<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------
FORM 10-K/A
------------------
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]
For the fiscal year ended December 31, 1997, or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from ____________ to____________
COMMISSION FILE NO. 1-5842
------------------
BOWNE & CO., INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-2618477
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
345 HUDSON STREET
NEW YORK, NEW YORK 10014
(Address of principal executive offices) (Zip code)
</TABLE>
(212) 924-5500
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
<S> <C>
Common Stock, American Stock Exchange
Par Value $.01
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(Title of class)
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 (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the Common Stock issued and outstanding and
held by nonaffiliates of the Registrant, based upon the closing price for the
Common Stock on the American Stock Exchange on March 24, 1998, was $739,875,384.
For purposes of the foregoing calculation, the Registrant's Employees' Stock
Purchase Plan is deemed to be an affiliate of the Registrant.
The number of shares outstanding of each of the Registrant's classes of
common stock was 18,322,046 shares of Common Stock outstanding as at March 24,
1998.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the documents of the Registrant listed below have been
incorporated by reference into the indicated parts of this Annual Report on Form
10-K:
<TABLE>
<S> <C>
Notice of Annual Meeting of Stockholders and Proxy
Statement anticipated to be dated April 10, 1998.... Part III, Items 11-12
Part IV, Item 14
</TABLE>
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<PAGE> 2
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Bowne & Co., Inc.
We have audited the accompanying consolidated balance sheets of Bowne &
Co., Inc. and Subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity and cash flows for the
year ended December 31, 1997, the two months ended December 31, 1996, and the
years ended October 31, 1996 and 1995. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Bowne & Co.,
Inc. and Subsidiaries at December 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for the year ended December 31,
1997, the two months ended December 31, 1996, and the years ended October 31,
1996 and 1995, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
March 4, 1998
12
<PAGE> 3
BOWNE & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
TWO MONTHS THREE MONTHS
YEAR ENDED YEAR ENDED OCTOBER 31, ENDED ENDED
DECEMBER 31, --------------------------- DECEMBER 31, JANUARY 31,
1997 1996 1995 1996 1996
------------ ------------ ------------ ------------ ------------
UNAUDITED
<S> <C> <C> <C> <C> <C>
Net sales.............................. $716,647,000 $501,369,000 $392,713,000 $90,218,000 $90,728,000
Expenses:
Cost of sales........................ 392,120,000 276,141,000 233,493,000 49,467,000 55,797,000
Selling and administrative........... 203,362,000 133,194,000 102,439,000 26,831,000 24,483,000
Depreciation and amortization........ 29,669,000 21,247,000 17,852,000 4,716,000 4,864,000
Interest............................. 1,621,000 677,000 884,000 120,000 194,000
Purchased in-process research and
development and other charges..... 6,991,000 -- -- -- --
------------ ------------ ------------ ----------- -----------
633,763,000 431,259,000 354,668,000 81,134,000 85,338,000
------------ ------------ ------------ ----------- -----------
Operating income....................... 82,884,000 70,110,000 38,045,000 9,084,000 5,390,000
Gain on sale of subsidiary............. 35,273,000 -- -- -- --
Other income........................... 2,456,000 4,905,000 3,706,000 228,000 922,000
------------ ------------ ------------ ----------- -----------
Income before income taxes............. 120,613,000 75,015,000 41,751,000 9,312,000 6,312,000
Income taxes........................... 51,070,000 32,512,000 18,465,000 4,128,000 2,719,000
------------ ------------ ------------ ----------- -----------
NET INCOME............................. $ 69,543,000 $ 42,503,000 $ 23,286,000 $ 5,184,000 $ 3,593,000
============ ============ ============ =========== ===========
NET INCOME PER SHARE:
Basic................................ $3.84 $2.42 $1.34 $0.29 $0.21
===== ===== ===== ====== ======
Diluted.............................. $3.74 $2.39 $1.33 $0.29 $0.20
===== ===== ===== ====== ======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
13
<PAGE> 4
BOWNE & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 40,646,000 $ 24,097,000
Marketable securities..................................... 5,829,000 4,488,000
Trade accounts receivable, less allowance for doubtful
accounts of $12,441,000 (1997) and $9,702,000 (1996).... 187,573,000 162,934,000
Inventories............................................... 35,617,000 41,917,000
Prepaid expenses and other current assets................. 15,839,000 12,385,000
------------ ------------
Total current assets...................... 285,504,000 245,821,000
------------ ------------
Property, plant and equipment at cost, less accumulated
depreciation of
$139,055,000 (1997) and $116,576,000 (1996)............... 138,933,000 131,983,000
------------ ------------
Other assets:
Goodwill, net of accumulated amortization of $7,174,000
(1997) and $5,496,000 (1996)............................ 64,452,000 21,847,000
Deferred income taxes..................................... 5,434,000 3,317,000
Other..................................................... 6,330,000 5,299,000
------------ ------------
76,216,000 30,463,000
------------ ------------
Total Assets................................................ $500,653,000 $408,267,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt....... $ 5,755,000 $ 4,004,000
Accounts payable.......................................... 28,097,000 27,840,000
Employee compensation..................................... 44,791,000 32,736,000
Accrued expenses.......................................... 29,876,000 23,362,000
Income taxes payable...................................... 12,120,000 11,024,000
------------ ------------
Total current liabilities.......................... 120,639,000 98,966,000
------------ ------------
Other liabilities:
Long-term debt -- net of current portion.................. 2,537,000 2,424,000
