<PAGE> 1
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- --------------------------------------------------------------------------------
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 MARCH 31, 1999
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)
<TABLE>
<S> <C>
DELAWARE 13-2618477
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
345 HUDSON STREET 10014
NEW YORK, NEW YORK (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
(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.
[X] Yes [ ] No
The number of shares outstanding of each of the issuer's classes of common
stock was 36,840,823 shares of common stock, par value $.01, outstanding as at
May 11, 1999.
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<PAGE> 2
FINANCIAL STATEMENTS
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
(UNAUDITED)
--------------------------
1999 1998
----------- -----------
(000'S OMITTED EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
Net sales................................................... $218,647 $194,285
Expenses:
Cost of sales............................................. 135,122 101,480
Selling and administrative................................ 65,079 62,658
Depreciation.............................................. 9,883 7,191
Amortization.............................................. 2,890 807
-------- --------
212,974 172,136
-------- --------
Operating income............................................ 5,673 22,149
Interest expense............................................ (1,601) (253)
Other income, net........................................... 516 96
-------- --------
Income before income taxes.................................. 4,588 21,992
Income taxes................................................ 2,849 9,038
-------- --------
Net income.................................................. $ 1,739 $ 12,954
======== ========
Earnings per share:
Basic..................................................... $ .05 $ .36
======== ========
Diluted................................................... $ .05 $ .34
======== ========
Dividends per share......................................... $ .055 $ .045
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE> 3
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
(UNAUDITED)
-----------------
1999 1998
------ -------
(000'S OMITTED)
<S> <C> <C>
Net income.................................................. $1,739 $12,954
Foreign currency translation adjustment................... (638) 156
Net unrealized gains arising from marketable securities
during the period, after deducting taxes of $83 for
March 31, 1998......................................... -- 111
------ -------
Comprehensive income........................................ $1,101 $13,221
====== =======
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
1999 DECEMBER 31,
(UNAUDITED) 1998
---------------- ----------------
(000'S OMITTED EXCEPT SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 16,075 $ 23,801
Marketable securities..................................... 389 391
Trade accounts receivable, less allowance for doubtful
accounts of $12,228 (1999) and $12,264 (1998).......... 204,487 188,470
Inventories............................................... 43,468 30,593
Prepaid expenses and other current assets................. 31,384 32,809
--------------- ---------------
Total current assets................................... 295,803 276,064
--------------- ---------------
Property, plant and equipment, less depreciation and
amortization of $166,926 (1999) and $157,725 (1998)....... 169,005 166,367
Goodwill and other intangible assets, net of accumulated
amortization of $17,615 (1999) and $14,725 (1998)......... 187,615 188,619
Deferred income taxes....................................... 1,463 2,807
Other assets................................................ 7,171 8,441
--------------- ---------------
Total assets........................................... $ 661,057 $ 642,298
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and other short-term
borrowings............................................. $ 3,914 $ 4,578
Accounts payable.......................................... 53,347 45,307
Employee compensation..................................... 46,301 61,465
Accrued expenses.......................................... 49,935 51,150
--------------- ---------------
Total current liabilities.............................. 153,497 162,500
--------------- ---------------
Long-term debt -- net of current portion.................... 99,148 74,887
Deferred employee compensation and benefits................. 30,117 26,092
--------------- ---------------
Total liabilities...................................... 282,762 263,479
--------------- ---------------
Stockholders' equity:
Preferred stock:
Authorized 2,000,000 shares, par value $.01 Issuable in
series -- none issued................................ -- --
Common stock:
Authorized 60,000,000 shares, par value $.01, Issued
39,559,260 shares (1999) and 39,546,860 shares
(1998)............................................... 395 395
Additional paid-in capital................................ 39,753 39,474
Retained earnings......................................... 358,899 359,185
Treasury stock, at cost, 2,725,137 shares (1999) and
2,745,137 shares (1998)................................ (16,393) (16,514)
Accumulated other comprehensive loss, net................. (4,359) (3,721)
--------------- ---------------
Total stockholders' equity............................. 378,295 378,819
--------------- ---------------
Total liabilities and stockholders' equity............. $ 661,057 $ 642,298
=============== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(UNAUDITED)
--------------------
1999 1998
-------- --------
(000'S OMITTED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 1,739 $ 12,954
