July 10, 2002 -- With the intent to focus on the "capture, management, and distribution of print and digital information," Banta has three business units: printing and digital imaging, supply chain management, and healthcare. Banta has a culture of integration that supports growth by acquisition, which is important since company management has targeted about one-third of the corporation’s growth to come from acquisitions and two-thirds from organic growth. It was impressive that each source we spoke with had an unusual ability to clearly articulate their integration and compensation plan as it related to "cross-selling and up-selling" all of the business units. The company brings acquisitions "into the fold" quickly and efficiently; and trains, motivates, and compensates its sales forces to cross-sell and up-sell products and services from other business units. Implementing a structured process incorporating a "single source manager," the company is a "one-stop-shop" for printing, communication, light manufacturing, and distribution services. The single source manager was explained to us as an "internal sales rep - responsible for bringing in business from other Banta business units." Diversity or Synergy? How did Banta get into these diverse businesses? In 1995, the company began broadening their services and acquired B.G. Turnkey Services Limited (B.G. Turnkey), to form the basis for the Banta Global Turnkey Group. The acquisition significantly increased the size and scope of the turnkey services provided by the company. That same year, Banta purchased Applied Technology Corporation, which served the single-use healthcare market, and New Frontiers Information Corporation, which launched Banta Integrated Media. Prior to these purchases, Banta was a primarily a commercial, book, and publications printer providing services such as pre-press services, printing, fulfillment, and distribution for their printing customers. In September 1997, however, Banta announced a strategic restructuring to improve profitability and operational effectiveness. Banta acquired a direct mail fulfillment and mailing company, an additional single-use healthcare products firm, and a special interest magazine printer. The company also divested its point-of-purchase sign and display division, discontinued its intaglio print-based security products business and prepared to divest The DI Group, Banta’s interactive video operation. The restructuring eliminated non-core and under performing operations, and was designed to enhance Banta’s long-term performance. Was this a brilliant strategic move or simply good timing? As in most successful businesses, it was most likely a combination of the two. Regardless, the result was growth in their stock price and continuous cash dividends since 1971. Willing to Take Risks Even though Banta is 100 years old and a respected pillar in the printing industry, the company is willing to take financial, technical, and business risks to capitalize on advances in printing and electronic information distribution. The company’s capital spending has averaged $71 million a year over the last three years to add and enhance cutting-edge technology ranging from high-speed printing presses to electronic on-demand printing systems, CD-interactive programs, e-commerce, digital content management and supply-chain integration solutions. For example, in March 2000, Banta increased its equity ownership of XYAN.com through a cash payment and asset exchange. XYAN.com acquired Banta’s database management and graphics design operation in Needham, Mass., some of their digital press assets, and also served as an application service provider (ASP) for Banta's B·media digital content management software. Almost exactly a year later, XYAN.com filed for bankruptcy. Because of the lack of customers and funding, Banta pulled its backing away and reacquired two of its digital print facilities. The 40 employees within the facilities returned to Banta, and Banta wrote off a non-operating charge against earnings of $12.5 million before taxes, $7.5 million after. Spring 2000 also saw Banta taking the unusual step of joining with three major competitors, R.R. Donnelley, Quad/Graphics, and Quebecor World, to form a consortium to "create supply-chain efficiencies for industry participants worldwide by establishing standards and leveraging enabling technologies." The four companies hoped to enable customers who work with multiple print providers to streamline the print process in areas such as job planning and administration. The companies also looked to address standards and common interfaces for administering the procurement of materials such as paper. The group intended to encourage broad participation among printers, customers and suppliers worldwide with the goal of enhancing industry relationships. As it became clear that "e-procurement" was gaining little traction in the printing and graphic arts industry, the alliance died a quiet death. Additionally, the chief executives of these four very large companies "know each other only casually" for the most part. This complicated the logistics and inertia simply overcame intent. The Future Who would have thought when the picture displayed above was taken at a small storefront in Menasha, Wisconsin, that the George Banta Printing Company would become a billion dollar global printing and distribution company? Banta has a long history as a successful printing company, and is evolving into a technology, service, and supply chain management company with two especially strong business units. The printing business is a good cash and earnings generator, and supply chain management is a robust, global growth business. Are there acquisitions and divestitures in the future? With strong cash flow capabilities and low debt levels, Banta has the ability to quickly invest in equipment, technologies, and acquisitions. We expect further acquisitions to strengthen their diverse business units - especially the printing and supply chain units. But what about divestitures? The company is not averse to shedding businesses that aren’t performing up to corporate standards and expectations. It doesn’t appear that there is any pressure (or logic) to spin off either the printing and digital imaging group or the Banta Global Turnkey group. There is strong synergy between printing and supply chain management -- similar technology, similar customer base, and an opportunity to leverage sales. The healthcare unit is a more logical candidate for divestiture. The group generated about 10% of the net sales and about 10% of the earnings from operations in 2001. Because the unit has no real strategic advantage to the other groups, we expect that the right offer by the right company would be successful. Together the whole -- Printing and Digital Imaging and Banta Global Turnkey -- is greater than the sum of the parts. The units work together to manage the entire communication process including document and product lifecycles; digital, hardcopy, and product distribution; data manipulation and analysis; light manufacturing; and fulfillment and reverse fulfillment. The end result is an end-to-end -- or rather a closed-loop -- service provider. Finally, the entire management team has very short tenure; all having joined the company since 1994, and half of those came to Banta since 2000. There are rumors that Donald Belcher, Chairman and CEO, will retire within the next two years. But shareholders, employees and customers should not worry as the company has a history of good transition planning. Banta's Board of Directors also has an interesting mix that bears noting. Three of the ten board members are women: Jameson Adkins Baxter of Baxter Associates, Ursula Burns of Xerox, and Stephanie Streeter, President/COO of Banta. Additionally, with Ms. Burns of Xerox and Michael Winkler of HP serving as board members, it will be interesting to watch the influence that could continue to encourage investments in digital technology to support future growth and cost savings. What will the future bring? For a large company, Banta has proven to be nimble on its feet - its part of their culture and should continue. Gail Kailing can be reached at [email protected].