UNITED STATESSECURITIES
AND EXCHANGE COMMISSION  Washington, D.C. 20549  FORM 10-K

|(X) | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT           OF 1934 For the fiscal year ended December 31, 2005
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

# OR

|(   ) | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE           ACT OF 1934 For the transition period from _________ to __________
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

Commission File Number
1-14637

|BANTA CORPORATION                                     
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)

|Wisconsin                         | 39-0148550   
|--------------------------------- | -------------
|(State or other jurisdiction      | (IRS Employer
|of incorporation or organization) | I.D. Number) 

|225 Main Street, Menasha, Wisconsin      | 54952     
|---------------------------------------- | ----------
|(Address of principal executive offices) | (Zip Code)

Registrants telephone number,
including area code:  (920) 751-7777

Securities registered pursuant to
Section 12(b) of the Act:

|                                | Name of Each Exchange  
|------------------------------- | -----------------------
|Title of Each Class             | On Which Registered    
|Common Stock, $.10 par value    | New York Stock Exchange
|Rights to Purchase Common Stock | New York Stock Exchange

Securities registered pursuant to
Section 12(g) of the Act:  None

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Exchange Act.  (X)  Yes   (   ) No

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange  Act. (   ) Yes  (X) No

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. (X) Yes (  ) No

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). (Check one):

Large accelerated filer
(X)                Accelerated filer (   )                 Non-accelerated filer (   )

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  (   ) Yes
      (X) No

Aggregate market value of voting
stock held by non-affiliates of the registrant as of July 1, 2005: $1,109,922,398.

Number of shares of common stock
outstanding as of February 17, 2006: 24,191,038

DOCUMENTS INCORPORATED
BY REFERENCE

|(1) | Portions
of the Annual Report to Shareholders for the year ended December 31,
                    2005 (incorporated into Parts I and II).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Portions
of the Definitive Proxy Statement for annual meeting of shareholders to
                    be held on April 25, 2006 (incorporated into Part III).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

1

---

# TABLE OF CONTENTS

|Form 10-KItem No. | Name of Item                                                                            | Page
|----------------- | --------------------------------------------------------------------------------------- | ----
|Part I            |                                                                                         |     
|Item 1.           | Business                                                                                | 3   
|Item 1A.          | Risk Factors                                                                            | 7   
|Item 1B.          | Unresolved Staff Comments                                                               | 9   
|Item 2.           | Properties                                                                              | 10  
|Item 3.           | Legal Proceedings                                                                       | 10  
|Item 4.           | Submission of Matters to a Vote of Security Holders                                     | 10  
|Part II          
|Item 5.           | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
|                  | of Equity Securities                                                                    | 10  
|Item 6.           | Selected Financial Data                                                                 | 11  
|Item 7.           | Managements Discussion and Analysis of Financial Condition and Results of             
|                  | Operations                                                                              | 11  
|Item 7A.          | Quantitative and Qualitative Disclosures About Market Risk                              | 23  
|Item 8.           | Financial Statements and Supplementary Data                                             | 23  
|Item 9.           | Changes in and Disagreements With Accountants on Accounting and Financial              
|                  | Disclosure                                                                              | 45  
|Item 9A.          | Controls and Procedures                                                                 | 45  
|Item 9B.          | Other Information                                                                       | 46  
|Part III         
|Item 10.          | Directors and Executive Officers of the Registrant                                      | 46  
|Item 11.          | Executive Compensation                                                                  | 47  
|Item 12.          | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 
|                  | Matters                                                                                 | 47  
|Item 13.          | Certain Relationships and Related Transactions                                          | 47  
|Item 14.          | Principal Accountant Fees and Services                                                  | 47  
|Part IV          
|Item 15.          | Exhibits, Financial Statement Schedules and Reports on Form 8-K                         | 47  

2

---

# PART I

# Item 1. Business

# Company Overview

Banta Corporation (the
Corporation) operates in two business segments, printing services and
supply-chain management services. The Corporations printing services segment
provides a comprehensive combination of printing and digital imaging solutions to leading
publishers and direct marketers. Products and services in this segment include books,
catalogs, publications, product brochures, literature management services, educational
materials and e-business services. The Corporations global supply-chain management
services segment provides a wide range of outsourcing capabilities, primarily to some of
the worlds largest technology companies. Services in this segment range from
materials sourcing, product configuration and customized kitting, to order fulfillment and
global distribution. The Corporation was incorporated in Wisconsin in 1901. Its principal
executive offices are located at 225 Main Street, Menasha, Wisconsin 54952. The
Corporation had approximately 8,500 employees at the end of fiscal 2005.

As discussed in detail in Note 2,
Divestiture, to the consolidated financial statements, on April 12, 2005, the
Corporation completed the sale of substantially all of the assets of its single-use
healthcare products subsidiary, Banta Healthcare Group, Ltd. (Healthcare), to
an affiliate of Fidelity Capital Investors, Inc., for $67 million. This transaction
generated net proceeds of $62.6 million. A gain of $20.2 million, net of income taxes, was
recorded in 2005 as a result of the transaction. In accordance with Statement of Financial
Accounting Standards (SFAS) No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the results of operations of Healthcare, which
previously comprised the entire healthcare segment, and the gain on the sale of the assets
have been reflected in discontinued operations in the accompanying consolidated statements
of earnings.

# Customers

The Corporation sells its services
and products to a large number of customers and generally does not have long-term
production contracts with its print customers. Production agreements covering one to three
years are, however, more frequent for supply-chain management services and magazine
production, and to a lesser extent, catalog production. The Corporation has a contract
with Hewlett-Packard Company that currently runs through 2006, subject to one-year
extensions pursuant to an evergreen provision. Revenue from Hewlett-Packard Company under
this agreement totaled approximately $135 million in 2005, and comparable revenue is
expected under this contract in 2006.

Substantially all sales are made to
customers through employees of the Corporation and its subsidiaries based on customer
specifications. The fifteen largest customers accounted for approximately 38%, 36%, and
35% of revenue from continuing operations during 2005, 2004 and 2003, respectively. In
2005, one customer (Hewlett-Packard Company) accounted for 10.5% of the Corporations
revenue from continuing operations, with revenue in both business segments. Michael J.
Winker, a director of the Corporation, served as an executive officer of Hewlett-Packard
Company until his retirement in December 2005. No single customer accounted for more than
10% of consolidated revenue from continuing operations during 2004 or 2003.

# Markets Served

The Corporation operates in two
business segments, printing services and supply-chain management services. These markets
are summarized in the following table and described in greater detail below. Tables in
this section set forth the approximate percentage of segment revenue from continuing
operations for the last three fiscal years.

|                                
|--------------------------------
|Printing services               
|Supply-chain management services
|                                
|Total                           
|                                

3

---

Printing Services Segment

Beginning with fiscal year 2005, the
Corporation strategically realigned certain components of the printing services segment
and defined the following operating units in this segment: Book, Direct Marketing,
Publications, Catalog and Literature Management. The Corporations literature
management services had previously been included as a part of the Book operating unit.
Effective January 2, 2005, the Corporations literature management services became a
separately managed operating unit. The Book operating unit includes revenue in 2003 and
2004 that is presented under the Literature Management operating unit in 2005.

|                     
|---------------------
|Book                 
|Direct Marketing     
|Publications         
|Catalog              
|Literature Management
|Other                
|                     
|Total                
|                     

Book

The book operating unit provides the
book publishing market with a variety of offset print solutions, in addition to a full
range of value-added packaging, fulfillment, document management and distribution
services. The Corporation serves publishing customers in the educational, trade,
professional and religious segments. The Corporation provides products including soft
cover books, business-to-business and industrial catalogs, specialty calendars,
multimedia kits and instructional games.

Direct Marketing

The products produced by the
direct marketing operating unit
vary in format and size, and include magazine and catalog inserts, bill
stuffers, brochures, booklets, cards and target market products designed to sample or
sell a product or solicit a response. The Corporations imaging technology enables
customers to obtain complex personalized direct mail pieces produced inline at press
speeds. The Corporations direct marketing customers are primarily marketers of
financial services, consumer packaged goods and retail products, as well as advertising
agencies.

Publications

The Corporations publications
operating unit prints, sorts and mails approximately 1,300 different magazine titles.
These magazines are primarily short-to-medium run publications (usually less than 350,000
copies), which are generally distributed to subscribers by mail. The Corporations
primary magazine customers are publishers of specialty magazines, including business and
professional journals, as well as hobby, craft, sporting and religious publications. The
Corporation also provides its customers with computerized mailing lists, re-print
services and distribution services.

Catalog

This operating unit produces
catalogs primarily for the specialty and retail catalog markets. Bindery services provide
ink-jet labeling, demographic binding (which allows several different versions of the
same catalog to be bound simultaneously) and computerized mail distribution planning
systems. These services assist the Corporations customers in minimizing postage
costs and are an integral part of catalog printing services.

4

---

Literature Management

Literature management facilities
enable targeted, direct, measurable marketing campaigns through highly-customized
communications across multiple channels  including digital print, complex kits,
email, and web pages for marketers in healthcare organizations, financial service
providers, retailers and other large corporations.

Other

Prepress services are provided by
several of the Corporations facilities to publishers, printers and advertising
agencies. Prepress services include the conversion of full-color photographs, art and
text into color separated film and digital files for use in the production of printing
plates. These locations also provide electronic graphic design and digital photography.

Supply-Chain Management
Services Segment

The global supply-chain management
services business provides a wide range of outsourcing services, from materials sourcing,
product configuration and customized kitting, to order fulfillment and global
distribution. Customers include computer hardware, computer software, communications and
networking companies, as well as medical device manufacturers in North America, Europe,
and Asia. The Corporation provides the systems, technology and infrastructure to manage
multiple elements of the supply chain, integrating the Corporation, its customers and the
customers suppliers into a common information technology system, thereby increasing
capacity while reducing costs, cycle times and inventory requirements.

# Raw Materials

The principal raw material used by
the Corporation in the printing services segment is paper. Most of the Corporations
production facilities are located in areas with concentrated papermaking resources, and
the Corporation can generally obtain quality paper at competitive prices. The Corporation
is not dependent upon any one source for its paper or other raw materials.

During 2005, the cost of paper
increased on a composite average by approximately 9%. The cost of paper, when supplied by
the Corporation, is passed through to the customer. As a result, increased paper cost in
2005 had a positive impact on revenue, estimated to be approximately one-third of the 10%
increase in revenue in the printing services segment. In 2004, the cost of paper increased
by approximately 4% and in 2003, the cost of paper decreased by approximately 2%. The cost
of ink used in certain portions of the printing services segment of the business remained
steady in 2005, and decreased in 2004 and 2003. The Corporation uses a number of other raw
materials including packaging materials and subcontracted components. The cost of these
materials for the printing services segment remained relatively stable in 2005, 2004 and
2003.

Materials used for assembly, testing
and fulfillment in the supply-chain management services segment are specific to the
customers products and may include computer keyboards or components, cables, printed
manuals, CD or DVD media, various hardware components and packing materials. There is no
single, dominant raw material used in this segment.

# Environmental
Considerations

The Corporation has environmental
compliance programs primarily for the control of air quality, groundwater quality,
disposal of waste material and all aspects of the work environment involving employee
health.  Capital expenditures for air quality equipment have approximated 1% to 3% of
total capital expenditures in each of the last three years.  Capital expenditures for
environmental control equipment are expected to be in the same range for 2006.  The
Corporation also incurs ongoing costs in monitoring compliance with environmental laws
concerning the disposal of waste materials and the remediation of sites previously used
for the disposal of waste materials.  Any costs, claims or penalties that may be incurred
or assessed under environmental laws, beyond any reserves we have already provided, will
have an adverse effect upon the Corporations operations and consolidated financial
position.

5

---

# Foreign Operations

Note 13, Segment Information,
to the consolidated financial statements includes information on the Corporations
foreign operations.

# Seasonality

There is no significant seasonal
pattern to the Corporations consolidated quarterly revenue and earnings.

# Available Information

The Corporations Internet
address is http://www.banta.com. The Corporation makes available free of charge (other
than an investors own Internet access charges) through its Internet website the
Corporations Annual Report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable
after it electronically files such material with, or furnishes such material to, the
Securities and Exchange Commission. In addition, the Corporation also makes available
through its Internet website the Banta Code of Business Conduct and Ethics, its Corporate
Governance Guidelines and the charters of the Audit, Compensation and Nominating and
Governance Committees of the Board of Directors. Documents available on the website are
also available in print for any shareholder who requests them. The Corporation is not
including the information contained on or available through its website as a part of, or
incorporating such information by reference into, this Annual Report on Form 10-K.

# Special Note Regarding
Forward-Looking Statements

Our Annual Report to Shareholders,
including this Form 10-K, are among certain communications that contain forward-looking
statements. Statements that describe future expectations, including revenue and earnings
projections, plans, results or strategies, are considered forward-looking. The statements
that are not purely historical should be considered forward-looking statements. Often they
can be identified by the use of forward-looking words, such as may,
will, could, project, believe,
anticipate, expect, estimate, continue,
potential, plan, forecasts, and the like. Such
statements are subject to certain risks and uncertainties which could cause actual results
to differ materially from those currently anticipated. Factors that could affect actual
results include, among others, changes in customers order patterns or demand for the
Corporations products and services, pricing, changes in raw material and energy
costs and availability, unanticipated changes in sourcing of raw materials (including
paper) by customers, unanticipated changes in operating expenses, unanticipated production
difficulties, unanticipated issues associated with the Corporations non-U.S.
operations, changes in the pattern of outsourcing supply-chain management functions by
customers, unanticipated costs or delays associated with ongoing productivity-enhancing
projects, unanticipated acquisition or loss of significant customer contracts or
relationships, unanticipated issues associated with the strategic objective of growing the
supply-chain management business, unanticipated difficulties and costs associated with the
design and implementation of new administrative systems, the impact of any acquisition or
divestiture effected by the Corporation, unanticipated changes in the Corporations
effective income tax rate, unanticipated swings in foreign currency exchange rates, any
unanticipated weakening of the economy and other risks described under the caption
Risk Factors. These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed on such statements.
The forward-looking statements included herein are made as of the date of the printing of
this Annual Report on Form 10-K, and the Corporation undertakes no obligation to update
publicly such statements to reflect subsequent events or circumstances.

6

---

# Executive Officers of
the Corporation

|                                                |                                                                         
|----------------------------------------------- | ------------------------------------------------------------------------
|Name, Age, Position                             | Business Experience During Last Five Years                              
|Stephanie A. Streeter; 48                       | Chairman of the Board  of the Corporation since April 2004;             
|Chairman of the Board                           | President and Chief Executive Officer since October 2002;               
|President and Chief Executive Officer           | President and Chief Operating Officer from January 2001 to              
|                                                | October 2002.                                                           
|Geoffrey J. Hibner; 56                          | Chief Financial Officer of the Corporation since August 2003;           
|Chief Financial Officer                         | independent management consultant with Bridge Associates, LLC           
|                                                | (management consulting firm) from 2000 to 2003.                         
|Michael B. Allen; 46                            | President, Banta Print Sector since January                             
|President, Banta Print Sector                   | 2003; Executive Vice President Print Sector for R.R. Donnelley (printing
|                                                | services) from 2001 to 2002; Executive Vice President Core Commercial   
|                                                | Print for R.R. Donnelley from 2000 to 2001.                             
|Edward P. Allen; 49                             | President, Banta Supply-Chain Management                                
|President, Banta Supply-Chain Management Sector | Group since June 2005; Director Strategic Planning from 2004 to 2005;   
|                                                | consultant with Leading Edge Group (supply-chain management consultancy 
|                                                | company) from 2001 to 2004; founder of iTooling (e-supply chain company)
|                                                | from 2000 to 2001.                                                      
|David F. Engelkemeyer; 54                       | Vice President, Worldwide Operations since                              
|Vice President, Worldwide Operations            | February 2004; Executive Vice President - Operations for Zoots (dry     
|                                                | cleaning services) from 2003 to 2004; Senior Vice President - Production
|                                                | Operations for Zoots from 2000 to 2003.                                 
|Ronald D. Kneezel; 49                           | Vice President, General Counsel and Secretary                           
|Vice President, General Counsel and Secretary   | of the Corporation.                                                     
|Frank W. Rudolph; 49                            | Vice President Human Resources of the                                   
|Vice President Human Resources                  | Corporation.                                                            

There are no family relationships
among the executive officers of the Corporation.

All of the executive officers are elected
or appointed annually by the Corporations Board of Directors. Each officer holds
office until his or her successor has been elected or appointed or until his or her death,
resignation or removal.

# Item 1A. Risk Factors

You should carefully consider each of
the risks described below, together with all of the other information contained in this
Annual Report on Form 10-K, before making an investment decision with respect to our
securities. If any of the following risks develop into actual events, our business,
financial condition or results of operations could be materially and adversely affected
and you may lose all or part of your investment.

7

---

We operate in a very competitive
environment that could negatively impact our revenue and margins.

In the printing services segment,
consolidation within the graphic arts industry has continued during the last few years.
This trend has resulted in fewer competitors, creating several competitors that are larger
than we are, with broader product offerings. The major competitive factors in our printing
services segment are quality of finished products, time-to-market and distribution
capabilities, ongoing customer service, price, availability of time on equipment and
schedule flexibility. The printing services segment has also experienced condolidation in its customer base.
The consolidation of customers within our markets has resulted in
greater competitive pricing pressures and the potential for increased volume solicitation
as customers reduce the number of vendors they use. In recent years, additional capacity
and competition from printing companies in lower cost countries also has increased,
particularly from book printers in Asia. In addition, seasonal excess capacity in the domestic printing
industry has also resulted in lower unit prices. Increased competition could result in our
having to reduce the prices we charge for our services or incurring reduced revenue.

