By our own estimates,

the total market for financial

printing services worldwide

grew to $900 million in 1996


This increase was fueled by record levels of IPO and M&A activity this past year. Once again Bowne benefited from being the printer of choice for many of the largest and most complex deals.

IN 1996 WE HANDLED THE PRINTING FOR THE AT&T SPIN-OFF OF LUCENT AND NCR AS WELL AS THE GIANT TELECOMMUNICATIONS MERGERS OF BELL ATLANTIC WITH NYNEX, AND SBC WITH PACIFIC TELESIS.

EDGAR filings are another way to measure financial printing activity. In May of 1996 the SEC completed its phase-in of mandatory electronic filing. Now virtually all filings must be made electronically via EDGAR.

The year 1996 was outstanding by any measure, as new formats for electronic delivery began to take their place alongside printed disclosure documents. The capital markets were extremely active, with merger and acquisition activity and corporate restructuring joining debt and equity offerings in the headlines, and competing for center stage.

Increases in services beyond the transactional markets were of equal or greater importance to us. During the year the final group of SEC registrants became subject to mandatory electronic filing; newly public companies purchased growing amounts of corporate printing; mutual funds and investment companies, which we have targeted for additional sales, continued to receive inflows of investment funds; and the Internet captured the attention of corporate investor relations staffs and funds marketing teams, creating additional demands for our file conversion services.

BOWNE'S LONG-TERM ATTENTION TO EDGAR PROVIDED CONTINUING RETURNS THIS YEAR. RATHER THAN TAKING WORK FROM US, EDGAR HAS PROVED TO BE A MAJOR SOURCE OF NEW WORK AND NEW CUSTOMERS.

In 1984, when EDGAR was first introduced by the Securities and Exchange Commission, Bowne was the first corporation to voluntarily join the program. We knew then, that one day all financial printing clients would be mandated to file electronically. Over the next 12 years we participated with the prime contractor in the development of EDGAR, and presented numerous seminars to educate registrants, investment bankers and attorneys on how EDGAR would impact them.

While we were educating the filing community, we were sharpening our skills and finetuning our software and procedures to convert and file documents from different electronic formats or hard copy. Our years of preparation served us well, as we've become the financial printer of choice when EDGAR is involved. In 1996 we made more successful EDGAR filings on behalf of corporate filers than the other two national financial printers combined.

Significantly, EDGAR has caused the return to the financial printer of some non-transactional printing, e.g., 10-Q and 10-K reports that require EDGAR filing. The benefits to Bowne from additional printing activity are as great as the benefits from the EDGAR revenue itself.

Internet services also grew significantly during 1996. Like EDGAR before it, the Internet presents Bowne with a major new opportunity to provide additional services to our financial printing clients. Customer demand for Internet services is developing much faster than EDGAR did, perhaps because growth is fueled by market demand rather than government mandate. The Internet provides another medium for the distribution of information -- not one which will replace paper, but a distribution channel which will coexist in the financial markets. Almost overnight, the Internet has created new standards for presentation of materials -- HTML (hyper-text markup language) and PDF (portable document format).To Bowne the web offers an opportunity to provide additional services, not something to shun. Many of our clients want to post their documents on the Internet shortly after they are filed with the SEC. Since we have the documents in an electronic format, we can complete the conversion to HTML, PDF or both, and add electronic indexing as required.

The completed documents can be transmitted electronically to a client or uploaded directly to a home page. Bowne is currently hosting home pages for clients and developing sites, including design, for others. While clients are requesting us to convert many of their documents into electronic Internet formats, this has not reduced the print runs on these documents. We don't expect print runs to be reduced anytime soon because of electronic dissemination.

The mutual fund industry is a significant and growing market for Bowne. Benefitting from a continuing influx of cash from individuals, qualified retirement plans and other investors, the industry's appetite for printed materials grows unabated. Here too, electronic services are becoming more and more important. In addition to EDGAR filings and Internet services, we have recently introduced FundSmith, a Bowne-developed software tool designed to assist investment companies and fund managers assemble data for shareholder reports. Currently we are testing software to help fund companies assemble the text portion of shareholder information. The industry's use of color printing and constant demand for improved quality have caused us to sharpen our skills and capabilities.

To fully utilize the new technologies and capacity we have developed, we are producing additional corporate communications pieces and specialized commercial printing products for a growing array of corporations.

INCREASINGLY OUR CUSTOMERS ARE ASKING US TO PARTNER WITH THEM IN MULTIYEAR SOLUTIONS TO THEIR DOCUMENT NEEDS. THESE AGREEMENTS WILL HELP STABILIZE REVENUE STREAMS AND MAKE REASONABLE LEVELS OF PROFITS AND MANUFACTURING REQUIREMENTS MORE PREDICTABLE.

Our successes were not limited to the electronic arena. During 1996 we printed on more paper than we have in any year in our history. The schedule for settling all security transactions, including new stock issues, in three days ( T+3 ) has moved work into the eastern half of the country and eliminated many regional printers from the ranks of those deemed capable of handling stock offerings on a timely basis. The headline transactions in the telecommunications industry generated larger documents than normal, and print runs in the millions which, if produced on a single press, would have run on for weeks. The long-term upgrading of our print capacity and the introduction of distributed printing concepts permitted Bowne to accept all transactional projects awarded to us. Our Meadowlands facility, first opened in 1993, reached full production in 1996 and produced the lion's share of major East Coast transactional work during the year. In addition to our own resources, we have established preferred supplier relationships with select plants that support our operations during peak activity periods, while maintaining the quality standards to which we are committed.

MOST IMPORTANT TO OUR SUCCESSES HAVE BEEN OUR PEOPLE -- A SUPERIOR SALES FORCE, EXPERT CUSTOMER SERVICE AND MANUFACTURING STAFFS, ALL SUPPORTED BY DEDICATED MANAGERS. OUR PEOPLE HAVE CONTINUALLY MET OR EXCEEDED CLIENT DEMANDS.

Time and time again, they would work 12 hour shifts, postpone scheduled vacations or forego well-earned rests to handle the heavy workload we experienced, almost without letup, the whole year. Our people have also been extremely flexible when it comes to introducing new technology to the process, frequently returning after-hours or on weekends for training that could not be accomplished during regular hours due to customer demands. Our employees are our most important asset, one that doesn't show on the balance sheet, but one that we rely on more than any other.

During the year we had two changes in our operating company leadership. After 24 years of leadership in several regions, Nicholas Amatangelo retired and is enjoying the slower pace of working with local charities and educational institutions in the Chicago area. Andy Williams, who has provided successful leadership in Dallas and Houston, added Chicago and Detroit to his growing list of responsibilities. Duncan Varty, who had taken a sabbatical for several years, returned to head up the Bowne of Cleveland region.

Though we are looking for new markets in which to apply our skills, our commitment to our core businesses is in no way diminished. On the contrary, our improving market position and our ability to develop new electronic services for our traditional clients have led to a renewed sense of enthusiasm among the employees of our core business units. Bowne is on the move, and all of our businesses are finding important new ways to increase revenue and profitability. Successes within both old and new Bowne business units will create opportunities for us all, as the new services provide additional reasons for clients to bring their documents to Bowne.