| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 3, 2004 |
|
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 1-14637
| BANTA CORPORATION |
|---|
| (Exact name of registrant as specified in its charter) |
Wisconsin |
39-0148550 | |
| (State or other jurisdiction of incorporation or organization) | (IRS Employer 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 |_|
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_|
Common stock outstanding as of April 21, 2004 – 24,889,693 shares.
BANTA CORPORATION AND
SUBSIDIARIES
Quarterly Report on
Form 10-Q
For the Quarter Ended
April 3, 2004
INDEX
| Page Number | ||
|---|---|---|
PART I FINANCIAL INFORMATION: |
||
Item 1 |
Financial Statements (Unaudited) | |
Condensed Consolidated Balance Sheets April 3, 2004 and January 3, 2004 |
3 | |
Condensed Consolidated Statements of Earnings for the Three Months Ended April 3, 2004 and March 29, 2003 |
4 | |
Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 3, 2004 and March 29, 2003 |
5 | |
Notes to Condensed Consolidated Financial Statements – April 3, 2004 |
6-11 | |
| Item 2 |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
12-15 |
Item 3 |
Quantitative and Qualitative Disclosures about Market Risk | 15 |
Item 4 |
Controls and Procedures | 16 |
PART II OTHER INFORMATION: |
||
Item 1 |
Legal Proceedings | 16 |
Item 2 |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 16 |
Item 6 |
Exhibits and Reports on Form 8 K | 17 |
SIGNATURES |
17 | |
EXHIBIT INDEX |
18 | |
CERTIFICATIONS |
19-21 | |
2
Part 1 Item 1. Financial Statements
| (Dollars in thousands) | ||||||||
|---|---|---|---|---|---|---|---|---|
| April 3, 2004 |
January 3, 2004 |
|||||||
| ASSETS | (unaudited) | |||||||
Current Assets | ||||||||
| Cash and cash equivalents | $ | 139,710 | $ | 181,112 | ||||
| Receivables | 238,657 | 234,219 | ||||||
| Inventories | 74,787 | 75,150 | ||||||
| Other current assets | 29,259 | 32,685 | ||||||
| Total Current Assets | 482,413 | 523,166 | ||||||
| Plant and equipment | 968,244 | 952,475 | ||||||
| Less accumulated depreciation | 678,405 | 666,128 | ||||||
| Plant and equipment, net | 289,839 | 286,347 | ||||||
| Goodwill | 65,723 | 65,835 | ||||||
| Other assets | 7,286 | 10,675 | ||||||
| Total Assets | $ | 845,261 | $ | 886,023 | ||||
| LIABILITIES AND SHAREHOLDERS' INVESTMENT | ||||||||
Current Liabilities | ||||||||
| Accounts payable | $ | 133,103 | $ | 132,841 | ||||
| Accrued salaries and wages | 31,266 | 38,987 | ||||||
| Other accrued liabilities | 31,218 | 27,901 | ||||||
| Current maturities of long-term debt | 24,080 | 24,122 | ||||||
| Total Current Liabilities | 219,667 | 223,851 | ||||||
| Long-term debt | 86,487 | 87,712 | ||||||
| Deferred income taxes | 14,572 | 14,793 | ||||||
| Other non-current liabilities | 42,859 | 46,238 | ||||||
| Total Liabilities | 363,585 | 372,594 | ||||||
| Shareholders' Investment | ||||||||
| Preferred stock-$10 par value; authorized 300,000 shares; none issued | -- | -- | ||||||
| Common stock-$.10 par value, authorized 75,000,000 shares; | ||||||||
| 29,146,093 and 29,048,188 shares issued, respectively | 2,915 | 2,905 | ||||||
| Amount in excess of par value of stock | 37,315 | 34,578 | ||||||
| Accumulated other comprehensive income | 13,388 | 14,037 | ||||||
| Treasury stock, at cost - 4,256,400 and 3,256,400 shares, respectively | (113,865 | ) | (70,175 | ) | ||||
| Retained earnings | 541,923 | 532,084 | ||||||
| Total Shareholders' Investment | 481,676 | 513,429 | ||||||
| $ | 845,261 | $ | 886,023 | |||||
See accompanying notes to unaudited condensed consolidated financial statements
3
(Dollars in thousands, except per share amounts)
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| April 3, 2004 |
March 29, 2003 |
|||||||
Net sales |
$ | 373,072 | $ | 336,430 | ||||
| Cost of goods sold | 296,930 | 264,873 | ||||||
| Gross earnings | 76,142 | 71,557 | ||||||
| Selling and administrative expenses | 52,886 | 50,561 | ||||||
| Restructuring charge | -- | 916 | ||||||
| Earnings from operations | 23,256 | 20,080 | ||||||
| Interest expense | (1,890 | ) | (2,621 | ) | ||||
| Other income, net | 618 | 787 | ||||||
