e10vq

0000950123-11-053090.txt : 20110523 0000950123-11-053090.hdr.sgml : 20110523 20110523172034 ACCESSION NUMBER: 0000950123-11-053090 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20110331 FILED AS OF DATE: 20110523 DATE AS OF CHANGE: 20110523 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BALDWIN TECHNOLOGY CO INC CENTRAL INDEX KEY: 0000805792 STANDARD INDUSTRIAL CLASSIFICATION: PRINTING TRADES MACHINERY & EQUIPMENT [3555] IRS NUMBER: 133258160 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09334 FILM NUMBER: 11865905 BUSINESS ADDRESS: STREET 1: 2 TRAP FALLS ROAD STREET 2: SUITE 402 CITY: SHELTON STATE: CT ZIP: 06484 BUSINESS PHONE: 2034021000 MAIL ADDRESS: STREET 1: 2 TRAP FALLS ROAD STREET 2: SUITE 402 CITY: SHELTON STATE: CT ZIP: 06484 10-Q 1 y91424e10vq.htm FORM 10-Q e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission file number 1-9334

BALDWIN TECHNOLOGY COMPANY, INC.

(Exact name of registrant as specified in its charter)


Delaware		13-3258160

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2 Trap Falls Road, Suite 402, Shelton, Connecticut 06484

(Address of principal executive offices) (Zip Code)

203-402-1000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o	Accelerated filer o	Smaller reporting company o	Non-accelerated filer þ
		(do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class	Outstanding at April 30, 2011
Class A Common Stock ($0.01 par value)		14,564,331
Class B Common Stock ($0.01 par value)		1,092,555

BALDWIN TECHNOLOGY COMPANY, INC.

INDEX


	Page
Part I Financial Information

Item 1 Financial Statements

Consolidated Balance Sheets at March 31, 2011 (unaudited) and June 30, 2010		1-2

Consolidated Statements of Operations for the three and nine months ended March 31, 2011 (unaudited) and 2010 (unaudited)		3

Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended March 31, 2011 (unaudited)		4

Consolidated Statements of Cash Flows for the nine months ended March 31, 2011 (unaudited) and 2010 (unaudited)		5-6

Notes to Consolidated Financial Statements (unaudited)		7-20

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3 Quantitative and Qualitative Disclosures About Market Risk		30

Item 4 Controls and Procedures		30

Part II Other Information

Item 1A Risk Factors		32

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		33

Item 6 Exhibits		33

Signatures		34
EX-10.01
EX-31.01
EX-31.02
EX-32.01
EX-32.02

BALDWIN TECHNOLOGY COMPANY, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)

ASSETS


	March 31,			June 30,
	2011			2010
	(unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	13,938		$	15,710
Accounts receivable trade, net of allowance for doubtful accounts of $1,272 ($1,154 at June 30, 2010)		27,076			22,042
Notes receivable, trade		2,893			2,328
Inventories, net		23,491			20,237
Deferred taxes, net		1,778			1,778
Prepaid expenses and other		4,890			4,365
Assets of discontinued operations		1,021			981

Total current assets		75,087			67,441

MARKETABLE SECURITIES:
(Cost $867 at March 31, 2011 and $787 at June 30, 2010)		546			500

PROPERTY, PLANT AND EQUIPMENT:
Land and buildings		1,179			1,139
Machinery and equipment		6,808			6,212
Furniture and fixtures		5,282			4,316
Capital leases		108			95

		13,377			11,762
Less: Accumulated depreciation		(8,605	)		(6,393	)

Net property, plant and equipment		4,772			5,369

INTANGIBLES, less accumulated amortization of $11,802 ($10,400 at June 30, 2010)		10,823			10,707
GOODWILL, less accumulated amortization of $1,574 ($1,425 at June 30, 2010)		19,717			18,753
DEFERRED TAXES, NET		9,816			7,712
Other assets		5,792			6,335
Assets of discontinued operations		—			2,475

TOTAL ASSETS	$	126,553		$	119,292

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

BALDWIN TECHNOLOGY COMPANY, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

LIABILITIES AND SHAREHOLDERS’ EQUITY


	March 31,			June 30,
	2011			2010
	(unaudited)
CURRENT LIABILITIES:
Loans payable	$	6,010		$	4,525
Current portion of long-term debt		16,215			389
Accounts payable, trade		15,759			13,536
Notes payable, trade		4,820			4,850
Accrued salaries, commissions, bonus and profit-sharing		4,153			3,626
Customer deposits		2,595			1,747
Accrued and withheld taxes		1,501			1,155
Income taxes payable		716			1,019
Other accounts payable and accrued liabilities		10,130			8,501
Liabilities of discontinued operations		1,214			853

Total current liabilities		63,113			40,201

LONG-TERM LIABILITIES:
Long-term debt, net of current portion		2,132			16,066
Other long-term liabilities		9,862			12,427

Total long-term liabilities		11,994			28,493

Total liabilities		75,107			68,694


Commitments and contingencies

SHAREHOLDERS’ EQUITY:
Class A Common Stock, $0.01 par, 45,000,000 shares authorized, 14,564,331 shares issued at March 31, 2011 and 14,471,363 shares issued at June 30, 2010		146			145
Class B Common Stock, $0.01 par, 4,500,000 shares authorized, 1,092,555 shares issued at March 31, 2011 and at June 30, 2010		11			11
Capital contributed in excess of par value		48,629			48,098
Accumulated earnings		(3,379	)		2,019
Accumulated other comprehensive income		6,039			325

Total shareholders’ equity		51,446			50,598


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	126,553		$	119,292

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

BALDWIN TECHNOLOGY COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)


	For the three months ended						For the nine months ended
	March 31,						March 31,
	2011			2010			2011			2010
Net sales	$	36,443		$	36,977		$	117,705		$	107,195
Cost of goods sold		25,972			25,722			82,251			74,910

Gross profit		10,471			11,255			35,454			32,285


Operating expenses:
General and administrative		4,884			4,160			15,523			13,902
Selling		3,412			3,180			10,815			9,828
Engineering and development		3,624			3,402			10,722			9,976
Restructuring		2,114			—			2,722			—

Total operating expenses		14,034			10,742			39,782			33,706

Legal settlement income, net of expenses		—			—			—			9,266

Operating (loss) income		(3,563	)		513			(4,328	)		7,845


Other (income) expense:
Interest expense, net		656			426			1,691			2,626
Other (income) expense, net		50			66			197			267

		706			492			1,888			2,893

Income (loss) from continuing operations before income taxes		(4,269	)		21			(6,216	)		4,952
Provision (benefit) for income taxes		(1,392	)		(4	)		(2,740	)		1,745

Income (loss) from continuing operations		(2,877	)		25			(3,476	)		3,207


Discontinued operations, net of tax
Income (loss) from discontinued operations		(1,688	)		108			(1,922	)		408

Net income (loss)		(4,565	)		133			(5,398	)		3,615


Basic:
Income (loss) per share from continuing operations	$	(0.18	)	$	0.00		$	(0.22	)	$	0.21
Income (loss) per share from discontinuing operations	$	(0.11	)	$	0.01		$	(0.12	)	$	0.02

Net Income (loss) per share	$	(0.29	)	$	0.01		$	(0.34	)	$	0.23


Diluted:
Income (loss) per share from continuing operations	$	(0.18	)	$	0.00		$	(0.22	)	$	0.21
Income (loss) per share from discontinuing operations	$	(0.11	)	$	0.01		$	(0.12	)	$	0.02

Net Income (loss) per share	$	(0.29	)	$	0.01		$	(0.34	)	$	0.23


Weighted average shares outstanding:
Basic		15,640			15,526			15,604			15,455

Diluted		15,640			15,562			15,604			15,502

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

BALDWIN TECHNOLOGY COMPANY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands, except shares) (Unaudited)


										Capital			Accumu-			Accumulated
	Class A					Class B				Contributed in			lated			Other									Comprehensive Income (Loss) for the
	Common Stock					Common Stock				Excess			Earnings/			Comprehensive			Treasury Stock						Nine Months Ended March 31,
	Shares			Amount		Shares		Amount		of Par			(Deficit)			Income (Loss)			Shares			Amount			2011			2010
Balance at June 30, 2010		14,471,363		$	145		1,092,555	$	11	$	48,098		$	2,019		$	325			—		$	—

Net loss for the nine months ended March 31, 2011														(5,398	)										$	(5,398	)	$	3,615

Translation adjustment																	5,494									5,494			7

Recognition of pension funded status, net of tax																	240									240			250

Unrealized loss on available-for-sale securities, net of tax																	(20	)								(20	)		(13	)

Amortization of stock based compensation											568


Comprehensive income (loss)																									$	316		$	3,859



Shares issued under stock compensation plans		122,238			1						—

Shares surrendered as payment of tax withholding		—																		(29,270	)		(37	)

Retirement of treasury stock		(29,270	)								(37	)								29,270			37

Balance at March 31, 2011		14,564,331		$	146		1,092,555	$	11	$	48,629		$	(3,379	)	$	6,039		$	0		$	0

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

BALDWIN TECHNOLOGY COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)


	For the nine months ended March 31,
	2011			2010
Cash flows from operating activities:
Income (loss) from continuing operations	$	(3,476	)	$	3,207
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization		1,944			1,799
Accrued retirement pay		—			(183	)
Provision for losses on accounts receivable		401			554
Gain on legal settlement		—			(9,266	)
Deferred financing charge		118			1,183
Proceeds from legal settlement		—			9,560
Restructuring charge		2,760			—
Non-cash compensation (CEO change)		878			—
Payments against CEO non-cash compensation		(12	)		—
Non-cash compensation (CFO change)		128			—
Loss on disposal of fixed assets		86			—
Stock based compensation		568			657
Deferred income taxes		(2,654	)		(132	)
Changes in assets and liabilities:
Accounts and notes receivable		(3,631	)		1,566
Inventories		(511	)		2,827
Prepaid expenses and other		60			1,837
Other assets		1,590			1,196
Customer deposits		622			(755	)
Accrued compensation		(813	)		(553	)
Payment of restructuring charges		(1,490	)		(1,795	)
Accounts and notes payable, trade		419			(3,959	)
Income taxes payable		(756	)		1,653
Accrued and withheld taxes		(74	)		(65	)
Other accounts payable and accrued liabilities		(959	)		(1,366	)

Net cash (used) provided by operating activities		(4,802	)		7,965

Cash flows from investing activities:
Additions of property, plant and equipment		(171	)		(328	)
Additions to patents and trademarks		(277	)		(97	)

Net cash (used) by investing activities		(448	)		(425	)

Cash flows from financing activities:
Long-term and short-term debt borrowings		2,788			726
Long-term and short-term debt repayments		—			(10,183	)
Payment of debt financing costs		(220	)		(752	)
Repurchase of common stock		(37	)		(45	)
Principal payments under capital lease obligations		(100	)		(81	)
Proceeds of stock option exercises		—			12
Other long-term liabilities		232			(367	)

Net cash provided (used) by financing activities		2,663			(10,690	)

Discontinued operations:
Cash provided by operating activities		(47	)		940
Cash provided by financing activities		—			(38	)
Cash provided by investing activities		(63	)		—

Net cash (used) provided by discontinued operations		(110	)		902

Effects of exchange rate changes on cash		925			204

Net (decrease) in cash and cash equivalents		(1,772	)		(2,044	)
Cash and cash equivalents (including discontinued operations) at beginning of period		15,710			13,806

Cash and cash equivalents (including discontinued operations) at end of period	$	13,938		$	11,762

Less cash and cash equivalents of discontinued operations at end of period		—			—

Cash and cash equivalents (excluding discontinued operations) at end of period	$	13,938		$	11,762

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

BALDWIN TECHNOLOGY COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

Supplemental disclosures of cash flow information:


	For the nine months
	ended March 31,
	2011		2010
Cash paid during the period for:
Interest	$	864	$	1,029
Income taxes	$	1,016	$	205

Non-cash investing and financing activities:
Warrants issued in connection with debt financing	$	529	$	—

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

BALDWIN TECHNOLOGY COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(in thousands, except share and per share data)

Note 1 — Organization and Basis of Presentation:

Baldwin Technology Company, Inc. and its subsidiaries (“Baldwin” or the “Company”) are engaged primarily in the development, manufacture and sale of press automation equipment and related parts and consumables for the printing and publishing industry.

The accompanying unaudited consolidated financial statements include the accounts of Baldwin and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in compliance with the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements reflect all adjustments of a normal recurring nature, which are in the opinion of management, necessary to present fairly the financial position and the results for the interim periods. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended June 30, 2010.

The results of operations for the interim period presented are not necessarily indicative of trends or of results to be expected for any future period including the entire fiscal year ending June 30, 2011.

On June 30, 2010 the Company successfully completed the acquisition of Nordson UV (“UV”), a manufacturer of ultraviolet curing systems, lamps and parts. Operating results of the acquired entities are included in the results of operations from the date of acquisition.

As described in Note 3, the Company has reclassified its food blending and packaging business to discontinued operations for all periods presented.

Note 2 — Recent Accounting Standards:

In October 2009, the FASB issued ASC Update No. 2009-13, “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements.” The consensus in Update No. 2009-13 supersedes certain guidance in Topic 605 (formerly EITF Issue No. 00-21, Multiple-Element Arrangements) and requires an entity to allocate arrangement consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices. The consensus eliminates the use of the residual method of allocation and requires the use of the relative-selling-price method in all circumstances in which an entity recognizes revenue for an arrangement with multiple deliverables subject to ASC 605-25. The Company adopted Update No. 2009-13 as of July 1, 2010.

The new guidance changes the criteria required to (1) separate deliverables into separate units of accounting when deliverables are sold in a bundled arrangement and (2) to allocate the arrangement’s consideration to each unit in the arrangement (such as, equipment, installation or commissioning services). Entities are now required to determine an estimated selling price for each separate deliverable following a hierarchy of evidence — first Vendor-specific objective evidence (“VSOE”), next Third Party Evidence (“TPE”) and, if VSOE and TPE do not exist, best estimate of selling price (“BESP”).

The Company’s material revenue streams are the result of a wide range of activities, from the delivery of stand-alone equipment, parts, services, consumables and, in some instances, design, installation and commissioning of equipment. The Company enters into revenue arrangements that may consist of multiple deliverables of its product and service offerings due to the needs of its customers. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability of the sale price is reasonably assured. In addition to these general revenue recognition criteria, the following specific revenue recognition policies are followed:

Products and Equipment — For product and equipment sales (one deliverable only), revenue recognition generally occurs when products or equipment have been shipped, risk of loss has transferred to the customer, objective evidence exists that customer acceptance provisions have been met, no significant obligations remain and an allowance for discounts, returns and customer incentives can be reliably estimated. Recorded revenues are reduced by these allowances. The Company bases its estimates of these allowances on historical experience taking into consideration the type of products sold, the type of customer, and the specific type of transaction in each arrangement.

Services — Revenue for services is generally recognized at completion of the contractually required services.

Multiple-Element Arrangements — Arrangements with customers may include multiple deliverables, including any combination of products, equipment and services. For the Company’s multiple-element arrangements, deliverables are separated into more than one unit of accounting when (i) the delivered element(s) have value to the customer on a stand-alone basis, and (ii) delivery of the undelivered element(s) is probable and substantially in the control of the Company. Based on the new accounting guidance adopted July 1, 2010, revenue is then allocated to each unit of accounting based on the estimated selling price determined using a hierarchy of evidence based first on VSOE if it exists, based next on TPE if VSOE does not exist, and finally, if both VSOE and TPE do not exist, based on BESP.

