UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 3, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
Rights to Purchase Common Stock
(Title of Class)
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.
(x) Yes ( ) No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. (x)
Aggregate market value of voting stock held by non-affiliates of the
registrant as of March 6, 1998: $777,585,000
Number of shares of common stock outstanding March 6, 1998:
29,727,419
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to Shareholders for year ended January 3, 1998
(incorporated into Parts I and II).
(2) Definitive Proxy Statement for annual meeting of shareholders to
be held on April 28, 1998 (incorporated into Part III).
<PAGE>
PART I
Item 1. Business.
General.
Banta Corporation (the "Corporation"or "Banta"), together with its
subsidiaries, is one of the larger printing organizations in the United
States, providing a broad range of printing and graphic arts services.
The Corporation was incorporated in Wisconsin in 1901. Its principal
executive offices are located at 225 Main Street, Box 8003, Menasha,
Wisconsin, 54952-8003. The Corporation had a total of 6,900 employees at
the end of fiscal 1997.
The Corporation operates in one business segment-Printing Services.
Market classifications of the Corporation's sales are commercial
(catalogs, direct mail and single-use products); books (educational,
general, trade and data manuals);turnkey (project management,
manufacturing, packaging and distribution); magazines; and other (digital
imaging services, production of point-of-purchase displays and security
products). During 1997, the corporation sold its point of purchase
display business and discontinued its security products business. These
businesses were immaterial to the Corporation's operation. At the end of
fiscal 1997, the Corporation's operations were conducted at 36 production
facilities in the United States located in Wisconsin, Minnesota,
California, Connecticut, Florida, Illinois, Massachusetts, Michigan,
Missouri, North Carolina, Ohio, Texas, Utah, Virginia and Washington and
at six European production facilities located in Ireland, Scotland, France
and The Netherlands.
The following table sets forth the approximate percentage of
consolidated net sales contributed by each class of similar products and
services which accounted for ten percent or more of consolidated net sales
for any of the last three fiscal years.
1997 1996 1995
Commercial 43% 44% 47%
Books 23 33 26
Turnkey 17 17 8
Magazines 11 11 11
Other 6 8 18
---- ---- ----
TOTAL 100% 100% 100%
==== ==== ====
In September 1997, the Corporation acquired the companies
constituting The Omnia Group ("Omnia") for approximately $50.7 million in
cash. Omnia is a supplier of single-use medical and dental products.
Omnia reported sales for 1996 of approximately $65 million.
In October 1997, the Corporation acquired Greenfield Printing &
Publishing Company ("Greenfield") for approximately $21.3 million in cash.
Greenfield is a printer of special-interest and trade magazines.
Greenfield reported sales for its most recent fiscal year of approximately
$22 million.
In September 1997, the Corporation acquired Bock West, Inc.("Bock
West") for 75,715 shares of the Corporation's common stock valued at $2.1
million. Bock West provides mailing and fulfillment services.
During the third quarter of 1997, the Corporation recognized a
restructuring charge related to the sale or closing of non-core businesses
and underperforming assets, including the sale of the Corporation's point-
of-purchase display business and its facilities; discontinuation of its
intaglio print-based security products division; the sale of the assets of
The DI Group, Banta's interactive video operation; and the closing of
three Banta U.S. Turnkey facilities that no longer met location or
customer requirements. As a result of the restructuring, the Corporation
recorded a one-time pretax charge to earnings of $13.5 million, $8.1
million after tax, reducing the Corporation's 1997 third-quarter and full
year per-share earnings by $.27.
Certain matters discussed in this Annual Report on Form 10-K are "forward-
looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of
1995. In addition, management of the Corporation may from time to time
make forward-looking statements intended to qualify for such safe harbors.
These forward-looking statements can generally be identified as such
because the context of the statement will include words such as the
Corporation "believes," "anticipates" or "expects," or words of similar
import. Similarly, statements that describe the Corporation's future
plans, objectives or goals are also forward-looking statements. Such
forward-looking statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from those currently
anticipated. Factors that could affect results include, among others,
changes in customers' demand for the Corporation's products, changes in
raw material costs and availability, pricing actions by competitors, the
Corporation's success in integrating recently acquired businesses, and
general changes in economic conditions. Shareholders, potential investors
and other readers are urged to consider these factors carefully in
evaluating the forward-looking statements and are cautioned not to place
undue reliance on such forward-looking statements.
Customers.
The Corporation sells its products and services to a large number of
customers and ordinarily does not have long-term contracts with its
customers. Production agreements covering one to three years are,
however, more frequent for magazine and catalog production. Substantially
all sales are made to customers through employees of the Corporation and
its subsidiaries based on customer specifications. The fifteen largest
customers accounted for approximately 27%, 28% and 25% of net sales during
1997, 1996, and 1995, respectively. No customer accounted for more than
10% of the Corporation's net sales in 1997, 1996 or 1995. In the opinion
of management, the loss of any single customer would not have a material
long-term adverse effect on the Corporation.
Backlog.
The Corporation is primarily a manufacturing services company and
provides its customers with printing, converting and other services. Lead
time for services varies, depending upon the type of customer, the
industry being serviced and seasonal factors. Backlogs would be expressed
in terms of time scheduled on equipment and not dollar value.
Consequently, the dollar value of backlog is not readily available.
Markets Served.
Set forth below is a description of the primary markets the
Corporation serves:
- Commercial
The Corporation produces catalogs primarily for the consumer,
industrial and retail catalog markets. Bindery services provide ink-jet
labeling and demographic binding (which allows several different versions
of the same catalog to be bound simultaneously). Distribution services
provided by various operating units of the Corporation, including
computerized mail distribution planning systems which assist the
Corporation's customers in minimizing postage costs, are an integral part
of catalog printing services.
Printed materials for direct marketing customers are provided
primarily by three operating units. These products vary in format and
size and include magazine and catalog inserts, bill stuffers, brochures,
booklets, cards and target market products designed to sell a product or
solicit a response. Over the past several years, the Corporation has
invested in imaging equipment which personalizes direct mail pieces at
press speeds. This capability is important to customers and the
Corporation expects to make additional investments in this important
technology. The acquisition of Bock West added mailing and fulfillment
services to the Corporation's direct marketing product offerings.
One of the Corporation's subsidiaries, Banta Healthcare Products,
Inc. (BHP), converts poly film and paper into single-use products for the
healthcare and food service industries. In addition, BHP extrudes films,
using both cast and blown extruders, for use in its manufacturing
processes and for sale to external customers. Its products include
plastic garment covers, examination gowns, stretcher sheets, examination
table paper, pillow covers, and gloves for food handlers and service
personnel who may come into contact with patients exposed to communicable
diseases. The acquisition of Omnia expanded BHP's medical product line
and added dental products to its offerings.
- Books
The Corporation prints consumable elementary and high school
workbooks and other products for publishers of educational and general
book markets including textbooks (primarily soft cover), testing materials
and paperbound books. Print opportunities in the consumable educational
workbook market have decreased during the last several years. Publisher
consolidations have resulted in fewer companies offering educational
products which has reduced the number of projects printed. Additionally,
the effort to improve the nation's educational system has prompted schools
to try alternate teaching methods. Some of these efforts have replaced
consumable workbooks with other instructional materials.
The Corporation has three operating units serving the computer
equipment and software industry's print manuals, all of which use offset
printing and high speed photocopying. During the last several years print
documentation for computer software and hardware has been increasingly
replaced by CD-ROM and online documentation. Banta's operations serving
these markets were successful in 1997 in refocusing their sales efforts
toward other publishers who utilize formats that fit the Corporation's
existing equipment.
The Corporation's book units also produce multimedia products for
educational and other publishers.
- Turnkey
The Corporation's product offerings in its turnkey market
classification include project management, manufacturing, procurement,
packaging, assembly and worldwide distribution services for computer
software publishers, as well as manufacturers of computer hardware and
consumer electronics primarily in the United States and Europe. These
operating units also perform computer disk replication, product packaging
and distribution.
- Magazines
The Corporation's plants serving the magazine market print, sort and
mail magazines representing more than 800 different titles. These
magazines include primarily short-to-medium run publications (usually less
than 350,000 copies) which are generally distributed to subscribers by
mail. The Corporation's magazine customers are primarily publishers of
specialty magazines, including religious, business and professional
journals and hobby, craft and sporting publications. The Corporation
provides its customers with computerized mailing list and distribution
services. The acquisition of Greenfield in 1997 increased the number of
plants serving this market from two to three. In 1997, the Corporation
also approved a significant expansion of the Kansas City, MO. facility
which will provide additional capacity.
- Other
Prepress services are provided by four of the Corporation's operating
units to publishers, printers and advertising agencies. Such services
include the conversion of full-color photographs, art and text into color
separated film and digital files for use in the production of printing
plates. These units also provide electronic graphic design, digital
photography and on-demand print services. During the last several years,
these units have diversified their customer base to include packaging
customers and increased their ability to maximize plant utilization by
connecting their facilities through an extensive network of high-speed
telecommunication lines.
In 1997, the Corporation opened its Digital Content Management
Solutions Center in Cambridge Massachusetts. This center provides
sophisticated database systems for archiving, managing, retrieving and
enabling multiple uses of our customers digital information. The
Corporation's service offerings also include CD-ROM production, CD
Interactive programming and developing interactive online products for the
World Wide Web. These services are primarily provided by two of the
Corporation's subsidiaries - KnowledgeSet Corporation and New Frontiers
Information Corporation, which was acquired in 1995.
Banta Specialty Converting, Inc.("BSC"), a subsidiary of the
Corporation, produces labels and decals for a variety of customers,
including those in the cosmetic, appliance, consumer and home
entertainment industries.
Competitive Conditions.
The Corporation is subject to competition from a large number of
companies, some of which have greater resources and capacity than the
Corporation. The graphic arts industry has undergone a period of
consolidation for a number of years. This trend has resulted in the
emergence of several additional competitors which are larger than the
Corporation in size and product offerings. The major competitive factors
in the Corporation's business are quality of finished products,
distribution capabilities, ongoing customer service, price and
availability of time on equipment which is appropriate in size and
function for a given project. The consolidation of customers within
certain of the Corporation's markets provides both greater competitive
pricing pressures and opportunities for increased volume solicitation.
In recent years, excess capacity in the printing industry has resulted
in lower unit prices. Despite the unit price reductions, the Corporation
has been able to remain competitive in part because it is financially
able to invest in modern technologically advanced equipment, which helps
reduce unit costs, and because of productivity gains resulting from
Continuous Improvement programs.
There are seasonal fluctuations in the usage of printing equipment
which in times of low demand and excess capacity can give rise to price
discounting. In the educational book market, for instance, activity is
greater in the first half of the year, and in the commercial markets,
activity is greater in the second half of the year. Computer software and
hardware products are also typically in greater demand during the second
half of the year, although the release of a new product by a major
customer can increase activity on an "event" basis at any time during the
year.
Raw Materials.
The principal raw material used by the Corporation is paper. Most of
the Corporation's production facilities are located in heavily
concentrated papermaking areas, and the Corporation can generally obtain
quality paper at competitive prices. The Corporation is not dependent
upon any one source for its paper or other raw materials.
In the fourth quarter of 1994 and throughout 1995, there was a
dramatic increase in paper prices and a tightening of availability, with
nearly all grades on allocation and delivery times extending up to six
weeks or more. During 1996, the price of paper fell dramatically such
that by the end of 1996 paper prices for the grades used most by the
Corporation stabilized at prices similar to those available at the
beginning of 1994. It is customary for printers to adjust sales prices to
reflect market fluctuations in paper prices. During 1997, the price of
paper grades used most frequently by the Corporation were on average about
equal to 1996. The average cost of paper to the Corporation's customers
was about 15% lower in 1996 than in 1995 and 33% higher in 1995 than in
1994.
The Corporation uses a number of other raw materials including ink,
resins, packaging materials and subcontracted components. The cost of ink
remained relatively stable in 1997. The cost of resin increased about 5%
early in 1997, but declined later in the year to levels slightly below
those prevalent at the beginning of the year. The cost of packaging
materials declined in 1997 and 1996.
Development.
In the graphic arts industry, most research and development is done
by equipment and material suppliers. The Corporation generally does not
engage in long-range research and development relating to equipment and
has not spent significant amounts of money for such purposes. One of the
purposes of the Corporation's technical research and development effort is
to establish a competitive advantage in existing markets by focusing on
improving operating procedures, increasing machine speeds and improving
monitoring of paper usage, as well as working on the development of
proprietary inks, coatings, adhesives and machine modifications. The
Corporation has also increased its emphasis on the development of new
products and services in many areas, including using digital technology
which includes online and database management products, as well as CD-ROM
based products. During the last several years, eleven professional and
technical employees have worked primarily on research and development
activities. Additionally, approximately fifty persons from quality
control and engineering devoted a portion of their time to research and
development.
The Corporation has environmental compliance programs primarily for
control of internal and external air quality, groundwater quality,
disposal of waste material and all aspects of the work environment
concerning employee health. Capital expenditures for air quality
equipment have approximated 1% to 3% of total capital expenditures in each
of the last three years. Planned capital expenditures for environmental
control equipment are expected to be in the same range for 1998. The
Corporation also incurs ongoing costs in monitoring compliance with
environmental laws, in connection with disposal of waste materials and in
connection with laws governing the remediation of sites at which the
Corporation has previously disposed of waste materials. Requirements of
the U.S. Environmental Protection Agency and state officials nationwide,
relating to disposal of wastes in landfill sites, are increasing and
result in higher costs for the Corporation and its competitors. Costs for
environmental compliance and waste disposal have not been material to the
Corporation in the past, but the Corporation presently believes that
expenditures for these purposes will have a negative impact on its
earnings and those of its competition in the future. These increased
costs should not have a material impact on the Corporation's competitive
position, assuming similar expenditures are required to be made by
competitors. The Corporation does not believe at the present time that any
costs, claims or penalties that may be incurred or assessed under
environmental laws, in connection with known environmental assessment and
remediation matters, beyond any reserves already provided, will have a
material adverse effect upon the operations or consolidated financial
position of the Corporation.
Foreign Operations.
Footnote 11 to the Corporation's Consolidated Financial Statements in
the Corporation's Annual Report to Shareholders for the fiscal year ended
January 3, 1998 includes information on the Corporation's foreign
operations. The disclosures contained in such footnote are hereby
incorporated herein by reference.
EXECUTIVE OFFICERS OF THE CORPORATION
Name, Age, Position Business Experience During Last Five Years
Donald D. Belcher; 59; . . . Chairman of the Board of the Corporation
Chairman, President and since May 1995: President and Chief
Chief Executive Officer Executive Officer of the Corporation since
January 1995; President and Chief Operating
Officer of the Corporation from September
1994 to January 1995; Senior Group Vice
President of Avery Dennison Corporation
(diversified manufacturing company) from
1990 until joining the Corporation.
Gerald A. Henseler; 57; . . . Executive Vice President and Chief
Executive Vice President Financial Officer of the Corporation.
and Chief Financial Officer
Ronald D. Kneezel; 41; . . . Secretary, Vice President and General
Vice President, General Counsel of the Corporation.
Counsel and Secretary
Robert A. Kreider; 43; . . . Treasurer and Corporate Controller of
Treasurer and Corporate the Corporation.
Controller
Dennis J. Meyer; 42; . . . . Vice President of the Corporation since
Vice President Marketing January 1994; Vice President, Quebecor
Printing (manufacturer of printed materials)
from 1990 to December 1993.
John E. Tiffany; 58; . . . . Vice President of the Corporation.
Vice President Manufacturing
Henry M. Wells, III, 53; . . Vice President of the Corporation.
Vice President Human Since April 1996; Senior Vice President
Resources of E.J Brach Corporation (a confectioner)
from 1988 until joining the Corporation.
There are no family relationships between the executive officers of the
Corporation.
All of the executive officers are elected or appointed annually by the
Corporation's Board of Directors. Each officer holds office until his
successor has been elected or appointed or until his death, resignation or
removal.
Item 2. Properties.
The Corporation and its subsidiaries own operating plants located in
Wisconsin,California, Connecticut, Ohio, Minnesota, Missouri, North
Carolina, Utah and Virginia, as well as several warehouse facilities for
storage of materials. As of the end of fiscal 1997, these owned facilities
included approximately 3,417,000 square feet of space utilized as follows:
office space 354,000, manufacturing 1,929,000 and warehouse 1,134,000. The
Corporation leases its headquarters office located in Menasha, Wisconsin.
The Corporation also leases production facilities in Wisconsin,
California, Florida, Illinois, Massachusetts, Michigan, Minnesota, Texas,
Utah and Washington, as well as warehouse space in numerous locations.
European production facilities located in Ireland, France, Scotland and
The Netherlands are also leased. The total of all leased facilities
contain approximately 3,045,000 square feet of space. The buildings owned
and leased by the Corporation are primarily of steel and brick
construction.
One plant owned by the Corporation and certain equipment are pledged
to secure issues of industrial revenue bonds in the principal amount of
$2,080,000 as of January 3, 1998.
Item 3. Legal Proceedings.
In September 1997, Banta Direct Marketing Group received a Notice of
Violation from the United States Environmental Protection Agency ("US
EPA"), Region V, relating to air emissions and operating an air emission
source without a permit from one if its facilities located in Illinois.
