SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
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 1, 1995, 20,211,809 shares of
$.10 par value common stock.
BANTA CORPORATION AND SUBSIDIARIES
Quarterly Report Form 10-Q
For the Quarter Ended July 1, 1995
INDEX
PART I Financial Statements: Page Number
Unaudited Consolidated Condensed Balance Sheets
July 1, 1995 and December 31, 1994 . . . . . . . . . . . . . . 3
Unaudited Consolidated Condensed Statements of Earnings for
the Three and Six Months Ended July 1, 1995 and July 2, 1994 . 4
Unaudited Consolidated Condensed Statements of Cash Flows
for the Six Months Ended July 1, 1995 and July 2, 1994 . . . . 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 4 - Submission of Matters to a Vote of Security Holders . . 8
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . 9
PART I Item 1 - Financial Statements
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
July 1, December 31,
1995 1994
ASSETS
Current Assets
Cash $ 2,188 $ 370
Receivables 164,833 169,613
Inventories 75,448 67,797
Other current assets 12,312 10,644
------- --------
Total Current Assets 254,781 248,424
-------- --------
Plant and Equipment 555,676 523,735
Less Accumulated Depreciation 253,491 230,073
------- --------
Plant and Equipment, net 302,185 293,662
------- --------
Other Assets 10,903 11,766
Cost in Excess of Net Assets of
Businesses Acquired 26,790 23,911
------- -------
$594,659 $ 577,763
======= =======
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities
Notes payable $ 13,438 $ 56,001
Accounts payable 40,983 44,960
Accrued salaries and wages 20,536 20,239
Other accrued liabilities 19,683 17,469
Current maturities of long-term
debt 7,949 8,333
------- ---------
Total Current Liabilities 102,589 147,002
------- ---------
Long-term Debt 107,299 67,834
Deferred Income Taxes 18,968 19,218
Other Non-current Liabilities 14,194 12,122
Shareholders' Investment
Preferred stock - $10 par value;
authorized 300,000 shares, none
issued - -
Common stock - $.10 par value;
authorized 75,000,000
shares, 20,211,809 and 20,126,026
shares issued, respectively 2,021 2,013
Amount in excess of par value of
stock 58,677 56,780
Retained earnings 290,911 272,794
-------- --------
Total Shareholders' Investment 351,609 331,587
-------- --------
$594,659 $ 577,763
======== ========
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 1, 1995 July 2, 1994 July 1, 1995 July 2, 1994
Net sales $ 235,346 $185,831 $ 468,300 $373,295
Cost of goods sold 182,241 139,765 365,506 286,165
------- ------- -------- -------
Gross earnings 53,105 46,066 102,794 87,130
Selling and administrative
expense 29,569 25,122 58,677 49,168
------- ------- ------- -------
Earnings from operations 23,536 20,944 44,117 37,962
Interest expense (2,152) (1,251) (4,420) (2,364)
Other (expense) income, net (131) 264 (142) 324
------- ------- ------- -------
Earnings before income
taxes 21,253 19,957 39,555 35,922
Provision for income taxes 8,500 8,000 15,800 14,400
------- ------- ------- --------
Net earnings $ 12,753 $ 11,957 $ 23,755 $ 21,522
======= ======= ======= ========
Earnings per share of common
stock $ .63 $ .59 $ 1.17 $ 1.06
===== ====== ======= ======
Average common shares
outstanding 20,318,632 20,237,006 20,289,239 20,240,005
=========== =========== ========== ===========
Cash dividends per share of
common stock $ .14 $ .13 $ .28 $ .26
========= ======== ======= ========
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 1, July 2,
1995 1994
Cash Flow From Operating Activities
Net earnings $23,755 $21,522
Depreciation and amortization 23,830 19,538
Deferred income taxes (250) (1,154)
Change in assets and liabilities
Decrease in receivables 4,780 2,216
(Increase) decrease in inventories (7,651) 5,204
Increase in other current assets (1,668) (409)
(Decrease) increase in accounts payable
and accrued liabilities (1,466) 7,619
Decrease in other non-current assets 863 1,067
Other, net 2,072 734
-------- ---------
Cash provided from operating
activities 44,265 56,337
-------- --------
Cash Flow From Investing Activities
Capital expenditures, net (29,063) (46,935)
Acquisition of businesses (6,169) (16,331)
------- ---------
Cash used for investing activities (35,232) (63,266)
------- ---------
Cash Flow From Financing Activities
Repayment of notes payable, net (42,563) (17,785)
Issuance of long-term debt 40,000 25,000
Repayment of long-term debt (919) (4,296)
Dividends paid (5,638) (5,206)
Proceeds from exercise of stock options 1,905 1,095
-------- ---------
Cash used for financing activities (7,215) (1,192)
-------- ---------
Net increase (decrease) in cash 1,818 (8,121)
Cash at beginning of period 370 8,230
-------- ---------
Cash at end of period $ 2,188 $ 109
======== =========
Cash payments for:
Interest, net of amount capitalized $ 4,028 $ 3,326
Income taxes 13,545 15,457
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) Inventories
The majority of the Corporation's inventories used in its printing
operations 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 1, 1995 and December 31, 1994 were as
follows:
(Dollars in Thousands)
December 31,
July 1, 1995 1994
Raw Materials and Supplies $48,476 $37,106
Work-In-Process and Finished Goods 35,212 35,531
-------- --------
FIFO value (current cost of all
inventories) 83,688 72,637
Excess of Current Cost over Carrying
Value of LIFO Inventories (8,240) (4,840)
-------- ---------
Net Inventories $75,448 $67,797
======== ========
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 increased by approximately $50.8
million during the first half of 1995. This increase was primarily due
to the issuance of $40 million of long-term debt during the first half of
1995 at interest rates ranging from 7.38% to 7.98%. The proceeds of the
debt issued were used primarily to repay short-term indebtedness. After
issuance of the debt, the Corporation's ratio of long-term debt to total
capitalization was 23%.
