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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 January 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 17,353,028 shares of common stock, par value $.01, outstanding as at
March 11, 1994.
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FINANCIAL STATEMENTS
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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<CAPTION>
JANUARY 31,
1994 OCTOBER 31,
(UNAUDITED) 1993
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(000'S OMITTED)
ASSETS
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Current assets:
Cash and cash equivalents........................................................... $ 21,020 $ 33,067
Trade accounts receivable, less allowance for doubtful accounts of $6,965,000 and
$6,550,000....................................................................... 85,579 92,857
Inventories......................................................................... 29,480 21,729
Prepaid expenses and sundry receivables............................................. 5,801 4,851
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Total current assets.................................................... 141,880 152,504
Marketable securities................................................................... 17,185 17,393
Real estate, equipment and leasehold improvements, less depreciation and amortization of
$71,379,000 and $68,338,000........................................................... 91,441 88,840
Excess cost of subsidiaries over net assets at date of acquisition...................... 15,607 15,784
Other assets............................................................................ 8,604 9,103
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Totals.............................................................. $274,717 $283,624
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................................... $ 7,350 $ 5,434
Accounts payable.................................................................... 12,165 14,134
Accrued liabilities................................................................. 26,277 40,037
Income taxes payable................................................................ 4,553 5,114
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Total current liabilities............................................... 50,345 64,719
Long-term debt -- net of current portion................................................ 8,627 8,836
Deferred employee compensation and benefits............................................. 13,609 13,386
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Total liabilities....................................................... 72,581 86,941
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Stockholders' equity:
Common stock, par value $.01, issued 18,969,717 shares in 1994 and 18,948,442 shares
in 1993.......................................................................... 190 189
Additional paid-in capital.......................................................... 23,161 22,903
Retained earnings................................................................... 197,590 192,229
Foreign currency translation adjustment............................................. (729) (584)
Treasury stock, at cost, 1,651,331 shares in 1994 and 1,650,331 shares in 1993...... (18,076) (18,054)
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Total stockholders' equity.............................................. 202,136 196,683
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Totals.............................................................. $274,717 $283,624
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BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
(UNAUDITED)
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(000'S OMITTED)
1994 1993
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Revenues:
Net sales.............................................................................. $82,075 $61,026
Other.................................................................................. 1,698 898
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83,773 61,924
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Expenses:
Cost of sales.......................................................................... 45,256 32,748
Selling and administrative............................................................. 23,247 18,665
Depreciation and amortization.......................................................... 3,599 3,285
Interest............................................................................... 353 641
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72,455 55,339
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Income before income taxes................................................................. 11,318 6,585
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Income taxes:
State and local........................................................................ 1,042 470
Federal................................................................................ 3,040 2,344
Foreign................................................................................ 577 (96)
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4,659 2,718
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Net income................................................................................. $ 6,659 $ 3,867
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Net income per share....................................................................... $.38 $.23
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Dividends per share........................................................................ $.075 $.075
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CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
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<CAPTION>
THREE MONTHS
ENDED
JANUARY 31, 1994
(UNAUDITED)
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(000'S OMITTED)
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Retained earnings at beginning of period..................................................... $192,229
Net income................................................................................... 6,659
Dividends.................................................................................... (1,298)
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Retained earnings at end of period........................................................... $197,590
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BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
(UNAUDITED)
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(000'S OMITTED)
1994 1993
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Cash flows from operating activities:
Net income........................................................................ $ 6,659 $ 3,867
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization................................................. 3,599 3,285
Provision for deferred employee compensation.................................. 224 (130)
Changes in certain current assets and liabilities, net of non-cash
transactions.................................................................. (18,302) (8,477)
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Net cash used in operating activities............................................. (7,820) (1,455)
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Cash flows from investing activities:
Purchase of marketable securities and other investments........................... (1,172) (6,699)
Proceeds from the sale of marketable securities and other investments............. 2,240 4,385
Purchase of real estate, equipment and leasehold improvements..................... (5,991) (2,320)
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Net cash used in investing activities............................................. (4,923) (4,634)
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Cash flows from financing activities:
Proceeds from borrowings.......................................................... 3,313 --
Payment of debt................................................................... (1,576) (37)
Proceeds from stock options exercised............................................. 237 330
Payment of dividends.............................................................. (1,299) (1,287)
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Net cash provided by (used in) financing activities............................... 675 (994)
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Effect of exchange rate on cash....................................................... 21 6
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Decrease in cash and cash equivalents................................................. $(12,047) $(7,077)
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BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. The financial information included herein as at January 31, 1994
and for the three months ended January 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 $29,480,000, in 1994, include raw materials of
$4,828,000 and work in process of $24,652,000. 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 for the three months ended January 31, 1994
and 1993 were 17,302,712 and 17,160,588, respectively.
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
provision or net income for the quarter ended January 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
January 31, 1994, the Company had a working capital ratio of 2.82 to 1 and
working capital of $91,535,000.
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 JANUARY 31, 1994 COMPARED TO QUARTER ENDED JANUARY 31, 1993
Sales increased by $21,049,000, or 34%. The increase was primarily
attributable to higher level of demand for financial printing services. The
overall increase in sales, combined with a 1% decrease in the gross margin
percentage, contributed to an increase in gross margin of $8,541,000.
Other revenue, consisting primarily of investment income, increased
$800,000 due to realized gains on the sale of securities.
Selling and administrative expenses increased $4,582,000, or 25%, to
$23,247,000, principally as a result of sales and incentive compensation and
other expenses related to increases in sales and profitability, and increases in
the number of employees and the costs of facilities and labor.
Depreciation and amortization increased $314,000, or 10%, primarily as a
result of the acquisition of equipment during 1993.
Interest expense decreased $288,000, or 45%, principally due to the
reduction of the Company's debt.
The income tax rate remained relatively constant as the higher tax rate
under the Omnibus Budget Reconciliation Act of 1993 was offset by the increased
proportion of income earned in jurisdictions with lower tax rates.
As a result of the foregoing, income before income taxes was $11,318,000,
an increase of 72%, and net income increased 72% to $6,659,000.
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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.
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Date: March 15, 1994 By RICHARD H. KOONTZ
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RICHARD H. KOONTZ
(PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER)
Date: March 15, 1994 By JAMES P. O'NEIL
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JAMES P. O'NEIL
(VICE PRESIDENT, FINANCE AND PRINCIPAL
FINANCIAL OFFICER)
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