SOURCE: Bowne & Co., Inc.

October 26, 2005 21:26 ET

Bowne & Co. Reports 2005 Third Quarter Results

Company Implementing $10 Million in Annualized Cost Savings

NEW YORK, NY -- (MARKET WIRE) -- October 26, 2005 -- Bowne & Co., Inc. (NYSE: BNE) today announced a 2005 third quarter loss from continuing operations of $3.8 million -- or $0.11 per share -- compared to a loss of $5.3 million, or $0.15 per share, for the third quarter of 2004. Revenue was $159.4 million in the 2005 third quarter, compared to $138.4 million in the comparable quarter of 2004. Financial Print revenue for the third quarter of 2005 increased $22.3 million, or 17% over the third quarter of 2004, primarily as a result of increased compliance reporting and mutual fund services. The 2005 and 2004 results from continuing operations exclude Bowne Global Solutions (BGS), which was sold to Lionbridge Technologies, Inc. in September 2005.

For the nine months ended September 30, 2005, income from continuing operations was $8.2 million, or $0.23 per diluted share, versus $7.6 million, or $0.21 per diluted share, for the same period last year. Revenue for the nine months ended September 30, 2005 was $532.6 million, up 2.3%, from $520.7 million in 2004, principally the result of a 13.7% increase in compliance reporting and mutual fund revenue, which was partially offset by a decrease in transactional financial print and Litigation Solutions revenue.

Excluding restructuring, integration and asset impairment charges and the gain on the sale of a building, pro forma loss per share from continuing operations was $0.04 and $0.13 in the third quarter of 2005 and 2004, respectively. Pro forma diluted earnings per share from continuing operations was $0.36 and $0.29 for 2005 and 2004 year-to-date, respectively. (See Pro Forma Supplemental Income Information on the last page of this release for a reconciliation of these non-GAAP financial measures to our Condensed Consolidated Statements of Operations.)

Philip E. Kucera, Chairman and Chief Executive Officer, said, "With the successful sale of our globalization business completed, we are executing our strategy to strengthen and grow our core business. We are investing in client-facing facilities and technology to ensure we remain the leading financial printer; however, we remain diligent with our resources."

The Company is implementing $10 million in annualized cost savings -- primarily the result of a reduction in workforce. The Company estimates that related restructuring expenses from these cost reductions will result in a fourth quarter pre-tax charge of $4 million.

David J. Shea, President and Chief Operating Officer, added, "Our recent shift to a regional approach, which gives local management the resources and responsibility to deliver the best service to our clients, enables us to take the actions that we announced today while remaining certain our clients will continue to receive the best service in the industry. Our non-transactional revenue, particularly mutual fund and compliance reporting, continues to grow, and we see these as opportunities for continued growth."

Financial Print: For the third quarter, Financial Print reported revenue of $152.3 million, compared to $130.0 million for the same period last year. Segment profit for the quarter increased $3.1 million and as a percentage of revenue was 6.3%, compared to 4.9% for the same period in 2004.

Year-to-date Financial Print revenue was $509.9 million compared to $494.0 million. Mutual fund and compliance revenue, increased 14% over 2004, offset by a 13% decrease in transactional revenue, which mirrors the decrease in transactional activity year-to-date. Year-to-date 2005 segment profit decreased $3.0 million, and as a percentage of revenue, was 11.6%, compared to 12.6% for the same period in 2004.

Litigation Solutions: Litigation Solutions' third quarter and year-to-date revenue decreased $1.3 million and $4.0 million, respectively, from last year. However, segment profit increased $0.7 million as compared to the third quarter of 2004 and $1.2 million year-over-year. The increase in segment profit is attributable to an overall reduction in expenses, and increased marketing expenses in 2004. During the third quarter of 2005, the Company recorded a pre-tax impairment charge of $2.1 million related to its document scanning and coding business.

Discontinued Operations: The 2005 and 2004 results from discontinued operations include Bowne Global Solutions (See press release dated September 1, 2005, Bowne Closes Sale of Globalization Business to Lionbridge Technologies, Inc.); 2004 results from discontinued operations also include Bowne Business Solutions. Including discontinued operations, net income for the 2005 third quarter and year-to-date was $4.5 million and $12.5 million, or $0.13 and $0.35 per diluted share, respectively, compared to a loss of $6.5 million -- or $0.18 per share -- and earnings of $7.7 million, or $0.21 per diluted share, in the respective 2004 periods.

