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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, 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 17,388,853 shares of common stock, par value $.01, outstanding as at
March 10, 1995.
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FINANCIAL STATEMENTS
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 31,
1995 OCTOBER 31,
(UNAUDITED) 1994
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<S> <C> <C>
(000'S OMITTED)
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 28,841 $ 38,464
Trade accounts receivable, less allowance for doubtful accounts of $6,234,000 and
$6,592,000......................................................................... 82,479 90,440
Inventories......................................................................... 25,408 20,176
Prepaid expenses and other current assets........................................... 6,071 8,670
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Total current assets.................................................... 142,799 157,750
Marketable securities................................................................... 12,834 10,198
Real estate, equipment and leasehold improvements, less depreciation and amortization of
$83,380,000 and $79,785,000........................................................... 100,405 101,522
Excess cost of subsidiaries over net assets at date of acquisition...................... 14,497 14,788
Other assets............................................................................ 8,285 7,323
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Totals.............................................................. $278,820 $291,581
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt................................. $ 3,223 $ 3,061
Accounts payable.................................................................... 11,464 13,398
Accrued liabilities................................................................. 23,602 34,794
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Total current liabilities............................................... 38,289 51,253
Long-term debt -- net of current portion................................................ 3,097 3,178
Deferred employee compensation and benefits............................................. 14,716 14,355
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Total liabilities....................................................... 56,102 68,786
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Stockholders' equity:
Common stock, par value $.01, issued 19,033,062 shares in 1995 and 19,032,387 shares
in 1994............................................................................ 190 190
Additional paid-in capital.......................................................... 23,951 23,944
Retained earnings................................................................... 218,464 218,001
Unrealized gains on marketable securities........................................... 360
Foreign currency translation adjustment............................................. (2,128) (1,221)
Treasury stock, at cost, 1,653,209 shares in 1995 and 1994.......................... (18,119) (18,119)
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Total stockholders' equity.............................................. 222,718 222,795
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Totals.............................................................. $278,820 $291,581
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</TABLE>
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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)
1995 1994
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Revenues:
Net sales.............................................................................. $76,813 $82,075
Other.................................................................................. 964 1,698
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77,777 83,773
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Expenses:
Cost of sales.......................................................................... 47,927 45,256
Selling and administrative............................................................. 21,509 23,247
Depreciation and amortization.......................................................... 4,478 3,599
Interest............................................................................... 213 353
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74,127 72,455
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Income before income taxes................................................................. 3,650 11,318
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Income taxes:
State and local........................................................................ 264 1,042
Federal................................................................................ 1,067 3,040
Foreign................................................................................ 292 577
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1,623 4,659
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Net income................................................................................. $ 2,027 $ 6,659
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Net income per share....................................................................... $.12 $.38
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Dividends per share........................................................................ $.09 $.075
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</TABLE>
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
JANUARY 31, 1995
(UNAUDITED)
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<S> <C>
(000'S OMITTED)
Retained earnings at beginning of period..................................................... $218,001
Net income................................................................................... 2,027
Dividends.................................................................................... (1,564)
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Retained earnings at end of period........................................................... $218,464
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</TABLE>
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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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<S> <C> <C>
(000'S OMITTED)
1995 1994
Cash flows from operating activities:
Net income........................................................................ $ 2,027 $ 6,659
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization................................................. 4,478 3,599
Provision for deferred employee compensation.................................. 385 224
Changes in certain current assets and liabilities, net of non-cash
transactions.............................................................. (9,740) (18,302)
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Net cash used in operating activities............................................. (2,850) (7,820)
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Cash flows from investing activities:
Purchase of marketable securities and other investments........................... (3,014) (1,172)
Proceeds from the sale of marketable securities and other investments............. 961 2,240
Purchase of real estate, equipment and leasehold improvements..................... (3,425) (5,991)
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Net cash used in investing activities............................................. (5,478) (4,923)
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Cash flows from financing activities:
Proceeds from borrowings.......................................................... 415 3,313
Payment of debt................................................................... (217) (1,576)
Proceeds from stock options exercised............................................. 7 237
Payment of dividends.............................................................. (1,564) (1,299)
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Net cash provided by (used in) financing activities............................... (1,359) 675
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Effect of exchange rate on cash....................................................... 64 21
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Decrease in cash and cash equivalents................................................. $(9,623) $(12,047)
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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 January 31, 1995
and for the three months ended January 31, 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 $25,408,000 in 1995 include raw materials of
$5,716,000 and work in process of $19,692,000. 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 for the three months ended January 31, 1995
and 1994 were 17,379,358 and 17,302,712, respectively.
