-----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, TbYxAWzTqoRSre1h91ERjRl9ss5SFTnCvVrBZ+frj5lL/yrnrVPIpVzzMugKnXj7 E2bVGgT6EYMKaaczjagXAg== 0000897069-97-000144.txt : 19970327 0000897069-97-000144.hdr.sgml : 19970327 ACCESSION NUMBER: 0000897069-97-000144 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970326 SROS: NASD 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-06187 FILM NUMBER: 97563496 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-K405 1 BANTA CORPORATION FORM 10-K 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 December 28, 1996 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: (414) 751-7777 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered None None 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) 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 7, 1997 $783,350,239. Number of shares of common stock outstanding March 7, 1997: 30,119,293. DOCUMENTS INCORPORATED BY REFERENCE (1) Annual Report to Shareholders for year ended December 28, 1996 (incorporated into Parts I and II). (2) Definitive Proxy Statement for annual meeting of shareholders to be held on April 22, 1997 (incorporated into Part III). PART I Item 1. Business. General. Banta Corporation (the "Corporation"), 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 6,100 employees at the end of fiscal 1996. 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, data manuals and project management services for publishers);turnkey (project management, manufacturing, packaging and distribution); magazines; and other (digital imaging services, production of point-of-purchase displays and security products). At the end of fiscal 1996, the Corporation's operations were conducted at 29 production facilities in the United States located in Wisconsin, Minnesota, California, Connecticut, Illinois, Massachusetts, Missouri, North Carolina, Utah, Virginia and Washington and at six European production facilities located in Ireland, Scotland 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. 1996 1995 1994 Commercial 44% 47% 46% Books 22 26 28 Turnkey 17 8 4 Magazines 11 11 12 Other 6 8 10 ---- ---- ---- TOTAL 100% 100% 100% ==== ==== ==== During 1996, the Corporation acquired Packaging Fulfillment Specialists, Inc. which provides fulfillment services to publishers and is included in the book market classification. The purchase price consisted of 236,337 shares of the Corporation's common stock. In October 1995, the Corporation acquired B.G. Turnkey Services Limited (B.G. Turnkey). B.G. Turnkey, which is included in the newly formed Banta Global Turnkey Group and is included in the turnkey market classification, reported sales for 1994 of approximately $160 million. The purchase price consisted of 355,142 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 Corporation also paid $3.2 million to former shareholders of B.G. Turnkey in exchange for a covenant not to compete. During 1995, the Corporation purchased Applied Technology Corporation, which serves the single-use healthcare 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 approximately $9.0 million. In August 1994, the Corporation completed its acquisition of United Graphics Inc. ("UGI") for approximately $9.5 million in cash and a $1.5 million note. The Corporation also paid $4 million to former shareholders of UGI in exchange for a covenant not to compete. UGI, which has been included in the book market classification since the acquisition date, reported sales for its fiscal year prior to acquisition of approximately $28 million. In March 1994, the Corporation purchased substantially all of the assets of Danbury Printing & Litho, Inc. ("Danbury"). The purchase price consisted of $16.3 million in cash plus the assumption of selected liabilities. Danbury, which has been included in the commercial market classification since the acquisition date, reported sales of approximately $35 million in 1993. In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share." The new statement requires changes in the manner in which earnings per share are calculated and is effective for fiscal years ending after December 15, 1997. The Standard does not allow early adoption. The Corporation intends to adopt this standard during the fourth quarter of 1997. The adoption of this standard is not expected to have a material effect on the Corporation's earnings per share. 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 28%, 25% and 23% of net sales during 1996, 1995 and 1994, respectively. No customer accounted for more than 10% of the Corporation's net sales in 1996, 1995 or 1994. 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. 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 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 Corporation's acquisition of Danbury in 1994 improved its ability to provide direct marketing materials to customers in the Northeastern United States. 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 who produce catalogs and direct mail. During 1996 many customers reduced print quantities and delayed projects 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 (see Raw Materials section below). One of the Corporation's subsidiaries, Banta Healthcare Products, Inc. (BHP), provides printed products to the fast-food industry and converts poly film and paper into single-use products for the food service industry and healthcare industry. In addition, BHP extrudes films, using both cast and blown extruders, for use in its manufacturing processes and for sale to external customers. Its healthcare products include plastic garment covers, examination gowns, stretcher sheets, examination table paper, pillow covers, and gloves for personnel who come into contact with patients having highly communicable diseases. The acquisition of Applied Technology Corporation in 1995 expanded the healthcare product offerings to include disposable thermometer sheaths and dental camera covers. - 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. To reduce its concentration in the elementary and high school markets, the Corporation has increased its marketing efforts relating to other softcover books including college texts, general books, and data manuals. 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. The Corporation's acquisition of UGI in 1994 enhanced its ability to service software publishers in the Northwestern United States. However, during the last several years print documentation for computer software and hardware has been increasingly replaced by CD- ROM and online documentation. The Corporation is actively pursuing other markets for these three operations. The Corporation's book units also produce multimedia products for educational publishers and industry, professional and trade associations. The Corporation's 1996 acquisition of Packaging Fulfillment Specialists, Inc. strengthened its ability to provide these services to its customers. Other customers include publishers of trade books, calendars, religious books, cookbooks and manuals. - 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. The acquisition of B.G. Turnkey in 1995 significantly increased the size and scope of the turnkey services provided by the Corporation. - Magazines The Corporation's two plants serving the magazine market print, sort and mail magazines representing more than 600 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. - 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. During the past several years, the Corporation has expanded its service offerings to include CD-ROM production, CD Interactive programming and developing interactive online products for the World Wide Web. These services are primarily provided by three of the Corporation's subsidiaries - KnowledgeSet Corporation, The DI Group, Inc. and New Frontiers Information Corporation, which was acquired in 1995. KCS Industries Inc., a subsidiary of the Corporation, produces point- of-purchase products such as custom designed signs, displays, labels and decals for a variety of customers, including those in the brewing, cosmetic, food, appliance, automotive and home entertainment industries. KCS Industries also participates, through a joint venture in furnishing postage stamps in booklet, coil and sheet format for the United States Postal Service. 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 price, quality of finished products, distribution capabilities, ongoing customer service 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 and especially in 1996, 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 increased pricing pressure. In the educational book market, for instance, activity is greater in the first half of the year, and in the catalog and direct marketing materials 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. The average cost of paper to the Corporation's customers was about 15% lower in 1996 than in 1995, 33% higher in 1995 than in 1994 and 3% lower in 1994 than in 1993. The Corporation uses a number of other raw materials including ink, resins, packaging materials and subcontracted components. The cost of ink decreased slightly in 1996. The cost of resin increased in 1996 but remained slightly lower, on average than in 1995. The cost of packaging materials declined in 1996, after increasing in 1995. 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 using digital technology which includes CD-ROM, video tape, online and database management 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 1997. 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 10 to the Corporation's Consolidated Financial Statements in the Corporation's Annual Report to Shareholders for the fiscal year ended December 28, 1996 includes information on the Corporation's foreign operations. The disclosures contained in such footnotes are hereby incorporated herein by reference. EXECUTIVE OFFICERS OF THE CORPORATION Business Experience During Last Five Name, Age, Position Years Donald D. Belcher; 58; . . . . . Chairman of the Board of the Chairman, President and Corporation since May 1995: President Chief Executive Officer and Chief 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; 56; . . . . . Executive Vice President and Chief Executive Vice President Financial Officer of the Corporation and Chief Financial Officer since 1992; Senior Vice President, Chief Financial Officer and Treasurer of the Corporation prior thereto. Ronald D. Kneezel; 40; . . . . . Secretary, Vice President and General Vice President, General Counsel Counsel of the Corporation. and Secretary Robert A. Kreider; 42; . . . . . Treasurer of the Corporation since Treasurer and Corporate November 1992; Corporate Controller Controller since July 1989; Assistant Treasurer from April 1991 to October 1992. Dennis J. Meyer; 41; . . . . . . Vice President of the Corporation Vice President Marketing since 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, 52; . . . . Vice President of the Corporation. Vice President Human Resources There are no family relationships between the executive officers of the Corporation. All of the executive officers are elected or appointed annually. 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, Connecticut, Minnesota, Missouri, North Carolina, Utah and Virginia, as well as several warehouse facilities for storage of materials. As of the end of fiscal 1996, these owned facilities included approximately 3,187,000 square feet of space utilized as follows: office space 310,000, manufacturing 1,848,000 and warehouse 1,029,000. The Corporation leases its headquarters office located in Menasha, Wisconsin. The Corporation also leases production facilities in Wisconsin, California, Illinois, Massachusetts, Minnesota, Utah and Washington, as well as warehouse space in numerous locations. European production facilities located in Ireland, Scotland and The Netherlands are also leased. The total of all leased facilities contain approximately 1,869,000 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 $2,370,000 as of December 28, 1996. Item 3. Legal Proceedings. The Corporation is not involved in any material pending legal proceedings, as defined by this Item. 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 December 28, 1996, approximately $111,085,000 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 December 28, 1996, 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 December 28, 1996, 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 December 28, 1996, is hereby incorporated herein by reference in response to this Item. Item 8. Financial Statements and Supplementary Data. The Consolidated Balance Sheets of the Corporation and subsidiaries as of December 28, 1996 and December 30, 1995, and the related Consolidated Statements of Earnings, Cash Flows and Shareholders' Investment for the fiscal years ended December 28, 1996, December 30, 1995 and December 31, 1994 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 December 28, 1996, 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 December 28, 1996, 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 caption "Election of Directors" contained in the Corporation's definitive proxy statement for the annual meeting of shareholders to be held on April 22, 1997, 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 22, 1997, 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 22, 1997, 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 22, 1997, 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 December 28, 1996 and December 30, 1995 20 For the fiscal years ended December 28, 1996, December 30, 1995, and December 31, 1994: 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) Amendment to Bylaws dated October 29, 1996 (c) Amendment to Bylaws dated December 10, 1996 (d) Bylaws, as amended 4. (a) Note Purchase Agreements dated December 9, 1986 (2) (b) Amendment to Note Purchase Agreements dated December 9, 1986 (3) (c) Note Purchase Agreement dated June 24, 1988 (4) (d) Amendment to Note Purchase Agreements dated December 9, 1986 (5) (e) Promissory Note Agreement dated July 17, 1990 (6) (f) Rights Agreement dated October 29, 1991 (7) (g) Note Purchase and Private Shelf Agreement dated May 12, 1994 (8) (h) Amendment to Note Purchase Agreements dated December 9, 1986 (9) (I) Amendment to Promissory Note Agreement dated July 17, 1990 (10) (j) Note Purchase and Medium-term Note Agreement Dated November 2, 1995 (11) [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 (12) (b) Amendment to Amended and Restated Supplemental Retirement Plan for Key Employees (c) Management Incentive Award Plan (13) (d) Amendment to Management Incentive Award Plan (14) (e) Form of Agreement with Gerald A. Henseler (15) (f) Form of Agreement with Ronald D. Kneezel (16) (g) Form of Agreements with Robert A. Kreider, Dennis J. Meyer and John E. Tiffany (17) (h) Agreement with Donald D. Belcher (18) (I) 1985 Deferred Compensation Plan for Key Employees, as amended and restated (19) (j) 1988 Deferred Compensation Plan for Key Employees, as amended and restated (20) (k) Basic Form of Deferred Compensation Agreements under (pre-January 1994) 1985 and 1988 Deferred Compensation Plans for Key Employees (21) (l) Basic Form of Deferred Compensation under (post- December 1993) 1988 Deferred Compensation plan for Key Employees (22) (m) Deferred Compensation Plan for Directors, as amended (n) Revised Form of Indemnity Agreements with Directors and Certain Officers (23) (o) 1987 Incentive Stock Option Plan; 1987 Nonstatutory Stock Option Plan (24) (p) Amendment to 1987 Nonstatutory Stock Option Plan (25) (q) Executive Trust Agreement (26) (r) Amendment to Executive Trust Agreement (27) (s) Long-term Incentive Plan, as amended (t) 1991 Stock Option Plan, as amended (u) Description of Supplemental Long-term Disability Plan (28) (v) Letter Agreement with Donald D. Belcher (29) (w) Letter Agreement with Dennis J. Meyer (30) (x) Agreement with Gerald A. Henseler (31) (y) Banta Corporation 1995 Equity Incentive Plan, as amended (z) Banta Corporation Director Stock Grant Plan 13. Portions of Annual Report to Shareholders for fiscal year ended December 28, 1996 that are incorporated by reference herein. 21. List of Subsidiaries. 23. Consent of Arthur Andersen LLP. 27. Financial Data Schedule [EDGAR version only]. (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. 4(c) to Form 10-K for the year ended January 3, 1987 is hereby incorporated herein by reference. (3) Exhibit No. 4(b) to Form 10-Q for the quarter ended July 2, 1988 is hereby incorporated herein by reference. (4) Exhibit No. 4(a) to Form 10-Q for the quarter ended July 2, 1988 is hereby incorporated herein by reference. (5) Exhibit No. 4(d) to Form 10-K for the year ended December 30, 1989 is hereby incorporated herein by reference. (6) Exhibit No. 4 to Form 10-Q for the quarter ended September 29, 1990 is hereby incorporated herein by reference. (7) Exhibit No. 4.1 to the Form 8-K dated October 29, 1991 is hereby incorporated herein by reference. (8) Exhibit No. 4(a) to Form 10-Q for the quarter ended July 2, 1994 is hereby incorporated herein by reference. (9) Exhibit No. 4(b) to Form 10-Q for the quarter ended July 2, 1994 is hereby incorporated herein by reference. (10) Exhibit No. 4(c) to Form 10-Q for the quarter ended July 2, 1994 is hereby incorporated herein by reference. (11) Exhibit No. 4(a) to Form 10-Q for the quarter ended September 30, 1995 is hereby incorporated herein by reference. (12) Exhibit No. 10(a) to Form 10-K for the year ended December 30, 1995 is hereby incorporated herein by reference. (13) Exhibit No. 10(e) to Form 10-K for the year ended December 29, 1990 is hereby incorporated herein by reference. (14) Exhibit No. 19(e) to Form 10-Q for the quarter ended April 3, 1993 is hereby incorporated herein by reference. (15) Exhibit No. 10 to Form 10-K for the year ended January 1, 1983 is hereby incorporated herein by reference. (16) Exhibit No. 10(k) to Form 10-K for the year ended December 31, 1988 is hereby incorporated herein by reference. (17) Exhibit No. 10(g) to Form 10-K for the year ended December 28, 1991 is hereby incorporated herein by reference. (18) Exhibit No. 10(b) to Form 10-Q for the quarter ended October 1, 1994 is hereby incorporated herein by reference. (19) Exhibit No. 10(j) to Form 10-K for the year ended December 30, 1989 is hereby incorporated herein by reference. (20) Exhibit No. 10(a) to Form 10-Q for the quarter ended April 2, 1994 is hereby incorporated herein by reference. (21) Exhibit No. 10(l) to Form 10-K for the year ended December 30, 1989 is hereby incorporated herein by reference. (22) Exhibit No. 10(b) to Form 10-Q for the quarter ended April 2, 1994 is hereby incorporated herein by reference. (23) Exhibit No. 10(a) to Form 10-Q for the quarter ended March 28, 1992 is hereby incorporated herein by reference. (24) Exhibit No. 6(a) to Form 10-Q for the quarter ended July 4, 1987 is hereby incorporated herein by reference. (25) Exhibit No. 19(a) to Form 10-Q for the quarter ended October 3, 1987 is hereby incorporated herein by reference. (26) Exhibit No. 10(r) to Form 10-K for the year ended December 30, 1989 is hereby incorporated herein by reference. (27) Exhibit No. 10(s) to Form 10-K for the year ended January 1, 1994 is hereby incorporated herein by reference. (28) Exhibit No. 10(a) to Form 10-Q for the quarter ended October 2, 1993 is hereby incorporated herein by reference. (29) Exhibit No. 10(a) to Form 10-Q for the quarter ended October 1, 1994 is hereby incorporated herein by reference. (30) Exhibit No. 10(bb) to Form 10-K for the year ended December 31, 1994 is hereby incorporated herein by reference. (31) Exhibit No. 10(dd) to Form 10-K for the year ended December 31, 1994 is hereby incorporated herein by reference. * Exhibits 10(a) through 10(z) 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 December 28, 1996. 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 January 27, 1997. 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, January 27, 1997. BANTA CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED December 28, 1996, December 30, 1995, and December 31, 1994 DOLLARS IN THOUSANDS BALANCE, ADDITIONS CHARGES BEGINNING CHARGED TO TO RESERVE, BALANCE, END OF YEAR EARNINGS NET OTHER OF YEAR Reserve for Doubtful Receivables: 1996 $ 3,414 $ 889 $ 817 $ 0 $ 3,486 ====== ====== ====== ====== ====== 1995 $ 3,984 $ 861 $ 1,431 $ 0 $ 3,414 ====== ====== ====== ====== ====== 1994 $ 2,943 $ 1,565 $ 524 $ 0 $ 3,984 ====== ====== ====== ====== ====== SIGNATURES Pursuant to the requirements 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 24, 1997 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 24, 1997 Donald D. Belcher, Chairman, President and Chief Executive Officer /s/ GERALD A. HENSELER March 24, 1997 Gerald A. Henseler, Executive Vice President, Chief Financial Officer, and Director /s/ ROBERT A. KREIDER March 24, 1997 Robert A. Kreider, Treasurer /s/ BERNARD S. KUBALE March 24, 1997 Bernard S. Kubale, Director /s/ DONALD TAYLOR March 24, 1997 Donald Taylor, Director /s/ JAMESON A. BAXTER March 24, 1997 Jameson A. Baxter, Director /s/ GEORGE T. BROPHY March 24, 1997 George T. Brophy, Director Form 10-K, Year Ended December 28, 1996 EXHIBIT INDEX Exhibit Number Numbering System 3.(b) Amendment to Bylaws dated October 29, 1996 3.(c) Amendment to Bylaws dated December 10, 1996 3.(d) Bylaws, as amended 10.(b) Amendment to Amended and Restated Supplemental Retirement Plan for Key Employees 10.(m) Deferred Compensation Plan for Directors, as amended 10.(s) Long-term Incentive Plan, as amended 10.(t) 1991 Stock Option Plan, as amended 10.(y) Banta Corporation 1995 Equity Incentive Plan, as amended 10.(z) Banta Corporation Director Stock Grant Plan 13. Annual Report to Shareholders for the fiscal year ended December 28, 1996 21. List of Subsidiaries 23. Consent of Arthur Andersen LLP 27. Financial Data Schedule [EDGAR version only] EX-3.B 2 EXHIBIT 3(B) AMNDMT TO BYLAWS DATED OCT. 29, 1996 Banta Corporation Amendment to By-laws The following resolution was adopted by the Board of Directors on October 29, 1996: RESOLVED, that Article III, Section 3.01 of the By-Laws of the Corporation is hereby amended to decrease the number of authorized directors to ten (10). EX-3.C 3 EXHIBIT 3(C) AMNDMT TO BYLAWS DATED DEC. 10, 1996 Banta Corporation Amendment to By-laws On December 10, 1996, Section 3.02 of the By-laws was amended in its entirety to provide as follows: 3.02. Tenure and Qualifications. Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified, or until there is a decrease in the number of directors which takes effect after the expiration of his term, or until his prior death, resignation or removal. A director may be removed by the shareholders only at a meeting called for the purpose of removing the director, and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director. A director may be removed from office but only for cause (as defined herein) if the number of votes cast to remove the director exceeds the number of votes cast not to remove him; provided, however, that, if the Board of Directors, by resolution, shall have recommended removal of a director, then the shareholders may remove such director without cause by the vote referred to above. As used herein, "cause" shall exist only if the director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction, where such conviction is no longer subject to direct appeal, or has been adjudged liable for actions or omissions in the performance of his duty to the corporation in a matter which has had a materially adverse effect on the business of the corporation, where such adjudication is no longer subject to appeal. A director may resign at any time by delivering written notice which complies with the Wisconsin Business Corporation Law to the Chairman of the Board or to the corporation. A director's resignation is effective when the notice is delivered unless the notice specifies a later effective date. Directors need not be residents of the State of Wisconsin but must be shareholders of the corporation. A director shall retire no later than the end of the term in which occurs the earlier of the director's attainment of age seventy (70) or the completion of fifteen (15) years of service as a non-employee director; provided, however, that the fifteen (15) year limitation shall be inapplicable to any director who had completed at least fifteen (15) years as a non-employee director as of January 1, 1995. As used herein, a "non- employee director" shall mean a director who is not an employee of the corporation or any of its subsidiaries. EX-3.D 4 EXHIBIT 3(D) BYLAWS 12/10/96 BY-LAWS OF BANTA CORPORATION (a Wisconsin corporation) ARTICLE I. OFFICES 1.01. Principal and Business Offices. The corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time. 1.02. Registered Office. The registered office of the corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors. The business office of the registered agent of the corporation shall be identical to such registered office. ARTICLE II. SHAREHOLDERS 2.01. Annual Meeting. The annual meeting of the shareholders of the corporation (the "Annual Meeting") shall be held on the second Tuesday in the month of April of each year, at the hour of two (2) o'clock p.m. (local time), or at such other time and date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may properly come before the Annual Meeting in accordance with Section 2.13 of these by-laws. If the day fixed for the Annual Meeting shall be a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein, or fixed as herein provided, for any Annual Meeting, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders (a "Special Meeting") as soon thereafter as conveniently may be. In fixing a meeting date for any Annual Meeting, the Board of Directors may consider such factors as it deems relevant within the good faith exercise of its business judgment. 