-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PA0OyYMiVbuoCWdzDS1zOPfi0lY5w9s6FikOfwhqbzhoGHk/Jf4WtLqL6FTOFb8c n9ew2pzPTBzFF70F0OQCfw== 0000897069-01-500190.txt : 20010516 0000897069-01-500190.hdr.sgml : 20010516 ACCESSION NUMBER: 0000897069-01-500190 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANTA CORP CENTRAL INDEX KEY: 0000009801 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 390148550 STATE OF INCORPORATION: WI FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14637 FILM NUMBER: 1637487 BUSINESS ADDRESS: STREET 1: 225 MAIN ST CITY: MENASHA STATE: WI ZIP: 54952 BUSINESS PHONE: 4147227777 FORMER COMPANY: FORMER CONFORMED NAME: BANTA GEORGE CO INC DATE OF NAME CHANGE: 19890509 FORMER COMPANY: FORMER CONFORMED NAME: BANTA GEORGE PUBLISHING CO DATE OF NAME CHANGE: 19720505 10-Q 1 slp32a.txt FORM 10-Q 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 March 31, 2001 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 March 31, 2001, 24,589,187 shares of $.10 par value common stock. BANTA CORPORATION AND SUBSIDIARIES Quarterly Report on Form 10-Q For the Quarter Ended March 31, 2001 INDEX Page Number PART I FINANCIAL INFORMATION: Item 1 - Financial Statements Unaudited Consolidated Condensed Balance Sheets March 31, 2001 and December 30, 2000...................... 3 Unaudited Consolidated Condensed Statements of Earnings for the Three Months Ended March 31, 2001 and April 1, 2000... 4 Unaudited Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2001 and April 1, 2000............................................ 5 Notes to Unaudited Consolidated Condensed Financial Statements..................................... 6-8 Item 2 - Management's Discussion and Analysis........................ 9-10 Item 3 - Qualitative and Quantitative Disclosures about Market Risk.. 11 PART II OTHER INFORMATION AND SIGNATURES: Item 6 - Exhibits and Reports on Form 8-K............................ 12 PART 1 Item 1. Financial Statements BANTA CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) March 31, 2001 December 30, 2000 -------------- ----------------- ASSETS Current Assets Cash and cash equivalents $ 30,955 $ 27,660 Receivables 220,272 249,200 Inventories 93,509 108,109 Other current assets 23,410 21,706 --------- --------- Total Current Assets 368,146 406,675 --------- --------- Plant and Equipment 889,488 876,243 Less accumulated depreciation (546,489) (531,982) --------- --------- Plant and Equipment, net 342,999 344,261 Other Assets 27,449 37,663 Cost in Excess of Net Assets of Subsidiaries Acquired 65,190 65,925 --------- --------- $ 803,784 $ 854,524 ========= ========= LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities Short-term debt $ 35,243 $ 46,863 Accounts payable 93,916 117,499 Accrued salaries and wages 31,388 43,235 Other accrued liabilities 24,768 24,217 Current maturities of long-term debt 7,346 8,505 --------- --------- Total Current Liabilities 192,661 240,319 --------- --------- Long-term Debt 176,546 179,202 Deferred Income Taxes 24,449 24,106 Other Non-Current Liabilities 42,134 39,985 --------- --------- Total Liabilities 435,790 483,612 --------- --------- 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; 27,733,587 and 27,709,103 shares issued, respectively 2,773 2,771 Amount in excess of par value of stock 426 43 Accumulated other comprehensive loss (11,214) (8,964) Treasury stock, at cost (3,144,400 shares) (66,814) (66,814) Retained earnings 442,823 443,876 --------- --------- Total Shareholders' Investment 367,994 370,912 --------- --------- $ 803,784 $ 854,524 ========= ========= See accompanying notes to consolidated financial statements BANTA CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Dollars in thousands) Three Months Ended March 31, 2001 April 1, 2000 -------------- --------------- Net sales $ 372,777 $ 341,534 Cost of goods sold 305,381 275,027 --------- --------- Gross earnings 67,396 66,507 Selling and administrative expenses 46,815 45,870 --------- --------- Earnings from operations 20,581 20,637 Interest expense (4,011) (3,890) Write-off of investment (12,500) 0 Other income (expense), net 162 (353) --------- --------- Earnings before income taxes 4,232 16,394 Provision for income taxes 1,600 6,500 --------- --------- Net earnings $ 2,632 $ 9,894 ========= ========= Basic earnings per share of common stock $ 0.11 $ 0.39 ========= ========= Diluted earnings per share of common stock $ 0.11 $ 0.39 ========= ========= Cash dividends per common share $ 0.15 $ 0.15 ========= ========= See accompanying notes to consolidated financial statements BANTA CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) Three Months Ended March 31, 2001 April 1, 2000 -------------- ---------------- Cash Flows From Operating Activities Net earnings $ 2,632 $ 9,894 Depreciation and amortization 18,952 18,107 Deferred income taxes 194 (2,505) Cash paid for restructuring (596) (1,862) Write-off of investment 12,500 -- Change in assets and liabilities: Decrease in receivables 28,403 1,767 Decrease (increase) in inventories 14,600 (7,330) Increase in other current assets (1,555) (1,126) (Decrease) increase in accounts payable and accrued liabilities (34,283) 14,827 Increase in other non-current assets (2,046) (634) Other, net (47) (1,181) -------- -------- Cash provided from operating activities 38,754 29,957 -------- -------- Cash Flows From Investing Activities Capital expenditures, net (15,499) (25,761) Additions to long-term investments (1,223) (3,695) -------- -------- Cash used for investing activities (16,722) (29,456) -------- -------- Cash Flows From Financing Activities Repayment of short-term debt, net (11,620) (6,843) Proceeds from issuance of long-term