The major competitive factors in our
supply-chain management services segment are customer service, price, location relative
to customer manufacturing sites, quality of information technology and the ability to
develop creative and innovative solutions for customer manufacturing, fulfillment and
distribution needs. In recent years, enhanced competition along with continuing pressure
from customers to reduce costs, reduce time to market and improve quality of service has
led to increased pricing pressures. In addition, operating margins in the supply-chain
management services segment continue to be at a level which may be higher than can be
sustained in the long-term, and may decrease in the future based on competitive conditions as well as the expectation of a lesser
proportion of value-added content in the product mix.

We are dependent in part on our
customers continuing to outsource non-core activities, and we are susceptible to being
negatively impacted by a decline in the technology market given the number of technology
customers served by our supply-chain management services segment.

Trends in outsourcing non-core
activities by our existing or potential customers could have an impact on our future
revenue, particularly in the literature management and book operating units of the
printing services segment, as well as the supply-chain management services segment.
Increased outsourcing activity has resulted in higher revenue in these areas of our
business in recent years. Any change in those trends could negatively impact revenue
growth in these portions of our business.

Our supply-chain management services
segment primarily serves global technology customers. The concentration of customers
within one industry creates increased risk if there is a significant decline in this
industry. In addition, in this segment we have a high concentration of revenue from
several large customers. Changes in the status of these customers could have a significant
impact on our future revenue and profitability.

We have a contract with
Hewlett-Packard Company in the supply-chain management services segment that runs through
2006, subject to one-year extensions pursuant to an evergreen provision. Pursuant to this
evergreen clause, the contract was most recently extended through 2006. Revenue from
Hewlett-Packard Company under this agreement totaled approximately $135 million in 2005.
The loss or the modification of terms of this contract could have a material adverse impact on our financial results.

We are susceptible to being
negatively impacted by increasing costs, including paper prices and fuel costs.

Paper pricing has had a significant
impact on revenue in our printing services segment in prior years. Paper prices are
influenced by world pulp prices, capacity utilization in the worldwide paper industry and
the value of the dollar in comparison to other currencies. Paper prices increased by an
average of 9% in 2005 and contributed approximately one-third of the 10% increase in our
revenue in the printing services segment in 2005.

Increases in fuel costs, especially
resulting from increased costs to operate our production facilities, could increase our
operating costs and negatively impact our operating results.

8

---

We could be negatively impacted by
strikes or other work stoppages by our employees.

We employ approximately 800 persons
who are covered by collective bargaining agreements. If our unionized employees were to
engage in a concerted strike or other work stoppage, or if our other employees were to
become unionized, we could experience a disruption of operations, higher labor costs or
both.

Our earnings could be negatively
impacted if we are unable to implement successfully our productivity enhancing projects.

We have initiated a number of cost
reduction initiatives that have reduced expenses in recent years, and management expects
that these initiatives will result in cost savings in coming years. If we are unable to
continue to deliver cost savings from these initiatives, it could have an adverse impact
on our profitability.

Our supply-chain management
services business operates in various international locations. As a result, we are subject
to foreign currency risk and risks associated with political and economic instability in international areas in
which we conduct business.

We derive a significant portion of
our revenue in the supply-chain management sector from operations in locations outside the
United States. As a result of this international presence, we are subject to potential
political and economic instability. In addition, some foreign jurisdictions in which we
operate use a local currency other than the United States dollar. Changes in foreign
currency exchange rates can result in increases or decreases in our revenue and operating
earnings for these jurisdictions.

We are subject to environmental
remediation and compliance risks that could adversely affect our earnings.

We have environmental compliance
programs primarily for the control of air quality, groundwater quality, disposal of waste
material and all aspects of the work environment involving employee health. We also incur
ongoing costs in monitoring compliance with environmental laws concerning the disposal of
waste materials and the remediation of sites previously used for the disposal of waste
materials. Any costs, claims or penalties that may be incurred or assessed under
environmental laws, beyond any reserves we have already provided, will have an adverse
effect upon our operations and consolidated financial position.

Our business is subject to shifts
in global economic conditions and could be adversely affected by a decline in the global
economy.

Global economic conditions have the
potential to impact our financial results significantly. Within the printing services
segment, a change in economic conditions can impact many areas of spending, including
government, business and individual spending. These changes can have a direct impact on
the amount of print business available to us. Examples of the changes in spending that
could affect our financial results include:

| | Reductions
or increases in state government spending on education leads to a corresponding decrease
or increase in the demand for educational materials, which are produced by our book
business unit.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Reductions
or increases in business spending on advertising impact advertising page counts in
magazines, and the volume of direct marketing materials. These changes can affect results
in our publication, direct marketing and catalog business units.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Within our supply-chain management
services segment, a change in economic conditions that influences individual or business
spending on technology has the potential to affect significantly our major customers in
the technology market, which could impact our financial performance by lowering the demand
of those customers for our services.

# Item 1B. Unresolved
Staff Comments

None.

9

---

# Item 2. Properties

At the end of fiscal 2005, the
Corporations operations were conducted at thirty-one production facilities in the
United States and at six foreign production facilities. The detail of the domestic owned
and leased facilities by state, along with total square footage is as follows:

|Printing Services Segment | Supply-Chain Management Services Segment
|------------------------- | ----------------------------------------
|Location                  | Owned
Facilities                        
|Connecticut               | 1                                       
|Georgia                   | --                                      
|Illinois                  | --                                      
|Massachusetts             | --                                      
|Minnesota                 | 4                                       
|Missouri                  | 1                                       
|Ohio                      | 1                                       
|Pennsylvania              | --                                      
|                          |                                         
|Tennessee                 | 1                                       
|Utah                      | 1                                       
|Virginia                  | 2                                       
|Wisconsin                 | 3                                       
|                         
|Total                     | 14                                      

Approximate square footage of owned
facilities:

|Office Space  |  |  |  | 336,000   | 
|------------- |  |  |  | --------- | 
|Manufacturing |  |  |  | 1,735,000 | 
|Warehouse     |  |  |  | 1,350,000 | 
|              |  | 
|Total         |  |  |  | 3,421,000 | 
|              |  | 

The total of all leased facilities
contain approximately 3,096,000 square feet of space. The buildings owned and leased by
the Corporation are considered well maintained and adequate for the Corporations
needs for the foreseeable future.

# Item 3. Legal Proceedings

In the ordinary course of its
business, the Corporation is involved in litigation matters. Based on the
Corporations assessment of these matters presently known to management and on the
existing reserves provided for them, the Corporation does not believe that any of these
matters, either individually or in the aggregate, will have a material adverse effect on
its results of operations, cash flows or financial condition.

# Item 4.  Submission of
Matters to a Vote of Security Holders

No matters were submitted to a vote
of the Corporations shareholders during the quarter ended December 31, 2005.

# PART II

# Item 5. Market for Registrants
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Corporations stock is
listed on the New York Stock Exchange.

10

---

During the quarter ended December 31,
2005, the Corporation did not repurchase any shares of outstanding common stock under its
repurchase program. The share repurchase program was approved in February 2005 and
authorizes the repurchase of shares with an aggregate value of up to $150 million. The
share repurchase program does not have an expiration date. As of December 31, 2005, the
Corporation had remaining authority to repurchase up to an additional $84.4 million in
common stock under this share repurchase program.

# Dividend Record and
Market Prices

|Per Share of Common Stock | First
Quarter | Second
Quarter | Third
Quarter | Fourth
Quarter | Entire
Year
|------------------------- | ------------- | -------------- | ------------- | -------------- | -----------
|2005 dividends paid       |               |                | $             | .17            |            
|Price range:              |               |               
|High                      |               |                | $             | 46.72          |            
|Low                       |               |                |               | 42.01          |            
|2004 dividends paid       |               |                | $             | .17            |            
|Price range:              |               |               
|High                      |               |                | $             | 47.50          |            
|Low                       |               |                |               | 40.93          |            

The stock prices listed above are the
high and low trades. As of February 13, 2006, the Corporation had 1,574 shareholders of
record.

# Item 6. Selected
Financial Data

|                                              |      |      |       |          
|--------------------------------------------- | ---- | ---- | ----- | ---------
|(dollars in thousands,
except per share data) | 2005 | 2004 | 20031 | 2002     
|Revenue from continuing operations            |      |      | $     | 1,543,927
|Earnings from continuing operations           |      |      |       | 68,319   
|Net earnings                                  |      |      |       | 90,521   
|Diluted earnings per share of common stock    |      |     
|from continuing operations                    |      |      |       | 2.76     
|Diluted earnings per share of common stock    |      |      |       | 3.65     
|Dividends paid per common share               |      |      |       | .70      
|Financial Summary                             |      |     
|Working capital                               |      |      |       | 341,321  
|Net plant and equipment                       |      |      |       | 263,849  
|Total assets                                  |      |      |       | 894,351  
|Total debt                                    |      |      |       | 86,506   
|Interest expense                              |      |      |       | 5,472    
|Shareholders investment                      |      |      |       | 542,589  

|1 | 2003
comprised 53 weeks, all other years comprised 52 weeks.
|- | ------------------------------------------------------------

# Item 7.  Management's
Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of financial
condition and results of operations should be read together with the consolidated
financial statements and notes to those statements included in Item 8 of this Form 10-K.

11

---

# Introduction

Managements Discussion and
Analysis (MD&A) is intended to help the reader understand the results of operations
and financial condition of the Corporation. MD&A is provided as a supplement to, and
should be read in conjunction with, the Corporations financial statements and the
accompanying notes to the financial statements. MD&A is organized in the following
sections:

| | Overview
|- | --------

| | Operating
Units
|- | ---------------

| | Results
of Continuing Operations and Related Information
|- | --------------------------------------------------------

| | Liquidity
and Capital Resources
|- | -------------------------------

| | Critical
Accounting Policies
|- | ----------------------------

# Overview

The Corporation operates in two
business segments, printing services and supply-chain management services. The
Corporations printing services segment provides a comprehensive combination of
printing and digital imaging solutions to leading publishers and direct marketers.
Products and services in this segment include books, catalogs, publications, product
brochures, literature management services, educational materials and e-business services.
The Corporations global supply-chain management services segment provides a wide
range of outsourcing capabilities, primarily to many of the worlds largest
technology companies. Services in this segment range from materials sourcing, product
configuration and customized kitting, to order fulfillment and global distribution.

As discussed in detail in Note 2 to
the consolidated financial statements, on April 12, 2005, the Corporation completed the
sale of substantially all of the assets of its single-use healthcare products subsidiary,
Banta Healthcare Group, Ltd. (Healthcare), to an affiliate of Fidelity Capital
Investors, Inc., for $67 million. This transaction generated net proceeds of $62.6
million. A gain of $20.2 million, net of income taxes, was recorded in 2005 as a result of
the transaction. In accordance with SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the results of operations of Healthcare, which
previously comprised the entire healthcare segment, and the gain on the sale of the assets
have been reflected in discontinued operations in the accompanying consolidated statements
of earnings.

The following discussion and analysis
relating to results of operations is based on a comparison of the Corporations
results of operations from continuing operations.

# Operating Units

Beginning with fiscal year 2005, the
Corporation strategically realigned certain components of the printing services segment
and included the following operating units in this segment: Book, Direct Marketing,
Publications, Catalog and Literature Management. The Corporations literature
management services had previously been included as a part of the Book operating unit.
Effective January 2, 2005, the Corporations literature management services became a
separately managed operating unit. The Literature Management operating unit provides
print-related outsourcing services involving digital printing, package assembly,
fulfillment and distribution for healthcare organizations, financial service providers,
retailers and other large corporations.

# Results of Continuing
Operations and Related Information

Summary

Results for 2005 included the
following:

| | Revenue
rose 9% over the prior-year level, with increases in both segments and all operating
units.
|- | ---------------------------------------------------------------------------------------------------

| | Record
levels of revenue, net earnings and diluted earnings per share.
|- | ----------------------------------------------------------------------

| | Continued
strong profitability in the printing services segment, with significant margin
improvement in the direct marketing and catalog operating units.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | Solid
performance in the supply-chain management services segment with strong performance in
the technology sector and promising activity in new markets.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | Repatriation
during the fourth quarter of 2005 of $126 million ($121.6 million after tax) of
accumulated foreign earnings under the American Jobs Creation Act of 2004 (Jobs Act),
which resulted in $4.4 million in associated tax expense (17 cents per diluted share).
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

---

Revenue from continuing operations
increased to $1.54 billion for 2005 compared with $1.42 billion in the prior year.
Operating earnings from continuing operations of $105.1 million in 2005 increased by 7%
over the $98.5 million reported in the prior year. The Corporations net earnings
from continuing operations were $68.3 million for 2005, 11% higher than the $61.5 million
in 2004. Diluted earnings per share from continuing operations were $2.76 in 2005 compared
with $2.41 in the prior year.

The printing services segment
accounted for approximately 72% of the Corporations total revenue from continuing
operations in 2005. The key factors monitored by management in this segment include:

| | Economic
conditions in the United States, particularly advertising and promotional spending.
Advertising and promotional spending directly impacts four of the five operating units in
this segment: direct marketing, publications, catalogs and literature management. Key
indicators in this area include capital spending by businesses, general advertising
spending and advertising pages printed, which are tracked by several publishing
organizations. Continued economic strength in 2005 and the trend by advertisers towards
personalized one-to-one marketing contributed to revenue growth in this segment.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
impact of internal initiatives to improve profitability. In 2005, management accelerated
internal productivity enhancing projects, resulting in reduced costs of services and
improved quality.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
level of educational spending in the United States, which directly impacts the book
operating unit. Educational spending is dependent on both the general level of budgetary
appropriations for educational materials by state and local governments, and the rate of
adoption of new materials. Educational spending and adoptions were up in 2005 compared
with 2004. This was reflected in the improved revenue growth rate in the book operating
unit compared to the prior year.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Trends
in outsourcing non-core activities by the Corporations existing or potential
customers, which impact revenue in the Corporations literature management programs.
Increased outsourcing activity has resulted in higher revenue for the Corporations
literature management programs in recent years.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Trends
in foreign sourcing of printed materials. To date, these trends have not had a
significant impact on revenue.
|- | --------------------------------------------------------------------------------------------------------------------

| | Paper
pricing, which has had a significant impact on revenue in the printing services segment
in prior years. Paper prices are influenced by world pulp prices, capacity utilization in
the worldwide paper industry and the value of the dollar in comparison to other
currencies. Paper prices increased by an average of 9% in 2005 and increased by 4% in
2004. The cost of paper, when supplied by the Corporation, is passed through to the
customer. As a result, increased paper prices in 2005 had a positive impact on revenue,
estimated to be approximately one-third of the 10% increase in revenue in this segment.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The supply-chain management services
segment accounted for approximately 28% of the Corporations revenue from continuing
operations in 2005. The key factors monitored by management in this segment include:

| | The
performance of the segments major customers. These customers primarily sell
computer hardware, software, and communications and networking equipment. The Corporation
provides a customized service to each customer and makes significant commitments in
technology and location of facilities. Performance by these customers, and the
continuation of these relationships, has a significant impact on this segment. Continued
strong performance by these customers in 2005 was reflected in the increased revenue in
this segment.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
general level of spending within the economy on technology and the mix of that spending.
Spending in this sector of the economy continued to increase during 2005 and was
reflected in the increased revenue in this segment.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Trends
in outsourcing non-core activities by the Corporations existing or potential
customers. Increased outsourcing activity resulted in higher revenue in this segment in
recent years. Increased outsourcing initiatives in industries other than technology have
created promising opportunities in new markets.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Component
material prices, since customer demand for improved pricing may be partially satisfied by
reducing the costs of materials acquired for inclusion in finished products.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Product
lifecycles in the technology-based industries that may have significant impact on the
market price of supply-chain services.
|- | ------------------------------------------------------------------------------------------------------------------------------------

13

---

Discontinued Operations

As indicated above, the Healthcare
segment was sold during 2005 and has been reported as a discontinued operation. The
operations of the Healthcare segment resulted in earnings, net of income taxes, of
$702,000 in 2005. A gain on the disposition of Healthcare assets of $21.5 million, net of
income taxes, was recorded in 2005. The gain of $21.5 million included $20.2 million as a
result of the sale of the segment in April 2005 and $1.3 million from the sale of a
related warehouse in January 2005. The results of discontinued operations and the gain
recorded on the sale of Healthcare assets contributed 89 cents to the $3.65 diluted
earnings per share earned by the Corporation in 2005.

