FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-6187
BANTA CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-0148550
(State or other jurisdiction (IRS Employer
of incorporation or organization) I.D. Number)
225 Main Street, Menasha, Wisconsin 54952
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 751-7777
"Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /"
The registrant had outstanding on July 2, 1994, 20,058,795 shares of $.10
par value common stock.
Page number of Exhibit Index 10
BANTA CORPORATION AND SUBSIDIARIES
INDEX
PART I Financial Statements: Page Number
Unaudited Consolidated Condensed Balance Sheets
July 2, 1994 and January 1, 1994 3
Unaudited Consolidated Condensed Statements of Earnings for
the Three and Six Months Ended July 2, 1994 and July 3, 1993 4
Unaudited Consolidated Condensed Statements of Cash Flows
for the Six Months Ended July 2, 1994 and July 3, 1993 5
Notes to Unaudited Consolidated Condensed
Financial Statements 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-8
PART II Other Information and Signatures:
Item 6 Exhibits and Reports on Form 8-K 8
Exhibit Index 10
PART I Item 1 - Financial Statements
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
ASSETS JULY 2, 1994 JANUARY 1, 1994
Current Assets
Cash $ 109 $ 8,230
Receivables 130,380 125,004
Inventories 48,849 52,447
Other current assets 13,105 12,225
--------- ---------
Total Current Assets 192,443 197,906
--------- ---------
Plant and Equipment 490,323 430,357
Less Accumulated Depreciation 215,689 197,469
--------- ---------
Plant and Equipment, net 274,634 232,888
--------- ---------
Other Assets 8,414 9,303
Cost in Excess of Net Assets of Subsidiaries Acquired 17,076 17,336
--------- ---------
$ 492,567 $ 457,433
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Notes Payable $ 3,015 $ 20,800
Accounts Payable 39,892 27,364
Accrued Salaries and Wages 17,347 16,903
Other Accrued Liabilities 19,021 19,807
Current Maturities of Long-term Debt 7,026 6,861
--------- ---------
Total Current Liabilities 86,301 91,735
--------- ---------
Long-term Debt 68,849 45,603
Deferred Income Taxes 17,434 18,257
Other Non-current Liabilities 10,144 9,410
Shareholders' Investment
Preferred Stock - $10 par value; authorized 300,000 shares;
none issued - -
Common Stock - $.10 par value; authorized 75,000,000 shares;
20,058,795 and 19,996,532 shares issued, respectively 2,006 2,000
Amount in Excess of Par Value of Stock 55,525 54,436
Retained Earnings 252,308 235,992
--------- ---------
309,839 292,428
--------- ---------
$ 492,567 $ 457,433
========= =========
<FN>
See accompanying notes to consolidated financial statements.
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
JULY 2, 1994 JULY 3, 1993 JULY 2, 1994 JULY 3, 1993
Net sales $ 185,831 $165,928 $373,295 $327,955
Cost of goods sold 139,765 125,361 286,165 251,181
--------- -------- -------- --------
Gross earnings 46,066 40,567 87,130 76,774
Selling and administrative expense 25,122 22,625 49,168 44,144
--------- -------- -------- --------
Earnings from operations 20,944 17,942 37,962 32,630
Other income (expense):
Interest expense (1,251) (1,052) (2,364) (2,414)
Other, net 264 388 324 634
--------- -------- -------- --------
Earnings before income taxes 19,957 17,278 35,922 30,850
Provision for income taxes 8,000 6,800 14,400 12,100
--------- -------- -------- --------
Net earnings $ 11,957 $ 10,478 $ 21,522 $ 18,750
========= ======== ======== ========
Earnings per share of common stock $ .59 $ .52 $ 1.06 $ .93
========= ======== ======== ========
Average common shares outstanding 20,237,006 20,125,582 20,240,005 20,115,938
========== ========== ========== ==========
Cash dividends per common share $ .13 $ .12 $ .26 $ .23
========= ======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Six Months Ended
July 2, 1994 July 3, 1993
Cash Flow From Operating Activities
Net earnings $ 21,522 $ 18,750
Depreciation and amortization 19,538 16,185
Deferred income taxes (1,154) (589)
Change in assets and liabilities
Decrease (increase) in receivables 2,216 (3,938)
Decrease (increase) in inventories 5,204 (9,958)
Increase in other current assets (409) (915)
Increase in accounts payable
and accrued liabilities 7,619 3,512
Decrease in other non-current assets 1,067 1,937
Other, net 734 1,352
-------- --------
Cash provided from operating activities 56,337 26,336
-------- --------
Cash Flow From Investing Activities
Capital expenditures, net (46,935) (29,646)
Acquisition of business (16,331) --
-------- --------
Cash used for investing activities (63,266) (29,646)
-------- --------
Cash Flow From Financing Activities
Repayment of notes payable, net (17,785) --
Isuance of long-term debt 25,000 --
Repayment of long-term debt (4,296) (5,271)
Dividends paid (5,206) (4,511)
Proceeds from exercise of stock options 1,095 1,197
-------- --------
Cash used for financing activities (1,192) (8,585)
-------- --------
Net decrease in cash (8,121) (11,895)
Cash at beginning of period 8,230 13,305
-------- --------
Cash at end of period $ 109 $ 1,410
======== ========
Cash payments for:
Interest, net of amount capitalized $ 3,326 $ 3,632
Income taxes 15,457 10,825
<FN>
See accompanying notes to consolidated financial statements.
BANTA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1) Basis of Presentation
The condensed financial statements included herein have been prepared by
the Corporation, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Corporation believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Corporation's latest
annual report on Form 10-K.
