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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JUNE 30, 1997 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)

ONE NORWALK WEST 06854
40 RICHARDS AVENUE, NORWALK, CONNECTICUT (Zip Code)
(Address of principal executive offices)


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, 1997 was $72,033,500.

Number of shares of Common Stock outstanding at August 31, 1997:



Class A Common Stock............... 15,288,881
Class B Common Stock............... 1,835,883
----------
Total............................ 17,124,764


DOCUMENTS INCORPORATED BY REFERENCE

Items 10, 11, 12 and 13 are incorporated by reference from the Baldwin
Technology Company, Inc. Proxy Statement for the 1997 Annual Meeting of
Stockholders to be held on November 18, 1997 into Part III of this Form 10-K. (A
definitive proxy statement will be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year covered by this
Form 10-K.)
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TABLE OF CONTENTS



PAGE
----

Item 1. Business......................................................... 1
Item 2. Properties....................................................... 6
Item 3. Legal Proceedings................................................ 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 8
Matters..........................................................
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...................... 16
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................. 42
Item 10. Directors, Executive Officers and Key Employees of the
Registrant....................................................... 42
Item 11. Executive Compensation........................................... 42
Item 12. Security Ownership of Certain Beneficial Owners and Management... 42
Item 13. Certain Relationships and Related Transactions................... 42
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.............................................................. 42


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, 1997.
3

PART I

ITEM 1. BUSINESS

Baldwin Technology Company, Inc. ("Baldwin" or the "Company") is the
leading international manufacturer of material handling, accessory and control
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, drying systems, web control and press protection systems, web
and material handling systems and newspaper inserter equipment.

The Company sells its products both to printers to upgrade the quality and
capability of existing and new presses and to printing press manufacturers who
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 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 and control equipment
for the printing industry. The Company believes that it produces the most
complete line of material handling, accessory and control equipment for the
printing industry.

The Company's products are used by printers engaged in all printing
processes including lithography, gravure, letterpress, flexography and
print-on-demand. 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 strategic geographic
locations 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 product line, 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
product line is primarily marketed to newspaper printers. Historically, the
Company's products have had a long life cycle as the Company continually

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upgrades and refines its product 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:

GRAPHIC PRODUCTS AND CONTROLS GROUP

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 the fiscal years ended June 30, 1997, 1996 and 1995, net sales of
Cleaning Systems represented approximately 29.7%, 27.8% and 30.2% 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, 1997, 1996 and 1995,
net sales of Fountain Solution Control Systems represented approximately 14.1%,
13.3% and 13.2% 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 and Gluing Systems. In
the fiscal years ended June 30, 1997, 1996 and 1995, net sales of Other
Accessory and Control Equipment represented approximately 14.0%, 12.0% and 10.3%
of the Company's net sales, respectively.

MATERIAL HANDLING GROUP

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, 1997,
1996 and 1995, net sales of Web Handling Systems represented approximately
13.0%, 13.8% and 14.3% of the Company's net sales, respectively.

MATERIAL HANDLING/STACKING SYSTEMS. Baldwin's Material Handling/Stacking
Systems automate the handling of the printed product. The efficient counting,
stacking, packing and compressing

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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 GROUP

The Company disposed of its Pre-press business on June 30, 1997 (see Note
3 -- Notes to Consolidated Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"). In the fiscal years
ended June 30, 1997, 1996 and 1995, net sales of Automated Imposition and Plate
Exposure Systems represented approximately 10.0%, 11.4% and 11.7% of the
Company's net sales, respectively.

PRINT ON-DEMAND GROUP

The Company entered the short-run, print-on-demand market in October of
1996 with the announcement of the formation of a business venture with Davlin
Business Systems, Inc. in which the Company purchased a 64% interest. The
venture, named Baldwin Davlin Finishing Systems, Inc. manufactures and markets
finishing equipment for the rapidly growing digital printing market. The
Company's integrator strategy includes the Davlin Set Accumulator, a unique
product that acts as an intelligent communication interface between an
electronic print engine and an in-line finishing system, as well as certain
other finishing equipment manufactured for the Company under private label.

WORLDWIDE OPERATIONS

The Company believes that it is the only manufacturer of material handling,
accessory and control equipment for the printing industry which has complete
product development, manufacturing and marketing facilities in the Americas,
Europe and Asia Pacific.

The following table sets forth the percentages of the Company's net sales
attributable to its geographic regions in the fiscal years ended June 30, 1997,
1996 and 1995:



YEARS ENDED JUNE 30,
---------------------------
1997 1996 1995
----- ----- -----

Americas................................................ 39.3% 40.7% 42.2%
Europe.................................................. 35.4 34.7 29.8
Asia Pacific............................................ 25.3 24.6 28.0
----- ----- -----
Total........................................ 100.0% 100.0% 100.0%
===== ===== =====


In the Americas, the Company operates in North, Central and South America
through its U.S. subsidiaries. In Europe, the Company operates through its
subsidiaries in Germany, Sweden, France, England and the Netherlands. In Asia
Pacific, the Company operates through its subsidiaries in Japan,

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Hong Kong, China and Australia. All of the Company's subsidiaries are wholly
owned except it's 64% owned joint venture.

For additional information relating to the Company's operations in its
three geographic regions, see Note 5 -- Notes to Consolidated Financial
Statements.

ACQUISITION STRATEGY

An 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 print-on-demand products 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 and marketing 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 115 employees devoted to marketing
and sales activities in its three principal markets and over 200 dealers
worldwide. The Company markets its products to printing press manufacturers and
to printers. For the fiscal year ended June 30, 1997 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 the Americas and Europe, the Company markets its products both through
direct sales representatives and an extensive dealer network. In Asia Pacific,
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 108 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 $72,727,000 as of June 30, 1997,
$69,351,000 as of June 30, 1996 and $71,866,000 as of June 30, 1995. Included in
June 30, 1996 and June 30, 1995 backlog were $5,008,000 and $6,817,000,
respectively, of backlog relative to the disposed pre-press business. 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, 1997, 1996 and 1995, 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, 1997.
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 (see Item 7 in "Management's Discussion
and Analysis of Financial Condition and Results of Operations").

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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 and control equipment for the
printing industry. The Company has won six Intertech awards from the Graphic
Arts Technical Foundation. 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 coordinated, decentralized approach to research and development
permits the Company to react quickly to meet the needs of its customers.

Baldwin employs approximately 204 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, 1997, 1996 and 1995 were $21,425,000, $21,022,000 and
$17,296,000, 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, 1997. The Company's patents expire at different times through
June, 2014; 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 North America, the Company has subsidiaries with
manufacturing facilities located on the East Coast, in the Midwest and on the
West Coast of the United States.

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, 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.

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COMPETITION

The printing press accessory industry is highly fragmented. Although the
Company believes it produces the most complete line of material handling,
accessory and control 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 1,047 persons, 469 of whom are production employees and
approximately 130 of whom are management and administrative employees.
Approximately 34% of the Company's 146 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, 1999. In Europe, employees are represented by various unions, under contracts
with indefinite terms. In Sweden at Amal AB, 4, 37 and 24 of the Company's 64
employees are represented by Ledarna (SALF), Lundsorganisationen, Metall and
Tjanstemannene Central Organisation, and Svenska Industritjanstemanna Forbundet,
respectively. Also in Sweden, at IVT AB, 3, 8 and 15 of the Company's 31
employees are represented by Ledarna (SALF), Lundsorganisationen, Metall and
Tjanstemannene Central Organisation, and Svenska Industritjanstemanna Forbundet,
respectively. In Germany, at Baldwin Grafotec GmbH, approximately 39 of the
Company's 261 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 three geographic regions and
total approximately 645,000 square feet.

In North America, manufacturing and office space leased by the Company and
its subsidiaries total approximately 315,000 square feet of which space
approximately 8,400 square feet is sublet. An additional 56,550 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 totaling approximately 158,000
square feet comprised of office and manufacturing facilities in Germany
(approximately 130,000 square feet), Sweden (approximately 18,000 square feet),
France (approximately 1,800 square feet), the Netherlands (approximately 600
square feet) and England (approximately 8,000 square feet of which 1,350 square
feet is sublet). In addition, the Company owns manufacturing facilities in
Sweden totaling approximately 66,000 square feet.

