Bowne Announces Q3 Loss, Digital print group volume up 70%
Press release from the issuing company
NEW YORK, Oct. 29 -- Bowne & Co., Inc. today announced net loss for the third quarter ended September 30, 2003 of $1,209,000, or $0.04 per share, versus net income of $4,649,000, or $0.13 per share, for the comparable quarter last year. The results for the 2003 quarter include restructuring charges, net of tax, of $3,283,000 or $0.10 per share while the 2002 third quarter includes one-time items, primarily gains on sale of certain assets, totaling $9.2 million, net of tax, or $.27 per share. This results in pro forma per share earnings of $.06 in 2003 as compared to a loss per share of $.14 in 2002. (See Pro forma supplemental income information)
Third quarter 2003 revenues were $249,979,000 compared to $214,156,000 for the same period last year. This increase, which includes revenues from acquisitions by both Bowne Business Solutions and Global Solutions, is across each of the business segments. Overall, non-transactional revenues were 70% of Bowne's total revenues.
On a pre-tax basis, restructuring costs amounted to $4,158,000, of which $1.7 million related to severance costs and $2.5 million related to other cost reductions and integration costs associated with the acquisition of Berlitz GlobalNet by the company's Globalization unit.
For the nine months ended September 30, 2003, net loss was $5,204,000, or $0.15 per diluted share, versus net income of $19,258,000 or $0.54 per share for the same period last year. The 2003 nine-month results include restructuring charges, net of tax, of $12,941,000 or $0.37 per diluted share. Revenue for the nine months ended September 30, 2003 was $813,443,000, up 6% from $767,107,000 reported a year earlier.
"We are pleased with the $.20 per share year-over-year improvement in pro forma operating results experienced in the third quarter and are cautiously optimistic about the fourth quarter. We are starting to see momentum in our transactional financial print business as the capital markets activity is building. This quarter's transactional print revenues were at their highest level since Q2 2002 and Q1 2001 before that. Our market leadership continues to serve us well and we are extremely pleased with the fact that Financial Print segment profit, as compared to the third quarter of 2002, has increased in correlation with our revenue, the direct result of our aggressive cost reductions," said Bowne chairman and chief executive officer Robert M. Johnson.
Johnson continued, "We are committed to reviewing our operations and managing our costs in each of our businesses as we continue to develop and improve upon a more efficient operating model that both leverages our technology investments and more variable cost components. While this effort resulted in greater than forecasted restructuring and integration charges this quarter, and will in the fourth quarter as well, our 2004 results are expected to show improved margins as a result.
"Bowne Global Solutions' (BGS) continued to benefit from our acquisition of Berlitz GlobalNet at the end of the third quarter of 2002 and for the third consecutive quarter achieved profit improvement. We are pleased with the progress of our integration efforts, and our further client diversification; however, we are not satisfied with segment profit margins, and we continue to examine our costs and infrastructure which will result in additional restructuring charges. These efforts are evidenced by the restructuring and integration charges in the quarter of $2.9 million related to this continuing effort in BGS. We continue our sales focus to sign new business outside of the IT market and as the recently announced signings of BKK AS, the United States Department of Justice, the Irish Department of Justice and SAAB indicate-our efforts have been successful, particularly in interpretation and translation services."
Bowne president Carl J. Crosetto commented on the performance of Bowne Business Solutions (BBS). "We have historically experienced a slight, seasonal downturn in revenue in the third quarter, however, we are encouraged by the improvement in the segment profit as a percent of revenue over the last 5 quarters. Importantly, during the third quarter BBS secured 15 new outsourcing contracts as we continue to strengthen our market leadership in the legal industry. The release of RapidView(TM), which permits law firms to collaboratively view, search and store electronic document and data files online, while reducing the time and costs associated with document discovery, adds to our suite of services to the legal industry. We also saw a pick-up in the levels of document creation activity at our Investment Banking clients in September, the first such improvement that we have seen in over two years and that could signal the beginning of improving results in that important vertical.
"Our digital print group within Bowne Financial Print is continuing to build momentum particularly in the area of customized and personalized enrollment and investor kits as production volumes continue to be approximately 70% higher than in 2002," Johnson said.
Johnson said Bowne also continues to focus on cash flow and managing receivables. Average days outstanding improved 4 days to 67 days in 2003. With the increased accounts receivable due to revenue growth and the funding of restructuring charges, cash used by operations for the nine months ended September 2003 was approximately $37.2 million versus cash provided by operations in 2002 of $29.0 million. Financial printing work-in-process inventories decreased 3% to $15.6 million in 2003 from September 2002.
The company noted that forward-looking statements for future performance like 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.
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