The US EPA has not yet indicated what penalty, if any, it may seek in
connection with these allegations. Although the Corporation believes
that its operations are currently in compliance with applicable
regulations, it is currently working to resolve these issues with the US
EPA. At this date, Management is unable to predict the specific outcome
of the ongoing discussions. However, Management believes that any such
outcome will not have a material adverse effect on the Corporation's
results of operations or financial condition.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
Under long-term debt agreements to which the Corporation is a party,
payment of cash dividends is restricted. As of January 3,1998,
approximately $122,513,000 of retained earnings was not restricted under
these agreements.
The information set forth under the caption "Dividend Record and
Market Prices" (but excluding the graphs related thereto) in the
Corporation's Annual Report to Shareholders for the fiscal year ended
January 3, 1998, is hereby incorporated herein by reference in response to
this Item.
Item 6. Selected Financial Data.
The information set forth under the caption "Five-Year Summary of
Selected Financial Data" (but excluding the graphs related thereto) in the
Corporation's Annual Report to Shareholders for the fiscal year ended
January 3, 1998, is hereby incorporated herein by reference in response to
this Item.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The information set forth under the caption "Management's Discussion
and Analysis of Financial Position and Operations" in the Corporation's
Annual Report to Shareholders for the fiscal year ended January 3, 1998,
is hereby incorporated herein by reference in response to this Item.
Item 7A. Quantitative and Qualitative Discussion about Market Risk.
Not Applicable
Item 8. Financial Statements and Supplementary Data.
The Consolidated Balance Sheets of the Corporation and subsidiaries
as of January 3, 1998 and December 28, 1996, and the related Consolidated
Statements of Earnings, Cash Flows and Shareholders' Investment for the
fiscal years ended January 3, 1998, December 28, 1996 and December 30,
1995, together with the related notes thereto and the Report of
Independent Public Accountants thereon set forth in the Corporation's
Annual Report to Shareholders for the fiscal year ended January 3, 1998,
are hereby incorporated herein by reference in response to a portion of
this Item.
The information set forth under the caption "Unaudited Quarterly
Financial Information" in the Corporation's Annual Report to Shareholders
for the fiscal year ended January 3, 1998, is hereby incorporated herein
by reference in response to a portion of this item.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information under the captions "Election of Directors" and "Other
Matters - Section 16(a) Beneficial Ownership Reporting Compliance"
contained in the Corporation's definitive proxy statement for the annual
meeting of shareholders to be held on April 28, 1998, as filed with the
Securities Exchange Commission, is hereby incorporated herein by reference
in response to a portion of this item. Reference is also made to the
information under the heading "Executive Officers of the Corporation"
included under Item 1 of Part I of this report.
Item 11. Executive Compensation.
The information under the captions "Board of Directors" and
"Executive Compensation" (other than the information under the subheading
"Committee Report on Executive Compensation") contained in the
Corporation's definitive proxy statement for the annual meeting of
shareholders to be held on April 28, 1998, as filed with the Securities
and Exchange Commission, is hereby incorporated herein by reference in
response to this Item.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information under the caption "Stock Ownership" contained in the
Corporation's definitive proxy statement for the annual meeting of
shareholders to be held on April 28, 1998, as filed with the Securities
and Exchange Commission, is hereby incorporated herein by reference in
response to this Item.
Item 13. Certain Relationships and Related Transactions.
The information under the caption "Board of Directors" and under the
subheading "Executive Compensation - Compensation Committee Interlocks and
Insider Participation" contained in the Corporation's definitive proxy
statement for the annual meeting of shareholders to be held on April 28,
1998, as filed with the Securities and Exchange Commission, is hereby
incorporated herein by reference in response to this Item.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
PAGE REFERENCE
ANNUAL REPORT
FORM 10-K TO SHAREHOLDERS
1. Financial Statements:
Consolidated Balance Sheets
January 3, 1998 and December 28, 1996 20
For the fiscal years ended January 3, 1998,
December 28,1996 and December 30, 1995:
Consolidated Statements of Earnings 21
Consolidated Statements of Cash Flows 22
Consolidated Statements of
Shareholders' Investment 23
Notes to Consolidated Financial Statements 24-31
Report of Independent Public Accountants 32
2. Financial Statement Schedule:
Report of Independent Public Accountants 14
Schedule II - Valuation and Qualifying Accounts 15
All other schedules have been omitted since the required information is
included in the consolidated financial statements or notes thereto, or
because the information is not required or applicable.
3. Exhibits:
3. (a) Articles of Incorporation, as amended (1)
(b) Bylaws, as amended (2)
4. (a) Note Purchase Agreement dated June 24, 1988 (3)
(b) Promissory Note Agreement dated July 17, 1990 (4)
(c) Rights Agreement dated October 29, 1991 (5)
(d) Note Purchase and Private Shelf Agreement dated May 12, 1994 (6)
(e) Amendment to Promissory Note Agreement dated July 17, 1990 (7)
(f) Note Purchase and Medium-term Note Agreement Dated November 2,
1995 (8)
[Note: The registrant has outstanding certain issues of industrial
revenue bonds, none of which authorize the issuance of securities in
an amount exceeding 10% of the registrant's consolidated assets.
The registrant hereby agrees to furnish to the Commission upon
request a copy of any instrument with respect to long-term debt not
being registered under which the total amount of securities
authorized does not exceed 10% of the registrant's consolidated
assets.]
*10.(a) Amended and Restated Supplemental Retirement Plan for Key
Employees (9)
(b) Amendment to Amended and Restated Supplemental Retirement Plan
for Key Employees (10)
(c) Management Incentive Award Plan (11)
(d) Amendment to Management Incentive Award Plan (12)
(e) Form of Agreement with Gerald A. Henseler (13)
(f) Form of Agreement with Ronald D. Kneezel (14)
(g) Form of Agreements with Robert A. Kreider, Dennis J. Meyer and
John E. Tiffany (15)
(h) Agreement with Donald D. Belcher (16)
(I) 1985 Deferred Compensation Plan for Key Employees, as amended
and restated (17)
(j) 1988 Deferred Compensation Plan for Key Employees, as amended
and restated (18)
(k) Basic Form of Deferred Compensation Agreements under (pre-
January 1994) 1985 and 1988 Deferred Compensation Plans for Key
Employees (19)
(l) Basic Form of Deferred Compensation under (post-December 1993)
1988 Deferred Compensation plan for Key Employees (20)
(m) Deferred Compensation Plan for Directors, as amended (21)
(n) Revised Form of Indemnity Agreements with Directors and Certain
Officers (22)
(o) Executive Trust Agreement (23)
(p) Amendment to Executive Trust Agreement (24)
(q) Long-term Incentive Plan, as amended (25)
(r) 1991 Stock Option Plan, as amended (26)
(s) Description of Supplemental Long-term Disability Plan (27)
(t) Letter Agreement with Donald D. Belcher (28)
(u) Agreement with Gerald A. Henseler (29)
(v) Banta Corporation 1995 Equity Incentive Plan, as amended (30)
(w) Banta Corporation Director Stock Grant Plan (31)
(x) Economic Profit Incentive Compensation Plan
(y) Economic Profit Long-term Incentive Compensation Plan
13. Portions of Annual Report to Shareholders for fiscal year ended
January 3, 1998 that are incorporated by reference herein.
21. List of Subsidiaries.
23. Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule for the twelve month period ended
January 3, 1998
27.2 Restated Financial Data Schedule for the nine month period ended
September 27, 1997
27.3 Restated Financial Data Schedule for the six month period ended
June 27, 1997
27.4 Restated Financial Data Schedule for the three month period ended
March 29, 1997
27.5 Restated Financial Data Schedule for the twelve month period ended
December 28, 1996
27.6 Restated Financial Data Schedule for the nine month period ended
September 28, 1996
27.7 Restated Financial Data Schedule for the six month period ended
June 29, 1996
27.8 Restated Financial Data Schedule for the three month period ended
March 30, 1996
27.9 Restated Financial Data Schedule for the twelve month period ended
December 30, 1995
(1) Exhibit No. 19(b) to Form 10-Q for the quarter ended April 3, 1993
is hereby incorporated herein by reference.
(2) Exhibit No. 3(d) to Form 10-K for the quarter ended December 28,
1996 is hereby incorporated herein by reference.
(3) Exhibit No. 4(a) to Form 10-Q for the quarter ended July 2, 1988 is
hereby incorporated herein by reference.
(4) Exhibit No. 4 to Form 10-Q for the quarter ended September 29, 1990
is hereby incorporated herein by reference.
(5) Exhibit No. 4.1 to the Form 8-K dated October 29, 1991 is hereby
incorporated herein by reference.
(6) Exhibit No. 4(a) to Form 10-Q for the quarter ended July 2, 1994 is
hereby incorporated herein by reference.
(7) Exhibit No. 4(c) to Form 10-Q for the quarter ended July 2, 1994 is
hereby incorporated herein by reference.
(8) Exhibit No. 4(a) to Form 10-Q for the quarter ended September 30,
1995 is hereby incorporated herein by reference.
(9) Exhibit No. 10(a) to Form 10-K for the year ended December 30, 1995
is hereby incorporated herein by reference.
(10) Exhibit No. 10(b) to form 10-K for the year ended December 28,
1996 is hereby incorporated herein by reference.
(11) Exhibit No. 10(e) to Form 10-K for the year ended December 29,
1990 is hereby incorporated herein by reference.
(12) Exhibit No. 19(e) to Form 10-Q for the quarter ended April 3, 1993
is hereby incorporated herein by reference.
(13) Exhibit No. 10 to Form 10-K for the year ended January 1, 1983 is
hereby incorporated herein by reference.
(14) Exhibit No. 10(k) to Form 10-K for the year ended December 31,
1988 is hereby incorporated herein by reference.
(15) Exhibit No. 10(g) to Form 10-K for the year ended December 28,
1991 is hereby incorporated herein by reference.
(16) Exhibit No. 10(b) to Form 10-Q for the quarter ended October 1,
1994 is hereby incorporated herein by reference.
(17) Exhibit No. 10(j) to Form 10-K for the year ended December 30,
1989 is hereby incorporated herein by reference.
(18) Exhibit No. 10(a) to Form 10-Q for the quarter ended April 2, 1994
is hereby incorporated herein by reference.
(19) Exhibit No. 10(l) to Form 10-K for the year ended December 30,
1989 is hereby incorporated herein by reference.
(20) Exhibit No. 10(b) to Form 10-Q for the quarter ended April 2, 1994
is hereby incorporated herein by reference.
(21) Exhibit No. 10(m) to Form 10-K for the year ended December 28,
1996 is hereby incorporated by reference.
(22) Exhibit No. 10(a) to Form 10-Q for the quarter ended March 28,
1992 is hereby incorporated herein by reference.
(23) Exhibit No. 10(r) to Form 10-K for the year ended December 30,
1989 is hereby incorporated herein by reference.
(24) Exhibit No. 10(s) to Form 10-K for the year ended January 1, 1994
is hereby incorporated herein by reference.
(25) Exhibit No.10(s) to Form 10K for the year ended December 28, 1996
is hereby incorporated herein by reference.
(26) Exhibit No. 10(t) to Form 10-K for the year ended December 28,
1996 is hereby incorporated herein by reference.
(27) Exhibit No. 10(a) to Form 10-Q for the quarter ended October 2,
1993 is hereby incorporated herein by reference.
(28) Exhibit No. 10(a) to Form 10-Q for the quarter ended October 1,
1994 is hereby incorporated herein by reference.
(29) Exhibit No. 10(dd) to Form 10-K for the year ended December 31,
1994 is hereby incorporated herein by reference.
(30) Exhibit No.10(y) to Form 10-K for the year ended December 28, 1996
is hereby incorporated herein by reference.
(31) Exhibit No. 10(z) to Form 10-K for the year ended December 28,
1996 is hereby incorporated herein by reference.
* Exhibits 10(a) through 10(y) are management contracts or compensatory
plans or arrangements.
All documents incorporated herein by reference are filed with the
Commission under File No. 0-6187
(b) Reports on Form 8-K. No Current Reports on Form 8-K were filed by the
Corporation during the quarter ended January 3, 1998.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in the Banta Corporation
annual report to shareholders and incorporated by reference in this Form
10-K, and have issued our report thereon dated February 2, 1998. Our
audit was made for the purpose of forming an opinion on those statements
taken as a whole. The schedule listed in the index in item 14(a) (2) is
the responsibility of the Corporation's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. The schedule has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation
to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
February 2, 1998.
<PAGE>
BANTA CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED January 3, 1998, December 28, 1996, and December 30, 1995,
DOLLARS IN THOUSANDS
BALANCE, ADDITIONS CHARGES
BEGINNING CHARGED TO TO BALANCE,
OF YEAR EARNINGS RESERVE,NET OTHER END OF YEAR
Reserve for
Doubtful
Receivables:
1997 $ 3,486 $ 1,408 $ 1,436 $ 250(1) $ 3,708
======= ======= ======= ====== =======
1996 $ 3,414 $ 889 $ 817 $ 0 $ 3,486
======= ======= ======= ====== =======
1995 $ 3,984 $ 861 $ 1,431 $ 0 $ 3,414
======= ======= ======= ====== =======
(1) Consists of additions to the reserve related to acquisitions.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
DATE: March 27, 1998 BY: /s/ DONALD D. BELCHER
Donald D. Belcher, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
/s/ DONALD D. BELCHER March 27, 1998
Donald D. Belcher, Chairman, President and
Chief Executive Officer
/s/ GERALD A. HENSELER March 27, 1998
Gerald A. Henseler, Executive Vice
President, Chief Financial Officer, and Director
/s/ ROBERT A. KREIDER March 27, 1998
Robert A. Kreider, Treasurer
/s/ BERNARD S. KUBALE March 27, 1998
Bernard S. Kubale, Director
/s/ DONALD TAYLOR March 27, 1998
Donald Taylor, Director
/s/ JAMESON A. BAXTER March 27, 1998
Jameson A. Baxter, Director
/s/ RICHARD L. GUNDERSON March 27, 1998
Richard L. Gunderson, Director
<PAGE>
BANTA CORPORATION - File No. 0-6187
Form 10-K, Year Ended January 3, 1998
EXHIBIT INDEX
Exhibit Number
10(x) Economic Profit Incentive Plan
10(y) Economic Profit Long-Term Incentive Plan
13. Annual Report to Shareholders for the fiscal year ended
January 3, 1998
21. List of Subsidiaries
23. Consent of Arthur Andersen LLP
27.1 Financial Data Schedule for the twelve month period ended
January 3, 1998
27.2 Restated Financial Data Schedule for the nine month period ended
September 27, 1997
27.3 Restated Financial Data Schedule for the six month period ended
June 27, 1997
27.4 Restated Financial Data Schedule for the three month period ended
March 29, 1997
27.5 Restated Financial Data Schedule for the twelve month period ended
December 28, 1996
27.6 Restated Financial Data Schedule for the nine month period ended
September 28, 1996
27.7 Restated Financial Data Schedule for the six month period ended
June 29, 1996
27.8 Restated Financial Data Schedule for the three month period ended
March 30, 1996
27.9 Restated Financial Data Schedule for the twelve month period ended
December 30, 1995
Exhibit 10(x)
BANTA CORPORATION
ECONOMIC PROFIT (EP)
INCENTIVE COMPENSATION PLAN
January 1, 1998
(Amended February 3, 1998)
ARTICLE I
Statement of Purpose
1.1 The purpose of the Banta Corporation (the "Company") Economic Profit
("EP") Incentive Compensation Plan (the "Plan") is to provide an
incentive compensation system which promotes and rewards the
maximization of shareholder value over the long term. The Plan is
designed to create a focus for all participants to achieve the key
financial and strategic objectives which drive shareholder value
creation. The Plan aims to provide a fair and meaningful reward for
achieving or surpassing shareholder value creation goals by directly
linking incentive compensation to EP and, thereby, reward management
for creating value.
1.2 EP is the performance measure of value creation. EP reflects the
benefits and costs of capital employment. Managers create value when
they employ capital in an endeavor that generates a return that
exceeds the cost of the capital employed. By imputing the cost of
capital upon the operating profits generated by the Company or other
designated operating unit, EP measures the total value created by
management.
EP = (Net Operating Profit After Tax - Capital Charge)
1.3 Each Plan Participant has a prescribed Target Bonus which is divided
into two parts (except for Participants who are not affiliated with a
specific business unit and have only one Target Bonus component).
The first part, the Actual Corporate EP Bonus, is based on the
Company's EP results. The second part, the Actual Unit EP Bonus, is
based on the EP results of the particular unit with which the
participant is affiliated. Bonuses that fall within a prespecified
range will be fully paid out. Bonuses falling outside this range are
banked in the Participant's Bonus Bank for possible payout in future
years.
1.4 The Plan will be administered on a fiscal year basis under the
direction and control of the Compensation Committee of the Banta
Corporation Board of Directors (the "Committee"). At a meeting of
the Committee during the first quarter of each year the Committee
will review and approve the list of Plan Participants for such year
along with their respective Target Bonus Percentages and respective
splits between Target Corporate EP Bonus and Target Unit EP Bonus.
