Bowne & Co. Reports 2006 Results

Bowne & Co., Inc. (NYSE: BNE), a leader in financial, marketing and business communications services, today announced strong operating results for 2006, representing significant improvement over 2005 results.

For the year ended December 31, 2006, revenue was $832.2 million, up 24.8% from $666.9 million in 2005. Income from continuing operations was $12.1 million, as compared to a $0.1 million loss in 2005, with resulting diluted earnings per share of $0.38 as compared to breakeven in 2005.

For the fourth quarter, revenue increased 21.7% to $191.1 million from $157.0 million, and diluted earnings per share from continuing operations improved to breakeven from a loss of $0.21 in the fourth quarter of 2005.

Full-year 2006 pro forma earnings of $21.3 million increased 80%, or $9.5 million, as compared to 2005, resulting in diluted earnings per share of $0.67 as compared to $0.34 in 2005, nearly double. Fourth quarter pro forma diluted earnings per share from continuing operations were $0.05 in both 2006 and 2005. (See Pro Forma Supplemental Income Information attached hereto for a reconciliation of these non-GAAP financial measures to our Condensed Consolidated Statements of Operations.)

"These results in 2006 reflect a year of significant accomplishment for Bowne -- a year of strong operating results and tangible, sustainable progress in reshaping the company to further strengthen our leadership position," said Bowne Chairman, President and Chief Executive Officer David J. Shea. "Our clients' needs have evolved, and so have we. Over the past few years, we've introduced new technology based products and services, such as Bowne Virtual Dataroom (TM), Pure Compliance(TM), FundAlign(TM), 8-K Express(TM) and XBRL expertise, to enable our clients to more effectively communicate with their shareholders and clients. To better reflect the full range of our value-added services, we are re-branding our Financial Print business as Financial Communications."

Mr. Shea continued, "Our expectation for growth in 2007 is driven by increasing our transactional market share, continuing the growth of our non-transactional financial communications revenue base, and improving the performance of our marketing and business communications segment."

Financial Communications: For the 2006 full-year, revenue increased 13% to $704.4 million, segment profit of $102.1 million increased 16.6%, or $14.5 million, and segment profit margin increased to 14.5% compared to 14.0% in 2005. Transactional revenue increased 18%, compliance reporting revenue increased 10%, due in part to new SEC regulations and more extensive disclosure requirements, and commercial revenue increased 44%. Revenue from the international markets increased 40% for the year ended December 31, 2006, as compared to 2005.

Fourth quarter revenue increased to $160.0 million as compared to $146.7 million for the same period last year, a 9.0% increase. Transactional revenue increased 8.3% primarily due to a healthy capital market. Segment profit for the quarter of $17.6 million increased 10.6%, or $1.7 million, compared to 2005.

Marketing & Business Communications (MBC): The 2006 results include the January 2006 acquisition of the Marketing and Business Communications division of Vestcom International (Vestcom). MBC reported revenue of $127.8 and $31.1 million for the full-year and fourth quarter, respectively. For the full-year, MBC segment loss improved $6.5 million to a loss of $0.6 million as compared to a loss of $7.1 million in 2005. Segment profit for the fourth quarter was $0.7 million compared to a loss of $2.0 million in the fourth quarter of 2005. The operating results include certain non-recurring operating costs incurred during the integration of the aforementioned acquisition.

Discontinued Operations: The 2006 full-year loss, net of tax, of $13.8 million includes: a $2.3 million loss on the sale of DecisionQuest in September 2006, a $5.1 million charge for the costs associated with exiting the leased facilities of DecisionQuest and Bowne Business Solutions, a $6.1 million gain on the sale of CaseSoft, and a $10.6 million goodwill impairment charge related to DecisionQuest. The 2006 fourth quarter income of $2.1 million, primarily the result of an increase in the estimated tax benefit from the DecisionQuest sale, compares to a loss of $0.8 million in the 2005 fourth quarter.

Balance Sheet and Cash Flow: For the year ended December 31, 2006, cash and marketable securities declined $101.7 million. This decline includes the funding of $68.6 million in stock repurchases, $32.9 million for acquisitions and $28.7 million in capital expenditures (including $5.6 million related to the integration of the Vestcom acquisition, $3.3 million related to the relocation of our London facility and $2.7 million related to our 55 Water Street facility).

Accounts receivable increased approximately $32.6 million as compared to December 2005 due to higher revenue, the increase in the days sales outstanding, and partially due to the inclusion of accounts receivable related to theVestcom acquisition in 2006. Days sales outstanding increased to 72 days in December 2006 from 70 days in December 2005. Financial Communications work-in-process inventory was $18.7 million at December 31, 2006 compared to $21.2 million at December 31, 2005. The Company had no borrowings outstanding under its $150 million five-year senior, unsecured revolving credit facility as of December 31, 2006.