Bowne & Co., Inc. a global leader in shareholder and marketing communications services, today announced profitable second quarter and year-to-date operating results in a difficult capital markets environment.

Revenue was $237.0 million in the second quarter of 2008 compared to $262.2 million in the second quarter of 2007, a decline of $25.2 million, or 9.6%. In the second quarter of 2008, the Company generated gross profit of $86.9 million, with a 36.7% gross margin contribution, compared to $100.3 million and a 38.2% gross margin contribution in the prior year period. Segment profit was $30.1 million in the second quarter of 2008 compared to $39.6 million in second quarter of 2007. Segment profit margin in the second quarter of 2008 was 12.7%, compared to 15.1% in the second quarter of 2007. Income from continuing operations was $2.0 million, or $0.07 per diluted share, compared to $15.8 million, or $0.49 per diluted share, in the second quarter of 2007.

For the six months ended June 30, 2008, revenue was $445.8 million, down 6.0% from $474.2 million reported for the first six months of 2007. In the first half of 2008, the Company generated gross profit of $157.5 million, with a 35.3% gross margin contribution, compared to $182.4 million and a 38.5% gross margin contribution in the comparable prior year period. Segment profit was $42.8 million in the first half of 2008 compared to $61.6 million in the first half of 2007. Segment profit margin in the first half of 2008 was 9.6%, compared to 13.0% in the first half of 2007. Income from continuing operations was $3.9 million, or $0.14 per diluted share for the six months ended June 30, 2008, compared to $26.0 million, or $0.82 per diluted share, in the first half of 2007.

Pro forma income from continuing operations totaled $12.8 million in the second quarter of 2008 and $16.3 million for the 2008 year-to-date period, compared to $18.0 million and $25.9 million, respectively, in the comparable prior year periods. This resulted in diluted earnings per share of $0.42 in the second quarter of 2008 and $0.55 for the 2008 year-to-date period, compared to $0.56 and $0.81, respectively, in the comparable 2007 periods. (See Pro Forma Supplemental Income Information, for a reconciliation between the non-GAAP financial measures and the Company's Condensed Consolidated Statements of Operations.)

"We're pleased that we achieved $43 million in segment profit during the first half of the year," said David J. Shea, Chairman and Chief Executive Officer. "We've been proactive in implementing a number of cost saving measures and made significant progress on the integration of our recent acquisitions, all of which will benefit us on an ongoing basis. Given the significant decline in capital markets activity, we are adjusting our annual guidance downward, which is outlined later in the release."

Additional comments on the operating results in the second quarter and first half of 2008 are provided below.

Revenue:

Capital markets services revenue, formerly referred to as transactional revenue, was $66.0 million in the second quarter of 2008, which is $16.1 million, or 19.6%, lower than the comparable 2007 period. For the first half of 2008, capital markets services revenue was $116.3 million, which is $28.1 million, or 19.5%, lower than the first half of 2007. This decrease is directly related to the decline in overall capital markets activity, with overall filing activity decreasing 29% during the quarter and 31% during the first half of 2008. The decline in the Company's capital markets services revenue was partially offset by an increase in revenue from Bowne Virtual Dataroom(TM) (VDR). VDR revenue, which is now reported as part of capital markets services revenue, increased 5% for the quarter and 62% year-to-date, to $3.6 million and $6.6 million, respectively.

Shareholder reporting services revenue, which includes compliance reporting, investment management services and translations services revenue, was $122.5 million and $228.1 million for the second quarter of 2008 and year-to-date periods, a decline of 11.5% and 4.9%, respectively, compared to the comparable 2007 periods. For the second quarter of 2008 and year-to-date periods, compliance reporting revenue decreased approximately 17.6% and 9.0%, investment management services revenue decreased 5.7% and 1.7%, and translations services revenue increased 38.1% and 22.0%, respectively. Compliance reporting revenue in 2007 benefited from new SEC regulations regarding executive compensation proxy disclosures, and revenue from special notice and proxy filings in 2007 that did not recur in 2008. The decrease in revenue from investment management services is primarily the result of one-time jobs in 2007 and the timing of certain projects, offset by revenue gained through the acquisition of GCom2 Solutions, Inc. ("GCom") in February 2008.

Marketing and business communications services revenue increased $8.4 million, or 27.6%, to $39.0 million during the second quarter of 2008, and increased $15.2 million, or 22.5%, to $82.5 million during the first half of 2008. The increase in revenue is due to revenue contributions from the acquisitions of the digital print division of Rapid Solutions Group ("RSG"), Alliance Data Mail Services ("Alliance"), and GCom.

