,338 224 (13,981) 0
--------- --------- ------- -------- --------
Total revenue ........ $ 98,166 $ 75,586 $62,665 $(14,076) $222,341
========= ========= ======= ======== ========
Operating profit ......... $ 8,337 $ 997 $ 7,187 $ (132) $ 16,389
========= ========= ======= ========
General corporate
expenses ............... (2,788)
Interest expense, net .... (2,859)
--------
Income from operations
before taxes ........... $ 10,742
========
Identifiable assets ...... $ 73,217 $ 76,420 $54,874 0 $204,511
========= ========= ======= ========
Corporate assets ......... 5,259
--------
Total assets ......... $209,770
========
Total liabilities .... $ 35,884 $ 46,575 $28,423 0 $110,882
========= ========= ======= ======== ========
26
29
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Adjustments
The Asia and
Americas Europe Pacific Eliminations 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 ............ $ 6,206 $ 2,692 $ 5,282 $ 194 $ 14,374
========= ======= ======= =========
General corporate expenses ... (2,960)
Interest expense, net ....... (3,313)
--------
Income from operations
before taxes .............. $ 8,101
========
Identifiable assets ......... $ 69,610 $71,634 $40,474 0 $181,718
========= ======= ======= =========
Corporate assets ............ 5,498
--------
Total assets ............ $187,216
========
Total liabilities ....... $ 35,586 $40,112 $23,438 0 $ 99,136
========= ======= ======= ========= ========
No customer accounted for 10% or more of the Company's net sales in the
fiscal years ended June 30, 1996, 1995 and 1994.
NOTE 5 -- INVENTORIES:
Inventories consist of the following:
JUNE 30, 1996
---------------------------------------------------
DOMESTIC FOREIGN TOTAL
----------- ----------- -----------
Raw materials ...... $ 8,713,000 $10,730,000 $19,443,000
In process ......... 3,183,000 11,053,000 14,236,000
Finished goods ..... 6,097,000 2,273,000 8,370,000
----------- ----------- -----------
$17,993,000 $24,056,000 $42,049,000
=========== =========== ===========
JUNE 30, 1995
---------------------------------------------------
DOMESTIC FOREIGN TOTAL
----------- ----------- -----------
Raw materials ...... $ 8,880,000 $ 9,017,000 $17,897,000
In process ......... 2,839,000 7,763,000 10,602,000
Finished goods ..... 6,419,000 4,906,000 11,325,000
----------- ----------- -----------
$18,138,000 $21,686,000 $39,824,000
=========== =========== ===========
Foreign inventories decreased $1,021,000 (increased $2,299,000 in 1995) due
to translation rates in effect at June 30, 1996 when compared to rates at June
30, 1995.
27
30
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6 -- LOANS PAYABLE:
SHORT-TERM INDEBTEDNESS AT JUNE 30, 1996: RATE AMOUNT
- ---------------------------------- --------------- ----------
Foreign subsidiaries........................... 5.03% (average) $9,704,000
==========
SHORT-TERM INDEBTEDNESS AT JUNE 30, 1995: RATE AMOUNT
- ---------------------------------- --------------- ----------
Foreign subsidiary............................. 6.78% (average) $9,188,000
==========
The maximum amount of loans payable to banks outstanding during the year
ended June 30, 1996 was $12,054,000 ($10,746,000 in 1995). Average rates are
weighted by month and reflect the monthly amount of short-term borrowings in use
and the respective rates of interest therein. Bank loans decreased by $776,000
(increased by $1,203,000 in 1995), due to translation rates in effect at June
30, 1996 when compared to rates at June 30, 1995.