Deferred employee compensation and benefits............... 18,877,000 15,321,000
------------ ------------
Total liabilities.................................. 142,053,000 116,711,000
------------ ------------
Stockholders' equity:
Preferred stock:
Authorized 1,000,000 shares, par value $.01
Issuable in series -- none issued
Common stock:
Authorized 60,000,000 shares, par value $.01
Issued 19,605,955 shares (1997) and 19,378,255 shares
(1996)................................................. 196,000 194,000
Additional paid-in capital................................ 36,685,000 31,422,000
Retained earnings......................................... 339,407,000 276,379,000
Treasury stock, at cost, 1,360,199 shares (1997) and
1,420,214 shares (1996)................................. (15,954,000) (15,816,000)
Other, net................................................ (1,734,000) (623,000)
------------ ------------
Total stockholders' equity......................... 358,600,000 291,556,000
------------ ------------
Total Liabilities and Stockholders' Equity.................. $500,653,000 $408,267,000
============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
14
<PAGE> 5
BOWNE & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, YEAR ENDED OCTOBER 31,
------------- ------------------------- TWO MONTHS ENDED THREE MONTHS ENDED
1997 1996 1995 DECEMBER 31, 1996 JANUARY 31, 1996
------------- ----------- ----------- ----------------- ------------------
UNAUDITED
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $69,543,000 $42,503,000 $23,286,000 $ 5,184,000 $ 3,593,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.............. 29,669,000 21,247,000 17,852,000 4,716,000 4,864,000
Provision for doubtful accounts............ 7,871,000 5,208,000 2,771,000 729,000 (223,000)
Gain on sale of subsidiary................. (35,273,000) -- -- -- --
Gain on disposal of fixed assets........... (959,000) -- -- (17,000) (26,000)
Gain on sales of securities and other
investments.............................. (706,000) (3,010,000) (158,000) -- (39,000)
Provision for deferred employee
compensation............................. 3,729,000 1,229,000 1,242,000 282,000 395,000
Deferred income taxes...................... (2,117,000) (1,740,000) 607,000 (329,000) --
Other...................................... 4,647,000 101,000 (315,000) (280,000) 8,000
Increase (decrease) in cash resulting from changes in:
Accounts receivable...................... (31,010,000) (47,392,000) (26,766,000) (1,822,000) 16,273,000
Inventories.............................. 6,693,000 (6,468,000) (6,832,000) (6,388,000) (6,099,000)
Prepaid expenses and other current
assets................................. (3,367,000) (1,298,000) 1,745,000 (4,010,000) (2,169,000)
Trade payables........................... (6,585,000) 4,345,000 3,599,000 1,616,000 (695,000)
Employee compensation.................... 12,283,000 9,767,000 4,375,000 (8,003,000) (15,629,000)
Accrued expenses and taxes............... 3,617,000 6,448,000 6,303,000 9,741,000 1,234,000
----------- ----------- ----------- ----------- -----------
Net cash provided by operating activities.... 58,035,000 30,940,000 27,709,000 1,419,000 1,487,000
----------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of subsidiary........... 36,679,000 -- -- -- --
Proceeds from the sale of fixed assets..... 3,992,000 -- -- 20,000 --
Purchase of other investments.............. (500,000) -- -- (1,000) --
Acquisition of businesses, net of cash..... (40,491,000) -- -- (3,369,000) --
Purchase of marketable securities and other
investments.............................. (1,929,000) (3,854,000) (7,840,000) (231,000) (1,661,000)
Proceeds from sales of marketable
securities and other investments......... 1,939,000 16,402,000 4,569,000 300,000 1,032,000
Purchase of property, plant and
equipment................................ (35,188,000) (44,485,000) (19,954,000) (5,649,000) (9,236,000)
----------- ----------- ----------- ----------- -----------
Net cash used in investing activities........ (35,498,000) (31,937,000) (23,225,000) (8,930,000) (9,865,000)
----------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Advances from demand notes................. 974,000 -- -- 894,000 --
Proceeds from borrowing.................... 20,000,000 -- -- -- 1,026,000
Payment of debt............................ (22,612,000) (658,000) (351,000) (1,265,000) (63,000)
Proceeds from stock options exercised...... 3,412,000 3,696,000 327,000 207,000 2,123,000
Payment of dividends....................... (6,515,000) (6,335,000) (6,260,000) -- (1,578,000)
Purchase of treasury stock................. (1,247,000) (417,000) (74,000) (107,000) --
----------- ----------- ----------- ----------- -----------
Net cash used in financing activities........ (5,988,000) (3,714,000) (6,358,000) (271,000) 1,508,000
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents................................ 16,549,000 (4,711,000) (1,874,000) (7,782,000) (6,870,000)
Cash and cash equivalents -- beginning....... 24,097,000 36,590,000 38,464,000 31,879,000 36,590,000
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS -- END............. $40,646,000 $31,879,000 $36,590,000 $24,097,000 $29,720,000
=========== =========== =========== =========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
15
<PAGE> 6
BOWNE & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1997, TWO MONTHS ENDED DECEMBER 31, 1996 AND
YEARS ENDED OCTOBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL UNREALIZED CURRENCY
COMMON PAID-IN RETAINED GAINS ON TRANSLATION TREASURY
STOCK CAPITAL EARNINGS INVESTMENTS ADJUSTMENT STOCK TOTAL
-------- ----------- ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance November 1, 1994... $190,000 $23,944,000 $218,001,000 $(1,221,000) $(18,119,000) $222,795,000
Net income............... 23,286,000 23,286,000
Unrealized gains on
investments............ $1,307,000 1,307,000
Foreign currency
translation
adjustment............. 128,000 128,000
Cash dividends ($.36 per
share)................. (6,260,000) (6,260,000)
Acquisition of treasury
stock.................. (74,000) (74,000)
Exercise of stock
options................ 1,000 326,000 327,000
-------- ----------- ------------ ---------- ----------- ------------ ------------
Balance October 31, 1995... 191,000 24,270,000 235,027,000 1,307,000 (1,093,000) (18,193,000) 241,509,000
Net income............... 42,503,000 42,503,000
Unrealized losses on
investments............ (560,000) (560,000)
