##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended December 31, 2004,                                                
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the Transition period
    from           to                                             

Commission File No. 1-5842


Bowne & Co., Inc.


(Exact name of Registrant as specified in its charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 13-2618477                                 
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification Number)
|                                                                  
|345 Hudson Street
    New York, New York                           |  | 10014(Zip code)                            
|(Address of principal executive offices)                           |  |                                            

(212) 924-5500


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Act:


|                             |  |                                          
|---------------------------- |  | -----------------------------------------
|Title of Each Class          |  | Name of Each Exchange on Which Registered
|                             |  |                                          
|Common Stock, Par Value $.01 |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the
Act:


None


(Title of class)


þ o


o


þ o






DOCUMENTS INCORPORATED BY REFERENCE




|                                                                                                       |  |  |                        | 
|------------------------------------------------------------------------------------------------------ |  |  | ---------------------- | 
|Notice of Annual Meeting of Stockholders and Proxy Statement
    anticipated to be dated April 1, 2005 |  |  | Part III, Items  10-12 | 









---










TABLE OF CONTENTS


|                                                                    |  |                                                                                                    |  |      |    | 
|------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|Form 10-K                                                           |  |                                                                                                    |  |     
|Item No.                                                            |  | Name of Item                                                                                       |  | Page |   
|                                                                    |  |                                                                                                    |  |      |   
|PART I                                                             
|Item 1.                                                             |  | Business                                                                                           |  |      | 2  | 
|Item 2.                                                             |  | Properties                                                                                         |  |      | 10 | 
|Item 3.                                                             |  | Legal Proceedings                                                                                  |  |      | 11 | 
|Item 4.                                                             |  | Submission of Matters to a Vote of Security
    Holders                                            |  |      | 11 | 
|                                                                    |  | Supplemental Item. Executive Officers of
    the Registrant                                        |  |      | 11 | 
|PART II                                                            
|Item 5.                                                             |  | Market for Registrants Common Equity
    and Related Stockholder Matters                          |  |      | 12 | 
|Item 6.                                                             |  | Selected Financial Data                                                                            |  |      | 13 | 
|Item 7.                                                             |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations          |  |      | 14 | 
|Item 7A.                                                            |  | Quantitative and Qualitative Disclosures
    about Market Risk                                     |  |      | 35 | 
|Item 8.                                                             |  | Financial Statements and Supplementary
    Data                                                    |  |      | 37 | 
|Item 9.                                                             |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure           |  |      | 75 | 
|Item 9A.                                                            |  | Controls and Procedures                                                                            |  |      | 75 | 
|Item 9B.                                                            |  | Other Information                                                                                  |  |      | 77 | 
|PART III                                                           
|Item 10.                                                            |  | Directors and Executive Officers of the
    Registrant                                             |  |      | 78 | 
|Item 11.                                                            |  | Executive Compensation                                                                             |  |      | 78 | 
|Item 12.                                                            |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters |  |      | 78 | 
|Item 13.                                                            |  | Certain Relationships and Related
    Transactions                                                 |  |      | 79 | 
|Item 14.                                                            |  | Principal Accounting Fees and Services                                                             |  |      | 79 | 
|PART IV                                                            
|Item 15.                                                            |  | Exhibits and Financial Statement
    Schedules                                                     |  |      | 79 | 
|                                                                    |  | Signatures                                                                                         |  |      | 82 | 
|                                                                    |  | Certifications                                                                                     |  |      |    | 
|EX-10.15 AMENDED & RESTATED STOCK PLAN                             
|EX-10.16 BASE SALARIES AND OTHER COMPENSATION OF EXECUTIVE OFFICERS
|EX-10.24: CONSENT AND WAIVER AGREEMENT                             
|EX-21 SUBSIDIARIES OF THE COMPANY                                  
|EX-23.1 CONSENT OF KPMG LLP                                        
|EX-24 POWERS OF ATTORNEY                                           
|EX-31.1 CERTIFICATION                                              
|EX-31.2 CERTIFICATION                                              
|EX-32.1 CERTIFICATION                                              
|EX-32.2 CERTIFICATION                                              



1



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##### Table of Contents






PART I







|        |         
|------- | --------
|Item 1. | Business



Financial Print




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Bowne Financial Print, the Companys traditional financial
    print services and the worlds largest financial printer,
    offers a comprehensive array of services to create, manage,
    translate and distribute transactional and compliance-related
    documents. Bowne provides these services to its clients in
    connection with capital market and corporate transactions, such
    as equity and debt issuances and mergers and acquisitions, which
    the Company calls transactional financial printing.
    Bowne also provides these services to public corporations and
    mutual fund clients in connection with the fulfillment of their
    compliance obligations to produce and deliver periodic and other
    reports under applicable laws and regulations, which the Company
    calls compliance printing, as well as in connection
    with general commercial and other printing needs.
|
| |  | Bowne Enterprise Solutions (BES) provides
    communications solutions that give its clients efficient and
    cost-effective systems for producing and delivering personalized
    and customized communications to their customers. From desktop
    editing to digital on-demand printing, Bowne offers the
    capability for just-in-time delivery of
    communications that can be individually personalized by the
    client and professionally produced and distributed.                                                                                                                                                                                                                                                                                                                                                                                                                                      



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Overall, the financial print segment generated revenue of
    approximately $637.4 million in 2004 and
    $590.9 million in 2003, representing approximately 71% and
    70% of total revenue, respectively. The Companys financial
    print segment generated segment profit of $69.0 million and
    $61.9 million in 2004 and 2003, respectively. The
    Companys segment profit is measured as gross margin
    (revenue less cost of revenue) less selling and administrative
    expenses. The largest class of service in this segment,
    transactional financial printing, accounted for
    $276 million, or 30.7% of total 2004 Company revenue.                                                                                                                                                                                                     
|
| | Globalization  This segment, which consists of
    Bowne Global Solutions (BGS), provides
    globalization, localization, translation, interpretation and
    technical writing services to adapt clients products and
    content for use in targeted countries in a manner that is both
    accurate in meaning and culturally appropriate. The
    globalization segment generated revenue of approximately
    $223 million in 2004 and $219 million in 2003,
    representing approximately 25% and 26% of total revenue,
    respectively. The Globalization segment generated a segment
    profit of approximately $9.6 million in 2004 and
    $13.1 million in 2003.                                                                                                                                                                                   
|
| | On November 9, 2004, the Company completed the sale of its
    document outsourcing business, Bowne Business Solutions
    (BBS) to Williams Lea, which is based in London. Excluded
    from the sale were Bownes litigation support services
    business, DecisionQuest, Digital Litigations Solutions (which
    has subsequently been re-branded as DecisionQuest Discovery
    Services), and JFS Litigators Notebook®. The document
    outsourcing business is reflected as a discontinued operation in
    the accompanying consolidated financial statements. In addition,
    the results for the litigation support services business, which
    historically had been presented in the outsourcing segment, are
    now included in the Corporate/ Other category. All prior period
    information has been reclassified to reflect this presentation.

2



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Industry Overview














| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | jury research, trial consulting, courtroom graphics, and
    strategic communications;

3



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| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | project-based, off-site litigation support, including document
    imaging, coding, electronic data discovery, and web hosting
    services; and
|
| |  | case management software.                                                                                                                       

The Company




| |                
| | ---------------
| | Financial Print

tm tm










| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For the third year in a row, Bowne was among the top
    500 companies recognized by Information Week magazine for
    the most innovative users of technology in the United States.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Recent advances in technology have permitted Bowne to centralize
    the majority of its typesetting operations into six
    Centers of Excellence, to reduce its typesetting
    workforce and to outsource offshore the more routine and less
    critical typesetting work at a lower cost than performing it
    in-house.                                                                                                                                                                                                                                                                                                                                           
|
| |  | The digital, print-on-demand services the Company offers through
    BES use advanced database technology, coupled with high-speed
    digital printing, to assist clients, primarily in the financial
    services industry, to reach their customers with more targeted
    levels of customized and personalized communications.                                                                                                                                                                                                                                                                                                                                        
|
| |  | The Company also developed
    BowneFaxtm
    to replace its standard fax machines. While a standard fax
    machine simply transmits a page from one location to another,
    BowneFaxtm
    creates a digital file at high resolution and speeds and
    facilitates work-sharing. In terms of speed,
    BowneFaxtm
    shortens turnaround time because pages are read and processed
    five to ten times faster than standard faxes. In terms of
    service,
    BowneFaxtm
    reduces the time the Company and its clients need to clarify
    unclear copy changes and significantly enhances accuracy through
    reduction of editing errors and page tracking.
|
| |  | XMarktm,
    another one of the Companys proprietary technologies,
    takes input from clients in a variety of formats and allows
    conversion personnel to produce near-perfect conversions in a
    single cycle, standardizes the document format, and then
    produces output in a variety of formats. In terms of speed,
    XMarktm
    reduces data conversion and composition production time in the
    range of 50 to 90 percent.                                                                                                                                                                                                                           
|
| |  | The Company expects to begin implementing its newest proprietary
    typesetting system, ACE (Advanced Composition Engine), in 2005.
    It believes that ACE will significantly improve productivity,
    accuracy and page turnaround, and substantially shorten training
    cycles, giving the Company even greater flexibility and
    responsiveness to its clients.                                                                                                                                                                                                                                                                                                 





| |              
| | -------------
| | Globalization



5



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| |   |                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Localization/Translation  the process of
    adapting content and products to meet the language and cultural
    requirements of users throughout the world. BGS offers a
    comprehensive solution covering all aspects of translation,
    engineering, content re-creation, multimedia, linguistic quality
    control and testing.                   
|
| |  | Technical Writing  the creation of technical
    documentation for owner and repair manuals, instructions for
    use, regulatory filings, and help systems. BGS authors and
    technical illustrators, working closely with client teams,
    develop effective documentation in a variety of formats suitable
    for distribution on-line or in print.
|
| |  | Interpretations  assisting government agencies
    and commercial organizations conducting business or legal
    proceedings with parties who do not speak the same native
    language. BGS trained and certified interpreters in the US and
    Europe perform in a variety of settings including face-to-face,
    over-the-phone, and in conferences. 









| |                            
| | ---------------------------
| | Litigation Support Services

tm


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Other Information




|                                 |  |              |     |   |      |  |     |      |  |  |     |  
|-------------------------------- |  | ------------ | --- | - | ---- |  | --- | ---- |  |  | --- | -
|                                 |  | Year Ended   |    
|                                 |  | December 31, |    
|                                 |  |              |    
|Type of Service                  |  | 2004         |     |   | 2003 |  |     | 2002 | 
|                                 |  |              |     |   |      |  |     |      | 
|Transactional financial printing |  |              | 31  | % |      |  | 29  | %    |  |  | 35  | %
|Compliance printing              |  |              | 17  |   |      |  | 17  |      |  |  | 18  |  
|Mutual fund printing             |  |              | 14  |   |      |  | 15  |      |  |  | 19  |  
|Commercial printing              |  |              | 4   |   |      |  | 4   |      |  |  | 5   |  
|Digital printing and other       |  |              | 5   |   |      |  | 5   |      |  |  | 5   |  
|                                 |  |              |     |   |      |  |     |      | 
|Financial Print                  |  |              | 71  |   |      |  | 70  |      |  |  | 82  |  
|Globalization                    |  |              | 25  |   |      |  | 26  |      |  |  | 17  |  
|Other                            |  |              | 4   |   |      |  | 4   |      |  |  | 1   |  
|                                 |  |              |     |   |      |  |     |      | 
|                                 |  |              | 100 | % |      |  | 100 | %    |  |  | 100 | %
|                                 |  |              |     |   |      |  |     |      | 









Competition




7



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Cyclical, Seasonal and Other Factors Affecting the
Companys Business










Research and Development






8



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Patents and Other Rights


sm sm sm sm tm  tm tm tm tm tm tm


Sales and Marketing




Customers and Backlog of Orders






Employees




Suppliers




9



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International Sales









|        |           
|------- | ----------
|Item 2. | Properties

Information regarding the material facilities of the Company,
as of December 31, 2004, seven of which were leased and
seven of which were owned, is set forth below.


|                                                              |  |         |       |  |             |                                                                                                 |         |  |         | 
|------------------------------------------------------------- |  | ------- | ----- |  | ----------- | ----------------------------------------------------------------------------------------------- | ------- |  | ------- | 
|                                                              |  | Year    |       |  |             |                                                                                                 |        
|                                                              |  | Lease   |       |  |             |                                                                                                 | Square  | 
|Location                                                      |  | Expires |       |  | Description |                                                                                                 | Footage | 
|                                                              |  |         |       |  |             |                                                                                                 |         | 
|345 Hudson Street
    New York, NY                            |  |         | 2006  |  |             | Customer service center, general office space, computer center,
    and corporate headquarters. |         |  | 222,000 | 
|800 Central Blvd
    Carlstadt, NJ                            |  |         | 2009  |  |             | Digital printing plant and general office space.                                                |         |  | 130,000 | 
|500 West Madison Avenue
    Chicago, IL                       |  |         | 2016  |  |             | Customer service center and general office space.                                               |         |  | 73,000  | 
|60 Gervais Drive
    Don Mills (Toronto),
    Ontario, Canada |  |         | 2005  |  |             | Customer service center, typesetting, printing plant and general
    office space.              |         |  | 71,000  | 
|1570 Northside Drive
    Atlanta, GA                          |  |         | 2009  |  |             | Customer service center, typesetting, printing plant and general
    office space.              |         |  | 51,000  | 
|18050 Central Avenue
    Carson, CA                           |  |         | 2014  |  |             | Printing plant and general office space.                                                        |         |  | 40,295  | 
|60 Queen Victoria Street
    London, England                  |  |         | 2020  |  |             | Customer service center and general office space.                                               |         |  | 30,000  | 
|5021 Nimtz Parkway
    South Bend, IN                         |  |         | Owned |  |             | Printing plant and general office space.                                                        |         |  | 127,000 | 
|215 County Avenue
    Secaucus, NJ                            |  |         | Owned |  |             | Printing plant and general office space.                                                        |         |  | 125,000 | 
|1200 Oliver Street
    Houston, TX                            |  |         | Owned |  |             | Customer service center, typesetting, printing plant and general
    office space.              |         |  | 110,000 | 
|411 D Street
    Boston, MA                                   |  |         | Owned |  |             | Customer service center, typesetting, printing plant and general
    office space.              |         |  | 73,000  | 
|1241 Superior Avenue
    Cleveland, OH                        |  |         | Owned |  |             | Customer service center, typesetting and general office space.                                  |         |  | 73,000  | 
|1931 Market Center Blvd,
    Dallas, TX                       |  |         | Owned |  |             | Customer service center, typesetting and general office space.                                  |         |  | 68,000  | 
|1500 North Central Avenue
    Phoenix, AZ                     |  |         | Owned |  |             | Customer service center, typesetting and general office space.                                  |         |  | 50,000  | 



10



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|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders








|                   |                                     
|------------------ | ------------------------------------
|Supplemental Item. | Executive Officers of the Registrant



|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                           |  |     |    | 
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --- | -- | 
|Name                |  | Principal Occupation During Past Five Years                                                                                                                                                                                                                                                                                                                                                                               |  | Age
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                           |  |    
|Philip E. Kucera    |  | Chief Executive Officer of the Company since October 2004;
    previously Interim Chief Executive Officer from May 2004; served
    as Senior Vice President and General Counsel since December 1998.                                                                                                                                                                                                                     |  |     | 62 | 
|David J. Shea       |  | President and Chief Operating Officer since October 2004,
    previously served as President since August 2004 and Senior Vice
    President and Chief Executive Officer of Bowne Enterprise
    Solutions, LLC since November 2003; also served as Senior Vice
    President, President, and Executive Vice President, Business
    Development and Strategic Technology of Bowne Business Solutions
    from July 1998. |  |     | 49 | 
|C. Cody Colquitt    |  | Senior Vice President and Chief Financial Officer since March
    2001; previously Vice President, Corporate Controller from
    February 1999 to August 2001; previously Vice President, Finance
    and Controller from September 1996 of Bowne of Dallas, L.P., a
    subsidiary of the Company.                                                                                                                       |  |     | 43 | 
|Susan W. Cummiskey  |  | Senior Vice President, Human Resources since December 1998.                                                                                                                                                                                                                                                                                                                                                               |  |     | 52 | 
|James E. Fagan, Jr. |  | Senior Vice President of the Company and President and Chief
    Executive Officer of Bowne Global Solutions, Inc. since December
    2002; previously Senior Vice President, Strategy and New
    Business Development from May 2001; previously Senior Vice
    President and Director of Capital Market Global Sales for R.R.
    Donnelley.                                                                           |  |     | 53 | 
|L. Andy Williams    |  | Senior Vice President and President of Financial Print since
    March 2004, previously President of Financial Print Central and
    Western Regions since April 2003; previously Regional President
    of Bowne of Dallas, L.P., Bowne of Houston and Bowne of Chicago,
    subsidiaries of the Company, since April 1996.                                                                                              |  |     | 57 | 
|Scott L. Spitzer    |  | Senior Vice President, General Counsel and Corporate Secretary
    since May 2004; served as Vice President, Associate General
    Counsel and Corporate Secretary since March 2002; served as Vice
    President and Associate General Counsel from April 2001;
    previously Vice President, General Counsel and Secretary of
    Vital Signs, Inc.                                                                    |  |     | 53 | 
|Kenneth W. Swanson  |  | Senior Vice President, Operations since October 2001; previously
    Senior Vice President, Manufacturing since December 1998; also
    President of Bowne Business Communications, Inc. and Bowne of
    South Bend.                                                                                                                                                                                                     |  |     | 48 | 

11



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|                     |  |                                                                                                                                                                                                                                           |  |     |    | 
|-------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --- | -- | 
|Name                 |  | Principal Occupation During Past Five Years                                                                                                                                                                                               |  | Age |   
|                     |  |                                                                                                                                                                                                                                           |  |     |   
|Richard Bambach, Jr. |  | Chief Accounting Officer of the Company since May 2002 and Vice
    President, Corporate Controller since August 2001; previously
    Vice President, External Financial Reporting for Winstar
    Communications, Inc. from August 1999. |  |     | 40 | 
|William J. Coote     |  | Vice President and Treasurer since December 1998.                                                                                                                                                                                         |  |     | 50 | 






PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters

Share Prices




|               |  |      |       |  |     |           |       |       |  |   |      | 
|-------------- |  | ---- | ----- |  | --- | --------- | ----- | ----- |  | - | ---- | 
|               |  |      |       |  |     | Dividends |      
|               |  |      |       |  |     | Per       |      
|               |  | High |       |  | Low |           |       | Share | 
|               |  |      |       |  |     |           |       |       | 
|2004           |  |      |       |  |     |           |       |       |  |   |      | 
|Fourth quarter |  | $    | 16.34 |  |     | $         | 11.11 |       |  | $ | .055 | 
|Third quarter  |  |      | 16.02 |  |     |           | 12.60 |       |  |   | .055 | 
|Second quarter |  |      | 17.99 |  |     |           | 14.81 |       |  |   | .055 | 
|First quarter  |  |      | 17.90 |  |     |           | 13.66 |       |  |   | .055 | 
|               |  |      |       |  |     |           |       |       | 
|Calendar year  |  |      | 17.99 |  |     |           | 11.11 |       |  | $ | .22  | 
|               |  |      |       |  |     |           |       |       | 
|2003           |  |      |       |  |     |           |       |       |  |   |      | 
|Fourth quarter |  | $    | 15.82 |  |     | $         | 13.30 |       |  | $ | .055 | 
|Third quarter  |  |      | 15.81 |  |     |           | 12.78 |       |  |   | .055 | 
|Second quarter |  |      | 13.44 |  |     |           | 9.95  |       |  |   | .055 | 
|First quarter  |  |      | 12.16 |  |     |           | 9.13  |       |  |   | .055 | 
|               |  |      |       |  |     |           |       |       | 
|Calendar year  |  |      | 15.82 |  |     |           | 9.13  |       |  | $ | .22  | 
|               |  |      |       |  |     |           |       |       | 