Bowne entered into a stock repurchase plan in accordance with Rule 10b5-1 on August 1, 2005 (See press release dated July 29, 2005, Bowne & Co. Adopts Stock Repurchase Plan in Accordance With Rule 10b5-1 For $35 Million in Common Stock). As of October 25, 2005, 1,636,200 shares have been purchased at an average price of $13.85.

Days sales outstanding increased three days at September 30, 2005 from 72 days at September 30, 2004. Net cash used in operations for the period ended September 30, 2005 was $10.4 million versus net cash provided by operations of $5.0 million in 2004. Financial Print work-in-process inventory was $20.9 million at September 30, 2005, compared to $15.5 million at September 30, 2004.

As announced in February 2005, Bowne's corporate office and New York-based operations will relocate to 55 Water Street during 2006, which is expected to result in a capital commitment of approximately $28 million. As detailed in our 8-K filed February 25, 2005, the lease has an initial term of 20 years for approximately 200,000 square feet. The guidance for capital expenditures for the remainder of 2005 has been updated to reflect an earlier move-in than originally expected.

Business Outlook

The Company notes that forward-looking statements of future performance contained in the foregoing and in the following statements and certain statements made elsewhere in this release are based upon current expectations and are subject to factors that could cause actual results to differ materially from those suggested here, including demand for and acceptance of the Company's services, new technological developments, competition and general economic or market conditions, particularly in the domestic and international capital markets, and the estimated annual savings from the cost reductions, the effect of potential dilution from the Convertible Subordinated Debt and the impact from any future purchases under our share repurchase program.

The following 2005 outlook is unchanged from our prior guidance given July
2005 except for additional restructuring and impairment charges and the
addition of capital expenditures related to the New York office relocation.


                                                   2005 Outlook (1)
Revenues:                                        $650 to $695 million
   Financial Print                               $620 to $660 million
   Litigation Solutions                           $30 to $35 million
Segment Profit:
   Financial Print                                $65 to $75 million
   Litigation Solutions                            $3 to $5 million
Corporate/Other:
   Corporate expense                              $17 to $21 million
   Restructuring and impairment charges              $11 million
Depreciation and amortization                        $28 million
Interest expense                                    $5.5 million
Diluted earnings per share
 from continuing operations                         $0.14 to $0.33
Diluted earnings per share from
 continuing operations, pro forma,
 adjusted for the sale of globalization
 business                                           $0.30 to $0.40
Diluted shares  (2)                                  35.2 million
Capital expenditures, excluding
 NY office relocation                                $20 million
Capital expenditures, NY office relocation (3)       $24 million

(1) Excludes Bowne Global Solutions, which is reported as a discontinued
    operation.
(2) Excludes the impact of the potential dilution from the Convertible
    Subordinated Debt (4,058,000 shares) and the impact of any purchases
    under our share repurchase program.  At October 25, 2005,
    32.6 million shares were outstanding.
(3) Total expenditures are expected to be $28 million, of which
    approximately $24 million will be expended in 2005.
Bowne & Co. will hold its earnings conference call to review the 2005 third quarter results on Thursday, October 27, 2005, at 11 a.m. Eastern Time. To join the Web cast, log on to http://www.bowne.com. To access the call via telephone, please dial (800) 406-5356 (domestic) or (913) 981-5572 (international) and ask for the Bowne teleconference.

About Bowne & Co., Inc.

Bowne & Co., Inc., founded in 1775, is a global leader in providing high-value solutions that empower our clients' communications.

--  Bowne Financial Print: The world's largest financial printer and
    leading EDGAR filer, specializing in the creation, management, translation
    and distribution of regulatory and compliance documents.
    
--  Bowne Enterprise Solutions: Digital composition, print, delivery and
    fulfillment of customized and personalized communications designed to
    enable companies to more-effectively target customers to increase market
    leadership.
    
--  Bowne Litigation Solutions: Consulting, electronic discovery and
    software solutions, including DecisionQuest®, one of the nation's largest
    trial research firms, bring our clients fresh perspective resulting in
    better informed choices about strategies and tactics at every step in the
    litigation process.
    
Bowne & Co. combines these capabilities with superior customer service, new
technologies, confidentiality and integrity to manage, repurpose and
distribute a client's information to any audience, through any medium, in
any language, anywhere in the world. For more information, visit us at
www.bowne.com.

