NEW YORK, Aug. 7 -- Bowne & Co., Inc., a global leader in delivering high-value document management solutions, announced today that for the second quarter ended June 30, 2002, net income was $11,061,000, or diluted earnings per share of $ .31, versus a loss of $6,402,000, or $ .19 per share, for the same period last year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2002 reached $31,966,000 compared to $15,942,000 reported in the second quarter of last year. Revenue for the second quarter increased 6% to $313,267,000 versus $295,895,000 for the same period a year earlier.
For the six months ended June 30, 2002, net income was $14,609,000, or diluted earnings per share of $ .41, versus a loss of $11,695,000 or $.35 per share for the same period last year. Revenue for the first six months of 2002 was $552,951,000, down 5% from $581,094,000 reported a year earlier. Prior period results included items which should be considered in comparison with current period results. See "Pro Forma Income Information."
Positive results for the quarter were due primarily to stronger performance in Bowne Financial Print, the world's largest financial printer, and in Bowne Business Solutions, the industry leader in providing business process outsourcing services to law firms and investment banks.
"Bowne's favorable results in the second quarter highlight our ability and commitment to control costs and manage through a very difficult business environment," said Bowne Chairman and CEO Robert M. Johnson. "We are pressing forward with an opportunistic sales effort that has produced some important wins. With three quarters of our revenue coming from longer-term, non-transactional services, we continue to benefit from our diversification, especially in the revenues and margins generated by our document outsourcing business.
"Nevertheless," he added, "the capital markets -- which primarily affect our transactional Financial Print business -- remain weak, and the business climate has been made even more unpredictable by recent corporate revelations and the resulting drive for regulatory reform. As a result, Bowne will continue to approach the rest of the year cautiously, using our assets wisely and assuring that our resources, including our workforce, are appropriately matched to realistic business prospects. We have previously demonstrated our willingness and ability to adjust our resources to the realities of the market and current economic conditions, and we will continue to do so."
Johnson and Bowne President Carl J. Crosetto reported these developments in Bowne's business segments:
Financial Print -- Crosetto said the division improved margins, strengthened its market share and generated some key wins -- including management of documents for the Bank of China initial public offering -- even in a challenging environment. "While the total number of significant mergers or acquisitions in the second quarter of 2002 declined sharply from the same period a year earlier, Bowne captured almost half of the deals -- more than our two nearest competitors combined," he said. "Similarly, with an upturn in initial public offerings in the second quarter of 2002 compared to last year, Bowne captured approximately half of this business."
Within this business segment, Johnson said that the company's newest division, Bowne Enterprise Solutions (BES), also achieved some important wins during the quarter. "We are continuing to develop BES as a key part of our diversification strategy," Johnson said. "Our ability to provide digital printing, as well as electronic delivery of customized and personalized communications, meets a key goal of major financial services and other companies that want to strengthen their own customer relationships."
Outsourcing -- "Bowne Business Solutions (BBS) had a solid quarter," Crosetto said, "adding major new law firm clients, including Paul Hastings and Thacher Proffitt, a new investment banking customer, Bear Stearns, and renewing contracts with several important customers, including the law firm of Shook, Hardy and Bacon. As a result, BBS achieved strong quarterly revenues and EBITDA margins."
Globalization -- Johnson said that BGS reported higher revenues for the quarter (with the current results including the August 2001 acquisition of Mendez S.A.), although the division's performance continues to be adversely affected by delays of new software introductions and releases in the technology sector. "During the quarter," Johnson said, "BGS announced important contracts with the Scottish and Southern energy group in Britain, as well as Commerce One and GE Contractual Services, reflecting our continuing effort to further diversify our client base beyond the technology sector."
In a separate news release, the company announced today that Bowne Global Solutions (BGS), the division providing outsourced globalization solutions, signed a definitive agreement to acquire Berlitz GlobalNet, a wholly owned subsidiary of Berlitz International, Inc. that provides globalization and localization services, software testing, translation and interpretation.
"Our strategy is to continue to invest in enhancing BGS' market position through organic growth, client and service diversification, and selected strategic acquisitions, such as the Mendez and Berlitz GlobalNet transactions," he added. "Our goal is to strengthen the division's market leadership and expand our options to maximize the value of this asset for our shareholders."
Johnson said Bowne continues to focus on cash flow and managing receivables. Average days outstanding improved 1 day to 72 days in 2002. Net debt is up from June 2001 by approximately $12 million, with 2002 including approximately $50 million for the 2001 Mendez acquisition. Cash used in operations reflects normal seasonality. Financial printing work-in-process inventories decreased 19% to $20,584,000 in 2002 from June 30, 2001.
In early July, Bowne announced completion of a $175 million, three-year revolving credit facility to replace the facility that had expired. The proceeds are being used for general corporate purposes, including Bowne's continued diversification, such as the Berlitz GlobalNet acquisition. This facility is in addition to the $75 million private placement of senior unsecured notes completed with several institutional investors and announced in February 2002.
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.
For the second half and full-year 2002, the company expects improved results over 2001. The results of its Financial Print business will continue to be affected by the anticipated continued softness in the capital markets, both domestically and internationally.
Although several circumstances, including volatile market conditions, have limited the company's visibility into future financial results, Bowne estimates the third quarter and full-year 2002 results to be in the following ranges. This outlook incorporates the new accounting rules of goodwill amortization, which, if effective in 2001, would have added $0.05 and $0.18 per diluted share to the company's third quarter and full-year financial results, respectfully. In addition, this outlook reflects results from continuing operations, does not reflect any impact from the announced acquisition of Berlitz' GlobalNet unit, and also excludes any potential restructuring charges or one-time items.
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