•

VSOE — The price of a deliverable when the Company regularly sells it on a stand-alone basis.

Typically, the Company is unable to determine VSOE for the installation and commissioning services portion, as well as, the equipment portion of a multiple-element arrangement. Since the Company does not sell its installation and commissioning services on a stand-alone basis, the Company is not able to determine VSOE for these portions of a multiple-element arrangement. In addition, in certain instances, similar equipment included in a multiple-element arrangement is sold separately in stand-alone arrangements as customers may perform installations themselves. The Company has determined that the applicability of this stand-alone pricing is almost always not appropriate to serve as the VSOE for equipment in multiple-element arrangements since this pricing considers the geographies in which the products or services are sold, major product and service groups, customer classification (OEM versus End User) and other marketing variables.

•

TPE — Third party (competitor, subcontractors, etc) sales prices for the same or largely interchangeable products or services to similar customers in stand-alone sales. TPE can only be used if VSOE is not available.

Generally, the Company’s strategy for many of its products differs from that of its peers and its offerings contain a level of customization and differentiation such that the comparable pricing

of products with similar functionality sold by other companies cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. Therefore, the Company is typically not able to determine TPE for the equipment portion of a multiple-element arrangement. However, there are others (subcontractors) in the industry with sufficient knowledge about the installation and commissioning process that the Company uses on occasion to perform these services. Overall, installation and commissioning services may vary, due in part, to the size and complexity of the installation and commissioning; however, these subcontractor rates may provide a basis for TPE after considering the type of services to be performed (i.e. mechanical, electrical) and negotiated subcontractor rates.

•

BESP — When the Company is unable to establish VSOE or TPE, the Company uses BESP. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis.

The Company determines BESP for a deliverable in a multiple element arrangement by first collecting all reasonably available data points including sales, cost and margin analysis of the product, and other inputs based on the Company’s normal pricing practices. Second, the Company makes any reasonably required adjustments to the data based on market conditions and Company-specific factors (customer, cost structure, etc.). Third, the Company stratifies the data points, when appropriate, based on customer, magnitude of the transaction and sales volume. In addition, the Company has negotiated supply agreements, primarily with large OEM customers, for pricing some of its products and installation and commissioning services. The Company has experience selling the products and installation and commissioning services at the published price list and considers this to be BESP when contracting with customers under supply agreements. The determination of BESP is a formal process within the Company that includes review and approval by the Company’s management.

Contractually stated prices in multiple-element arrangements are not presumed to represent VSOE, TPE or BESP for an individual deliverable. An entity must develop its estimate of selling prices using the hierarchy of evidence in the new guidance.

After determination of the estimated selling price of each deliverable in a multiple-element arrangement, the arrangement consideration is then allocated using the relative selling price method. Under the relative selling price method, the estimated selling price for each deliverable is compared to the sum of the estimated selling prices for all deliverables. The percentage that is calculated for each deliverable is then multiplied by the total contractual value of the multiple-element arrangement to determine the revenue allocated to each deliverable.

The revenue allocated to each deliverable will then be recorded in accordance with existing revenue recognition guidance for stand alone product/equipment sales and unbundled services.

Based on the Company’s current sales strategies, the newly adopted accounting guidance for revenue recognition has not and is not expected to have a significant effect on the timing and pattern of revenue recognition for sales in periods after the initial adoption when applied to multiple-element arrangements.

Note 3 — Discontinued Operations:

During the quarter ended March 31, 2011 the Company decided to discontinue its non-core food blending and packaging business. As a result of this decision and having met the criteria to be reported as a discontinued operation, the assets, liabilities, results of operations and cash flows of the food blending and packaging business are classified as discontinued operations for all periods presented.

Additionally, as a result of its decision to discontinue the food blending and packaging business, the Company performed an assessment as to the recoverability of goodwill, intangibles and fixed assets associated with the discontinued operation. Based on these assessments, the Company recorded a pre-tax impairment charge of $2,449 related to goodwill, intangibles and fixed assets associated with the discontinued operation.

Revenues and net income (loss) of the food blending and packaging business included in discontinued operations are as follows:


	Three Months Ended					Nine Months Ended
	March 31, 2011			March 31, 2010		March 31, 2011			March 31, 2010
	(in thousands)					(in thousands)
Revenues	$	1,571		$	2,521	$	5,000		$	7,228

Pre-tax income (loss) from operations of blending and packaging business		(217	)		184		(569	)		614

Pre-tax loss for impairment of blending and packaging assets:
Goodwill		(1,349	)		—		(1,349	)		—
Intangibles, net		(356	)		—		(356	)		—
Fixed assets		(668	)		—		(668	)		—
Other write offs/accruals		(76	)		—		(76	)		—

		(2,449	)		—		(2,449	)		—

Pre-tax income (loss) from discontinued operations		(2,666	)		184		(3,018	)		614
Tax (benefit) provision		(978	)		76		(1,096	)		206

Income (loss) from discontinued operations	$	(1,688	)	$	108	$	(1,922	)	$	408

Assets and liabilities of the discontinued operations were as follows:


	March 31, 2011		June 30, 2010
ASSETS
Accounts Receivable, net	$	499	$	261
Inventory, net		492		602
Pre-paid		—		88
Other		30		30

Current Assets of discontinued operations		1,021		981

Long Term Assets of discontinued operations		—		2,475
Assets of discontinued operations	$	1,021	$	3,456


LIABILITIES
Accounts Payable	$	880	$	550
Customer Deposits		9		8
Other		110		80
Deferred Taxes		215		215

Liabilities of discontinued operations	$	1,214	$	853

Note 4 — Long Term Debt:


	March 31, 2011				June 30, 2010
	Current		Long-Term		Current		Long-Term
	(in thousands)				(in thousands)
Revolving Credit Facility due November 21, 2011, interest rate one-month LIBOR rate 0.25% plus 4.50% (a)	$	13,700	$	—	$	—	$	12,100
Revolving Credit Facility due November 21, 2011, interest rate one-month LIBOR rate 0.87% plus 4.50% (a)		2,126		—		—		1,834
Subordinated promissory note due June 30, 2015, interest rate one year LIBOR rate 1.2% plus 4.50% (b)		389		2,132		389		2,132

	$	16,215	$	2,132	$	389	$	16,066


(a)		The Company’s primary source of external financing is its Credit Agreement, as amended, with certain Lenders (the “Lenders”) and Bank of America (“BofA”), as Agent for the Lenders (the “Credit Agreement”), which has a term that ends on November 21, 2011. The borrowings under the Credit Agreement are secured in the U.S. by a pledge of substantially all of the Company’s domestic assets and in Europe by a pledge of the Company’s European assets and the stock of the Company’s European subsidiaries and certain of the Company’s Asian subsidiaries.

On September 28 and 29, 2010, the Company entered into Amendments #8 and #9 to the Credit Agreement (“Amendment #8” and “Amendment #9”, respectively) with the Lender and BofA, as agent for the Lenders. Under the terms of Amendment #8, the total commitment under the Credit Agreement was reduced from $25 million to $20 million, certain adjustments were made to the interest payment provisions and the Company issued to the Lenders warrants with a term of 10 years to purchase a total of 352,671 shares of common stock in the Company for $0.01 per share (the “September Warrants”). The September Warrants contain a put provision that enables the holders after September 28, 2012 to request a cash settlement of the then fair market value of the September Warrants in an amount not to exceed $1.50 per share. Amendment #8 sets new covenants for currency adjusted net sales, establishes minimum EBITDA levels and sets a limit on capital expenditures for the fiscal year ended June 30, 2011. Under the terms of Amendment #9, the definition of EBITDA was revised.

The Company incurred costs of approximately $689 ($220 in cash, $469 associated with the September Warrants) associated with Amendment #8. Certain of these costs, together with certain legacy deferred financing costs, were required to be charged to expense, and the Company recorded a charge of approximately $118 during the first quarter of fiscal year 2011. The balance of these costs, together with the remaining legacy deferred financing costs, aggregating approximately $1,162, will be amortized over the remaining term of the facility under the Credit Agreement, as amended.

The September Warrants were valued based on the Company’s stock price at September 28, 2010 and are presented as a liability under other long-term liabilities. The value of the September Warrants is marked to market at the end of each reporting period and the change in value will be recorded as interest expense. During the three and nine months ended March 31, 2011, the value of the September Warrants was increased by $60 and $88, respectively.

On May 16, 2011, the Company entered into Waiver and Amendment No. 10 to the Credit Agreement (“Amendment No. 10”) with Bank of America. Amendment No. 10 provided for a waiver by the lenders of the Company’s failure to meet the minimum EBITDA covenant for the period ended March 31, 2011 and the Currency Adjusted Net Sales covenant for the three consecutive months ended April 2011. Under the terms of Amendment No. 10, the Company provided the lenders Warrants (the “May Warrants”) with a term of ten years to purchase 372,374 shares of the Company’s Class A common stock in the Company for $0.01 per share. The May Warrants also contain a put provision that enables the Holder after May 16, 2013 to request a cash settlement equal to the fair market value of the Warrants in an amount not to exceed $1.50 per share. Amendment No. 10 also sets new covenants for Currency Adjusted Net Sales, establishes minimum EBITDA levels, adjusts


interest rate provisions, approves the disposition of the assets of the Company’s food blends discontinued operations and establishes certain milestones regarding refinancing the amounts owed under the Credit Agreement.

The Company incurred cost of approximately $777 ($222 in cash and $555 associated with aforementioned issuance of Warrants) for the Amendment No. 10. These costs, together with legacy deferred financing costs, aggregating approximately $1,344 will be amortized over the remaining term of the amended Credit Agreement.

The May Warrants will be presented as a liability under other long-term liabilities. The value of the May Warrants will mark to market at the end of each reporting period and the change in value will be recorded as interest expense.

The Company currently believes that its cash flows from operations, along with its available bank lines of credit, are sufficient to finance its working capital and other capital requirements through the term of the Credit Agreement. The facility under the Credit Agreement (the “Credit Facility”) matures November 21, 2011, and the Company may be unable to renew or replace this financing. The Company has begun discussions regarding renewal of its Credit Facility and anticipates finalizing a renewal or replacement of the Credit Agreement, although there are no assurances that any such agreement will be completed by the loan maturity date.

(b)		$2,521 five year subordinated promissory note with principal and interest payments due and payable in five annual installments.

The Company maintains relationships with both foreign and domestic banks, which combined have extended short and long-term credit facilities to the Company totaling $29,617. As of March 31, 2011, the Company had $22,946 outstanding under these credit facilities (including Letters of Credit). The amount available under these credit facilities at March 31, 2011 was $3,471.

Note 5 — Net income (loss) per share:

Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share reflects the potential dilution by securities that would share in the earnings of an entity.

Due to the losses incurred during the three and nine months ended March 31, 2011, the denominator in the diluted earnings per share calculations does not include the effects of options or warrants as it would result in a less dilutive computation. As a result, for the three and nine months ended March 31, 2011, outstanding options and warrants to purchase 2,071,000 shares, of the Company’s common stock are not included in the calculation to compute diluted net income per share.

The weighted average shares outstanding used to compute diluted net income (loss) per share includes potentially dilutive shares of 36,000 and 47,000, respectively, for the three and nine months ended March 31, 2010. Outstanding options to purchase, 1,010,000 shares of the Company’s common stock for the three and nine months ended March 31, 2010, are not included in the calculations for period ended March 31, 2010 to compute diluted net income per share, as their exercise prices exceeded market value.

Note 6 — Accumulated Other Comprehensive Income (Loss):

Accumulated Other Comprehensive Income (Loss) (“AOCI”) is comprised of various items which affect equity that result from recognized transactions and other economic events other than transactions with owners in their capacity as owners. AOCI is included in stockholders’ equity in the consolidated balance sheets. AOCI consists of the following:


	March 31, 2011			June 30, 2010
	(in thousands)
Cumulative translation adjustments	$	6,978		$	1,484
Unrealized (loss) on investments, net of tax benefit of $135 (benefit of $121 at June 30, 2010)		(186	)		(166	)
Pension and other, net of tax benefit of $592 (benefit of $768 at June 30, 2010)		(753	)		(993	)

	$	6,039		$	325

Note 7 — Inventories:

Inventories consist of the following:


	March 31, 2011		June 30, 2010
	(in thousands)
Raw materials	$	13,020	$	10,972
In process		5,585		4,528
Finished goods		4,886		4,737

	$	23,491	$	20,237

Foreign currency translation effects increased inventories by $2,554 from June 30, 2010 to March 31, 2011.

Note 8 — Goodwill and Other Intangible Assets:

The changes in the carrying amount of goodwill for the nine months ended March 31, 2011 were as follows:


	Gross Carrying		Accumulated		Net
	Amount		Amortization		Book Value
	(in thousands)
Balance as of June 30, 2010	$	20,178	$	1,425	$	18,753
Effects of currency translation		1,113		149		964

Balance as of March 31, 2011	$	21,291	$	1,574	$	19,717

Intangible assets subject to amortization were comprised of the following:


			As of March 31, 2011				As of June 30, 2010
			Gross				Gross
	Amortization		Carrying		Accumulated		Carrying		Accumulated
Intangible Assets:	Period		Amount		Amortization		Amount		Amortization
			(in thousands)				(in thousands)
Patents and trademarks		12-20	$	11,836	$	7,722	$	11,372	$	7,155
Customer relationships		2-13		583		120		538		58
Trademarks		30		1,522		221		1,368		163
Existing product technology		15		6,260		1,522		5,605		1,135
Non-compete/solicitation agreements		5		99		83		59		41
Other		5-30		2,325		2,134		2,165		1,848

Total			$	22,625	$	11,802	$	21,107	$	10,400

Amortization expense associated with these intangible assets was $344 and $1,043, respectively, for the three and nine months ended March 31, 2011 and $302 and $918, respectively, for the three and nine months ended March 31, 2010.

Note 9 — Supplemental Compensation:

The following table sets forth the components of net periodic benefit costs for the Company’s defined benefit plans for the three and nine months ended March 31, 2011 and 2010:


	Pension Benefits						Pension Benefits
	For the three months						For the nine months
	ended March 31,						ended March 31,
	2011			2010			2011			2010
				(in thousands)
Service cost	$	100		$	100		$	300		$	300
Interest cost		79			84			237			252
Expected return on plan assets		(7	)		(4	)		(21	)		(12	)
Amortization of net actuarial gain		18			(3	)		54			(9	)

Net periodic benefit cost	$	190		$	177		$	570		$	531

During the three and nine months ended March 31, 2011, respectively, the Company made contributions to the plans of $202 and $424. During the three and nine months ended March 31, 2010, respectively, the Company made contributions to the plans of $112 and $282.

Note 10 — Customers:

During each of the three and nine months ended March 31, 2011, one customer accounted for more than 10% of the Company’s net sales. Koenig and Bauer Aktiengesellschaft (“KBA”) accounted for approximately 12% and 13% of the Company’s net sales, respectively. During the three months ended March 31, 2010, no one customer accounted for more than 10% of the Company’s net sales. During the nine months ended March 31, 2010, one customer accounted for more than 10% of the Company’s net sales. KBA accounted for approximately 13% of the Company’s net sales for the nine months ended March 31, 2010.