2.02. Special Meetings. (a) A Special Meeting may be called only by (i) the Chairman of the Board, (ii) the President or (iii) the Board of Directors and shall be called by the Chairman of the Board or the President upon the demand, in accordance with this Section 2.02, of the holders of record of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting. (b) In order that the corporation may determine the shareholders entitled to demand a Special Meeting, the Board of Directors may fix a record date to determine the shareholders entitled to make such a demand (the "Demand Record Date"). The Demand Record Date shall not precede the date upon which the resolution fixing the Demand Record Date is adopted by the Board of Directors and shall not be more than 10 days after the date upon which the resolution fixing the Demand Record Date is adopted by the Board of Directors. Any shareholder of record seeking to have shareholders demand a Special Meeting shall, by sending written notice to the Secretary of the corporation by hand or by certified or registered mail, return receipt requested, request the Board of Directors to fix a Demand Record Date. The Board of Directors shall promptly, but in all events within 10 days after the date on which a valid request to fix a Demand Record Date is received, adopt a resolution fixing the Demand Record Date and shall make a public announcement of such Demand Record Date. If no Demand Record Date has been fixed by the Board of Directors within 10 days after the date on which such request is received by the Secretary, the Demand Record Date shall be the 10th day after the first day on which a valid written request to set a Demand Record Date is received by the Secretary. To be valid, such written request shall set forth the purpose or purposes for which the Special Meeting is to be held, shall be signed by one or more shareholders of record (or their duly authorized proxies or other representatives), shall bear the date of signature of each such shareholder (or proxy or other representative) and shall set forth all information about each such shareholder and about the beneficial owner or owners, if any, on whose behalf the request is made that would be required to be set forth in a shareholder's notice described in paragraph (a)(ii) of Section 2.13 of these by-laws. (c) In order for a shareholder or shareholders to demand a Special Meeting, a written demand or demands for a Special Meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting must be delivered to the corporation. To be valid, each written demand by a shareholder for a Special Meeting shall set forth the specific purpose or purposes for which the Special Meeting is to be held (which purpose or purposes shall be limited to the purpose or purposes set forth in the written request to set a Demand Record Date received by the corporation pursuant to paragraph (b) of this Section 2.02, shall be signed by one or more persons who as of the Demand Record Date are shareholders of record (or their duly authorized proxies or other representatives), shall bear the date of signature of each such shareholder (or proxy or other representative), and shall set forth the name and address, as they appear in the corporation's books, of each shareholder signing such demand and the class or series and number of shares of the corporation which are owned of record and beneficially by each such shareholder, shall be sent to the Secretary by hand or by certified or registered mail, return receipt requested, and shall be received by the Secretary within 70 days after the Demand Record Date. (d) The corporation shall not be required to call a Special Meeting upon shareholder demand unless, in addition to the documents required by paragraph (c) of this Section 2.02, the Secretary receives a written agreement signed by each Soliciting Shareholder (as defined herein), pursuant to which each Soliciting Shareholder, jointly and severally, agrees to pay the corporation's costs of holding the Special Meeting, including the costs of preparing and mailing proxy materials for the corporation's own solicitation, provided that if each of the resolutions introduced by any Soliciting Shareholder at such meeting is adopted, and each of the individuals nominated by or on behalf of any Soliciting Shareholder for election as director at such meeting is elected, then the Soliciting Shareholders shall not be required to pay such costs. For purposes of this paragraph (d), the following terms shall have the meanings set forth below: (i) "Affiliate" of any Person shall mean any Person controlling, controlled by or under common control with such first Person. (ii) "Participant" shall have the meaning assigned to such term in Rule 14a-11 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (iii) "Person" shall mean any individual, firm, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity. (iv) "Proxy" shall have the meaning assigned to such term in Rule 14a-1 promulgated under the Exchange Act. (v) "Solicitation" shall have the meaning assigned to such term in Rule 14a-11 promulgated under the Exchange Act. (vi) "Soliciting Shareholder" shall mean, with respect to any Special Meeting demanded by a shareholder or shareholders, any of the following Persons: (A) if the number of shareholders signing the demand or demands for a meeting delivered to the corporation pursuant to paragraph (c) of this Section 2.02 is 10 or fewer, each shareholder signing any such demand; (B) if the number of shareholders signing the demand or demands for a meeting delivered to the corporation pursuant to paragraph (c) of this Section 2.02 is more than 10, each Person who either (I) was a Participant in any Solicitation of such demand or demands or (II) at the time of the delivery to the corporation of the documents described in paragraph (c) of this Section 2.02, had engaged or intended to engage in any Solicitation of Proxies for use at such Special Meeting (other than a Solicitation of Proxies on behalf of the corporation); or (C) any Affiliate of a Soliciting Shareholder, if a majority of the directors then in office determine, reasonably and in good faith, that such Affiliate should be required to sign the written notice described in paragraph (c) of this Section 2.02 and/or the written agreement described in this paragraph (d) in order to prevent the purposes of this Section 2.02 from being evaded. (e) Except as provided in the following sentence, any Special Meeting shall be held at such hour and day as may be designated by whichever of the Chairman of the Board, the President or the Board of Directors shall have called such meeting. In the case of any Special Meeting called by the Chairman of the Board or the President upon the demand of shareholders (a "Demand Special Meeting"), such meeting shall be held at such hour and day as may be designated by the Board of Directors; provided, however, that the date of any Demand Special Meeting shall be not more than 70 days after the Meeting Record Date (as defined in Section 2.05 of these by-laws); and provided further that in the event that the directors then in office fail to designate an hour and date for a Demand Special Meeting within 10 days after the date that valid written demands for such meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting are delivered to the corporation (the "Delivery Date"), then such meeting shall be held at 2:00 p.m. (local time) on the 100th day after the Delivery Date or, if such 100th day is not a Business Day (as defined below), on the first preceding Business Day. In fixing a meeting date for any Special Meeting, the Chairman of the Board, the President or the Board of Directors may consider such factors as he or it deems relevant within the good faith exercise of his or its business judgment, including, without limitation, the nature of the action proposed to be taken, the facts and circumstances surrounding any demand for such meeting, and any plan of the Board of Directors to call an Annual Meeting or a Special Meeting for the conduct of related business. (f) The corporation may engage nationally or regionally recognized independent inspectors of elections to act as an agent of the corporation for the purpose of promptly performing a ministerial review of the validity of any purported written demand or demands for a Special Meeting received by the Secretary. For the purpose of permitting the inspectors to perform such review, no purported demand shall be deemed to have been delivered to the corporation until the earlier of (i) 5 Business Days following receipt by the Secretary of such purported demand and (ii) such date as the independent inspectors certify to the corporation that the valid demands received by the Secretary represent at least 10% of all the votes entitled to be cast on each issue proposed to be considered at the Special Meeting. Nothing contained in this paragraph shall in any way be construed to suggest or imply that the Board of Directors or any shareholder shall not be entitled to contest the validity of any demand, whether during or after such 5 Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto). (g) For purposes of these by-laws, "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of Wisconsin are authorized or obligated by law or executive order to close. 2.03. Place of Meeting. The Board of Directors, the Chairman of the Board or the President may designate any place, either within or without the State of Wisconsin, as the place of meeting for any Annual Meeting or for any Special Meeting, or for any postponement thereof. If no designation is made, the place of meeting shall be the principal business office of the corporation in the State of Wisconsin. Any meeting may be adjourned to reconvene at any place designated by vote of the Board of Directors or by the Chairman of the Board or the President. 2.04. Notice of Meeting. Written notice stating the place, day and hour of any Annual Meeting or Special Meeting shall be delivered not less than 10 (unless a longer period is required by the Wisconsin Business Corporation Law) nor more than 70 days before the date of such meeting, either personally or by mail, by or at the direction of the Secretary, to each shareholder of record entitled to vote at such meeting and to other shareholders as may be required by the Wisconsin Business Corporation Law. In the event of any Demand Special Meeting, such notice of meeting shall be sent not more than 30 days after the Delivery Date. If mailed, notice pursuant to this Section 2.04 shall be deemed to be effective when deposited in the United States mail, addressed to each shareholder at his or her address as it appears on the stock record books of the corporation, with postage thereon prepaid. Unless otherwise required by the Wisconsin Business Corporation Law, a notice of an Annual Meeting need not include a description of the purpose for which the meeting is called. In the case of any Special Meeting, (a) the notice of meeting shall describe any business that the Board of Directors shall have theretofore determined to bring before the meeting and (b) in the case of a Demand Special Meeting, the notice of meeting (i) shall describe any business set forth in the statement of purpose of the demands received by the corporation in accordance with Section 2.02 of these by-laws and (ii) shall contain all of the information required in the notice received by the corporation in accordance with Section 2.13(b) of these by-laws. If an Annual Meeting or Special Meeting is adjourned to a different date, time or place, the corporation shall not be required to give notice of the new date, time or place if the new date, time or place is announced at the meeting before adjournment; provided, however, that if a new Meeting Record Date for an adjourned meeting is or must be fixed, the corporation shall give notice of the adjourned meeting to persons who are shareholders as of the new Meeting Record Date. 2.05. Fixing of Record Date. The Board of Directors may fix in advance a date not less than 10 days and not more than 70 days prior to the date of any Annual Meeting or Special Meeting as the record date for the determination of shareholders entitled to notice of, or to vote at, such meeting (the "Meeting Record Date"). In the case of any Demand Special Meeting, (i) the Meeting Record Date shall be not later than the 30th day after the Delivery Date and (ii) if the Board of Directors fails to fix the Meeting Record Date within 30 days after the Delivery Date, then the close of business on such 30th day shall be the Meeting Record Date. The shareholders of record on the Meeting Record Date shall be the shareholders entitled to notice of and to vote at the meeting. Except as provided by the Wisconsin Business Corporation Law for a court-ordered adjournment, a determination of shareholders entitled to notice of and to vote at any Annual Meeting or Special Meeting is effective for any adjournment of such meeting unless the Board of Directors fixes a new Meeting Record Date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. The Board of Directors may also fix in advance a date as the record date for the purpose of determining shareholders entitled to take any other action or determining shareholders for any other purpose. Such record date shall be not more than 70 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. The record date for determining shareholders entitled to a distribution (other than a distribution involving a purchase, redemption or other acquisition of the corporation's shares) or a share dividend is the date on which the Board of Directors authorizes the distribution or share dividend, as the case may be, unless the Board of Directors fixes a different record date. 2.06. Shareholder Lists. After a Meeting Record Date has been fixed, the corporation shall prepare a list of the names of all of the shareholders entitled to notice of the meeting. The list shall be arranged by class or series of shares, if any, and show the address of and number of shares held by each shareholder. Such list shall be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing to the date of the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder or his or her agent may, on written demand, inspect and, subject to the limitations imposed by the Wisconsin Business Corporation Law, copy the list, during regular business hours and at his or her expense, during the period that it is available for inspection pursuant to this Section 2.06. The corporation shall make the shareholders' list available at the meeting and any shareholder or his or her agent or attorney may inspect the list at any time during the meeting or any adjournment thereof. Refusal or failure to prepare or make available the shareholders' list shall not affect the validity of any action taken at a meeting of shareholders. 2.07. Quorum and Voting Requirements; Postponements; Adjournments. (a) Shares entitled to vote as a separate voting group may take action on a matter at any Annual Meeting or Special Meeting only if a quorum of those shares exists with respect to that matter. If the corporation has only one class of stock outstanding, such class shall constitute a separate voting group for purposes of this Section 2.07. Except as otherwise provided in the Articles of Incorporation, any by-law adopted under authority granted in the Articles of Incorporation, or the Wisconsin Business Corporation Law, a majority of the votes entitled to be cast on the matter shall constitute a quorum of the voting group for action on that matter. Once a share is represented for any purpose at any Annual Meeting or Special Meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new Meeting Record Date is or must be set for the adjourned meeting. If a quorum exists, except in the case of the election of directors, action on a matter shall be approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation, any by-law adopted under authority granted in the Articles of Incorporation, or the Wisconsin Business Corporation Law requires a greater number of affirmative votes. Unless otherwise provided in the Articles of Incorporation, directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors at any Annual Meeting or Special Meeting at which a quorum is present. For purposes of this Section 2.07(a), "plurality" means that the individuals with the largest number of votes are elected as directors up to the maximum number of directors to be chosen at the Annual Meeting or Special Meeting. (b) The Board of Directors acting by resolution may postpone and reschedule any previously scheduled Annual Meeting or Special Meeting; provided, however, that a Demand Special Meeting shall not be postponed beyond the 100th day following the Delivery Date. Any Annual Meeting or Special Meeting may be adjourned from time to time, whether or not there is a quorum, (i) at any time, upon a resolution of shareholders if the votes cast in favor of such resolution by the holders of shares of each voting group entitled to vote on any matter theretofore properly brought before the meeting exceed the number of votes cast against such resolution by the holders of shares of each such voting group or (ii) at any time prior to the transaction of any business at such meeting, by the Chairman of the Board or pursuant to resolution of the Board of Directors. No notice of the time and place of adjourned meetings need be given except as required by the Wisconsin Business Corporation Law. At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. 2.08. Conduct of Meetings. The Chairman of the Board, and in his absence the President, shall call any Annual Meeting or Special Meeting to order and shall act as chairman of such meeting. In the absence of the Chairman of the Board and the President, such duties shall be performed by a Vice-President in the order provided under Section 4.07, or in their absence, by any person chosen by the shareholders present. The Secretary of the corporation shall act as secretary of all Annual Meetings and Special Meetings, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. 2.09. Proxies. At any Annual Meeting or Special Meeting, a shareholder entitled to vote may vote in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form, either personally or by his or her attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent of the corporation authorized to tabulate votes. An appointment is valid for eleven months from the date of its signing unless a different period is expressly provided in the appointment form. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies. 2.10. Voting of Shares. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at any Annual Meeting or Special Meeting except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the Articles of Incorporation or the Wisconsin Business Corporation Law. 2.11. Acceptance of Instruments Showing Shareholder Action. If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a shareholder, the corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of a shareholder. If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of a shareholder, the corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder if any of the following apply: (a) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity. (b) The name purports to be that of a personal representative, administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (c) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (d) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder is presented with respect to the vote, consent, waiver or proxy appointment. (e) Two or more persons are the shareholders as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners. The corporation may reject a vote, consent, waiver or proxy appointment if the Secretary or other officer or agent of the corporation who is authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. 2.12. Waiver of Notice by Shareholders. A shareholder may waive any notice required by the Wisconsin Business Corporation Law, the Articles of Incorporation or these by-laws before or after the date and time stated in the notice. The waiver shall be in writing and signed by the shareholder entitled to the notice, contain the same information that would have been required in the notice under applicable provisions of the Wisconsin Business Corporation Law (except that the time and place of meeting need not be stated) and be delivered to the corporation for inclusion in the corporate records. A shareholder's attendance at any Annual Meeting or Special Meeting, in person or by proxy, waives objection to all of the following: (a) lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting or promptly upon arrival objects to holding the meeting or transacting business at the meeting; and (b) consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. 2.13. Notice of Shareholder Business and Nomination of Directors. (a) Annual Meetings. (i) Nominations of persons for election to the Board of Directors of the corporation and the proposal of business to be considered by the shareholders may be made at an Annual Meeting (A) pursuant to the corporation's notice of meeting, (B) by or at the direction of the Board of Directors or (C) by any shareholder of the corporation who is a shareholder of record at the time of giving of notice provided for in this by-law and who is entitled to vote at the meeting and complies with the notice procedures set forth in this Section 2.13. (ii) For nominations or other business to be properly brought before an Annual Meeting by a shareholder pursuant to clause (C) of paragraph (a)(i) of this Section 2.13, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder's notice shall be received by the Secretary of the corporation at the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the second Tuesday in the month of April; provided, however, that in the event that the date of the Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the second Tuesday in the month of April, notice by the shareholder to be timely must be so received not earlier than the 90th day prior to the date of such Annual Meeting and not later than the close of business on the later of (x) the 60th day prior to such Annual Meeting and (y) the 10th day following the day on which public announcement of the date of such meeting is first made. Such shareholder's notice shall be signed by the shareholder of record who intends to make the nomination or introduce the other business (or his duly authorized proxy or other representative), shall bear the date of signature of such shareholder (or proxy or other representative) and shall set forth: (A) the name and address, as they appear on this corporation's books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination or proposal is made; (B) the class and number of shares of the corporation which are beneficially owned by such shareholder or beneficial owner or owners; (C) a representation that such shareholder is a holder of record of shares of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination or introduce the other business specified in the notice; (D) in the case of any proposed nomination for election or re-election as a director, (I) the name and residence address of the person or persons to be nominated, (II) a description of all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by such shareholder, (III) such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Regulation 14A under the Exchange Act, including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors and (IV) the written consent of each nominee to be named in a proxy statement and to serve as a director of the corporation if so elected; and (E) in the case of any other business that such shareholder proposes to bring before the meeting, (I) a brief description of the business desired to be brought before the meeting and, if such business includes a proposal to amend these by-laws, the language of the proposed amendment, (II) such shareholder's and beneficial owner's or owners' reasons for conducting such business at the meeting and (III) any material interest in such business of such shareholder and beneficial owner or owners. (iii) Notwithstanding anything in the second sentence of paragraph (a)(ii) of this Section 2.13 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least 70 days prior to the second Tuesday in the month of April, a shareholder's notice required by this Section 2.13 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the Secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation. (b) Special Meetings. Only such business shall be conducted at a Special Meeting as shall have been described in the notice of meeting sent to shareholders pursuant to Section 2.04 of these by-laws. Nominations of persons for election to the Board of Directors may be made at a Special Meeting at which directors are to be elected pursuant to such notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the corporation who (A) is a shareholder of record at the time of giving of such notice of meeting, (B) is entitled to vote at the meeting and (C) complies with the notice procedures set forth in this Section 2.13. Any shareholder desiring to nominate persons for election to the Board of Directors at such a Special Meeting shall cause a written notice to be received by the Secretary of the corporation at the principal executive offices of the corporation not earlier than 90 days prior to such Special Meeting and not later than the close of business on the later of (x) the 60th day prior to such Special Meeting and (y) the 10th day following the day on which public announcement is first made of the date of such Special Meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. Such written notice shall be signed by the shareholder of record who intends to make the nomination (or his duly authorized proxy or other representative), shall bear the date of signature of such shareholder (or proxy or other representative) and shall set forth: (A) the name and address, as they appear on the corporation's books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination is made; (B) the class and number of shares of the corporation which are beneficially owned by such shareholder or beneficial owner or owners; (C) a representation that such shareholder is a holder of record of shares of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination specified in the notice; (D) the name and residence address of the person or persons to be nominated; (E) a description of all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by such shareholder; (F) such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Regulation 14A under the Exchange Act, including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors; and (G) the written consent of each nominee to be named in a proxy statement and to serve as a director of the corporation if so elected. (c) General. (i) Only persons who are nominated in accordance with the procedures set forth in this Section 2.13 shall be eligible to serve as directors. Only such business shall be conducted at an Annual Meeting or Special Meeting as shall have been brought before such meeting in accordance with the procedures set forth in this Section 2.13. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 2.13 and, if any proposed nomination or business is not in compliance with this Section 2.13, to declare that such defective proposal shall be disregarded. (ii) For purposes of this Section 2.13, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (iii) Notwithstanding the foregoing provisions of this Section 2.13, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.13. Nothing in this Section 2.13 shall be deemed to limit the corporation's obligation to include shareholder proposals in its proxy statement if such inclusion is required by Rule 14a-8 under the Exchange Act. ARTICLE III. BOARD OF DIRECTORS 3.01. General Powers and Number. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, its Board of Directors. The number of directors of the corporation shall be ten (10). 3.02. Tenure and Qualifications. Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified, or until there is a decrease in the number of directors which takes effect after the expiration of his term, or until his prior death, resignation or removal. A director may be removed by the shareholders only at a meeting called for the purpose of removing the director, and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director. A director may be removed from office but only for cause (as defined herein) if the number of votes cast to remove the director exceeds the number of votes cast not to remove him; provided, however, that, if the Board of Directors, by resolution, shall have recommended removal of a director, then the shareholders may remove such director without cause by the vote referred to above. As used herein, "cause" shall exist only if the director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction, where such conviction is no longer subject to direct appeal, or has been adjudged liable for actions or omissions in the performance of his duty to the corporation in a matter which has had a materially adverse effect on the business of the corporation, where such adjudication is no longer subject to appeal. A director may resign at any time by delivering written notice which complies with the Wisconsin Business Corporation Law to the Chairman of the Board or to the corporation. A director's resignation is effective when the notice is delivered unless the notice specifies a later effective date. Directors need not be residents of the State of Wisconsin but must be shareholders of the corporation. A director shall retire no later than the end of the term in which occurs the earlier of the director's attainment of age seventy (70) or the completion of fifteen (15) years of service as a non-employee director; provided, however, that the fifteen (15) year limitation shall be inapplicable to any director who had completed at least fifteen (15) years as a non-employee director as of January 1, 1995. As used herein, a "non-employee director" shall mean a director who is not an employee of the corporation or any of its subsidiaries. 3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the Annual Meeting, and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the Annual Meeting which precedes it, or such other suitable place as may be announced at such Annual Meeting. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings without other notice than such resolution. 3.04. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the President or any three directors. The Chairman of the Board or the President may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors, and if no other place is fixed the place of meeting shall be the principal business office of the corporation in the State of Wisconsin. 3.05. Notice; Waiver. Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 3.03) shall be given by written notice delivered or communicated in person, by telegram, facsimile or other form of wire or wireless communication, or by mail or private carrier, to each director at his business address or at such other address as such director shall have designated in writing filed with the Secretary, in each case not less than 48 hours prior to the time of the meeting. If mailed, such notice shall be deemed to be effective when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be effective when the telegram is delivered to the telegraph company. If notice is given by private carrier, such notice shall be deemed to be effective when the notice is delivered to the private carrier. Whenever any notice whatever is required to be given to any director of the corporation under the Articles of Incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice. The corporation shall retain any such waiver as part of the permanent corporate records. A director's attendance at or participation in a meeting waives any required notice to him of the meeting unless the director at the beginning of the meeting or promptly upon his arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. 3.06. Quorum. Except as otherwise provided by the Wisconsin Business Corporation Law or by the Articles of Incorporation or these by-laws, a majority of the number of directors set forth in Section 3.01 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but a majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice. 3.07. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by the Wisconsin Business Corporation Law or by the Articles of Incorporation or these by-laws. 3.08. Conduct of Meetings. The Chairman of the Board, and in his absence, the President, or a Vice-President in the order provided under Section 4.07, and in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the corporation shall act as secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding officer may appoint any Assistant Secretary or any director or other person present to act as secretary of the meeting. Minutes of any regular or special meeting of the Board of Directors shall be prepared and distributed to each director. 3.09. Vacancies. Except as provided below, any vacancy occurring in the Board of Directors, including a vacancy resulting from an increase in the number of directors, may be filled by any of the following: (a) the shareholders; (b) the Board of Directors; or (c) if the directors remaining in office constitute fewer than a quorum of the Board of Directors, the directors, by the affirmative vote of a majority of all directors remaining in office. If the vacant office was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group may vote to fill the vacancy if it is filled by the shareholders, and only the remaining directors elected by that voting group may vote to fill the vacancy if it is filled by the directors. A vacancy that will occur at a specific later date, because of a resignation effective at a later date or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. 3.10. Compensation. The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees to the corporation. 3.11. Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless any of the following occurs: (a) the director objects at the beginning of the meeting or promptly upon his arrival to holding the meeting or transacting business at the meeting; (b) the director dissents or abstains from an action taken and minutes of the meeting are prepared that show the director's dissent or abstention from the action taken; (c) the director delivers written notice that complies with the Wisconsin Business Corporation Law of his dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting; or (d) the director dissents or abstains from an action taken, minutes of the meeting are prepared that fail to show the director's dissent or abstention from the action taken, and the director delivers to the corporation a written notice of that failure that complies with the Wisconsin Business Corporation Law promptly after receiving the minutes. Such right to dissent or abstain shall not apply to a director who voted in favor of such action. 3.12. Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of the number of directors set forth in Section 3.01 may create one or more committees, appoint members of the Board of Directors to serve on the committees and designate other members of the Board of Directors to serve as alternates. Each committee shall have two or more members who shall, unless otherwise provided by the Board of Directors, serve at the pleasure of the Board of Directors. A committee may be authorized to exercise the authority of the Board of Directors, except that a committee may not do any of the following: (a) authorize distributions; (b) approve or propose to shareholders action that the Wisconsin Business Corporation Law requires to be approved by shareholders; (c) fill vacancies on the Board of Directors or, unless the Board of Directors provides by resolution that vacancies on a committee shall be filled by the affirmative vote of the remaining committee members, on any Board committee; (d) amend the corporation's Articles of Incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan of merger not requiring shareholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; and (h) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee to do so within limits prescribed by the Board of Directors. Unless otherwise provided by the Board of Directors in creating the committee, a committee may employ counsel, accountants and other consultants to assist it in the exercise of its authority. 3.13. Telephonic Meetings. Except as herein provided and notwithstanding any place set forth in the notice of the meeting or these by-laws, members of the Board of Directors (and any committee thereof) may participate in regular or special meetings by, or through the use of, any means of communication by which all participants may simultaneously hear each other, such as by conference telephone. If a meeting is conducted by such means, then at the commencement of such meeting the presiding officer shall inform the participating directors that a meeting is taking place at which official business may be transacted. Any participant in a meeting by such means shall be deemed present in person at such meeting. Notwithstanding the foregoing, no action may be taken at any meeting held by such means on any particular matter which the presiding officer determines, in his sole discretion, to be inappropriate under the circumstances for action at a meeting held by such means. Such determination shall be made and announced in advance of such meeting. 3.14. Unanimous Consent without Meeting. Any action required or permitted by the Articles of Incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law to be taken by the Board of Directors (or a committee thereof) at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all members of the Board or of the committee, as the case may be, then in office. Such action shall be effective when the last director or committee member signs the consent, unless the consent specifies a different effective date. ARTICLE IV. OFFICERS 4.01. Number. The principal officers of the corporation shall be a Chairman of the Board, a President, one or more Vice-Presidents, not to exceed six (6) at any given time, a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. The Board of Directors may also authorize any duly appointed officer to appoint one or more officers or assistant officers. Any two or more offices may be held by the same person. 4.02. Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after the Annual Meeting. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successor shall have been duly elected or until his prior death, resignation or removal. 4.03. Removal and Resignation. The Board of Directors may remove any officer and, unless restricted by the Board of Directors or these by-laws, an officer may remove any officer or assistant officer appointed by that officer, at any time, with or without cause and notwithstanding the contract rights, if any, of the officer removed. Election or appointment shall not of itself create contract rights. An officer may resign at any time by delivering notice to the corporation that complies with the Wisconsin Business Corporation Law. The resignation shall be effective when the notice is delivered, unless the notice specifies a later effective date and the corporation accepts the later effective date. 4.04. Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. If a resignation of an officer is effective at a later date as contemplated by Section 4.03 hereof, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor may not take office until the effective date. 4.05. Chairman of the Board. The Chairman of the Board shall, when present, preside at all Annual Meetings and Special Meetings and at all meetings of the Board of Directors. He shall perform such other duties and functions as shall be assigned to him from time to time by the Board of Directors or in these by-laws. Except where by law the signature of the President of the corporation is required, the Chairman of the Board shall possess the same power and authority as the President to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments and shall have such additional power to sign, execute and acknowledge, on behalf of the corporation, as may be authorized by resolution of the Board of Directors. 4.06. President. The President shall be the chief executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the corporation as he shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the President. He shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he may authorize any Vice President or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in his place and stead. In general he shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. 4.07. The Vice-Presidents. In the absence of the President or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impracticable for the President to act personally, the Vice-President (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice-President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. The execution of any instrument of the corporation by any Vice-President shall be conclusive evidence, as to third parties, of his authority to act in the stead of the President. 4.08 The Secretary. The Secretary shall: (a) keep the minutes of all Annual Meetings and Special Meetings and of all meetings of the Board of Directors in one or more books provided for that purpose (including records of actions taken without a meeting); (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by the Wisconsin Business Corporation Law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) maintain a record of the shareholders of the corporation, in a form that permits preparation of a list of the names and addresses of all shareholders, by class or series of shares and showing the number and class or series of shares held by each shareholder; (e) sign with the Chairman of the Board, the President, or a Vice-President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. 4.09. The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) maintain appropriate accounting records; (c) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Section 5.04; and (d) in general perform all of the duties incident to the office of Treasurer and have such other duties and exercise such other authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. 4.10. Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the Chairman of the Board, the President or a Vice-President certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. 4.11 Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint, or to authorize any duly appointed officer of the corporation to appoint, any person to act as assistant to any officer, or as agent for the corporation in his stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors or the appointing officer shall have the power to perform all the duties of the office to which he is so appointed to be assistant, or as to which he is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors or the appointing officer. 4.12 Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS 5.01. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the corporation shall be executed in the name of the corporation by the Chairman of the Board, the President or one of the Vice-Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. 5.02. Loans. No indebtedness for borrowed money shall be contracted on behalf of the corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as may be selected by or under the authority of a resolution of the Board of Directors. 5.05 Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this corporation may be voted at any meeting of security holders of such other corporation by the Chairman of the Board of this corporation if he be present, or in his absence by the President of this corporation if he be present, or in his absence by any Vice-President of this corporation who may be present, and (b) whenever, in the judgment of the Chairman of the Board, or in his absence, of the President, or in his absence, of any Vice-President, it is desirable for this corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this corporation, such proxy or consent shall be executed in the name of this corporation by the Chairman of the Board, the President or one of the Vice-Presidents of this corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this corporation the same as such shares or other securities might be voted by this corporation. 5.06. No Nominee Procedures. The corporation has not established, and nothing in these by-laws shall be deemed to establish, any procedure by which a beneficial owner of the corporation's shares that are registered in the name of a nominee is recognized by the corporation as the shareholder under Section 180.0723 of the Wisconsin Business Corporation Law. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 6.01. Certificates for Shares. Certificates representing shares of the corporation shall be in such form, consistent with the Wisconsin Business Corporation Law, as shall be determined by the Board of Directors. Such certificates shall be signed by the Chairman of the Board, the President or a Vice-President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as provided in Section 6.06. 6.02. Facsimile Signatures and Seal. The seal of the corporation on any certificates for shares may be a facsimile. The signatures of the Chairman of the Board, the President or any Vice-President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. 6.03. Signature by Former Officers. In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue. 6.04. Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer the corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner. Where a certificate for shares is presented to the corporation with a request to register for transfer, the corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The corporation may require reasonable assurance that said endorsements are genuine and effective and in compliance with such other regulations as may be prescribed under the authority of the Board of Directors. 6.05. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the corporation upon the transfer of such shares. 6.06. Lost, Destroyed or Stolen Certificates. Where the owner claims that his certificate for shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the corporation a sufficient indemnity bond, and (c) satisfies such other reasonable requirements as the Board of Directors may prescribe. 6.07. Consideration for Shares. The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation. Before the corporation issues shares, the Board of Directors shall determine that the consideration received or to be received for the shares to be issued is adequate. In the absence of a resolution adopted by the Board of Directors expressly determining that the consideration received or to be received is adequate, Board approval of the issuance of the shares shall be deemed to constitute such a determination. The determination of the Board of Directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable. The corporation may place in escrow shares issued in whole or in part for a contract for future services or benefits, a promissory note, or other property to be issued in the future, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the benefits or property are received or the promissory note is paid. If the services are not performed, the benefits or property are not received or the promissory note is not paid, the corporation may cancel, in whole or in part, the shares escrowed or restricted and the distributions credited. 6.08. Stock Regulation. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the corporation. ARTICLE VII. SEAL 7.01. The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words, "Corporate Seal". ARTICLE VIII. INDEMNIFICATION 8.01. Certain Definitions. All capitalized terms used in this Article VIII and not otherwise hereinafter defined in this Section 8.01 shall have the meaning set forth in Section 180.0850 of the Statute. The following capitalized terms (including any plural forms thereof) used in this Article VIII shall be defined as follows: (a) "Affiliate" shall include, without limitation, any corporation, partnership, joint venture, employee benefit plan, trust or other enterprise that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation. (b) "Authority" shall mean the entity selected by the Director or Officer to determine his or her right to indemnification pursuant to Section 8.04. (c) "Board" shall mean the entire then elected and serving Board of Directors of the Corporation, including all members thereof who are Parties to the subject Proceeding or any related Proceeding. (d) "Breach of Duty" shall mean the Director or Officer breached or failed to perform his or her duties to the Corporation and his or her breach of or failure to perform those duties is determined, in accordance with Section 8.04, to constitute misconduct under Section 180.0851 (2) (a) 1, 2, 3 or 4 of the Statute. (e) "Corporation," as used herein and as defined in the Statute and incorporated by reference into the definitions of certain other capitalized terms used herein, shall mean this Corporation, including, without limitation, any successor corporation or entity to this Corporation by way of merger, consolidation or acquisition of all or substantially all of the capital stock or assets of this Corporation. (f) "Director or Officer" shall have the meaning set forth in the Statute; provided, that, for purposes of Article VIII, it shall be conclusively presumed that any Director or Officer serving as a director, officer, partner, trustee, member of any governing or decision-making committee, employee or agent of an Affiliate shall be so serving at the request of the Corporation. (g) "Disinterested Quorum" shall mean a quorum of the Board who are not Parties to the subject Proceeding or any related Proceeding. (h) "Party" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article VIII, the term "Party" shall also include any Director or Officer or employee who is or was a witness in a Proceeding at a time when he or she has not otherwise been formally named a Party thereto. (i) "Proceeding" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article VIII, the term "Proceeding" shall also include all Proceedings (i) brought under (in whole or in part) the Securities Act of 1933, as amended, the Exchange Act, their respective state counterparts, and/or any rule or regulation promulgated under any of the foregoing; (ii) brought before an Authority or otherwise to enforce rights hereunder; (iii) any appeal from a Proceeding; and (iv) any Proceeding in which the Director or Officer is a plaintiff or petitioner because he or she is a Director or Officer; provided, however, that such Proceeding is authorized by a majority vote of a Disinterested Quorum. (j) "Statute" shall mean Sections 180.0850 through 180.0859, inclusive, of the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes, as the same shall then be in effect, including any amendments thereto, but, in the case of any such amendment, only to the extent such amendment permits or requires the Corporation to provide broader indemnification rights than the Statute permitted or required the Corporation to provide prior to such amendment. 