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 January 31, 1995, the fair value of
marketable securities exceeded cost by $643,000. The unrealized gains, net of
deferred taxes, were $360,000. 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
January 31, 1995, the Company had a working capital ratio of 3.73 to 1 and
working capital of $104,510,000.
Cash generated from operations, available working capital and borrowings
have been used to finance acquisitions, capital expenditures, payment of debt,
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 growth, 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, facilities,
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 for facilities, labor and
equipment constitute a major portion of the costs of goods sold. These costs do
not normally increase or decrease proportionally with changes in sales.
QUARTER ENDED JANUARY 31, 1995 COMPARED TO QUARTER ENDED JANUARY 31, 1994
Sales decreased by $5,262,000, or 6%. The decrease was primarily
attributable to lower levels of demand for transactional printing services. The
decrease in demand was partially offset by increases in sales of non-
transactional printing to corporate, mutual funds 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 $7,933,000.
Other revenue, consisting primarily of investment income, decreased
$734,000 due to reduced amounts of realized gains from the sale of securities.
Selling and administrative expenses decreased $1,738,000 to $21,509,000. As
a percentage of sales these costs remained relatively constant due to decreases
in certain expenses directly related to sales and profitability.
Depreciation and amortization increased $879,000, or 24%, primarily as a
result of the acquisition of equipment and the expansion of facilities during
1994.
Interest expense decreased $140,000 principally due to the reduction of the
Company's debt.
The effective overall income tax rate increased from 41% to 44%. The
increased rate is principally attributable to non-deductible expenses, including
the amortization of goodwill, representing a larger portion of the reduced
income before taxes. Also, the Company had taxable losses in jurisdictions for
which carryback benefits are not available and for which future earnings are not
assured. Losses not carried back will be used to offset future taxes when
operations are profitable.
As a result of the foregoing, income before income taxes was $3,650,000, a
decrease of 68%, and net income decreased 70% to $2,027,000.
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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: March 15, 1995 By RICHARD H. KOONTZ
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RICHARD H. KOONTZ
(PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER)
Date: March 15, 1995 By JAMES P. O'NEIL
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JAMES P. O'NEIL
(VICE PRESIDENT, FINANCE AND PRINCIPAL
FINANCIAL OFFICER)
</TABLE>
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EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION
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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
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE ANNUAL REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 28,841
<SECURITIES> 0
<RECEIVABLES> 88,713
<ALLOWANCES> 6,234
<INVENTORY> 25,408
<CURRENT-ASSETS> 142,799
<PP&E> 183,785
<DEPRECIATION> 83,380
<TOTAL-ASSETS> 278,820
<CURRENT-LIABILITIES> 38,289
<BONDS> 0
<COMMON> 190
0
0
<OTHER-SE> 222,528
<TOTAL-LIABILITY-AND-EQUITY> 278,820
<SALES> 76,813
<TOTAL-REVENUES> 77,777
<CGS> 47,927
<TOTAL-COSTS> 47,927
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 244
<INTEREST-EXPENSE> 213
<INCOME-PRETAX> 3,650
<INCOME-TAX> 1,623
<INCOME-CONTINUING> 2,027
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,027
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
