By Ann Levine of Raine Consulting February 25, 2003 -- Bowne & Co., Inc. (NYSE: BNE) is a New York-based global business services provider offering its customers document and information management, printing and outsourcing solutions. Bowne’s service groups include: Financial Print, Enterprise Solutions, Business Solutions and Global Solutions. Bowne serves its customers needs through document creation, regulatory filing, printing, and electronic distribution requirements using a combination of the technology in typesetting, conversion, printing hardware and distribution tools. During their fourth quarter, Bowne announced revenue for the fourth quarter 2002 increased 2% to $236 million versus $231 million for the same period a year earlier. Revenue for 2002 overall was $1.003 billion, down 5% from $1.055 billion reported for 2001. Bowne posted a net loss for the fourth quarter ending December 31, 2002 of $18.0 million– or $ .56 per share – versus a loss of $8.6 million – or $ .26 per share – for the same period last year. Topics of this summary - Reduction of Fixed Costs - New Business Model - Diversification Strategy - 2003 Services Overview - Q & A Bowne’s CEO and Chairman, Robert Johnson, highlighted company performance by stating Bowne has faced another challenging year due to the unpredictable market environment and fourth quarter results were in line with November’s outlook. Bowne is well on its way to reaching its goal of reducing costs by $35 million as promised in the November conference call. The company has cut costs by $25 million from financial print and $10 million in global services. Although Bowne has made changes to their transaction business model, 2003 promises to be another challenging year. The changes for 2003 include: 1. A continuation of a diversification strategy 2. Accelerated leveraging of technology infrastructure 3. Aggressive use of outsourcing ability (outsourcing ability includes the investment in new technology, outsourcing of certain manufacturing- which would add additional capacity, greater workforce utilization and customer responsiveness -and enhancement to typesetting systems.) Bowne’s diversification strategy includes going after new markets and customers in financial services with potential expansion to health care and pharmaceuticals, expansion of DecisionQuest to further penetrate the legal services industry, and extended global leadership with Berlitz GlobalNet. CEO Johnson stated that Bowne is looking towards the future with optimism and using the future as an opportunity to reinvent their business model to make it less subject to a volatile market. 2003 Services Model Financial Print – Although Bowne has a flexible manufacturing and typesetting system the capital market remains weak, and the company does not see prospects of recovery in the near future. Bowne expects new IPO’s in Asia and the use of technology to make the business more efficient and viable. Bowne’s Enterprise Solutions are being extended to other industries to expand market share. The company will continue to take advantage of the regulatory environment to introduce new services. Outsourcing Solutions – Outsourcing has held its own in a difficult climate in serving law firms and investment banks and provides the most comprehensive set of services. DecisionQuest has been identified as a tool to expand into new business services. Global Solutions – With new opportunities and a newly appointed CEO, James Fagan, Bowne is committee to implementing greater global efficiencies in 2003. The company expects new market spin-off activity and international IPO activity. Q & A Summary: 1. Bowne stated at the beginning of the conference call that the unpredictable market environment had made it impossible to predict a first quarter outlook. Shareholders questioned CEO Johnson how the company could provide a full year forecast for 2003 without one for first quarter. It was also noted that 2002 forecasts were inaccurate against performance. Johnson stated Bowne was tying to provide the best guidance in an unpredictable environment. 2. The 2003 guidance includes a wide range with regard to financial projections for the transaction market. Assumptions made for the 2003 guidance include middle range projections that assume the transactional market is equal to 2002 performance, lower end projections that would indicate a weaker market, higher projections, a more robust market. 3. 2003 Guidance for Bowne’s Enterprise Solutions suggests this market will be stronger due to business that these services have already attracted this year. 4. Global improvement is forecast based on a model that Bowne will obtain substantial new contracts. 5. Bowne’s Globalization business in 2002 proved troubling to shareholders when competitors (Lionbridge) have witnessed a turn-around in the global sector. Johnson stated that when Mendez was acquired, the company did not cut enough staff. He also stated that Bowne will perform much better than Lionbridge in 2003 because Bowne has been more conservative in staffing. 6. In response to performance, globalization and acquisitions, Johnson stated the company’s fundamental belief is that it is more important to secure broader industry representation and clear market leadership than it is to maximize EBITA. 7. 2003 will show a complete focus on execution. No acquisitions are planned and Johnson stated there would be no money spent on acquisitions. Any positive cash flow will be used towards debt reduction. Bowne will focus on clear growth before looking at any further acquisitions. 8. The company is sized appropriately to the transaction market that currently is estimated at $250-300 million dollars. Johnson believes the fixed cost cuts made over the last two years have brought Bowne 90-95% of the way to sizing to the market. Additional cost reduction opportunities may include downsizing or consolidating facilities.