##### 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 1934For the fiscal year ended
    December 31, 2006,oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For 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)   55 Water Street
    New York, New York


10041(Address of principal executive
    offices)


(Zip code
)   (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 RegisteredCommon Stock, Par Value $.01

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of class)
  o þ
  þ o
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  o þ o
  Rule 12b-2).  Yes o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K:
  Items 10-12




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##### 



TABLE OF
    CONTENTS
  Form 10-KItem No.

Name of Item

PagePART IItem 1.


Business


2Item 1A.


Risk
    Factors


9Item 1B.


Unresolved Staff
    Comments


14Item 2.


Properties


15Item 3.


Legal
    Proceedings


15Item 4.


Submission of
    Matters to a Vote of Security Holders


16Supplemental Item.
    Executive Officers of the Registrant


16PART IIItem 5.


Market for
    Registrants Common Equity and Related Stockholder
    Matters


17Item 6.


Selected Financial
    Data


20Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


21Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


42Item 8.


Financial
    Statements and Supplementary Data


44Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


86Item 9A.


Controls and
    Procedures


86Item 9B.


Other
    Information


90PART IIIItem 10.


Directors and
    Executive Officers of the Registrant


91Item 11.


Executive
    Compensation


91Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


91Item 13.


Certain
    Relationships and Related Transactions


92Item 14.


Principal
    Accountant Fees and Services


92PART IVItem 15.


Exhibits and
    Financial Statement Schedules


93Signatures


96CertificationsEX-10.22: FORM OF LONG-TERM EQUITY INCENTIVE AWARD AGREEMENTEX-10.23: AMENDMENT TO LONG-TERM EQUITY INCENTIVE AWARD AGREEMENTEX-10.24: CONSULTING AGREEMENTEX-21: SUBSIDIARIESEX-23.1: CONSENT OF KPMG LLPEX-24: POWERS OF ATTORNEYEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION   1




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##### Table of Contents



PART I  Item 1.
    Business    Financial Communications
    Marketing & Business Communications
    (MBC) print-on-demand, web-to-print,
  ® ®
 2




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##### Table of Contents



Industry
    Overview
    print-on-demand end-to-end, end-to-end
  The
    Company
  Financial
    Communications
  ® 8-K tm 6-K tm . tm
 3




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##### Table of Contents




    In 2006, the Company completed the implementation of its newest
    proprietary composition system, ACE (Advanced Composition
    Engine). The Company believes that ACE will significantly
    improve productivity, accuracy and page turnaround, and
    substantially shorten training cycles, giving the Company
    greater flexibility and responsiveness to its clients.
    Advances in technology have permitted Bowne to centralize the
    majority of its composition operations into six Centers of
    Excellence, to reduce its composition workforce and to
    outsource the more routine and less critical composition work at
    a lower cost than performing it in-house.
    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.
    Bowne was recognized by InfoWorld magazine in 2005 for its
    pioneering role in XBRL-based solutions and for being the first
    company to file earnings information through the SECs
    voluntary pilot program to test this new data tagging
    technology. Bowne continues to participate in the SECs
    voluntary filing program. During 2006, the Company formed a
    strategic relationship with
    Rivet®
    Software to provide SEC filing 4




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##### Table of Contents



companies with a complete interactive data solution, including
    the creation, management, submission and analysis of XBRL
    documents, related consulting services, and software support and
    maintenance.  
    XMarktm,
    another 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.
    E2
    Expresstm,
    a proprietary technology using
    XMarktm
    as the underlying component, streamlines the process of
    converting
    Microsoft®
    Word, Excel, and PowerPoint files to standardized SEC compliant
    HTML. By standardizing the style elements of typical SEC
    compliance documents such as
    8-Ks and
    10-Qs, a
    significant amount of automation has been added to the
    conversion process. E2 Express reduces the conversion time by
    approximately 30 percent and additional improvements are
    expected in 2007.
    Based upon technology acquired from PLUM Computer Consulting
    Inc. during 2006, the Company announced the launch of a content
    management system,
    FundAligntm,
    that provides mutual fund and investment management firms with
    the means to collaborate throughout the process of creating,
    composing and distributing critical communications such as
    prospectuses and shareholder reports. The system combines a
    Microsoft®
    interface with a network of composing systems.
    Bowne was named to the 2006 Information Week 500, the annual
    ranking of the nations most innovative Information
    Technology companies. Bowne placed 20th in the Business and
    Consulting Category. Bowne was recognized for investments in
    innovative technology infrastructure such as ACE, and its client
    facilities with an advanced telecommunications and information
    technology infrastructure and
    state-of-the-art
    amenities.      Marketing &
    Business Communication
  print-on-demand
    
    Clients are provided with web-based tools to edit and manage
    their document content repository and order documents for
    delivery, with an electronic library of the clients
    documents that can be edited in real-time by the clients
    sales, marketing, legal and other authorized users.
    Extensive business logic provides for automated customization
    and personalization of each document based on an individual
    clients needs. 5




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
    Production and distribution methods are flexible to match the
    needs of our clients with a mix of capabilities for digital
    print and electronic delivery that can be managed at the
    document level.
    Automated controls incorporated throughout the system, using
    barcode technology, provide for speed, quality, and audit
    capabilities for a unique document to be tracked anywhere in the
    system.    Other
    Information
    Years EndedDecember 31,Type of Service

2006


2005


2004Transactional financial printing


35
%


37
%


43
%Compliance reporting


22



25



23Mutual fund printing


18



23



20Commercial printing


8



7



6Other


2



2



2Financial Communications


85



94



94Marketing & Business
    Communications


15



6



6100
%


100
%


100
%       On-site
  (212) 924-5500.
 6




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Competition
          Cyclical,
    Seasonal and Other Factors Affecting the Companys
    Business
        Research
    and Development
         7




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Patents
    and Other Rights
  ® sm sm tm ® ® tm 8-K tm 6-K tm ® ® ® tm tm tm tm tm tm tm tm tm tm
  Sales and
    Marketing
    Customers
    and Backlog of Orders
      Employees
    Suppliers
   8




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##### Table of Contents



International
    Sales
   Item 1A.  Risk
    Factors  Form 10-K.
  Our
    strategy to increase revenue through enhancement and
    streamlining our operations and acquiring businesses that
    complement our existing businesses may not be successful, which
    could adversely affect results and may negatively affect
    earnings.
    
    the pace of technological changes affecting our business
    segments and our clients needs could accelerate, and our
    products and services could become obsolete before we have
    recovered the cost of developing them or obtained the desired
    return on our investment; and
    product innovations and effectively serving our clients requires
    a large investment in personnel and training. The market for
    sales and technical staff is competitive, and we may not be able
    to attract and retain a sufficient number of qualified personnel.    Revenue
    from printed financial documents is subject to regulatory
    changes and volatility in demand, which could adversely affect
    our operating results.
   9




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The
    environment in which we compete is highly competitive, which
    creates adverse pricing pressures and may harm our business and
    operating results if we cannot compete
    effectively.
    in-house
    The
    market for our marketing and business communications services is
    relatively new and we may not realize the anticipated benefits
    of our investment.
       10




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##### Table of Contents



Our
    business could be harmed if we do not successfully manage the
    integration of businesses that we acquire.
    
    the difficulty of integrating the operations and personnel of
    the acquired businesses into our ongoing operations;
    the potential disruption of our ongoing business and distraction
    of management;
    the difficulty in incorporating acquired technology and rights
    into our products and technology;
    unanticipated expenses and delays relating to completing
    acquired development projects and technology integration;
    a potential increase in our indebtedness and contingent
    liabilities, which could restrict our ability to access
    additional capital when needed or to pursue other important
    elements of our business strategy;
    the management of geographically remote units;
    the establishment and maintenance of uniform standards,
    controls, procedures and policies;
    the impairment of relationships with employees and clients as a
    result of any integration of new management personnel;
    risks of entering markets or types of businesses in which we
    have either limited or no direct experience;
    the potential loss of key employees or clients of the acquired
    businesses; and
    potential unknown liabilities, such as liability for hazardous
    substances, or other difficulties associated with acquired
    businesses.    We are
    exposed to risks associated with operations outside of the
    United States.
    
    costs of customizing products and services for foreign countries;
    difficulties in managing and staffing international operations;
    increased infrastructure costs including legal, tax, accounting
    and information technology;
    reduced protection for intellectual property rights in some
    countries;
    exposure to currency exchange rate fluctuations;
    potentially longer sales and payment cycles;
    potentially greater difficulties in collecting accounts
    receivable, including currency conversion and cash repatriation
    from foreign jurisdictions; 11




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##### Table of Contents




    increased licenses, tariffs and other trade barriers;
    potentially adverse tax consequences;
    increased burdens of complying with a wide variety of foreign
    laws, including employment-related laws, which may be more
    stringent than U.S. laws;
    unexpected changes in regulatory requirements; and
    political and economic instability.    We do
    not have long-term service agreements in the transactional
    financial print business, which may make it difficult for us to
    achieve steady earnings growth on a quarterly basis and lead to
    adverse movements in the price of our common
    stock.
    If we
    are unable to retain our key employees and attract and retain
    other qualified personnel, our business could
    suffer.
  and/or
  If we
    fail to keep our clients information confidential or if we
    handle their information improperly, our business and reputation
    could be significantly and adversely affected.
   12




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Our
    services depend on the reliability of our computer systems and
    our ability to implement and maintain information technology and
    security measures.
    Our
    services depend on third-parties to provide or support some of
    our services and our business and reputation could suffer if
    these third-parties fail to perform
    satisfactorily.
    We
    must adapt to rapid changes in technology and client
    requirements to remain competitive.
    
    technological change;
    frequent product and service introductions; and
    evolving client requirements.    
    enhance our existing products and services;
    successfully develop new products and services that meet
    increasing client requirements; and
    gain market acceptance.    
    have sufficient resources to make these investments;
    be successful in developing product and service enhancements or
    new products and services on a timely basis, if at all; or
    be able to market successfully these enhancements and new
    products once developed.   13




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##### Table of Contents



The
    inability to identify, obtain and retain important intellectual
    property rights to technology could harm our
    business.
    Fluctuations
    in the costs of paper, ink, energy, and other raw materials may
    adversely impact the Company.
    Item 1B.
    Unresolved
    Staff Comments  Form 10-K,
 14




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##### Table of Contents



Item 2.
    Properties    YearLease



SquareLocation

Expires

Description

Footage5 Henderson Drive
    West Caldwell, NJ


2014


Digital printing plant and general
    office space.


