Form 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.

[Mark one]
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
    1934

                       For quarter ended December 31, 2003

                                       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                                     12-3258160
 -------------------------------           ------------------------------------
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

                Twelve Commerce Drive, Shelton, Connecticut 06484
               --------------------------------------------------
               (Address of principal executive offices)     (Zip Code)

        Registrant's telephone number, including area code: 203-402-1000
  ----------------------------------------------------------------------------
         (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 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 [ ]

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).

         YES [ ]                         NO [X]

                      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 January 31, 2004
---------------------        -------------------------------
                          
Class A Common Stock
   $0.01 par value                     12,832,647

Class B Common Stock
   $0.01 par value                      2,181,883




                        BALDWIN TECHNOLOGY COMPANY, INC.

                                      INDEX



                                                                                          Page
                                                                                          ----
                                                                                       
Part I   Financial Information

         Item 1  Financial Statements

                 Consolidated Balance Sheets at December 31, 2003 (unaudited) and
                 June 30, 2003                                                              1-2

                 Consolidated Statements of Income for the three
                 and six months ended December 31, 2003 (unaudited)
                 and 2002 (unaudited)                                                         3

                 Consolidated Statements of Changes in Shareholders'
                 Equity for the six months ended December 31, 2003 (unaudited)                4

                 Consolidated Statements of Cash Flows for the six
                 months ended December 31, 2003 (unaudited) and
                 2002 (unaudited)                                                           5-6

                 Notes to Consolidated Financial Statements (unaudited)                    7-17

         Item 2  Management's Discussion and Analysis of Financial Condition and
                 Results of Operations                                                    18-27

         Item 3  Quantitative and Qualitative Disclosures About
                 Market Risk                                                                 27

         Item 4  Controls and Procedures                                                     27

Part II          Other Information

         Item 6  Exhibits and Reports on Form 8-K                                            28

Signatures                                                                                   29




                        BALDWIN TECHNOLOGY COMPANY, INC.

                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                     ASSETS



                                                                               December 31, 2003   June 30, 2003
                                                                               -----------------   -------------
                                                                                 (Unaudited)
                                                                                             
CURRENT ASSETS:
  Cash and cash equivalents                                                        $  12,678         $  6,950
  Accounts receivable trade, net of allowance for doubtful
    accounts of $2,370 ($2,286 at June 30, 2003)                                      22,357           22,102
  Notes receivable, trade                                                             12,650           10,336
  Inventories, net                                                                    25,404           22,769
  Deferred taxes                                                                         580              532
  Prepaid expenses and other                                                           8,573            4,611
                                                                                   ---------         --------
                  Total Current Assets                                                82,242           67,300
                                                                                   ---------         --------

MARKETABLE SECURITIES:
  Cost $580 ($505 at June 30, 2003)                                                      541              407
                                                                                   ---------         --------

PROPERTY, PLANT AND EQUIPMENT, at cost:
  Land and buildings                                                                   1,023              914
  Machinery and equipment                                                              3,466            2,896
  Furniture and fixtures                                                               3,864            3,461
  Leasehold improvements                                                                 473              474
  Capital leases                                                                         282              255
                                                                                   ---------         --------
                                                                                       9,108            8,000
  Less:  Accumulated depreciation and amortization                                    (4,204)          (2,978)
                                                                                   ---------         --------
Net Property, Plant and Equipment                                                      4,904            5,022
                                                                                   ---------         --------

PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS, at cost, less accumulated
  amortization of $4,056 ($3,824 at June 30, 2003)                                     2,224            2,137

GOODWILL, less accumulated amortization of $3,569 (3,227 at June 30, 2003)            11,250           10,227

DEFERRED TAXES                                                                         7,612            7,453

OTHER ASSETS                                                                           4,240            4,287
                                                                                   ---------         --------

TOTAL ASSETS                                                                       $ 113,013         $ 96,833
                                                                                   =========         ========


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

                                        1



                        BALDWIN TECHNOLOGY COMPANY, INC.

                           CONSOLIDATED BALANCE SHEETS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

                      LIABILITIES AND SHAREHOLDERS' EQUITY



                                                                                  December 31, 2003  June 30, 2003
                                                                                  -----------------  -------------
                                                                                     (Unaudited)
                                                                                               
CURRENT LIABILITIES:
   Loans payable                                                                      $   2,794        $   3,301
   Current portion of long-term debt                                                     20,911           16,247
   Accounts payable, trade                                                               12,677           12,249
   Notes payable, trade                                                                  11,218            8,168
   Accrued salaries, commissions, bonus and
    profit-sharing                                                                        5,238            4,196
   Customer deposits                                                                      4,412            3,175
   Accrued and withheld taxes                                                             1,990            2,102
   Income taxes payable                                                                   2,332            1,975
   Other accounts payable and accrued liabilities                                        11,740           11,823
                                                                                      ---------        ---------
                  Total current liabilities                                              73,312           63,236
                                                                                      ---------        ---------

LONG TERM LIABILITIES:
   Long-term debt                                                                         2,367              521
   Other long-term liabilities                                                            7,111            6,795
                                                                                      ---------        ---------
                  Total long-term liabilities                                             9,478            7,316
                                                                                      ---------        ---------
                  Total liabilities                                                      82,790           70,552
                                                                                      ---------        ---------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
   Class A Common Stock, $.01 par, 45,000,000 shares authorized, 16,462,849
     shares issued (16,458,849 shares at June 30, 2003)                                     165              165
   Class B Common Stock, $.01 par, 4,500,000 shares authorized, 2,181,883 shares
     issued (2,185,883 shares at June 30, 2003)                                              21               21
   Capital contributed in excess of par value                                            56,986           56,986
   Retained Deficit                                                                     (17,750)         (19,653)
   Accumulated other comprehensive income                                                 3,450            1,411
   Less: Treasury stock, at cost:
     Class A - 3,630,202 shares                                                         (12,199)         (12,199)
   Note receivable from a former executive for common stock issuance                       (450)            (450)
                                                                                      ---------        ---------
                  Total shareholders' equity                                             30,223           26,281
                                                                                      ---------        ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                            $ 113,013        $  96,833
                                                                                      =========        =========


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

                                        2



                        BALDWIN TECHNOLOGY COMPANY, INC.

                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)



                                                                For the three months         For the six months
                                                                 ended December 31,          ended December 31,
                                                               ----------------------      ----------------------
                                                                 2003          2002          2003          2002
                                                               --------      --------      --------      --------
                                                                                             
Net Sales                                                      $ 39,443      $ 35,288      $ 73,954      $ 68,092
Cost of goods sold                                               26,646        23,806        50,388        47,422
                                                               --------      --------      --------      --------
Gross Profit                                                     12,797        11,482        23,566        20,670
                                                               --------      --------      --------      --------

Operating Expenses:
 General and administrative                                       4,670         3,105         8,311         7,657
 Selling                                                          3,305         2,953         5,978         5,888
 Engineering and development                                      3,315         4,417         6,558         8,508
 Restructuring charges                                               43            50           425         3,337
                                                               --------      --------      --------      --------
                                                                 11,333        10,525        21,272        25,390
                                                               --------      --------      --------      --------
Operating income (loss)                                           1,464           957         2,294        (4,720)
                                                               --------      --------      --------      --------

Other (income) expense:
 Interest expense                                                 1,418           600         2,355         1,318
 Interest income                                                    (30)          (65)          (56)         (141)
 Royalty income, net                                               (900)         (529)       (1,551)       (1,158)
 Other (income) expense, net                                     (1,038)           76        (1,630)          432
                                                               --------      --------      --------      --------
                                                                   (550)           82          (882)          451
                                                               --------      --------      --------      --------
  Income (loss) from continuing operations before
    income taxes                                                  2,014           875         3,176        (5,171)

Provision for income taxes                                          790           363         1,273           622
                                                               --------      --------      --------      --------
Income (loss) from continuing operations                          1,224           512         1,903        (5,793)
Discontinued operations (Note 10):
   Loss from operations of discontinued component (less
   applicable income taxes of $0)                                     0           (65)            0          (253)
   Gain on sale of discontinued component (less applicable
   income taxes of $0)                                                0           543             0           543
                                                               --------      --------      --------      --------
Net income (loss)                                              $  1,224      $    990      $  1,903      $ (5,503)
                                                               ========      ========      ========      ========
Net income (loss) per share - basic and diluted
   Continuing operations                                       $   0.08      $   0.03      $   0.13      $  (0.39)
   Discontinued operations - loss from operations                  0.00          0.00          0.00         (0.02)
   Discontinued operations - gain on sale                          0.00          0.04          0.00          0.04
                                                               --------      --------      --------      --------
                                                               $   0.08      $   0.07      $   0.13      $  (0.37)
                                                               ========      ========      ========      ========
Weighted average shares outstanding:
   Basic                                                         15,015        15,015        15,015        15,015
                                                               ========      ========      ========      ========
   Diluted                                                       15,245        15,015        15,130        15,015
                                                               ========      ========      ========      ========


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

                                        3



                        BALDWIN TECHNOLOGY COMPANY, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                    (IN THOUSANDS, EXCEPT SHARES) (UNAUDITED)






                              Class A             Class B         Capital                 Accumulated
                           Common Stock        Common Stock     Contributed                  Other
                        ------------------   -----------------   In Excess   Retained    Comprehensive
                          Shares    Amount     Shares   Amount    of Par      Deficit    Income (loss)
                        ----------  ------   ---------  ------  -----------  ---------   -------------
                                                                    
Balance at
 June 30, 2003          16,458,849   $165    2,185,883   $21      $56,986    $ (19,653)    $  1,411

Net income for the
  six months ended
  December 31, 2003                                                              1,903

Translation adjustment                                                                        2,031

Unrealized gain on
  available-for-sale
  securities, net of
  tax                                                                                            34

