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 June 28, 1997
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: (920) 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 June 28, 1997, 29,785,807 shares
of $.10 par value common stock.
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
Quarterly Report Form 10-Q
For the Quarter Ended June 28, 1997
INDEX
PART I - FINANCIAL INFORMATION Page Number
Item 1 - Financial Statements:
Unaudited Consolidated Condensed
Balance Sheets June 28, 1997
and December 28, 1996 . . . . . . . . . . . . . . . 3
Unaudited Consolidated Condensed
Statements of Earnings for the
Three Months and Six Months Ended
June 28, 1997 and June 29, 1996 . . . . . . . . . . 4
Unaudited Consolidated Condensed
Statements of Cash Flows for the
Six Months Ended June 28, 1997
and June 29, 1996 . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Consolidated Condensed
Financial Statements . . . . . . . . . . . . . . . . 6
Item 2 - Management's Discussion and Analysis
of Financial Condition
and Results of Operations . . . . . . . . . . . . . 7-8
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 8
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . 9
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 - Financial Statements
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 28, 1997 December 28, 1996
ASSETS
Current Assets
Cash $ 42,740 $ 57,417
Receivables 198,242 206,245
Inventories 77,472 69,063
Other current assets 17,841 14,730
-------- -----------
Total Current Assets 336,295 347,455
-------- -----------
Plant and Equipment 674,339 650,243
Less: Accumulated Depreciation (356,557) (330,304)
-------- -----------
Plant and Equipment, net 317,782 319,939
-------- -----------
Other Assets 13,819 11,886
Cost in Excess of Net Assets of
Subsidiaries Acquired 38,214 39,938
-------- -----------
$ 706,110 $ 719,218
========== ============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Short-term debt 2,230 4,620
Accounts payable 82,584 75,428
Accrued salaries and wages 19,787 18,269
Other accrued liabilities 22,458 23,888
Current maturities of long-term debt 5,278 5,620
--------- ----------
Total Current Liabilities 132,337 127,825
--------- ----------
Long-term Debt 133,404 133,696
Deferred Income Taxes 21,805 21,805
Other Non-Current Liabilities 15,839 15,300
Shareholders' Investment
Preferred stock-$10 par value;
authorized 300,000 shares;
none issued 0 0
Common stock-$.10 par value;
authorized 75,000,000 shares;
29,785,807 and 30,969,069 shares
issued and outstanding, respectively 2,979 3,097
Amount in excess of par value
of stock 35,715 66,119
Cumulative translation adjustment (1,494) 1,473
Retained earnings 365,525 349,903
---------- ----------
Total Shareholders' Investemnt 402,725 420,592
---------- ----------
$706,110 $719,218
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
<CAPTION>
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 28, 1997 June 29, 1996 June 28, 1997 June 29, 1996
<S> <C> <C> <C> <C>
Net sales $ 276,217 $ 258,650 $ 551,580 $ 529,920
Cost of goods sold 218,571 206,679 441,212 428,226
---------- ---------- ---------- -----------
Gross earnings 57,646 51,971 110,368 101,694
Selling and administrative
expenses 35,110 29,979 69,495 62,258
---------- ---------- ---------- -----------
Earnings from operations 22,536 21,992 40,873 39,436
Interest expense (2,424) (2,702) (5,217) (5,563)
Other, net 572 334 1,446 489
---------- ---------- ---------- -----------
Earnings before income taxes 20,684 19,624 37,102 34,362
Provision for income taxes 8,100 7,800 14,500 13,700
---------- ---------- ---------- -----------
Net earnings $ 12,584 $ 11,824 $ 22,602 $ 20,662
========== ========== ========== ===========
Earnings per share of common
stock $ .42 $ .38 $ 0.75 $ 0.66
========== ========== ========== ===========
Average common shares
outstanding 29,969,850 31,313,042 30,255,968 31,335,236
========== ========== ========== ===========
Cash dividends per common share $ 0.12 $ 0.11 $ 0.23 $ 0.215
========== ========== ========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six Months Ended
June 28, 1997 June 29, 1996
Cash Flows From Operating Activities
Net earnings $ 22,602 $ 20,662
Depreciation and amortization 30,324 28,741
Deferred income taxes 96 (743)
Change in assets and liabilities
Decrease in receivables 8,003 23,695
(Increase) decrease in inventories (8,409) 8,786
Increase in other current assets (3,111) (1,057)
Increase (decrease) in accounts
payable and accrued liabilities 7,148 (15,179)
(Increase) decrease in other
non-current assets (1,933) 598
Other, net (1,403) 827
---------- ----------
Cash provided from operating
activities 53,317 66,330
---------- ----------
Cash Flows From Investing Activities
Capital expenditures, net (27,468) (34,825)
---------- ----------
Cash used for investing
activities (27,468) (34,825)
---------- ----------
Cash Flows From Financing Activities
Repayment of notes payable, net (2,390) 0
Repayment of long-term debt (634) (1,837)
Dividends paid (6,980) (6,720)
Proceeds from exercise of
stock options 2,048 1,585
Repurchase of common stock (32,570) 0
--------- ---------
Cash used for financing
activities (40,526) (6,972)
--------- ---------
Net increase (decrease) in cash (14,677) 24,533
Cash at beginning of period 57,417 27,130
--------- ---------
Cash at end of period $ 42,740 $ 51,663
========= =========
Cash payments for:
Interest, net of amount
capitalized $ 4,996 $ 5,284
Income taxes 13,212 12,358
See accompanying notes to consolidated statements.
<PAGE>
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. Results for the period ended June 28, 1997 are not
necessarily indicative of results that may be expected for the year
ending January 3, 1998.