Stock Repurchase




12



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

Five Year Financial Summary


|                                                             |                                                                           |                                              |         |          |      |   |          |          |   |   |         |          |   |      |         |          |   |   |         |          |  
|------------------------------------------------------------ | ------------------------------------------------------------------------- | -------------------------------------------- | ------- | -------- | ---- | - | -------- | -------- | - | - | ------- | -------- | - | ---- | ------- | -------- | - | - | ------- | -------- | -
|                                                             |                                                                           | Years Ended December 31,                     |        
|                                                             |                                                                           |                                              |        
|                                                             |                                                                           |                                              |         | Restated |      |   | Restated |          |   |  
|                                                             |                                                                           | 2004                                         |         |          | 2003 |   |          | 2002     |   |   | 2001    |          |   | 2000 |        
|                                                             |                                                                           |                                              |         |          |      |   |          |          |   |   |         |          |   |      |        
|                                                             |                                                                           | (In thousands, except per share information) |        
|Operating Data                                               |                                                                           |                                              |         |          |      |   |          |          |   |   |         |          |   |      |         |          |   |   |         |         
|Revenue                                                      |                                                                           | $                                            | 899,011 |          |      | $ | 847,636  |          |   | $ | 778,865 |          |   | $    | 830,918 |          |   | $ | 992,042 |         
|Expenses:                                                    |                                                                           |                                              |         |          |      |   |          |          |   |   |         |          |   |      |         |          |   |   |         |         
|                                                             | Cost of revenue                                                           |                                              |         | (574,264 | )    |   |          | (536,166 | ) |   |         | (485,176 | ) |      |         | (531,778 | ) |   |         | (600,458 | )
|                                                             | Selling and administrative                                                |                                              |         | (266,034 | )    |   |          | (247,977 | ) |   |         | (247,705 | ) |      |         | (243,604 | ) |   |         | (277,839 | )
|                                                             | Depreciation                                                              |                                              |         | (32,121  | )    |   |          | (35,466  | ) |   |         | (35,684  | ) |      |         | (36,528  | ) |   |         | (37,196  | )
|                                                             | Amortization                                                              |                                              |         | (2,713   | )    |   |          | (2,478   | ) |   |         | (874     | ) |      |         | (2,994   | ) |   |         | (2,904   | )
|                                                             | Restructuring charges, integration costs and asset impairment
    charges |                                              |         | (14,644  | )    |   |          | (23,076  | ) |   |         | (17,658  | ) |      |         | (15,602  | ) |   |         | (2,106   | )
|                                                             | Gain (loss) on sale of certain printing assets                            |                                              |         |         |      |   |          |         |   |   |         | 15,369   |   |      |         | (1,858   | ) |   |         |         |  
|                                                             | Gain on sale of building                                                  |                                              |         | 896      |      |   |          |         |   |   |         | 4,889    |   |      |         |         |   |   |         |         |  
|                                                             | Purchased in-process research and development                             |                                              |         |         |      |   |          |         |   |   |         |         |   |      |         | (800     | ) |   |         |         |  
|                                                             |                                                                           |                                              |         |          |      |   |          |          |   |   |         |          |   |      |        
|Operating income (loss)                                      |                                                                           |                                              | 10,131  |          |      |   | 2,473    |          |   |   | 12,026  |          |   |      | (2,246  | )        |   |   | 71,539  |         
|                                                             | Interest expense                                                          |                                              |         | (10,709  | )    |   |          | (11,389  | ) |   |         | (7,119   | ) |      |         | (6,258   | ) |   |         | (6,953   | )
|                                                             | Loss on extinguishment of debt                                            |                                              |         | (8,815   | )    |   |          |         |   |   |         |         |   |      |         |         |   |   |         |         |  
|                                                             | Other (expense) income, net                                               |                                              |         | (118     | )    |   |          | (1,367   | ) |   |         | (1,427   | ) |      |         | 1,582    |   |   |         | (1,575   | )
|                                                             |                                                                           |                                              |         |          |      |   |          |          |   |   |         |          |   |      |        
|(Loss) income from continuing operations before income taxes |                                                                           |                                              | (9,511  | )        |      |   | (10,283  | )        |   |   | 3,480   |          |   |      | (6,922  | )        |   |   | 63,011  |         
|                                                             | Income tax benefit (expense)                                              |                                              |         | 1,313    |      |   |          | 729      |   |   |         | (6,482   | ) |      |         | (2,876   | ) |   |         | (29,107  | )
|                                                             |                                                                           |                                              |         |          |      |   |          |          |   |   |         |          |   |      |        
|(Loss) income from continuing operations                     |                                                                           | $                                            | (8,198  | )        |      | $ | (9,554   | )        |   | $ | (3,002  | )        |   | $    | (9,798  | )        |   | $ | 33,904  |         
|                                                             |                                                                           |                                              |         |          |      |   |          |          |   |   |         |          |   |      |        

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|                                          |                          |                                              |     |          |      |   |          |         |   |   |      |         |   |      |     |         |   |   |     |         | 
|----------------------------------------- | ------------------------ | -------------------------------------------- | --- | -------- | ---- | - | -------- | ------- | - | - | ---- | ------- | - | ---- | --- | ------- | - | - | --- | ------- | 
|                                          |                          | Years Ended December 31,                     |    
|                                          |                          |                                              |    
|                                          |                          |                                              |     | Restated |      |   | Restated |         |   |  
|                                          |                          | 2004                                         |     |          | 2003 |   |          | 2002    |   |   | 2001 |         |   | 2000 |    
|                                          |                          |                                              |     |          |      |   |          |         |   |   |      |         |   |      |    
|                                          |                          | (In thousands, except per share information) |    
|Balance Sheet Data                        |                          |                                              |     |          |      |   |          |         |   |   |      |         |   |      |     |         |   |   |     |        
|                                          | Current assets           |                                              | $   | 315,626  |      |   | $        | 270,389 |   |   | $    | 261,833 |   |      | $   | 264,698 |   |   | $   | 314,508 | 
|                                          | Current liabilities      |                                              | $   | 157,605  |      |   | $        | 179,544 |   |   | $    | 179,494 |   |      | $   | 186,556 |   |   | $   | 180,966 | 
|                                          | Working capital          |                                              | $   | 158,021  |      |   | $        | 90,845  |   |   | $    | 82,339  |   |      | $   | 78,142  |   |   | $   | 133,542 | 
|                                          | Current ratio            |                                              |     | 2.00:1   |      |   |          | 1.51:1  |   |   |      | 1.46:1  |   |      |     | 1.42:1  |   |   |     | 1.74:1  | 
|                                          | Plant and Equipment, net |                                              | $   | 116,021  |      |   | $        | 129,886 |   |   | $    | 143,139 |   |      | $   | 153,262 |   |   | $   | 370,403 | 
|                                          | Total assets             |                                              | $   | 654,609  |      |   | $        | 728,879 |   |   | $    | 705,456 |   |      | $   | 637,334 |   |   | $   | 660,215 | 
|                                          | Long-term debt           |                                              | $   | 76,962   |      |   | $        | 139,828 |   |   | $    | 142,708 |   |      | $   | 76,940  |   |   | $   | 85,676  | 
|                                          | Stockholders equity     |                                              | $   | 372,797  |      |   | $        | 351,572 |   |   | $    | 337,374 |   |      | $   | 330,029 |   |   | $   | 360,966 | 
|Per Share Data                            |                          |                                              |     |          |      |   |          |         |   |   |      |         |   |      |     |         |   |   |     |        
|(Loss) income from continuing operations: |                          |                                              |     |          |      |   |          |         |   |   |      |         |   |      |     |         |   |   |     |        
|                                          | Basic                    |                                              | $   | (.23     | )    |   | $        | (.28    | ) |   | $    | (.09    | ) |      | $   | (.30    | ) |   | $   | .98     | 
|                                          | Diluted                  |                                              | $   | (.23     | )    |   | $        | (.28    | ) |   | $    | (.09    | ) |      | $   | (.28    | ) |   | $   | .96     | 
|Dividends                                 |                          | $                                            | .22 |          |      | $ | .22      |         |   | $ | .22  |         |   | $    | .22 |         |   | $ | .22 |        










|        |                                                                                                                                                           
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations (In thousands, except
    per share information and where noted)

Cautionary Statement Concerning Forward Looking Statements






14



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| |   |                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general economic or capital market conditions affecting the
    demand for transactional financial printing or the
    Companys other services;                                                                                                                                                                    
|
| |  | competition based on pricing and other factors;                                                                                                                                                                                                                                                                     
|
| |  | fluctuations in the cost of paper, other raw materials and
    utilities;                                                                                                                                                                                                                                           
|
| |  | fluctuations in foreign currency rates;                                                                                                                                                                                                                                                                             
|
| |  | changes in air and ground delivery costs and postal rates and
    postal regulations;                                                                                                                                                                                                                               
|
| |  | seasonal fluctuations in overall demand for the Companys
    services;                                                                                                                                                                                                                                             
|
| |  | changes in the printing market;                                                                                                                                                                                                                                                                                     
|
| |  | the Companys ability to integrate the operations of
    acquisitions into its operations;                                                                                                                                                                                                                          
|
| |  | the financial condition of the Companys clients;                                                                                                                                                                                                                                                                   
|
| |  | the Companys ability to continue to obtain improved
    operating efficiencies;                                                                                                                                                                                                                                    
|
| |  | the Companys ability to continue to develop services for
    its clients;                                                                                                                                                                                                                                          
|
| |  | changes in the rules and regulations to which the Company is
    subject and the cost of complying with these rules and
    regulations, including environmental and health and welfare
    benefit regulations;                                                                                                    
|
| |  | changes in the rules and regulations to which the Companys
    clients are subject, such as the implementation of the
    Sarbanes-Oxley Act of 2002, which may result in decreased
    capital markets activity as issuers weigh enhanced liabilities
    against the benefits of conducting securities offerings;
|
| |  | the effects of war or acts of terrorism affecting the overall
    business climate;                                                                                                                                                                                                                                 
|
| |  | loss or retirement of key executives or employees; and                                                                                                                                                                                                                                                              
|
| |  | natural events and acts of God such as earthquakes, fires or
    floods.                                                                                                                                                                                                                                            



Overview




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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Financial Print: On a full year basis,this
    segment reported revenue of $637.4 million, a
    $46.6 million or 7.9% increase over the prior year. Segment
    profit for the year was $69.2 million, an increase of
    $7.1 million as compared to 2003. For the fourth quarter of
    2004, revenue was $143.4 million, an increase of
    $10.6 million, or 8% over 2003. Segment profit for the
    fourth quarter declined to $7 million in 2004 from
    $14.3 million for the same period in 2003. The decline in
    the segment profit for the fourth quarter resulted from
    increased employee compensation costs and the impact of price
    competition particularly in connection with initial public
    offerings. Despite a fourth quarter which did not meet
    expectations, the Company is optimistic about 2005 given the
    upturn in capital market activity and the Companys
    continued market leading position.                                       
|
| |  | Globalization: On a full year basis, this segment
    reported revenue of $223 million, a $3.7 million
    increase over 2003. This segment reported profit of
    $9.6 million which was $3.5 million less than 2003.
    Fourth quarter revenue was $55.1 million, with segment
    profit of $1.5 million, a decline of $2.4 million from
    the same period in 2003. Segment profit was lower in 2004 as the
    expected rebound in spending by the technology sector failed to
    materialize and significant projects were delayed until 2005.
    The Company took action in the fourth quarter to reduce costs
    through reorganizing the segments management structure,
    including the elimination of senior management and staff
    positions, and scaling back research and development spending.
    The expected cost savings from these reductions, as well as the
    start-up of delayed customer projects, should help this segment
    perform better in 2005.

Items Affecting Comparability




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|                 |  |      |        |  |      |   |        |      |  |   |        | 
|---------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                 |  | 2004 |        |  | 2003 |   |        | 2002 | 
|                 |  |      |        |  |      |   |        |      | 
|Financial Print  |  | $    | 5,799  |  |      | $ | 12,380 |      |  | $ | 6,876  | 
|Globalization    |  |      | 6,195  |  |      |   | 8,605  |      |  |   | 10,624 | 
|Corporate/ Other |  |      | 2,650  |  |      |   | 2,091  |      |  |   | 158    | 
|                 |  |      |        |  |      |   |        |      | 
|Total            |  | $    | 14,644 |  |      | $ | 23,076 |      |  | $ | 17,658 | 
|After tax impact |  | $    | 10,498 |  |      | $ | 16,869 |      |  | $ | 12,830 | 
|Per share impact |  | $    | 0.29   |  |      | $ | 0.50   |      |  | $ | 0.38   | 























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Results of Operations






Year Ended December 31, 2004 Compared to Year Ended
December 31, 2003




| |                
| | ---------------
| | Financial Print

|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |          |   |         |   |  |  |     |   
|------------------------------------------------------- |  | ------------------------ | -------- | ---- | -------------- |  | --- | ---- | ---- | - | -------- | - |  | -------- | --- | -- | -------- | - | ------- | - |  |  | --- | --
|                                                        |  | Years Ended December 31, |          |      |               
|                                                        |  |                          |          |      | Year Over Year | 
|                                                        |  |                          |          | % of |                |  |     |      | % of |   |          |   | 
|Financial Print Results:                                |  | 2004                     |          |      | Revenue        |  |     | 2003 |      |   | Revenue  |   |  | $ Change |     |    | % Change |  
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |          |  
|                                                        |  | (Dollars in thousands)   |         
|Revenue:                                                |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |          |   |         |   |  |  |     |   
|Transactional financial printing                        |  | $                        | 275,578  |      |                |  | 43  | %    |      | $ | 244,719  |   |  |          | 41  | %  |          | $ | 30,859  |   |  |  | 13  | % 
|Compliance printing                                     |  |                          | 148,218  |      |                |  | 23  |      |      |   | 142,293  |   |  |          | 24  |    |          |   | 5,925   |   |  |  | 4   |   
|Mutual funds                                            |  |                          | 129,222  |      |                |  | 21  |      |      |   | 125,159  |   |  |          | 21  |    |          |   | 4,063   |   |  |  | 3   |   
|Commercial                                              |  |                          | 37,790   |      |                |  | 6   |      |      |   | 37,128   |   |  |          | 6   |    |          |   | 662     |   |  |  | 2   |   
|Other                                                   |  |                          | 46,605   |      |                |  | 7   |      |      |   | 41,557   |   |  |          | 8   |    |          |   | 5,048   |   |  |  | 12  |   
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |          |  
|Total revenue                                           |  |                          | 637,413  |      |                |  | 100 |      |      |   | 590,856  |   |  |          | 100 |    |          |   | 46,557  |   |  |  | 8   |   
|Cost of revenue                                         |  |                          | (397,568 | )    |                |  | (62 | )    |      |   | (367,429 | ) |  |          | (62 | )  |          |   | (30,139 | ) |  |  | 8   |   
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |          |  
|Gross margin                                            |  |                          | 239,845  |      |                |  | 38  |      |      |   | 223,427  |   |  |          | 38  |    |          |   | 16,418  |   |  |  | 7   |   
|Selling and administrative                              |  |                          | (170,809 | )    |                |  | (27 | )    |      |   | (161,538 | ) |  |          | (27 | )  |          |   | (9,271  | ) |  |  | 6   |   
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |          |  
|Segment profit                                          |  | $                        | 69,036   |      |                |  | 11  | %    |      | $ | 61,889   |   |  |          | 11  | %  |          | $ | 7,147   |   |  |  | 12  | % 
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |          |  
|Other Items:                                            |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |          |   |         |   |  |  |     |   
|Depreciation                                            |  | $                        | (24,190  | )    |                |  | (4  | )%   |      | $ | (27,353  | ) |  |          | (5  | )% |          | $ | 3,163   |   |  |  | (12 | )%
|Restructuring, integration and asset impairment charges |  |                          | (5,799   | )    |                |  | (1  | )    |      |   | (12,380  | ) |  |          | (2  | )  |          |   | 6,581   |   |  |  | 5   |   
|Gain on sale of building                                |  |                          | 896      |      |                |  | 1   |      |      |   |         |   |  |          |    |    |          |   | 896     |   |  |  | 100 |   



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| |              
| | -------------
| | Globalization

|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |        |   |        |   |  |  |     |   
|------------------------------------------------------- |  | ------------------------ | -------- | ---- | -------------- |  | --- | ---- | ---- | - | -------- | - |  | -------- | --- | -- | ------ | - | ------ | - |  |  | --- | --
|                                                        |  | Years Ended December 31, |          |      | Year Over Year | 
|                                                        |  |                          |          |      |                | 
|                                                        |  |                          |          | % of |                |  |     |      | % of |   |          |   |  | %        |    
|Globalization Results:                                  |  | 2004                     |          |      | Revenue        |  |     | 2003 |      |   | Revenue  |   |  | $ Change |     |    | Change |  
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |        |  
|                                                        |  | (Dollars in thousands)   |         
|Revenue                                                 |  | $                        | 222,973  |      |                |  | 100 | %    |      | $ | 219,245  |   |  |          | 100 | %  |        | $ | 3,728  |   |  |  | 2   | % 
|Cost of revenue                                         |  |                          | (147,599 | )    |                |  | (66 | )    |      |   | (140,415 | ) |  |          | (64 | )  |        |   | (7,184 | ) |  |  | 5   |   
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |        |  
|Gross margin                                            |  |                          | 75,374   |      |                |  | 34  |      |      |   | 78,830   |   |  |          | 36  |    |        |   | (3,456 | ) |  |  | (4  | ) 
|Selling and administrative                              |  |                          | (65,817  | )    |                |  | (30 | )    |      |   | (65,758  | ) |  |          | (30 | )  |        |   | (59    | ) |  |  | 0   |   
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |        |  
|Segment profit                                          |  | $                        | 9,557    |      |                |  | 4   | %    |      | $ | 13,072   |   |  |          | 6   | %  |        | $ | (3,515 | ) |  |  | (27 | )%
|                                                        |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |        |  
|Other Items:                                            |  |                          |          |      |                |  |     |      |      |   |          |   |  |          |     |    |        |   |        |   |  |  |     |   
|Depreciation (2003 restated)                            |  | $                        | (5,930   | )    |                |  | (3  | )%   |      | $ | (5,509   | ) |  |          | (3  | )% |        | $ | 421    |   |  |  | 8   | % 
|Restructuring, integration and asset impairment charges |  |                          | (6,195   | )    |                |  | (3  | )    |      |   | (8,605   | ) |  |          | (4  | )  |        |   | 2,410  |   |  |  | (28 | ) 













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| |        
| | -------
| | Summary























21



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Domestic Versus
International Results of Operations




|                                                      |  |                         |         |          |      |   |         |  
|----------------------------------------------------- |  | ----------------------- | ------- | -------- | ---- | - | ------- | -
|                                                      |  | Year Ended December 31, |        
|                                                      |  |                         |        
|                                                      |  |                         |         | Restated |     
|                                                      |  | 2004                    |         |          | 2003 |  
|                                                      |  |                         |         |          |      |  
|United States                                         |  | $                       | (20,618 | )        |      | $ | 789     |  
|Foreign                                               |  |                         | 11,107  |          |      |   | (11,072 | )
|                                                      |  |                         |         |          |      |  
|(Loss) income from continuing operations before taxes |  | $                       | (9,511  | )        |      | $ | (10,283 | )
|                                                      |  |                         |         |          |      |  





Year Ended December 31, 2003 Compared to Year Ended
December 31, 2002




| |                
| | ---------------
| | Financial Print

|                                                        |                                  |                          |          |         |                |                        |     |      |      |   |          |         |  |          |     |    |          |   |         |         |   |  |      |     |   
|------------------------------------------------------- | -------------------------------- | ------------------------ | -------- | ------- | -------------- | ---------------------- | --- | ---- | ---- | - | -------- | ------- |  | -------- | --- | -- | -------- | - | ------- | ------- | - |  | ---- | --- | --
|                                                        |                                  | Years Ended December 31, |          |         |               
|                                                        |                                  |                          |          |         | Year Over Year |                       
|                                                        |                                  |                          |          | % of    |                |                        |     |      | % of |   |          |         | 
|Financial Print Results:                                |                                  | 2003                     |          |         | Revenue        |                        |     | 2002 |      |   | Revenue  |         |  | $ Change |     |    | % Change |  
|                                                        |                                  |                          |          |         |                |                        |     |      |      |   |          |         |  |          |     |    |          |  
|                                                        |                                  |                          |          |         |                | (Dollars in thousands) |     |      |      |   |         
|Revenue:                                                |                                  |                          |          |         |                |                        |     |      |      |   |          |         |  |          |     |    |          |   |         |         |   |  |      |    
|                                                        | Transactional financial printing |                          | $        | 244,719 |                |                        |     | 41   | %    |   | $        | 273,900 |  |          |     | 43 | %        |   | $       | (29,181 | ) |  |      | (11 | )%
|                                                        | Compliance printing              |                          |          | 142,293 |                |                        |     | 24   |      |   |          | 139,455 |  |          |     | 22 |          |   |         | 2,838   |   |  |      | 2   |   
|                                                        | Mutual funds                     |                          |          | 125,159 |                |                        |     | 21   |      |   |          | 150,921 |  |          |     | 24 |          |   |         | (25,762 | ) |  |      | (17 | ) 
|                                                        | Commercial                       |                          |          | 37,128  |                |                        |     | 6    |      |   |          | 35,478  |  |          |     | 6  |          |   |         | 1,650   |   |  |      | 5   |   
|                                                        | Other                            |                          |          | 41,557  |                |                        |     | 8    |      |   |          | 38,515  |  |          |     | 5  |          |   |         | 3,042   |   |  |      | 8   |   
|                                                        |                                  |                          |          |         |                |                        |     |      |      |   |          |         |  |          |     |    |          |  
|Total revenue                                           |                                  |                          | 590,856  |         |                |                        | 100 |      |      |   | 638,269  |         |  |          | 100 |    |          |   | (47,413 | )       |   |  | (7   | )  
|Cost of revenue                                         |                                  |                          | (367,429 | )       |                |                        | (62 | )    |      |   | (391,233 | )       |  |          | (61 | )  |          |   | 23,804  |         |   |  | (6   | )  
|                                                        |                                  |                          |          |         |                |                        |     |      |      |   |          |         |  |          |     |    |          |  
|Gross margin                                            |                                  |                          | 223,427  |         |                |                        | 38  |      |      |   | 247,036  |         |  |          | 39  |    |          |   | (23,609 | )       |   |  | (10  | )  
|Selling and administrative                              |                                  |                          | (161,538 | )       |                |                        | (27 | )    |      |   | (180,467 | )       |  |          | (28 | )  |          |   | 18,929  |         |   |  | (10  | )  
|                                                        |                                  |                          |          |         |                |                        |     |      |      |   |          |         |  |          |     |    |          |  
|Segment profit                                          |                                  | $                        | 61,889   |         |                |                        | 11  | %    |      | $ | 66,569   |         |  |          | 11  | %  |          | $ | (4,680  | )       |   |  | (7   | )% 
|                                                        |                                  |                          |          |         |                |                        |     |      |      |   |          |         |  |          |     |    |          |  
|Other Items:                                            |                                  |                          |          |         |                |                        |     |      |      |   |          |         |  |          |     |    |          |   |         |         |   |  |      |    
|Depreciation                                            |                                  | $                        | (27,353  | )       |                |                        | (5  | )%   |      | $ | (29,075  | )       |  |          | (5  | )% |          | $ | 1,722   |         |   |  | (6   | )% 
|Restructuring, integration and asset impairment charges |                                  |                          | (12,380  | )       |                |                        | (2  | )    |      |   | (6,876   | )       |  |          | (1  | )  |          |   | (5,504  | )       |   |  | 80   |    
|Gain on sale of certain printing assets                 |                                  |                          |         |         |                |                        |    |      |      |   | 15,369   |         |  |          | 2   |    |          |   | (15,369 | )       |   |  | (100 | )  
|Gain on sale of building                                |                                  |                          |         |         |                |                        |    |      |      |   | 4,889    |         |  |          | 1   |    |          |   | (4,889  | )       |   |  | (100 | )  