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 9,883 7,191
Amortization........................................... 2,890 807
Provision for deferred employee compensation........... 941 442
Changes in other assets and liabilities, net of
non-cash transactions................................. (29,919) (3,483)
-------- --------
Net cash (used in) provided by operating
activities.......................................... (14,466) 17,911
-------- --------
Cash flows from investing activities:
Acquisitions of businesses, including covenants not to
compete, net of cash acquired.......................... (2,905) (14,000)
Purchase of marketable securities or other investments.... -- (399)
Proceeds from the sale of marketable securities and other
investments............................................ -- 150
Purchase of property, plant and equipment................. (13,207) (16,315)
-------- --------
Net cash used in investing activities................ (16,112) (30,564)
-------- --------
Cash flows from financing activities:
Proceeds from borrowings.................................. 46,172 20,000
Payment of debt........................................... (21,388) (3,014)
Proceeds from stock options exercised..................... 93 1,664
Purchase of treasury stock................................ -- (436)
Payment of dividends...................................... (2,025) (1,642)
-------- --------
Net cash provided by financing activities............ 22,852 16,572
-------- --------
(Decrease) increase in cash and cash equivalents..... $ (7,726) $ 3,919
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN 000'S, EXCEPT SHARE INFORMATION AND WHERE NOTED)
NOTE 1. The financial information as of March 31, 1999 and for the three
month periods ended March 31, 1999 and 1998 has been prepared without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the consolidated
financial position, results of operations and of cash flows for each period
presented have been made on a consistent basis. Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. It is suggested that these financial statements be read in conjunction
with the Company's annual consolidated financial statements. Operating results
for the three months ended March 31, 1999 may not be indicative of the results
that may be expected for the full year.
NOTE 2. Inventories of $43,468 at March 31, 1999 include raw materials of
$8,181 and work in process of $35,287. At December 31, 1998, inventories of
$30,593 included raw materials of $6,977 and work in process of $23,616.
NOTE 3. The Company had a two-for-one stock split in the form of a 100%
stock dividend to shareholders of record at the close of business on August 14,
1998. The shares were distributed on August 26, 1998. In addition, effective in
the third quarter 1998, the split-adjusted quarterly dividend rate was raised
from $.045 to $.055 per share.
Net income per share is calculated for basic earnings per share based on
the weighted-average number of shares outstanding and for diluted earnings per
share after adjustment for the assumed conversion of all potentially dilutive
securities. The following weighted-average shares outstanding reflect the
aforementioned stock split:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Basic shares................................ 36,778,161 36,479,638
Diluted shares.............................. 37,529,011 37,751,436
</TABLE>
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 March 31, 1999, the fair value of
marketable securities exceeded cost by $197, which is unchanged from December
31, 1998. The net unrealized gain, after deferred taxes, was $102 at both March
31, 1999 and December 31, 1998, respectively.
The foreign currency translation adjustment was $4,461 and $3,823 at March
31, 1999 and December 31, 1998, respectively.
NOTE 5. During the first quarter, the Company acquired KAPA International,
a Korean-based company, for approximately $1 million. KAPA will help enhance the
Company's global solutions services. In addition, the Company made certain
payments for non-compete agreements related to prior acquisitions.
NOTE 6. At March 31, 1999, the Company had borrowings of $93,000 under its
$300,000 unsecured five-year revolving credit agreement, with a blended interest
rate of approximately 6%. At December 31, 1998, the Company had borrowings of
$68,000 under this agreement.
6
<PAGE> 7
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7. SEGMENT INFORMATION
The Company continues to focus on "Empowering Your 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.
The Company's operations are classified into four reportable business
segments: Financial Printing, Outsourcing, Localization and Internet Consulting
and Development. The services of each segment are marketed throughout the world.
The major services provided by each segment are as follows:
Financial Printing -- transactional financial, corporate reporting, mutual
fund, commercial and digital printing.
Outsourcing -- document management solutions primarily for the legal and
financial communities.
Localization -- translation and reengineering of software products.
Internet Consulting and Development -- integrated solutions primarily for
the financial sector.
Information as to the operations of each business segment is set forth
below. Performance is evaluated based on several factors, of which the primary
financial measure is business segment income before interest, taxes,
depreciation and amortization of intangible assets ("EBITDA"). The Company also
uses income before interest, taxes, and amortization expenses ("EBITA") as a
measure of performance; therefore, this information is also presented. The
Company manages income taxes on a global basis. Segment performance is evaluated
exclusive of the disposal of business units, other expenses, and other income.
