-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RaJM83no5KIZ4l18TC2TPnjn0hm8yyVfsWq7kzIiZFPHihzX6qGVHCw792N3uqeS 5or1eeMUdmJUHl/+QnwYyg== 0000805792-96-000006.txt : 19960508 0000805792-96-000006.hdr.sgml : 19960508 ACCESSION NUMBER: 0000805792-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960507 SROS: AMEX 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: 96557004 BUSINESS ADDRESS: STREET 1: 65 ROWAYTON AVE CITY: ROWAYTON STATE: CT ZIP: 06853 BUSINESS PHONE: 2038387470 MAIL ADDRESS: STREET 1: 65 ROWAYTON AVENUE CITY: ROWAYTON STATE: CT ZIP: 06853 10-Q 1 10-Q FOR FY96 3RD QTR FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [ Mark one ] [ X ] Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For quarter ended March 31, 1996 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 1-9334 BALDWIN TECHNOLOGY COMPANY, INC. (Exact name of registrant as specified in its charter) Delaware 13-3258160 (State or other jurisdiction of (I.R.S Employer incorporation or organization) Identification No.) 65 Rowayton Avenue, Rowayton, Connecticut 06853 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 203-838-7470 (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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES X . NO . APPLICABLE ONLY TO CORPORATE ISSUERS: 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, 1996 Class A Common Stock $0.01 par value 15,590,627 Class B Common Stock $0.01 par value 1,835,883 Total number of pages in this document 14 BALDWIN TECHNOLOGY COMPANY, INC. INDEX Page Part I Financial Information Consolidated Balance Sheet - March 31, 1996 and June 30, 1995 1 Consolidated Statement of Income - Three months and nine months ended March 31, 1996 and 1995 2 Consolidated Statement of Changes in Shareholders' Equity - Nine months ended March 31, 1996 3 Consolidated Statement of Cash Flows - Nine months ended March 31, 1996 and 1995 4-5 Notes to Consolidated Financial Statements 6-7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-13 Part II Other Information Item 6 Exhibits and Reports on Form 8-K 13 Signature 14 PART I FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS BALDWIN TECHNOLOGY COMPANY, INC. CONSOLIDATED BALANCE SHEET (in thousands, except share data) March 31, June 30, 1996 1995 ASSETS (Unaudited) CURRENT ASSETS: Cash $ 7,892 $ 12,719 Short-term securities 318 470 Accounts receivable trade, net of allowance for doubtful accounts of $2,593 ($2,897 at June 30, 1995) 50,163 46,478 Notes receivable, trade 10,576 16,916 Inventories 45,919 39,824 Prepaid expenses and other 8,978 8,496 Total current assets 123,846 124,903 MARKETABLE SECURITIES, at cost: Market $977 ($971 at June 30, 1995) 787 971 PROPERTY, PLANT AND EQUIPMENT, at cost: Land and buildings 7,930 2,348 Machinery and equipment 10,347 8,941 Furniture and fixtures 5,890 5,855 Leasehold improvements 1,736 1,734 Capital leases 7,505 7,837 33,408 26,715 Less: Accumulated depreciation and amortization 20,119 19,538 Net property, plant and equipment 13,289 7,177 PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS at cost, less accumulated amortization of $3,766 ($3,243 at June 30, 1995) 5,353 5,355 GOODWILL, less accumulated amortization of $11,245 ($9,734 at June 30, 1995) 64,387 61,477 OTHER ASSETS 9,132 9,887 TOTAL ASSETS $216,794 $209,770 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Loans payable $ 11,013 $ 9,188 Current portion of long-term debt 479 160 Accounts payable, trade 15,319 14,895 Notes payable, trade 9,911 12,637 Accrued salaries, commissions, bonus and profit-sharing 8,953 9,680 Customer deposits 8,734 5,410 Accrued and withheld taxes 2,823 2,321 Income taxes payable 3,525 4,389 Restructuring reserve 2,974 Other accounts payable and accrued liabilities 13,694 12,648 Total current liabilities 77,425 71,328 LONG-TERM LIABILITIES: Long-term debt (Note 4) 35,071 29,868 Other long-term liabilities 9,238 9,686 Total long-term liabilities 44,309 39,554 Total liabilities 121,734 110,882 SHAREHOLDERS' EQUITY: Class A Common Stock, $.01 par, 45,000,000 shares authorized, 16,391,683 shares issued (16,011,586 at June 30, 1995) 164 160 Class B Common Stock, $.01 par, 4,500,000 shares authorized, 2,000,000 shares issued 20 20 Capital contributed in excess of par value 57,185 54,881 Retained earnings 41,278 41,631 Cumulative translation adjustment 861 4,174 Less: Treasury stock, at cost: Class A - 772,556 shares (174,256 at June 30, 1995) Class B - 164,117 shares (164,117 at June 30, 1995) (4,448) (1,978) Total shareholders' equity 95,060 98,888 COMMITMENTS ------ ------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $216,794 $209,770 The accompanying notes to consolidated financial statements are an integral part of these statements. - 1 - BALDWIN TECHNOLOGY COMPANY, INC. CONSOLIDATED STATEMENT OF INCOME (in thousands of dollars except per share data) (Unaudited) For the three months For the nine months ended March 31, ended March 31, 1996 1995 1996 1995 Net sales $63,812 $55,375 $182,463 $155,727 Cost of goods sold 43,102 36,709 123,048 102,838 Gross Profit 20,710 18,666 59,415 52,889 Operating expenses: General and administrative 6,747 6,212 19,713 17,294 Selling 6,547 5,125 18,624 15,128 Engineering 3,547 3,092 9,944 8,783 Research and development 1,812 1,332 4,783 4,175 Restructuring Charge: (Note 3) Employee terminations 1,500 Dealer terminations 1,500 18,653 15,761 56,064 45,380 Operating income 2,057 2,905 3,351 7,509 Other (income) expense Interest expense 1,056 898 3,074 2,590 Interest income (178) (146) (427) (468) Other income, net (656) (355) (1,197) (915) 222 397 1,450 1,207 Income before taxes 1,835 2,508 1,901 6,302 Provision for income taxes 844 1,254 2,254 3,151 Net income (loss) $ 991 $ 1,254 $ (353) $ 3,151 Net income (loss) per common and common equivalent share $ 0.06 $ 0.07 $ (0.02) $ 0.18 Weighted average number of shares outstanding 17,783 17,932 17,915 17,938 The accompanying notes to consolidated financial statements are an integral part of these statements. - 2 - BALDWIN TECHNOLOGY COMPANY INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (in thousands, except share data) (Unaudited) (PART 1 OF 2 PART TABLE)
Capital Class A Class B Contributed Common Stock Common Stock in Excess Shares Amount Shares Amount of Par Balance at June 30, 1995 16,011,586 $160 2,000,000 $20 $54,881 Net loss for the nine months Stock issued in conjunction with the acquisition of Acrotec 350,000 4 2,184 Stock options exercised 30,097 120 Treasury stock purchased Translation adjustment Balance at March 31, 1996 16,391,683 $164 2,000,000 $20 $57,185
BALDWIN TECHNOLOGY COMPANY INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (in thousands, except share data) (Unaudited) (PART 2 OF 2 PART TABLE)
Cumulative Retained Translation Treasury Stock Earnings Adjustment Shares Amount Balance at June 30, 1995 $41,631 $4,174 (338,373) $(1,978) Net loss for the nine months (353) Stock issued in conjunction with the acquisition of Acrotec Stock options exercised Treasury stock purchased (598,300) (2,470) Translation adjustment (3,313) Balance at March 31, 1996 $41,278 $ 861 (936,673) $(4,448)
The accompanying notes to consolidated financial statements are an integral part of these statements. - 3 - BALDWIN TECHNOLOGY COMPANY, INC.CONSOLIDATED STATEMENT OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents (in thousands) (Unaudited) For the nine months ended March 31, 1996 1995 Cash Flows from operating activities: (Loss) income from operations $ (353) $ 3,151 Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 3,526 3,488 Accrued retirement pay 138 151 Provision for losses on accounts receivable 36 62 Restructuring charge 3,000 Changes in assets and liabilities net of effects from subsidiary purchase - Accounts and notes receivable, net 5,627 (10,169) Inventories (3,298) (7,380) Prepaid expenses and other 256 279 Customer deposits 1,909 2,367 Accrued compensation (251) (242) Accounts and notes payable, trade (1,138) 2,465 Income taxes payable (899) (1,626) Accrued and withheld taxes 528 38 Other accounts payable and accrued liabilities (1,647) (69) Interest payable 636 481 Net cash provided (used) by operating activities 8,070 (7,004) Cash flows from investing activities: Acquisitions of subsidiaries, net of cash acquired (4,798) Additions of property, net (5,567) (882) Additions of patents, trademarks and drawings, net (379) (274) Other assets (181) 433 Net cash used by investing activities (10,925) (723) Cash flows from financing activities: Long-term borrowings 10,334 2,000 Long-term debt repayment (7,777) (3,335) Short-term borrowings 7,021 4,566 Short-term debt repayment (7,465) (1,096) Principal payments under capital lease obligations (323) (372) Other long-term liabilities (827) (23) Treasury