debt -- 20,000 Repayment of long-term debt (3,815) (1,229) Dividends paid (3,685) (3,858) Proceeds from exercise of stock options 383 -- Repurchase of common stock -- (11,961) -------- -------- Cash used for financing activities (18,737) (3,891) -------- -------- Net increase (decrease) in cash 3,295 (3,390) Cash and cash equivalents at beginning of period 27,660 27,651 -------- -------- Cash and cash equivalents at end of period $ 30,955 $ 24,261 ======== ======== Cash payments for: Interest, net of amount capitalized $ 2,562 $ 2,007 Income taxes 885 3,341 See accompanying notes to consolidated statements BANTA CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1) Basis of Presentation The condensed financial statements included herein have been prepared by the Corporation, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Corporation believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Corporation's latest Annual Report on Form 10-K. In the opinion of management, the aforementioned statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. Results for the three months ended March 31, 2001 are not necessarily indicative of results that may be expected for the year ending December 29, 2001. 2) Inventories The Corporation's 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 March 31, 2001 and December 30, 2000 were as follows:
(Dollars in thousands) March 31, 2001 December 30, 2000 Raw Materials and Supplies $ 56,255 $ 58,513 Work-In-Process and Finished Goods 37,254 49,596 -------- --------- FIFO value (current cost of all inventories) $ 93,509 $ 108,109 ======== =========
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 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 outstanding. The common equivalent shares 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): March 31, 2001 April 1, 2000 -------------- ------------- Basic 24.6 25.5 Diluted 24.7 25.5 4) Comprehensive Income Total comprehensive income, comprised of net income and other comprehensive income (loss), was $382,000 and $8,428,000 for the first quarter of 2001 and 2000, 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. 5) Segment Information The Corporation operates in two primary business segments, print and turnkey services, with other business operations in healthcare products. Summarized segment data for the three months ended March 31, 2001 and April 1, 2000 are as follows:
------------------------------------------------------------------------------------------------------------- Turnkey Dollars in thousands Printing Services Healthcare Total ------------------------------------------------------------------------------------------------------------- 2001 Net sales $256,009 $91,795 $24,973 $372,777 Earnings from operations 17,424 5,833 2,537 25,794 2000 Net sales $256,516 $60,009 $25,009 $341,534 Earnings from operations 20,732 1,223 2,615 24,570
The following table presents a reconciliation of segment earnings from operations to the totals contained in the condensed financial statements: Dollars in thousands 2001 2000 Reportable segment earnings $25,794 $24,570 Unallocated corporate expenses (5,213) (3,933) Interest expense (4,011) (3,890) Write-off of investment (12,500) - Other income (expense) 162 (353) ------- -------- Earnings before income taxes $ 4,232 $ 16,394 ======= ======== 6) Restructuring Charge In the second quarter of 1999, the Corporation recorded a restructuring charge of $55 million ($38.5 million or $1.40 diluted share, after tax). The restructuring primarily involved the Corporation's print segment and resulted in three facility closings and the elimination of certain underperforming business assets. With the exception of continued lease payments for certain of the closed facilities, all restructuring actions were substantially completed in 2000. At March 31, 2001, the remaining restructuring reserve balance was $6.2 million. 7) Write-off of Investment As a result of the inability to obtain additional financing for its continued operation, coupled with the unfavorable operating results due to the economic downturn in its market, XYAN.com, Inc. ("Xyan") filed for bankruptcy under Chapter 11 on March 31, 2001. In response to Xyan's filing for bankruptcy, the Corporation wrote-off its minority interest in Xyan in March 2001. This write-off resulted in a non-operating charge of $12.5 million ($7.5 million or $.30 diluted share, after tax). Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Sales Net sales for the first quarter of 2001 increased to $372.8 million, 9.1% higher than the $341.5 million in the prior year quarter. First quarter sales for the print segment were $256.0 million, substantially equivalent to the prior year's $256.5 million. Sales in the book market for the first quarter of 2001 were comparable to the prior year period. Lower than expected sales to educational and trade book customers were offset by the sales volume generated by Southeastern Color Graphics, a second quarter 2000 acquisition. Increased market share more than offset the approximate 2% lower page counts impacting sales for the magazine market. Paper prices for the current year first quarter were consistent with the prior year first quarter. Supply-chain management sales of $91.8 million for the current quarter were 53% higher than the prior period's $60.0 million. This increase was partially due to a full quarter of activity for Compaq in three geographic locations, U.S., Europe and Asia. The Corporation also began serving other major technology companies during the first quarter and continued its expansion into Mexico to serve additional customers. Healthcare sales of $25.0 million for the current year first quarter