211,00055 Water Street
    New York, NY


2026


Customer service center, general
    office space, and corporate headquarters.


204,00060 Gervais Drive
    Don Mills (Toronto),
    Ontario, Canada


2010


Customer service center, printing
    plant, and general office space.


71,00013527 Orden Drive
    Santa Fe Springs, CA


2011


Digital printing plant and general
    office space.


60,0006800 West Calumet Road
    Milwaukee, WI


2008


Digital printing plant and general
    office space.


57,0001570 Northside Drive
    Atlanta, GA


2009


Customer service center,
    composition, printing plant and general office space.


51,0005 Cornell Place
    Wilmington, MA


2011


Digital printing plant and general
    office space.


49,50018050 Central Avenue
    Carson, CA


2014


Printing plant and general office
    space.


40,000500 West Madison Avenue
    Chicago, IL


2016


Customer service center and
    general office space.


36,0001 London Wall
    London, England


2021


Customer service center and
    general office space.


16,5005021 Nimtz Parkway
    South Bend, IN


Owned


Printing plant and general office
    space.


127,000215 County Avenue
    Secaucus, NJ


Owned


Printing plant and general office
    space.


125,0001200 Oliver Street
    Houston, TX


Owned


Customer service center,
    composition, printing plant and general office space.


110,000411 D Street
    Boston, MA


Owned


Customer service center,
    composition, printing plant and general office space.


73,0001241 Superior Avenue
    Cleveland, OH


Owned


Customer service center,
    composition and general office space.


73,0001931 Market Center Blvd,
    Dallas, TX


Owned


Customer service center,
    composition and general office space.


68,0001500 North Central Avenue
    Phoenix, AZ


Owned


Customer service center,
    composition and general office space.


53,000     Item 3.
    Legal
    Proceedings   15




---



##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders    Supplemental
    Item.
    Executive
    Officers of the Registrant  Form 10-K.
  Name

Principal Occupation During Past Five Years

AgeDavid J. Shea

Chairman, President, and Chief
    Executive Officer since January 2007, previously President and
    Chief Operating Officer since October 2004, and served as
    President from August 2004 to October 2004. Also served as
    Senior Vice President, Bowne & Co., Inc., and Senior
    Vice President and Chief Executive Officer, Bowne Business
    Solutions and Bowne Enterprise Solutions since November 2003;
    and as Senior Vice President of the Company and President of
    Bowne Business Solutions since May 2002. Also served as
    Executive Vice President, Business Development and Strategic
    Technology of Bowne Business Solutions from July 1998.


51Elaine Beitler

Senior Vice President since March
    2007, and President of Bowne Marketing & Business
    Communications since December 2005; previously served as General
    Manager of Bowne Enterprise Solutions since 2004 and Senior Vice
    President of Client Services and Operations for Bowne Enterprise
    Solutions from 2003, and Chief Technology Officer for Bowne
    Technology Enterprise since 1998.


47Susan W. Cummiskey

Senior Vice President, Human
    Resources since December 1998.


54William P. Penders

Senior Vice President and
    President of Bowne Financial Communications since August 2006;
    previously Chief Operating Officer of Bowne Financial
    Communications since December 2005, and served as President of
    Bowne International and President of the Eastern Region of Bowne
    Financial Communications since 2003, and as President of Bowne
    International since 2000.


45Scott 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.


55John J. Walker

Senior Vice President and Chief
    Financial Officer since September 2006; previously, served as
    Senior Vice President, Chief Financial Officer and Treasurer for
    Loews Cineplex Entertainment Corporation since 1990.


54Richard Bambach, Jr.

Chief Accounting Officer of the
    Company since May 2002 and Vice President, Corporate Controller
    since August 2001; served as Interim Chief Financial Officer of
    the Company from April 2006 to September 2006.


42William J. Coote

Vice President and Treasurer since
    December 1998.


52    16




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity and Related Stockholder
    Matters  Share
    Prices
    DividendsPerHigh


Low


Share2006Fourth quarter

$
16.47


$
14.07


$
.055Third quarter


15.90



13.05



.055Second quarter


17.00



13.10



.055First quarter


16.67



13.99



.055Calendar year


17.00



13.05


$
.222005Fourth quarter

$
15.71


$
12.96


$
.055Third quarter


14.96



12.93



.055Second quarter


15.15



11.65



.055First quarter


16.16



14.15



.055Calendar year


16.16



11.65


$
.22    17




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##### Table of Contents



Comparison
    of Five-Year Cumulative Return
        
  BasePeriodCompany/Index

12/31/01

12/31/02

12/31/03

12/31/04

12/31/05

12/31/06Bowne & Co., Inc.

$
100


$
95.05


$
109.76


$
133.54


$
123.74


$
134.85S&P 500 Index

$
100


$
77.90


$
100.25


$
111.15


$
116.61


$
135.03S&P 500 Diversified
    Commercial & Professional Services

$
100


$
79.84


$
121.35


$
125.65


$
111.25


$
114.79   Stock
    Repurchase
   18




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##### Table of Contents



10b5-1
      TotalNumber of


ApproximateShares


Dollar Value ofPurchased as


Shares thatPart of


May Yet BeTotal


Average


Publicly


PurchasedNumber


Price


Announced


Under theof Shares


Paid Per


Plans or


Plans orPeriod

Purchased


Share


Programs


Programs(In thousands, except per share data)October 1, 2006 to
    October 31, 2006


361


$
15.19



361


$
62,100November 1, 2006 to
    November 30, 2006


346


$
15.57



346


$
56,700December 1, 2006 to
    December 31, 2006


276


$
15.72



276


$
52,400Total


983


$
14.47



983  19




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Five-Year
    Financial Summary
  Years Ended December 31,2006


2005


2004


2003


2002(In thousands)Operating DataRevenue

$
832,215


$
666,934


$
637,413


$
590,856


$
638,269Expenses:Cost of revenue


(542,696
)


(428,411
)


(397,715
)


(367,653
)


(391,847
)Selling and administrative


(223,635
)


(186,774
)


(192,724
)


(176,969
)


(197,204
)Depreciation


(25,379
)


(25,625
)


(25,372
)


(29,147
)


(31,082
)Amortization


(534
)














Restructuring charges, integration
    costs and asset impairment charges


(14,097
)


(10,410
)


(7,738
)


(14,471
)


(7,035
)Gain on sale of certain printing
    assets


















15,369Gain on sale of building










896







4,889Purchased in-process research and
    development


(958
)














Operating income


24,916



15,714



14,760



2,616



31,359Interest expense


(5,477
)


(5,154
)


(10,435
)


(11,200
)


(6,914
)Loss on extinguishment of debt










(8,815
)






(Loss) gain on sale of marketable
    securities






(7,890
)






1,022



Other income (expense), net


3,341



1,537



(40
)


(1,626
)


(357
)Income (loss) from continuing
    operations before income taxes


22,780



4,207



(4,530
)


(9,188
)


24,088Income tax (expense) benefit


(10,701
)


(4,330
)


224



(1,686
)


(8,541
)Income (loss) from continuing
    operations

$
12,079


$
(123
)

$
(4,306
)

$
(10,874
)

$
15,547   20




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##### Table of Contents



Years Ended December 31,2006


2005


2004


2003


2002(In thousands, except per share data)Balance Sheet DataCurrent assets

$
300,918


$
369,995


$
308,299


$
266,000


$
269,676Current liabilities

$
128,527


$
139,100


$
157,387


$
179,088


$
182,816Working capital

$
172,391


$
230,895


$
150,912


$
86,912


$
86,860Current ratio


2.34:1



2.66:1



1.96:1



1.49:1



1.48:1Plant and equipment, net

$
132,767


$
106,908


$
93,939


$
108,410


$
124,697Total assets

$
515,401


$
563,248


$
661,895


$
729,521


$
719,918Total debt

$
77,509


$
75,780


$
75,000


$
138,000


$
140,431Stockholders equity

$
236,748


$
311,773


$
379,941


$
360,511


$
348,514Per Share DataEarnings (loss) per share from
    continuing operations:Basic

$
.39


$
.00


$
(.12
)

$
(.32
)

$
.46Diluted

$
.38


$
.00


$
(.12
)

$
(.32
)

$
.45Dividends

$
.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
       21




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##### Table of Contents




    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;
    changes in air and ground delivery costs and postal rates and
    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;
    changes in the rules and regulations to which the Companys
    clients are subject;
    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
      print-on-demand
 22