NOTE 7 -- LONG-TERM DEBT:
JUNE 30, 1996 JUNE 30, 1995
----------------------------- -----------------------------
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 $25,000,000
Note payable December, 1998 interest
rate (1.25% over LIBOR) 6.75% ....... 1,750,000 750,000
Note payable by foreign subsidiary
March, 1999, interest rate 3.8% ..... 2,715,000 3,503,000
Note payable by foreign subsidiary
August, 2004, interest rate 6.4% .... $ 301,000 2,165,000
Note payable by foreign subsidiary
through 2002, interest rate 7.7% .... 1,353,000
Industrial revenue bond payable in
annual installments through
October, 1998, interest rate 9% ..... 118,000 150,000 $ 112,000 268,000
Notes payable by foreign subsidiary
through 2002, interest rates 6.7%
9.9% and 10.25% ..................... 52,000 304,000 48,000 347,000
Notes payable by foreign subsidiary
through May, 1999, interest
rates 5.5% and 6.5% ................. 99,000
Note payable by foreign subsidiary
August, 2000, interest rate 8.25% ... 21,000 40,000
----------- ----------- ----------- -----------
$ 492,000 33,576,000 $ 160,000 29,868,000
=========== =========== =========== ===========
Notes payable, denominated in currencies other than the U.S. dollar,
decreased by $503,000 (increased by $518,000 in 1995), due to translation rates
in effect at June 30, 1996 when compared to rates at June 30, 1995.
28
31
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The foreign note due August, 2004, with an interest rate of 6.4%, and the
foreign note due through 2002, with an interest rate of 7.7%, and the
industrial revenue bond are collateralized by buildings and specific equipment
as outlined in the indenture relating thereto. Approximately $516,000 of the
loans included above are collateralized by assets of foreign subsidiaries of the
Company. The notes payable from October, 1997 through October, 2000 (the "Senior
Notes") and note payable December, 1998 (the "Revolver", a $20,000,000 credit
facility) are collateralized by a pledge of the capital stock of the Company's
domestic subsidiaries. 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, 1996, this ratio was 1.59 to 1.
Maturities of long-term debt in each fiscal year succeeding June 30, 1996
are as follows:
Fiscal Year ending June 30,
- ---------------------------
1997............................................................ $ 492,000
1998............................................................ 6,799,000
1999............................................................ 11,140,000
2000............................................................ 6,594,000
2001............................................................ 6,591,000
2002 and thereafter............................................. 2,452,000
-----------
$34,068,000
===========
At June 30, 1996, the Company had available lines of credit of $39,698,000
upon which $11,571,000 had been drawn and of which $1,867,000 is included in
long-term debt. Only the Revolver has associated commitment fees. 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 years ended June 30, 1996 and 1995 and the seven months
ended June 30, 1994 were $71,000, $67,000 and $29,000, respectively.
29
32
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8 -- TAXES ON INCOME:
Income from operations before taxes and the provision for income taxes are
comprised of:
FOR THE YEARS ENDED JUNE 30,
---------------------------------------------
1996 1995 1994
------------ ------------ ------------
Income from operations before taxes:
Domestic ....................... $ 12,613,000 $ 8,897,000 $ 6,656,000
Foreign ........................ (5,394,000) 1,845,000 1,445,000
------------ ------------ ------------
$ 7,219,000 $ 10,742,000 $ 8,101,000
============ ============ ============
Provision for income taxes:
Currently payable:
Domestic ....................... $ 1,060,000 $ 2,026,000 $ 3,048,000
Foreign ........................ 4,035,000 2,960,000 2,475,000
------------ ------------ ------------
5,095,000 4,986,000 5,523,000
------------ ------------ ------------
Deferred (prepaid):
Domestic ....................... (1,200,000)
Foreign ........................ (394,000) 105,000 (354,000)
------------ ------------ ------------
(394,000) 105,000 (1,554,000)
------------ ------------ ------------
Total income tax expense ........... $ 4,701,000 $ 5,091,000 $ 3,969,000
============ ============ ============
Deferred income taxes are provided on temporary differences between the
financial reporting basis and tax basis of the Company's assets and liabilities.