In addition, the Committee will annually review and approve the Cost
of Capital, Target EP, Improvement Factor, and Bonus Table Generator
amount for each Value Center of the Plan for such year.
ARTICLE II
Definition of EP and the Components of EP
2.1 "Capital" means the net investment employed in the operations of the
Value Center. The components of Capital are as follows:
Shareholders Equity
Plus: Advances from (to) Corporate
Plus: Collected cash overdrafts (balances)
Plus: Long-term debt (including current portion) and
short-term debt
Plus: Deferred taxes (net of future tax benefit)
Plus: Accrued (prepaid) income taxes
Plus: LIFO Reserve
Plus: Goodwill and non-competes recorded on Corporate
books (applies to Unit calculations only)
Plus: Cumulative goodwill and non-compete amortization
Plus: Acquisition earnouts paid
Plus: Capitalized leases
Plus: Non-cash accruals
Plus: Negative EP on acquisitions and/or major R&D
projects approved by the Chief Executive Officer
Plus/Less: Other capital items as determined by management
and approved by the Committee
Less: Non-operating Cash
Equals: Capital
Each component of Capital will be measured by computing an average
balance based on the ending period balance for each period the Value
Center closes their books within the year.
2.2 "Cost of Capital" will be estimated at the beginning of each year
based on the weighted average of the after-tax cost of debt and
equity for the year in question for the entire Company. Calculations
will be carried to one decimal point.
2.3 "Capital Charge" means the deemed opportunity cost of employing
Capital in the Value Center. The Capital Charge is computed as
follows:
Capital Charge = Capital x Cost of Capital
2.4 "Net Operating Profit After Tax" or "NOPAT"
"NOPAT" means the after-tax earnings attributable to the capital
employed in the Value Center for the year in question. The
components of NOPAT are as follows:
Operating Earnings Before Income Taxes
Plus: Miscellaneous income (excluding interest income)
Plus: Current LIFO expense
Plus: Change in non-cash accruals
Plus: Capitalized lease adjustment
Plus: Non-compete amortization
Plus: Goodwill amortization
Plus: Acquisition earnouts expensed
Plus: R&D expense
Less: R&D amortization
Plus/Less: Other items as determined by management and
approved by the Committee
Less: Income Taxes .
Equals: Net Operating Profit After Tax
Gains and losses on the sale of assets, gains and losses on the
disposition of businesses and/or business segments, restructuring
charges and other large non-recurring gains and losses will be
excluded from NOPAT unless the Committee determines that a specific
item should be included.
2.5 "Economic Profit" or "EP" means the NOPAT that remains after
subtracting the Capital Charge, expressed as follows:
NOPAT
Less: Capital Charge
Equals: EP
EP may be positive or negative.
2.6 "Value Center" means any unit of operations of the Company, including
the Company as a whole, as determined by management and approved by
the Committee for the purpose of this Plan.
2.7 Operations acquired will be excluded from the EP computations for the
first 12 months after acquisition, unless the Committee approves
earlier, or later, inclusion based on the facts related to a specific
acquisition.
ARTICLE III
Definition and Computation of Target Bonus
3.1 "Actual EP" means the EP as calculated for the Value Center for the
year in question.
3.2 "Target EP" means the level of EP that is expected in order for a
Participant of the Value Center to receive one hundred percent (100%)
of the Target Bonus calculated for that Value Center.
Target EP is calculated according to the following formula:
Target EP = Prior Yr's Actual EP + Prior Yr's Target EP +
Improvement Factor
2
For the initial year, Target EP for each Value Center will be
established by the Committee independent of the above formula.
3.3 "Target Bonus" means the "Target Bonus Percentage" times a
Participant's Base Pay actually paid for the year (see article VII
for calculations related to a change in a Participant's employment
status).
3.4 "Target Bonus Percentage" is determined annually for each Participant
by his/her salary grade. The Target Bonus Percentages for 1998 are
listed in Exhibit A.
3.5 "Base Pay" means the Participant's base rate of salary excluding
bonuses and other benefits or forms of compensation.
3.6 "Improvement Factor" means the prior year's Capital multiplied by X%,
where X is uniquely identified annually for each Value Center. For
Value Centers which returned a negative EP in the prior year, the
Improvement Factor will be a fixed dollar amount rather than an
amount based on X. This amount will be approved by the Committee
pursuant to Section 1.4.
ARTICLE IV
Definition and Computation of Actual Bonus
4.1 Each Participant shall have his/her Target Bonus subdivided into two
component targets, the Target Corporate EP Bonus and the Target Unit
EP Bonus. Participants with no specific business unit affiliation
will only have a Target Corporate EP Bonus.
4.2 "Target Corporate EP Bonus" means the percentage of the Target Bonus
which is based on total Company EP results.
4.3 "Target Unit EP Bonus" means the percentage of the Target Bonus which
is based on the EP results of the unit with which a Participant is
affiliated.
4.4 The split between Target Corporate EP Bonus and Target Unit EP Bonus
is determined annually for each Participant.
4.5 "Actual Corporate EP Bonus" means the bonus earned by a Participant
based on total Company EP results and is calculated by multiplying
the Target Corporate EP Bonus by a percentage which is determined as
follows:
[Actual EP - Target EP] + 1
[Bonus Table Generator]
4.6 "Actual Unit EP Bonus" means the bonus earned by a Participant based
on the EP results of the unit with which the Participant is
affiliated and is calculated by multiplying the Target Unit EP Bonus
by a percentage, with such percentage also determined as in Section
4.5.
4.7 "Bonus Table Generator" is the annually determined negative
(positive) deviation from Target EP necessary before a zero (two
times Target) bonus is earned.
4.8 "Combined EP Bonus" is the sum of the Actual Corporate EP Bonus and
the Actual Unit EP Bonus. If one of the two bonus amounts
constituting the Combined EP Bonus is positive and the other bonus
amount is negative, the two bonus amounts will be combined to a net
bonus amount. Combined EP Bonus amounts, whether positive or
negative, will be capped at 300% of Target Bonus for each Participant
such that any amounts above (or below for a negative number) 300% of
a Participant's Target Bonus will be ignored for any calculation and
other purpose of this Plan.
ARTICLE V
Description of Bonus Banks
5.1 Establishment of a Bonus Bank. To encourage a long-term commitment
by Participants to the Company, all exceptional Combined EP Bonuses
(amounts above 200% of Target Bonus and all negative bonuses) shall
be credited to (or debited against in the case of a negative Combined
EP Bonus amount) "at risk" accounts (Bonus Banks), with the level of
future payout contingent on sustained high performance and continued
employment as provided herein.
5.2 Although a Bonus Bank may, as a result of negative EP, have a
deficit, no Participant shall be required, at any time, to reimburse
his/her Bonus Bank.
5.3 "Bonus Bank" means, with respect to each Participant, a bookkeeping
record of an account to which amounts are credited, or debited as the
case may be, from time to time under the Plan and from which bonus
payments to such Participants are debited.
5.4 "Bank Balance" means, with respect to each Participant, a bookkeeping
record of the net balance of the amounts credited to and debited
against such Participant's Bonus Bank. A Participant's Bank Balance
shall initially be equal to zero.
5.5 Payout Rules:
(A) If there is no positive or negative balance in the Bonus Bank
carried over from the prior year:
(1) Pay out the Combined EP Bonus up to 200% of
Target Bonus.
(2) Add any portion of the Combined EP Bonus
over 200% of Target Bonus to the Bonus Bank. Unless negative
bonuses in subsequent years reduce the payout, the banked amount
will be paid out in three equal installments beginning with a
payment at the time that bonuses would be paid for the
subsequent year.
(3) If the Combined EP Bonus is negative for the
year, a negative Bonus Bank balance equal to such amount will be
created. Any such negative amount will be offset against
positive bonuses earned in subsequent years. The first offset
will be that 50% of the negative amount will be charged against
any bonus up to 200% of the Target Bonus earned in each of the
next two years. If the bonus earned in a year is insufficient
to absorb 50% of the negative amount, the remaining negative
balance will be carried forward and charged against any
subsequent bonus earned. The second offset will be that any
amounts earned in excess of 200% of the Target Bonus, which
would otherwise be credited to the Bonus Bank, will be reduced
by any negative amounts.
(4) Carry forward any positive or negative amounts in the Bonus
Bank.
(B) If there is a positive Bonus Bank balance carried forward:
(1) Pay out the Combined EP Bonus up to 200% of
Target Bonus.
(2) Add any portion of the Combined EP Bonus
over 200% of Target Bonus to the Bonus Bank. Unless negative
bonuses in subsequent years reduce the payout, the newly banked
amount will be paid out in three equal installments beginning
with a payment at the time that bonuses would be paid for the
subsequent year.
(3) If the Combined EP Bonus is negative for the year:
(a) If the negative bonus is greater than the
carryover balance, the entire prior positive balance will be
eliminated. The remaining negative balance will be treated
as though it was the negative bonus earned for the year and will
be offset against bonuses earned in subsequent
years as in (A)(3) above.
(b) If the negative bonus is less than the
carryover balance, it will reduce any scheduled installment
payouts earned in prior years on a prorata basis.
(4) Carry forward any positive or negative Bonus
Bank balances.
(C) If there is a negative Bonus Bank balance carried forward:
(1) Reduce any positive Combined EP Bonus for
the year, which is up to 200% of the Target Bonus, by 50% of any
negative bonus generated in the prior year and any other
unabsorbed negative Bonus Bank balance which originated two or
more years prior. Pay out the remainder of (i) the Combined EP
Bonus which is up to 200% of the Target Bonus, less (ii) the
reductions in the prior sentence.
(2) If the Combined EP Bonus is in excess of
200% of the Target Bonus for the year, the excess over 200% will
be credited to the Bonus Bank pursuant to (A)(2) above. If a
negative balance remains after the reduction in (C)(1), that
negative carryover balance will be offset against this credit.
After that offset is applied:
(a) If the remaining balance is positive, it will be treated as
though it was the only amount credited to the Bonus Bank
for the year and paid out as described in (A)(2).
(b) If the remaining balance is negative, it will be carried
forward and offset against any subsequent bonus earned.
(3) If the Combined EP Bonus is negative for the
year it will be added to the negative carryover balance and
treated in accordance with (A)(3).
(4) Carry forward any positive or negative balances.
See attached Exhibit B for payout examples.
5.6 Payment of Awards. All amounts payable to Participants shall be paid
in cash within 30 days following approval of the calculations by the
Committee.
ARTICLE VI
Deferred Payment
6.1 Deferrals. A Participant may elect in advance to defer payment of
all or any portion of the payments he/she would otherwise receive
pursuant to Sections 5.5 and 5.6. No bonus amount otherwise payable
in a year shall be deferred for any year unless the Company shall
have received a written notice from the Participant not later than
December 31 of the second preceding year specifying the portion of
the award which is to be deferred. By way of example, an election to
defer any 1998 awards (which would otherwise be paid in early 1999)
must be received by December 31, 1997. Any such deferral election
shall be irrevocable.
6.2 Deferral Accounts. All amounts so deferred will be credited, as of
the dates otherwise payable, to an account created on the Company's
books for the Participant. Amounts standing to a Participant's
credit in the account shall be paid to the Participant or his
designated beneficiary or estate: (1) over a period of not more than
fifteen years following termination of the Participant's employment
by reason of death, disability or normal or early retirement as
permitted by the Company's Retirement Plan; and (2) over a period of
not more than three years following termination of a Participant's
employment for any other reason, in either case at such times and in
such installments as shall be determined in the sole discretion of
the Committee.
6.3 Interest. Until such time as all amounts in the account are paid in
full, a credit in lieu of interest shall be made to the account on
December 31 of each year ( or on the date of the final installment
payment from the account, as the case may be ) in an amount equal to
interest on the balance from time to time outstanding in the account
during the year at a rate equal to the average prime rate of interest
less one percentage point. For purposes of this section the "average
prime rate of interest" in effect during the applicable period shall
be computed by multiplying each prime rate of interest in effect at
the Firstar Bank of Milwaukee during such period by the number of
days each such rate was so in effect, and by dividing the total
number so obtained by the total number of days in such period.
ARTICLE VII
Plan Participation, Transfers and Terminations
7.1 Participant. "Participant" shall mean an employee employed on a
regular full time or part-time basis by the Company and who has been
recommended by the Chief Executive Officer to be eligible to
participate in the Plan and approved by the Committee. In order to
be eligible for a Combined EP Bonus for a year, the Participant must
be designated as such pursuant to Section 1.4. A person shall remain
a Participant for other purposes of the Plan as long as he/she has a
Bonus Bank balance or a deferred balance.
7.2 New Participants. The percentage (%) of award to which a Participant
is entitled in the first year of his/her participation in the Plan is
prorated at a rate of 1/12 for each complete month from the date of
participation.
7.3 Changing Position Level/Promotions. The Target Bonus of a
Participant who has changed position level or has been promoted
during a given year and such position change or promotion
necessitates a change in the Participant's Target Bonus Percentage
will be prorated at a rate of 1/12 for each complete month commencing
with the event generating the change and based on his/her Base Pay in
each position. Plan Participants who transfer between business units
during a year will have their Target Bonuses and unit participation
reviewed and approved by the Committee based on the specific
circumstances of each situation.
7.4 Retirement, Disability, Involuntary Termination Without Cause or
Death. A Participant who retires under the terms of the Company's
Retirement Plan, or suffers a "disability", as such term is defined
in the Company's long-term disability benefits program and is not
reasonably expected by management to return to work, or is
involuntarily terminated without cause or who dies shall be eligible
to receive the balance of his/her Bonus Bank as of the end of the
year pursuant to Article 5.6 after taking into account the actual
bonus value for the said year. The actual bonus value for the said
year shall be equal to zero dollars ($0) if the Participant has not
completed six full months of employment with the Company during the
year. Otherwise, the percentage of award for the said year to which
a Participant is entitled shall be prorated at a rate of 1/12 for
each complete month of employment during the year.
7.5 Voluntary Termination. In the event that a Participant voluntarily
terminates employment with the Company on or before the end of the
applicable fiscal year, the right of the Participant to his/her Bank
Balance and/or any potential current year payout shall be forfeited.
7.6 Termination for Cause. "Cause" shall mean:
(1) misappropriation by the Participant of funds
of the Company or any of its subsidiaries;
(2) the Participant personally and secretly
obtaining profits from dealings with the Company or any of
its subsidiaries;
(3) the Participant's unreasonable neglect of,
or refusal to perform, his/her duties or responsibilities;
and
(4) conviction of a serious crime involving
moral turpitude.
7.7 Payment and Breach of Agreement. Notwithstanding any other provision
of the Plan or any other agreement, in the event that a Participant
shall breach any noncompetition agreement with the Company or breach
any agreement with respect to the postemployment conduct of such
Participant, any remaining payment otherwise due to the Participant
hereunder shall be forfeited.
7.8 No Guarantee. Selection as a Participant is no guarantee that
benefits under the Plan will be earned or that selection as a
Participant will be made in any subsequent year.
ARTICLE VIII
General Provisions
8.1 Withholding of Taxes. The Company shall have the right to withhold
the amount of taxes, which in the determination of the Company, are
required to be withheld under law with respect to any amount due or
paid under the Plan.
8.2 Expenses. All expenses and costs in connection with the adoption and
administration of the Plan shall be borne by the Company.
8.3 No Prior Right or Offer. Except and until expressly granted pursuant
to the Plan, nothing in the Plan shall be deemed to give any employee
any contractual or other right to participate in the benefits of the
Plan.
8.4 Rights Personal to Participant. Any rights provided to a Participant
under the Plan shall be personal to such Participant, shall not be
transferable (except by will or pursuant to the laws of descent or
distribution), and shall be exercisable, during his/her lifetime,
only by such Participant.
8.5 Distribution of Bank Balances Upon Termination of the Plan. Upon
termination of the Plan, the Bank Balance of each Participant shall
be distributed as soon as practicable but in no event later than 90
days from such event.
ARTICLE IX
Limitation
9.1 No Continued Employment. Nothing contained herein shall provide any
Participant with any right to continued employment or in any way
abridge the rights of the Company to determine the terms and
conditions of employment and whether to terminate employment of any
Participant.
9.2 No Vested Rights. Except as otherwise provided herein, no
Participant or other person shall have any claim of right (legal,
equitable, or otherwise) to any award, allocation, or distribution or
any right, title, or vested interest in any amounts in his/her Bonus
Bank and no officer or employee of the Company or any other person
shall have any authority to make representations or agreements to the
contrary. No interest conferred herein to a Participant shall be
assignable or subject to claim by a Participant's creditors. The
right of the Participant to receive a distribution hereunder shall be
an unsecured claim against the general assets of the Company, and the
Participant shall have no rights in or against any specific assets of
the Company as the result of participation hereunder.
9.3 Not Part of Other Benefits. The benefits provided in this Plan shall
not be deemed a part of any other benefit provided by the Company to
its employees. The Company assumes no obligation to Participants
except as specified herein. This is a complete statement, along with
the Exhibits attached hereto, of the terms and conditions of the
Plan.
9.4 Other Plans. Nothing contained herein shall limit the Company or the
Committee's power to grant bonuses to employees of the Company,
whether or not Participants in this Plan.