8.02. Mandatory Indemnification. To the fullest extent permitted or required by the Statute, the Corporation shall indemnify a Director or Officer against all Liabilities incurred by or on behalf of such Director or Officer in connection with a Proceeding in which the Director or Officer is a Party because he or she is a Director or Officer. 8.03. Procedural Requirements. (a) A Director or Officer who seeks indemnification under Section 8.02 shall make a written request therefor to the Corporation. Subject to Section 8.03(b), within 60 days of the Corporation's receipt of such request, the Corporation shall pay or reimburse the Director or Officer for the entire amount of Liabilities incurred by the Director or Officer in connection with the subject Proceeding (net of any Expenses previously advanced pursuant to Section 8.05). (b) No indemnification shall be required to be paid by the Corporation pursuant to Section 8.02 if, within such 60-day period, (i) a Disinterested Quorum, by a majority vote thereof, determines that the Director or Officer requesting indemnification engaged in misconduct constituting a Breach of Duty or (ii) a Disinterested Quorum cannot be obtained. (c) In either case of nonpayment pursuant to Section 8.03(b), the Board shall immediately authorize by resolution that an Authority, as provided in Section 8.04, determine whether the Director's or Officer's conduct constituted a Breach of Duty and, therefore, whether indemnification should be denied hereunder. (d) (i) If the Board does not authorize an Authority to determine the Director's or Officer's right to indemnification hereunder within such 60-day period and/or (ii) if indemnification of the requested amount of Liabilities is paid by the Corporation, then it shall be conclusively presumed for all purposes that a Disinterested Quorum has determined that the Director or Officer did not engage in misconduct constituting a Breach of Duty and, in the case of subsection (i) above (but not subsection (ii)), indemnification by the Corporation of the requested amount of Liabilities shall be paid to the Director or Officer immediately. 8.04. Determination of Indemnification. (a) If the Board authorizes an Authority to determine a Director's or Officer's right to indemnification pursuant to Section 8.03, then the Director or Officer requesting indemnification shall have the absolute discretionary authority to select one of the following as such Authority: (i) An independent legal counsel; provided, that such counsel shall be mutually selected by such Director or Officer and by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board; (ii) A panel of three arbitrators selected from the panels of arbitrators of the American Arbitration Association in Milwaukee, Wisconsin; provided, that (A) one arbitrator shall be selected by such Director or Officer, the second arbitrator shall be selected by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board, and the third arbitrator shall be selected by the two previously selected arbitrators, and (B) in all other respects, such panel shall be governed by the American Arbitration Association's then existing Commercial Arbitration Rules; or (iii) A court pursuant to and in accordance with Section 180.0854 of the Statute. (b) In any such determination by the selected Authority there shall exist a rebuttable presumption that the Director's or Officer's conduct did not constitute a Breach of Duty and that indemnification against the requested amount of Liabilities is required. The burden of rebutting such a presumption by clear and convincing evidence shall be on the Corporation or such other party asserting that such indemnification should not be allowed. (c) The Authority shall make its determination within 60 days of being selected and shall submit a written opinion of its conclusion simultaneously to both the Corporation and the Director or Officer. (d) If the Authority determines that indemnification is required hereunder, the Corporation shall pay the entire requested amount of Liabilities (net of any Expenses previously advanced pursuant to Section 8.05), including interest thereon at a reasonable rate, as determined by the Authority, within 10 days of receipt of the Authority's opinion; provided, that, if it is determined by the Authority that a Director or Officer is entitled to indemnification as to some claims, issues or matters, but not as to other claims, issues or matters, involved in the subject Proceeding, the Corporation shall be required to pay (as set forth above) only the amount of such requested Liabilities as the Authority shall deem appropriate in light of all of the circumstances of such Proceeding. (e) The determination by the Authority that indemnification is required hereunder shall be binding upon the Corporation regardless of any prior determination that the Director or Officer engaged in a Breach of Duty. (f) All Expenses incurred in the determination process under this Section 8.04 by either the Corporation or the Director or Officer, including, without limitation, all Expenses of the selected Authority, shall be paid by the Corporation. 8.05. Mandatory Allowance of Expenses. (a) The Corporation shall pay or reimburse, within 10 days after the receipt of the Director's or Officer's written request therefor, the reasonable Expenses of the Director or Officer as such Expenses are incurred; provided, the following conditions are satisfied: (i) The Director or Officer furnishes to the Corporation an executed written certificate affirming his or her good faith belief that he or she has not engaged in misconduct which constitutes a Breach of Duty; and (ii) The Director or Officer furnishes to the Corporation an unsecured executed written agreement to repay any advances made under this Section 8.05 if it is ultimately determined by an Authority that he or she is not entitled to be indemnified by the Corporation for such Expenses pursuant to this Section 8.04. (b) If the Director or Officer must repay any previously advanced Expenses pursuant to this Section 8.05, such Director or Officer shall not be required to pay interest on such amounts. 8.06. Indemnification and Allowance of Expenses of Certain Others. (a) The Corporation shall indemnify a director or officer of an Affiliate (who is not otherwise serving as a Director or Officer) against all Liabilities, and shall advance the reasonable Expenses, incurred by such director or officer in a Proceeding to the same extent hereunder as if such director or officer incurred such Liabilities because he or she was a Director or Officer, if such director or officer is a Party thereto because he or she is or was a director or officer of the Affiliate. (b) The Corporation shall indemnify an employee who is not a Director or Officer, to the extent that he or she has been successful on the merits or otherwise in defense of a Proceeding, for all reasonable Expenses incurred in the Proceeding if the employee was a Party because he or she was an employee of the Corporation. (c) The Board may, in its sole and absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify (to the extent not otherwise provided in Section 8.06(b) hereof) against Liabilities incurred by, and/or provide for the allowance of reasonable Expenses of, an employee or authorized agent of the Corporation acting within the scope of his or her duties as such and who is not otherwise a Director or Officer. 8.07. Insurance. The Corporation may purchase and maintain insurance on behalf of a Director or Officer or any individual who is or was an employee or authorized agent of the Corporation against any Liability asserted against or incurred by such individual in his or her capacity as such or arising from his or her status as such, regardless of whether the Corporation is required or permitted to indemnify against any such Liability under this Article VIII. 8.08. Notice to the Corporation. A Director, Officer or employee shall promptly notify the Corporation in writing when he or she has actual knowledge of a Proceeding which may result in a claim of indemnification against Liabilities or allowance of Expenses hereunder, but the failure to do so shall not relieve the Corporation of any liability to the Director, Officer or employee hereunder unless the Corporation shall have been irreparably prejudiced by such failure (as determined, in the case of Directors or Officers only, by an Authority selected pursuant to Section 8.04(a)). 8.09. Severability. If any provision of this Article VIII shall be deemed invalid or inoperative, or if a court of competent jurisdiction determines that any of the provisions of this Article VIII contravene public policy, this Article VIII shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such provisions which are invalid or inoperative or which contravene public policy shall be deemed, without further action or deed by or on behalf of the Corporation, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable. 8.10. Nonexclusivity of Article VIII. The rights of a Director, Officer or employee (or any other person) granted under this Article VIII shall not be deemed exclusive of any other rights to indemnification against Liabilities or advancement of Expenses which the Director, Officer or employee (or such other person) may be entitled to under any written agreement, Board resolution, vote of shareholders of the Corporation or otherwise, including, without limitation, under the Statute. Nothing contained in this Article VIII shall be deemed to limit the Corporation's obligations to indemnify against Liabilities or advance Expenses to a Director, Officer or employee under the Statute. 8.11. Contractual Nature of Article VIII; Repeal or Limitation of Rights. This Article VIII shall be deemed to be a contract between the Corporation and each Director, Officer and employee of the Corporation and any repeal or other limitation of this Article VIII or any repeal or limitation of the Statute or any other applicable law shall not limit any rights of indemnification against Liabilities or allowance of Expenses then existing or arising out of events, acts or omissions occurring prior to such repeal or limitation, including, without limitation, the right to indemnification against Liabilities or allowance of Expenses for Proceedings commenced after such repeal or limitation to enforce this Article VIII with regard to acts, omissions or events arising prior to such repeal or limitation. ARTICLE IX. AMENDMENTS 9.01. By Shareholders. These by-laws may be altered, amended or repealed and new by-laws may be adopted by the shareholders at any Annual Meeting or Special Meeting at which a quorum is in attendance. 9.02. By Directors. These by-laws may also be altered, amended or repealed and new by-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; provided, however, that the shareholders in adopting, amending or repealing a particular by-law may provide therein that the Board of Directors may not amend, repeal or readopt that by-law. 9.03. Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the by-laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the by-laws so that the by-laws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. EX-10.B 5 EXHIBIT 10(B) AMNDMT TO RETIREMENT PLAN Amendment to Banta Corporation Supplemental Retirement Plan for Key Employees 1. The second sentence of section 3 of the SERP is amended to read as follows: The term "Committee" shall mean the Compensation Committee of the Board of Directors of the Corporation. 2. The third sentence of section 3 of the SERP is amended to read as follows: Notwithstanding the foregoing, for purposes of this Supplemental Plan, "Compensation" and "Average Monthly Compensation" shall be: (i) deemed to include any non-deferred bonuses paid after December 31, 1996 under the Banta Corporation Management Incentive Award Plan, the Banta Corporation Long Term Incentive Plan, or any successor to any such plan; (ii) deemed to include any amounts not otherwise included therein or taken into account in the calculation thereof which the Eligible Employee would have received for such period but for his election to defer such amount pursuant to the Banta Corporation 1985 Deferred Compensation Plan, the Banta Corporation 1988 Deferred Compensation Plan, after December 31, 1996 the bonus plans identified in (i) above, or any successor to any such plan; and (iii) calculated without regard to the limitations imposed by Section 401(a)(17) of the Internal Revenue Code of 1986 on the amount of compensation that may be taken into account by plans qualifying under such Section. * * * EX-10.M 6 EXHIBIT 10(M) DEFERRED COMP. PLAN BANTA CORPORATION DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS (As Amended Effective January 1, 1997) 1. PARTICIPANTS Any director of Banta Corporation (the "Company"), other than a director who is also a salaried officer or employee of the Company or any of its subsidiaries, may elect to become a Participant under this Plan by written notice to the Company. 2. DEFERRED COMPENSATION Any Participant may defer all or any part of his compensation as a director which is earned after the date of said election as he may specify in said written notice to the Company, and such deferred compensation shall be credited by the Company to a deferred compensation account for such Participant at the time it would otherwise be payable to him. Any Participant may increase, reduce or suspend his election with respect to payments to be made in any future calendar year by written notice to the Company, filed prior to the beginning of such calendar year. 3. ACCOUNTS AND SUBACCOUNTS The deferred compensation of each Participant will be credited to an account on the Company's books in the name of such Participant, and each Participant will be furnished annually with a statement of his account. Such accounts shall serve solely as a device for determining the amount of the deferred compensation to be paid to Participants and shall not constitute or be treated as a trust fund of any kind. Each account shall be composed of an interest subaccount and a phantom stock subaccount. Principal additions to the Participant's account pursuant to paragraph 2 shall be allocated between the subaccounts as determined by the Participant. With respect to the part of his compensation as a director which is payable in cash, the Participant may elect either the interest subaccount or the phantom stock subaccount. With respect to the part of his compensation which is payable in Stock, the Participant may only elect the phantom stock subaccount. Once allocated, balances in one subaccount may not be transferred to the other subaccount. 4. INTEREST SUBACCOUNT The interest subaccount of each Participant shall be credited with interest annually, on March 15 of each year, until full payment to him of his account. The rate of interest to be credited shall be equal to the average prime rate of interest in effect at the Firstar Bank of Milwaukee, Wisconsin, for the preceding calendar year, computed by multiplying each prime rate of interest in effect at such bank during such calendar year by the number of days such rate was so in effect, and by dividing the total number so obtained by 365. 5. PHANTOM STOCK SUBACCOUNT The phantom stock subaccount of each Participant shall be treated for valuation purposes as if it were invested in the common stock of the Company ("Stock"). Cash and stock dividends, stock splits, and other events which affect the value of a share of Stock shall be reflected in the Participant's subaccount. Notwithstanding the foregoing, in no event shall the Participant have any Stock voting rights as a result of his subaccount balance. Transactions in the subaccount which have the effect of purchases or sales of Stock shall be determined based on the last sale or closing price for Stock on such market or exchange as the Stock is then traded (as reported by The Wall Street Journal (Midwest Edition)) on the business day immediately preceding the transaction (or if no trading occurred in the Stock on that date, on the next preceding date on which the Stock was traded). In the event a Participant elects to defer a portion of his compensation which is payable in Stock, the number of shares of Stock which the Participant would have otherwise received shall be credited to his subaccount. In addition to the principal amounts added pursuant to paragraphs 2 and 3 above, the phantom stock subaccount shall include any amount determined by the Company and the Participant resulting from the termination of the Banta Corporation Outside Directors' Retirement Plan, based on the last sale or closing price of the Stock on the last day on which the Stock was traded in December 1996. 6. PAYMENTS When a Participant shall cease to be a director of the Company, the amount accumulated in such Participant's deferred compensation account shall be paid as follows: (a) With respect to the interest subaccount, the Company shall pay to the Participant on the first business day following January 1 of each year following the date when he ceased to be a director an amount equal to one-third of the amount accumulated in his interest subaccount at the date he ceased to be a director, plus any interest thereafter credited to such account under the provisions of paragraph 4. (b) With respect to the phantom stock subaccount, the Company shall pay to the Participant in cash three installments, payable on the first business day following January 1 of each of the first three years following the date when he ceased to be a director. Each installment shall be a percentage of the value of the Participant's phantom stock subaccount determined as of the business day prior to the distribution. The first installment shall be one-third of the then-current value of the subaccount. The second installment shall be one-half of the then-current value of the subaccount. The third installment shall be the full value of the remaining subaccount. (c) Notwithstanding (a) and (b), the Company may, if its Board of Directors shall by resolution so determine, pay the full remaining balances in one lump sum at any time when the sum of such balances is less than $20,000. (d) If a Participant shall cease to be a director by reason of his death or if he shall die after he shall be entitled to payment hereunder but prior to receipt of all payments hereunder, all amounts credited to his account shall be paid to such beneficiary as such Participant shall have designated by an instrument in writing filed with the Secretary of the Company, or in the absence of such designation, to his personal representative, in the same manner and at the same intervals as such payments would have been made to such Participant had he continued to live. 7. CONDITIONS Until the Participant shall have received full payment hereunder, he shall not (i) divulge at any time any confidential information, technical or otherwise, obtained by him in his capacity as a director, or (ii) take any steps to do anything which would damage or reflect adversely on the reputation of the Company. Any Participant who shall fail to comply with either of the foregoing conditions shall forfeit all right to receive the balance remaining in his account. 8. ASSIGNMENT Neither the Participant, nor his beneficiary, nor his estate shall have any right or power to transfer, assign, pledge, encumber, anticipate or otherwise dispose of any rights or any distributions payable hereunder. 9. PARTICIPANTS' RIGHTS UNSECURED The right of any Participant to receive a payment hereunder shall be an unsecured claim against the general assets of the Company, wholly contingent upon the conditions set forth in paragraph 7. 10. AMENDMENTS OF THE PLAN The Board of Directors of the Company may amend the Plan at any time, without the consent of the Participants or their beneficiaries; provided, however, that no amendment shall divest any Participant of the right to receive the amounts then credited to his account hereunder, subject only to the conditions described in paragraph 7. 11. TERMINATION OF PLAN The Board of Directors of the Company may terminate the Plan at any time. Upon termination of the Plan, payments in respect of credits to Participants' deferred compensation accounts as of the date of termination shall be made in the manner and at the time heretofore prescribed or, if the Board of Directors so determines, in a lump sum. 12. EXPENSES Costs of administration of the Plan will be paid by the Company. 13. TAX WITHHOLDING To the extent required by law, the Company shall be entitled to withhold from any payments otherwise due hereunder all applicable state and federal taxes. EX-10.S 7 EXHIBIT 10(S) LONG-TERM INCENTIVE PLAN BANTA CORPORATION LONG TERM INCENTIVE PLAN 1. Purposes. The purposes of the Banta Corporation Long Term Incentive Plan (the "Plan") are to attract and retain in the employ of the Company and its subsidiaries persons who will contribute substantially to the long term success of the Company, and to provide incentive to such persons by rewarding them with additional compensation when significant financial objectives related to the Company's strategic plan are achieved. The Plan is designed to promote continuity of management and a long term perspective by those who are primarily responsible for developing and carrying out the long-range plans of the Company and securing its continued growth and financial success. 2. Definitions. For purposes of the Plan the following terms shall have the meaning set forth in this Section. (a) "Base Salary" means the average annual amount paid to a Participant as base compensation during the Performance Period (except as provided in Sections 9 and 10), including any amount of base compensation which would otherwise have been paid but which is deferred pursuant to a written agreement between the Participant and the Company or pursuant to any plan adopted by the Company providing for such deferral. (b) "Committee" means the Compensation Committee of the Board of Directors of the Company as from time to time constituted. (c) "Participant" means any employee of the Company or a Subsidiary, approved by the Committee, who is participating in the Plan. (d) "Performance Period" means a period of three successive calendar years during which performance is measured for purposes of the Plan. The first Performance Period will include the calendar years 1991, 1992 and 1993. (e) "Subsidiary" means any corporation in which the Company owns 50% or more of the outstanding stock entitled to vote for directors. 3. Administration. The Plan is to be administered by the Committee. The Committee will have complete authority, in its discretion, to construe and interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, and to make all other determinations necessary for the administration of the Plan. Any determination made by the Committee pursuant to this Section 3 or otherwise in accordance with the provisions of the Plan will be conclusive. 4. Amendment and Termination. The Plan may be amended at any time and from time to time in any respect by either the Committee or the Board of Directors of the Company and the Committee or the Board of Directors of the Company may waive, either generally or in particular cases, the application of any provision of the Plan which would result in the forfeiture or reduction of amounts otherwise payable. The Plan may be terminated at any time by the Board of Directors of the Company but no such termination shall be effective with respect to any Performance Period which has been in effect for more than twelve months. 5. Employees Eligible. Participation in the Plan will be limited to persons in salary grades 24 and above who are corporate or corporate staff officers of the Company or are presidents of a Subsidiary or division of the Company except as may be determined in individual cases by the Committee. Prior to January 31 of each calendar year the Chief Executive Officer of the Company will submit a list of employees eligible for participation in the Plan during the Performance Period which will begin with such calendar year. The Committee will review such list and approve or disapprove the participation of eligible persons. The persons whose participation is approved will be promptly notified of such approval. 6. Determination of Goals and Awards. Prior to January 31 of each calendar year the Chief Executive Officer of the Company will submit to the Committee for approval recommended financial performance goals applicable to each Participant or group of Participants for the Performance Period beginning with such calendar year. Levels of achievement will be identified for each goal, including minimum achievement, target achievement and maximum achievement and all Participants will be promptly notified of such levels. Once approved, the goals for a Performance Period may not be changed unless the Committee, in its discretion, determines that material unforeseen circumstances have affected the fairness of the goals to such an extent that an upward or downward adjustment is required. Participants affected by any such adjustment will be promptly notified of the adjustment. The amount of a Participant's award will range from 12.5% of Base Salary at minimum achievement to 25% at target achievement and 37.5% at maximum achievement in increments approved by the Committee in connection with approval of the goals for the Performance Period. 