In the opinion of Management, the aforementioned statements reflect all
adjustments (consisting only of normal recurring adjustments) necessary
for a fair presentation of the results for the interim periods.
2) Acquisition of Danbury Printing & Litho, Inc.
On March 8, 1994, the Corporation purchased substantially all of the
assets of Danbury Printing & Litho, Inc. ("Danbury") for approximately
$16.3 million in cash and assumed selected liabilities. Danbury, which
reported sales of approximately $35 million in 1993, has become part of
the Corporation's Direct Marketing Group, which is classified in the
commercial market. This acquisition was accounted for as a purchase and,
accordingly, the accompanying financial statements of the Corporation
include Danbury's results beginning with the acquisition date.
3) Inventories
The majority of the Corporation's inventories are accounted for at cost
determined on a last-in, first-out (LIFO) basis, which is not in excess
of market. The remaining inventories are stated at the lower of cost or
market using the first-in, first-out (FIFO) method. Inventories include
material, labor and manufacturing overhead.
Inventory amounts at July 2, 1994 and January 1, 1994 are as follows:
Dollars in Thousands
July 2, 1994 January 1, 1994
Raw Materials and Supplies $24,874 $25,502
Work-In-Process and Finished Goods 28,271 30,941
------- -------
FIFO value (current cost of all inventories) 53,145 56,443
Excess of current cost over carrying value
of LIFO inventories (4,296) (3,996)
------- -------
Net Inventories $48,849 $52,447
======= =======
4) Subsequent Event
On August 8, 1994, the Corporation completed its acquisition of United
Graphics Inc. ("UGI"). UGI, which reported sales of its most recent
fiscal year of approximately $28 million, has become part of the
Corporation's Information Services Group, which is classified in the book
market. This acquisition will be accounted for as a purchase and
accordingly the Corporation's financial statements will include UGI's
results beginning with the acquisition date.
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have influenced the Corporation's financial position and results
of operations from the close of the latest fiscal year-end in comparison to
the corresponding interim period in the preceding year included in the
Unaudited Consolidated Condensed Balance Sheets, Statements of Earnings and
Statements of Cash Flows.
FINANCIAL CONDITION
Liquidity and Capital Resources
The Corporation's net working capital did not change significantly during
the first half of 1994. During the second quarter the Corporation sold
$25 million of long-term debt at an interest rate of 7.62%. The proceeds
from this debt placement were used to repay short-term indebtedness,
which had been issued earlier in the year primarily to finance capital
expenditures and the acquisition of Danbury.
RESULTS OF OPERATIONS
Net Sales
Sales for the second quarter of 1994 were $19.9 million (12%) higher than
the second quarter of 1993. Danbury, which was acquired during the first
quarter of 1994, accounted for approximately $9 million of the sales
gain. The markets which recorded the largest sales increase were direct
marketing materials (including Danbury) and catalogs (particularly
business-to-business), both of which are included in the commercial
classification.
Sales for the first half of 1994 increased $45.3 million (14%) over 1993.
All market classifications reported sales increases for the first half of
1994. The largest increase in sales was in the commercial
classification, particularly in catalogs and direct marketing materials
(including Danbury).
Cost of Goods Sold
Cost of goods sold as a percentage of sales decreased from 75.6% for the
second quarter of 1993 to 75.2% for the second quarter of 1994.
Increased plant utilization lead to improved margins in most of the
Corporation's operations. Margins in direct marketing materials were
down, primarily due to the margins of Danbury being added to the mix.
KCS Industries continued to experience lower margins due to less than
expected sales volume.
Cost of goods sold as a percentage of sales increased from 76.6% for the
first six months of 1993 to 76.7% for the first six months of 1994. This
slight reduction in margins for the six month period resulted from lower
first quarter margins in the book market and at KCS Industries which
offset the second quarter margin increases discussed above.
Selling and Administrative Expenses
Selling and administrative expenses were $2.5 million and $5.0 million
higher for the second quarter and first six months of 1994, respectively,
than for the same periods of 1993. The increase is primarily due to
higher levels of activity and the inclusion of $1.0 million and $1.3 of
costs for Danbury for the quarter and six month periods respectively.
Interest Expense
Interest expense was $199,000 higher in the second quarter of 1994 than
in the second quarter of 1993. This increase was due to higher average
borrowing levels and higher average interest rates during 1994. Interest
expense was $50,000 lower for the first half of 1994 than for the first
half of 1993. This reduction is due to a smaller increase in average
borrowings during the first quarter of 1994 compared with the first
quarter of 1993 and an increase of $290,000 in the amount of interest
which was capitalized in 1994. The increased capitalized interest is due
to several large capital projects that are being installed in 1994.
Income Taxes
The Corporation's effective income tax rate increased approximately one
percentage point in 1994 as a result of the Federal tax increase that was
enacted in the third quarter of 1993.
PART II: OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4 (a) Note Purchase and Private Shelf Agreement dated May 12, 1994.
4 (b) Amendment to Note Purchase Agreements dated December 9, 1986.
4 (c) Amendment to Agreement dated July 17, 1990.
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANTA CORPORATION
/S/ GERALD A. HENSELER
Gerald A. Henseler
Executive Vice President and Chief Financial Officer
Date August 10, 1994
BANTA CORPORATION
EXHIBIT INDEX TO FORM 10-Q
For The Quarter Ended July 2, 1994
Page Number in Sequential
Exhibit Number Numbering System
4 (a) Note Purchase and Private Shelf Agreement dated May 12, 1994. . 11-67
(b) Amendment to Note Purchase Agreements dated December 9, 1986. . 68-83
(c) Amendment to Agreement dated July 17, 1990. . . . . . . . . . . . .84