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In Asia, the Company leases office and manufacturing facilities of
approximately 40,000 square feet in Japan and 6,000 square feet in Beijing and
office facilities aggregating approximately 2,000 square feet in Hong Kong,
Shanghai 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 19,
1996.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

(A) PRICE RANGE OF CLASS A COMMON STOCK

The Company's Class A Common Stock is traded on the American Stock Exchange
("AMEX") under the symbol "BLD". The following chart sets forth, for the
calendar periods indicated, the range of closing prices for the Class A Common
Stock on the AMEX, as reported by the AMEX.



HIGH LOW
------ ------

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................................................ 3.75 2.625
Fourth Quarter............................................... 3.25 2.3125
1997
First Quarter................................................ 3.25 2.375
Second Quarter............................................... 3.1875 2.5625
Third Quarter (through September 15)......................... 5.50 2.8125


(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, 1997, 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 463 and 26, respectively. The Company believes, however, that
there are in excess of 3,400 beneficial owners of its Class A Common Stock.

(D) DIVIDENDS

Declarations of dividends depend upon the earnings and financial position
of the Company and are within the discretion of the Company's Board of
Directors. No dividend in cash or property can be declared or paid on shares of
Class B Common Stock unless simultaneously therewith there is declared or paid,
as the case may be, a dividend in cash or property on shares of Class A Common
Stock of at least 105% of the dividend on shares of Class B Common Stock (see
Note 10 -- Notes to Consolidated Financial Statements). See Note 8 -- Notes to
Consolidated Financial Statements and "Liquidity and Capital Resources" within
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for restrictions on dividends.

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ITEM 6. SELECTED FINANCIAL DATA

The Company's income statement and balance sheet data as they relate to the
years ended June 30, 1997, 1996, 1995, 1994, and 1993, have been derived from
the Company's audited financial statements (including the Consolidated Balance
Sheet of the Company at June 30, 1997 and 1996 and the related Consolidated
Statement of Income of the Company for the years ended June 30, 1997, 1996 and
1995 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,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(IN THOUSANDS)

INCOME STATEMENT DATA:
Net sales....................... $244,146 $259,301 $222,341 $198,055 $215,759
Cost of goods sold(1)........... 163,791 173,271 146,727 130,051 142,564
-------- -------- -------- -------- --------
Gross profit.................... 80,355 86,030 75,614 68,004 73,195
-------- -------- -------- -------- --------
Selling, general and
administrative expenses(2).... 50,435 52,799 45,847 42,068 42,532
Research, development and
engineering expenses.......... 21,425 21,022 17,296 15,409 16,711
Provision for loss on the
disposition of Misomex........ 42,407
Restructuring charge............ 3,000 880
-------- -------- -------- -------- --------
Operating (loss) income......... (33,912) 9,209 12,471 10,527 13,072
-------- -------- -------- -------- --------
Interest expense................ 3,516 4,032 3,436 3,694 5,850
Interest income................. 414 552 577 381 285
Minority interest in net loss... (190)
Other income, net............... 1,617 1,490 1,130 887 462
-------- -------- -------- -------- --------
(Loss) income from operations
before taxes.................. (35,207) 7,219 10,742 8,101 7,969
-------- -------- -------- -------- --------
Provision for income taxes...... 2,790 4,701 5,091 3,969 4,303
-------- -------- -------- -------- --------
(Loss) income from operations... (37,997) 2,518 5,651 4,132 3,666
-------- -------- -------- -------- --------
Extraordinary loss on
extinguishment of debt........ (1,105)
Cumulative effect of change in
accounting for income taxes... 1,229
-------- -------- -------- -------- --------
Net (loss) income............... $(37,997) $ 2,518 $ 5,651 $ 4,132 $ 3,790
========= ========= ========= ========= =========


- ---------------------

(1) Includes all technical service expense, of which $2,732,000 for the year
ended June 30, 1993 was previously classified as an item of Operating
Expense.

(2) Includes amortization expense of $2,499,000 for intangible assets for the
year ended June 30, 1993 which was previously classified as an item of Other
Income and Expense.

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YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

INCOME STATEMENT DATA:
(Loss) Income per share from:
Operations...................... $ (2.21) $ 0.14 $ 0.32 $ 0.23 $ 0.21
Extinguishment of debt.......... (0.06)
Cumulative effect of change in
accounting for income taxes... 0.07
-------- -------- -------- -------- --------
Net (loss) income per share..... $ (2.21) $ 0.14 $ 0.32 $ 0.23 $ 0.22
========= ========= ========= ========= =========
Cash dividends declared per
share:
Class A Common Stock............
Class B Common Stock............
Weighted average shares
outstanding................... 17,228 17,793 17,939 18,015 17,593
========= ========= ========= ========= =========
Balance Sheet Data (as of the
end of each period):
Working capital................. $ 29,696 $ 46,050 $ 53,575 $ 45,098 $ 34,414
Total assets.................... 162,123 217,340 209,770 187,216 188,479
Short-term debt................. 14,737 10,196 9,348 6,033 16,257
Long-term debt.................. 20,256 33,576 29,868 32,230 25,998
Shareholders' equity............ $ 58,262 $ 97,056 $ 98,888 $ 88,080 $ 82,864


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
- ------------------------------------------------------ ------------ ------------

1997.................................................. $118,635,000 $125,511,000
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


The term "acquisitions" as it is used throughout Management's Discussion
and Analysis of Financial Condition and Results of Operations relates to the
October 1, 1995 acquisition of the former Acrotec Group of companies and the
formation of a business venture with Davlin Business Systems, Inc., in which the
Company purchased a 64% interest, in January of 1997. For fiscal year 1997, the
first six months sales include acquisition sales of $7,735,000 and the second
six months include acquisition sales of $141,000. For fiscal year 1996, the
first six months sales include acquisition sales of $6,574,000 and the second
six months sales include acquisition sales of $14,373,000.

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,
---------------------------
1997 1996 1995
----- ----- -----

Net sales............................................... 100.0% 100.0% 100.0%
Cost of goods sold...................................... 67.1 66.8 66.0
----- ----- -----
Gross profit............................................ 32.9 33.2 34.0
Selling, general and administrative expenses............ 20.7 20.4 20.6
Research, development and engineering expenses.......... 8.7 8.1 7.8
Provision for loss on the disposition of Misomex........ 17.4
Restructuring charge.................................... 1.1
----- ----- -----
Operating (loss) income................................. (13.9) 3.6 5.6
----- ----- -----
Interest expense........................................ 1.4 1.6 1.6
Interest income......................................... .2 .2 .3
Other income, net....................................... .7 .6 .5
----- ----- -----
(Loss) income from operations before taxes.............. (14.4) 2.8 4.8
Provision for income taxes.............................. 1.2 1.8 2.3
----- ----- -----
Net (loss) income....................................... (15.6)% 1.0% 2.5%
===== ===== =====


COMPANY'S FISCAL YEAR ENDED JUNE 30, 1997 VERSUS FISCAL YEAR ENDED JUNE 30, 1996

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, 1997 decreased by
$15,155,000, or 5.8%, to $244,146,000 from $259,301,000 for the fiscal year
ended June 30, 1996. Currency rate fluctuations attributable to the Company's
overseas operations decreased net sales for the current period by $12,247,000
and acquisitions added $7,876,000 to net sales. Product volume changes were
primarily responsible for the remainder of the change. In terms of local
currency and after excluding the impact of acquisitions, sales generally
decreased in Europe. Sales decreased in Germany by 12.7% and were down 14.2% in
Sweden. In Asia, local currency sales increased by 13.7% in Japan. In the
Americas, net sales decreased by 8.4%.

GROSS PROFIT. Gross profit for the fiscal year ended June 30, 1997 was
$80,355,000 (32.9% of net sales), as compared to $86,030,000 (33.2% of net
sales) for the fiscal year ended June 30, 1996, a decrease of $5,675,000 or
6.6%. Gross profit decreased by $3,755,000 on fluctuations in currency rates and
increased by $2,627,000 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 effects of lower
sales levels in the Americas and weaker margins in Germany and in the divested
Pre-press group.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $50,435,000 (20.7% of net sales) for the fiscal
year ended June 30, 1997, as compared to

11
14

$52,799,000 (20.4% of net sales) for the prior year, a decrease of $2,364,000.
Currency rate fluctuations decreased the current year's expenses by $660,000 and
acquisitions added $1,687,000. General and administrative expenses increased
marginally primarily due to severance expenses related to the former Chairman of
the Company, increased pension expenses for the divested Pre-press group and
increased consulting fees associated with certain strategic initiatives
undertaken in fiscal 1997. These increases were almost offset by reduced charges
for goodwill amortization and cost savings achieved through the consolidation of
facilities and reduced staff. Selling expense decreases of $2,465,000 were due
to volume related decreases in sales commissions, lower trade show and
advertising expenses and reduced staffing levels.

