SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 4, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 0-6187
BANTA CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-0148550
(State or other jurisdiction (IRS Employer
of incorporation or organization) I.D. Number)
225 Main Street, Menasha, Wisconsin 54952
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (920) 751-7777
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes /X/
No / /
The registrant had outstanding on April 4, 1998, 29,728,706 shares of
$.10 par value common stock.
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Quarter Ended April 4, 1998
INDEX
Page Number
PART I FINANCIAL INFORMATION:
Item 1 - Financial Statements
Unaudited Consolidated Condensed Balance Sheets
April 4, 1998 and January 3, 1998 . . . . . . . . . 3
Unaudited Consolidated Condensed Statements
of Earnings for the Three Months Ended
April 4, 1998 and March 29, 1997 . . . . . . . . . . 4
Unaudited Consolidated Condensed Statements
of Cash Flows for the Three Months Ended
April 4, 1998 and March 29, 1997 . . . . . . . . . . 5
Notes to Unaudited Consolidated Condensed
Financial Statements . . . . . . . . . . . . . . . 6-7
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . 8-9
Item 3 - Quantitative and Qualitative Disclosures
about Market Risk . . . . . . . . . . . . . . . . . 9
PART II OTHER INFORMATION AND SIGNATURES:
Item 6 - Exhibits and Reports on Form 8-K . . . . . 10
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
PART I Item 1. Financial Statements
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
April 4, 1998 January 3, 1998
ASSETS
Current Assets
Cash and cash equivalents $19,851 $ 16,432
Receivables 224,432 228,483
Inventories 83,349 95,341
Other current assets 26,472 25,420
-------- ---------
Total Current Assets 354,104 365,676
-------- ---------
Plant and Equipment 730,416 718,669
Less: Accumulated Depreciation (394,432) (380,312)
-------- ---------
Plant and Equipment, net 335,984 338,357
-------- ---------
Other Assets 15,396 14,524
Cost in Excess of Net Assets of
Subsidiaries Acquired 64,891 62,659
-------- ---------
$ 770,375 $ 781,216
======== =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Short-term debt $ 20,705 $ 33,880
Accounts payable 98,281 106,235
Accrued Salaries and wages 22,610 22,575
Other accrued liabilities 38,096 32,492
Current maturities of long-term
debt 5,172 5,186
--------- ---------
Total Current Liabilities 184,864 200,368
--------- ---------
Long-term Debt 129,930 130,065
Deferred Income Taxes 19,829 19,831
Other Non-Current Liabilities 17,345 16,849
Shareholders' Investment
Preferred stock-$10 par value;
authorized 300,000 shares;
none issued 0 0
Common stock-$.10 par value;
authorized 75,000,000 shares;
29,738,706 and 29,793,279
shares issued and outstanding,
respectively 2,973 2,979
Amount in excess of par value
of stock 33,554 35,542
Accumulated other comprehensive
income (loss) (4,657) (3,498)
Retained earnings 386,537 379,080
--------- ---------
Total Shareholders' Investment 418,407 414,103
--------- ---------
$ 770,375 $ 781,216
========= =========
See accompanying notes to consolidated financial statements
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(Dollars in thousands, except
per share amounts)
Three Months Ended
April 4, 1998 March 29, 1997
Net sales $ 330,810 $ 275,363
Cost of goods sold 265,996 222,641
--------- ---------
Gross earnings 64,814 52,722
Selling and administrative
expenses 43,500 34,385
--------- ---------
Earnings from operations 21,314 18,337
Interest expense (2,918) (2,793)
Other, net (364) 874
-------- ---------
Earnings before income taxes 18,032 16,418
Provision for income taxes 7,000 6,400
-------- ---------
Net earnings $ 11,032 $ 10,018
======== =========
Basic earnings per share of
common stock $ .37 $ .33
======== =========
Diluted earnings per share
of common stock $ .37 $ .33
======== =========
Cash dividends per common
share $ .13 $ .11
======== =========
See accompanying notes to consolidated financial statements
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended
April 4, 1998 March 29, 1997
Cash Flows From Operating Activities
Net earnings $ 11,032 $ 10,018
Depreciation and amortization 16,533 15,164
Deferred income taxes 143 105
Change in assets and liabilities:
Decrease in receivables 4,051 10,673
Decrease (increase) in
inventories 11,992 (5,655)
(Increase) decrease in other
current assets (1,197) (3,584)
(Decrease) increase in accounts
payable and accrued
liabilities (2,315) 14,934
(Increase) in other non-current
assets (872) (2,047)
Other, net (663) (2,068)
--------- ----------
Cash provided from
operating activities 38,704 37,540
--------- --------
Cash Flows From Investing
Activities
Capital expenditures, net (16,392) (11,986)
--------- --------
Cash Flows From Financing
Activities
Repayment of short-term
debt, net (13,175) (2,111)
Repayment of long-term debt (149) (329)
Dividends Paid (3,575) (3,407)
Proceeds from exercise of
stock options 1,238 333
Repurchase of common stock (3,232) (27,570)
--------- ---------
Cash used for financing
activities (18,893) (33,084)
--------- ---------
Net increase (decrease) in cash 3,419 (7,530)
Cash and cash equivalents at
beginning of period 16,432 57,417
--------- ---------
Cash and cash equivalents
at end of period $ 19,851 $ 49,887
========= =========
Cash payments for:
Interest, net of amount
capitalized $ 3,123 $ 2,521
Income taxes 1,338 1,267
See accompanying notes to consolidated financial statements
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1) Basis of Presentation
The condensed financial statements included herein have been prepared
by the Corporation, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Corporation believes that the disclosures
are adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Corporation's latest Annual Report on Form 10-K.
