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 September 28, 1996
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 September 28, 1996, 30,995,171
shares of $.10 par value common stock.
BANTA CORPORATION AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Quarter Ended September 28, 1996
INDEX
PART I Financial Statements Page Number
Unaudited Consolidated Condensed Balance Sheets at
September 28, 1996 and December 30, 1995 . . . . . . . . . 3
Unaudited Consolidated Condensed Statements of Earnings
for the Three and Nine Months Ended September 28, 1996
and September 30, 1995 . . . . . . . . . . . . . . . . . . 4
Unaudited Consolidated Condensed Statements of Cash Flows
for the Nine Months Ended September 28, 1996 and
September 30, 1995 . . . . . . . . . . . . . . . . . . . . 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:
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . 8
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART I Item 1 - Financial Statements
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
Sept. 28, 1996 Dec. 30, 1995
ASSETS
Current Assets
Cash $40,571 $27,130
Receivables 206,711 199,151
Inventories 66,456 70,750
Other current assets 15,433 13,775
-------- --------
Total Current Assets 329,171 310,806
-------- --------
Plant and Equipment 640,461 592,707
Less Accumulated Depreciation 316,445 278,989
-------- --------
Plant and Equipment, net 324,016 313,718
-------- --------
Other Assets 12,407 13,292
Cost in Excess of Net Assets of
Businesses Acquired 39,860 40,993
-------- -------
$705,454 $678,809
======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Accounts payable $79,648 $68,365
Accrued salaries and wages 17,893 21,784
Other accrued liabilities 21,951 24,848
Current maturities of long-term
debt 7,956 7,853
-------- -------
Total Current Liabilities 127,448 122,850
-------- -------
Long-term Debt 134,121 134,953
Deferred Income Taxes 21,566 20,785
Other Non-current Liabilities 13,714 13,109
Shareholders' Investment
Preferred stock - $10 par value;
authorized 300,000 shares,
none issued - -
Common stock - $.10 par value;
authorized 75,000,000 shares,
30,995,171 and 20,559,614 shares
issued, respectively 3,100 2,056
Amount in excess of par value
of stock 67,281 70,138
Cumulative translation adjustment (131) (118)
Retained earnings 338,355 315,036
-------- --------
Total Shareholders' Investment 408,605 387,112
-------- --------
$705,454 $678,809
======== ========
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 Nine Months Ended
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
Net sales $264,552 $249,267 $794,472 $717,567
Cost of goods sold 207,902 193,524 636,128 559,030
------- ------- ------- -------
Gross earnings 56,650 55,743 158,344 158,537
Selling and administrative
expense 30,239 28,066 92,497 86,743
------- ------- ------- -------
Earnings from operations 26,411 27,677 65,847 71,794
Interest expense (2,331) (2,427) (7,894) (6,847)
Other income, net 1,215 524 1,704 382
------- ------- ------- -------
Earnings before income
taxes 25,295 25,774 59,657 65,329
Provision for income taxes 10,000 10,300 23,700 26,100
------- ------- ------- -------
Net earnings $15,295 $15,474 $35,957 39,229
======= ======= ======= =======
Earnings per share of common
stock $.49 $.51 $1.15 $1.29
======= ======= ======= =======
Average common shares
outstanding 31,260,177 30,607,875 31,310,216 30,491,864
========== ========== ========== ==========
Cash dividends per share
of common stock $.1100 $.0925 $.3250 $.2800
======= ======= ======= =======
See accompanying notes to consolidated financial statements.
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Nine Months Ended
Sept. 28, Sept. 30,
1996 1995
Cash Flow From Operating Activities
Net earnings $35,957 $39,229
Depreciation and amortization 43,338 35,691
Deferred income taxes 448 (387)
Change in assets and liabilities
Increase in receivables (7,028) (10,071)
Decrease (increase) in inventories 4,438 (8,955)
(Increase) decrease in other
current assets (1,243) 373
Increase in accounts payable
and accrued liabilities 4,157 3,140
Decrease in other non-current assets 885 137
Other, net 669 1,852
------- -------
Cash provided from
operating activities 81,621 61,009
------- -------
Cash Flow From Investing Activities
Capital expenditures, net (47,582) (42,766)
Acquisition of businesses - (8,419)
------- -------
Cash used for investing
activities (47,582) (51,185)
------- -------
Cash Flow From Financing Activities
Repayment of notes payable, net - (29,781)
Issuance of long-term debt - 40,000
Repayment of long-term debt (6,450) (5,587)
Dividends paid (11,006) (8,469)
Proceeds from exercise of stock
options and stock issues 2,324 2,953
Repurchase of common stock (5,466) -
-------- -------
Cash used for financing
activities (20,598) (884)
-------- -------
Net increase in cash 13,441 8,940
Cash at beginning of period 27,130 370
-------- -------
Cash at end of period $40,571 $9,310
======== =======
Cash payments for:
Interest, net of amount
capitalized $ 7,656 $ 6,877
Income taxes 17,615 23,476
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 September 28, 1996 and December 30, 1995 were as
follows:
(Dollars in Thousands)
Sept. 28, Dec. 30,
1996 1995
Raw Materials and Supplies $ 43,380 $ 44,815
Work-In-Process and Finished Goods 30,180 34,789
----- -----
FIFO value (current cost of all
inventories) 73,560 79,604
Excess of Current Cost over Carrying
Value of LIFO Inventories (7,104) (8,854)
----- ------
Net Inventories $ 66,456 $ 70,750
====== ======
3) Acquisition
During the first quarter of 1996, the Corporation acquired all of the
outstanding shares of common stock of Packaging Fulfillment
Specialists, Inc. ("PFS") in a share exchange. In this transaction,
the Corporation issued a total of 236,337 shares of its common stock.