9.5 Limitations. Neither the establishment of the Plan nor the grant of
an award hereunder shall be deemed to constitute an express or
implied contract of employment for any period of time or in any way
abridge the rights of the Company to determine the terms and
conditions of employment or to terminate the employment of any
Participant with or without cause at any time.
9.6 Unfunded Plan. This Plan is unfunded. Nothing herein shall create
or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant.
ARTICLE X
Authority
10.1 Committee Authority. Except as otherwise expressly provided herein,
full power and authority to interpret and administer this Plan shall
be vested in the Committee. The Committee may from time to time make
such decisions and adopt such rules and regulations for implementing
the Plan as it deems appropriate for any Participant under the Plan.
Any decision taken by the Committee arising out of or in connection
with the construction, administration, interpretation and effect of
the Plan shall be final, conclusive and binding upon all participants
and any person claiming under or through them.
10.2 Board of Directors Authority. The Board shall be ultimately
responsible for administration of the Plan. The Board or the
Committee, as appropriate, shall work with the Chief Executive
Officer of the Company in all aspects of the administration of the
Plan.
ARTICLE XI
Notice
11.1 Any notice to be given pursuant to the provisions of the Plan shall
be in writing and directed to the appropriate recipient thereof at
his/her business address or office location.
ARTICLE XII
Effective Date
12.1 This Plan shall be effective as of January 1, 1998.
12.2 The Plan is intended to remain in force indefinitely beginning on the
first day of each fiscal year after the effective date hereof, unless
the Board of Directors, in its discretion, terminates it by
resolution and notifies the Participants.
ARTICLE XIII
Amendments
13.1 Amendment. This Plan may be amended or terminated at any time at the
sole discretion of the Board upon the recommendation of the
Committee. The annual activities of the Committee pursuant to the
Plan are not Plan amendments, including but not limited to the
determinations pursuant to Section 1.4.
13.2 Protected Benefits. Notwithstanding the foregoing, after the last
day of an applicable fiscal year, other than 1998, the Plan may not
be amended or the Participants revised such that the Participant
receives less than the amount payable by the Plan nor may an
amendment reduce or eliminate any previously banked amount under
Article V prior to such amendment or revision. For 1998, the
Committee, at its discretion, has the right to make any retroactive
changes to the terms and conditions of the Plan it deems necessary
and prudent up to and including the date of payment of bonuses
pursuant to Section 5.6.
13.3 Notice. Notice of any amendment or termination shall be given
promptly to each Participant.
ARTICLE XIV
Applicable Law
14.1 This Plan shall be construed in accordance with the provisions of the
laws of the State of Wisconsin to the extent not preempted by Federal
law.
Exhibit 10(y)
BANTA CORPORATION
ECONOMIC PROFIT (EP)
LONG-TERM INCENTIVE COMPENSATION PLAN
January 1, 1998
(Amended February 3, 1998)
ARTICLE I
Statement of Purpose
1.1 The purpose of the Banta Corporation (the "Company") Economic Profit
("EP") Long-Term Incentive Compensation Plan (the "Plan") is to
provide an incentive compensation system which promotes and rewards
the maximization of shareholder value over the long term. The Plan
is designed to create a focus for all participants to achieve the key
financial and strategic objectives which drive shareholder value
creation. The Plan aims to provide a fair and meaningful reward for
achieving or surpassing shareholder value creation goals by directly
linking incentive compensation to EP and, thereby, reward management
for creating value.
1.2 EP is the performance measure of value creation. EP reflects the
benefits and costs of capital employment. Managers create value when
they employ capital in an endeavor that generates a return that
exceeds the cost of the capital employed. By imputing the cost of
capital upon the operating profits generated by the Company, EP
measures the total value created by management.
EP = (Net Operating Profit After Tax - Capital Charge)
1.3 Each Plan Participant has a prescribed Target Bonus which is based on
the Company's Actual EP results. Bonuses are calculated based on
annual EP. Each bonus will be paid out one-third annually over a
three year period subject to the payout rules contained in Section
5.5. In no circumstance will the participant be required to reimburse
the company for negative bank balances.
1.4 The Plan will be administered on a fiscal year basis under the
direction and control of the Compensation Committee of the Banta
Corporation Board of Directors (the "Committee"). At a meeting of
the Committee during the first quarter of each year the Committee
will review and approve the list of Plan Participants for such year,
along with the Company's Cost of Capital, Target EP, Improvement
Factor, and Bonus Table Generator amounts for such year.
ARTICLE II
Definition of EP and the Components of EP
2.1 "Capital" means the net investment employed in the operations of the
Company. The components of Capital are as follows:
Shareholders Equity
Plus: Advances from (to) Corporate
Plus: Collected cash overdrafts (balances)
Plus: Long-term debt (including current portion) and
short-term debt
Plus: Deferred taxes (net of future tax benefit)
Plus: Accrued (prepaid) income taxes
Plus: LIFO Reserve
Plus: Cumulative goodwill and non-compete amortization
Plus: Acquisition earnouts paid
Plus: Capitalized leases
Plus: Non-cash accruals
Plus: Negative EP on acquisitions and/or major R&D
projects approved by the Chief Executive Officer
Plus/Less: Other capital items as determined by management
and approved by the Committee
Less: Non-operating Cash
Equals: Capital
Each component of Capital will be measured by computing an average
balance based on the ending period balance for each period the
Company closes its books within the year.
2.2 "Cost of Capital" will be estimated at the beginning of each year
based on the weighted average of the after-tax cost of debt and
equity for the year in question for the entire Company. Calculations
will be carried to one decimal point.
2.3 "Capital Charge" means the deemed opportunity cost of employing
Capital in the Company. The Capital Charge is computed as follows:
Capital Charge = Capital x Cost of Capital
2.4 "Net Operating Profit After Tax" or "NOPAT"
"NOPAT" means the after-tax earnings attributable to the capital
employed in the Company for the year in question. The components of
NOPAT are as follows:
Operating Earnings Before Income Taxes
Plus: Miscellaneous income (excluding interest income)
Plus: Current LIFO expense
Plus: Change in non-cash accruals
Plus: Capitalized lease adjustment
Plus: Non-compete amortization
Plus: Goodwill amortization
Plus: Acquisition earnouts expensed
Plus: R&D expense
Less: R&D amortization
Plus/Less: Other items as determined by management and
approved by the Committee
Less: Income Taxes .
Equals: Net Operating Profit After Tax
Gains and losses on the sale of assets, gains and losses on the
disposition of businesses and/or business segments, restructuring
charges and other large non-recurring gains and losses will be
excluded from NOPAT unless the Committee determines that a specific
item should be included.
2.5 "Economic Profit" or "EP" means the NOPAT that remains after
subtracting the Capital Charge, expressed as follows:
NOPAT
Less: Capital Charge
Equals: EP
EP may be positive or negative.
2.6 Operations acquired will be excluded from the EP computations for the
first 12 months after acquisition, unless the Committee approves
earlier, or later, inclusion based on the facts related to a specific
acquisition.
ARTICLE III
Definition and Computation of Target Bonus
3.1 "Actual EP" means the EP as calculated for the Company for the year
in question.
3.2 "Target EP" means the level of EP that is expected in order for a
Participant of the Company to receive one hundred percent (100%) of
the Target Bonus.
Target EP is calculated according to the following formula:
Target EP = Prior Yr's Actual EP + Prior Yr's Target EP +
Improvement Factor
2
For the initial year, Target EP will be established by the Committee
independent of the above formula.
3.3 "Target Bonus" means the "Target Bonus Percentage" times a
Participant's Base Pay actually paid for the year (see article VII
for calculations related to a change in a Participant's employment
status).
3.4 "Target Bonus Percentage" is 25% for each Participant.
3.5 "Base Pay" means the Participant's base rate of salary excluding
bonuses and other benefits or forms of compensation.
3.6 "Improvement Factor" means the prior year's Capital multiplied by X%,
where X is uniquely identified annually. If the Company returned a
negative EP in the prior year, the Improvement Factor will be a fixed
dollar amount rather than an amount based on X. This amount will be
approved by the Committee pursuant to Section 1.4.
ARTICLE IV
Definition and Computation of Actual Bonus
4.1 Each participant shall have his/her Target Bonus based on total
Company EP results.
4.2 "Actual EP Bonus" means the bonus earned by a Participant based on
total Company EP results and is calculated by multiplying the Target
Bonus by a percentage which is determined as follows:
[Actual EP - Target EP] + 1
[Bonus Table Generator]
Actual EP Bonus amounts, whether positive or negative, will be capped
at 300% of Target Bonus for each Participant such that any amounts
above (or below for a negative number) 300% of a Participant's Target
Bonus will be ignored for any calculation and other purpose of this
Plan.
4.3 "Bonus Table Generator" is the annually determined negative
(positive) deviation from Target EP necessary before a zero (two
times Target) bonus is earned.
ARTICLE V
Description of Bonus Banks
5.1 Establishment of a Bonus Bank. To encourage a long-term commitment
by Participants to the Company, all Actual EP Bonus amounts shall be
credited to (or debited against in the case of a negative Actual EP
Bonus amount) "at risk" accounts (Bonus Banks), with the level of
future payout contingent on sustained high performance and continued
employment as provided herein.
5.2 Although a Bonus Bank may, as a result of negative EP, have a
deficit, no Participant shall be required, at any time, to reimburse
his/her Bonus Bank.
5.3 "Bonus Bank" means, with respect to each Participant, a bookkeeping
record of an account to which amounts are credited, or debited as the
case may be, from time to time under the Plan and from which bonus
payments to such Participants are debited.
5.4 "Bank Balance" means, with respect to each Participant, a bookkeeping
record of the net balance of the amounts credited to and debited
against such Participant's Bonus Bank. A Participant's Bank Balance
shall initially be equal to zero.
5.5 Payout Rules:
(A) If there is no positive or negative balance in the Bonus Bank
carried over from the prior year:
(1) If the Actual EP Bonus is positive, pay out 1/3 of the Actual
EP Bonus. Add the remaining Actual EP Bonus to the Bonus Bank.
Unless negative bonuses in subsequent years reduce the payout,
the banked amount will be paid out in two equal installments
beginning with a payment at the time that bonuses would be paid
for the subsequent year.
(2) If the Actual EP Bonus is negative for the year, a negative
Bonus Bank balance equal to such amount will be created. Any
such negative amount will be offset against positive bonuses
earned in subsequent years. No payouts will be made under the
Plan until the negative balance is absorbed by future credits to
the Bonus Bank.
(3) Carry forward any positive or negative Bonus Bank amounts.
(B) If there is a positive Bonus Bank balance carried forward:
(1) If a positive Actual EP Bonus was earned for the year:
(a) Pay out 1/3 of the Actual EP Bonus earned for the current
year.
(b) Pay out any scheduled installments from prior years
applicable to the current year.
(2) If the Actual EP Bonus is negative for the year:
(a) If the Actual EP Bonus is greater than the carryover
balance, the entire prior positive balance will be eliminated.
The remaining negative balance will be offset against bonuses
earned in subsequent years as in (A)(2) above.
(b) If the negative bonus is less than the carryover balance, it
will first offset any scheduled installment amount which would
have otherwise been paid for the current year. Any negative
amount remaining after this offset will be used to reduce any
installments that would otherwise have been paid for the
subsequent year.
(3) Carry forward any positive or negative Bonus Bank balances.
(C) If there is a negative Bonus Bank balance carried forward:
(1) If the Actual EP Bonus is positive for the year:
(a) If the Actual EP Bonus is greater than the negative
carryover balance, the negative balance will be offset against
the current payment and the two installment payments in the
order in which they would otherwise have been paid until the
negative balance is consumed. No payment will be made from the
Bonus Bank unless all carryover negative balances have been
offset.
(b) If the Actual EP Bonus earned is less than the negative
carryover balance, the two are offset and the remaining negative
balance will be carried forward to the next year.
(2) If the Actual EP Bonus is negative for the year it will be
added to the negative carryover balance.
(3) Carry forward any positive or negative balances.
See attached Exhibit A for payout examples.
5.6 Payment of Awards. All amounts payable to Participants shall be paid
in cash within 30 days following approval of the calculations by the
Committee.
ARTICLE VI
Deferred Payment
6.1 Deferrals. A Participant may elect in advance to defer payment of
all or any portion of the payments he/she would otherwise receive
pursuant to Sections 5.5 and 5.6. No bonus amount otherwise payable
in a year shall be deferred for any year unless the Company shall
have received a written notice from the Participant not later than
December 31 of the second preceding year specifying the portion of
the award which is to be deferred. By way of example, an election to
defer any 1998 awards (which would otherwise be paid in early 1999)
must be received by December 31, 1997. Any such deferral election
shall be irrevocable.
6.2 Deferral Accounts. All amounts so deferred will be credited, as of
the dates otherwise payable, to an account created on the Company's
books for the Participant. Amounts standing to a Participant's
credit in the account shall be paid to the Participant or his
designated beneficiary or estate: (1) over a period of not more than
fifteen years following termination of the Participant's employment
by reason of death, disability or normal or early retirement as
permitted by the Company's Retirement Plan; and (2) over a period of
not more than three years following termination of a Participant's
employment for any other reason, in either case at such times and in
such installments as shall be determined in the sole discretion of
the Committee.
6.3 Interest. Until such time as all amounts in the account are paid in
full, a credit in lieu of interest shall be made to the account on
December 31 of each year ( or on the date of the final installment
payment from the account, as the case may be ) in an amount equal to
interest on the balance from time to time outstanding in the account
during the year at a rate equal to the average prime rate of interest
less one percentage point. For purposes of this section the "average
prime rate of interest" in effect during the applicable period shall
be computed by multiplying each prime rate of interest in effect at
the Firstar Bank of Milwaukee during such period by the number of
days each such rate was so in effect, and by dividing the total
number so obtained by the total number of days in such period.
ARTICLE VII
Plan Participation, Transfers and Terminations
7.1 Participant. "Participant" shall mean an employee employed on a
regular full time or part-time basis by the Company and who has been
recommended by the Chief Executive Officer to be eligible to
participate in the Plan and approved by the Committee. In order to
be eligible for an Actual EP Bonus for a year, the Participant must
be designated as such pursuant to Section 1.4. A person shall remain
a Participant for other purposes of the Plan as long as he/she has a
Bonus Bank balance or a deferred balance.
7.2 New Participants. The percentage (%) of award to which a Participant
is entitled in the first year of his/her participation in the Plan is
prorated at a rate of 1/12 for each complete month from date of
participation.
7.3 Retirement, Disability, Involuntary Termination Without Cause or
Death. A Participant who retires under the terms of the Company's
Retirement Plan, or suffers a "disability", as such term is defined
in the Company's long-term disability benefits program and is not
reasonably expected by management to return to work, or is
involuntarily terminated without cause or who dies shall be eligible
to receive the balance of his/her Bonus Bank as of the end of the
year pursuant to Article 5.6 after taking into account the actual
bonus value for the said year. The actual bonus value for the said
year shall be equal to zero dollars ($0) if the Participant has not
completed six full months of employment with the Company during the
year. Otherwise, the percentage of award for the said year to which
a Participant is entitled shall be prorated at a rate of 1/12 for
each complete month of employment during the year.
7.4 Voluntary Termination. In the event that a Participant voluntarily
terminates employment with the Company on or before the end of the
applicable fiscal year, the right of the Participant to his/her Bank
Balance and/or any potential current year payout shall be forfeited.
7.5 Termination for Cause. "Cause" shall mean:
(1) misappropriation by the Participant of funds of the Company
or any of its subsidiaries;
(2) the Participant personally and secretly obtaining profits
from dealings with the Company or any of its subsidiaries;
(3) the Participant's unreasonable neglect of, or refusal to
perform, his/her duties or responsibilities; and
(4) conviction of a serious crime involving moral turpitude.
7.6 Payment and Breach of Agreement. Notwithstanding any other provision
of the Plan or any other agreement, in the event that a Participant
shall breach any noncompetition agreement with the Company or breach
any agreement with respect to the postemployment conduct of such
Participant, any remaining payment otherwise due to the Participant
hereunder shall be forfeited.
7.7 No Guarantee. Selection as a Participant is no guarantee that
benefits under the Plan will be earned or that selection as a
Participant will be made in any subsequent year.
ARTICLE VIII
General Provisions
8.1 Withholding of Taxes. The Company shall have the right to withhold
the amount of taxes, which in the determination of the Company, are
required to be withheld under law with respect to any amount due or
paid under the Plan.
8.2 Expenses. All expenses and costs in connection with the adoption and
administration of the Plan shall be borne by the Company.
8.3 No Prior Right or Offer. Except and until expressly granted pursuant
to the Plan, nothing in the Plan shall be deemed to give any employee
any contractual or other right to participate in the benefits of the
Plan.
8.4 Rights Personal to Employee. Any rights provided to a Participant
under the Plan shall be personal to such Participant, shall not be
transferable (except by will or pursuant to the laws of descent or
distribution), and shall be exercisable, during his/her lifetime,
only by such Participant.
8.5 Distribution of Bank Balances Upon Termination of the Plan. Upon
termination of the Plan, the Bank Balance of each Participant shall
be distributed as soon as practicable but in no event later than 90
days from such event.
ARTICLE IX
Limitation
9.1 No Continued Employment. Nothing contained herein shall provide any
Participant with any right to continued employment or in any way
abridge the rights of the Company to determine the terms and
conditions of employment and whether to terminate employment of any
Participant.