                           BOWNE & CO., INC.
                              (NYSE: BNE)
            Condensed Consolidated Statements of Operations
                              (unaudited)

                                    For the Periods Ended Sept 30
(in thousands, except per   ----------------------------------------------
 share information)                Quarter               Year-to-Date
                            ----------------------  ----------------------
                               2005        2004        2005        2004
                            ----------  ----------  ----------  ----------
                                      (as restated)           (as restated)
Revenue                     $  159,359  $  138,353  $  532,585  $  520,689
Expenses:
  Cost of revenue             (107,185)    (92,688)   (344,469)   (323,339)
  Selling and administrative   (46,606)    (43,724)   (142,152)   (149,839)
  Depreciation                  (5,876)     (6,712)    (19,009)    (20,310)
  Amortization                    (235)       (165)       (705)       (495)
  Gain on sale of building           -           -           -         896
  Restructuring, integration
   and asset impairment
   charges                      (3,692)       (789)     (6,861)     (5,786)
                            ----------  ----------  ----------  ----------
                              (163,594)   (144,078)   (513,196)   (498,873)
                            ----------  ----------  ----------  ----------
Operating (loss) income         (4,235)     (5,725)     19,389      21,816
  Interest expense              (1,200)     (2,594)     (3,793)     (7,985)
  Other income, net                154         173       1,316         868
                            ----------  ----------  ----------  ----------
(Loss) income from
 continuing operations
 before income taxes            (5,281)     (8,146)     16,912      14,699
Income tax benefit (expense)     1,456       2,846      (8,704)     (7,115)
                            ----------  ----------  ----------  ----------
(Loss) income from
 continuing operations          (3,825)     (5,300)      8,208       7,584
Discontinued operations
 (see notes):
Gain on sale of subsidiary       3,426           -       3,426           -
Income (loss) from
 discontinued operations,
 net of tax                      4,922      (1,160)        822         108
                            ----------  ----------  ----------  ----------
Net income (loss) from
 discontinued operations         8,348      (1,160)      4,248         108
                            ----------  ----------  ----------  ----------
Net income (loss)           $    4,523  $   (6,460) $   12,456  $    7,692
                            ==========  ==========  ==========  ==========

(Loss) earnings per share
 from continuing operations:
  Basic                     $    (0.11) $    (0.15) $     0.24  $     0.21
  Diluted                   $    (0.11) $    (0.15) $     0.23  $     0.21

Earnings (loss) per share
 from discontinued
 operations:
  Basic                     $     0.24  $    (0.03) $     0.12  $     0.00
  Diluted                   $     0.24  $    (0.03) $     0.12  $     0.00

Total earnings (loss)
 per share:
  Basic                     $     0.13  $    (0.18) $     0.36  $     0.21
  Diluted                   $     0.13  $    (0.18) $     0.35  $     0.21

Weighted-average shares
 outstanding:
  Basic                         34,489      36,410      34,693      35,878
  Diluted                       34,871      36,930      35,144      36,865

Dividends per share         $    0.055  $    0.055  $    0.165  $    0.165

Note: In November 2004, the Company sold its document outsourcing business,
Bowne Business Solutions, to Williams Lea.  The Condensed Consolidated
Statements of Operations for the 2004 periods have been reclassified to
reflect the results from this business as discontinued operations.

On September 1, 2005, the Company sold its globalization business, Bowne
Global Solutions, to Lionbridge Technologies, Inc. The Condensed
Consolidated Statements of Operations for the current and prior periods
has been reclassified to reflect the results from this business as
discontinued operations.

As restated: As previously disclosed in the Company's 2004 Form 10-K, the
results for the quarter and year-to-date ended September 30, 2004 have
been restated to reflect the tax effect of corrections to intercompany
adjustments related to foreign entities within the globalization segment.
While this restatement had no impact on results of operations for the
2004 full year, the impact on the 2004 third quarter was a decrease in net
loss of $166, or $0.00 per share.  The impact on the 2004 nine-month,
year-to-date results was an increase in net income of $297, or $0.01 per
share. The effect of this restatement is reflected in the income (loss)
from discontinued operations.