stock purchased (2,470) (263) Stock options exercised 120 4 Net cash (used) provided by financing activities (1,387) 1,481 Effects of exchange rate changes (737) 657 Net decrease in cash and cash equivalents (4,979) (5,589) Cash and cash equivalents at beginning of year 13,189 18,534 Cash and cash equivalents at end of period $ 8,210 $ 12,945 The accompanying notes to consolidated financial statements are an integral part of these statements. - 4 - BALDWIN TECHNOLOGY COMPANY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Supplemental disclosures of cash flow information: For the nine months ended March 31, 1996 1995 (in thousands) Cash paid during the period for: Interest $ 2,438 $ 2,109 Income taxes $ 3,118 $ 4,834 Supplemental schedule of non-cash investing and financing activities: For the nine months ended March 31, 1996: The Company acquired the capital stock of Acrotec AB and subsidiaries (Acrotec) in a purchase transaction for consideration of $7,848,000 ($5,660,000 in cash and 350,000 shares of the Company's Class A Common Stock). The fair value of the acquired assets excluding goodwill was $16,915,000 and the liabilities assumed were $12,539,000. The excess of the purchase price over the net assets acquired of $3,472,000 was recorded as goodwill. A restructuring charge was expensed during the second quarter of the fiscal year in a non-cash transaction of $3,000,000. The change in the related liability is recorded as a change in "Other accounts payable and accrued liabilities" for cash flow purposes. See Note 3 in Notes to Consolidated Financial Statements. Other assets included $267,000 of previously capitalized patent costs unrealized as royalties at March 31, 1996. See comments below for March 31, 1995. The Company entered into capital lease agreements of $80,927 for the nine months ended March 31, 1996. For the nine months ended March 31, 1995: The Company successfully defended a patent which, under the terms of the patent purchase agreement with the patent's inventor, entitles the Company to indemnification of a portion of the legal fees incurred to defend the patent infringement. Accordingly, the Company reclassified from patents to long term assets $693,000 of legal fees. These previously capitalized patent costs will be realized as royalties become payable to the patent's inventor. At March 31, 1995, other assets included $591,000 of such costs. In accordance with the terms of a note receivable from a former officer, the Company canceled the note in exchange for the collateral which consisted of 25,000 shares of the Company's Class B Common Stock. The balance of the note together with interest receivable was $171,000. Under an incentive compensation agreement with an officer, the Company issued from treasury 40,000 shares of Class A Common Stock for which the accrued compensation was $235,000. During the quarter ended March 31, 1995, the Company reclassified $279,000 of prepaid taxes previously classified as a current asset to long term other assets. The Company entered into capital lease agreements of $77,767 for the nine months ended March 31, 1995. Disclosure of accounting policy: For purposes of the statement of cash flows, the Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. The accompanying notes to consolidated financial statements are an integral part of these statements. - 5 - BALDWIN TECHNOLOGY COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - General: Baldwin Technology Company, Inc. (Baldwin, or the Company) is engaged primarily in the development, manufacture and sale of material handling, accessory, control and pre-press equipment for the printing industry. The consolidated financial statements include the accounts of Baldwin and its subsidiaries and reflect all adjustments (consisting of only normal recurring adjustments) which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods. Operating results for the three month and nine month periods ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending June 30, 1996. All significant intercompany transactions have been eliminated in consolidation. Net income per share is based on the weighted average number of common shares and common stock equivalents outstanding during the period. For the three and nine month periods ended March 31, 1996 and 1995, net income (loss) was divided by the total of the weighted average number