Note 11 — Warranty Costs:

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


	Warranty Amount
	2011			2010
	(in thousands)
Warranty reserve at June 30	$	1,999		$	2,626
Additional warranty expense accruals		1,693			1,928
Payments against reserve		(1,722	)		(2,319	)
Effects of currency rate fluctuations		321			60

Warranty reserve at March 31	$	2,291		$	2,295

Note 12 — Share Based Payments:

Total share-based compensation for the three and nine months ended March 31, 2011 and 2010 are summarized in the following table:


	For the three months				For the nine months
	ended March 31,				ended March 31,
	2011		2010		2011		2010
	(in thousands)
Share based compensation
Stock options	$	46	$	52	$	475	$	154
Restricted stock		21		157		93		503
Performance shares (a)		—		—		—		—

Total share-based compensation	$	67	$	209	$	568	$	657


(a)		No compensation expense was recorded in any period presented related to performance shares, based on assessment of probability of achievement.

During the quarter ended September 30, 2010, the Company entered into an advisory agreement (the “Advisory Agreement”) with OBX Partners LLC (“OBX”), under which OBX acted as a financial advisor and strategic consultant. As part of the consideration for the services rendered, the Company granted to OBX an option (the “OBX Option”) to purchase 300,000 shares of the Company’s Class A Common Stock (the “Shares”) at an exercise price per share of $1.26, exercisable on or after October 1, 2011. The Option would have terminated on November 16, 2010 if OBX had not substantially completed the engagement, which OBX completed during the second quarter. If not previously exercised, the OBX Option shall terminate on September 30, 2020. The fair value of the OBX Option on the date of grant was $167. The Company recomputed the fair value of the OBX Option as of December 31, 2010 (the measurement date) and recorded an adjustment to the fair value of $31, resulting in a fair value of $198 at December 31, 2010.

In order to induce Mark Becker, President and Chief Executive Officer of the Company, to enter into an employment agreement with the Company, the Company granted, effective October 1, 2010, to Mr. Becker the following options:

(i) An option to purchase 200,000 shares of Class A Common Stock of the Company, at an exercise price of $1.20 per share, pursuant to the Company’s 2005 Equity Compensation Plan (the “Plan Option”). The Plan Option vested and became exercisable on October 1, 2010. The Plan Option shall expire, if not sooner exercised, as of the close of business on September 30, 2020.

(ii) An option to purchase 200,000 shares of Class A Common Stock of the Company, at an exercise price of $1.20 per share (the “Non-Plan Option”). The Non-Plan Option shall vest and become exercisable on October 1, 2011.

The aggregate fair value of the Plan Option and the Non-Plan Option on the date of grant was $220.

Effective November 18, 2010, the Company granted to each non-employee director of the Company (i) either a Restricted Stock Award or a Restricted Stock Unit with respect to 9,524 shares (a total of 57,144 shares for all non-employee directors) of the Company’s Class A Common Stock, the restrictions on which will lapse on November 18, 2011, having an aggregate grant date fair value of $72 and (ii) a non-qualified option (a “Non-Employee Director Option”) to purchase 9,524 shares (a total of 57,144 shares for all non-employee directors) of the Company’s Class A Common Stock, which shall vest

in three equal annual installments commencing on the second anniversary of the date of grant, having an aggregate grant date fair value of $34.

Effective February 17, 2011 the Company granted options to Purchase 165,000 Shares of Class A common stock to certain officers of the Company, at an exercise Price of $1.52 per share and aggregate fair value of $121, which shall vest in three equal annual installments commencing on the second anniversary of the grant.

Note 13 — Restructuring:

Quarter 3 FY 2009 Plan:

In January and March 2009, the Company committed to the principal features of plans to restructure some of its existing operations. These plans included the consolidation of production facilities in Germany, as well as employment reductions in Germany, Sweden, Italy and the U.S. The actions were taken in response to sustained weak market conditions. Actions under the plan commenced during the Company’s third quarter of Fiscal 2009; and the Company substantially completed the actions by June 30, 2009. Nearly all the costs associated with the plans are cash costs, payment of which will continue through Fiscal 2011.


			Payments			Balance at		Payments			Balance at
	Initial		against			June 30,		against			March 31,
	Reserve		Reserve			2010		Reserve			2011
	(in thousands)
Restructuring costs:
Employee termination costs	$	3,836	$	(3,570	)	$	266	$	(160	)	$	106
Other		230		(101	)		129		—			129

Total restructuring costs	$	4,066	$	(3,671	)	$	395	$	(160	)	$	235

Quarter 4 FY 2010 Plan:

In June 2010, the Company committed to the principal features of a plan to additionally restructure its operation in Germany. Actions under the plan commenced and were completed by June 30, 2010. All costs associated with the plan are cash payments related to employee reductions.


			Payments			Balance at		Payments			Balance at
	Initial		against			June 30,		against			March 31,
	Reserve		Reserve			2010		Reserve			2011
	(in thousands)
Restructuring costs:
Employee termination costs	$	540	$	(38	)	$	502	$	(301	)	$	201

Total restructuring costs	$	540	$	(38	)	$	502	$	(301	)	$	201

Quarter 1 FY 2011 Plan:

In September 2010 the Company committed to the principle features of a plan to restructure its operations in the UK and Japan. Actions under the plan to consolidate facilities in the UK and to reduce employment levels in Japan commenced in September and were concluded in the UK. Additional actions continued in Japan through the second quarter of Fiscal 2011. Costs associated with the current plan are primarily cash payments related to employee reductions. Payments will continue through the fiscal year.


			Payments			Balance at
	Initial		against			March 31,
	Reserve		Reserve			2011
	(in thousands)
Restructuring costs:
Employee termination costs	$	145	$	(140	)	$	5
Other		47		—			47

Total restructuring costs	$	192	$	(140	)	$	52

Quarter 2 FY 2011 Plan:

In December 2010 the Company committed to the principle features of a plan to restructure its operations in Japan, Germany and the U.S. Actions under the plan to reduce employment levels commenced in December. Costs associated with the current plan are primarily cash payments related to employee reductions. Payments will continue through the fiscal year.


			Payments			Balance at
	Initial		against			March 31,
	Reserve		Reserve			2011
	(in thousands)
Restructuring costs:
Employee termination costs	$	455	$	(170	)	$	285
Other		—		—			—

Total restructuring costs	$	455	$	(170	)	$	285

Quarter 3 FY 2011 Plan:

In March 2011 the Company committed to the principle features of a plan to further restructure its operations in Japan, Germany, the U.K. and Sweden. Actions under the plan primarily relate to reduction in employment levels, consolidation of facilities and fixed asset write-downs. Costs associated with the current plan are primarily cash payments related to employee reductions. Payments will continue through the fiscal year.


			Payments			Balance at
	Initial		against			March 31,
	Reserve		Reserve			2011
	(in thousands)
Restructuring costs:
Employee termination costs	$	1,583	$	(719	)	$	864
Other		531		—			531

Total restructuring costs	$	2,114	$	(719	)	$	1,395

Note 14 — Legal Proceedings:

Baldwin is involved in various legal proceedings from time to time, including actions with respect to commercial, intellectual property and employment matters. The Company believes that it has meritorious defenses against the claims currently asserted against it and intends to defend them vigorously. However, the outcome of litigation is inherently uncertain, and the Company cannot be sure that it will prevail in any of the cases currently in litigation. The Company believes that the ultimate outcome of any such cases will not have a material adverse effect on its results of operations, financial position or cash flows; however, there can be no assurances that an adverse determination would not have a material adverse effect on the Company.

On September 24, 2009, the Company and technotrans AG (“technotrans”) agreed to an out-of-court settlement to terminate all proceedings that had continued for a number of years in connection with the infringement of a Baldwin patent. Under the agreement, technotrans paid to the Company Euro 6.5 million (approximately $9.6 million) and the Company agreed to dismiss its claim for damages.

Note 15 — Income Taxes:

The Company’s effective tax rate is impacted by several factors including but not limited to (i) having significant operations outside the United States, which are taxed at rates different than the U.S. statutory rate, (ii) no tax benefit being recognized for losses incurred in certain countries as the realization of such benefits is not more likely than not, (iii) certain foreign and domestic permanent items, and (iv) adjustments to the Company’s valuation allowances and FIN 48 reserve.

Note 16 — Fair Value Measurements:

ASC Topic 820, Fair Value Measurements and Disclosures, requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs consist of market data obtained from independent sources while unobservable inputs reflect the Company’s own market assumptions. These inputs create the following fair value hierarchy:

	•		Level 1 — Quoted prices in active markets for identical assets or liabilities

	•		Level 2 — Valuations based on quoted prices in markets that are not active, quoted prices for similar assets or liabilities or all other inputs that are observable

	•		Level 3 — Unobservable inputs for which there is little or no market data which require the Company to develop its own assumptions

If the inputs used to measure the fair value of a financial instrument fall within different levels of the hierarchy, the financial instrument is categorized based upon the lowest level input that is significant to the fair value measurement.

Whenever possible, the Company uses quoted market prices to determine fair value. In the absence of quoted market prices, the Company uses independent sources and data to determine fair value.

At March 31, 2011, the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis, consistent with the fair value hierarchy provision and valued as Level 1 are comprised of marketable securities and warrants. At March 31, 2011, the Company did not have any assets

or liabilities at fair value on a recurring basis using significant unobservable inputs (Level 3) in the Consolidated Financial Statements.

There has been no change in the Company’s valuation technique during the quarter ended March 31, 2011.

Note 17 — Subsequent Event:

On May 16, 2011, the Company entered into Waiver and Amendment No. 10 to the Credit Agreement (“Amendment No. 10”) with Bank of America. Amendment No. 10 provided for a waiver by the lenders of the Company’s for failure to meet the applicable minimum EBITDA and Currency Adjusted Net Sales for certain reporting periods. Under the terms of Amendment No. 10, the Company provided the lenders warrants with a term of ten years to purchase 372,374 shares of the Company’s Class A common stock in the Company for $0.01 per share. The May Warrants also contain a put provision that enables the holder after May 16, 2013 to request a cash settlement equal to the fair market value of the Warrants in an amount not to exceed $1.50 per share. Amendment No. 10 set new covenants for Currency Adjusted Net Sales, establishes minimum EBITDA levels, adjusts interest rate provisions, approves the disposition of the assets of the food blends discontinued operations and establishes certain milestones regarding refinancing the amounts owed under the Credit Agreement.


ITEM 2:		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (IN THOUSANDS)

The following is management’s discussion and analysis of certain factors, which have affected the consolidated financial statements of Baldwin.

Forward-looking Statements

Except for the historical information contained herein, certain statements contained herein are based on current expectations. Similarly, the press releases issued by the Company and other public statements made by the Company from time to time may contain language that is forward-looking. These forward-looking statements may be identified by the use of forward-looking words or phrases such as “forecast,” “believe,” “expect,” “intend,” “anticipate,” “should,” “plan,” “estimate,” and “potential,” among others. Such statements are forward-looking statements that involve a number of risks and uncertainties. The Company cautions investors that any such forward-looking statements made by the Company are not guarantees of future performance, and that actual results may differ materially from those in the forward-looking statements. Some of the factors that could cause actual results to differ materially include, but are not limited to the following: (i) the ability of the Company to comply with requirements of credit agreements; the availability of funding under said agreements; and the ability of the Company to maintain adequate liquidity in declining and challenging economic conditions impacting the Company as well as customers, (ii) general economic conditions, either in the U.S. or foreign countries, (iii) the ability of the Company to obtain, maintain and defend challenges against valid patent protection on certain technology, primarily as it relates to the Company’s cleaning systems and other products, (iv) material changes in foreign currency exchange rates versus the U.S. Dollar, (v) changes in the Company’s mix of products and services comprising revenues, (vi) a decline in the rate of growth of the installed base of printing press units and the timing of new press orders, (vii) the ultimate realization of certain trade receivables and the status of ongoing business levels with the Company’s large OEM customers, and (viii) competitive market influences. Additional factors are set forth in Item 1A “Risk Factors” in the Company’s Annual Report or Form 10-K as amended for the fiscal year ended June 30, 2010, which should be read in conjunction herewith.

Critical Accounting Policies and Estimates

For further information regarding the Company’s critical accounting policies, please refer to the Management’s Discussion and Analysis section of the Company’s Annual Report on Form 10-K as amended for the fiscal year ended June 30, 2010. There have been no material changes during the nine months ended March 31, 2011, other than the adoption of ASC update No. 2009-13 “Revenue Recognition Topic 605: Multiple Deliverable Revenue Arrangements” discussed in Note 2.

Overview

Baldwin Technology Company, Inc. is a leading global supplier of print automation equipment and related parts and consumables for the printing and publishing industries. Baldwin offers its customers a broad range of market-leading technologies, products and systems that enhance the quality of printed products and improve the economic and environmental efficiency of printing presses. Headquartered in Shelton, CT, the Company has sales and service centers and product development and production facilities in the Americas, Asia and Europe. Baldwin’s technology and products include cleaning systems and related consumables, fluid management and ink control systems, web press protection systems and drying systems.

The Company manages its business as one reportable business segment built around its core competency in process automation and related consumables.

The market for printing equipment continues to face significant challenges. These challenges have translated into a lower level of business activity for the Company.

During the quarter ended March 31, 2011 the Company classified its non-core blending and packaging business as a discontinued operation. The following highlights and ensuing discussion relate to the continuing operations.

Highlights for Three and Nine Months Ended March 31, 2011

	•		Revenues, as reported, decreased 1% and increased 9% for the three and nine months ended March 31, 2011, respectively, versus the year ago comparable periods.

	•		Backlog of $38,919 at March 31, 2011, increased 15% compared to June 30, 2010.

	•		For the three and nine month periods ended March 31, 2011, order intake was up 19% and 22%, respectively, versus the comparable year ago periods.

	•		On June 30, 2010 the Company successfully completed the acquisition of Nordson UV, (“UV”), a manufacturer of ultraviolet curing systems, lamps and parts. Operating results of the acquired entities are included in the results of operations from the date of acquisition.

	•		In September 2010, the Company concluded an amendment to its Credit Agreement with its lenders covering the period through November 21, 2011, the end of the term of the Agreement.

	•		On May 16, 2011, the Company entered into Waiver and Amendment No. 10 to its Credit Agreement with its lenders, covering the period through November 21, 2011, the end of the term of the Agreement.

See discussion below related to the Company’s consolidated results of operations, liquidity and capital resources from continuing operation.

Three Months Ended March 31, 2011 vs. Three Months Ended March 31, 2010

Consolidated Results

Net Sales

Net sales for the three months ended March 31, 2011, decreased by $534, or 1%, to $36,443 from $36,977 for the three months ended March 31, 2010. Currency rate changes attributable to the Company’s

overseas operations increased recorded net sales by $1,142 in the current period. The UV business acquisition contributed net sales of approximately $3,585 during the quarter ended March 31, 2011.

Net sales reflects decreased sales in Europe of $833, including $289 of favorable effects from exchange rate fluctuations. The decrease was attributable to the continued weakening of global demand for the Company’s equipment reflecting reduced order and sales activity for new printing equipment partially offset by the additional revenue from the UV business.

In Asia, net sales decreased $2,622, including $854 of favorable effects from exchange rate fluctuations. The decrease reflects lower shipments of cleaning and spray dampening equipment to the newspaper markets, particularly in Japan.