Foreign currency
translation
adjustment............. 211,000 211,000
Cash dividends ($.36 per
share)................. (6,335,000) (6,335,000)
Acquisition of treasury
stock.................. (417,000) (417,000)
Non-cash stock
compensation........... 127,000 127,000
Exercise of stock
options................ 3,000 3,693,000 3,696,000
-------- ----------- ------------ ---------- ----------- ------------ ------------
Balance October 31, 1996... 194,000 28,090,000 271,195,000 747,000 (882,000) (18,610,000) 280,734,000
Net income............... 5,184,000 5,184,000
Unrealized losses on
investments............ (87,000) (87,000)
Foreign currency
translation
adjustment............. (401,000) (401,000)
Issuance of stock for
acquisition............ 3,099,000 2,901,000 6,000,000
Acquisition of treasury
stock.................. (107,000) (107,000)
Non-cash stock
compensation........... 26,000 26,000
Exercise of stock
options................ 207,000 207,000
-------- ----------- ------------ ---------- ----------- ------------ ------------
Balance December 31,
1996..................... 194,000 31,422,000 276,379,000 660,000 (1,283,000) (15,816,000) 291,556,000
-------- ----------- ------------ ---------- ----------- ------------ ------------
Net income............... 69,543,000 69,543,000
Unrealized gains on
investments............ 433,000 433,000
Foreign currency
translation
adjustment............. (1,544,000) (1,544,000)
Cash dividends ($.36 per
share)................. (6,515,000) (6,515,000)
Issuance of stock for
acquisitions........... 1,700,000 1,109,000 2,809,000
Acquisition of treasury
stock.................. (1,247,000) (1,247,000)
Non-cash stock
compensation........... 153,000 153,000
Exercise of stock
options................ 2,000 3,410,000 3,412,000
-------- ----------- ------------ ---------- ----------- ------------ ------------
Balance December 31,
1997..................... $196,000 $36,685,000 $339,407,000 $1,093,000 $(2,827,000) $(15,954,000) $358,600,000
======== =========== ============ ========== =========== ============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
16
<PAGE> 7
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF ACCOUNTING POLICIES
On October 30, 1997, the Company elected to change the date of its fiscal
year-end to December 31. As a result, a transition period for the two months
ended December 31, 1996, three months ended January 31, 1996 (unaudited), was
previously reported on a transition report on Form 10-Q and is also presented
herein. Consequently, the consolidated Balance Sheets have been prepared at
December 31. The Statements of Income and Cash Flows present information for the
year ended December 31, 1997, the two months ended December 31, 1996, and the
years ended October 31, 1996 and 1995.
A summary of the Company's significant accounting policies followed in the
preparation of the accompanying financial statements is set forth below:
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All of the significant intercompany accounts and
transactions are eliminated in consolidation.
Reclassification
Certain amounts have been reclassified to conform to the current year's
presentation.
Revenue Recognition
For substantially all services, revenues are recognized when products or
services are delivered or rendered to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
by using purchase cost (first-in, first-out method) for materials and standard
costs, which approximate actual costs, for work in process.
Property, Plant and Equipment
Property, plant and equipment are carried at cost. Maintenance and repairs
are expensed as incurred.
Depreciation for financial statement purposes is provided on the
straight-line method and is calculated for tax purposes using accelerated
methods.
The following table summarizes the components of property, plant and
equipment:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Land and buildings....................................... $ 73,008,000 $ 71,482,000
Machinery and plant equipment............................ 141,524,000 128,508,000
Leasehold improvements................................... 32,264,000 26,056,000
Furniture, fixtures and vehicles......................... 31,192,000 22,513,000
------------ ------------
Total.......................................... $277,988,000 $248,559,000
============ ============
</TABLE>
Estimated lives used in the calculation of depreciation for financial
statement purposes are:
<TABLE>
<S> <C>
Buildings................................................... 20-40 years
Machinery and plant equipment............................... 3-12 1/2 years
Furniture and fixtures...................................... 5-12 1/2 years
Vehicles.................................................... 3-5 years
Leasehold improvements...................................... Shorter of useful life
or term of lease
</TABLE>
17
<PAGE> 8
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Intangible Assets and Goodwill
The Company does not recognize the fair value of internally generated
intangible assets. Costs incurred to produce internally developed software and
other products to enhance customer related processes and internally used
management systems are expensed and recorded as a reduction of income as
incurred. On the other hand, intangible assets acquired in business combinations
accounted for by the purchase method of accounting are capitalized and amortized
over their expected useful life as a noncash charge against future results of
operations. Accordingly, the intangible assets reported in the consolidated
balance sheets are limited to intangible assets resulting from certain
acquisitions.
The Company amortizes goodwill using the straight-line method over forty
years for its printing, localization and globalization, and document management
outsourcing related acquisitions. Goodwill arising from acquisitions related to
the Company's Internet services are amortized using the straight-line method
over twenty years. The realizability of goodwill is evaluated periodically to
determine the recoverability of carrying amounts. The evaluation, based on
various analyses including cash flow and profitability projections, addresses
the impact on the existing Company business. The evaluation necessarily involves
significant management judgment. Historically, the Company has generated
sufficient returns from acquired businesses to recover the cost of related
goodwill.
Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123 "Accounting for Stock-Based Compensation," became effective in the first
quarter of fiscal 1997. The Company elected to continue accounting for
stock-based compensation under the provisions of APB Opinion 25 "Accounting for
Stock Issued to Employees".
Income Taxes
The Company uses the liability method to account for income taxes. Under
the liability method, deferred income taxes reflect tax carryforwards and the
net tax effects of temporary differences between the carrying amount of assets
and liabilities for financial statement and income tax purposes, as determined
under enacted tax laws and rates.
United States income tax has not been provided on the unremitted earnings
of the Company's foreign operations since the Company intends to continue to
reinvest its undistributed foreign earnings to expand its foreign operations. In
addition, applicable foreign taxes have been provided and credits for foreign
income taxes will be available to significantly reduce any U.S. tax liability if
foreign earnings are remitted. At December 31, 1997, the cumulative amount of
undistributed foreign earnings was approximately $30 million.
Net Income Per Share
In 1997, the Financial Accounting Standards Board issued Statement 128
"Earnings per Share" which became effective for interim and annual financial
statements for periods ending after December 15, 1997. Net income is calculated
for basic earnings per share based on the weighted-average number of shares
outstanding and for diluted earnings per share as adjusted for the assumed
conversion of all potentially dilutive securities. All earnings per share
amounts for all periods have been presented, and where appropriate, restated to
conform to the Statement 128 requirements.
The following table sets forth the basic and diluted weighted average share
amounts:
<TABLE>
<CAPTION>
TWO MONTHS YEAR ENDED
YEAR ENDED ENDED OCTOBER 31,
DECEMBER 31, DECEMBER 31, --------------------------
1997 1996 1996 1995
------------ ------------ ---- ----
<S> <C> <C> <C> <C>
Weighted-average Basic shares................ 18,105,084 17,656,603 17,563,754 17,388,748
Dilutive stock options and deferred stock
units...................................... 484,382 337,236 205,242 113,831
----------- ----------- ---------- ----------
Weighted-average Diluted shares.............. 18,589,466 17,993,839 17,768,996 17,502,579
=========== =========== ========== ==========
</TABLE>
18
<PAGE> 9
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the period.
Actual results can differ from those estimates.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income." This statement establishes standards for
the reporting and display of comprehensive income, requiring its components to
be reported in a financial statement that is displayed with the same prominence
as other financial statements. The Company will adopt this standard in the first
quarter of 1998. The adoption of Statement No. 130 will have no impact on
consolidated results of operations, financial condition or cash flows.
In June 1997, the Financial Accounting Standards Board issued Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information." This
statement establishes standards for reporting financial information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial reports
issued to shareowners. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. Operating
segments are defined as components of an enterprise about which separate
financial information is available and evaluated regularly by the chief decision
makers when deciding how to allocate resources and in assessing performance. The
Company is required to disclose this information for the first time when
publishing the 1998 annual report but earlier adoption of the statement is
permitted. The Company is in the process of evaluating the applicability of the
segment disclosures for purposes of reporting under Statement No. 131. The
adoption of Statement No. 131 will have no impact on consolidated results of
operations, financial condition or cash flows.
NOTE 2 -- SALE OF SUBSIDIARY
On January 6, 1997, the Company sold its 90% interest in Baseline Financial
Services, Inc. The Company recorded a pre-tax gain of $35,273,000 and an
after-tax gain of $20,005,000, or $1.11 per share on a diluted basis.
NOTE 3 -- ACQUISITIONS
During the two month period ended December 31, 1996, the Company acquired
80% of IDOC, Inc., a localization and globalization solutions company, by
issuing 261,438 shares from treasury, and 100% of the financial printing
business of the Williams Lea Group, Ltd. of the United Kingdom for cash. The
total purchase price of these two companies approximated $10,700,000 with
goodwill recorded of approximately $8,300,000.
During March 1997 the Company purchased 100% of several foreign companies,
including their ownership of certain affiliates, offering localization and
globalization solutions. The companies (and respective locations) purchased
were: I&G COM (France); ME&TA Software Localization Company, S.L. (Spain);
Pacifitech (Japan); and GECAP Localization Technologies (Germany). In June 1997,
the Company purchased ME&TA MULTIMEDIA. The total purchase price and acquisition
costs related to these acquisitions were approximately $31,500,000, paid in
cash.
The Company also purchased several U.S. based companies, for a combination
of cash and stock, to promote the growth of its internally developed document
management outsourcing offerings (started in late 1996) and a machine language
translation company to enhance the localization and globalization offerings of
the Company. The companies purchased were: Imagineer, Inc. (February 1997);
Internet Factory, Inc. (March 1997); the assets of J. Feuerstein Systems (JFS),
a division of Docucon Incorporated (November 1997); the assets of United Media
Corporation (November 1997); and Linguistix, Inc. (December 1997). The total
purchase price of these companies was approximately $16,400,000, including
acquisition costs. The shares issued for the purchase of Imagineer and Internet
Factory were 88,888 and 10,000, respectively. For Internet Factory, the purchase
agreement requires an additional 10,000 shares to be issued in both January 1998
and 1999. All of the acquisitions were accounted for using the purchase method
of
19
<PAGE> 10
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
accounting and the results from these operations were included in the statement
of income and cash flows after the date of acquisition. The goodwill recorded
during 1997 as a result of the acquisitions was nearly $46,000,000.