Other operating expenses, before the provision for loss on the disposition
of Misomex and restructuring charges (see Notes 3 and 4 -- Notes to Consolidated
Financial Statements) increased by $403,000 over the same period of the prior
year. Fluctuations in currency rates decreased these expenses by $1,162,000 and
acquisitions increased these expenses by $770,000. The remainder of the increase
in these expenses relates to increased engineering personnel and project costs.

INTEREST AND OTHER. Interest expense for the fiscal year ended June 30,
1997 was $3,516,000, as compared to $4,032,000 for the fiscal year ended June
30, 1996. Currency rate fluctuations decreased interest expense by $471,000
while acquisitions added $351,000 to the current period. The remainder of the
decrease was due primarily to a decrease in the amount of outstanding working
capital related indebtedness used by the Company's European operations and a
reduction in long-term debt. Interest income was $414,000 and $552,000 for the
fiscal years ended June 30, 1997 and June 30, 1996, respectively. Currency rate
fluctuations decreased interest income by $101,000 and acquisitions added
$21,000 to interest income for the current period. Other income was $1,617,000
and $1,490,000 for the fiscal years ended June 30, 1997 and June 30, 1996,
respectively, and includes foreign currency transaction (losses) gains of
$(182,000) and $594,000 for the current and prior period, respectively. The
remaining net increase in other income is primarily due to increased royalty
income offset by currency rate fluctuations which decreased other income by
$20,000 for the current period.

INCOME TAXES. The Company's effective tax rate on income before the
provision for loss on the disposition of Misomex was 38.8% for the year ended
June 30, 1997 as compared to 46% on income before restructuring charges (see
Note 9 -- Notes to Consolidated Statements) for the fiscal year ended June 30,
1996. Currency rate fluctuations decreased the provision for income taxes by
$79,000 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 either the $42,407,000 provision for loss
on the disposition of Misomex for the current year or the $3,000,000 charge for
restructuring in the prior year due to the Company's tax loss carryforward
positions in Europe. The decrease from the prior year's effective rate is
primarily caused by the favorable settlement of certain prior year tax matters
in Germany in the amount of $854,000 (see Note 9 -- Notes to Consolidated
Financial Statements).

NET (LOSS) INCOME. The net (loss) for the fiscal year ended June 30, 1997
was $(37,997,000) versus net income for the fiscal year ended June 30, 1996 of
$2,518,000, or a net (loss) income of $(2.21) and $0.14 per share, respectively.
For the current period, currency rate fluctuations and acquisitions increased
the net loss by $124,000 and $56,000, respectively. Weighted average equivalent
shares outstanding during the fiscal year ended June 30, 1997 were 17,228,438
and were 17,792,938 for the fiscal year ended June 30, 1996. The net loss per
share for the provision for loss on the sale of Misomex in the current period
and for restructuring charges in the prior period were $(2.46) and $(0.17),
respectively.

12
15

The following condensed income statement data sets forth the consolidated
results of the divested Pre-press business for the fiscal years ended June 30,
1997 and 1996.



FOR THE YEARS ENDED
JUNE 30,
--------------------------
1997 1996
----------- -----------

Net sales............................................... $28,327,000 $33,232,000
Costs and expenses...................................... 29,965,000 33,278,000
----------- -----------
Operating loss.......................................... (1,638,000) (46,000)
Other (income) expense, net............................. (64,000) 349,000
----------- -----------
Loss before taxes....................................... $(1,574,000) $ (395,000)
============ ============


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. In terms of local currency, sales changes were mixed
within Europe. Sales decreased in Germany by 3.5%, increased in England by 14.7%
and increased in Sweden by 5.6%. Local currency sales in Asia increased 7.1% in
Japan. In the Americas, 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 of the increase. Other
operating expenses, before restructuring charges (see Note 4 -- 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

13
16

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 9 -- 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 9
- -- 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.

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 and a three-year $20,000,000 Revolving
Credit Agreement (the "Revolver") with NationsBank of North Carolina, 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 the terms of the Senior Notes and the
Revolver to $1,000,000 plus 50% of the Company's net income after January 1,
1997. 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, 1997, this ratio was 1.63
to 1.

14
17

The net cash used by investing activities as reflected in the Consolidated
Statement of Cash Flows decreased by $7,305,000 from $12,086,000 for the year
ended June 30, 1996 to $4,781,000 for the year ended June 30, 1997, primarily
due to the fact that the prior year amount included the purchase of Acrotec AB
and its subsidiaries for $5,137,000 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 $5,941,000 for the year ended June 30, 1997 as
compared to $4,911,000 for the year ended June 30, 1996. The difference is
primarily caused by debt reductions on the Company's working capital lines of
credit and decreased purchases of treasury stock.

The Company's working capital decreased from $46,050,000 at June 30, 1996,
to $29,696,000 at June 30, 1997, a decrease of $16,354,000 or 35.5%. The
principal reasons for the decrease in working capital were the write down of
$10,981,000 of net working capital in conjunction with the disposition of the
Pre-press business offset by recording a short term other receivable of
$6,000,000 and the reclassification of $8,965,000 of long-term debt to current
liabilities of which $6,250,000 was due to scheduled repayments and the
remainder due to refinancing a long-term loan in order to obtain a more
favorable interest rate. Currency rate fluctuations decreased working capital by
$914,000 for the current period. Increases in other current liabilities 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 $30,868,000, including
amounts available under the Revolver. As of June 30, 1997, the Company had
outstanding $8,516,000 under these lines of credit, of which $103,000 is
classified as long-term debt. Total debt levels as reported on the balance sheet
at June 30, 1997 are $1,205,000 lower then they would have been if June 30, 1996
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, 1997 and June 30, 1996, including
commitments for capital lease payments, were $2,137,000 and $2,177,000,
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.

15
18

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



Report of Independent Accountants.......................................... 17

Consolidated Balance Sheet at June 30, 1997 and June 30, 1996.............. 18

Consolidated Statement of Income for the years ended June 30, 1997, June
30, 1996 and June 30, 1995............................................... 20

Consolidated Statement of Changes in Shareholders' Equity for the years
ended
June 30, 1997, June 30, 1996 and June 30, 1995........................... 21

Consolidated Statement of Cash Flows for the years ended June 30, 1997,
June 30, 1996 and June 30, 1995.......................................... 22

Notes to Consolidated Financial Statements................................. 25


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, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended June 30, 1997, 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. An audit also includes 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 8, 1997

17
20

BALDWIN TECHNOLOGY COMPANY, INC.

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)

ASSETS



JUNE 30, JUNE 30,
1997 1996
-------- --------

CURRENT ASSETS:
Cash................................................... $ 9,421 $ 9,781
Short-term securities.................................. 4,032 13
Accounts receivable trade, net of allowance for
doubtful accounts of $2,106 ($2,503 at June 30,
1996)............................................... 38,177 53,894
Notes receivable, trade................................ 15,051 9,827
Inventories............................................ 27,833 42,049
Prepaid expenses and other............................. 13,512 8,724
-------- --------
Total current assets.......................... 108,026 124,288
-------- --------
MARKETABLE SECURITIES:
(Cost $712 at June 30, 1997 and $742 at June 30,
1996)............................................... 942 984
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings..................................... 3,136 7,995
Machinery and equipment................................ 6,732 10,176
Furniture and fixtures................................. 5,638 5,746
Leasehold improvements................................. 976 1,280
Capital leases......................................... 5,397 7,192
-------- --------
21,879 32,389
Less: Accumulated depreciation and amortization.......... 14,334 19,075
-------- --------
Net property, plant and equipment........................ 7,545 13,314
-------- --------
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS, at cost,
less accumulated amortization of $4,664 ($3,957 at June
30, 1996).............................................. 5,279 5,414
GOODWILL, less accumulated amortization of $7,368
($12,218 at June 30, 1996)............................. 31,452 64,381
OTHER ASSETS............................................. 8,879 8,959
-------- --------
TOTAL ASSETS.................................. $162,123 $217,340
========= =========


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 SHARES)

