MENASHA, Wis., July 25 -- Banta Corporation today reported second quarter results and simultaneously announced the first step in a Print Sector reorganization designed to reduce costs, make it easier to do business with the company, and position Banta's print businesses for stronger long-term growth. Banta's second quarter revenue from continuing operations of $361 million was slightly below the $366 million recorded during the same period in 2005. Earnings from continuing operations were $16.1 million compared with $14.0 million in last year's second quarter. Diluted earnings per share from continuing operations were 66 cents compared with 56 cents in 2005's second quarter. Results for this year's second quarter were favorably impacted by the reversal of a tax contingency reserve established during the last five years related to incentives granted by the Singapore tax authority. The corporation was eligible to earn these incentives assuming it met investment and employment requirements at its supply-chain management operation in that country. In the second quarter of 2006, the corporation received final approval of qualification for the tax incentives and reversed the tax contingency reserve of $3.7 million. Without the release of the tax reserve in the second quarter, which lowered the corporation's effective tax rate to 9.5 percent from 30.0 percent, Banta's second quarter earnings from continuing operations would have been $12.4 million, or 51 cents per diluted share. Excluding the aforementioned reduction of the tax provision, the corporation anticipates the effective tax rate for the full year 2006 to be 30.0 percent. Also affecting the corporation's second quarter diluted earnings per share was stock-based compensation expense of five cents per share, reported in accordance with new accounting standards. The amount of stock-based compensation expense recognized in last year's second quarter was immaterial. Results from continuing operations exclude proceeds from the sale of Banta's healthcare business in 2005's second quarter, as well as its operating results prior to the sale being completed on Apr. 12, 2005. "Our Print Sector faced considerable pricing pressures and volume challenges in the second quarter, which negatively affected our results from operations," said Banta Chairman, President and Chief Executive Officer Stephanie A. Streeter. "Despite these volume challenges, had we not had a large bad-debt expense in our catalog division, we would still have delivered corporate earnings results in the first half of this year comparable to results in the same period last year, which was our expectation. "While we continue to make important progress on driving efficiencies and productivity through our corporatewide Operational Excellence efforts, the on- going evolution of the print industry requires that we reconfigure our resources to assure we maximize future growth and profit opportunities. Effective today, we are reorganizing our five print divisions into two divisions. By doing so, we will be eliminating management infrastructure, reducing general and administrative costs, and better aligning our print service capabilities to meet the needs of our customers." Banta's book, publications and consumer catalog print divisions will become a single division called Banta Publishing & Catalog Solutions. Combining these three business units will reduce costs, promote better asset utilization and streamline its interactions with customers. The corporation's direct marketing and literature management divisions will form a new division called Banta Direct Marketing Solutions. The two divisions share a common customer base and market focus, and together they will present direct marketers with a complete range of dynamic marketing solutions to meet their growing needs for multi-channel communications. While the former direct marketing division provides high-volume personalized and standard direct mail solicitations, the literature management division offers marketers and other clients customized, multi-component direct marketing materials, digital printing and state-of-the-art fulfillment services. "This reorganization is our initial response to the print market dynamics that we saw more rapidly develop during the second quarter," explained Streeter. "We intend to remove significant costs from our Print Sector infrastructure, and at the same time better leverage our scale to make us more responsive to, and competitive in, the marketplace." The Print Sector reorganization announced today 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. "Today's announcement represents only the first step in our effort to streamline our company's operations and administrative functions," said Streeter. "Over the next several months, we will evaluate other competitive improvement options, with a focus on actions that will help us deliver more cost savings, and sustainable growth in both revenue and earnings. Further reorganization will result in additional charges in the second half of this year, with added cost savings expected in 2007 and beyond." 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. This year's first six months diluted earnings per share were reduced by nine cents due to the recognition of stock-based compensation expense, compared with less than one cent in last year's first half. "We expect many of the pricing and volume challenges to carry over into the second half of the year, particularly for our consumer catalog, publications and direct marketing businesses," noted Streeter. "While second quarter capital projects should benefit all three product categories during the balance of this year -- with a rebuilt press for catalog, co-mailing capabilities for publications and additional personalization capacity for direct marketing -- we do not expect those projects to fully offset the continuing effects of the market dynamics that caused the earnings shortfall in the second quarter. The beginning of the reorganization activities that we are announcing today underscores our commitment to cost reductions, productivity improvements, and assuring we are structured in the best way to service our customers. Our efforts will not be limited to the Print Sector, as we look at all opportunities to configure and streamline Banta to invigorate our businesses and meaningfully accelerate our progress in the months and quarters ahead." 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.