                           BOWNE & CO., INC.
                              (NYSE: BNE)
                 Condensed Consolidated Balance Sheets
                              (unaudited)

                                        Sept.  30,  Sept.  30,   Dec. 31,
(in thousands)                             2005        2004        2004
                                        ----------  ----------  ----------

Assets
Cash and marketable securities          $  145,462  $    8,290  $   71,928
Accounts receivable, net                   133,247     110,775     114,376
Inventories                                 27,915      20,122      20,559
Prepaid expenses and other current
 assets                                     28,418      29,432      28,941
Assets held for sale                             -     116,119      79,822
                                        ----------  ----------  ----------
      Total current assets                 335,042     284,738     315,626
                                        ----------  ----------  ----------

Property, plant and equipment, net          89,045      97,302      95,620
Goodwill and other intangibles, net         50,873      52,787      53,677
Other assets                                85,224      22,618      23,119
Assets held for sale, non current                -     262,506     166,567
                                        ----------  ----------  ----------
      Total assets                      $  560,184  $  719,951  $  654,609
                                        ==========  ==========  ==========

Liabilities and Stockholders' Equity
Current portion of long-term debt and
 short-term borrowings                  $      200  $        -  $      200
Accounts payable and accrued
 liabilities                               110,169     102,218     120,312
Liabilities held for sale                        -      52,220      37,093
                                        ----------  ----------  ----------
      Total current liabilities            110,369     154,438     157,605
                                        ----------  ----------  ----------

Long-term debt                              75,600     135,000      75,800
Deferred employee compensation and other    38,317      43,631      43,359
Liabilities held for sale, non current           -      10,982       5,048
Stockholders' equity                       335,898     375,900     372,797
                                        ----------  ----------  ----------
    Total liabilities and stockholders'
     equity                             $  560,184  $  719,951  $  654,609
                                        ==========  ==========  ==========

Note: 2004 balances have been reclassified to reflect the November 2004
sale of Bowne Business Solutions and the September 1, 2005 sale of Bowne
Global Solutions.  The assets and liabilities from these businesses are
reported as held for sale and the condensed consolidated balance sheets
for the 2004 periods have been reclassified to reflect this presentation.


                           BOWNE & CO., INC.
                              (NYSE: BNE)
            Condensed Consolidated Statements of Cash Flows
                              (unaudited)

                                                      Nine Months Ended
                                                        September 30,
                                                    ----------------------
(in thousands)                                         2005        2004
                                                    ----------  ----------
                                                              (as restated)
Cash flows from operating activities:
  Income from continuing operations                 $    8,208  $    7,584
  Depreciation and amortization                         19,714      20,805
  Asset impairment charges                               4,723         153
  Gain on sale of building                                   -        (896)
  Changes in assets and liabilities, net of
   non-cash transactions                               (43,018)    (22,678)
                                                    ----------  ----------
Net cash (used in) provided by operating activities    (10,373)      4,968
                                                    ----------  ----------

Cash flows from investing activities:
  Purchase of property, plant and equipment            (14,594)    (13,275)
  Purchase of marketable securities                    (67,000)          -
  Proceeds from the sale of marketable securities       20,280           -
  Proceeds from the sale of subsidiary, net of
   costs paid and marketable securities received       120,218           -
  Proceeds from the sale of building                         -       6,731
  Other                                                    230         122
                                                    ----------  ----------
Net cash provided by (used in) investing activities     59,134      (6,422)
                                                    ----------  ----------

Cash flows from financing activities:
  Proceeds from borrowings                              34,000     128,229
  Payment of debt                                      (34,200)   (131,229)
  Proceeds from stock options exercised                  7,455      18,503
  Purchase of treasury stock                           (18,122)          -
  Payment of dividends                                  (5,611)     (5,762)
                                                    ----------  ----------
Net cash (used in) provided by financing activities    (16,478)      9,741
                                                    ----------  ----------
Net cash used in discontinued operations                (5,491)    (10,817)
                                                    ----------  ----------

Net increase (decrease) in cash and cash
 equivalents                                        $   26,792  $   (2,530)
Cash and Cash Equivalents -- beginning of period        51,557      10,738
                                                    ----------  ----------
Cash and Cash Equivalents -- end of period          $   78,349  $    8,208
                                                    ==========  ==========


                        BOWNE & CO., INC.
                           (NYSE: BNE)
                       Segment Information
                           (unaudited)

Information regarding the operations of each business segment is set forth
below. Performance is evaluated based on several factors, of which the
primary financial measure is segment profit. Segment profit is defined
as gross margin (revenue less cost of revenue) less selling and
administrative expenses, plus the Company's equity share of income
(losses) associated with a joint venture investment in the Litigation
Solutions segment. Segment performance is evaluated exclusive of interest,
income taxes, depreciation, amortization, certain shared corporate
expenses, restructuring, integration and asset impairment charges,
gain on sale of building, other expenses and other income. Therefore,
this information is presented in order to reconcile to income from
continuing operations before income taxes. The Corporate/Other category
includes (i) corporate expenses for shared administrative, legal, finance
and other support services which are not directly attributable to the
operating segments, (ii) restructuring, integration and asset impairment
charges, and (iii) other expenses and other income.