Net Sales in the Americas increased $2,921 primarily reflecting additional sales of products acquired in the UV business acquisition coupled with improved equipment sales.

Gross Profit

Gross profit for the three months ended March 31, 2011 was $10,471 (28.7% of net sales) compared to $11,255 (30.4% of net sales) for the three months ended March 31, 2010, a decrease of $784.

The decrease reflects continued pricing pressure from OEM and end users and unfavorable overhead absorption related to reduced equipment volumes. Partially offsetting these decreases were the additional sales volume and higher gross margin associated with the UV business. Currency rate fluctuations favorably increased gross profit $455 in the current period.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses (SG&A) was $8,296 (23% of net sales) for the three months ended March 31, 2011, compared to $7,340 (20% of net sales) for the same period in the prior fiscal year, an increase of $956 or 13%. Currency rate fluctuations increased these expenses by $144 in the current period. The increase primarily reflects additional G&A expenses associated with the UV business of $332. Selling expenses increased $234. Currency rate fluctuations increased these expenses by $151 in the current period. The increase primarily reflects additional selling expenses associated with the UV business of $346.

Engineering and Development Expenses

Engineering and development expenses were $3,624 (10% of net sales) for the three months ended March 31, 2011, compared to $3,401 (9.0% of net sales) for the same period of the prior fiscal year, an increase of $223. Currency rate fluctuations of $121 increased engineering and development expenses. The increase primarily reflects additional expenses associated with the UV business of $167.

Restructuring

The Company recorded $2,114 of restructuring costs during the three months ended March 31, 2011 versus $0 in the comparable prior year period. The restructuring plan is designed to achieve operational efficiencies in Germany, Japan and Sweden and consists of employee terminations, consolidation of facilities and fixed asset write downs.

Interest and Other

Interest expense, net, for the three months ended March 31, 2011 was $656 compared to $426 for the three months ended March 31, 2010. The increase reflects higher debt levels and interest rates.

Other income (expense), net, amounted to expense of $50 for the three months ended March 31, 2011 compared to expense of $66 for the three months ended March 31, 2010. Other income (expense), net, for the three months ended March 31, 2011 and 2010, respectively, primarily reflects net foreign currency transaction losses.

Income Taxes

The Company recorded an income tax benefit of $1,392 on a loss before tax of $4,269 (effective rate of 32.6%) for the three months ended March 31, 2011, compared to a tax benefit of $4 for the three months ended March 31, 2010 on income before tax of $21. The effective tax rate for the three months ended March 31, 2011 and March 31, 2010 differs from the statutory rate and reflects a) foreign income taxed at rates different than the U.S. statutory rate, (b) no benefits being recognized for losses incurred in certain countries, as the realization of such benefits is not more likely than not, (c) the impact of foreign and domestic permanent items.

Income (loss) from continuing operations

The Company’s loss from continuing operations amounted to $2,877 for the three months ended March 31, 2011, compared to a net income of $25 for the three months ended March 31, 2010. Loss per share from continuing operations amounted to $0.18 basic and diluted for the three months ended March 31, 2011, compared to loss per share of $0.00 basic and diluted for the three months ended March 31, 2010.

Nine Months Ended March 31, 2011 vs. Nine Months Ended March 31, 2010

Consolidated Results

Net Sales

Net sales for the nine months ended March 31, 2011 increased $10,510, or 10%, to $117,705 from $107,195 for the nine months ended March 31, 2010. Currency rate fluctuations attributable to the Company’s overseas operations increased net sales by $989 for the current period. The UV business acquisition contributed net sales of approximately $13,242 during the nine months ended March 31, 2011.

The net sales increase reflects higher sales in Europe of $327, including $1,786 of unfavorable effects from exchange rate fluctuations. The increase in net sales primarily reflects the additional revenue associated with the UV business acquisition partially offset by lower sales activity by OEM press manufacturers, primarily in Germany and Sweden, for new printing equipment and lower level demand from end user customers.

In Asia, net sales increased approximately $3,760, including $2,775 of favorable effects from exchange rate fluctuations. The increase in net sales reflects the impact of UV shipments and other increases of products sold in China and India, and delivery of several large newspaper equipment projects in Japan.

Net sales in the Americas increased $6,423, primarily reflecting additional sales from the UV business acquisition.

Gross Profit

Gross profit for the nine months ended March 31, 2011 was $35,454 (30.1% of net sales) compared to $32,285 (30.1% of net sales) for the nine months ended March 31, 2010, an increase of $3,169

Currency rate fluctuations had virtually no impact on gross profit in the current period. The increase in gross profit primarily relates to the additional sales volume and higher gross margins associated with the UV business. Partially offsetting these increases were continued pricing pressure from OEM and end users and unfavorable overhead absorption related to reduced volumes.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A) amounted to $26,338 (22.4% of net sales) for the nine months ended March 31, 2011 compared to $23,730 (22.1% of net sales) for the same period in the prior fiscal year, an increase of $2,608 or 11%. Currency rate fluctuations increased SG&A $353 during the nine month period. G&A expenses increased $1,393. The increase primarily reflects additional G&A expenses associated with the UV business of $1,076 and costs associated with the termination agreement with the Company’s former CEO and CFO and other professional fees. Partially offsetting these increases were lower professional fees of $900 incurred in fiscal year 2010 related to an investigation into internal control matters. Selling expenses increased $862. The increase primarily reflects additional selling expenses associated with the UV business of $1,072.

Engineering and Development Expenses

Engineering and development expenses amounted to $10,722 (9% of net sales) for the nine months ended March 31, 2011, compared to $9,976 (9.3% of net sales) for the same period in the prior fiscal year, an increase of $746 or 7%. Currency rate fluctuations had virtually no impact on expenses in the current period. The increase primarily reflects additional expenses associated with the UV business of $498.

Restructuring

The Company recorded $2,722 of restructuring costs during the nine months ended March 31, 2011 versus $0 in the comparable prior year period. The restructuring plan is designed to achieve operational efficiencies in Germany, Japan and Sweden and consists of employee terminations, consolidation of facilities and fixed asset write downs.

Legal Settlement

During the nine months ended March 31, 2010, the Company recorded a net gain on the settlement of a patent infringement lawsuit of $9,266.

Interest and Other

Interest expense, net, for the nine months ended March 31, 2011 was $1,691 compared to $2,626 for the nine months ended March 31, 2010. During the quarter ended September 30, 2010, the Company concluded an amendment to its credit agreement with its Lenders. Legacy deferred financing costs totaling approximately $118 were charged to interest expense during the quarter ended September 30, 2010. During the quarter ended September 30, 2009, the Company concluded an amendment to its credit agreement with its Lenders. Certain costs associated with the amendment, together with legacy deferred financing costs totaling approximately $1,183, were charged to expense during the quarter ended September 30, 2009. After giving effect to these expenses and the decrease from currency of $50, interest expense increased $130.

Other (income) expense, net was an expense of $197 for the nine months ended March 31, 2011 compared to expense of $267 for the nine months ended March 31, 2010 and is primarily comprised of net foreign currency transaction losses.

Income Taxes

The Company recorded an income tax benefit of $2,740, for the nine months ended March 31, 2011, compared to a provision of $1,745, for the nine months ended March 31, 2010. The effective tax rate for fiscal 2011 of 44.1% differs from the U.S. statutory rate and reflects a) foreign income taxed at rates different than the U.S. statutory rate, (b) no benefits being recognized for losses incurred in certain countries, as the realization of such benefits is not more likely than not, (c) the impact of foreign and domestic permanent items, and (d) reversal of previously recorded reserves associated with unrecognized tax benefits (FIN 48 “Liabilities”) upon finalization of a German tax audit for years 2000-2004, of $777 and a reversal of a valuation allowance in the U.K.

The effective tax rate for fiscal 2010, differs from the statutory rate and reflect (a) foreign income taxed at rates different than the U.S. statutory rate, (b) no benefits recognized for losses incurred in certain countries, as the realization of such benefits is not more likely than not, and (c) the impact of foreign and domestic permanent items.

The Company continues to assess the need for its deferred tax asset valuation allowance in the jurisdictions in which it operates. Any adjustments to the deferred tax asset valuation allowance, either positive or negative, would be recorded in the statement of operations for the period that the adjustment was determined to be required.

Net Income (Loss) from continuing operations

The Company’s net loss was $3,476 for the nine months ended March 31, 2011, compared to income of $3,207 for the nine months ended March 31, 2010. Net loss per share amounted to $0.22 basic and diluted for the nine months ended March 31, 2011, compared to net income per share of $0.21 basic and diluted for the nine months ended March 31, 2010.

Discontinued Operations three and nine months ended March 31, 2011 and 2010:

During the quarter ended March 31, 2011 the Company announced its decision to discontinue its non-core food blending and packaging business. As a result of this decision and having met the criteria to be reported as a discontinued operation, the assets, liabilities, results of operation and cash flows of the food blending and packaging business are classified as discontinued operations for all periods presented.

Revenues net income (loss) of the food blending and packaging business included in discontinued operations are as follows:


	Three Months Ended					Nine Months Ended
	March 31, 2010			March 31, 2011		March 31, 2011			March 31, 2010
	(in thousands)					(in thousands)
Revenues	$	1,571		$	2,521	$	5,000		$	7,228

Pre-tax income (loss) from operations of blending and packaging business		(217	)		184		(569	)		614

Pre-tax loss for impairment of blending and packaging assets:
Goodwill		(1,349	)		—		(1,349	)		—
Intangibles, net		(356	)		—		(356	)		—
Fixed assets		(668	)		—		(668	)		—
Other write offs/accruals		(76	)		—		(76	)		—

		(2,449	)		—		(2,449	)		—

Pre-tax income (loss) from discontinued operations		(2,666	)		184		(3,018	)		614
Tax (benefit) provision		(978	)		76		(1,096	)		206

Income (loss) from discontinued operations	$	(1,688	)	$	108	$	(1,922	)	$	408

Non-GAAP Financial Measures

Consolidated EBITDA and adjusted EBITDA are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. These non-GAAP measures are provided because management of the Company uses these financial measures as indicators of business performance in maintaining and evaluating the Company’s on-going financial results and trends. The Company believes that both management and investors benefit from referring to these non-GAAP measures in assessing the performance of the Company’s ongoing operations and liquidity and when planning and forecasting future periods. These non-GAAP measures also facilitate management’s internal comparisons to the Company’s historical operating results and liquidity. The following is a reconciliation of the net income (loss) as reported to EBITDA from continuing operations.


	For the three months					For the nine months
	ended March 31,					ended March 31,
	2011			2010		2011			2010
	(in thousands)					(in thousands)
Net income (loss) as reported	$	(2,877	)	$	25	$	(3,476	)	$	3,208
(Benefit) provision for income taxes		(1,392	)		4		(2,740	)		1,745
Interest expense, net		656			426		1,691			2,626
Depreciation and amortization		596			594		1,944			1,799

EBITDA	$	(3,017	)	$	1,049	$	(2,581	)	$	9,378

Expenses related to inventory step up		—			—		243			—
Expenses related to Pres/CEO termination		—			—		878			—
Restructuring		2,114			—		2,722			—

Legal settlement gain		—			—		—			(9,266	)
Internal control investigation costs		—			—		—			911

Adjusted EBITDA	$	(903	)	$	1,049	$	1,262		$	1,023

Liquidity and Capital Resources at March 31, 2011

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


	2011			2010
Cash provided by (used for):
Operating activities	$	(4,802	)	$	7,965
Investing activities		(448	)		(425	)
Financing activities		2,663			(10,690	)
Effect of exchange rate changes on cash		925			204

Decrease in cash from continuing operations		(1,662	)		(2,946	)

Net cash provided (used) by discontinued operations		(110	)		902

Net increase (decrease) in cash and cash equivalents	$	(1,772	)	$	(2,044	)

Cash from continuing operations from operating activities decreased $12,767 during the nine months ended March 31, 2011 versus the comparable prior year period. This decrease primarily reflects receipt of the proceeds from the legal settlement with a German competitor in fiscal year 2010 of $9,560. In addition, cash from operating activities was negatively impacted by lower accounts and notes receivable, increased inventory in anticipation of higher shipments and tax payments associated with the legal settlement. Partially offsetting these negative impacts were increased customer deposits and timing of payments on accounts and notes payable.

Cash utilized for investing during the nine months ending March 31, 2011 and 2010 includes additions to property, plant and equipment and patents and trademarks of $448 and $425, respectively.

Cash flow from financing activities primarily reflects borrowings in fiscal year 2011 in excess of payments. On September 28 and 29, 2010, the Company entered into Amendment #8 and #9 to the Credit Agreement (“Amendment #8” and “Amendment #9”, respectively) with its Lenders and BofA as agent for its Lenders (the “Credit Agreement”). Under the terms of Amendment #8, the total commitment under the Credit Agreement was reduced from $25 million to $20 million, certain adjustments were made to the interest payment provisions and the Company issued to the Lenders warrants with a term of 10 years to purchase 352,671 shares of common stock in the Company for $0.01 per share (the “Warrants”). The Warrants also contain a put provision that enables the holders after September 28, 2012 to request a cash settlement of the then fair market value of the Warrants in an amount not to exceed $1.50 per share. Amendment #8 sets new covenants for currency adjusted net sales, establishes minimum EBITDA levels and sets a limit on capital expenditures for the fiscal year ending June 30, 2011. Under the terms of Amendment #9, the definition of EBITDA was revised.

As a result of the required restatements of the Company’s financial results for the periods ended June 30, 2010, September 30, 2010 and December 31, 2010 the Company was not in compliance with the financial covenants contained in its Credit Agreement. Specifically, as a result of the restatement, at June 30, 2010, the Company failed to meet the established June 30, 2010 financial targets for minimum EBITDA and Currency Adjusted Net Sales. Additionally, as a result of the restatement, during the quarter ended September 30, 2010, the Company failed to meet the established target for Currency Adjusted Net Sales for the consecutive three-month periods ended July 31, 2010 and August 30, 2010.

In addition, the Company has reported that it did not meet the minimum EBITDA covenant for the period ended March 31, 2011 and did not meet the Currency Adjusted Net Sales target for the three-month consecutive months ended April 30, 2011.

On May 16, 2011, the Company entered into Waiver and Amendment No. 10 to the Credit Agreement (“Amendment No. 10”) with Bank of America. Amendment No. 10 provided for a waiver by the lenders of the Company’s for failure to meet the applicable minimum EBITDA and Currency Adjusted Net Sales for all periods as noted above. Under the terms of Amendment No. 10, the Company provided the Lenders Warrants with a term of ten years to purchase 372,374 shares of the Company’s Class A common stock in the Company for $0.01 per share. The Warrants also contain a put provision that enables the Holder after May 16, 2013 to request a cash settlement equal to the fair market value of the Warrants in an amount not to exceed $1.50 per share. Amendment No. 10 also sets new covenants for Currency Adjusted Net Sales, establishes minimum EBITDA levels, adjusts interest rate provisions, approves the disposition of the assets of the Company’s food blends discontinued operations and establishes certain milestones regarding refinancing the amounts owed under the Credit Agreement.

The Company incurred cost of approximately $777 ($222 in cash and $555 associated with aforementioned issuance of warrants) for the May 16, 2011 Amendment. These costs, together with legacy deferred financing costs, aggregating approximately $1,344 will be amortized over the remaining term of the amended Agreement.