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##### Table of Contents



start-up
      ® ®
   23




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##### Table of Contents




    Financial Communications:  Revenue increased
    approximately $79.3 million, or 13%, to approximately
    $704.4 million for 2006 compared to 2005 and segment profit
    increased $14.5 million, or 17%, to approximately
    $102.1 million for 2006 as compared to 2005. The results
    for the year ended December 31, 2006 reflect the increases
    in revenue from both transactional and non-transactional
    printing during 2006. Revenue from transactional printing
    increased 18% for the year ended December 31, 2006, when
    compared to 2005, a result of the continued momentum in capital
    market activity and increased IPO market share.
    Non-transactional print revenue increased 9% for the year ended
    December 31, 2006 as compared to 2005.
    Marketing & Business
    Communications:  This segment reported revenue of
    $127.8 million for the year ended December 31, 2006,
    as compared to revenue of $41.8 million for the year ended
    December 31, 2005. The increase in revenue resulted from
    the acquisition (in January 2006) and integration of
    Vestcoms Marketing & Business Communications
    division with the Companys existing digital print
    business. Segment loss for 2006 was $0.6 million, compared
    to a loss of $7.1 million in 2005. As previously noted, the
    segment operating results for 2006 were burdened with
    incremental operating costs associated with the integration of
    the operations of the Vestcom digital print business into Bowne,
    the consolidation of our production facilities in New Jersey,
    and the creation of certain new production capabilities in other
    locations.  Items Affecting
    Comparability
      2006


2005


2004Financial Communications

$
3,268


$
6,114


$
3,028Marketing & Business
    Communications


10,114



415



2,771Corporate/Other


715



3,881



1,939Total

$
14,097


$
10,410


$
7,738After tax impact

$
8,663


$
6,933


$
4,800Per share impact

$
0.28


$
0.20


$
0.13          24




---



##### Table of Contents



Results
    of Operations
     25




---



##### Table of Contents



Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
  Financial
    Communications
  Years Ended December 31,


Year Over Year% of





% of


Favorable/(Unfavorable)Financial Communications Results:

2006


Revenue


2005


Revenue


$ Change


% Change(Dollars in thousands)Revenue:Transactional financial printing

$
293,842



42
%

$
249,588



40
%

$
44,254



18
%Compliance reporting


182,821



26



166,592



27



16,229



10Mutual funds


147,791



21



152,785



24



(4,994
)


(3
)Commercial


66,087



9



45,939



7



20,148



44Other


13,881



2



10,224



2



3,657



36Total revenue


704,422



100



625,128



100



79,294



13Cost of revenue


(451,814
)


(64
)


(404,624
)


(65
)


(47,190
)


(12
)Gross margin


252,608



36



220,504



35



32,104



15Selling and administrative


(150,544
)


(21
)


(132,945
)


(21
)


(17,599
)


(13
)Segment profit

$
102,064



15
%

$
87,559



14
%

$
14,505



17
%Other Items:Depreciation

$
(12,079
)


(2
)%

$
(12,757
)


(2
)%

$
678



5
%Restructuring, integration and
    asset impairment charges

$
(3,268
)


(0
)%

$
(6,114
)


(1
)

$
2,846



47
%          26




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##### Table of Contents



Marketing &
    Business Communications
  Years Ended December 31,


Year Over Year% of





% of


Favorable/(Unfavorable)Marketing & Business Communications Results:

2006


Revenue


2005


Revenue


$ Change


% Change(Dollars in thousands)Revenue

$
127,793



100
%

$
41,806



100
%

$
85,987



206
%Cost of revenue


(109,236
)


(85
)


(41,538
)


(99
)


(67,698
)


(163
)Gross margin


18,557



15



268



1



18,289



6,824Selling and administrative


(19,197
)


(16
)


(7,350
)


(18
)


(11,847
)


(161
)Segment loss

$
(640
)


(1
)%

$
(7,082
)


(17
)%

$
6,442



91
%Other Items:Depreciation

$
(6,884
)


(5
)%

$
(1,777
)


(4
)%

$
(5,107
)


(287
)%Restructuring, integration, and
    asset impairment charges

$
(10,114
)


(8
)%

$
(415
)


(1
)%

$
(9,699
)


(2,337
)%       27




---



##### Table of Contents



Summary
               28




---



##### Table of Contents



Domestic
    Versus International Results of Operations
    Years Ended December 31,2006


2005Domestic (United States)

$
3,907


$
(2,620
)International


18,873



6,827Income from continuing operations
    before taxes

$
22,780


$
4,207    29




---



##### Table of Contents



Year
    Ended December 31, 2005 Compared to Year Ended
    December 31, 2004
  Financial
    Communications
  Years Ended December 31,


Year Over Year% of





% of


Favorable/(Unfavorable)Financial Communications Results:

2005


Revenue


2004


Revenue


$ Change


% Change(Dollars in thousands)Revenue:Transactional financial printing

$
249,588



40
%

$
272,095



45
%

$
(22,507
)


(8
)%Compliance reporting


166,592



27



148,318



25



18,274



12Mutual funds


152,785



24



129,222



22



23,563



18Commercial


45,939



7



40,210



7



5,729



14Other


10,224



2



8,918



1



1,306



15Total revenue


625,128



100



598,763



100



26,365



4Cost of revenue


(404,624
)


(65
)


(378,783
)


(63
)


(25,841
)


(7
)Gross margin


220,504



35



219,980



37



524



Selling and administrative


(132,945
)


(21
)


(132,320
)


(22
)


(625
)


Segment profit

$
87,559



14
%

$
87,660



15
%

$
(101
)



%Other Items:Depreciation

$
(12,757
)


(2
)%

$
(12,226
)


(2
)%

$
(531
)


(4
)%Restructuring, integration and
    asset impairment charges

$
(6,114
)


(1
)%

$
(3,028
)


(1
)%

$
(3,086
)


(102
)%Gain on sale of building

$





%

$
896




%

$
(896
)


(100
)%           30




---



##### Table of Contents



Marketing &
    Business Communications
  Years Ended December 31,


Year Over Year% of





% of


Favorable/(Unfavorable)Marketing & Business Communications Results:

2005


Revenue


2004


Revenue


$ Change


% Change(Dollars in thousands)Revenue

$
41,806



100
%

$
38,650



100
%

$
3,156



8
%Cost of revenue


(41,538
)


(99
)


(40,815
)


(106
)


(723
)


(2
)Gross margin


268



1



(2,165
)


(6
)


2,433



112Selling and administrative


(7,350
)


(18
)


(8,921
)


(23
)


1,571



18Segment loss

$
(7,082
)


(17
)%

$
(11,086
)


(29
)%

$
4,004



36
%Other Items:Depreciation

$
(1,777
)


(4
)%

$
(1,480
)


(4
)%

$
(297
)


(20
)%Restructuring, integration, and
    asset impairment charges

$
(415
)


(1
)%

$
(2,771
)


(7
)%

$
2,356



85
%       31




---



##### Table of Contents



Summary
                   32




---



##### Table of Contents



Domestic
    Versus International Results of Operations
    Years Ended December 31,2005


2004Domestic (United States)

$
(2,620
)

$
(7,057
)International


6,827



2,527Income (loss) from continuing
    operations before taxes

$
4,207


$
(4,530
)    33




---



##### Table of Contents



2007
    Outlook
    Full Year 2007Revenues:

$810 to $900 millionFinancial Communications

$690 to $760 millionMarketing & Business
    Communications

$120 to $140 millionSegment Profit:Financial Communications

$90 to $120 millionMarketing & Business
    Communications

$3 to $10 millionCorporate/Other:Corporate expenses, net of other
    income

$28 to $32 millionIntegration, restructuring and
    impairment charges

$7 to $10 millionDepreciation and amortization

$26 to $28 millionInterest expense

$5.4 millionDiluted earnings per share from
    continuing operations

$0.45 to $1.05Diluted earnings per share from
    continuing operations, excluding integration, restructuring and
    impairment charges

$0.60 to $1.25Diluted shares

29.3 millionCapital expenditures

$22 to $25 million   Liquidity
    and Capital Resources
  Liquidity and Cash Flow information:

2006


2005


2004Working capital

$
172,391


$
230,895


$
150,912Current ratio


2.34 to 1



2.66 to 1



1.96 to 1Net cash provided by operating
    activities

$
3,574


$
17,806


$
16,142Net cash provided by investing
    activities

$
6,128


$
51,170


$
125,919Net cash used in financing
    activities

$
(63,555
)

$
(33,359
)

$
(97,849
)Capital expenditures

$
(28,668
)

$
(39,724
)

$
(17,501
)Proceeds from the sale of
    subsidiaries (2005 includes the proceeds received from the sale
    of the Lionbridge common stock)

$
19,447


$
164,282


$
167,264Acquisitions, net of cash acquired

$
32,923


$



$
3,500Average days sales outstanding


72



70



65    34




---



##### Table of Contents



Cash
    Flows
   35




---



##### Table of Contents



Contractual
    Obligations, Commercial Commitments, and Off-Balance Sheet
    Arrangements
       36




---



##### Table of Contents



Payments Due by YearContractual Obligations

Total


2007


2008


2009


2010


2011


ThereafterLong-term debt obligations(1)

$
75,000


$



$
75,000


$



$



$



$
Operating lease obligations(2)


252,582



33,460



28,324



23,767



18,481



15,669



132,881Capital lease obligations


2,509



1,017



695



478



306



13



Synthetic lease obligation(3)


7,366



7,366



















Unconditional purchase
    obligations(4)


26,400



10,400



11,000



5,000











Total contractual cash obligations

$
363,857


$
52,243


$
115,019


$
29,245


$
18,787


$
15,682


$
132,881     (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 11
    to the Consolidated Financial Statements for additional
    information regarding the redemption and repurchase provisions
    of the debentures.(2)
    
