MENASHA, Wis., Jan. 31 /PRNewswire-FirstCall/ -- Banta Corporation today reported a very strong fourth quarter, concluding a year that established new all-time highs in both revenue and profitability. Fourth quarter earnings from continuing operations rose 32 percent to a record $23.3 million, excluding a tax expense of $4.4 million (18 cents per diluted share) associated with Banta's repatriation of accumulated foreign earnings. The results compare with $17.6 million reported in 2004's final quarter. Diluted earnings per share from continuing operations, excluding the repatriation tax expense, reached 95 cents, a 36 percent increase over the 70 cents reported in 2004's fourth quarter. Including the repatriation tax expense, fourth quarter earnings from continuing operations also reached an all-time high, increasing 7 percent to $18.9 million (77 cents per diluted share). Revenue from continuing operations increased 9 percent to a fourth quarter record $410 million, compared with $376 million in 2004.
Full-year 2005 earnings from continuing operations increased 18 percent to $72.7 million, excluding the repatriation tax expense in the fourth quarter, compared with 2004's $61.5 million. On that same basis, diluted earnings per share rose 22 percent to $2.93, compared with the prior year's $2.41. Including the additional fourth quarter tax expense, 2005 earnings from continuing operations also reached an all-time high, increasing 11 percent to $68.3 million, and diluted earnings per share rose 15 percent to $2.76. Revenue from continuing operations for the year rose 9 percent, reaching $1.54 billion, compared with 2004's $1.42 billion.
Results from continuing operations exclude the contributions of Banta's healthcare products business, which was sold effective Apr. 12, 2005. Including the operating results of the discontinued healthcare business, and the repatriation tax expense, 2005's fourth quarter net earnings were $19.0 million (78 cents per diluted share), compared with $19.6 million (77 cents per diluted share) in 2004. On that same basis, and including the proceeds from the sale of the healthcare business and a related warehouse, full-year 2005 net earnings were $90.5 million ($3.65 per diluted share), compared with $68.0 million ($2.67 per diluted share) in 2004.
The following table provides a reconciliation of earnings and diluted earnings per share from continuing operations, reported in accordance with generally accepted accounting principles, to earnings and diluted earnings per share from continuing operations, excluding the foreign earnings repatriation tax expense, for the three- and twelve-month periods ended December 31, 2005, and January 1, 2005:
Earnings from
Continuing Operations Three Months Ended Twelve Months Ended
(dollars in millions) 2005 2004 2005 2004
GAAP earnings from
continuing operations,
as reported $18.9 $17.6 $68.3 $61.5
Foreign earnings
repatriation tax
expense 4.4 -- 4.4 --
Earnings from continuing
operations excluding
foreign earnings
repatriation tax
expense $23.3 $17.6 $72.7 $61.5
Diluted Earnings per
Share from Continuing
Operations (EPS)
GAAP diluted EPS, as
reported $0.77 $0.70 $2.76 $2.41
Foreign earnings
repatriation tax
expense .18 -- .17 --
Diluted EPS excluding
foreign earnings
repatriation tax
expense $0.95 $0.70 $2.93 $2.41
"Banta had a great 2005 and an exceptional fourth quarter," said Chairman and Chief Executive Officer Stephanie A. Streeter. "During the first half of the year we focused on investment and preparation for a strong second half of the year -- and we achieved our expectations. Our employees did a great job during the year with the start up of new and rebuilt equipment, delivering new-technology solutions to our customers, and aggressively implementing culture-shifting productivity processes. I am extremely proud of our employees' accomplishments and eager to see the benefits of their continuing efforts in 2006 and beyond."
The additional fourth quarter tax expense of $4.4 million was incurred because Banta took advantage of the American Jobs Creation Act, which allowed U.S. corporations during 2005 to repatriate accumulated earnings of non-U.S. operations at a significantly reduced U.S. income tax rate. Banta returned a net $122 million of its accumulated foreign earnings to the U.S., thus making the cash more readily available for investment in its domestic operations, consistent with the intent of the legislation.