The warrants will be presented as a liability under other long-term liabilities. The value of the warrants will mark to market at the end of each reporting period and the change in value will be recorded as interest expense.

Cash used by financing activities of $10,690 for the period ended March 31, 2010 primarily reflects the use of the net cash proceeds from the gain on the legal settlement of approximately $7,700 to repay the term loan in accordance with the provisions of the July 31, 2009 Credit Agreement amendment. In addition, cash used for financing activities reflected scheduled term loan payments of approximately $2,183 and payment of debt financing costs $752

During the nine months ended March 31, 2011 the Company announced restructuring initiatives in Japan, Sweden, Germany and the UK. The restructuring plan which is comprised of employee terminations and facilities consolidation is designed to lower the Company’s overall cost structure, optimize operational performance and right size employment levels for current sales levels. The Company has incurred charges for the nine months of $2,760 and anticipates annual savings of approximately $6,600. Cash payments related to all of the Company’s restructuring plans through nine months ended March 31, 2011 amounted to $1,490 and remaining payments of $2,167 will continue through the second quarter of fiscal 2012.

The Company maintains relationships with both foreign and domestic banks, which combined have extended credit facilities to the Company totaling $29,617. As of March 31, 2011, the Company had $22,946 (including letters of credit) outstanding under these Credit Facilities. The amount available under these credit facilities at March 31, 2011 was $3,471.

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

The facility under the Credit Agreement (the “Credit Facility”) matures November 21, 2011, and the Company may be unable to renew or replace this financing. The Company has begun preliminary discussions regarding renewal of its Credit Facility and anticipates finalizing a renewal or replacement of the Credit Agreement, although there are no assurances that such agreement will be completed by the loan maturity date.

At March 31, 2011 and June 30, 2010, the Company did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance entities, special purpose entities or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, the Company is not exposed to any financing, liquidity, market or credit risk that could arise if the Company had engaged in such relationships.

The following summarizes the Company’s contractual obligations at March 31, 2011 and the effect such obligations are expected to have on its liquidity and cash flow in future periods (in thousands):


	Fiscal Years Ending June 30,
	Total at
	March 31,												2016 and
	2011		2011*		2012		2013		2014		2015		thereafter
Contractual obligations:
Loans payable	$	6,010	$	—	$	6,010	$	—	$	—	$	—	$	—
Capital lease obligations		10		9		1		—		—		—		—
Debt		18,347		389		16,268		499		561		630		—
Non-cancelable operating lease obligations		21,452		1,929		5,687		3,659		2,854		2,218		5,105
Purchase commitments (materials)		12,399		9,035		3,278		86		—		—		—
Supplemental compensation		8,516		883		804		1,030		813		613		4,373
Restructuring payments		2,167		782		1,385		—		—		—		—
Interest expense ⁽¹⁾		745		347		198		96		68		36		—

Total contractual cash obligations	$	69,646	$	13,374	$	33,631	$	5,370	$	4,296	$	3,497	$	9,478


*		Includes only the remaining three months of the fiscal year ending June 30, 2011.

⁽¹⁾		the anticipated future interest payments are based on the Company’s current indebtedness and interest rates at March 31, 2011, with consideration given to debt reduction as the result of expected payments.


ITEM 3: Quantitative and Qualitative Disclosures About Market Risk:

A discussion of market risk exposures is included in Part II Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the Company’s Annual Report on Form 10-K as amended for the fiscal year ended June 30, 2010. There have been no material changes during the nine months ended March 31, 2011.


ITEM 4: Controls and Procedures:

Evaluation of Disclosure Controls and Procedures:

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports it files or submits under the Exchange act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to its management, including the Chief Executive officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act, as of the end of the period covered by this Report. Based upon that evaluation, as a result of the restatement of the financial statements, disclosed in the Current Report on Form 8-K dated May 10, 2011, and in the Annual Report on Form 10-K/A and the material weaknesses which are described below, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2011.

Material Weakness Identified in the Company’s operations in Japan. In late February 2011, allegations surfaced that profits had been manipulated at the Company’s Japanese subsidiary. The Audit

Committee of the Board of Directors oversaw an internal investigation consisting of extensive employee interviews and audit procedures to review the allegations. The investigation identified the premature recognition of revenue and related costs primarily during the quarter ended June 30, 2010 as well as the inappropriate deferral and subsequent recognition of expenses during the quarters of 2009 and 2010, which had no impact on full year fiscal 2009 and were not material in 2010. These irregularities occurred as a result of management override and intentional circumvention of established revenue recognition, purchase and expense policies and related internal controls at the Company’s Japanese subsidiary. Specifically, existing policies and controls were violated, as revenue was recorded prior to shipments of goods or completion of installation services and related costs were recorded prior to receipt of materials and components. This intentional circumvention of internal controls was apparently intended to achieve sales and earnings forecasts previously submitted by the Japanese subsidiary to corporate senior management, although such forecasts were not met. The investigation also revealed that no individual appeared to personally benefit from these irregularities. This circumvention of controls was the result of a material weakness in the control environment at the Japan operation.

Since August 2010, which is before the identification of the irregularities in Japan, the Company has made significant senior level and other management changes and other organizational changes. In August 2010, the former president of the Company’s Japanese operations left the Company. In October 2010, the Company hired a new Chief Executive Officer. In December 2010, under the leadership of the new CEO, the Company made significant organizational changes including transforming the Company from a country-based group of silo organizations, with local management and local focus, to a globally integrated organization with multiple leaders having global responsibility managing the Company’s business units with improved reporting and personal accountabilities. Additionally, in March 2011, the Company hired a new President for its Japanese subsidiary and in April 2011, the Company hired a new Chief Financial Officer. We believe that these senior management and organizational changes will contribute significantly to remediating the issues with management override and circumvention of internal controls at the Japanese facility.

Additionally, as a result of the violations of Company policy and circumvention of internal controls at its Japanese facility, the Company will:

	•		Take appropriate disciplinary actions against employees in Japan who were involved in the irregularities.

	•		Conduct updated training with respect to Baldwin’s Code of Conduct and Business Ethics policy and require annual written confirmation from each employee of their understanding and adherence to this policy.

	•		Improve the communication surrounding and encourage the use of the Company’s whistleblower program to insure that any issues, such as those that led to the material weaknesses are reported in a more timely fashion.

	•		Implement a quarterly process for management of the individual subsidiaries to review and validate the appropriateness of revenue recognition with corporate management.

Changes in Internal Control Over Financial Reporting:

Except as noted above, during the quarter ended March 31, 2011, the Company has not made any changes in the internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company continues to review, document and test its internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that its systems evolve with the Company’s business. These efforts may lead to various changes in its internal control over reporting.

Part II: Other Information

ITEM 1A. Risk Factors

The following is an update to Item 1A — Risk Factors contained in the Company’s Annual Report on Form 10-K as amended for its Fiscal Year ended June 30, 2010. For additional risk factors that could cause actual results to differ materially from those anticipated, please refer to the Company’s Form 10-K as amended.

Risks associated with indebtedness.

The Company has indebtedness. As of March 31, 2011, the Company’s total indebtedness was $24,357 including $15,826 under its secured credit facility (the “Credit Facility”). Borrowings under the Credit Facility are secured by the assets of the Company. Under the terms of the Credit Facility, the Company is required to satisfy certain financial covenants.

A decline in the Company’s financial performance could have a material adverse effect on the Company, including the Company’s ability to comply with the Credit Agreement covenants to retain its existing financing or obtain additional financing; or any such financing may not be available on terms favorable to the Company. The Company’s ability to make expected repayments of borrowings under its Credit Facility and to meet its other debt or contractual obligations (including compliance with applicable financial covenants) will depend upon the Company’s future performance and its cash flows from operations, both of which are subject to prevailing economic conditions and financial, business, and other known and unknown risks and uncertainties, certain of which are beyond the Company’s control.

The Company’s Credit Facility matures November 21, 2011, and the Company may be unable to renew or replace this financing. The Company has begun discussions regarding renewal of its Credit Facility and anticipates finalizing a renewal or replacement Credit Agreement although there are no assurances that such agreement will be completed by the loan maturity date.

Current economic conditions and market disruptions adversely affect the Company’s business and results of operations.

A substantial portion of the Company’s business depends on customers’ demand for its products and services, the overall economic health of current and prospective customers, and general economic conditions. The general economic downturn has and will continue to adversely impact the Company’s business and financial condition in a number of ways, including impacts beyond those typically associated with previous economic contractions in the U.S. and other locations. The economic slowdown is leading to reduced capital spending by OEM and end users, which has already adversely affected and will continue to adversely affect the Company’s product sales. The slowdown could necessitate further testing for impairment of goodwill, other intangible assets, and long-lived assets and may negatively impact the valuation allowance with respect to deferred tax assets. In addition, further cost reduction actions may be necessary which would lead to additional restructuring charges. The Company’s ability to collect its accounts receivable on a timely basis could result in additional reserves for uncollectible accounts receivable being required, and in the event of continued contraction in the Company’s sales, could lead to dated inventory and require additional reserves for obsolescence.

The Company is unable to predict the duration and severity of the economic downturn and disruption in financial markets or their effects on the Company’s business and results of operations; but the consequences may be materially adverse and more severe than other recent economic slowdowns.


ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

There has been no activity under the Company’s stock repurchase program for the quarter ended March 31, 2011.


ITEM 6. Exhibits

10.1		Waiver and Amendment No. 10 to Credit Agreement, dated as of May 16, 2011 among Baldwin Technology Company, Inc. and certain of its subsidiaries, Bank of America N.A. and certain other Lenders (filed herewith).

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

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

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

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	BALDWIN TECHNOLOGY COMPANY, INC.
	BY	/s/ Ivan R. Habibe
		Ivan R. Habibe
		Vice President, Chief Financial Officer and Treasurer

Dated: May 23, 2011

EX-10.01 2 y91424exv10w01.htm EX-10.01 exv10w01

Exhibit 10.1

Execution Version

WAIVER AND AMENDMENT NO. 10
TO
CREDIT AGREEMENT

THIS WAIVER AND AMENDMENT NO. 10 TO CREDIT AGREEMENT (this “Amendment”), dated as of May 16, 2011, is by and among BALDWIN TECHNOLOGY COMPANY, INC., a Delaware corporation (“Parent”), BALDWIN GERMANY HOLDING GMBH, a German company (“Newco”), BALDWIN GERMANY GMBH, a German company (“BGG”), BALDWIN OXY-DRY GMBH (formerly known as “OXY-DRY MASCHINEN GMBH”), a German company (“Oxy-Dry GmbH”, and, collectively with the Parent, Newco and BGG, the “Borrowers”), the other Credit Parties (as defined in the Guaranty and Collateral Agreement (as defined below)) a party hereto, the Lenders (as defined in the Credit Agreement referred to below) signatory hereto and BANK OF AMERICA, N.A., a national banking association (as successor-by-merger to LASALLE BANK NATIONAL ASSOCIATION), in its capacity as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders.

PRELIMINARY STATEMENTS

A. The Borrowers, the Lenders and the Administrative Agent are parties to that certain Credit Agreement, dated as of November 21, 2006, as amended by that certain (i) Amendment to Credit Agreement dated as of December 29, 2006, (ii) Waiver, Consent and Amendment No. 2, dated as of April 18, 2007, (iii) Waiver, Consent and Amendment No. 3 to Credit Agreement dated as of January 3, 2008, (iv) Amendment No. 4 to Credit Agreement dated as of February 26, 2008, (v) Modification and Limited Waiver Agreement dated as of March 31, 2009, as amended and restated as of May 15, 2009 and amended on June 22, 2009 (such Modification and Limited Waiver Agreement, as so amended and restated and as so amended, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Modification and Limited Waiver”), (vi) Waiver and Amendment No. 5 to Credit Agreement dated as of July 31, 2009 (“Amendment No. 5”), (vii) Waiver and Amendment No. 6 dated as of May 12, 2010, (viii) Waiver and Amendment No. 7 dated as of June 9, 2010, (ix) Amendment No. 8 to Credit Agreement dated as of September 28, 2010 (“Amendment No. 8”) and (x) Amendment No. 9 to Credit Agreement dated as of September 29, 2010 (“Amendment No. 9”);

B. The term “Credit Agreement” as used in this Amendment shall mean such Credit Agreement as amended as set forth in paragraph A above;

C. The Guaranty and Collateral Agreement (as defined in the Credit Agreement) was amended pursuant to (i) Amendment No. 1 to Guaranty and Collateral Agreement, dated as of June 24, 2009, (ii) Amendment No. 2 to Guaranty and Collateral Agreement, dated as of February 16, 2010 and (iii) Amendment No. 3 to Guaranty and Collateral Agreement, dated as of June 30, 2010 and is being amended on the date hereof pursuant to Amendment No. 4 to Guaranty and Collateral Agreement (as defined below);

D. The Borrowers have notified the Administrative Agent and the Lenders that (i) the annual audit report of the Parent and its Subsidiaries for the Fiscal Year ending June 30, 2010

furnished to the Lenders and the Administrative Agent pursuant to Section 10.1.1 of the Credit Agreement and (ii) the quarterly financial statements of the Parent and its Subsidiaries for the respective Fiscal Quarters ending September 30, 2010 and December 31, 2010 furnished to the Lenders and the Administrative Agent pursuant to Section 10.1.2 of the Credit Agreement contained certain inaccuracies with respect to the reporting of certain sale transactions in the Fiscal Quarters ending June 30, 2010, September 30, 2010 and December 31, 2010 at the Japanese operations of the applicable Loan Party(ies), as such inaccuracies are described in the Form 8-K filed by the Parent on May 10, 2011 (the “May 10, 2011 Form 8-K”) with the United States Securities and Exchange Commission (such inaccuracies in such annual audit report and such quarterly financial statements, the “Specified 2010 Financial Statements Inaccuracies”) and the Borrowers have requested that the Lenders waive any Events of Default under Section 13.1.6 of the Credit Agreement that may have resulted solely from the Specified 2010 Financial Statements Inaccuracies (any such Events of Default so solely resulting from the Specified 2010 Financial Statements Inaccuracies, the “Specified 2010 Events of Default”).

E. The Borrowers have further notified the Administrative Agent and the Lenders that (i) the Compliance Certificates (in the form required prior to the amendments set forth in this Amendment and properly reflecting the adjustments to be set forth in the applicable financial statement(s) referred to in Section 5.01(h) below) to be delivered under Section 10.1.3 of the Credit Agreement (1) for the Fiscal Quarter ending March 31, 2011 would show the EBITDA for the Four Fiscal Quarter Computation Period ending March 31, 2011 was less than $2,557,000 and (2) for the Fiscal Quarter ending June 30, 2010 would show the EBITDA for the Four Fiscal Quarter Computation Period ending June 30, 2011 to be less than $3,642,000, each in breach of the respective minimum EBITDA amounts for such Periods required by Section 11.4.1 as such Section 11.14.1 existed prior to the amendments set forth in this Amendment (the Events of Default resulting from such breaches are referred to below as the “Specified EBITDA Events of Default”) and (ii) the Minimum Liquidity and Currency Adjusted Net Sales Certificate to be delivered under Section 10.1.6 of the Credit Agreement with respect to the Currency Adjusted Net Sales for the consecutive three-month period ending April 30, 2011 would show the Currency Adjusted Net Sales for such consecutive three-month period to be less than $35,984,000 in breach of the minimum Currency Adjusted Net Sales amount for such Period required by Section 11.14.4 of the Credit Agreement as such Section 11.14.4 existed prior to the amendments set forth in this Amendment (the Event of Default resulting such breach, the “Specified Net Sales Event of Default”; the Specified Net Sales Event of Default, the Specified EBITDA Events of Default and the Specified 2010 Events of Default are collectively referred to below as the “Specified Events of Default”), and the Borrowers have also requested that the Lenders waive the Specified EBITDA Events of Default and the Specified Net Sales Event of Default.