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| |              
| | -------------
| | Globalization

|                                                        |  |                          |          |      |                |  |     |      |      |   |         |   |  |          |     |    |          |   |         |   |  |  |     |  
|------------------------------------------------------- |  | ------------------------ | -------- | ---- | -------------- |  | --- | ---- | ---- | - | ------- | - |  | -------- | --- | -- | -------- | - | ------- | - |  |  | --- | -
|                                                        |  | Years Ended December 31, |          |      |               
|                                                        |  |                          |          |      | Year Over Year | 
|                                                        |  |                          |          | % of |                |  |     |      | % of |   |         |   | 
|Globalization Results:                                  |  | 2003                     |          |      | Revenue        |  |     | 2002 |      |   | Revenue |   |  | $ Change |     |    | % Change |  
|                                                        |  |                          |          |      |                |  |     |      |      |   |         |   |  |          |     |    |          |  
|                                                        |  | (Dollars in thousands)   |         
|Revenue                                                 |  | $                        | 219,245  |      |                |  | 100 | %    |      | $ | 131,171 |   |  |          | 100 | %  |          | $ | 88,074  |   |  |  | 67  | %
|Cost of revenue                                         |  |                          | (140,415 | )    |                |  | (64 | )    |      |   | (87,038 | ) |  |          | (66 | )  |          |   | (53,377 | ) |  |  | 61  |  
|                                                        |  |                          |          |      |                |  |     |      |      |   |         |   |  |          |     |    |          |  
|Gross margin                                            |  |                          | 78,830   |      |                |  | 36  |      |      |   | 44,133  |   |  |          | 34  |    |          |   | 34,697  |   |  |  | 79  |  
|Selling and administrative                              |  |                          | (65,758  | )    |                |  | (30 | )    |      |   | (48,574 | ) |  |          | (37 | )  |          |   | (17,184 | ) |  |  | 35  |  
|                                                        |  |                          |          |      |                |  |     |      |      |   |         |   |  |          |     |    |          |  
|Segment profit (loss)                                   |  | $                        | 13,072   |      |                |  | 6   | %    |      | $ | (4,441  | ) |  |          | (3  | )% |          | $ | 17,513  |   |  |  | 394 | %
|                                                        |  |                          |          |      |                |  |     |      |      |   |         |   |  |          |     |    |          |  
|Other Items:                                            |  |                          |          |      |                |  |     |      |      |   |         |   |  |          |     |    |          |   |         |   |  |  |     |  
|Depreciation (restated)                                 |  | $                        | (5,509   | )    |                |  | (3  | )%   |      | $ | (4,428  | ) |  |          | (3  | )% |          | $ | (1,081  | ) |  |  | 24  | %
|Restructuring, integration and asset impairment charges |  |                          | (8,605   | )    |                |  | (4  | )    |      |   | (10,624 | ) |  |          | (8  | )  |          |   | 2,019   |   |  |  | (19 | )













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Summary




















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| |                                                    
| | ---------------------------------------------------
| | Domestic Versus International Results of Operations



|                                                      |  |                         |         |   |          |   |         |  
|----------------------------------------------------- |  | ----------------------- | ------- | - | -------- | - | ------- | -
|                                                      |  | Year Ended December 31, |        
|                                                      |  |                         |        
|                                                      |  | Restated                |         |   | Restated |  
|                                                      |  | 2003                    |         |   | 2002     |  
|                                                      |  |                         |         |   |          |  
|United States                                         |  | $                       | 789     |   |          | $ | 14,599  |  
|Foreign                                               |  |                         | (11,072 | ) |          |   | (11,119 | )
|                                                      |  |                         |         |   |          |  
|(Loss) income from continuing operations before taxes |  | $                       | (10,283 | ) |          | $ | 3,480   |  
|                                                      |  |                         |         |   |          |  





2005 Outlook






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|                                                            |                  |                            |                      |                       
|----------------------------------------------------------- | ---------------- | -------------------------- | -------------------- | ----------------------
|                                                            |                  | Full Year 2005            
|                                                            |                  |                           
|Revenues:                                                   |                  | $900 million to $1 billion
|                                                            | Financial Print  |                            | $640 to $715 million
|                                                            | Globalization    |                            | $225 to $265 million
|                                                            | Corporate/ Other |                            | $40 to $50 million  
|Segment Profit:                                             |                  |                           
|                                                            | Financial Print  |                            | $70 to $95 million  
|                                                            | Globalization    |                            | $19 to $24 million  
|                                                            | Corporate/Other: |                            |                     
|                                                            |                  | Litigation Solutions       |                      | $5 to $8 million      
|                                                            |                  | Corporate Spending         |                      | $(17) to $(23) million
|                                                            |                  | Restructuring charges      |                      | $(3) to $(8) million  
|Depreciation and amortization                               |                  | $35 million               
|Interest expense                                            |                  | $5.5 million              
|Diluted earnings per share                                  |                  | $0.50 to $1.00            
|Diluted earnings per share, excluding restructuring charges |                  | $0.60 to $1.08            
|Diluted shares                                              |                  | 35,100 shares             
|Capital expenditures                                        |                  | $25 million               

Liquidity and Capital Resources


|                                                       |  |      |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|Liquidity and Cash Flow information:                   |  | 2004 |           |   | 2003 |   |           | 2002 | 
|                                                       |  |      |           |   |      |   |           |      | 
|Working capital                                        |  | $    | 158,021   |   |      | $ | 90,845    |      |  | $ | 82,339    |  
|Current ratio                                          |  |      | 2.00 to 1 |   |      |   | 1.51 to 1 |      |  |   | 1.46 to 1 |  
|Net cash provided by operating activities              |  | $    | 34,199    |   |      | $ | 20,249    |      |  | $ | 45,964    |  
|Net cash provided by (used in) investing activities    |  | $    | 126,390   |   |      | $ | (21,117   | )    |  | $ | (89,506   | )
|Net cash (used in) provided by financing activities    |  | $    | (97,784   | ) |      | $ | (10,782   | )    |  | $ | 22,769    |  
|Net cash (used in) provided by discontinued operations |  | $    | (18,593   | ) |      | $ | (4,131    | )    |  | $ | 25,885    |  
|Capital expenditures                                   |  | $    | 24,057    |   |      | $ | 22,073    |      |  | $ | 26,492    |  
|Proceeds from the sale of subsidiary                   |  | $    | 167,264   |   |      |   |          |      |  |   |          |  
|Acquisitions, net of cash acquired                     |  | $    | 3,500     |   |      |   |          |      |  | $ | 86,761    |  
|Average days sales outstanding                         |  |      | 66        |   |      |   | 67        |      |  |   | 70        |  



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Cash Flows






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Contractual Obligations, Commercial Commitments, and
Off-Balance Sheet Arrangements










|                                      |  |                      |         |  |      |   |        |      |  |   |        |  |  |      |        |  |      |   |         |            |  |   |        |  |  |   |         | 
|------------------------------------- |  | -------------------- | ------- |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  | ---- | - | ------- | ---------- |  | - | ------ |  |  | - | ------- | 
|                                      |  | Payments Due by Year |        
|                                      |  |                      |        
|Contractual Obligations               |  | Total                |         |  | 2005 |   |        | 2006 |  |   | 2007   |  |  | 2008 |        |  | 2009 |   |         | Thereafter | 
|                                      |  |                      |         |  |      |   |        |      |  |   |        |  |  |      |        |  |      |   |         |            | 
|Long-term debt obligations(1)         |  | $                    | 77,683  |  |      | $ | 782    |      |  | $ | 792    |  |  | $    | 548    |  |      | $ | 75,313  |            |  | $ | 248    |  |  |   |        | 
|Operating lease obligations(2)(3)     |  |                      | 291,335 |  |      |   | 30,684 |      |  |   | 32,015 |  |  |      | 28,169 |  |      |   | 23,616  |            |  |   | 17,453 |  |  | $ | 159,398 | 
|Capital lease obligations             |  |                      | 208     |  |      |   | 147    |      |  |   | 61     |  |  |      |       |  |      |   |        |            |  |   |       |  |  |   |        | 
|Synthetic lease obligation(4)         |  |                      | 12,276  |  |      |   | 2,455  |      |  |   | 2,455  |  |  |      | 7,366  |  |      |   |        |            |  |   |       |  |  |   |        | 
|Unconditional purchase obligations(5) |  |                      | 17,370  |  |      |   | 2,250  |      |  |   | 3,600  |  |  |      | 5,520  |  |      |   | 6,000   |            |  |   |       |  |  |   |        | 
|                                      |  |                      |         |  |      |   |        |      |  |   |        |  |  |      |        |  |      |   |         |            | 
|Total contractual cash obligations    |  | $                    | 398,872 |  |      | $ | 36,318 |      |  | $ | 38,923 |  |  | $    | 41,603 |  |      | $ | 104,929 |            |  | $ | 17,701 |  |  | $ | 159,398 | 
|                                      |  |                      |         |  |      |   |        |      |  |   |        |  |  |      |        |  |      |   |         |            | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The debt payment information presented above assumes that the
    Companys convertible subordinated debentures issued in
    September 2003 will either be redeemed by the Company or
    repurchased from the holders in October 2008, the earliest date
    upon which redemption or repurchase may occur. Refer to
    Note 12 to the Consolidated Financial Statements for
    additional information regarding the redemption and repurchase
    provisions of the debentures.

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The operating lease obligations shown in the table have not been
    reduced by minimum non-cancelable sublease rentals aggregating
    approximately $4.8 million. The Company remains secondarily
    liable under these leases in the event that the sub-lessee
    defaults under the sublease terms. The Company does not believe
    that material payments will be required as a result of the
    secondary liability provisions of the primary lease agreements.
|   
|(3) | The operating lease obligations shown in the table include the
    minimum annual rental commitments related to the 20-year lease
    entered into in February 2005 pertaining to the Companys
    relocation of its primary New York offices currently located at
    345 Hudson Street to 55 Water Street.                                                                                                                                                            
|   
|(4) | The synthetic lease payments indicated in the table assume that
    the Company would exercise its option to purchase the equipment
    at the end of the lease for approximately $6.3 million,
    which represents the estimated residual value of the equipment
    at the end of the lease.                                                                                                                                                                          
|   
|(5) | Unconditional purchase obligations primarily represent
    commitments for services ($16,600) and capital expenditures
    ($770).                                                                                                                                                                                                                                                                                                                                       









Critical Accounting Policies and Estimates




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Accounting for Goodwill and Intangible Assets










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Revenue Recognition


Allowance for Doubtful Accounts


Accounting for Income Taxes


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Accounting for Pensions






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Restructuring Accrual




Recent Accounting Pronouncements










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|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk



Interest Rate Risk






Foreign Exchange Rates




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Equity Price Risk




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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




















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BOWNE & CO., INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                             |                                                                           |                                              |          |          |      |   |          |          |   |   |          |          |  
|------------------------------------------------------------ | ------------------------------------------------------------------------- | -------------------------------------------- | -------- | -------- | ---- | - | -------- | -------- | - | - | -------- | -------- | -
|                                                             |                                                                           | Year Ended December 31,                      |         
|                                                             |                                                                           |                                              |         
|                                                             |                                                                           |                                              |          | Restated |      |   | Restated |         
|                                                             |                                                                           | 2004                                         |          |          | 2003 |   |          | 2002     |  
|                                                             |                                                                           |                                              |          |          |      |   |          |          |  
|                                                             |                                                                           | (In thousands, except per share information) |         
|Revenue                                                      |                                                                           | $                                            | 899,011  |          |      | $ | 847,636  |          |   | $ | 778,865  |         
|Expenses:                                                    |                                                                           |                                              |          |          |      |   |          |          |   |   |          |         
|                                                             | Cost of revenue                                                           |                                              |          | (574,264 | )    |   |          | (536,166 | ) |   |          | (485,176 | )
|                                                             | Selling and administrative                                                |                                              |          | (266,034 | )    |   |          | (247,977 | ) |   |          | (247,705 | )
|                                                             | Depreciation                                                              |                                              |          | (32,121  | )    |   |          | (35,466  | ) |   |          | (35,684  | )
|                                                             | Amortization                                                              |                                              |          | (2,713   | )    |   |          | (2,478   | ) |   |          | (874     | )
|                                                             | Restructuring charges, integration costs and asset impairment
    charges |                                              |          | (14,644  | )    |   |          | (23,076  | ) |   |          | (17,658  | )
|                                                             | Gain on sale of certain printing assets                                   |                                              |          |         |      |   |          |         |   |   |          | 15,369   |  
|                                                             | Gain on sale of building                                                  |                                              |          | 896      |      |   |          |         |   |   |          | 4,889    |  
|                                                             |                                                                           |                                              |          |          |      |   |          |          |  
|                                                             |                                                                           |                                              | (888,880 | )        |      |   | (845,163 | )        |   |   | (766,839 | )       
|                                                             |                                                                           |                                              |          |          |      |   |          |          |  
|Operating income                                             |                                                                           |                                              | 10,131   |          |      |   | 2,473    |          |   |   | 12,026   |         
|                                                             | Interest expense                                                          |                                              |          | (10,709  | )    |   |          | (11,389  | ) |   |          | (7,119   | )
|                                                             | Loss on extinguishment of debt                                            |                                              |          | (8,815   | )    |   |          |         |   |   |          |         |  
|                                                             | Other expense, net                                                        |                                              |          | (118     | )    |   |          | (1,367   | ) |   |          | (1,427   | )
|                                                             |                                                                           |                                              |          |          |      |   |          |          |  
|(Loss) income from continuing operations before income taxes |                                                                           |                                              | (9,511   | )        |      |   | (10,283  | )        |   |   | 3,480    |         
|                                                             | Income tax benefit (expense)                                              |                                              |          | 1,313    |      |   |          | 729      |   |   |          | (6,482   | )
|                                                             |                                                                           |                                              |          |          |      |   |          |          |  
|Loss from continuing operations                              |                                                                           |                                              | (8,198   | )        |      |   | (9,554   | )        |   |   | (3,002   | )       
|Discontinued operations:                                     |                                                                           |                                              |          |          |      |   |          |          |   |   |          |         
|                                                             | Income from discontinued operations, net of tax                           |                                              |          | 4,150    |      |   |          | 1,805    |   |   |          | 4,286    |  
|                                                             | Gain on sale of discontinued operations, net of tax                       |                                              |          | 31,552   |      |   |          |         |   |   |          |         |  
|                                                             |                                                                           |                                              |          |          |      |   |          |          |  
|Net income from discontinued operations                      |                                                                           |                                              | 35,702   |          |      |   | 1,805    |          |   |   | 4,286    |         
|                                                             |                                                                           |                                              |          |          |      |   |          |          |  
|Net income (loss)                                            |                                                                           | $                                            | 27,504   |          |      | $ | (7,749   | )        |   | $ | 1,284    |         
|                                                             |                                                                           |                                              |          |          |      |   |          |          |  
|Loss per share from continuing operations:                   |                                                                           |                                              |          |          |      |   |          |          |   |   |          |         
|                                                             | Basic                                                                     |                                              | $        | (.23     | )    |   | $        | (.28     | ) |   | $        | (.09     | )
|                                                             | Diluted                                                                   |                                              | $        | (.23     | )    |   | $        | (.28     | ) |   | $        | (.09     | )
|Earnings per share from discontinued operations:             |                                                                           |                                              |          |          |      |   |          |          |   |   |          |         
|                                                             | Basic                                                                     |                                              | $        | 1.00     |      |   | $        | .05      |   |   | $        | .13      |  
|                                                             | Diluted                                                                   |                                              | $        | 1.00     |      |   | $        | .05      |   |   | $        | .13      |  
|Total earnings (loss) per share:                             |                                                                           |                                              |          |          |      |   |          |          |   |   |          |         
|                                                             | Basic                                                                     |                                              | $        | .77      |      |   | $        | (.23     | ) |   | $        | .04      |  
|                                                             | Diluted                                                                   |                                              | $        | .77      |      |   | $        | (.23     | ) |   | $        | .04      |  



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BOWNE & CO., INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |         |         |         |         |         | 
|--------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------------------------ | -------- | ------- | ------- | ------- | ------- | ------- | ------- | 
|                                                                                                                |                                                                                                    | December 31,                                                                     |                                           
|                                                                                                                |                                                                                                    |                                                                                  |                                           
|                                                                                                                |                                                                                                    |                                                                                  |                                            | Restated |        
|                                                                                                                |                                                                                                    | 2004                                                                             |                                            |          | 2003    |        
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|                                                                                                                |                                                                                                    | (In thousands, except                                                            |                                           
|                                                                                                                |                                                                                                    | share information)                                                               |                                           
|ASSETS                                                                                                         
|Current assets:                                                                                                 |                                                                                                    |                                                                                  |                                            |          |         |         |         |        
|                                                                                                                | Cash and cash equivalents                                                                          |                                                                                  | $                                          | 61,222   |         |         | $       | 17,010  |        
|                                                                                                                | Marketable securities                                                                              |                                                                                  |                                            | 20,378   |         |         |         | 77      |        
|                                                                                                                | Accounts receivable, less allowance for doubtful accounts of
    $14,392 (2004) and $14,597 (2003) |                                                                                  |                                            | 177,180  |         |         |         | 167,168 |        
|                                                                                                                | Inventories                                                                                        |                                                                                  |                                            | 20,321   |         |         |         | 19,764  |        
|                                                                                                                | Prepaid expenses and other current assets                                                          |                                                                                  |                                            | 36,525   |         |         |         | 33,220  |        
|                                                                                                                | Assets held for sale                                                                               |                                                                                  |                                            |         |         |         |         | 33,150  |        
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|                                                                                                                |                                                                                                    | Total current assets                                                             |                                            |          | 315,626 |         |         |         | 270,389 |        
|Property, plant and equipment at cost, less accumulated
    depreciation of $299,140 (2004) and $276,717 (2003) |                                                                                                    |                                                                                  | 116,021                                    |          |         |         | 129,886 |        
|Other noncurrent assets:                                                                                        |                                                                                                    |                                                                                  |                                            |          |         |         |         |        
|                                                                                                                | Goodwill, less accumulated amortization of $20,604
    (2004) and $20,138 (2003)                   |                                                                                  |                                            | 171,326  |         |         |         | 162,590 |        
|                                                                                                                | Intangible assets, less accumulated amortization of $6,579
    (2004) and $3,487 (2003)            |                                                                                  |                                            | 26,426   |         |         |         | 31,379  |        
|                                                                                                                | Deferred income taxes                                                                              |                                                                                  |                                            | 9,403    |         |         |         | 9,235   |        
|                                                                                                                | Other                                                                                              |                                                                                  |                                            | 15,807   |         |         |         | 18,502  |        
|                                                                                                                | Assets held for sale, noncurrent                                                                   |                                                                                  |                                            |         |         |         |         | 106,898 |        
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|                                                                                                                |                                                                                                    |                                                                                  | Total assets                               |          | $       | 654,609 |         |         | $       | 728,879 | 
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|                                                                                                               
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                           
|Current liabilities:                                                                                            |                                                                                                    |                                                                                  |                                            |          |         |         |         |        
|                                                                                                                | Current portion of long-term debt and other short-term borrowings                                  |                                                                                  | $                                          | 929      |         |         | $       | 770     |        
|                                                                                                                | Accounts payable                                                                                   |                                                                                  |                                            | 44,094   |         |         |         | 38,475  |        
|                                                                                                                | Employee compensation and benefits                                                                 |                                                                                  |                                            | 57,158   |         |         |         | 65,235  |        
|                                                                                                                | Accrued expenses and other obligations                                                             |                                                                                  |                                            | 55,424   |         |         |         | 49,607  |        
|                                                                                                                | Liabilities held for sale                                                                          |                                                                                  |                                            |         |         |         |         | 25,457  |        
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|                                                                                                                |                                                                                                    |                                                                                  | Total current liabilities                  |          |         | 157,605 |         |         |         | 179,544 | 
|Other liabilities:                                                                                              |                                                                                                    |                                                                                  |                                            |          |         |         |         |        
|                                                                                                                | Long-term debt  net of current portion                                                            |                                                                                  |                                            | 76,962   |         |         |         | 139,828 |        
|                                                                                                                | Deferred employee compensation and other                                                           |                                                                                  |                                            | 47,245   |         |         |         | 54,053  |        
|                                                                                                                | Liabilities held for sale, noncurrent                                                              |                                                                                  |                                            |         |         |         |         | 3,882   |        
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|                                                                                                                |                                                                                                    |                                                                                  | Total liabilities                          |          |         | 281,812 |         |         |         | 377,307 | 
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|Commitments and contingencies                                                                                   |                                                                                                    |                                                                                  |                                            |          |         |         |         |        
|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 and outstanding 41,444,817 shares (2004) and
    40,334,233 shares (2003) |                                            |          | 414     |         |         |         | 403     |        
|                                                                                                                | Additional paid-in capital                                                                         |                                                                                  |                                            | 75,368   |         |         |         | 56,882  |        
|                                                                                                                | Retained earnings                                                                                  |                                                                                  |                                            | 345,448  |         |         |         | 325,677 |        
|                                                                                                                | Treasury stock, at cost 7,781,468 shares (2004) and
    6,296,750 shares (2003)                    |                                                                                  |                                            | (85,620  | )       |         |         | (55,534 | )      
|                                                                                                                | Accumulated other comprehensive income, net                                                        |                                                                                  |                                            | 37,187   |         |         |         | 24,144  |        
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|                                                                                                                |                                                                                                    |                                                                                  | Total stockholders equity                 |          |         | 372,797 |         |         |         | 351,572 | 
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        
|                                                                                                                |                                                                                                    |                                                                                  | Total liabilities and stockholders equity |          | $       | 654,609 |         |         | $       | 728,879 | 
|                                                                                                                |                                                                                                    |                                                                                  |                                            |          |         |        