7. Payment of Awards. Except for amounts deferred as provided in Section 8, all awards will be paid to Participants in cash within 30 days after the date on which the consolidated financial statements of the Company for the last calendar year in a Performance Period have been reported upon and certified by the Company's independent certified public accountants. 8. Deferred Payment. A Participant may elect in advance to defer payment of all or any portion of the award otherwise payable to him under the Plan for a Performance Period by giving written notice (in the form specified by the Committee) to the Company providing for such deferral not later than December 31 of the year preceding commencement of the Performance Period; provided, however, that deferrals for the Performance Period beginning in 1991 may be elected by furnishing such notice to the Company not later than February 28, 1991. Any such deferral election shall be irrevocable. 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 will be paid to the Participant or his designated beneficiary or estate: (I) over a period of not more than fifteen years following termination of the Participant's employment by reason of death, disability or early or normal retirement (as permitted by the Company's retirement plans); and (ii) 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 are determined in the sole discretion of the Committee. Until such time as all amounts in the account are paid in full a credit in lieu of interest will 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 such 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 preceding calendar year will be computed by multiplying each prime rate of interest in effect at the First Wisconsin National Bank of Milwaukee during such year 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 the year. 9. Termination of Employment. In the event a Participant's employment is terminated by reason of death, disability or normal or early retirement (as permitted by the Company's retirement plans), the Participant will be entitled to receive a partial award for any Performance Period in which he was a Participant and during which he was employed for at least 24 months (or such shorter period as shall be determined by the Committee). The "Base Salary" of such a Participant will be determined by dividing his total base compensation (including amounts deferred as provided in Section 2(e)) while employed during the Performance Period by the number of full months he was so employed and multiplying the result by 12. The amount payable to the Participant will be a portion of the award which would otherwise be payable determined by multiplying such award by the fraction obtained by dividing the number of full months the Participant was employed during the Performance Period by 36. In the event a Participant's employment is terminated during a Performance Period for any reason other than death, disability or normal or early retirement, the Participant will not be entitled to any award for such Performance Period. 10. Change of Eligibility. With the approval of the Committee, a person who is hired or first promoted to an eligible position during the first two years of a Performance Period may be permitted to receive a partial award for such Performance Period. The "Base Salary" of the Participant and the amount of such partial award will be determined in the same manner as provided in Section 9. If a Participant becomes ineligible to participate in the Plan solely due to assignment to a different position, then the Committee may, in its discretion, permit such Participant to continue to participate in the Plan on such basis as the Committee may determine. 11. Beneficiary. Upon being notified that he has been approved for participation in the Plan, each Participant must file with the Company a designation of a beneficiary to receive the payments to which he is entitled under the Plan in the event of his death prior to receipt of all of such payments. Any such designation may be revoked and a new beneficiary may be designated at any time by the filing of written notice of such revocation and designation with the Company. If a Participant fails to make such a designation, or if the most recently designated beneficiary predeceases the Participant, payments due under the Plan after the Participant's death will be made to the Participant's estate. 12. Tax Withholding - Status of Payments. The Company may deduct and withhold from any amounts otherwise payable to a Participant such amount as may be required for the purpose of satisfying the Company's obligation to withhold federal, state or local taxes. No right, benefit or payment under the Plan will be subject to anticipation, sale, assignment, pledge, encumbrances or charge, and any attempt to anticipate, sell, assign, pledge, encumber or charge the same will be void. No right, benefit or payment hereunder will in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits. If any Participant or beneficiary hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit or payment hereunder, then such right, benefit or payment or any part thereof, will, in the sole discretion of the Committee, cease and determine; and in such event, the Company may hold or apply the same or any part thereof for the benefit of the Participant or his beneficiary, his or her spouse, children or other dependents, or any of them, in such manner and in such proportion as the Committee deems proper. The account created for a Participant under the Plan and amounts credited thereto will not constitute or be treated as a trust fund of any kind. On the contrary, the Company will not be required to set aside any amounts with respect thereto and all amounts at any time credited to such account will be and remain the sole property of the Company. A Participant will have no ownership rights of any nature with respect to amounts credited to his account until such time as such amounts are paid over and transferred to the Participant. EX-10.T 8 EXHIBIT 10(T) STOCK OPTION PLAN BANTA CORPORATION 1991 STOCK OPTION PLAN, As Amended 1. Purpose. The purpose of the Banta Corporation 1991 Stock Option Plan (the "Plan") is to promote the best interests of Banta Corporation (the "Company") and its shareholders by providing key employees of the Company and its subsidiaries and members of the Company's Board of Directors who are not employees of the Company or its subsidiaries with an opportunity to acquire a proprietary interest in the Company. It is intended that the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company by those key employees who are primarily responsible for shaping and carrying out the long-range plans of the Company and securing the Company's continued growth and financial success. In addition, by encouraging stock ownership by non-employee directors, the Company seeks both to attract and retain on its Board of Directors (the "Board") persons of exceptional competence and to provide a further incentive to serve as a director of the Company. It is intended that certain of the options issued pursuant to the Plan will constitute incentive stock options within the meaning of Section 422 of the Internal Revenue Code and successor provisions thereto ("Incentive Stock Options") and the remainder of the options issued under the Plan will constitute nonstatutory stock options. 2. Administration. The Plan shall be administered by the Stock Option Committee (the "Committee") of the Board. The Committee shall consist of not less than two members of the Board who qualify as "non- employee directors under Rule 16b-3" as defined in Section 13 hereof. A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by at least a majority of its members. Any decision or determination reduced to writing and signed by all of the members of the Committee shall be fully as effective as if it had been made by a unanimous vote at a meeting duly called and held. In accordance with the provisions of the Plan, the Committee shall select the key employees to whom options shall be granted; shall determine the number of shares to be embraced in each option, the time at which the option is to be granted, the type of option, the option period, the option price and the manner in which options become exercisable; and shall establish such other provisions of the option agreements as the Committee may deem necessary or desirable. Grants of options to non-employee directors, all of which options shall be nonstatutory stock options, shall be automatic and the amount and the terms of such awards shall be determined in accordance with Section 5 hereof. The Committee may adopt such rules and regulations for carrying out the Plan as it may deem proper and in the best interests of the Company. The interpretation of any provision of the Plan by the Committee and any determination on the matters referred to in this Section 2 shall be final. 3. Shares Subject to the Plan. The shares to be subject to options under the Plan shall be shares of the Company's Common Stock, $.10 par value ("Stock"). The total number of shares of Stock which may be purchased pursuant to options granted under the Plan shall not exceed an aggregate of 800,000 shares, subject to adjustment as provided in Section 8 hereof. In the event that an option granted under the Plan expires, is cancelled or terminates unexercised as to any shares of Stock covered thereby, such shares shall thereafter be available for the granting of additional options under the Plan. 4. Grants to Key Employees. (a) Eligibility. Any key employee ("Employee") of the Company or its present and future subsidiaries, as defined in Section 424(f) of the Internal Revenue Code ("Subsidiaries"), including any such Employee who is also an officer or director of the Company, whose judgment, initiative and efforts contribute materially to the successful performance of the Company shall be eligible to receive options under the Plan. (b) Option Price. The option price per share of Stock shall be fixed by the Committee, but shall not be less than 100% of the fair market value of a share of Stock on the date the option is granted. Unless otherwise determined by the Committee, the "fair market value" of a share of Stock on the date of grant shall be the last sale price for shares of Stock in the NASDAQ National Market System on the trading date next preceding the date on which the option is granted, as reported in The Wall Street Journal (Midwest Edition); provided, however, that if the principal market for the Stock is then a national securities exchange, the "fair market value" shall be the closing price for shares of Stock on the principal securities exchange on which the Stock is traded on the trading date next preceding the date of grant, or, in either case above, if no trading occurred on the trading date next preceding the date of grant, then the option price per share shall be determined with reference to the next preceding date on which the Stock is traded. (c) Grant of Options. Subject to the terms and conditions of the Plan, the Committee may, from time to time, grant to Employees options to purchase such number of shares of Stock and on such terms and conditions as the Committee may determine; provided, however, that any option granted to an Employee who is subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended, on the date of the grant shall not become exercisable (except as otherwise contemplated by Section 4(g) hereof or as otherwise specifically set forth in the option agreement) until at least six months elapse from the date of grant. More than one option may be granted to the same Employee. The date on which an option is granted shall be the date the Committee approves the granting of the option or, if the Committee so specifies, such later date as the Committee may determine. Options granted to Employees may be either Incentive Stock Options or nonstatutory stock options as determined by the Committee. Without in any way limiting the authority of the Committee to make grants of options to Employees hereunder, and in order to induce Employees to retain ownership of shares of Stock, the Committee shall have the authority (but not an obligation) to include within any option agreement a provision entitling an Employee to a further option (a "Re-load Option") in the event the Employee exercises an option under the Plan, in whole or in part, by surrendering previously acquired shares of Stock (as defined below). Any such Re- load Option shall be for a number of shares equal to the number of shares surrendered, shall only become exercisable on the terms specified by the Committee in the event the shares acquired upon such exercise are held for a minimum period of time as prescribed by the Committee, and shall be subject to such other terms and conditions as the Committee may determine. (d) Option Period. The Committee shall determine the expiration date of each option, but such expiration date shall be not later than five years after the date such option is granted. (e) Maximum Per Participant. The aggregate fair market value (determined as of the date the option is granted) of the Stock with respect to which any Incentive Stock Options are exercisable for the first time by an Employee during any calendar year under the Plan or any other plan of the Company or any parent corporation or Subsidiary shall not exceed $100,000. (f) Exercise of Options. An option may be exercised, subject to its terms and conditions and the terms and conditions of the Plan, in full at any time or in part from time to time by delivery to the Secretary of the Company at the Company's principal office in Menasha, Wisconsin, of a written notice of exercise specifying the number of shares with respect to which the option is being exercised. Any notice of exercise shall be accompanied by full payment of the option price of the shares being purchased (i) in cash or its equivalent; (ii) with the consent of the Committee (as set forth in the option agreement or otherwise), by tendering previously acquired shares of Stock (valued at their fair market value as of the date of exercise, as determined by the Committee consistent with the method of valuation set forth in Section 4(b) above); or (iii) with the consent of the Committee (as set forth in the option agreement or otherwise), by any combination of the means of payment set forth in subparagraphs (i) and (ii). For purposes of this Section 4, the term "previously acquired shares of Stock" shall only include Stock owned by the Employee prior to the exercise of the option for which payment is being made and shall not include shares of Stock which are being acquired pursuant to the exercise of said option. No shares shall be issued until full payment therefor has been made. (g) Termination of Options. Except as hereinafter provided, an option granted under the Plan to an Employee may be exercised only while the recipient is an employee of the Company or its Subsidiaries and only if he has been continuously so employed since the date the option was granted. Subject to the terms of any option agreement, in the event an Employee ceases to be employed by the Company or a Subsidiary by reason of death, disability or retirement after reaching the age of 65, the option, to the extent not theretofore exercised, may be exercised in full as follows: (i) by the legal representative of the Employee at any time within six months after the date of termination of employment due to death; or (ii) by the Employee or his legal representative or guardian at any time within three months after termination of the Employee's employment by reason of retirement after reaching the age of 65 or disability, but in either case no later than five years after the date of grant. Subject to the terms of any option agreement, in the event the Employee is discharged or leaves the employ of the Company and its Subsidiaries for any reason other than death, disability or retirement after reaching the age of 65, the option, to the extent not theretofore exercised and then exercisable in accordance with its terms, may be exercised by the Employee or his legal representative or guardian at any time within three months after the date of termination of employment, but in no event later than five years after the date of grant. 5. Grants to Non-Employee Directors. (a) Eligibility. Each member of the Board who is not an employee of the Company or any of its Subsidiaries or any parent corporation of the Company (a "Non-Employee Director") shall be eligible to be granted nonstatutory stock options under the Plan. A Non-Employee Director may hold more than one option, but only on the terms and subject to any restrictions set forth in this Section 5. (b) Option Price. The option price per share of Stock shall be equal to 100% of the fair market value of such shares on the date the option is granted. The "fair market value" of a share of Stock shall be determined with reference to the reported market price of the Stock in the manner set forth in Section 4(b) hereof. (c) Grant of Options. Each person then serving as a Non- Employee Director shall automatically be granted an option to purchase 3,000 shares of Stock on the date following the date on which shareholders of the Company approve the Plan. Any person who is first elected as a Non-Employee Director after the date of approval of the Plan by shareholders and prior to the date of the 1995 annual meeting of shareholders shall automatically on the date of such election be granted an option to purchase 3,000 shares of Stock. (d) Exercisability and Termination of Options. Options granted to Non-Employee Directors shall become exercisable six months following the date of grant; provided, however, that if a Non- Employee Director ceases to be a director of the Company by reason of death, disability or retirement within six months after the date of grant, the option shall become immediately exercisable in full. Options granted to Non-Employee Directors shall terminate on the earlier of: (i) five years after the date of grant; (ii) six months after the Non-Employee Director ceases to be a director of the Company by reason of death; or (iii) three months after the Non-Employee Director ceases to be a director of the Company for any reason other than death. (e) Exercise of Options. An option may be exercised, subject to its terms and conditions and the terms and conditions of the Plan, in full at any time or in part from time to time by delivery to the Secretary of the Company at the Company's principal office in Menasha, Wisconsin, of a written notice of exercise specifying the number of shares with respect to which the option is being exercised. Any notice of exercise shall be accompanied by full payment of the option price of the shares being purchased (i) in cash or its equivalent; (ii) by tendering previously acquired shares of Stock (valued at their fair market value as of the date of exercise, as determined with reference to the reported market price in the manner set forth in Section 4(b) above); or (iii) by any combination of the means of payment set forth in subparagraphs (i) and (ii). For purposes of subparagraphs (ii) and (iii) above, the term "previously acquired shares of Stock" shall only include Stock owned by the Non- Employee Director prior to the exercise of the option for which payment is being made and shall not include shares of Stock which are being acquired pursuant to the exercise of said option. No shares shall be issued until full payment therefor has been made. 6. Nontransferability of Options. No option shall be transferable by an optionee other than by will or the laws of descent and distribution. Options under the Plan may be exercised during the life of the optionee only by the optionee or his guardian or legal representative. 7. Powers of the Company Not Affected. The existence of the Plan or any options granted under the Plan shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred, or prior preference stock ahead of or affecting the Stock or the rights thereof, or any dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company's assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. 8. Capital Adjustments Affecting Stock. In the event of a capital adjustment resulting from a stock dividend (other than a stock dividend in lieu of an ordinary cash dividend), stock split, reorganization, spin-off, split-up or distribution of assets to shareholders, recapitalization, merger, consolidation, combination or exchange of shares or the like, the number of shares of Stock subject to the Plan and the number of shares under option in outstanding option agreements shall be adjusted in a manner consistent with such capital adjustment; provided, however, that no such adjustment shall require the Company to sell any fractional shares and the adjustment shall be limited accordingly. The price of any shares under option shall be adjusted so that there will be no change in the aggregate purchase price payable upon exercise of any such option. The determination of the Committee as to any adjustment shall be final. 9. Corporate Mergers and Other Consolidations. The Committee may also grant options having terms and provisions which vary from those specified in the Plan provided that any options granted pursuant to this Section 9 are granted in substitution for, or in connection with the assumption of, existing options granted by another corporation and assumed or otherwise agreed to be provided for by the Company pursuant to or by reason of a transaction involving a corporate merger, consolidation, acquisition or other combination or reorganization to which the Company is a party. 10. Option Agreements. All options granted under the Plan shall be evidenced by written agreements (which need not be identical) in such form as the Committee shall determine. Each option agreement shall specify whether the option granted thereunder is intended to constitute an Incentive Stock Option or a nonstatutory stock option. 11. Rights as a Shareholder; Rights as an Employee or a Director. An optionee shall have no rights as a shareholder with respect to shares covered by an option until the date of issuance of stock certificates to him and only after such shares are fully paid. Neither the Plan nor any option granted hereunder shall confer upon any optionee the right to continue as an employee or as a director of the Company. 12. Transfer Restrictions. Shares of Stock purchased under the Plan and held by any person who is an officer or director of the Company, or who directly or indirectly controls the Company, may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act of 1933, as amended, or except in a transaction which, in the opinion of counsel for the Company, is exempt from registration under said Act. The Committee may waive the foregoing restrictions in whole or in part in any particular case or cases or may terminate such restrictions whenever the Committee determines that such restrictions afford no substantial benefit to the Company. 13. Qualifications of Members of the Committee. A "non-employee director under Rule 16b-3" for purposes of Section 2 of the Plan shall mean a director who qualifies as a "non-employee director" as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended. 14. Amendment of Plan. The Board shall have the right to amend the Plan at any time and for any reason; provided, however, that the provisions of Section 5 of the Plan shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code of 1986, as amended, the Employee Retirement Income Security Act of 1974, as amended, or the rules promulgated thereunder; and provided further that shareholder approval of any amendment to the Plan shall also be obtained; (a) if otherwise required by (i) the rules and/or regulations promulgated under Section 16 of the Securities Exchange Act of 1934, as amended (in order for the Plan to remain qualified under Rule 16b-3 or any successor provisions under such Act), (ii) the Internal Revenue Code of 1986, as amended, or any rules promulgated thereunder (in order to allow for Incentive Stock Options to be granted under the Plan) or (iii) the quotation or listing requirements of NASDAQ or any principal securities exchange or market on which the Stock is then traded (in order to maintain the Stock's quotation or listing thereon); (b) if such amendment materially modifies the eligibility requirements as provided in Sections 4(a) and 5(a) hereof; (c) if such amendment increases the total number of shares of Stock, except as provided in Section 8 hereof, which may be purchased pursuant to the exercise of options granted under the Plan; or (d) if such amendment reduces the minimum option price per share at which options may be granted as provided in Sections 4(b) and 5(b) hereof. Any amendment of the Plan shall not, without the consent of the optionee, alter or impair any of the rights or obligations under any option previously granted to the optionee. 