Including the repatriation tax expense, the company's effective income tax rate for 2005 was 34.0 percent, a decrease from the 35.2 percent recorded in 2004. The effective tax rate without the additional $4.4 million of tax expense related to the earnings repatriation would have been 29.8 percent. The tax rate decrease from the 35.2 percent recorded in 2004 was due largely to the proportion of earnings from locations outside the United States earned by the company's Supply-Chain Management Sector, which has extensive operations in countries whose tax rates are more favorable than the tax rates in the United States.
HIGHLIGHTS
-- Fourth quarter revenue for Banta's Printing Services Sector increased
12 percent to $300 million, compared with the prior year's
$269 million. Higher paper prices contributed approximately
30 percent of the increase. Operating earnings climbed 21 percent to
$27.0 million, benefiting from improved facility utilization and
productivity initiatives, including equipment rebuilds. For the full
year, revenue increased 10 percent to $1.1 billion, while operating
earnings increased nearly 10 percent, reaching $86.6 million.
-- The book division turned in a solid fourth quarter, with strong
activity in business-to-business catalogs and continuing good
demand in the educational market. Revenue increased 7 percent over
the prior year's fourth quarter and operating earnings rose
13 percent. For the full year, book division revenue increased
7 percent, while operating earnings rose 8 percent. During 2005,
the division's educational revenue grew 17 percent, reflecting a
strong year for state curriculum adoptions. In addition, major
capital investments in the first half of the year, including the
acquisition of a new press and the rebuild of another press,
increased capacity and improved productivity, helping boost results
for both the fourth quarter and full year.
-- The direct marketing division reported a good fourth quarter and an
outstanding full year. Revenue for the quarter increased
2 percent, while operating earnings rose 16 percent. For the year,
revenue increased 7 percent and operating earnings climbed
42 percent. Throughout 2005, the division benefited from a
significantly improved product mix, as the division continued to
shift its work mix to more complex and personalized direct mail
products.
-- Banta's consumer catalog division reported fourth quarter revenue
comparable to the strong fourth quarter in 2004; however, operating
earnings declined due to higher operating costs, equipment
scheduling issues and pricing pressures. For the full year, the
catalog division recorded exceptionally strong results, with
revenue up 13 percent and operating earnings ahead 53 percent,
compared with 2004. Market share gains, improved production
quality and productivity improvements throughout the year combined
to drive 2005's results.
-- The publications division reported an 11 percent revenue increase
in the fourth quarter, with 35 percent of the increase due to
higher paper prices. Operating earnings for the quarter declined
4 percent. Revenue for the full year increased 12 percent and
operating earnings declined 6 percent. The division continued to
gain market share during the year, however additional costs in
areas such as employee training and manufacturing process
improvement programs have not yet produced the anticipated
benefits.
-- Banta's literature management division, which was established as a
separate business entity earlier this year, recorded a breakout
fourth quarter with exceptional activity involving several new
projects. The largest project involved the one-time production and
fulfillment of information packages related to the launch of an
insurer's Medicare Part D prescription drug offering. Due largely
to this program, fourth quarter revenue nearly doubled compared
with the same period in 2004, while operating earnings climbed
dramatically. For the full year, revenue increased 28 percent and
operating earnings, affected by additional expenses related to
establishing the division's new infrastructure, rose 9 percent.
-- Banta's Supply-Chain Management Services Sector reported both improved
revenue and operating earnings in the fourth quarter, as it continued
to experience good demand from both existing and new technology
customers. Fourth quarter revenue increased 3 percent to
$111 million, while operating earnings grew 11 percent, reaching
$14.1 million. Full-year revenue and operating earnings both
increased 4 percent to $429 million and $48.7 million, respectively.
Operating margins remained strong throughout the year, supported by a
continuing favorable product mix, very successful productivity
improvement efforts and aggressive cost controls. Although revenue
from new-business development during the year did not meet
expectations, new customer opportunities just starting up in the
fourth quarter provide momentum for 2006.