Revenue from Continuing
Operations

| | 2005
compared with 2004
| | -----------------------

| | Printing
services segment revenue of $1.12 billion for 2005 was $105 million, or 10%, higher than
the prior-year total of $1.01 billion. The increase in revenue was the result of the paper
price increases discussed above, as well as increased revenue in each operating unit. The
literature management, catalog and publications operating units produced double-digit
percentage revenue increases in 2005.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Revenue
for the printing services segment operating units in 2005 and 2004, as a percent of total
printing services segment revenue, was as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------

|                     
|---------------------
|Book                 
|Direct Marketing     
|Publications         
|Catalog              
|Literature Management
|Other                
|                     
|                     
|                     

| | Book
operating unit revenue for 2005 was approximately 7% higher than the prior year due
primarily to increased printing of educational materials. Literature management revenue
increased by 28% over 2004, driven primarily by strong sales to one customer late in 2005.
This operating unit provided print and packaging services to assist a major healthcare
insurer with Medicare Part D prescription drug marketing efforts. Catalog operating unit
revenue increased by 13% in 2005. Approximately nine percentage points of the increase was
related to higher paper prices in 2005. The remaining increase was due to higher volumes
versus the prior year. Revenue for the direct marketing operating unit was approximately
7% above the level of the prior year, with increased paper prices contributing five
percentage points of this increase. The remaining increase related to increased volume of
printed direct mail, and increased sales of in-line, custom personalized marketing
materials. In the publications operating unit, revenue increased by 12% primarily as a
result of increased market share within the magazine printing market. This operating unit
increased the number of magazines it prints by 166 titles in 2005. In addition,
approximately one percentage point of the increase in revenue for this operating unit from
2004 to 2005 related to paper price increases.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Supply-chain
management services segment revenue was $429 million in 2005, an increase of $16.5
million, or 4%, from 2004. Of this increase, approximately $2 million resulted from
favorable changes in foreign currency exchange rates. The remaining increase was the
result of continued strong levels of consumer spending on technology and increased
outsourcing of non-core activities by other customers. Both factors drove an increase in
demand for products and services by the Corporations major technology customers.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Corporation has a contract with Hewlett-Packard Company in the supply-chain management
services segment that runs through 2006, subject to one-year extensions pursuant to an
evergreen provision. Pursuant to this evergreen clause, the contract was most recently
extended through 2006. Revenue from Hewlett-Packard Company under this agreement totaled
approximately $135 million in 2005 and $134 million in 2004. The loss or modification of the terms of this contract
could have a material adverse impact on the Corporations financial results.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

---

| | 2004
compared with 2003
| | -----------------------

| | Printing
services segment revenue of $1.01 billion for 2004 was $51 million, or 5%, higher than the
prior-year total of $959 million. The increase in revenue was the result of the paper
price increases discussed above, as well as revenue increases of 20% in the direct
marketing operating unit and 8% in the publications operating unit.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Revenue
for the printing services segment operating units in 2004 and 2003, as a percent of total
printing services segment revenue is presented below. The Book operating unit includes
revenue in both 2004 and 2003 that is now included in the newly formed Literature
Management operating unit, effective in 2005.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                
|----------------
|Book            
|Direct Marketing
|Publications    
|Catalog         
|Other           
|                
|                
|                

| | Book
operating unit revenue for 2004 was approximately 4% higher than the prior year due
primarily to increased revenue in literature management services. Catalog operating unit
revenue decreased by 10% in 2004. Approximately 45% of the decrease was related to revenue
that was transferred to other Banta plants as a result of the 2003 restructuring activity.
The remaining decrease was due to lost capacity following the closure of one of the two
facilities in this operating unit during the 2003 restructuring activities. Revenue for
the direct marketing operating unit was approximately 20% above the level of the prior
year due to increased sales in advertising and promotional material, particularly related
to increased volume of printed direct mail, and increased sales of in-line, custom
personalized marketing materials that are printed in this operating unit. In the
publications operating unit, revenue increased by 8% primarily as a result of the
Corporation increasing its market share within the magazine printing market. Despite the
competitive operating environment and a high incidence of magazine title attrition within
the magazine printing market, this operating unit increased the number of magazines it
prints by approximately 220 titles in 2004.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Supply-chain
management services segment revenue was $412 million in 2004, an increase of 15% from
2003. Of this increase, $22 million resulted from favorable changes in foreign currency
exchange rates. The remaining increase was the result of continued strong levels of
consumer spending on technology and increased outsourcing of non-core activities. Both
factors drove the significant increase in demand for products and services by the
Corporations major technology customers.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Earnings from Continuing
Operations

| | 2005
compared with 2004
| | -----------------------

| | Earnings
from continuing operations of $105.1 million for 2005 were 7% higher than the $98.5
million recorded in the prior year. Gross margin from continuing operations increased to
22.2% in 2005 from 21.5% in 2004 as a result of increased gross margin in 2005 for both
the printing services and supply-chain management services segments. The reasons for
changes in gross margin are described below in the discussion of earnings from operations
by segment.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Printing
services segment earnings from operations for 2005 were $86.6 million, 9% higher than the
prior years $79.1 million. Operating margin for the printing services segment was
7.8% for 2005 and 2004. The increase in 2005 printing services segment operating earnings
was the result of increased revenue at all operating units. Operating earnings as a
percentage of revenue increased for the direct marketing operating unit primarily due to
improved pricing and mix shift to more complex, personalized services. The increase in
2005 operating earnings as a percentage of revenue for the catalog operating unit was due
primarily to increased volume and continuing operational improvements. The book operating
unit operating earnings as a percentage of revenue were consistent from 2004 to 2005 as
operational improvements offset pricing pressures. The publications and literature
management operating units experienced small decreases in operating earnings as a
percentage of revenue due to increased costs, including investments in productivity
programs, and the mix of print and fulfillment work, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

---

| | Earnings
from operations for the supply-chain management services segment increased to $48.7
million in 2005 from $46.7 million in 2004, and operating margin increased slightly to
11.4% compared with 11.3% in the prior year. Higher volumes and a mix shift to
higher-margin activities contributed to additional earnings, offsetting pricing pressure
from new and existing customers; as well as costs related to customer service requirements
and personnel expenses incurred during the year. Operating margins in this segment
continue to be at a level which may be higher than can be sustained long-term, and may
decrease in the future based on the expectation of a lesser proportion of value-added
content in the product mix, and anticipated continued pricing pressure from existing and
new customers.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2004
compared with 2003
| | -----------------------

| | Earnings
from continuing operations for 2004 were $98.5 million, an increase of 42% compared with
the prior year. Of this increase, 75% was a result of the Corporation having no special
charges in 2004. Special charges, which are discussed in more detail below, were $21.6
million in 2003. Gross margin on a corporatewide basis decreased to 21.5% in 2004 from
21.6% in 2003 as a result of decreased gross margin in 2004 in the supply-chain management
services segment. Gross margin for the printing services segment improved in 2004 compared
with the prior year. The reasons for changes in gross margin are described below in the
discussion of earnings from operations by segment.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Printing
services segment earnings from operations for 2004 were $79.1 million, 45% higher than the
prior years $54.7 million. Operating margin for the printing services segment was
7.8% for 2004 compared with 5.7% during 2003. Restructuring charges of $12 million were
included in the 2003 results. Excluding the impact of the special charges, the increase in
2004 printing services segment operating earnings was primarily the result of improved
results in the catalog and direct marketing operating units. The operating earnings for
the catalog operating unit increased significantly in 2004, primarily as the result of the
restructuring activity in 2003. Operating earnings also increased for the direct marketing
operating unit, primarily due to increased demand and pricing for in-line, custom
personalized marketing materials.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Earnings
from operations for the supply-chain management services segment increased to $46.7
million in 2004 from $35.8 million in 2003, and operating margin increased to 11.3%
compared with 10.0% in the prior year. Earnings from operations were reduced during 2003
by special charges totaling $9.6 million. The absence of these charges in 2004 contributed
2.6 percentage points of improvement in operating margin. This improvement was partially
offset by a lower proportion of value-added content in the product mix and continued
pricing pressure from existing and new customers.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fiscal 2003 Special
Charges

During 2003, the Corporation
announced and completed a restructuring involving its consumer catalog business and a
realignment of operating activities within its printing services and supply-chain
management services segments. Charges incurred in the restructuring totaled $17.0 million.
The objective of the plan was to consolidate certain operations, leverage existing
capacity, improve efficiencies and reduce costs. The components of the restructuring
expenses were as follows: employees severance and benefits, $9.3 million; facility
costs, including lease terminations, $2.8 million; and reduction in the carrying value of
impaired assets and other, $4.9 million. Approximately $12.0 million of the restructuring
charges related to the printing services segment and the remaining $5.0 million related to
the supply-chain management services segment.

During 2003, the Corporation settled
a lawsuit with Singapore-based Mentor Media, Ltd. (Mentor) related to its proposed
acquisition of Mentor. The Corporation recorded a charge of $4.6 million in the second
quarter of 2003 in connection with the settlement.

Geographic Analysis of
Revenue and Earnings from Operations from Continuing Operations

Revenue and earnings from operations
(excluding unallocated corporate expenses) by geographic area for 2005, 2004 and 2003 are
presented below (dollars in thousands). Virtually all revenue for the printing services
segment was from customers in the United States. Revenue in the supply-chain management
services segment was from customers in the United States, Europe and Asia.

16

---

|                        
|------------------------
|Revenue                 
|United States           
|Non-United States       
|                        
|Total                   
|                        
|Earnings from operations
|United States           
|Non-United States       
|                        
|Total                   
|                        

Revenue in the United States
increased by 12% in 2005 compared with the prior year. This increase was primarily due to
the increased revenue in the printing services segment, which increased by 10% in 2005 and
constituted the majority of the Corporations revenue in the United States. In
addition, the supply-chain management services segment experienced strong growth as
revenue in the United States for this segment increased 27% in 2005. Non-United States
revenue decreased by 3% in 2005 compared with the prior year. Virtually all non-United
States revenue was in the supply-chain management services segment and the loss of two
customers outside the United States more than offset the growth with new and existing
customers in foreign locations.

Operating earnings in the United
States increased by 10% in 2005 compared with 2004. The improvements were the result of
the increased, higher-margin activities in the printing services and supply-chain services
segments in the United States. Non-United States operating earnings increased by 1.5% in
2005, compared with 2004, due primarily to a mix shift to higher margin activities.

Revenue in the United States
increased by 6% in 2004 from 2003. This increase was consistent with the increase in
revenue in 2004 in the printing services segment, which constituted the majority of the
Corporations revenue in the United States. Non-United States revenue increased by
17% in 2004 from 2003. Virtually all non-United States revenue was in the supply-chain
management services segment and the increase in revenue was consistent with the strong
growth in new customers outside of the United States.

Operating earnings in the United
States increased by 32% in 2004 compared with the prior year. The improvements were the
result of factors described above impacting the printing services segment, primarily the
absence of special charges in 2004, and improved earnings for the catalog and direct
marketing operating units. Non-United States operating earnings increased by 63% in 2004,
compared with the prior year, due primarily to the absence of special charges in 2004 and
changes in mix and pricing described above. In addition, increases in operating earnings
in non-United States locations were the result of demand by new customers in these
geographical markets.

Interest Expense,
Interest Income and Other Income from Continuing Operations

Interest expense of $5.5 million in
2005 was $0.7 million lower than the prior-year interest expense of $6.2 million. The
reduction in interest expense was the result of scheduled repayments of long-term debt. In
addition, the Corporation capitalized approximately $178,000 of interest in connection
with major ongoing capital projects during 2005. Capitalized interest was $1,279,000 for
2004 and $798,000 for 2003. Interest expense of $6.2 million in 2004 was $2.2 million
lower than interest expense of $8.4 million in 2003. Interest expense declined as the
Corporation made its scheduled long-term debt payments.

Interest income increased $1.1
million to $3.3 million in 2005 compared with 2004. The increase in interest income was
the result of the Corporations movement of some of its cash reserves to higher-yield
investments as well as to rising short-term interest rates, in general, during 2005.
Interest income of $2.2 million in 2004 decreased $0.2 million compared with $2.4 million
of interest income in 2003. The decrease was primarily the result of reduced returns on
the Corporations cash reserves during a period of falling interest rates.

17

---

Other income for 2005 increased
approximately $0.2 million to $0.7 million in 2005 due primarily to a gain of $0.1 million
on foreign currency transactions in 2005 compared to a loss on foreign currency
transactions in 2004. Other income for 2004 was approximately $1.5 million higher than
2003 due to reduced losses on foreign currency transactions and increased gain from the
sale of fixed assets.

Provision for Income
Taxes

Effective income tax rates from
continuing operations were 34.0%, 35.2% and 37.2% in 2005, 2004 and 2003, respectively.
The continuing reductions in the effective tax rates were due to a greater mix of earnings
generated by the supply-chain management services segment, which has extensive operations
in countries whose tax rates are more favorable than the rates in the United States.

In December 2005, the Corporation
repatriated approximately $126.0 million of its accumulated foreign earnings. These
earnings were repatriated due solely to the tax benefits made available by the special
dividends deduction provisions of the Jobs Act. The Corporation recorded a $4.4 million
tax provision in the fourth quarter of 2005 related to this event.

Net Earnings

The Corporations earnings from
continuing operations were $68.3 million in 2005, 11% higher than the $61.5 million in
2004. Diluted earnings per share from continuing operations were $2.76 in 2005 compared
with $2.41 in 2004. The increase in earnings reflected the growth in revenue and the
increased profitability of both the printing services segment and the supply-chain
management services segment. Approximately 14% of the increase in diluted earnings per
share from continuing operations in 2005 was the result of share repurchases, which are
described in more detail below.

The Corporations net earnings
were $90.5 million in 2005, 33% higher than the $68.0 million in 2004 based on the factors
described above as well as the results of operations and the gain on the sale of the
Healthcare segment during 2005.

The Corporations earnings from
continuing operations were $61.5 million for 2004, 57% higher than the $39.2 million in
2003. Diluted earnings per share from continuing operations were $2.41 in 2004 compared
with $1.52 the prior year. The increase in earnings reflected the absence of special
charges and the increased profitability of both the printing services segment and the
supply-chain management services segment. Approximately 8% of the increase in diluted
earnings per share in 2004 was the result of share repurchases, which is described in more
detail below.

# Liquidity and Capital
Resources

On December 31, 2005, the Corporation
had cash and cash equivalents of $149 million. The change in cash and cash equivalents for
the years presented was as follows:

|Dollars in thousands                                 | 2005 | 2004 | 2003
|---------------------------------------------------- | ---- | ---- | ----
|Cash and cash equivalents at beginning of year       |      |      | $   
|Cash provided by operating activities                |      |      |     
|Cash provided by (used for) investing activities     |      |      |     
|Cash used for financing activities                   |      |      |     
|Effect of exchange rate changes on cash and cash     |      |     
|equivalents                                          |      |      |     
|                                                     |      |      |     
|Net increase (decrease) in cash and cash equivalents |      |      |     
|                                                     |      |      |     
|Cash and cash equivalents at end of year             |      |      | $   
|                                                     |      |      |     

Operating Activities

Cash provided by operating activities
increased 1% to approximately $85.5 million, the result of cash generated from net
earnings and changes to the balance sheet during the year. Inventory levels in 2005 were
lower than levels at the end of 2004. The fourth quarter of 2004 had higher-than-normal
inventories, primarily because of paper purchases in advance of expected price increases
in 2005. Inventory levels were reduced by the end of 2005. This decrease was offset by an
increase in accounts receivables which were the result of strong sales in the fourth
quarter of 2005, particularly in the literature management operating unit, as a major
project related to the Medicare Part D program was completed.

18

---

Investing Activities

Investing activities consist
principally of capital expenditures as well as acquisition and divestiture activity. The
Corporations capital expenditures totaled $45.4 million, $65.2 million and $70.7
million for 2005, 2004 and 2003, respectively. The Corporation is committed to maintaining
modern, safe and efficient plants and to providing customers with enhanced supply-chain
management services as well as new printing and digital imaging technologies. Preliminary
plans for 2006 are for capital expenditures of approximately $90 million. Capital
expenditures are expected to be funded by existing cash and cash provided from operations.
Proceeds from the sale of the Healthcare business in 2005 were used to finance the share
repurchases effected in 2005, and are discussed in more detail below.

Financing Activities

Cash used for financing activities in
2005 reflected share repurchases, payment of dividends to shareholders, and net borrowings
and repayments of long-term debt, partially offset by proceeds from stock option
exercises.

The Corporation has in effect a stock
repurchase program pursuant to which it may repurchase shares of its common stock on the
open market or in privately negotiated transactions from time to time. During 2005, the
Corporation purchased 1,458,500 shares of common stock under the repurchase program at an
aggregate cost of $65.6 million. The 2005 share repurchases were principally financed with
the proceeds from the sale of the Healthcare business. The Corporation purchased 1,000,000
shares of common stock at a cost of $44.3 million in 2004. No shares of the
Corporations common stock were repurchased in 2003. As of December 31, 2005, the
Corporation had authority to repurchase up to an additional $84.4 million in common stock
under the current share repurchase program. The Corporation may continue its repurchase of
shares in the future pursuant to this authorization if market conditions warrant. Any
future stock repurchases are expected to be funded by a combination of existing cash, cash
provided from operations and short-term borrowings.

The Corporation paid dividends of
$17.1 million, $17.2 million and $16.7 million for the fiscal years 2005, 2004 and 2003,
respectively.

The Corporation incurred $24.2
million of long-term borrowings at locations outside the United States in 2005 related to
the repatriation of its foreign earnings. These earnings were repatriated due solely to
the tax benefits made available by the special dividend deduction provisions of the Jobs
Act. Of the $86.5 million of total debt at the end of 2005, $11.5 million matures in 2006
with the remaining balance maturing at varying intervals through 2015. The Corporation has
historically raised short-term funds by borrowing against lines of credit with banks. Such
borrowings are supported by a credit facility with three domestic banks, which provide a
total borrowing capacity of $80 million. During 2005, the Corporation had a maximum of
$20.0 million outstanding under short-term credit facilities, all of which was repaid
prior to December 31, 2005. During 2004, the Corporation had a maximum of $10.0 million
outstanding under short-term credit facilities, all of which was repaid prior to January
1, 2005.

