January 28, 2003
Contact: Gerald A. Henseler, executive vice president and CFO
Mark A. Fleming, investor and corporate communications
BANTA REPORTS SOLID 2002 PERFORMANCE;
ANNOUNCES PLAN TO IMPROVE FUTURE OPERATING RESULTS
Corporation Launches Restructuring Plan,
Targeting Cost Reductions and Profitability Improvement
MENASHA, WI . . . Banta Corporation (NYSE: BN) today reported solid
results for the fourth quarter and full-year 2002 with net earnings and diluted
earnings per share above the prior year, before impairment charges. Banta also
announced a restructuring involving its consumer catalog business and a
realignment of operating activities within its supply-chain management sector.
The plan, which will be implemented in 2003, will consolidate certain
operations, leverage existing capacity, improve efficiencies and reduce costs.
Full-year net earnings were $43.8 million for 2002 versus $50.0 million
the prior year. Diluted earnings per share were $1.71 in 2002 compared with
$2.01 the prior year. The 2002 results included a fourth quarter non-cash
impairment charge of $26.8 million, pretax (64 cents per diluted share). The
2001 results included a first quarter non-cash investment write-off of $12.5
million, pretax (30 cents per diluted share).
Excluding these charges in both periods, 2002 net earnings reached a
record $60.2 million, 5 percent higher than 2001's $57.5 million, and diluted
earnings per share totaled $2.35 in 2002 versus the prior year's $2.31. Sales
for 2002 were $1.37 billion versus $1.46 billion in 2001.
Fourth quarter net earnings were $392,000 (2 cents per diluted share)
compared with $16.1 million (65 cents per diluted share) for the same period
last year. Excluding the asset impairment charge, 2002 fourth quarter net
earnings were 4 percent above the prior year at $16.8 million versus $16.1
million. Diluted earnings per share for 2002's fourth quarter were 66 cents,
before the charge, compared with 65 cents in 2001. Fourth quarter sales were
$348 million versus the prior year's $367 million.
President and Chief Executive Officer Stephanie A. Streeter says Banta
recorded strong operating performance during 2002, despite a very difficult
economic environment. "Reduced advertising and promotional spending negatively
impacted many of our businesses, especially direct marketing and publications,
yet before the asset impairment charge we were able to deliver an all-time high
in net earnings and match our record for diluted EPS established during an
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exceptionally strong 2000," says Streeter. "We also produced record free cash
flow during the year, lowering our debt levels and interest expense.
Financially, Banta has never been stronger. Our balance sheet is in excellent
condition, with strong borrowing capacity. We are well positioned to continue
investing in the latest technologies and capabilities, and to aggressively
pursue acquisition opportunities.
"While operationally most of our units are performing at excellent
levels, there are always opportunities to improve," explains Streeter. "As we
have previously indicated, given the continuing soft economy, over the past
several months we have been actively examining various options to properly
balance our revenue and production capacity. The restructuring actions we are
announcing today are a result of that analysis."
The major portion of the restructuring involves the consolidation of
Banta's consumer catalog group, with the primary cost being the closing of the
corporation's catalog plant in St. Paul, MN, one of Banta's oldest and least
efficient print operations. Catalog production will be consolidated at the
corporation's largest and most efficient catalog plant in nearby Maple Grove,
MN, and at other Banta facilities with available capacity and similar production
capabilities.
Actions within Banta's supply-chain management sector entail realigning
various operating activities to maximize efficiencies and create greater
facility utilization.
The restructuring plan will involve pretax charges totaling $15 million
to $18 million, the majority of which is expected in this year's second and
third quarters. This plan is expected to generate annual savings of $8 million
to $10 million, beginning in 2004, with modest benefit expected in 2003's fourth
quarter.
"We remain committed to the consumer catalog market," emphasized
Streeter, noting Banta's catalog plant in Maple Grove expects to launch a major
expansion program later this year. "By closing an inefficient plant, leveraging
our existing catalog capacity at other facilities, and expanding our largest
catalog plant, we will provide customers with the highest quality and most
efficient production at a competitive price.
"We regret any job loss due to our restructuring, and are taking every
possible action to keep that number to a minimum," said Streeter. "Affected
employees will be encouraged to apply for positions at our other operations, and
for those employees displaced, we will provide severance packages and assist
with outplacement services."
