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Bowne Announces 2Q Loss, Still Targets $1 Billion in Revenue for the Year

Press release from the issuing company

NEW YORK, Aug. 8 Bowne & Co., Inc. today announced operating results for the period ended June 30, 2001. Net sales for the quarter of $278,647,000 compared to $297,692,000 for the quarter ended June 30, 2000. Non-transactional revenues grew 13% to $217 million or 78% of total revenue. The Company had a net loss from continuing operations, including certain one-time charges, for the quarter of $68 thousand, compared to net earnings from continuing operations of $14,880,000 for the comparable 2000 period. Earnings per share from continuing operations were $0.00 compared to diluted earnings per share of $0.41 for the same period last year. Excluding the impact of certain one-time charges, adjusted net income and diluted earnings per share from continuing operations for the three and six months ended June 30, 2001 were approximately $6,432,000 and $11,168,000 and $0.19 and $0.33, respectively. The one-time items include the impact of restructuring charges and the loss on the sale of subsidiary (the commercial print operations of Bowne of Montreal). Net loss and loss per share for the three months ended June 30, 2001 were $6,402,000 and $0.19 compared to net income and diluted earnings per share of $10,729,000 and $0.30 for the second quarter of 2000. Earnings before interest, taxes, depreciation and amortization (EBITDA), including certain one-time charges, for the three months ended June 30, 2001 was $15,942,000 compared to $40,582,000 for the comparable 2000 period. Robert M. Johnson, chairman and chief executive officer of Bowne stated, "The results for the second quarter are a strong testament to the efforts we have made in diversifying our revenue stream, and underscore our success in realignment of resources in response to the sustained downturn in the capital markets. We are extremely pleased with the continued strong growth of our non-transactional financial printing revenue, which include corporate reporting, mutual funds, commercial, and digital on-demand printing, and the results from our outsourcing businesses, Bowne Global Solutions and Bowne Business Solutions. The softness in the economy, which negatively effects the global capital markets, are favorable, in the long-term, to our outsourcing businesses. Most businesses need to grow revenues and control costs -- ourservices provide an effective alternative to accomplish that goal and have us very well positioned for continuing growth in the future.'' Mr. Johnson continued, "The growth in non-transactional financial print services, which seasonally peaks in the second quarter, continues to support the improved financial print segment EBITDA results, which in the second quarter, are stronger than the prior two sequential quarters; despite the fact that the IPO and M&A activity is weaker.'' Commenting on the recent announcement concerning its agreement with Belgium-based Lernout & Hauspie Speech Products N.V. to acquire Mendez S.A., Mr. Johnson stated, "We see Bowne Global Solutions as a leader in the globalization market and this acquisition strengthens that position. Mendez S.A. is one of the leading providers of localization, translation technology and technical translation services. We believe that the globalization industry is going through further consolidation and in order to continue a trend of increased profitability, you need a higher level of scale. We believe that this asset is going to bring substantial return for Bowne shareholders.'' Carl J. Crosetto, president of Bowne, noted, "For the ninth consecutive quarter, Bowne Business Solutions (BBS) achieved significant revenue growth and continued strong EBITDA results. Although there was some downsizing and a drop in revenue in some of our major accounts due to the economic environment, we added several new clients and expanded services in many of our existing clients in the quarter including Donaldson, Lufkin & Jenrette, Stroock & Stroock, SG Cowen and Enron.'' Mr. Crosetto continued, "Activity in all our financial printing markets, including international, remained sluggish in the quarter, the result of the overall slowdown in the global equity capital markets. However, we continue to be the transactional printer of choice for the financing and merger activity that took place across the international market place.'' Mr. Johnson concluded, "As we move forward, and as conditions warrant, we will continue to evaluate and change our business model in order to seize every opportunity to gain operating efficiencies and lower costs -- especially as we gauge the activity in the global capital markets. In conjunction with the upgrades we have been making to our manufacturing network, we are in the process of discontinuing our manufacturing facility in Chicago which will complete the consolidation of the manufacturing network.'' The company stated that it continues to focus on cash flow and managing receivables. Days outstanding decreased to 75 days in 2001 from 83 days in 2000. Cash used in operations reflects normal seasonality and is approximately $40 million favorable to the prior year to date. Financial printing work-in-process inventories of $25,454,000 in 2001 are approximately equivalent to 2000 levels. Business Outlook The following statements are based upon current expectations. These statements, and certain statements above, 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 activity. For the third quarter of 2001, the company expects its overall results to be unfavorable with the second quarter results. The results of its financial print business and, to a lesser degree, Bowne Business Solutions, will continue to be impacted by the anticipated continued downturn in the capital markets, both domestically and internationally. Although several circumstances, including volatile market conditions and the potential acquisition of Mendez S.A., have limited the company's visibility into future financial results, Bowne continues to project 2001 results to be in the following ranges. * Revenues: $1.0 to $1.1 billion * Diluted earnings per share, from continuing operations, and excluding one-time items, in the range of $0.45 to $0.60 * Capital expenditures (excluding the proposed acquisition of Mendez S.A.): $38 million to $42 million

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