NEW YORK, May 7 -- Bowne & Co., Inc. today announced a net loss for the first quarter ended March 31, 2003 of $4,253,000, or $0.13 loss per share, versus net income of $3,548,000, or $0.10 per share, for the same period last year. The results for the quarter were affected by restructuring charges with a net impact of $3,522,000, or $0.11 per share, as we continue to implement our cost containment initiatives.
The results for the quarter, despite a continuing year-over-year decline in capital market activity, highlight the success of the company's diversification strategy and the impact of our ongoing cost reduction program.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2003 decreased to $7,631,000 from $18,905,000 in the first quarter of 2002 (see page 7 for reconciliation to (loss) income before income taxes).
First quarter 2003 revenues were $255,723,000 compared to $239,684,000 for the same period last year, with the increase due to record levels in both the Outsourcing and Globalization segments-driven by acquisitions-offset by a decline in transactional financial printing as the continued inactivity in the capital markets negatively impacts this business. Overall, non-transactional revenues are 83% of Bowne's total revenues.
"We continue to manage through the most difficult economic environment -- especially in the capital markets -- in the past decade," said Bowne chairman and chief executive officer Robert M. Johnson. "Because of the continuing weakness in the first quarter, we have initiated further cost reductions that should be completed by the end of the second quarter. These reductions will bring our overall cost savings over the past 30 months to more than $135 million in annual savings from fiscal 2000 levels. It is important to remember that most of these savings are structural and related to our resources being managed globally and as the capital markets eventually recover, we do not anticipate fully replacing these resources. We are confident that these steps, along with our investments to enhance our technology capabilities and further our diversification strategy, will significantly improve our prospects as the capital markets come back."
Johnson continued, "We are extremely pleased with the top-line results and EBITDA performance of Bowne Global Solutions (BGS) for the first quarter. We attribute these strong results to our acquisition of Berlitz GlobalNet (BGN) and to our aggressive push to sign new business outside of our traditional target market -- IT. As the results show, the integration of BGS and BGN has been a successful one as we combine the best resources, workflow practices, production sites and expertise."
Bowne president Carl J. Crosetto said the Company is satisfied with the performance of Bowne Business Solutions (BBS), given the difficult environment. "As the leader in providing a range of business process outsourcing services to the legal, investment banking and financial services communities, BBS has also felt the effects -- to a lesser degree than financial printing -- of the depressed capital markets. The headwind faced in the banking industry and the reality of the closings and bankruptcy of major law firms, are just a few of the challenges within these industries."
"We are encouraged by the performance of Bowne DecisionQuest (BDQ) which was acquired in December 2002 and is part of our Outsourcing segment. BDQ places us in a much stronger position, it has extended our range of services offered in the litigation arena -- furthering our diversification strategy away from dependence on capital market activity." In addition, we currently do business with about 90% of the top 200 global law firms, therefore, we believe there is a real opportunity to expand both our traditional document management and litigation support services, within this broader customer base."
"In Bowne Enterprise Solutions (BES), the digital print group of Financial Print, our digital printing capability has become a vital part of the solution for financial services companies that need to customize and personalize their communications to both new and existing investors. We believe there are significant opportunities for BES and we're starting to see some of those opportunities materialize, as this innovative digital printing solution is now being extended to other industries outside of financial services that have similar needs to reduce costs and improve efficiency and effectiveness of customer communications," Johnson said.
"We view 2003 as a year of execution and to build upon the strategic realignments of our business which allow us to focus on new opportunities and to build momentum, even if the capital markets remain soft," Johnson said in summing up the quarter.
Johnson said Bowne also continues to focus on cash flow and managing receivables. Average days outstanding improved 7 days to 65 days in 2003. Net debt is up from March 2002 by approximately $32 million, reflecting the acquisition of DecisionQuest and GlobalNet. Cash used by operations increased approximately $7,871,000 from 2002 to $46,548,000. Financial printing work-in-process inventories increased 85% to $22,700,000 in 2003 from December 31, 2002.
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