Approximately, $3,000,000 of the purchase price for JFS and Linguistix was
assigned to purchased in-process research and development and written off. No
pro forma financial information is presented herein due to the insignificance of
the aggregate amount of the acquisitions disclosed above.
NOTE 4 -- SUBSEQUENT EVENTS
During February 1998, the Company acquired 80% of Quadravision
Communications Limited for $10,000,000 and 100% of Sitewerks Inc. for
$2,750,000. Quadravision and Sitewerks are worldwide Internet development
companies servicing the banking, insurance, mutual funds, brokerage, automotive
and software markets.
NOTE 5 -- CASH AND CASH EQUIVALENTS
The Company's policy is to invest cash in excess of operating requirements
in income producing investments. Cash equivalents of $25,703,000 and $8,155,000
at December 31, 1997 and 1996, respectively, are carried at cost, which
approximates market, and include certificates of deposit and money market
accounts, substantially all of which have maturities of three months or less
when purchased.
NOTE 6 -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Raw materials............................................... $ 5,750,000 $ 6,068,000
Work in process............................................. 29,867,000 35,849,000
----------- -----------
$35,617,000 $41,917,000
=========== ===========
</TABLE>
NOTE 7 -- MARKETABLE SECURITIES
The Company classifies its investment in marketable equity 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. The fair value of marketable securities
exceeded cost by $1,918,000 and $1,269,000, at December 31, 1997 and 1996,
respectively. The net unrealized gains, after deferred taxes, were $1,093,000
(1997) and $660,000 (1996).
NOTE 8 -- EMPLOYEE BENEFIT PLANS
Pension Plans
The Company sponsors a defined benefit pension plan which covers
substantially all of its United States employees not covered by union
agreements. Benefits are based upon salary and years of service under the
projected unit benefit method. The Company's policy is to fund each year's
pension expense to the maximum allowable level. The Company has an unfunded
supplemental retirement program for certain management employees. Employees
covered by union agreements are included in separate multi-employer pension
plans to which the Company makes contributions. Plan benefit and net asset data
for these multi-employer pension plans are not available. Also, certain
non-union Canadian employees are covered by defined contribution retirement
plans.
20
<PAGE> 11
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pension costs are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
YEAR ENDED -------------------------
DECEMBER 31, 1997 1996 1995
------------------- ----------- -----------
<S> <C> <C> <C>
Service cost................................................ $ 4,176,000 $ 3,077,000 $ 4,946,000
Interest cost............................................... 3,313,000 2,549,000 2,402,000
Actual return on plan assets................................ (8,508,000) (7,124,000) (7,113,000)
Net amortization and deferrals.............................. 4,490,000 3,211,000 3,765,000
----------- ----------- -----------
Net periodic pension cost of defined benefit plans.......... 3,471,000 1,713,000 4,000,000
Union plans................................................. 444,000 534,000 607,000
Defined contribution plans.................................. 765,000 679,000 407,000
----------- ----------- -----------
Total pension cost.......................................... $ 4,680,000 $ 2,926,000 $ 5,014,000
=========== =========== ===========
</TABLE>
The status of the Company's funded defined benefit pension plan is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1997 1996
----------------- -----------------
<S> <C> <C>
Fair value of plan assets................................... $48,500,000 $41,942,000
----------- -----------
Actuarial value of benefit obligations:
Vested.................................................... 24,761,000 19,867,000
Non-vested................................................ 7,004,000 5,620,000
----------- -----------
Accumulated benefit obligation.............................. 31,765,000 25,487,000
Effect of projected future salary increases................. 8,966,000 7,193,000
----------- -----------
Projected benefit obligation................................ 40,731,000 32,680,000
----------- -----------
Plan assets in excess of projected benefit obligation....... 7,769,000 9,262,000
Unrecognized net gain....................................... (12,567,000) (11,829,000)
Unrecognized net transition asset amortized over twenty-two
years..................................................... (3,215,000) (3,489,000)
----------- -----------
Accrued pension cost........................................ $ 8,013,000 $ 6,056,000
=========== ===========
</TABLE>
At December 31, 1997, the projected benefit obligation under the unfunded
supplemental retirement program amounted to $3,446,000 for retired employees and
$2,193,000 for active employees, which amounts have been fully accrued. The plan
contains covenants which prohibit retired participants from engaging in
competition with the Company.
Effective November 1, 1996, the defined benefit pension plan was amended
with respect to compensation and service used in determining benefits for
certain employees. In addition, effective with the December 31, 1996 measurement
date, the mortality assumption was updated to reflect current market and
demographic conditions. As a result of these changes, the December 31, 1996
projected benefit obligation increased approximately $3,425,000 and the annual
periodic pension cost increased approximately $1,190,000. The discount rate used
to calculate the projected benefit obligations was 7.25% and 8% at December 31,
1997 and 1996, respectively. The rate used to project future salary increases
was 4.0% and 4.5% at December 31, 1997 and 1996, respectively. The expected
long-term rate of return on plan assets was 9.0% for the years ended December
31, 1997 and October 31, 1996 and 1995. The assets of the funded plan consist
primarily of equity and fixed income securities.
Profit Sharing Plan
Certain subsidiaries are participating companies in a qualified profit
sharing plan covering substantially all employees of those subsidiaries who are
not covered by union agreements. Amounts charged to income for the Profit
Sharing Plan were $9,483,000 for the year ended December 31, 1997 and $8,364,000
and $4,937,000 for the years ended October 31, 1996 and 1995, respectively.