15. Termination of Plan. The Board shall have the right to suspend or terminate the Plan at any time; provided, however, that no Incentive Stock Options may be granted after the tenth anniversary of the effective date of the Plan. Termination of the Plan shall not affect the rights of optionees under options previously granted to them, and all unexpired options shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. 16. Effective Date. The Plan shall become effective on the date of adoption by the Board, subject to the approval of the Plan by the shareholders of the Company within twelve months of the date of adoption by the Board. All options granted prior to shareholder approval of the Plan shall be subject to such approval and shall not be exercisable until after such approval. 17. Tax Withholding. The Company may deduct and withhold from any cash otherwise payable to the optionee (whether payable as salary, bonus or other compensation) such amount as may be required for the purpose of satisfying the Company's obligation to withhold Federal, state or local taxes. Further, in the event the amount so withheld is insufficient for such purpose, the Company may require that the optionee pay to the Company upon its demand or otherwise make arrangements satisfactory to the Company for payment of such amount as may be requested by the Company in order to satisfy its obligations to withhold any such taxes. With the consent of the Committee, an Employee may be permitted to satisfy the Company's withholding tax requirements by electing to have the Company withhold shares of Stock otherwise issuable to the Employee or to deliver to the Company shares of Stock having a fair market value on the date income is recognized pursuant to the exercise of an option equal to the amount required to be withheld. The election shall be made in writing and shall be made according to such rules and in such form as the Committee may determine. EX-10.Y 9 EXHIBIT 10(Y) EQUITY INCENTIVE PLAN BANTA CORPORATION 1995 EQUITY INCENTIVE PLAN As Amended Section 1. Purpose The purpose of the Banta Corporation 1995 Equity Incentive Plan (the "Plan") is to promote the best interests of Banta Corporation (together with any successor thereto, the "Company") and its shareholders by providing key employees of the Company and its Affiliates (as defined below) and members of the Company's Board of Directors who are not employees of the Company or its Affiliates with an opportunity to acquire a proprietary interest in the Company. It is intended that the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company by those key employees who are primarily responsible for shaping and carrying out the long-range plans of the Company and securing the Company's continued growth and financial success. In addition, by encouraging stock ownership by directors who are not employees of the Company or its Affiliates, the Company seeks to attract and retain on its Board of Directors persons of exceptional competence and to provide a further incentive to serve as a director of the Company. Section 2. Definitions As used in the Plan, the following terms shall have the respective meanings set forth below: (a) "Affiliate" shall mean any entity that, directly or through one or more intermediaries, is controlled by, controls, or is under common control with, the Company. (b) "Award" shall mean any Option, Stock Appreciation Right, Restricted Stock or Performance Share granted under the Plan. (c) "Award Agreement" shall mean any written agreement, contract, or other instrument or document evidencing any Award granted under the Plan. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (e) "Commission" shall mean the United States Securities and Exchange Commission or any successor agency. (f) "Committee" shall mean a committee of the Board of Directors of the Company designated by such Board to administer the Plan and composed of not less than two directors, each of whom is a "non- employee director for purposes of Section 16" within the meaning of Rule 16b-3 and each of whom is an "outside director" within the meaning of Section 162(m)(4)(C) of the Code (or any successor provision thereto). (g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (h) "Excluded Items" shall mean any items which the Committee determines shall be excluded in fixing Performance Goals, such as any gains or losses from discontinued operations, any extraordinary gains or losses and the effects of accounting changes. (i) "Fair Market Value" shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. (j) "Incentive Stock Option" shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code (or any successor provision thereto). (k) "Key Employee" shall mean any officer or other key employee of the Company or of any Affiliate who is responsible for or contributes to the management, growth or profitability of the business of the Company or any Affiliate as determined by the Committee. (l) "Non-Employee Director" shall mean any member of the Company's Board of Directors who is not an employee of the Company or of any Affiliate. (m) "Non-Qualified Stock Option" shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option and shall mean any option granted to a Non-Employee Director under Section 6(b) of the Plan. (n) "Option" shall mean an Incentive Stock Option or a Non- Qualified Stock Option. (o) "Participating Key Employee" shall mean a Key Employee designated to be granted an Award under the Plan. (p) "Performance Goals" shall mean the following (in all cases after excluding the impact of applicable Excluded Items): (i) Return on equity for the Performance Period for the Company on a consolidated basis. (ii) Return on investment for the Performance Period (aa) for the Company on a consolidated basis, (bb) for any one or more Affiliates or divisions of the Company and/or (cc) for any other business unit or units of the Company as defined by the Committee at the time of selection. (iii) Return on net assets for the Performance Period (aa) for the Company on a consolidated basis, (bb) for any one or more Affiliates or divisions of the Company and/or (cc) for any other business unit or units of the Company as defined by the Committee at the time of selection. (iv) Economic value added (as defined by the Committee at the time of selection) for the Performance Period (aa) for the Company on a consolidated basis, (bb) for any one or more Affiliates or divisions of the Company and/or (cc) for any other business unit or units of the Company as defined by the Committee at the time of selection. (v) Earnings from operations for the Performance Period (aa) for the Company on a consolidated basis, (bb) for any one or more Affiliates or divisions of the Company and/or (cc) for any other business unit or units of the Company as defined by the Committee at the time of selection. (vi) Pre-tax profits for the Performance Period (aa) for the Company on a consolidated basis, (bb) for any one or more Affiliates or divisions of the Company and/or (cc) for any other business unit or units of the Company as defined by the Committee at the time of selection. (vii) Net earnings for the Performance Period (aa) for the Company on a consolidated basis, (bb) for any one or more Affiliates or divisions of the Company and/or (cc) for any other business unit or units of the Company as defined by the Committee at the time of selection. (viii) Net earnings per Share for the Performance Period for the Company on a consolidated basis. (ix) Working capital as a percent of net sales for the Performance Period (aa) for the Company on a consolidated basis, (bb) for any one or more Affiliates or divisions of the Company and/or (cc) for any other business unit or units of the Company as defined by the Committee at the time of selection. (x) Net cash provided by operating activities for the Performance Period (aa) for the Company on a consolidated basis, (bb) for any one or more Affiliates or divisions of the Company and/or (cc) for any other business unit or units of the Company as defined by the Committee at the time of selection. (xi) Market price per Share for the Performance Period. (xii) Total shareholder return for the Performance Period for the Company on a consolidated basis. (q) "Performance Period" shall mean, in relation to Performance Shares, any period for which a Performance Goal or Goals have been established. (r) "Performance Share" shall mean any right granted under Section 6(e) of the Plan that will be paid out as a Share (which, in specified circumstances, may be a Share of Restricted Stock). (s) "Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof. (t) "Released Securities" shall mean Shares of Restricted Stock with respect to which all applicable restrictions have expired, lapsed, or been waived. (u) "Restricted Securities" shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions. (v) "Restricted Stock" shall mean any Share granted under Section 6(d) of the Plan or, in specified circumstances, a Share paid in connection with a Performance Share under Section 6(e) of the Plan. (w) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission under the Exchange Act, or any successor rule or regulation thereto. (x) "Shares" shall mean shares of common stock of the Company, $.10 par value, and such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(b) of the Plan. (y) "Stock Appreciation Right" shall mean any right granted under Section 6(c) of the Plan. Section 3. Administration The Plan shall be administered by the Committee; provided, however, that if at any time the Committee shall not be in existence, the functions of the Committee as specified in the Plan shall be exercised by a committee consisting of those members of the Board of Directors of the Company who qualify as "non-employee directors for purposes of Section 16" under Rule 16b-3 and as "outside directors" under Section 162(m)(4)(C) of the Code (or any successor provision thereto). Subject to the terms of the Plan and without limitation by reason of enumeration, the Committee shall have full power and authority to: (i) designate Participating Key Employees; (ii) determine the type or types of Awards to be granted to each Participating Key Employee under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards granted to Participating Key Employees; (iv) determine the terms and conditions of any Award granted to a Participating Key Employee; (v) determine whether, to what extent, and under what circumstances Awards granted to Participating Key Employees may be settled or exercised in cash, Shares, other securities, other Awards, or other property, and the method or methods by which Awards may be settled, exercised, cancelled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other Awards, and other amounts payable with respect to an Award granted to Participating Key Employees under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan (including, without limitation, any Award Agreement); (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participating Key Employee, any Non-Employee Director, any holder or beneficiary of any Award, any shareholder, and any employee of the Company or of any Affiliate. Notwithstanding the foregoing, Awards to Non- Employee Directors under the Plan shall be automatic and the amount and terms of such Awards shall be determined as provided in Section 6(b) of the Plan. Section 4. Shares Available for Award (a) Shares Available. Subject to adjustment as provided in Section 4(b): (i) Number of Shares Available. The number of Shares with respect to which Awards may be granted under the Plan shall be 1,000,000. If, after the effective date of the Plan, any Shares covered by an Award granted under the Plan, or to which any Award relates, are forfeited or if an Award otherwise terminates, expires or is cancelled prior to the delivery of all of the Shares or of other consideration issuable or payable pursuant to such Award, then the number of Shares counted against the number of Shares available under the Plan in connection with the grant of such Award, to the extent of any such forfeiture, termination, expiration or cancellation, shall again be available for granting of additional Awards under the Plan. (ii) Limitations on Awards to Individual Participants. No Participating Key Employee shall be granted Awards under the Plan that could result in such Participating Key Employee exercising Options for, or Stock Appreciation Rights with respect to, more than 150,000 Shares or receiving Awards relating to more than 50,000 Shares of Restricted Stock or more than 50,000 Performance Shares under the Plan. Such number of Shares as specified in the preceding sentence shall be subject to adjustment in accordance with the terms of Section 4(b) hereof. In all cases, determinations under this Section 4(a)(ii) shall be made in a manner that is consistent with the exemption for performance-based compensation provided by Section 162(m) of the Code (or any successor provision thereto) and any regulations promulgated thereunder. (iii) Accounting for Awards. The number of Shares covered by an Award under the Plan, or to which such Award relates, shall be counted on the date of grant of such Award against the number of Shares available for granting Awards under the Plan. (iv) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares. (b) Adjustments. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee may, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares subject to the Plan and which thereafter may be made the subject of Awards under the Plan, (ii) the number and type of Shares subject to outstanding Awards, and (iii) the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; provided, however, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b) of the Code (or any successor provision thereto); and provided further that the number of Shares subject to any Award payable or denominated in Shares shall always be a whole number. Notwithstanding the foregoing, Non-Qualified Stock Options subject to grant or previously granted to Non-Employee Directors under Section 6(b) of the Plan at the time of any event described in the preceding sentence shall be subject to only such adjustments as shall be necessary to maintain the relative proportionate interest represented thereby immediately prior to any such event and to preserve, without exceeding, the value of such Options. Section 5. Eligibility Any Key Employee, including any executive officer or employee- director of the Company or of any Affiliate, who is not a member of the Committee shall be eligible to be designated a Participating Key Employee. All Non-Employee Directors shall receive Awards of Non-Qualified Stock Options as provided in Section 6(b). Section 6. Awards (a) Option Awards to Key Employees. The Committee is hereby authorized to grant Options to Key Employees with the terms and conditions as set forth below and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine. (i) Exercise Price. The exercise price per Share of an Option granted pursuant to this Section 6(a) shall be determined by the Committee; provided, however, that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option. (ii) Option Term. The term of each Option shall be fixed by the Committee; provided, however, that in no event shall the term of any Incentive Stock Option exceed a period of ten years from the date of its grant. (iii) Exercisability and Method of Exercise. An Option shall become exercisable in such manner and within such period or periods and in such installments or otherwise as shall be determined by the Committee. The Committee also shall determine the method or methods by which, and the form or forms, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which payment of the exercise price with respect to any Option may be made or deemed to have been made. (iv) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code (or any successor provision thereto) and any regulations promulgated thereunder. Notwithstanding any provision in the Plan to the contrary, no Incentive Stock Option may be granted hereunder after the tenth anniversary of the adoption of the Plan by the Board of Directors of the Company. (b) Non-Qualified Stock Option Awards to Non-Employee Directors. (i) Eligibility. Each Non-Employee Director shall automatically be granted Non-Qualified Stock Options under the Plan in the manner set forth in this Section 6(b). A Non-Employee Director may hold more than one Non-Qualified Stock Option, but only on the terms and subject to any restrictions set forth herein. (ii) Grant of Options to Newly-Elected Non-Employee Directors. Any Person who is first elected as a Non-Employee Director after the effective date of the Plan shall, on the date of such election, automatically be granted a Non-Qualified Stock Option to purchase 3,000 Shares (which number of Shares shall be subject to adjustment in the manner provided in Section 4(b) hereof). (iii) Annual Option Grants to Non-Employee Directors. Each Non-Employee Director (if he or she continues to serve in such capacity) shall, on the day following the annual meeting of shareholders in each year during the time the Plan is in effect, automatically be granted a Non-Qualified Stock Option to purchase 1,000 Shares (which number of Shares shall be subject to adjustment in the manner provided in Section 4(b) hereof); provided, however, that a Person who is first elected as a Non-Employee Director on the date of an annual meeting of shareholders and who receives on that date a Non-Qualified Stock Option pursuant to Section 6(b)(ii) hereof shall not be eligible to begin to receive grants pursuant to this Section 6(b)(iii) until the day following the next succeeding annual meeting of shareholders. (iv) Grant Limitation. Notwithstanding the provisions of Sections 6(b)(ii) and 6(b)(iii) hereof, Non-Qualified Stock Options shall be automatically granted to Non-Employee Directors under the Plan only for so long as the Plan remains in effect and a sufficient number of Shares are available hereunder for the granting of such Options. (v) Exercise Price. The exercise price per Share for a Non-Qualified Stock Option granted to a Non-Employee Director under the Plan shall be equal to 100% of the "market value" of a Share on the date of grant of such Option. The "market value" of a Share on the date of grant to the Non-Employee Director shall be the last sale price per Share for the Shares in the Nasdaq National Market on the trading date next preceding such grant date; provided, however, that if the principal market for the Shares is then a national securities exchange, the "market value" shall be the closing price per Share for the Shares on the principal securities exchange on which the Shares are traded on the trading date next preceding the date of grant, or, in either case above, if no trading occurred on the trading date next preceding the date on which the Non-Qualified Stock Option is granted, then the "market price" per Share shall be determined with reference to the next preceding date on which the Shares were traded. (vi) Exercisability and Termination of Options. Non- Qualified Stock Options granted to Non-Employee Directors under the Plan shall become exercisable six months following the date of grant; provided, however, that if a Non-Employee Director ceases to be a director of the Company by reason of death, disability or retirement within six months after the date of grant, the Option shall become immediately exercisable in full. Non-Qualified Stock Options granted to Non-Employee Directors shall terminate on the earlier of: (A) ten years after the date of grant; or (B) twelve months after the Non-Employee Director ceases to be a director of the Company for any reason, including as a result of the Non-Employee Director's death, disability or retirement. (vii) Exercise of Options. A Non-Qualified Stock Option granted to a Non-Employee Director may be exercised, subject to its terms and conditions and the terms and conditions of the Plan, in full at any time or in part from time to time by delivery to the Secretary of the Company at the Company's principal office in Menasha, Wisconsin, of a written notice of exercise specifying the number of shares with respect to which the Option is being exercised. Any notice of exercise shall be accompanied by full payment of the exercise price of the Shares being purchased (x) in cash or its equivalent; (y) by tendering previously acquired Shares (valued at their "market value" [as determined in accordance with Section 6(b)(v)] as of the date of exercise); or (z) by any combination of the means of payment set forth in subparagraphs (x) and (y). For purposes of subparagraphs (y) and (z) above, the term "previously acquired Shares" shall only include Shares owned by the Non-Employee Director prior to the exercise of the Option for which payment is being made and shall not include Shares which are being acquired pursuant to the exercise of said Option. No shares will be issued until full payment therefor has been made. (c) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Key Employees. Non- Employee Directors are not eligible to be granted Stock Appreciation Rights under the Plan. Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right. Subject to the terms of the Plan, the grant price, term, methods of exercise, methods of settlement (including whether the Participating Key Employee will be paid in cash, Shares, other securities, other Awards, or other property, or any combination thereof), and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. (d) Restricted Stock Awards. (i) Issuance. The Committee is hereby authorized to grant Awards of Restricted Stock to Key Employees; provided, however, that the aggregate number of Shares of Restricted Stock granted under the Plan to all Participating Key Employees as a group shall not exceed 150,000 (such number of Shares subject to adjustment in accordance with the terms of Section 4(b) hereof). Non-Employee Directors are not eligible to be granted Restricted Stock under the Plan. (ii) Restrictions. Shares of Restricted Stock granted to Participating Key Employees shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate. (iii) Registration. Any Restricted Stock granted under the Plan to a Participating Key Employee may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan to a Participating Key Employee, such certificate shall be registered in the name of the Participating Key Employee and shall bear an appropriate legend (as determined by the Committee) referring to the terms, conditions, and restrictions applicable to such Restricted Stock. (iv) Payment of Restricted Stock. At the end of the applicable restriction period relating to Restricted Stock granted to a Participating Key Employee, one or more stock certificates for the appropriate number of Shares, free of restrictions imposed under the Plan, shall be delivered to the Participating Key Employee, or, if the Participating Key Employee received stock certificates representing the Restricted Stock at the time of grant, the legends placed on such certificates shall be removed. (v) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment of a Participating Key Employee (as determined under criteria established by the Committee) for any reason during the applicable restriction period, all Shares of Restricted Stock still subject to restriction shall be forfeited by the Participating Key Employee; provided, however, that the Committee may, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock held by a Participating Key Employee. (e) Performance Shares. (i) Issuance. The Committee is hereby authorized to grant Awards of Performance Shares to Participating Key Employees. Non- Employee Directors are not eligible to be granted Performance Shares under the Plan. (ii) Performance Goals and Other Terms. The Committee shall determine the Performance Period, the Performance Goal or Goals (and the performance level or levels related thereto) to be achieved during any Performance Period, the proportion of payments, if any, to be made for performance between the minimum and full performance levels for any Performance Goal and, if applicable, the relative percentage weighting given to each of the selected Performance Goals, the restrictions applicable to Shares of Restricted Stock received upon payment of Performance Shares if Performance Shares are paid in such manner, and any other terms, conditions and rights relating to a grant of Performance Shares. The Committee shall have sole discretion to alter the selected Performance Goals set forth in Section 2(p), subject to shareholder approval, to the extent required to comply with Rule 16b-3 and to qualify the Award for the performance-based exemption provided by Section 162(m) of the Code (or any successor provision thereto). Notwithstanding the foregoing, in the event the Committee determines it is advisable to grant Performance Shares which do not qualify for the performance-based exemption under Section 162(m) of the Code (or any successor provision thereto), the Committee may make such grants without satisfying the requirements thereof. (iii) Rights and Benefits During the Performance Period. The Committee may provide that, during a Performance Period, a Participating Key Employee shall be paid cash amounts, with respect to each Performance Share held by such Participating Key Employee, in the same manner, at the same time, and in the same amount paid, as a cash dividend on a Share. Participating Key Employees shall have no voting rights with respect to Performance Shares held by them. (iv) Payment of Performance Shares. As soon as is reasonably practicable following the end of the applicable Performance Period, and