At December 31, 2005, the Corporation
had the following contractual obligations. These obligations are discussed in more detail
in Notes 5 and 9 to the Consolidated Financial Statements. The Corporation has no
off-balance sheet arrangements.

|                                              
|----------------------------------------------
|Contractual Obligations (Dollars in
thousands)
|Long-Term Debt                                
|Interest on Long-Term Debt                    
|Operating Lease Obligations                   
|                                              
|Total Contractual Obligations                 
|                                              

Management believes the
Corporations financial condition is strong and that its ability to generate cash
from operations and its ability to issue short-term and long-term debt are adequate to
fund working capital, capital spending, payment of dividends, repurchases of common stock
and other investment for the foreseeable future.

19

---

Litigation

In the ordinary course of its
business, the Corporation is involved in litigation matters. Based on the
Corporations assessment of these matters presently known to management and on the
existing reserves provided for them, the Corporation does not believe that any of these
matters, either individually or in the aggregate, will have a material adverse effect on
its results of operations, cash flows or financial condition.

Outlook

Expectations on a consolidated basis
for the full-year 2006 are for revenue to be in the range of $1.6 billion to $1.65
billion. Diluted earnings per share from continuing operations are expected to be in the
range of $3.00 to $3.15. This estimate includes the effects of expensing stock options
required under SFAS No. 123 (R), Share Based Payment. We expect earnings per
share from continuing operations in the first half of 2006 to be fairly comparable to the
first half of 2005, with the bulk of the anticipated increase in earnings per share
occurring in the second half of the year.

# Critical Accounting
Policies

The Corporations accounting
policies are described in Note 1 to the Consolidated Financial Statements. The preparation
of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions about future events
that affect the amounts reported in the financial statements and footnotes. Future events
and their effects cannot be determined with absolute certainty. Therefore, the
determination of estimates requires the exercise of judgment. Actual results inevitably
will differ from those estimates, and such differences may be material to the financial
statements.

The most significant accounting
estimates inherent in the preparation of the Corporations consolidated financial
statements include estimates as to the recovery of receivables and the realization of
inventories, plant and equipment, and goodwill. Significant assumptions are also used in
the determination of liabilities related to pension and postretirement benefits,
obligations for lease terminations, income taxes and environmental matters. The process of
determining significant estimates is fact specific and takes into account factors such as
historical experience, current and expected economic conditions, product mix and, in some
cases, actuarial assumptions. The Corporation re-evaluates these significant factors as
facts and circumstances dictate. Historically, actual results have not differed
significantly from those determined using the estimates described above.

The Corporation believes the
following critical accounting policies affect its more significant judgments and estimates
used in the preparation of its consolidated financial statements:

| | Revenue
recognition.Revenue is recognized, net of estimated discounts, allowances and
returns, when title and risk of loss transfers to the customer and the earnings process
is complete. The Securities and Exchange Commissions (SEC) Staff
Accounting Bulletin (SAB) No. 104, Revenue Recognition, provides
guidance on the application of accounting principles generally accepted in the United
States to selected revenue recognition issues. In addition, revenue in the supply-chain
management services segment is recognized in accordance with Emerging Issues Task Force
(EITF) Issue No. 99-19, Reporting Revenue Gross as a Principal versus Net as an
Agent. Each major contract is evaluated based on various criteria, with management
judgment required to assess the importance of each criterion in reaching the final
decision. In general, revenue is recognized on a gross basis if the Corporation has the
risks and rewards of ownership, latitude in establishing component vendors and pricing,
and bears all credit risk. Revenue from contracts that do not meet these criteria are
recognized on a net basis, recording only the portion that is related to services or
products provided directly by the Corporation.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Corporation records shipping and handling fees billed to customers as revenue, and
records the related costs as cost of printing and supply-chain services, when incurred.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Goodwill.In accordance with SFAS No. 142 Goodwill and Other Intangible Assets, goodwill
is no longer amortized, but is reviewed for impairment on an annual basis. The
Corporation completed the annual impairment tests in the fourth quarter of 2005, 2004 and
2003. This analysis was based on the comparison of the fair value of its reporting units
to the carrying value of the net assets of the respective reporting units. The
Corporation concluded that no impairment of goodwill existed at the time of the annual
impairment tests in 2005, 2004 and 2003.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

---

| | Stock-based
compensation.The Corporation has three stock-based employee compensation plans. The
Corporations stock-based employee compensation plans are accounted for under the
recognition and measurement principles of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Because the number of shares is fixed and the exercise price of the
stock options equals the market price of the underlying stock on the date of grant, no
cost is reflected in net earnings for stock options granted under these plans. The
Corporation amortizes restricted stock awards to net earnings over the vesting period
based on the fair value of the stock at the date of grant. Notes 1 and 8 to the
Consolidated Financial Statements provide supplemental information, including pro forma
earnings and earnings per share, as if the Corporation had accounted for options based on
the fair value method prescribed by SFAS No. 123, Accounting for Stock-Based
Compensation. The estimate of fair value requires a number of assumptions,
including estimated option life and future volatility of the underlying stock price.
Changes in these assumptions could significantly impact the estimated fair value of the
stock options.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Retirement
benefits. The Corporation has significant pension and postretirement benefit costs
that are developed from actuarial valuations. The valuations reflect key assumptions
regarding, among other things, discount rates, expected return on plan assets, retirement
ages and years of service. The discount rate is based upon the 10-year Moodys Aa
bond rate at the end of each year. Consideration is given to current market conditions,
including changes in interest rates and investment returns, in making these assumptions.
Changes in these assumptions will affect the amount of pension and postretirement expense
recognized in future periods. Changes in the following key assumptions would impact the
funded status and cost of the pension and postretirement plans as described below:
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(Dollars in thousands)     | Discount rate change of +/- 50 basis points | Asset return of +/- 100 basis points 
|-------------------------- | ------------------------------------------- | -------------------------------------
|Pension plans              | Postretirement
plan                         | Pension plans
(expected asset
return)
|Increase (decrease) net    |                                             |                                      
|periodic benefit cost      | ($2,100)/$2,395                             | ($84)/$95                            
|Increase (decrease) funded
|status at end of year      | $16,483/($18,711)                           | $665/($760)                          

| | The
Corporation recognized pension and postretirement benefit expense of $9.6 million, $7.7
million and $7.2 million in 2005, 2004 and 2003, respectively. As of December 31, 2005,
the Corporations pension plans had accumulated benefit obligations of $206.6
million compared with plan assets of $166.0 million. The Corporation elected to
contribute approximately $16 million to the qualified pension plan in 2005 and $11
million in 2004 to maintain the funded status of the plan at a level comparable to recent
years.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Asset
impairments.Impairments of long-lived assets are accounted for under SFAS No. 144
Accounting for the Impairment or Disposal of Long-Lived Assets.Long-lived
assets are tested for recoverability whenever events or changes in circumstances indicate
that the carrying value of the asset may not be recoverable. Asset impairment charges
were recognized in 2003, as described in Note 11 to the Consolidated Financial
Statements. No asset impairment charges were recognized in 2005 or 2004.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Income
taxes.The Corporations annual tax rate is determined based on income,
statutory tax rates and the tax impacts of items treated differently for tax purposes
than for financial reporting purposes. Tax law requires some items to be included in the
tax return at different times than the items reflected in the financial statements. As a
result, the annual tax rate in the financial statements is different than the rate
reported on the Corporations tax return. Some of these differences are permanent,
such as expenses that are not deductible in the tax return and some differences are
temporary, reversing over time, such as depreciation expense. These temporary differences
create deferred tax assets and liabilities.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21

---

| | Inherent
in determining the annual tax rate are judgments regarding business plans, planning
opportunities and expectations about future outcomes. Significant management judgments
are required for the following items:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ° | Management
reviews the Corporations deferred tax assets for realizability. Valuation
allowances are established when management believes that it is more likely than not that
some portion of the deferred tax assets will not be realized. Changes in valuation
allowances from period to period are included in the tax provision.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ° | The
Corporation establishes accruals for certain tax contingencies when, despite the belief
that the Corporations tax return positions are fully supported, the Corporation
believes that certain positions may be challenged. The tax contingency accruals are
adjusted in light of changing facts and circumstances, such as the progress of tax
audits, case law and emerging legislation.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ° | The
Corporation has not provided for possible U.S. taxes or foreign withholding taxes on the
undistributed earnings of foreign subsidiaries that are considered to be reinvested
indefinitely.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Accounting Pronouncements

In May 2005, the Financial Accounting
Standards Board (FASB) issued SFAS No. 154, Accounting Changes and Error
Corrections  a replacement of APB Opinion No. 20 and SFAS No. 3. The
pronouncement requires that all voluntary changes in accounting principles be reported by
retrospectively applying the principle to all prior periods that are presented in the
financial statements. The statement is effective for fiscal years beginning after
December 15, 2005. The Corporations financial position, results of operations
or cash flows will only be impacted by SFAS No. 154 if it implements changes in accounting
principles that are addressed by the standard or corrects accounting errors in future
periods.

In December 2004, the FASB issued
SFAS No. 123 (R), Share-Based Payment. SFAS No. 123 (R) requires that
compensation cost related to share-based payment transactions be recognized in the
financial statements. Share-based payment transactions within the scope of SFAS No. 123
(R) include stock options, restricted stock awards, performance-based awards, stock
appreciation rights, and employee share purchase plans. The provisions of SFAS No. 123 (R)
are effective for fiscal years beginning after June 15, 2005. Accordingly, the
Corporation will implement the revised standard in the first quarter of fiscal year 2006.
SFAS No. 123 (R) requires measurement of the cost of employee services received in
exchange for an award of equity instruments based on the fair value of the award at the
grant date (with limited exceptions) and recognition of the compensation expense over the
period during which an employee is required to provide service in exchange for the award.
In March 2005, the SEC issued SAB 107, which expresses views of the SEC staff regarding
the application of SFAS No. 123 (R). Among other things, SAB 107 provides interpretive
guidance related to the interaction between SFAS No. 123 (R) and certain SEC rules and
regulations, as well as provides the SEC staffs views regarding the valuation of
share-based payment arrangements for public companies. For fiscal years prior to 2006 the
Corporation accounted for its share-based payment transactions under the provisions of APB
Opinion No. 25, which generally does not require the recognition of compensation cost for
employee stock options in the financial statements. Management has selected a transition
method in which prior period financial statements would not be restated. In addition,
management will use the Black-Scholes-Merton valuation model, which is the same valuation
model the Corporation uses to value stock options for pro forma presentation of earnings
and per-share data for SFAS No. 148 disclosure purposes. Management believes that the
current required disclosures in Note 1 appropriately reflect the impact this standard
would have on reported net earnings if adopted in the periods presented.

In December 2004, the FASB issued
Staff Position (FSP) No. 109-2, Accounting and Disclosure Guidance for
the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of
2004, (the Jobs Act). The Jobs Act became law in the U.S. in October
2004. This legislation implemented a number of changes in U.S. tax laws. FSP No. 109-2
requires recognition of a deferred tax liability for the tax effect of the excess of book
over tax basis of an investment in a foreign corporate venture that is permanent in
duration, unless a company firmly asserts that such amounts are indefinitely reinvested
outside the companys home jurisdiction. Management believes that the Corporation is
in compliance with the guidance of FSP No. 109-2.

22

---

In December 2004, the FASB issued
SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion
No. 29, Accounting for Nonmonetary Transactions. This statement amends APB
Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of nonmonetary assets that
do not have commercial substance. Under SFAS No. 153, if a nonmonetary exchange of similar
productive assets meets a commercial-substance criterion and fair value is determinable,
the transaction must be accounted for at fair value resulting in recognition of any gain
or loss. SFAS No. 153 is effective for nonmonetary transactions in fiscal periods that
begin after June 15, 2005. The Corporation does not anticipate that the
implementation of this standard will have a material impact on its financial position,
results of operations or cash flows.

In November 2004, the FASB issued
SFAS No. 151, Inventory Costs. The Statement requires abnormal amounts of
inventory costs related to amounts of idle freight, handling costs and spoilage be
recognized as current period expenses. The standard is effective for fiscal years
beginning after June 15, 2005, with early application permitted. The
Corporations policy has always been to handle inventory costs in a manner consistent
with the provisions of this statement.

In May 2004, the FASB issued FSP No.
106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003, in response to a new law regarding
prescription drug benefits under Medicare as well as a federal subsidy to sponsors of
retiree healthcare benefit plans. The Corporation has applied the provisions of FSP No.
106-2 to the calculation of retiree healthcare benefits plans for 2005 and 2004.

# Item 7A. Quantitative
and Qualitative Disclosures about Market Risk

The Corporation is exposed to market
risk from changes in interest rates and foreign exchange rates. On December 31, 2005, the
Corporation had no outstanding borrowings under its lines of credit with banks and minimal
floating rate long-term debt. Since essentially all long-term debt is at fixed interest
rates, exposure to interest rate fluctuations is immaterial. Disclosure relating to the
fair value of long-term debt is included in Note 1 of the Notes to Consolidated Financial
Statements.

Portions of potential market risk
associated with changes in foreign exchange rates are considered in contractual
arrangements with customers. The Corporation also manages foreign currency exchange rate
exposure by utilizing some natural hedges to mitigate a portion of its transaction and
commitment exposures, and may utilize forward contracts in certain situations. Based on
the Corporations overall foreign currency exchange rate exposure on December 31,
2005, a 10% change in foreign currency exchange rates would not have had a material effect
on the Corporations financial position, net earnings or cash flows.

# Item 8. Financial
Statements and Supplementary Data

Index to
Financial Statements and Financial Statement Schedules

|Report of Independent Registered Public Accounting Firm                                             | 24
|--------------------------------------------------------------------------------------------------- | --
|Consolidated Balance Sheets at December 31, 2005, and January 1, 2005                               | 25
|Consolidated Statements of Earnings for each of the three years ended December 31, 2005, January 1,
|2005, and January 3, 2004                                                                           | 26
|Consolidated Statements of Cash Flows for each of the three years ended December 31, 2005, January 
|1, 2005, and January 3, 2004                                                                        | 27
|Consolidated Statements of Shareholders' Equity for each of the three years ended December 31,     
|2005, January 1, 2005, and January 3, 2004                                                          | 28
|Notes to Consolidated Financial Statements                                                          | 29

23

---

# Report of Independent
Registered Public Accounting Firm

The Board of Directors
and ShareholdersBanta Corporation

We have audited the accompanying
consolidated balance sheets of Banta Corporation as of December 31, 2005 and January 1,
2005, and the related consolidated statements of earnings, shareholders investment,
and cash flows for each of the three years in the period ended December 31, 2005. Our
audits also included the financial statement schedule listed in the Index at Item 15(a).
These financial statements and schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the consolidated
financial position of Banta Corporation at December 31, 2005 and January 1, 2005, and the
consolidated results of its operations and its cash flows for each of the three years in
the period ended December 31, 2005, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the
effectiveness of Banta Corporations internal control over financial reporting as of
December 31, 2005, based on criteria established in Internal ControlIntegrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated February 6, 2006, expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP
 Milwaukee, WisconsinFebruary 6, 2006

24

---

# Consolidated Balance
Sheets

|December 31, 2005, and January 1, 2005
  Dollars in thousands | 2005 | 2004
|------------------------------------------------------------- | ---- | ----
|ASSETS                                                        |      |     
|Current Assets:                                               |      |     
|Cash and cash equivalents                                     |      |     
|Receivables, less reserves of $4,399 and $5,578, respectively |      |     
|Inventories                                                   |      |     
|Prepaid expenses                                              |      |     
|Deferred income taxes                                         |      |     
|                                                              |      |     
|Total Current Assets                                          |      |     
|                                                              |      |     
|Plant and Equipment:                                          |      |     
|Land                                                          |      |     
|Buildings and improvements                                    |      |     
|Machinery and equipment                                       |      |     
|                                                              |      |     
|Total plant and equipment                                     |      |     
|Less accumulated depreciation                                 |      |     
|                                                              |      |     
|Net plant and equipment                                       |      |     
|Other Assets                                                  |      |     
|Goodwill                                                      |      |     
|                                                              |      |     
|Total Assets                                                  |      |     
|                                                              |      |     
|LIABILITIES AND SHAREHOLDERS INVESTMENT                      |      |     
|Current Liabilities:                                          |      |     
|Accounts payable                                              |      |     
|Accrued salaries and wages                                    |      |     
|Other accrued liabilities                                     |      |     
|Current maturities of long-term debt                          |      |     
|                                                              |      |     
|Total Current Liabilities                                     |      |     
|                                                              |      |     
|Non-current Liabilities:                                      |      |     
|Long-term debt                                                |      |     
|Deferred income taxes                                         |      |     
|Other non-current liabilities                                 |      |     
|                                                              |      |     
|Total Non-current Liabilities                                 |      |     
|                                                              |      |     
|Commitments and Contingencies (Notes 6 and 9)                 |      |     
|Shareholders Investment:                                     |      |     
|Preferred stock                                               |      |     
|Common stock - 29,787,969 and 29,278,884 shares issued,       |      |     
|respectively                                                  |      |     
|Amount in excess of par value of stock                        |      |     
|Retained earnings                                             |      |     
|Unearned compensation                                         |      |     
|Treasury stock, at cost - 5,670,118 and 4,232,412 shares,     |      |     
|respectively                                                  |      |     
|Accumulated other comprehensive income                        |      |     
|                                                              |      |     
|Total Shareholders Investment                                |      |     
|                                                              |      |     
|Total Liabilities and Shareholders Investment                |      |     
|                                                              |      |     

The accompanying notes to
consolidated financial statements are an integral part of these balance sheets.