The principal temporary differences which give rise to deferred tax assets and
liabilities at June 30, 1996 are as follows:
DEFERRED TAX
-----------------------------
ASSETS LIABILITIES TOTAL
------------ ------------ ------------
Foreign tax credit carryforwards .......... $ 2,664,000
Foreign net operating loss carryforwards .. 12,853,000
Inventories ............................... 1,853,000
Pension ................................... 1,461,000
Other, individually less than 5% of
"Net Deferred Tax Asset" ................ 2,641,000 $ 1,171,000
------------ ------------
Net Deferred Tax Asset and Liability ...... $ 21,472,000 $ 1,171,000 $ 20,301,000
============ ============
Valuation Allowance ....................... (16,957,000)
------------
Total Net Deferred Tax Assets ......... $ 3,344,000
============
30
33
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At June 30, 1996, the Company has foreign tax credit carryforwards for tax
purposes of $2,664,000, which expire in fiscal 2001. At June 30, 1996, net
operating loss carryforwards of $42,662,000 are available to reduce future
foreign taxable income ($2,719,000 and $4,301,000 of which expire in fiscal
years 1997 and 1998, respectively and the remainder of which have indefinite
carryforward periods).
The Company has not had to provide for income taxes on $9,661,000 of
cumulative undistributed earnings of subsidiaries outside the United States
because of the Company's intention to reinvest those earnings. In the event that
earnings were remitted, the tax effect on the results of operations after
considering available tax credits would not be significant.
The total income tax expense allocated to operations exceeded the computed
"expected" tax (determined by applying the United States Federal statutory
income tax rate of 34% to income from operations before taxes) by $2,247,000,
$1,439,000 and $1,215,000 for the years ended June 30, 1996, 1995 and 1994. The
reasons for the difference are as follows:
FOR THE YEARS ENDED JUNE 30,
-------------------------------------------
1996 1995 1994
----------- ----------- -----------
Computed "expected" tax .................................. $2,454,000 $3,652,000 $2,754,000
State income taxes, net of federal income tax benefit .... 510,000 376,000 420,000
Foreign income taxed at higher than the U.S. .............
statutory rate ......................................... 1,745,000 985,000 1,795,000
Recognition of previously unrecognized tax benefits ...... (1,200,000)
Goodwill write-off not deductible for taxes .............. 233,000 233,000 232,000
Foreign Sales Corporation ................................ (264,000) (228,000) (55,000)
Other reconciling items, individually less than 5% of
the "expected" tax ..................................... 23,000 73,000 23,000
----------- ----------- -----------
Total income tax expense ............................. $4,701,000 $5,091,000 $3,969,000
=========== =========== ===========
NOTE 9 -- 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 as of the record date of the Annual Meeting, 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, 1996, the number of outstanding shares of Class B Common
Stock constituted 10.5% (10.4% in 1995) of the total number of outstanding
shares of both classes of Common Stock.
31
34
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
In March of 1996, the Company's stock repurchase program authorization for
$8,000,000 of Class A Common Stock and 500,000 shares of Class B Common Stock
was increased to $10,000,000 of Class A Common Stock and 500,000 shares of Class
B Common Stock. As of June 30, 1996, 1,663,156 shares of Class A Common Stock
(1,019,256 in 1995) and 164,117 shares of Class B Common Stock (164,117 in 1995)
had been repurchased for $8,276,000, of which $7,155,000 represents Class A
Common Stock, ($5,625,000 in 1995 of which $4,504,000 represents Class A Common
Stock) under this program.
NOTE 10 -- STOCK OPTIONS:
The 1986 Stock Option Plan, as amended and restated (the "1986 Plan"),
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 and canceled shares become available for
future grants.
The 1990 Directors' Stock Option Plan (the "1990 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 1990 Plan are similar to those of the