"Banta has strong businesses in stable and growing markets, which will help deliver another solid year in 2006," said Streeter. "We are extremely well positioned. Over the past year, we sold a non-core business, which allowed us to focus on accelerating the growth of our remaining strategic businesses. We made high-impact capital investments, continued to fine tune our market positioning, and significantly advanced our productivity and employee training. Efforts in these areas, and more, will continue in the coming year, helping us further improve upon our 2005 results."
Looking to 2006, Banta management believes that revenue will be in the range of $1.6 billion to $1.65 billion. Diluted earnings per share for 2006 are expected to be in a range of $3.00 to $3.15, which includes the expected annual cost of 17 cents per diluted share for expensing stock options. Although Banta did not expense stock options in 2005, had it done so, diluted earnings per share (before the 2005 repatriation expense) would have been $2.79. This number is based on diluted earnings per share of $2.93, before the repatriation tax expense shown in the reconciliation table above, less estimated 2005 stock option expense of 14 cents per share.
Banta will host a conference call to discuss its fourth quarter and 2005 year-end results on Wednesday, Feb. 1 at 10:00 a.m. Central (11:00 a.m. Eastern). The call will be simultaneously broadcast in the Investor Information area of Banta's Web site at http://www.banta.com/ , and a replay of the call will be available.
Banta Corporation is a technology and market leader in printing and supply-chain management. Our integrated approach provides a comprehensive combination of printing and digital imaging solutions to leading publishers and direct marketers. We excel at helping customers find unique solutions to the complex challenges of getting their products and communications to market. We focus on five print markets: books, special-interest magazines, catalogs, direct marketing materials and literature management services. Banta's global supply-chain management business provides a wide range of outsourcing capabilities to some of the world's largest companies. Services range from materials sourcing, product configuration and customized kitting, to order fulfillment and global distribution.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
This news release includes forward-looking statements. Statements that describe future expectations, including revenue and earnings projections, plans, results 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' order patterns or demand for the corporation's products and services, pricing, changes in raw material and energy costs and availability, unanticipated changes in sourcing of raw materials (including paper) by customers, unanticipated changes in operating expenses, unanticipated production difficulties, unanticipated issues associated with the corporation's non-U.S. operations, changes in the pattern of outsourcing supply-chain management functions by customers, unanticipated costs or delays associated with ongoing productivity-enhancing projects, unanticipated acquisition or loss of significant customer contracts or relationships, unanticipated issues associated with the strategic objective of growing the supply-chain management business, unanticipated difficulties and costs associated with the design and implementation of new administrative systems, the impact of any acquisition or divestiture effected by Banta, unanticipated changes in the corporation's effective income tax rate, unanticipated swings in foreign currency exchange rates, and any unanticipated weakening of the economy. 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 Banta undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.
An electronic version of this news release, as well as other information about Banta Corporation, is available through the company's World Wide Web home site at http://www.banta.com/ .
Banta Corporation
Unaudited Condensed Consolidated Financial Statements
($000's omitted, except per share data)
3 Months Ended December 12 Months Ended December
2005 2004 2005 2004
Revenue $410,491 $375,740 $1,543,927 $1,422,184
Cost of Printing and
