Corporate Office
225 Main Street
Box 8003
Menasha, WI 54952-8003
920-751-7777 www.banta.com
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News Release
April 29, 2003
Contact: Gerald A. Henseler, executive vice president and CFO
Mark A. Fleming, investor and corporate communications
BANTA REPORTS IMPROVED 2003 FIRST QUARTER PERFORMANCE
MENASHA, WI . . . Banta Corporation (NYSE: BN) today reported improved 2003
first quarter net earnings and diluted earnings per share.
"We reported improved financial results for the first quarter, largely due
to the performance of our supply-chain management business," says Banta
President and Chief Executive Officer Stephanie A. Streeter. "Our results were
very good considering the continuing soft economy, the war's negative effect on
advertising and promotional spending, and the worst print environment in many
years. During the quarter we focused on increasing market share and offering our
broad range of value-added services to an expanding list of customers. We also
maintained cost discipline and continued to increase our cash position by
generating strong cash flow during the quarter."
2003 first quarter sales were $336 million compared with $333 million in
the comparable 2002 period. Net earnings for this year's first quarter,
including a restructuring charge, were $11.2 million compared with $10.5 million
last year. Diluted earnings per share for the first quarter were 44 cents per
share versus 41 cents in 2002. The restructuring charge affecting the first
quarter totaled $916,000 pretax ($565,000 after tax, or 2 cents per diluted
share), part of the previously announced $15 million to $18 million
restructuring ($9 million to $11 million after tax, or 36 cents to 43 cents per
diluted share) and realignment of Banta's consumer catalog and other facilities.
"The first three months of the year were encouraging," notes Streeter,
"however, economic challenges continue and most of our businesses have limited
forecasting visibility due to the uncertainty surrounding the expected rebound
in advertising,
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technology spending and consumer confidence. In addition, spending on
educational materials is a concern given state budget deficits."
The corporation's expectations for full-year 2003 earnings per diluted
share, before restructuring, are $2.36 to $2.48, consistent with earlier
guidance of a low- to mid-single digit increase over 2002. However, due to the
continuing difficult economic environment and the lack of forward visibility,
management believes the upper end of that range may be a bit optimistic.
Management expects 2003 full-year earnings per diluted share, based on
generally accepted accounting principles, to range from $1.93 to $2.12, which
includes 36 cents to 43 cents cost per diluted share for restructuring charges.
OPERATING HIGHLIGHTS
o Banta's Supply-Chain Management Sector delivered exceptional first
quarter performance. Sales increased 11 percent over 2002's first
quarter as Banta experienced increased activity with nearly all of its
major technology customers. Operating earnings nearly doubled the
year-ago period due to a favorable product mix and improved facility
utilization at most locations. "While it is difficult to predict when
technology markets will recover, we were encouraged by our level of
business activity during the quarter," says Streeter. "If spending by
corporations on new capabilities and infrastructure resumes later this
year, we should benefit from increased demand for our supply-chain
outsourcing services."
o Print Sector sales were 2 percent below the same period last year,
$232 million versus $236 million. Despite lower revenues, actual first
quarter print manufacturing activity rose, confirming Banta's market
share gains. Sector operating earnings were appreciably off last
year's first quarter as demand was weak in the commercial print
markets and excess industry capacity continued to subject printers to
significant pricing pressures.
o Educational book printing was below 2002's strong first quarter
as publishers dealt with the potential for less spending on
educational materials by states facing budget deficits. Several
states have delayed spending on curriculum materials as they
determine the best areas to target for spending reductions.
Literature management services
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remained strong during the quarter as the book division gained
new customers and expanded its value-added service capabilities.
o Banta's publications division delivered both improved sales and
earnings in the first quarter despite further magazine
advertising page reductions. Market share gains continued to
propel the division's strong performance.
o Catalog division revenues increased in the first quarter compared
to the same period last year. Earnings, however, decreased due to
competitive pricing and a lower-margin mix of print projects.
o Direct marketing was Banta's most challenged business during the
first quarter, as customers remained cautious about promotional
spending, awaiting positive signs on consumer confidence. In
addition, the war caused a major disruption in direct marketing
activities during March, significantly affecting the print
industry and Banta's first quarter results.
o Operating profitability for Banta's single-use healthcare products
division increased 3 percent in the first quarter versus the same
period last year due to improved efficiencies and cost containment.
