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Banta Q3 EPS Falls On Special Charges

Wednesday, October 25, 2006

Press release from the issuing company

MENASHA, Wis., Oct. 24-- Banta Corporation, a leading printer of books, magazines, catalogs and direct marketing materials, and a global provider of supply-chain management services, today reported 2006 third quarter revenue of $382 million, comparable to the $381 million reported in the same period last year. Net earnings declined to $15.9 million from the prior year's record $21.7 million, primarily due to restructuring and asset impairment charges, and reduced pricing in both the company's Printing and Supply-Chain Management sectors. Excluding the special charges, net earnings were $20.4 million. Third quarter diluted earnings per share were 65 cents compared with 89 cents in the same period last year. Excluding the special charges, diluted earnings per share were 83 cents. Third quarter average shares outstanding were comparable in 2006 and 2005. Pretax restructuring and asset impairment charges in 2006's third quarter totaled $7.4 million, or 18 cents per diluted share. The restructuring charges of $961,000, or 2 cents per diluted share, were primarily employee severance and benefit expenses resulting from the initial phase of Banta's Print Sector consolidation. The asset impairment charge of $6.4 million, pretax, or 16 cents per diluted share, was due to the write off of previously capitalized development costs for the final phase of an administrative software system implementation that the Company will not place in service. As previously announced, Banta expects full-year restructuring and asset impairment pretax charges to total $9 million in 2006, and $19 million in 2007. Positively impacting 2006 third quarter results was a gain of 7 cents per diluted share ($2.5 million, pretax) due to an amendment to a retiree benefit plan. The amendment impacted the accrual for retiree benefits, but does not reduce benefits, or payments, for eligible employees. Both net earnings and diluted earnings per share were also reduced by this year's requirement to expense equity-based compensation, which was not required in 2005. The incremental cost, primarily related to stock-based compensation, was 5 cents per diluted share ($1.9 million, pretax). "Despite recent distractions, we have accomplished a great deal in the third quarter. We have made significant progress in our restructuring, financed our special dividend and executed a letter of intent with our largest customer, HP, for a new five-year relationship," said Chairman and Chief Executive Officer Stephanie A. Streeter. "We identified, and initiated, a comprehensive series of strategic initiatives and cost-containment actions that will position both our print and supply-chain management businesses to accelerate growth, and deliver sustained annual cost savings of $27 million in 2007, and $35 million in 2008. "Our Supply-Chain Management Sector continues to benefit from solid unit volume demand from its major customers, including strong activity in the medical device segment, and we're gaining additional opportunities in new markets," noted Streeter. "Our Print Sector has rapidly grown its literature management business, with especially strong activity related to Medicare Part D prescription drug promotions and four-color digital printing. In addition, our market share gains in catalogs and special-interest magazines that began late in the second quarter continued through the third quarter, and those new customer wins will provide important contributions starting in the fourth quarter and continuing into 2007." For 2006's first nine months, revenue was $1.13 billion, comparable to the same period last year. Earnings from continuing operations were $45.7 million ($1.87 per diluted share) compared with 2005's $49.4 million ($1.98 per diluted share). Net earnings from continuing operations for the nine-month period, excluding charges and the reversal of the $3.7 million tax contingency reserve in the second quarter, were $46.5 million ($1.90 per diluted share). Pretax stock-based compensation expense for the first nine months of the year totaled $5.5 million (14 cents per diluted share). Earnings were positively impacted by the second quarter reversal of a tax contingency reserve of $3.7 million (15 cents per diluted share) and by this year's third quarter retiree benefit plan amendment.




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