39



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##### Table of Contents



BOWNE & CO., INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |   |   |          |         |  
|----------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------- | -------- | -------- | ---- | - | -------- | ------- | - | - | -------- | ------- | -
|                                                                                                                              |                                                   | Year Ended December 31, |         
|                                                                                                                              |                                                   |                         |         
|                                                                                                                              |                                                   |                         |          | Restated |      |   | Restated |        
|                                                                                                                              |                                                   | 2004                    |          |          | 2003 |   |          | 2002    |  
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  
|                                                                                                                              |                                                   | (In thousands)          |         
|Cash flows from operating activities:                                                                                         |                                                   |                         |          |          |      |   |          |         |   |   |          |        
|Loss from continuing operations                                                                                               |                                                   | $                       | (8,198   | )        |      | $ | (9,554   | )       |   | $ | (3,002   | )      
|Adjustments to reconcile loss from continuing operations to net
    cash provided by operating activities:                    |                                                   |                         |          |          |      |   |          |         |   |   |          |        
|                                                                                                                              | Depreciation                                      |                         |          | 32,121   |      |   |          | 35,466  |   |   |          | 35,684  |  
|                                                                                                                              | Amortization                                      |                         |          | 2,713    |      |   |          | 2,478   |   |   |          | 874     |  
|                                                                                                                              | Asset impairment charges                          |                         |          | 518      |      |   |          | 2,198   |   |   |          | 1,575   |  
|                                                                                                                              | Gain on sale of building                          |                         |          | (896     | )    |   |          |        |   |   |          | (4,889  | )
|                                                                                                                              | Loss on extinguishment of debt                    |                         |          | 8,815    |      |   |          |        |   |   |          |        |  
|                                                                                                                              | Provision for doubtful accounts                   |                         |          | 2,026    |      |   |          | 4,284   |   |   |          | 6,697   |  
|                                                                                                                              | Gain on sale of certain printing assets           |                         |          |         |      |   |          |        |   |   |          | (15,369 | )
|                                                                                                                              | Loss on disposal of fixed assets                  |                         |          | 469      |      |   |          | 556     |   |   |          | 935     |  
|                                                                                                                              | Gain on sales of securities and other investments |                         |          |         |      |   |          | (1,022  | ) |   |          |        |  
|                                                                                                                              | Provision for deferred employee compensation      |                         |          | 13,063   |      |   |          | 14,340  |   |   |          | 11,085  |  
|                                                                                                                              | Deferred income taxes                             |                         |          | 2,825    |      |   |          | (8,502  | ) |   |          | (996    | )
|                                                                                                                              | Other                                             |                         |          | 2,285    |      |   |          | 2,087   |   |   |          | (5,650  | )
|Changes in other assets and liabilities, net of acquisitions,
    discontinued operations, and certain non-cash transactions: |                                                   |                         |          |          |      |   |          |         |   |   |          |        
|                                                                                                                              | Accounts receivable                               |                         |          | (9,808   | )    |   |          | (19,023 | ) |   |          | 10,479  |  
|                                                                                                                              | Inventories                                       |                         |          | (557     | )    |   |          | (932    | ) |   |          | (409    | )
|                                                                                                                              | Prepaid expenses and other current assets         |                         |          | (2,156   | )    |   |          | 5,195   |   |   |          | 5,268   |  
|                                                                                                                              | Accounts payable                                  |                         |          | 5,600    |      |   |          | (6,467  | ) |   |          | (3,466  | )
|                                                                                                                              | Employee compensation and benefits                |                         |          | (20,053  | )    |   |          | 7,247   |   |   |          | (6,560  | )
|                                                                                                                              | Accrued expenses and other obligations            |                         |          | 5,432    |      |   |          | (8,102  | ) |   |          | 13,708  |  
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  
|Net cash provided by operating activities                                                                                     |                                                   |                         | 34,199   |          |      |   | 20,249   |         |   |   | 45,964   |        
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  
|Cash flows from investing activities:                                                                                         |                                                   |                         |          |          |      |   |          |         |   |   |          |        
|Purchase of property, plant and equipment                                                                                     |                                                   |                         | (24,057  | )        |      |   | (22,073  | )       |   |   | (26,492  | )      
|Purchase of marketable securities                                                                                             |                                                   |                         | (20,280  | )        |      |   |         |         |   |   |         |        
|Proceeds from the sale of fixed assets                                                                                        |                                                   |                         | 232      |          |      |   | 632      |         |   |   | 452      |        
|Proceeds from the sale of subsidiary, net of costs                                                                            |                                                   |                         | 167,264  |          |      |   |         |         |   |   |         |        
|Acquisition of businesses, net of cash acquired                                                                               |                                                   |                         | (3,500   | )        |      |   |         |         |   |   | (86,761  | )      
|Proceeds from the sale of certain assets                                                                                      |                                                   |                         |         |          |      |   |         |         |   |   | 15,000   |        
|Proceeds from sale of building                                                                                                |                                                   |                         | 6,731    |          |      |   |         |         |   |   | 8,295    |        
|Proceeds from sales of marketable securities and other
    investments                                                        |                                                   |                         |         |          |      |   | 324      |         |   |   |         |        
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  
|Net cash provided by (used in) investing activities                                                                           |                                                   |                         | 126,390  |          |      |   | (21,117  | )       |   |   | (89,506  | )      
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  
|Cash flows from financing activities:                                                                                         |                                                   |                         |          |          |      |   |          |         |   |   |          |        
|Proceeds from borrowings                                                                                                      |                                                   |                         | 150,620  |          |      |   | 313,374  |         |   |   | 368,244  |        
|Payment of debt                                                                                                               |                                                   |                         | (222,817 | )        |      |   | (321,381 | )       |   |   | (340,951 | )      
|Proceeds from stock options exercised                                                                                         |                                                   |                         | 22,326   |          |      |   | 4,551    |         |   |   | 2,838    |        
|Payment of dividends                                                                                                          |                                                   |                         | (7,733   | )        |      |   | (7,416   | )       |   |   | (7,362   | )      
|Purchase of treasury stock                                                                                                    |                                                   |                         | (40,180  | )        |      |   |         |         |   |   |         |        
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  
|Net cash (used in) provided by financing activities                                                                           |                                                   |                         | (97,784  | )        |      |   | (10,872  | )       |   |   | 22,769   |        
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  
|Net cash (used in) provided by discontinued operations                                                                        |                                                   |                         | (18,593  | )        |      |   | (4,131   | )       |   |   | 25,885   |        
|Net increase (decrease) in cash and cash equivalents                                                                          |                                                   |                         | 44,212   |          |      |   | (15,871  | )       |   |   | 5,112    |        
|Cash and Cash Equivalents  Beginning of year                                                                                 |                                                   |                         | 17,010   |          |      |   | 32,881   |         |   |   | 27,769   |        
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  
|Cash and Cash Equivalents  End of year                                                                                       |                                                   | $                       | 61,222   |          |      | $ | 17,010   |         |   | $ | 32,881   |        
|                                                                                                                              |                                                   |                         |          |          |      |   |          |         |  



40



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##### Table of Contents



BOWNE & CO., INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   |         |        |  
|--------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | -------------------------------------------- | --- | ----------- | ------- | - | ------ | -------- | ------------- | - | ------- | - |  | -------- | ------ | ------ | ----- | - | ------- | - |  | - | ------- | ------ | -
|                                                                                                                      |                                                         | Year Ended December 31, 2004, 2003, and 2002 |    
|                                                                                                                      |                                                         |                                              |    
|                                                                                                                      |                                                         |                                              |     | Accumulated |         |   |       
|                                                                                                                      |                                                         |                                              |     | Other       |         |   |       
|                                                                                                                      |                                                         |                                              |     | Additional  |         |   |        |          | Comprehensive |   |         |  
|                                                                                                                      |                                                         | Common                                       |     |             | Paid-In |   |        | Retained |               |   | Income  |   |  | Treasury |        |        |      
|                                                                                                                      |                                                         | Stock                                        |     |             | Capital |   |        | Earnings |               |   | (Loss)  |   |  | Stock    |        |        | Total |  
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|                                                                                                                      |                                                         | (In thousands, except per share information) |    
|Balance at January 1, 2002                                                                                            |                                                         | $                                            | 398 |             |         | $ | 50,879 |          |               | $ | 346,920 |   |  | $        | (9,260 | )      |       | $ | (58,908 | ) |  | $ | 330,029 |       
|Comprehensive income (loss):                                                                                          |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   |         |       
|Net income (restated)                                                                                                 |                                                         |                                              |     |             |         |   |        |          |               |   | 1,284   |   |  |          |        |        |       |   |         |   |  |   | 1,284   |       
|Foreign currency translation adjustment (restated)                                                                    |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          | 12,227 |        |       |   |         |   |  |   | 12,227  |       
|Minimum pension liability adjustment (net of tax effect)                                                              |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          | (1,994 | )      |       |   |         |   |  |   | (1,994  | )     
|Unrealized losses on securities:                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   |         |       
|                                                                                                                      | Unrealized holding losses arising during the period     |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        | (1,338 | )     |   |         |   |  |   |         | (1,338 | )
|                                                                                                                      | Income tax benefit related to unrealized holding losses |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        | 535    |       |   |         |   |  |   |         | 535    |  
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Comprehensive income (restated)                                                                                       |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   | 10,714  |       
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Cash dividends ($.22 per share)                                                                                       |                                                         |                                              |     |             |         |   |        |          |               |   | (7,362  | ) |  |          |        |        |       |   |         |   |  |   | (7,362  | )     
|Noncash stock compensation                                                                                            |                                                         |                                              |     |             |         |   | 642    |          |               |   |         |   |  |          |        |        |       |   | 513     |   |  |   | 1,155   |       
|Exercise of stock options                                                                                             |                                                         |                                              | 3   |             |         |   | 2,360  |          |               |   |         |   |  |          |        |        |       |   | 475     |   |  |   | 2,838   |       
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Balance at December 31, 2002 (restated)                                                                               |                                                         | $                                            | 401 |             |         | $ | 53,881 |          |               | $ | 340,842 |   |  | $        | 170    |        |       | $ | (57,920 | ) |  | $ | 337,374 |       
|Comprehensive income (loss):                                                                                          |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   |         |       
|Net loss (restated)                                                                                                   |                                                         |                                              |     |             |         |   |        |          |               |   | (7,749  | ) |  |          |        |        |       |   |         |   |  |   | (7,749  | )     
|Foreign currency translation adjustment (restated)                                                                    |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          | 24,961 |        |       |   |         |   |  |   | 24,961  |       
|Minimum pension liability adjustment (net of tax effect)                                                              |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          | (441   | )      |       |   |         |   |  |   | (441    | )     
|Unrealized gains on securities:                                                                                       |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   |         |       
|                                                                                                                      | Unrealized holding gains arising during the period      |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        | 25     |       |   |         |   |  |   |         | 25     |  
|                                                                                                                      | Income tax expense related to unrealized holding gains  |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        | (11    | )     |   |         |   |  |   |         | (11    | )
|Reclassification adjustment for realized holding gains on
    certain investments during the year (net of tax effect) |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          | (560   | )      |       |   |         |   |  |   | (560    | )     
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Comprehensive income (restated)                                                                                       |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   | 16,225  |       
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Cash dividends ($.22 per share)                                                                                       |                                                         |                                              |     |             |         |   |        |          |               |   | (7,416  | ) |  |          |        |        |       |   |         |   |  |   | (7,416  | )     
|Noncash stock compensation                                                                                            |                                                         |                                              |     |             |         |   | 649    |          |               |   |         |   |  |          |        |        |       |   | 189     |   |  |   | 838     |       
|Exercise of stock options                                                                                             |                                                         |                                              | 2   |             |         |   | 2,352  |          |               |   |         |   |  |          |        |        |       |   | 2,197   |   |  |   | 4,551   |       
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Balance at December 31, 2003 (restated)                                                                               |                                                         | $                                            | 403 |             |         | $ | 56,882 |          |               | $ | 325,677 |   |  | $        | 24,144 |        |       | $ | (55,534 | ) |  | $ | 351,572 |       
|Comprehensive income (loss):                                                                                          |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   |         |       
|Net income                                                                                                            |                                                         |                                              |     |             |         |   |        |          |               |   | 27,504  |   |  |          |        |        |       |   |         |   |  |   | 27,504  |       
|Foreign currency translation adjustment                                                                               |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          | 13,471 |        |       |   |         |   |  |   | 13,471  |       
|Minimum pension liability adjustment (net of tax effect)                                                              |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          | (435   | )      |       |   |         |   |  |   | (435    | )     
|Unrealized gains on securities:                                                                                       |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   |         |       
|                                                                                                                      | Unrealized holding gains arising during the period      |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        | 12     |       |   |         |   |  |   |         | 12     |  
|                                                                                                                      | Income tax expense related to unrealized holding gains  |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        | (5     | )     |   |         |   |  |   |         | (5     | )
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Comprehensive income                                                                                                  |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   | 40,547  |       
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Cash dividends ($.22 per share)                                                                                       |                                                         |                                              |     |             |         |   |        |          |               |   | (7,733  | ) |  |          |        |        |       |   |         |   |  |   | (7,733  | )     
|Purchase of treasury stock                                                                                            |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |   | (40,180 | ) |  |   | (40,180 | )     
|Noncash stock compensation                                                                                            |                                                         |                                              |     |             |         |   | 1,001  |          |               |   |         |   |  |          |        |        |       |   | 2,037   |   |  |   | 3,038   |       
|Exercise of stock options                                                                                             |                                                         |                                              | 11  |             |         |   | 14,258 |          |               |   |         |   |  |          |        |        |       |   | 8,057   |   |  |   | 22,326  |       
|Tax benefit of stock option exercises                                                                                 |                                                         |                                              |     |             |         |   | 3,227  |          |               |   |         |   |  |          |        |        |       |   |         |   |  |   | 3,227   |       
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  
|Balance at December 31, 2004                                                                                          |                                                         | $                                            | 414 |             |         | $ | 75,368 |          |               | $ | 345,448 |   |  | $        | 37,187 |        |       | $ | (85,620 | ) |  | $ | 372,797 |       
|                                                                                                                      |                                                         |                                              |     |             |         |   |        |          |               |   |         |   |  |          |        |        |       |  



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES


(In thousands, except share and per share information and
where noted)




|         |                                           
|-------- | ------------------------------------------
|Note 1  | Summary of Significant Accounting Policies





| |                            
| | ---------------------------
| | Principles of Consolidation





| |                    
| | -------------------
| | Revenue Recognition





| |            
| | -----------
| | Inventories





| |                              
| | -----------------------------
| | Property, Plant and Equipment



|                                 |                               |              |         |          |         |   |         |          |         | 
|-------------------------------- | ----------------------------- | ------------ | ------- | -------- | ------- | - | ------- | -------- | ------- | 
|                                 |                               | December 31, |        
|                                 |                               |              |        
|                                 |                               |              |         | Restated |        
|                                 |                               | 2004         |         |          | 2003    |  
|                                 |                               |              |         |          |         |  
|Land and buildings               |                               | $            | 69,106  |          |         | $ | 73,351  |         
|Machinery and plant equipment    |                               |              | 71,050  |          |         |   | 71,621  |         
|Computer equipment and software  |                               |              | 174,277 |          |         |   | 163,509 |         
|Furniture, fixtures and vehicles |                               |              | 40,920  |          |         |   | 40,924  |         
|Leasehold improvements           |                               |              | 59,808  |          |         |   | 57,198  |         
|                                 |                               |              |         |          |         |  
|                                 |                               |              | 415,161 |          |         |   | 406,603 |         
|                                 | Less accumulated depreciation |              |         | (299,140 | )       |   |         | (276,717 | )      
|                                 |                               |              |         |          |         |  
|                                 |                               | Net          |         | $        | 116,021 |   |         | $        | 129,886 | 
|                                 |                               |              |         |          |         |  

42



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|                                |  |                                        
|------------------------------- |  | ---------------------------------------
|Buildings                       |  | 10-40 years                            
|Machinery and plant equipment   |  | 3-12 1/2 years                         
|Computer equipment and software |  | 2-5 years                              
|Furniture and fixtures          |  | 3-12 1/2 years                         
|Leasehold improvements          |  | Shorter of useful life or term of lease





| |                  
| | -----------------
| | Intangible Assets



|                           |  |           
|-------------------------- |  | ----------
|Customer relationships     |  | 5-15 years
|Software license agreement |  | 5 years   
|Covenants not-to-compete   |  | 5-7 years 
|Proprietary technology     |  | 3 years   



43



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




| |                         
| | ------------------------
| | Stock-Based Compensation

Accounting for Stock Issued to
Employees,


|                                                       |                                           |                                                                                                                                                               |   |          |        |   |          |         |        |   |   |        |        |  
|------------------------------------------------------ | ----------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | ------ | - | -------- | ------- | ------ | - | - | ------ | ------ | -
|                                                       |                                           | Years Ended December 31,                                                                                                                                      |  
|                                                       |                                           |                                                                                                                                                               |  
|                                                       |                                           |                                                                                                                                                               |   | Restated |        |   | Restated |        
|                                                       |                                           | 2004                                                                                                                                                          |   |          | 2003   |   |          | 2002    |       
|                                                       |                                           |                                                                                                                                                               |   |          |        |   |          |         |       
|Loss from continuing operations:                       |                                           |                                                                                                                                                               |   |          |        |   |          |         |        |   |   |       
|                                                       | As reported                               |                                                                                                                                                               | $ | (8,198   | )      |   | $        | (9,554  | )      |   | $ | (3,002 | )     
|                                                       |                                           | Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related pro forma tax effects |   |          | (2,100 | ) |          |         | (2,113 | ) |   |        | (4,002 | )
|                                                       |                                           |                                                                                                                                                               |   |          |        |   |          |         |       
|                                                       | Pro forma loss from continuing operations |                                                                                                                                                               | $ | (10,298  | )      |   | $        | (11,667 | )      |   | $ | (7,004 | )     
|                                                       |                                           |                                                                                                                                                               |   |          |        |   |          |         |       
|As reported loss per share from continuing operations: |                                           |                                                                                                                                                               |   |          |        |   |          |         |        |   |   |       
|                                                       | Basic                                     |                                                                                                                                                               | $ | (.23     | )      |   | $        | (.28    | )      |   | $ | (.09   | )     
|                                                       | Diluted                                   |                                                                                                                                                               | $ | (.23     | )      |   | $        | (.28    | )      |   | $ | (.09   | )     
|Pro forma loss per share from continuing operations:   |                                           |                                                                                                                                                               |   |          |        |   |          |         |        |   |   |       
|                                                       | Basic                                     |                                                                                                                                                               | $ | (.29     | )      |   | $        | (.35    | )      |   | $ | (.21   | )     
|                                                       | Diluted                                   |                                                                                                                                                               | $ | (.29     | )      |   | $        | (.35    | )      |   | $ | (.21   | )     

|                                                             |                                               |                                                                                                                                                               |   |          |      |   |          |       |      |   |   |       |      |  
|------------------------------------------------------------ | --------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | ---- | - | -------- | ----- | ---- | - | - | ----- | ---- | -
|                                                             |                                               | Years Ended December 31,                                                                                                                                      |  
|                                                             |                                               |                                                                                                                                                               |  
|                                                             |                                               |                                                                                                                                                               |   | Restated |      |   | Restated |      
|                                                             |                                               | 2004                                                                                                                                                          |   |          | 2003 |   |          | 2002  |     
|                                                             |                                               |                                                                                                                                                               |   |          |      |   |          |       |     
|Net income from discontinued operations:                     |                                               |                                                                                                                                                               |   |          |      |   |          |       |      |   |   |      
|                                                             | As reported                                   |                                                                                                                                                               | $ | 35,702   |      |   | $        | 1,805 |      |   | $ | 4,286 |     
|                                                             |                                               | Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related pro forma tax effects |   |          | (237 | ) |          |       | (178 | ) |   |       | (313 | )
|                                                             |                                               |                                                                                                                                                               |   |          |      |   |          |       |     
|                                                             | Pro forma income from discontinued operations |                                                                                                                                                               | $ | 35,465   |      |   | $        | 1,627 |      |   | $ | 3,973 |     
|                                                             |                                               |                                                                                                                                                               |   |          |      |   |          |       |     
|As reported earnings per share from discontinued operations: |                                               |                                                                                                                                                               |   |          |      |   |          |       |      |   |   |      
|                                                             | Basic                                         |                                                                                                                                                               | $ | 1.00     |      |   | $        | .05   |      |   | $ | .13   |     
|                                                             | Diluted                                       |                                                                                                                                                               | $ | 1.00     |      |   | $        | .05   |      |   | $ | .13   |     
|Pro forma earnings per share from discontinued operations:   |                                               |                                                                                                                                                               |   |          |      |   |          |       |      |   |   |      
|                                                             | Basic                                         |                                                                                                                                                               | $ | .99      |      |   | $        | .05   |      |   | $ | .12   |     
|                                                             | Diluted                                       |                                                                                                                                                               | $ | .99      |      |   | $        | .05   |      |   | $ | .12   |     