Unrealized loss on
  forward ontracts,
  net of tax                                                                                    (26)


Conversion of B
  shares into A shares       4,000      0       (4,000)    0

Comprehensive
  Income


                        ----------   ----    ---------   ---      -------    ---------      -------
Balance at
December 31, 2003       16,462,849   $165    2,181,883   $21      $56,986    $ (17,750)     $ 3,450
                        ==========   ====    =========   ===      =======    =========      =======





                                                       Note
                                                    receivable
                                                   from a former
                            Treasury Stock         executive for
                        -----------------------     Common Stock   Comprehensive
                          Shares       Amount        Issuance      Income (loss)
                        ----------   ----------    -------------   -------------
                                                       
Balance at
 June 30, 2003          (3,630,202)  $(12,199)        $(450)

Net income for the
  six months ended
  December 31, 2003                                                   $ 1,903

Translation adjustment                                                  2,031

Unrealized gain on
  available-for-sale
  securities, net of
  tax                                                                      34

Unrealized loss on
  forward ontracts,
  net of tax                                                              (26)
                                                                      -------

Conversion of B
  shares into A shares

Comprehensive
  Income                                                              $ 3,942
                                                                      =======

                        ----------    --------        -----
Balance at
December 31, 2003       (3,630,202)   $(12,199)       $(450)
                        ==========    ========        =====


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

                                        4



                        BALDWIN TECHNOLOGY COMPANY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)



                                                                    For the six months ended
                                                                          December 31,
                                                                    ------------------------
                                                                      2003           2002
                                                                    ---------      ---------
                                                                             
Cash flows from operating activities:
 Net income (loss)                                                  $   1,903      $  (5,503)
 Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
     Depreciation and amortization                                        913            966
     Accrued retirement pay                                               197            307
     Provision for losses on accounts receivable                           29            154
     Gain from disposition of business                                      0           (543)
     Restructuring charges                                                425          3,337
     Deferred income taxes                                                 23           (456)
     Changes in assets and liabilities, net of businesses sold:
       Accounts and notes receivable                                      662          3,593
       Inventories                                                       (817)           542
       Prepaid expenses and other                                        (848)         1,683
       Other assets                                                       213            929
       Customer deposits                                                  686           (491)
       Accrued compensation                                               694           (494)
       Payments against restructuring charges                            (997)        (1,677)
       Accounts and notes payable, trade                                1,500          1,252
       Income taxes payable                                               211            234
       Accrued and withheld taxes                                        (287)          (194)
       Other accounts payable and accrued liabilities                    (739)        (2,159)
       Interest payable                                                    74             16
                                                                    ---------      ---------
           Net cash provided by operating activities                    3,842          1,496
                                                                    ---------      ---------
Cash flows from investing activities:
   Proceeds from disposition of businesses, net                             0          3,736
   Additions of property, plant and equipment                            (203)          (413)
   Additions of patents and trademarks                                   (269)          (153)
                                                                    ---------      ---------
        Net cash (used) provided by investing activities                 (472)         3,170
                                                                    ---------      ---------
Cash flows from financing activities:
   Long-term and short-term debt borrowings                            22,271            147
   Long-term and short-term debt repayments                           (18,874)        (4,021)
   Principal payments under capital lease obligations                     (64)            (3)
   Payment of debt financing costs                                     (2,457)          (471)
   Other long-term liabilities                                             (9)            14
                                                                    ---------      ---------
           Net cash provided (used) by financing activities               867         (4,334)
                                                                    ---------      ---------

Effects of exchange rate changes                                        1,491            148
                                                                    ---------      ---------

Net increase in cash and cash equivalents                               5,728            480
Cash and cash equivalents at beginning of period                        6,950          5,106
                                                                    ---------      ---------
Cash and cash equivalents at end of period                          $  12,678      $   5,586
                                                                    =========      =========


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

                                        5



                        BALDWIN TECHNOLOGY COMPANY, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:



                                     For the six months
                                     ended December 31,
                                     ------------------
                                      2003        2002
                                     ------     -------
                                          
Cash paid during the period for:
   Interest                          $2,429      $1,334
   Income taxes                      $1,007      $1,133


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

                                        6



                        BALDWIN TECHNOLOGY COMPANY, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

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
accessories and controls for the printing industry.

         The Company has experienced operating losses and debt covenant
violations over the past three fiscal years. As more fully discussed in these
notes to the consolidated financial statements, the Company has embarked on
restructuring plans (see Note 9) and undertaken other actions aimed at improving
the Company's competitiveness, operating results and cash flow. These actions
have included the sale of certain non-core operating units (see Note 10), the
consolidation of manufacturing facilities and headcount reductions. As a result
of these actions, combined with a new credit agreement (see Note 3), management
believes that the Company's cash flows from operations, along with available
bank lines of credit and alternative sources of borrowings, if necessary, are
sufficient to finance its working capital and other capital requirements over
the term of the current financing agreement, which matures on August 15, 2004.
Management further believes that additional actions can be taken to reduce
operating expenses and that assets can be sold to meet liquidity needs, if
necessary.

         The accompanying unaudited consolidated financial statements include
the accounts of Baldwin and its subsidiaries 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. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements. These financial statements reflect all adjustments, which are in the
opinion of management, necessary to present a fair statement of 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 latest Annual Report on Form 10-K for the fiscal year ended June 30,
2003. Operating results for the three and six months ended December 31, 2003 are
not necessarily indicative of the results that may be expected for the fiscal
year ending June 30, 2004. All significant intercompany transactions have been
eliminated in consolidation.

NOTE 2 - RECENTLY ISSUED ACCOUNTING STANDARDS:

         In December 2003, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 104 ("SAB 104") "Revenue Recognition",
which supercedes Staff Accounting Bulletin No. 101 ("SAB 101") "Revenue
Recognition in Financial Statements". SAB 104's primary purpose is to rescind
accounting guidance contained in SAB 101 related to multiple element revenue
arrangements, superceded as a result of the issuance of EITF 00-21 "Accounting
for Revenue Arrangements with Multiple Deliverables." While the wording of SAB
104 has changed to reflect the issuance of EITF 00-21, the revenue recognition
principles of SAB 101 remain largely unchanged by the issuance of SAB 104. SAB
104 is not expected to have a material impact on the Company's revenue
recognition.

         In May 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 150 ("SFAS 150"),
"Accounting for Certain Financial Instruments with Characteristics of both
Liability and Equity." SFAS 150 modifies the

                                        7



accounting for certain financial instruments that, under previous guidance,
issuers could account for as equity and requires that those instruments be
classified as liabilities (or assets in certain circumstances) in statements of
financial position. SFAS 150 affects the issuer's accounting for certain types
of freestanding financial instruments and also requires disclosure about
alternative ways of settling the instruments and the capital structure of
entities -- all of whose shares are mandatorily redeemable. SFAS 150 is
generally effective for all financial instruments entered into or modified after
May 31, 2003, and otherwise is effective as of July 1, 2003 for the Company.
SFAS 150 is not expected to have a material impact on the Company's current
capital structure, but may in the future should the Company enter into
transactions with certain types of freestanding financial instruments.

RECLASSIFICATIONS:

         Certain prior year items have been reclassified to conform to the
current period's presentation.

NOTE 3 - REVOLVING CREDIT FACILITY:

         On August 18, 2003, the Company entered into a $20,000,000 Credit
Agreement (the "Credit Agreement") with Maple Bank GmbH ("Maple" or "Lender"),
which if not terminated by the Lender on August 15, 2004 or by the Company at
any time by payment in full, shall terminate in its entirety on August 15, 2005.
The credit facility is collateralized by substantially all of the accounts and
notes receivable of the Company and a portion of the Company's inventory up to a
maximum amount of $5,000,000. Borrowings under the credit facility are subject
to a borrowing base and bear interest at a rate equal to the three-month
Eurodollar rate (as defined in the Credit Agreement) plus (i) 10% for loans
denominated in U.S. Dollars or (ii) 11.5% for loans denominated in Euros. The
Credit Agreement provides that the interest rate will be reduced by 0.50% or
whole increments thereof for each whole increment of Disclosed EBITDA (as
defined in the Credit Agreement) that equals or exceeds $1,250,000 for any
fiscal quarter commencing with the quarter ending December 31, 2003. In no event
however, may the interest rate be less than 10.5% per annum. As a result of the
Company exceeding the Disclosed EBITDA for the quarter ended December 31, 2003,
the interest rate was reduced beginning January 1, 2004 by 0.68% for loans
denominated in U.S Dollars and 1.5% for loans denominated in Euros. The initial
borrowings under the credit facility amounted to $18,874,000, of which the
Company utilized $16,243,000 to retire its previously existing debt and
associated interest with Fleet National Bank and Wachovia Bank National
Association and the remainder of the borrowings was utilized for closing costs
and working capital purposes. The closing costs are being amortized and included
in interest expense through August 15, 2004. The Credit Agreement does not
require the Company to meet any financial covenants, except for a limitation on
annual capital expenditures and a prohibition against additional credit
facilities; however, it contains a material adverse effect clause, which
provides that Maple would not be obligated to fund any loan, convert or continue
any loan as a LIBOR loan or issue any new letters of credit in the event of a
material adverse effect. Management does not anticipate that such an event will
occur; however, there can be no assurance that such an event will not occur.
Although there can be no guarantee, management is exploring additional financing
alternatives and believes that the Company's debt can be refinanced on a
long-term basis.