                                    For Periods Ended September 30,
(in thousands)                       Quarter              Year-to-Date
                              2005        2004        2005        2004
                            --------    --------    --------    --------
Revenues:                            (as restated)           (as restated)
Financial Printing          $152,337    $129,991    $509,889    $494,015
Litigation Solutions           7,022       8,362      22,696      26,674
                            --------    --------    --------    --------
                            $159,359    $138,353    $532,585    $520,689
                            ========    ========    ========    ========
Segment profit:
Financial Printing             9,541       6,429      59,192      62,270
Litigation Solutions             670         (26)      2,212       1,042
Corporate/Other
 (see detail below)           (8,181)     (5,078)    (20,985)    (19,823)
                            --------    --------    --------    --------
                               2,030       1,325      40,419      43,489
                            --------    --------    --------    --------
Depreciation                  (5,876)     (6,712)    (19,009)    (20,310)
Amortization                    (235)       (165)       (705)       (495)
Interest                      (1,200)     (2,594)     (3,793)     (7,985)
                            --------    --------    --------    --------
Loss (income) from
 continuing operations
 before income taxes        $ (5,281)   $ (8,146)   $ 16,912    $ 14,699
                            ========    ========    ========    ========

Corporate/Other (by type):
Shared corporate expenses   $ (4,329)   $ (4,241)   $(14,602)   $(15,054)
Other (expense) income, net     (160)        (48)        478         121
Gain on sale of building           -           -           -         896
Restructuring charges,
 integration costs and
 asset impairment charges     (3,692)       (789)     (6,861)     (5,786)
                            --------    --------    --------    --------
  Total                     $ (8,181)   $ (5,078)   $(20,985)   $(19,823)
                            ========    ========    ========    ========

                        BOWNE & CO., INC.
                           (NYSE: BNE)
            PRO FORMA SUPPLEMENTAL INCOME INFORMATION
   Reconciliation to Condensed Consolidated Statements of Operations
                           (unaudited)

Pro forma supplemental income information, which is not prepared in
accordance with generally accepted accounting principles, excludes
restructuring, integration and asset impairment charges and the gain
on sale of building. The Company believes that presentation of this
supplemental information is useful to investors to evaluate performance
in comparison to prior year's results. This pro forma supplemental
information is an alternative to, and not a replacement measure of,
operating performance as determined in accordance with generally
accepted accounting principles.


                                    For the Periods Ended Sept. 30,
(in thousands, except per          Quarter              Year-to-Date
 share information)           2005        2004        2005        2004
                            --------    --------    --------    --------
                                     (as restated)           (as restated)
(Loss) income from
 continuing operations      $ (3,825)   $ (5,300)   $  8,208    $  7,584
Add back:
Restructuring, integration
 and asset impairment
 charges, net of pro forma
 tax effect  (1)               2,377         491       4,373       3,639
Gain on sale of building,
 net of pro forma tax
 effect  (2)                       -           -           -        (551)
                            --------    --------    --------    --------
(Loss) income from
 continuing operations,
 pro forma                  $ (1,448)   $ (4,809)   $ 12,581    $ 10,672
                            ========    ========    ========    ========

Earnings per share from
 continuing operations:
     Basic                  $  (0.11)   $  (0.15)   $   0.24    $   0.21
     Diluted                $  (0.11)   $  (0.15)   $   0.23    $   0.21
Earnings per share from
 continuing operations
 --pro forma:
     Basic                  $  (0.04)   $  (0.13)   $   0.36    $   0.30
     Diluted                $  (0.04)   $  (0.13)   $   0.36    $   0.29
Weighted-average shares
 outstanding:
     Basic                    34,489      36,410      34,693      35,878
     Diluted                  34,871      36,930      35,144      36,865

(1) In 2005, restructuring, integration and asset impairment charges of
    $3.7 million for the quarter and $6.9 million year-to-date are net
    of tax benefits of $1.3 million and $2.5 million, respectively.
    In 2004, the restructuring, integration and asset impairment charges
    of $0.8 million for the quarter and $5.8 million year-to-date, are
    net of tax benefits of $0.3 million and $2.2 million, respectively.
(2) Gain on sale of building of $0.9 million, net of taxes of $0.3
    million.

Contact Information

  • Investor Relations Contact:
    William J. Coote
    Treasurer
    212-886-0614
    Email Contact

    Bowne & Co., Inc.
    345 Hudson Street
    212/886-0614
    Fax: 212/229-7392