Bowne Announces Q3 Results: Company Cuts Costs, Sells Non-Core Assets
Press release from the issuing company
Company Cuts Costs, Sells Non-Core Assets and Focuses on Diversified Businesses to Manage through Unpredictable Climate
NEW YORK, Nov. 6 -- Bowne & Co., Inc., a global leader in delivering high-value document management solutions, today reported net income for the third quarter ended September 30, 2002 of $4,649,000, or $ .13 per diluted share, versus a loss of $3,703,000, or $ .11 per share, for the same period last year on a GAAP basis.
The 2002 results include after-tax gains of approximately $11.3 million from the third quarter sales of Bowne's non-core securities publishing group and a Chicago office building. The company also incurred restructuring and impairment charges of approximately $2.1 million due to its September 5 announcement of a 2.5% workforce reduction and other initiatives. As a result, Bowne expects total annualized cost reductions of approximately $10 million.
Excluding the items above, the company would have reported a net loss for the quarter of $4,558,000, or $ .14 per share, versus a net loss of $1,109,000, or $ .03 per share, for the same period in 2001. (Also see "Pro Forma Income Information" table.)
Revenue for the third quarter of 2002 declined 12% to $214,156,000 versus $242,055,000 for the same period a year earlier. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter, including the gains and the restructuring and impairment charges described above, were $20,506,000 compared to $10,026,000 reported in the third quarter of last year.
For the nine months ended September 30, 2002, net income from continuing operations was $19,258,000, or diluted earnings per share of $ .54, versus net income from continuing operations of $965,000, or $ .03 per share for the same period last year. Revenue for the first nine months of 2002 was $767,107,000, down 7% from $823,149,000 reported a year earlier. EBITDA, including the one-time gains previously mentioned, was $71,377,000 versus $48,999,000 for the same period a year earlier.
As indicated in Bowne's October 1 news release, the quarter's operating results were affected primarily by these factors: less-than-anticipated transactional business in Bowne's Financial Print division caused by unexpected customer delays and postponements of transactions in the weak capital markets sector, as well as an adverse impact on Bowne's Global Solutions (BGS) division caused by continued delays of new software introductions and releases by a large number of BGS technology clients.
"Bowne continues to report year-to-date profitability and is achieving sales 'wins' in each of its business units even as we manage through a difficult and unpredictable period," said Chairman and CEO Robert M. Johnson. "We are meeting this tough business climate head-on by continuing aggressive reductions in our fixed costs, selling non-core assets and further diversifying our businesses to reduce reliance on the cyclical -- and currently weak -- capital markets and technology sectors. We are continuing to focus on using our assets wisely and plan to take further steps in the near future to ensure that our resources are matched appropriately to realistic business prospects.
"At the same time," Johnson added, "Bowne is investing prudently to maintain and expand market leadership. Our Financial Print, Business Solutions and Global Solutions units continue as the leaders in their respective industries. In Financial Print, for example, our technology investments give us a greater competitive advantage and more flexibility in dealing with market fluctuations than at any time in Bowne's history. Our newest unit, Enterprise Solutions, is positioned to become a leader in the emerging market for customized and personalized information in financial services and other industries.
"In Business Solutions," he added, "we are investing to capture opportunities in the litigation support field. And in Global Solutions, the September 27 acquisition of Berlitz GlobalNet expands the breadth, depth and geographic scope of our globalization and localization service offerings, extends our industry leadership and reduces our reliance on the currently weak technology sector."
Johnson and Bowne President Carl J. Crosetto reported these developments in Bowne's business segments:
Financial Print -- Crosetto said that while Financial Print revenue and EBITDA declined in the third quarter of 2002 versus the same period last year, Bowne managed the documents for 46% of the significant merger and acquisition deals, a seven-point gain in market share from the same quarter a year earlier and a figure well above the combined work of its two nearest competitors. Over the first nine months of 2002, he said, the company has managed documents for 41% of all initial public offerings, substantially more than its competition and 11 percentage points higher than Bowne's market share a year earlier.
Bowne is also focusing on emerging business opportunities from sweeping changes in U.S. securities regulations that should increase both the volume and speed of required corporate document filings. At the same time, Bowne Enterprise Solutions, which is included in our Financial Print segment, continued to add new business in the quarter, including contracts with AIM Funds Management, TELUS Corporation and Manulife Financial.
Outsourcing -- "Bowne Business Solutions, as the leader in providing outsourced services to law firms and investment banks, has continued to generate relatively stable results in this tough business environment," Crosetto said. "During the quarter, the company added new law firm clients, renewed and expanded business from existing clients, and signed a new contract with a major pharmaceutical company."
Globalization -- Johnson said that this unit is working rapidly to integrate the Berlitz GlobalNet acquisition so that it can capitalize on the new and different customers, markets and services that the transaction brings. "Berlitz GlobalNet, with its annual revenues of slightly more than $100 million, brings with it a number of important new relationships with new clients in new sectors. This allows us to reduce the impact that the softness in technology has had on our business," he said. During the quarter, BGS also announced projects with Drager Medical, SAP and Network Associates, and, as a newly named Premier Vendor to Microsoft, renewed a multi-year contract with that company.
Johnson said Bowne also continues to focus on cash flow and managing receivables. Average days outstanding improved 1 day to 73 days in 2002. Net debt is down from September 2001 by approximately $22 million, with September 2002 reflecting the net impact of the recent Berlitz GlobalNet acquisition. Financial printing work-in-process inventories decreased 12% to $16 million in 2002 from September 30, 2001.
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.
The company expects the fourth quarter results from continuing operations to be consistent with the third quarter. The results of its Financial Print business will continue to be adversely affected by the 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 fourth quarter and full-year 2002 results to be in the ranges shown below. The outlook reflects results from continuing operations and the EBITDA and per share information excludes any restructuring charges or one-time items.
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