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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended April 30, 1994, or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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COMMISSION FILE NUMBER 1-5842
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BOWNE & CO., INC.
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of
incorporation or organization)
345 HUDSON STREET
NEW YORK, NEW YORK
(Address of principal executive offices)
13-2618477
(IRS Employer Identification Number)
10014
(Zip code)
(212) 924-5500
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the issuer's classes of common
stock was 17,376,953 shares of common stock, par value $.01, outstanding as at
June 8, 1994.
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FINANCIAL STATEMENTS
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30,
1994 OCTOBER 31,
(UNAUDITED) 1993
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<S> <C> <C>
(000'S OMITTED)
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 12,733 $ 33,067
Trade accounts receivable, less allowance for doubtful accounts of $7,517,000 and
$6,550,000......................................................................... 112,884 92,857
Inventories......................................................................... 36,238 21,729
Prepaid expenses and sundry receivables............................................. 5,649 4,851
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Total current assets.................................................... 167,504 152,504
Marketable securities................................................................... 10,742 17,393
Real estate, equipment and leasehold improvements, less depreciation and amortization of
$74,180,000 and $68,338,000........................................................... 95,220 88,840
Excess cost of subsidiaries over net assets at date of acquisition...................... 15,269 15,784
Other assets............................................................................ 7,483 9,103
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Totals.............................................................. $296,218 $283,624
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current debt...................................................... $ 3,934 $ 5,434
Accounts payable.................................................................... 17,785 14,134
Accrued liabilities................................................................. 32,864 40,037
Income taxes payable................................................................ 8,604 5,114
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Total current liabilities............................................... 63,187 64,719
Long-term debt -- net of current portion................................................ 3,373 8,836
Deferred employee compensation and benefits............................................. 14,088 13,386
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Total liabilities....................................................... 80,648 86,941
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Stockholders' equity:
Common stock, par value $.01, issued 19,029,462 shares in 1994 and 18,948,442 shares
in 1993............................................................................ 190 189
Additional paid-in capital.......................................................... 23,906 22,903
Retained earnings................................................................... 211,158 192,229
Treasury stock, 1,653,209 shares in 1994 and 1,650,331 shares in 1993, at cost...... (18,119) (18,054)
Foreign currency translation adjustment............................................. (1,565) (584)
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Total stockholders' equity.............................................. 215,570 196,683
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Totals.............................................................. $296,218 $283,624
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</TABLE>
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BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 30,
(UNAUDITED)
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(000'S OMITTED)
1994 1993
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Revenues:
Net sales............................................................................. $119,187 $89,649
Other................................................................................. 1,545 1,200
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120,732 90,849
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Expenses:
Cost of sales......................................................................... 63,142 42,749
Selling and administrative............................................................ 26,903 25,354
Depreciation and amortization......................................................... 4,119 3,501
Interest.............................................................................. 326 458
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94,490 72,062
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Income before income taxes................................................................ 26,242 18,787
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Income taxes:
State and local....................................................................... 2,291 1,703
Federal............................................................................... 8,251 5,178
Foreign............................................................................... 830 311
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11,372 7,192
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Net income................................................................................ $ 14,870 $11,595
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Net income per share...................................................................... $.86 $.67
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Dividends per share....................................................................... $.075 $.075
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</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30,
(UNAUDITED)
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(000'S OMITTED)
1994 1993
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Revenues:
Net sales............................................................................. $201,262 $150,675
Other................................................................................. 3,243 2,098
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204,505 152,773
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Expenses:
Cost of sales......................................................................... 108,398 75,497