were comparable to the prior period sales. Earnings from Operations First quarter earnings from operations were $20.6 million, consistent with the prior year's $20.6 million. Operating margins of 5.5% were slightly lower than the prior year operating margins of 6.0%, primarily due to product mix and lower print segment margins. This reduction was partially offset by higher supply-chain management operating margins. Increased sales volume from supply-chain management will lower the overall-operating margin for the Corporation because of the higher material content of this segment's products. Print segment earnings from operations were 16.0% lower than the prior year and operating margins for this segment decreased to 6.8% from 8.1% in 2000. These reductions were a result of lower utilization at most print facilities and higher gas and electric costs and employee healthcare costs. Utility costs for the current year first quarter were approximately $1.3 million higher than the prior year period. Earnings from operations for the supply-chain management segment increased nearly five-fold from $1.2 million for the first quarter of 2000 to $5.8 million for the current year first quarter. Operating margins increased to 6.4% from 2.0% in 2000. These improvements were primarily due to improved utilization at the facilities servicing the Compaq contract and strong volume increases at other U.S., European and Mexican facilities. Prior-year first quarter results were impacted by the continued ramp-up of the Houston facility and the start-up of the European facility servicing Compaq. Healthcare segment earnings from operations were consistent with the prior year period. Operating margins were slightly lower than the prior year first quarter due to continuing pricing pressures and increasing raw material prices. Investment Write-off As a result of the inability to obtain additional financing for its continued operation, coupled with the unfavorable operating results due to the economic downturn in its market, XYAN.com, Inc. ("Xyan") filed for bankruptcy under Chapter 11 on March 31, 2001. In response to Xyan's filing for bankruptcy, the Corporation wrote-off its minority interest in Xyan in March 2001. This write-off resulted in a non-operating charge of $12.5 million ($7.5 million or $.30 diluted share, after tax). Interest Expense Interest expense for the first quarter of 2001 was comparable to the prior year first quarter. Income Taxes The Corporation's effective first quarter income tax rate for 2001 of 37.8% was slightly lower than the 2000 first quarter rate of 39.6%. The current year tax rate was impacted by the rate applied to the investment write-off. Without giving effect to the investment write-off, the effective income tax rate for the first quarter of 2001 was 39.4%. FINANCIAL CONDITION Liquidity and Capital Resources The Corporation's net working capital increased by approximately $9.1 million during the first quarter of 2001 due to a decrease in payables and accrued liabilities. These decreases more than offset the reductions in receivables and inventory. Reductions in these balances from December 30, 2000 were primarily due to lower sales volume for the first quarter of 2001 compared to the fourth quarter of 2000. Capital expenditures were $15.5 million during the first quarter of 2001, a decrease of $10.3 million from the amount expended during the prior year first quarter. Included in the prior year capital expenditure amount were significant expenditures to support the Compaq start-up. Capital requirements for the full year are expected to be approximately $90 million and will be funded by a combination of cash provided from operations and borrowings. During the first quarter of 2001, the Corporation repurchased no shares of common stock. Long-term debt as a percentage of total capitalization at March 31, 2001 was comparable to the percentage at December 30, 2000. Future Outlook Projections for the Corporation's second quarter are for revenues and earnings to be comparable with the prior year second quarter. Supply-chain management results are expected to exceed the prior year, while print segment revenues and earnings are expected to be lower. 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 customer order patterns or demand for the Corporation's products and services, changes in raw material costs and availability, unanticipated changes in operating expenses, unanticipated production difficulties, 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 Disclosures About Market Risk The Corporation is exposed to market risk from changes in interest rates and foreign exchange rates. At March 31, 2001, the Corporation had notes payable outstanding aggregating $35.2 million against lines of credit with banks. These notes consist entirely of commercial paper and bear interest at floating rates. Each 1% fluctuation in the interest rate will increase or decrease interest expense for the Corporation by approximately $352,000 annually. Since essentially all long-term debt is at fixed interest rates, exposure to interest rate fluctuations is minimal. Exposure to adverse changes in foreign exchange rates is considered immaterial. Any potential market risk associated with changes in foreign exchange is considered in contractual arrangements with customers. PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) No exhibits are being filed with this report. (b) No reports on Form 8-K were filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANTA CORPORATION /S/GERALD A. HENSELER Gerald A. Henseler Executive Vice President, Chief Financial Officer and Treasurer Date: May 15, 2001 -----END PRIVACY-ENHANCED MESSAGE-----