subject to the Committee certifying in writing as to the satisfaction of the requisite Performance Goal or Goals if such certification is required in order to qualify the Award for the performance-based exemption provided by Section 162(m) of the Code (or any successor provision thereto), one or more certificates representing the number of Shares equal to the number of Performance Shares payable shall be registered in the name of and delivered to the Participating Key Employee; provided, however, that any Shares of Restricted Stock payable in connection with Performance Shares shall, pending the expiration, lapse, or waiver of the applicable restrictions, be evidenced in the manner as set forth in Section 6(d)(iii) hereof. (f) General. (i) No Consideration for Awards. Awards shall be granted to Participating Key Employees for no cash consideration unless otherwise determined by the Committee. Awards of Non-Qualified Stock Options granted to Non-Employee Directors under Section 6(b) of the Plan shall be granted for no cash consideration unless otherwise required by law. (ii) Award Agreements. Each Award granted under the Plan shall be evidenced by an Award Agreement in such form (consistent with the terms of the Plan) as shall have been approved by the Committee. (iii) Awards May Be Granted Separately or Together. Awards to Participating Key Employees under the Plan may be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards. (iv) Forms of Payment Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award to a Participating Key Employee may be made in such form or forms as the Committee shall determine, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of interest on installment or deferred payments. (v) Limits on Transfer of Awards. No Award (other than Released Securities), and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participating Key Employee or a Non-Employee Director otherwise than by will or by the laws of descent and distribution (or, in the case of an Award of Restricted Securities, to the Company); provided, however, that a Participating Key Employee at the discretion of the Committee may, and a Non-Employee Director shall, be entitled, in the manner established by the Committee, to designate a beneficiary or beneficiaries to exercise his or her rights, and to receive any property distributable, with respect to any Award upon the death of the Participating Key Employee or the Non-Employee Director, as the case may be. Each Award, and each right under any Award, shall be exercisable, during the lifetime of the Participating Key Employee or the Non-Employee Director, only by such individual or, if permissible under applicable law, by such individual's guardian or legal representative. No Award (other than Released Securities), and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. (vi) Term of Awards. Except as otherwise provided in the Plan, the term of each Award shall be for such period as may be determined by the Committee. (vii) Rule 16b-3 Six-Month Limitations. To the extent required in order to comply with Rule 16b-3 only, any equity security offered pursuant to the Plan may not be sold for at least six months after acquisition, except in the case of death or disability, and any derivative security issued pursuant to the Plan shall not be exercisable for at least six months, except in case of death or disability of the holder thereof. Terms used in the preceding sentence shall, for the purposes of such sentence only, have the meanings, if any, assigned or attributed to them under Rule 16b-3. (viii) Share Certificates; Representation. In addition to the restrictions imposed pursuant to Section 6(d) and Section 6(e) hereof, all certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Commission, any stock exchange or other market upon which such Shares are then listed or traded, and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. The Committee may require each Participating Key Employee, Non-Employee Director or other Person who acquires Shares under the Plan by means of an Award originally made to a Participating Key Employee or a Non-Employee Director to represent to the Company in writing that such Participating Key Employee, Non-Employee Director or other Person is acquiring the Shares without a view to the distribution thereof. Section 7. Amendment and Termination of the Plan; Correction of Defects and Omissions (a) Amendments to and Termination of the Plan. The Board of Directors of the Company may at any time amend, alter, suspend, discontinue, or terminate the Plan; provided, however, that the provisions of Section 6(b) of the Plan shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, as amended, or the rules promulgated thereunder; and provided further that shareholder approval of any amendment of the Plan shall also be obtained if otherwise required by: (i) the rules and/or regulations promulgated under Section 16 of the Exchange Act (in order for the Plan to remain qualified under Rule 16b-3), (ii) the Code or any rules promulgated thereunder (in order to allow for Incentive Stock Options to be granted under the Plan), or (iii) the quotation or listing requirements of the Nasdaq National Market or any principal securities exchange or market on which the Shares are then traded (in order to maintain the quotation or listing of the Shares thereon). Termination of the Plan shall not affect the rights of Participating Key Employees or Non-Employee Directors with respect to Awards previously granted to them, and all unexpired Awards shall continue in force and effect after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. (b) Correction of Defects, Omissions and Inconsistencies. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in any Award or Award Agreement in the manner and to the extent it shall deem desirable to carry the Plan into effect. Section 8. General Provisions (a) No Rights to Awards. No Key Employee, Participating Key Employee or other Person (other than a Non-Employee Director to the extent provided in Section 6(b) of the Plan) shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Key Employees, Participating Key Employees, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each Participating Key Employee. (b) Withholding. No later than the date as of which an amount first becomes includible in the gross income of a Participating Key Employee for federal income tax purposes with respect to any Award under the Plan, the Participating Key Employee shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, withholding obligations arising with respect to Awards to Participating Key Employees under the Plan may be settled with Shares (other than Restricted Securities), including Shares that are part of, or are received upon exercise of, the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and any Affiliate shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participating Key Employee. The Committee may establish such procedures as it deems appropriate for the settling of withholding obligations with Shares, including, without limitation, the establishment of such procedures as may be necessary to satisfy the requirements of Rule 16b-3. (c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. (d) Rights and Status of Recipients of Awards. The grant of an Award shall not be construed as giving a Participating Key Employee the right to be retained in the employ of the Company or any Affiliate. Further, the Company or any Affiliate may at any time dismiss a Participating Key Employee from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. The grant of an Award to a Non-Employee Director pursuant to Section 6(b) of the Plan shall confer no right on such Non-Employee Director to continue as a director of the Company. Except for rights accorded under the Plan and under any applicable Award Agreement, Participating Key Employees and Non-Employee Directors shall have no rights as holders of Shares as a result of the granting of Awards hereunder. (e) Unfunded Status of the Plan. Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any Participating Key Employee, any Non-Employee Director or other Person. To the extent any Person holds any right by virtue of a grant under the Plan, such right (unless otherwise determined by the Committee) shall be no greater than the right of an unsecured general creditor of the Company. (f) Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Wisconsin and applicable federal law. (g) Severability. If any provision of the Plan or any Award Agreement or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan, any Award Agreement or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, any Award Agreement or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan, any such Award Agreement and any such Award shall remain in full force and effect. (h) No Fractional Shares. No fractional Shares or other securities shall be issued or delivered pursuant to the Plan, any Award Agreement or any Award, and the Committee shall determine (except as otherwise provided in the Plan) whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights thereto shall be canceled, terminated, or otherwise eliminated. (i) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Section 9. Effective Date of the Plan The Plan shall be effective on the day immediately following its approval by the shareholders of the Company provided that such approval is obtained within twelve months following the date of adoption of the Plan by the Board of Directors of the Company. EX-10.Z 10 EXHIBIT 10(Z) DIRECTOR STOCK GRANT PLAN BANTA CORPORATION DIRECTOR STOCK GRANT PLAN 1. Purpose. The purpose of the Banta Corporation Director Stock Grant Plan (the "Plan") is to promote the best interests of Banta Corporation (the "Company") and its shareholders by providing a means to attract and retain competent independent directors and to provide opportunities for additional stock ownership by such directors which will further increase their proprietary interest in the Company and, consequently, their identification with the interests of the shareholders of the Company. 2. Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Administrator"), subject to review by the Board of Directors (the "Board"). The Administrator may adopt such rules and regulations for carrying out the Plan as it may deem proper and in the best interests of the Company. The interpretation by the Board of any provision of the Plan or any related documents shall be final. 3. Stock Subject to the Plan. Subject to adjustment in accordance with the provisions of paragraph 6, the total number of shares of common stock, $.10 par value, of the Company ("Common Stock") available for issuance under the Plan shall be 25,000. Shares of Common Stock to be delivered under the Plan shall be made available from presently authorized but unissued Common Stock or authorized and issued shares of Common Stock reacquired and held as treasury shares, or a combination thereof. In no event shall the Company be required to issue fractional shares of Common Stock under the Plan. Whenever under the terms of the Plan a fractional share of Common Stock would otherwise be required to be issued, there shall be paid in lieu thereof one full share of Common Stock. 4. Eligible Directors and Director Grants. Each member of the Board who is not an employee of the Company or any subsidiary of the Company and who is paid a cash retainer fee by the Company for service as a director ("Eligible Director") shall be eligible to receive shares of Common Stock under the Plan. After January 1 but before January 15 of each year following the effective date of the Plan, each Eligible Director shall receive such number of shares of Common Stock equal to the quotient (rounded up to the nearest whole number) obtained by dividing 50% of the then current annual retainer fee payable to the Company's directors by the last sale price of the Common Stock as reported on The Nasdaq Stock Market on the last day on which shares of Common Stock are traded in the immediately preceding calendar year. An Eligible Director who is elected as a director of the Company for the first time after the foregoing payment of Common Stock has been made in any year shall be entitled to receive (within 15 calendar days of his or her election) such number of shares of Common Stock as is equal to the product (rounded up to the nearest whole number) obtained by multiplying the number of shares an Eligible Director received under the Plan in the previous January by a fraction, the numerator of which is the amount of cash retainer (at the then current rate) which the newly-elected director will be paid for the remainder of the year and the denominator of which is 50% of the then annual retainer fee. In lieu of the receipt of shares of Common Stock under the Plan, an Eligible Director will be allowed to defer such award pursuant to the terms of the Company's Deferred Compensation Plan for Certain Directors. 5. Restrictions on Transfer. Shares of Common Stock acquired under the Plan may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act of 1933, as amended, or except in a transaction which, in the opinion of counsel, is exempt from registration under said Act. All certificates evidencing shares subject to awards to Eligible Directors may bear an appropriate legend evidencing any such transfer restriction. The Administrator may require each Eligible Director receiving an award under the Plan to represent in writing that such person is acquiring the shares of Common Stock for his or her own account for investment purposes only and without a view to the distribution thereof. All dividends and voting rights for shares issued under the Plan shall accrue as of the issue date thereof. 6. Adjustment Provisions. In the event of any change in the Common Stock by reason of a declaration of a stock dividend (other than a stock dividend declared in lieu of an ordinary cash dividend), stock split, spin-off, merger, consolidation, recapitalization, or split-up, combination or exchange of shares, or otherwise, the aggregate number of shares available under the Plan shall be appropriately adjusted in order to prevent dilution or enlargement of the benefits intended to be made available under the Plan. 7. Amendment of Plan. The Board shall have the right to amend the Plan at any time or from time to time in any manner that it may deem appropriate; provided, however, that the provisions of paragraph 4 shall not be amended more than once every six months. 8. Governing Law. The Plan, all awards hereunder, and all determinations made and actions taken pursuant to the Plan shall be governed by the internal laws of the State of Wisconsin and applicable federal law. 9. Effective Date and Term of Plan. The effective date of the Plan is January 1, 1997. The Plan shall terminate on such date as may be determined by the Board. EX-13 11 PORTIONS OF THE ANNUAL REPORT [Page 16 of the Annual Report] Five-Year Summary of Selected Financial Data Not Covered by Report of Independent Public Accountants
Dollars in thousands (except per share data) 1996 1995 1994 1993 1992 Summary of Earnings (1) Net sales $1,083,763 $1,022,650 $811,330 $691,244 $637,416 Net earnings 50,907 53,550 47,228 40,992 35,662 Net earnings per common share (2) 1.63 1.75 1.56 1.36 1.19 Dividends paid per common share (2) .44 .37 .35 .31 .27 Financial Summary Working capital 219,630 187,956 101,422 106,171 102,214 Net plant and equipment 319,939 313,718 293,662 232,888 205,246 Total assets 719,218 678,809 577,763 457,433 410,182 Long-term debt 133,696 134,953 67,834 45,603 52,491 Interest expense 10,214 9,891 5,902 5,346 5,786 Shareholders' investment 420,592 387,112 331,587 292,428 258,237 Book value per share of common stock (2),(3) 13.58 12.55 10.98 9.75 8.67 (1) All years comprised 52 weeks except 1992 which comprised 53 weeks. (2) Per share amounts have been adjusted for the three-for-two stock splits distributed in March 1996 and April 1993. (3) Book values per share for common stock are based on shares outstanding at year-end, as adjusted for stock splits.
[Pages 17-19 of the Annual Report] Management's Discussion and Analysis of Financial Position and Operations Highlights In 1996, Banta Corporation recorded its second consecutive $1 billion sales year, with revenues of $1.08 billion, up 6%, and net earnings of $51 million, 5% below 1995, a record year. 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 addition to the impact that paper prices had on buying patterns of customers, the Corporation's sales were directly impacted by paper prices in 1996. Since changes in paper prices are reflected in pricing to customers, the Corporation's sales were reduced by approximately $50 million in 1996 due to falling paper prices. The Corporation nonetheless reported higher sales for 1996 because of increased sales by its newly formed Banta Global Turnkey Group. During the fourth quarter of 1995, Banta acquired six of the operations of B.G. Turnkey Services Ltd. (primarily located in Europe) which are now part of this Group. These operations provide project management, manufacturing, packaging and worldwide distribution services to computer software publishers as well as manufacturers of computer hardware and consumer electronics. The Group's sales reached $185 million, an increase of $96 million in 1996 due to a full year of ownership of the acquired operations. The increase in Global Turnkey's sales reduced the Corporation's 1996 margins because the turnkey sales generally have a higher material content than the Corporation's traditional print sales. The 1996 operating margin for the turnkey market classification was 3.1%, down from 6.6% for 1995 due to costs associated with expanding the business and lower volume from several core customers. The higher margin in 1995 included only the fourth quarter's results for the acquired operations, which is traditionally their busiest and most profitable quarter. The operating margin for the remainder of the Corporation's business was 9.6%, down from 9.8% in 1995 influenced by a reduction in capacity utilization because of lower print demand, a $7 million increase in depreciation from recent capital additions, costs associated with the start up of equipment for the consumer catalog market and generally lower pricing. As a result of the lower demand for printing services in 1996, the pressure to reduce prices for the Corporation's customers was intense throughout the print markets. The consumer catalog and direct marketing businesses experienced an extremely competitive pricing environment. Some of the pricing pressure was offset by productivity improvements, aided both by investments in new technology and the Corporation's Continuous Improvement culture. Net Sales The Corporation classifies its printing services 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). Net sales for these market classifications, as a percent of net sales, were as follows: 1996 1995 1994 Commercial 44% 47% 46% Books 22 26 28 Turnkey 17 8 4 Magazines 11 11 12 Other 6 8 10 ---- ---- ---- 100% 100% 100% ==== ==== ==== 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%). In 1996 sales declined in all categories of the commercial market, other than single-use products. 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. The Corporation expects 1997 to be a better year for textbook adoptions. During the last several years print documentation for computer software and hardware has been increasingly replaced by CD-ROM and online documentation. Sales of these manuals declined in 1996 as the Corporation's Information Services Group pursued other markets for its equipment. Sales of turnkey services segment increased in 1996 because it included a full year's sales of B.G. Turnkey Services which was acquired in the fourth quarter of 1995. Sales of the operations acquired were $96 million higher in 1996 than during the three-month period they were owned by the Corporation in 1995. The magazine market sales increase was accomplished despite the large reduction in paper prices. New eight-unit presses added in 1995 at both plants serving the market provided capacity to allow the Corporation to add new publishers and titles to their customer lists. The sales decrease in the "other" classification is 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. Sales of point-of-purchase and digital imaging were down slightly in 1996. Percentage increases (decreases) in sales by market classification for 1995 compared with 1994 were as follows: commercial - 29%; books - 17%; turnkey - 144%; magazines - 18%; and other - (4%). Approximately one-half of the 1995 sales gain came from the unprecedented rise in paper prices that occurred in 1995. Higher levels of utilization and the addition of a 48-page high-speed press for the consumer catalog market contributed to the commercial market increase. Increases in the educational and trade markets added to the book market increase. The aqcuisition of B.G. Turnkey Services accounted for the turnkey sales gain. The increase in the magazine market was due to increased market penetration made possible by new capacity additions. The decline in "other" sales was primarily due to lower utilization at the Banta Digital Group's plants. Costs of Goods Sold In 1996, cost of goods sold as a percent of sales was 79.8% compared with 78.9% in 1995 and 77.0% in 1994. The largest single factor contributing to the percentage margin reduction was the higher proportion of turnkey sales in 1996 sales. Turnkey services generally provide a lower percentage margin because they contain a higher material content. Margins for the Corporation's printing markets were impacted by several factors in 1996. Extremely competitive pricing in several markets reduced margins. Margins were also reduced in 1996 by lower cost recovery from the sale of by-products (primarily scrap paper). Somewhat offsetting these factors was the impact of lower paper prices in 1996. Since the margin on the sale of paper is generally lower than that of value-added services, declining paper prices increased margin percentages, particularly during the last half of 1996. At the end of 1996 paper prices appeared to have stabilized in most grades at a level lower than the prices that were available at any time during the year. A second factor that offsets the trends causing margin decline was the Corporation's use of the LIFO inventory valuation method. LIFO adjustments increased (reduced) cost of goods sold by ($4,481,000), $4,014,000 and $844,000 in 1996, 1995 and 1994, respectively. The changes in the LIFO valuation adjustment represented an .8% increase in the 1996 margin compared with that of 1995. Turnkey margin percentages declined during 1996 primarily due to costs associated with expanding services in the United States. The margin decline in 1995 resulted from increasing paper prices, the acquisition of B.G. Turnkey Services and the LIFO valuation adjustment. The change in LIFO valuation adjustment between 1995 and 1994, which is primarily due to the significant paper price increases, represents about one-third of the percentage increase in cost of goods sold. Expenses Selling and administrative expenses as a percentage of sales were 11.7%, 11.5% and 12.7% in 1996, 1995 and 1994, respectively. Selling and administrative expenses increased $8.8 million (7.4%) in 1996 and $15.1 million (14.7%) in 1995. The 1996 increase is attributable to increased costs associated with the expansion of the turnkey services segment. This increase was somewhat offset by reductions in other expenses, including profit-based incentives. The increase in expenses in 1995 includes $7.9 million of costs incurred by the companies acquired in 1995 and 1994 and costs required to support the sales increases in other operations. Earnings From Operations and Interest Expense Earnings from operations as a percent of sales were 8.5%, 9.6% and 10.3% in 1996, 1995 and 1994, respectively. Interest expense was $10.2 million, $9.9 million and $5.9 million in 1996, 1995 and 1994, respectively. The increased interest expense in 1996 was the result of additional borrowings in 1995. During 1996, the Corporation incurred no new long-term debt and made minimal use of short-term credit facilities. During 1995, the Corporation's average debt levels increased due to acquisitions, capital expenditures and increased average investment in working capital as a result of higher paper prices, higher inventory levels due to the tight paper market and higher activity levels in general. The increased debt levels caused the higher interest expense in 1995 as compared to 1994. Pretax earnings as a percent of sales were 7.8%, 8.7% and 9.7% in 1996, 1995 and 1994, respectively. Effective income tax rates were 39.5%, 39.9% and 40.0% in 1996, 1995 and 1994, respectively. The small reduction in the effective tax rates in 1996 and 1995 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 1996 1995 1994 Cash $ 57,417 $ 27,130 $ 370 Receivables 206,245 199,151 169,613 Inventories 69,063 70,750 67,797 Short-term debt 4,620 -- 56,001 Accounts payable and accrued liabilities 117,585 114,997 82,668 Working capital 219,630 187,956 101,422 Long-term debt 133,696 134,953 67,834 Shareholders' investment 420,592 387,112 331,587 Long-term debt to total long-term debt and shareholders' investment 24.1% 25.8% 17.0% Current ratio 2.72 2.53 1.69 The Corporation generally raises short-term financing 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 1996, 1995 and 1994 were $760,000, $19.4 million and $26.0 million, respectively. The Corporation has historically raised long-term debt financing by issuing unsecured promissory notes to insurance companies on a private placement basis. No long-term borrowings were required in 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. 