Selling and administrative............................................................ 50,150 44,019
Depreciation and amortization......................................................... 7,718 6,786
Interest.............................................................................. 679 1,099
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166,945 127,401
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Income before income taxes................................................................ 37,560 25,372
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Income taxes:
State and local....................................................................... 3,333 2,173
Federal............................................................................... 11,291 7,522
Foreign............................................................................... 1,407 215
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16,031 9,910
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Net income................................................................................ $ 21,529 $ 15,462
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Net income per share...................................................................... $1.24 $.90
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Dividends per share....................................................................... $.15 $.15
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</TABLE>
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BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1994
(UNAUDITED)
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<S> <C>
(000'S OMITTED)
Retained earnings at beginning of period.................................................... $192,229
Net income.................................................................................. 21,529
Dividends................................................................................... (2,600)
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Retained earnings at end of period.......................................................... $211,158
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</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30,
(UNAUDITED)
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<S> <C> <C>
(000'S OMITTED)
1994 1993
Cash flows from operating activities:
Net income....................................................................... $ 21,529 $ 15,462
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization................................................ 7,718 6,786
Provision for deferred employee compensation................................. 702 (43)
Changes in other current assets and liabilities, net of non-cash
transactions................................................................. (36,823) (29,009)
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Net cash used in operating activities............................................ (6,874) (6,804)
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Cash flows from investing activities:
Purchase of securities or other investments...................................... (1,852) (9,447)
Proceeds from the sale of securities and other investments....................... 10,439 7,447
Purchase of real estate, equipment and leasehold improvements.................... (13,626) (6,466)
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Net cash used in investing activities............................................ (5,039) (8,466)
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Cash flows from financing activities:
Payment of debt.................................................................. (9,409) (5,274)
Proceeds from borrowings......................................................... 2,612
Proceeds from stock options exercised............................................ 1,003 986
Payment of dividends............................................................. (2,600) (2,576)
Purchase of treasury stock....................................................... (65) (121)
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Net cash used in financing activities............................................ (8,459) (6,985)
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Effect of exchange rate on cash...................................................... 38 13
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Decrease in cash and cash equivalents................................................ $(20,334) $(22,242)
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</TABLE>
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BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. The financial information included herein as at April 30, 1994 and
for the three and six months ended April 30, 1994 and 1993 is unaudited and, in
the opinion of the Company, reflects all adjustments (which include only normal
recurring accruals) necessary for a fair presentation of the financial position
as of those dates and the results of operations for those periods. The
information in the Condensed Consolidated Balance Sheet as at October 31, 1993
was derived from the Company's audited annual report for 1993.
NOTE 2. Inventories of $36,238,000 in 1994 include raw materials of
$5,088,000 and work in process of $31,150,000. In 1993, inventories of
$21,729,000 included raw materials of $4,293,000 and work in process of
$17,436,000.
NOTE 3. Net income per share is calculated by dividing net income by the
weighted average number of common shares outstanding during the period. The
weighted average number of shares was 17,356,042 (three months) and 17,329,377
(six months) in 1994, and 17,205,163 (three months) and 17,182,876 (six months)
in 1993.
NOTE 4. Effective November 1, 1993, the Company adopted FASB No. 109,
"Accounting for Income Taxes" (SFAS 109), and has applied the provisions
prospectively for 1994. The adoption of SFAS 109 had no effect on the tax
provisions or net income for the three and six months ended April 30, 1994.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company has a strong financial position with excellent liquidity. On
April 30, 1994, the Company had a working capital ratio of 2.65 to 1 and working
capital of $104,317,000.
Cash generated from operations, available working capital and borrowings
have been used to finance acquisitions, capital expenditures, purchase of
treasury stock and payment of dividends. It is expected that such funds and the
Company's borrowing capacity will be sufficient to finance the Company's future
capital expenditures, acquisition of treasury stock, payment of dividends and
possible acquisitions.
INFLATION
The Company has experienced the effects of inflation through increases in
the costs of employee compensation and related fringe benefits, outside
services, raw materials and other supplies. Due to price competition, the
Company does not always fully recover all of its increased costs.