Sales were modestly lower for the quarter, primarily due to lower
prices on foreign-sourced products and a general industry slowdown.
"Our product and service diversity, ability to gain market share and
ongoing cost controls combined to produce solid results for the first quarter,"
says Streeter. "While questions remain regarding the status of the economic
recovery, Banta is well positioned to benefit from renewed business activity. We
have ample capacity, our customer base continues to expand and we have the
financial strength to invest where appropriate to maximize growth."
Banta will host a conference call to discuss its first quarter results
Wednesday, April 30 at 9:45 a.m. CDT (10:45 a.m. EDT). This call will be
simultaneously broadcast in the Investor Relations area of Banta's Website at
www.banta.com, and a replay of the call will be available.
Banta Corporation is a technology and market leader in printing and
supply-chain management. Banta provides a comprehensive combination of printing
and
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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
materials sourcing and product configuration, to customized kitting, order
fulfillment 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; unexpected results related to the corporation's ongoing
litigation relating to Mentor Media Ltd. and XYAN.com; changes in the pattern of
outsourcing supply-chain management functions by customers, including as a
result of product re-engineering; 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 March
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2003 2002
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Net Sales $ 336,430 $ 332,773
Cost of Sales 265,459 263,881
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Gross Profit 70,971 68,892
SG&A Expense 49,975 48,415
Restructuring Charge 916 -
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Earnings from Operations 20,080 20,477
Other Income (Expense)
Interest Expense (2,621) (3,110)
Other, net 787 (61)
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Earnings before Income Taxes 18,246 17,306
Provision for Income Taxes 7,000 6,818
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Net Income $ 11,246 $ 10,488
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Basic Earnings per Share $ 0.45 $ 0.42
Diluted Earnings per Share $ 0.44 $ 0.41
Average Shares Outstanding:
Basic 25,251 25,034
Diluted 25,428 25,372
Composite Tax Rate 38.4% 39.4%
SEGMENT INFORMATION
3 Months Ended March
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Net Sales 2003 2002
- -------------------------------------------- ------------ ------------
Printing and digital imaging $ 232,361 $ 235,977
Supply-chain management 81,535 73,203
Healthcare 22,534 23,593
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$ 336,430 $ 332,773
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Earnings from Operations
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Printing and digital imaging $ 13,286 $ 18,666
Supply-chain management 9,021 4,705
Healthcare 2,662 2,585
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Segment earnings from operations 24,969 25,956
Unallocated corporate expenses (4,889) (5,479)
Interest expense (2,621) (3,110)
Other income (expense) 787 (61)
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Earnings before income taxes $ 18,246 $ 17,306
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Cash Flow Items:
Depreciation/Amortization $ 16,464 $ 18,677
Capital Expenditures $ 14,938 $ 6,526
Banta Corporation
Condensed Consolidated Balance Sheet
($000's omitted)
3 Months Ended March
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ASSETS 2003 2002
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Cash and short-term investments $ 183,774 $ 111,526
Receivables 207,854 185,292
Inventories 63,818 64,564
Other current assets 22,828 21,707
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Total current assets 478,274 383,089
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Plant and equipment, net 277,277 314,182
Other assets 70,085 89,207
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Total Assets $ 825,636 $ 786,478
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
Accounts Payable $ 110,193 $ 92,457
Other accrued liabilities 63,146 56,899
Current maturities of long-term debt 18,202 19,509
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Total current liabilities 191,541 168,865
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Long-term debt 112,380 130,881
Deferred income taxes 16,010 21,281
Other noncurrent liabilities 43,933 44,323
Shareholders' investment 461,772 421,128
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Total Liabilities and Shareholders' Investment $ 825,636 $ 786,478
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