Operational highlights for the fourth quarter and 2002 include the
following:
o Banta's print sector reported mixed results, with lower sales and
profitability in both the fourth quarter and full year due to adverse
market conditions, including reductions in
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advertising and promotional spending, and lower pricing. However, nearly
all of the sector's sales decline can be attributed to paper price
reductions. Actual print manufacturing activity for 2002, or unit
production, was modestly higher than the prior year as strong sales efforts
helped maintain good plant utilization.
o The book division turned in a good fourth quarter and an
excellent 2002. For the year, strong activity in the educational
market and encouraging growth in value-added literature
management services drove higher sales and a double-digit
increase in profitability.
o Continued market share gains in Banta's publications division
helped produce good results for the fourth quarter and 2002,
despite experiencing a 10 percent advertising page count
reduction for the year. Sales and earnings improved in the fourth
quarter and results for the full year were only modestly below
2001.
o Banta's commercial print businesses were hardest hit by the
sluggish economy. Consumer catalogs and direct marketing
materials both reported lower sales and earnings for the year and
fourth quarter, with business activity especially slow during the
final three months of 2002. Market share gains in consumer
catalogs helped generate full-year results that were only
modestly below the prior year, however direct marketing
performance fell significantly below 2001.
o The corporation's supply-chain management sector recorded strong
profitability in a continuing difficult technology market. Both fourth
quarter and full-year earnings were above the prior year, on lower
sales. Disciplined expense control and a favorable product mix that
includes more value-added services helped produce the strong
bottom-line results.
o Banta's single-use healthcare products business continued to benefit
from its global sourcing initiatives, cost controls and new product
introductions. While sales decreased for both the fourth quarter and
year due to pricing and foreign sourcing of lower-cost products,
profits increased significantly in both periods.
"Overall, we are pleased with our performance in 2002," notes Streeter.
"Our diverse business portfolio allowed us to deliver record earnings in a very
difficult economic climate. Before the asset impairment charges, we improved
operating margins, matched our all-time high for diluted earnings per share,
produced record cash flow, increased our product and service offerings, and
expanded our business with existing clients. Our many efforts, including today's
announced restructuring, are intended to position Banta for continued growth in
2003 and beyond."
Banta management believes that despite the prospect of sluggish economic
conditions continuing through the first half of 2003, Banta's earnings for the
first six months of 2003, before the restructuring charges, should equal or
modestly exceed the same period in 2002. Expectations
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for the full-year 2003, excluding the restructuring charges, are for continued
growth in sales and earnings, with growth rates in the low- to mid-single
digits, depending on the timing and pace of the economic recovery.
Banta will host a conference call to discuss its fourth quarter and
year-end results Tuesday, January 28 at 2:45 p.m. CST (3:45 p.m. EST). This call
will be simultaneously broadcast in the Investor Relations area of Banta's
Website at www.banta.com. A replay of the call will be available for 10 days.
Banta Corporation is a technology and market leader in printing and
supply-chain management. Banta provides a comprehensive combination of printing
and digital imaging solutions to leading publishers and direct marketers,
including advanced digital content management and e-business services. Banta's
global supply-chain management businesses provide a wide range of outsourcing
capabilities to the world's largest technology companies. Services range from
component procurement, product assembly and packaging to inventory control and
global distribution.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
This news release includes forward-looking statements. Statements that describe
future expectations, including revenue and earnings projections, plans, results
or strategies, are considered forward-looking. Such statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially from those currently anticipated. Factors that could affect actual
results include, among others, changes in customers' order patterns or demand
for the corporation's products and services, changes in raw material costs and
availability, unanticipated changes in operating expenses, unanticipated
production difficulties, issues related to the termination of the previously
announced Mentor Media Ltd. acquisition, changes in the pattern of outsourcing
supply-chain management functions by customers, unanticipated issues related to
the restructurings in the catalog and supply-chain management businesses and
expected cost savings related thereto, and any unanticipated delay in the
economic recovery. These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed on such
statements. The forward-looking statements included herein are made as of the
date hereof, and Banta undertakes no obligation to update publicly such
statements to reflect subsequent events or circumstances.
