By Ann Levine November 3, 2003 – Banta Corporation (NYSE: BN) today announced third quarter sales of $352 million, equal to sales for the same period last year. Earnings per diluted share were $0.62 as compared to $0.76 for the third quarter of 2002. Net earnings were $16 million down from $19.5 million last year. Banta had special charges affecting results included restructuring and realignment of Banta’s consumer catalog and supply chain management divisions which resulting in pretax charges of $2.0 million or $0.05 a diluted share impact after taxes. Topics of this Summary: * Sector Performance * Guidance * Q & A Sector Performance In Print and Digital Imaging sales were $243.6 million with operating margins showing a 9% decline from the same quarter in 2003. Operating margins were down 8.7% from 10.8% in the third quarter of 2002. Performance was affected by additional costs in the catalog division and pricing pressure throughout the print industry. Sales in the Catalog Division were down 22% due to work being transferred to other Banta plants and from capacity constraints. Book sales were down 17% due to lower paper sales and the absence of a large business to business catalog printing this year. Publications reported a 7% increase with total print impressions rising by 9%. This market has been weak for the last two years and the end of the quarter marked the 37th consecutive month of fewer pages printed. Direct Marketing reported 11% lower sales and earnings but the company predicted that by year end revenues will improve due to the national “Do Not Call” list diverting advertising to redirect marketing dollars into print. Supply Chain Management showed excellence performance with sales 33% over those of the third quarter of 2003 and operating margins up 12% from 10.4% last year. Restructuring will occur in Supply Chain as Banta will close its Dublin facility and will consolidate the work with a facility in Cork. Health care reported $24.6 million in revenue; up 11%. Guidance Fourth quarter earnings should be comparable to those reported last year. The 2004 overall is expected to be a year of solid growth. Banta’s restructuring is expected to result in $8-10 million in annual cost savings. The Company predicted that in Print, the depressed magazine environment should be over. Pricing will stabilize in Direct Marketing. Spending will increase in their Education and Supply Chain Management sectors as Banta has momentum and a growth effort underway. In Health Care, company efforts have created a strong cash flow, and finally, company restructuring efforts will be apparent next year. Q & A 1. Banta’s reorganization of its health care sales force was in an effort to realign territories and to realign the company’s stance in the marketplace. It was also to obtain additional skills and contacts in the industry. Although only 6 people were affected, it did impact the company’s results. 2. Tyco’s troubles are not impacting Banta as Tyco operates in different segments than Banta and the products are much different. 3. The increased performance in the publication division is due to Banta taking market share gains and the utilization of the print platform on alternative commercial products. Banta has started to offer additional services, such as Pubnet, which is adding to the revenue stream. 4. Banta is not looking to add capacity, but since it is changing its technology to be higher speed and more productive with the result of capacity. 5. New products in the Health Care segment are driving growth such as an adult incontinent product, special printing on table paper, liners and themed dental towels. There are four to five new products in this category. The realignment of the sales force in the Health segment should only affect one quarter. 6. The company’s cash on the balance sheet allow Banta to grow the business. Opportunities to grow the business include capital expenditures such as acquisitions, equipment, or the realignment of the catalog business, the expansion of the literature packaging and fulfillment business and investing in systems. Any capital expenditures discussions go through a rigorous review process with the company’s Board. 7. Banta is beginning to see the market loosen and become more rational with regard to acquisition opportunities. The company has seen recent properties but they haven’t been attractive because they are in trouble or their valuation is higher than what the company wants to pay. In a print acquisition situation,Banta would look for a 5 to 6 times EBITDA multiple. In a supply chain multiple, it would look for a 7 to 8 times EBITDA multiple. Although there is some movement, the prices are not wholesale. 8. Banta officials do not see the pricing environment turning around immediately, such as in the fourth quarter, but does see a turn-around more likely in the second quarter of 2004. Guiding Banta’s optimism in industry pricing include what Banta sees as some increase in capital spending in North America which would bode well for catalogs. B2B magazines tend to increase with capital spending increases, and the “Do Not Call” registry will drive more volume to print. 9. The fourth quarter will not be a banner quarter with magazine publications, but Banta is seeing a number of new magazine start-ups which is an indicator the industry is rebounding.