<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 April 30, 1995 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 17,388,891 shares of common stock, par value $.01, outstanding as at
June 8, 1995.
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<PAGE> 2
FINANCIAL STATEMENTS
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30,
1995 OCTOBER 31,
(UNAUDITED) 1994
------------ -----------
(000'S OMITTED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 22,227 $ 38,464
Trade accounts receivable, less allowance for doubtful accounts of $7,066,000 and
$6,592,000......................................................................... 100,465 90,440
Inventories......................................................................... 33,566 20,176
Prepaid expenses and other current assets........................................... 5,384 8,670
--------- ---------
Total current assets.................................................... 161,642 157,750
Marketable securities................................................................... 13,859 10,198
Real estate, equipment and leasehold improvements, less depreciation and amortization of
$87,885,000 and $79,785,000........................................................... 101,681 101,522
Excess cost of subsidiaries over net assets at date of acquisition...................... 14,449 14,788
Other assets............................................................................ 7,430 7,323
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Totals.............................................................. $299,061 $291,581
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt................................. $ 4,644 $ 3,061
Accounts payable.................................................................... 18,709 13,398
Accrued liabilities................................................................. 27,814 34,794
Income taxes payable................................................................ 1,475
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Total current liabilities............................................... 52,642 51,253
Long-term debt -- net of current portion................................................ 3,031 3,178
Deferred employee compensation and benefits............................................. 15,096 14,355
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Total liabilities....................................................... 70,769 68,786
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Stockholders' equity:
Common stock, par value $.01, issued 19,042,312 shares in 1995 and 19,032,387 shares
in 1994............................................................................ 190 190
Additional paid-in capital.......................................................... 24,058 23,944
Retained earnings................................................................... 222,605 218,001
Unrealized gains on marketable securities........................................... 855
Foreign currency translation adjustment............................................. (1,294) (1,221)
Treasury stock, 1,653,421 shares in 1995 and 1,653,209 shares in 1994, at cost...... (18,122) (18,119)
--------- ---------
Total stockholders' equity.............................................. 228,292 222,795
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Totals.............................................................. $299,061 $291,581
========= =========
</TABLE>
1
<PAGE> 3
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)
1995 1994
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<S> <C> <C>
Revenues:
Net sales............................................................................ $102,460 $119,187
Other................................................................................ 581 1,545
-------- --------
103,041 120,732
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Expenses:
Cost of sales........................................................................ 61,232 63,142
Selling and administrative........................................................... 26,521 26,903
Depreciation and amortization........................................................ 4,754 4,119
Interest............................................................................. 299 326
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92,806 94,490
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Income before income taxes............................................................... 10,235 26,242
-------- --------
Income taxes:
State and local...................................................................... 836 2,291
Federal.............................................................................. 3,613 8,251
Foreign.............................................................................. 80 830
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4,529 11,372
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Net income............................................................................... $ 5,706 $ 14,870
======== ========
Net income per share..................................................................... $.33 $.86
======== ========
Dividends per share...................................................................... $.09 $.075
======== ========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30,
(UNAUDITED)
-----------------------
(000'S OMITTED)
1995 1994
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<S> <C> <C>
Revenues:
Net sales............................................................................. $179,273 $201,262
Other................................................................................. 1,545 3,243
-------- --------
180,818 204,505
-------- --------
Expenses:
Cost of sales......................................................................... 109,159 108,398
Selling and administrative............................................................ 48,030 50,150
Depreciation and amortization......................................................... 9,232 7,718
Interest.............................................................................. 512 679
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166,933 166,945
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Income before income taxes................................................................ 13,885 37,560
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Income taxes:
State and local....................................................................... 1,100 3,333
Federal............................................................................... 5,098 11,291
Foreign............................................................................... (46) 1,407
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6,152 16,031
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Net income................................................................................ $ 7,733 $ 21,529
======== ========
Net income per share...................................................................... $.44 $1.24
======== ========
Dividends per share....................................................................... $.18 $.15
======== ========
</TABLE>
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BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1995
(UNAUDITED)
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<S> <C>
(000'S OMITTED)
Retained earnings at beginning of period...................................................... $ 218,001
Net income.................................................................................... 7,733
Dividends..................................................................................... (3,129)
--------
Retained earnings at end of period............................................................ $ 222,605
==========
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30,
(UNAUDITED)
---------------------------
(000'S OMITTED)
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income....................................................................... $ 7,733 $ 21,529
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization................................................ 9,232 7,718
Provision for deferred employee compensation................................. 765 702
Changes in other current assets and liabilities, net of non-cash
transactions................................................................. (21,761) (36,823)
-------- --------
Net cash used in operating activities............................................ (4,031) (6,874)
-------- --------
Cash flows from investing activities:
Purchase of securities and other investments..................................... (4,510) (1,852)
Proceeds from the sale of securities and other investments....................... 2,395 10,439
Purchase of real estate, equipment and leasehold improvements.................... (8,434) (13,626)
-------- --------
Net cash used in investing activities............................................ (10,549) (5,039)
-------- --------
Cash flows from financing activities:
Payment of debt.................................................................. (315) (9,409)
Proceeds from borrowings......................................................... 1,724 2,612
Proceeds from stock options exercised............................................ 114 1,003
Payment of dividends............................................................. (3,129) (2,600)
Purchase of treasury stock....................................................... (3) (65)
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Net cash used in financing activities............................................ (1,609) (8,459)
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Effect of exchange rate on cash...................................................... (48) 38
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Decrease in cash and cash equivalents................................................ $(16,237) $(20,334)
======== ========
</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, 1995 and
for the three and six months ended April 30, 1995 and 1994 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, 1994
was derived from the Company's audited annual report for 1994.
