Highlights

Net income of $3.9 million, or $0.25 per diluted share

Year-over-year reduction of operating expenses by 25% (net of non-routine charges)

$9.6 million settlement of patent infringement case

Reduced net debt from $16.2 million at September 30 to $6.7 million in October

Company is in full compliance with covenant targets in amended credit agreement

Introduced new product applications for the packaging industry

First Quarter Fiscal 2010 Financial Results

The Company reported net sales of $36.2 million for the first quarter, compared to net sales of $38.3 million in the fourth quarter of fiscal 2009 and $55.9 million for the first quarter of the prior year. Currency effects reduced sales by $0.5 million, or 1% from the same quarter of the prior year.

Net income for the first quarter was $3.9 million or $0.25 per diluted share, compared to net income of $1.2 million or $0.08 per diluted share for the comparable quarter in the prior year. Current year net of tax results reflect a gain of $6.7 million from the settlement of a patent infringement action, as well as expenses associated with debt financing of $0.8 million and investigation costs of $0.6 million related to certain internal control matters as reported in the Company's 2009 Report on Form 10-K. Excluding these items, the Company would have reported a net loss of $1.4 million.

EBITDA as reported was $8.1 million for the first quarter. Adjusted EBITDA, which the Company defines as earnings (loss) before interest, taxes, depreciation, amortization, restructuring and other non-routine items, as shown in the attached schedule, was ($0.2) million for the quarter, compared to $3.6 million in the same quarter of FY2009.

Cash flow from operations in the quarter was ($1.2) million compared to ($2.1) million in the first quarter of the prior year.

Orders for the quarter were approximately $34.3 million, compared to $60.0 million in first quarter of the prior year, a decrease of 43%. Backlog as of September 30, 2009 was $37.8 million compared to $39.7 million at June 30, 2009 and $52.3 million at September 30, 2008.

Please refer to the attached schedule, "Non-GAAP Statements of Operations," for a reconciliation of GAAP results to adjusted results.

Settled Patent Infringement Case

The Company entered into a settlement agreement with a German competitor on September 24, 2009, which provided for the Company to receive €6.5 million ($9.6 million) in full settlement of its patent infringement suit. The Company received the settlement funds on October 12th, after the balance sheet date. This settlement resolved a long-standing dispute between the parties concerning patent infringement, patent validity and the alleged amount of damages.

Improved Balance Sheet

As a result of the settlement discussed above, net of the first quarter results, the Company's equity increased to $55 million at September 30, 2009 from $47.6 million at June 30, 2009. The proceeds from the settlement, net of taxes and expenses, were applied to repayment of a portion of the Company's term loan in Germany. Net debt was reduced from $16.2 million reported on September 30 to $6.7 million in October; the ratio of funded debt to total capital improved from 37.0% at June 30 to 26.9%, and our debt to equity ratio improved from 58.8% at June 30, 2009 to 36.8% after the debt repayment.

Amended Credit Facility

As previously reported, the Company entered on July 31st into an amendment to its credit agreement with Bank of America as the lead bank. The Company is in full compliance with the revised covenants of the agreement.

Released New Product Applications for the Packaging Industry

The Company released a new product application of its process automation technology in the packaging industry opening up opportunities in a new market segment.

Introduced New Products and Alliances at Trade Shows

In September, the Company introduced its new COBRA spray dampening technology at IFRA Expo India and, in October, showed a range of new process automation systems at JGAS in Japan. Also in October, at IFRA Expo 09 in Austria, the Company announced its latest alliances with other leading manufacturers and continued the roll-out of its Just Ask! global campaign, introduced at Print 09 in Chicago in September.

Announced Significant Events

Baldwin Announces New Press Equipment Orders (October 26, 2009)

Baldwin and technotrans end Patent Dispute (September 25, 2009)

Baldwin Expands Blending and Packaging Facility (September 10, 2009)

Baldwin Chairman Receives Soderstrom Award (September 2, 2009)

Baldwin Signs Agreement with Q.I. Press Controls for Exclusive Representation in Japan (July 16, 2009)

Baldwin Selected for Middle East Upgrade Project (July 30, 2009)

Additional details, copies of these releases and other news can be found at www.baldwintech.com.

Comments

President and CEO Karl S. Puehringer said, "Based on historical quarterly run rates, where the first quarters have traditionally been the lowest, this first quarter revenue of $36.2 million gives us an indication that our quarterly revenues will be improving going forward. In addition, we have made great progress to adjust cost structure and capacities to an unprecedented decline in demand for printing equipment. The 2009 cost reductions and restructurings are now completed and providing the anticipated benefits. Year-over-year we lowered our operating expense by 25% and adjusted our headcount by 21%. We strengthened our position by expanding our network of alliances and by making inroads with our technology in the growing emerging markets. Additionally, we are growing our space by successfully applying our know-how in the packaging markets. Leveraging our well-recognized global brand and leading market position to continue developing alliances and sales into emerging countries is providing results that will help drive organic growth in the current environment. We are excited about the opportunities that lie ahead of us." Puehringer added.

Vice President and CFO John P. Jordan said, "Our decisive actions ahead of the curve last year reset our cost structure for reduced activity levels. Operating expenses during the quarter were $11.1 million, net of the $0.9 million investigation cost, compared to $14.8 million in the same quarter last year. Aggressive working capital management generated $1.9 million in cash from working capital during the quarter. We continue to control cost levels to fit the business model and are minimizing our investment in working capital. Additionally, settlement of the patent infringement lawsuit and the credit agreement amendment executed on July 31 provide the liquidity to carry out our operating plan and strengthen the balance sheet. We used the proceeds during October to reduce net debt to $6.7 million from $16.2 million at September 30, 2009. We have also addressed the issues that gave rise to the investigation discussed in the Company's Form 10-K and will continue to expect absolute integrity in all aspects of the Company's management and operations," Jordan concluded.

Non-GAAP Financial Measures

This earnings release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flows of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Pursuant to the requirements of Regulation G, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP measures are provided because management of the Company uses these financials measures in maintaining and evaluating the Company's on-going financial results and trends. Management uses this non-GAAP information as an indicator of business performance.

Conference Call and Webcast

The Company will host a conference call to discuss the financial results and business outlook today at 11:00 AM Eastern Time. Call in information is below:

 Conference Call Access:       
 Domestic: (800) 619-4043      
 International: (415) 228-5043 
 Passcode: Baldwin Q1          
                               
 Rebroadcast Access:           
 Domestic: (866) 356-4351      
 International: (203) 369-0104 
 Passcode: #6484               


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An archived webcast of the conference call will also be available on the Company's web site http://www.baldwintech.com or http://www.investorcalendar.com/IC/CEPage.asp?ID=151978 .

Leading the call will be Baldwin President and CEO Karl S. Puehringer and Vice President and CFO John P. Jordan.

About Baldwin

Baldwin Technology Company, Inc. is a leading international supplier of process automation equipment and related consumables for the printing and publishing industries.