25

---

# Consolidated Statements
of Earnings

|For the Years Ended December 31, 2005, January 1, 2005, and January 3, 2004
Dollars in thousands (except earnings per share) | 2005 | 2004 | 2003
|---------------------------------------------------------------------------------------------------------------------------- | ---- | ---- | ----
|Continuing operations:                                                                                                       |      |      |     
|Revenue                                                                                                                      |      |      | $   
|Cost of printing and supply-chain services                                                                                   |      |      |     
|                                                                                                                             |      |      |     
|Gross earnings                                                                                                               |      |      |     
|Selling and administrative expenses                                                                                          |      |      |     
|Restructuring charge                                                                                                         |      |      |     
|Litigation settlement                                                                                                        |      |      |     
|                                                                                                                             |      |      |     
|Operating earnings from continuing operations                                                                                |      |      |     
|Interest expense                                                                                                             |      |      |     
|Interest income                                                                                                              |      |      |     
|Other income (expense), net                                                                                                  |      |      |     
|                                                                                                                             |      |      |     
|Earnings from continuing operations before income taxes                                                                      |      |      |     
|Provision for income taxes                                                                                                   |      |      |     
|                                                                                                                             |      |      |     
|Earnings from continuing operations                                                                                          |      |      |     
|Discontinued operations:                                                                                                     |      |     
|Earnings from operations of discontinued Healthcare                                                                          |      |     
|segment, net of income taxes                                                                                                 |      |      |     
|Gain from sale of Healthcare segment, net of income taxes                                                                    |      |      |     
|                                                                                                                             |      |      |     
|Net earnings                                                                                                                 |      |      | $   
|                                                                                                                             |      |      |     
|Basic earning per share of common stock:                                                                                     |      |     
|Earnings from continuing operations                                                                                          |      |      | $   
|Earnings from discontinued operations                                                                                        |      |      |     
|Earnings from gain on sale of Healthcare segment                                                                             |      |      |     
|                                                                                                                             |      |      |     
|Total                                                                                                                        |      |      | $   
|                                                                                                                             |      |      |     
|Diluted earning per share of common stock:                                                                                   |      |     
|Earnings from continuing operations                                                                                          |      |      | $   
|Earnings from discontinued operations                                                                                        |      |      |     
|Earnings from gain on sale of Healthcare segment                                                                             |      |      |     
|                                                                                                                             |      |      |     
|Total                                                                                                                        |      |      | $   
|                                                                                                                             |      |      |     

The accompanying notes to
consolidated financial statements are an integral part of these statements.

26

---

# Consolidated Statements
of Cash Flows

|For the Years Ended December 31, 2005, January 1, 2005, and January 3, 2004
Dollars in thousands | 2005 | 2004 | 2003
|------------------------------------------------------------------------------------------------ | ---- | ---- | ----
|Cash Flows from Operating Activities                                                             |      |      |     
|Net earnings                                                                                     |      |      | $   
|Adjustments to reconcile net earnings to cash provided by operating                              |      |     
|activities, net of acquisition and divestiture:                                                  |      |     
|Depreciation and amortization                                                                    |      |      |     
|Gain on sale of plant and equipment                                                              |      |      |     
|Gain on sale of Healthcare segment                                                               |      |      |     
|Gain on sale of warehouse related to Healthcare segment                                          |      |      |     
|Deferred income taxes                                                                            |      |      |     
|Tax benefit from the exercise of stock options                                                   |      |      |     
|Non-cash stock compensation                                                                      |      |      |     
|Non-cash restructuring charges                                                                   |      |      |     
|Change in assets and liabilities, net of effects of acquisition and                              |      |     
|divestiture:                                                                                     |      |     
|Increase in receivables                                                                          |      |      |     
|Decrease (increase) in inventories                                                               |      |      |     
|Decrease (increase) in prepaid expenses                                                          |      |      |     
|Increase in other non-current assets                                                             |      |      |     
|(Decrease) increase in accounts payable                                                          |      |     
|and accrued liabilities                                                                          |      |      |     
|Increase (decrease) in other non-current liabilities                                             |      |      |     
|                                                                                                 |      |      |     
|Cash provided by operating activities                                                            |      |      |     
|                                                                                                 |      |      |     
|Cash Flows from Investing Activities                                                             |      |     
|Capital expenditures                                                                             |      |      |     
|Proceeds from sale of plant and equipment                                                        |      |      |     
|Business acquisition                                                                             |      |      |     
|Proceeds from sale of Healthcare segment                                                         |      |      |     
|Proceeds from sale of warehouse related to Healthcare segment                                    |      |      |     
|Purchases of long-term investments                                                               |      |      |     
|Redemptions of long-term investments                                                             |      |      |     
|                                                                                                 |      |      |     
|Cash provided by (used for) investing activities                                                 |      |      |     
|                                                                                                 |      |      |     
|Cash Flows from Financing Activities                                                             |      |     
|Payments on long-term debt                                                                       |      |      |     
|Additions of long-term debt                                                                      |      |      |     
|Proceeds from exercise of stock options, net                                                     |      |      |     
|Dividends paid                                                                                   |      |      |     
|Repurchase of common stock                                                                       |      |      |     
|Other                                                                                            |      |      |     
|                                                                                                 |      |      |     
|Cash used for financing activities                                                               |      |      |     
|                                                                                                 |      |      |     
|                                                                                                 |      |      |     
|Effect of exchange rate changes on cash and cash equivalents                                     |      |     
|                                                                                                 |      |      |     
|Net increase (decrease) in cash and cash equivalents                                             |      |     
|Cash and cash equivalents at beginning of year                                                   |      |      |     
|                                                                                                 |      |      |     
|Cash and cash equivalents at end of year                                                         |      |      | $   
|                                                                                                 |      |      |     
|Cash payments for:                                                                               |      |     
|Interest, net of amount capitalized                                                              |      |      | $   
|Income taxes                                                                                     |      |      |     

The accompanying notes to
consolidated financial statements are an integral part of these statements.

27

---

# Consolidated Statements
of Shareholders Investment

For the Years Ended
December 31, 2005, January 1, 2005, and January 3, 2004

|                                       |               |           |                              |                  
|-------------------------------------- | ------------- | --------- | ---------------------------- | -----------------
|Dollars in thousands                   | Shares Issued | Par Value | Excess of Par
Value of Stock | Retained
Earnings
|Balance, December 28, 2002             |               |           |                              | 28,503,446       
|Net earnings                           |               |           |                              |                  
|Cumulative foreign currency            |               |          
|translation adjustments                |               |           |                              |                  
|                                       |               |           |                              |                  
|Comprehensive income                   |               |           |                              |                  
|                                       |               |           |                              |                  
|Cash dividends declared ($.67 per      |               |          
|share)                                 |               |           |                              |                  
|Stock options exercised, net of shares |               |          
|tendered                               |               |           |                              | 544,047          
|Other                                  |               |           |                              | 695              
|                                       |               |           |                              |                  
|Balance, January 3, 2004               |               |           |                              | 29,048,188       
|Net earnings                           |               |           |                              |                  
|Cumulative foreign currency            |               |          
|translation adjustments                |               |           |                              |                  
|                                       |               |           |                              |                  
|Comprehensive income                   |               |           |                              |                  
|                                       |               |           |                              |                  
|Cash dividends declared ($.68 per      |               |          
|share)                                 |               |           |                              |                  
|Stock options exercised, net of shares |               |          
|tendered                               |               |           |                              | 230,696          
|Restricted stock issuance              |               |           |                              |                  
|Unearned compensation amortization     |               |           |                              |                  
|Treasury stock purchases               |               |           |                              |                  
|                                       |               |           |                              |                  
|Balance, January 1, 2005               |               |           |                              | 29,278,884       
|Net earnings                           |               |           |                              |                  
|Cumulative foreign currency            |               |          
|translation adjustments                |               |           |                              |                  
|                                       |               |           |                              |                  
|Comprehensive income                   |               |           |                              |                  
|                                       |               |           |                              |                  
|Cash dividends declared ($.71 per      |               |          
|share)                                 |               |           |                              |                  
|Stock options exercised, net of shares |               |          
|tendered                               |               |           |                              | 509,085          
|Restricted stock issuance              |               |           |                              |                  
|Restricted stock vests and forfeitures |               |           |                              |                  
|Unearned compensation amortization     |               |           |                              |                  
|Treasury stock purchases               |               |           |                              |                  
|                                       |               |           |                              |                  
|Balance, December 31, 2005             |               |           |                              | 29,787,969       
|                                       |               |           |                              |                  

The accompanying notes to
consolidated financial statements are an integral part of these statements.

28

---

# Notes To Consolidated
Financial Statements

For the Years Ended December 31,
2005, January 1, 2005, and January 3, 2004

# 1 Significant Accounting
Policies

Significant accounting policies
followed by Banta Corporation (the Corporation) in maintaining financial
records and preparing financial statements are:

# Business

The Corporation operates in two
business segments, printing services and supply-chain management services. The
Corporations printing services segment provides a comprehensive combination of
printing and digital imaging solutions to leading publishers and direct marketers.
Products and services in this segment include books, catalogs, publications, product
brochures, literature management services, educational materials and e-business services.
The Corporations global supply-chain management services segment provides a wide
range of outsourcing capabilities, primarily to some of the worlds largest
technology companies. Services in this segment range from materials sourcing, product
configuration and customized kitting, to order fulfillment and global distribution.

As discussed in Note 2, the
Corporation completed the sale of substantially all of the assets of its single-use
healthcare products subsidiary, Banta Healthcare Group, Ltd. (Healthcare), to
an affiliate of Fidelity Capital Investors, Inc. on April 12, 2005. In accordance with
Statement of Financial Accounting Standards (SFAS) No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, the results of operations of
Healthcare, which previously comprised the entire healthcare segment, and the gain on the
sale of the assets, have been reflected in discontinued operations in the accompanying
consolidated statements of earnings.

In 2005, one customer accounted for
10.5% of the Corporations revenue from continuing operations, with revenue in both
business segments. No single customer accounted for more than 10% of consolidated revenue
from continuing operations during 2004 or 2003.

# Year-End

The Corporation reports its results
of operations on a 52/53 week year ending on the Saturday closest to December 31.
Operations included 52 weeks in 2005 and 2004, and 53 weeks in 2003.

# Principles of
Consolidation

The consolidated financial statements
include the accounts of the Corporation and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.

# Revenue Recognition

Revenue is recognized, net of
estimated discounts, allowances and returns, when title and risk of loss transfers to the
customer and the earnings process is complete. The Securities and Exchange
Commissions (SEC) Staff Accounting Bulletin (SAB) No. 104,
Revenue Recognition, provides guidance on the application of accounting
principles generally accepted in the United States to selected revenue recognition issues.
In addition, revenue in the supply-chain management services segment is recognized in
accordance with Emerging Issues Task Force (EITF) Issue No. 99-19,
Reporting Revenue Gross as a Principal versus Net as an Agent. Each major
contract is evaluated based on various criteria, with management judgment required to
assess the importance of each criterion in reaching the final decision. In general,
revenue is recognized on a gross basis if the Corporation has the risks and rewards of
ownership, latitude in establishing component vendors and pricing, and bears all credit
risk. Revenue from contracts that do not meet these criteria is recognized on a net basis,
recording only the portion that is related to services or products provided directly by
the Corporation.

Customers, who are primarily located
throughout the United States, Europe and Asia, are granted credit on an unsecured basis.
The Corporation maintains an allowance for doubtful accounts based upon the expected
collectibility of accounts receivable and, to date, such losses have been within
managements expectations. Specific accounts are written off against the allowance
for doubtful accounts when it is deemed that the receivable is no longer collectible.

29

---

The Corporation records shipping and
handling fees billed to customers as revenue, and records the related costs as cost of
printing and supply-chain services, when incurred.

# Foreign Currency
Translation

For all subsidiaries outside the
United States, with the exception of operations in Hungary, the Corporation uses the local
currency as the functional currency. For those operations using a functional currency
other than the U.S. dollar, assets and liabilities are translated into U.S. dollars at
year-end exchange rates, and revenue and expenses are translated at weighted-average
exchange rates. The resulting translation adjustments are recorded as a separate component
of shareholders investment. Operations in Hungary use the GBP sterling as the
functional currency. Gains and losses from foreign currency transactions are included in
net earnings, and totaled a gain of $234,000 in 2005, and losses of $944,000 and
$1,503,000 in 2004 and 2003, respectively.

# Cash Equivalents and
Investments

The Corporation considers all highly
liquid investments, with maturities of less than 90 days at the date of purchase, to be
cash equivalents. The cost of these investments, which are considered as available
for sale for financial reporting purposes, approximated fair value at December 31,
2005, and January 1, 2005. There were no realized gains or losses on these investments
during 2005, 2004 and 2003.

The Corporation held $4,280,000 and
$4,740,000 of non-rated, tax-exempt Wisconsin Industrial Revenue Bonds backed by a letter
of credit from a Thompson rated A financial institution at December 31, 2005,
and January 1, 2005, respectively. The bonds have a 7-day interest rate reset feature and
put option. Based on the original maturity of the underlying investments, the Corporation
has classified these instruments as long-term investments considered available for
sale. It is the current intention of the Corporation to hold these instruments for
more than one year.

# Fair Value of Financial
Instruments

The carrying amounts of cash and cash
equivalents, receivables, accounts payable and long-term investments approximated fair
value as of December 31, 2005, and January 1, 2005, due to the short maturities of these
instruments. Based on the borrowing rates available to the Corporation for loans with
similar terms and average maturities, the fair value of long-term debt as of December 31,
2005, and January 1, 2005, including current maturities, was estimated to be $89,056,000
and $95,719,000, respectively.

# Inventories

Inventories are stated at the lower
of cost, using the first-in, first-out method, or market. Inventories include material,
labor and manufacturing overhead. Inventories at December 31, 2005, and January 1, 2005,
were as follows:

|Dollars in thousands               | 2005 | 2004
|---------------------------------- | ---- | ----
|Raw materials and supplies         |      |     
|Work-in-process and finished goods |      |     
|                                   |      |     
|Net inventories                    |      |     
|                                   |      |     

# Plant and Equipment

Plant and equipment are stated at
cost and depreciated over the estimated useful life of the assets. Depreciation is
computed using the straight-line method for financial reporting purposes. Accelerated
depreciation methods are used for income tax reporting purposes. Leasehold improvements
are amortized over the shorter of the term of the lease or the estimated useful life on a
straight-line basis. The range of useful lives for financial reporting is 15 to 40 years
for buildings and improvements, 3 to 7 years for information systems and equipment
installations, and 3 to 10 years for machinery and equipment.

Plant and equipment are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset or group of assets may not be recoverable. If the sum of the expected
undiscounted cash flows is less than the carrying value of the related asset or group of
assets, a loss is recognized for the difference between the fair value and carrying value
of the asset or group of assets. Such analyses necessarily involve significant judgment.

30

---

# Capitalized Interest

The Corporation capitalizes interest
on major buildings, information systems and machinery and equipment installations and
depreciates the amount capitalized over the lives of the related assets. Total interest
incurred was $5,650,000 in 2005, $7,527,000 in 2004, and $9,218,000 in 2003, of which
$178,000, $1,279,000 and $798,000 was capitalized in 2005, 2004 and 2003, respectively.

# Capitalized Software
Development Costs

The Corporation capitalizes costs
incurred to develop or obtain software for internal use based on guidance provided by the
Accounting Standards Executive Committee Statement of Position 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use. Qualifying
costs incurred during the application development stage are capitalized, and such costs
are depreciated over the estimated useful life of the software when it is placed into
service.

# Goodwill

In accordance with SFAS No. 142,
Goodwill and Other Intangible Assets, goodwill is no longer amortized, but is
reviewed for impairment on an annual basis.

The Corporation completed the annual
impairment tests in the fourth quarter of 2005, 2004 and 2003. This analysis was based on
the comparison of the fair value of its reporting units to the carrying value of the net
assets of the respective reporting units. The Corporation concluded that no impairment of
goodwill existed at the time of the annual impairment tests in 2005, 2004 and 2003.

# Environmental Costs

The Corporation accrues for potential
costs associated with environmental obligations when such losses are probable and
reasonably estimable. Costs of estimated future expenditures are not discounted to their
present value. The accruals, which are subject to management judgment, are adjusted as
facts and circumstances change.

# Earnings Per Share of
Common Stock

Basic earnings per share of common
stock is computed by dividing net earnings by the weighted average number of common shares
outstanding during the period. Diluted earnings per share of common stock is computed by
dividing net earnings by the weighted average number of common shares and common
equivalent shares, which relate primarily to the assumed exercise of stock options.
Weighted average common shares for computation of basic earnings per share were
24,400,087; 25,123,022; and 25,499,789, in 2005, 2004 and 2003, respectively. Weighted
average common and common equivalent shares for computation of diluted earnings per share
were 24,784,216; 25,508,380; and 25,742,979, in 2005, 2004 and 2003, respectively.

The shares outstanding used to
compute diluted earnings per share for 2005, 2004 and 2003 excluded outstanding options to
purchase 101,881; 114,548; and 524,584 shares of common stock, respectively, with
weighted-average exercise prices of $45.06, $45.52 and $35.08, respectively. These options
were excluded because their exercise prices were greater than the average market price of
the common shares and their inclusion in the computation would have been antidilutive.

# Stock-Based Compensation

The Corporation has three stock-based
employee compensation plans (see Note 8). The Corporations stock-based employee
compensation plans are accounted for under the recognition and measurement principles of
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations. Because the number of shares is
fixed and the exercise price of the stock options equals the market price of the
underlying stock on the date of grant, no cost is reflected in net earnings for stock
options granted under these plans. The Corporation amortizes restricted stock awards to
net earnings over the vesting period based on the fair value of the stock at the date of
grant.