1986 Plan 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.
THE 1986 PLAN THE 1990 PLAN
-------------------------------------- ------------------------------------------------
OPTION OPTION
CLASS A CLASS B PRICE RANGE TOTAL CLASS A CLASS B PRICE RANGE
--------- ------- ------------- ------- ------- ------- -------------
Outstanding at June 30,
1994 ..................... 1,010,000 175,000 $3.88 - $9.94 16,000 14,132 1,868 $3.75 - $6.09
Granted .................... 100,000 100,000 $4.88 - $6.09 5,000 4,485 515 $5.00 - $6.25
Canceled ................... (156,667) $3.94 - $9.94
Exercised .................. (880) (880) $3.75
--------- ------- ------- ------- ------
Outstanding at June 30,
1995 ..................... 953,333 275,000 $3.88 - $9.84 20,120 17,737 2,383 $3.75 - $6.25
--------- ------- ------- ------- ------
Granted .................... 391,000 195,000 $5.38 - $6.72 5,000 4,490 510 $5.50 - $6.88
Canceled ................... (7,000) $5.63
Exercised .................. (28,333) $4.00 - $5.50 (1,764) (1,764) $4.50 - $4.75
--------- ------- ------- ------ ------
Outstanding at June 30,
1996 ..................... 1,309,000 470,000 $3.88 - $9.84 23,356 20,463 2,893 $3.75 - $6.88
========= ======= ======= ======= ======
Exercisable at June 30,
1996 ..................... 544,993 175,000 $3.88 - $9.84 18,356 15,973 2,383 $3.75 - $6.25
========= ======= ======= ======= ======
Available for future option
grants at June 30, 1996 .. 332,668 120,000 74,000
========= ======= =======
32
35
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11 -- 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 years ended June 30,
-------------------------------
1996 1995 1994
---------- -------- --------
Baldwin Technology Corporation ("BTC")
and Baldwin Graphic Systems, Inc. ("BGS")..... $ 833,000 $647,000 $446,000
Kansa Corporation............................... 173,000 192,000 176,000
Enkel Corporation............................... 75,000 52,000 114,000
Misomex of North America, Inc................... 18,000 19,000 41,000
---------- -------- --------
Total expense........................... $1,099,000 $910,000 $777,000
========== ======== ========
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 and divisions within the Company's European Sector
maintain pension plans. Amounts expensed under these plans were as follows:
For the years ended June 30,
-----------------------------
1996 1995 1994
-------- -------- --------
Baldwin Gegenheimer GmbH........................ $188,000 $426,000 $287,000
Grafotec GmbH................................... 11,000
Misomex AB...................................... 83,000 246,000 280,000
Amal AB......................................... 112,000 64,000 57,000
IVT Graphics Division........................... 91,000
Jimek Division.................................. 251,000
Baldwin Europe Consolidated B.V................. 20,000 23,000 52,000
Misomex U.K..................................... 133,000 103,000 84,000
-------- -------- --------
Total expense........................... $889,000 $862,000 $760,000
======== ======== ========
33
36
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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, English, Swedish (except
Misomex 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 3 employees, 2 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 18 retired employees and the other
covering 78 employees, 22 of whom are retired. The unfunded recorded liability
related to the Misomex AB plan at June 30, 1996 was $3,343,000 ($3,360,000 in
1995). The recorded liability is sufficient to cover obligations earned under
the plan.
The following table sets forth the components of net pension costs of the
defined benefit plans:
For the years ended June 30,
-------------------------------------
1996 1995 1994
--------- --------- ---------
Service Cost -- benefits earned during the
period ........................................ $ 4,000 $ 29,000 $ 77,000
Interest on projected benefit obligation ........ 224,000 235,000 258,000
Annual return on plan assets .................... 21,000 11,000 9,000
Net amortization and deferrals .................. (184,000) (229,000) (93,000)
--------- --------- ---------
Net pension cost ........................ $ 65,000 $ 46,000 $ 251,000
========= ========= =========
The following table sets forth the funded status of the above defined
benefit pension plans:
For the years ended June 30,
----------------------------
1996 1995
----------- -----------
Actuarial present value of:
Vested benefit obligation ........................ $ 1,299,000 $ 1,706,000
=========== ===========
Accumulated benefit obligation ................... $ 2,344,000 $ 2,959,000
=========== ===========
Plan assets at fair value ........................ $ 81,000 $ 419,000
Projected benefit obligation ..................... 2,360,000 3,076,000
----------- -----------
Plan assets less than projected benefit
obligation ..................................... (2,279,000) (2,657,000)
Unrecognized transition asset ...................... 323,000 379,000
Unrecognized actuarial gain ........................ (1,733,000) (2,198,000)
----------- -----------
Accrued pension costs ............................ $ 3,689,000 $ 4,476,000
=========== ===========
Actuarial assumptions:
Discount rate ...................................... 3% to 8.5% 3% to 8.5%
Rate of increase in compensation levels ............ 3% to 5% 5% to 7%
Expected rate of return on plan assets ............. 3% 7%
34
37
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
There are two retirement plans within the Company's Asia Pacific Sector. The
Company's Japanese subsidiary maintains non-contributory retirement plans
covering all employees, excluding directors and a separate plan for its
directors. Amounts expensed under these programs are determined based on
participants' salary and length of service. The programs are fully accrued and
partially funded through insurance contracts. Expenses relating to these
programs were $606,000, $391,000 and $325,000 for the years ended June 30, 1996,
1995 and 1994, respectively.
