-----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, DVARY4qYeHd/o7O/nWJUqJQzjfkw91QS8ItrQ297UiF2cJ1iItjglWTRQRdJRb4t X6PVAyh47Z4+GGIpdpk3Yg== 0000897069-98-000290.txt : 19980514 0000897069-98-000290.hdr.sgml : 19980514 ACCESSION NUMBER: 0000897069-98-000290 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980404 FILED AS OF DATE: 19980513 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-Q SEC ACT: SEC FILE NUMBER: 000-06187 FILM NUMBER: 98618754 BUSINESS ADDRESS: STREET 1: 225 MAIN ST CITY: MENASHA STATE: WI ZIP: 54952 BUSINESS PHONE: 4147227777 FORMER COMPANY: FORMER CONFORMED NAME: BANTA GEORGE CO INC DATE OF NAME CHANGE: 19890509 FORMER COMPANY: FORMER CONFORMED NAME: BANTA GEORGE PUBLISHING CO DATE OF NAME CHANGE: 19720505 10-Q 1 BANTA CORPORATION SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 4, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 0-6187 BANTA CORPORATION (Exact name of registrant as specified in its charter) Wisconsin 39-0148550 (State or other jurisdiction (IRS Employer of incorporation or organization) I.D. Number) 225 Main Street, Menasha, Wisconsin 54952 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (920) 751-7777 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / The registrant had outstanding on April 4, 1998, 29,728,706 shares of $.10 par value common stock. BANTA CORPORATION AND SUBSIDIARIES Quarterly Report on Form 10-Q For the Quarter Ended April 4, 1998 INDEX Page Number PART I FINANCIAL INFORMATION: Item 1 - Financial Statements Unaudited Consolidated Condensed Balance Sheets April 4, 1998 and January 3, 1998 . . . . . . . . . 3 Unaudited Consolidated Condensed Statements of Earnings for the Three Months Ended April 4, 1998 and March 29, 1997 . . . . . . . . . . 4 Unaudited Consolidated Condensed Statements of Cash Flows for the Three Months Ended April 4, 1998 and March 29, 1997 . . . . . . . . . . 5 Notes to Unaudited Consolidated Condensed Financial Statements . . . . . . . . . . . . . . . 6-7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 8-9 Item 3 - Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . 9 PART II OTHER INFORMATION AND SIGNATURES: Item 6 - Exhibits and Reports on Form 8-K . . . . . 10 Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . 11 PART I Item 1. Financial Statements BANTA CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) April 4, 1998 January 3, 1998 ASSETS Current Assets Cash and cash equivalents $19,851 $ 16,432 Receivables 224,432 228,483 Inventories 83,349 95,341 Other current assets 26,472 25,420 -------- --------- Total Current Assets 354,104 365,676 -------- --------- Plant and Equipment 730,416 718,669 Less: Accumulated Depreciation (394,432) (380,312) -------- --------- Plant and Equipment, net 335,984 338,357 -------- --------- Other Assets 15,396 14,524 Cost in Excess of Net Assets of Subsidiaries Acquired 64,891 62,659 -------- --------- $ 770,375 $ 781,216 ======== ========= LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities Short-term debt $ 20,705 $ 33,880 Accounts payable 98,281 106,235 Accrued Salaries and wages 22,610 22,575 Other accrued liabilities 38,096 32,492 Current maturities of long-term debt 5,172 5,186 --------- --------- Total Current Liabilities 184,864 200,368 --------- --------- Long-term Debt 129,930 130,065 Deferred Income Taxes 19,829 19,831 Other Non-Current Liabilities 17,345 16,849 Shareholders' Investment Preferred stock-$10 par value; authorized 300,000 shares; none issued 0 0 Common stock-$.10 par value; authorized 75,000,000 shares; 29,738,706 and 29,793,279 shares issued and outstanding, respectively 2,973 2,979 Amount in excess of par value of stock 33,554 35,542 Accumulated other comprehensive income (loss) (4,657) (3,498) Retained earnings 386,537 379,080 --------- --------- Total Shareholders' Investment 418,407 414,103 --------- --------- $ 770,375 $ 781,216 ========= ========= See accompanying notes to consolidated financial statements BANTA CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF EARNINGS (Dollars in thousands, except per share amounts) Three Months Ended April 4, 1998 March 29, 1997 Net sales $ 330,810 $ 275,363 Cost of goods sold 265,996 222,641 --------- --------- Gross earnings 64,814 52,722 Selling and administrative expenses 43,500 34,385 --------- --------- Earnings from operations 21,314 18,337 Interest expense (2,918) (2,793) Other, net (364) 874 -------- --------- Earnings before income taxes 18,032 16,418 Provision for income taxes 7,000 6,400 -------- --------- Net earnings $ 11,032 $ 10,018 ======== ========= Basic earnings per share of common stock $ .37 $ .33 ======== ========= Diluted earnings per share of common stock $ .37 $ .33 ======== ========= Cash dividends per common share $ .13 $ .11 ======== ========= See accompanying notes to consolidated financial statements BANTA CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) Three Months Ended April 4, 1998 March 29, 1997 Cash Flows From Operating Activities Net earnings $ 11,032 $ 10,018 Depreciation and amortization 16,533 15,164 Deferred income taxes 143 105 Change in assets and liabilities: Decrease in receivables 4,051 10,673 Decrease (increase) in inventories 11,992 (5,655) (Increase) decrease in other current assets (1,197) (3,584) (Decrease) increase in accounts payable and accrued liabilities (2,315) 14,934 (Increase) in other non-current assets (872) (2,047) Other, net (663) (2,068) --------- ---------- Cash provided from operating activities 38,704 37,540 --------- -------- Cash Flows From Investing Activities Capital expenditures, net (16,392) (11,986) --------- -------- Cash Flows From Financing Activities Repayment of short-term debt, net (13,175) (2,111) Repayment of long-term debt (149) (329) Dividends Paid (3,575) (3,407) Proceeds from exercise of stock options 1,238 333 Repurchase of common stock (3,232) (27,570) --------- --------- Cash used for financing activities (18,893) (33,084) --------- --------- Net increase (decrease) in cash 3,419 (7,530) Cash and cash equivalents at beginning of period 16,432 57,417 --------- --------- Cash and cash equivalents at end of period $ 19,851 $ 49,887 ========= ========= Cash payments for: Interest, net of amount capitalized $ 3,123 $ 2,521 Income taxes 1,338 1,267 See accompanying notes to consolidated financial statements BANTA CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1) Basis of Presentation The condensed financial statements included herein have been prepared by the Corporation, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Corporation believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Corporation's latest Annual Report on Form 10-K. In the opinion of management, the aforementioned statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. Results for the three months ended April 4, 1998, are not necessarily indicative of results that may be expected for the year ending January 2, 1999. 2) Inventories The majority of the Corporation's inventories used in its printing operations are accounted for at cost determined on a last-in, first- out (LIFO) basis, which is not in excess of market. The remaining inventories are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories include material, labor and manufacturing overhead. Inventory amounts at April 4, 1998 and January 3, 1998 were as follows: (Dollars in thousands) April 4, 1998 January 3, 1998 Raw Materials and $ 45,856 $ 55,026 Work-In-Process and Finished Goods 42,384 44,908 ---------- ---------- FIFO value (current cost of all inventories) 88,240 99,934 Excess of current cost over carrying value of LIFO inventories (4,891) (4,593) ----------- ----------- Net Inventories $ 83,349 $ 95,341 =========== =========== 3) Earnings Per Share of Common Stock Basic earnings per share of common stock is computed by dividing net earnings by the weighted average number of common shares during the period. Diluted earnings per share of common stock is computed by dividing net earnings by the weighted average number of common shares and common equivalent shares, which relate entirely to the assumed exercise of stock options. The weighted average shares used in the computation of earnings per share were as follows (in millions of shares): April 4, 1998 March 29, 1997 Basic 29.7 30.4 Diluted 29.9 30.5 4) Restructuring Charge In the third quarter of 1997, the Corporation recorded a restructuring charge of $13.5 million ($8.1 million after tax or $.27 per common share) related to the sale of its point-of-purchase sign and display business, the discontinuation of its intaglio print- based security products business and the interactive video operation, and the closing of three Global Turnkey facilities. At January 3, 1998, the remaining reserve totaled $3.7 million related to the expenditures for closing the facilities. During the first quarter of 1998, costs of approximately $1.0 million, related primarily to lease termination and employee severance costs, were charged against the reserve. It is expected that the restructuring initiatives will be completed in 1998 and charged against the remaining reserve. 5) Comprehensive Income Total comprehensive income, comprised of net income and other comprehensive income (loss), was $9,873,000 and $8,422,000 for the first quarter of 1998 and 1997, respectively. Other comprehensive income (loss) was comprised solely of foreign currency translation adjustments. The Corporation does not provide U.S. income taxes on foreign currency translation adjustments because it does not provide for such taxes on undistributed earnings of foreign subsidiaries. 6) Accounting for Internal-use Software The Accounting Standards Executive Committee of the AICPA has issued a Statement of Position (SOP) titled "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." The Corporation has elected to adopt this SOP as of the beginning of its 1998 fiscal year. The Corporation does not anticipate the SOP will have a material impact on the Corporation's financial statements. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Liquidity and Capital Resources The Corporation's net working capital increased by approximately $3.9 million during the first quarter of 1998 primarily due to the repayment of short-term debt and current liabilities with cash provided from operations. This increase was partially offset by a reduction in receivables and inventories. Also during the first quarter of 1998, the Corporation repurchased approximately 125,000 shares of common stock at an aggregate purchase price of $3.2 million pursuant to its common stock repurchase program. In April 1998, the Board authorized the purchase of up to an additional $60 million of common stock. Stock repurchases are expected to be funded by a combination of cash provided from operations and short-term borrowings. Capital expenditures were $16.4 million during the first quarter of 1998, an increase of $4.4 million from the amount incurred during the prior year first quarter. Capital requirements for the full year are expected to be between $85 million and $95 million and are expected to be funded by a combination of cash provided from operations and short-term borrowings. The increase in capital spending reflects the Corporation's commitment to expand and modernize its facilities. Long-term debt as a percentage of total capitalization remained consistent with the 1997 year-end percentage. RESULTS OF OPERATIONS Net Sales Sales for the first quarter of 1998 were $55.4 million (20%) higher than the first quarter of 1997. Slightly less than half of the increase was a result of sales from companies acquired during the second half of 1997. Operating activity levels during the first quarter of 1998, in all of the Corporation's market classifications, were above 1997 operating levels. Significant sales gains were made in the book market where demand for educational products, including educational media, was strong. Activity levels were also strong in the magazine market due to increased page counts and market share gains as well as the impact of the acquisition of Greenfield Printing & Publishing during the fourth quarter of 1997. Expanded print personalization capacity resulted in strong sales in the catalog market while facility expansion in Europe lead to increased sales in turnkey services. Single-use product sales increased primarily due to the acquisition of The Omnia Group during the third quarter of 1997. Cost of Goods Sold Cost of goods sold as a percentage of sales decreased from 80.9% for the first quarter of 1997 to 80.4% for the first quarter of 1998. This overall margin gain was primarily due to changes in product mix and increased utilization among most of the groups which more than offset a competitive pricing environment in commercial markets. Selling and Administrative Expenses Selling and administrative expenses were $9.1 million higher for the first quarter of 1998 than for the first quarter of 1997. The increase is primarily due to the inclusion of selling and administrative expenses for the companies acquired in 1997 ($4.3 million) along with higher levels of operating activity at previously owned facilities. Interest Expense Interest expense was $125,000 higher in the first quarter of 1998 than for the first quarter of 1997 due to increased debt levels to support the 1997 acquisitions. Income Taxes The Corporation's effective first quarter income tax rate for 1998 of 38.8% was slightly less than the 39.0% tax rate for 1997. Other Matters The Corporation has completed a preliminary evaluation of its computer software to determine its ability to handle dates beginning with the year 2000. A significant portion of the Corporation's software is already year-2000 compliant. This evaluation resulted in the development of detailed plans to replace certain software and to reprogram other software. Management believes it is devoting the necessary resources to resolve all significant year-2000 issues in a timely manner. There have been no significant changes in the total costs expected to be incurred. Cautionary Statements for Forward-Looking Information This document includes forward-looking statements. Statements that describe future expectations, plans or strategies are considered forward-looking. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Factors that could affect actual results include, among others, changes in customers' demand for the Corporation's products, changes in raw material costs and availability, continued success in the implementation of the Corporation's single-source marketing strategy, pricing actions by competitors, success in the integration of businesses acquired in 1997, and general changes in economic conditions. These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. The forward-looking statements included herein are made as of the date hereof, and the Corporation undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Item 3. Qualitative and Quantitative Disclosure about Market Risk Not applicable PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - 27 - Financial Data Schedule (EDGAR version only) (b) No reports on Form 8-K were filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANTA CORPORATION /S/ GERALD A. HENSELER Gerald A. Henseler Executive Vice President, Chief Financial Officer and Treasurer Date May 13, 1998 BANTA CORPORATION EXHIBIT INDEX TO FORM 10-Q For The Quarter Ended April 4, 1998 Exhibit Number 27 Financial Data Schedule (EDGAR version only) EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF BANTA CORPORATION AS OF AND FOR THE THREE MONTHS ENDED APRIL 4, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JAN-02-1999 JAN-04-1998 APR-04-1998 19,851 0 228,077 3,645 83,349 354,104 730,416 394,432 770,375 184,864 129,930 0 0 2,973 415,434 770,375 330,810 330,810 265,996 265,996 43,500 0 2,918 18,032 7,000 11,032 0 0 0 11,032 0.37 0.37 THE EPS UNDER THE "EPS-PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE
-----END PRIVACY-ENHANCED MESSAGE-----