21
<PAGE> 12
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock Purchase Plan
Under the Employees' Stock Purchase Plan, participating subsidiaries match
50% of amounts contributed by employees. All contributions are invested in the
common stock of the Company. The plan acquired 115,255 shares in the year ended
December 31, 1997, and 88,453 shares and 102,049 shares in the years ended
October 31, 1996 and 1995, respectively, of the Company's common stock on the
open market. At December 31, 1997 and 1996, the Stock Purchase Plan held 547,262
shares and 483,513 shares of the Company's common stock, respectively. Charges
to income amounted to $1,138,000, $603,000 and $500,000 for the year ended
December 31, 1997 and the years ended October 31, 1996 and 1995, respectively.
The shares held by the plan are considered outstanding in computing the
Company's earnings per share, and dividends paid to the plan are charged to
retained earnings.
NOTE 9 -- STOCK OPTION PLANS
The Company has three stock option plans, a 1981 Plan, a 1992 Plan and a
1997 Plan.
The 1981 Plan, which provided for the granting of options to purchase
1,400,000 shares of the Company's common stock, expired December 15, 1991 except
as to options then outstanding. The Company's 1992 Stock Option Plan provides
for the granting of options to purchase 850,000 shares to officers and key
employees at a price not less than the fair market value on the date each option
is granted. The 1997 Plan, provides for the granting of options to purchase
850,000 shares to officers and key employees at a price not less than the fair
market value of a share on the date each option is granted.
All plans permit grants of either Incentive Stock Options or Non-Qualified
Options. Options become exercisable as determined at the date of grant by a
committee of the Board of Directors. Options expire ten years after the date of
grant unless an earlier expiration date is set at the time of grant. The 1997
Plan permits the issuance of stock appreciation rights ("SARs"), limited stock
appreciation rights ("LSARs") and awards that are valued in whole or in part on
the fair value of the shares. SARs, LSARs and awards may be paid in shares, cash
or combinations thereof.
Details of stock options are as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTION
SHARES PRICE
--------- -------------
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1995
- ---------------------------
Granted................................................ 104,900 $16.06
Exercised.............................................. 35,042 8.13--14.50
Cancelled.............................................. 40,800 8.13--19.06
Outstanding, end of year............................... 1,042,176 9.75--19.06
Exercisable, end of year............................... 291,225 9.75--17.88
YEAR ENDED OCTOBER 31, 1996
- ---------------------------
Granted................................................ 222,300 $20.19
Exercised.............................................. 273,876 9.75--20.19
Cancelled.............................................. 62,650 10.00--20.19
Outstanding, end of year............................... 927,950 11.13--20.19
Exercisable, end of year............................... 264,900 11.13--17.88
TWO MONTHS ENDED DECEMBER 31, 1996
- ----------------------------------
Granted................................................ 144,300 $22.31
Exercised.............................................. 9,850 13.69--17.88
Cancelled.............................................. 400 17.19--19.06
Outstanding, end of period............................. 1,062,000 11.13--22.31
Exercisable, end of period............................. 83,200 11.13--17.19
</TABLE>
22
<PAGE> 13
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF OPTION
SHARES PRICE
--------- -------------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997
- ----------------------------
Granted................................................ 509,050 $22.31--37.06
Exercised.............................................. 226,700 11.13--19.06
Cancelled.............................................. 59,425 11.13--22.31
Outstanding, end of year............................... 1,284,925 11.13--37.06
Exercisable, end of year............................... 334,225 11.13--22.31
</TABLE>
Options to purchase 401,275 shares (at December 31, 1997) and 900 shares
(at December 31, 1996) were available for grant under the 1997 and 1992 Plan.
In accordance with APB Opinion 25 and related interpretations, no
compensation cost has been recognized for the Company's stock option plans. Had
compensation cost been based upon the fair value at the grant dates for all
awards granted during the year ended December 31, 1997, the two month period
ended December 31, 1996, and the year ended October 31, 1996, net income would
have been reduced on a pro forma basis as follows:
<TABLE>
<CAPTION>
TWO MONTHS
YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996 OCTOBER 31, 1996
----------------- ----------------- ----------------
<S> <C> <C> <C>
Net Income:
As Reported........... $69,543,000 $5,184,000 $42,503,000
Pro Forma............. 68,756,000 5,107,000 42,332,000
Pro Forma Per Share:
Basic................. $3.80 $.29 $2.41
Diluted............... 3.70 .29 2.38
</TABLE>
No adjustment was made to October 31, 1995, as Statement No. 123 does not
apply to grants issued before December 31, 1994. The grants issued during the
year ended October 31, 1995 were issued on December 14, 1994. Since the
compensation expense associated with the grants would have been recognized
generally over a four year vesting period, the initial impact of applying
Statement No. 123 on pro forma net income is not representative of the potential
impact on pro forma net income in future years, when the pro forma effect would
be fully reflected.
These pro forma amounts may not be representative of future disclosures
since the estimated fair value of stock options is amortized to expense over the
vesting period, and additional options may be granted in future years. The fair
value for these options was estimated at the date of grant using the
Black-Scholes model with the following assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
GRANTS GRANTS GRANTS
------- ------- -------
<S> <C> <C> <C>
Expected dividend yield.............................. 1.2% 1.7 % 2.0 %
Expected stock price volatility...................... 30.1% 32.2 % 36.3 %
Risk-free interest rate.............................. 5.8% 5.97% 5.51%
Expected life of options............................. 5 years 5 years 5 years
Weighted average fair value.......................... $12.23 $7.36 $6.86
</TABLE>
Deferred Stock Awards
In October 1996, the Company initiated a program for certain key
executives, and in 1997 for directors, that provided for the conversion of a
portion of their cash bonuses or directors fees into deferred stock units. It
also provided further granting of additional units for the key executives when
targets were exceeded. These units are convertible into the Company's common
stock on one-for-one basis generally at the time of retirement or earlier under
certain specific circumstances. At December 31, 1997 and 1996, there were
102,656 and 31,492 units outstanding, respectively.