7
<PAGE> 8
BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1ST QUARTER 1ST QUARTER
1999 1998
----------- -----------
(000'S OMITTED)
<S> <C> <C>
REVENUES FROM EXTERNAL CUSTOMERS:
Financial Printing.......................................... $166,465 $177,459
Outsourcing................................................. 35,884 5,474
Localization................................................ 12,908 9,257
Internet Consulting and Development......................... 3,390 2,095
-------- --------
$218,647 $194,285
======== ========
EBITDA:
Financial Printing.......................................... $ 21,459 $ 39,775
Outsourcing................................................. 1,492 (2,916)
Localization................................................ (1,763) (4,855)
Internet Consulting and Development......................... (2,742) (1,857)
Other....................................................... 516 96
-------- --------
$ 18,962 $ 30,243
-------- --------
DEPRECIATION EXPENSE:
Financial Printing.......................................... $ 7,099 $ 6,276
Outsourcing................................................. 1,664 232
Localization................................................ 792 580
Internet Consulting and Development......................... 328 103
-------- --------
$ 9,883 $ 7,191
-------- --------
EBITA:
Financial Printing.......................................... $ 14,360 $ 33,499
Outsourcing................................................. (172) (3,148)
Localization................................................ (2,555) (5,435)
Internet Consulting and Development......................... (3,070) (1,960)
Other....................................................... 516 96
-------- --------
$ 9,079 $ 23,052
Amortization expense........................................ (2,890) (807)
Interest expense............................................ (1,601) (253)
-------- --------
Income before income taxes.................................. $ 4,588 $ 21,992
======== ========
</TABLE>
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(IN 000'S, EXCEPT SHARE INFORMATION AND WHERE NOTED)
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
The Company desires to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 (the "1995 Act"). The 1995
Act provides a "safe harbor" for forward-looking statements to encourage
companies to provide information without fear of litigation so long as those
statements are identified as forward-looking and are accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected.
Set forth below is a summary of factors the Company believes important and
that could cause actual results to differ from the Company's expectations. The
Company is publishing these factors pursuant to the 1995 Act. Such factors
should not be construed as exhaustive or as an admission regarding the adequacy
of disclosure made by the Company prior to the effective date of the 1995 Act.
Readers should understand that many factors govern whether any forward-looking
statements can or will be achieved. Any one of those results could cause actual
results to differ materially from those projected. The words "believe,"
"expect," "anticipate," "intend," "aim," "will" and similar words identify
forward-looking statements. The Company cautions readers that the following
important factors, among others, could affect the Company's actual results and
could cause the Company's actual results to differ materially from those
expressed either orally or in writing in any forward-looking statements made by
or on behalf of the Company.
-- Loss or retirement of key executives, employees or technical personnel.
-- The effect of changes within the Company's organization or in the
compensation and benefit plans and the ability of the Company to attract
and retain experienced and qualified management and sales personnel.
-- Natural events and acts of God such as earthquakes, fires or floods.
-- The Company's ability and the ability of third-parties with whom the
Company has relationships to become Year 2000 complaint.
-- The ability of the Company to integrate the operations of acquisitions
into its operations.
-- General economic or market conditions affecting the demand for
transactional financial printing.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position continues to be strong with excellent
liquidity. On March 31, 1999, the Company had a working capital ratio of 1.93 to
1 and working capital of $142,306, compared to a ratio of 1.70 to 1 and working
capital of $113,564 at December 31, 1998.
CASH FLOWS
The Company had net cash (used in) provided by operating activities of
$(14,466) and $17,911 for the three months ended March 31, 1999 and 1998,
respectively. This reflects the effects of reduced net income and increases in
certain assets (primarily accounts receivable and inventory), partially offset
by depreciation and amortization.
Net cash used in investing activities was $16,112 and $30,564 for the three
months ended March 31, 1999 and 1998, respectively. This was primarily as a
result of 1998 acquisitions as well as expenditures related to the expansion of
facilities and continued investments in new technologies.
Net cash provided by financing activities was $22,852 and $16,572 for the
three months ended March 31, 1999 and 1998, respectively. This increase was
provided by the net proceeds from borrowings.
9
<PAGE> 10
FOREIGN EXCHANGE
The Company derives a portion of its revenues from various foreign sources.
To date, the Company has not experienced significant gains or losses as a result
of fluctuations in the exchange rates of the related foreign currencies.
However, as the Company expands its global presence, fluctuations may become
significant. To date, the Company has not used foreign currency hedging
instruments to reduce its exposure to foreign exchange fluctuations.
PROSPECTIVE ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities," was issued in
June 1998. SFAS 133 standardizes the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts, by
requiring recognition of those instruments as assets and liabilities and to
measure them at fair value. SFAS 133 will be effective for the Company in the
year 2000. The adoption of this pronouncement is not expected to have a material
effect on the Company's consolidated financial statements.