    The operating lease obligations shown in the table have not been
    reduced by minimum non-cancelable sublease rentals aggregating
    approximately $6.0 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 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 in May 2007 for approximately
    $6.3 million, which represents the estimated residual value
    of the equipment at the end of the lease.(4)
    
    Unconditional purchase obligations represent commitments for
    outsourced services.     37




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
      Accounting for Goodwill and Intangible Assets
  and/or
   38




---



##### Table of Contents



Revenue Recognition
 39




---



##### Table of Contents



Allowance for Doubtful Accounts and Sales
    Credits
  Accounting for Income Taxes
        Accounting for Pensions
 40




---



##### Table of Contents



Restructuring Accrual
  Recent
    Accounting Pronouncements
       41




---



##### Table of Contents



December 31,2006Impact on income from continuing
    operations before income taxes

$
(1,118
)Impact on income from continuing
    operations

$
(688
)Impact on basic earnings per share
    from continuing operations

$
(.02
)Impact on diluted earnings per
    share from continuing operations

$
(.02
)Impact on net loss

$
(688
)Impact on basic loss per share

$
(.02
)Impact on diluted loss per share

$
(.02
)         Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk    Interest
    Rate Risk
   42




---



##### Table of Contents



Foreign
    Exchange Rates
    Equity
    Price Risk
   43




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
            
    44




---



##### Table of Contents



BOWNE &
    CO., INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2006


2005


2004(In thousands, except per share information)Revenue

$
832,215


$
666,934


$
637,413Expenses:Cost of revenue


(542,696
)


(428,411
)


(397,715
)Selling and administrative


(223,635
)


(186,774
)


(192,724
)Depreciation


(25,379
)


(25,625
)


(25,372
)Amortization


(534
)






Restructuring charges, integration
    costs and asset impairment charges


(14,097
)


(10,410
)


(7,738
)Gain on sale of building










896Purchased in-process research and
    development


(958
)






(807,299
)


(651,220
)


(622,653
)Operating income


24,916



15,714



14,760Interest expense


(5,477
)


(5,154
)


(10,435
)Loss on extinguishment of debt










(8,815
)Loss on sale of marketable
    securities






(7,890
)


Other income (expense), net


3,341



1,537



(40
)Income (loss) from continuing
    operations before income taxes


22,780



4,207



(4,530
)Income tax (expense) benefit


(10,701
)


(4,330
)


224Income (loss) from continuing
    operations


12,079



(123
)


(4,306
)Discontinued operations:Gain on sale of subsidiaries, net
    of tax


3,831



671



32,054Loss from discontinued operations,
    net of tax


(17,678
)


(1,152
)


(524
)Net (loss) income from
    discontinued operations


(13,847
)


(481
)


31,530Net (loss) income

$
(1,768
)

$
(604
)

$
27,224Earnings (loss) per share from
    continuing operations:Basic

$
.39


$
.00


$
(.12
)Diluted

$
.38


$
.00


$
(.12
)(Loss) earnings per share from
    discontinued operations:Basic

$
(.45
)

$
(.02
)

$
.88Diluted

$
(.44
)

$
(.02
)

$
.88Total (loss) earnings per
    share:Basic

$
(.06
)

$
(.02
)

$
.76Diluted

$
(.06
)

$
(.02
)

$
.76    45




---



##### Table of Contents



BOWNE &
    CO., INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2006


2005(In thousands, except share information)ASSETSCurrent assets:Cash and cash equivalents

$
42,986


$
96,684Marketable securities


42,628



90,675Accounts receivable, less
    allowances of $6,392 (2006) and $8,552 (2005)


153,016



120,450Inventories


25,591



25,957Prepaid expenses and other current
    assets


33,901



28,414Assets held for sale


2,796



7,815Total current assets


300,918



369,995Property, plant and equipment at
    cost, less accumulated depreciation of $231,137 (2006) and
    $254,760 (2005)


132,767



106,908Other noncurrent assets:Goodwill


30,521



16,691Intangible assets, less accumulated
    amortization of $552 (2006) and $0 (2005)


4,494



7,859Deferred income taxes


36,588



20,823Other


10,113



7,415Assets held for sale, noncurrent






33,557Total assets

$
515,401


$
563,248LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    and other short-term borrowings

$
1,017


$
252Accounts payable


43,333



31,089Employee compensation and benefits


38,166



41,912Accrued expenses and other
    obligations


45,328



62,430Liabilities held for sale


683



3,417Total current liabilities


128,527



139,100Other liabilities:Long-term debt  net of
    current portion


76,492



75,528Deferred employee compensation


50,154



32,771Deferred rent


22,199



2,161Other


1,281



1,262Liabilities held for sale,
    noncurrent






653Total liabilities


278,653



251,475Commitments and contingenciesStockholders 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 42,537,617 shares
    (2006) and 41,913,467 shares (2005)


425



419Additional paid-in capital


98,113



85,721Retained earnings


333,312



341,760Treasury stock, at cost
    14,030,907 shares (2006) and 9,842,404 shares
    (2005)


(177,901
)


(113,652
)Accumulated other comprehensive
    loss, net


(17,201
)


(2,475
)Total stockholders equity


236,748



311,773Total liabilities and
    stockholders equity

$
515,401


$
563,248    46




---



##### Table of Contents



BOWNE &
    CO., INC. AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF CASH FLOWS
  Years Ended December 31,2006


2005


2004(In thousands)Cash flows from operating
    activities:Net (loss) income

$
(1,768
)

$
(604
)

$
27,224Adjustments to reconcile net (loss)
    income to net cash provided by operating activities:Net loss (gain) from discontinued
    operations


13,847



481



(31,530
)Depreciation


25,379



25,625



25,372Amortization


534







Purchased in-process research and
    development


958







Asset impairment charges


2,550



3,523



153Gain on sale of building










(896
)Loss on sale of marketable
    securities






7,890



Loss on extinguishment of debt










8,815Provision for doubtful accounts


856



812



1,688Non-cash stock compensation


3,175



1,171



3,038Deferred income tax provision


(546
)


(3,353
)


2,311Tax benefit of stock option
    exercises


999



1,075



3,382Excess tax benefits from stock
    based compensation


(184
)






Other


(234
)


(3,101
)


(2,079
)Changes in other assets and
    liabilities, net of acquisitions, and certain non-cash
    transactions:Accounts receivable


(13,751
)


(15,325
)


(11,597
)Inventories


2,686



(5,399
)


(557
)Prepaid expenses and other current
    assets


(3,210
)


1,472



(5,312
)Accounts payable


5,020



527



5,937Employee compensation and benefits


(9,019
)


(12,197
)


(4,407
)Accrued expenses and other
    obligations


(21,620
)


15,300



1,549Net cash used in operating
    activities of discontinued operations


(2,098
)


(91
)


(6,949
)Net cash provided by operating
    activities


3,574



17,806



16,142Cash flows from investing
    activities:Purchase of property, plant and
    equipment


(28,668
)


(39,724
)


(17,501
)Purchase of marketable securities


(61,100
)


(154,272
)


(20,280
)Proceeds from sales of marketable
    securities


109,314



139,357



Proceeds from the sale of fixed
    assets


248



234



109Proceeds from the sale of
    subsidiaries, net


6,738



108,910



167,264Acquisition of businesses, net of
    cash acquired


(32,923
)






Proceeds from sale of building










6,731Net cash provided by (used in)
    investing activities of discontinued operations


12,519



(3,335
)


(10,404
)Net cash provided by investing
    activities


6,128



51,170



125,919Cash flows from financing
    activities:Proceeds from borrowings, net of
    financing costs






33,503



150,440Payment of debt


(821
)


(34,100
)


(222,048
)Proceeds from stock options
    exercised


12,533



9,868



22,326Payment of dividends


(6,680
)


(7,386
)


(7,733
)Purchase of treasury stock


(68,558
)


(33,970
)


(40,180
)Excess tax benefits from stock
    based compensation


184







Other


(113
)






Net cash used in financing
    activities of discontinued operations


(100
)


(1,274
)


(654
)Net cash used in financing
    activities


(63,555
)


(33,359
)


(97,849
)Net (decrease) increase in cash and
    cash equivalents


(53,853
)


35,617



44,212Cash and Cash
    Equivalents  Beginning of year


96,839



61,222



17,010Cash and Cash
    Equivalents  End of year

$
42,986


$
96,839


$
61,222       47




---



##### Table of Contents



BOWNE &
    CO., INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  Years Ended December 31, 2006, 2005, and 2004AccumulatedOtherAdditional





ComprehensiveCommon


Paid-In


Retained


Income


TreasuryStock


Capital


Earnings


(Loss)


Stock


Total(In thousands, except per share information)Balance at December 31,
    2003

$
403


$
60,909


$
330,259


$
24,473


$
(55,534
)

$
360,510Comprehensive income (loss):Net income










27,224











27,224Foreign currency translation
    adjustment














11,802







11,802Minimum pension liability
    adjustment (net of tax)














(435
)






(435
)Unrealized gains on securities:Unrealized holding gains arising
    during the period














12







12Income tax expense related to
    unrealized holding gains














(5
)






(5
)Comprehensive income






















38,598Cash dividends ($.22 per share)










(7,733
)










(7,733
)Purchase of treasury stock


















(40,180
)


(40,180
)Non-cash stock compensation and
    deferred stock conversions






1,863











1,175



3,038Deferred stock compensation






(862
)