44



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)


|                                       |                             |                                                                                                                                                               |   |          |        |   |          |         |        |   |   |        |        |  
|-------------------------------------- | --------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | ------ | - | -------- | ------- | ------ | - | - | ------ | ------ | -
|                                       |                             | Years Ended December 31,                                                                                                                                      |  
|                                       |                             |                                                                                                                                                               |  
|                                       |                             |                                                                                                                                                               |   | Restated |        |   | Restated |        
|                                       |                             | 2004                                                                                                                                                          |   |          | 2003   |   |          | 2002    |       
|                                       |                             |                                                                                                                                                               |   |          |        |   |          |         |       
|Net income (loss):                     |                             |                                                                                                                                                               |   |          |        |   |          |         |        |   |   |       
|                                       | As reported                 |                                                                                                                                                               | $ | 27,504   |        |   | $        | (7,749  | )      |   | $ | 1,284  |       
|                                       |                             | Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related pro forma tax effects |   |          | (2,337 | ) |          |         | (2,291 | ) |   |        | (4,315 | )
|                                       |                             |                                                                                                                                                               |   |          |        |   |          |         |       
|                                       | Pro forma net income (loss) |                                                                                                                                                               | $ | 25,167   |        |   | $        | (10,040 | )      |   | $ | (3,031 | )     
|                                       |                             |                                                                                                                                                               |   |          |        |   |          |         |       
|As reported earnings (loss) per share: |                             |                                                                                                                                                               |   |          |        |   |          |         |        |   |   |       
|                                       | Basic                       |                                                                                                                                                               | $ | .77      |        |   | $        | (.23    | )      |   | $ | .04    |       
|                                       | Diluted                     |                                                                                                                                                               | $ | .77      |        |   | $        | (.23    | )      |   | $ | .04    |       
|Pro forma earnings (loss) per share:   |                             |                                                                                                                                                               |   |          |        |   |          |         |        |   |   |       
|                                       | Basic                       |                                                                                                                                                               | $ | .70      |        |   | $        | (.30    | )      |   | $ | (.09   | )     
|                                       | Diluted                     |                                                                                                                                                               | $ | .70      |        |   | $        | (.30    | )      |   | $ | (.09   | )     



|                                         |  |        |         |   |        |   |         |        |  |   |         |  
|---------------------------------------- |  | ------ | ------- | - | ------ | - | ------- | ------ |  | - | ------- | -
|                                         |  | 2004   |         |   | 2003   |   |         | 2002   | 
|Stock options from continuing operations |  | Grants |         |   | Grants |   |         | Grants | 
|                                         |  |        |         |   |        |   |         |        | 
|Expected dividend yield                  |  |        | 1.4     | % |        |   | 1.6     | %      |  |   | 2.0     | %
|Expected stock price volatility          |  |        | 34.9    | % |        |   | 34.2    | %      |  |   | 40.9    | %
|Risk-free interest rate                  |  |        | 3.6     | % |        |   | 2.5     | %      |  |   | 2.2     | %
|Expected life of options                 |  |        | 5 years |   |        |   | 3 years |        |  |   | 3 years |  
|Weighted-average fair value              |  | $      | 4.66    |   |        | $ | 3.03    |        |  | $ | 2.66    |  

|                                           |  |        |         |   |        |   |         |        |  |   |         |  
|------------------------------------------ |  | ------ | ------- | - | ------ | - | ------- | ------ |  | - | ------- | -
|                                           |  | 2004   |         |   | 2003   |   |         | 2002   | 
|Stock options from discontinued operations |  | Grants |         |   | Grants |   |         | Grants | 
|                                           |  |        |         |   |        |   |         |        | 
|Expected dividend yield                    |  |        | 1.4     | % |        |   | 1.6     | %      |  |   | 2.0     | %
|Expected stock price volatility            |  |        | 31.8    | % |        |   | 33.7    | %      |  |   | 41.2    | %
|Risk-free interest rate                    |  |        | 2.8     | % |        |   | 2.3     | %      |  |   | 2.4     | %
|Expected life of options                   |  |        | 3 years |   |        |   | 3 years |        |  |   | 3 years |  
|Weighted-average fair value                |  | $      | 3.30    |   |        | $ | 2.88    |        |  | $ | 2.83    |  



45



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




| |             
| | ------------
| | Income Taxes





| |                          
| | -------------------------
| | Earnings (Loss) Per Share





|                                                                        |  |                         |            |  |      |  |            |      |  |  |            | 
|----------------------------------------------------------------------- |  | ----------------------- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                                                        |  | Year Ended December 31, |           
|                                                                        |  |                         |           
|                                                                        |  | 2004                    |            |  | 2003 |  |            | 2002 | 
|                                                                        |  |                         |            |  |      |  |            |      | 
|Average shares outstanding  basic shares                               |  |                         | 35,897,782 |  |      |  | 33,735,795 |      |  |  | 33,472,462 | 
|Potential dilutive effect of stock options and deferred stock
    units |  |                         | 897,346    |  |      |  | 1,411,159  |      |  |  | 1,204,378  | 
|                                                                        |  |                         |            |  |      |  |            |      | 
|Average shares outstanding  diluted shares                             |  |                         | 36,795,128 |  |      |  | 35,146,954 |      |  |  | 34,676,840 | 
|                                                                        |  |                         |            |  |      |  |            |      | 



| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments



46



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)






| |                 
| | ----------------
| | Use of Estimates





| |                     
| | --------------------
| | Comprehensive Income





| |                    
| | -------------------
| | Segment Information





| |                  
| | -----------------
| | Reclassifications





| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements





47



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)








Note 2  Restatement of 2003 and 2002
Financial Results




48



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|        |                        
|------- | -----------------------
|Note 3. | Discontinued Operations



|                                          |                                    |              |        |         | 
|----------------------------------------- | ---------------------------------- | ------------ | ------ | ------- | 
|                                          |                                    | December 31, |       
|                                          |                                    | 2003         |       
|                                          |                                    |              |       
|Accounts receivable, net                  |                                    | $            | 31,334 |        
|Inventory                                 |                                    |              | 526    |        
|Prepaid expenses and other current assets |                                    |              | 1,290  |        
|                                          |                                    |              |       
|                                          | Total current assets held for sale |              |        | 33,150  | 
|Property and equipment, net               |                                    |              | 8,036  |        
|Goodwill and intangible assets, net       |                                    |              | 98,862 |        
|                                          |                                    |              |       
|                                          | Total assets held for sale         |              | $      | 140,048 | 
|                                          |                                    |              |       
|Accounts payable and accrued expenses     |                                    |              | 25,457 |        
|Deferred taxes and other                  |                                    |              | 3,882  |        
|                                          |                                    |              |       
|                                          | Total liabilities held for sale    |              | $      | 29,339  | 
|                                          |                                    |              |       



|                                 |  |                          |         |  |      |   |         |      |  |   |         | 
|-------------------------------- |  | ------------------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                 |  | Years Ended December 31, |        
|                                 |  |                          |        
|                                 |  | 2004                     |         |  | 2003 |   |         | 2002 | 
|                                 |  |                          |         |  |      |   |         |      | 
|Revenue                          |  | $                        | 197,009 |  |      | $ | 217,184 |      |  | $ | 224,460 | 
|                                 |  |                          |         |  |      |   |         |      | 
|Income, net of tax expense       |  | $                        | 4,150   |  |      | $ | 1,805   |      |  | $ | 4,286   | 
|Gain on sale, net of tax expense |  | $                        | 31,552  |  |      | $ |        |      |  | $ |        | 
|                                 |  |                          |         |  |      |   |         |      | 
|Net income                       |  | $                        | 35,702  |  |      | $ | 1,805   |      |  | $ | 4,286   | 
|                                 |  |                          |         |  |      |   |         |      | 





49



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|         |             
|-------- | ------------
|Note 4  | Acquisitions





|         |                          
|-------- | -------------------------
|Note 5  | Cash and Cash Equivalents





|         |                      
|-------- | ---------------------
|Note 6  | Marketable Securities





|         |            
|-------- | -----------
|Note 7  | Inventories



|                |  |              |        |  |      |   |        | 
|--------------- |  | ------------ | ------ |  | ---- | - | ------ | 
|                |  | December 31, |       
|                |  |              |       
|                |  | 2004         |        |  | 2003 |  
|                |  |              |        |  |      |  
|Raw materials   |  | $            | 3,615  |  |      | $ | 5,149  | 
|Work-in-process |  |              | 16,706 |  |      |   | 14,615 | 
|                |  |              |        |  |      |  
|                |  | $            | 20,321 |  |      | $ | 19,764 | 
|                |  |              |        |  |      |  



|         |                               
|-------- | ------------------------------
|Note 8  | Goodwill and Intangible Assets



50



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|                                                  |  |                |        |  |               |   |         |       |  |   |        |  |  |   |         |  
|------------------------------------------------- |  | -------------- | ------ |  | ------------- | - | ------- | ----- |  | - | ------ |  |  | - | ------- | -
|                                                  |  | Financial      |        |  |               |   |         |       | 
|                                                  |  | Print          |        |  | Globalization |   |         | Other |  |   | Total  | 
|                                                  |  |                |        |  |               |   |         |       |  |   |        | 
|                                                  |  | (In thousands) |       
|Balance at January 1, 2003                        |  | $              | 15,835 |  |               | $ | 107,766 |       |  | $ | 15,580 |  |  | $ | 139,181 |  
|Adjustments to previously recorded purchase price |  |                |       |  |               |   | 3,118   |       |  |   | 4,640  |  |  |   | 7,758   |  
|Foreign currency translation adjustment           |  |                | 481    |  |               |   | 15,170  |       |  |   |       |  |  |   | 15,651  |  
|                                                  |  |                |        |  |               |   |         |       |  |   |        | 
|Balance at December 31, 2003                      |  | $              | 16,316 |  |               | $ | 126,054 |       |  | $ | 20,220 |  |  | $ | 162,590 |  
|Goodwill associated with Tri-Coastal acquisition  |  |                |       |  |               |   |        |       |  |   | 1,913  |  |  |   | 1,913   |  
|Adjustments to previously recorded purchase price |  |                |       |  |               |   | (993    | )     |  |   |       |  |  |   | (993    | )
|Foreign currency translation adjustment           |  |                | 201    |  |               |   | 7,615   |       |  |   |       |  |  |   | 7,816   |  
|                                                  |  |                |        |  |               |   |         |       |  |   |        | 
|Balance at December 31, 2004                      |  | $              | 16,517 |  |               | $ | 132,676 |       |  | $ | 22,133 |  |  | $ | 171,326 |  
|                                                  |  |                |        |  |               |   |         |       |  |   |        | 



|                                 |                                                       |                   |        |             |                   |   |       |              |             |   |              |        |  |   |       |       | 
|-------------------------------- | ----------------------------------------------------- | ----------------- | ------ | ----------- | ----------------- | - | ----- | ------------ | ----------- | - | ------------ | ------ |  | - | ----- | ----- | 
|                                 |                                                       | December 31, 2004 |        |             | December 31, 2003 |  
|                                 |                                                       |                   |        |             |                   |  
|                                 |                                                       |                   |        | Accumulated |                   |   |       |              | Accumulated |  
|                                 |                                                       | Gross Amount      |        |             | Amortization      |   |       | Gross Amount |             |   | Amortization |       
|                                 |                                                       |                   |        |             |                   |   |       |              |             |   |              |       
|                                 |                                                       | (In thousands)    |       
|Amortizable intangible assets:   |                                                       |                   |        |             |                   |   |       |              |             |   |              |        |  |   |       |      
|                                 | Customer lists                                        |                   | $      | 19,587      |                   |   | $     | 4,881        |             |   | $            | 19,023 |  |   | $     | 2,501 | 
|                                 | Software licenses and proprietary technology          |                   |        | 1,500       |                   |   |       | 904          |             |   |              | 1,760  |  |   |       | 596   | 
|                                 | Covenants not-to-compete                              |                   |        | 3,026       |                   |   |       | 794          |             |   |              | 1,800  |  |   |       | 390   | 
|Unamortizable intangible assets: |                                                       |                   |        |             |                   |   |       |              |             |   |              |        |  |   |       |      
|                                 | Trade name                                            |                   |        | 1,900       |                   |   |       |             |             |   |              | 1,900  |  |   |       |      | 
|                                 | Intangible asset related to minimum pension liability |                   |        | 6,992       |                   |   |       |             |             |   |              | 10,383 |  |   |       |      | 
|                                 |                                                       |                   |        |             |                   |   |       |              |             |   |              |       
|                                 |                                                       | $                 | 33,005 |             |                   | $ | 6,579 |              |             | $ | 34,866       |        |  | $ | 3,487 |      
|                                 |                                                       |                   |        |             |                   |   |       |              |             |   |              |       



|     |  |   |       | 
|---- |  | - | ----- | 
|2005 |  | $ | 2,685 | 
|2006 |  | $ | 2,516 | 
|2007 |  | $ | 2,285 | 
|2008 |  | $ | 1,790 | 
|2009 |  | $ | 1,790 | 

51



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|         |                       
|-------- | ----------------------
|Note 9  | Gain on Sale of Assets









|          |                                              
|--------- | ---------------------------------------------
|Note 10  | Accrued Restructuring and Integration Charges









52



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)








|                 |  |               |       |  |           |   |       |             |  |   |       |  |  |       |       |  |  |   |        | 
|---------------- |  | ------------- | ----- |  | --------- | - | ----- | ----------- |  | - | ----- |  |  | ----- | ----- |  |  | - | ------ | 
|                 |  | Severance     |       |  |           |   |       |             |  |   |      
|                 |  | and           |       |  |           |   |       |             |  |   |      
|                 |  | Personnel-    |       |  | Occupancy |   |       | Asset       |  |   |       |  | 
|                 |  | Related Costs |       |  | Costs     |   |       | Impairments |  |   | Other |  |  | Total |      
|                 |  |               |       |  |           |   |       |             |  |   |       |  |  |       |      
|Financial print  |  | $             | 1,551 |  |           | $ | 2,254 |             |  | $ | 153   |  |  | $     | 1,841 |  |  | $ | 5,799  | 
|Globalization    |  |               | 4,278 |  |           |   | 468   |             |  |   | 48    |  |  |       | 1,401 |  |  |   | 6,195  | 
|Corporate/ Other |  |               | 1,037 |  |           |   | 1,296 |             |  |   | 317   |  |  |       |      |  |  |   | 2,650  | 
|                 |  |               |       |  |           |   |       |             |  |   |       |  |  |       |      
|Total            |  | $             | 6,866 |  |           | $ | 4,018 |             |  | $ | 518   |  |  | $     | 3,242 |  |  | $ | 14,644 | 
|                 |  |               |       |  |           |   |       |             |  |   |       |  |  |       |      



|                             |  |               |         |   |           |   |        |       |  |   |        |   |  |   |         |  
|---------------------------- |  | ------------- | ------- | - | --------- | - | ------ | ----- |  | - | ------ | - |  | - | ------- | -
|                             |  | Severance     |         |   |           |   |        |       | 
|                             |  | and           |         |   |           |   |        |       | 
|                             |  | Personnel-    |         |   | Occupancy |   |        |       |  |  
|                             |  | Related Costs |         |   | Costs     |   |        | Other |  |   | Total  |  
|                             |  |               |         |   |           |   |        |       |  |   |        |  
|Balance at December 31, 2001 |  | $             | 3,513   |   |           | $ | 405    |       |  | $ | 604    |   |  | $ | 4,522   |  
|2002 expenses                |  |               | 10,178  |   |           |   | 3,371  |       |  |   | 2,534  |   |  |   | 16,083  |  
|Paid in 2002                 |  |               | (6,652  | ) |           |   | (338   | )     |  |   | (2,305 | ) |  |   | (9,295  | )
|                             |  |               |         |   |           |   |        |       |  |   |        |  
|Balance at December 31, 2002 |  |               | 7,039   |   |           |   | 3,438  |       |  |   | 833    |   |  |   | 11,310  |  
|2003 expenses                |  |               | 13,043  |   |           |   | 4,766  |       |  |   | 3,067  |   |  |   | 20,876  |  
|Paid in 2003                 |  |               | (16,903 | ) |           |   | (3,170 | )     |  |   | (2,992 | ) |  |   | (23,065 | )
|                             |  |               |         |   |           |   |        |       |  |   |        |  
|Balance at December 31, 2003 |  |               | 3,179   |   |           |   | 5,034  |       |  |   | 908    |   |  |   | 9,121   |  
|2004 expenses                |  |               | 6,866   |   |           |   | 4,018  |       |  |   | 3,242  |   |  |   | 14,126  |  
|Paid in 2004                 |  |               | (7,137  | ) |           |   | (3,072 | )     |  |   | (3,266 | ) |  |   | (13,475 | )
|                             |  |               |         |   |           |   |        |       |  |   |        |  
|Balance at December 31, 2004 |  | $             | 2,908   |   |           | $ | 5,980  |       |  | $ | 884    |   |  | $ | 9,772   |  
|                             |  |               |         |   |           |   |        |       |  |   |        |  





53



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)








|                             |  |               |        |   |           |   |      |       |  |   |        |  
|---------------------------- |  | ------------- | ------ | - | --------- | - | ---- | ----- |  | - | ------ | -
|                             |  | Severance     |        |   |           |   |     
|                             |  | and           |        |   |           |   |     
|                             |  | Personnel-    |        |   | Occupancy |   |      |      
|                             |  | Related Costs |        |   | Costs     |   |      | Total | 
|                             |  |               |        |   |           |   |      |       | 
|Opening balance              |  | $             | 1,789  |   |           | $ | 708  |       |  | $ | 2,497  |  
|Paid in 2002                 |  |               | (964   | ) |           |   | (99  | )     |  |   | (1,063 | )
|                             |  |               |        |   |           |   |      |       | 
|Balance at December 31, 2002 |  |               | 825    |   |           |   | 609  |       |  |   | 1,434  |  
|Adjustments in 2003          |  |               | 525    |   |           |   | 475  |       |  |   | 1,000  |  
|Paid in 2003                 |  |               | (1,120 | ) |           |   | (561 | )     |  |   | (1,681 | )
|                             |  |               |        |   |           |   |      |       | 
|Balance at December 31, 2003 |  |               | 230    |   |           |   | 523  |       |  |   | 753    |  
|Paid in 2004                 |  |               | (230   | ) |           |   | (192 | )     |  |   | (422   | )
|                             |  |               |        |   |           |   |      |       | 
|Balance at December 31, 2004 |  | $             |       |   |           | $ | 331  |       |  | $ | 331    |  
|                             |  |               |        |   |           |   |      |       | 





|          |             
|--------- | ------------
|Note 11  | Income Taxes



|          |                 |                         |        |          |      |   |          |        |   |   |       |        |  
|--------- | --------------- | ----------------------- | ------ | -------- | ---- | - | -------- | ------ | - | - | ----- | ------ | -
|          |                 | Year Ended December 31, |       
|          |                 |                         |       
|          |                 |                         |        | Restated |      |   | Restated |       
|          |                 | 2004                    |        |          | 2003 |   |          | 2002   |  
|          |                 |                         |        |          |      |   |          |        |  
|Current:  |                 |                         |        |          |      |   |          |        |   |   |       |       
|          | U.S. federal    |                         | $      | (6,615   | )    |   | $        | 1,114  |   |   | $     | 3,045  |  
|          | Foreign         |                         |        | 2,541    |      |   |          | 5,465  |   |   |       | 1,995  |  
|          | State and local |                         |        | (64      | )    |   |          | 1,194  |   |   |       | 2,438  |  
|          |                 |                         |        |          |      |   |          |        |  
|          |                 |                         | (4,138 | )        |      |   | 7,773    |        |   |   | 7,478 |       
|          |                 |                         |        |          |      |   |          |        |  
|Deferred: |                 |                         |        |          |      |   |          |        |   |   |       |       
|          | U.S. federal    |                         |        | 2,153    |      |   |          | (359   | ) |   |       | 3,652  |  
|          | Foreign         |                         |        | 660      |      |   |          | (6,561 | ) |   |       | (3,260 | )
|          | State and local |                         |        | 12       |      |   |          | (1,582 | ) |   |       | (1,388 | )
|          |                 |                         |        |          |      |   |          |        |  
|          |                 |                         | 2,825  |          |      |   | (8,502   | )      |   |   | (996  | )     
|          |                 |                         |        |          |      |   |          |        |  
|          |                 | $                       | (1,313 | )        |      | $ | (729     | )      |   | $ | 6,482 |       
|          |                 |                         |        |          |      |   |          |        |  

54



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|                        |  |                         |        |          |      |   |          |      |  |   |       | 
|----------------------- |  | ----------------------- | ------ | -------- | ---- | - | -------- | ---- |  | - | ----- | 
|                        |  | Year Ended December 31, |       
|                        |  |                         |       
|                        |  |                         |        | Restated |      |   | Restated |     
|                        |  | 2004                    |        |          | 2003 |   |          | 2002 | 
|                        |  |                         |        |          |      |   |          |      | 
|Continuing operations   |  | $                       | (1,313 | )        |      | $ | (729     | )    |  | $ | 6,482 | 
|Discontinued operations |  |                         | 20,326 |          |      |   | 1,333    |      |  |   | 2,886 | 
|                        |  |                         |        |          |      |   |          |      | 
|                        |  | $                       | 19,013 |          |      | $ | 604      |      |  | $ | 9,368 | 
|                        |  |                         |        |          |      |   |          |      | 



|                                                            |  |                         |         |          |      |   |          |      |  |   |         |  
|----------------------------------------------------------- |  | ----------------------- | ------- | -------- | ---- | - | -------- | ---- |  | - | ------- | -
|                                                            |  | Year Ended December 31, |        
|                                                            |  |                         |        
|                                                            |  |                         |         | Restated |      |   | Restated |     
|                                                            |  | 2004                    |         |          | 2003 |   |          | 2002 | 
|                                                            |  |                         |         |          |      |   |          |      | 
|United States                                               |  | $                       | (18,608 | )        |      | $ | (1,117   | )    |  | $ | 15,777  |  
|Foreign                                                     |  |                         | 9,097   |          |      |   | (9,166   | )    |  |   | (12,297 | )
|                                                            |  |                         |         |          |      |   |          |      | 
|Total (loss) income from continuing operations before taxes |  | $                       | (9,511  | )        |      | $ | (10,283  | )    |  | $ | 3,480   |  
|                                                            |  |                         |         |          |      |   |          |      | 





|                                                                             |  |                         |        |          |      |   |          |      |  |   |       |  
|---------------------------------------------------------------------------- |  | ----------------------- | ------ | -------- | ---- | - | -------- | ---- |  | - | ----- | -
|                                                                             |  | Year Ended December 31, |       
|                                                                             |  |                         |       
|                                                                             |  |                         |        | Restated |      |   | Restated |     
|                                                                             |  | 2004                    |        |          | 2003 |   |          | 2002 | 
|                                                                             |  |                         |        |          |      |   |          |      | 
|Income tax (benefit) expense based upon U.S. statutory tax
    rate          |  | $                       | (3,329 | )        |      | $ | (3,599   | )    |  | $ | 1,218 |  
|State income tax (benefit) expense                                           |  |                         | (34    | )        |      |   | (252     | )    |  |   | 683   |  
|Effect of foreign taxes (including change in valuation allowance)            |  |                         | 17     |          |      |   | 2,113    |      |  |   | 3,038 |  
|Non-deductible meals and entertainment expenses                              |  |                         | 2,249  |          |      |   | 1,504    |      |  |   | 2,206 |  
|Other, net                                                                   |  |                         | (216   | )        |      |   | (495     | )    |  |   | (663  | )
|                                                                             |  |                         |        |          |      |   |          |      | 
|Total income tax (benefit) expense attributable to continuing
    operations |  | $                       | (1,313 | )        |      | $ | (729     | )    |  | $ | 6,482 |  
|                                                                             |  |                         |        |          |      |   |          |      | 