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 continued its efforts to control investment in receivables and inventories during 1996. During 1995 working capital increased $86 million. This was made possible by cash flow from operations and $75 million of new long-term borrowings. These cash flows also allowed the Corporation to repay all of the $56 million of short-term debt that was outstanding at the end of 1994. During 1996, the Corporation repurchased 303,600 of its common shares at an average price of $23.38. The Corporation's Board of Directors has authorized a repurchase program for up to 1.5 million shares of common stock. During 1997 the Corporation intends to continue its repurchase of shares pursuant to this authorization. The Corporation's capital investment program, which resulted in capital spending of $60 million in 1996, reflects its commitment to maintain modern, efficient plants and to be able to utilize new printing and digital imaging technologies. Preliminary plans for 1997 are for capital commitments to exceed $65 million. Cash requirements would exceed that amount as the unpaid balance of prior commitments exceeded $20 million at the end of 1996. [Pages 20-32 of the Annual Report] Consolidated Balance Sheets December 28, 1996 and December 30, 1995 Dollars in thousands Assets 1996 1995 Current Assets: Cash and cash equivalents $ 57,417 $ 27,130 Receivables, less reserves of $3,486,000 and $3,414,000, respectively 206,245 199,151 Inventories 69,063 70,750 Prepaid expenses 5,585 4,324 Deferred income taxes 9,145 9,451 -------- -------- 347,455 310,806 Plant and Equipment: Land 6,438 6,295 Buildings and improvements 96,185 85,161 Machinery and equipment 547,620 501,251 -------- -------- 650,243 592,707 Less accumulated depreciation (330,304) (278,989) -------- -------- 319,939 313,718 Other Assets 11,886 13,292 Cost in Excess of Net Assets of Businesses Acquired 39,938 40,993 -------- -------- $719,218 $ 678,809 ======== ======== Liabilities and Shareholders' Investment Current Liabilities: Short-term debt $ 4,620 $ - Accounts payable 75,428 68,365 Accrued salaries and wages 18,269 21,784 Other accrued liabilities 23,888 24,848 Current maturities of long-term debt 5,620 7,853 -------- -------- 127,825 122,850 Non-current Liabilities: Long-term debt 133,696 134,953 Deferred income taxes 21,805 20,785 Other non-current liabilities 15,300 13,109 -------- -------- 170,801 168,847 Shareholders' Investment: Common stock - $.10 par value, authorized 75,000,000 shares; 30,969,069 and 20,559,614 shares issued outstanding, respectively 3,097 2,056 Amount in excess of par value of stock 66,119 70,138 Cumulative translation adjustment 1,473 (118) Retained earnings 349,903 315,036 -------- -------- 420,592 387,112 -------- -------- $719,218 $678,809 ======== ======== The accompanying notes to consolidated financial statements are an integral part of these balance sheets. Consolidated Statements of Earnings For the Periods Ended December 28, 1996, December 30, 1995 and December 31, 1994 Dollars in thousands (except earnings per share) 1996 1995 1994 Net sales $1,083,763 $1,022,650 $811,330 Cost of goods sold 864,736 806,651 625,049 --------- --------- ------- Gross Earnings 219,027 215,999 186,281 Selling and administrative expenses 126,855 118,068 102,923 --------- --------- ------- Earnings from Operations 92,172 97,931 83,358 Interest expense (10,214) (9,891) (5,902) Other income, net 2,249 1,010 1,272 --------- --------- ------- Earnings Before Income Taxes 84,207 89,050 78,728 Provision for income taxes 33,300 35,500 31,500 --------- --------- ------- Net Earnings $ 50,907 $ 53,550 $ 47,228 ========= ========= ======= Net Earnings per Share of Common Stock $ 1.63 $ 1.75 $ 1.56 ========= ========= ======= The accompanying notes to consolidated financial statements are an integral part of these statements. Consolidated Statements of Cash Flows For the Periods Ended December 28, 1996, December 30, 1995 and December 31, 1994 Dollars in thousands 1996 1995 1994 Cash Flows from Operating Activities Net earnings $ 50,907 $ 53,550 $ 47,228 Adjustments to reconcile net earnings to net cash provided by operating activities, net of acquisitions: Depreciation and amortization 58,270 51,055 41,502 Deferred income taxes 1,326 2,313 459 Change in assets and liabilities, net of effects of acquisitions: (Increase) in receivables (6,562) (8,966) (32,942) Decrease (increase) in inventories 1,831 9,785 (12,759) (Increase) decrease in other current assets (1,179) 805 2,166 Increase in accounts payable and accrued liabilities 2,250 5,908 11,048 Decrease (increase) in other non-current assets 1,406 (1,526) 1,715 Other, net 2,574 869 2,830 ------- ------- ------- Cash provided by operating activities 110,823 113,793 61,247 Cash Flows from Investing Activities Capital expenditures (60,461) (63,822) (87,048) Proceeds from sale of plant and equipment 2,376 733 3,205 Cash used for acquisitions, net of cash acquired - (27,441) (29,831) ------- ------- ------- Cash used for investing activities (58,085) (90,530) (113,674) Cash Flows from Financing Activities Short-term debt proceeds (payments), net 4,620 (56,001) 35,201 Proceeds from issuance of long-term debt - 75,000 25,000 Payments on long-term debt (9,210) (8,361) (7,565) Proceeds and tax benefit from exercise of stock options 2,797 4,167 2,357 Dividends paid and stock redemptions (13,560) (11,308) (10,426) Repurchase of common stock (7,098) - - ------- ------- ------- Cash (used for) provided by financing activities (22,451) 3,497 44,567 Net increase (decrease) in cash and cash equivalents 30,287 26,760 (7,860) Cash and cash equivalents at beginning of year 27,130 370 8,230 ------- ------- ------- Cash and cash equivalents at end of year $ 57,417 $27,130 $ 370 ======= ======= ======== Cash payments for: Interest, net of amount capitalized $ 10,312 $ 9,487 $ 5,788 Income taxes 30,292 33,023 32,250 The accompanying notes to consolidated financial statements are an integral part of these statements. Consolidated Statements of Shareholders' Investment For the Periods Ended December 28, 1996, December 30, 1995 and December 31, 1994
Dollars in thousands Common Stock Amount in Cumulative Shares Par Excess of Translation Retained Outstanding Value Par Value Adjustment Earnings Balance, January 1, 1994 19,996,532 $ 2,000 $ 54,436 $ - $ 235,992 Net earnings 47,228 Cash dividends ($.35 per share) (10,426) Stock options exercised 129,494 13 2,344 ---------- ------- ------- ------- -------- Balance, December 31, 1994 20,126,026 2,013 56,780 - 272,794 Net earnings 53,550 Cash dividends ($.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 ========== ======== ======= ====== =========
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. Notes to Consolidated Financial Statements For the Periods Ended December 28, 1996, December 30, 1995 and December 31, 1994 One 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 segments - 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 1996, 1995 or 1994. Year-end The Corporation's operating year ends on the Saturday closest to December 31. The years 1996, 1995 and 1994 ended December 28, 1996, December 30, 1995 and December 31, 1994, 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. Earnings Per Share of Common Stock Net earnings per share of common stock is computed by dividing net earnings by the weighted average number of common shares and common equivalent shares related to the assumed exercise of stock options. Average common and common equivalent shares for computation of earnings per share were 31,249,169, 30,624,134 and 30,365,840 in 1996, 1995 and 1994, respectively. 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. 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 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 $12,030,000 in 1996, $11,128,000 in 1995 and $7,588,000 in 1994 of which $1,816,000, $1,237,000 and $1,686,000 were capitalized in 1996, 1995 and 1994, 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 33% and 36% of total inventories in 1996 and 1995, 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 1996 1995 Raw materials and supplies $ 40,980 $44,815 Work-in-process and finished goods 32,456 34,789 ------- ------- FIFO value (current cost) of all inventories 73,436 79,604 Excess of current cost over carrying value of LIFO inventories (4,373) (8,854) ------- ------- Net inventories $ 69,063 $ 70,750 ======= ======= During 1995, inventory quantities were reduced in certain printing facilities, resulting in liquidations of LIFO inventory layers carried at lower costs which prevailed in prior years. The effect of these liquidations was to decrease cost of goods sold by $1,915,000. 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 $6,232,000 and $4,719,000 as of December 28, 1996, and December 30, 1995, 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 1996, 1995 and 1994. 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. Long-Lived Assets In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The Corporation adopted this standard during 1996. The adoption of this standard did not have an effect on the Corporation's financial position or results of operations. Stock-Based Compensation In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123), "Accounting for Stock-Based Compensation" (SFAS No. 123). This standard requires disclosure of certain pro-forma information for stock-based compensation as though the Corporation had adopted the provisions of the Statement by charging earnings for the "compensation cost" for options granted after January 1, 1995. The Corporation adopted this standard in 1996, however the detailed disclosures have not been made because the pro-forma impact of compensation expense for stock-based employee compensation arrangements is not material to the financial statements. Two Acquisitions Acquisition of B.G. Turnkey Services Limited In October 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 Ireland, Scotland and The Netherlands. 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. Acquisition of United Graphics Inc. In August 1994, the Corporation acquired the outstanding shares of United Graphics, Inc. ("UGI") for approximately $9.5 million in cash and a $1.5 million note. The purchase price plus the liabilities assumed exceeded the fair value of the tangible and identified intangible assets purchased by $7.2 million. The Corporation also paid $4 million to former shareholders of UGI in exchange for covenants not to compete. UGI reported sales for its most recent fiscal year prior to the acquisition of approximately $28 million. This acquisition was accounted for as a purchase and accordingly, the accompanying financial statements include UGI's results beginning with the acquisition date. Acquisition of Danbury Printing & Litho, Inc. In March 1994, the Corporation purchased substantially all of the assets of Danbury Printing & Litho, Inc. ("Danbury"). The purchase price of $16.3 million in cash plus the assumption of selected liabilities was equal to the fair value of the assets acquired. Danbury reported sales of approximately $35 million in 1993. This acquisition was accounted for as a purchase and accordingly, the accompanying financial statements include Danbury's results beginning with the acquisition date. Other Acquisitions 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. Three 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 December 28, 1996, 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 December 28, 1996, the Corporation had borrowings outstanding aggregating $4,620,000 under the European credit facility. At December 30, 1995, the Corporation had no borrowings outstanding. The average outstanding borrowings during 1996 and 1995 were $760,000 and $19.4 million, respectively. The weighted-average interest rates on such borrowings during 1996 and 1995 were 7.5% and 6.12%, respectively. Four Long-term Debt Long-term debt, including amounts payable within one year, consists of the following: Dollars in thousands Maturities 1996 1995 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% 1997-2005 16,364 18,182 7.38% 2005-2015 15,000 15,000 10.11% 1997-1999 6,500 9,000 8.58% - - 2,175 Notes Payable and Capital Lease Obligations, generally fixed rates of interest, 6.0% to 9.8% 1997-2002 7,382 4,089 Industrial Revenue Bonds: Floating rates of interest, approximating 80% of the prime rate 1997-2015 6,750 6,900 Fixed rate of interest at 5.8% to 7.5% 1997-2002 2,320 2,460 -------- -------- 139,316 142,806 Less current maturities (5,620) (7,853) -------- -------- Long-term debt $133,696 $134,953 ======== ======== Maturities of long-term debt during the next five years are: 1997, $5,620,000; 1998, $6,118,000; 1999, $7,951,000; 2000, $7,320,000; and 2001, $9,374,000. Industrial Revenue Bonds aggregating $2,370,000 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. One of the Promissory Note agreements contains covenants which restrict the payment of dividends. As of December 28, 1996, $111,085,000 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 December 28, 1996, including current maturities, was $145,731,000. Five 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 $9,816,000, $7,661,000 and $5,261,000 in 1996, 1995 and 1994, respectively. Minimum rental commitments for the years 1997 through 2001 aggregate $8,895,000, $8,281,000, $6,590,000, $5,651,000, and $5,946,000 respectively, and $28,451,000 thereafter. Six Stock and Incentive Programs for Management Employees The Corporation has a Management Incentive Award Plan which provides for the payment of cash awards or bonuses to officers and other key employees with respect to any year in which the Corporation and its operating units achieve specified objectives. Awards under the plan were $243,000 in 1996, $2,799,000 in 1995 and $2,770,000 in 1994. 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 was no award under the plan for the 1994 to 1996 performance period. Awards under the plan were $511,000 for the 1993 to 1995 performance period and $609,000 for the 1992 to 1994 performance period. At December 28, 1996, 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. 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 January 1, 1994 1,573,980 $ 9 5/8 - $23 3/8 $ 15 Granted 421,950 20 5/8 - 24 1/8 20 7/8 Exercised (280,331) 9 5/8 - 21 7/8 10 5/8 Canceled or expired (44,119) 11 3/8 - 23 3/8 18 1/4 ---------- Outstanding at December 31, 1994 1,671,480 9 5/8 - 24 1/8 17 1/8 Granted 468,300 20 1/8 - 29 1/2 27 1/2 Exercised (419,313) 9 5/8 - 23 3/8 12 1/2 Canceled or expired (8,437) 20 5/8 - 23 3/8 21 ---------- Outstanding at December 30, 1995 1,712,030 11 1/8 - 29 1/2 21 Granted 442,300 21 - 28 7/8 21 1/4 Exercised (316,911) 11 1/8 - 24 1/8 13 7/8 Canceled or expired (58,188) 20 5/8 - 27 5/8 24 1/8 ---------- Outstanding at December 28, 1996 1,779,231 $15 - $29 1/2 $22 1/4 ========== Of the options outstanding at December 28, 1996, 896,256 were exercisable at prices ranging from $15 to $29 1/2, and a weighted average of $21 1/2. The balance of the options become exercisable at various times through 1999 at prices ranging from $20 5/8 to $29 1/2, and a weighted average of $22 5/8. At December 28, 1996, 949,361 shares of the Corporation's common stock were reserved for future option grants. During 1996, 1995 and 1994, 46,410, 124,078, and 86,090 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. Seven 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 1996, 1995 and 1994 was $5,631,000, $4,941,000 and $5,204,000 respectively. Net periodic pension cost for the Corporation-sponsored qualified and supplemental plans, was as follows:
Dollars in thousands Qualified Plans Supplemental Plan 1996 1995 1994 1996 1995 1994 Service cost-benefits earned during the year $3,801 $2,651 $3,039 $336 $131 $200 Interest cost on projected benefit obligation 4,628 4,220 4,022 401 301 249 Actual return on plan assets, net of unrecognized gains (losses) of $2,128,000, $12,038,000, and ($4,564,000) in 1996, 1995 and 1994, respectively (5,602) (4,373) (3,773) - - - Net amortization (131) (113) (427) 202 97 107 ------ ------ ------ ----- ----- ----- Net pension expense $ 2,696 $ 2,385 $2,861 $ 939 $ 529 $ 556 ====== ====== ====== ===== ===== =====
Significant assumptions used in determining net pension expense for the Corporation's plans are as follows:
Qualified Plans Supplemental Plan 1996 1995 1994 1996 1995 1994 Discount rate 7.25% 8.5% 7.5% 7.25% 8.5% 7.5% Expected rate of increase in compensation 5.0 5.0 5.0 5.0 5.0 5.0 Expected long-term rate of return on plan assets 9.0 8.5 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 7.75% and 7.25% for 1996 and 1995, respectively:
Dollars in thousands Qualified Plans Supplemental Plan 1996 1995 1996 1995 Projected benefit obligation: Vested benefits $50,354 $ 48,468 $ 3,483 $ 2,859 Non-vested benefits 3,238 4,205 1,082 580 ------ ------- ------ ------ Accumulated benefit obligation 53,592 52,673 4,565 3,439 Effect of projected future compensation levels 12,533 14,097 3,124 1,707 ------ ------- ------ ------ 66,125 66,770 7,689 5,146 Plan assets at fair value 81,299 73,076 - - ------ ------- ------ ------ Plan assets (in excess of) less than projected benefit obligation (15,174) (6,306) 7,689 5,146 Unrecognized net gain (loss) 15,434 6,582 (4,276) (2,437) Adjustment required to recognize minimum liability - - 1,260 866 Unrecognized net asset (obligation) being amortized over 16 years 2,244 2,671 (108) (136) ------ ------- ------ ------ Accrued pension cost $ 2,504 $ 2,947 $ 4,565 $ 3,439 ====== ======= ====== ======
Approximately 60% of the Corporation's non-salaried employees are covered by multi-employer union sponsored, collectively bargained defined benefit pension plans. Pension expense includes $1,996,000, $2,027,000 and $1,787,000 in 1996, 1995 and 1994, respectively, attributable to the multi-employer plans. These costs are determined in accordance with the provisions of negotiated labor contacts. Postretirement Health Care Costs The Corporation and its subsidiaries provide non-contractual limited health care benefits for certain retired employees. The program provides for defined initial contributions by the Corporation toward the cost of postretirement health care 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 December 28, 1996, and December 30, 1995: Dollars in thousands 1996 1995 Accumulated postretirement benefit obligation: Retirees $ 2,368 $2,512 Other active plan participants 4,581 4,477 Fully eligible active plan participants 685 776 ------ ----- 7,634 7,765 Unrecognized transition obligation being amortized over 20 years (4,073) (4,328) Unrecognized net gain (loss) 376 (614) ------ ----- Accrued postretirement benefit cost $ 3,937 $2,823 ====== ===== The net periodic postretirement benefit cost for 1996, 1995 and 1994 included the following components: Dollars in thousands 1996 1995 1994 Service cost - benefits attributed to service during the year $ 641 $ 423 $ 468 Interest cost on accumulated postretirement benefit obligation 525 476 456 Amortization of transitio obligation 255 247 254 ------ ------ ------- Net periodic postretirement benefit cost $ 1,421 $ 1,146 $ 1,178 ====== ====== ======= The discount rate used in determining the accumulated postretirement benefit obligation was 7.75% and 7.25% at December 28, 1996, and December 30, 1995, respectively. Due to the terms of the Corporation's postretirement health care program, assumed health care 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-bargained employees. Employee contributions are partially matched by the Corporation in accordance with criteria set forth in the plan. Matching contributions charged to earnings for 1996, 1995 and 1994 were $2,341,000, $2,148,000 and $1,467,000, respectively. Eight Income Taxes The provision for income taxes consists of the following: Dollars in thousands 1996 1995 1994 Current Federal $25,354 $27,347 $25,975 State 5,754 5,564 5,066 Foreign 866 276 - ------ ------ ------ 31,974 33,187 31,041 Deferred 1,326 2,313 459 ------ ------ ------ Provision for income taxes $33,300 $35,500 $31,500 ====== ====== ====== Below is a reconciliation of the statutory federal income tax rate and the effective income tax rate: 1996 1995 1994 Statutory federal tax rate 35.0% 35.0% 35.0% State and local income taxes, less applicable federal tax benefit 4.1 4.3 4.4 Other, net .4 .6 .6 ----- ----- ----- Effective income tax rate 39.5% 39.9% 40.0% ===== ===== ===== Temporary differences which give rise to the deferred tax assets and liabilities at December 28, 1996 and December 30, 1995 are as follows: Dollars in thousands 1996 1995 Deferred tax assets: Vacation accrual $2,383 $2,548 Other accrued liabilities 3,998 3,996 Reserve for uncollectible accounts 1,332 1,164 Other 1,432 1,743 ----- ----- $9,145 $9,451 ===== ===== Deferred tax liability: Accelerated depreciation ($29,648) ($28,466) Accrued pension cost 2,523 2,935 Accrued postretirement benefit cost 1,575 1,110 Deferred compensation 2,235 2,377 Other 1,510 1,259 ------ ------ ($21,805) ($20,785) ====== ====== No United States deferred taxes have been provided on the undistributed foreign subsidiary earnings which aggregated $2,882,000 and $1,304,000 at December 28, 1996 and December 30, 1995, respectively, and are considered permanently invested. The non-United States component of income before income taxes was $2,444,000 and $1,580,000 in 1996 and 1995, respectively. Nine 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. All common stock per share amounts and common stock data, other than the actual shares outstanding, have been restated in the consolidated financial statements and throughout the Annual Report to reflect the stock split. The Corporation has been 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 program for an aggregate cost of $7,098,000. These 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. Ten Geographic Information Summarized data for the Corporation's European operations for 1996 and 1995 are as follows: Dollars in thousands 1996 1995 Net sales $138,023 $54,638 Earnings from operations 2,779 1,654 Assets 79,488 66,147 There are no material transactions between the Corporation's domestic and European operations. Eleven 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. 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 December 28, 1996 and December 30, 1995, and the related consolidated statements of earnings, shareholders' investment and cash flows for each of the fiscal years in the three-year period ended December 28, 1996. 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 December 28, 1996 and December 30, 1995, and the results of their operations and their cash flows for each of the fiscal years in the three-year period ended December 28, 1996, in conformity with generally accepted accounting principles. Arthur Andersen LLP Milwaukee, Wisconsin, January 27, 1997 [Page 33 of the Annual Report] Unaudited Quarterly Financial Information The following table presents financial information by quarter for the years 1996 and 1995.
Dollars in thousands (except per share data) Quarter Ended Quarter Ended Quarter Ended Quarter Ended March June September December 1996 1995 1996 1995 1996 1995 1996 1995 Net sales $271,270 $232,954 $258,650 $235,346 $264,552 $249,267 $289,291 $305,083 Gross earnings 49,723 46,689 51,971 53,105 56,650 55,743 60,683 57,462 Net earnings 8,838 11,002 11,824 12,758 15,295 15,474 14,950 14,321 Net earnings per share of common stock .28 .36 .38 .42 .49 .51 .48 .46
Per share amounts have been adjusted for three-for-two stock split distributed in March 1996. Dividend Record and Market Prices
Per Share of Common Stock First Second Third Fourth Entire Quarter Quarter Quarter Quarter Year 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 1995 dividends paid $ .09 $ .09 $ .09 $ .09 $ .37 Price range: High $ 22 1/2 $ 23 5/8 $ 28 3/4 $30 1/8 $ 30 1/8 Low 19 21 1/2 21 1/8 25 3/4 19
Per share amounts have been adjusted for three-for-two stock split distributed in March 1996. 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 January 31, 1997, the Corporation had 2,552 shareholders of record. EX-21 12 LIST OF SUBSIDIARIES EXHIBIT 21 SUBSIDIARIES OF BANTA CORPORATION OWNERSHIP BY BANTA STATE OR CORPORATION 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 Software Services International, Inc. 100% Minnesota 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 Dimensional Neon, Inc. 100% Wisconsin The DI Group, Inc. 100% Massachusetts KCS Industries 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 EX-23 13 CONSENT 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 Statements Nos. 33-13584, 33-40036, 33-54576, 33-61683 and 333-01289 and Form S-3 Registration Statement No. 33-55829. ARTHUR ANDERSEN LLP Milwaukee, Wisconsin, March 25, 1997. EX-27 14 FINANCIAL DATA SCHEDULE
5 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 1,000 12-MOS DEC-28-1996 DEC-31-1995 DEC-28-1996 57,417 0 206,245 3,486 69,063 347,455 650,243 330,304 719,218 127,825 133,696 0 0 3,097 417,495 719,218 1,083,763 1,083,763 864,736 864,736 126,855 0 10,214 84,207 33,300 50,907 0 0 0 50,907 1.63 1.63 PER SHARE AMOUNTS HAVE BEEN ADJUSTED FOR THREE-FOR-TWO STOCK SPLIT DISTRIBUTED IN MARCH 1996. PRIOR PERIOD SCHEDULES HAVE NOT BEEN RESTATED FOR THIS RECAPITALIZATION.
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