IMPACT OF THE EURO CONVERSION
On January 1, 1999, 11 of the 15 member countries of the European Union
established fixed conversion rates between their existing sovereign currencies
("legacy currencies") and a single currency called the euro. The legacy
currencies are scheduled to remain legal tender as denominations of the euro
during the transition period from January 1, 1999 to January 1, 2002. Beginning
January 1, 2002, euro-denominated bills and coins will be introduced and by July
1, 2002, legacy currencies will no longer be legal tender.
The Company has initiated an internal analysis regarding the business and
systems issues related to the euro conversion and is in the process of
developing a plan to ensure that all necessary modifications are made on a
timely basis. As the first step to accommodate the introduction of the euro, the
Company's operations in markets that are adopting the euro expect to be able to
accept payments and pay suppliers in euros and have the ability to indicate the
euro equivalent of pricing on invoices. During the transition period, the
Company will be monitoring customer and competitor reaction to the euro and will
update the plan as needed.
The Company believes that the conversion to the euro will not have a
significant impact on the strategy for the Company's European operations. The
euro is not expected to have a significant competitive impact, including the
resulting need to synchronize prices between markets. The estimated costs to
convert all affected systems to the euro will not be finalized until the Company
has developed a plan; however, it is not likely that the costs of conversion
will have a material adverse effect on the Company's results of operations,
financial position or cash flow.
YEAR 2000 READINESS DISCLOSURE
Computer systems which have defined the applicable year with two digits
rather than four may produce erroneous results or fail to operate when handling
dates near the end of 1999 and into 2000. This Year 2000 problem may arise
within the Company's administrative, production, communications and distribution
operations.
The Company initiated a project in 1997 to evaluate the potential impact of
the Year 2000 computer problems on its business. The project included an
analysis of all of the Company's computer systems and suppliers and the
development of a plan to make any changes required to essential systems and
deploy any necessary software by 1999.
The Company has continued its program to minimize the impact of the Year
2000 problem by addressing internal computer systems and other intelligent
equipment deployed globally across all of its business units. With the aid of
third party service providers, the Company has inventoried all components
critical to the continued operation of all of its facilities and support
functions.
10
<PAGE> 11
The on-going changes, replacement or retirement of non-compliant
inventoried items is being monitored and has progressed on schedule in
accordance with a structured program designed to achieve full Year 2000
compliance in 1999. As the Company enters the closing stages of its Year 2000
compliance program, it continues to test its mission critical production and
operational systems to ensure that they remain compliant.
Bowne is sensitive to the Year 2000 well-being of its key suppliers. The
Company has instituted a program to manage the business risks posed by the
potential inability of our key suppliers and service providers to properly
respond to their own Year 2000 issues by contacting them to inquire as to their
Year 2000 compliance. Although there can be no certainty that any major business
partner will function without disruption, the Company has been developing
contingency plans for each of these critical business partner risks and will
continue to monitor the status of their Year 2000 programs. This business
continuity focus has been designed to mitigate serious disruptions to its
operations beyond the end of 1999 and operate independent of our external
providers' Year 2000 compliance.
The Company estimate of the total cost related to our Year 2000 program is
approximately $6 to $8 million of which $2.4 million has been incurred from
inception through March 31, 1999. Of the total estimated costs, approximately $2
million will be capitalized. Spending for the Year 2000 program is being funded
through operating cash flows. These costs do not include normal system upgrades
and replacements.
RESULTS OF OPERATIONS
Historically, the Company has primarily provided printing and other related
services. Revenues related to the transactional financial printing services are
affected by cyclical conditions of the capital markets. Over the past few years
the Company has expanded its service offerings.
The Company decided to focus its business on empowering information to
become the global market leader in this field by combining superior customer
service with appropriate new technologies to manage, repurpose and distribute a
client's information to any audience, through any medium, in any language,
anywhere in the world. The Company's goal is to become the empowerer of
information to global companies. The Company is investing in building its
resources outside the United States to enable it to provide worldwide
information empowerment solutions to its global clients. While the Company is
growing and integrating these services outside the United States, these
operations are anticipated to operate at a loss. We expect to continue to invest
outside the United States as the Company grows in the newer information solution
fields and as it positions itself to take advantage of the impact of the
European Monetary Union in the financial services industry.
