<PAGE> 1
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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 July 31, 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 17,378,378 shares of common stock, par value $.01, outstanding as at
September 7, 1994.
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<PAGE> 2
FINANCIAL STATEMENTS
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31,
1994 OCTOBER 31,
(UNAUDITED) 1993
----------- -----------
(000'S OMITTED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................... $ 30,435 $ 33,067
Trade accounts receivable, less allowance for doubtful accounts of $7,109,000 and
$6,550,000......................................................................... 98,096 92,857
Inventories......................................................................... 25,376 21,729
Prepaid expenses and sundry receivables............................................. 4,967 4,851
--------- ---------
Total current assets.................................................... 158,874 152,504
Marketable securities................................................................... 11,070 17,393
Real estate, equipment and leasehold improvements, less depreciation and amortization of
$77,680,000 and $68,338,000........................................................... 98,126 88,840
Excess cost of subsidiaries over net assets at date of acquisition...................... 15,097 15,784
Other assets............................................................................ 7,494 9,103
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Totals.............................................................. $290,661 $283,624
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current debt...................................................... $ 3,572 $ 5,434
Accounts payable.................................................................... 11,796 14,134
Accrued liabilities................................................................. 35,214 40,037
Income taxes payable................................................................ 2,233 5,114
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Total current liabilities............................................... 52,815 64,719
Long-term debt -- net of current portion................................................ 3,265 8,836
Deferred employee compensation and benefits............................................. 14,450 13,386
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Total liabilities....................................................... 70,530 86,941
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Stockholders' equity:
Common stock, par value $.01, issued 19,031,387 shares in 1994 and 18,948,442 shares
in 1993............................................................................ 190 189
Additional paid-in capital.......................................................... 23,933 22,903
Retained earnings................................................................... 215,876 192,229
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............................................. (1,749) (584)
--------- ---------
Total stockholders' equity.............................................. 220,131 196,683
--------- ---------
Totals.............................................................. $290,661 $283,624
========= =========
</TABLE>
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<PAGE> 3
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
JULY 31,
(UNAUDITED)
----------------------
(000'S OMITTED)
1994 1993
----- -----
<S> <C> <C>
Revenues:
Net sales.............................................................................. $95,591 $82,476
Other.................................................................................. 460 659
------- -------
96,051 83,135
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Expenses:
Cost of sales.......................................................................... 58,283 45,375
Selling and administrative............................................................. 23,178 21,075
Depreciation and amortization.......................................................... 3,847 3,511
Interest............................................................................... 226 493
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85,534 70,454
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Income before income taxes................................................................. 10,517 12,681
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Income taxes:
State and local........................................................................ 1,146 1,085
Federal................................................................................ 3,312 3,952
Foreign................................................................................ 37 351
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4,495 5,388
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Net income................................................................................. $ 6,022 $ 7,293
======= =======
Net income per share....................................................................... $.35 $.42
======= =======
Dividends per share........................................................................ $.075 $.075
======= =======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JULY 31,
(UNAUDITED)
-----------------------
(000'S OMITTED)
1994 1993
---- ----
<S> <C> <C>
Revenues:
Net sales............................................................................. $296,853 $233,151
Other................................................................................. 3,703 2,757
-------- --------
300,556 235,908
-------- --------
Expenses:
Cost of sales......................................................................... 166,681 120,872
Selling and administrative............................................................ 73,328 65,094
Depreciation and amortization......................................................... 11,565 10,297
Interest.............................................................................. 905 1,592
-------- --------
252,479 197,855
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Income before income taxes................................................................ 48,077 38,053
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Income taxes:
State and local....................................................................... 4,479 3,258
Federal............................................................................... 14,603 11,474
Foreign............................................................................... 1,444 566
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20,526 15,298
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Net income................................................................................ $ 27,551 $ 22,755
======== ========
Net income per share...................................................................... $1.59 $1.32
======== ========
Dividends per share....................................................................... $.225 $.225
======== ========
</TABLE>
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<PAGE> 4
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JULY 31, 1994
(UNAUDITED)
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(000'S OMITTED)
<S> <C>
Retained earnings at beginning of period.................................................... $192,229
Net income.................................................................................. 27,551
Dividends................................................................................... (3,904)
--------
Retained earnings at end of period.......................................................... $215,876
========
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JULY 31,
(UNAUDITED)
---------------------------
(000'S OMITTED)
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income....................................................................... $ 27,551 $ 22,755
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization................................................ 11,565 10,297
Provision for deferred employee compensation................................. 1,338 29
Changes in other current assets and liabilities, net of non-cash
transactions................................................................. (21,001) (30,847)
-------- --------
Net cash provided by operating activities........................................ 19,453 2,234
-------- --------
Cash flows from investing activities:
Purchase of securities or other investments...................................... (2,455) (10,840)
Proceeds from the sale of securities and other investments....................... 10,768 8,868
Purchase of real estate, equipment and leasehold improvements.................... (20,265) (10,060)
-------- --------
Net cash used in investing activities............................................ (11,952) (12,032)
-------- --------
Cash flows from financing activities:
Payment of debt.................................................................. (9,858) (5,323)
Proceeds from borrowings......................................................... 2,612
Proceeds from stock options exercised............................................ 1,031 1,395
Payment of dividends............................................................. (3,904) (3,872)
Purchase of treasury stock....................................................... (65) (340)
-------- --------
Net cash used in financing activities............................................ (10,184) (8,140)
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Effect of exchange rate on cash...................................................... 51 4
-------- --------
Decrease in cash and cash equivalents................................................ $ (2,632) $(17,934)
======== ========
</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 July 31, 1994 and
for the three and nine months ended July 31, 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 $25,376,000 in 1994 include raw materials of
$4,267,000 and work in process of $21,109,000. 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 17,377,017 (three months) and 17,345,257
(nine months) in 1994, and 17,274,115 (three months) and 17,213,289 (nine
months) in 1993.