55



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)






|                                       |                                    |      |         |          |      |   |         |         |  
|-------------------------------------- | ---------------------------------- | ---- | ------- | -------- | ---- | - | ------- | ------- | -
|                                       |                                    |      |         | Restated |     
|                                       |                                    | 2004 |         |          | 2003 |  
|                                       |                                    |      |         |          |      |  
|Deferred tax assets:                   |                                    |      |         |          |      |   |         |        
|                                       | Operating loss carry-forwards      |      | $       | 18,715   |      |   | $       | 20,116  |  
|                                       | Deferred compensation and benefits |      |         | 19,242   |      |   |         | 25,753  |  
|                                       | Allowance for doubtful accounts    |      |         | 3,676    |      |   |         | 3,514   |  
|                                       | Tax credits                        |      |         | 422      |      |   |         | 2,714   |  
|                                       | Other, net                         |      |         | 7,629    |      |   |         | 2,175   |  
|                                       |                                    |      |         |          |      |  
|Gross deferred tax assets              |                                    |      | 49,684  |          |      |   | 54,272  |        
|                                       |                                    |      |         |          |      |  
|Deferred tax liabilities:              |                                    |      |         |          |      |   |         |        
|                                       | Property, plant and equipment      |      |         | (9,309   | )    |   |         | (17,422 | )
|                                       | Intangible assets                  |      |         | (9,341   | )    |   |         | (6,960  | )
|                                       |                                    |      |         |          |      |  
|Gross deferred tax liabilities         |                                    |      | (18,650 | )        |      |   | (24,382 | )      
|                                       |                                    |      |         |          |      |  
|Deferred tax asset valuation allowance |                                    |      | (13,490 | )        |      |   | (10,881 | )      
|                                       |                                    |      |         |          |      |  
|Net deferred tax asset                 |                                    | $    | 17,544  |          |      | $ | 19,009  |        
|                                       |                                    |      |         |          |      |  



|                                                                               |  |      |        |          |      |   |        |  
|------------------------------------------------------------------------------ |  | ---- | ------ | -------- | ---- | - | ------ | -
|                                                                               |  |      |        | Restated |     
|                                                                               |  | 2004 |        |          | 2003 |  
|                                                                               |  |      |        |          |      |  
|Current deferred tax asset included in other current assets                    |  | $    | 10,399 |          |      | $ | 14,384 |  
|Noncurrent deferred tax asset                                                  |  |      | 9,403  |          |      |   | 9,235  |  
|Noncurrent deferred tax liability included in other noncurrent
    liabilities |  |      | (2,258 | )        |      |   | (4,610 | )
|                                                                               |  |      |        |          |      |  
|                                                                               |  | $    | 17,544 |          |      | $ | 19,009 |  
|                                                                               |  |      |        |          |      |  







56



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)






|          |     
|--------- | ----
|Note 12  | Debt



|                                    |  |              |        |  |      |   |         | 
|----------------------------------- |  | ------------ | ------ |  | ---- | - | ------- | 
|                                    |  | December 31, |       
|                                    |  |              |       
|                                    |  | 2004         |        |  | 2003 |  
|                                    |  |              |        |  |      |  
|Convertible subordinated debentures |  | $            | 75,000 |  |      | $ | 75,000  | 
|Senior notes                        |  |              |       |  |      |   | 60,000  | 
|Revolving credit facility           |  |              |       |  |      |   | 3,000   | 
|Other                               |  |              | 2,891  |  |      |   | 2,598   | 
|                                    |  |              |        |  |      |  
|                                    |  | $            | 77,891 |  |      | $ | 140,598 | 
|                                    |  |              |        |  |      |  





57



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)














58



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|          |                       
|--------- | ----------------------
|Note 13  | Employee Benefit Plans



| |              
| | -------------
| | Pension Plans





|                                             |  |                         |        |   |                         |   |        |      |  |   |        |   |  |      |       |  |      |   |       |  |  |   |       | 
|-------------------------------------------- |  | ----------------------- | ------ | - | ----------------------- | - | ------ | ---- |  | - | ------ | - |  | ---- | ----- |  | ---- | - | ----- |  |  | - | ----- | 
|                                             |  | Pension                 |        |   | SERP                    |  
|                                             |  |                         |        |   |                         |  
|                                             |  | Year Ended December 31, |        |   | Year Ended December 31, |  
|                                             |  |                         |        |   |                         |  
|                                             |  | 2004                    |        |   | 2003                    |   |        | 2002 |  |   | 2004   |   |  | 2003 |       |  | 2002 |  
|                                             |  |                         |        |   |                         |   |        |      |  |   |        |   |  |      |       |  |      |  
|Service cost                                 |  | $                       | 5,888  |   |                         | $ | 6,017  |      |  | $ | 7,113  |   |  | $    | 370   |  |      | $ | 654   |  |  | $ | 523   | 
|Interest cost                                |  |                         | 6,157  |   |                         |   | 5,933  |      |  |   | 5,299  |   |  |      | 1,741 |  |      |   | 1,632 |  |  |   | 1,565 | 
|Expected return on plan assets               |  |                         | (5,708 | ) |                         |   | (4,076 | )    |  |   | (5,202 | ) |  |      |      |  |      |   |      |  |  |   |      | 
|Amortization of transition (asset) liability |  |                         | (321   | ) |                         |   | (321   | )    |  |   | (321   | ) |  |      | 101   |  |      |   | 101   |  |  |   | 101   | 
|Amortization of prior service cost           |  |                         | 318    |   |                         |   | 318    |      |  |   | 99     |   |  |      | 1,511 |  |      |   | 1,350 |  |  |   | 1,022 | 
|Amortization of actuarial loss               |  |                         | 258    |   |                         |   | 1,070  |      |  |   |       |   |  |      | 825   |  |      |   | 425   |  |  |   | 347   | 
|                                             |  |                         |        |   |                         |   |        |      |  |   |        |   |  |      |       |  |      |  
|Net periodic cost of defined benefit plans   |  |                         | 6,592  |   |                         |   | 8,941  |      |  |   | 6,988  |   |  |      | 4,548 |  |      |   | 4,162 |  |  |   | 3,558 | 
|Union plans                                  |  |                         | 362    |   |                         |   | 295    |      |  |   | 304    |   |  |      |      |  |      |   |      |  |  |   |      | 
|Other retirement plans                       |  |                         | 1,297  |   |                         |   | 1,003  |      |  |   | 828    |   |  |      |      |  |      |   |      |  |  |   |      | 
|                                             |  |                         |        |   |                         |   |        |      |  |   |        |   |  |      |       |  |      |  
|Total cost                                   |  | $                       | 8,251  |   |                         | $ | 10,239 |      |  | $ | 8,120  |   |  | $    | 4,548 |  |      | $ | 4,162 |  |  | $ | 3,558 | 
|                                             |  |                         |        |   |                         |   |        |      |  |   |        |   |  |      |       |  |      |  

59



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|                                                  |  |              |         |   |              |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------- |  | ------------ | ------- | - | ------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                  |  | Pension Plan |         |   | SERP         |  
|                                                  |  |              |         |   |              |  
|                                                  |  | December 31, |         |   | December 31, |  
|                                                  |  |              |         |   |              |  
|                                                  |  | 2004         |         |   | 2003         |   |         | 2004 |  |   | 2003    |  
|                                                  |  |              |         |   |              |   |         |      |  |   |         |  
|Projected benefit obligation at beginning of year |  | $            | 109,325 |   |              | $ | 90,659  |      |  | $ | 28,103  |   |  | $ | 22,631  |  
|Service cost                                      |  |              | 5,888   |   |              |   | 6,017   |      |  |   | 370     |   |  |   | 654     |  
|Interest cost                                     |  |              | 6,157   |   |              |   | 5,933   |      |  |   | 1,741   |   |  |   | 1,633   |  
|Amendments                                        |  |              |        |   |              |   | 2,639   |      |  |   | 1,132   |   |  |   | 2,290   |  
|Actuarial (gain) loss                             |  |              | (2,049  | ) |              |   | 9,558   |      |  |   | 2,434   |   |  |   | 2,848   |  
|Benefits paid                                     |  |              | (3,458  | ) |              |   | (5,481  | )    |  |   | (6,870  | ) |  |   | (1,953  | )
|                                                  |  |              |         |   |              |   |         |      |  |   |         |  
|Projected benefit obligation at end of year       |  |              | 115,863 |   |              |   | 109,325 |      |  |   | 26,910  |   |  |   | 28,103  |  
|                                                  |  |              |         |   |              |   |         |      |  |   |         |  
|Fair value of plan assets at beginning of year    |  |              | 63,236  |   |              |   | 49,700  |      |  |   |        |   |  |   |        |  
|Actual return on plan assets                      |  |              | 7,548   |   |              |   | 11,982  |      |  |   |        |   |  |   |        |  
|Other                                             |  |              | 58      |   |              |   |        |      |  |   |        |   |  |   |        |  
|Employer contributions                            |  |              | 18,252  |   |              |   | 7,035   |      |  |   | 6,870   |   |  |   | 1,953   |  
|Benefits paid                                     |  |              | (3,458  | ) |              |   | (5,481  | )    |  |   | (6,870  | ) |  |   | (1,953  | )
|                                                  |  |              |         |   |              |   |         |      |  |   |         |  
|Fair value of plan assets at end of year          |  |              | 85,636  |   |              |   | 63,236  |      |  |   |        |   |  |   |        |  
|                                                  |  |              |         |   |              |   |         |      |  |   |         |  
|Unfunded status                                   |  |              | (30,227 | ) |              |   | (46,089 | )    |  |   | (26,910 | ) |  |   | (28,103 | )
|Unrecognized net transition (asset) obligation    |  |              | (1,558  | ) |              |   | (1,879  | )    |  |   | 233     |   |  |   | 334     |  
|Unrecognized prior service cost                   |  |              | 2,965   |   |              |   | 3,283   |      |  |   | 6,387   |   |  |   | 6,766   |  
|Unrecognized net actuarial loss                   |  |              | 17,016  |   |              |   | 21,223  |      |  |   | 8,666   |   |  |   | 7,057   |  
|                                                  |  |              |         |   |              |   |         |      |  |   |         |  
|Net accrued cost                                  |  | $            | (11,804 | ) |              | $ | (23,462 | )    |  | $ | (11,624 | ) |  | $ | (13,946 | )
|                                                  |  |              |         |   |              |   |         |      |  |   |         |  





|                                               |  |              |         |   |              |   |         |      |  |   |         |   |  |   |         |  
|---------------------------------------------- |  | ------------ | ------- | - | ------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                               |  | Pension Plan |         |   | SERP         |  
|                                               |  |              |         |   |              |  
|                                               |  | December 31, |         |   | December 31, |  
|                                               |  |              |         |   |              |  
|                                               |  | 2004         |         |   | 2003         |   |         | 2004 |  |   | 2003    |  
|                                               |  |              |         |   |              |   |         |      |  |   |         |  
|Accrued benefit liability                      |  | $            | (12,176 | ) |              | $ | (27,572 | )    |  | $ | (22,873 | ) |  | $ | (24,148 | )
|Intangible asset for minimum pension liability |  |              | 372     |   |              |   | 3,283   |      |  |   | 6,620   |   |  |   | 7,100   |  
|Accumulated other comprehensive loss           |  |              |        |   |              |   | 512     |      |  |   | 2,870   |   |  |   | 1,923   |  
|Deferred income tax asset                      |  |              |        |   |              |   | 315     |      |  |   | 1,759   |   |  |   | 1,179   |  
|                                               |  |              |         |   |              |   |         |      |  |   |         |  
|Net amount recognized                          |  | $            | (11,804 | ) |              | $ | (23,462 | )    |  | $ | (11,624 | ) |  | $ | (13,946 | )
|                                               |  |              |         |   |              |   |         |      |  |   |         |  



60



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)






|                                 |  |              |     |   |              |  |      |      |  |  |      |   |  |      |     |   |      |  |      |   |  |  |     |  
|-------------------------------- |  | ------------ | --- | - | ------------ |  | ---- | ---- |  |  | ---- | - |  | ---- | --- | - | ---- |  | ---- | - |  |  | --- | -
|                                 |  | Pension Plan |     |   | SERP         | 
|                                 |  |              |     |   |              | 
|                                 |  | Years Ended  |     |   | Years Ended  | 
|                                 |  | December 31, |     |   | December 31, | 
|                                 |  |              |     |   |              | 
|                                 |  | 2004         |     |   | 2003         |  |      | 2002 |  |  | 2004 |   |  | 2003 |     |   | 2002 | 
|                                 |  |              |     |   |              |  |      |      |  |  |      |   |  |      |     |   |      | 
|Discount rate                    |  |              | 6.0 | % |              |  | 6.25 | %    |  |  | 6.5  | % |  |      | 6.0 | % |      |  | 6.25 | % |  |  | 6.5 | %
|Projected future salary increase |  |              | 4.0 | % |              |  | 4.0  | %    |  |  | 4.0  | % |  |      | 4.0 | % |      |  | 4.0  | % |  |  | 4.0 | %



|                                                 |  |              |      |   |              |  |     |      |  |  |      |   |  |      |      |   |      |  |     |   |  |  |      |  
|------------------------------------------------ |  | ------------ | ---- | - | ------------ |  | --- | ---- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | --- | - |  |  | ---- | -
|                                                 |  | Pension Plan |      |   | SERP         | 
|                                                 |  |              |      |   |              | 
|                                                 |  | Year Ended   |      |   | Year Ended   | 
|                                                 |  | December 31, |      |   | December 31, | 
|                                                 |  |              |      |   |              | 
|                                                 |  | 2004         |      |   | 2003         |  |     | 2002 |  |  | 2004 |   |  | 2003 |      |   | 2002 | 
|                                                 |  |              |      |   |              |  |     |      |  |  |      |   |  |      |      |   |      | 
|Discount rate                                    |  |              | 6.25 | % |              |  | 6.5 | %    |  |  | 7.25 | % |  |      | 6.25 | % |      |  | 6.5 | % |  |  | 7.25 | %
|Projected future salary increase                 |  |              | 4.0  | % |              |  | 4.0 | %    |  |  | 4.0  | % |  |      | 4.0  | % |      |  | 4.0 | % |  |  | 4.0  | %
|Expected long-term rate of return on plan assets |  |              | 8.5  | % |              |  | 8.5 | %    |  |  | 9.0  | % |  |      | N/A  |   |      |  | N/A |   |  |  | N/A  |  





61



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|                        |  |              |     |   |      |  |     |  
|----------------------- |  | ------------ | --- | - | ---- |  | --- | -
|                        |  | December 31, |    
|                        |  |              |    
|Asset Category:         |  | 2004         |     |   | 2003 | 
|                        |  |              |     |   |      | 
|Equity securities       |  |              | 77  | % |      |  | 75  | %
|Fixed income securities |  |              | 21  |   |      |  | 23  |  
|Other                   |  |              | 2   |   |      |  | 2   |  
|                        |  |              |     |   |      | 
|Total                   |  |              | 100 | % |      |  | 100 | %
|                        |  |              |     |   |      | 







62



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|               |                 |        |          |          | 
|-------------- | --------------- | ------ | -------- | -------- | 
|Asset Classes: |                 | Ranges |         
|               |                 |        |         
|Equities       |                 |        | 65 - 85% |         
|               | Domestic        |        |          | 55 - 75% | 
|               | Large Cap Core  |        |          | 28 - 38% | 
|               | Large Cap Value |        |          | 15 - 25% | 
|               | Small Cap       |        |          | 10 - 20% | 
|               | International   |        |          | 5 - 15%  | 
|Fixed Income   |                 |        | 15 - 35% |         
|Alternatives   |                 |        | 5 - 15%  |         







| |   |                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Option trading is limited to writing covered options.                                                                                                                                                                                                              
|
| |  | Letter stock.                                                                                                                                                                                                                                                      
|
| |  | Bowne & Co., Inc. common stock.                                                                                                                                                                                                                                    
|
| |  | Commodities.                                                                                                                                                                                                                                                       
|
| |  | Direct real estate or mortgages.                                                                                                                                                                                                                                   
|
| |  | Security loans.                                                                                                                                                                                                                                                    
|
| |  | Risky or volatile derivative securities as commonly defined by
    the financial industry.                                                                                                                                                                         
|
| |  | Manager portfolios may hold no greater than two times (2X) their
    respective index sector weights, up to a maximum of 30%.                                                                                                                                      
|
| |  | No position greater than two (2) weeks average
    trading volume.                                                                                                                                                                                                
|
| |  | No more than 4.99% of the outstanding shares of any company may
    be owned in the clients portfolio.                                                                                                                                                            
|
| |  | Unless authorized in specific manager guidelines, managers may
    not sell securities short, buy securities on margin, buy private
    or direct placements or restricted securities, borrow money or
    pledge assets, nor buy or sell commodities or annuities.





63



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|            |  |              |        |  |      |   |       | 
|----------- |  | ------------ | ------ |  | ---- | - | ----- | 
|Year        |  | Pension Plan |        |  | SERP |  
|            |  |              |        |  |      |  
|2005        |  | $            | 4,925  |  |      | $ | 6,499 | 
|2006        |  |              | 3,898  |  |      |   | 6,251 | 
|2007        |  |              | 4,907  |  |      |   | 826   | 
|2008        |  |              | 6,015  |  |      |   | 913   | 
|2009        |  |              | 4,647  |  |      |   | 983   | 
|2010  2014 |  |              | 46,479 |  |      |   | 4,609 | 



| |                           
| | --------------------------
| | Defined Contribution Plans









64



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)






| |            
| | -----------
| | Health Plan





|          |                                         
|--------- | ----------------------------------------
|Note 14  | Deferred Employee Compensation and Other



|                                                   |  |              |        |  |      |   |        | 
|-------------------------------------------------- |  | ------------ | ------ |  | ---- | - | ------ | 
|                                                   |  | December 31, |       
|                                                   |  |              |       
|                                                   |  | 2004         |        |  | 2003 |  
|                                                   |  |              |        |  |      |  
|Pension and other retirement costs, long-term      |  | $            | 12,176 |  |      | $ | 12,730 | 
|Supplemental retirement, long-term                 |  |              | 16,535 |  |      |   | 19,803 | 
|Deferred compensation and other long-term benefits |  |              | 9,459  |  |      |   | 10,786 | 
|Deferred tax liability, non-current                |  |              | 2,258  |  |      |   | 4,610  | 
|Accrued restructuring, long-term                   |  |              | 4,755  |  |      |   | 4,287  | 
|Other                                              |  |              | 2,062  |  |      |   | 1,837  | 
|                                                   |  |              |        |  |      |  
|                                                   |  | $            | 47,245 |  |      | $ | 54,053 | 
|                                                   |  |              |        |  |      |  



|          |                              
|--------- | -----------------------------
|Note 15  | Commitments and Contingencies



| |                  
| | -----------------
| | Lease commitments







65



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|            |  |   |         | 
|----------- |  | - | ------- | 
|2005        |  | $ | 30,684  | 
|2006        |  |   | 32,015  | 
|2007        |  |   | 28,169  | 
|2008        |  |   | 23,616  | 
|2009        |  |   | 17,453  | 
|2010  2026 |  |   | 159,398 | 
|            |  |   |        
|Total       |  | $ | 291,335 | 
|            |  |   |        







| |                     
| | --------------------
| | Purchase Commitments





| |                          
| | -------------------------
| | Joint Venture Arrangement





| |              
| | -------------
| | Contingencies



66



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|          |                     
|--------- | --------------------
|Note 16  | Stockholders Equity









|          |                      
|--------- | ---------------------
|Note 17  | Stock Incentive Plans