         Prior to this refinancing with Maple, and on October 31, 2000, the
Company entered into a $35,000,000 revolving credit facility (the "Credit
Facility") with Fleet National Bank and First Union National Bank (collectively
the "Banks"), which had an original scheduled maturity date of October 31, 2003.
The Credit Facility consisted of a $25,000,000 revolving credit line (the
"Revolver") and a $10,000,000 credit line to be utilized for acquisitions, (the
"Acquisition Line"). On January 28, 2002, the Credit Facility was amended (the
"Amended Credit Facility"), to among other things, remove the Acquisition Line,
reduce the Revolver to $21,000,000 (subject

                                        8



to a borrowing base), and change the maturity date to October 1, 2002. In
addition, $4,000,000 of the existing Revolver was converted into a term loan
(the "Term Loan"), which matured on June 28, 2002, resulting in available
borrowings under the Revolver from July 1, 2002 to October 1, 2002 of
$17,000,000. The Amended Credit Facility required the Company to satisfy certain
financial covenants including minimum operating income covenants. The Revolver
had associated commitment fees, which were calculated quarterly, at a rate of
one-half of one percent per annum of the unused portion of the Revolver.

         The Company had experienced operating and net losses, and debt covenant
violations over the past three fiscal years. During the quarters ended March 31,
2002 and June 30, 2002, the Company did not meet its minimum operating income
covenants contained in the Amended Credit Facility, and further the Company did
not make the required $4,000,000 principal payment on the Term Loan on June 28,
2002. The Banks granted a forbearance of the collection of the indebtedness
until October 1, 2002 and on October 30, 2002, the Company and the Banks entered
into an amendment to further amend and extend the Amended Credit Facility and
waive the covenant violations and Term Loan default (the "Extended Credit
Facility"). The Extended Credit Facility, totaling $20,900,000, consisted of a
$17,000,000 revolving credit line (the "Extended Revolver") and a $3,900,000
term loan each due July 1, 2003 (the "Extended Term Loan"). The Extended Credit
Facility required the Company to utilize the net proceeds of $3,736,000 from the
sale of certain assets of its wholly-owned subsidiary Baldwin Kansa Corporation
("BKA") (see Note 10) plus $464,000 from the Company's cash flows to reduce
outstanding borrowings under the Extended Revolver by $4,200,000 before October
30, 2002, of which $2,700,000 permanently reduced the Extended Revolver and
$1,036,000 became available for future borrowings, subject to a borrowing base
calculation. Additionally, beginning in December 2002 and extending through June
2003, the Company was required to permanently reduce the Extended Revolver by
making monthly principal payments of $125,000. The Company was also required to
permanently reduce the Extended Revolver by $5,000,000 on December 30, 2002 and
by $5,000,000 on March 30, 2003, but only if the Company generated non-operating
alternative sources of financing. As the Company did not generate any
alternative sources of financing after entering into the Extended Credit
Facility on October 30, 2002, the Company was not required to make, and did not
make, the $5,000,000 payment on December 30, 2002 or the $5,000,000 payment on
March 30, 2003. Additionally, at September 30, 2002 and March 31, 2003, the
Company was not in compliance with its debt covenants, and received waivers for
the non-compliance. At June 30, 2003, the Company had outstanding borrowings of
$16,112,000 under the Extended Revolver and Extended Term Loan and this entire
outstanding balance, which was classified as current as of June 30, 2003, was
entirely repaid from the proceeds of the refinancing with Maple on August 18,
2003.

         In December 2003, the Company, through its Japanese subsidiary,
obtained a YEN 300,000,000 term loan (approximately $2,794,000), which matures
in December 2006 (the "Japanese Term Loan"). The Japanese Term Loan is subject
to semi-annual principal payments of YEN 50,000,000 and bears interest at TIBOR
plus 0.75%. The Company has received a waiver from Maple in connection with this
loan, received the proceeds in December 2003, and is currently considering
alternative uses of these funds.

         The Company maintains relationships with both foreign and domestic
banks, which combined have extended credit facilities to the Company totaling
$27,516,000, including $20,000,000 available under the Credit Agreement. As of
December 31, 2003, the Company had $26,072,000 outstanding under these credit
facilities including $19,835,000 under the Credit Agreement. Total debt levels
as reported on the balance sheet at December 31, 2003 are $2,607,000 higher than
they would have been if June 30, 2003 exchange rates had been used.

NOTE 4 - NET INCOME (LOSS) PER SHARE:

                                        9



         Basic net income (loss) per share includes no dilution and is computed
by dividing net income (loss) available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted net income
(loss) per share reflects the potential dilution of securities that could share
in the earnings of an entity. The weighted average shares outstanding used to
compute diluted net income (loss) per share include 115,000 and 230,000
additional shares, respectively for the three and six months ended December 31,
2003 and zero additional shares for the three and six months ended December 31,
2002, which represent potentially dilutive securities. Outstanding options to
purchase 1,589,000 and 931,000 shares of the Company's common stock for the six
months ended December 31, 2003 and 2002 respectively, are not included in the
above calculation to compute diluted net income (loss) per share as they have an
anti-dilutive effect.

NOTE 5 - 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 and consists of cumulative translation adjustments, unrealized gains and
losses on available-for-sale securities and unrealized gains and losses on
derivative instruments. AOCI consists of the following:



                                        December 31, 2003  June 30, 2003
                                        -----------------  -------------
                                                  (Unaudited)
                                                     
Cumulative translation adjustments         $ 3,503,000      $ 1,472,000
Unrealized loss on investments,
   net of deferred taxes of $16,000
   ($41,000 at June 30, 2003)                  (23,000)         (57,000)
Unrealized loss on derivatives,
   net of deferred taxes of $15,000
   ($2,000 at June 30, 2003)                   (30,000)          (4,000)
                                           -----------      -----------
                                           $ 3,450,000      $ 1,411,000
                                           ===========      ===========


NOTE 6 - INVENTORIES:

         Inventories consist of the following:



                   December 31, 2003     June 30, 2003
                   -----------------    ----------------
                                (Unaudited)
                                  
Raw materials       $    12,236,000     $     11,006,000
In process                6,353,000            5,669,000
Finished goods            6,815,000            6,094,000
                    ---------------     ----------------
                    $    25,404,000     $     22,769,000
                    ===============     ================


         Foreign currency translation effects increased inventories by
$1,819,000 from June 30, 2003 to December 31, 2003.

NOTE 7 - DERIVATIVES:

         On April 27, 2001, the Company entered into an interest rate swap
agreement (the "Swap") with Fleet National Bank. The effect of this agreement
was to convert $15,000,000 of the Company's variable rate debt into fixed rate
debt with an interest rate of 4.98% with the maturity the same as the then
existing credit facility. Included in interest expense was $48,000 and $196,000,
respectively, for the three and six months ended December 31, 2003 and $126,000
and $249,000, respectively for the three and six months ended December 31, 2002
associated with this Swap, which expired on October 30, 2003.

                                       10



         As a result of entering into the Extended Credit Facility on October
30, 2002, as defined in Note 3, which changed various provisions of the Amended
Credit Agreement, also defined in Note 3, including the maturity date, the Swap
no longer qualified as an effective cash flow hedge. Therefore, adjustments to
the fair value of the Swap subsequent to October 30, 2002 were recorded in
earnings through its maturity date of October 30, 2003. The adjustments to the
fair value of this portion of the Swap resulted in a gain (loss) for the three
and six months ended December 31, 2003 of $48,000 and $196,000, respectively and
$91,000 and ($65,000), respectively for the three and six months ended December
31, 2002, which was recorded in "Other income and expense" in the accompanying
consolidated statement of income.

         During the six months ended December 31, 2003, the Company also had
currency futures contracts that qualified as cash flow hedges; accordingly, the
gain or loss on these cash flow hedges was recorded in AOCI and will be
recognized when the hedged items affect earnings. Except for the Swap, hedge
ineffectiveness had no material impact on earnings for the six months ended
December 31, 2003 and 2002.

         Unrealized net gains (losses) included in AOCI are as follows:



                                          December 31, 2003   December 31, 2002
                                          -----------------   -----------------
                                                        
Balance at beginning of period              $      (4,000)     $       (32,000)
Additional gains (losses), net                    (49,000)              28,000
Amounts reclassified to earnings, net              23,000              (10,000)
                                            -------------      ---------------
Balance at end of period                    $     (30,000)     $       (14,000)
                                            =============      ===============


         The unrealized net loss of $30,000 at December 31, 2003 is comprised of
net losses on currency futures contracts, which expired at various times through
January 28, 2004, and were reclassified to earnings during that period.

NOTE 8 -- GOODWILL AND OTHER INTANGIBLE ASSETS:

         The changes in the carrying amount of goodwill for the six months ended
December 31, 2003 are as follows:



                                           Accessories and Controls
                                 -----------------------------------------
                                    Gross
                                   Carrying    Accumulated        Net
                                    Amount     Amortization    Book Value
                                 ------------  ------------   ------------
                                                     
Balance as of July 1, 2003       $ 13,454,000   $3,227,000    $ 10,227,000
Effects of currency translation     1,365,000      342,000       1,023,000
                                 ------------   ----------    ------------
Balance as of December 31, 2003  $ 14,819,000   $3,569,000    $ 11,250,000
                                 ============   ==========    ============


Intangible assets subject to amortization are comprised of the following:



                            As of December 31, 2003          As of June 30, 2003
                         -----------------------------  -----------------------------
                             Gross                          Gross
                           Carrying       Accumulated      Carrying     Accumulated
  Intangible Assets:        Amount       Amortization       Amount      Amortization
----------------------   -------------  --------------  -------------   -------------
                                                            
Patents and trademarks   $   6,280,000  $    4,056,000  $   5,961,000   $   3,824,000
Other                          855,000         604,000        781,000         481,000
                         -------------  --------------  -------------   -------------
Total                    $   7,135,000  $    4,660,000  $   6,742,000   $   4,305,000
                         =============  ==============  =============   =============


         Amortization expense associated with these intangible assets was
$110,000 and $274,000, respectively, for the three and six months ended December
31, 2003 and $206,000

                                       11



and $397,000, respectively for the three and six months ended December 31, 2002.
The other category is included in "Other assets" on the accompanying
consolidated balance sheets.