Had compensation cost been determined
based upon the fair value at the grant date for awards under the plans based on the
provisions of SFAS No. 123 Accounting for Stock-Based Compensation, the
Corporations pro forma net earnings and earnings per share would have been as
follows:

31

---

|Dollars in thousands, except per share amounts
Net earnings: | 2005 | 2004 | 2003
|------------------------------------------------------------ | ---- | ---- | ----
|As reported                                                  |      |      | $   
|Add: Compensation expense related to restricted stock        |      |     
|included in net earnings, net of related taxes               |      |      |     
|Deduct: Total stock-based employee compensation              |      |     
|expense determined under fair value based method, net        |      |     
|of related taxes                                             |      |      |     
|                                                             |      |      |     
|Pro forma                                                    |      |      | $   
|                                                             |      |      |     
|Earnings per share:                                          |      |     
|As reported:                                                 |      |     
|Basic                                                        |      |      | $   
|Diluted                                                      |      |      |     
|Pro forma:                                                   |      |     
|Basic                                                        |      |      | $   
|Diluted                                                      |      |      |     

The fair value of each stock option
grant is estimated on the date of grant using the Black-Scholes-Merton option pricing
model with the following weighted average assumptions used for grants in 2005, 2004 and
2003, respectively: risk-free interest rates of 3.9%, 3.6% and 3.4%; expected dividend
yields of 1.6%, 1.7% and 1.8%; expected option lives of 5.0, 5.3 and 5.7 years; and
expected volatility of 22%, 26% and 26%. Based on these assumptions, the weighted average
fair value of the options granted at the date of grant in 2005, 2004 and 2003 was $10.17,
$9.40 and $9.51, respectively.

# Derivative Financial
Instruments

The Corporation enters into foreign
currency forward exchange contracts to mitigate exposure related to receivables and
payables denominated in foreign currencies. Those contracts are adjusted to fair value at
each balance sheet date with the gain or loss reflected in operations. For each of the
three years presented, the gain or loss recognized on these contracts was not material.

# Use of Estimates

The preparation of financial
statements in conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect the amounts
reported in the accompanying financial statements and notes. Actual results could differ
from those estimates.

# New Accounting Standards

In May 2005, the Financial Accounting
Standards Board (FASB) issued SFAS No. 154, Accounting Changes and Error
Corrections  a replacement of APB Opinion No. 20 and SFAS No. 3. The
pronouncement requires that all voluntary changes in accounting principles be reported by
retrospectively applying the principle to all prior periods that are presented in the
financial statements. The statement is effective for fiscal years beginning after
December 15, 2005. The Corporations financial position, results of operations
or cash flows will only be impacted by SFAS No. 154 if it implements changes in accounting
principles that are addressed by the standard or corrects accounting errors in future
periods.

32

---

In December 2004, the FASB issued
SFAS No. 123 (R), Share-Based Payment. SFAS No. 123 (R) requires that
compensation cost related to share-based payment transactions be recognized in the
financial statements. Share-based payment transactions within the scope of SFAS No. 123
(R) include stock options, restricted stock awards, performance-based awards, stock
appreciation rights, and employee share purchase plans. The provisions of SFAS No. 123 (R)
are effective for fiscal years beginning after June 15, 2005. Accordingly, the
Corporation will implement the revised standard in the first quarter of fiscal year 2006.
SFAS No. 123 (R) requires measurement of the cost of employee services received in
exchange for an award of equity instruments based on the fair value of the award at the
grant date (with limited exceptions) and recognition of the compensation expense over the
period during which an employee is required to provide service in exchange for the award.
In March 2005, the SEC issued SAB 107, which expresses views of the SEC staff regarding
the application of SFAS No. 123 (R). Among other things, SAB 107 provides interpretive
guidance related to the interaction between SFAS No. 123 (R) and certain SEC rules and
regulations, as well as provides the SEC staffs views regarding the valuation of
share-based payment arrangements for public companies. For fiscal years prior to 2006, the
Corporation accounted for its share-based payment transactions under the provisions of APB
Opinion No. 25, which generally does not require the recognition of compensation cost for
employee stock options in the financial statements. Management has selected a transition
method in which prior period financial statements would not be restated. In addition,
management will use the Black-Scholes-Merton valuation model, which is the same valuation
model the Corporation uses to value stock options for pro forma presentation of earnings
and per-share data for SFAS No. 148 disclosure purposes. Management believes that the
current required disclosures in Note 1 under Stock-Based Compensation appropriately
reflect the impact this standard would have on reported net earnings if adopted in the
periods presented.

Based on unvested options outstanding
at December 31, 2005, the future compensation cost to be recognized as a result of the
implementation of SFAS No. 123 (R) is as follows (in thousands of dollars):

|      | 
|----- | 
|2006  | 
|2007  | 
|2008  | 
|      | 
|Total | 
|      | 

In December 2004, the FASB issued
Staff Position (FSP) No. 109-2, Accounting and Disclosure Guidance for
the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of
2004, (the Jobs Act). The Jobs Act became law in the U.S. in October
2004. This legislation implemented a number of changes in U.S. tax laws. FSP No. 109-2
requires recognition of a deferred tax liability for the tax effect of the excess of book
over tax basis of an investment in a foreign corporate venture that is permanent in
duration, unless a company firmly asserts that such amounts are indefinitely reinvested
outside the companys home jurisdiction. Management believes that the Corporation is
in compliance with the guidance of FSP No. 109-2 (see Note 12).

In December 2004, the FASB issued
SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion
No. 29, Accounting for Nonmonetary Transactions. This statement amends APB
Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of nonmonetary assets that
do not have commercial substance. Under SFAS No. 153, if a nonmonetary exchange of similar
productive assets meets a commercial-substance criterion and fair value is determinable,
the transaction must be accounted for at fair value resulting in recognition of any gain
or loss. SFAS No. 153 is effective for nonmonetary transactions in fiscal periods that
begin after June 15, 2005. The Corporation does not anticipate that the
implementation of this standard will have a material impact on its financial position,
results of operations or cash flows.

In November 2004, the FASB issued
SFAS No. 151, Inventory Costs. The Statement requires abnormal amounts of
inventory costs related to amounts of idle freight, handling costs and spoilage be
recognized as current period expenses. The standard is effective for fiscal years
beginning after June 15, 2005 with early application permitted. The
Corporations policy has always been to handle inventory costs in a manner consistent
with the provisions of this statement.

In May 2004, the FASB issued FSP No.
106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003, in response to a new law regarding
prescription drug benefits under Medicare as well as a federal subsidy to sponsors of
retiree healthcare benefit plans. The Corporation has applied the provisions of FSP No.
106-2 to the calculation of retiree healthcare benefits plans for 2005 and 2004.

33

---

# Reclassifications

Certain reclassifications have been
made to the 2004 and 2003 financial statements to conform to the 2005 presentation.

# 2 Divestiture

On April 12, 2005, the Corporation
sold substantially all of the assets of Healthcare to an affiliate of Fidelity Capital
Investors, Inc. for $67 million. This transaction generated net proceeds of $62.6 million.
The results of operations of Healthcare for the period up to the date of sale and the gain
on the sale of assets have been reflected as discontinued operations in the accompanying
consolidated statements of earnings. The Corporation recognized a $23.9 million gain on
the sale of the segment ($20.2 million net of related income taxes). The effective tax
rate on the gain derived from the transaction was favorably impacted by the
Corporations ability to offset a portion of the gain with previously incurred
capital losses. The deferred tax assets related to the aforementioned capital loss
carryforwards had been offset in full by a valuation allowance until the sale transaction
closed due to uncertainty regarding realization of the capital loss carryforwards.

During the first quarter of 2005, in
a transaction related to the sale of Healthcare, the Corporation sold its warehouse in
Rialto, California, to a California real estate investment company. The sale resulted in
net proceeds of $6.8 million and a gain of $2.1 million, ($1.3 million net of related
income taxes), which is included in gain from the sale of discontinued operations in the
accompanying consolidated statements of earnings for the year ended December 31, 2005.

The accompanying consolidated balance
sheets include the following assets and liabilities of Healthcare considered available for
sale at January 1, 2005 (dollars in thousands):

|                                      | 
|------------------------------------- | 
|Current assets                        | 
|Long-lived assets, including goodwill | 
|Current liabilities                   | 
|Non-current liabilities               | 

Healthcare revenue totaled
$21,900,000, $101,068,000 and $100,371,000 in 2005, 2004 and 2003, respectively, and
earnings from operations totaled $1,126,000, $10,594,000 and $12,075,000 in 2005, 2004 and
2003, respectively.

# 3 Goodwill

Changes in the carrying amount of
goodwill by segment during the years ended December 31, 2005, and January 1, 2005, consist
of the following (dollars in thousands):

|                                    
|------------------------------------
|Balance at January 3, 2004          
|Translation adjustments for goodwill
|denominated in foreign currencies   
|                                    
|Balance at January 1, 2005          
|Sale of Healthcare segment          
|Translation adjustments for goodwill
|denominated in foreign currencies   
|                                    
|Balance at December 31, 2005        
|                                    

# 4 Short-Term Debt

The Corporation generally obtains
short-term financing by borrowing against lines of credit with banks. At December 31,
2005, the Corporation had short-term credit facilities totaling $89.4 million. Of this
total, $75.0 million represents a credit facility made available by three banks, which can
be used to support both commercial paper and unsecured borrowings; $5.0 million represents
a facility in place to support the issuance of letters of credit and to meet short-term
liquidity needs; and the remaining $9.4 million is comprised of secured credit facilities
denominated in Euros and GBP Sterling, which can be used to finance the Corporations
European operations. The Corporation had $4 million of letters of credit outstanding as of
December 31, 2005, and January 1, 2005. As of December 31, 2005, and January 1, 2005, the
Corporation had no short-term borrowings outstanding. During 2005, the Corporation had a
maximum of $20.0 million outstanding under short-term credit facilities, all of which was
repaid prior to December 31, 2005. During 2004, the Corporation had a maximum of $10.0
million outstanding under short-term credit facilities, all of which was repaid prior to
January 1, 2005.

34

---

# 5 Long-Term Debt

Long-term debt consists of the
following:

|Dollars in thousands                                     | Maturities | 2005 | 2004
|-------------------------------------------------------- | ---------- | ---- | ----
|Promissory Notes:                                        |            |      |     
|6.81%                                                    |            |      |     
|7.38%                                                    |            |      |     
|7.62%                                                    |            |      |     
|7.98%                                                    |            |      |     
|8.05%                                                    |            |      |     
|9.53%                                                    |            |      |     
|Borrowings outstanding from foreign currency denominated |            |     
|term loans, variable interest rates from 3.55% to 5.74%  |            |      |     
|Capital Lease Obligations, 1.39% to 8.90%                |            |      |     
|Industrial Revenue Bonds, floating interest rate,        |            |     
|approximating 50% of the prime rate                      |            |      |     
|Other note, variable rate based on 10-year Treasury note |            |     
|rate                                                     |            |      |     
|                                                         |            |      |     
|                                                         |            |      |     
|Less current maturities                                  |            |      |     
|                                                         |            |      |     
|Total long-term debt                                     |            |      |     
|                                                         |            |      |     

Maturities of long-term debt during
the next five years are: $11,460,000 in 2006, $36,614,000 in 2007, $11,126,000 in 2008,
$9,935,000 in 2009, and $7,554,000 in 2010.

The promissory notes and term loans
contain various operating and financial covenants. The Corporation was in compliance with
all debt covenants at December 31, 2005.

In order to facilitate the
repatriation of the maximum allowable undistributed foreign earnings under the Jobs Act,
term loans were put in place during the fourth quarter of 2005 to meet the current working
capital requirements of the Corporations foreign operations. Total amounts of the
term loans in local currency are Euro 10,000,000, Singapore $20,000,000 and GBP
sterling £5,000,000. The term loans become due in full on November 30, 2007, and
carry interest rates at 1.1% above the cost of funds to banks on the Euro Interbank Market
and the London Interbank Market, where applicable. As of December 31, 2005, the foreign
currency denominated term loans have additional funds available totaling $8,291,000.

# 6 Contingencies

On June 26, 2003, the Corporation
settled its lawsuit with Singapore-based Mentor Media, Ltd. (Mentor) relating
to its proposed acquisition of Mentor. The Corporation recorded a charge of $4,602,000 in
the second quarter of 2003 in connection with the settlement.

In the ordinary course of its
business, the Corporation is also involved in other litigation matters. Based on the
Corporations assessment of these matters and on the existing reserves provided for
them, the Corporation does not believe that any of these matters, either individually or
in the aggregate, will have a material adverse effect on its results of operations, cash
flows or financial condition.

35

---

# 7 Capital Stock

The Corporations authorized
capital consists of 300,000 shares of preferred stock ($10 par value) and 75 million
shares of common stock ($.10 par value).

In February 2005, the Board of
Directors approved a $150 million share repurchase program, which replaced the
Corporations previous repurchase program. During 2005, the Corporation purchased
1,458,500 shares of its common stock under this authority at an aggregate cost of
$65,571,000. As of December 31, 2005, the Corporation had remaining authority to
repurchase up to an additional $84.4 million in common stock under this share repurchase
program. Through January 1, 2005, the Corporation had purchased 6,519,400 shares of its
common stock under the previous authority at an aggregate cost of $173,870,000. Prior to
the second quarter of 1999, all of the repurchased shares were canceled. Beginning April
4, 1999, the Corporations repurchases of outstanding common stock have been recorded
as treasury stock. The Corporation held 5,670,118 and 4,232,412 shares of its common stock
in treasury at December 31, 2005, and January 1, 2005, respectively. These shares may be
reissued pursuant to the Corporations equity incentive plans or for other purposes.

On March 19, 2004, the Corporation
announced that it had entered into an Accelerated Share Repurchase (ASR)
agreement whereby 1,000,000 shares of the Corporations common stock were repurchased
at an initial price of $43.69 per share. The ASR required the counterparty to acquire the
shares in the open market over a fixed period of time. On July 27, 2004, the Corporation
paid $663,000 to settle the ASR. The final settlement amount was based on the
volume-weighted average price of $44.35 per share for actual repurchases made by the
counterparty.

Pursuant to the Corporations
Shareholder Rights Plan, one common stock purchase right is included with each outstanding
share of common stock. In the event the rights become exercisable, each right will
initially entitle its holder to buy one-half of one share of the Corporations common
stock at a price of $140 per share (equivalent to $70 per one-half share), subject to
adjustment. The rights will become exercisable if a person or group acquires 15% or more
of the Corporations common stock or announces a tender offer for 15% or more of the
common stock. Upon the occurrence of certain events, including a person or group acquiring
15% or more of the Corporations common stock, each right will entitle the holder to
purchase, at the rights then current exercise price, common stock of the Corporation
or, depending on the circumstances, common stock of the acquiring corporation having a
market value of twice such exercise price. The rights may be redeemed by the Corporation
at a price of $.001 per right at any time prior to the rights becoming exercisable or
prior to their expiration in November 2011, subject to amendment.

# 8 Stock-Based
Compensation Plans

At December 31, 2005, the Corporation
had options outstanding or available for grant under three stock-based compensation plans
 the 2005 Equity Incentive Plan (2005 Plan), the Equity Incentive Plan
(1995 Plan) and the 1991 Stock Option Plan (1991 Plan). The 2005
and 1995 Plans provide for the issuance of non-qualified and incentive stock options,
stock appreciation rights, and restricted stock to officers and key employees. The
exercise prices for options or stock appreciation rights under such plans may not be less
than the fair market value of the common stock on the date of the grant. Options granted
under the 1991 Plan may be exercised up to five years after the date of grant. Options
granted under the 2005 and 1995 Plans may be exercised up to 10 years from the date of
grant. The 2005 Plan includes automatic grants of stock options to non-employee Directors
on an annual basis. At December 31, 2005, 3,429,059 shares of the Corporations
common stock were reserved for future equity incentive awards. The following table
summarizes stock option activity under the equity incentive plans:

36

---

|                                
|--------------------------------
|Outstanding at December 28, 2002
|Granted                         
|Exercised                       
|Canceled or expired             
|                                
|Outstanding at January 3, 2004  
|Granted                         
|Exercised                       
|Canceled or expired             
|                                
|Outstanding at January 1, 2005  
|Granted                         
|Exercised                       
|Canceled or expired             
|                                
|Outstanding at December 31, 2005
|                                

The following table summarizes
weighted average information by range of exercise prices for stock options outstanding and
exercisable at December 31, 2005:

|                        |                                         | Options Outstanding                         | Options Exercisable            
|----------------------- | --------------------------------------- | ------------------------------------------- | -------------------------------
|Range of
Exercise Price | Number Outstanding
at December 31, 2005 | Weighted Average
Remaining
Contractual Life | Weighted Average
Exercise Price
|$18-$27                 | 255,200                                 | 4.0 years                                   | $24                            
|$28-$34                 | 314,167                                 | 6.1 years                                   | $29                            
|$35-$38                 | 1,317,149                               | 7.3 years                                   | $37                            
|$39-$50                 | 649,054                                 | 9.1 years                                   | $45                            
|                        |                                         |                                             |                                
|$18-$50                 | 2,535,570                               | 7.3 years                                   | $37                            
|                        |                                         |                                             |                                

The options outstanding but not
exercisable at December 31, 2005, become exercisable at various times through 2008 in
accordance with the vesting schedules of the plans.