F. The Borrowers have requested that Lenders constituting at least the Required Lenders agree to further amend the Credit Agreement to (i) eliminate the minimum EBITDA financial covenant set forth in Sections 11.14.1 for the Four Fiscal Quarter Computation Period ending March 31, 2011 and (ii) otherwise amend the financial covenants in Sections 11.14.1 and 11.14.4 of the Credit Agreement as set forth below; and

G. The Administrative Agent and the Lenders signatory hereto, representing at least the Required Lenders, are willing to provide for such amendments (a) provided that (i) the

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Applicable Margins under the Credit Agreement (and related Notes) be increased as set forth below, (ii) the 2011 Warrants (as defined below) are issued by the Parent, and (iii) certain other modifications are made as set forth below and (b) and otherwise upon the other terms and subject to the conditions set forth in this Amendment.

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

ARTICLE I
DEFINITIONS

1.01 Capitalized terms used in this Amendment and not defined herein shall have the meanings ascribed to such terms in the Credit Agreement unless otherwise stated herein.

ARTICLE II
AMENDMENTS; CONSENT

2.01 Amendment to Section 1.1: Addition of New Definitions. Section 1.1 of the Credit Agreement is hereby amended by adding the following new definitions (to be inserted in proper alphabetical order):

2010 Warrants — see definition of Warrants.

2011 Warrants — see definition of Warrants.

Amendment No. 10 means that certain Waiver and Amendment No. 10 to Credit Agreement dated as of May 16, 2011, among Borrowers, the other Credit Parties a party thereto, the Lenders signatory thereto and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.

Tenth Amendment Effective Date means May 16, 2011.

2.02 Amendment to Section 1.1: Existing Definitions. Section 1.1 of the Credit Agreement is hereby further amended by amending and restating the following definitions:

Applicable Margin means, for any day on or after March 31, 2009, the applicable rate per annum set forth below with respect to the applicable period set forth below plus, with respect to interest on the Loans (for any day on or after October 1, 2010), the Incremental Margin (it being understood and agreed that the Applicable Margin for (i) LIBOR Loans shall be the applicable percentage set forth under the column “LIBOR Margin” for the applicable period plus (for any day on or after October 1, 2010) the applicable Incremental Margin, (ii) Base Rate Loans shall be the applicable percentage set forth under the column “Base Rate Margin” for the applicable period plus (for any day on or after October 1, 2010) the applicable Incremental Margin, (iii) the Non-Use Fee Rate shall be the applicable percentage set forth under the column “Non-Use Fee Rate” for the

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applicable period and (iv) the L/C Fee Rate shall be the applicable percentage set forth under the column “L/C Fee Rate” for the applicable period):


Applicable	LIBOR			Base Rate			Non-Use			L/C Fee
Period	Margin			Margin			Fee Rate			Rate
March 31, 2009 to and including May 15, 2011		4.50	%		3.00	%		0.500	%		4.50	%
On and after May 16, 2011		5.50	%		4.00	%		0.500	%		5.50	%

Warrants means, collectively, (i) those certain warrants (the “2010 Warrants”) issued by the Parent on the Eighth Amendment Effective Date to each of the Lenders signatory to Amendment No. 8 on the Eighth Amendment Effective Date for the purchase (in the aggregate) of 352,671 shares of the Parent’s Class A Common Stock with such shares being equal to two percent (2%) (in the aggregate) of all of the then issued and outstanding shares of the Parent’s Common Stock (of any Class) on a fully diluted basis, such warrants to be substantially in the form of Attachments A-1, A-2 and A-3 to Amendment No. 8, and (ii) those certain warrants (the “2011 Warrants”) issued by the Parent on or about the Tenth Amendment Effective Date to each of the Lenders signatory to Amendment No. 10 for the purchase (in the aggregate) of 372,373 shares of the Parent’s Class A Common Stock with such shares being equal to two percent (2%) (in the aggregate) of all of the issued and outstanding shares of the Parent’s Common Stock (of any Class) on a fully diluted basis, such warrants to be substantially in the form of Attachments A-1, A-2 and A-3 to Amendment No. 10, which term “Warrants” shall also include any warrants delivered in exchange, replacement or substitution for any 2010 Warrant(s) or any 2011 Warrant(s) and shall also include all related amendments, supplements, restatements or other modifications of the original 2010 Warrants or 2011 Warrants or any exchange, replacement or substitution warrants for the 2010 Warrants or 2011 Warrants (and any amendments, supplements, restatements or modifications thereto) and any shares issued pursuant to the exercise of any of the Warrants.

2.03 Amendment to Definition of EBITDA. The definition of the term EBITDA set forth in Section 1.1 of the Credit Agreement is hereby amended by (a) deleting the phrase “and (xv)” and inserting in lieu thereof the phrase “, (xv)” and (b) deleting the phrase “(for all periods in the aggregate) $900,000,” and inserting in lieu thereof the phrase: (for all periods in the aggregate) $900,000, and (xvi) to the extent paid by the Borrowers and not capitalized, the $179,000 fee under Amendment No. 10, the legal fees incurred by the Agent in connection with Amendment No. 10 and the Agent (and any Lender) in connection with the 2011 Warrants, the Capstone fees required to be paid pursuant to Amendment No. 10, legal fees incurred by the Borrowers in connection with Amendment No. 10 and the 2011 Warrants, and any fees of the Investment Banker (as defined in Amendment No. 10),”.

2.04 Amendment to Section 10.1.6. Section 10.1.6(a) of the Credit Agreement is hereby amended by deleting the phrase “(commencing with the month of July of 2009 and

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ending (in the case of clauses (i) and (ii) below) with the month of September of 2010 and ending (in the case of clause (iii) below) with the month of November of 2010)” and inserting in lieu thereof the phrase “(commencing with the month of July of 2009)”.

2.05 Amendment to Section 10.1.8. Section 10.1.8 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

As soon as practicable, and in any event (i) for the Fiscal Year commencing July 1, 2010, no later than June 22, 2010, (ii) for the Fiscal Year commencing July 1, 2011, no later than June 30, 2011, and (iii) for any Fiscal Year other than the Fiscal Years commencing July 1, 2010 or July 1, 2011, no later than the last Business Day of the first month of such Fiscal Year, financial projections for the Parent and its Subsidiaries for such Fiscal Year (including quarterly operating and cash flow projections) prepared in a manner consistent with the projections delivered by the Parent to the Lenders prior to the Fifth Amendment Effective Date, or otherwise in a manner reasonably satisfactory to the Administrative Agent, accompanied by a certificate of a Senior Officer of the Parent on behalf of the Parent to the effect that (a) such projections were prepared by the Parent in good faith, (b) the Parent believes the assumptions contained in such projections are reasonable and (c) such projections have been prepared in accordance with such assumptions.

2.06 Amendment to Section 11.14.1. Section 11.14.1 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

11.14.1 EBITDA. Not permit EBITDA for any of the following Four Fiscal Quarter Computation Periods set forth below to be less than the following respective amounts of minimum EBITDA set forth below for such period:


Period	Minimum EBITDA
Four Fiscal Quarter Computation Period ending September 30, 2010	$	1,955,000
Four Fiscal Quarter Computation Period ending December 31, 2010	$	2,612,000
Four Fiscal Quarter Computation Period ending June 30, 2011		($1,501,000	)
Four Fiscal Quarter Computation Period ending September 30, 2011		($5,522,000	)

2.07 Amendment to Section 11.14.4. Section 11.14.4 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

11.14.4 Currency Adjusted Net Sales. Not permit Currency Adjusted Net Sales for any of the following periods to be less than the following respective amounts set forth below for each such period:

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	Minimum Currency Adjusted
Period	Net Sales for the Applicable Period
Three Consecutive Months Ending September 30, 2010	$	31,630,000
Three Consecutive Months Ending October 31, 2010	$	32,970,000
Three Consecutive Months Ending November 30, 2010	$	32,815,000
Three Consecutive Months Ending December 31, 2010	$	33,514,000
Three Consecutive Months Ending January 31, 2011	$	31,778,000
Three Consecutive Months Ending February 28, 2011	$	31,988,000
Three Consecutive Months Ending March 31, 2011	$	34,195,000
Three Consecutive Months Ending April 30, 2011	$	35,728,000
Three Consecutive Months Ending May 31, 2011	$	34,903,000
Three Consecutive Months Ending June 30, 2011	$	32,448,000
Three Consecutive Months Ending July 31, 2011	$	30,096,000
Three Consecutive Months Ending August 31, 2011	$	30,339,000
Three Consecutive Months Ending September 30, 2011	$	28,461,000
Three Consecutive Months Ending October 31, 2011	$	29,785,000

2.08 Amendment to Exhibit B. Exhibit B to the Credit Agreement is hereby amended and restated to read in its entirety as set forth in Exhibit B attached hereto and hereby made a part hereof.

2.09 Attachments. Attachments A-1, A-2 and A-3 to this Amendment are hereby made a part of this Amendment.

2.10 Consent. As a result of the amendments set forth in Section 2.25 of Amendment No. 5, the sale of Oxy-Dry Food Blends, Inc. is not permitted without the consent of the Required Lenders. The Lenders a party hereto hereby consent to (a) the sale of all of the capital stock of Oxy-Dry Food Blends, Inc. to a third party purchaser (the “Oxy-Dry Food Blends Buyer”), (b) simultaneously with such sale, the release of any Liens (granted under the Collateral Documents) in such capital stock (but such release shall not release any Lien on the proceeds from such sale of such capital stock), (c) the release (simultaneous with such sale) of Oxy-Dry Food Blends, Inc. as a party (including as a “Guarantor” and “Grantor” thereunder) under the Guaranty and Collateral Agreement and (d) the release of the Administrative Agent’s security in any Collateral owned by Oxy-Dry Food Blends, Inc., including, without limitation, certain intellectual property; provided, that (i) the sales price paid by the Oxy-Dry Food Blends Buyer is approximately $250,000 and such price is paid in cash by the Buyer to Oxy-Dry Corporation or the Parent at the closing of such sale, (ii) no material assets of any Loan Party (other than Oxy-Dry Food Blends, Inc.) are transferred to Oxy-Dry Food Blends, Inc., (iii) the purchase and sale documents relating to such sale are in customary form and the Loan Parties (other than Oxy-Dry Food Blends, Inc.) have no liabilities thereunder other than those that are customary and typical for transactions of that type and (iv) after such sale no Loan Party shall have any material exposure for the liabilities of Oxy-Dry Food Blends, Inc. The Parent represents and warrants that it does not anticipate, and as of the date of sale it will not anticipate, if such a sale actually occurs, that any of the Credit Parties will have any actual material exposure for any such indemnification obligations.

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ARTICLE III
CERTAIN WAIVER

3.01 Waiver. The undersigned Lenders (representing at least the Required Lenders) hereby waive the Specified Events of Default. The foregoing waiver in this Section 3.01 is limited solely to the Specified Events of Default and shall not apply to any other Events of Default or Unmatured Events of Default which may now or hereafter exist. Without limiting the generality of the immediately preceding sentence, the Borrowers (and other Credit Parties) hereby acknowledge and agree that (i) the waiver set forth in the first sentence of this paragraph does not apply to any breach of Sections 11.14.1 or 11.14.4 of the Credit Agreement other than (a) the breach of Section 11.14.1 (as it existed prior to the amendments set forth in this Amendment No. 10) for the Four Fiscal Quarter Computation Periods respectively ending March 31, 2011 and June 30, 2011 and (b) the breach of Section 11.14.4 (as it existed prior to the amendments set forth in this Amendment No. 10) for the consecutive three-month period ending April 30, 2011 and (ii) nothing contained in this paragraph shall, or shall be interpreted to, limit the provisions of Sections 11.14.1 and 11.14.4 of the Credit Agreement as amended by this Amendment (including without limitation, for the avoidance of doubt, the amended financial covenant under Section 11.14.1 of the Credit Agreement for the Four Fiscal Quarter Computation Period ending June 30, 2011 and the amended financial covenant under Section 11.4.14 of the Credit Agreement for the consecutive three month period ending April 30, 2011). Each of the Borrowers and the other Credit Parties hereby consents to, and acknowledges the availability of, each and every right and remedy set forth in the Credit Agreement, the Guaranty and Collateral Agreement and the other Loan Documents with respect to any Event of Default other than the Specified Events of Default at any time.

ARTICLE IV
CERTAIN COVENANTS REGARDING
REFINANCING AND OTHER MATTERS

4.01 Refinancing and Certain Other Matters. In addition, and not in limitation of all reporting, notice and other obligations under the Credit Agreement and the other Loan Documents, the Parent hereby covenants as follows:

(i) No later than May 30, 2011, the Parent shall retain and continue to use the services of an investment banking firm selected by the Parent of recognized standing, experience and expertise in assisting companies obtaining financings of the type represented by the Refinancing (such investment banking firm, or any substitute investment banking firm meeting the same qualifications, the “Investment Banker”) for the purpose of assisting the Borrowers and other Credit Parties in consummating the Refinancing (as defined below). The Parent shall provide to the Administrative Agent, a copy of the signed engagement letter with the Investment Banker. “Refinancing” shall mean obtaining financing (debt and, to the extent applicable, equity) in an amount at least sufficient to refinance in full (i.e., pay out in full) all of the Loans and all other outstanding Obligations and which financing shall also result in the termination of any remaining Commitments and either the termination of all outstanding Letters of Credit or the Cash Collateralization (at 105% of the then aggregate Dollar Equivalent of all

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then Stated Amounts) of all outstanding Letters of Credit with the further agreement (given at the time of the Refinancing) of the Parent (and, with respect to any German Letter of Credit, of the German Opcos) to cause the termination of all Letters of Credit no later than 91 days after the occurrence of the Refinancing.

(ii) The Parent shall provide the Administrative Agent and Capstone (as defined below) with full access to the Parent and the other Loan Parties (and their respective officers) including without limitation discussing and timely providing any updates and information requested with respect to, (a) the Refinancing (including without limitation progress towards achieving the milestones referred to in clause (iii) below), (b) the liquidity of the Parent and its Subsidiaries, (c) the projections to be delivered under Section 10.1.8 of the Credit Agreement for the Fiscal Year commencing July 1, 2011, (d) the revised audit report and financial statements referred to in Section 5.01(h) below and such (e) other matters as Capstone or the Administrative Agent shall reasonably request in good faith. The Company shall also provide the Administrative Agent and Capstone full access to the Investment Banker with respect to any matters relating to the Refinancing including, without limitation, providing updates and information related to achieving the milestones referred to in clause (iii) below.

(iii) The Parent shall use its reasonable best efforts to achieve the following “milestones” with respect to the Refinancing:

	(a)		By no later than June 30, 2011, (x) complete a list of prospective lenders/investors that the private offering memorandum (and related materials) referred to in clause (y) below is to be sent to and (y) circulate to such prospective lenders/investors a private offering memorandum, and any related materials, with respect to the Refinancing. The Parent shall also promptly provide copies of such list, memorandum and materials to Capstone and the Administrative Agent.