NOTE 9 -- RESTRUCTURING CHARGES AND RELATED RESERVES:

         During March 2000, the Company initiated a restructuring plan (the
"March 2000 Plan") that included the consolidation of production into certain
facilities, and reduction in total employment, primarily in the United States.
The March 2000 Plan was expanded during the fourth quarter of the fiscal year
ended June 30, 2001. The Company recorded restructuring charges in the amounts
of zero and $23,000, respectively for the three and six months ended December
31, 2003 and $9,000 and $55,000, respectively for the three and six months ended
December 31, 2002 related to the March 2000 Plan. These charges relate primarily
to additional exit costs, which were expensed as incurred. The March 2000 Plan
reduced the Company's worldwide cost base and strengthened its competitive
position as a leading global supplier of auxiliary equipment to the printing and
publishing industry. Prior to initiating the March 2000 Plan, the Company was
managed in a decentralized manner through geographically dispersed autonomous
business units. Given that many of the Company's significant customers had
reorganized on a global basis, management realigned the Company to support its
global customer base. Rather than have separate sales, product development and
production activities at each decentralized business unit, the March 2000 Plan
included centralizing control of these activities. The following table details
the components of the restructuring charges and the remaining reserve balances
as of December 31, 2003 and June 30, 2003 related to the March 2000 Plan.

         Activity related to the March 2000 Plan in the six months ended
December 31, 2003 was as follows:



                                          Remaining      Additional   Payments      Remaining
                                           Reserve     Restructuring  Against        Reserve
                                        June 30, 2003     Charges     Reserve   December 31, 2003
                                        -------------  -------------  --------  -----------------
                                                              (in thousands)
                                                                    
Severance..........................         $   55         $  0        $ (55)        $    0
Facility lease termination costs...          1,396           23         (401)         1,018
Other costs........................              0            0            0              0
                                            ------         ----        -----         ------
Total program......................         $1,451         $ 23        $(456)        $1,018
                                            ======         ====        =====         ======


         Facility lease termination costs will be paid through April 2006. As of
December 31, 2003, $443,000 is included in "Other accounts payable and accrued
liabilities" and $575,000 is included in "Other long-term liabilities."

         In August 2002, in response to weak market conditions, the Company
announced additional restructuring activities (the "August 2002 Plan"), which
reduced total worldwide employment by approximately 160. Accordingly, the
Company recorded an initial restructuring charge of $3,241,000 in August 2002
and additional restructuring charges of $144,000 during the balance of the
fiscal year ended June 30, 2003 related to the August 2002 Plan. In August 2003,
the Company expanded the August 2002 Plan and announced additional employment
reductions of 15 in the United States and 8 in the United Kingdom. In addition,
the Company closed its Dunstable, England office and is currently running its
two separate United Kingdom business operations from its Poole, England location
in an effort to reduce or eliminate certain costs as part of its global
restructuring efforts. The Company recorded restructuring charges of $43,000 and
$401,000, respectively for the three and six months ended December 31, 2003
related to the August 2002 Plan. The following table details the components of
the restructuring charges and the remaining reserve balances as of December 31,
2003 and June 30, 2003 related to the August 2002 Plan.

         Activity related to the August 2002 Plan in the six months ended
December 31, 2003 was as follows:

                                       12





                                         Remaining        Additional     Payments       Remaining
                                          Reserve       Restructuring     Against        Reserve
                                       June 30, 2003       Charges        Reserve   December 31, 2003
                                       -------------   ---------------   --------   -----------------
                                                               (in thousands)
                                                                        
Severance...........................     $    258          $    220      $   (476)        $      2
Facility lease termination costs....          345               173           (43)             475
Other costs.........................           47                 8           (23)              32
                                         --------          --------      --------         --------
Total program.......................     $    650          $    401      $   (542)        $    509
                                         ========          ========      ========         ========


         Severance and other costs will be paid through February 2004, and lease
termination costs will be paid through October 2006, the end of the lease terms.
As of December 31, 2003, $282,000 is included in "Other accounts payable and
accrued liabilities" and $227,000 is included in "Other long-term liabilities."

NOTE 10 - SALE OF BUSINESSES:

         During the first quarter of the fiscal year ended June 30, 2003, the
Company committed to a plan to dispose of substantially all of the assets of
BKA; the transaction closed on October 10, 2002. Under SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," ("SFAS 144") BKA qualified
as a component and therefore the results of BKA's operations are required to be
reported as discontinued operations in the accompanying consolidated statements
of income. Accordingly, BKA's results for each of the three and six months ended
December 31, 2002 have been aggregated and reported as a single amount in each
respective period. BKA's net sales were $141,000 and $978,000, respectively for
the three and six months ended December 31, 2002. The consideration received for
the transaction, after certain post-closing adjustments, was approximately
$3,736,000 and resulted in a gain on the sale of discontinued operations of
approximately $543,000 (net of $80,000 in transaction costs), which was
recognized in the second quarter of the fiscal year ending June 30, 2003.

NOTE 11 - BUSINESS SEGMENT INFORMATION:

         Operating segments are defined as material components of an enterprise
about which separate information is available that is evaluated regularly by the
chief operating decision maker, or decision-making group, in deciding how to
allocate resources and assess performance.

         The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2003. An operating
segment's financial performance is primarily evaluated based on operating
profit.

         The tables below present information about reported segments for the
three and six months ended December 31, 2003 and 2002 (in thousands).



                                Three months ended        Six months ended
                                   December 31,             December 31,
                              -----------------------  -----------------------
                                    (Unaudited)              (Unaudited)
                              -----------------------  -----------------------
                                 2003         2002        2003         2002
                              ----------   ----------  ----------   ----------
                                                        
Net Sales:
   Accessories and Controls   $   39,443   $   35,288  $   73,954   $   68,092
                              ----------   ----------  ----------   ----------
          Total Net Sales     $   39,443   $   35,288  $   73,954   $   68,092
                              ==========   ==========  ==========   ==========


         Foreign currency translation effects increased net sales by $4,342,000
and $6,411,000, respectively for the three and six months ended December 31,
2003.

                                       13





                                                 Three months ended           Six months ended
                                                    December 31,                December 31,
                                               ----------------------      ----------------------
                                                    (Unaudited)                  (Unaudited)
                                               ----------------------      ----------------------
                                                 2003          2002          2003          2002
                                               --------      --------      --------      --------
                                                                             
Operating income (loss):
  Accessories and Controls                     $  3,601      $  1,658      $  6,105      $   (346)
  Corporate                                      (2,137)         (701)       (3,811)       (4,374)
                                               --------      --------      --------      --------
       Total operating income (loss)              1,464           957         2,294        (4,720)
Interest expense, net                            (1,388)         (535)       (2,299)       (1,177)
Royalty income, net                                 900           529         1,551         1,158
Other income (expense), net                       1,038           (76)        1,630          (432)
                                               --------      --------      --------      --------
  Income (loss) from continuing operations
     before income taxes                       $  2,014      $    875      $  3,176      $ (5,171)
                                               ========      ========      ========      ========


         Included in operating income (loss) are restructuring charges of
$43,000 and $422,000, respectively for the three and six months ended December
31, 2003 and $50,000 and $2,662,000, respectively for the three and six months
ended December 31, 2002 related to accessories and controls and zero and $3,000,
respectively for the three and six months ended December 31, 2003 and $146,000
and $146,000, respectively for the three and six months ended December 31, 2002
related to corporate.



                                    December 31,  June 30,
                                       2003         2003
                                    -----------   --------
                                    (Unaudited)
                                            
Identifiable assets:
  Accessories and Controls          $    98,914   $ 85,555
  Corporate                              14,099     11,269
  Divested operations                         0          9
                                    -----------   --------
        Total identifiable assets   $   113,013   $ 96,833
                                    ===========   ========


NOTE 12 - COMMON STOCK:

         Except with respect to the election or removal of Directors, and
certain other matters with respect to which Delaware law requires each class to
vote as a separate class, the holders of the Company's Class A Common Stock
("Class A") and Class B Common Stock ("Class B") vote as a single class on all
matters, with each share of Class A having one vote per share and each share of
Class B having ten votes per share.

         With respect to the election of Directors, the holders of Class A,
voting as a separate class, are entitled to elect 25% of the total number of
Directors (or the nearest higher whole number) constituting the entire Board of
Directors. The holders of Class B, voting as a separate class, are entitled to
elect the remaining Directors, so long as the number of outstanding shares of
Class B is equal to at least 12.5% of the number of outstanding shares of both
classes of Common Stock as of the record date of the Company's Annual Meeting.
If the number of outstanding shares of Class B is less than 12.5% of the total
number of outstanding shares of both classes of Common Stock as of the record
date of the Company's Annual Meeting, the remaining directors are elected by the
holders of both classes of Common Stock voting together as a single class, with
the holders of Class A having one vote per share and the holders of Class B
having ten votes per share. As of December 31, 2003, the number of outstanding
shares of Class B constituted approximately 14.5% (14.6% as of June 30, 2003) of
the total number of outstanding shares of both classes of Common Stock.

         Class A has no conversion rights; however, Class B is convertible into
Class A on a one-

                                       14



for-one basis. During the three months ended December 31, 2003, 4,000 shares of
Class B were converted into 4,000 shares of Class A. In addition, no dividend in
cash or property may be declared or paid on shares of Class B without a dividend
being declared or paid on shares of Class A of at least 105% of the dividend
declared or paid on shares of Class B.