In the opinion of management, the aforementioned statements reflect
all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results for the interim
periods. Results for the three months ended April 4, 1998, are not
necessarily indicative of results that may be expected for the year
ending January 2, 1999.
2) Inventories
The majority of the Corporation's inventories used in its printing
operations are accounted for at cost determined on a last-in, first-
out (LIFO) basis, which is not in excess of market. The remaining
inventories are stated at the lower of cost or market using the
first-in, first-out (FIFO) method. Inventories include material,
labor and manufacturing overhead.
Inventory amounts at April 4, 1998 and January 3, 1998 were as
follows:
(Dollars in thousands)
April 4, 1998 January 3, 1998
Raw Materials and $ 45,856 $ 55,026
Work-In-Process and
Finished Goods 42,384 44,908
---------- ----------
FIFO value (current
cost of all
inventories) 88,240 99,934
Excess of current cost
over carrying value
of LIFO inventories (4,891) (4,593)
----------- -----------
Net Inventories $ 83,349 $ 95,341
=========== ===========
3) Earnings Per Share of Common Stock
Basic earnings per share of common stock is computed by dividing net
earnings by the weighted average number of common shares 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. The weighted average shares used in the
computation of earnings per share were as follows (in millions of
shares):
April 4, 1998 March 29, 1997
Basic 29.7 30.4
Diluted 29.9 30.5
4) Restructuring Charge
In the third quarter of 1997, the Corporation recorded a
restructuring charge of $13.5 million ($8.1 million after tax or $.27
per common share) related to the sale of its point-of-purchase sign
and display business, the discontinuation of its intaglio print-
based security products business and the interactive video
operation, and the closing of three Global Turnkey facilities. At
January 3, 1998, the remaining reserve totaled $3.7 million related
to the expenditures for closing the facilities. During the first
quarter of 1998, costs of approximately $1.0 million, related
primarily to lease termination and employee severance costs, were
charged against the reserve. It is expected that the restructuring
initiatives will be completed in 1998 and charged against the
remaining reserve.
5) Comprehensive Income
Total comprehensive income, comprised of net income and other
comprehensive income (loss), was $9,873,000 and $8,422,000 for the
first quarter of 1998 and 1997, respectively. Other comprehensive
income (loss) was comprised solely of foreign currency translation
adjustments. The Corporation does not provide U.S. income taxes on
foreign currency translation adjustments because it does not provide
for such taxes on undistributed earnings of foreign subsidiaries.
6) Accounting for Internal-use Software
The Accounting Standards Executive Committee of the AICPA has issued
a Statement of Position (SOP) titled "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The
Corporation has elected to adopt this SOP as of the beginning of its
1998 fiscal year. The Corporation does not anticipate the SOP will
have a material impact on the Corporation's financial statements.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Liquidity and Capital Resources
The Corporation's net working capital increased by approximately $3.9
million during the first quarter of 1998 primarily due to the
repayment of short-term debt and current liabilities with cash
provided from operations. This increase was partially offset by a
reduction in receivables and inventories. Also during the first
quarter of 1998, the Corporation repurchased approximately 125,000
shares of common stock at an aggregate purchase price of $3.2 million
pursuant to its common stock repurchase program. In April 1998, the
Board authorized the purchase of up to an additional $60 million of
common stock. Stock repurchases are expected to be funded by a
combination of cash provided from operations and short-term
borrowings.
Capital expenditures were $16.4 million during the first quarter of
1998, an increase of $4.4 million from the amount incurred during the
prior year first quarter. Capital requirements for the full year are
expected to be between $85 million and $95 million and are expected
to be funded by a combination of cash provided from operations and
short-term borrowings. The increase in capital spending reflects the
Corporation's commitment to expand and modernize its facilities.