Supply-Chain
Services 317,030 294,177 1,200,487 1,115,761
Gross Earnings 93,461 81,563 343,440 306,423
SG&A Expense 60,531 53,778 238,384 207,916
Earnings from
Operations 32,930 27,785 105,056 98,507
Other Income (Expense)
Interest Expense (1,225) (1,274) (5,472) (6,248)
Interest Income 869 620 3,286 2,159
Other Income
(Expense), net (102) (147) 689 453
Earnings from
Continuing
Operations
before Income
Taxes 32,472 26,984 103,559 94,871
Provision for
Income Taxes 13,554 9,351 35,240 33,413
Earnings from
Continuing
Operations 18,918 17,633 68,319 61,458
Discontinued Operations
Earnings from
Operations of
Healthcare Segment,
Net of Income Taxes - 1,998 702 6,547
Gain from the Sale of
Healthcare Segment,
Net of Income Taxes 125 - 21,500 -
Net Earnings $19,043 $19,631 $90,521 $68,005
Basic Earnings per Share:
Continuing Operations $0.78 $0.71 $2.80 $2.45
Discontinued Operations $- $0.08 $0.03 $0.26
Gain from Sale of
Discontinued
Operations $0.01 $- $0.88 $-
Total $0.79 $0.79 $3.71 $2.71
Diluted Earnings per
Share:
Continuing Operations $0.77 $0.70 $2.76 $2.41
Discontinued Operations $- $0.07 $0.03 $0.26
Gain from Sale of
Discontinued
Operations $0.01 $- $0.86 $-
Total $0.78 $0.77 $3.65 $2.67
Average Shares
Outstanding:
Basic 23,999 24,987 24,400 25,123
Diluted 24,416 25,344 24,784 25,508
Composite Tax Rate on
Continuing Operations 41.7% 34.7% 34.0% 35.2%
SEGMENT INFORMATION
3 Months Ended December 12 Months Ended December
Revenue 2005 2004 2005 2004
Printing Services $299,929 $268,578 $1,115,374 $1,010,100
Supply-Chain
Management Services 110,562 107,162 428,553 412,084
$410,491 $375,740 $1,543,927 $1,422,184
Earnings from
Operations
Printing Services $26,958 $22,265 $86,554 $79,052
Supply-Chain
Management Services 14,053 12,688 48,659 46,716
Segment earnings
from operations 41,011 34,953 135,213 125,768
Unallocated corporate
expenses (8,081) (7,168) (30,157) (27,261)
Interest expense (1,225) (1,274) (5,472) (6,248)
Interest income 869 620 3,286 2,159
Other income
(expense), net (102) (147) 689 453
Earnings from
continuing
operations before
income taxes $32,472 $26,984 $103,559 $94,871
Banta Corporation
Unaudited Condensed Consolidated Financial Statements
($000's omitted, except per share data)
As of
ASSETS Dec. 31, 2005 Jan. 1, 2005
Cash and cash equivalents $148,895 $128,353
Receivables 295,993 263,087
Inventories 80,756 102,892
Other current assets 20,696 25,169
Total current assets 546,340 519,501
Plant and equipment, net 263,849 288,127
Other assets 84,162 97,945
Total Assets $894,351 $905,573
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Accounts payable $107,944 $105,656
Other accrued liabilities 85,616 92,356
Current maturities of long-term debt 11,460 25,594
Total current liabilities 205,020 223,606
Long-term debt 75,047 62,333
Deferred income taxes 15,250 25,622
Other noncurrent liabilities 56,447 56,046
Shareholders' investment 542,587 537,966
Total Liabilities and
Shareholders' Investment $894,351 $905,573
Statement of Cash Flows 12 Months Ended December
2005 2004
CASH FLOW FROM OPERATING ACTIVITIES
Net Earnings $90,521 $68,005
Adjustments to reconcile net earnings to
net cash provided
Depreciation 55,135 59,943
Deferred income taxes (2,545) 11,862
Tax benefit from the exercise of
stock options 4,808 2,460
Non-cash stock compensation 642 237
Gain on sale of Healthcare Segment (21,500) -
Gain on sale of fixed assets (436) (1,242)
Change in assets and liabilities (41,163) (56,481)
Cash provided by operating activities 85,462 84,784
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (45,416) (65,175)
Proceeds from sale of fixed assets 1,303 5,351
Purchases and sales of investments, net 460 710
Proceeds from sale of Healthcare Segment 69,345 -
Cash provided by (used for)
investing activities 25,692 (59,114)
CASH FLOW FROM FINANCING ACTIVITIES
Repayments of long-term debt (25,648) (23,907)
Additions of long-term debt 24,228 -
Dividends paid (17,112) (17,245)
Proceeds from exercise of stock options, net 11,867 3,844
Repurchase of common stock (65,571) (44,353)
Other (54) -
Cash used for financing activities (72,290) (81,661)
Effect of exchange rate changes on cash
and cash equivalents (18,322) 8,682
Net increase (decrease) in cash $20,542 $(47,309)
First Call Analyst:
FCMN Contact:
