Banta Notes Concern for Second Half of 2006 and Announces Print Restructuring: Summary of Second Quarter 2006 Earnings Call August 4, 2006 -- Banta Corp. (NYSE: BN) announced their second quarter 2006 earnings recently. The company’s revenue from continued operations for the second quarter was $361 million, compared to $366 million in the same quarter a year ago. Earnings from continued operations increased in the quarter to $16.1 million, compared to $14.1 million last year. Second quarter diluted earnings per share were $0.66, up 17.8%, compared to $0.56 a year ago. Of the $0.66 in diluted EPS, $0.15 was the result of a tax reserve reversal. "Even though we added customers during the quarter, particularly in the retail electronics segment, and are experiencing growth in demand from our medical device customers, we remain concerned about demand and margin erosion during the second half of the year," said Stephanie Streeter, President, Chairman and CEO of Banta. Contents of this Summary * Quarter Highlights * Segment Performance * Guidance * Raine Radar * Q & A Quarter Highlights • The print sector reorganization, which was announced with second quarter earnings, is expected to generate annualized pre-tax savings of approximately $3 million, beginning in 2007. The action will result in a third quarter cash charge of approximately $2 million, primarily related to employee severance costs. • SG&A expense in the second quarter was $59 million compared to $58.5 million in the year ago quarter. • GAAP earnings from continued operations were $16.1 million compared to $14 million in the same quarter a year ago, although the company did benefit from a tax reserve reversal of $3.7 million in the 2006 quarter. • Net earnings were $16.1 million in Q2 2006 compared to $33.8 million in the same quarter a year ago. • For the six months ended June 2006, revenue from continuing operations totaled $745 million, compared with $752 million during the same period last year. Earnings from continuing operations were $29.8 million compared with $27.7 million in 2005's first half. • Diluted earnings per share from continuing operations were $1.22, compared with $1.10 in last year's first six months. The favorable impact of the tax reserve reversal in the second quarter of 2006 was $3.7 million, or 15 cents per diluted share. Segment Performance Print Segment The company announced that it would be consolidating its five print groups into two to better align capabilities with customer needs and to reduce costs. The consolidation plan, effective immediately, includes merging the consumer catalog, book and publications divisions into a single unit. Literature management and direct marketing will form a new group called Banta Direct Marketing Solutions. The restructuring will also include a layer of management being removed, although specifics were not released. The print segment posted revenue for the second quarter of $254 million, roughly comparable with the $257 million reported in the same period last year. Operating earnings for the second quarter were $14.4 million, compared to $17.0 million last year. The drop in operating earnings was primarily due to pricing pressures and volume declines in consumer catalogs, publications and non-personalized direct mail. Results were also negatively impacted by an approximate $1 million bad-debt expense in the catalog division. Helping to offset the declines was strong growth in the corporation's literature management division. Supply Chain Management Segment The corporation's supply-chain management sector reported second quarter revenue of $107 million, compared with $109 million last year. Operating earnings were $10.4 million, compared with the prior year's $11.1 million. Pricing pressures, a continued reduction in the content requirements for certain products, unfavorable changes in foreign currencies, and general softness in demand for some technology products negatively affected second quarter results. Guidance In light of second quarter results, as well as expectations for continuing pricing pressures and softness in demand, management has updated its previous 2006 guidance. Full-year revenue from continuing operations is now expected to be in the range of $1.55 billion to $1.58 billion. Diluted earnings per share from continuing operations, excluding any charges or benefits from the reorganization, are now expected to be in the range of $2.75 to $2.85, which excludes the 15 cent per share benefit from the effect of the tax reserve reversal, and $2.90 to $3.00 including the benefit. Raine Radar Revenue and earnings (without the tax benefit) are both down this quarter, continuing the negative trend from last quarter. The company just isn’t seeing the demand or prices it had anticipated. There does not appear to be one area where the company is suffering, but rather, minor to moderate pricing and volume difficulties appear to be occurring across the company. Banta is working to meet this challenge, reorganizing its print division in an attempt to keep earnings moving in the right direction. Q & A 1. Banta is concentrating on increasing their complex area of print since there is much competition in the regular commercial print market. Banta has also noticed a shift towards multi-media; with advertisers and marketers moving their money around, Banta is concentrating more on their literature management. 2. The company’s cash priority focus has not changed from acquisitions; they are still looking at acquisitions as an important part of future growth. 3. In the ongoing reorganization process, the company will be taking a close look at their G&A expenses while consolidating its print groups, including removing a layer of management. Banta feels this streamlining is necessary for future growth. 4. With pricing, re-pricing, and volume changing, Banta feels they are being pro-actively competitive in both their print and supply chain management business units. 5. Banta’s supply-chain management side has shifted from the April optimism because of pricing pressures and constant erosion of material processes. 6. The pricing pressures in the supply-chain and printing divisions have not really affected Banta’s acquisitions to date, and there is no speculation at this time as to the effects they may be realized in the future.