23
<PAGE> 14
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 10 -- INCOME TAXES
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
TWO MONTHS YEAR ENDED OCTOBER 31,
YEAR ENDED ENDED --------------------------
DECEMBER 31, 1997 DECEMBER 31, 1996 1996 1995
----------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
Current:
U.S. Federal........................... $39,346,000 $ 3,308,000 $25,813,000 $12,725,000
Foreign................................ 3,183,000 91,000 1,504,000 1,292,000
State and local........................ 10,658,000 852,000 6,935,000 3,841,000
----------- ----------- ----------- -----------
53,187,000 4,251,000 34,252,000 17,858,000
----------- ----------- ----------- -----------
Deferred:
U.S. Federal........................... (1,415,000) 166,000 (1,220,000) 533,000
Foreign................................ (379,000) (327,000) (229,000) (110,000)
State and local........................ (323,000) 38,000 (291,000) 184,000
----------- ----------- ----------- -----------
(2,117,000) (123,000) (1,740,000) 607,000
----------- ----------- ----------- -----------
$51,070,000 $ 4,128,000 $32,512,000 $18,465,000
=========== =========== =========== ===========
</TABLE>
Income taxes paid during the year ended December 31, 1997, the two months
ended December 31, 1996, and the years ended October 31, 1996 and 1995 were
$51,523,000, $850,000, $31,508,000 and $11,489,000, respectively.
The provision for income taxes differed from the U.S. Federal statutory
rate for the following reasons:
<TABLE>
<CAPTION>
YEAR ENDED
TWO MONTHS OCTOBER 31,
YEAR ENDED ENDED ------------
DECEMBER 31, 1997 DECEMBER 31, 1996 1996 1995
----------------- ----------------- ---- ----
<S> <C> <C> <C> <C>
Statutory tax rate...................................... 35.0% 35.0% 35.0% 35.0%
Increase in tax resulting from:
State and local taxes................................. 5.5 6.2 5.8 6.3
Foreign taxes......................................... .1 .3 .3 .1
Non-deductible items.................................. 2.5 2.8 2.2 2.7
Other................................................. (.8) -- -- .1
---- ---- ---- ----
Effective income tax rate............................... 42.3% 44.3% 43.3% 44.2%
==== ==== ==== ====
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets at December 31, 1997 and 1996
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Non-current deferred tax assets (liability):
Deferred compensation and benefits........................ $ 8,742,000 $ 7,627,000
Depreciation.............................................. (4,115,000) (5,155,000)
Other..................................................... 807,000 845,000
----------- -----------
Total net non-current asset................................. $ 5,434,000 $ 3,317,000
=========== ===========
</TABLE>
24
<PAGE> 15
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Prepaid expenses and other current assets at December 31, 1996 included a
current deferred tax asset of $1,455,000 related to the Company's allowance for
doubtful accounts.
NOTE 11 -- NOTES PAYABLE AND LONG-TERM DEBT
Notes payable
During March 1997, the Company entered into a short-term line of credit for
$25,000,000 to be used for general corporate purposes. The Company borrowed
$20,000,000 in July 1997, under this agreement, of which $10,000,000 was repaid
in July and the remainder paid in August.
In July 1997, the Company entered into a new unsecured five-year revolving
credit agreement for $200,000,000 with a consortium of banks. Under the new
credit agreement, interest will be charged at London Inter-bank Offered Rate
(LIBOR) plus 1/4% to 1/2% depending on certain leverage ratios. This agreement
replaced the $50,000,000 uncommitted line of credit and the temporary
$25,000,000 short-term line of credit, which was repaid in August. There were no
borrowings during the year or amounts outstanding under the new revolving credit
agreement as of December 31, 1997.
Long-term debt
The Company's long-term debt consists primarily of capital lease
obligations.
Aggregate annual installments of both the notes payable and long-term debt
due for the next five years are $5,755,000, $1,010,000, $679,000, $464,000 and
$384,000 respectively.
Interest paid was $1,535,000, $662,000 and $871,000 for the years ended
December 31, 1997 and October 31, 1996 and 1995, respectively.
NOTE 12 -- DEFERRED EMPLOYEE COMPENSATION AND BENEFITS
Liabilities for deferred employee compensation and benefits consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
Pension costs............................................... $ 8,540,000 $ 6,635,000
Supplemental retirement..................................... 5,133,000 4,128,000
Deferred compensation....................................... 5,204,000 4,558,000
----------- -----------
$18,877,000 $15,321,000
=========== ===========
</TABLE>
NOTE 13 -- OTHER INCOME
The components of other income are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
YEAR ENDED -----------------------
DECEMBER 31, 1997 1996 1995
----------------- ---------- ----------
<S> <C> <C> <C>
Interest income............................................. $1,569,000 $ 991,000 $1,477,000
Dividends................................................... 202,000 642,000 720,000
Capital gains (loss)........................................ (228,000) 2,809,000 446,000
Other....................................................... 913,000 463,000 1,063,000
---------- ---------- ----------
$2,456,000 $4,905,000 $3,706,000
========== ========== ==========
</TABLE>
25
<PAGE> 16
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 14 -- LEASE COMMITMENTS
The Company's subsidiaries occupy premises and utilize equipment under
leases which are classified as operating leases and expire at various dates to
2007. Many of the leases provide for payment of certain expenses and contain
renewal and purchase options.
