Bowne Announces Second Quarter Results: Globalization Segment Posts Record
Thursday, July 31, 2003
NEW YORK, July 30 -- Bowne & Co., Inc. today announced net income for the second quarter ended June 30, 2003 of $258,000, or $0.01 per share, versus net income of $11,061,000, or $0.31 per share, for the same period last year. The results for the quarter include restructuring charges, net of tax, of $6,136,000 or $0.18 per share. On a pre-tax basis, restructuring costs amounted to $9,617,000, of which $8 million related to severance costs and $1.6 million related to other cost reductions and integration costs associated with the acquisition of Berlitz GlobalNet by the company's Globalization unit. Second quarter 2003 revenues were $307,741,000 compared to $313,267,000 for the same period last year. This decrease reflects a 38% decline in transactional financial printing, the result of the continued softness in the capital markets, offset by revenue growth in both Outsourcing and Globalization. Overall, non-transactional revenues were 82% of Bowne's total revenues. For the six months ended June 30, 2003, net loss was $3,995,000, or $0.12 per share, versus net income of $14,609,000 or $0.41 per share for the same period last year. The 2003 six-month results include restructuring charges with a net of tax impact of $9,658,000, or $0.29 per share. Revenue for the six months ended June 30, 2003 was $563,464,000, up 2% from $552,951,000 reported a year earlier. "The restructuring and integration charges are greater than forecasted and are now expected to total $18 million for the year compared with the previously provided range of $10 to $15 million. The resulting cost savings of $35 to $40 million also exceeded our projections by $5 to $10 million annually, demonstrating our ability and commitment to aggressively reduce fixed costs and manage through a very difficult business environment," said Bowne chairman and chief executive officer Robert M. Johnson. Johnson continued, "The operating results for the quarter met the high end of our forecast and we are cautiously optimistic about the second half of the year given the traction we are seeing in our Globalization business and the positive impact that we expect in financial print from the anticipated improvement in the capital markets from 2002, coupled with our aggressive cost reductions over the past two years." "We are obviously pleased with the record revenue and segment profit results of Bowne Global Solutions (BGS). We attribute these continued strong results to our acquisition of Berlitz GlobalNet (BGN), to our aggressive push to sign new business outside of the IT market and to our management team's focus upon synergies and efficiencies arising from the successful combination of these two businesses. As the results show, the integration of BGS and BGN continues on a successful path as we combine the best resources, workflow practices, production sites and expertise. Organic revenue growth contributed approximately 16% in the current quarter compared to the same period in the prior period." Bowne president Carl J. Crosetto said the Company is satisfied with the performance of Bowne Business Solutions (BBS). "We are encouraged by the improvement in the segment profit as a percent of revenue over the first quarter on basically flat revenues. While BBS has felt the effects of the depressed capital markets in its financial services clients, we have signed seven new outsourcing contracts in the second quarter (all within the legal sector) including service expansion for two clients. These signings continue to strengthen our market leadership in the legal industry and as the capital markets continue their improvement, we should experience volume increases in our financial services clients." "Within Bowne Financial Print, our digital print group is beginning to see some real momentum as financial services companies act on the need to customize and personalize their investor communications. Production volumes within our digital business are 66% higher than in 2002 with June proving to be its highest production month ever. We believe this trend will continue and our digital print group will become a positive contributor to this segment by year end," Johnson said. Johnson said Bowne also continues to focus on cash flow and managing receivables. Average days outstanding improved 6 days to 65 days in 2003. Cash used by operations for the six months ended June 30, 2003 increased approximately $42,308,000 from 2002 to $49,452,000. Financial printing work- in-process inventories increased 26% to $15,518,000 in 2003 from December 31, 2002. Business Outlook The following statements and certain statements made elsewhere in this release are based upon current expectations. These statements are forward looking and actual results may differ materially. Current trends in the global economy, particularly in the domestic and international capital markets, make it difficult at present to project future activity. For the year 2003, the company expects improved results over 2002. The results of its financial print business will continue to be affected by softness in the capital markets, both domestically and internationally. In addition, the third quarter is typically a seasonally slow quarter for our financial print business and given the uncertainty of the timing of transactions coming to market, the company's visibility into future financial results of the third quarter is reduced. However, we estimate the third quarter and full-year 2003 results to be in the following ranges.