By Steven Schnoll February 7, 2005 -- Banta Corporation (NYSE: BN) offers impressive results for the fourth quarter of 2004 with a surging 61% increase in profits. The continued efforts of the company to cut costs and increase productivity coupled with the rising economic tide are clearly indicating what a lot of good management and a little good fortune can do in the competitive marketing services business. The company reported fourth quarter net income rose to $19.6 million or $0.77 per share from $12.2 million or $0.47 per share in the comparable 2003 quarter... Sales increased to $402.2 million from the year ago quarter of $393.7 million. For the year, net earnings were $68 million compared to $46.6 in 2003 or $2.67 a diluted per share compared to $1.81 in 2003. Topics of this summary: Company Performance Overview Guidance Raine’s Radar Q & A Company Performance Banta reported a modest yearly revenue increase to $1.523 billion from $1.418 billion in 2003; a 6% increase. The earnings numbers reflected the high end of the 2004 forecast and close to an all time high, improving by 13%. Chairman, President and CEO, Stephanie Streeter reported, “Our catalog and direct marketing print businesses experienced significant turnarounds from the prior year.” Streeter also commented that “The markets were stronger, boosting plant utilization and our major productivity initiatives which included last years restructuring, drove costs down and profitability up.” The Supply Chain Management segment delivered weaker results in the fourth quarter than the third quarter of 2004, with a 6% revenue decline from $114 million in Q4 2003 to $107 million in the 2004 quarter. For the year, the sector reported a healthy 15% improvement from $359 million in 2003 to $412 million in 2004. Operating earnings, however, were disappointing indicating a decline in comparable fourth quarters, 2004 - $12.7 million and 2003 - $16.2 million. Streeter was not disappointed in these results stating, “Our supply-chain management business recorded a strong 2004, further improving upon 2003’s outstanding performance.” 2004 Print revenue increased by 5% from $959 million in 2003 to $1 billion in 2004. Operating earnings were 19% higher than 2003, $79.1 million vs. $66.7 million before a pretax restructuring charge of $12 million. Fourth quarter revenue increased 7% to $269 million from record 2003 levels of $252 million. Both the catalog and direct marketing divisions achieved significant improvements for both the full year and fourth quarter. The magazine group showed modest revenue gains due largely to increased page counts and a few market share wins, however, profitability continued to decline due in part to the fiercely competitive magazine marketplace. The book division finished the year positively with modest gains in the fourth quarter, but for the full year revenues and earnings were almost flat with a slight single digit increase. Guidance Banta is very up beat for 2005. It forecasts that 2005 earnings will rise 12% to 20 % to a range of $3.00 to $3.20 per share. The company estimates 2005 sales to increase between 5% to 7% from the $1.52 billion reported in 2004. Raine’s Radar Streeter and her Banta team continue to work their magic. With record earnings and improved sales in all market sectors the company should be proud of its accomplishment. The most significant aspect is their “lean” approach to improving productivity and reducing costs. They could be the Womack and Jones poster company for the tough graphics sector. While the company caught a little luck in the rising number of ad pages in the magazine division their “world class manufacturing” model is an example for all within the industry. The companies four strategic pillars – maximizing productivity, pursue key market segments, acquisitions, and developing leadership and talent are certainly paying off. There are no indicators that 2005 will be any different. Q & A 2005 guidance excludes any new potential acquisitions. Tax rate for each quarter should be 32%. Revenue was a bit weaker for year but margins much higher Stock buy backs will be tempered by a balancing of highest and best use of cash for potential acquisitions. Acquisitions will be sought for their key market segment positions and geographical opportunities. Working capital requirements for all three units are about the same. No desire to build up cash. Want to use money wisely for investing in plants, equipment and acquisitions. There is a 20-25% increase in healthcare costs due to new plan. The new self insured plan should even out over a five year period. Sarbanes-Oxley costs are much higher than anticipated (More than double anticipated costs). These costs will not decrease in 2005. Book division has an excellent opportunity in 2005 with several key states undergoing curriculum reviews