Management evaluates the performances of its operating segments separately
to monitor the different factors affecting financial results. "EBITDA" and
"EBITA" are measured because management believes that such information is useful
in evaluating the results of certain segments relative to other entities which
operate within these industries and to its affiliated segments. EBITDA and EBITA
are alternatives to and not a replacement measure of operating performance as
determined in accordance with generally accepted accounting principles.
Consistent with its focus on expanding various service offerings to clients
and empowering information, the Company made a number of acquisitions in 1998 in
the Outsourcing, Localization and Internet business segments. As anticipated,
these acquisitions, along with the resources allocated to integrating these
services, had an impact on the results of operations during the first quarters
of 1999 and 1998. Management plans to continue to invest in the non-printing
segments as well as the financial printing segment. Historically, the Company
primarily provided financial printing services which have experienced
fluctuations related to market trends. Revenues (as a percentage of the total
Company's revenues) relating to that segment represent 76% in 1999, compared to
91% in 1998.
The decline in the first quarter 1999 from the same period in 1998 in
EBITDA and EBITA in the Financial Printing segment is primarily due to the
decrease in activity for work related to public offerings and mergers and
acquisitions. EBITDA income from the Company's Outsourcing segment was achieved
in 1999 primarily as a result of the acquisition of Donnelley Enterprise
Solutions Incorporated (DESI) in July 1998.
11
<PAGE> 12
This acquisition not only produced an increase in revenue from 1998, it allowed
the Outsourcing segment to better leverage certain selling, general and
administrative expenses through its integration with the Company's previous
outsourcing business. EBITA loss from the Outsourcing segment also decreased;
however, not at the same rate as EBITDA due to the increased depreciation
expense on equipment associated with the DESI acquisition.
The EBITDA loss from the Localization segment was substantially reduced
mainly due to staffing reductions and the streamlining of certain processes. The
EBITDA loss relating to the Company's Internet Consulting and Development
segment continued to increase reflecting the Company's investments in these
businesses.
QUARTER ENDED MARCH 31, 1999 COMPARED TO QUARTER ENDED MARCH 31, 1998
Net sales increased by $24,362, or approximately 13%, to $218,647. The
increase was attributable to acquisitions made in 1998, partially offset by
lower levels of demand for transactional financial printing. The gross margin
percentage decreased 10 percentage points to 38% resulting in a $9,280 decrease
in gross margin. This decrease was primarily attributable to a greater
proportion of sales from the lower margin products within the Financial Printing
segment and a greater percentage of sales from the lower margin segments.
Selling and administrative expenses increased by $2,421, or 4%, to $65,079.
This increase was due to the administrative costs related to the new businesses,
increased staff, and annual salary increases. However, as a percentage of total
sales, these expenses were reduced by 2 percentage points to 30%.
Depreciation and amortization increased $4,775, or 60%, primarily due to
new businesses, the expansion of facilities, and the acquisition of equipment.
Interest expense increased by $1,348 primarily from borrowings under the
revolving credit agreement to finance the new acquisitions.
Other income (expense) increased by $420 due to various non-operating
transactions.
The effective overall tax rate for the quarter increased from 41% to 62%,
due to increased non-deductible expenses (primarily amortization of goodwill and
other intangibles) as a percentage of pre-tax income. The income tax rate on
pre-tax income before amortization expense decreased from 40% to 38% due to the
change in the geographic distribution of pre-tax income from jurisdictions with
higher rates to those with lower tax rates.
As a result of the foregoing, net income was $1,739 as compared to $12,954
for the same period last year.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's market risk is principally associated with market interest
rate fluctuations related to its debt obligations. Any such market risk is not
considered significant by the Company.
To date, the Company has not experienced significant gains or losses as a
result of fluctuations in the exchange rates of the related foreign currencies.
The Company continues to address the risks posed by exchange rate fluctuations.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 -- Financial Data Schedule
(b) The Company did not file any reports on Form 8-K for the quarter ended
March 31, 1999.
12
<PAGE> 13
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>
<CAPTION>
<S> <C>
Date: May 14, 1999 /s/ ROBERT M. JOHNSON
-----------------------------------------------------
Robert M. Johnson
(Chairman of the Board
(and Director) and
Chief Executive Officer)
Date: May 14, 1999 /s/ DENISE K. FLETCHER
-----------------------------------------------------
Denise K. Fletcher
(Senior Vice President,
Chief Financial Officer)
Date: May 14, 1999 /s/ C. CODY COLQUITT
-----------------------------------------------------
C. Cody Colquitt
(Vice President and Controller)
(Principal Accounting Officer)
</TABLE>
13
<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 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
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