NOTE 2. Inventories of $33,566,000 in 1995 include raw materials of
$5,404,000 and work in process of $28,162,000. At October 31, 1994, inventories
of $20,176,000 included raw materials of $4,613,000 and work in process of
$15,563,000.
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 17,387,012 (three months) and 17,383,185
(six months) in 1995, and 17,356,042 (three months) and 17,329,377 (six months)
in 1994.
NOTE 4. Effective November 1, 1994, the Company adopted FASB Statement No.
115 ("Accounting for Certain Investments in Debt and Equity Securities"). The
Company classifies its investment in marketable securities as
available-for-sale. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses, net of tax, reported as a separate
component of stockholders' equity. At April 30, 1995, the fair value of
marketable securities exceeded cost by $1,527,000. The unrealized gains, net of
deferred taxes, were $855,000. In accordance with the provisions of FASB
Statement No. 115, prior year information was not restated.
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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, 1995, the Company had a working capital ratio of 3.07 to 1 and working
capital of $109,000,000.
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. The costs of labor, facilities and
equipment constitute a major portion of the cost of goods sold. These costs do
not normally increase or decrease proportionally with changes in sales.
QUARTER ENDED APRIL 30, 1995 COMPARED TO QUARTER ENDED APRIL 30, 1994
Sales decreased $16,727,000, or 14%. The decrease was primarily
attributable to lower levels of major financial transactions in the capital
markets which reduced demand for transactional printing services. The decline
was partially offset by increased sales of non-transactional printing to
corporate, mutual fund and specialized commercial printing clients. Such
printing traditionally generates lower gross margins than transactional
printing. The overall decrease in sales, combined with a 7% decrease in the
gross margin percentage, contributed to a decline in gross margin of
$14,817,000.
Other revenue, which consists primarily of investment income, declined
$964,000. The decline is the result of lower levels of investment assets in the
current year and higher levels of capital gains realized in 1994.
Selling and administrative expenses remained relatively unchanged as
decreases attributable to reduced levels of sales and profitability were offset
by general increases in the cost of labor and facilities.
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Depreciation and amortization increased $635,000, or 15%, primarily due to
expansion of facilities and the acquisition of equipment.
Interest expense remained relatively constant.
The effective overall tax rate increased from 43% to 44%, primarily as a
result of changes in the deductibility of certain expenses for tax purposes.
As a result of the foregoing, income before income taxes was $10,235,000, a
decrease of 61%, and net income declined 62% to 5,706,000.
SIX MONTHS ENDED APRIL 30, 1995 COMPARED TO SIX MONTHS ENDED APRIL 30, 1994
Sales declined 11%, or $21,989,000, as a result of lower levels of demand
for transactional financial printing services which was partially offset by
increased sales of lower margin services. The overall decline in sales, combined
with a 7% decline in the gross margin percentage, contributed to a decline in
gross margin of $22,750,000.
Other revenue, consisting primarily of investment income, decreased
$1,698,000 due to lower levels of realized capital gains from the sale of
securities.
Selling and administrative expenses decreased $2,120,000 to $48,030,000.
Decreases in expenses related to sales and profitability were partially offset
by general cost increases.
Depreciation and amortization increased $1,514,000, or 20%, primarily due
to expansion of facilities and the acquisition of equipment.
Interest expense decreased $167,000 due to the payment of senior notes
early in 1994.
The increase, from 43% to 44%, in the effective overall income tax rate is
attributable to the change in the deductibility of certain expenses.
As a result of the foregoing, income before income taxes was $13,885,000, a
decrease of 63%, and net income decreased 64% to $7,733,000.
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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 12, 1995 RICHARD H. KOONTZ
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RICHARD H. KOONTZ
(PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER)
Date: June 12, 1995 JAMES P. O'NEIL
-----------------------------------------------
JAMES P. O'NEIL
(VICE PRESIDENT, FINANCE AND PRINCIPAL
FINANCIAL OFFICER)
</TABLE>
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<PAGE> 9
EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION
------- -----------
27 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission for information
only and not filed.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Financial Condition at April 30, 1995
(Unaudited) and the Condensed Consolidated Statement of Income for the Six
Months Ended April 30, 1995 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<CASH> 22,227
<SECURITIES> 0
<RECEIVABLES> 107,531
<ALLOWANCES> 7,066
<INVENTORY> 33,566
<CURRENT-ASSETS> 161,642
<PP&E> 189,566
<DEPRECIATION> 87,885
<TOTAL-ASSETS> 299,061
<CURRENT-LIABILITIES> 52,642
<BONDS> 3,031
<COMMON> 190
0
0
<OTHER-SE> 228,102
<TOTAL-LIABILITY-AND-EQUITY> 299,061
<SALES> 179,273
<TOTAL-REVENUES> 180,818
<CGS> 109,159
<TOTAL-COSTS> 109,159
<OTHER-EXPENSES> 55,955
<LOSS-PROVISION> 1,307
<INTEREST-EXPENSE> 512
<INCOME-PRETAX> 13,885
<INCOME-TAX> 6,152
<INCOME-CONTINUING> 7,733
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,733
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