9.2 No Vested Rights. Except as otherwise provided herein, no employee
or other person shall have any claim of right (legal, equitable, or
otherwise) to any award, allocation, or distribution or any right,
title, or vested interest in any amounts in his/her Bonus Bank and no
officer or employee of the Company or any other person shall have any
authority to make representations or agreements to the contrary. No
interest conferred herein to a Participant shall be assignable or
subject to claim by a Participant's creditors. The right of the
Participant to receive a distribution hereunder shall be an unsecured
claim against the general assets of the Company and the Participant
shall have no rights in or against any specific assets of the Company
as the result of participation hereunder.
9.3 Not Part of Other Benefits. The benefits provided in this Plan shall
not be deemed a part of any other benefit provided by the Company to
its employees. The Company assumes no obligation to Plan
Participants except as specified herein. This is a complete
statement, along with the Exhibits attached hereto, of the terms and
conditions of the Plan.
9.4 Other Plans. Nothing contained herein shall limit the Company or the
Committee's power to grant bonuses to employees of the Company,
whether or not Participants in this Plan.
9.5 Limitations. Neither the establishment of the Plan nor the grant of
an award hereunder shall be deemed to constitute an express or
implied contract of employment for any period of time or in any way
abridge the rights of the Company to determine the terms and
conditions of employment or to terminate the employment of any
Participant with or without cause at any time.
9.6 Unfunded Plan. This Plan is unfunded. Nothing herein shall create
or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant.
ARTICLE X
Authority
10.1 Committee Authority. Except as otherwise expressly provided herein,
full power and authority to interpret and administer this Plan shall
be vested in the Committee. The Committee may from time to time make
such decisions and adopt such rules and regulations for implementing
the Plan as it deems appropriate for any Participant under the Plan.
Any decision taken by the Committee arising out of or in connection
with the construction, administration, interpretation and effect of
the Plan shall be final, conclusive and binding upon all participants
and any person claiming under or through them.
10.2 Board of Directors Authority. The Board shall be ultimately
responsible for administration of the Plan. The Board or the
Committee, as appropriate, shall work with the Chief Executive
Officer of the Company in all aspects of the administration of the
Plan.
ARTICLE XI
Notice
11.1 Any notice to be given pursuant to the provisions of the Plan shall
be in writing and directed to the appropriate recipient thereof at
his/her business address or office location.
ARTICLE XII
Effective Date
12.1 This Plan shall be effective as of January 1, 1998.
12.2 The Plan is intended to remain in force indefinitely beginning on the
first day of each fiscal year after the effective date hereof, unless
the Board of Directors, in its discretion, terminates it by
resolution and notifies the Participants.
ARTICLE XIII
Amendments
13.1 Amendment. This Plan may be amended or terminated at any time at the
sole discretion of the Board upon the recommendation of the
Committee. The annual activities of the Committee pursuant to the
Plan are not Plan amendments, including but not limited to the
determinations pursuant to Section 1.4.
13.2 Protected Benefits. Notwithstanding the foregoing, after the last
day of an applicable fiscal year, other than 1998, the Plan may not
be amended or the Participants revised such that the Participant
receives less than the amount payable by the Plan nor may an
amendment reduce or eliminate any previously banked amount under
Article V prior to such amendment or revision. For 1998, the
Committee, at its discretion, has the right to make any retroactive
changes to the terms and conditions of the Plan it deems necessary
and prudent up to and including the date of payment of bonuses
pursuant to Section 5.6.
13.3 Notice. Notice of any amendment or termination shall be given
promptly to each Participant.
ARTICLE XIV
Applicable Law
14.1 This Plan shall be construed in accordance with the provisions of the
laws of the State of Wisconsin to the extent not preempted by Federal
law.
Exhibit 13
Five-Year Summary of Selected Financial Data
Not Covered by Report of Independent Public Accountants
Dollars in thousands (except per share data)
1997 1996 1995 1994 1993
Summary of Earnings1
Net sales $1,202,483 $1,083,763 $1,022,650 $811,330 $691,244
Net earnings2 43,323 50,907 53,550 47,228 40,992
Net earnings before
restructuring charge 51,423 50,907 53,550 47,228 40,992
Net earnings per
common share:3
Basic2 1.45 1.64 1.76 1.57 1.37
Diluted2 1.44 1.63 1.75 1.56 1.36
Diluted before
restructuring charge 1.71 1.63 1.75 1.56 1.36
Dividends paid per
common share3 .47 .44 .37 .35 .31
Financial Summary
Working capital 165,308 219,630 187,956 101,422 106,171
Net plant and
equipment 338,357 319,939 313,718 293,662 232,888
Total assets 781,216 719,218 678,809 577,763 457,433
Long-term debt 130,065 133,696 134,953 67,834 45,603
Interest expense 11,062 10,214 9,891 5,902 5,346
Shareholders' investment 414,103 420,592 387,112 331,587 292,428
Book value per share
of common stock 3,4 13.90 13.58 12.55 10.98 9.75
1 All years comprised 52 weeks, except 1997 which comprised 53 weeks.
2 Results of operations for 1997 includes a restructuring charge of $8.1
million, after tax, or $.27 per common share.
3 Per share amounts have been adjusted for a three-for-two stock split
distributed in March 1996.
4 Book values per share of common stock are based on shares outstanding
at year-end, as adjusted for stock splits.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL POSITION AND OPERATIONS
Highlights Results for 1997 included the following:
* Sales increase of $119 million, up 11%
* Increased net earnings before restructuring charge
* Three acquisitions that expanded capabilities and increased
market share
* A restructuring, including the discontinuation of several non-
core activities and elimination of underperforming assets
* Development of new services utilizing digital technology,
including:
- In-line press digital imaging
- High-speed inkjet imaging
- Online computer services, including commercial web sites
- Opening of a Digital Content Management Solutions Center
- Expanded use of computer-to-plate systems
While the direct revenue from these new technology applications is still
in the early growth stages, the impact on retention and growth of current
customers and development of new customer business is very significant and
will contribute substantially to future revenue, including growth from
both traditional print and new applications.
Sales were $1.2 billion, and net earnings before the restructuring charge
were $51.4 million ($1.72 basic earnings per share). Net earnings were
$43.3 million ($1.45 basic earnings per share), net of the after-tax
restructuring charge of $8.1 million ($.27 per share), compared with sales
of $1.08 billion and net earnings of $50.9 million ($1.64 basic earnings
per share) in 1996.
The unprecedented fluctuation in paper prices over the last several years,
while continuing to affect customer print order patterns, was less
disruptive in 1997 than the previous two years. Paper prices, which
declined early in 1997 and then rose steadily thereafter, were on average
about equal to 1996 prices. The Corporation furnishes a significant
amount of paper used in its printing operations, and therefore major
fluctuations in paper prices affect sales proportionately.
The Corporation classifies its sales as follows: commercial (catalogs,
direct marketing materials and single-use products); books (educational,
general, trade and data manuals); turnkey (project management,
manufacturing, packaging and distribution); magazines; and other (point-
of-purchase, security products and digital imaging services). Demand
varies for Banta's market classifications from year to year, influenced by
many factors including the strength of the overall economy, which
influences the level of advertising expenditures; consumer spending
behavior; the overall level of capacity utilization by the printing
industry, which influences pricing levels; and individual operating
factors within the Corporation's operations.
In 1997, sales and operating results for the book and magazine markets, as
well as for prepress operations, increased over 1996. Sales increases
were modest (excluding the impact of acquisitions) and operating results
were lower for the Corporation's commercial market. Increased competitive
pricing pressures, together with increased use of one-to-one marketing
(personalization) by the Corporation's customers, reduced print
quantities. Maturing market conditions in key advertising sectors, such
as credit card and financial services, reduced quantities of many print
programs. Banta continues to prioritize investments designed to expand
market share. The Corporation focuses on developing new and creative
products and formats utilizing digital imaging and database management.
Net sales of turnkey services were $210 million in 1997, an increase of
13%. However, the operating margins were lower because of losses incurred
at the three facilities that were closed and multiple facility start-ups.
In 1997, the operating margin for the turnkey services market
classification was 1.5%, down from 3.1% in 1996. Operating margins for
this market are lower because the sales include a substantial material
content. However, capital investment per location is modest, and
shareholder value can be created with the lower operating margins. The
Corporation's operating margin, excluding Global Turnkey, was 9.1% in
1997, compared with 9.6% in 1996. The lower margin in 1997 resulted from
a $3.4 million increase in depreciation expense; lower utilization and
performance issues within the commercial market; competitive industry
pricing; and costs associated with developing digital services, online
activities, and start-up of the Digital Content Management Solutions
Center.
Banta increased its capabilities and capacity through acquisitions in
three key growth sectors during the third and fourth quarters of 1997 (a
specialty magazine facility, a letter shop capability for direct marketing
customers, and facilities with capabilities to increase Banta's single-use
healthcare market share). These acquisitions increased fourth quarter and
1997 revenue by $27.4 million and, subject to market conditions, are
expected to increase 1998 sales by an additional $80 million. During
1997, the Corporation recognized a restructuring charge related to the
sale or closing of non-core businesses and underperforming assets,
including the sale of the Corporation's point-of-purchase sign and display
business and its facilities; discontinuation of its intaglio print-based
security products division; the sale of the assets of The DI Group,
Banta's interactive video operation; and the closing of three Banta U. S.
Turnkey facilities that no longer met location or customer requirements.
As a result of the restructuring, the Corporation recorded a one-time
pretax charge to earnings of $13.5 million, $8.1 million after tax,
reducing the Corporation's 1997 third-quarter and full-year per-share
earnings by $.27.
Net Sales Net sales for the Corporation's market classifications, as a
percent of total net sales, were as follows:
1997 1996 1995
Commercial 43% 44% 47%
Books 23 22 26
Turnkey 17 17 8
Magazines 11 11 11
Other 6 6 8
---- ---- ----
100% 100% 100%
==== ==== ====
Percentage increases in sales by market classification for 1997 compared
with 1996 were as follows: commercial - 8%; books - 16%; turnkey - 13%;
magazines - 12%; and other - 8%.
In 1997, sales results within the categories of the commercial market
varied. Catalog sales were flat while sales in the direct marketing
materials and single-use products categories increased, primarily due to
the sales volume added via acquisitions. A highly competitive pricing
environment in catalogs and direct marketing materials eroded both sales
and margins.
Book market sales increased significantly in 1997 as a result of higher
educational and trade book printing activity. The recent trend toward
replacing printed computer manuals with digital formats is continuing.
Banta's operations serving these markets were successful in 1997 in
refocusing their sales efforts toward other publishers who utilize formats
that fit existing equipment.
The increase in sales of turnkey services resulted primarily from the
sales generated by new facilities opened during the year. Sales levels
within this market classification will continue to be somewhat volatile as
many of our facilities are dependent on a small number of large customers.
The Corporation's sales levels are therefore very dependent upon the
success of its customers' products in the marketplace.
The sales increase in the magazine market was a result of increased
advertising pages and market share gains resulting in high levels of
capacity utilization as well as the impact of the acquisition of
Greenfield Printing & Publishing ("Greenfield") in the fourth quarter of
1997. The acquisition added approximately $6 million in magazine market
sales during the fourth quarter. The facilities serving this market
operated throughout most of 1997 at, or above, optimum levels of capacity
utilization. In order to provide additional capacity, the Corporation
acquired Greenfield and approved a significant capacity expansion at the
Kansas City, Mo., facility.
The sales increase in the "other" classification is primarily due to
increased digital imaging activity. Future sales for this classification
will be impacted by the 1997 restructuring because the sales contributed
by the point-of-purchase sign and display business and the video business
will be absent.
Percentage increases (decreases) in sales by market classification for
1996 compared with 1995 were as follows: commercial - (1%); books - (7%);
turnkey - 118%; magazines - 3%; and other - (9%).
The unprecedented paper price increases of 1994 and 1995, combined with
the 1995 postage rate increase, had a significant impact on the buying
patterns of the Corporation's customers in 1996. Many customers reduced
print quantities and delayed projects, particularly in consumer catalogs
and direct mail markets, in an effort to regain profitability lost during
1995. These reductions were most prevalent during the first six months of
1996, with quantities increasing during the second half of the year as
paper prices declined to early 1994 levels for key paper grades.
In 1996, catalog and direct marketing materials sales were significantly
impacted by reduced paper prices. Consumer catalog sales were also lower
due to an extremely competitive pricing environment brought on by reduced
demand and industrywide capacity added in the last several years. Book
market sales declined in all categories in 1996 due in large part to
reduced paper prices. Sales of general and trade books also declined due
to reduced demand. Educational book sales were lower due to a cyclically
lower number of textbook adoption programs in 1996. Sales of turnkey
services increased in 1996 because they included a full year's sales of
B.G. Turnkey Services, which was acquired in the fourth quarter of 1995.
The magazine market sales increase was accomplished as a result of market
share gains, despite the large reduction in paper prices. The sales
decrease in the "other" classification was primarily due to the transfer
of postage stamp finishing services from one of the Corporation's
operations to an entity owned by one of the Corporation's joint venture
partners.
Cost of Goods Sold In 1997, cost of goods sold as a percent of sales
was 80.2% compared with 79.8% in 1996 and 78.9% in 1995.
Margins for the Corporation's printing markets were impacted by several
factors in 1997. Highly competitive pricing, particularly in the
commercial markets, reduced margins. Turnkey services margins were lower
as a result of start-up costs at three new facilities that were opened
during the year, as well as losses incurred at three other facilities
prior to their shutdown. The use of the LIFO inventory valuation method
also contributed to the margin decline. LIFO inventory adjustments
increased (reduced) cost of goods sold by $220,000, ($4,481,000) and
$4,014,000 in 1997, 1996 and 1995, respectively. The changes in the LIFO
valuation adjustment represented a 0.4% decrease in the 1997 margin
compared with 1996. Margins in the book and magazine markets were
improved in 1997 due to higher levels of utilization.
The lower margin in 1996 compared to 1995 resulted primarily from two
factors. First, 1996 included proportionately greater sales of turnkey
services, which generally provide a lower percentage margin because of
their higher material content. Additionally, competitive pricing in the
commercial markets reduced margins. Somewhat offsetting these factors was
the impact of lower paper prices on margins. Since the margin on the sale
of paper is generally lower than that of value-added services, declining
paper prices increased margin percentages. The change in the LIFO
inventory valuation adjustment added 0.8% to the 1996 margin compared with
that of 1995.
Expenses Selling and administrative expenses as a percent of sales were
12.1%, 11.7% and 11.5% in 1997, 1996 and 1995, respectively. Selling and
administrative expenses increased $18.7 million (14.7%) in 1997 and $8.8
million (7.4%) in 1996. The acquisitions made in 1997 accounted for
approximately $5 million of the 1997 increase. The remainder of the
increase was primarily a result of costs required to support 1997's
increased sales volume, including sales commissions and other support
costs. The 1996 increase is attributable to increased costs associated
with the expansion of the turnkey services business. This increase was
somewhat offset by reductions in other expenses, including profit-based
incentives.
Earnings From Operations and Interest Expense Earnings from operations
as a percent of sales were 6.6%, 8.5% and 9.6% in 1997, 1996 and 1995,
respectively. Before the restructuring charge, 1997 earnings from
operations as a percent of sales were 7.7%. Interest expense was $11.1
million, $10.2 million and $9.9 million in 1997, 1996 and 1995,
respectively. During most of 1997 and all of 1996, the Corporation made
minimal use of short-term credit facilities and incurred no significant
new long-term debt. During the fourth quarter of 1997, the Corporation
utilized its short-term credit facilities in order to finance three
acquisitions. Average borrowings outstanding during the fourth quarter of
1997 were approximately $37 million. This increased borrowing resulted in
higher interest expense in 1997 compared to 1996. The increased interest
expense in 1996 was the result of additional borrowings made in 1995,
which were made to finance acquisitions made late in 1995. Other income
is expected to decrease in 1998 due to reduced interest income and a
reduction in the earnings from a partnership that produced U.S. postage
stamps. That partnership is in the process of being phased out.
Pretax earnings as a percent of sales were 5.9% (7.0% before the
restructuring charge), 7.8% and 8.7% in 1997, 1996 and 1995, respectively.
Effective income tax rates were 38.8%, 39.5% and 39.9% in 1997, 1996 and
1995, respectively. The reduction in the effective tax rates in 1997 and
1996 was due to lower tax rates on earnings of the European operations and
the impact of tax exempt interest earned on short-term investments.
Liquidity and Capital Resources
Selected Financial Data
Dollars in thousands
1997 1996 1995
Cash $16,432 $57,417 $27,130
Receivables 228,483 206,245 199,151
Inventories 95,341 69,063 70,750
Short-term debt 33,880 4,620 -
Accounts payable and accrued liabilities 161,302 117,585 114,997
Working capital 165,308 219,630 187,956
Long-term debt 130,065 133,696 134,953
Shareholders' investment 414,103 420,592 387,112
Long-term debt to total long-term debt
and shareholders' investment 23.9% 24.1% 25.8%
Current ratio 1.83 2.72 2.53
The Corporation generally raises short-term funds by selling commercial
paper and issuing unsecured bank notes. Such borrowings are primarily
supported by a credit facility with a total borrowing capacity of $70
million. The Corporation also has a secured credit facility in the amount
of $8 million denominated in Irish punts, which is used to finance
European operations. Average outstanding short-term borrowings during
1997, 1996 and 1995 were $11.6 million, $760,000 and $19.4 million,
respectively. The 1997 increase resulted primarily from borrowings used
to finance acquisitions.