862



Exercise of stock options


11



14,258











8,057



22,326Tax benefit of stock option
    exercises






3,382















3,382Balance at December 31,
    2004

$
414


$
79,550


$
349,750


$
35,847


$
(85,620
)

$
379,941Comprehensive income (loss):Net loss










(604
)










(604
)Foreign currency translation
    adjustment














(14,530
)






(14,530
)Minimum pension liability
    adjustment (net of tax)














(1,175
)






(1,175
)Comprehensive loss






















(16,309
)Reclassification adjustment for the
    recognized foreign currency translation gains relating to the
    sale of subsidiary














(22,617
)






(22,617
)Cash dividends ($.22 per share)










(7,386
)










(7,386
)Purchase of treasury stock


















(33,970
)


(33,970
)Non-cash stock compensation and
    deferred stock conversions






272











899



1,171Deferred stock compensation






(994
)










994



Exercise of stock options


5



5,818











4,045



9,868Tax benefit of stock option
    exercises






1,075















1,075Balance at December 31,
    2005

$
419


$
85,721


$
341,760


$
(2,475
)

$
(113,652
)

$
311,773Comprehensive income (loss):Net loss










(1,768
)










(1,768
)Foreign currency translation
    adjustment














734







734Minimum pension liability
    adjustment (net of tax)














34







34Comprehensive loss






















(1,000
)Cash dividends ($.22 per share)










(6,680
)










(6,680
)Purchase of treasury stock


















(68,558
)


(68,558
)Non-cash stock compensation and
    deferred stock conversions






1,923











1,252



3,175Reclassification of deferred stock
    compensation






1,349











(1,349
)


Exercise of stock options


6



8,121











4,406



12,533Tax benefit of stock option
    exercises






999















999Adjustment to initially adopt the
    provisions of SFAS 158 (net of tax)














(15,494
)






(15,494
)Balance at December 31,
    2006

$
425


$
98,113


$
333,312


$
(17,201
)

$
(177,901
)

$
236,748    48




---



##### 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



A summary of the significant accounting policies the Company
    followed in the preparation of the accompanying financial
    statements is set forth below:



Principles
    of Consolidation



The consolidated financial statements include the accounts of
    the Company and its wholly-owned subsidiaries. All intercompany
    accounts and transactions are eliminated in consolidation.



Revenue
    Recognition



The Company recognizes revenue in accordance with SEC Staff
    Accounting Bulletin No. 104, Revenue
    Recognition, which requires that (i) persuasive
    evidence of an arrangement exists, (ii) delivery has
    occurred or services have been rendered, (iii) the sales
    price is fixed or determinable, and (iv) collectibility is
    reasonably assured. The Company recognizes revenue related to
    its Financial Communications segment and Marketing &
    Business Communications segment when services are completed or
    when the printed documents are shipped to customers. Revenue for
    completed but unbilled work is recognized based on the
    Companys historical standard pricing for type of service
    and is adjusted to actual when billed.



The Company accounts for sales and other use taxes on a net
    basis in accordance with Emerging Issues Task Force
    (EITF) Issue No. 06-3 How Taxes Collected from
    Customers and Remitted to Governmental Authorities Should Be
    Presented in the Income Statement. Therefore, these taxes
    are excluded from revenue and cost of revenue in the
    Consolidated Statements of Operations.



The Company records an allowance for doubtful accounts based on
    its estimates derived from historical experience. The allowance
    is made up of specific reserves, as deemed necessary, on client
    account balances, and a reserve based upon our historical
    experience.



Inventories



Raw materials inventories are valued at the lower of cost or
    market. Cost of
    work-in-process
    is determined by using purchase cost
    (first-in,
    first-out method) for materials and standard costs for labor,
    which approximate actual costs.

49




---



##### 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)
   Property,
    Plant and Equipment
    December 31,2006


2005Land and buildings

$
62,249


$
61,929Machinery and plant equipment


78,086



70,677Computer equipment and software


122,930



118,269Furniture, fixtures and vehicles


35,819



42,386Leasehold improvements


64,820



68,407363,904



361,668Less accumulated depreciation


(231,137
)


(254,760
)Net

$
132,767


$
106,908     Buildings

10-40 yearsMachinery and plant equipment

3-121/2
    yearsComputer equipment and software

2-5 yearsFurniture and fixtures

3-121/2
    yearsLeasehold improvements

Shorter of useful life or term of
    lease   No. 98-1, (SOP 98-1). SOP 98-1
    Intangible
    Assets
    Customer relationships

9 - 10 yearsCovenants
    not-to-compete

3 years  50




---



##### 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
      2006


2005


2004Stock options from continuing operations

Grants


Grants


GrantsExpected dividend yield


1.5
%


1.5
%


1.4
%Expected stock price volatility


34.9
%


33.9
%


34.9
%Risk-free interest rate


4.7
%


4.3
%


3.6
%Expected life of options


5 years



5 years



5 yearsWeighted-average fair value

$
5.23


$
4.20


$
4.66   2006


2005


2004Stock options from discontinued operations

Grants


Grants


GrantsExpected dividend yield


*



*



1.4
%Expected stock price volatility


*



*



31.8
%Risk-free interest rate


*



*



2.8
%Expected life of options


*



*



3 yearsWeighted-average fair value


*



*


$
3.30     *
    
    The Company did not grant any options related to discontinued
    operations during the years ended December 31, 2006 and
    2005.   51




---



##### 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)
      2006Impact on income from continuing
    operations before income taxes

$
(1,118
)Impact on income from continuing
    operations

$
(688
)Impact on basic earnings per share
    from continuing operations

$
(.02
)Impact on diluted earnings per
    share from continuing operations

$
(.02
)Impact on net loss

$
(688
)Impact on basic loss per share

$
(.02
)Impact on diluted loss per share

$
(.02
)     2005


2004Loss from continuing operations:As reported

$
(123
)

$
(4,306
)Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related pro forma tax effects


(1,199
)


(2,100
)Pro forma loss from continuing
    operations

$
(1,322
)

$
(6,406
)As reported loss per share from
    continuing operations:Basic

$
.00


$
(.12
)Diluted

$
.00


$
(.12
)Pro forma loss per share from
    continuing operations:Basic

$
(.04
)

$
(.18
)Diluted

$
(.04
)

$
(.18
)   52




---



##### 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


2004(Loss) income from discontinued
    operations:As reported

$
(481
)

$
31,530Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related pro forma tax effects






(237
)Pro forma (loss) income from
    discontinued operations

$
(481
)

$
31,293As reported (loss) earnings per
    share from discontinued operations:Basic

$
(.02
)

$
.88Diluted

$
(.02
)

$
.88Pro forma (loss) earnings per
    share from discontinued operations:Basic

$
(.02
)

$
.87Diluted

$
(.02
)

$
.87   2005


2004Net (loss) income:As reported

$
(604
)

$
27,224Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related pro forma tax effects


(1,199
)


(2,337
)Pro forma net (loss) income

$
(1,803
)

$
24,887As reported (loss) earnings per
    share:Basic

$
(.02
)

$
.76Diluted

$
(.02
)

$
.76Pro forma (loss) earnings per
    share:Basic

$
(.06
)

$
.69Diluted

$
(.06
)

$
.69   Income
    Taxes
    Earnings
    (Loss) Per Share
  stock-based No. 04-08,
 53




---



##### 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)
  04-08
    Years Ended December 31,2006


2005


2004Average shares
    outstanding  basic


31,143,466



34,250,598



35,897,782Potential dilutive effect of
    stock-based
    awards


307,355



448,501



897,346Average shares
    outstanding  diluted


31,450,821



34,699,099



36,795,128   Foreign
    Currency Translation
    Fair
    Value of Financial Instruments
    Use of
    Estimates
    Comprehensive
    Income
    Segment
    Information
   54




---



##### 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)
   Recent
    Accounting Pronouncements
             55




---



##### 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 
    Acquisitions
  St Ives
    Financial
    PLUM
    Computer Consulting, Inc.
  not-to-compete.
  Vestcom
    International, Inc.s Marketing and Business Communications
    Division
      No. 95-03,
     56




---



##### 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 and Assets Held for Sale
  ® ®
        18-month
   57




---



##### 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 31,2006


2005Cash

$



$
155Accounts receivable, net


153



7,125Prepaid expenses and other current
    assets


16



535Property and equipment, net


17



1,514Goodwill and intangible assets, net


2,610



26,861Other noncurrent assets






5,182Total assets held for sale

$
2,796


$
41,372Current portion of long-term debt

$



$
200Accounts payable and accrued
    expenses


683



3,217Long-term debt  net of
    current portion






550Other noncurrent liabilities






103Total liabilities held for sale

$
683


$
4,070       Years Ended December 31,2006


2005


2004Revenue

$
16,720


$
29,012


$
38,625(Loss) income from discontinued
    operations before income taxes

$
(19,893
)

$
(1,185
)

$
822   Form 10-K
 58




---



##### 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 31,2005


2004Revenue

$
165,350


$
222,973Income (loss) from discontinued
    operations before income taxes

$
10,749


$
(5,801
)     Form 10-K
    Year EndedDecember 31,2004Revenue

$
197,009Income from discontinued
    operations before income taxes

$
56,529   Note 4 
    Cash and Cash Equivalents
    Note 5 
    Marketable Securities
  available-for-sale. Available-for-sale
  Note 6 
    Inventories    December 31,2006


2005Raw materials

$
6,185


$
3,500Work-in-process


19,406



22,457$
25,591


$
25,957  59




---



##### 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 7 
    Goodwill and Intangible Assets
      MarketingFinancial