Rent expense relating to premises and equipment amounted to $12,736,000 for
the year ended December 31, 1997 and $9,823,000 and $8,265,000 for the years
ended October 31, 1996 and 1995, respectively. The minimum annual rental
commitments under non-cancelable leases as at December 31, 1997 are summarized
as follows:
<TABLE>
<S> <C> <C> <C>
1998............................. $14,287,000 2001............................. $ 8,035,000
1999............................. 12,593,000 2002............................. 6,510,000
2000............................. 9,986,000 2003-2007........................ 15,302,000
-----------
Total............................ $66,713,000
===========
</TABLE>
NOTE 15 -- STOCKHOLDER RIGHTS PLAN
During 1997, the Company adopted a Stockholder Rights Plan that grants a
Right to each Stockholder of record on February 10, 1997 and all shares issued
thereafter to purchase 1,000 shares of the Preferred Stock for each share of
common stock owned when certain events occur. This plan is triggered when
certain events that involve the acquisition, tender offer or exchange of 20% or
more of the Common Stock by a person or group of persons, without the approval
of the Company's Board of Directors, occur. Prior to the event, the Rights will
be linked to the underlying shares of the Common stock and may not be
transferred by themselves.
NOTE 16 -- SEGMENT AND GEOGRAPHIC DATA
The Company's business focuses on one line of business "Empowering
Information," a term used to define the management, repurposing and distribution
of a client's information. The Company manages and repurposes the information
for distribution by digital, Internet or paper media. It manages documents on
the clients' site or at its own facilities. It provides business services and
solutions for transactional printing, corporate reporting and mutual fund
printing, digital data-management, Internet services, localization, translation
and document management outsourcing, among others. Information about the
business of the Company by geographic area is presented in the table below. The
Company's areas of operations outside of the United States and Canada
principally include London, Paris, Hong Kong and Singapore. Sales or transfers
between geographic areas and United States export sales were not material.
General corporate expenses are included in the United States operations.
<TABLE>
<CAPTION>
OTHER
UNITED STATES CANADA FOREIGN TOTAL
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
1997
Net sales........................................ $547,880,000 $76,695,000 $92,072,000 $716,647,000
Net income....................................... 70,918,000 4,208,000 (5,583,000) 69,543,000
Identifiable assets.............................. 367,216,000 49,556,000 83,881,000 500,653,000
1996
Net sales........................................ $404,683,000 $62,513,000 $34,173,000 $501,369,000
Net income....................................... 40,951,000 1,818,000 (266,000) 42,503,000
Identifiable assets.............................. 324,172,000 36,760,000 24,890,000 385,822,000
1995
Net sales........................................ $314,264,000 $56,199,000 $22,250,000 $392,713,000
Net income....................................... 23,328,000 526,000 (568,000) 23,286,000
Identifiable assets.............................. 276,107,000 33,536,000 16,027,000 325,670,000
</TABLE>
26
<PAGE> 17
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 17 -- SUMMARY OF QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER FULL YEAR
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Net sales......................... $153,696,000 $193,828,000 $177,667,000 $191,456,000 $716,647,000
Gross margin...................... 70,460,000 84,999,000 80,005,000 89,063,000 324,527,000
Income before income taxes........ 53,956,000 26,223,000 17,310,000 23,124,000 120,613,000
Income taxes...................... 23,433,000 10,809,000 6,640,000 10,188,000 51,070,000
Net income........................ 30,523,000 15,414,000 10,670,000 12,936,000 69,543,000
============ ============ ============ ============ ============
Net income per share:
Basic.......................... $1.70 $.85 $.59 $.71 $3.84
Diluted........................ $1.66 $.83 $.57 $.69 $3.74
Weighted average shares
outstanding:
Basic.......................... 17,986,227 18,085,111 18,158,095 18,190,905 18,105,084
============ ============ ============ ============ ============
Diluted........................ 18,389,689 18,532,306 18,612,922 18,754,362 18,589,466
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER FULL YEAR
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31, 1996
Net sales.......................... $90,728,000 $136,396,000 $134,153,000 $140,092,000 $501,369,000
Gross margin....................... 34,931,000 62,695,000 61,807,000 65,795,000 225,228,000
Income before income taxes......... 6,312,000 22,376,000 22,285,000 24,042,000 75,015,000
Income taxes....................... 2,719,000 9,862,000 9,123,000 10,808,000 32,512,000
Net income......................... 3,593,000 12,514,000 13,162,000 13,234,000 42,503,000
=========== ============ ============ ============ ============
Net income per share:
Basic........................... $.21 $.71 $.75 $.75 $2.42
Diluted......................... $.20 $.71 $.74 $.74 $2.39
Weighted average shares
outstanding:
Basic........................... 17,482,870 17,566,959 17,585,439 17,608,193 17,563,754
=========== ============ ============ ============ ============
Diluted......................... 17,659,976 17,732,641 17,800,623 17,866,110 17,768,996
=========== ============ ============ ============ ============
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Inapplicable.
27
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BOWNE & CO., INC. (Registrant)
By: /s/ ROBERT M. JOHNSON
---------------------------------
Robert M. Johnson
Chairman of the Board
and Chief Executive Officer
April 21, 1998