The Corporation has historically raised long-term debt financing by
issuing unsecured promissory notes to insurance companies on a private
placement basis. No significant long-term borrowings were required in
1997 or 1996. During 1995, the Corporation issued $75 million of long-
term debt at interest rates ranging from 6.81% to 7.98%. The proceeds
were used to repay all of the Corporation's short-term debt and to finance
acquisitions.
Management believes the Corporation's liquidity continues to be strong and
the degree of leverage allows the Corporation to finance, at attractive
borrowing rates, its capital expenditures, as well as any other investment
opportunities that may arise.
During 1997 working capital decreased $54 million. This decrease was due
to the financing of acquisitions with cash and short-term borrowings. The
1996 increase in working capital of $32 million resulted from cash
provided by operations that exceeded requirements for capital expenditures
and financing activities.
The Corporation repurchased 1,456,900 shares of its common stock at an
average price of $24.89 in 1997 and 303,600 shares at an average price of
$23.38 in 1996. The Corporation's Board of Directors has authorized a
repurchase program for up to an additional 1.2 million shares of common
stock. During 1998 the Corporation expects to continue its repurchase of
shares pursuant to this authorization as market conditions warrant.
The Corporation's capital investment program, which resulted in capital
spending of $63 million in 1997, reflects its commitment to maintain
modern, efficient plants and to be able to utilize new printing and
digital imaging technologies. Preliminary plans for 1998 are for capital
commitments to exceed $70 million. Cash requirements are expected to
exceed that amount as the unpaid balance of prior commitments exceeded $20
million at the end of 1997.
The Corporation has completed a preliminary evaluation of its computer
software to determine its ability to handle dates beginning with the year
2000. A significant portion of the Corporation's software was already
year-2000 compliant. This evaluation resulted in the development of
detailed plans to replace certain software and to reprogram other
software. The total cost of replacing and reprogramming software is
expected to be between $4 million and $6 million. This cost will be
incurred before mid-1999 and will be a combination of capital expenditures
and costs charged to operations.
Due to the forward-looking nature of the preceding information, Banta
Corporation management recommends readers reference the "Safe Harbor"
Statement under the Private Securities Litigation Reform Act of 1995,
which is reproduced on page 35 of this Annual Report to Shareholders.
<PAGE>
Consolidated Balance Sheets
January 3, 1998 and December 28, 1996
Dollars in thousands
Assets 1997 1996
Current Assets:
Cash and cash equivalents $ 16,432 $ 57,417
Receivables, less reserves of $3,708,000
and $3,486,000, respectively 228,483 206,245
Inventories 95,341 69,063
Prepaid expenses 8,922 5,585
Deferred income taxes 16,498 9,145
------- -------
365,676 347,455
Plant and Equipment:
Land 8,544 6,438
Buildings and improvements 107,298 96,185
Machinery and equipment 602,827 547,620
------- -------
718,669 650,243
Less accumulated depreciation (380,312) (330,304)
------- -------
338,357 319,939
Other Assets 14,524 11,886
Cost in Excess of Net Assets of
Businesses Acquired 62,659 39,938
------- -------
$781,216 $ 719,218
======== ========
Liabilities and Shareholders' Investment
Current Liabilities:
Short-term debt $ 33,880 $ 4,620
Accounts payable 106,235 75,428
Accrued salaries and wages 22,575 18,269
Other accrued liabilities 32,492 23,888
Current maturities of long-term debt 5,186 5,620
------- -------
200,368 127,825
Non-current Liabilities:
Long-term debt 130,065 133,696
Deferred income taxes 19,831 21,805
Other non-current liabilities 16,849 15,300
------- -------
166,745 170,801
Shareholders' Investment:
Common stock -
$.10 par value, authorized 75,000,000
shares; 29,793,279 and 30,969,069
shares issued and outstanding, respectively 2,979 3,097
Amount in excess of par value of stock 35,542 66,119
Cumulative translation adjustment (3,498) 1,473
Retained earnings 379,080 349,903
------- -------
414,103 420,592
------- -------
$781,216 $719,218
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
<PAGE>
Consolidated Statements of Earnings
For the Periods Ended January 3, 1998, December 28, 1996,
and December 30, 1995
Dollars in thousands (except earnings per share)
1997 1996 1995
Net sales $1,202,483 $1,083,763 $1,022,650
Cost of goods sold 963,920 864,736 806,651
---------- ---------- ----------
Gross Earnings 238,563 219,027 215,999
Selling and administrative expenses 145,519 126,855 118,068
Restructuring charge 13,500 - -
---------- ---------- ----------
Earnings from Operations 79,544 92,172 97,931
Interest expense (11,062) (10,214) (9,891)
Other income, net 2,341 2,249 1,010
---------- ---------- ----------
Earnings Before Income Taxes 70,823 84,207 89,050
Provision for income taxes 27,500 33,300 35,500
---------- ---------- ----------
Net Earnings $ 43,323 $ 50,907 $ 53,550
======== ======== ========
Basic Earnings per Share
of Common Stock $ 1.45 $ 1.64 $ 1.76
======== ======== ========
Diluted Earnings per Share
of Common Stock $ 1.44 $ 1.63 $ 1.75
======== ======== ========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
<PAGE>
Consolidated Statements of Cash Flows
For the Periods Ended January 3, 1998, December 28, 1996,
and December 30, 1995
Dollars in thousands
1997 1996 1995
Cash Flows from Operating Activities
Net earnings $ 43,323 $ 50,907 $ 53,550
Adjustments to reconcile net earnings
to net cash provided
by operating activities,
net of acquisitions:
Depreciation and amortization 62,107 58,270 51,055
Deferred income taxes (5,128) 1,326 2,313
Restructuring charge 13,500 - -
Restructuring charges paid (1,843) - -
Change in assets and liabilities,
net of effects of acquisitions:
(Increase) in receivables (2,603) (6,562) (8,966)
(Increase) decrease in inventories (10,931) 1,831 9,785
(Increase) decrease in other
current assets (1,806) (1,179) 805
Increase in accounts payable and
accrued liabilities 23,843 2,250 5,908
(Increase) decrease in other
non-current assets (2,638) 1,406 (1,526)
Other, net (1,890) 2,574 869
-------- -------- --------
Cash provided by operating activities 115,934 110,823 113,793
-------- -------- --------
Cash Flows from Investing Activities
Capital expenditures (63,065) (60,461) (63,822)
Proceeds from sale of plant and equipment 3,571 2,376 733
Cash used for acquisitions,
net of cash acquired (75,598) - (27,441)
-------- -------- --------
Cash used for investing activities (135,092) (58,085) (90,530)
Cash Flows from Financing Activities
Short-term debt proceeds (payments), net 29,260 4,620 (56,001)
Proceeds from issuance of long-term debt 1,600 - 75,000
Payments on long-term debt (5,697) (9,210) (8,361)
Proceeds and tax benefit from
exercise of stock options 3,418 2,797 4,167
Dividends paid and stock redemptions (14,146) (13,560) (11,308)
Repurchase of common stock (36,262) (7,098) -
-------- -------- --------
Cash (used for) provided by
financing activities (21,827) (22,451) 3,497
Net (decrease) increase in cash
and cash equivalents (40,985) 30,287 26,760
Cash and cash equivalents at
beginning of year 57,417 27,130 370
-------- -------- --------
Cash and cash equivalents at
end of year $ 16,432 $ 57,417 $ 27,130
======== ======== ========
Cash payments for:
Interest, net of amount capitalized $ 10,818 $10,312 $ 9,487
Income taxes 30,583 30,292 33,023
The accompanying notes to consolidated financial statements are an
integral part of these statements.
<PAGE>
<TABLE>
Consolidated Statements of Shareholders' Investment
For the Periods Ended January 3, 1998, December 28, 1996, and December 30, 1995
<CAPTION>
Dollars in thousands
Common Stock Amount in Cumulative
Shares Par Excess of Translation Retained
Outstanding Value Par Value Adjustment Earnings
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 20,126,026 $2,013 $56,780 $ - $272,794
Net earnings 53,550
Cash dividends ($.37 per share) (11,308)
Stock options exercised 196,823 19 4,148
Stock issued for acquisition 236,765 24 9,210
Other (118)
---------- ------ ------- ------ --------
Balance, December 30, 1995 20,559,614 2,056 70,138 (118) 315,036
Three-for-two stock split effected in
the form of a 50% stock dividend 10,292,824 1,029 (7) (1,029)
Net earnings 50,907
Cash dividends ($.44 per share) (13,553)
Stock options exercised 183,894 18 2,779
Repurchase of common stock (303,600) (30) (7,068)
Stock issued for acquisition 236,337 24 277 (1,458)
Other 1,591
---------- ------ ------- ------ --------
Balance, December 28, 1996 30,969,069 3,097 66,119 1,473 349,903
Net earnings 43,323
Cash dividends ($.47 per share) (14,146)
Stock options exercised 204,914 20 3,397
Repurchase of common stock (1,456,900) (146) (36,116)
Stock issued for acquisition 75,715 8 2,131
Other 481 11 (4,971)
---------- ------ ------- ------ --------
Balance, January 3, 1998 29,793,279 $2,979 $35,542 ($3,498) $379,080
========== ====== ======= ====== ========
</TABLE>
There are 300,000 shares of $10 par value preferred stock authorized, none
of which is issued.
The accompanying notes to consolidated financial statements are an
integral part of these statements.
<PAGE>
Notes to Consolidated Financial Statements
For the Periods Ended January 3, 1998, December 28, 1996, December 30,
1995
1 Summary of Accounting Policies
Significant accounting policies followed by the Banta Corporation (the
"Corporation") in maintaining financial records and preparing financial
statements are:
Business The Corporation operates in one business segment - printing
services. Customers, which are primarily located throughout the United
States and Europe, are granted credit on an unsecured basis. No single
customer accounted for more than 10% of consolidated sales during 1997,
1996 or 1995.
Year-end The Corporation's operating year ends on the Saturday closest
to December 31. Operating year 1997 ended on January 3, 1998, and
comprised 53 weeks. The years 1996 and 1995 ended on December 28, 1996,
and December 30, 1995, respectively, and comprised 52 weeks each.
Principles of Consolidation The consolidated financial statements
include the accounts of the Corporation and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated.
Recognition of Sales In accordance with trade practices of the
printing industry, sales are recorded by the Corporation primarily upon
completion of manufacturing. Substantially all such sales are produced to
customer specifications, therefore, the Corporation has no material
amounts of finished goods inventory.
Earnings Per Share of Common Stock In February 1997 the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." The standard requires the
disclosure of two earnings per share amounts - "basic earnings per share
of common stock" and "diluted earnings per share of common stock." The
computation of diluted earnings per share is similar to the Corporation's
previous computation of "earnings per share of common stock." Earnings
per common share included throughout the Annual Report have been computed
in accordance with the new standard. Basic earnings per share of common
stock is computed by dividing net earnings by the weighted average number
of common shares outstanding during the period. Diluted earnings per
share of common stock is computed by dividing net earnings by the weighted
average number of common shares and common equivalent shares, which relate
entirely to the assumed exercise of stock options. Average common shares
for computation of basic earnings per share were 29,973,736, 31,103,078
and 30,388,778 in 1997, 1996 and 1995, respectively. Average common and
common equivalent shares for computation of diluted earnings per share
were 30,113,098, 31,249,169 and 30,624,134 in 1997, 1996 and 1995,
respectively. The shares outstanding used to compute diluted earnings per
share for 1997, 1996 and 1995 excluded outstanding options to purchase
408,300, 701,600 and 4,500 shares of common stock, respectively, with
weighted-average exercise prices of $27.64, $26.09 and $29.50,
respectively. The options were excluded because their exercise prices
were greater than the average market price of the common shares during
the respective year and their inclusion in the computation would have been
antidilutive.
Foreign Currency Translation Financial statements of foreign subsidiaries
are translated into United States dollars in accordance with the
provisions of Statement of Financial Accounting Standards No. 52. Foreign
currency transaction gains and losses were insignificant in 1997, 1996
and 1995.
Capitalized Interest The Corporation capitalizes interest on major
building and equipment installations and depreciates the amount over the
lives of the related assets. The total interest incurred was $12,007,000
in 1997, $12,030,000 in 1996, and $11,128,000 in 1995 of which
$945,000, $1,816,000 and $1,237,000 was capitalized in 1997, 1996 and
1995, respectively.
Cash and Cash Equivalents Short-term investments, with maturities of
less than 90 days at the date of purchase, are considered cash equivalents
for purposes of the accompanying consolidated balance sheets and
statements of cash flows. These investments are stated at cost which
approximates market.
Inventories Approximately 34% and 33% of total inventories in 1997 and
1996, respectively, and the majority of the Corporation's inventories used
in its printing operations, are accounted for at cost, determined by 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) basis.
Inventories include material, labor and manufacturing overhead. Inventory
amounts at year-end are as follows:
Dollars in thousands
1997 1996
Raw materials and supplies $55,026 $40,980
Work-in-process and finished goods 44,908 32,456
------- -------
FIFO value (current cost) of all inventories 99,934 73,436
Excess of current cost over carrying
value of LIFO inventories (4,593) (4,373)
------- -------
Net inventories $95,341 $69,063
======= =======
Plant and Equipment Plant and equipment (including major renewals and
betterments) are carried at cost and depreciated by ratable charges over
the estimated useful life of the assets. Substantially all depreciation
is computed using the straight-line method for financial reporting
purposes. Accelerated depreciation methods are used for tax purposes.
Leasehold improvements are generally amortized over the term of the leases
on a straight-line basis.
Income Taxes Deferred tax liabilities and assets are determined based on
the difference between the book and the tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Cost in Excess of Net Assets of Businesses Acquired Cost in excess of
net assets of businesses acquired ("goodwill") is amortized and charged
against operations on a straight-line method over periods of 25 to 40
years. The realizability of goodwill is evaluated annually based upon the
undiscounted earnings of the businesses acquired compared with the
unamortized amount of goodwill. Accumulated amortization of goodwill was
$8,128,000 and $6,232,000 as of January 3, 1998, and December 28, 1996,
respectively.
Derivative Financial Instruments The Corporation occasionally utilizes
interest rate swaps and foreign currency forward exchange contracts to
hedge specific interest rate and foreign currency exposures. These
derivative financial instruments are not used for trading purposes. The
Corporation was party to no material derivative financial instrument
contracts in 1997, 1996 and 1995.
Use of Estimates The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported periods. Actual results could differ from
those estimates.
Comprehensive Income In June 1997, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income." The Corporation intends to adopt this
standard in 1998. If the standard had been adopted in 1997, comprehensive
income would have been reported as $38,352,000.
Segment Disclosures In June 1997 the FASB issued Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise
and Related Information." This standard requires footnote disclosure of
information related to the business segments in which an enterprise
operates. The Corporation intends to adopt this standard in 1998 and has
not yet determined the extent of the disclosures it will make.
2 Acquisitions
Acquisition of The Omnia Group In September of 1997, the Corporation
acquired The Omnia Group ("Omnia") for approximately $50.7 million in
cash. Omnia is a supplier of single-use medical and dental products.
Omnia reported sales for 1996 of approximately $65 million. The purchase
price plus the liabilities assumed exceeded the fair market value of the
tangible assets and identified intangible assets by a preliminary
estimate of $8.8 million. Subsequent adjustments to this estimate are not
expected to be significant. This acquisition was accounted for as a
purchase and accordingly, the accompanying financial statements of the
Corporation include the results of Omnia beginning with the acquisition
date.
Acquisition of Greenfield Printing & Publishing In October of 1997, the
Corporation acquired Greenfield Printing & Publishing Company
("Greenfield") for approximately $21.3 million in cash. Greenfield is a
printer of special-interest and trade magazines. Greenfield reported
sales for its most recent fiscal year of approximately $22 million.The
purchase price plus the liabilities assumed exceeded the fair market value
of the tangible assets and the identified intangible assets by a
preliminary estimate of $14 million. Subsequent adjustments to this
estimate are not expected to be significant.
Acquisition of B.G. Turnkey Services Limited In October of 1995, the
Corporation acquired B.G. Turnkey Services Limited ("B.G. Turnkey"). B.G.
Turnkey, headquartered in Cork, Ireland, provides project management,
product assembly, fulfillment and product localization services to
computer software and hardware companies primarily from facilities
located in Europe. B.G. Turnkey reported sales for 1994 of approximately
$160 million. The purchase price consisted of 355,147 shares (as adjusted
for the 1996 stock split) of the Corporation's common stock and
approximately $21 million of the Corporation's debentures which were
called and prepaid in December 1995. The payment of these debentures is
classified as cash used for acquisitions in the Statement of Cash Flows.
The Corporation also paid $3.2 million to former shareholders of B.G.