Officers and key employees of the Company participate in various incentive
compensation plans. Amounts expensed under such plans were $2,182,000,
$2,437,000 and $2,090,000 for the years ended June 30, 1996, 1995 and 1994,
respectively.
The Company adopted FAS 112, "Employer's Accounting for Postemployment
Benefits", as of July 1, 1994, the effect of which was immaterial.
NOTE 12 -- COMMITMENTS:
Future minimum annual lease payments under capital leases, which consist of
buildings, and machinery and equipment with accumulated depreciation amounting
to $6,097,000 at June 30, 1996 and $6,495,000 at June 30, 1995, together with
the present value of the minimum lease payments are as follows at June 30, 1996:
FISCAL YEAR ENDING JUNE 30, AMOUNT
- --------------------------- ----------
1997............................................................ $ 470,000
1998............................................................ 361,000
1999............................................................ 332,000
2000............................................................ 323,000
2001............................................................ 9,000
2002 and thereafter............................................. 0
----------
Total minimum lease payments.................................... 1,495,000
Less -- Amount representing interest............................ (454,000)
----------
Present value of minimum lease payments......................... $1,041,000
==========
At June 30, 1996, $788,000 ($982,000 at June 30, 1995) 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 $5,370,000, $5,179,000 and
$4,672,000 for the years ended June 30, 1996, 1995 and 1994, respectively.
Aggregate future annual rentals under noncancellable leases for periods of more
than one year at June 30, 1996 are as follows:
FISCAL YEAR ENDING JUNE 30, AMOUNT
- --------------------------- -----------
1997............................................................ $ 5,295,000
1998............................................................ $ 4,411,000
1999............................................................ $ 3,586,000
2000............................................................ $ 3,095,000
2001............................................................ $ 2,807,000
2002 and thereafter............................................. $11,844,000
35
38
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13 -- RELATED PARTIES:
On January 1, 1990, the Company, through each of its 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. 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, 1996, 1995 and 1994 the
aggregate compensation expensed under these agreements was $158,000, $160,000
and $84,000, 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 maximum amounts of the notes outstanding, including interest, during the
year ended June 30, 1996 were $1,623,866 and $179,669 for Mr. Nathe and Mr.
Lauricella, respectively. At June 30, 1996, the balances of the notes
receivable, including interest, were $1,560,945 and $179,669 for Mr. Nathe and
Mr. Lauricella, respectively.
The maximum amount of the notes outstanding, including interest, during the
year ended June 30, 1995 were $1,918,662, $170,744 and $174,212 for Mr. Nathe,
Mr. Youngman and Mr. Lauricella, respectively. On May 18, 1995, Mr. Nathe repaid
$317,321 of his outstanding note and on November 17, 1994, the Company exchanged
the note it held from Mr. Youngman for its collateralized shares. At June 30,
1995, the balances of the notes receivable, including interest, were $1,577,581
and $167,940 for Mr. Nathe and Mr. Lauricella, respectively.
The Company employs the firm of Morgan, Lewis & Bockius LLP as its legal
counsel. Samuel B. Fortenbaugh III, a Director of the Company, is a partner in
the firm. In the fiscal years ended June 30, 1996, 1995, and 1994, the Company
incurred legal fees of approximately $474,000, $200,000 and $252,000,
respectively, payable to Morgan, Lewis & Bockius LLP.
On July 1, 1990, Baldwin Technology Corporation and Baldwin Graphic Systems,
Inc., 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
36
39
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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, 1996, 1995 and 1994.