& BusinessCommunications


Communications


TotalBalance at January 1, 2005

$
13,902


$
2,615


$
16,517Foreign currency translation
    adjustment


174







174Balance at December 31, 2005

$
14,076


$
2,615


$
16,691Goodwill associated with the MBC
    acquisition






11,132



11,132Goodwill associated with the PLUM
    acquisition


2,784







2,784Foreign currency translation
    adjustment


(86
)






(86
)Balance at December 31, 2006

$
16,774


$
13,747


$
30,521     December 31, 2006


December 31, 2005Accumulated





AccumulatedGross Amount


Amortization


Gross Amount


AmortizationAmortizable intangible assets:Customer lists

$
5,021


$
548


$



$
Covenants
    not-to-compete


25



4







Unamortizable intangible assets:Intangible asset related to
    minimum pension liability










7,859



$
5,046


$
552


$
7,859


$
   not-to-compete
   60




---



##### 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)
     2007

$
5672008

$
5672009

$
5612010

$
5592011

$
559   Note 8 
    Gain on Sale of Assets
    Note 9 
    Accrued Restructuring, Integration, and Asset Impairment
    Charges
         61




---



##### 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)
     SeveranceandPersonnel-


Occupancy





AssetRelated Costs


Costs


Other


Impairments


TotalFinancial Communications

$
2,185


$
1,083


$



$



$
3,268Marketing & Business
    Communications


698



1,722



5,144



2,550



10,114Corporate/Other


715















715Total

$
3,598


$
2,805


$
5,144


$
2,550


$
14,097     SeveranceandPersonnel-


OccupancyRelated Costs


Costs


Other


TotalBalance at January 1, 2004

$
1,927


$
4,035


$
326


$
6,2882004 expenses


2,271



3,473



1,841



7,585Paid in 2004


(3,089
)


(2,627
)


(2,140
)


(7,856
)Balance at December 31, 2004


1,109



4,881



27



6,0172005 expenses


5,675



1,212







6,887Paid in 2005


(2,761
)


(1,321
)


(27
)


(4,109
)Balance at December 31, 2005


4,023



4,772







8,7952006 expenses


3,598



2,805



5,144



11,547Paid in 2006


(5,970
)


(5,372
)


(4,934
)


(16,276
)Balance at December 31, 2006

$
1,651


$
2,205


$
210


$
4,066     EITF 95-03.
 62




---



##### 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 10 
    Income Taxes
    Years Ended December 31,2006


2005


2004Current:U.S. federal

$
4,326


$
6,619


$
(1,265
)Foreign


4,863



584



172State and local


2,058



480



(1,442
)$
11,247


$
7,683


$
(2,535
)Deferred:U.S. federal

$
(1,058
)

$
(4,538
)


2,027Foreign


126



2,034



(105
)State and local


386



(849
)


389$
(546
)

$
(3,353
)

$
2,311     Years Ended December 31,2006


2005


2004Continuing operations

$
10,701


$
4,330


$
(224
)Discontinued operations


(6,046
)


10,044



20,019$
4,655


$
14,374


$
19,795     Years Ended December 31,2006


2005


2004Domestic (United States)

$
8,673


$
(405
)

$
(5,229
)International


14,107



4,612



699Total income (loss) from
    continuing operations before taxes

$
22,780


$
4,207


$
(4,530
)     Years Ended December 31,2006


2005


2004Continuing operations

$
12,396


$
9,091


$
6,916Discontinued operations


1,082



1,534



3,648$
13,478


$
10,625


$
10,564  63




---



##### 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 31,2006


2005


2004Income tax expense (benefit) based
    upon U.S. statutory tax rate

$
7,973


$
1,276


$
(1,635
)State income tax expense (benefit)


997



(281
)


(720
)Effect of foreign taxes


(1,195
)


776



(178
)Permanent differences, primarily
    non-deductible meals and entertainment expenses


2,258



1,904



1,943Other, net


668



655



366Total income tax expense (benefit)
    attributable to continuing operations

$
10,701


$
4,330


$
(224
)        64




---



##### 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)
     2006


2005Deferred tax assets:Operating loss carry-forwards

$
4,642


$
5,155Deferred compensation and benefits


27,908



17,756Allowance for doubtful accounts


1,916



3,189Property, plant and equipment


1,919



2,834Tax credits


4,180



3,828Accrued expenses


9,712



7,547Other, net


3,322



2,761Gross deferred tax assets


53,599



43,070Deferred tax liabilities:Lease obligations


(2,306
)


(3,585
)Intangible assets


(725
)


(4,124
)Gross deferred tax liabilities


(3,031
)


(7,709
)Deferred tax asset valuation
    allowance


(2,221
)


(1,733
)Net deferred tax asset

$
48,347


$
33,628     2006


2005Current deferred tax asset
    included in other current assets

$
11,759


$
12,805Noncurrent deferred tax asset


36,588



20,823$
48,347


$
33,628       Note 11 
    Debt
    December 31,2006


2005Convertible subordinated debentures

$
75,000


$
75,000Other


2,509



780$
77,509


$
75,780    65




---



##### 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)
               66




---



##### 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 
    Employee Benefit Plans
  Pension
    Plans
        Pension Plan


SERPYears Ended December 31,


Years Ended December 31,Change in Benefit Obligation

2006


2005


2004


2006


2005


2004Projected benefit obligation at
    beginning of year

$
127,044


$
115,863


$
109,325


$
23,048


$
26,910


$
28,103Service cost


6,628



6,361



5,888



310



418



370Interest cost


7,533



6,792



6,157



1,150



1,429



1,741Amendments


724











(350
)


236



1,132Actuarial loss (gain)


2,898



5,721



(2,049
)


1,352



454



2,434Benefits paid


(7,532
)


(7,693
)


(3,458
)


(8,077
)


(6,399
)


(6,870
)Projected benefit obligation at
    end of year

$
137,295


$
127,044


$
115,863


$
17,433


$
23,048


$
26,910   67




---



##### 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


SERPYears Ended December 31,


Years Ended December 31,Change in Plan Assets

2006


2005


2004


2006


2005


2004Fair value of plan assets at
    beginning of year

$
96,955


$
85,636


$
63,236


$



$



$
Actual return on plan assets


14,541



6,762



7,606











Employer contributions prior to
    measurement date


10,200



12,250



18,252



8,077



6,399



6,870Benefits paid


(7,532
)


(7,693
)


(3,458
)


(8,077
)


(6,399
)


(6,870
)Fair value of plan assets at end
    of year


114,164



96,955



85,636











Unfunded status


(23,131
)


(30,089
)


(30,227
)


(17,433
)


(23,048
)


(26,910
)Unrecognized actuarial loss


17,816



22,784



17,016



8,716



8,247



8,666Unrecognized prior service cost


3,052



2,646



2,965



3,190



5,081



6,387Unrecognized net initial (asset)
    obligation


(916
)


(1,237
)


(1,558
)


31



132



233Net accrued cost

$
(3,179
)

$
(5,896
)

$
(11,804
)

$
(5,496
)

$
(9,588
)

$
(11,624
)     Pension Plan


SERPYears Ended December 31,


Years Ended December 31,2006


2005


2004


2006


2005


2004Accumulated benefit obligation

$
111,704


$
107,280


$
97,812


$
15,274


$
19,595


$
22,873     Pension Plan


SERPYears Ended December 31,


Years Ended December 31,Before Adoption of SFAS 158

2006


2005


2004


2006


2005


2004Accrued benefit liability

$
(3,179
)

$
(10,325
)

$
(12,176
)

$
(15,274
)

$
(19,595
)

$
(22,873
)Intangible asset for minimum
    pension liability






2,646



372



3,222



5,213



6,620Deferred income tax asset






686







2,545



1,846



1,759Accumulated other comprehensive
    income






1,097







4,011



2,948



2,870Net amount recognized

$
(3,179
)

$
(5,896
)

$
(11,804
)

$
(5,496
)

$
(9,588
)

$
(11,624
)   Pension Plan


SERPYears Ended December 31,


Years Ended December 31,After Adoption of SFAS 158

2006


2005


2004


2006


2005


2004Current liabilities

$




N/A



N/A


$
(3,200
)


N/A



N/ANoncurrent liabilities


(23,131
)


N/A



N/A



(14,233
)


N/A



N/ANet amount recognized

$
(23,131
)


N/A



N/A


$
(17,433
)


N/A



N/A  68




---



##### 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)
      PensionPlan


SERPNet actuarial loss

$
17,816


$
8,716Prior service cost


3,052



3,190Unrecognized net initial (asset)
    obligation


(916
)


31Total (before tax effects)

$
19,952


$
11,937Total net of tax effects

$
12,204


$
7,301Change in accumulated other
    comprehensive income due to adoption of SFAS 158 (before
    tax effects)

$
19,952


$
5,381Change in accumulated other
    comprehensive income due to adoption of SFAS 158, net of
    tax effects

$
12,204


$
3,290         Pension Plan


SERPYears Ended December 31,


Years Ended December 31,2006


2005


2004


2006


2005


2004Discount rate


6.00
%


5.75
%


6.00
%


6.00
%


5.75
%


6.00
%Projected future salary increase


4.00
%


4.00
%


4.00
%


4.00
%


4.00
%


4.00
%  69




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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


SERPYears Ended December 31,


Years Ended December 31,2006


2005


2004


2006


2005


2004Service cost

$
6,628


$
6,361


$
5,888


$
310


$
418


$
370Interest cost


7,533



6,792



6,157



1,150



1,429



1,741Expected return on plan assets


(8,158
)


(7,315
)


(5,708
)










Recognized net initial (asset)
    obligation


(321
)


(321
)


(321
)