         In November 1999, the Company initiated a stock repurchase program.
Under this new program, the Company is authorized to utilize up to $5,000,000 to
repurchase shares of Class A and Class B. As of December 31, 2003, 818,300
shares of Class A and 25,000 shares of Class B had been repurchased for
$1,784,000, of which $1,721,000 was used to purchase Class A and $63,000 was
used to purchase Class B under this program. There was no activity under this
repurchase program during the three and six months ended December 31, 2003.

NOTE 13 - STOCK OPTIONS:

         On January 1, 2003, the Company adopted the disclosure provisions of
Financial Accounting Standards Board ("FASB") Statement No. 148, "Accounting for
Stock-Based Compensation - transition and disclosure" ("SFAS 148"), which
amended FASB Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123") to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for stock-based
employee compensation, effective as of the beginning of the fiscal year. Baldwin
continues to apply the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," ("APB 25") in accounting for
stock-based compensation. In accordance with APB No. 25, compensation costs for
stock options is recognized in income based on the excess, if any, of the quoted
market price over the exercise price of the stock on the date of grant. The
exercise price for all stock option grants equals the fair market value on the
date of grant, therefore no compensation expense is recorded.

         The pro forma net income (loss) and income (loss) per share information
have been determined for employee stock plans under the fair value method using
the Black-Scholes option-pricing model at the date of grant. The following table
illustrates the effect on net income (loss) and income (loss) per share if the
Company had applied the fair value recognition provisions of SFAS 123 for the
three and six months ended December 31, 2003 and 2002 (in thousands):



                                                        Three months ended         Six months ended
                                                           December 31,              December 31,
                                                       --------------------      --------------------
                                                            (Unaudited)               (Unaudited)
                                                       --------------------      --------------------
                                                        2003         2002         2003          2002
                                                       -------      -------      -------      -------
                                                                                  
Net income (loss), as reported                         $ 1,224      $   990      $ 1,903      $(5,503)
Deduct: Total stock-based employee compensation
  expense determined under fair value based method
  for all awards, net of related tax effects               (25)         (41)         (51)         (81)
                                                       -------      -------      -------      -------
Pro forma net income (loss)                            $ 1,199      $   949      $ 1,852      $(5,584)
                                                       =======      =======      =======      =======

Income (loss) per share:
   Basic and diluted - as reported                     $  0.08      $  0.07      $  0.13      $ (0.37)
                                                       =======      =======      =======      =======
   Basic and diluted - pro forma                       $  0.08      $  0.06      $  0.12      $ (0.37)
                                                       =======      =======      =======      =======


NOTE 14 - RELATED PARTIES:

                                       15



         On October 25, 2002, John T. Heald, Jr. resigned as President, Chief
Executive Officer and a Director of the Company. Mr. Heald was employed by the
Company from March 21, 2001 to November 21, 2002. In accordance with Mr. Heald's
employment agreement, the Company sold 375,000 shares of Class B to Mr. Heald in
October 2001 at $1.80 per share in exchange for a recourse demand promissory
note in the amount of $675,000. The promissory note bears interest, payable
annually, at a rate of 5% per annum. Of the 375,000 shares issued, 189,117
shares were treasury shares and the balance of 185,883 shares were newly issued
shares. The promissory note is collateralized by the shares, pursuant to a loan
and pledge agreement between Mr. Heald and the Company dated October 17, 2001.
If at any time, Mr. Heald sells any of these shares, he is to pay the Company
$1.80 times the number of shares sold within five days of receipt of the funds
from such sale. In November 2002, the Company amended the loan and pledge
agreement, and the promissory note, to evidence a reduction of the outstanding
principal due from Mr. Heald on the loan by $225,000 in exchange for a reduction
in deferred compensation payments to be made by the Company to Mr. Heald. The
Company agreed not to demand payment of the promissory note for a period of two
years following Mr. Heald's termination. The reduction represented the then
present value of Mr. Heald's deferred compensation benefit that had accrued to
Mr. Heald. The balance of the loan, including interest, was $512,000 and
$501,000 at December 31, 2003 and June 30, 2003, respectively.

         In accordance with the terms of the employment agreement between the
Company and Gerald A. Nathe, Chairman, President and Chief Executive Officer of
the Company, the Company loaned Mr. Nathe $1,817,000 to enable Mr. Nathe to
purchase 315,144 shares of Class B from a non-employee shareholder in November
1993 in exchange for a recourse demand promissory note for said amount. The note
bore interest, payable on the anniversary dates of the loan, at LIBOR rates plus
1.25%, reset on the first day of each succeeding January, April, July and
October. The note, was collateralized by the shares pursuant to a loan and
pledge agreement between Mr. Nathe and the Company dated November 30, 1993, as
amended and restated on November 25, 1997. Upon termination of Mr. Nathe's
employment, the Company has agreed not to demand payment for a period of six
months following termination, or twelve months following termination if Mr.
Nathe's employment terminates by reason of death. Notwithstanding the foregoing,
if at any time Mr. Nathe sells any of these shares, he is to pay the Company
$5.77 times the number of shares sold within five days of receipt of the funds
from such sale.

         In February, 2002, the Company amended Mr. Nathe's employment agreement
and the loan and pledge agreement, and, following repayment by Mr. Nathe of a
portion of the principal on the loan, Mr. Nathe issued a substitute recourse
demand promissory note for $1,500,000, the outstanding principal balance on the
date thereof, with interest payable annually at an annual rate of 5%. In August,
2002, the Company amended Mr. Nathe's employment agreement, the loan and pledge
agreement, and the promissory note, to evidence reduction of the outstanding
principal and interest due from Mr. Nathe on the loan by $750,000 in exchange
for an equal reduction in deferred compensation payments to be made by the
Company to Mr. Nathe. The reduction represented the then present value of a
portion of Mr. Nathe's deferred compensation benefit that had accrued to Mr.
Nathe. Mr. Nathe was responsible for his personal taxes on this exchange. The
balance of the loan, including interest, was $854,000 and $836,000 at December
31, 2003 and June 30, 2003, respectively.

NOTE 15 - CUSTOMERS:

         During the three and six months ended December 31, 2003, one customer
accounted for more than 10% of the Company's net sales. Koenig and Bauer
Aktiengesellschaft ("KBA") accounted for approximately 16% of the Company's net
sales for each of the three and six months ended December 31, 2003 and
approximately 11% of the Company's net sales for each of the three and six
months ended December 31,2002. Mitsubishi accounted for less than 10% of the
Company's net sales for each of the three and six months ended December 31, 2003
and

                                       16



approximately 11% of the Company's net sales for each of the three and six
months ended December 31, 2002.

NOTE: 16 - 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 within the Company. Hence,
the Company accrues estimated warranty costs 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 separate from the percent of
revenue discussed above.



                                          Warranty Amount
                                          ---------------
                                       
Warranty reserve at June 30, 2003          $  1,665,000
Additional warranty expense accruals          1,990,000
Payments against reserve                     (1,807,000)
Effects of currency rate fluctuations           172,000
                                           ------------
Warranty reserve at December 31, 2003      $  2,020,000
                                           ============


NOTE 17 - LEGAL PROCEEDINGS AND SETTLEMENTS:

         On November 14, 2002, the Dusseldorf Higher Regional Court ("DHRC")
announced its judgment in favor of Baldwin in a patent infringement dispute
against its competitor, technotrans AG ("Technotrans"). Subsequent to November
14, 2002, Technotrans filed an appeal of the DHRC ruling with the German Supreme
Court in Karlsruhe. Technotrans has also filed to invalidate the Company's
patent with the German Patent Court in Munich. No amounts have been recorded in
the consolidated financial statements with regard to the potential contingent
gain from the DHRC judgment.

         In August, 2001, R.R. Donnelley & Sons (RRD), a customer of the Company
and a licensor to Baldwin Stobb, formerly a division of the Company, filed a
complaint against the Company and Systems Technology Inc. (STI), the entity that
acquired substantially all the assets of Baldwin Stobb in September 2000,
alleging among other things, breach of a license agreement. In March 2002, RRD
amended its complaint alleging additional causes of action. In early March 2003,
RRD withdrew some of its claims and moved to again amend its complaint to
include additional allegations and request specific performance; in late March
2003, RRD moved to file a corrected second amended complaint, alleging new
causes of action and increased damages. The parties reached a settlement in June
2003, under which the Company agreed to provide product, in lieu of cash,
("Credits") to RRD for the Company's share of the settlement, over the course of
the next two years, limited to $250,000 per quarter. The Company recognized a
charge to earnings, which is included in the loss from continuing operations,
during the fourth quarter of the fiscal quarter and year ended June 30, 2003, in
the amount of $1,250,000 representing the fair market value of said product.
During the six months ended December 31, 2003, RRD utilized Credits of $209,000
resulting in a remaining balance of $1,041,000 at December 31, 2003.

NOTE 18 - PROPOSED SALE OF THE COMPANY:

         On December 12, 2003, the Company entered into a non-binding Letter of
Intent ("LOI") whereby technotrans AG would acquire, through a one-step merger,
all outstanding shares of Class A and Class B for a price of $2.50 per share in
cash.

                                       17



NOTE 19 - SUBSEQUENT EVENT:

         On January 29, 2004 the Company terminated the LOI with technotrans AG.

                                       18



                        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
factors, which have affected the consolidated financial statements of Baldwin
Technology Company, Inc. ("Baldwin" or the "Company").

         During the first quarter of the fiscal year ending June 30, 2003, the
Company committed to a plan to dispose of certain assets of its wholly-owned
subsidiary, Baldwin Kansa Corporation ("BKA"); the transaction closed on October
10, 2002. The consideration received for the transaction, after certain
post-closing adjustments, was approximately $3,736,000, which resulted in the
recognition of a gain on the sale of discontinued operations of approximately
$543,000 in the second quarter of the fiscal year ending June 30, 2003. During
the fourth quarter of the fiscal year ended June 30, 2002, the Company recorded
an impairment charge of $5,434,000 related to the goodwill associated with this
business as the recorded value of this goodwill exceeded the assessment of its
fair value made by the Company. For a further discussion, see Note 10 to the
consolidated financial statements. The effects of this transaction on the
consolidated financial statements are discussed below where significant.