Turnkey in exchange for a covenant not to compete. The purchase price plus
the liabilities assumed exceeded the fair value of the tangible assets and
identified intangible assets purchased by $12.2 million. This acquisition
was accounted for as a purchase and accordingly, the accompanying
financial statements include B.G. Turnkey's results beginning with the
acquisition date.
Other Acquisitions In September of 1997, the Corporation acquired Bock
West, Inc. ("Bock West") for 75,715 shares of the Corporation's common
stock valued at $2.1 million. Bock West provides mailing and fulfillment
services. In connection with this transaction the Corporation repaid $3.3
million of Bock West's debt which is classified as cash used for
acquisitions in the Statement of Cash Flows.
During 1996, the Corporation acquired Packaging Fulfillment Specialists,
Inc., which provides fulfillment services to publishers. This purchase
price consisted of 236,337 shares of the Corporation's common stock.
During 1995, the Corporation purchased Applied Technology Corporation,
which serves the single-use health care market, and New Frontiers
Information Corporation, which provides customers with online solutions
for distributing catalogs and direct marketing materials via the
Internet's World Wide Web. The combined purchase price for these two
acquisitions was $9.0 million.
3 Short-term Debt
The Corporation generally obtains short-term financing through the
issuance of commercial paper and borrowing against lines of credit with
banks. At January 3, 1998, the Corporation had lines of credit available
totaling $78 million. Of this total, $70 million represents a credit
facility made available by three banks, which can be used to support both
commercial paper and unsecured borrowings. The remaining $8 million is a
secured credit facility denominated in Irish punts, which is utilized to
finance the Corporation's European operations.
At January 3, 1998, the Corporation had notes payable outstanding
aggregating $33.9 million, which consisted entirely of commercial paper
with a weighted-average interest rate of 6.0%. At December 28, 1996, the
Corporation had borrowings outstanding aggregating $4.6 million under the
European credit facility. The maximum outstanding borrowings during 1997
and 1996 were $40.1 million and $4.6 million, respectively. The average
outstanding borrowings during 1997 and 1996 were $11.6 million and
$760,000, respectively. The weighted-average interest rates on such
borrowings during 1997 and 1996 were 5.8% and 7.5%, respectively.
4 Long-term Debt
Long-term debt, including amounts payable within one year, consists of the
following:
Dollars in thousands
Maturities 1997 1996
Promissory Notes:
6.81% 2004-2010 $ 35,000 $ 35,000
7.62% 1999-2009 25,000 25,000
7.98% 2000-2010 25,000 25,000
9.53% 1998-2005 14,545 16,364
7.38% 2005-2015 15,000 15,000
10.11% 1998-1999 4,000 6,500
Notes Payable and Capital Lease Obligations,
generally fixed rates of
interest, 6.0% to 9.8% 1998-2002 7,926 7,382
Industrial Revenue Bonds:
Floating rates of interest,
approximating 80% of the
prime rate 1998-2015 6,600 6,750
Fixed rate of interest
at 5.8% to 7.5% 1998-2002 2,180 2,320
-------- --------
135,251 139,316
Less current maturities (5,186) (5,620)
-------- --------
Long-term debt $130,065 $133,696
======== ========
Maturities of long-term debt during the next five years are: 1998,
$5,186,000; 1999, $9,019,000; 2000, $7,401,000; 2001, $9,434,000;
and 2002, $11,773,000. Industrial Revenue Bonds aggregating $2,080,000
are secured by certain real estate and equipment.
The Promissory Note agreements contain various operating and financial
covenants. The more restrictive of these covenants require that working
capital be maintained at a minimum of $40,000,000, current assets be 150%
of current liabilities and consolidated tangible net worth be not less
than $125,000,000. Funded debt of up to 50% of the sum of consolidated net
worth and consolidated funded debt may be incurred without prior consent
of the noteholders. The Corporation may incur short-term debt of up to 25%
of consolidated net worth at any time and is required to be free of all
such obligations in excess of 12.5% of consolidated net worth for 60
consecutive days each year. The agreements also contain limitations on
leases and ratable security on certain types of liens. The Corporation
was in compliance with all of its significant debt covenants throughout
1997, 1996 and 1995.
One of the Promissory Note agreements contains covenants which restrict
the payment of dividends. As of January 3, 1998, $122,513,000 of retained
earnings was available for the payment of dividends under the most
restrictive of such covenants.
Based on the borrowing rates currently available to the Corporation for
loans with similar terms and average maturities, the fair value of
long-term debt as of January 3, 1998, including current maturities, was
$143,490,000.
5 Operating Leases
The Corporation leases a variety of assets used in its operations
including manufacturing facilities, warehouses, office space, office
equipment, automobiles and trucks. Annual rentals amounted to
$12,748,000, $9,816,000 and $7,661,000 in 1997, 1996 and 1995,
respectively. Minimum rental commitments for the years 1998 through 2002
aggregate $12,294,000, $8,959,000, $8,465,000, $7,996,000 and $6,714,000,
respectively, and $34,192,000 thereafter.
6 Stock and Incentive Programs for Management Employees
During 1997, 1996 and 1995 the Corporation had a Management Incentive
Award Plan which provided for the payment of cash awards or bonuses to
officers and other key employees with respect to any year in which the
Corporation and/or its operating units achieve specified objectives.
Awards under the plan were $1,024,000 in 1997, $243,000 in 1996 and
$2,799,000 in 1995.
The Corporation also has a Long-term Incentive Plan, which provides for
payment of cash awards to key officers and executives of the Corporation
upon achievement of specified objectives over three-year performance
periods. There were no awards under the plan for the 1995 to 1997 and
1994 to 1996 performance periods. Awards under the plan were $511,000 for
the 1993 to 1995 performance period.
At January 3, 1998, the Corporation had options outstanding or available
for grant under two stock option plans - the 1995 Equity Incentive Plan
and the 1991 Stock Option Plan. Under the plans, options to purchase
common stock are granted to officers and key employees at prices not less
than the fair market value of the common stock on the date of the grant.
Options granted under the 1991 plan may be exercised up to five years
after the date of the grant. Options granted under the 1995 plan may be
exercised up to ten years from the date of the grant. At January 3,1998,
606,864 shares of the Corporation's common stock were reserved for future
option grants.
The plans permit participants to use option shares for the purpose of
offsetting income tax liabilities incurred upon the exercise of stock
options and allow for grants of either Incentive Stock Options or
Nonstatutory Stock Options. The plans include provisions which authorize
options to be granted to non-employee Directors.
The following table summarizes activity under the stock option plans:
Weighted
Options Price Range Average Price
Outstanding at December 31, 1994 1,671,480 $10 - $24 $17
Granted 468,300 20 - 29 27
Exercised (419,313) 10 - 23 12
Canceled or expired (8,437) 21 - 23 21
---------
Outstanding at December 30, 1995 1,712,030 11 - 29 21
Granted 442,300 21 - 29 21
Exercised (316,911) 11 - 24 14
Canceled or expired (58,188) 21 - 28 24
---------
Outstanding at December 28, 1996 1,779,231 15 - 29 22
Granted 402,500 25 - 26 26
Exercised (398,461) 15 - 23 18
Canceled or expired (60,003) 21 - 28 25
---------
Outstanding at January 3, 1998 1,723,267 $18 - $29 $24
=========
Of the options outstanding at January 3, 1998, 921,447 were exercisable
at prices ranging from $18 to $29, and a weighted average of $23. The
balance of the options become exercisable at various times through 2000 at
prices ranging from $21 to $29, and a weighted average of $25.
During 1997, 1996 and 1995, 193,547, 133,017 and 124,078 shares,
respectively, were submitted to the Corporation in partial payment for
stock option exercises and to offset income tax liabilities. These shares
were canceled by the Corporation.
The Corporation accounts for stock options pursuant to the provisions of
APB Opinion No. 25, which requires no compensation cost to be recognized
when stock options are granted. If the Corporation had charged earnings
for the compensation cost related to its stock option grants determined
consistent with Financial Accounting Standards Board Statement No. 123,
its net earnings and earnings per share would have been reduced to the
following pro forma amounts:
Dollars in thousands, except per share amounts
1997 1996 1995
Net Earnings: As Reported $43,323 $50,907 $53,550
Pro Forma 42,032 50,168 53,377
Earnings per share of common stock:
Basic: As Reported $1.45 $1.64 $1.76
Pro Forma 1.40 1.61 1.76
Diluted: As Reported 1.44 1.63 1.75
Pro Forma 1.40 1.61 1.74
Because the Statement No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in
future years.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-
average assumptions used for grants in 1997, 1996 and 1995, respectively:
risk-free interest rates of 6.2%, 6.6% and 6.0%; expected dividend yields
of 1.7%, 1.9% and 1.3%; expected lives of 4.9, 4.9 and 4.4 years;
expected volatility of 25%, 26% and 28%. The weighted average fair
value of the options granted in 1997, 1996 and 1995 was $7.65, $5.86 and
$7.75, respectively.
7 Employee Benefit Plans
Pension Plans The Corporation and its unions have several pension plans
covering substantially all employees. The plans are non-contributory and
benefits are based on an employee's years of service and earnings. The
Corporation makes contributions to the qualified plans each year, at least
equal to the minimum required contributions as defined by the Employee
Retirement Income Security Act (ERISA) of 1974. A Non-qualified
Supplemental Retirement Plan is not funded.
Total pension expense, including multi-employer and union sponsored plans
for 1997, 1996 and 1995 was $4,731,000, $5,631,000 and $4,941,000
respectively. Net periodic pension cost for the Corporation-sponsored
qualified and supplemental plans, was as follows:
Dollars in thousands
Qualified Plans Supplemental Plan
1997 1996 1995 1997 1996 1995
Service cost-benefits
earned during the year $3,615 $3,801 $2,651 $337 $336 $131
Interest cost on
projected benefit
obligation 4,873 4,628 4,220 437 401 301
Actual return on plan
assets, net of
unrecognized gains of
$6,244,000, $2,128,000
and $12,038,000 in 1997,
1996 and 1995, respectively (6,606) (5,602) (4,373) - - -
Net amortization (374) (131) (113) 165 202 97
------ ------ ------ ---- ---- ----
Net pension expense $1,508 $2,696 $2,385 $939 $939 $529
====== ====== ====== ==== ==== ====
Significant assumptions used in determining net pension expense for
the Corporation's plans are as follows:
Dollars in thousands
Qualified Plans Supplemental Plan
1997 1996 1995 1997 1996 1995
Discount rate 7.75% 7.25% 8.5% 7.75% 7.25% 8.5%
Expected rate of
increase in compensation 4.0 5.0 5.0 4.0 5.0 5.0
Expected long-term
rate of return on
plan assets 9.0 9.0 8.5 - - -
All of the Corporation's plans, except the Supplemental Plan,
have assets in excess of the accumulated benefit obligation.
Plan assets include commingled funds, marketable equity
securities and corporate and government debt securities. The following
table presents a reconciliation of the funded status of the plans using
assumed discount rates of 7.00% and 7.75% for 1997 and 1996,
respectively:
Dollars in thousands
Qualified Plans Supplemental Plan
1997 1996 1997 1996
Projected benefit obligation:
Vested benefits $57,835 $ 50,354 $4,463 $ 3,483
Non-vested benefits 6,677 3,238 994 1,082
------ ------- ------ -------
Accumulated benefit obligation 64,512 53,592 5,457 4,565
Effect of projected
future compensation levels 13,967 12,533 2,446 3,124
------ ------- ------ -------
78,479 66,125 7,903 7,689
Plan assets at fair value 94,069 81,299 - -
------ ------- ------ -------
Plan assets (in excess of)
less than projected
benefit obligation (15,590) (15,174) 7,903 7,689
Unrecognized net gain (loss) 14,880 15,434 (3,991) (4,276)
Adjustment required to
recognize minimum liability - - 1,626 1,260
Unrecognized net asset
(obligation) being amortized
over 16 years 1,816 2,244 (81) (108)
------ ------- ------ -------
Accrued pension cost $1,106 $ 2,504 $5,457 $ 4,565
====== ======= ====== =======
Approximately 42% of the Corporation's non-salaried employees are covered
by multi-employer union-sponsored, collectively bargained defined benefit
pension plans. Pension expense includes $2,284,000, $1,996,000 and
$2,027,000 in 1997, 1996 and 1995, respectively, attributable to the
multi-employer plans. These costs are determined in accordance with the
provisions of negotiated labor contacts.
Postretirement Healthcare Costs The Corporation and its subsidiaries
provide non-contractual limited healthcare benefits for certain
retired employees. The program provides for defined initial contributions
by the Corporation toward the cost of postretirement
healthcare coverage. The balance of the cost is borne by the retirees.
The program provides that increases in the Corporation's
contribution toward coverage will not exceed 4% per year.
The following table sets forth the plan's status at January 3, 1998 and
December 28, 1996:
Dollars in thousands
1997 1996
Accumulated postretirement benefit obligation:
Retirees $ 2,989 $ 2,368
Other active plan participants 7,058 4,581
Fully eligible active plan participants 910 685
------ ------
10,957 7,634
Unrecognized transition obligation
being amortized over 20 years (3,818) (4,073)
Unrecognized net (loss) gain (1,833) 376
------- -------
Accrued postretirement benefit cost $ 5,306 $ 3,937
======= =======
The net periodic postretirement benefit cost for 1997, 1996 and 1995
included the following components:
Dollars in thousands
1997 1996 1995
Service cost - benefits attributed
to service during the year $ 572 $ 641 $ 423
Interest cost on accumulated
postretirement benefit obligation 657 525 476
Amortization of transition obligation 255 255 247
------- ------- -------
Net periodic postretirement benefit cost $ 1,484 $ 1,421 $ 1,146
======= ======= =======
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.00% and 7.75% at January 3, 1998 and
December 28, 1996, respectively. Due to the terms of the Corporation's
postretirement healthcare program, assumed healthcare cost rate
trends do not affect the Corporation's costs.
Other Benefits The Corporation has established an Incentive Savings Plan
(401K) for substantially all of its non-bargaining unit employees.
Employee contributions are partially matched by the Corporation in
accordance with criteria set forth in the plan. Matching contributions
charged to earnings for 1997, 1996 and 1995 were $2,408,000, $2,341,000
and $2,148,000, respectively.
8 Income Taxes
The provision for income taxes consists of the following:
Dollars in thousands
1997 1996 1995
Current:
Federal $25,531 $25,354 $27,347
State 5,772 5,754 5,564
Foreign 1,325 866 276
------- ------- -------
32,628 31,974 33,187
Deferred (5,128) 1,326 2,313
------- ------- -------
Provision for income taxes $27,500 $33,300 $35,500
======= ======= =======
Below is a reconciliation of the statutory federal income tax rate and the
effective income tax rate:
1997 1996 1995
Statutory federal tax rate 35.0% 35.0% 35.0%
State and local income taxes,
less applicable federal tax benefit 3.9 4.1 4.3
Other, net (.1) .4 .6
---- ---- ----
Effective income tax rate 38.8% 39.5% 39.9%
==== ==== ====
Temporary differences which give rise to the deferred tax assets and
liabilities at January 3, 1998 and December 28, 1996 are as follows:
Dollars in thousands
1997 1996
Deferred tax assets:
Vacation accrual $2,735 $2,383
Other accrued liabilities 10,202 3,998
Reserve for uncollectible accounts 1,643 1,332
Other 1,918 1,432
-------- --------
$16,498 $9,145
======== ========
Deferred tax liabilities:
Accelerated depreciation $(33,026) $(29,648)
Goodwill amortization 5,427 (66)
Accrued pension cost 2,139 2,523
Accrued postretirement benefit cost 2,109 1,575
Deferred compensation 2,159 2,235
Other 1,361 1,576
-------- --------
$(19,831) $(21,805)
======== ========
No United States deferred taxes have been provided on the undistributed
foreign subsidiary earnings which aggregated $5,443,000 and $2,882,000 at
January 3, 1998 and December 28, 1996, respectively, and are considered
permanently invested.
The non-United States component of income before income taxes was
$3,886,000 and $2,444,000 in 1997 and 1996, respectively.
9 Capital Stock
In March 1996, the Corporation distributed a three-for-two stock split
effected in the form of a 50% stock dividend. The par value of the
additional shares issued was capitalized by a transfer of $1,029,000 from
retained earnings to common stock.
Prior to 1997, the Corporation was authorized by the Board of Directors to
purchase up to 1,500,000 shares of outstanding common stock in the open
market. As of December 28, 1996, 303,600 shares of the Corporation's
stock had been repurchased under this authority for an aggregate cost of
$7,098,000. During 1997 an additional 1,158,900 shares were repurchased
under this authority for an aggregate cost of $28,713,000. In 1997 the
Corporation was authorized by the Board of Directors to purchase up to an
additional 1,500,000 shares of outstanding common stock in the open
market. As of January 3, 1998, 298,000 shares of the Corporation's stock
had been repurchased under this authority at an aggregate cost of
$7,549,000. All of the repurchased shares were subsequently canceled.