67



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)






|                                    |                      |                      |  |           |                     |  |   |                      |   |  |  |           |           | 
|----------------------------------- | -------------------- | -------------------- |  | --------- | ------------------- |  | - | -------------------- | - |  |  | --------- | --------- | 
|                                    |                      | Number of Securities |  |           | Weighted-Average    |  |   | Number of Securities |  
|                                    |                      | to be Issued Upon    |  |           | Exercise Price of   |  |   | Remaining Available  |  
|                                    |                      | Exercise/Conversion  |  |           | Outstanding Options |  |   | for Future Issuance  |  
|                                    |                      |                      |  |           |                     |  |   |                      |  
|Plans approved by shareholders:     |                      |                      |  |           |                     |  |   |                      |   |  |  |          
|                                    | Stock options        |                      |  | 3,250,228 |                     |  | $ | 13.66                |   |  |  | 1,321,564 |          
|Plans not approved by shareholders: |                      |                      |  |           |                     |  |   |                      |   |  |  |          
|                                    | Stock options        |                      |  | 1,518,350 |                     |  |   | 12.30                |   |  |  | 74,140    |          
|                                    | Deferred stock units |                      |  | 821,807   |                     |  |   | (a                   | ) |  |  | 455,037   |          
|                                    |                      |                      |  |           |                     |  |   |                      |  
|                                    |                      | Total                |  |           | 5,590,385           |  |   |                      |   |  |  |           | 1,850,741 | 
|                                    |                      |                      |  |           |                     |  |   |                      |  






|    |               
|--- | --------------
|(a) | Not applicable



|                             |                          |           |  |           |        |  |   |       | 
|---------------------------- | ------------------------ | --------- |  | --------- | ------ |  | - | ----- | 
|                             |                          |           |  | Weighted- |       
|                             |                          |           |  | Average   |       
|                             |                          | Number of |  |           | Option | 
|                             |                          | Shares    |  |           | Price  | 
|                             |                          |           |  |           |        | 
|Year Ended December 31, 2002 |                          |           |  |           |        |  |   |      
|                             | Granted                  |           |  | 881,250   |        |  | $ | 10.97 | 
|                             | Exercised                |           |  | 313,351   |        |  |   | 9.44  | 
|                             | Cancelled                |           |  | 314,924   |        |  |   | 13.58 | 
|                             | Outstanding, end of year |           |  | 5,756,051 |        |  |   | 12.27 | 
|                             | Exercisable, end of year |           |  | 3,875,379 |        |  |   | 12.48 | 
|Year Ended December 31, 2003 |                          |           |  |           |        |  |   |      
|                             | Granted                  |           |  | 1,573,795 |        |  | $ | 13.48 | 
|                             | Exercised                |           |  | 458,077   |        |  |   | 10.09 | 
|                             | Cancelled                |           |  | 258,150   |        |  |   | 13.51 | 
|                             | Outstanding, end of year |           |  | 6,613,619 |        |  |   | 12.66 | 
|                             | Exercisable, end of year |           |  | 4,768,407 |        |  |   | 12.50 | 
|Year Ended December 31, 2004 |                          |           |  |           |        |  |   |      
|                             | Granted                  |           |  | 389,433   |        |  | $ | 15.39 | 
|                             | Exercised                |           |  | 1,971,324 |        |  |   | 11.38 | 
|                             | Cancelled                |           |  | 263,150   |        |  |   | 16.14 | 
|                             | Outstanding, end of year |           |  | 4,768,578 |        |  |   | 13.22 | 
|                             | Exercisable, end of year |           |  | 3,812,395 |        |  |   | 12.93 | 

68



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)




|                |  |                     |           |           |                     |  |           |          |  |   |                   |           |  |          |           |  |  |   |       | 
|--------------- |  | ------------------- | --------- | --------- | ------------------- |  | --------- | -------- |  | - | ----------------- | --------- |  | -------- | --------- |  |  | - | ----- | 
|                |  | Options Outstanding |           |           | Options Exercisable | 
|                |  |                     |           |           |                     | 
|                |  |                     |           | Weighted- |                     |  | Weighted- |          |  |   |                   | Weighted- | 
|                |  | Number              |           |           | Average             |  |           | Average  |  |   | Number            |           |  | Average  |          
|Range of        |  | Outstanding         |           |           | Remaining           |  |           | Exercise |  |   | Exercisable       |           |  | Exercise |          
|Exercise Prices |  | December 31, 2004   |           |           | Life                |  |           | Price    |  |   | December 31, 2004 |           |  | Price    |          
|                |  |                     |           |           |                     |  |           |          |  |   |                   |           |  |          |          
|$ 8.84  $10.31 |  |                     | 373,297   |           |                     |  | 5 years   |          |  | $ | 9.36              |           |  |          | 365,297   |  |  | $ | 9.35  | 
|10.32   11.30  |  |                     | 711,430   |           |                     |  | 5 years   |          |  |   | 10.60             |           |  |          | 699,930   |  |  |   | 10.60 | 
|11.31   12.80  |  |                     | 508,951   |           |                     |  | 5 years   |          |  |   | 12.28             |           |  |          | 508,951   |  |  |   | 12.28 | 
|12.81   13.75  |  |                     | 1,047,346 |           |                     |  | 4 years   |          |  |   | 12.93             |           |  |          | 1,035,675 |  |  |   | 12.93 | 
|13.76   13.86  |  |                     | 1,163,500 |           |                     |  | 6 years   |          |  |   | 13.86             |           |  |          | 614,250   |  |  |   | 13.86 | 
|13.87   22.50  |  |                     | 964,054   |           |                     |  | 6 years   |          |  |   | 16.71             |           |  |          | 588,292   |  |  |   | 17.52 | 
|                |  |                     |           |           |                     |  |           |          |  |   |                   |           |  |          |          
|                |  |                     | 4,768,578 |           |                     |  | 5 years   |          |  | $ | 13.22             |           |  |          | 3,812,395 |  |  | $ | 12.93 | 
|                |  |                     |           |           |                     |  |           |          |  |   |                   |           |  |          |          



| |                           
| | --------------------------
| | Subsidiaries Option Plans







| |                      
| | ---------------------
| | Deferred Stock Awards



69



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)








| |                        
| | -----------------------
| | Restricted Stock Awards





|          |                            
|--------- | ---------------------------
|Note 18  | Comprehensive Income (Loss)



|                                                                           |  |              |        |          |      |   |          |      |  |   |        |  
|-------------------------------------------------------------------------- |  | ------------ | ------ | -------- | ---- | - | -------- | ---- |  | - | ------ | -
|                                                                           |  | December 31, |       
|                                                                           |  |              |       
|                                                                           |  |              |        | Restated |      |   | Restated |     
|                                                                           |  | 2004         |        |          | 2003 |   |          | 2002 | 
|                                                                           |  |              |        |          |      |   |          |      | 
|Foreign currency translation adjustment                                    |  | $            | 40,077 |          |      | $ | 26,606   |      |  | $ | 1,645  |  
|Minimum pension liability adjustment (net of tax effect)                   |  |              | (2,870 | )        |      |   | (2,435   | )    |  |   | (1,994 | )
|Unrealized (losses) gains on marketable securities (net of tax
    effect) |  |              | (20    | )        |      |   | (27      | )    |  |   | 519    |  
|                                                                           |  |              |        |          |      |   |          |      | 
|                                                                           |  | $            | 37,187 |          |      | $ | 24,144   |      |  | $ | 170    |  
|                                                                           |  |              |        |          |      |   |          |      | 

Note 19  Segment Information




70



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)








| |                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Financial Print  transactional financial
    printing, compliance printing, mutual fund printing, commercial
    printing, digital printing, and electronic delivery of
    personalized communications.                                                                                                                                                             
|
| | Globalization  outsourced globalization
    solutions, including solutions that use translation,
    localization, technical writing and interpretation services to
    help companies adapt their communications or products for use in
    other cultures and countries around the world. This segment is
    commonly referred to as Bowne Global Solutions (BGS).





71



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)


|                                                                          |  |                         |         |          |      |   |          |      |  |   |         |  
|------------------------------------------------------------------------- |  | ----------------------- | ------- | -------- | ---- | - | -------- | ---- |  | - | ------- | -
|                                                                          |  | Year Ended December 31, |        
|                                                                          |  |                         |        
|                                                                          |  |                         |         | Restated |      |   | Restated |     
|                                                                          |  | 2004                    |         |          | 2003 |   |          | 2002 | 
|                                                                          |  |                         |         |          |      |   |          |      | 
|Revenue from external customers:                                          |  |                         |         |          |      |   |          |      |  |   |         |  
|Financial print                                                           |  | $                       | 637,413 |          |      | $ | 590,856  |      |  | $ | 638,269 |  
|Globalization                                                             |  |                         | 222,973 |          |      |   | 219,245  |      |  |   | 131,171 |  
|Other                                                                     |  |                         | 38,625  |          |      |   | 37,535   |      |  |   | 9,425   |  
|                                                                          |  |                         |         |          |      |   |          |      | 
|                                                                          |  | $                       | 899,011 |          |      | $ | 847,636  |      |  | $ | 778,865 |  
|                                                                          |  |                         |         |          |      |   |          |      | 
|Segment profit (loss):                                                    |  |                         |         |          |      |   |          |      |  |   |         |  
|Financial print                                                           |  | $                       | 69,036  |          |      | $ | 61,889   |      |  | $ | 66,569  |  
|Globalization                                                             |  |                         | 9,557   |          |      |   | 13,072   |      |  |   | (4,441  | )
|Corporate/Other (see detail below)                                        |  |                         | (33,746 | )        |      |   | (35,911  | )    |  |   | (14,971 | )
|                                                                          |  |                         |         |          |      |   |          |      | 
|                                                                          |  |                         | 44,847  |          |      |   | 39,050   |      |  |   | 47,157  |  
|Depreciation                                                              |  |                         | (32,121 | )        |      |   | (35,466  | )    |  |   | (35,684 | )
|Amortization                                                              |  |                         | (2,713  | )        |      |   | (2,478   | )    |  |   | (874    | )
|Interest                                                                  |  |                         | (10,709 | )        |      |   | (11,389  | )    |  |   | (7,119  | )
|Loss on extinguishment of debt                                            |  |                         | (8,815  | )        |      |   |         |      |  |   |        |  
|                                                                          |  |                         |         |          |      |   |          |      | 
|(Loss) income from continuing operations before income taxes              |  | $                       | (9,511  | )        |      | $ | (10,283  | )    |  | $ | 3,480   |  
|                                                                          |  |                         |         |          |      |   |          |      | 
|Corporate/Other (by type):                                                |  |                         |         |          |      |   |          |      |  |   |         |  
|Shared corporate expenses                                                 |  | $                       | (22,062 | )        |      | $ | (15,655  | )    |  | $ | (17,351 | )
|Litigation support services                                               |  |                         | 3,113   |          |      |   | 4,081    |      |  |   | 1,207   |  
|Other (expense) income, net                                               |  |                         | (1,049  | )        |      |   | (1,261   | )    |  |   | (1,427  | )
|Gain on sale of building                                                  |  |                         | 896     |          |      |   |         |      |  |   | 4,889   |  
|Gain on sale of certain printing assets                                   |  |                         |        |          |      |   |         |      |  |   | 15,369  |  
|Restructuring charges, integration costs and asset impairment
    charges |  |                         | (14,644 | )        |      |   | (23,076  | )    |  |   | (17,658 | )
|                                                                          |  |                         |         |          |      |   |          |      | 
|                                                                          |  | $                       | (33,746 | )        |      | $ | (35,911  | )    |  | $ | (14,971 | )
|                                                                          |  |                         |         |          |      |   |          |      | 

|                     |  |                         |         |          |      |   |          |      |  |   |         | 
|-------------------- |  | ----------------------- | ------- | -------- | ---- | - | -------- | ---- |  | - | ------- | 
|                     |  | Year Ended December 31, |        
|                     |  |                         |        
|                     |  |                         |         | Restated |      |   | Restated |     
|                     |  | 2004                    |         |          | 2003 |   |          | 2002 | 
|                     |  |                         |         |          |      |   |          |      | 
|Assets:              |  |                         |         |          |      |   |          |      |  |   |         | 
|Financial print      |  | $                       | 262,015 |          |      | $ | 241,563  |      |  | $ | 239,022 | 
|Globalization        |  |                         | 247,392 |          |      |   | 243,219  |      |  |   | 220,727 | 
|Corporate/ Other     |  |                         | 145,202 |          |      |   | 104,049  |      |  |   | 105,168 | 
|Assets held for sale |  |                         |        |          |      |   | 140,048  |      |  |   | 140,539 | 
|                     |  |                         |         |          |      |   |          |      | 
|                     |  | $                       | 654,609 |          |      | $ | 728,879  |      |  | $ | 705,456 | 
|                     |  |                         |         |          |      |   |          |      | 

72



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BOWNE & CO., INC. AND SUBSIDIARIES 
(Continued)


(In thousands, except share and per share information and
where noted)


|                  |  |                         |        |  |      |   |        |      |  |   |        | 
|----------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                  |  | Year Ended December 31, |       
|                  |  |                         |       
|                  |  | 2004                    |        |  | 2003 |   |        | 2002 | 
|                  |  |                         |        |  |      |   |        |      | 
|Capital spending: |  |                         |        |  |      |   |        |      |  |   |        | 
|Financial print   |  | $                       | 6,936  |  |      | $ | 6,621  |      |  | $ | 11,901 | 
|Globalization     |  |                         | 6,033  |  |      |   | 7,704  |      |  |   | 4,328  | 
|Corporate/ Other  |  |                         | 11,088 |  |      |   | 7,748  |      |  |   | 10,263 | 
|                  |  |                         |        |  |      |   |        |      | 
|                  |  | $                       | 24,057 |  |      | $ | 22,073 |      |  | $ | 26,492 | 
|                  |  |                         |        |  |      |   |        |      | 



|                                |  |                         |         |  |      |   |         |      |  |   |         | 
|------------------------------- |  | ----------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                |  | Year Ended December 31, |        
|                                |  |                         |        
|                                |  | 2004                    |         |  | 2003 |   |         | 2002 | 
|                                |  |                         |         |  |      |   |         |      | 
|Revenue by source:              |  |                         |         |  |      |   |         |      |  |   |         | 
|United States                   |  | $                       | 619,803 |  |      | $ | 613,728 |      |  | $ | 592,109 | 
|Canada                          |  |                         | 62,316  |  |      |   | 47,659  |      |  |   | 43,258  | 
|Other foreign, primarily Europe |  |                         | 216,892 |  |      |   | 186,249 |      |  |   | 143,498 | 
|                                |  |                         |         |  |      |   |         |      | 
|                                |  | $                       | 899,011 |  |      | $ | 847,636 |      |  | $ | 778,865 | 
|                                |  |                         |         |  |      |   |         |      | 

|                                |  |                         |         |          |      |   |          |      |  |   |         | 
|------------------------------- |  | ----------------------- | ------- | -------- | ---- | - | -------- | ---- |  | - | ------- | 
|                                |  | Year Ended December 31, |        
|                                |  |                         |        
|                                |  |                         |         | Restated |      |   | Restated |     
|                                |  | 2004                    |         |          | 2003 |   |          | 2002 | 
|                                |  |                         |         |          |      |   |          |      | 
|Long-lived assets, net:         |  |                         |         |          |      |   |          |      |  |   |         | 
|United States                   |  | $                       | 209,607 |          |      | $ | 328,961  |      |  | $ | 297,448 | 
|Canada                          |  |                         | 14,924  |          |      |   | 11,750   |      |  |   | 6,634   | 
|Other foreign, primarily Europe |  |                         | 114,452 |          |      |   | 117,779  |      |  |   | 139,541 | 
|                                |  |                         |         |          |      |   |          |      | 
|                                |  | $                       | 338,983 |          |      | $ | 458,490  |      |  | $ | 443,623 | 
|                                |  |                         |         |          |      |   |          |      | 

73



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BOWNE & CO., INC. AND SUBSIDIARIES


SUMMARY OF QUARTERLY DATA


(In thousands except share and per share information,
unaudited)








|                                                             |         |             |         |        |         |   |         |         |  |   |         |        |   |           |         |        |   |   |         |        |  
|------------------------------------------------------------ | ------- | ----------- | ------- | ------ | ------- | - | ------- | ------- |  | - | ------- | ------ | - | --------- | ------- | ------ | - | - | ------- | ------ | -
|                                                             |         | As Restated |         |        |         |   |        
|                                                             |         |             |         |        |         |   |        
|                                                             |         | First       |         |        | Second  |   |         | Third   |  |   | Fourth  |        |   |          
|                                                             |         | Quarter     |         |        | Quarter |   |         | Quarter |  |   | Quarter |        |   | Full Year |        
|                                                             |         |             |         |        |         |   |         |         |  |   |         |        |   |           |        
|Year Ended December 31, 2004                                 |         |             |         |        |         |   |         |         |  |   |         |        |   |           |         |        |   |   |         |       
|Revenue                                                      |         | $           | 232,727 |        |         | $ | 261,694 |         |  | $ | 194,146 |        |   | $         | 210,444 |        |   | $ | 899,011 |       
|Gross margin                                                 |         |             | 90,601  |        |         |   | 100,015 |         |  |   | 64,822  |        |   |           | 69,309  |        |   |   | 324,747 |       
|Income (loss) from continuing operations before income taxes |         |             | 4,501   |        |         |   | 16,984  |         |  |   | (7,931  | )      |   |           | (23,065 | )      |   |   | (9,511  | )     
|Income tax (expense) benefit                                 |         |             | (2,986  | )      |         |   | (6,967  | )       |  |   | 1,059   |        |   |           | 10,207  |        |   |   | 1,313   |       
|                                                             |         |             |         |        |         |   |         |         |  |   |         |        |   |           |        
|Income (loss) from continuing operations                     |         |             | 1,515   |        |         |   | 10,017  |         |  |   | (6,872  | )      |   |           | (12,858 | )      |   |   | (8,198  | )     
|Income from discontinued operations, net of taxes            |         |             | 1,449   |        |         |   | 1,171   |         |  |   | 412     |        |   |           | 32,670  |        |   |   | 35,702  |       
|                                                             |         |             |         |        |         |   |         |         |  |   |         |        |   |           |        
|Net income (loss)                                            |         | $           | 2,964   |        |         | $ | 11,188  |         |  | $ | (6,460  | )      |   | $         | 19,812  |        |   | $ | 27,504  |       
|                                                             |         |             |         |        |         |   |         |         |  |   |         |        |   |           |        
|Income (loss) per share from continuing operations:          |         |             |         |        |         |   |         |         |  |   |         |        |   |           |         |        |   |   |         |       
|                                                             | Basic   |             | $       | .04    |         |   | $       | .28     |  |   | $       | (.19   | ) |           | $       | (.36   | ) |   | $       | (.23   | )
|                                                             | Diluted |             |         | .04    |         |   |         | .27     |  |   |         | (.19   | ) |           |         | (.36   | ) |   |         | (.23   | )
|Net income (loss) per share from discontinued operations:    |         |             |         |        |         |   |         |         |  |   |         |        |   |           |         |        |   |   |         |       
|                                                             | Basic   |             |         | .04    |         |   |         | .03     |  |   |         | .01    |   |           |         | .91    |   |   |         | 1.00   |  
|                                                             | Diluted |             |         | .04    |         |   |         | .03     |  |   |         | .01    |   |           |         | .91    |   |   |         | 1.00   |  
|Total net income (loss) per share:                           |         |             |         |        |         |   |         |         |  |   |         |        |   |           |         |        |   |   |         |       
|                                                             | Basic   |             |         | .08    |         |   |         | .31     |  |   |         | (.18   | ) |           |         | .55    |   |   |         | .77    |  
|                                                             | Diluted |             | $       | .08    |         |   | $       | .30     |  |   | $       | (.18   | ) |           | $       | .55    |   |   | $       | .77    |  
|Average shares outstanding:                                  |         |             |         |        |         |   |         |         |  |   |         |        |   |           |         |        |   |   |         |       
|                                                             | Basic   |             |         | 35,247 |         |   |         | 35,977  |  |   |         | 36,410 |   |           |         | 35,956 |   |   |         | 35,898 |  
|                                                             | Diluted |             |         | 36,522 |         |   |         | 37,203  |  |   |         | 36,930 |   |           |         | 36,556 |   |   |         | 36,795 |  

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|                                                                             |         |          |         |        |          |   |         |          |  |   |          |        |   |           |         |        |   |   |         |        |  
|---------------------------------------------------------------------------- | ------- | -------- | ------- | ------ | -------- | - | ------- | -------- |  | - | -------- | ------ | - | --------- | ------- | ------ | - | - | ------- | ------ | -
|                                                                             |         | First    |         |        | Second   |   |         | Third    |  |   | Fourth   |        |   |          
|                                                                             |         | Quarter  |         |        | Quarter  |   |         | Quarter  |  |   | Quarter  |        |   | Full Year |        
|                                                                             |         | Restated |         |        | Restated |   |         | Restated |  |   | Restated |        |   | Restated  |        
|                                                                             |         |          |         |        |          |   |         |          |  |   |          |        |   |           |        
|Year Ended December 31, 2003                                                 |         |          |         |        |          |   |         |          |  |   |          |        |   |           |         |        |   |   |         |       
|Revenue                                                                      |         | $        | 200,575 |        |          | $ | 253,828 |          |  | $ | 197,015  |        |   | $         | 196,218 |        |   | $ | 847,636 |       
|Gross margin                                                                 |         |          | 73,797  |        |          |   | 91,022  |          |  |   | 73,332   |        |   |           | 73,319  |        |   |   | 311,470 |       
|(Loss) income from continuing operations before income taxes                 |         |          | (5,725  | )      |          |   | 349     |          |  |   | (1,181   | )      |   |           | (3,726  | )      |   |   | (10,283 | )     
|Income tax (expense) benefit                                                 |         |          | 1,665   |        |          |   | (243    | )        |  |   | (691     | )      |   |           | (2      | )      |   |   | 729     |       
|                                                                             |         |          |         |        |          |   |         |          |  |   |          |        |   |           |        
|(Loss) income from continuing operations                                     |         |          | (4,060  | )      |          |   | 106     |          |  |   | (1,872   | )      |   |           | (3,728  | )      |   |   | (9,554  | )     
|(Loss) income from discontinued operations, net of tax
    (expense) benefit |         |          | (30     | )      |          |   | 362     |          |  |   | 709      |        |   |           | 764     |        |   |   | 1,805   |       
|                                                                             |         |          |         |        |          |   |         |          |  |   |          |        |   |           |        
|Net (loss) income                                                            |         | $        | (4,090  | )      |          | $ | 468     |          |  | $ | (1,163   | )      |   | $         | (2,964  | )      |   | $ | (7,749  | )     
|                                                                             |         |          |         |        |          |   |         |          |  |   |          |        |   |           |        
|(Loss) income per share from continuing operations:                          |         |          |         |        |          |   |         |          |  |   |          |        |   |           |         |        |   |   |         |       
|                                                                             | Basic   |          | $       | (.12   | )        |   | $       | .00      |  |   | $        | (.06   | ) |           | $       | (.11   | ) |   | $       | (.28   | )
|                                                                             | Diluted |          |         | (.12   | )        |   |         | .00      |  |   |          | (.06   | ) |           |         | (.11   | ) |   |         | (.28   | )
|Net (loss) income per share from discontinued operations:                    |         |          |         |        |          |   |         |          |  |   |          |        |   |           |         |        |   |   |         |       
|                                                                             | Basic   |          |         | .00    |          |   |         | .01      |  |   |          | .03    |   |           |         | .02    |   |   |         | .05    |  
|                                                                             | Diluted |          |         | .00    |          |   |         | .01      |  |   |          | .03    |   |           |         | .02    |   |   |         | .05    |  
|Total net (loss) income per share:                                           |         |          |         |        |          |   |         |          |  |   |          |        |   |           |         |        |   |   |         |       
|                                                                             | Basic   |          |         | (.12   | )        |   |         | .01      |  |   |          | (.03   | ) |           |         | (.09   | ) |   |         | (.23   | )
|                                                                             | Diluted |          | $       | (.12   | )        |   | $       | .01      |  |   | $        | (.03   | ) |           | $       | (.09   | ) |   | $       | (.23   | )
|Average shares outstanding:                                                  |         |          |         |        |          |   |         |          |  |   |          |        |   |           |         |        |   |   |         |       
|                                                                             | Basic   |          |         | 33,585 |          |   |         | 33,632   |  |   |          | 33,782 |   |           |         | 33,945 |   |   |         | 33,736 |  
|                                                                             | Diluted |          |         | 34,599 |          |   |         | 34,828   |  |   |          | 35,568 |   |           |         | 35,861 |   |   |         | 35,147 |  








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Disclosure Controls and Procedures.