LIABILITIES AND SHAREHOLDERS' EQUITY



JUNE 30, JUNE 30,
1997 1996
-------- --------

CURRENT LIABILITIES:
Loans payable.......................................... $ 8,312 $ 9,704
Current portion of long-term debt...................... 6,425 492
Accounts payable, trade................................ 15,634 17,500
Notes payable, trade................................... 11,273 10,793
Accrued salaries, commissions, bonus and
profit-sharing...................................... 7,794 9,769
Customer deposits...................................... 6,439 6,686
Accrued and withheld taxes............................. 1,941 2,780
Income taxes payable................................... 5,369 5,557
Other accounts payable and accrued liabilities......... 15,143 14,957
-------- --------
Total current liabilities..................... 78,330 78,238
-------- --------
LONG-TERM LIABILITIES:
Long-term debt......................................... 20,256 33,576
Other long-term liabilities............................ 5,275 8,470
-------- --------
Total long-term liabilities................... 25,531 42,046
-------- --------
Total liabilities............................. 103,861 120,284
-------- --------
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,391,683 shares issued................ 164 164
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 57,185
Retained earnings...................................... 6,152 44,149
Cumulative translation adjustment...................... 538 49
Unrealized gain on investments net of $117 of deferred
taxes ($124 at June 30, 1996)....................... 113 118
Less: Treasury stock, at cost:
Class A -- 1,102,802 shares (818,156 at June 30,
1996) Class B -- 164,117 shares (164,117 at June 30,
1996)............................................... (5,910) (4,629)
-------- --------
Total shareholders' equity.................... 58,262 97,056
-------- --------
COMMITMENTS..............................................
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............... $162,123 $217,340
========= =========


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,
----------------------------------------
1997 1996 1995
-------- -------- --------

Net sales.................................. $244,146 $259,301 $222,341
Cost of goods sold......................... 163,791 173,271 146,727
-------- -------- --------
Gross profit............................... 80,355 86,030 75,614
-------- -------- --------
Operating expenses:
General and administrative............... 27,627 27,428 24,614
Selling.................................. 22,808 25,371 21,233
Engineering.............................. 14,604 13,896 12,055
Research and development................. 6,821 7,126 5,241
Provision for loss on the disposition of
Misomex............................... 42,407
Restructuring charge..................... 3,000
-------- -------- --------
114,267 76,821 63,143
-------- -------- --------
Operating (loss) income.................... (33,912) 9,209 12,471
-------- -------- --------
Other (income) expense:
Interest expense......................... 3,516 4,032 3,436
Interest (income)........................ (414) (552) (577)
Minority interest........................ (190)
Other (income), net...................... (1,617) (1,490) (1,130)
-------- -------- --------
1,295 1,990 1,729
-------- -------- --------
(Loss) income from operations before
taxes.................................... (35,207) 7,219 10,742
-------- -------- --------
Provision (benefit) for income taxes:
Domestic:
Federal............................... (707) 288 1,456
State................................. 344 772 570
Foreign............................... 3,153 3,641 3,065
-------- -------- --------
Total income taxes.............. 2,790 4,701 5,091
-------- -------- --------
Net (loss) income.......................... $(37,997) $ 2,518 $ 5,651
========= ========= =========
Net (loss) income per share................ $ (2.21) $ 0.14 $ 0.32
========= ========= =========
Weighted average shares outstanding........ 17,228 17,793 17,939
========= ========= =========


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 TREASURY
COMMON STOCK COMMON STOCK IN EXCESS CUMULATIVE UNREALIZED STOCK
------------------ ----------------- OF PAR RETAINED TRANSLATION GAIN ON --------------------
SHARES AMOUNT SHARES AMOUNT VALUE EARNINGS ADJUSTMENTS INVESTMENTS SHARES AMOUNT
---------- ------ --------- ------ --------- -------- ----------- ----------- ---------- -------

Balance at June 30,
1994 16,010,706 $160 2,000,000 $ 20 $54,837 $35,980 $(1,900) (156,756) $(1,017)
Year ended June 30,
1995:
Net income for the
year 5,651
Stock options
exercised 880 4
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 40,000 175
Translation
adjustment 6,074
---------- ------ --------- ------ --------- -------- ----------- ----- ---------- -------
Balance at June 30,
1995 16,011,586 160 2,000,000 20 54,881 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 350,000 4 2,184
Stock options
exercised 30,097 120
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 16,391,683 164 2,000,000 20 57,185 44,149 49 118 (982,273) (4,629)
Year ended June 30,
1997:
Net loss for the
year (37,997)
Purchase of
treasury stock (156,400) (481)
Stock received in
the settlement of
an
indemnification
claim made under
the Acrotec Stock
Purchase
Agreement (128,246) (800)
Unrealized loss on
available for
sale securities,
net of tax (5)
Translation
adjustment 489
---------- ------ --------- ------ --------- -------- ----------- ----- ---------- -------
Balance at June 30,
1997 16,391,683 $164 2,000,000 $ 20 $57,185 $ 6,152 $ 538 $ 113 (1,266,919) $(5,910)
========= ======= ======== ======= ======== ======== =========== =========== ========= =======


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,
--------------------------------
1997 1996 1995
-------- -------- --------

Cash flows from operating activities:
(Loss) income from operations...................... $(37,997) $ 2,518 $ 5,651
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 4,321 4,801 4,504
Accrued retirement pay.......................... 228 (289) 149
Provision for losses on accounts receivable..... 429 95 190
Provision for loss on the disposition of
Misomex...................................... 42,407
Restructuring charge............................ 3,000
Changes in assets and liabilities net of effects
from the acquisitions and disposition:
Accounts and notes receivable................ (164) 904 (14,003)
Inventories.................................. 3,678 643 (4,586)
Prepaid expenses and other................... 61 568 (262)
Customer deposits............................ 631 (103) 1,029
Accrued compensation......................... (826) 476 1,471
Accounts and notes payable, trade............ 2,533 2,803 2,357
Income taxes payable......................... 2 1,824 (51)
Accrued and withheld taxes................... 38 545 394
Other accounts payable and accrued
liabilities............................... (143) (2,520) 793
Interest payable............................. (31) 18 (31)
-------- -------- --------
Net cash provided (used) by operating activities..... 15,167 15,283 (2,395)
-------- -------- --------
Cash flows from investing activities:
Acquisitions of subsidiaries, net of cash
acquired........................................ (538) (5,137)
Additions of property, net......................... (1,395) (5,924) (1,331)
Additions of patents, trademarks and drawings,
net............................................. (742) (617) (532)
Other assets....................................... (2,106) (408) 356
-------- -------- --------
Net cash used by investing activities................ (4,781) (12,086) (1,507)
-------- -------- --------
Cash flows from financing activities:
Long-term borrowings............................... 3,776 11,101 2,000
Short-term borrowings.............................. 8,802 8,665 4,390
Long-term debt repayment........................... (9,052) (9,970) (4,863)
Short-term debt repayment.......................... (8,381) (10,062) (2,296)
Stock options exercised............................ 120 4
Principal payments under capital lease
obligations..................................... (273) (427) (524)
Other long-term liabilities........................ (332) (1,687) (543)
Treasury stock purchased........................... (481) (2,651) (965)
-------- -------- --------
Net cash used by financing activities................ (5,941) (4,911) (2,797)
-------- -------- --------
Effect of exchange rate changes...................... (786) (1,681) 1,354
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents........................................ 3,659 (3,395) (5,345)
Cash and cash equivalents at beginning of year....... 9,794 13,189 18,534
-------- -------- --------
Cash and cash equivalents at end of year............. $ 13,453 $ 9,794 $ 13,189
======== ======== ========


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,
------------------------------
1997 1996 1995
------ ------ ------
(IN THOUSANDS)

Cash paid during the period for:
Interest........................................... $3,547 $4,014 $3,467
Income taxes....................................... $3,078 $5,869 $5,076


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

FISCAL YEAR ENDED JUNE 30, 1997. The Company reclassified $6,250,000 of
its 8.17% Senior Notes to "Current portion of long-term debt" from "Long-term
debt" as the first scheduled installment became current.

All previously capitalized patent costs that had been recorded in other
assets have been realized as royalties.

The Company entered into capital lease agreements of $62,000 for the year
ended June 30, 1997.

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

23
26

BALDWIN TECHNOLOGY COMPANY, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

The Company entered into capital lease agreements of $129,000 during the
year ended June 30, 1995.

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.

24
27

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 and control equipment for the printing and
print-on-demand industries.

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, its wholly owned subsidiaries and its 64% owned subsidiary (Baldwin
Davlin Finishing Systems, Inc.). 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 (losses) gains, charged or credited
to income for the years ended June 30, 1997, 1996 and 1995 were $(182,000),
$594,000 and $152,000, 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 $772,000 and $778,000 greater as of June 30, 1997
and 1996, 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
decreased $6,188,000 in fiscal 1997 (increased $1,111,000 in fiscal 1996) 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, 1997, these costs were
$1,716,000 less $1,324,000 of accumulated amortization ($1,794,000 less
$1,160,000 of accumulated amortization at June 30, 1996) and were included in
"Other Assets".

