MENASHA, Wis., July 31- Banta Corporation today reported solid performance during the second quarter, despite the challenging economic environment. The corporation achieved second quarter diluted earnings per share of 50 cents, equal to last year's record second quarter, on lower sales. Net earnings for the second quarter were $12.5 million compared with last year's $12.6 million. Sales were $337 million versus $359 million for 2000's second quarter. For the six-month period ended June 2001, diluted earnings per share increased to 91 cents, before the one-time charge taken during 2001's first quarter, versus 89 cents last year. Net earnings for the first half of both 2001 and 2000 were comparable at $22.6 million, before the one-time charge. Sales for this year's first six months increased to $710 million compared with $700 million in 2000. Chairman Donald D. Belcher says, "Achieving results equal to last year's strong second quarter was a solid achievement given the sluggish economic environment and business slowdown. The strategic diversification of our business portfolio proved beneficial during these slower economic times, as higher second quarter supply-chain management revenue helped offset lower print sales. In addition, our ongoing focus on execution and our strong efforts on cost containment allowed us to counter much of the recent decrease in print spending and increase in utility costs.'' Highlights of the quarter include: -- Operating performance and profitability of Banta's direct marketing print units, including both direct mail and consumer catalogs, continued to improve for the quarter and six months, although sales were lower reflecting the sluggish economy. Direct marketers are increasingly adopting print personalization technologies and one-to-one marketing strategies, which leverage Banta's investments in on-press imaging systems. The increased use of these systems, along with stringent cost controls, resulted in improved margins and profitability during a period of lower direct mail print demand. -- The specialty publications business continues to deliver excellent profitability, despite an approximate 10 percent reduction in magazine pages during the second quarter compared to the same period last year. -- In the educational market, performance was affected by higher customer inventories. This weakened the normally strong first-six-month print demand, significantly reducing revenues and earnings. These inventories are decreasing, thus some of the expected second quarter print activity should move into the third quarter. -- Second quarter sales for Banta's supply-chain management sector increased 23 percent over the same period last year, primarily due to a more normal run-rate for the Compaq Computer contract this year versus start-up activity during 2000's second quarter. The continuing slowdown in the technology sector reduced order quantities for most of Banta's customers, however the demand for outsourcing services continues to be strong. Several of the corporation's technology customers reduced channel inventories during the first half of the year. This reduction provides some optimism for increased activity, although it may be difficult to match last year's outstanding final six months. Meanwhile, Banta's European business has been stronger than in the U.S., proving the value of a global service platform. -- The corporation's healthcare unit benefited from last year's global sourcing and domestic manufacturing initiatives. Second quarter sales were comparable to the same period in 2000, however profitability increased substantially due to the one-time nature of the expenses related to last year's initiatives. The financial results of the healthcare business reflected the success of management's efforts to improve performance and respond to competitive pressures through the utilization of lower-cost global sourcing alliances. "Overall, we are encouraged by our second quarter performance, which was supported by our continued focus on customer needs, stringent cost controls and significant spending reductions to offset lower facility utilization,'' explains Belcher. "We have reduced our 2001 capital spending commitments and now expect cash outlays to approximate $65 million to $70 million, about one-third less than previous expectations. We continue to aggressively pursue our growth strategies and are confident that this lower spending level will not diminish our ability to meet customer needs.'' Belcher added, "Our print sector has a good start to the second half of the year, with nearly all print operations experiencing improved plant loading in July. Educational publishers have increased their print activities; and direct marketing, including consumer catalogs, is benefiting from improved forward production schedules. Revenue growth in Banta's supply-chain management business will depend on how quickly the technology sector rebounds following a period of lower demand and inventory reductions. While growth over the next few months may be more moderate, long term we continue to be confident that a 20 percent to 25 percent compound annual growth rate for our supply-chain management business is achievable.'' Banta management believes that given the continued soft economy, it will be a challenge to fully achieve the levels of revenue and earnings reached during last year's exceptionally strong final six months. Thus, for the full-year 2001, the corporation's diluted earnings per share are expected to be comparable to last year, before the one-time charge taken during 2001's first quarter. 2000 diluted EPS reached a record $2.35. Earlier guidance for 2001 was $2.40-$2.48.