This transaction was accounted for as a pooling of interests.
However, since the assets, liabilities, results of operations and
cash flows of PFS are not material in relation to those of the
Corporation, prior period financial statements have not been restated
to reflect this transaction.
4) Stock Dividend
On March 1, 1996, the Corporation distributed a three-for-two stock
split effected in the form of a 50% stock dividend. The earnings per
share, dividends per share and average shares outstanding have been
adjusted in the condensed financial statements to reflect the stock
split.
5) Subsequent Event
Subsequent to the end of the third quarter of 1996, the Corporation
announced that it had signed a letter of intent to acquire all of
the outstanding shares of Dittler Brothers, Incorporated ("Dittler"),
a leading specialty printer of direct marketing materials, promotional
games, lottery tickets, airline timetables and hotel directories.
Dittler operates two printing plants in the Atlanta, Georgia area and
reported 1995 sales of $104 million. The purchase price is expected
to be 3,070,000 shares of the Corporation's common stock.
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Liquidity and Capital Resources
The Corporation's net working capital increased by approximately
$13.8 million during the first three quarters of 1996. This increase
was primarily due to an increase in cash balances maintained. The
Corporation estimates that capital commitments will be approximately
$55 million in 1996, down from the original plan of $70 million.
During the third quarter of 1996, the Corporation repurchased 231,100
shares of its common stock at an aggregate purchase price of $5.5
million pursuant to its common stock repurchase program.
RESULTS OF OPERATIONS
Net Sales
Sales for the third quarter of 1996 were $15.3 million (6%) higher
than the third quarter of 1995. The sales increase is attributable to
$25.9 million of sales reported by B.G. Turnkey Services, which was
acquired in October 1995. This increase in sales was offset by lower
paper sales as paper prices declined significantly from the record
levels seen in the third quarter of 1995. Activity levels in the
commercial market were ahead of 1995 as a result of increased demand
for in-line print personalization and demographic versioning. Sales
reported in the other market classifications were flat or lower than
1995.
Sales for the first three quarters of 1996 increased by $76.9 million
(11%) over 1995 also due in large part to the impact of the acquired
turnkey operation, which reported sales of $86.6 million during the
first three quarters of 1996. Increased paper prices also impacted
sales for the first half of 1996 over the first half of 1995.
However, these increases in prices were offset by reduced operating
activity in almost all markets with capacity utilization in the first
quarter of 1996 significantly lower than the first quarter of 1995.
Activity levels in the magazine market were ahead of 1995 as a result
of capacity added in 1995. Banta's single-use products unit also
reported stronger performance during the first three quarters of 1996
over the same period in 1995.
Cost of Goods Sold
Cost of goods sold as a percentage of sales increased from 77.6% for
the third quarter of 1995 to 78.6% for the third quarter of 1996.
This overall margin decline resulted from the inclusion of the newly
acquired turnkey operation because its project management services
generally provide lower margins than the Corporation's print business
due to higher material content. Cost of goods sold as a percentage of
sales for the acquired turnkey operation was approximately 86.5% for
the quarter compared to 77.3% for the balance of the Corporation's
operations. Margins were also reduced in the third quarter of 1996
as a result of pricing pressures and reduced operating activity in
several markets.
Due to decreases in the price for paper in the third quarter of 1996,
cost of goods sold was reduced by $1,750,000 for last-in, first-out
(LIFO) inventory valuation. Due to paper price increases experienced
in the third quarter of 1995, a $1.7 million provision for LIFO
inventory valuation was recorded in that quarter. The trend of
reduced paper prices is expected to last through the end of 1996 and
early 1997.
Cost of goods sold as a percentage of sales increased from 77.9% for
the first nine months of 1995 to 80.1% for the first nine months of
1996. The reduction in margins for the nine-month period resulted
from the factors discussed above for the third quarter. The
Corporation recorded a total $5.1 million provision for LIFO during
the first nine months of 1995, representing 0.7% of sales. The only
LIFO inventory valuation provision recorded in the first nine months
of 1996 was the third quarter $1,750,000 cost of goods sold
reduction.
Selling and Administrative Expenses
Selling and administrative expenses were $2.2 million and $5.8
million higher for the third quarter and first nine months of 1996,
respectively, than for the same periods of 1995. The increase is
primarily due to the inclusion of $2.8 million and $6.6 million for
the third quarter and nine-month period, respectively, of selling and
administrative expenses for the turnkey operation acquired during
1995. These increases were offset partially by reduced selling and
administration expenses due to the reduced operating activity.
Interest Expense
Interest expense for the third quarter of 1996 was approximately
$100,000 lower than the same period of 1995. Although the
Corporation increased average debt levels during 1996, a greater
portion of that interest expense was capitalized during 1996.
Interest expense was approximately $1.0 million higher in the first
nine months of 1996 than for the same period of 1995 due to increased
debt level over those periods.
Income Taxes
The Corporation's effective income tax rate decreased from 40.0% for
the third quarter of 1995 to 39.5% for the third quarter of 1996 due
to the impact of tax exempt interest income earned on the cash
balances maintained during 1996. The effective income tax rate
decreased from 40.0% for the first three quarters of 1995 to 39.7%
for the first three quarters of 1996 for the same reason.
PART II: OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
27 Financial Data Schedule [EDGAR filing only]
(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 November 12, 1996
BANTA CORPORATION
EXHIBIT INDEX TO FORM 10-Q
For The Quarter Ended September 28, 1996
Exhibit Number
27 Financial Data Schedule [EDGAR filing only]