NET (LOSS) INCOME PER SHARE. Net (loss) 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, 1997, 1996 and 1995 were 0 (none),

25
28

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

73,257 and 125,370, respectively. The Company intends to adopt Statement of
Financial Accounting Standards No. 128, "Earnings per Share" for the year ended
June 30, 1998. The effect of adoption of this standard is not anticipated to
have a material impact on the Company's financial statements.

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.

LONG-LIVED ASSETS. The Company adopted 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 was immaterial.

OTHER ACCOUNTING STANDARDS. The Company intends to adopt Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" and No.
131, "Disclosures about Segments of an enterprise and Related Information" for
the year ended June 30, 1999. The effect of adoption of these standards is not
anticipated to have a material impact on the Company's financial statements.

NOTE 3 -- PROVISION FOR LOSS ON THE DISPOSITION OF MISOMEX:

On June 9, 1997, the Company signed a Stock Purchase Agreement with Kaber
Imaging, Inc. under which terms it agreed to sell all of the outstanding shares
of the Misomex Group. The transaction was completed on June 30, 1997 and
resulted in a charge to earnings of $42,407,000 which included accruals
amounting to $993,000 for expenses related to the disposition. At June 30, 1997
the Company recorded a receivable for the proceeds of the sale in the amount of
$6,000,000 in "prepaid expenses and other". The Company collected $4,000,000 of
this receivable on July 1, 1997 and the remaining $2,000,000 is due on September
30, 1997.

The following pro-forma condensed Consolidated Statement of Income of the
Company reflects the removal of the results of the Company's Pre-press
operations for the years ended June 30, 1997, 1996 and 1995.



YEARS ENDED JUNE 30,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------

Net sales............................ $215,819,000 $226,069,000 $192,350,000
------------ ------------ ------------
Gross profit......................... 71,095,000 73,193,000 63,167,000
Operating expenses................... 60,962,000 60,938,000 51,598,000
Provision for loss on disposal of
Misomex............................ 42,407,000
Restructuring charge................. 3,000,000
------------ ------------ ------------
Operating (loss) income.............. (32,274,000) 9,255,000 11,569,000
Other expenses....................... 1,359,000 1,641,000 1,938,000
------------ ------------ ------------
Pre-tax (loss) income................ $(33,633,000) $ 7,614,000 $ 9,631,000
============ ============ ============


26
29

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4 -- RESTRUCTURING CHARGE AND RESERVES:

A restructuring reserve was charged to income during 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 reduction at 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. The
Company also has $160,000 remaining from a fiscal 1992 restructuring charge, all
of which relates to an excess facility sublease subsidy.

During fiscal 1997 all claims arising from the charges associated with the
European dealer network and distribution system were settled. As a result, the
Company charged $807,000 against the reserve. Since December 31, 1995, charges
of $1,049,000 have been made against the restructuring reserve for severance. It
is anticipated that the remaining reserve of $1,144,000 at June 30, 1997 will be
fully utilized during fiscal 1998 based upon notices of termination already
provided to employees. Restructuring reserves, except for the long-term portion
of the excess facility sublease subsidy of $57,000 which is recorded in "Other
long-term liabilities", were included in "Other accounts payable and accrued
liabilities".

Restructuring reserves consist of the following:



YEARS ENDED JUNE 30,
----------------------------
1997 1996
---------- ----------

Severance and dealer claims........................... $1,144,000 $2,552,000
Excess facility sublease subsidy...................... 160,000 263,000
---------- ----------
$1,304,000 $2,815,000
========== ==========


NOTE 5 -- BUSINESS SEGMENT INFORMATION:

The Company operates primarily in the printing industry. The Company,
through its subsidiaries, operates in three geographic regions: 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.

27
30

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

A summary of the results by geographic region is as follows (in thousands):



ADJUSTMENTS
THE ASIA AND
AMERICAS EUROPE PACIFIC ELIMINATIONS CONSOLIDATED
-------- -------- ------- ------------ ------------

YEAR ENDED JUNE 30, 1997
Sales to unaffiliated
customers.............. $95,833 $ 86,340 $61,782 $ 191 $244,146
Transfers between
geographic areas....... 4,875 6,389 188 (11,452) 0
-------- -------- ------- -------- --------
Total revenue....... $100,708 $ 92,729 $61,970 $(11,261) $244,146
======== ======== ======= ======== ========
Operating profit (loss)... $ 276 $(35,382) $ 7,583 $ (170) $(27,693)
======== ======== ======= ========
General corporate
expenses............... (4,412)
Interest expense, net..... (3,102)
--------
(Loss) from operations
before taxes........... $(35,207)
========
Identifiable assets....... $69,872 $ 43,083 $44,292 0 $157,247
======== ======== ======= ========
Corporate assets.......... 4,876
--------
Total assets........ $162,123
========
Total liabilities... $33,599 $ 43,051 $27,211 0 $103,861
======== ======== ======= ======== ========
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
======== ======== ======= ======== ========


28
31

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



ADJUSTMENTS
THE ASIA AND
AMERICAS EUROPE PACIFIC ELIMINATIONS CONSOLIDATED
-------- -------- ------- ------------ ------------

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
======== ======== ======= ======== ========


No customer accounted for 10% or more of the Company's net sales in the
fiscal years ended June 30, 1997, 1996 and 1995.

NOTE 6 -- INVENTORIES:

Inventories consist of the following:



JUNE 30, 1997
-----------------------------------------
DOMESTIC FOREIGN TOTAL
----------- ----------- -----------

Raw materials............................... $ 5,748,000 $ 5,635,000 $11,383,000
In process.................................. 3,739,000 5,094,000 8,833,000
Finished goods.............................. 4,302,000 3,315,000 7,617,000
----------- ----------- -----------
$13,789,000 $14,044,000 $27,833,000
=========== =========== ===========




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
============ ============ ============


Foreign inventories decreased $1,483,000 (decreased $1,021,000 in 1996) due
to translation rates in effect at June 30, 1997 when compared to rates at June
30, 1996.

29
32

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7 -- LOANS PAYABLE:



RATE AMOUNT
--------------- ----------

SHORT-TERM INDEBTEDNESS AT JUNE 30, 1997:
Foreign subsidiaries.................................. 4.64% (average) $8,312,000
===========
SHORT-TERM INDEBTEDNESS AT JUNE 30, 1996:
Foreign subsidiaries.................................. 5.03% (average) $9,704,000
===========


The maximum amount of loans payable to banks outstanding during the year
ended June 30, 1997 was $13,470,000 ($12,054,000 in 1996). Average rates are
weighted by month and reflect the monthly amount of short-term borrowing in use
and the respective rates of interest therein. Loans payable decreased by
$951,000 (decreased by $776,000 in 1996), due to translation rates in effect at
June 30, 1997 when compared to rates at June 30, 1996.

NOTE 8 -- LONG-TERM DEBT:



JUNE 30, 1997 JUNE 30, 1996
------------------------- -----------------------
CURRENT LONG-TERM CURRENT LONG-TERM
---------- ----------- -------- -----------

Notes payable in equal annual
installments from October, 1997
through October, 2000, interest
rates 8.17%.................... $6,250,000 $18,750,000 $25,000,000
Note payable December, 1998
interest rate (1.25% over
LIBOR) 6.75%................... 1,750,000
Note payable by foreign
subsidiary March, 1999,
interest rate 3.8%............. 2,715,000
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 6.0%............. 1,160,000 1,353,000
Industrial revenue bond payable
in annual installments through
October, 1998, interest rate
9%............................. 114,000 36,000 118,000 150,000
Notes payable by foreign
subsidiary through 2003,
interest rates 4.38% and
9.9%........................... 34,000 223,000 52,000 304,000
Notes payable by foreign
subsidiary through March, 1999,
interest rates 6.25% and
6.5%........................... 57,000 99,000
Note payable by foreign
subsidiary August, 2000,
interest rate 8.25%............ 27,000 30,000 21,000 40,000
---------- ----------- -------- -----------
$6,425,000 $20,256,000 $492,000 $33,576,000
=========== ============ ========= ============


Notes payable, denominated in currencies other than the U.S. dollar,
decreased by $254,000 (decreased by $503,000 in 1996), due to translation rates
in effect at June 30, 1997 when compared to

30
33

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

rates at June 30, 1996. The foreign note due through 2002, with an interest rate
of 6.0%, and the industrial revenue bond are collateralized by buildings and
specific equipment as outlined in the indenture relating thereto. Approximately
$371,000 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
$1,000,000 plus 50% of the Company's net income after January 1, 1997. 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, 1997, this ratio was 1.63
to 1.

