NEW YORK, July 28 -- Bowne & Co., Inc., a global leader in delivering high-value document management solutions, today announced net income for the second quarter ended June 30, 2004 of $10,761,000 or $0.29 per diluted share, versus net income of $122,000, or $0.00 per share, for the same period last year.
For the six months ended June 30, 2004, net income was $14,021,000, or $0.38 per diluted share, versus net loss of $4,295,000 or $0.13 per diluted share for the same period last year.
Excluding restructuring charges and the gain on the sale of a building, 2004 pro forma diluted earnings per share were $0.33 and $0.54 in 2004, as compared to a 2003 pro forma earnings per share of $0.18 and $0.15 for the quarter and year-to-date, respectively. (See attached Pro Forma Supplemental Income Information for a reconciliation of these non-GAAP financial measures to our consolidated statements of operations).
Second quarter 2004 revenues were $319,102,000, up 4%, compared to $307,741,000 for the same period last year. This increase reflects continued growth in the capital markets supporting financial print results, along with continued organic growth in our outsourcing operations. Revenues for the six months ended June 30, 2004 were $608,648,000, up 8% from $563,464,000 reported a year earlier.
"Overall, we had a strong quarter and are pleased with our results. In particular, the significant increase in Financial Print segment profit demonstrates the leverage in our operating model. The capital market activity continues to show improvement, and as a result, revenue for Financial Print increased $11 million, or 6%, over the same period a year ago. More significantly, second quarter segment profits were up $8.6 million, representing a 38% increase over 2003," said Bowne interim Chief Executive Officer Philip E. Kucera.
"Including our strong first quarter, the first half of 2004 represents a dramatic improvement for Financial Print over the same period of 2003, with revenue up 13% and segment profit up 66%. Our Global Solutions business did not deliver on plan, however, Bowne Business Solutions had improved revenue and segment profit results year-over-year," Kucera continued.
Bowne Financial Print -- For the 2004 second quarter, Financial Print reported an $11 million, or 6% increase in revenues and segment profit increased $8.6 million, or 38%. Transactional financial printing was up significantly for the quarter and year-to-date, increasing 29% and 38% over the same periods last year. The IPO market continued its upward trend with more IPOs priced in the first half of 2004 than all of last year. M&A activity is also higher than last year. Compliance reporting work in the first six months was up slightly year-over-year and the Company experienced a revenue shift from the second to the first quarter as a result of accelerated filing requirements.
Enterprise Solutions, the digital print group within Financial Print, saw investor kit volumes increase by 80% for the first half of this year versus the same period a year ago. Bowne remains the market leader in financial print and continues to be optimistic about the balance of the year for Financial Print due to the continued upturn in capital market activity.
Bowne Global Solutions' (BGS) second quarter revenues of $57.4 million are $2.6 million lower than 2003 and segment profit of $3.4 million was $0.4 million below the second quarter of 2003. Year-to-date revenue and segment profit are both $1.0 million lower as compared to the first six months of 2003. BGS results were impacted by delays in client projects that are now expected to begin in the third and fourth quarters. Second quarter revenues and segment profit also reflect continued pricing pressure. Additionally, BGS experienced a decline in interpretation work due to a reduction in the number of cases for the Department of Justice, one of BGS' largest clients.
Bowne Business Solutions (BBS), Bowne's document outsourcing business had revenues of $67.2 million -- a $2.9 million, or 4.5%, increase over the second quarter of 2003. Segment profit improved over the prior year, growing 35%, and the margin improved to 7.1% from 5.5% for the second quarter of 2003. On a year-to-date basis, revenue increased 3% while segment profit increased 55%. BBS added 13 new deals during the second quarter, with a total contract value of $38 million. Additionally, nine existing client contracts were renewed totaling $57 million. This business unit continues to see the benefits of its 2003 restructuring along with increased customer volumes.
Commenting on the financial results, Chief Financial Officer Cody Colquitt said, "The results in Financial Print demonstrate the long-term benefit of the restructuring actions taken over the past few years. We continue to evaluate additional opportunities for savings. We have incurred year-to-date restructuring charges of $9.1 million. This figure is above our $7 million guidance, due to our continuing review of operations and aggressive cost reduction charges. Offsetting these charges, we realized a gain of $896,000 related to the sale of our Dominguez Hills, California facility."
Bowne continues to focus on cash flow and managing receivables. Average days outstanding remained at 65 days compared to June 2003. Cash used by operations for the six months ended June 30, 2004 was reduced to $16.8 million from $49.5 million in 2003. Net debt decreased $41 million from June 2003 to $135 million. Financial printing work-in-process inventory increased to $18.5 million in 2004, a 30% and 19% increase from December 31, 2003 and June 30, 2003, respectively.
The company noted that forward-looking statements of future performance contained in the foregoing and in the following statements and certain statements made elsewhere in this release are based upon current expectations and are subject to factors that could cause actual results to differ materially from those suggested here, including demand for and acceptance of the company's services, new technological developments, competition and general economic or market conditions, particularly in the domestic and international capital markets.
The following is our revised 2004 outlook, which reflects changes from our previous guidance given in February and April 2004. The changes in the outlook reflect increased segment profit for Financial Print and Outsourcing, decreased revenue and segment profit for Global Solutions, a tighter range for Corporate/Other, and increased restructuring charges-resulting in a refinement in the diluted earnings per share excluding restructuring charges guidance range from $0.56 to $0.91 to $0.63 to $0.97.
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