During 2005, 2004 and 2003, 177,586;
130,136; and 136,874 shares, respectively, were submitted to the Corporation in partial
payment for stock option exercises and to offset income tax liabilities. The Corporation
canceled these shares.

The Corporation awarded an aggregate
of 25,537 and 23,988 shares of restricted stock to certain employees pursuant to the 1995
Plan during 2005 and 2004, respectively. Restricted stock is granted in the name of the
employee, who has all the rights of a shareholder, subject to certain restrictions. The
restricted stock vests ratably over three years from the date of grant, subject to
acceleration in certain cases. The shares issued were previously acquired treasury shares.
Upon issuance of the restricted stock, unearned compensation of $1,092,000 and $1,077,000
was charged to shareholders investment for the fair value of the restricted stock in
2005 and 2004, respectively, and is being recognized as compensation expense ratably over
the three-year vesting period. Compensation expense related to restricted stock for 2005
and 2004 was $642,000 ($385,000 net of related taxes) and $237,000 ($142,000 net of
related taxes), respectively. Approximately $150,000 of unearned compensation was reversed
from shareholders investment during 2005 due to the forfeiture of 3,378 shares. The
Corporation had 38,147 and 23,988 shares of restricted stock outstanding at December 31,
2005, and January 1, 2005, respectively.

37

---

# 9 Operating Leases

The Corporation leases certain
manufacturing facilities, warehouses, office space, office equipment, automobiles and
trucks. Annual rentals amounted to $23,975,000, $25,266,000 and $24,512,000 in 2005, 2004
and 2003, respectively. Minimum rental commitments for the years 2006 through 2010
aggregate $21,856,000, $18,435,000, $14,612,000, $9,716,000 and $7,273,000, respectively,
and $16,839,000 thereafter.

As the result of business decisions
in prior years, the Corporation is obligated for lease payments for facilities that are no
longer in use. The costs of future lease obligations including real estate taxes, less
expected sub-lease income, have been included in the consolidated balance sheets and total
$1,930,000 and $3,837,000 at December 31, 2005, and January 1, 2005, respectively. Gross
commitments for the years 2006 and 2007 aggregate $1,522,000 and $1,155,000, respectively.

# 10 Employee Benefit Plans

The Corporation has two pension plans
covering substantially all employees. The plans are non-contributory and benefits are
based on an employees years of service and earnings. The Corporation also maintains
a non-qualified supplemental retirement plan, which is not funded. The disclosures for
this plan for all years presented are combined with the pension plans. The Corporation
makes contributions to the qualified plans each year in an amount that is at least equal
to the minimum required contributions as defined by the Employee Retirement Income
Security Act (ERISA) of 1974.

The Corporation also provides
non-contractual limited healthcare benefits for certain retired employees. The program
provides for defined initial contributions by the Corporation toward the cost of
postretirement healthcare coverage. The balance of the cost is borne by the retirees. The
program provides that increases in the Corporations contribution toward coverage
will not exceed 4% per year. Due to the terms of the Corporations postretirement
healthcare program, assumed healthcare cost rate trends do not materially affect the
Corporations costs.

The Corporations postretirement
healthcare program provides for prescription drug benefits. On December 8, 2003, the
Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was signed
into law. The Act introduced a prescription drug benefit under Medicare (Medicare Part D).
In May 2004, the FASB issued FSP 106-2, which provides accounting guidance to employers
that offer prescription drug benefits under retiree healthcare benefit plans to Medicare
eligible retirees. FSP 106-2 requires that the benefit attributable to past service be
accounted for as an actuarial gain and the benefit related to current service be reported
as a reduction in service cost. The Corporation has elected to integrate retiree
healthcare coverage with the new Medicare Part D, in a method similar to the way benefits
currently integrate with Medicare Parts A and B. In the third quarter of 2004, the
Corporation adopted FSP 106-2 retroactive to January 4, 2004.

Net periodic pension and
postretirement benefit costs for the Corporation-sponsored plans, were as follows:

|(Dollars in thousands)             | Pension Benefits | Postretirement Benefits
|---------------------------------- | ---------------- | -----------------------
|2005                               | 2004             | 2003                   
|Service cost-benefits earned       |                  |                        
|during the year                    |                  |                        
|Interest cost on projected benefit |                  |                        
|obligation                         |                  |                        
|Expected return on plan assets     |                  |                        
|Amortization of prior service cost |                  |                        
|Amortization of transition         |                  |                        
|obligation                         |                  |                        
|Amortization of net loss (gain)    |                  |                        
|                                   |                  |                        
|Net pension and postretirement     |                  |                        
|benefits cost                      |                  |                        
|                                   |                  |                        

38

---

Significant assumptions used by the
Corporations actuary in determining net pension and postretirement benefits expense
for the Corporations plans were as follows:

|                                        | Pension Benefits | Postretirement Benefits
|--------------------------------------- | ---------------- | -----------------------
|2005                                    | 2004             | 2003                   
|Discount rate for periodic benefit cost |                  |                        
|Rate of increase in compensation        |                  |                        
|Long-term rate of return on plan assets |                  |                        

The discount rate is based upon the
10-year Moodys Aa bond rate at the end of each year. The expected long-term rate of
return on assets assumption was chosen from the range of likely results of compound
average annual returns over a 10-year time horizon based on the plans current
investment policy. The expected return and volatility for each asset class was based on
historical equity, bond and cash market returns during the period 1926 through 2005. While
this approach gives appropriate consideration to recent fund performance and historical
returns, the assumption is primarily a long-term, prospective rate. Based on the analysis,
the expected long-term return assumption for the plans will remain at 9.0%.

The following table presents a
reconciliation of the funded status of the plans using an assumed discount rate of 5.75%
at December 31, 2005, and 6.00% at January 1, 2005:

|                                        
|----------------------------------------
|Dollars in thousands                    
|Change in benefit obligation:           
|Benefit obligation at beginning         
|of year                                 
|Service cost                            
|Interest cost                           
|Actuarial loss (gain)                   
|Participants contributions             
|Plan amendments                         
|Benefits paid                           
|                                        
|Benefit obligations at end of year      
|                                        
|Change in plan assets:                  
|Fair value of plan assets at            
|beginning of year                       
|Actual return on plan assets            
|Employer contributions                  
|Participants contributions             
|Benefits paid                           
|                                        
|Fair value of plan assets at end        
|of year                                 
|                                        
|Plan assets less than benefit obligation
|Unrecognized net actuarial gain (loss)  
|Unrecognized prior-service cost         
|Unrecognized transition obligation      
|                                        
|Accrued (prepaid) pension and           
|postretirement benefits cost            
|                                        

39

---

All of the Corporations pension
plans, except the supplemental retirement plan, have assets in excess of the accumulated
benefit obligation. The projected benefit obligation and accumulated benefit obligation for
the supplemental retirement plan were $13,292,000 and $11,127,000 in 2005, respectively,
and $11,928,000 and $10,101,000 in 2004, respectively.

The following table details the
accrued or prepaid benefit cost recorded as of December 31, 2005, and January 1, 2005, as
related to the Corporations pension plans:

|Accrued (prepaid) benefit cost: | 2005 | 2004
|------------------------------- | ---- | ----
|Employees pension plan          |      |     
|Hourly pension plan             |      |     
|Supplemental retirement plan    |      |     
|                                |      |     
|Total                           |      |     
|                                |      |     

The Corporation maintains target
allocation percentages among various asset classes based on an investment policy
established for the pension plans, which is designed to achieve long-term objectives of
return, while mitigating downside risk and considering expected cash flows. The current
weighted-average target asset allocations are as follows: equity securities 70% and debt
securities 30%. The investment policy is reviewed periodically in order to achieve overall
objectives in light of current circumstances. There are no trust assets invested in the
common stock of the Corporation.

The Corporations pension plan
weighted-average asset allocations for the qualified plans at December 31, 2005, and
January 1, 2005, by asset category were as follows:

|                 
|-----------------
|Asset Category:  
|Equity securities
|Debt securities  
|Other            
|                 
|Total            
|                 

The Corporation made a contribution
of $10 million to the qualified pension plan in February 2006, and currently expects to
make no further contributions to its qualified pension plans during 2006. A contribution
of $775,000 is expected to be made as benefit payments to retired supplemental retirement
plan participants. A contribution of $254,000 is expected to be made as benefit payments
to retirees under the postretirement healthcare plan.

The following benefit payments, which
reflect expected future service, as appropriate, are expected to be paid:

|Dollars in thousands | Pension Benefits | Postretirement Benefits
|-------------------- | ---------------- | -----------------------
|2006                 |                  |                        
|2007                 |                  |                        
|2008                 |                  |                        
|2009                 |                  |                        
|2010                 |                  |                        
|2011-2015            |                  |                        

Approximately 800 of the
Corporations U.S. employees are covered by multi-employer union-sponsored,
collectively bargained defined-benefit pension plans. The Corporation recorded expense of
$1,603,000, $1,436,000 and $2,194,000 in 2005, 2004 and 2003, respectively, attributable
to the multi-employer pension plans. These costs are determined in accordance with the
provisions of negotiated labor contracts.

40

---

The Corporation has established an
Incentive Savings Plan (401k) for substantially all of its non-bargaining unit employees.
Employee contributions are partially matched by the Corporation in accordance with
criteria set forth in the plan. Matching contributions charged to earnings for 2005, 2004,
and 2003 were $3,392,000, $3,346,000 and $3,287,000, respectively.

# 11 Restructuring

On January 28, 2003, the Corporation
announced a restructuring involving its consumer catalog business and a realignment of
operating activities within its supply-chain management services segment. The objective of
the plan, which was implemented throughout 2003, was to consolidate certain operations,
leverage existing capacity, improve efficiencies and reduce costs.

Restructuring charges by segment for
2003 were:

|                                     
|-------------------------------------
|Employee severance and benefits      
|Facility costs                       
|Impaired assets and other liabilities
|                                     
|Total                                
|                                     

The 2003 restructuring included the
decision to exit three facilities, the largest of which was the consumer catalog facility
in St. Paul, Minnesota. An asset impairment charge totaling $4.4 million was recorded for
machinery and equipment, building and building improvements at this facility. The
remaining impairment charges related to machinery, equipment and fixtures at two
facilities in the supply-chain management services segment. Assets were reviewed for
recoverability and adjusted to their fair value as appropriate in the quarter in 2003 in
which the decision to close the facility was made, in accordance with the
Corporations accounting policy.

Employee severance amounts were
determined based on the Corporations policy and varied based on factors including
the tenure of the employee. Employee severance and benefit charges in 2003 included $1.3
million of estimated costs to exit certain multi-employer, defined-benefit pension plans.

The restructuring activities were
substantially completed in 2003, and the Corporation did not record additional charges in
2005 or 2004 related to these activities. Included in the accompanying consolidated
balance sheets at December 31, 2005, and January 1, 2005, were liabilities related to the
restructuring activities of $626,000 and $1,792,000, respectively.

# 12 Income Taxes

The provision for income taxes for
continuing operations consists of the following:

|Dollars in thousands                | 2005 | 2004 | 2003
|----------------------------------- | ---- | ---- | ----
|Current:                            |      |      |     
|Federal                             |      |      | $   
|State                               |      |      |     
|Foreign                             |      |      |     
|                                    |      |      |     
|                                    |      |      |     
|Tax on repatriated foreign earnings |      |      |     
|Deferred                            |      |      |     
|                                    |      |      |     
|Provision for income taxes          |      |      | $   
|                                    |      |      |     

41

---

Below is a reconciliation of the
statutory federal income tax rate and the effective income tax rate:

|                                    
|------------------------------------
|Statutory federal income tax rate   
|Foreign income tax rate differential
|Federal tax on dividend repatriation
|State and local income taxes,       
|less applicable federal tax benefit 
|Other, net                          
|                                    
|Effective income tax rate           
|                                    

Temporary differences that give rise
to the deferred tax assets and liabilities at December 31, 2005, and January 1, 2005, are
as follows:

|Dollars in thousands                              | 2005 | 2004
|------------------------------------------------- | ---- | ----
|Net current deferred tax assets:                  |      |     
|Vacation accrual                                  |      |     
|Other accrued liabilities                         |      |     
|Reserve for uncollectible accounts                |      |     
|Other                                             |      |     
|                                                  |      |     
|Continuing operations deferred tax assets         |      |     
|Discontinued operations deferred tax assets       |      |     
|                                                  |      |     
|Net current deferred tax assets                   |      |     
|                                                  |      |     
|Net long-term deferred tax liabilities:           |      |     
|Accelerated depreciation                          |      |     
|Deductible goodwill amortization                  |      |     
|Prepaid pension cost                              |      |     
|Accrued postretirement benefit cost               |      |     
|Deferred compensation                             |      |     
|Other                                             |      |     
|                                                  |      |     
|Continuing operations deferred tax liabilities    |      |     
|Capital loss carryforward                         |      |     
|Valuation allowance for capital loss carryforward |      |     
|Discontinued operations deferred tax liabilities  |      |     
|                                                  |      |     
|Net long-term deferred tax liabilities            |      |     
|                                                  |      |     

The non-United States component of
income before income taxes was $36,159,000, $32,913,000 and $24,958,000 in 2005, 2004 and
2003, respectively.

Due to the gain generated by the sale
of its Healthcare subsidiary as discussed in Note 2, the Corporation was able to utilize
capital loss carryforwards of $16.3 million in 2005. The tax benefit of these
carryforwards has been included as part of discontinued operations. Due to the significant
uncertainty of realizing a benefit on these carryforwards, the Corporation had provided a
valuation allowance against such carryforwards in years prior to 2005.

In December 2005, the Corporation
repatriated approximately $126.0 million of its accumulated foreign earnings. These
earnings were repatriated due solely to the tax benefits made available by the special
dividends deduction provisions of the Jobs Act. The Corporation recorded a $4.4 million
tax provision in the fourth quarter of 2005 related to this event. All remaining
undistributed earnings of the Corporations foreign subsidiaries are considered
permanently invested. No provision for U.S. income taxes or foreign withholding taxes have
been made on the remaining undistributed earnings which amounted to approximately
$12,467,000 at December 31, 2005. In addition, no provision or benefit for U.S. income
taxes has been made on foreign currency translation gains or losses.

# 13 Segment Information

The Corporation operates in two
business segments, printing services and supply-chain management services. These
operations are strategic business units that service different markets and offer different
products and services. The accounting policies of the segments are the same as those
described in Note 1 Significant Accounting Policies. The Corporation evaluates performance
based on earnings from operations. Summarized segment data for 2005, 2004 and 2003 are as
follows:

42

---

|Dollars in thousands                                  | 2005 | 2004 | 2003
|----------------------------------------------------- | ---- | ---- | ----
|Revenue from continuing segments:                     |      |      |     
|Printing services                                     |      |      | $   
|Supply-chain management services                      |      |      |     
|                                                      |      |      |     
|Total                                                 |      |      | $   
|                                                      |      |      |     
|Operating earnings from continuing segments:          |      |     
|Printing services                                     |      |      | $   
|Supply-chain management services                      |      |      |     
|                                                      |      |      |     
|Total1                                                |      |      | $   
|                                                      |      |      |     
|Total assets of continuing segments:                  |      |     
|Printing services                                     |      |      | $   
|Supply-chain management services                      |      |      |     
|                                                      |      |      |     
|Total1                                                |      |      | $   
|                                                      |      |      |     
|Capital expenditures of continuing segments:          |      |     
|Printing services                                     |      |      | $   
|Supply-chain management services                      |      |      |     
|                                                      |      |      |     
|Total1                                                |      |      | $   
|                                                      |      |      |     
|Depreciation and amortization of continuing segments: |      |     
|Printing services                                     |      |      | $   
|Supply-chain management services                      |      |      |     
|                                                      |      |      |     
|Total1                                                |      |      | $   
|                                                      |      |      |     

1          Difference
between segment total and the total included in the consolidated           financial
statements is unallocated corporate headquarters amounts and amounts           related to
the divested Healthcare segment.

The following table presents a
reconciliation of certain segment information to the totals contained in the consolidated
financial statements:

|Dollars in thousands                           | 2005 | 2004 | 2003
|---------------------------------------------- | ---- | ---- | ----
|Operating earnings from continuing operations: |      |      |     
|Reportable segment earnings                    |      |      | $   
|Unallocated corporate expenses                 |      |      |     
|Interest expense                               |      |      |     
|Interest income                                |      |      |     
|Other income (expense), net                    |      |      |     
|                                               |      |      |     
|Earnings from continuing operations before     |      |     
|income taxes                                   |      |      | $   
|                                               |      |      |     
|Total assets:                                  |      |     
|Reportable segment assets                      |      |      | $   
|Intergroup receivable elimination              |      |      |     
|Other unallocated amounts                      |      |      |     
|                                               |      |      |     
|Consolidated total assets                      |      |      | $   
|                                               |      |      |     

43

---

Summarized geographic data for the
Corporations operations for 2005, 2004 and 2003 are as follows (net revenue is
attributed to countries primarily based on location of operation):

|Dollars in thousands                | 2005 | 2004 | 2003
|----------------------------------- | ---- | ---- | ----
|Revenue from continuing operations: |      |      |     
|United States                       |      |      | $   
|Ireland                             |      |      |     
|Other foreign countries             |      |      |     
|                                    |      |      |     
|                                    |      |      | $   
|                                    |      |      |     
|Assets:                             |      |     
|United States                       |      |      | $   
|Ireland                             |      |      |     
|Other foreign countries             |      |      |     
|                                    |      |      |     
|                                    |      |      | $   
|                                    |      |      |     

# Unaudited Quarterly
Financial Information

The following table presents
financial information by quarter for the years 2005 and 2004.

|                                             
|---------------------------------------------
|(Dollars in thousands,
except per share data)
|Continuing Operations:                       
|Revenue                                      
|Gross earnings                               
|Earnings from                                
|continuing operations                        
|Discontinued Operations:                     
|Earnings (loss) from                         
|discontinued                                 
|operations, net of                           
|income taxes                                 
|Earnings from gain on                        
|sale of Healthcare                           
|segment, net of income                       
|taxes                                        
|                                             
|Net earnings                                 
|                                             
|Basic earnings per share                     
|Earnings from                                
|continuing operations                        
|Earnings (loss) from                         
|discontinued operations                      
|Earnings from gain on                        
|sale of Healthcare                           
|segment                                      
|                                             
|Total                                        
|                                             
|Diluted earnings per                         
|share                                        
|Earnings from                                
|continuing operations                        
|Earnings (loss) from                         
|discontinued operations                      
|Earnings from gain on                        
|sale of Healthcare                           
|segment                                      
|                                             
|Total                                        
|                                             

44

---

# Item 9.   Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure

None.