Maturities of long-term debt in each fiscal year succeeding June 30, 1997
are as follows:



FISCAL YEAR ENDING JUNE 30,
- --------------------------------------------------------------------

1998................................................................ $ 6,425,000
1999................................................................ 7,525,000
2000................................................................ 6,326,000
2001................................................................ 6,285,000
2002................................................................ 17,000
2003 and thereafter................................................. 103,000
-----------
$26,681,000
============


At June 30, 1997, the Company had available lines of credit of $30,868,000
upon which $8,516,000 had been drawn and of which $103,000 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, 1997, 1996 and 1995 were $61,000,
$71,000 and $67,000, respectively.

31
34

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9 -- TAXES ON INCOME:

(Loss) income from operations before taxes and the (benefit) provision for
income taxes are comprised of:



FOR THE YEARS ENDED JUNE 30,
----------------------------------------------
1997 1996 1995
------------ ----------- -----------

(Loss) income from operations before
taxes:
Domestic............................. $ 346,000 $12,613,000 $ 8,897,000
Foreign.............................. (35,553,000) (5,394,000) 1,845,000
------------ ----------- -----------
$(35,207,000) $ 7,219,000 $10,742,000
============ ============ ============
(Benefit) provision for income taxes:
Currently payable:
Domestic.......................... $ (363,000) $ 1,060,000 $ 2,026,000
Foreign........................... 3,522,000 4,035,000 2,960,000
------------ ----------- -----------
3,159,000 5,095,000 4,986,000
------------ ----------- -----------
(Prepaid) deferred:
Foreign.............................. (369,000) (394,000) 105,000
------------ ----------- -----------
(369,000) (394,000) 105,000
------------ ----------- -----------
Total income tax expense.... $ 2,790,000 $ 4,701,000 $ 5,091,000
============ ============ ============


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, 1997 and 1996 are as follows:

DEFERRED TAX:



FOR THE YEARS ENDED JUNE 30,
-------------------------------------------------------------------------------------
1997 1996
---------------------------------------- ----------------------------------------
ASSETS LIABILITIES TOTAL ASSETS LIABILITIES TOTAL
----------- ----------- ------------ ----------- ----------- ------------

Foreign tax credit
carryforwards.............. $ 2,664,000
Foreign net operating loss
carryforwards.............. $18,127,000 12,853,000
Capital loss carryforwards... 4,391,000
Inventories.................. 1,519,000 1,853,000
Pension...................... 1,735,000 1,461,000
Other, individually less than
5% of "Net Deferred Tax
Asset"..................... $ 1,771,000 $ 1,099,000 $ 2,641,000 $ 1,171,000
----------- ----------- ----------- -----------
Net Deferred Tax Asset and
Liability.................. $27,543,000 $ 1,099,000 $ 26,444,000 $21,472,000 $ 1,171,000 $ 20,301,000
============ ========== ============ ==========
Valuation Allowance.......... (22,774,000) (16,957,000)
------------ ------------
Total Net Deferred
Tax Assets........ $ 3,670,000 $ 3,344,000
============ ============


32
35

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At June 30, 1997, net operating loss carryforwards of $61,890,000 are
available to reduce future foreign taxable income ($3,762,000 of which expire in
fiscal year 1998, and the remainder of which have indefinite carryforward
periods). The Company also has capital loss carryforwards in the amount of
$11,305,000 ($9,481,000 of which is domestic and expire in fiscal year 2002 and
the remainder in England having an indefinite carryforward period) available at
June 30, 1997.

The Company has not had to provide for income taxes on $10,932,000 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" (benefit) tax (determined by applying the United States Federal
statutory income tax rate of 34% to (loss) income from operations before taxes)
by $14,760,000, $2,247,000 and $1,439,000 for the years ended June 30, 1997,
1996 and 1995, respectively. The reasons for the difference are as follows:



FOR THE YEARS ENDED JUNE 30,
----------------------------------------------
1997 1996 1995
------------ ----------- -----------

Computed "expected" (benefit) tax....... $(11,970,000) $ 2,454,000 $ 3,652,000
State income taxes, net of federal
income tax benefit.................... 227,000 510,000 376,000
Foreign income taxed at higher than the
U.S. statutory rate................... 309,000 1,745,000 985,000
Pre-press divestiture................... 14,418,000
Goodwill write-off not deductible for
taxes................................. 213,000 233,000 233,000
Foreign Sales Corporation............... (368,000) (264,000) (228,000)
Other reconciling items, individually
less than 5% of the "expected" tax.... (39,000) 23,000 73,000
------------ ----------- -----------
Total income tax expense..... $ 2,790,000 $ 4,701,000 $ 5,091,000
============ =========== ===========


NOTE 10 -- 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, 1997, the number of outstanding shares of Class B Common
Stock constituted 10.7% (10.5% in 1996) of the total number of outstanding
shares of both classes of Common Stock.

33
36

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 was increased to
$10,000,000 of Class A Common Stock and 500,000 shares of Class B Common Stock.
As of June 30, 1997, 1,819,556 shares of Class A Common Stock (1,663,156 at
1996) and 164,117 shares of Class B Common Stock (164,117 at 1996) had been
repurchased for $8,756,000, of which $7,635,000 represents Class A Common Stock,
($8,276,000 at 1996 of which $7,155,000 represents Class A Common Stock) under
this program.

NOTE 11 -- 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. On October 14, 1996 the 1986 Plan terminated.

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

34
37

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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
-------------------------------------------------------
WEIGHTED
AVERAGE
PRICE
OPTION --------------
CLASS A CLASS B PRICE RANGE A B
--------- ------- -------------- ----- -----

Outstanding at June 30, 1995...................... 953,333 275,000 $3.88 - $9.84 $4.84 $7.72
--------- ------- -------------- ----- -----
Granted........................................... 391,000 195,000 $5.38 - $6.72 $5.40 $6.72
Canceled.......................................... (7,000) $5.63 $5.63
Exercised......................................... (28,333) $4.00 - $5.50 $4.31
--------- ------- -------------- ----- -----
Outstanding at June 30, 1996...................... 1,309,000 470,000 $3.88 - $9.84 $5.01 $7.30
--------- ------- -------------- ----- -----
Granted........................................... 352,500 120,000 $3.00 - $3.75 $3.00 $3.75
Canceled.......................................... (236,001) (61,667) $3.00 - $8.13 $5.11 $6.55
Exercised.........................................
--------- ------- -------------- ----- -----
Outstanding at June 30, 1997...................... 1,425,499 528,333 $3.00 - $9.84 $4.50 $6.58
========== ======== ============== ====== ======
Exercisable at June 30, 1997...................... 653,993 208,332 $3.88 - $9.84 $4.92 $8.24
========== ======== ============== ====== ======
Available for future option grants at June 30,
1997............................................. 0 0
========== ========


THE 1990 PLAN
----------------------------------------------------------------
WEIGHTED
AVERAGE
PRICE
OPTION PRICE --------------
TOTAL CLASS A CLASS B RANGE A B
------- ------- ------- -------------- ----- -----

Outstanding at June 30, 1995...................... 20,120 17,737 2,383 $3.75 - $6.25 $4.64 $5.73
------- ------- ------- -------------- ----- -----
Granted........................................... 5,000 4,490 510 $5.50 - $6.88 $5.50 $6.88
Canceled..........................................
Exercised......................................... (1,764) (1,764) $4.50 - $4.75 $4.62
------- ------- ------- -------------- ----- -----
Outstanding at June 30, 1996...................... 23,356 20,463 2,893 $3.75 - $6.88 $4.83 $5.92
------- ------- ------- -------------- ----- -----
Granted........................................... 5,000 4,470 530 $2.56 - $3.20 $2.56 $3.20
Canceled..........................................
Exercised.........................................
------- ------- ------- -------------- ----- -----
Outstanding at June 30, 1997...................... 28,356 24,933 3,423 $2.56 - $6.88 $4.42 $5.50
======= ======== ======== ============== ====== ======
Exercisable at June 30, 1997...................... 23,356 20,463 2,893 $3.75 - $6.88 $4.83 $5.92
======= ======== ======== ============== ====== ======
Available for future option grants at June 30,
1997............................................. 69,000
=======