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 June 28, 1997 and December 28, 1996 were as
follows:
(Dollars in thousands)
June 28, 1997 December 28, 1996
Raw Materials and Supplies $ 47,570 $ 40,980
Work-In-Process and Finished Goods 34,275 32,456
---------- -----------
FIFO value (current cost of all 81,845 73,436
Excess of current cost over
of LIFO inventories (4,373) (4,373)
---------- -----------
Net Inventories $ 77,472 $ 69,063
========== ===========
3) In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share." The new statement requires changes in the manner in which
earnings per share are calculated and is effective for fiscal years
ending after December 15, 1997. The Standard does not allow early
adoption. The Corporation intends to adopt this standard during the
fourth quarter of 1997. The adoption of this standard is not
expected to have a material effect on the Corporation's earnings per
share.
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 decreased by approximately
$15.7 million during the first half of 1997 primarily because the
Corporation purchased approximately 1.3 million (at an aggregate cost
of $32.6 million) shares of its common stock under a repurchase
program authorized by its Board of Directors. In April 1997, the
Board authorized the repurchase of up to an additional 1.5 million
shares.
RESULTS OF OPERATIONS
Net Sales
Sales for the second quarter of 1997 were $17.6 million (7%) higher
than for second quarter of 1996. The sales increase was offset by
lower paper prices in the second quarter of 1997 as compared with the
second quarter of 1996. The cost of paper is generally passed on to
the Corporation's customers and, as a result, as paper prices
decreased from 1996 levels, the Corporation's sales were reduced.
Comparable paper prices to those in second quarter 1996 would have
increased 1997 sales by approximately $14 million. Operating activity
levels during the second quarter of 1997, in all of the Corporation's
market classifications, except for healthcare products, were above
1996 second quarter levels. Significant sales gains were made in the
book market where demand for educational products was strong and
activity levels were also strong in the magazine market as page
counts have increased. The plants previously serving the computer
software documentation publishers are making progress in refocusing
their efforts toward serving a more diverse market.
Sales for the first half of 1997 were $21.7 million (4%) higher than
for the first half of 1996. The sales increase was also offset by
the impact of lower paper prices in 1997. Comparable paper prices to
those in the first half of 1996 would have increased first half 1997
sales by an additional $36 million. Trends in operating activity
levels for the first two quarters of 1997 were similar to those
described above for the second quarter.
Cost of Goods Sold
Cost of goods sold as a percentage of sales decreased from 79.9% for
the second quarter of 1996 to 79.1% for the second quarter of 1997.
This overall margin improvement resulted from several factors. Since
the sale of paper generally has lower margins than manufacturing
sales, the decrease in paper sales increased average margins.
Additionally, increased utilization among most of the Corporation's
operating facilities increased margins.
Cost of goods sold as a percentage of sales decreased from 80.8 % for
the first half of 1996 to 80.0% for the first half of 1997. This
reduction resulted from the same factors that impacted the second
quarter.
Selling and Administrative Expenses
Selling and administrative expenses were $5.1 million higher for the
second quarter of 1997 than for the second quarter of 1996 and $7.2
million higher for the first half of 1997 than for the first half of
1996. The increase is primarily due to the higher level of operating
activity and the selling and administrative expenses related to that
higher level.
Interest Expense
Interest expense was $278,000 lower in the second quarter of 1997
than for the second quarter of 1996 and $346,000 lower for the first
half of 1997 than for the first half of 1996 due to decreased debt
levels in 1997.
Income Taxes
The Corporation's effective income tax rates declined as indicated in
the table below due to an increase in tax-free interest income earned
in 1997 as compared to 1996.
Effective Tax Rate
1997 1996
Second Quarter 39.2% 39.7%
First Half 39.1% 39.9%
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 22, 1997, all of the
persons nominated as directors were elected for terms expiring at the 1998
Annual Meeting. The following table sets forth certain information with
respect to such election:
Shares Withholding
Name Shares Voted For Authority
Jameson A. Baxter 24,475,832 151,972
Donald D. Belcher 24,479,767 148,037
George T. Brophy 24,469,803 158,001
William J. Cadogan 21,822,639 2,805,165
Henry T. DeNero 24,487,845 139,959
Richard L. Gunderson 24,484,410 143,394
Gerald A. Henseler 24,472,960 154,844
Bernard S. Kubale 23,736,027 891,777
Donald Taylor 24,441,117 186,687
Michael J. Winkler 24,488,709 139,065
Item 6 - Exhibits and Report on Form 8-K
(a) Exhibits - 27 - Financial Data Schedule (EDGAR version 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 August 11, 1997
BANTA CORPORATION
EXHIBIT INDEX TO FORM 10-Q
For The Quarter Ended June 28, 1997
Exhibit Number
27 Financial Data Schedule (EDGAR version only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF BANTA CORPORATION AS OF AND FOR THE SIX
MONTHS ENDED JUNE 28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-30-1996
<PERIOD-END> JUN-28-1997
<CASH> 42,740
<SECURITIES> 0
<RECEIVABLES> 201,595
<ALLOWANCES> 3,353
<INVENTORY> 77,472
<CURRENT-ASSETS> 336,295
<PP&E> 674,339
<DEPRECIATION> 356,557
<TOTAL-ASSETS> 706,110
<CURRENT-LIABILITIES> 132,337
<BONDS> 133,404
0
0
<COMMON> 2,979
<OTHER-SE> 399,746
<TOTAL-LIABILITY-AND-EQUITY> 706,110
<SALES> 553,379
<TOTAL-REVENUES> 551,580
<CGS> 441,212
<TOTAL-COSTS> 441,212
<OTHER-EXPENSES> 69,495
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,217
<INCOME-PRETAX> 37,102
<INCOME-TAX> 14,500
<INCOME-CONTINUING> 22,602
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,602
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.75
</TABLE>