| Earnings before income taxes | 21,984 | 18,246 | ||||||
| Provision for income taxes | 7,910 | 7,000 | ||||||
| Net earnings | $ | 14,074 | $ | 11,246 | ||||
Basic earnings per share of common stock | $ | 0.55 | $ | 0.45 | ||||
Diluted earnings per share of common stock | $ | 0.54 | $ | 0.44 | ||||
Cash dividends per share of common stock | $ | 0.17 | $ | 0.16 | ||||
See accompanying notes to condensed consolidated financial statements
4
| (Dollars in thousands) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three Months Ended | ||||||||
| April 3, 2004 |
March 29, 2003 |
|||||||
Cash Flows from Operating Activities |
||||||||
| Net earnings | $ | 14,074 | $ | 11,246 | ||||
| Depreciation and amortization | 15,127 | 16,464 | ||||||
| Deferred income taxes | (727 | ) | 2,000 | |||||
| Tax benefit from the exercise of stock options | 1,012 | 51 | ||||||
| Gain on sale of plant and equipment | (482 | ) | (436 | ) | ||||
| Change in assets and liabilities | ||||||||
| (Increase) decrease in receivables | (4,438 | ) | 5,180 | |||||
| Decrease in inventories | 363 | 5,598 | ||||||
| (Decrease) increase in accounts payable | ||||||||
| and accrued liabilities | (3,989 | ) | 6,802 | |||||
| Net change in other current assets and liabilities | 3,932 | 482 | ||||||
| Net change in other non-current assets and liabilities | 10 | 1,795 | ||||||
| Cash provided from operating activities | 24,882 | 49,182 | ||||||
Cash Flows From Investing Activities | ||||||||
| Capital expenditures | (18,865 | ) | (15,374 | ) | ||||
| Proceeds from the sale of plant and equipment | 668 | 436 | ||||||
| Business acquisition | -- | (2,379 | ) | |||||
| Cash used for investing activities | (18,197 | ) | (17,317 | ) | ||||
Cash Flows From Financing Activities | ||||||||
| Repayments of long-term debt, net | (1,267 | ) | (284 | ) | ||||
| Dividends paid | (4,388 | ) | (4,040 | ) | ||||
| Proceeds from exercise of stock options | 1,734 | 309 | ||||||
| Repurchase of common stock | (43,690 | ) | -- | |||||
| Other | -- | (334 | ) | |||||
| Cash used for financing activities | (47,611 | ) | (4,349 | ) | ||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (476 | ) | 1,422 | |||||
Net (decrease) increase in cash | (41,402 | ) | 28,938 | |||||
| Cash and cash equivalents at the beginning of period | 181,112 | 154,836 | ||||||
| Cash and cash equivalents at the end of the period | $ | 139,710 | $ | 183,774 | ||||
Cash payments for: | ||||||||
| Interest, net of capitalized interest | $ | 1,353 | $ | 2,200 | ||||
| Income taxes | 556 | 1,102 | ||||||
See accompanying notes to condensed consolidated financial statements
5
| 1) | Basis of Presentation |
| The unaudited condensed consolidated financial statements of Banta Corporation (the Corporation) included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and 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 accounting principles generally accepted in the United States 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 consolidated 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 financial statements include 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 3, 2004 are not necessarily indicative of results that may be expected for the year ending January 1, 2005. Certain prior year amounts have been reclassified to conform to the 2004 presentation. |
| 2) | Inventories |
| Inventories consist of the following (dollars in thousands): |
| April 3, 2004 |
January 3, 2004 |
|||||||
|---|---|---|---|---|---|---|---|---|
| Raw materials | $ | 32,992 | $ | 33,134 | ||||
| Work-in-process and finished goods | 41,795 | 42,016 | ||||||
| $ | 74,787 | $ | 75,150 | |||||
| 3) | Earnings Per Share of Common Stock |
| Basic earnings per share of common stock is computed by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share of common stock is computed by dividing net earnings by the weighted average number of common shares and common equivalent shares outstanding during the period. The common equivalent shares relate to the assumed exercise of stock options and the assumed settlement of the accelerated share repurchase agreement described in Note 9. |