Acquisition activity and integration of acquired businesses: The Company has made substantial progress in the integration of its recent acquisitions of Alliance, acquired in November 2007; GCom, acquired in February 2008; and RSG, acquired in April 2008. Together, these acquisitions contributed approximately $18.6 million in revenue during the second quarter, and $29.2 million during the first half of 2008. As previously noted, diversifying Bowne's revenue stream has been a strategic goal during the past several years and the revenue contributions from the acquisitions of RSG, Alliance and GCom will continue to support this objective. The integration of these acquired businesses has been substantially completed during the third quarter.

In addition, on July 1st, 2008 the Company acquired the US-based assets and operating business of Capital Systems, Inc. ("Capital"), a leading provider of financial communications services based in mid-town Manhattan, for approximately $13 million.

With 2007 revenue of approximately $48 million, the acquisition of Capital enables Bowne to expand its leadership position in the New York market and further expand its investment, compliance and capital markets services. Given the downturn in capital markets activity, the Company expects Capital to contribute approximately $15 million in revenue during the second half of 2008. The integration of this business was substantially completed during July.

The annualized revenue from the four recently completed acquisitions is expected to approximate $110 to $120 million. It is estimated that these acquisitions will generate incremental annualized segment profit of approximately $25 to $30 million.

Segment Profit: The Company generated segment profit of $30.1 million in the second quarter and $42.8 million year to-date, compared to $39.6 million and $61.6 million in the comparable prior year periods, a decline of 24% and 31%, respectively. The Company's segment profit margin as reported in the quarter and year-to-date periods was 12.7% and 9.6%, respectively. Excluding the impact of the aforementioned recent acquisitions, the segment profit margin was 13.6% and 10.3 % for the quarter and year-to-date periods, respectively. The decline in revenue and the inclusion of the operating results of our recent acquisitions are the primary drivers of the reduction in segment profit margin in the second quarter and first half of 2008. The Company is in the early stages of integrating the strategic acquisitions it made in the fourth quarter of 2007 and first half of 2008. The Company expects it will begin to realize the benefits of synergies and cost reductions related to these acquisitions starting in the third quarter of 2008.

Balance Sheet and Cash Flow: The Balance Sheet at June 30, 2008 includes $37.7 million in cash and marketable securities, which is $66.1 million lower than the prior year-end. This decline reflects a decrease in operating income, the normally high seasonal working capital usage in the first half of the year, $10.0 million in capital expenditures and the utilization of cash to help fund the acquisitions of GCom and RSG.

Average days sales outstanding was 68 days for both the six months ended June 30, 2008 and 2007. Work-in-process inventory was $16.8 million at June 30, 2008 compared to $20.8 million at June 30, 2007. As of June 30, 2008 the Company had $48 million outstanding under its $150 million five-year senior, unsecured revolving credit facility that expires in May 2010. As of today, the Company has $39 million outstanding under this facility.

Business Outlook: The Company is revising its business outlook for 2008 for the following:

--  to reflect its recent acquisitions. The acquisition of Alliance and GCom were included in the original guidance provided in March 2008; however, the acquisitions of RSG and Capital were not contemplated as part of the original guidance. The Company substantially completed the integration of these acquired businesses in the third quarter of 2008, and is beginning to realize the benefits resulting from the operating efficiencies and cost reduction synergies.  As noted earlier, the annualized revenue from these four acquisitions is estimated at $110 to $120 million, and the segment profit on an annual basis is estimated at $25 to $30 million.  The Company expects that these four acquisitions will contribute approximately $80 to $85 million in revenue and $9 to $11 million in segment profit in 2008 to Bowne's consolidated operating results.

--  to reflect the estimated impact of the reduction in the Company's workforce that was completed late in the second quarter of 2008.  As previously announced, the Company reduced its workforce as part of its ongoing efforts to consolidate its operations, as well as in response to the downturn in capital markets activity.  This included the elimination of approximately 270 positions, excluding the impact of staff reductions associated with the integration of recent acquisitions.  The reduction in workforce was enterprise-wide and included a broad range of functions as well as the continued consolidation of manufacturing and fulfillment capabilities.  The annual cost savings as a result of these efforts are expected to approximate $21 to $23 million, with the savings in 2008 expected to approximate $11 to $13 million.

--  to reflect the continued downturn in capital markets activity through the remainder of the year, the Company is estimating its revenue in 2008 from transactional services in the $220 to $245 million range.

The Company notes that forward-looking statements of future performance made 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.