NOTE 14 -- QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for fiscal 1996 and fiscal 1995 are as
follows (in thousands except per share data):
QUARTER
-----------------------------------------------
FISCAL 1996 FIRST SECOND THIRD FOURTH
- ----------- -------- -------- -------- --------
Net sales ......................... $ 52,835 $ 65,816 $ 63,812 $ 76,838
Costs and expenses
Cost of goods sold .............. 35,688 44,258 43,102 50,223
Operating expenses .............. 14,886 19,525 18,653 20,757
Restructuring charge ............ 3,000
Interest, net ................... 851 918 878 833
Other (income) .................. (429) (112) (656) (293)
-------- -------- -------- --------
Income before taxes ............... 1,839 (1,773) 1,835 5,318
Provision for income taxes ........ 846 564 844 2,447
-------- -------- -------- --------
Net income ........................ $ 993 $ (2,337) $ 991 $ 2,871
======== ======== ======== ========
Net income per share .............. $ 0.06 $ (0.13) $ 0.06 $ 0.17
======== ======== ======== ========
Weighted average shares
outstanding ..................... 17,829 18,132 17,783 17,425
======== ======== ======== ========
QUARTER
-----------------------------------------------
FISCAL 1995 FIRST SECOND THIRD FOURTH
- ----------- -------- -------- -------- --------
Net sales ......................... $ 47,639 $ 52,713 $ 55,375 $ 66,614
Costs and expenses
Cost of goods sold .............. 31,280 34,849 36,709 43,889
Operating expenses .............. 14,234 15,385 15,761 17,763
Interest, net ................... 708 662 752 737
Other (income) .................. (253) (307) (355) (215)
-------- -------- -------- --------
Income before taxes ............... 1,670 2,124 2,508 4,440
Provision for income taxes ........ 835 1,062 1,254 1,940
-------- -------- -------- --------
Net income ........................ $ 835 $ 1,062 $ 1,254 $ 2,500
======== ======== ======== ========
Net income per share .............. $ 0.05 $ 0.06 $ 0.07 $ 0.14
======== ======== ======== ========
Weighted average shares
outstanding ..................... 17,916 18,002 17,932 17,944
======== ======== ======== ========
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.
37
40
PART III
ITEMS 10, 11, 12 AND 13
Information required under these items is contained in the Company's 1996
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.
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..... 42
Schedule VIII -- Valuation and Qualifying Accounts..................... 43
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.
38
41
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 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.
10.9* 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.
10.10 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.
10.11* 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.
10.12 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.
10.13 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.
10.14 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.
10.15 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.
10.16 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.
10.17 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.
39
42
10.18 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.
10.19 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.
10.20 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.
10.21* Employment Agreement effective as of August 5, 1993 between Baldwin
Technology Company, Inc. and Gerald A. Nathe. Filed as Exhibit 10.22 to
the Company's Report on Form 10-K for the fiscal year ended June 30, 1994
and incorporated herein by reference.
10.22 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 as Exhibit 10.23 to the Company's
Report on Form 10-K for the fiscal year ended June 30, 1994 and
incorporated herein by reference.
10.23 Amended and Restated $20,000,000 Revolving Credit Agreement dated as of
December 31, 1995 between Baldwin Technology Company, Inc. and its
subsidiaries, Baldwin Americas Corporation and Baldwin Technology Ltd.,
and NationsBank of North Carolina, National Association, as Agent (filed
herewith).
10.24* Amendment to the employment agreement between the Company and Wendell M.
Smith effective July 1, 1995 (filed herewith).
10.25* Amendment to the employment agreement between Baldwin-Japan Limited
and Akira Hara effective August 15, 1995 (filed herewith).
21. List of Subsidiaries of Registrant (filed herewith).
23. Consent of Price Waterhouse LLP (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.
99. Company statement regarding the Private Securities Litigation Reform Act
of 1995, "Safe Harbor for Forward-Looking Statements" (filed herewith).
(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.
