<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
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, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM__________ TO__________
------------------------
COMMISSION FILE NUMBER 1-5842
------------------------
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 17,620,688 shares of common stock, par value $.01, outstanding as at
June 6, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
FINANCIAL STATEMENTS
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30,
1996 OCTOBER 31,
(UNAUDITED) 1995
----------- -----------
(000'S OMITTED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................... $ 17,342 $ 36,590
Trade accounts receivable, less allowance for doubtful accounts of $8,196,000 and
$6,269,000......................................................................... 134,848 114,532
Inventories......................................................................... 41,786 27,028
Prepaid expenses and sundry receivables............................................. 9,295 6,184
---------- ----------
Total current assets.................................................... 203,271 184,334
Marketable securities................................................................... 14,107 16,015
Real estate, equipment and leasehold improvements, less depreciation and amortization of
$103,195,000 and $94,996,000.......................................................... 113,703 105,130
Excess cost of subsidiaries over net assets at date of acquisition...................... 13,913 14,223
Other assets............................................................................ 5,974 5,968
---------- ----------
Totals.............................................................. $350,968 $325,670
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt................................. $ 3,944 $ 3,075
Accounts payable.................................................................... 25,875 16,961
Accrued liabilities................................................................. 47,042 47,264
---------- ----------
Total current liabilities............................................... 76,861 67,300
Long-term debt -- net of current portion................................................ 2,699 2,830
Deferred employee compensation and benefits............................................. 14,757 14,031
---------- ----------
Total liabilities....................................................... 94,317 84,161
---------- ----------
Stockholders' equity:
Common stock, par value $.01, issued 19,272,055 shares in 1996 and 19,067,429 shares
in 1995............................................................................ 193 191
Additional paid-in capital.......................................................... 26,627 24,270
Retained earnings................................................................... 247,972 235,027
Unrealized gains on marketable securities........................................... 1,507 1,307
Foreign currency translation adjustment............................................. (1,455) (1,093)
Treasury stock, at cost, 1,657,196 shares in 1996 and 1995.......................... (18,193) (18,193)
---------- ----------
Total stockholders' equity.............................................. 256,651 241,509
---------- ----------
Totals.............................................................. $350,968 $325,670
========== ==========
</TABLE>
1
<PAGE> 3
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 30,
(UNAUDITED)
------------------------
(000'S OMITTED)
1996 1995
-------- --------
<S> <C> <C>
Revenues:
Net sales............................................................................ $136,396 $102,460
Other................................................................................ 1,518 581
-------- --------
137,914 103,041
-------- --------
Expenses:
Cost of sales........................................................................ 73,701 61,232
Selling and administrative........................................................... 36,654 26,521
Depreciation and amortization........................................................ 4,938 4,754
Interest............................................................................. 245 299
-------- --------
115,538 92,806
-------- --------
Income before income taxes............................................................... 22,376 10,235
-------- --------
Income taxes:
State and local...................................................................... 2,067 836
Federal.............................................................................. 7,053 3,613
Foreign.............................................................................. 742 80
-------- --------
9,862 4,529
-------- --------
Net income............................................................................... $ 12,514 $ 5,706
======== ========
Net income per share..................................................................... $.71 $.33
======== ========
Dividends per share...................................................................... $.09 $.09
======== ========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30,
(UNAUDITED)
------------------------
(000'S OMITTED)
1996 1995
-------- --------
<S> <C> <C>
Revenues:
Net sales............................................................................ $227,124 $179,273
Other................................................................................ 2,440 1,545
-------- --------
229,564 180,818
-------- --------
Expenses:
Cost of sales........................................................................ 129,498 109,159
Selling and administrative........................................................... 61,137 48,030
Depreciation and amortization........................................................ 9,802 9,232
Interest............................................................................. 439 512
-------- --------
200,876 166,933
-------- --------
Income before income taxes............................................................... 28,688 13,885
-------- --------
Income taxes:
State and local...................................................................... 2,683 1,100
Federal.............................................................................. 9,360 5,098
Foreign.............................................................................. 538 (46)
-------- --------
12,581 6,152
-------- --------
Net income............................................................................... $ 16,107 $ 7,733
======== ========
Net income per share..................................................................... $.92 $.44
======== ========
Dividends per share...................................................................... $.18 $.18
======== ========
</TABLE>
2
<PAGE> 4
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1996
(UNAUDITED)
----------------
(000'S OMITTED)
<S> <C>
Retained earnings at beginning of period........................................ $235,027
Net income...................................................................... 16,107
Dividends....................................................................... (3,162)
--------
Retained earnings at end of period.............................................. $247,972
========
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30,
(UNAUDITED)
---------------------------
<S> <C> <C>
(000'S OMITTED)
1996 1995
---- ----
Cash flows from operating activities:
Net income....................................................................... $ 16,107 $ 7,733
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization................................................ 9,802 9,232
Provision for deferred employee compensation................................. 826 765
Changes in other current assets and liabilities, net of non-cash
transactions................................................................. (30,851) (21,761)
-------- --------
Net cash used in operating activities............................................ (4,116) (4,031)
-------- --------
Cash flows from investing activities:
Purchase of securities or other investments...................................... (2,581) (4,510)
Proceeds from the sale of securities and other investments....................... 5,788 2,395
Purchase of real estate, equipment and leasehold improvements.................... (18,289) (8,434)
-------- --------
Net cash used in investing activities............................................ (15,082) (10,549)
-------- --------
Cash flows from financing activities:
Payment of debt.................................................................. (132) (315)
Proceeds from borrowings......................................................... 907 1,724
Proceeds from stock options exercised............................................ 2,307 114
Payment of dividends............................................................. (3,162) (3,129)
Payment of treasury stock........................................................ (3)
-------- --------
Net cash used in financing activities................................................ (80) (1,609)
-------- --------
Effect of exchange rate on cash...................................................... 30 (48)
-------- --------
Decrease in cash and cash equivalents................................................ $(19,248) $(16,237)
======== ========
</TABLE>
3
<PAGE> 5
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. The financial information included herein as at April 30, 1996 and
for the three and six months ended April 30, 1996 and 1995 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, 1995
was derived from the Company's audited annual report for 1995.