An electronic version of this news release, as well as other information about
Banta Corporation, is available through the company's World Wide Web home site
at www.banta.com
#
Banta Corporation
Condensed Consolidated Income Statement
($000's omitted, except per share data)
3 Months Ended December 12 Months Ended December
----------------------- ------------------------
2002 2001 2002 2001
-------- -------- -------- --------
Net Sales $348,151 $367,427 $1,366,457 $1,457,935
Cost of Sales 269,224 287,094 1,062,968 1,159,822
--------- -------- ---------- ----------
Gross Profit 78,927 80,333 303,489 298,113
SG&A Expense 48,919 50,050 195,046 189,704
Asset Impairment Charge 26,800 - 26,800 -
-------- -------- ---------- ----------
Earnings from Operations 3,208 30,283 81,643 108,409
Other Income (Expense)
Interest Expense (3,227) (2,913) (11,343) (13,720)
Write-off of Investment - - - (12,500)
Other, net 649 (424) 1,501 8
-------- -------- ---------- ----------
Earnings before Income Taxes 630 26,946 71,801 82,197
Provision for Income Taxes 238 10,800 28,002 32,200
-------- -------- ---------- ----------
Net Income $ 392 $ 16,146 $ 43,799 $ 49,997
======== ======== ========== ==========
Basic Earnings per Share
Before asset impairment charge and investment write-off $ 0.66 $ 0.65 $ 2.39 $ 2.33
After asset impairment charge and investment write-off $ 0.02 $ 0.65 $ 1.74 $ 2.03
Diluted Earnings per Share
Before asset impairment charge and investment write-off $ 0.66 $ 0.65 $ 2.35 $ 2.31
After asset impairment charge and investment write-off $ 0.02 $ 0.65 $ 1.71 $ 2.01
Average Shares Outstanding:
Basic 25,304 24,730 25,227 24,659
Diluted 25,568 24,960 25,565 24,857
Composite Tax Rate 37.8% 40.1% 39.0% 39.2%
SEGMENT INFORMATION
3 Months Ended December 12 Months Ended December
----------------------- ------------------------
Net Sales 2002 2001 2002 2001
- ------------------------------------------------- -------- -------- -------- --------
Printing and digital imaging $237,570 $254,004 $ 977,282 $1,009,037
Supply-chain management 87,106 87,701 292,582 345,875
Healthcare 23,475 25,722 96,593 103,023
-------- -------- ---------- ----------
$348,151 $367,427 $1,366,457 $1,457,935
======== ======== ========== ==========
Earnings from Operations
- -------------------------------------------------
Printing and digital imaging $ 19,660 $ 27,205 $ 88,033 $ 93,778
Supply-chain management 10,762 6,337 27,754 24,683
Healthcare 2,513 2,318 10,254 9,549
-------- -------- ---------- ----------
Segment earnings from operations 32,935 35,860 126,041 128,010
Unallocated corporate expenses (2,927) (5,577) (17,598) (19,601)
Interest expense (3,227) (2,913) (11,343) (13,720)
Write-off of asset (26,800) - (26,800) (12,500)
Other expense 649 (424) 1,501 8
-------- -------- ---------- ----------
Earnings before income taxes $ 630 $ 26,946 $ 71,801 $ 82,197
======== ======== ========== ==========
Depreciation/Amortization $ 20,614 $ 19,008 $ 76,186 $ 75,378
Capital Expenditures $ 5,098 $ 8,088 $ 26,100 $ 48,399
Banta Corporation
Condensed Consolidated Balance Sheet
($000's omitted)
12 Months Ended December
------------------------
ASSETS 2002 2001
--------- --------
Cash and short-term investments $ 154,836 $ 65,976
Receivables 212,988 215,505
Inventories 69,388 71,079
Other current assets 22,938 22,146
--------- --------
Total current assets 460,150 374,706
--------- --------
Plant and equipment, net 277,971 324,984
Other assets 67,143 89,446
-------- --------
Total Assets $ 805,264 $789,136
========= ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Accounts Payable $ 102,635 $ 98,391
Other accrued liabilities 63,770 57,390
Current maturities of long-term debt 19,377 25,915
--------- --------
Total current liabilities 185,782 181,696
--------- --------
Long-term debt 111,489 130,981
Deferred income taxes 13,679 24,633
Other noncurrent liabilities 41,201 44,548
Shareholders' investment 453,113 407,278
--------- --------
Total Liabilities and Shareholders' Investment $ 805,264 $789,136
========= ========