40
43
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: GERALD A. NATHE
-----------------------------
GERALD A. NATHE
(PRESIDENT AND CHIEF EXECUTIVE OFFICER)
Dated: September 27, 1996
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 Chairman of the Board
- --------------------------- and Director September 27, 1996
(WENDELL M. SMITH)
GERALD A. NATHE President, Chief Executive
- --------------------------- Officer and Director September 27, 1996
(GERALD A. NATHE)
AKIRA HARA Vice President and
- --------------------------- Director September 27, 1996
(AKIRA HARA)
WILLIAM J. LAURICELLA Treasurer and Chief
- --------------------------- Financial Officer September 27, 1996
(WILLIAM J. LAURICELLA)
HELEN P. OSTER Secretary September 27, 1996
- ---------------------------
(HELEN P. OSTER)
WARREN W. SMITH Chief Accounting Officer September 27, 1996
- ---------------------------
(WARREN W. SMITH)
JUDITH A. BOOTH Director September 27, 1996
- ---------------------------
(JUDITH A. BOOTH)
SAMUEL B. FORTENBAUGH III Director September 27, 1996
- ---------------------------
(SAMUEL B. FORTENBAUGH III)
JUDITH G. HYERS Director September 27, 1996
- ---------------------------
(JUDITH G. HYERS)
M. RICHARD ROSE Director September 27, 1996
- ---------------------------
(M. Richard Rose)
RALPH R. WHITNEY, JR. Director September 27, 1996
- ---------------------------
(RALPH R. WHITNEY, JR.)
41
44
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 9,
1996 appearing on page 17 in this Annual Report on Form 10-K also included an
audit of the Financial Statement Schedule listed in Item 14(a) (2) of this Form
10-K.
In our opinion, this Financial Statement Schedule presents 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 9, 1996
42
45
SCHEDULE VIII
BALDWIN TECHNOLOGY COMPANY, INC
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
---------- ---------- ---------- ---------- ---------
Year ended June 30, 1996
Allowance for
doubtful accounts
(deducted from
accounts receivable) ... $ 2,897 $ 95 $ 489 $ 2,503
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) .......... $13,313 $ 3,644(1) $16,957
Year ended June 30, 1995
Allowance for
doubtful accounts
(deducted from
accounts receivable) ... $ 3,209 $ 190 $ 502 $ 2,897
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) .......... $15,665 $ 2,352(2) $13,313
Year ended June 30, 1994
Allowance for
doubtful accounts
(deducted from
accounts receivable) ... $ 1,831 $ 1,589(3) $ 211 $ 3,209
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) .......... $16,537 $ 328 $ 1,200(2) $15,665
(1) The increase in the amount of the valuation allowance is primarily the
result of increased foreign net operating loss carryforwards. See Note 8
-- Notes to Consolidated Financial Statements.
(2) The reduction in the amount of the valuation allowance is the result of
improved earnings in the Company's domestic operations. See Note 8 --
Notes to Consolidated Financial Statements.
(3) 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.
43
46
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.
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 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.
47
10.9* 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.
10.10 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.
10.11* 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.
10.12 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.
10.13 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.
10.14 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.
10.15 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.
10.16 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.
10.17 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.
10.18 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.
10.19 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.
10.20 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.
10.21* Employment Agreement effective as of August 5, 1993 between Baldwin
Technology Company, Inc. and Gerald A. Nathe. Filed as Exhibit 10.22 to
the Company's Report on Form 10-K for the fiscal year ended June 30, 1994
and incorporated herein by reference.
48
10.22 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 as Exhibit 10.23 to the Company's
Report on Form 10-K for the fiscal year ended June 30, 1994 and
incorporated herein by reference.
10.23 Amended and Restated $20,000,000 Revolving Credit Agreement dated as of
December 31, 1995 between Baldwin Technology Company, Inc. and its
subsidiaries, Baldwin Americas Corporation and Baldwin Technology Ltd.,
and NationsBank of North Carolina, National Association, as Agent (filed
herewith).
10.24* Amendment to the employment agreement between the Company and Wendell M.
Smith effective July 1, 1995 (filed herewith).
10.25* Amendment to the employment agreement between Baldwin-Japan Limited
and Akira Hara effective August 15, 1995 (filed herewith).
21. List of Subsidiaries of Registrant (filed herewith).
23. Consent of Price Waterhouse LLP (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.
99. Company statement regarding the Private Securities Litigation Reform Act
of 1995, "Safe Harbor for Forward-Looking Statements" (filed herewith).