101



101



101Recognized prior service cost


318



318



318



1,541



1,541



1,511Recognized actuarial loss


1,482



508



258



884



873



825Net periodic benefit cost


7,482



6,343



6,592



3,986



4,362



4,548Union plans


337



358



362











Other retirement plans


1,675



1,458



1,297











Total cost

$
9,494


$
8,159


$
8,251


$
3,986


$
4,362


$
4,548     PensionPlan


SERPNet actuarial (gain) loss

$
(3,486
)

$
1,352Recognized actuarial gain


(1,482
)


(884
)Prior service cost (credit)


724



(350
)Recognized prior service credit


(318
)


(1,541
)Total recognized in other
    comprehensive income (before tax effects)

$
(4,562
)

$
(1,423
)Total recognized in other
    comprehensive income, net of tax effects

$
(2,783
)

$
(868
)Total recognized in net benefit
    cost and other comprehensive income (before tax effects)

$
2,920


$
2,563Total recognized in net benefit
    cost and other comprehensive income, net of tax effects

$
1,781


$
1,563      70




---



##### 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)
     PensionPlan


SERPLoss recognition

$
353


$
996Prior service cost recognition


381



1,491Net initial (asset) recognition


(321
)


31     Pension Plan


SERPYears Ended December 31,


Years Ended December 31,2006


2005


2004


2006


2005


2004Discount rate


5.75
%


6.00
%


6.25
%


5.75
%


6.00
%


6.25
%Expected asset return


8.50
%


8.50
%


8.50
%


N/A



N/A



N/ASalary scale


4.00
%


4.00
%


4.00
%


4.00
%


4.00
%


4.00
%Average future working lifetime
    (in years)


11.57



11.62



11.89



7.00



6.75



7.00        71




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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

2006


2005


2004Equity securities


80
%


80
%


77
%Fixed income securities


19



19



21Other


1



1



2Total


100
%


100
%


100
%     net-of-fees and/or 5-year net-of-fees and/or 5-year
     72




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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

RangesEquities


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 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.   73




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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)
     Year

Pension Plan


SERP2007

$
4,558


$
3,2952008


5,088



2,6112009


4,428



2,1332010


7,505



5592011


5,533



5542012 - 2016


57,259



8,083     Defined
    Contribution Plans
    Health
    Plan
   74




---



##### 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 
    Deferred Employee Compensation
    December 31,2006


2005Pension and other retirement
    costs, long-term

$
23,131


$
10,325Supplemental retirement, long-term


14,387



11,298Deferred compensation and other
    long-term benefits


12,636



11,148$
50,154


$
32,771   Note 14 
    Other Income (Expense)
    Years Ended December 31,2006


2005


2004Interest income

$
3,673


$
2,112


$
709Other expense


(332
)


(575
)


(749
)Total other income (expense)

$
3,341


$
1,537


$
(40
)   Note 15 
    Commitments and Contingencies
  Lease
    commitments
        2007

$
33,4602008


28,3242009


23,7672010


18,4812011


15,6692012 - 2026


132,881Total

$
252,582  75




---



##### 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)
  20-year
  sub-lessee
  Purchase
    Commitments
    Contingencies
    Note 16 
    Stockholders Equity
       76




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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)
   10b5-1
    Note 17 
    Stock Option Plans
       77




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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-Averageto be Issued Upon


Exercise Price ofExercise/Conversion


Outstanding OptionsPlans approved by
    shareholders:Stock options


2,564,095


$
14.41Restricted stock and deferred
    stock units


201,624



(a
)Restricted stock units


465,833



(a
)Plan not approved by
    shareholders:Stock options


721,825


$
12.30Deferred stock units


515,346



(a
)Total


4,468,723     (a)
    
    Not applicable      Plans approved by shareholders


2,388,104Plan not approved by shareholders


180,554Total


2,568,658     Weighted-Average


AggregateNumber of


Exercise


IntrinsicOptions


Price


ValueOutstanding at January 1, 2006


4,053,478


$
13.57Granted


379,000


$
15.43Exercised


(975,208
)

$
12.59Forfeited


(171,350
)

$
16.14Outstanding, as of
    December 31, 2006


3,285,920


$
13.95


$
7,571Exercisable, as of
    December 31, 2006


2,603,420


$
13.63


$
7,038    78




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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 ExercisableNumber


Weighted-


Weighted-





Weighted-Outstanding


Average


Average


Number


AverageRange of

December 31,


Remaining


Exercise


Exercisable


ExerciseExercise Prices

2006


Life


Price


December 31, 2006


Price$  8.84 - $10.31


210,864



4 years


$
9.32



210,864


$
9.32$10.32 - $11.99


260,430



4 years


$
10.61



260,430


$
10.61$12.00 - $14.00


1,479,822



4 years


$
13.23



1,422,197


$
13.20$14.01 - $15.77


982,050



7 years


$
15.16



358,675


$
14.94$15.78 - $22.50


352,754



2 years


$
18.84



351,254


$
18.853,285,920



4 years


$
13.95



2,603,420


$
13.63     Weighted-AverageNumber of


Grant-DateOptions


Fair valueNonvested stock options at
    January 1, 2006


523,750


$
4.78Granted


379,000


$
5.23Vested


(158,000
)

$
4.98Forfeited


(62,250
)

$
4.94Nonvested stock options at
    December 31, 2006


682,500


$
4.97     Deferred
    Stock Awards
  one-for-one
   79




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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)
      Restricted
    Stock Awards
      Weighted-AverageNumber of


Grant-DateOptions


Fair valueNonvested restricted stock at
    January 1, 2006


98,668


$
14.64Granted


30,000


$
15.33Vested


(79,881
)

$
14.61Forfeited


(4,118
)

$
15.43Nonvested restricted stock at
    December 31, 2006


44,669


$
15.09     Long-Term
    Equity Incentive Plan and Restricted Stock Units
   80




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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 18 
    Comprehensive Income (Loss)
    December 31,2006


2005


2004Foreign currency translation
    adjustment

$
2,324


$
1,590


$
38,737Minimum pension liability
    adjustment, including initial impact of adopting SFAS 158
    (net of tax effect)


(19,505
)


(4,045
)


(2,870
)Unrealized losses on marketable
    securities (net of tax effect)


(20
)


(20
)


(20
)$
(17,201
)

$
(2,475
)

$
35,847       Note 19 
    Segment Information
   81




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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 Communications
  Marketing & Business Communications
 82




---



##### 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 31,2006


2005


2004Revenue from external
    customers:Financial Communications

$
704,422


$
625,128


$
598,763Marketing & Business
    Communications


127,793



41,806



38,650$
832,215


$
666,934


$
637,413Segment profit
    (loss):Financial Communications

$
102,064


$
87,559


$
87,660Marketing & Business
    Communications


(640
)


(7,082
)


(11,086
)Corporate/Other (see detail below)


(47,254
)


(45,491
)


(45,297
)54,170



34,986



31,277Depreciation


(25,379
)


(25,625
)


(25,372
)Amortization


(534
)






Interest


(5,477
)


(5,154
)


(10,435
)Income (loss) from continuing
    operations before income taxes

$
22,780


$
4,207


$
(4,530
)Corporate/Other (by
    type):Shared corporate expenses and
    other costs not directly attributable to the segments

$
(35,540
)

$
(28,728
)

$
(29,600
)Other income (expense), net


3,341



1,537



(40
)Loss on extinguishment of debt










(8,815
)Loss on sale of marketable
    securities






(7,890
)


Gain on sale of building










896Restructuring charges, integration
    costs and asset impairment charges


(14,097
)


(10,410
)


(7,738
)Purchased in-process research and
    development


(958
)






$
(47,254
)

$
(45,491
)

$
(45,297
)   83




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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 31,2006


2005Assets:Financial Communications

$
323,419


$
274,199Marketing & Business
    Communications


69,317



23,205Corporate/Other


119,869



224,472Assets held for sale


2,796



41,372$
515,401


$
563,248   Years Ended December 31,2006


2005


2004Capital spending:Financial Communications

$
17,559


$
36,071


$
14,869Marketing & Business
    Communications


10,133



3,031



1,063Corporate/Other


976



622



1,569$
28,668


$
39,724


$
17,501     Years Ended December 31,2006


2005


2004Revenue by source:United States

$
649,639


$
536,826


$
524,983Canada


89,349



68,004



55,452Other international, primarily
    Europe and Asia


93,227



62,104



56,978$
832,215


$
666,934


$
637,413   Years Ended December 31,2006


2005Long-lived assets,
    net:United States

$
162,880


$
159,246Canada


10,516



11,274Other international, primarily
    Europe and Asia


4,499



1,910$
177,895


$
172,430  84




---



##### Table of Contents



BOWNE &
    CO., INC. AND SUBSIDIARIES
  SUMMARY
    OF QUARTERLY DATA
 (In
    thousands, except share and per share information,
    unaudited)
      SecondFirst


Quarter


Third


FourthQuarter


(as adjusted)


Quarter


Quarter


Full YearYear Ended December 31,
    2006Revenue

$
205,776


$
260,269


$
175,110


$
191,060


$
832,215Gross margin


70,508



93,568



59,220



66,223



289,519Income (loss) from continuing
    operations before income taxes


3,488



20,210



(609
)


(309
)


22,780Income tax (expense) benefit


(2,023
)


(10,034
)


905



451



(10,701
)Income from continuing operations


1,465



10,176



296



142



12,079Income (loss) from discontinued
    operations, net of tax


72



(3,943
)


(12,068
)


2,092



(13,847
)Net income (loss)

$
1,537


$
6,233


$
(11,772
)