	(b)		By no later than August 15, 2011, obtain a term sheet(s) (which term sheet(s) may be binding or non-binding), in customary form, for the Refinancing from prospective lenders/investors who customarily provide financing of a type similar to the Refinancing and, if obtained, promptly provide a copy(ies) of same to the Administrative Agent, the Lenders and Capstone.

	(c)		By no later than September 15, 2011, obtain a binding commitment letter(s), in customary form, for the Refinancing from prospective lenders/investors who customarily provide financing of a type similar to the Refinancing and, if obtained, promptly provide a copy(ies)

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of same to the Administrative Agent, the Lenders and Capstone.

(iv) Commencing on or about July 1, 2011, (a) the Parent shall hold bi-weekly update calls (to be held the first Business Day after the applicable bi-weekly cash flow forecast and schedules required under Section 10.1.6(c) of the Credit Agreement are delivered) with the Parent, the Lenders, the Administrative Agent, Capstone and the Investment Banker, to provide information with respect the Refinancing (including, without limitation, an update relating to the milestones referred to in clause (iii) above), the liquidity of the Parent and its Subsidiaries, any matters relating to the projections to be delivered under Section 10.1.8 of the Credit Agreement for the Fiscal Year commencing July 1, 2011, and such other matters as the Lenders, the Administrative Agent and Capstone shall request in good faith and (b) at the time of such update calls, the Parent shall provide to the Lenders and the Administrative Agent a written tracking report listing lenders/investors contacted with respect to the Refinancing, whether such lenders/investors have expressed an interest in participating in the Refinancing and a general update on the status of the Refinancing, including, without limitation, progress towards meeting such milestones.

(v) The Parent shall keep the Administrative Agent and the Lenders promptly informed (in writing) of any other material developments with respect to any prospective Refinancing and the progress of the Parent and the other Loan Parties in obtaining same.

It is understood and agreed that any reference herein to reasonable best efforts shall not, and shall not be interpreted to, impair or otherwise limit the obligations (which obligations are absolute and unconditional) under the Loan Documents to timely make payments when due under the Loan Documents.

ARTICLE V
CONDITIONS PRECEDENT

5.01 Conditions to Effectiveness. The effectiveness of the amendments set forth in Article II above, the consent set forth in Section 2.10 above and the waiver set forth in Section 3.01 above are each subject to the satisfaction (by no later than May 17, 2011 unless the Administrative Agent extends such date) of the following conditions precedent, unless specifically waived in writing by the Administrative Agent:

(a) The Administrative Agent shall have received the following documents, each in form and substance satisfactory to the Administrative Agent and its legal counsel:

(i) this Amendment duly executed by Borrowers and the other Credit Parties and the Lenders constituting at least the Required Lenders;

(ii) an Amendment No. 4 to Guaranty and Collateral Agreement duly executed by Borrowers and the other Credit Parties and the Administrative Agent (the “Amendment No. 4 to Guaranty and Collateral Agreement”) (the Lenders a

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party to this Amendment hereby confirm their authorization of the Administrative Agent to enter into Amendment No. 4 to Guaranty and Collateral Agreement); and

(iii) such other documents as reasonably requested by the Administrative Agent;

(b) All corporate (or other organization) proceedings taken in connection with the transactions contemplated by this Amendment, Amendment No. 4 to Guaranty and Collateral Agreement) and the 2011 Warrants and all documents, instruments and other legal matters incident hereto or thereto shall be reasonably satisfactory to the Administrative Agent and its legal counsel and the Administrative Agent shall receive such certifications with respect thereto as the Administrative Agent shall reasonably require;

(c) Borrowers shall have paid all costs and expenses (including reasonable outside attorneys’ fees and disbursements) and out-of-pocket fees of the Administrative Agent incurred as of the date hereof including without limitation the following legal and consultant fees: (i) Capstone: $8,361.25 and (ii) Finn Dixon & Herling LLP: $34,900; and the Borrowers shall have paid any reasonable and out-of-pocket legal fees (if any) of the Lenders referred to in clause (ii) of Section 9.04 below with respect to the review or negotiation of the 2011 Warrants;

(d) the Parent shall have issued the 2011 Warrants;

(e) The Parent shall cause an opinion letter with respect to the 2011 Warrants and other warrant related matters, issued by its counsel Morgan, Lewis & Bockius LLP, substantially in the form (but with conforming changes to reflect the fact that the opinion letter shall address the 2011 Warrants) of the opinion letter delivered to the Lenders pursuant to Section 3.01 of Amendment No. 8), to be delivered to the Lenders;

(f) The Borrowers shall pay the First Installment of the Amendment No. 10 Fee (as defined below);

(g) The Administrative Agent and the Lenders shall have received (a) the financial statements required to be delivered by Section 10.1.2 of the Credit Agreement for the Fiscal Quarter ending March 31, 2011 and (b) the related Compliance Certificate (reflecting any applicable amendments to the form of Compliance Certificate set forth in Exhibit B hereto) required to be delivered by Section 10.1.3 of the Credit Agreement with respect to such Fiscal Quarter;

(h) The Administrative Agent and the Lenders shall have received the draft revised audit report for the Fiscal Year ending June 30, 2010 and the draft revised quarterly financial statements for the Fiscal Quarters ending September 30, 2010 and December 31, 2010 contemplated by the May 10, 2011 Form 8-K (it is understood and agreed by the Borrowers and other Loan Parties that such revised audit report and quarterly financial statements shall be deemed financial statements deemed furnished by the Parent under the Credit Agreement); and

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(i) the “split” of existing stock certificates, and delivery of related stock powers in blank, referred to in Section 2.19 of Amendment No. 8 shall be consummated. (Nothing contained herein shall, or shall be interpreted to, limit or otherwise impair any other obligations of any Credit Party under such Section 2.19.).

ARTICLE VI
AMENDMENT FEE

6.01 Amendment Fee. In consideration of the Required Lenders entering into this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Borrowers hereby agree to pay to each Lender who executes and delivers this Amendment on or before the date hereof, an amendment fee (the “Amendment No. 10 Fee”) equal to such Lender’s Pro-Rata Share (as defined in clause (d) of the definition of Pro-Rata Share) of $179,000. The Amendment No. 10 Fee shall be fully earned on the date hereof and (i) $89,500 shall be payable on the date of this Amendment (the “First Installment of the Amendment No. 10 Fee”) and (ii) $89,500 shall be payable upon the earlier of (x) July 31, 2011, (y) the consummation of the sale (if any) of the capital stock of Oxy-Dry Food Blends, Inc. to the Oxy-Dry Food Blends Buyer and (z) upon any Refinancing. Any failure to pay, when due, any such installments under clause (i) or (ii) above shall constitute an Event of Default under the Credit Agreement

ARTICLE VII
NO WAIVER

7.01 No Waiver. Other than the waiver set forth in Section 3.01 above, nothing contained in this Amendment shall be construed as a waiver by the Administrative Agent or the Lenders of any covenant or provision of the Credit Agreement, the Guaranty and Collateral Agreement, this Amendment, the other Loan Documents, or of any other contract or instrument among the Borrowers and/or the other Credit Parties, as the case may be, and the Administrative Agent and/or the Lenders (and/or their respective Affiliates), as the case may be, and the failure of the Administrative Agent and/or Lenders (and/or their respective Affiliates) at any time or times hereafter to require strict performance by the Borrowers and/or the other Credit Parties of any provision thereof shall not waive, affect or diminish any right of the Administrative Agent and the Lenders (or their respective Affiliates) to thereafter demand strict compliance therewith.

ARTICLE VIII
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES; CONFIRMATIONS

8.01 Ratifications; etc. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in Credit Agreement and the other Loan Documents. The terms and provisions of the Credit Agreement and the other Loan Documents, as amended hereby, are ratified and confirmed and shall continue in full force and effect. For the avoidance of doubt, this Amendment and all prior amendments to the Credit Agreement shall be considered Loan Documents. The Borrowers, the other Credit Parties, the Lenders and the Administrative Agent agree that the Credit Agreement and the other Loan Documents, as amended hereby, shall continue to be legal, valid, binding obligations of the parties thereto, enforceable against such parties in accordance with their respective terms.

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Without limiting the generality of the foregoing, the Borrowers and the other Credit Parties hereby confirm and agree that (a) all Liens under the Collateral Documents (as amended) remain in full force and effect (as so amended) and (b) the guaranty obligations and other obligations of the Borrowers and all other Credit Parties under the Guaranty and Collateral Agreement (and other applicable Collateral Documents), as amended, remain in full force and effect (as so amended) and (as set forth in the Guaranty and Collateral Agreement) such guaranties and Liens (and other obligations), under the Guaranty and Collateral Agreement shall not be impaired or otherwise limited by any waiver or modification set forth in this Amendment (and nothing contained in this Amendment shall, or shall be interpreted to, create a custom, course of dealing or other agreement or arrangement by which the consent or confirmation of any Credit Party to any modification or waiver is required in order to keep any obligations (with respect to any guarantee, granting of Liens or otherwise) under the Guaranty and Collateral Agreement (and other applicable Collateral Documents) in full force and effect, it being agreed that no such consent or confirmation is necessary or required in order to keep such obligations in full force and effect. Without limiting the generality of the foregoing (or of Section 1.2(e) of the Credit Agreement), it is hereby confirmed and agreed that any reference in the Loan Documents to any Note shall include all amendments, restatements, supplements and other modifications thereto and any Notes issued under Section 15.6.1 of the Credit Agreement and/or other Notes in substitution or replacement of any Note(s). Any breach of any representation, warranty, covenant, agreement or confirmation set forth in this Amendment by any Borrower or any other Credit Party shall be deemed to constitute an Event of Default under the Credit Agreement.

8.02 Representations and Warranties. Each of the Borrowers and the other Credit Parties hereby represents and warrants to the Administrative Agent and the Lenders that (a) the execution, delivery and performance of this Amendment and any and all Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite corporate (or other applicable organization) action on the part of such Borrower or other Credit Party, as the case may be, and will not violate the charter, by-laws or other organizational documents of such Borrower or other Credit Party; (b) the representations and warranties of such Borrower or other Credit Party, as the case may be, contained in any Loan Document are true and correct in all respects (or if the applicable representation or warranty is not qualified by a materiality qualifier, true and correct in all material respects) on the date hereof and on and as of the date of execution hereof as though made on and as of each such date (except to the extent stated to relate to a specific earlier date, in which case such representations and warranties were true and correct in all respects (or if the applicable representation or warranty is not qualified by a materiality qualifier, true and correct in all material respects) as of such earlier date); (c) after giving effect to the amendments set forth herein, no Event of Default or Unmatured Event of Default under the Credit Agreement has occurred and is continuing; and (d) no Credit Party that is party to the Guaranty and Collateral Agreement has changed its legal name since November 21, 2006 except (i) Newco changed its name from Mainsee 430. VV GmbH to Baldwin Germany Holding GmbH, (ii) Oxy-Dry GmbH changed its name from Oxy-Dry Maschinen GmbH to Baldwin Oxy-Dry GmbH, (iii) Baldwin Southeast Asia Corporation changed its name from Oxy-Dry Asia Pacific, Inc and (iv) Baldwin Rockford Corporation has merged with and into Baldwin Americas Corporation. The Borrowers and the other Credit Parties acknowledge and agree that all unpaid principal of, and accrued and unpaid interest under, each of the Loans (and any reimbursement obligations with respect to any Letters of Credit and any other outstanding Obligations) is justly owed without claim, counterclaim, cross-complaint, offset, defense or other reduction of any

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kind against the Lenders or the Administrative Agent. The Parent acknowledges and agrees that each Warrant constitutes the legal, valid and binding obligation of the Parent, enforceable against the Parent in accordance with its respective terms and Parent has no claims, counterclaims, cross-complaints, offsets, defenses or other reduction of any kind with respect to its respective obligations thereunder.

8.03 Confirmations. All confirmations and agreements set forth in Sections 7.03, 7.04 and 7.05 of Amendment No. 5 remain in full force and effect.

ARTICLE IX
MISCELLANEOUS PROVISIONS

9.01 Survival of Representations and Warranties. All representations and warranties made in the Credit Agreement or the Guaranty and Collateral Agreement or any other Loan Documents or under or in connection with this Amendment, including, without limitation, any document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents.

9.02 Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

9.03 Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the Administrative Agent, the Lenders, the Borrowers and the other Credit Parties and their respective successors and assigns, except that no Borrower or Credit Party may assign or transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent. It is acknowledged and agreed that Bank of America, N.A., has, as successor by merger to LaSalle Bank National Association, succeeded to all of the respective rights and duties of LaSalle Bank National Association as a Lender (including without limitation as the Issuing Lender), and the Administrative Agent under the Loan Documents.

9.04 Certain Costs and Expenses. Without in any way limiting the generality of Sections 10.2 or 15.5 of the Credit Agreement, the Parent acknowledges and agrees that it shall (i) promptly pay the reasonable fees and disbursements of all legal counsel retained by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment or the 2011 Warrants or any related documents or any future waiver or modification (or proposed modification or waiver whether or not consummated), if any, of any Loan Document(s) or the Warrants or any related documents (provided that Parent shall not have to pay the allocable costs of internal legal services of the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment; provided it is understood and agreed that this parenthetical phrase shall not, and shall not be interpreted to, limit the right of the Administrative Agent or any Lender to receive the allocable costs of internal legal services with respect to agreements or matters other than the preparation, negotiation, execution and delivery of this Amendment), (ii) promptly pay the reasonable fees and disbursements of any legal counsel retained by any of the Lenders in connection with the review or negotiation of the 2011 Warrants or any related warrant document, and (iii) promptly pay all

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fees of Capstone (as defined in the Modification and Limited Waiver) incurred (at any time) by the Agent whether such fees relate to the Refinancing, discussions with the Loan Parties, the Investment Banker (in the case of the Investment Banker, with respect to matters relating solely to the Refinancing), the Lenders or the Administrative Agent, updates to the Lenders or the Administrative Agent, the review of projections or the revised audit report and financial statements referred to in Section 5.01(h) above or other financial matters, or any other matters relating to the Loan Parties and/or Subsidiaries (it is understood and agreed that the $8,361.25 of Capstone fees referred to in Sections 4.01(c) above are with respect to fees incurred through the date hereof and that the Parent shall also be responsible for (and promptly pay upon presentation of invoices by Capstone) any fees of Capstone incurred after the date hereof). The obligations of the Parent under this Section 9.04 shall be considered part of the Parent’s obligations under Section 15.5 of the Credit Agreement. The Borrowers and other Credit Parties hereby agree that all findings and conclusions and other work product of Capstone shall be protected by the attorney-client privilege and shall not be subject to review or discovery by the Borrowers or any other Credit Party.

9.05 Counterparts. This Amendment may be executed and delivered by facsimile, portable document format (“.pdf”), Tagged Image File Format (“.TIFF”) or other electronic means of delivery and in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument.

9.06 Preliminary Statements. The Preliminary Statements set forth in this Amendment are accurate and shall form a substantive part of the agreement of the parties hereto.