FORWARD-LOOKING STATEMENTS

         Except for the historical information contained herein, the following
statements and certain other statements contained herein are based on current
expectations. 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 to obtain, maintain and defend challenges against valid patent
protection on certain technology, primarily as it relates to the Company's
cleaning systems, (ii) material changes in foreign currency exchange rates
versus the U.S. Dollar, (iii) changes in the mix of products and services
comprising revenues, (iv) a decline in the rate of growth of the installed base
of printing press units and the timing of new press orders, (v) general economic
conditions, either domestically or in foreign locations, (vi) the ultimate
realization of certain trade receivables and the status of ongoing business
levels with the Company's large OEM customers, (vii) competitive market
influences and (viii) the ability to successfully implement the Company's
restructuring initiatives. Additional factors are set forth in Exhibit 99 to the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2003
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 for the fiscal year ended June 30,
2003.

SIX MONTHS ENDED DECEMBER 31, 2003 VS. SIX MONTHS ENDED DECEMBER 31, 2002

CONSOLIDATED RESULTS

                                       19



         Net sales for the six months ended December 31, 2003 increased by
$5,862,000, or 8.6%, to $73,954,000 from $68,092,000 for the six months ended
December 31, 2002. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales by $6,411,000 in the current period,
otherwise, net sales would have decreased by $549,000. This decrease was
primarily due to timing of shipments.

         Gross profit for the six months ended December 31, 2003 was $23,566,000
(31.9% of net sales) as compared to $20,670,000 (30.4% of net sales) for the six
months ended December 31, 2002, an increase of $2,896,000 or 14.0%. Currency
rate fluctuations increased gross profit by $2,266,000 in the current period.
Excluding the effects of currency rate fluctuation, gross profit would have
increased by $630,000. Gross profit as a percentage of net sales increased
primarily due to a favorable mix of products, improved capacity utilization and
reduced service costs, resulting primarily from the Company's restructuring
efforts. In addition, gross profit in the prior year period was unfavorably
impacted by higher warranty costs associated with two customer installations in
Japan.

         Selling, general and administrative expenses amounted to $14,289,000
(19.3% of net sales) for the six months ended December 31, 2003 as compared to
$13,545,000 (19.9% of net sales) for the same period in the prior fiscal year,
an increase of $744,000 or 5.5%. Currency rate fluctuations increased these
expenses by $1,064,000 in the current period. Otherwise, selling, general and
administrative expenses would have decreased by $320,000. Selling expenses
decreased by $475,000, which primarily relates to decreased compensation and
travel costs associated with reduced employment levels, and to decreased trade
show and advertising costs in the current year period. General and
administrative expenses increased by $155,000 primarily due to incentive
compensation accruals associated with the Company's improved performance,
coupled with an increase in certain consulting and insurance costs, offset by
reduced travel and other employee related costs primarily as a result of the
Company's restructuring efforts and to decreased subcontracting costs in the
current year period.

         Engineering and development expenses decreased by $1,950,000 over the
same period in the prior fiscal year. Currency rate fluctuations increased these
expenses by $647,000 in the current period. Excluding the effects of currency
rate fluctuations, engineering and development expenses would have decreased by
$2,597,000 in the current period. This decrease relates primarily to decreased
employee compensation and related costs primarily as a result of the Company's
restructuring efforts and to decreased research and development project and
subcontracting costs. As a percentage of net sales, engineering and development
expenses decreased 3.6% to 8.9% for the six months ended December 31, 2003
compared to 12.5% for the same period in the prior fiscal year.

         The Company recorded restructuring charges of $425,000 for the six
months ended December 31, 2003 compared to $3,337,000 for the same period in the
prior fiscal year. The restructuring charge in the current fiscal year period of
$425,000 primarily represents additional employment reductions in the United
States and the United Kingdom announced in August 2003 associated with the
restructuring activities initiated in August 2002 (the "August 2002 Plan"). The
restructuring charge in the prior fiscal year period of $3,337,000 relates
primarily to the initial restructuring charge of $3,241,000 and $41,000 of
additional costs expensed as incurred associated with the August 2002 Plan and
$55,000 of additional costs associated with the restructuring plan announced in
March 2000 (the "March 2000 Plan"), which were expensed as incurred.

         Interest expense for the six months ended December 31, 2003 was
$2,355,000 as compared to $1,318,000 for the six months ended December 31, 2002.
Currency rate fluctuations increased interest expense by $310,000 in the current
period. Otherwise, interest expense would have increased by $727,000. This
increase was primarily due to both higher interest rates in effect for the six
months ended December 31, 2003 as a result of the new

                                       20



credit agreement with Maple Bank GmbH ("Maple"), which was entered into on
August 18, 2003 and higher deferred debt financing cost amortization during the
period associated with Maple. Interest income amounted to $56,000 and $141,000
for the six months ended December 31, 2003 and 2002, respectively. This decrease
in interest income is primarily due to decreased funds available for investment.
Currency rate fluctuations increased interest income by $28,000 in the current
period.

         Net royalty income for the six months ended December 31, 2003 was
$1,551,000 as compared to $1,158,000 for the six months ended December 31, 2002.

         Other income (expense), net amounted to income of $1,630,000 for the
six months ended December 31, 2003 compared to expense of $432,000 for the six
months ended December 31, 2002. Other income (expense), net includes net foreign
currency transaction gains of $1,610,000 and $183,000 for the six months ended
December 31, 2003 and 2002, respectively. The increase is primarily attributable
to currency fluctuations associated with the Maple loan. Included in other
income and expense for the six months ended December 31, 2003 and 2002 are gains
of $1,000 and losses of $91,000, respectively, resulting from the ineffective
portions of derivative financial instruments which qualify as cash flow hedge
gains of $197,000 and $26,000 related to an interest rate swap which ceased to
qualify as a hedge. Also included in other income and expense in the prior
fiscal year period is an additional loss of $211,000 as a result of finalizing
certain adjustments with the buyer of the Roll Handling Group ("RHG"), which
closed in September 2001.

         The Company recorded an income tax provision of $1,273,000 for the six
months ended December 31, 2003 as compared to $622,000 for the six months ended
December 31, 2002. The effective tax rate of 40.1% for the six months ended
December 31, 2003 is primarily due to greater taxable income in higher tax
jurisdictions and in which tax loss carryforwards are not available. The
effective tax rate for the six months ended December 31, 2002 differs from the
statutory rate as no benefit was recognized for losses incurred in certain
countries as the realization of such benefits was not more likely than not.
Currency rate fluctuations increased the provision for income taxes by $74,000
in the current period.

         Loss from operations of discontinued operations for the six months
ended December 31, 2002 was $253,000 and is related to the sale of the BKA
operation, which was completed in October 2002. A gain on the sale of BKA of
$543,000 was recorded during the six months ended December 31, 2002.

         The Company's net income amounted to $1,903,000 for the six months
ended December 31, 2003, compared to a net loss of $5,503,000 for the six months
ended December 31, 2002. Currency rate fluctuations increased net income by
$414,000 in the current period. Net income per share amounted to $0.13 basic and
diluted for the six months ended December 31, 2003, as compared to net loss per
share of $0.37 basic and diluted for the six months ended December 31, 2002.

SEGMENT RESULTS

ACCESSORIES AND CONTROLS GROUP

         Net sales for the six months ended December 31, 2003 increased by
$5,862,000, or 8.6%, to $73,954,000 from $68,092,000 for the six months ended
December 31, 2002. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales for the current period by $6,411,000;
otherwise, net sales would have decreased by $549,000 in the current period.

                                       21



         Operating income amounted to $2,294,000 (3.1% of net sales) for the six
months ended December 31, 2003, as compared to an operating loss of $4,720,000
(6.9% of net sales) for the same period in the prior fiscal year, an increase of
$7,014,000. Currency rate fluctuations increased the current fiscal year's
operating income by $632,000. Otherwise, operating income would have increased
by $6,382,000 in the current period. This increase is primarily the result of
the effects of the Company's previous restructuring efforts, and to decreased
restructuring charges and consulting costs in the current fiscal year period.
Operating income for the six months ended December 31, 2003 and 2002, includes
restructuring charges of $422,000 and $2,662,000, respectively, associated with
both the March 2000 Plan and the August 2002 Plan.

THREE MONTHS ENDED DECEMBER 31, 2003 VS. THREE MONTHS ENDED DECEMBER 31, 2002

CONSOLIDATED RESULTS

         Net sales for the three months ended December 31, 2003 increased by
$4,155,000, or 11.8%, to $39,443,000 from $35,288,000 for the three months ended
December 31, 2002. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales by $4,342,000 in the current period,
otherwise, net sales would have decreased by $187,000. This decrease was
primarily due to timing of shipments.

         Gross profit for the three months ended December 31, 2003 was
$12,797,000 (32.4% of net sales) as compared to $11,482,000 (32.5% of net sales)
for the three months ended December 31, 2002, an increase of $1,315,000 or
11.5%. Currency rate fluctuations increased gross profit by $1,515,000 in the
current period. Excluding the effects of currency rate fluctuation, gross profit
would have decreased by $200,000. Gross profit as a percentage of net sales
remained relatively constant over the same period in the prior year.

