By Trevor Shackelford February 23, 2005 -- Bowne & Co (NYSE: BNE) today announced 2004 net earnings of $27.5 million, or $0.77 per share, from $899 million in revenue. Bowne posted a net loss of $7.7 million, or $0.23 per share, in 2003. Net earnings in the fourth quarter were $20.1 million, or $0.56 per share, off of $210 million in revenue compared to a net loss of $3 million, or $0.09 per share, for the same period in 2003. The large net earnings in the fourth quarter came from the sale of its Bowne Business Services (BBS) division for a net gain of $31.6 million. Topics of this Summary Quarter and 2004 Highlights Segment Performance Guidance Raine Radar Q & A Quarter and 2004 Highlights Fourth quarter performance was below the company’s target, with profits from its two primary segments down $9.8 million from the same period last year, despite a net gain in revenues. Bowne sold its BBS division in November 2004 for a net gain of $31.6 million. The company restructured its BGS division in the fourth quarter. The company expects the cost savings will help it achieve 2005 segment goals. S G & A as a percentage of sales increased 34 basis points in 2004 from 2003. Bowne began a share repurchase plan in 2004 which has bought back 2,035,000 shares. BGS began working on a major localization project for Microsoft which will keep earning revenue through the first quarter and likely into the second quarter of 2005. Segment Performance Financial Print In 2004, Financial Print reported total revenue of $637.4 million, a $46.6 million, or 7.9%, increase in revenue as compared to last year. Segment profit for the full year of 2004 of $69.0 million increased $7.1 million as compared to 2003. For the fourth quarter of 2004, financial print revenue of $143.4 million was up $10.6 million, or 8.0%, over the same period in 2003. Segment profit for the fourth quarter of 2004 was $6.8 million compared with $14.3 million in 2003. Price pressure was a big contributor to the loss in profitability, especially in the IPO print business. Global Solutions In 2004, Global Solutions reported total revenue of $223 million, up $3.7 million from 2003, while segment profit of $9.6 million was $3.5 million lower than 2003. Fourth quarter revenue of $55.1 million was up slightly as compared to 2003, while segment profit for the fourth quarter of 2004 of $1.5 million was lower by $2.4 million as compared to 2003. Guidance Bowne anticipates total revenues in 2005 in the $900 million to $1 billion range with net income in the range of $28.5 million to $66.5 million, or $0.50 to $1.00 in diluted earnings per share. Bowne expects revenues in the financial print segment of between $640 million and $715 million, with profits in the range of $70 million (an increase of $1 million from 2004) and $95 million. The company believes the revenue growth would be fueled by an increase in M&A. In the global solutions segment, Bowne is anticipating revenues of between $225 million and $260 million with profits doubling with a 2005 range of between $19 million and $24 million. The company expects this increased profit to come from the cost savings it will generate from its Q4 2004 segment restructuring. Raine Radar Although one tries not to be too liberal with terms like “saucy,” it is probably an accurate description of Bowne’s 2005 guidance. The first half of 2005 will show whether or not the Q4 restructuring in the Global Services division will translate into a 100% increase in profit. Or maybe Bowne’s profits are directly tied to the cyclical nature of the financial markets? Whichever way it goes, the company may start seeing its stock rise. Bowne executives made no comments about looking to sell BGS, but they did say that the segment was not “core business” and that it had not seen any benefit from potential synergies with the financial print segment. They also made it very clear that the focus in 2005 would be on their core business of financial print. Based on this, Raine Radar believes Bowne would entertain the possibility of selling their Global Services division, but probably not until after their Microsoft localization project is completed. Q & A Corporate spending was $1 million above what was budgeted based on Sarbanes-Oxley expenses and increased audit costs. 2004 costs in maintaining Sarbanes-Oxley compliance are $3 million, and are anticipated to decrease by as much as 50-75% Bowne saw more growth come from IPO’s than M&A in 2004. Pricing pressure has been pretty steady over the past couple quarters and is not anticipated to grow dramatically in 2005. Cost savings from restructuring in the BGS segment are estimated to be 5 million during 2005. BGS revenues are expected to build throughout the year Larger revenue transactions in BGS will be recognized in 2005 from 2004.