9.07 Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

9.08 Relationship. The relationship between the Borrowers and other Credit Parties on the one hand and the Lenders and the Administrative Agent on the other hand shall be solely that of borrowers and guarantors, on the one hand, and lender on the other (or, in the case of the Warrants, the relationship is that the Parent is the issuer, and the applicable Lender is the holder, of the applicable Warrant). Neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to any Borrower or other Credit Party arising out of or in connection with this Amendment or any of the other Loan Documents or the Warrants or any related documents, and the relationship between the Borrowers and other Credit Parties, on the one hand, and the Administrative Agent and the Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor (or, in the case of the Warrants, the relationship is that the Parent is the issuer, and the applicable Lender is the holder, of the applicable Warrant). The Borrowers and other Credit Parties acknowledge that they have been advised by counsel in the negotiation, execution and delivery of this Amendment and the other Loan Documents and the Warrants and any related documents. No joint venture or partnership is created hereby or by the other Loan Documents or by the Warrants or related documents or otherwise exists by virtue of the transactions contemplated hereby or by the other Loan Documents (or the Warrants or related documents) among the Lenders or among the Borrowers (and other Credit Parties) and the Lenders (or the Agent). It is acknowledged and agreed by all Lenders that each Lender is the owner of its individual Warrants which individual Warrants are exercisable by such Lender at its

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own election. No other Lender (or the Administrative Agent) has any obligations with respect to the Warrants issued to any other Lender or for the performance or content of any Warrants issued to any other Lender.

9.09 Time is of the Essence. The parties hereto (i) have agreed specifically with regard to the times for performance set forth herein and in the other Loan Documents and (ii) acknowledge and agree such times are material to this Amendment and the other Loan Documents. Therefore, time is of the essence with respect to this Agreement and the other Loan Documents.

9.10 Jury Trial; Indemnification. Without limiting the generality of Sections 15.17, 15.18, 15.19 and 15.20 of the Credit Agreement, it is hereby agreed that the terms and provisions of such Sections shall apply to this Amendment and any transaction or matter contemplated by, in connection with or arising out of this Amendment.

9.11 Applicable Law. THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED PURSUANT HERETO (EXCEPT AS EXPRESSLY SET FORTH IN ANY SUCH AGREEMENT) SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

9.12 Final Agreement. THE CREDIT AGREEMENT (AS AMENDED HEREBY) AND THE OTHER LOAN DOCUMENTS REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE CREDIT AGREEMENT (AS AMENDED HEREBY) AND THE OTHER LOAN DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING PROVISIONS, THE BORROWERS AND THE OTHER CREDIT PARTIES ACKNOWLEDGE AND AGREE THAT NEITHER ANY LENDER NOR THE ADMINISTRATIVE AGENT HAS MADE ANY PROMISES OR ASSURANCES WITH RESPECT TO, AND THE BORROWERS AND OTHER CREDIT PARTIES ACKNOWLEDGE AND AGREE THAT THERE IS NO ORAL AGREEMENT WITH RESPECT TO, ANY FUTURE AMENDMENT, WAIVER OR OTHER MODIFICATION OF THE LOAN DOCUMENTS OR ANY RESTRUCTURING OR WORKOUT THEREOF OR WITH RESPECT THERETO. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE BORROWERS AND OTHER CREDIT PARTIES ACKNOWLEDGE AND AGREE THAT (1) THERE IS NO ORAL AGREEMENT AS TO ANY EXTENSION OF THE TERMINATION DATE OR FOR THE EXTENSION OF ANY OTHER DATE FOR THE PAYMENT OF ANY OBLIGATIONS (OR FOR ANY EXTENSION OF ANY DATE FOR THE TERMINATION OF ANY COMMITMENTS) AND (2) NO FAILURE OF THE PARENT OR ANY OF THE OTHER CREDIT PARTIES TO OBTAIN THE REFINANCING (REGARDLESS OF WHETHER OR NOT THE PARENT HAS USED ITS REASONABLE BEST EFFORTS TO OBTAIN THE REFINANCING) SHALL EXCUSE, OR DELAY, THE PAYMENT OF ANY OF THE OBLIGATIONS WHEN DUE UNDER THE TERMS OF THE

- 15 -

LOAN DOCUMENTS (OR, IN THE CASE OF OBLIGATIONS CONSISTING OF BANK PRODUCT OBLIGATIONS, UNDER THE TERMS OF THE DOCUMENTS EVIDENCING SUCH BANK PRODUCT OBLIGATIONS). NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY THE BORROWERS AND THE REQUIRED LENDERS AND (WITH RESPECT TO MATTERS AFFECTING THE ADMINISTRATIVE AGENT) THE ADMINISTRATIVE AGENT AND (WITH RESPECT TO MATTERS AFFECTING THE ISSUING LENDER) THE ISSUING LENDER.

9.13 Release. EACH OF THE BORROWERS AND THE OTHER CREDIT PARTIES HEREBY ACKNOWLEDGES THAT, AS OF THE DATE HEREOF, IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED (A) TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS APPLICABLE LIABILITIES UNDER ANY LOAN DOCUMENT, ANY BANK PRODUCT AGREEMENT (INCLUDING ANY HEDGING AGREEMENT) WITH ANY LENDER, THE ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE AFFILIATES OR UNDER THE WARRANTS OR ANY RELATED DOCUMENT AND/OR (B) TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS (OR ANY OF THEIR RESPECTIVE AFFILIATES). EACH OF THE BORROWERS AND THE OTHER CREDIT PARTIES HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE ADMINISTRATIVE AGENT AND LENDERS, THEIR PREDECESSORS, AGENTS, AFFILIATES, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH SUCH BORROWER OR OTHER CREDIT PARTY MAY NOW OR HEREAFTER HAVE AGAINST THE ADMINISTRATIVE AGENT, LENDERS, THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING OUT OF OR OTHERWISE IN ANY WAY RELATING IN ANY WAY TO THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT, HEDGING AGREEMENT, BANK PRODUCT AGREEMENT, THE OBLIGATIONS, THE WARRANTS OR ANY RELATED DOCUMENT, ANY OTHER TRANSACTION CONTEMPLATED BY ANY OF THE FOREGOING DOCUMENTS, OR ANY ACTION OR OMISSION OF THE ADMINISTRATIVE AGENT OR ANY LENDER UNDER OR OTHERWISE IN ANY WAY RELATING TO ANY OF THE FOREGOING DOCUMENTS. THE BORROWERS AND OTHER CREDIT PARTIES EXPRESSLY WAIVE ANY PROVISION OF STATUTORY OR DECISIONAL LAW TO THE EFFECT THAT A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE RELEASING PARTY(IES) DOES NOT KNOW OR SUSPECT TO EXIST IN SUCH PARTY’S FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY SUCH PARTY, MUST OR MIGHT HAVE MATERIALLY AFFECTED SUCH PARTY’S SETTLEMENT WITH THE RELEASED PARTIES. NOTHING CONTAINED IN THIS PARAGRAPH SHALL, OR SHALL BE

- 16 -

INTERPRETED TO, IMPAIR ANY RIGHTS OF ANY BORROWER (OR OTHER CREDIT PARTY) WITH RESPECT TO ANY DEPOSIT OR OTHER BANK ACCOUNTS OF SUCH BORROWER OR OTHER CREDIT PARTY (OR ANY OF THEIR RESPECTIVE SUBSIDIARIES) WITH ANY LENDER OR THE ADMINISTRATIVE AGENT.

9.14 Warrant Value; OID. The Lenders and the Borrowers agree (i) that the aggregate fair market value (as of the date hereof) of all of the 2011 Warrants is equal to $554,836 (allocated as follows: $277,418 for the 2011 Warrant issued to Bank of America, N.A., in its capacity as Lender, $110,967 for the 2011 Warrant issued to Webster Bank, National Association, as Lender, and $166,451 for the 2011 Warrant issued to RBS Citizens, N.A., as Lender), (ii) that as a result of (x) the value allocated to the 2011 Warrants pursuant to clause (i) above, as well as (y) the value allocated to the 2010 Warrants and certain interest attributable to the Incremental Margin being payable on the Termination Date, in each case (under this clause (y)) as described in Section 8.14 of Amendment No. 8, the Permanent Loans Notes are deemed, for federal income tax purposes, to be issued with original issue discount (“OID”), as defined in Section 1273(a)(1) of the Code, (iii) that any calculation by any of the Borrowers regarding the amount of OID for any accrual period on such Notes shall be subject to review and approval of the Required Lenders, which approval shall not be unreasonably withheld, delayed or conditioned, and (iv) to adhere to this Amendment for federal income tax purposes and not to take any action or file any tax return, report or declaration inconsistent herewith (including with respect to the amount of OID on such Notes as determined in accordance with the preceding clause (iii)). It is agreed that the provisions of Section 8.14 of Amendment No. 8 remain in full force and effect. Nothing contained in this paragraph or in such Section 8.14 shall, or shall be interpreted to, limit any obligation of any Borrower under any such Note or under any other Loan Document or of the Parent under the Warrants.

9.15 Certain Acknowledgments and Representations. Each of the Lenders hereby acknowledges for itself, severally only and not jointly, that (i) the 2011 Warrant issued to it and any shares of Common Stock issuable upon any of its exercise are, as of the date hereof, not registered: (A) under the Securities Act of 1933, as amended (the “Act”) on the ground that the issuance of the 2011 Warrants is exempt from registration under Section 4(2) of the Act as not involving any public offering or (B) under any applicable state securities law because the issuance of the 2011 Warrants does not involve any public offering and (ii) the Parent’s reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations severally made below by the Lenders to the Parent. Each Lender, severally only and not jointly, represents and warrants as to itself that it is (i) an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Act, (ii) (A) familiar with the business and affairs of the Parent and (B) knowledgeable and experienced in financial and business matters to the extent that it is capable of evaluating the merits and risks of an investment in a 2011 Warrant and the shares of Common Stock issuable upon their exercise, and (iii) acquiring a 2011 Warrant and will acquire the shares of Common Stock issuable upon its exercise for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same. No breach of any such representation or warranty or other provision of this paragraph shall impair any obligations of the Credit Parties under the Loan Documents.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment as of the date first written above.


		BALDWIN TECHNOLOGY COMPANY, INC.

		By:		/s/ Mark T. Becker

				Name: Mark T. Becker
				Title: President and CEO

		BALDWIN GERMANY HOLDING GMBH

		By:		/s/ Mark T. Becker

				Name: Mark T. Becker
				Title: Geschaftsfuhrer

		BALDWIN GERMANY GMBH

		By:		/s/ Mark T. Becker

				Name: Mark T. Becker
				Title: Geschaftsfuhrer

		BALDWIN OXY-DRY GMBH
		(formerly known as OXY-DRY MASCHINEN GMBH)

		By:		/s/ Mark T. Becker

				Name: Mark T. Becker
				Title: Geschaftsfuhrer

[Signature Page to Waiver and Amendment No. 10 to Credit Agreement]


		BALDWIN GRAPHIC SYSTEMS, INC.

		By:		/s/ Leon Richards

		Name:		Leon Richards
		Title:		Treasurer

		OXY-DRY FOOD BLENDS, INC.

		By:		/s/ Leon Richards

		Name: Leon Richards
		Title: Vice President and Treasurer

		OXY-DRY U.K., INC.

		By:		/s/ Leon Richards

		Name: Leon Richards
		Title: Vice President

		BALDWIN SOUTHEAST ASIA CORPORATION
		(formerly known as Oxy-Dry Asia Pacific, Inc.)

		By:		/s/ Leon Richards

		Name: Leon Richards
		Title: Vice President and Treasurer

		BALDWIN AMERICAS CORPORATION

		By:		/s/ Leon Richards

		Name: Leon Richards
		Title: Vice President and Treasurer

		BALDWIN ASIA PACIFIC CORPORATION

		By:		/s/ Leon Richards

		Name: Leon Richards
		Title: Vice President and Treasurer

[Signature Page to Waiver and Amendment No. 10 to Credit Agreement]


		MTC TRADING COMPANY

		By:		/s/ Mark T. Becker

		Name: Mark T. Becker
		Title: President

		OXY-DRY CORPORATION

		By:		/s/ Mark T. Becker

		Name: Mark T. Becker
		Title: Vice President

		BALDWIN EUROPE CONSOLIDATED INC.

		By:		/s/ Mark T. Becker

		Name: Mark T. Becker
		Title: President

[Signature Page to Waiver and Amendment No. 10 to Credit Agreement]


		BALDWIN EUROPE CONSOLIDATED B.V.

		By: Baldwin Graphic Equipment BV

		By:		/s/ Mark T. Becker

		Name(s): Mark T. Becker
		Title: Managing Director

		By:		/s/ Jacobus Willems

		Name(s): Jacobus Willems
		Title: Managing Director

		BALDWIN GRAPHIC EQUIPMENT B.V.

		By:		/s/ Mark T. Becker

		Name(s): Mark T. Becker
		Title: Managing Director

		By:		/s/ Jacobus Willems

		Name(s): Jacobus Willems
		Title: Managing Director

		HORIZON LAMPS, INC.

		By:		/s/ Leon Richards

		Name: Leon Richards
		Title: Treasurer

[Signature Page to Waiver and Amendment No. 10 to Credit Agreement]


		BANK OF AMERICA, N.A., as Administrative Agent

		By:		/s/ Kristine Thennes

		Name: Kristine Thennes
		Title: Vice President

		BANK OF AMERICA, N.A., as Lender

		By:		/s/ Anthony D. Healey

		Name: Anthony D. Healey
		Title: Senior Vice President

[Signature Page to Waiver and Amendment No. 10 to Credit Agreement]


		WEBSTER BANK, NATIONAL ASSOCIATION, as Lender

		By:		/s/ Stephen Corcoran

		Name: Stephen Corcoran
		Title: Senior Vice President

[Signature Page to Waiver and Amendment No. 10 to Credit Agreement]


		RBS CITIZENS, N.A., as Lender

		By:		/s/ Gregory R. D. Clark

		Name: Gregory R. D. Clark
		Title: Senior Vice President

[Signature Page to Waiver and Amendment No. 10 to Credit Agreement]

EX-31.01 3 y91424exv31w01.htm EX-31.01 exv31w01

Exhibit 31.01

CERTIFICATIONS

I, Mark T. Becker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Baldwin Technology Company Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 23, 2011


/s/ Mark T. Becker Mark T. Becker
President and Chief Executive Officer

EX-31.02 4 y91424exv31w02.htm EX-31.02 exv31w02

Exhibit 31.02

CERTIFICATIONS

I, Ivan R. Habibe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Baldwin Technology Company Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 23, 2011


/s/ Ivan R. Habibe Ivan R. Habibe
Vice President, CFO and Treasurer

EX-32.01 5 y91424exv32w01.htm EX-32.01 exv32w01

Exhibit 32.01

CERTIFICATION

PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Baldwin Technology Company, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011 to be filed with Securities and Exchange Commission on or about the date hereof (the “Report”), I, Mark T. Becker, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

	(1)		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.


Date: May 23, 2011	By:	/s/ Mark T. Becker Mark T. Becker
		Chief Executive Officer

EX-32.02 6 y91424exv32w02.htm EX-32.02 exv32w02

Exhibit 32.02

CERTIFICATION

PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Baldwin Technology Company, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011 to be filed with Securities and Exchange Commission on or about the date hereof (the “Report”), I, Ivan R. Habibe, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

	(1)		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.


Date: May 23, 2011	By:	/s/ Ivan R. Habibe Ivan R. Habibe
		Chief Financial Officer

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