$
2,234


$
(1,768
)Earnings per share from continuing
    operations:Basic

$
.05


$
.32


$
.01


$
.00


$
.39Diluted

$
.05


$
.30


$
.01


$
.00


$
.38Earnings (loss) per share from
    discontinued operations:Basic

$
.00


$
(.12
)

$
(.40
)

$
.08


$
(.45
)Diluted

$
.00


$
(.11
)

$
(.39
)

$
.07


$
(.44
)Total earnings (loss) per share:Basic

$
.05


$
.20


$
(.39
)

$
.08


$
(.06
)Diluted

$
.05


$
.19


$
(.38
)

$
.07


$
(.06
)Average shares outstanding:Basic


32,523



32,191



30,375



29,487



31,143Diluted


32,904



36,553



30,596



29,954



31,451   85




---



##### Table of Contents



BOWNE &
    CO., INC. AND SUBSIDIARIES
  SUMMARY
    OF QUARTERLY DATA  (Continued)
 (In
    thousands, except share and per share information,
    unaudited)
  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Full YearYear Ended December 31,
    2005Revenue

$
159,923


$
197,629


$
152,337


$
157,045


$
666,934Gross margin


58,788



73,993



50,943



54,799



238,523Income (loss) from continuing
    operations before income taxes


7,439



14,038



(3,502
)


(13,768
)


4,207Income tax (expense) benefit


(4,555
)


(8,594
)


2,144



6,675



(4,330
)Income (loss) from continuing
    operations


2,884



5,444



(1,358
)


(7,093
)


(123
)(Loss) income from discontinued
    operations, net of tax


(308
)


(3,049
)


3,691



(815
)


(481
)Net income (loss)

$
2,576


$
2,395


$
2,333


$
(7,908
)

$
(604
)Earnings (loss) per share from
    continuing operations:Basic

$
.08


$
.16


$
(.04
)

$
(.21
)

$
.00Diluted

$
.08


$
.15


$
(.04
)

$
(.21
)

$
.00(Loss) earnings per share from
    discontinued operations:Basic

$
(.01
)

$
(.09
)

$
.11


$
(.03
)

$
(.02
)Diluted

$
(.01
)

$
(.08
)

$
.11


$
(.03
)

$
(.02
)Total earnings (loss) per share:Basic

$
.07


$
.07


$
.07


$
(.24
)

$
(.02
)Diluted

$
.07


$
.07


$
.07


$
(.24
)

$
(.02
)Average shares outstanding:Basic


34,662



34,927



34,489



33,144



34,251Diluted


35,355



39,304



34,871



33,593



34,699     Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure Controls and
    Procedures.
   86




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##### Table of Contents



Rule 13a-15(e) 15d-15(e) 10-K
  Managements Annual Report on Internal Control
    Over Financial Reporting. Rules 13a-15(f).
    Form 10-K
    Changes in Internal Control Over Financial
    Reporting.
  
    The Company hired a Vice President of Finance and Tax in
    November 2006.
    The Company began implementing new tax provision and tax
    compliance software in December 2006.  Form 10-Q
 87




---



##### Table of Contents



Report of Independent Registered Public Accounting
    Firm.
  Report of
    Independent Registered Public Accounting Firm
     Internal Control 
    Integrated Framework
        , Internal Control  Integrated
    Framework Internal Control  Integrated Framework .
 88




---



##### Table of Contents



89




---



##### Table of Contents



Item 9B.
    Other
    Information   90




---



##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant          Rule 10A-3
  (www.bowne.com)
  (www.bowne.com)
    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   91




---



##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accounting Fees and Services   92




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Documents filed as part of this Report:
    Page NumberIn This ReportReport of Independent Registered
    Public Accounting Firm


44Consolidated Statements of
    Operations  Years Ended December 31, 2006, 2005
    and 2004


45Consolidated Balance Sheets as of
    December 31, 2006 and 2005


46Consolidated Statements of Cash
    Flows  Years Ended December 31, 2006, 2005 and
    2004


47Consolidated Statements of
    Stockholders Equity  Years Ended
    December 31, 2006, 2005 and 2004


48Notes to Consolidated Financial
    Statements


49(2) Financial Statement
    Schedule  Years Ended December 31, 2006, 2005
    and 2004Schedule II 
    Valuation and Qualifying Accounts


S-1All other schedules are omitted
    because they are not applicable     ExhibitNumber



Description3.1



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)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
    as amended and restated May 25, 2006 (incorporated by
    reference to Exhibit A to the Companys definitive
    proxy statement dated April 11, 2006)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; amendments to the
    Plan are further described in Item 9B of the Companys
    annual report on
    Form 10-K
    for the year ended December 31, 2004) 93




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##### Table of Contents



ExhibitNumber



Description10.8



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 (incorporated by reference to Exhibit 10.15
    in the Companys annual report on
    Form 10-K
    for the year ended December 31, 2004)10.16



Base Salaries and Other
    Compensation of Named Executive Officers of the Registrant
    (incorporated by reference to Exhibit 10.16 in the
    Companys annual report on
    Form 10-K
    for the year ended December 31, 2004)10.17



Credit Agreement, dated as of
    May 11, 2005, related to $150 million revolving credit
    facility (incorporated by reference to Exhibit 99.1 in the
    Companys current report on
    Form 8-K
    dated May 13, 200510.18



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)10.19



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)10.20



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)10.21



Lease agreement between The London
    Wall Limited Partnership and Bowne & Co. Inc. dated
    February 8, 2006 relating to the lease of office space at 1
    London Wall, London (incorporated by reference to
    Exhibit 99.2 to the Companys current report on
    Form 8-K
    dated February 9, 2006)10.22



Form of Long-Term Equity Incentive
    Award Agreement under the 1999 Amended and Restated Incentive
    Compensation Plan (filed herewith)10.23



Amendment to Long-Term Equity
    Incentive Award Agreement under the 1999 Amended and Restated
    Incentive Compensation Plan (filed herewith)10.24



Consulting agreement dated
    December 14, 2006, between the Company and Carl J. Crosetto
    (filed herewith)21



Subsidiaries of the Company23.1



Consent of KPMG LLP, Independent
    Registered Public Accounting Firm24



Powers of Attorney31.1



Certification pursuant to
    section 302 of the Sarbanes-Oxley Act of 2002, signed by
    David J. Shea, Chairman of the Board, President and Chief
    Executive Officer31.2



Certification pursuant to
    section 302 of the Sarbanes-Oxley Act of 2002, signed by
    John J. Walker, Senior Vice President and Chief Financial
    Officer 94




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##### Table of Contents



ExhibitNumber



Description32.1



Certification pursuant to
    18 U.S.C. Section 1350 as adopted pursuant to
    section 906 of the Sarbanes-Oxley Act of 2002, signed by
    David J. Shea, Chairman of the Board, President and Chief
    Executive Officer32.2



Certification pursuant to
    18 U.S.C. Section 1350 as adopted pursuant to
    section 906 of the Sarbanes-Oxley Act of 2002, signed by
    John J. Walker, Senior Vice President and Chief Financial
    Officer  95




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##### Table of Contents



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/  David
    J. Shea    Chairman of the Board, President and
 Chief Executive Officer
  (Principal Executive Officer)
      Signature

Title

Date/s/  David
    J. Shea(David
    J. Shea)

Chairman of the Board, President
    and
    Chief Executive Officer

March 14, 2007/s/  John
    J. Walker(John
    J. Walker)

Senior Vice President and
    Chief Financial Officer
    (Principal Financial Officer)

March 14, 2007/s/  Richard
    Bambach, Jr.(Richard
    Bambach, Jr.)

Vice President and
    Corporate Controller
    (Principal Accounting Officer)

March 14, 2007/s/  Carl
    J. Crosetto(Carl
    J. Crosetto)

Director

March 14, 2007/s/  Douglas
    B. Fox(Douglas
    B. Fox)

Director

March 14, 2007/s/  Marcia
    J. Hooper(Marcia
    J. Hooper)

Director

March 14, 2007/s/  Philip
    E. Kucera(Philip
    E. Kucera)

Director

March 14, 2007/s/  Stephen
    V. Murphy(Stephen
    V. Murphy)

Director

March 14, 2007/s/  Gloria
    M. Portela(Gloria
    M. Portela)

Director

March 14, 2007/s/  H.
    Marshall
    Schwarz(H.
    Marshall Schwarz)

Director

March 14, 2007 96




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##### Table of Contents



Signature

Title

Date/s/  Wendell
    M. Smith(Wendell
    M. Smith)

Director

March 14, 2007/s/  Lisa
    A. Stanley(Lisa
    A. Stanley)

Director

March 14, 2007/s/  Vincent
    Tese(Vincent
    Tese)

Director

March 14, 2007/s/  Richard
    R. West(Richard
    R. West)

Director

March 14, 2007  97




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##### Table of Contents



BOWNE &
    CO., INC. AND SUBSIDIARIES
  SCHEDULE II  VALUATION AND QUALIFYING
    ACCOUNTS
  Column EColumn A

Column B


Column C


Column D


Column EAdditionsBalance at


Charged to


(Deductions)/


Balance atBeginning of


Costs and


Additions


End ofDescription

Period


Expenses





Period(In thousands)Allowance for doubtful accounts
    and sales credits:Year Ended December 31, 2006

$
8,552


$
10,841


$
(13,001
)

$
6,392Year Ended December 31, 2005

$
8,688


$
16,288


$
(16,424
)

$
8,552Year Ended December 31, 2004

$
9,550


$
11,598


$
(12,460
)

$
8,688  S-1