RESULTS OF OPERATIONS
The Company provides printing services to produce the varied documentation
required by major financial transactions, corporate periodic reports,
restructuring plans for bankrupt companies, communication to shareholders and
basic commercial printing. The sales value of each project is dependent, among
other things, upon the size, complexity and type of document printed, the time
allowed for completion and the level of changes required, and may be further
impacted by the level of competition.
The Company's corporate printing business is seasonal to the extent that
the greatest number of proxy statements and annual reports are required to be
printed during the Company's second fiscal quarter ending April 30. In addition,
the Company's business is generally affected by cyclical conditions in the
capital markets.
The general necessity for rapid document processing after delivery of copy
by its customers requires that the Company maintain physical plant and customer
service staff sufficient to meet maximum work loads. Consequently, the Company
does not always operate at full capacity.
QUARTER ENDED APRIL 30, 1994 COMPARED TO QUARTER ENDED APRIL 30, 1993
Sales increased 33% to $119,187,000. The increase was primarily
attributable to increased demand for the Company's financial printing services
and additional sales to the mutual fund industry. The increase in sales was
partially offset by a decrease in the gross margin percentage from 52% to 47%.
The decrease in the gross margin percentage was due to expansion of production
facilities, increases in the production workforce and changes in the mix of
services. As a result, gross margin increased $9,145,000.
Other revenue increased $345,000 to $1,545,000 on higher realized gains
from the sale of securities.
Selling and administrative expenses increased $1,549,000, or 6%, to
$26,903,000 as a result of general increases in the cost of facilities and
employee compensation, as well as sales commission and incentive compensation
related to increases in sales.
Depreciation and amortization increased $618,000, or 18%, primarily as a
result of the expansion of facilities and acquisition of equipment.
Interest expense decreased $132,000 due to the reduction of the Company's
debt.
The income tax rate increased from 38% to 43% as a result of an increased
proportion of earnings in higher tax jurisdictions, and the higher tax rate and
changes in the deductibility of certain expenses under the Omnibus Budget
Reconciliation Act of 1993.
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As a result of the foregoing, income before income taxes increased
$7,455,000, or 40%, to $26,242,000, and net income increased $3,275,000, or 28%,
to $14,870,000.
SIX MONTHS ENDED APRIL 30, 1994 COMPARED TO SIX MONTHS ENDED APRIL 30, 1993
Sales increased 34% to $201,262,000 due to increased demand for financial
printing services and additional sales to the mutual fund industry. The increase
in sales, combined with a 4% decrease in the gross margin percentage,
contributed to an increase in the gross margin of $17,686,000. The decrease in
the gross margin percentage was due to expansion of production facilities,
increases in the production workforce and changes in the mix of services.
Other revenues increased $1,145,000 to $3,243,000, due to higher realized
gains on the sale of securities.
Selling and administrative expenses increased $6,131,000, or 14%, to
$50,150,000 principally as a result of sales and incentive compensation and
other expenses related to increases in sales and profitability, and to general
increases in the costs of facilities and labor.
Depreciation and amortization increased $932,000, or 14%, primarily as a
result of the expansion of facilities and the acquisition of equipment.
Interest expense decreased $420,000 due to the reduction of the Company's
debt.
The effective overall income tax rate increased from 39% to 43% as a result
of an increased proportion of earnings in higher tax jurisdictions, and the
higher tax rate and changes in deductions under the Omnibus Budget
Reconciliation Act of 1993.
As a result of the foregoing, income before income taxes increased
$12,188,000, or 48%, to $37,560,000 and net income increased $6,067,000, or 39%,
to $21,529,000.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
BOWNE & CO., INC.
<TABLE>
<S> <C>
Date: June 10, 1994 RICHARD H. KOONTZ
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RICHARD H. KOONTZ
(PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER)
Date: June 10, 1994 JAMES P. O'NEIL
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JAMES P. O'NEIL
(VICE PRESIDENT, FINANCE AND PRINCIPAL
FINANCIAL OFFICER)
</TABLE>
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