The following table summarizes information regarding stock options
outstanding and exercisable at June 30, 1997:



OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------- ------------------------
WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF AVERAGE AVERAGE NUMBER OF AVERAGE
EXERCISE OUTSTANDING REMAINING EXERCISE EXERCISABLE EXERCISE
PRICES OPTIONS CONTRACTUAL LIFE PRICE OPTIONS PRICE
- ------------- --------- ---------------- -------- ----------- --------

$2.56 - $3.75 470,140 9.3 years $ 3.19 2,640 $ 3.75
$3.88 - $5.63 1,015,770 6.4 years $ 4.85 586,764 $ 4.70
$5.88 - $6.88 320,278 6.9 years $ 6.33 120,277 $ 5.94
$8.13 - $9.84 176,000 3.8 years $ 8.91 176,000 $ 8.91


The Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" (FAS 123), on July 1, 1996 electing
the disclosure only provisions of that statement. Accordingly, no charge for
compensation has been recorded for stock based employee awards. In accordance
with FAS 123, the fair value method of accounting has not been applied to
options granted prior to July 1, 1995. Due to the vesting schedule of options
granted under both the 1986 and 1990 plans as well as the exclusion of the fair
value of options granted prior to July 1, 1995, the fair value of compensation
cost calculated to disclose pro forma financial information may not be
representative of that to be expected in future years. The fair value method of
calculating the value of each option granted subsequent to June 30, 1995 was
estimated as of the option grant date using the Black-Scholes option pricing
model. Significant assumptions used to fair value the options by the pricing
model were that the forfeiture rate was 0% (none), the weighted averages for the
risk free interest rates, expected life, expected volatility and expected
dividends were 6.29%, five years, 41.31% and $0.00 per share, respectively. If
the Company had recorded compensation cost based upon the fair

35
38

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

values as calculated above, the effect on net (loss) income and (loss) earnings
per share would have been the pro forma amounts indicated below;



YEARS ENDED JUNE 30,
------------------------------
1997 1996
------------ ----------

Net (loss) income as reported................... $(35,997,000) $2,518,000
Pro forma net (loss) income net of $4,150 of tax
benefit in 1997 ($0 in 1996).................. $(36,005,000) $2,518,000
(Loss) earnings per share as reported........... $ (2.21) $ 0.14
Pro forma (Loss) earnings per share............. $ (2.21) $ 0.14


On November 19, 1996, the shareholders approved the 1996 Stock Option Plan
(the "1996 Plan"). The 1996 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. Grants from the 1996 Plan are limited to a
maximum outstanding total of 875,000 and 125,000 shares of Class A and Class B
Common Stock, respectively, at all times. 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.

NOTE 12 -- SUPPLEMENTAL COMPENSATION:

Subsidiaries within the Americas maintain profit sharing, savings and
retirement plans. Amounts expensed under these plans were as follows:



FOR THE YEARS ENDED JUNE 30,
----------------------------------------
1997 1996 1995
---------- ---------- --------

Baldwin Technology Corporation ("BTC")
and Baldwin Graphic Systems, Inc.
("BGS")................................. $ 773,000 $ 833,000 $647,000
Kansa Corporation......................... 193,000 173,000 192,000
Enkel Corporation......................... 92,000 75,000 52,000
Misomex of North America, Inc. ........... 17,000 18,000 19,000
---------- ---------- --------
Total expense.................. $1,075,000 $1,099,000 $910,000
=========== =========== =========


Company contributions to the BTC/BGS and Kansa plans are discretionary and
are subject to approval by their respective Boards of Directors. 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.

36
39

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Certain subsidiaries and divisions within Europe maintain pension plans.
Amounts expensed under these plans were as follows:



FOR THE YEARS ENDED JUNE 30,
--------------------------------------
1997 1996 1995
---------- -------- --------

Baldwin Grafotec GmbH....................... $ 394,000 $199,000 $426,000
Misomex AB.................................. 355,000 83,000 246,000
Amal AB..................................... 156,000 112,000 64,000
IVT Graphics................................ 104,000 91,000
Jimek....................................... 93,000 251,000
Baldwin Europe Consolidated B.V............. 18,000 20,000 23,000
Misomex U.K. ............................... 107,000 133,000 103,000
---------- -------- --------
Total expense.................... $1,227,000 $889,000 $862,000
========== ======== ========


The amount of expense relating to the European pension plans is determined
based upon, among other things, the age, salary and years of service of
employees within the plans. The Company's German, English, Swedish and
Netherlands subsidiaries make annual contributions to the plans equal to the
amounts accrued for pension expense.

In Germany, at Baldwin Grafotec 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 were 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, 1997 was $0 (none) due to the
divestiture of Misomex ($3,343,000 in 1996). The recorded liability at June 30,
1996 was 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,
---------------------------------------
1997 1996 1995
--------- --------- ---------

Service Cost -- benefits earned during the
period.................................... $ 6,000 $ 4,000 $ 29,000
Interest on projected benefit obligation.... 17,000 224,000 235,000
Annual return on plan assets................ 32,000 21,000 11,000
Net amortization and deferrals.............. (111,000) (184,000) (229,000)
--------- --------- ---------
Net pension cost............................ $ (56,000) $ 65,000 $ 46,000
========= ========= =========


37
40

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table sets forth the funded status of the above defined
benefit pension plans:



FOR THE YEARS ENDED JUNE 30,
----------------------------
1997 1996
--------- -----------

Actuarial present value of:
Vested benefit obligation......................... $ 206,000 $ 1,299,000
========= ===========
Accumulated benefit obligation.................... $ 206,000 $ 2,344,000
========= ===========
Plan assets at fair value........................... $ 74,000 $ 81,000
Projected benefit obligation........................ 221,000 2,360,000
--------- -----------
Plan assets less than projected benefit
obligation........................................ (147,000) (2,279,000)
Unrecognized transition asset....................... 262,000 323,000
Unrecognized actuarial gain......................... (519,000) (1,733,000)
--------- -----------
Accrued pension costs............................... $ 404,000 $ 3,689,000
========= ===========
Actuarial assumptions:
Discount rate............................. 7.5% 7.5% to 8.5%
Rate of increase in compensation levels... 3% 3% to 5%
Expected rate of return on plan assets.... 7% 7%


There are two retirement plans within Asia Pacific. 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 $623,000, $606,000 and
$391,000 for the years ended June 30, 1997, 1996 and 1995, respectively.

Officers and key employees of the Company participate in various incentive
compensation plans. Amounts expensed under such plans were $1,740,000,
$2,183,000 and $2,437,000 for the years ended June 30, 1997, 1996 and 1995,
respectively.

The Company adopted FAS 112, "Employer's Accounting for Postemployment
Benefits", as of July 1, 1994, the effect of which was immaterial.

38
41

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13 -- COMMITMENTS AND CONTINGENCIES:

Future minimum annual lease payments under capital leases, which consist of
buildings, and machinery and equipment with accumulated depreciation amounting
to $4,413,000 at June 30, 1997 and $6,097,000 at June 30, 1996, together with
the present value of the minimum lease payments are as follows at June 30, 1997:



FISCAL YEARS ENDING JUNE 30, AMOUNT
- ------------------------------------------------------------------ ---------

1998.............................................................. $ 503,000
1999.............................................................. 436,000
2000.............................................................. 411,000
2001.............................................................. 97,000
2002.............................................................. 0
2003 and thereafter............................................... 0
---------
Total minimum lease payments...................................... 1,447,000
Less -- Amount representing interest.............................. (612,000)
---------
Present value of minimum lease payments........................... $ 835,000
==========


At June 30, 1997, $578,000 ($788,000 at June 30, 1996) 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 $5,603,000, $5,370,000 and
$5,179,000 for the years ended June 30, 1997, 1996 and 1995, respectively.
Aggregate future annual rentals under noncancellable leases for periods of more
than one year at June 30, 1997 are as follows:



FISCAL YEARS ENDING JUNE 30, AMOUNT
- ------------------------------------------------------------------- ----------

1998............................................................... $4,266,000
1999............................................................... 3,718,000
2000............................................................... 3,365,000
2001............................................................... 2,852,000
2002............................................................... 2,483,000
2003 and thereafter................................................ 7,821,000


From time to time in the ordinary course of business, the Company is
subject to legal proceedings. While it is impossible to determine the ultimate
outcome of such matters, it is management's opinion that the resolution of any
pending issues will not have a material adverse effect on the financial position
or results of operation of the Company.