RESULTS OF OPERATIONS
Net Sales
Sales for the second quarter of 1995 were $49.5 million (27%) higher than
the second quarter of 1994. Paper price increases had a significant
impact on sales since the Corporation supplies much of its customers'
paper. These price increases accounted for about one-half of the sales
increase for the quarter. The 1994 acquisition of United Graphics
(acquired in the second half of 1994) accounted for 10% of the sales
increase. All market classifications showed increases for the quarter.
The largest sales gains were in the commercial market which included
increased volume from the Banta Direct Marketing Group and from the Banta
Catalog Group resulting from a higher volume of work produces as well as
the increased paper prices. The book market classification showed
increased sales strength due to higher activity levels in trade and
educational books and the increased paper prices.
Sales for the first half of 1995 increased by $95 million (25%) over 1994
also due in significant part to the impact of increased paper prices. The
commercial, book and magazine market classifications reported sales
increases for the first half of 1995. The largest increases in sales were
in the commercial classification, particularly in consumer catalogs and
direct marketing materials (which was due in part to an acquisition made
in 1994), and the book classification. The increases in both market
classifications resulted from higher activity levels and increased paper
prices. Acquisitions completed in 1994 accounted for approximately one-
fourth of the 1995 sales increase.
Cost of Goods Sold
Cost of goods sold as a percentage of sales increased from 75.2% for the
second quarter of 1994 to 77.4% for the second quarter of 1995. This
overall margin decline resulted from several factors. Since the sale of
paper generally has lower margins than manufacturing sales, the increase
in paper sales reduced average margins. The inclusion of the results of
United Graphics has reduced margins as this company currently provides
margins below the Corporation's average. Due to the recent large increase
in paper prices, the Corporation recorded a $1.9 million provision for
last-in first-out (LIFO) inventory valuation during the second quarter of
1995. This represents .8% of sales and about one-third of the decline in
the margin percentage. A provision of $300,000 was provided in the second
quarter of 1994. During the second quarter of 1995 paper suppliers
announced additional price increases to be implemented in the third
quarter. These increases, if implemented, will impact the LIFO provision
required during the remainder of 1995.
Cost of goods sold as a percentage of sales increased from 76.7% for the
first six months of 1994 to 78.0% for the first six months of 1995. The
reduction in margins of the six-month period resulted from the factors
discussed above regarding the second quarter. The Corporation has
recorded a total $3.4 million provision for LIFO during the first six
months of 1995, representing .7% of sales and about one-half of the
decline in the margin percentage. A total of $300,000 was provided for
LIFO in the first six months of 1994.
Selling and Administrative Expenses
Selling and administrative expenses were $4.4 million and $9.5 million
higher for the second quarter and first six months of 1995, respectively,
than for the same periods of 1994. The increase is primarily due to
higher levels of activity in general and the inclusion of $1.2 million
and $3.2 million for the second quarter and six-month period,
respectively, of selling and administrative expenses for the operations
acquired during 1994.
Interest Expense
Interest expense was approximately $900,000 and $2.1 million higher in
the second quarter and first six months of 1995, respectively, than for
the same periods of 1994. This is due to increased borrowings and higher
average interest rates. The Corporation's average level of indebtedness
was approximately $50 million higher during the first half of 1995
compared with the same period in 1994.
Income Taxes
The Corporation's effective income tax rates were approximately the same
for the first half of 1995 and 1994.
PART II: OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) - (c)
At the annual meeting of shareholders held on April 25, 1995, all of the
persons nominated as directors were elected for terms expiring at the
1996 Annual Meeting. The following table sets forth certain information
with respect to such election:
Shares
Shares Voted Withholding
Name of Nominee For Authority
Barry K. Allen 16,527,958 153,742
Jameson A. Baxter 16,526,228 155,472
Donald D. Belcher 16,502,682 179,015
George T. Brophy 16,516,016 165,684
William J. Cadogan 16,163,613 518,087
Richard L. Gunderson 16,523,070 158,630
Gerald H. Henseler 16,501,878 179,822
Bernard S. Kubale 15,971,815 709,885
Donald Taylor 16,508,219 173,481
Allan J. Williamson 16,494,216 187,484
Also at the annual meeting of shareholders on April 25, 1995, the
shareholders approved the adoption of the Banta Corporation 1995 Equity
Incentive Plan. The shares voted for, against and those abstaining were
14,220,293, 1,740,141, and 721,266, respectively.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
10(a) Banta Corporation 1995 Equity Incentive Plan (1)
10(b) Banta Corporation 1991 Stock Option Plan, as amended
27 Financial Data Schedule [EDGAR filing only]
(1) Exhibit No. 4.4 to the Company's Registration Statement on
Form S-8 (Registration #33-61683) is hereby incorporated
herein by reference.
(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, 1995
BANTA CORPORATION
EXHIBIT INDEX TO FORM 10-Q
For The Quarter Ended July 1, 1995
Page Number in Sequential
Exhibit Number Numbering System
10(a) Banta Corporation 1995 Equity
Incentive Plan . . . . . . . . . . . . . . . . . . (1)
10(b) Banta Corporation 1991 Stock Option
Plan, as amended . . . . . . . . . . . . . . . . . --
27 Financial Data Schedule [EDGAR filing only] . . . . --
(1) Exhibit No. 4.4 to the Company's Registration Statement on Form S-8
(Registration #33-61683) is hereby incorporated herein by
reference.