         Selling, general and administrative expenses amounted to $7,975,000
(20.2% of net sales) for the three months ended December 31, 2003 as compared to
$6,058,000 (17.2% of net sales) for the same period in the prior fiscal year, an
increase of $1,917,000 or 31.6%. Currency rate fluctuations increased these
expenses by $709,000 in the current period. Otherwise, selling, general and
administrative expenses would have increased by $1,208,000. Selling expenses
decreased by $31,000, which primarily relates to decreased compensation and
travel costs associated with reduced employment levels, and to decreased trade
show and advertising costs in the current year period. General and
administrative expenses increased by $1,239,000 primarily due to incentive
compensation accruals associated with the Company's improved performance,
coupled with an increase in certain consulting and insurance costs.

         Engineering and development expenses decreased by $1,102,000 over the
same period in the prior fiscal year. Currency rate fluctuations increased these
expenses by $409,000 in the current period. Excluding the effects of currency
rate fluctuations, engineering and development expenses would have decreased by
$1,511,000 in the current period. This decrease relates primarily to decreased
employee compensation and related costs primarily as a result of the Company's
restructuring efforts and to decreased research and development project and
subcontracting costs. As a percentage of net sales, engineering and development
expenses decreased 4.1% to 8.4% for the three months ended December 31, 2003
compared to 12.5% for the same period in the prior fiscal year.

         The Company recorded restructuring charges of $43,000 for the three
months ended December 31, 2003 compared to $50,000 for the same period in the
prior fiscal year. These restructuring charges represent additional costs
associated with both the March 2000 Plan and August 2002 Plan, which were
expensed as incurred.

                                       22



         Interest expense for the three months ended December 31, 2003 was
$1,418,000 as compared to $600,000 for the three months ended December 31, 2002.
Currency rate fluctuations increased interest expense by $217,000 in the current
period. Otherwise, interest expense would have increased by $601,000. This
increase was primarily due to both higher interest rates in effect for the three
months ended December 31, 2003 as a result of the new credit agreement with
Maple Bank GmbH ("Maple"), which was entered into on August 18, 2003 and higher
deferred debt financing cost amortization during the period associated with
Maple. Interest income amounted to $30,000 and $65,000 for the three months
ended December 31, 2003 and 2002, respectively. This decrease in interest income
is primarily due to decreased funds available for investment. Currency rate
fluctuations increased interest income by $23,000 in the current period.

         Net royalty income for the three months ended December 31, 2003 was
$900,000 as compared to $529,000 for the three months ended December 31, 2002.
The increase in royalty income in the current period is primarily due to a
decline in the number of units sold by one of the Company's licensees in the
prior year period.

         Other income (expense), net amounted to income of $1,038,000 for the
three months ended December 31, 2003 compared to expense of $76,000 for the
three months ended December 31, 2002. Other income (expense), net includes net
foreign currency transaction gains of $1,092,000 and losses of $185,000 for the
three months ended December 31, 2003 and 2002, respectively. The increase is
primarily attributable to currency fluctuations associated with the Maple loan.
Included in other income and expense for the three months ended December 31,
2003 and 2002 are losses of $2,000 and zero, respectively, resulting from the
ineffective portions of derivative financial instruments which qualify as cash
flow hedges and gains of $48,000 and $91,000 related to an interest rate swap
which ceased to qualify as a hedge.

         The Company recorded an income tax provision of $790,000 for the three
months ended December 31, 2003 as compared to $363,000 for the three months
ended December 31, 2002. The effective tax rate of 39.2% for the three months
ended December 31, 2003 is primarily due to greater taxable income in higher tax
jurisdictions and in which tax loss carryforwards are not available. The
effective tax rate for the three months ended December 31, 2002 differs from the
statutory rate as no benefit was recognized for losses incurred in certain
countries as the realization of such benefits was not more likely than not.
Currency rate fluctuations increased the provision for income taxes by $65,000
in the current period.

         Loss from operations of discontinued operations for the three months
ended December 31, 2002 was $65,000 and is related to the sale of the BKA
operation, which was completed in October 2002. A gain on the sale of BKA of
$543,000 was recorded during the three months ended December 31, 2002.

         The Company's net income amounted to $1,224,000 for the three months
ended December 31, 2003, compared to $990,000 for the three months ended
December 31, 2002. Currency rate fluctuations increased net income by $274,000
in the current period. Net income per share amounted to $0.08 basic and diluted
for the three months ended December 31, 2003, as compared to $0.07 basic and
diluted for the three months ended December 31, 2002.

SEGMENT RESULTS

ACCESSORIES AND CONTROLS GROUP

                                       23



         Net sales for the three months ended December 31, 2003 increased by
$4,155,000, or 11.8%, to $39,443,000 from $35,288,000 for the three months ended
December 31, 2002. Currency rate fluctuations attributable to the Company's
overseas operations increased net sales for the current period by $4,342,000;
otherwise, net sales would have decreased by $187,000 in the current period.

         Operating income amounted to $1,464,000 (3.7% of net sales) for the
three months ended December 31, 2003, as compared to $957,000 (2.7% of net
sales) for the same period in the prior fiscal year, an increase of $507,000.
Currency rate fluctuations increased the current fiscal year's operating income
by $447,000. Otherwise, operating income would have increased by $60,000 in the
current period. This increase is primarily the result of the effects of the
Company's previous restructuring efforts, and to decreased restructuring charges
and consulting costs in the current fiscal year period. Operating income for the
three months ended December 31, 2003 and 2002, includes restructuring charges of
$43,000 and $50,000, respectively, associated with both the March 2000 Plan and
the August 2002 Plan.

              LIQUIDITY AND CAPITAL RESOURCES AT DECEMBER 31, 2003
                          LIQUIDITY AND WORKING CAPITAL

         On August 18, 2003, the Company entered into a $20,000,000 Credit
Agreement (the "Credit Agreement") with Maple Bank GmbH ("Maple" or "Lender"),
which if not terminated by the Lender on August 15, 2004 or by the Company at
any time by payment in full, shall terminate in its entirety on August 15, 2005.
The credit facility is collateralized by substantially all of the accounts and
notes receivable of the Company and a portion of the Company's inventory up to a
maximum amount of $5,000,000. Borrowings under the credit facility are subject
to a borrowing base and bear interest at a rate equal to the three-month
Eurodollar rate (as defined in the Credit Agreement) plus (i) 10% for loans
denominated in U.S. Dollars or (ii) 11.5% for loans denominated in Euros. The
Credit Agreement provided that the interest rate will be reduced by 0.50% or
whole increments thereof for each whole increment of Disclosed EBITDA (as
defined in the Credit Agreement) that equals or exceeds $1,250,000 for any
fiscal quarter commencing with the quarter ending December 31, 2003. In no event
however, may the interest rate be less than 10.5% per annum. As a result of the
Company exceeding the Disclosed EBITDA for the quarter ended December 31, 2003,
the interest rate was reduced beginning January 1, 2004 by 0.68% for loans
denominated in U.S Dollars and 1.5% for loans denominated in Euros. The initial
borrowings under the credit facility amounted to $18,874,000, of which the
Company utilized $16,243,000 to retire its previously existing debt and
associated interest with Fleet National Bank and Wachovia Bank National
Association and the remainder of the borrowings was utilized for closing costs
and working capital purposes. The closing costs are being amortized and included
in interest expense through August 15, 2004. The Credit Agreement does not
require the Company to meet any financial covenants, except for the limitation
on annual capital expenditures and a prohibition against additional credit
facilities; however, it contains a material adverse effect clause, which
provides that Maple would not be obligated to fund any loan, convert or continue
any loan as a LIBOR loan or issue any new letters of credit in the event of a
material adverse effect. Management does not anticipate that such an event will
occur; however, there can be no assurance that such an event will not occur.
Although there can be no guarantee, management is exploring additional financing
alternatives and believes that the Company's debt can be refinanced on a
long-term basis.

     Prior to this refinancing with Maple, and on October 31, 2000, the Company
entered into a $35,000,000 revolving credit facility (the "Credit Facility")
with Fleet National Bank and First Union National Bank (collectively the
"Banks"), which had an original scheduled maturity date of October 31, 2003. The
Credit Facility consisted of a $25,000,000 revolving credit line (the
"Revolver") and a $10,000,000 credit line to be utilized for acquisitions, (the
"Acquisition Line").

                                       24



On January 28, 2002, the Credit Facility was amended (the "Amended Credit
Facility"), to among other things, remove the Acquisition Line, reduce the
Revolver to $21,000,000 (subject to a borrowing base), and change the maturity
date to October 1, 2002. In addition, $4,000,000 of the existing Revolver was
converted into a term loan (the "Term Loan"), which matured on June 28, 2002,
resulting in available borrowings under the Revolver from July 1, 2002 to
October 1, 2002 of $17,000,000. The Amended Credit Facility required the Company
to maintain certain financial covenants including minimum operating income
covenants. The Revolver had associated commitment fees, which were calculated
quarterly, at a rate of one-half of one percent per annum of the unused portion
of the Revolver.

