Bowne Reports Net Loss in Q3, Lowers Full Year Guidance
Press release from the issuing company
NEW YORK, Oct. 27 -- Bowne & Co., Inc. today announced a net loss for the third quarter ended September 30, 2004 of $6,626,000 or $0.18 per share, versus net loss of $1,505,000, or $0.04 per share, for the same period last year. For the nine months ended September 30, 2004, net income was $7,394,000, or $0.20 per diluted share, versus a net loss of $5,800,000 or $0.17 per share for the same period last year. These results include Bowne Business Solutions (BBS) as a discontinued operation which is to be sold to Williams Lea. (See press release dated October 8, 2004.)
Third quarter 2004 revenues of $194,146,000 compared to $197,015,000 in 2003. Revenues for the nine months ended September 30, 2004 were $688,567,000, up 5.7% from $651,418,000 reported a year earlier.
Several items impact the comparability of the quarter's financial results including expenses related to the disposition of BBS, restructuring charges and the write-off of certain deferred tax assets. Excluding these items, the third quarter 2004 pro forma loss per share was $0.09 as compared to a 2003 pro forma earnings per share of $0.05. Year-to-date, the pro forma diluted earnings per share was $0.45 in 2004, as compared to 2003 pro forma earnings per share of $0.21. (See attached Pro Forma Supplemental Income Information for a reconciliation of these non-GAAP financial measures to our consolidated statements of operations).
"Financial performance in the third quarter was disappointing. These results are lower than expected for two primary reasons. Our Globalization segment was negatively impacted by the continuing weak technology sector spending and delayed product rollouts. The Financial Print business, after performing well in the first half of the year, experienced a weak quarter, with revenues at the lowest level since the fourth quarter of 2002," said Bowne Chief Executive Officer Philip E. Kucera.
David J. Shea, Bowne President and Chief Operating Officer said, "Bowne continues to be the market leader in financial print and we are cautiously optimistic about the return of capital market activity following the upcoming presidential election. The previously announced sale of BBS to Williams Lea, for approximately $180 million in cash, is proceeding on schedule and delivers significant value for our shareholders. We expect to close the transaction in mid-November."
Bowne Financial Print -- For the third quarter of 2004, Financial Print reported revenues of $130 million, a $6 million, or 4% decrease in revenues as compared to last year-due to a 19% decrease in transactional printing partially offset by increases in mutual fund and corporate compliance reporting revenue. Segment profit of $6.4 million decreased $7.8 million as compared to the third quarter of 2003. On a year-to-date basis, financial print revenue of $494 million was up $36 million, or 7.9%, with transactional print up $24 million, or 13.7%, over the same period last year.
Bowne Global Solutions (BGS) third quarter revenues of $55.8 million are $4.0 million higher than 2003, while segment profit of $2.7 million was relatively flat as compared to the third quarter of 2003. Year-to-date revenue of $167.9 million is $3.0 million higher as compared to 2003. Segment profit of $8.1 million in 2004 was lower by $1.1 million as compared to the same period in the prior year. While revenues are slightly ahead of the prior year, client project delays, particularly in the IT sector, led to lower than anticipated revenues. BGS is taking aggressive action to reduce costs through reorganizing the management structure, including the elimination of senior management and staff positions, and scaling back research and development spending. It also continues its efforts to diversify its customer base to reduce its dependence on the IT sector.
Bowne Business Solutions (BBS), Bowne's document outsourcing business, which is to be sold to Williams Lea, is reflected as discontinued operations within our financial statements.
As announced on October 1, DecisionQuest, part of Bowne's litigation services business, acquired Tri-Coastal Legal Technologies, which will expand the presence of DecisionQuest throughout the Southwestern United States.
Bowne continues to focus on cash flow and managing receivables. Days outstanding improved 8 days compared to September 2003. Cash provided by operations for the nine months ended September 30, 2004 improved $27.0 million to $7.0 million, from net cash used by operations of $20.1 million in 2003. Net debt decreased $53 million from September 2003 to $119 million. Financial Print work-in-process inventory was $15.1 million at September 30, 2004, down 3.2% from September 30, 2003.
The company noted 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.
The following is our revised 2004 outlook, which reflects changes from our previous guidance provided in July 2004. This guidance reflects the following:
* Gain on sale of subsidiary (BBS), scheduled to close mid-November;
* Removal of BBS earnings for the remainder of 2004; and
* Lower full-year guidance reflecting the actual third quarter results and our expectations for the full-year.
Reduced guidance for Financial Print reflects our expectation of continuing softness in the transactional markets. Reduced guidance for Globalization reflects our expectation of continued client project delays.
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