NOTE 2. Inventories of $41,786,000 in 1996 include raw materials of
$6,977,000 and work in process of $34,809,000. At October 31, 1995, inventories
of $27,028,000 included raw materials of $6,288,000 and work in process of
$20,740,000.
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 17,606,959 (three months) and 17,551,137
(six months) in 1996, and 17,387,012 (three months) and 17,383,185 (six months)
in 1995.
NOTE 4. 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, 1996, the fair value of
marketable securities exceeded cost by $2,691,000. At October 31, 1995, the fair
value of marketable securities exceeded cost by $2,333,000. The net unrealized
gains, after deferred taxes, were $1,507,000 and $1,307,000 at April 30, 1996
and October 31, 1995, respectively.
4
<PAGE> 6
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, 1996, the Company had a working capital ratio of 2.64 to 1 and working
capital of $126,410,000.
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, 1996 COMPARED TO QUARTER ENDED APRIL 30, 1995
Sales increased by $33,936,000, or 33%, to $136,396,000. The increase was
primarily attributable to higher levels of demand for transactional printing
services especially Initial Public Offerings (IPO's) and continued growth in
non-transactional printing services. The overall increase in sales, combined
with an increase in the gross margin percentage from 40% to 46%, contributed to
a $21,467,000 growth in gross margin.
Other revenue increased $937,000 due to capital gains from the sale of
securities.
Selling and administrative expenses increased $10,133,000 to $36,654,000.
This increase was due in part to the variable costs associated with sales and
profitability.
Depreciation and amortization increased $184,000, or 4%, primarily due to
the expansion of facilities and the acquisition of equipment.
Interest expense remained relatively unchanged.
The effective overall tax rate remained constant at 44%.
As a result of the foregoing, income before income taxes was $22,376,000
and net income increased 119% to $12,514,000.
5
<PAGE> 7
SIX MONTHS ENDED APRIL 30, 1996 COMPARED TO SIX MONTHS ENDED APRIL 30, 1995
Sales increased 27%, or $49,851,000, to $227,124,000 as a result of higher
levels of demand for transactional financial printing services which was
supported by an increase in higher margin services. The overall increase in
sales, combined with an increase in the gross margin percentage from 39% to 43%,
contributed to an increase in gross margin of $27,512,000.
Other revenue, consisting primarily of investment income, increased
$895,000 due to higher levels of realized capital gains from the sale of
securities.
Selling and administrative expenses increased $13,107,000 to $61,137,000,
due to increases in expenses related to sales and profitability.
Depreciation and amortization increased $570,000 primarily due to expansion
of facilities and the acquisition of equipment.
Interest expense remained relatively unchanged.
The effective overall income tax rate remained constant at 44%.
As a result of the foregoing, income before income taxes was $28,688,000,
an increase of 107%, and net income increased 108% to $16,107,000.
6
<PAGE> 8
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, 1996 ROBERT M. JOHNSON
-----------------------------------------------
ROBERT M. JOHNSON
(VICE CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER)
Date: June 12, 1996 JAMES P. O'NEIL
-----------------------------------------------
JAMES P. O'NEIL
(EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING
OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER))
</TABLE>
7
<PAGE> 9
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
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 April 30, 1996
(Unaudited) and the Condensed Consolidated Statement of Income for the Six
Months Ended April 30, 1996 (Unaudited) and is qualified in it entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<CASH> 17,342
<SECURITIES> 0
<RECEIVABLES> 143,044
<ALLOWANCES> 8,196
<INVENTORY> 41,786
<CURRENT-ASSETS> 203,271
<PP&E> 216,898
<DEPRECIATION> 103,195
<TOTAL-ASSETS> 350,968
<CURRENT-LIABILITIES> 76,861
<BONDS> 2,699
0
0
<COMMON> 193
<OTHER-SE> 256,458
<TOTAL-LIABILITY-AND-EQUITY> 350,968
<SALES> 227,124
<TOTAL-REVENUES> 229,564
<CGS> 129,498
<TOTAL-COSTS> 129,498
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,726
<INTEREST-EXPENSE> 439
<INCOME-PRETAX> 28,688
<INCOME-TAX> 12,581
<INCOME-CONTINUING> 16,107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,107
<EPS-PRIMARY> .92
<EPS-DILUTED> .92
</TABLE>