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Banta Reports Solid First Quarter Results

Press release from the issuing company

MENASHA, Wis., April 25 -- Banta Corporation today reported first quarter 2006 earnings from continuing operations of $13.7 million, nearly equal to 2005's record first quarter earnings from continuing operations. First quarter revenue from continuing operations was $384 million, slightly below the $386 million recorded in the first quarter of 2005. Diluted earnings per share from continuing operations reached 56 cents compared with last year's 54 cents. Approximately 6 cents of diluted earnings per share were due to higher interest income, a lower tax rate, and fewer shares outstanding as a result of share repurchases during the past 12 months. This increase was partially offset by incremental expense of 4 cents per diluted share (approximately $1.5 million) for equity-based compensation, primarily associated with stock option expensing, as required by new accounting standards. Comparisons with last year's first quarter results exclude both the operating earnings of the Banta Healthcare Group, which was sold during the second quarter of 2005, and a gain on the sale of the Group's West Coast distribution facility. Last year's first quarter net earnings, including results from the discontinued operation and the proceeds from the asset sale, were $16.0 million, or 63 cents per diluted share. "Our first quarter results came in as we expected, for the most part matching last year's strong first quarter," said Banta Chairman, President and Chief Executive Officer Stephanie A. Streeter. "The Banta Print Sector had mixed results, with excellent contributions from our literature management division and improved earnings from both the direct marketing and book divisions. Our Supply-Chain Management Sector continued to benefit from healthy unit volume from several of its major customers, however first quarter pricing pressures and currency effects caused both revenue and operating earnings to fall short of last year's record first quarter." The corporation's outlook for the remainder of the year is unchanged, noted Streeter. "We continue to expect that 2006 will be another record year for Banta," said Streeter. "While we believe our second quarter results will again be relatively comparable to those in the same period last year, we expect stronger performance during the final six months of the year as we ramp up our service to new customers in our Supply-Chain Management Sector, including a significant new relationship with a major medical device company. In addition, our Print Sector should more fully benefit from its continuing productivity gains during the historically stronger second half." Management's full-year 2006 guidance continues to be for revenue in the range of $1.6 billion to $1.65 billion, and diluted earnings per share from continuing operations, including the first-year effects of expensing stock options, in the range of $3.00 to $3.15. OPERATING HIGHLIGHTS -- Print Sector revenue in the first quarter reached $280 million, 2 percent above the $275 million reported in the same period last year. Three major issues impacted Print Sector revenue: paper price increases, strong sales from the literature management division, and the negative impact from price and mix changes. First quarter operating earnings for the Print Sector were $16.1 million, compared with $16.5 million in the first quarter of 2005. - The book division reported improved operating earnings on lower revenue, benefiting from strong productivity efforts and healthy volumes in fulfillment services for major customers. Business activity for the quarter started off slowly, but momentum grew throughout the three-month period, providing a good start to the second quarter. - The literature management division delivered exceptionally strong gains in both revenue and operating earnings during the quarter. In addition to several new customer wins, the division benefited from continuing good activity involving the production and fulfillment of enrollment kits related to a major customer's Medicare Part D prescription drug program. - The catalog division reported lower first quarter revenue and operating earnings. A general decline in catalog volumes and continued pricing pressures caused results to fall short of last year's strong first quarter. While several new customers were gained during the first quarter, the new accounts did not involve first quarter catalog production. - The direct marketing division turned in another good quarter, with both revenue and operating earnings above 2005's strong first quarter. Spending on direct mail promotions by major customers remained at a high level during the quarter, especially in the highly personalized sub-segment of the market. - The publications division reported lower revenue and operating earnings due to aggressive competitive pricing, and reduced volumes of magazine and commercial print work. Earnings were also affected by the start-up costs for the division's newly announced co-mailing and distribution center. -- Banta's Supply-Chain Management Sector reported first quarter revenue of $103 million, compared with the prior year's first quarter record $111 million, with about one-half of the decline related to currency valuations. Operating earnings fell short of last year's strong first quarter, at $11.4 million compared with 2005's $12.4 million. While business activity remained good among Banta's major customers, normal contractual adjustments at the beginning of the year caused additional downward pressure on prices. However, a favorable value-added product mix, strong cost controls and continuing productivity advances enabled the sector's operating margin to equal last year's solid first quarter.

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