     The Company had experienced operating and net losses, and debt covenant
violations over the past three fiscal years. During the quarters ended March 31,
2002 and June 30, 2002, the Company did not meet its minimum operating income
covenants contained in the Amended Credit Facility, and further the Company did
not make the required $4,000,000 principal payment on the Term Loan on June 28,
2002. The Banks granted a forbearance of the collection of the indebtedness
until October 1, 2002 and on October 30, 2002, the Company and the Banks entered
into an amendment to further amend and extend the Amended Credit Facility and
waive the covenant violations and Term Loan default (the "Extended Credit
Facility"). The Extended Credit Facility, totaling $20,900,000, consisted of a
$17,000,000 revolving credit line (the "Extended Revolver") and a $3,900,000
term loan each due July 1, 2003 (the "Extended Term Loan"). The Extended Credit
Facility required the Company to utilize the net proceeds of $3,736,000 from the
sale of certain assets of its wholly-owned subsidiary Baldwin Kansa Corporation
("BKA") (see Note 10 to the consolidated financial statements) plus $464,000
from the Company's cash flows to reduce outstanding borrowings under the
Extended Revolver by $4,200,000 before October 30, 2002, of which $2,700,000
permanently reduced the Extended Revolver and $1,036,000 became available for
future borrowings, subject to a borrowing base calculation. Additionally,
beginning in December 2002 and extending through June 2003, the Company was
required to permanently reduce the Extended Revolver by making monthly principal
payments of $125,000. The Company was also required to permanently reduce the
Extended Revolver by $5,000,000 on December 30, 2002 and by $5,000,000 on March
30, 2003, but only if the Company generated non-operating alternative sources of
financing. As the Company did not generate any alternative sources of financing
after entering into the Extended Credit Facility on October 30, 2002, the
Company was not required to make, and did not make, the $5,000,000 payment on
December 30, 2002 or the $5,000,000 payment on March 30, 2003. Additionally, at
September 30, 2002 and March 31, 2003, the Company was not in compliance with
its debt covenants, and received waivers for the non-compliance. At June 30,
2003, the Company had outstanding borrowings of $16,112,000 under the Extended
Revolver and Extended Term Loan and this entire outstanding balance, which was
classified as current as of June 30, 2003, was entirely repaid from the proceeds
of the refinancing with Maple on August 18, 2003.

         In December 2003, the Company, through its Japanese subsidiary,
obtained a YEN 300,000,000 term loan (approximately $2,794,000), which matures
in December 2006 (the "Japanese Term Loan"). The Japanese Term Loan is subject
to semi-annual principal payments of YEN 50,000,000 and bears interest at TIBOR
plus 0.75%. The Company has received the proceeds of this loan in December 2003,
and is currently considering alternative uses of these funds.

         The Company maintains relationships with both foreign and domestic
banks, which combined have extended credit facilities to the Company totaling
$27,516,000, including $20,000,000 available under the Credit Agreement. As of
December 31, 2003, the Company had $26,072,000 outstanding under these credit
facilities including $19,835,000 under the Credit Agreement. Total debt levels
as reported on the balance sheet at December 31, 2003 are $2,607,000 higher than
they would have been if June 30, 2003 exchange rates had been used.

                                       25



         On April 27, 2001, the Company entered into an interest rate swap
agreement (the "Swap") with Fleet National Bank. The effect of this agreement
was to convert $15,000,000 of the Company's variable rate debt into fixed rate
debt with an interest rate of 4.98% with the maturity the same as the then
existing credit facility. The effect of this interest rate Swap added $48,000
and $196,000, respectively to interest expense for the three and six months
ended December 31, 2003 and $126,000 and $249,000, respectively to interest
expense for the three and six months ended December 31, 2002 associated with
this Swap, which expired on October 30, 2003.

         The Company's working capital increased by $4,866,000 or 119.7%, from
$4,064,000 at June 30, 2003, to $8,930,000 at December 31, 2003. Foreign
currency rate fluctuations accounted for an increase of $658,000; otherwise,
working capital would have increased by $4,208,000. Working capital increased
primarily due to increased levels of cash, primarily in Japan, associated with
the additional credit facility under the Japanese Term Loan and additional
deferred financing costs associated with the Maple loan. Working capital
decreased primarily by the additional debt resulting from Maple and increased
notes payable, primarily in Japan.

         The Company utilized $472,000 and $566,000 for investing activities for
the six months ended December 31, 2003 and 2002, respectively, primarily for
additions to property, plant and equipment, and patents and trademarks.

         Net cash provided (used) by financing activities was $876,000 for the
six months ended December 31, 2003 as compared to ($4,334,000) for the six
months ended December 31, 2002. The difference was primarily due to higher net
debt borrowings in the current fiscal year period primarily from Maple,
partially offset by the additional closing costs associated with obtaining the
Maple loan.

         During March 2000, the Company initiated a restructuring plan (the
"March 2000 Plan") that included the consolidation of production into certain
facilities, and reduction in total employment, primarily in the United States.
The March 2000 Plan was expanded during the fourth quarter of the fiscal year
ended June 30, 2001. The Company recorded restructuring charges in the amounts
of zero and $23,000 for the three and six months ended December 31, 2003 and
2002, respectively, related to the March 2000 Plan. These charges relate
primarily to additional exit costs, which were expensed as incurred. The March
2000 Plan reduced the Company's worldwide cost base and strengthened its
competitive position as a leading global supplier of auxiliary equipment to the
printing and publishing industry. Prior to initiating the March 2000 Plan, the
Company was managed in a decentralized manner through geographically dispersed
autonomous business units. Given that many of the Company's significant
customers had reorganized on a global basis, management realigned the Company to
support its global customer base. Rather than have separate sales, product
development and production activities at each decentralized business unit, the
March 2000 Plan included centralizing control of these activities. Facility
lease termination costs will be paid through April 2006. As of December 31,
2003, $443,000 is included in "Other accounts payable and accrued liabilities"
and $575,000 is included in "Other long-term liabilities."

         In response to weak market conditions, in August 2002, the Company
announced additional restructuring activities (the "August 2002 Plan"), which
reduced total worldwide employment by approximately 160. Accordingly, the
Company recorded an initial restructuring charge of $3,241,000 in August 2002
and additional restructuring charges of $144,000 during the balance of the
fiscal year ended June 30, 2003 related to the August 2002 Plan. In August 2003,
the Company expanded the August 2002 Plan and announced additional employment
reductions of 15 in the United States and 8 in the United Kingdom. In addition,
the Company closed its office in Dunstable, England and is currently running its
two separate United Kingdom business operations from its Poole, England location
in an effort to reduce or eliminate certain costs as part of its global
restructuring efforts. The Company recorded restructuring charges of

                                       26



$43,000 and $401,000, respectively for the three and six months ended December
31, 2003 associated with the August 2002 Plan.

         The August 2002 Plan is expected to reduce operating costs by
approximately $6,900,000 annually. Severance and other costs will be paid
through March 2004, and lease termination costs will be paid through October
2006, the end of the lease terms. As of December 31, 2003, $282,000 is included
in "Other accounts payable and accrued liabilities" and $227,000 is included in
"Other long-term liabilities."

         During the Company's fiscal year ended June 30, 2002, the German Tax
Authority changed its position regarding the taxability of certain intercompany
dividends. As a result, several companies, including Baldwin, were assessed
additional tax on dividends paid from 1994 through 1996. At this point in time,
the proposed assessment would result in a tax charge of approximately $2,570,000
and the elimination of previously reserved tax assets. However, based on
precedent, the Company believes it will prevail in this matter and there will be
no material financial impact as a result of the German Tax Authority's change in
position. It is expected that the German Tax Authority will assess the Company
during the third or fourth quarter of the fiscal year ended June 30, 2004. Under
German tax law, an assessment is payable at the time it is assessed, however, a
Company is permitted to request a deferral of the payment from the German Tax
Authority through various alternatives. Management believes a deferral will be
granted, however no assurances can be given that such deferral will be granted.

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

         At December 31, 2003 and June 30, 2003, 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
December 31, 2003 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                                                                   2009
                                               December                                                                   and
                                               31, 2003     2004*       2005        2006        2007        2008       thereafter
                                               --------    -------     -------     -------     -------     -------     ----------
                                                                                                  
Contractual Obligations:
Loans payable                                  $  2,794    $ 2,794     $     0     $     0     $     0     $     0      $     0
Capital lease obligations                           223         38          91          67          25           2            0
Long-term debt                                   23,278        548      20,917       1,067         590         125           31
Non-cancelable operating lease obligations       13,459      2,248       4,114       3,343       1,784         990          980
                                               --------    -------     -------     -------     -------     -------      -------
Total contractual cash obligations             $ 39,754    $ 5,628     $25,122     $ 4,477     $ 2,399     $ 1,117      $ 1,011
                                               ========    =======     =======     =======     =======     =======      =======


*Includes only the remaining six months of the fiscal year ending June 30, 2004.

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

                                       27



containment programs and improved operating efficiencies to offset the otherwise
negative impact of inflation on its operations.

RECENTLY ISSUED ACCOUNTING STANDARDS

         See Note 2 to the consolidated financial statements for information
concerning recently issued accounting standards.

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 for the fiscal year ended June 30, 2003. There have
been no material changes during the six months ended December 31, 2003.

ITEM 4: CONTROLS AND PROCEDURES:

         The Chief Executive Officer and Chief Financial Officer of the Company
(its principal executive officer and principal financial officer, respectively)
have concluded, based on their evaluation as of a date within 90 days prior to
the date of the filing of this Report on Form 10-Q, that the Company's controls
and procedures are effective to ensure that information required to be disclosed
by the Company in the reports filed by it under the Securities and Exchange Act
of 1934, as amended, are recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and include controls and
procedures designed to ensure that information required to be disclosed by the
Company in such reports is accumulated and communicated to the Company's
management, including the Chief Executive Officer and Chief Financial Officer of
the Company, as appropriate, to allow timely decisions regarding required
disclosure.

         There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of such evaluation.

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                           PART II: OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

  (a)   Exhibits

      10.65      Amendment to Baldwin Technology Management Incentive
                 Compensation Plan effective January 1, 2004 (filed herewith).

      10.66      Strategic Advisory Services Agreement dated October 19, 2003
                 and effective January 1, 2004 between Baldwin Technology
                 Company, Inc. and Akira Hara (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 (filed
                 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 (filed
                 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).

  (b)   Reports on Form 8-K.

                 The Company filed a Current Report on Form 8-K dated November
                 5, 2003 relating to items 7 and 9.

                 The Company filed a Current Report on Form 8-K dated December
                 12, 2003 relating to items 5 and 7.

                                       29



                                   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/ Vijay C. Tharani
                                                -------------------------
                                                Vice President, Chief Financial
                                                Officer and Treasurer

Dated: February 13, 2004

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