Pursuant to the Corporation's Shareholder Rights Plan, one common stock
purchase right is included with each outstanding share of common stock. In
the event the rights become exercisable, each right will initially
entitle its holder to buy one-half of one share of the Corporation's
common stock at a price of $40 per share (equivalent to $20 per one-half
share), subject to adjustment. The rights will become exercisable if a
person or group acquires 20% or more of the Corporation's common stock or
announces a tender offer for 20% or more of the common stock. Upon the
occurrence of certain events, including a person, or group, acquiring 20%
or more of the Corporation's common stock, each right will entitle the
holder to purchase, at the right's then-current exercise price, common
stock of the Corporation or, depending on the circumstances, common stock
of the acquiring corporation having a market value of twice such exercise
price. The rights may be redeemed by the Corporation at a price of one
cent per right at any time prior to the rights becoming exercisable or
prior to their expiration in November 2001.
10 Restructuring Charge
In the third quarter of 1997, the Corporation recorded a restructuring
charge of $13.5 million ($8.1 million after tax and $.27 per common share)
related to the sale of its point-of-purchase sign and display business,
the discontinuation of the intaglio print-based security products
business and the interactive video operation, and the closing of three
Banta Global Turnkey facilities. Pre-tax cash payments associated with
the restructuring charge, consisting largely of lease termination costs,
are expected to total approximately $5.6 million, of which $1.8 million
was paid in 1997. The balance is expected to be paid in 1998.
The following table presents the components of the Corporation's
restructuring reserves together with the payments against the reserves
from their establishment through January 3, 1998:
Dollars in thousands
Original
Restructuring Asset Cash Year-End
Charge Write down Payments Balance
Write down of property, plant and
equipment, and other assets $7,924 $(7,924) $ - $ -
Expenditures for closing facilities 5,576 - (1,843) 3,733
------- ------- ------- ------
Total $13,500 $(7,924) $(1,843) $3,733
======= ======= ======= ======
11 Geographic Information
Summarized data for the Corporation's European operations for 1997, 1996
and 1995 are as follows:
Dollars in thousands
1997 1996 1995
Net sales $145,692 $138,023 $54,638
Earnings from operations 3,959 2,779 1,654
Assets 77,383 79,488 66,147
There are no material transactions between the Corporation's domestic and
European operations.
12 Contingencies
The Corporation is involved in various claims, including those related to
environmental matters, and lawsuits arising in the normal course of
business. In the opinion of management, the ultimate liability, if any,
for these claims and lawsuits beyond any reserves already provided, will
not have a material adverse effect on the consolidated statements of
earnings of the Corporation.
<PAGE>
Report of Independent Public Accountants
To the Shareholders of Banta Corporation:
We have audited the accompanying consolidated balance sheets of Banta
Corporation (a Wisconsin corporation) and subsidiaries as of January 3,
1998 and December 28, 1996, and the related consolidated statements of
earnings, shareholders' investment and cash flows for each of the fiscal
years in the three-year period ended January 3, 1998. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Banta Corporation and
subsidiaries as of January 3, 1998 and December 28, 1996, and the results
of their operations and their cash flows for each of the fiscal years in
the three-year period ended January 3, 1998, in conformity with generally
accepted accounting principles.
Arthur Andersen LLP
Milwaukee, Wisconsin,
February 2, 1998
Responsibility for Financial Statements
The Consolidated Financial Statements and other financial references
appearing in this Annual Report were prepared by management in conformity
with generally accepted accounting principles appropriate for the
circumstances. Where acceptable alternative accounting principles exist,
as described in Note 1 of the Notes to the Consolidated Financial
Statements, management uses its best judgment in selecting those
principles that reflect fairly the financial position and results of
operations of the Corporation. The accounting records and systems of
internal control are designed to reflect the transactions of the
Corporation in accordance with established policies and procedures.
Financial and operational reviews are undertaken by management to provide
assurance that the books and records properly reflect transactions
authorized by the Corporation.
The Consolidated Financial Statements appearing in this Annual Report
have been audited by Arthur Andersen LLP. Its audits were made in
accordance with generally accepted auditing standards and provide an
independent review of those management responsibilities that relate to the
preparation of this Annual Report.
The Audit Committee of the Board of Directors, comprised of directors
who are not officers or employees, reviews the financial and accounting
reports of the Corporation, including a review and discussion of the
principles and procedures used by management in preparation of the
financial statements. The independent auditors have full and free access
to the Audit Committee and meet with it to review the results of the audit
engagement, the preparation of the Annual Report and to discuss auditing
and financial reporting matters.
<PAGE>
Unaudited Quarterly Financial Information
The following table presents financial information by quarter for the
years 1997 and 1996.
<TABLE>
<CAPTION>
Dollars in thousands (except per share data)
Quarter Ended Quarter Ended Quarter Ended Quarter Ended
March June September December
1997 1996 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $275,363 $271,270 $276,217 $258,650 $298,322 $264,552 $352,581 $289,291
Gross earnings 52,722 49,723 57,646 51,971 59,707 56,650 68,488 60,683
Net earnings 10,018 8,838 12,584 11,824 5,602* 15,295 15,119 14,950
Basic earnings per
share of common stock .33 .28 .42 .38 .19 .49 .51 .48
Diluted earnings per
share of common stock .33 .28 .42 .38 .19 .49 .50 .48
* Third quarter 1997 results of operations include a restructuring charge of $8.1 million, after tax ($.27 per common share).
</TABLE>
Dividend Record and Market Prices
Per Share of Common Stock
First Second Third Fourth Entire
Quarter Quarter Quarter Quarter Year
1997 dividends paid $ .11 $ .12 $ .12 $ .12 $ .47
Price range:
High $ 26 5/8 $ 29 1/2 $ 29 7/8 $ 28 11/16 $ 29 7/8
Low 22 1/2 24 7/8 26 1/8 24 3/4 22 1/2
1996 dividends paid $ .11 $ .11 $ .11 $ .11 $ .44
Price range:
High $ 30 5/8 $ 27 1/4 $ 25 3/8 $ 25 1/4 $ 30 5/8
Low 25 3/4 22 3/4 20 3/4 20 1/2 20 1/2
Banta Corporation is included in the NASDAQ National Market List and the
symbol is BNTA. The stock prices listed above are the high and low
trades. As of February 2, 1998, the Corporation had 2,465 shareholders of
record.
EXHIBIT 21
SUBSIDIARIES OF BANTA CORPORATION
OWNERSHIP BY
BANTA CORPORATION STATE OR JURISDICTION
OR ONE OF IT'S OF INCORPORATION
LIST OF SUBSIDIARIES SUBSIDIARIES OR ORGANIZATION
Banta Direct Marketing, Inc. 100% Minnesota
Banta Europe Corp. 100% Ireland
Banta Healthcare Products, Inc. 100% Wisconsin
Banta Security Printing, Inc. 100% Wisconsin
Banta Ventures, Inc. 100% Wisconsin
Banta Global Turnkey B.V. 100% The Netherlands
Banta Global Turnkey France 100% France
Banta Global Turnkey Limited 100% Ireland
Banta Global Turnkey Limited 100% Scotland
Danbury Printing & Litho, Inc. 100% Minnesota
Banta Specialty Converting, Inc. 100% Wisconsin
KnowledgeSet Corporation 100% California
New Frontiers Information Corporation 100% Massachusetts
One Pass Network, Inc. 100% California
Packaging Fulfillment Specialists, Inc. 100% Wisconsin
United Graphics Inc. 100% Washington
Wrapper, Inc. 100% Wisconsin
Banta Publications-Greenfield, Inc. 100% Ohio
The Omnia Corporation 100% Delaware
Cidex International, Inc. 100% Wisconsin
Banta Direct Marketing-Berkeley, Inc. 100% Minnesota
Omnia I, Inc. 100% Delaware
Tidi Products, Inc. 100% Delaware
Unidisco, Inc. 100% Delaware
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports, included and incorporated by reference in this Form 10-K,
into Banta Corporation's previously filed Form S-8 Registration Statement
Nos. 33-40036, 33-54576, 33-61683 and 33-01289 and Form S-3 Registration
Statement No. 33-55829.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF BANTA CORPORATION AS OF AND FOR
THE TWELVE MONTHS ENDED JANUARY 3, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-30-1996
<PERIOD-END> JAN-03-1998
<CASH> 16,432
<SECURITIES> 0
<RECEIVABLES> 232,191
<ALLOWANCES> 3,708
<INVENTORY> 95,341
<CURRENT-ASSETS> 365,676
<PP&E> 718,669
<DEPRECIATION> 380,312
<TOTAL-ASSETS> 781,216
<CURRENT-LIABILITIES> 200,368
<BONDS> 130,065
0
0
<COMMON> 2,979
<OTHER-SE> 410,605
<TOTAL-LIABILITY-AND-EQUITY> 781,216
<SALES> 1,202,483
<TOTAL-REVENUES> 1,202,483
<CGS> 963,920
<TOTAL-COSTS> 963,920
<OTHER-EXPENSES> 145,519
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,602
<INCOME-PRETAX> 70,823
<INCOME-TAX> 27,500
<INCOME-CONTINUING> 43,323
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,323
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 1.44
</TABLE>
<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 NINE MONTHS ENDED SEPTEMBER 27, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-30-1996
<PERIOD-END> SEP-27-1997
<CASH> 12,793
<SECURITIES> 0
<RECEIVABLES> 241,551
<ALLOWANCES> 3,001
<INVENTORY> 90,535
<CURRENT-ASSETS> 360,502
<PP&E> 694,712
<DEPRECIATION> 368,580
<TOTAL-ASSETS> 761,034
<CURRENT-LIABILITIES> 184,968
<BONDS> 128,960
0
0
<COMMON> 2,991
<OTHER-SE> 404,426
<TOTAL-LIABILITY-AND-EQUITY> 761,034
<SALES> 849,902
<TOTAL-REVENUES> 849,902
<CGS> 679,827
<TOTAL-COSTS> 679,827
<OTHER-EXPENSES> 104,471
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,673
<INCOME-PRETAX> 46,204
<INCOME-TAX> 18,000
<INCOME-CONTINUING> 28,204
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,204
<EPS-PRIMARY> 0.94<F1>
<EPS-DILUTED> 0.94<F1>
<FN>
<F1>RESTATED TO REFLECT THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, "EARNINGS PER SHARE." THE EPS UNDER THE
"EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
<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 27, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-30-1996
<PERIOD-END> JUN-27-1997
<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> 551,580
<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<F1>
<EPS-DILUTED> 0.75<F1>
<FN>
<F1>RESTATED TO REFLECT THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, "EARNINGS PER SHARE." THE EPS UNDER THE
"EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
<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 THREE MONTHS ENDED MARCH 29, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-30-1996
<PERIOD-END> MAR-29-1997
<CASH> 49,887
<SECURITIES> 0
<RECEIVABLES> 198,951
<ALLOWANCES> 3,379
<INVENTORY> 74,718
<CURRENT-ASSETS> 338,491
<PP&E> 658,870
<DEPRECIATION> 341,759
<TOTAL-ASSETS> 708,510
<CURRENT-LIABILITIES> 140,371
<BONDS> 133,539
0
0
<COMMON> 2,988
<OTHER-SE> 395,382
<TOTAL-LIABILITY-AND-EQUITY> 708,510
<SALES> 275,363
<TOTAL-REVENUES> 275,363
<CGS> 222,641
<TOTAL-COSTS> 222,641
<OTHER-EXPENSES> 34,385
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,793
<INCOME-PRETAX> 16,418
<INCOME-TAX> 6,400
<INCOME-CONTINUING> 10,018
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,018
<EPS-PRIMARY> 0.33<F1>
<EPS-DILUTED> 0.33<F1>
<FN>
<F1>RESTATED TO REFLECT THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, "EARNINGS PER SHARE." THE EPS UNDER THE
"EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
<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 TWELVE MONTHS ENDED DECEMBER 28, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> DEC-28-1996
<CASH> 57,417
<SECURITIES> 0
<RECEIVABLES> 206,245
<ALLOWANCES> 3,486
<INVENTORY> 69,063
<CURRENT-ASSETS> 347,455
<PP&E> 650,243
<DEPRECIATION> 330,304
<TOTAL-ASSETS> 719,218
<CURRENT-LIABILITIES> 127,825
<BONDS> 133,696
0
0
<COMMON> 3,097
<OTHER-SE> 417,495
<TOTAL-LIABILITY-AND-EQUITY> 719,218
<SALES> 1,083,763
<TOTAL-REVENUES> 1,083,763
<CGS> 864,736
<TOTAL-COSTS> 864,736
<OTHER-EXPENSES> 126,855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,214
<INCOME-PRETAX> 84,207
<INCOME-TAX> 33,300
<INCOME-CONTINUING> 50,907
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,907
<EPS-PRIMARY> 1.64<F1>
<EPS-DILUTED> 1.63<F1>
<FN>
<F1>RESTATED TO REFLECT THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, "EARNINGS PER SHARE." THE EPS UNDER THE
"EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
<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 NINE MONTHS ENDED SEPTEMBER 28, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> SEP-28-1996
<CASH> 40,571
<SECURITIES> 0
<RECEIVABLES> 210,275
<ALLOWANCES> 3,564
<INVENTORY> 66,456
<CURRENT-ASSETS> 329,171
<PP&E> 640,461
<DEPRECIATION> 316,445
<TOTAL-ASSETS> 705,454
<CURRENT-LIABILITIES> 127,448
<BONDS> 134,121
0
0
<COMMON> 3,100
<OTHER-SE> 405,505
<TOTAL-LIABILITY-AND-EQUITY> 705,454
<SALES> 794,472
<TOTAL-REVENUES> 794,472
<CGS> 636,128
<TOTAL-COSTS> 636,128
<OTHER-EXPENSES> 92,497
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,894
<INCOME-PRETAX> 59,657
<INCOME-TAX> 23,700
<INCOME-CONTINUING> 35,957
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,957
<EPS-PRIMARY> 1.15<F1>
<EPS-DILUTED> 1.15<F1>
<FN>
<F1>RESTATED TO REFLECT THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, "EARNINGS PER SHARE." THE EPS UNDER THE
"EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
<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 29, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> JUN-29-1996
<CASH> 51,663
<SECURITIES> 0
<RECEIVABLES> 179,849
<ALLOWANCES> 3,861
<INVENTORY> 62,108
<CURRENT-ASSETS> 304,673
<PP&E> 631,096
<DEPRECIATION> 305,589
<TOTAL-ASSETS> 682,938
<CURRENT-LIABILITIES> 108,110
<BONDS> 138,736
0
0
<COMMON> 3,118
<OTHER-SE> 397,959
<TOTAL-LIABILITY-AND-EQUITY> 682,938
<SALES> 529,920
<TOTAL-REVENUES> 529,920
<CGS> 428,226
<TOTAL-COSTS> 428,226
<OTHER-EXPENSES> 62,258
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,563
<INCOME-PRETAX> 34,362
<INCOME-TAX> 13,700
<INCOME-CONTINUING> 20,662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,662
<EPS-PRIMARY> 0.66<F1>
<EPS-DILUTED> 0.66<F1>
<FN>
<F1>RESTATED TO REFLECT THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, "EARNINGS PER SHARE." THE EPS UNDER THE
"EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
<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 THREE MONTHS ENDED MARCH 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-START> DEC-30-1995
<PERIOD-END> MAR-30-1996
<CASH> 27,583
<SECURITIES> 0
<RECEIVABLES> 200,219
<ALLOWANCES> 3,682
<INVENTORY> 69,638
<CURRENT-ASSETS> 306,700
<PP&E> 615,953
<DEPRECIATION> 292,422
<TOTAL-ASSETS> 683,590
<CURRENT-LIABILITIES> 116,649
<BONDS> 139,005
0
0
<COMMON> 3,116
<OTHER-SE> 389,350
<TOTAL-LIABILITY-AND-EQUITY> 683,590
<SALES> 271,270
<TOTAL-REVENUES> 271,270
<CGS> 221,547
<TOTAL-COSTS> 221,547
<OTHER-EXPENSES> 32,279
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 281
<INCOME-PRETAX> 14,738
<INCOME-TAX> 5,900
<INCOME-CONTINUING> 8,838
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,838
<EPS-PRIMARY> 0.28<F1>
<EPS-DILUTED> 0.28<F1>
<FN>
<F1>RESTATED TO REFLECT THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, "EARNINGS PER SHARE." THE EPS UNDER THE
"EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
<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 TWELVE MONTHS ENDED DECEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 27,130
<SECURITIES> 0
<RECEIVABLES> 199,151
<ALLOWANCES> 3,414
<INVENTORY> 70,750
<CURRENT-ASSETS> 310,806
<PP&E> 592,707
<DEPRECIATION> 278,989
<TOTAL-ASSETS> 678,809
<CURRENT-LIABILITIES> 122,850
<BONDS> 134,953
0
0
<COMMON> 2,056
<OTHER-SE> 385,056
<TOTAL-LIABILITY-AND-EQUITY> 678,809
<SALES> 1,022,650
<TOTAL-REVENUES> 1,022,650
<CGS> 806,651
<TOTAL-COSTS> 806,651
<OTHER-EXPENSES> 118,068
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,891
<INCOME-PRETAX> 89,050
<INCOME-TAX> 35,500
<INCOME-CONTINUING> 53,550
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,550
<EPS-PRIMARY> 1.76<F1>
<EPS-DILUTED> 1.75<F1>
<FN>
<F1>RESTATED TO REFLECT THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, "EARNINGS PER SHARE." THE EPS UNDER THE
"EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE.
</FN>
</TABLE>