NOTE 14 -- RELATED PARTIES:

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 a loan and pledge agreement and
promissory note with 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

39
42

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

and Mr. Lauricella was loaned $164,063 to purchase 25,000 shares 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, 1997 were $1,604,613 and $191,169 for Mr. Nathe and Mr.
Lauricella, respectively. At June 30, 1997, the balances of the notes
receivable, including interest, were $1,561,480 and $191,169 for Mr. Nathe and
Mr. Lauricella, respectively.

The maximum amount 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 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, 1997, 1996, and 1995, the Company
incurred legal fees of approximately $200,000, $474,000 and $200,000,
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 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, 1997, 1996 and 1995.

On February 10, 1997, Wendell M. Smith resigned as Chairman of the Company.
Pursuant to his employment agreement, the Company made compensation payments to
Mr. Smith in the amount of $890,000. During fiscal 1997, certain consulting
agreements between the Company and Polestar Limited ("Polestar"), a corporation
controlled by Mr. Smith, were canceled and renegotiated into a new agreement
providing for payments of $60,000 per year for consulting services. The maximum
duration of the new agreement is 17 years. For the years ended June 30, 1996 and
1995 the aggregate compensation expensed under the prior agreements was $158,000
and $160,000, respectively.

40
43

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15 -- QUARTERLY FINANCIAL DATA (UNAUDITED):

Summarized quarterly financial data for fiscal 1997 and fiscal 1996 are as
follows (in thousands except per share data):



QUARTER
-----------------------------------------------
FISCAL 1997 FIRST SECOND THIRD FOURTH
- ------------------------------------- ------- -------- ------- -------

Net sales............................ $57,541 $ 61,094 $58,318 $67,193
Costs and expenses:
Cost of goods sold................. 38,959 41,859 39,031 43,942
Operating expenses................. 17,325 17,439 17,893 19,203
Provision for loss on sale of
Misomex......................... 46,036 (3,629)
Interest, net...................... 798 802 757 745
Other (income)....................... (570) (357) (669) (21)
Minority interest.................... (73) (117)
------- -------- ------- -------
Income (loss) before taxes........... 1,029 (44,685) 1,379 7,070
Provision for income taxes........... 473 622 634 1,061
------- -------- ------- -------
Net income........................... $ 556 $(45,307) $ 745 $ 6,009
======== ======== ======== ========
Net income per share................. $ 0.03 $ (2.62) $ 0.04 $ 0.35
======== ======== ======== ========
Weighted average shares
outstanding........................ 17,359 17,298 17,128 17,125
======== ======== ======== ========




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
====== ====== ====== ======


NOTE 16 -- SUBSEQUENT EVENT:

On August 12, 1997, the Board of Directors granted non-qualified options to
purchase 375,000 shares of the Company's Class A Common Stock to certain
executives and key personnel under the Company's 1996 Plan at an exercise price
of $3.00 per share, the fair market value on the date of grant. The options
granted are otherwise identical with regard to restrictions to options
previously granted.

41
44

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There has been no Form 8-K filed within 24 months prior to the date of the
most recent financial statements reporting a change of accountants and/or
reporting a disagreement on any matter of accounting principle or financial
statement disclosure.

PART III

ITEMS 10, 11, 12 AND 13

Information required under these items is contained in the Company's 1997
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........ 46
Schedule VIII -- Valuation and Qualifying Accounts........................ 47


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.


42
45



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 Company, Inc. 1996 Stock Option Plan. Filed as Exhibit
A to the Baldwin Technology Company, Inc. 1996 Proxy Statement and
incorporated by reference to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1996 and incorporated herein by reference.
10.5 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.
10.6 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.
10.7 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.
10.8 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.
10.9* 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.
10.10 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.
10.11 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.
10.12 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.
10.13 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.
10.14 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.
10.15* 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.


43
46



10.16 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.
10.17 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
as Exhibit 10.23 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1996 and incorporated herein by reference.
10.18* Amendment to the employment agreement between Baldwin -- Japan Limited
and Akira Hara effective August 15, 1995 filed as Exhibit 10.25 to the
Company's Report on Form 10-K for the fiscal year ended June 30, 1996 and
incorporated herein by reference.
10.19 Third Amendment to Amended and Restated Revolving Credit Agreement dated
as of February 14, 1997 by and among Baldwin Technology Company, Inc. and
its subsidiaries, Baldwin Americas Corporation and Baldwin Technology
Limited, and NationsBank NA as agent and Lender, and Bank of Boston
Connecticut filed as Exhibit 10.26 on the Company's Form 10-Q dated
February 14, 1997 and incorporated herein by reference.
10.20 Amendment to Note Agreement dated as of February 14, 1997 by and among
Baldwin Technology Company, Inc. and its subsidiaries, Baldwin Americas
Corporation and Baldwin Technology Limited, and John Hancock Mutual Life
Insurance Company, John Hancock Variable Life Insurance Company and John
Hancock Life Insurance Company of America filed as Exhibit 10.27 on the
Company's Form 10-Q dated February 14, 1997 and incorporated herein by
reference.
10.21 Stock Purchase Agreement, (to sell all the shares of the Misomex Group of
Companies), dated as of June 9, 1997, between Kaber Imaging, Inc. and the
Company. Filed as Exhibit 10.26 to the Company's Report on Form 8-K dated
July 3, 1997 and incorporated herein by reference.
10.22 Amendment Number One, dated June 30, 1997, to the Stock Purchase
Agreement. Filed as Exhibit 10.27 to the Company's Report on Form 8-K
dated July 3, 1997 and incorporated herein by reference.
10.23 Fourth Amendment to Amended and Restated Revolving Credit Agreement dated
as of September 12, 1997 by and among Baldwin Technology Company, Inc.
and its subsidiaries, Baldwin Americas Corporation and Baldwin Technology
Limited, and NationsBank NA as agent and Lender, and Bank of Boston
Connecticut (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.

44
47

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: /s/ GERALD A. NATHE
------------------------------------
GERALD A. NATHE
(CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER)

Dated: September 29, 1997

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
- ------------------------------------- ------------------------ -------------------

/s/ GERALD A. NATHE Chairman of the Board, September 29, 1997
- ------------------------------------- President and Chief
GERALD A. NATHE Executive Officer

/s/ AKIRA HARA Vice President and September 29, 1997
- ------------------------------------- Director
AKIRA HARA

/s/ WILLIAM J. LAURICELLA Treasurer and Chief September 29, 1997
- ------------------------------------- Financial Officer
WILLIAM J. LAURICELLA

/s/ WARREN W. SMITH Chief Accounting Officer September 29, 1997
- -------------------------------------
WARREN W. SMITH

/s/ JUDITH A. BOOTH Director September 29, 1997
- -------------------------------------
JUDITH A. BOOTH

/s/ SAMUEL B. FORTENBAUGH III Director September 29, 1997
- -------------------------------------
SAMUEL B. FORTENBAUGH III

/s/ JOHN T. HEALD, JR. Director September 29, 1997
- -------------------------------------
JOHN T. HEALD, JR.

/s/ M. RICHARD ROSE Director September 29, 1997
- -------------------------------------
M. RICHARD ROSE

/s/ WENDELL M. SMITH Director September 29, 1997
- -------------------------------------
WENDELL M. SMITH

/s/ RALPH R. WHITNEY, JR. Director September 29, 1997
- -------------------------------------
RALPH R. WHITNEY, JR.


45
48

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. referred to in our report dated August 8, 1997 appearing in this
Annual Report to Shareholders of Baldwin Technology Company, Inc. (which report
and consolidated financial statements are incorporated by reference in the
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 8, 1997

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49

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, 1997
Allowance for doubtful
accounts (deducted
from accounts
receivable).......... $ 2,503 $429 $ 826(1) $ 2,106
Valuation allowance for
deferred tax asset
(deducted from
prepaid and other
assets).............. $ 16,957 $5,817(2) $ 22,774
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(2) $ 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(3) $ 13,313


- ---------------------

(1) The decrease in the allowance for doubtful accounts resulted from $413,000
of recoveries, $228,000 of allowances as part of the Misomex sale and
currency fluctuations of $185,000.
(2) The increase in the amount of the valuation allowance is primarily the
result of increased foreign net operating loss carryforwards. See Note
9 -- Notes to Consolidated Financial Statements.
(3) The reduction in the amount of the valuation allowance is the result of
improved earnings in the Company's domestic operations. See Note 9 -- Notes
to Consolidated Financial Statements.

47