| The weighted average shares used in the computation of earnings per share consist of the following (in millions of shares): |
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| April 3, 2004 |
March 29, 2003 | |||||||
| Basic | 25.7 | 25.3 | ||||||
| Diluted | 26.1 | 25.4 | ||||||
6
| 4) | Comprehensive Earnings |
| Comprehensive earnings consist of the following (dollars in thousands): |
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| April 3, 2004 |
March 29, 2003 |
|||||||
| Net earnings | $ | 14,074 | $ | 11,246 | ||||
| Other comprehensive earnings (loss): | ||||||||
| Foreign currency translation adjustments | (649 | ) | 1,422 | |||||
| Comprehensive earnings | 13,425 | $ | 12,668 | |||||
| 5) | Goodwill |
| Changes in the carrying amount of goodwill by segment for the quarter ended April 3, 2004 consist of the following (dollars in thousands): |
| Print |
Supply- chain management |
Healthcare |
Total |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at January 3, 2004 | $ | 37,502 | $ | 6,719 | $ | 21,614 | $ | 65,835 | ||||||
| Translation adjustments for goodwill | ||||||||||||||
| denominated in foreign currencies | -0- | (112 | ) | -0- | (112 | ) | ||||||||
| Balance at April 3, 2004 | $ | 37,502 | $ | 6,607 | $ | 21,614 | $ | 65,723 | ||||||
| 6) | Stock-Based Compensation |
| As of April 3, 2004, the Corporation’s stock-based employee compensation plans are accounted for under the recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, because the number of shares is fixed and the exercise price of the stock options equals the market price of the underlying stock on the date of grant, no compensation expense has been recognized. The following table illustrates the effect on net earnings and earnings per share if the Corporation had applied the fair value recognition and measurement provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation (dollars in thousands, except per share amounts): |
7
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| April 3, 2004 |
March 29, 2003 |
|||||||
| Net earnings, as reported | $ | 14,074 | $ | 11,246 | ||||
| Deduct: | ||||||||
| Compensation expense determined | ||||||||
| under SFAS No. 123, net of related taxes | (1,349 | ) | (746 | ) | ||||
| Pro forma net earnings | $ | 12,725 | $ | 10,500 | ||||
| Earnings per share | ||||||||
| As reported: | ||||||||
| Basic | $ | 0.55 | $ | 0.45 | ||||
| Diluted | $ | 0.54 | $ | 0.44 | ||||
| Pro forma: | ||||||||
| Basic | $ | 0.50 | $ | 0.42 | ||||
| Diluted | $ | 0.49 | $ | 0.41 | ||||
| 7) | Restructuring Charge |
| Effective January 1, 2003, the Corporation adopted SFAS No 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies the previous guidance on the subject. It requires, among other things, that a liability for a cost associated with an exit or disposal activity initiated after December 31, 2002 be recognized at fair value when the liability is incurred rather than at the commitment date to the exit or disposal plan. |
| On January 28, 2003, the Corporation announced a restructuring involving its consumer catalog business and a realignment of operating activities within its supply-chain management sector. The objective of the plan, which was implemented throughout 2003, was to consolidate certain operations, leverage existing capacity, improve efficiencies and reduce costs. For the quarter ended March 29, 2003, $916,000 of restructuring charges were reflected in operating expenses. No restructuring charges were recorded during the quarter ended April 3, 2004. |
| The reconciliation of the beginning and ending restructuring liabilities included in the balance sheet for the first quarter of 2004 are as follows (dollars in thousands): |
| Charge to
Operations
During 2003 |
Liability Balance
at January 3, 2004 |
Payments
Reductions |
Liability Balance
at April 3, 2004 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Employee severance and benefits | $ | 9,329 | $ | 2,613 | $ | 1,615 | $ | 998 | ||||||
| Facility costs | 2,755 | 2,755 | 323 | 2,432 | ||||||||||
| Impaired assets and other liabilities | ||||||||||||||