of common shares outstanding and common stock equivalents, in order to calculate net income (loss) per share. Common stock equivalents for the three month periods ended March 31, 1996 and 1995 consisted of 18,476 shares and 117,965 shares, respectively, for stock options. The weighted average number of common and common equivalent shares outstanding for the three month periods ended March 31, 1996 and 1995 were 17,783,312 and 17,932,228, respectively. Common stock equivalents for the nine month periods ended March 31, 1996 and 1995 consisted of 97,676 shares and 121,134 shares, respectively, for stock options. For the nine month periods ended March 31, 1996 and 1995 the weighted average number of common and common equivalent shares were 17,914,971 and 17,937,880, respectively. Common stock equivalents calculated for fully diluted earnings per share were not materially different from those calculated for primary earnings per share. Note 2 - Inventories: Inventories consist of the following:- March 31, June 30, 1996 1995 Raw material $20,470,000 $17,897,000 In process 17,854,000 10,602,000 Finished goods 7,595,000 11,325,000 $45,919,000 $39,824,000 Inventories decreased $1,092,000 due to translation effects of exchange from June 30, 1995 to March 31, 1996. Inventories acquired in the October 2, 1995 purchase of Acrotec AB and Subsidiaries amounted to $3,889,000 and at March 31, 1996 Acrotec inventories were $4,306,000. - 6 - Note 3 - Restructuring: A restructuring reserve was charged to income for the quarter ended December 31, 1995 in the amount of $3,000,000. The reserve was established in order to accrue the costs associated with a planned workforce rationalization of the Company's German operations as well as to accrue for dealer claims associated with changes made to the European dealer network and distribution system. At March 31, 1996, payments of $26,000 had been made for severence against the restructuring reserve and the remaining reserve was $2,974,000. Note 4 - Debt Refinancing: As of December 31, 1995, the Company refinanced it's $20,000,000 revolving credit agreement (the "Revolver") with NationsBank, National Association, as Agent. In connection with the refinancing, certain of the related financial covenants were amended. Note 5 - Common Stock: On November 21, 1995, five (5) eligible non-employee Directors of the Company were automatically granted non-qualified options for a total of 4,490 shares of Class A Common Stock and 510 shares of Class B Common Stock under the Company's 1990 Directors' Stock Option Plan at $5.50 and $6.875, respectively, the fair market values on the date of grant. Restrictions, as described in the Company's 1991 Proxy Statement, are similar to the 1986 Stock Option Plan, as amended and restated (the "1986 Plan"), with the exception of the dates of exercise, vesting and termination. On October 30, 1995 the Compensation and Stock Option Committee of the Board of Directors granted non-qualified options to purchase 41,000 shares of the Company's Class A Common Stock to certain executives under the Company's 1986 Plan. The options were granted at the fair market value on the date of grant ($5.63) and are otherwise identical with regard to restrictions on options previously granted. - 7 - BALDWIN TECHNOLOGY COMPANY, INC. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected the Company's financial position and consolidated financial statements. Nine Months Ended March 31, 1996 vs. Nine Months Ended March 31, 1995. Net sales for the nine months ended March 31, 1996 increased by $26,736,000 or 17.2% to $182,463,000 from $155,727,000 for the nine months ended March 31, 1995. Currency rate fluctuations attributable to the Company's overseas operations increased net sales for the current period by $2,301,000 and acquisitions added $12,143,000 to net sales. Product volume was the primary reason for the $12,292,000 remainder of the increase of which $9,832,000 occurred in the Americas Sector. In terms of local currency, sales changes were mixed within the European Sector. Sales were down 0.25% in Germany, were up 14.4% in the United Kingdom and were up 7.1% in Sweden. Local currency Asian Sector sales were down 6.8%. In the Americas Sector, net sales increased 14.4%. Gross profit for the nine month period ended March 31, 1996 was $59,415,000 (32.6% of net sales) as compared to $52,889,000 (34% of net sales) for the nine month period ended March 31, 1995, an increase of $6,526,000 or 12.3%. Gross profit increased by $510,000 on fluctuations in currency rates, by $4,411,000 due to acquisitions with the remainder due to volume changes, product mix and other factors. Gross profit was lower as a percentage of sales when compared to the prior year due primarily to sales of products that contribute lower gross profits, pressure on sales prices and increased technical service costs in the European and Asia Pacific Sectors. Selling, general and administrative expenses were $38,337,000 (21.0% of net sales) for the nine month period ended March 31, 1996 as compared to $32,422,000 (20.8% of net sales) for the same period of the prior year, an increase of $5,915,000 or 18.2% in these expenses of which $359,000 was due to currency rate fluctuations and $3,393,000 was due to acquisitions. Increased expenses related to sales volume, trade shows and personnel were primarily responsible for selling expense increases while general and administrative expenses increased due primarily to personnel and legal expenses in the current period. Other operating expenses, before restructuring charges (See Note 3, Notes to Consolidated Financial Statements) increased by $1,769,000 over the same period of the prior year of which $197,000 was due to currency rate fluctuations and $1,618,000 was due to acquisitions with the remaining decrease primarily related to decreased engineering and contract related research costs. Interest expense for the nine month period ended March 31, 1996 was $3,074,000 as compared to $2,590,000 for the nine month period ended March 31, 1995. Currency rate fluctuations increased interest expense by $121,000 and acquisitions added $338,000 for the current period. Interest income was $427,000 and $468,000 for the nine month periods ended March 31, 1996 and March 31, 1995, respectively. Currency rate fluctuations decreased interest income by $6,000 and acquisitions increased interest income by $103,000 for the current period. Other income and expense includes foreign currency transaction gains of $418,000 and $204,000 for the nine month periods ended March 31, 1996 and 1995, respectively. The effects of currency rate fluctuations decreased other income by $136,000. Acquisitions increased other income by $31,000 with the remaining increase due primarily to increased royalty income for the current period. - 8 - The Company's effective tax rate was 46% on income before restructuring charges (See Note 3 - Notes to Consolidated Financial Statements) for the nine month period ended March 31, 1996, as compared to 50% for the nine month period ended March 31, 1995. Currency rate fluctuations decreased the provision for income taxes by $135,000 for the current period. The difference in effective rates results primarily from increased domestic income. The current period's effective rate reflects the impact of foreign source income which is generally taxed at significantly higher rates than domestic income. No tax benefit was recorded on the $3,000,000 charge for restructuring due to the Company's tax loss carryforward position in Germany. Net (loss) for the nine month period ended March 31, 1996 was $(353,000) versus net income of $3,151,000 for the nine month period ended March 31, 1995, or $(0.02) and $0.18 per share, respectively. The net loss due to restructuring charges was $(0.17) per share. Currency rate fluctuations increased the net loss by $159,000 and acquisitions increased the net loss by $912,000 or $(0.05) per share for the current period. Weighted average equivalent shares outstanding during the nine month periods ended March 31, 1996 and March 31, 1995 were 17,914,971 and 17,937,880, respectively. - 9 - Three Months Ended March 31, 1996 vs. Three Months Ended March 31, 1995. Net sales for the three months ended March 31, 1996 increased by $8,437,000 or 15.2% to $63,812,000 from $55,375,000 for the three months ended March 31, 1995. Currency rate fluctuations attributable to the Company's overseas operations decreased net sales for the current period by $948,000 while acquisitions added $5,569,000 to net sales for the current period. Product volume increases were primarily responsible for the remainder of the change. In terms of local currency, sales changes were mixed within the European Sector. Sales were down 23.8% in Germany, were up 22.5% in United Kingdom and were up 15.5% in Sweden. Local currency Asian Sector sales were flat in Japan and up by AUS $1,811,000 in the current period from AUS $220,000 in the prior year. In the Americas Sector, net sales increased $4,709,000 or 19.6% for the current period. Gross profit for the three month period ended March 31, 1996 was $20,710,000 (32.5% of net sales) as compared to $18,666,000 (33.7% of net sales) for the three month period ended March 31, 1995, an increase of $2,044,000 or 11.0%. Currency rate fluctuations decreased gross profit by $257,000 and acquisitions added $1,708,000 to gross profit with the remainder of the increase due primarily to increased volume changes, product mix and other factors. Gross profit was lower as a percentage of sales when compared to the prior year due primarily to sales of products that contribute lower gross profit margins, pricing pressures and increased technical service costs. Gross profit margins of the recently acquired Acrotec group were also effected by low sales volume for the quarter. Selling, general and administrative expenses were $13,294,000 (20.8% of net sales) for the three month period ended March 31, 1996 as compared to $11,337,000 (20.4% of net sales) for the same period of the prior year, an increase of $1,957,000 or 17.3% in these expenses. Currency rate fluctuations decreased these expenses by $182,000 and acquisitions added $1,606,000 in the current period. The remainder of the increase was primarily selling expenses related to increased sales volume and personnel. Other operating expenses increased $935,000 or 21.1% over the same period of the prior year. Currency rate fluctuations decreased these expenses by $26,000 and acquisitions added $663,000 for the current period with the remaining increase primarily related to product design engineering. Interest expense for the three month period ended March 31, 1996 was $1,056,000 as compared to $898,000 for the three month period ended March 31, 1995. Currency rate fluctuations decreased interest expense by $9,000 and acquisitions added $152,000 for the current period. Interest income was $178,000 and $146,000 for the three month periods ended March 31, 1996 and March 31, 1995, respectively. Currency rate fluctuations decreased interest income by $30,000 and acquisitions increased interest income by $47,000 for the current period. Other income and expense includes foreign currency transaction gains of $426,000 and $147,000 for the three month periods ended March 31, 1996 and 1995, respectively. Currency rate fluctuations decreased other income by $86,000 and acquisitions added $6,000 for the period with the remaining change due primarily to increased royalty income. The Company's effective tax rate on income before taxes was 46% for the three month period ended March 31, 1996, as compared to 50% for the three month period ended March 31, 1995. The difference in effective rates results primarily from increased domestic source income. The effective tax rate reflects the impact of foreign source income which is generally taxed at significantly higher rates than domestic source income and foreign source losses for which no tax loss carryback benefit is available. Currency rate fluctuations decreased the provision for income taxes by $141,000 for the current period. - 10 - Net income for the three month period ended March 31, 1996 decreased by $263,000 or 21.0% to $991,000 from $1,254,000 for the three month period ended March 31, 1995, or to $0.06 from $0.07 per share, respectively. Currency rate fluctuations decreased net income by $76,000 and acquisitions decreased net income by $739,000 $(0.04) for the current period. Weighted average equivalent shares outstanding during the three month periods ended March 31, 1996 and March 31, 1995 were 17,783,312 and 17,932,228, respectively. - 11 - Liquidity and Capital Resources at March 31, 1996 Liquidity and Working Capital The Company's long-term debt includes $25,000,000 of 8.17% senior notes (the "Senior Notes") due October 29, 2000 and a three- year $20,000,000 Revolving Credit Agreement (the "Revolver") with NationsBank, National Association, as Agent, which matures in December, 1998 (See Note 4 - Notes to Consolidated Financial Statements). The Senior Notes and the Revolver require the Company to maintain certain financial covenants and have certain restrictions regarding the payment of dividends, limiting them throughout the terms of the Senior Notes and the Revolver to $3,000,000 plus 50% of the Company's net income after June 30, 1993. In addition, the Company was required to pledge certain of the shares of its domestic subsidiaries as collateral for both the Senior Notes and the Revolver. Both the Senior Notes and the Revolver require the Company to maintain a ratio of current assets to current liabilities (as those terms are defined in the agreements) of not less than 1.4 to 1. At March 31, 1996, this ratio was 1.60 to 1. Net cash used by investing activities increased by $10,202,000 from $723,000 at March 31, 1995 to $10,925,000 at March 31, 1996 primarily due to the purchase of a previously leased Swedish manufacturing facility for SEK 28,840,000 ($4,295,000) and the purchase of Acrotec AB and Subsidiaries, net of cash acquired, of $4,798,000. Net cash used by financing activities increased by $2,868,000 to $1,387,000 at March 31, 1996 from $1,481,000 provided by financing at March 31, 1995 primarily due to the difference in treasury stock repurchase activity. The Company's working capital decreased from $51,964,000 at March 31, 1995, to $46,421,000 at March 31, 1996, a decrease of $5,543,000 or 10.7%. Currency rate fluctuations decreased working capital by $2,402,000 and acquisitions, net of cash acquired, added $4,912,000 to the current period's working capital. The decrease was due primarily to cash used to finance the Acrotec acquisition and the purchase of the Swedish manufacturing facility. The remainder of the decrease was related to decreases in trade receivables and loans payable to banks. The Company's working capital decreased by $7,154,000 or 13.4% from $53,575,000 at June 30, 1995 to $46,421,000 at March 31, 1996. Currency rate fluctuations decreased working capital by $3,408,000 and acquisitions, net of cash acquired, added $4,912,000 to the current period's working capital. Cash used to finance the Acrotec acquisition and the purchase of the Swedish manufacturing facility were primarily responsible for the change in working capital. Decreases in receivables, net of inventory increases, accounted for the remainder of the change. Increases in customer deposits were largely offset by decreases in other payables. The Company maintains relationships with foreign and domestic banks which have extended credit facilities to the Company totaling $38,136,000, including amounts available under the Revolver. As of March 31, 1996, the Company had outstanding $14,135,000 under these lines of credit, of which $3,123,000 is classified as long-term debt. Total debt levels as reported on the balance sheet at March 31, 1996 are $867,000 lower then they would have been if June 30, 1995 exchange rates had been used and include $3,465,000 of debt of the acquired entities. Net capital expenditures made to meet the normal business needs of the Company for the nine months ended March 31, 1996 and March 31, 1995, including commitments for capital lease payments, were $1,651,000 and $1,156,000, respectively. The Company believes its cash flow from operations and bank lines of credit are sufficient to finance its working capital and other capital requirements for the near and long-term future. - 12 - Impact of Inflation The Company's results are affected by the impact of inflation on manufacturing and operating costs. Historically, the Company has used selling price adjustments, cost containment programs and improved operating efficiencies to offset the otherwise negative impact of inflation on its operations. BALDWIN TECHNOLOGY COMPANY, INC. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) Reports on Form 8-K. There were no reports on Form 8-K filed for the three months ended March 31, 1996. - 13 - 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\ William J. Lauricella Treasurer and Chief Financial Officer Dated: May 6, 1996 - 14 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS IN THE COMPANY'S CURRENT REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH UNAUDITED FINANCIAL STATEMENTS. 9-MOS JUN-30-1996 MAR-31-1996 7892 318 63332 2593 45919 123846 33408 20119 216794 77425 0 0 0 184 94876 216794 63812 63812 43102 43102 18653 0 1056 1835 844 991 0 0 0 991 0.06 0.06
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