NOTE 4. Effective November 1, 1993, the Company adopted prospectively
Statement of Financial Standards (SFAS) No. 109, "Accounting for Income Taxes".
The adoption of SFAS 109 had no effect on net income for the three and nine
months ended July 31, 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
July 31, 1994, the Company had a working capital ratio of 3.01 to 1 and working
capital of $106,059,000.
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 JULY 31, 1994 COMPARED TO QUARTER ENDED JULY 31, 1993
Sales increased 16% to $95,591,000. The increase was primarily attributable
to increased levels of mutual fund, EDGAR and commercial printing sales,
partially offset by a decline in sales of financial printing related to
transactional activity. The expected benefits from an increase in sales were
substantially offset by a decrease in the gross margin percentage from 45% to
39%. The decrease in the gross margin percentage was due to the increased sales
of mutual fund products and commercial printing which normally produce lower
margins and to general increases in production costs related to expansion of
facilities and increases in the workforce. As a result, gross margin remained
relatively constant.
Other revenue decreased $199,000 to $460,000 due to lower levels of
invested funds.
Selling and administrative expenses increased $2,103,000, or 10%, to
$23,178,000 as a result of increases in sales commissions, the cost of
facilities and employee compensation.
Depreciation and amortization increased $336,000, or 10%, primarily as a
result of the expansion of facilities and acquisition of equipment.
Interest expense decreased $267,000 due to the reduction of the Company's
debt.
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The income tax rate remained relatively unchanged.
As a result of the foregoing, income before income taxes decreased
$2,164,000 to $10,517,000, and net income decreased $1,271,000, or 17%, to
$6,022,000.
NINE MONTHS ENDED JULY 31, 1994 COMPARED TO NINE MONTHS ENDED JULY 31, 1993
Sales increased 27% to $296,853,000 due to increased demand for financial
printing services during the first six months of the period and additional sales
from mutual funds, EDGAR and commercial printing. The increase in sales,
partially offset by a 4% decrease in the gross margin percentage, contributed to
an increase of $17,893,000 in the gross margin. The decrease in the gross margin
percentage was due to an increase in the proportion of sales with lower profit
margins, expansion of production facilities and increases in the production
workforce.
Other revenues increased $946,000 to $3,703,000, due to higher realized
gains on the sale of securities.
Selling and administrative expenses increased $8,234,000, or 13%, to
$73,328,000 principally as a result of increases in sales commissions, 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 $1,268,000, or 12%, primarily as a
result of the expansion of facilities and the acquisition of equipment.
Interest expense decreased $687,000 due to the reduction of the Company's
debt.
The effective overall income tax rate increased from 40% to 43% as a result
of an increased proportion of earnings in higher tax jurisdictions and changes
in the deductibility of certain expenses under the Omnibus Budget Reconciliation
Act of 1993.
As a result of the foregoing, income before income taxes increased
$10,024,000, or 26%, to $48,077,000 and net income increased $4,796,000, or 21%,
to $27,551,000.
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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.
Date: September 9, 1994 RICHARD H. KOONTZ
----------------- -----------------------------------------------
RICHARD H. KOONTZ
(PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER)
Date: September 9, 1994 JAMES P. O'NEIL
----------------- -----------------------------------------------
JAMES P. O'NEIL
(VICE PRESIDENT, FINANCE AND PRINCIPAL
FINANCIAL OFFICER)
7
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EXHIBIT INDEX
Exhibit
No. Description
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Financial Condition at July 31, 1994
(Unaudtited) and the Condensed Consolidated Statement of Income for the Nine
Months Ended July 31, 1994 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1993
<PERIOD-END> JUL-31-1994
<CASH> 30,435
<SECURITIES> 0
<RECEIVABLES> 105,205
<ALLOWANCES> 7,109
<INVENTORY> 25,376
<CURRENT-ASSETS> 158,874
<PP&E> 175,806
<DEPRECIATION> 77,680
<TOTAL-ASSETS> 290,661
<CURRENT-LIABILITIES> 52,815
<BONDS> 3,265
<COMMON> 190
0
0
<OTHER-SE> 219,941
<TOTAL-LIABILITY-AND-EQUITY> 290,661
<SALES> 296,853
<TOTAL-REVENUES> 300,556
<CGS> 166,681
<TOTAL-COSTS> 166,681
<OTHER-EXPENSES> 83,956
<LOSS-PROVISION> 937
<INTEREST-EXPENSE> 905
<INCOME-PRETAX> 48,077
<INCOME-TAX> 20,526
<INCOME-CONTINUING> 27,551
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,551
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 1.59
</TABLE>