Long-term debt as a percentage of total capitalization remained
consistent with the 1997 year-end percentage.
RESULTS OF OPERATIONS
Net Sales
Sales for the first quarter of 1998 were $55.4 million (20%) higher
than the first quarter of 1997. Slightly less than half of the
increase was a result of sales from companies acquired during the
second half of 1997. Operating activity levels during the first
quarter of 1998, in all of the Corporation's market classifications,
were above 1997 operating levels. Significant sales gains were made
in the book market where demand for educational products, including
educational media, was strong. Activity levels were also strong in
the magazine market due to increased page counts and market share
gains as well as the impact of the acquisition of Greenfield Printing
& Publishing during the fourth quarter of 1997. Expanded print
personalization capacity resulted in strong sales in the catalog
market while facility expansion in Europe lead to increased sales in
turnkey services. Single-use product sales increased primarily due
to the acquisition of The Omnia Group during the third quarter of
1997.
Cost of Goods Sold
Cost of goods sold as a percentage of sales decreased from 80.9% for
the first quarter of 1997 to 80.4% for the first quarter of 1998.
This overall margin gain was primarily due to changes in product mix
and increased utilization among most of the groups which more than
offset a competitive pricing environment in commercial markets.
Selling and Administrative Expenses
Selling and administrative expenses were $9.1 million higher for the
first quarter of 1998 than for the first quarter of 1997. The
increase is primarily due to the inclusion of selling and
administrative expenses for the companies acquired in 1997 ($4.3
million) along with higher levels of operating activity at previously
owned facilities.
Interest Expense
Interest expense was $125,000 higher in the first quarter of 1998
than for the first quarter of 1997 due to increased debt levels to
support the 1997 acquisitions.
Income Taxes
The Corporation's effective first quarter income tax rate for 1998 of
38.8% was slightly less than the 39.0% tax rate for 1997.
Other Matters
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 is already year-2000 compliant. This evaluation resulted in
the development of detailed plans to replace certain software and to
reprogram other software. Management believes it is devoting the
necessary resources to resolve all significant year-2000 issues in a
timely manner. There have been no significant changes in the total
costs expected to be incurred.
Cautionary Statements for Forward-Looking Information
This document includes forward-looking statements. Statements that
describe future expectations, plans or strategies are considered
forward-looking. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially
from those currently anticipated. Factors that could affect actual
results include, among others, changes in customers' demand for the
Corporation's products, changes in raw material costs and
availability, continued success in the implementation of the
Corporation's single-source marketing strategy, pricing actions by
competitors, success in the integration of businesses acquired in
1997, and general changes in economic conditions. These factors
should be considered in evaluating the forward-looking statements,
and undue reliance should not be placed on such statements. The
forward-looking statements included herein are made as of the date
hereof, and the Corporation undertakes no obligation to update
publicly such statements to reflect subsequent events or
circumstances.
Item 3. Qualitative and Quantitative Disclosure about Market Risk
Not applicable
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - 27 - Financial Data Schedule (EDGAR version only)
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANTA CORPORATION
/S/ GERALD A. HENSELER
Gerald A. Henseler
Executive Vice President, Chief Financial Officer and Treasurer
Date May 13, 1998
<PAGE>
BANTA CORPORATION
EXHIBIT INDEX TO FORM 10-Q
For The Quarter Ended April 4, 1998
Exhibit Number
27 Financial Data Schedule (EDGAR version only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF BANTA CORPORATION AS OF AND FOR THE THREE
MONTHS ENDED APRIL 4, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> APR-04-1998
<CASH> 19,851
<SECURITIES> 0
<RECEIVABLES> 228,077
<ALLOWANCES> 3,645
<INVENTORY> 83,349
<CURRENT-ASSETS> 354,104
<PP&E> 730,416
<DEPRECIATION> 394,432
<TOTAL-ASSETS> 770,375
<CURRENT-LIABILITIES> 184,864
<BONDS> 129,930
0
0
<COMMON> 2,973
<OTHER-SE> 415,434
<TOTAL-LIABILITY-AND-EQUITY> 770,375
<SALES> 330,810
<TOTAL-REVENUES> 330,810
<CGS> 265,996
<TOTAL-COSTS> 265,996
<OTHER-EXPENSES> 43,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,918
<INCOME-PRETAX> 18,032
<INCOME-TAX> 7,000
<INCOME-CONTINUING> 11,032
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,032
<EPS-PRIMARY> 0.37 <F1>
<EPS-DILUTED> 0.37
<FN>
<F1> THE EPS UNDER THE "EPS-PRIMARY" TAG
REPRESENTS BASIC EARNINGS PER SHARE
</FN>
</TABLE>