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Managements Annual Report on Internal Control
Over Financial Reporting.






Changes in Internal Control Over Financial
Reporting.




| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Formalized and enhanced processes and procedures for reconciling
    and reviewing the elimination of adjustments and entries related
    to purchase price adjustments for the globalization segment.        
|
| |  | Implemented a more thorough and comprehensive reconciliation and
    review of the profitability, tax expense and related tax
    accounts associated with each legal entity in the globalization
    segment.



| |                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company believes that the steps outlined above will
    strengthen the Companys internal control over financial
    reporting and address the material weaknesses described in
    (b) above.






|         |                  
|-------- | -----------------
|Item 9B. | Other Information





| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On August 30, 2004, the independent directors of the Board
    of Directors of the Company (the Board) increased
    Mr. David Sheas annual base salary to $400,000, and
    granted him 10,000 shares

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | of Bowne common stock to vest over a two-year period. This
    action was taken in connection with the Boards
    determination to promote Mr. Shea to President of the
    Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | On October 26, 2004, the independent Board directors
    granted Mr. Philip E. Kucera 40,000 shares of Bowne
    common stock to vest over a three-year period. This action was
    taken in connection with the Boards determination to
    promote Mr. Kucera to Chief Executive Officer of the
    Company. Also on October 26, 2004, the independent Board
    granted Mr. Shea 10,000 shares of Bowne common stock
    to vest over a three-year period. This action was taken in
    connection with the Boards determination to
    promote Mr. Shea to President and Chief Operating
    Officer of the Company.                                                                                                                           
|
| |  | On December 16, 2004, the Compensation and Management
    Development Committee of the Board (the Compensation
    Committee) set 2005 annual base salaries for
    Mr. Kucera, Mr. Shea, Mr. C. Cody Colquitt,
    Mr. L. Andy Williams, and Mr. Kenneth Swanson, each of
    whom is a Bowne named executive officer for 2004 (collectively,
    the Named Officers), at $450,000, $400,000,
    $330,000, $310,500, and $295,300 respectively, subject, in the
    case of Mr. Kucera and Mr. Shea, to approval by the
    independent Board directors. On December 16, 2004, the
    independent Board directors approved setting
    Mr. Kuceras and Mr. Sheas 2005 annual base
    salary as set forth above.                            
|
| |  | On December 16, 2004, the Compensation Committee also
    approved individual targets for 2005 performance-based awards
    that may be paid to the Named Officers under the Companys
    Annual Incentive Plan (AIP) and Long-Term Incentive Plan
    (LTIP), subject, in the case of Mr. Kucera and
    Mr. Shea, to approval by the independent directors of the
    Board. The AIP and LTIP awards will be calculated for each
    participant based on the attainment of the performance goals to
    be established in 2005. On December 16, 2005, the
    independent Board directors approved setting 2005
    performance-based AIP and LTIP individual target awards for
    Mr. Kucera and Mr. Shea.                                     
|
| |  | On December 16, 2004, the Compensation Committee also
    granted Mr. Colquitt 10,000 shares of Bowne common
    stock to vest over a three-year period. This action was taken in
    recognition of Mr. Colquitts efforts as to various
    financial matters on behalf of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | On January 18, 2005, the Compensation Committee increased
    Mr. Swansons annual base salary to $305,000 and
    granted him 5,000 shares of Bowne common stock to vest over a
    three-year period. This action was taken in connection with
    Mr. Swanson assuming responsibilities for the
    Companys technology platform.                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | On March 10, 2005, the Compensation Committee approved the
    payment of 2004 performance-based awards under the AIP and LTIP
    to the Named Officers, subject in the case of Mr. Kucera
    and Mr. Shea, to approval by the independent Board
    directors. The awards were calculated for each participant based
    on the attainment of financial performance standards established
    during 2004. The AIP financial performance standards were based
    on the Companys annual operating results. The LTIP
    financial performance standards were based on the Companys
    return on invested capital. On March 10, 2005, the
    independent Board directors approved the 2004 AIP and LTIP
    awards to Mr. Kucera and Mr. Shea.
|
| |  | On March 10, 2005, the Compensation Committee also approved
    a change to the Companys Supplemental Executive Retirement
    Plan (SERP). The change limits prior service credit
    granted to any senior executive hired by the Company subsequent
    to March 10, 2005 and who become eligible for participation
    in the SERP to a maximum amount of one year of prior service
    credit for every year of service with the Company. Subject to
    such limitation, the exact amount of such grant shall be
    determined by the Company in its discretion.                                                                                                                                                                           

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##### Table of Contents






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant











(www.bowne.com)


(www.bowne.com)







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters



78



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##### Table of Contents








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Documents filed as part of this Report:




|                                                                                                   |  |                |     | 
|-------------------------------------------------------------------------------------------------- |  | -------------- | --- | 
|                                                                                                   |  | Page Number    |    
|                                                                                                   |  | In This Report |    
|                                                                                                   |  |                |    
|Report of Independent Registered Public Accounting Firm                                            |  |                | 37  | 
|Consolidated Statements of Operations  Years Ended
    December 31, 2004, 2003 and 2002           |  |                | 38  | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                       |  |                | 39  | 
|Consolidated Statements of Cash Flows  Years Ended
    December 31, 2004, 2003 and 2002           |  |                | 40  | 
|Consolidated Statements of Stockholders Equity 
    Years Ended December 31, 2004, 2003 and 2002 |  |                | 41  | 
|Notes to Consolidated Financial Statements                                                         |  |                | 42  | 
|(2) Financial Statement Schedule  Years Ended
    December 31, 2004, 2003 and 2002               
|                                                                                                  
|Schedule II  Valuation and Qualifying Accounts                                                    |  |                | S-1 | 





|        |    |    |  |   |             |                                                                                                                                                                                                                                                                              
|------- | -- | -- |  | - | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |    |  |   |            
|Number  |    |    |  |   | Description
|        |    |    |  |   |            
|        | 3  | .1 |  |  |             | Certificate of Incorporation (incorporated by reference to
    Exhibit 3 to the Companys current report on Form 8-K
    dated June 23, 1998)                                                                                                                                
|        | 3  | .2 |  |  |             | Certificate of Designations (incorporated by reference to
    Exhibit 2 to the Companys current report on Form 8-K
    dated June 23, 1998)                                                                                                                                 
|        | 3  | .5 |  |  |             | By-Laws (incorporated by reference to Exhibit 4 to the
    Companys current report on Form 8-K dated June 23,
    1998)                                                                                                                                                     
|        | 4  | .1 |  |  |             | Rights Agreement dated June 19, 1998 (incorporated by
    reference to Exhibit 5 to the Companys current report
    on Form 8-K dated June 23, 1998)                                                                                                                        
|        | 4  | .2 |  |  |             | Indenture, dated as of September 24, 2003 among
    Bowne & Co., Inc. and the Bank of New York as Trustee
    (incorporated by reference to Exhibit 4.2 to
    Bowne & Co., Inc.s Registration Statement on
    Form S-3 filed on October 17, 2003, File
    No. 333-109810)
|        | 10 | .1 |  |  |             | Amended and Restated 1981 Stock Option Plan (incorporated by
    reference to the Companys definitive Proxy Statement dated
    January 30, 1985)                                                                                                                           
|        | 10 | .2 |  |  |             | Amendment to 1981 Stock Option Plan (incorporated by reference
    to the Companys Post-Effective Amendment No. 1 on
    Form S-8 relating to the Companys Stock Option Plan
    dated April 16, 1987)                                                                     

79



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|        |    |     |  |   |             |                                                                                                                                                                                                                                                                                                             
|------- | -- | --- |  | - | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |  |   |            
|Number  |    |     |  |   | Description
|        |    |     |  |   |            
|        | 10 | .3  |  |  |             | Amendment to 1981 Stock Option Plan (incorporated by reference
    to the Companys Post-Effective Amendment No. 2 on
    Form S-8 relating to the Companys Stock Option Plan
    dated October 19, 1988)                                                                                                  
|        | 10 | .4  |  |  |             | 1992 Stock Option Plan (incorporated by reference to
    Exhibit 10.4 to the Companys annual report on Form
    10-K for the year ended December 31, 2002)                                                                                                                                                 
|        | 10 | .5  |  |  |             | 1997 Stock Incentive Plan (incorporated by reference to
    Exhibit A to the Companys definitive Proxy Statement
    dated February 6, 1997)                                                                                                                                                               
|        | 10 | .6  |  |  |             | 1999 Incentive Compensation Plan (incorporated by reference to
    Exhibit A to the Companys definitive proxy statement
    dated April 7, 1999)                                                                                                                                                           
|        | 10 | .7  |  |  |             | Supplemental Executive Retirement Plan effective as of
    January 1, 1999 (incorporated by reference to
    Exhibit 10.7 to the Companys annual report on Form
    10-K for the year ended December 31, 1999)                                                                                             
|        | 10 | .8  |  |  |             | Form of Termination Protection Agreement for selected key
    Employees providing for a possible change in ownership or
    control of the Company (incorporated by reference to
    Exhibit 10.8 to the Companys annual report on Form
    10-K for the year ended October 31, 1995)                      
|        | 10 | .9  |  |  |             | Revised Termination Protection Agreement as of August 23,
    1995 (incorporated by reference to Exhibit 10.9 to the
    Companys annual report on Form 10-K for the year ended
    December 31, 2000)                                                                                                     
|        | 10 | .10 |  |  |             | Letter agreement dated January 29, 1996 between the Company
    and Robert M. Johnson relating to restricted stock and certain
    compensation and benefits matters (incorporated by reference to
    Exhibit 10.10 to the Companys annual report on Form
    10-K/A for the year ended December 31, 1997)
|        | 10 | .11 |  |  |             | Amendment dated September 1, 1998 to the letter agreement
    in Exhibit 10.9 above (incorporated by reference to
    Exhibit 10.13 in the Companys annual report on Form
    10-K for the year ended December 31, 1998)                                                                                   
|        | 10 | .12 |  |  |             | 2000 Stock Incentive Plan (incorporated by reference to Exhibit
    10.12 in the Companys annual report on Form 10-K for the
    year ended December 31, 2003)                                                                                                                                             
|        | 10 | .13 |  |  |             | Long-Term Performance Plan (incorporated by reference to Exhibit
    10.13 in the Companys annual report on Form 10-K for the
    year ended December 31, 2003)                                                                                                                                            
|        | 10 | .14 |  |  |             | Deferred Award Plan (incorporated by reference to Exhibit 10.14
    in the Companys annual report on Form 10-K for the year
    ended December 31, 2003)                                                                                                                                                   
|        | 10 | .15 |  |  |             | Amended and Restated Stock Plan for Directors (filed herewith)                                                                                                                                                                                                                                              
|        | 10 | .16 |  |  |             | Base Salaries and Other Compensation of Named Executive Officers
    of the Registrant (filed herewith)                                                                                                                                                                                                     
|        | 10 | .17 |  |  |             | Intercreditor Agreement, dated as of July 2, 2002, related
    to First Amendment to Note Purchase Agreements (incorporated by
    reference to Exhibit 10.15 in the Companys annual
    report on Form 10-K for the year ended December 31,
    2002)                                                     
|        | 10 | .18 |  |  |             | Credit Agreement, dated as of July 2, 2002, related to
    $175 million revolving credit facility (incorporated by
    reference to Exhibit 10.16 in the Companys quarterly
    report on Form 10-Q for the period ended June 30, 2002)                                                                    
|        | 10 | .19 |  |  |             | Stock Purchase Agreement by and among BGS Companies, Inc. and
    Berlitz International, Inc. and Berlitz Investment Corporation
    dated August 7, 2002 (incorporated by reference to
    Exhibit 10.17 in the Companys quarterly report on
    Form 10-Q for the period ended September 30, 2002)       
|        | 10 | .20 |  |  |             | Intercreditor and Collateral Agency Agreement, dated as of
    March 28, 2003, related to Second Amendment to Note
    Purchase Agreements (incorporated by reference to
    Exhibit 10.19 in the Companys quarterly report on
    Form 10-Q for the period ended March 31, 2003)                          
|        | 10 | .21 |  |  |             | First Amendment, dated as of March 28, 2003, to Credit
    Agreement dated as of July 2, 2002, related to
    $175 million revolving credit facility (incorporated by
    reference to Exhibit 10.20 in the Companys quarterly
    report on Form 10-Q for the period ended March 31, 2003)                

80



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|        |    |     |  |   |             |                                                                                                                                                                                                                                                                                                                             
|------- | -- | --- |  | - | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |  |   |            
|Number  |    |     |  |   | Description
|        |    |     |  |   |            
|        | 10 | .22 |  |  |             | Second Amendment, dated as of September 18, 2003, to Credit
    Agreement dated as of July 2, 2002, related to
    $175.0 million revolving credit facility (incorporated by
    reference to Exhibit 10.2 to Bowne & Co., Inc.s
    Registration Statement on Form S-3 filed on
    October 17, 2003, File No. 333-109810)
|        | 10 | .23 |  |  |             | Third Amendment, dated October 2004 to Credit Agreement dated as
    of July 2, 2002, related to $115.0 million revolving
    credit facility (incorporated by reference to Exhibit 10.25
    in the Companys quarterly report on Form 10-Q for the
    period ended September 30, 2004)                                   
|        | 10 | .24 |  |  |             | Consent and Waiver Agreement dated January 12, 2005,
    related to $115 million revolving credit facility (filed
    herewith)                                                                                                                                                                                             
|        | 10 | .25 |  |  |             | Form of Stock Option Agreement under the 1999 Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 10.26 in the Companys quarterly report on
    Form 10-Q for the period ended September 30, 2004                                                                                                    
|        | 10 | .26 |  |  |             | Form of Restricted Stock Agreement under the 1999 Incentive
    Compensation Plan (incorporated by reference to
    Exhibit 10.27 in the Companys quarterly report on
    Form 10-Q for the period ended September 30, 2004)                                                                                               
|        | 10 | .27 |  |  |             | Lease agreement between New Water Street Corp. and Bowne &
    Co. Inc. dated February 25, 2005 relating to the lease of office
    space at 55 Water Street, New York, New York (incorporated
    by reference to Exhibit 99.1 to the Companys current
    report on Form 8-K dated February 28, 2005)                    
|        | 21 |     |  |  |             | Subsidiaries of the Company                                                                                                                                                                                                                                                                                                 
|        | 23 | .1  |  |  |             | Consent of KPMG LLP, Independent Registered Public Accounting
    Firm                                                                                                                                                                                                                                                      
|        | 24 |     |  |  |             | Powers of Attorney                                                                                                                                                                                                                                                                                                          
|        | 31 | .1  |  |  |             | Certification pursuant to section 302 of the Sarbanes-Oxley
    Act of 2002, signed by Philip E. Kucera, Chief Executive Officer                                                                                                                                                                                            
|        | 31 | .2  |  |  |             | Certification pursuant to section 302 of the Sarbanes-Oxley
    Act of 2002, signed by C. Cody Colquitt, Senior Vice President
    and Chief Financial Officer                                                                                                                                                              
|        | 32 | .1  |  |  |             | Certification pursuant to 18 U.S.C. Section 1350 as
    adopted pursuant to section 906 of the Sarbanes-Oxley Act
    of 2002, signed by Philip E. Kucera, Chief Executive Officer                                                                                                                                          
|        | 32 | .2  |  |  |             | Certification pursuant to 18 U.S.C. Section 1350 as
    adopted pursuant to section 906 of the Sarbanes-Oxley Act
    of 2002, signed by C. Cody Colquitt, Senior Vice President and
    Chief Financial Officer                                                                                                            

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SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.



| |     |                     
| | --- | --------------------
| | By: | /s/ Philip E. Kucera

| |                              
| | -----------------------------
| |                              
| | Philip E. Kucera             
| | Chief Executive Officer      
| | (Principal Executive Officer)





|                                                       |  |                                                                                         |  |                |  | 
|------------------------------------------------------ |  | --------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                              |  | Title                                                                                   |  | Date          
|                                                       |  |                                                                                         |  |               
|                                                      
|/s/ Philip E. Kucera(Philip
    E. Kucera)             |  | Chief Executive Officer and Director                                                    |  | March 16, 2005
|                                                      
|/s/ David J. Shea(David
    J. Shea)                   |  | Chief Operating Officer,
    President and Director                                     |  | March 16, 2005
|                                                      
|/s/ C. Cody Colquitt(C.
    Cody Colquitt)             |  | Senior Vice President and
    Chief Financial Officer
    (Principal Financial Officer) |  | March 16, 2005
|                                                      
|/s/ Richard Bambach,
    Jr.(Richard
    Bambach, Jr.) |  | Vice President and
    Corporate Controller
    (Principal Accounting Officer)          |  | March 16, 2005
|                                                      
|/s/ H. Marshall Schwarz(H.
    Marshall Schwarz)       |  | Non-Executive Chairman of the Board and Director                                        |  | March 16, 2005
|                                                      
|/s/ Carl J. Crosetto(Carl
    J. Crosetto)             |  | Director                                                                                |  | March 16, 2005
|                                                      
|/s/ Douglas B. Fox(Douglas
    B. Fox)                 |  | Director                                                                                |  | March 16, 2005
|                                                      
|/s/ Gloria M. Portela(Gloria
    M. Portela)           |  | Director                                                                                |  | March 16, 2005
|                                                      
|/s/ Wendell M. Smith(Wendell
    M. Smith)             |  | Director                                                                                |  | March 16, 2005

82



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|                                         |  |          |  |                |  | 
|---------------------------------------- |  | -------- |  | -------------- |  | 
|Signature                                |  | Title    |  | Date          
|                                         |  |          |  |               
|                                        
|/s/ Lisa A. Stanley(Lisa
    A. Stanley) |  | Director |  | March 16, 2005
|                                        
|/s/ Vincent Tese(Vincent
    Tese)       |  | Director |  | March 16, 2005
|                                        
|/s/ Harry Wallaesa(Harry
    Wallaesa)   |  | Director |  | March 16, 2005
|                                        
|/s/ Richard R. West(Richard
    R. West) |  | Director |  | March 16, 2005

83



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BOWNE & CO., INC. AND SUBSIDIARIES


SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS


|                                 |                              |                |   |           |            |  |   |             |  |  |            |       |  |  |   |        | 
|-------------------------------- | ---------------------------- | -------------- | - | --------- | ---------- |  | - | ----------- |  |  | ---------- | ----- |  |  | - | ------ | 
|Column A                         |                              | Column B       |   |           | Column C   |  |   | Column D    |  |  | Column E   |      
|                                 |                              |                |   |           |            |  |   |             |  |  |            |      
|                                 |                              |                |   | Additions |            |  |   |             | 
|                                 |                              | Balance at     |   |           | Charged to |  |   | Deductions/ |  |  | Balance at |      
|                                 |                              | Beginning of   |   |           | Costs and  |  |   | (Additions) |  |  | End of     |      
|Description                      |                              | Period         |   |           | Expenses   |  |   | (a)         |  |  | Period     |      
|                                 |                              |                |   |           |            |  |   |             |  |  |            |      
|                                 |                              | (In thousands) |  
|Allowance for doubtful accounts: |                              |                |   |           |            |  |   |             |  |  |            |       |  |  |   |       
|                                 | Year Ended December 31, 2004 |                | $ | 14,597    |            |  | $ | 2,026       |  |  | $          | 2,231 |  |  | $ | 14,392 | 
|                                 | Year Ended December 31, 2003 |                | $ | 14,065    |            |  | $ | 4,284       |  |  | $          | 3,752 |  |  | $ | 14,597 | 
|                                 | Year Ended December 31, 2002 |                | $ | 12,067    |            |  | $ | 6,697       |  |  | $          | 4,699 |  |  | $ | 14,065 | 






|    |                                                       
|--- | ------------------------------------------------------
|(a) | Uncollectible accounts written off, net of recoveries.

S-1