# Item 9A. Controls and
Procedures

# Evaluation of Disclosure
Controls and Procedures

The Corporations management,
with the participation of the Corporations Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the Corporations disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the
end of the period covered by this report. Based on such evaluation, the Corporations
Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of
such period, the Corporations disclosure controls and procedures were effective in
recording, processing, summarizing and reporting, on a timely basis, information required
to be disclosed by the Corporation in the reports that it files or submits under the
Exchange Act.

# Managements Report
on Internal Control over Financial Reporting

The Corporations management is
responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934.  The Corporations internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles.

Because of inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness of the internal control over financial
reporting to future periods are subject to risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

The Corporations management
assessed the effectiveness of the Corporations internal control over financial
reporting as of December 31, 2005 using criteria set forth in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.  Based on this assessment, the Corporations management believes
that, as of December 31, 2005, the Corporations internal control over financial
reporting was effective based on those criteria.

The Corporations independent
registered public accounting firm, Ernst & Young LLP, has issued an attestation
report on managements assessment of the Corporations internal control over
financial reporting. That attestation report is included herein.

# Report of Independent
Registered Public Accounting Firm

We have audited managements
assessment, included in the accompanying Managements Report on Internal Control Over
Financial Reporting, that Banta Corporation maintained effective internal control over
financial reporting as of December 31, 2005, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (the COSO criteria). Banta Corporations management is
responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting. Our
responsibility is to express an opinion on managements assessment and an opinion on
the effectiveness of the companys internal control over financial reporting based on
our audit.

We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating managements assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

45

---

A companys internal control
over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material
effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

In our opinion, managements
assessment that Banta Corporation maintained effective internal control over financial
reporting as of December 31, 2005, is fairly stated, in all material respects, based on
the COSO criteria. Also, in our opinion, Banta Corporation maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2005,
based on the COSO criteria.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Banta Corporation as of December 31, 2005 and January 1,
2005, and the related consolidated statements of earnings, shareholders investment,
and cash flows for each of the three years in the period ended December 31, 2005 and our
report dated February 6, 2006 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLPMilwaukee,
WisconsinFebruary 6, 2006

# Changes in Internal
Control over Financial Reporting

There have not been any changes in
the Corporations internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal period to which
this report relates that have materially affected, or are reasonably likely to materially
affect, the Corporations internal control over financial reporting.

# Item 9B. Other
Information

None.

# PART III

# Item 10. Directors and
Executive Officers of the Registrant

The information under the captions
Election of Directors, Board of Directors  Committees and
Other Matters-Section 16(a) Beneficial Ownership Reporting Compliance to be
contained in the Corporations definitive proxy statement for the annual meeting of
shareholders to be held on April 25, 2006, when such proxy statement is filed with the
Securities Exchange Commission, will be incorporated herein by reference in response to a
portion of this Item. Information with respect to our executive officers appears in Part 1
of this Annual Report on Form 10-K.

The Corporation has adopted a Code of
Ethics for Senior Financial Officers that covers the principal executive officer, the
principal financial officer and the principal accounting officer or controller. This Code
is posted on the Corporations website at http://www.banta.com. If any substantive
amendments are made to the Code of Ethics for Senior Financial Officers or the Board of
Directors grants any waiver from a provision of the Code to any officer(s) of the
Corporation, then the Corporation will disclose the nature of such amendment or waiver on
its website at the above address.

46

---

# Item 11. Executive
Compensation

The information under the captions
Board of Directors and Executive Compensation (other than the
information under the subheading Committee Report on Executive Compensation)
to be contained in the Corporations definitive proxy statement for the annual
meeting of shareholders to be held on April 25, 2006, when such proxy statement is filed
with the Securities and Exchange Commission, will be incorporated herein by reference in
response to this Item.

# Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information under the caption
Stock Ownership to be contained in the Corporations definitive proxy
statement for the annual meeting of shareholders to be held on April 25, 2006, when such
proxy statement is filed with the Securities and Exchange Commission, will be incorporated
herein by reference in response to this Item.

# Item 13. Certain
Relationships and Related Transactions

The information under the caption Other
Matters  Related Party Transaction to be contained in the Corporations
definitive proxy statement for the annual meeting of shareholders to be held on April 25,
2006, when such proxy statement is filed with the Securities and Exchange Commission, will
be incorporated herein by reference in response to this Item.

# Item 14. Principal
Accountant Fees and Services

The information under the caption
Ratification of Ernst & Young LLP as Independent Registered Public Accounting
Firm of the Company for 2006  Independent Auditors Fees to be contained
in the Corporations definitive proxy statement for the annual meeting of
shareholders to be held on April 25, 2006, when such proxy statement is filed with the
Securities and Exchange Commission, will be incorporated herein by reference in response
to this item.

# PART IV

# Item 15. Exhibits,
Financial Statement Schedules and Reports on Form 8-K

|(a) | 1. | Financial Statements
|--- | -- | --------------------

| | The
financial statements and report of independent registered public accounting firm are contained in Item 8 of this annual report.
| | -----------------------------------------------------------------------------------------------------------------------------------

| | 2. | Financial
Statement Schedule
| | -- | ----------------------------

| | The
financial statement schedule included on page 53 is filed as part of this annual report.
| | --------------------------------------------------------------------------------------------

| | Certain
schedules have been omitted because the required information is included in the
consolidated financial statements or notes thereto or because they are not applicable or
not required.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Exhibits
| | -- | --------

| | 2. | (a) | Asset Purchase Agreement among Banta Corporation, Banta Healthcare Group           Ltd.
and BHG Acquisition LLC, dated as of February 12, 2005 (1)
| | -- | --- | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | (a) | Articles of Incorporation, as amended (2)
| | -- | --- | -----------------------------------------

| | (b) | Bylaws,
as amended (3)
| | --- | ----------------------

| | 4. | (a) | Note Purchase Agreement dated June 24, 1988 (4)
| | -- | --- | -----------------------------------------------

| | (b) | Rights
Agreement dated November 5, 2001 (5)
| | --- | -------------------------------------------

| | (c) | Amendment
to Rights Agreement dated September 30, 2002 (6)
| | --- | ----------------------------------------------------------

| | (d) | Note
Purchase and Private Shelf Agreement dated May 12, 1994 (7)
| | --- | ----------------------------------------------------------------

47

---

| | (e) | Note
Purchase and Medium-term Note Agreement Dated November 2, 1995 (8)
| | --- | -----------------------------------------------------------------------

| | (f) | Credit
Agreement dated March 10, 2000 (9)
| | --- | -----------------------------------------

| | (g) | Amendment
to Purchase and Private Shelf Agreement dated May 12, 1994 (10)
| | --- | -------------------------------------------------------------------------

| | Note:
The registrant has outstanding certain issues of industrial revenue bonds, none of which
authorize the issuance of securities in an amount exceeding 10% of the registrants
consolidated assets. The registrant hereby agrees to furnish to the Commission upon
request a copy of any instrument with respect to long-term debt under which the total
amount of securities authorized does not exceed 10% of the registrants consolidated
assets.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | *10. | (a) | Supplemental Executive Retirement Plan, as amended and restated (11)
| | ---- | --- | --------------------------------------------------------------------

| | (b) | Agreement
with Ronald D. Kneezel (12)
| | --- | -------------------------------------

| | (c) | Form
of Agreement with Stephanie A. Streeter, Geoffrey J. Hibner, and Michael B.
               Allen (13)
| | --- | ----------------------------------------------------------------------------------------------------------

| | (d) | 1985
Deferred Compensation Plan for Key Employees, as amended and restated (14)
| | --- | -------------------------------------------------------------------------------

| | (e) | 1988
Deferred Compensation Plan for Key Employees, as amended and restated (15)
| | --- | -------------------------------------------------------------------------------

| | (f) | Basic
Form of Deferred Compensation Agreements under (pre-January 1994) 1985 and
               1988 Deferred Compensation Plans for Key Employees (16)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g) | Basic
Form of Deferred Compensation under (post-December 1993) 1988 Deferred
               Compensation plan for Key Employees (17)
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

| | (h) | Revised
Form of Indemnity Agreements with Directors and Certain Officers (18)
| | --- | -----------------------------------------------------------------------------

| | (i) | Executive
Trust Agreement (19)
| | --- | ------------------------------

| | (j) | Amendment
to Executive Trust Agreement (20)
| | --- | -------------------------------------------

| | (k) | 1991
Stock Option Plan, as amended (21)
| | --- | ---------------------------------------

| | (l) | Description
of Supplemental Long-term Disability Plan (22)
| | --- | ----------------------------------------------------------

| | (m) | Equity
Incentive Plan, as amended (23)
| | --- | --------------------------------------

| | (n) | Agreement
with Stephanie A. Streeter (24)
| | --- | -----------------------------------------

| | (o) | Amendment
to the Deferred Compensation Plans for Key Employees (25)
| | --- | -------------------------------------------------------------------

| | (p) | Executive
Deferred Compensation Plan B, as amended and restated (26)
| | --- | ----------------------------------------------------------------------

| | (q) | Long-Term
Incentive Cash Compensation Plan, as amended and restated (27)
| | --- | ------------------------------------------------------------------------

| | (r) | Short-Term
Incentive Plan, as amended and restated (28)
| | --- | -------------------------------------------------------

| | (s) | Deferred
Compensation Plan for Certain Directors, as amended and restated (29)
| | --- | ------------------------------------------------------------------------------

| | (t) | Agreement
with Geoffrey J. Hibner (30)
| | --- | --------------------------------------

| | (u) | Form
of Nonstatutory Stock Option Agreement for grants prior to July 25, 2005
               (31)
| | --- | -------------------------------------------------------------------------------------------------

| | (v) | Form
of Restricted Stock Award Agreement for grants prior to July 25, 2005 (32)
| | --- | -------------------------------------------------------------------------------

| | (w) | Executive
Deferred Compensation Plan C (33)
| | --- | ---------------------------------------------

| | (x) | Agreement
with Michael B. Allen (34)
| | --- | ------------------------------------

| | (y) | 2005
Equity Incentive Plan (35)
| | --- | -------------------------------

| | (z) | Form
of Nonstatutory Stock Option Agreement for grants after July 25, 2005 (36)
| | --- | -------------------------------------------------------------------------------

| | (aa) | Form
of Stock Option Agreement for Non-Employee Directors (37)
| | ---- | --------------------------------------------------------------

| | (bb) | Form
of Restricted Stock Award Agreement for grants after July 25, 2005 (38)
| | ---- | ----------------------------------------------------------------------------

| | 21. | List
of Subsidiaries.
| | --- | ---------------------

| | 23. | Consent
of Independent Registered Public Accounting Firm
| | --- | --------------------------------------------------------

| | 31.1 | Certification
by the Chief Executive Officer pursuant to Rule 13a-14(a).
| | ---- | ------------------------------------------------------------------------

| | 31.2 | Certification
by the Chief Financial Officer pursuant to Rule 13a-14(a).
| | ---- | ------------------------------------------------------------------------

| | 32 | Written
Statement of Chief Executive Officer and Chief Financial Officer pursuant to Section 906
of the Sarbanes                      Oxley Act of 2002
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | 99 | Proxy
Statement for the 2006 Annual Meeting of Shareholders, to be filed within 120 days of
December 31, 2005. (To be filed with the Securities and Exchange Commission under
Regulation 14A within 120 days after December 31, 2005; except to the extent specifically
incorporated by reference, the Proxy Statement for the 2006 Annual Meeting of
Shareholders shall not be deemed to be filed with the Securities and Exchange Commission
as part of this Annual Report on Form 10-K)
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

48

---

| | * | Exhibits
10(a) through 10(bb) are management contracts or compensatory plans or arrangements.
| | - | ---------------------------------------------------------------------------------------------

| | All
documents incorporated herein by reference are filed with the Commission under File No.
1-14637.
| | ----------------------------------------------------------------------------------------------------

| | 1) | Exhibit
No. 10.1 to Form 10-Q for the quarter ended April 2, 2005 is hereby
          incorporated herein by reference.
| | -- | -----------------------------------------------------------------------------------------------------------------------

| | 2) | Exhibit
No. 19(b) to Form 10-Q for the quarter ended April 3, 1993 is hereby
          incorporated herein by reference.
| | -- | ------------------------------------------------------------------------------------------------------------------------

| | 3) | Exhibit
No. 3.2 to Form 8-K dated December 22, 2004 is hereby incorporated           herein by
reference.
| | -- | ---------------------------------------------------------------------------------------------------------

| | 4) | Exhibit
No. 4(a) to Form 10-Q for the quarter ended July 2, 1988 is hereby           incorporated
herein by reference.
| | -- | ----------------------------------------------------------------------------------------------------------------------

| | 5) | Exhibit
No. 4.1 to the Form 8-A Registration Statement dated November 5, 2001 is           hereby
incorporated herein by reference.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------

| | 6) | Exhibit
No. 4.1 to the Form 10-Q for the quarter ended September 28, 2002 is           hereby
incorporated herein by reference.
| | -- | -------------------------------------------------------------------------------------------------------------------------------

| | 7) | Exhibit
No. 4(a) to Form 10-Q for the quarter ended July 2, 1994 is hereby           incorporated
herein by reference.
| | -- | ----------------------------------------------------------------------------------------------------------------------

| | 8) | Exhibit
No. 4(a) to Form 10-Q for the quarter ended September 30, 1995 is hereby
          incorporated herein by reference.
| | -- | ----------------------------------------------------------------------------------------------------------------------------

| | 9) | Exhibit
No. 4(a) to Form 10-Q for the quarter ended April 1, 2000 is hereby
          incorporated herein by reference.
| | -- | -----------------------------------------------------------------------------------------------------------------------

| | 10) | Exhibit
No. 4.1 to Form 10-Q for the quarter ended July 1, 2000 is hereby           incorporated
herein by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | 11) | Exhibit
No. 10.3 to Form 10-Q for the quarter ended October 2, 2004 is hereby
          incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | 12) | Exhibit
No. 10(d) to Form 10-K for the year ended January 1, 2000 is hereby
          incorporated herein by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | 13) | Exhibit
No. 10(e) to Form 10-K for the year ended January 1, 2000 is hereby
          incorporated herein by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | 14) | Exhibit
No. 10(j) to Form 10-K for the year ended December 30, 1989 is hereby
          incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | 15) | Exhibit
No. 10(a) to Form 10-Q for the quarter ended April 2, 1994 is hereby
          incorporated herein by reference.
| | --- | ------------------------------------------------------------------------------------------------------------------------

| | 16) | Exhibit
No. 10(l) to Form 10-K for the year ended December 30, 1989 is hereby
          incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | 17) | Exhibit
No. 10(b) to Form 10-Q for the quarter ended April 2, 1994 is hereby
          incorporated herein by reference.
| | --- | ------------------------------------------------------------------------------------------------------------------------

| | 18) | Exhibit
No. 10(a) to Form 10-Q for the quarter ended March 28, 1992 is hereby
          incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | 19) | Exhibit
No. 10(r) to Form 10-K for the year ended December 30, 1989 is hereby
          incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | 20) | Exhibit
No. 10(s) to Form 10-K for the year ended January 1, 1994 is hereby
          incorporated herein by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | 21) | Exhibit
No. 10(t) to Form 10-K for the year ended December 28, 1996 is hereby
          incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | 22) | Exhibit
No. 10(a) to Form 10-Q for the quarter ended October 2, 1993 is hereby
          incorporated herein by reference.
| | --- | --------------------------------------------------------------------------------------------------------------------------

| | 23) | Exhibit
No. 10.1 to Form 10-Q for the quarter ended June 30, 2001 is hereby
          incorporated herein by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | 24) | Exhibit
No. 10(w) to Form 10-K for the year ended December 30, 2000 is hereby
          incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | 25) | Exhibit
No. 10 (x) to Form 10-K for the year ended December 30, 2000 is hereby
          incorporated herein by reference.
| | --- | --------------------------------------------------------------------------------------------------------------------------

49

---

| | 26) | Exhibit
No. 10.2 to Form 10-Q for the quarter ended July 2, 2004 is hereby           incorporated
herein by reference.
| | --- | ----------------------------------------------------------------------------------------------------------------------

| | 27) | Exhibit
No. 10.2 to Form 10-Q for the quarter ended October 2, 2004 is hereby
          incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | 28) | Exhibit
No. 10 (s) to Form 10-K for the year ended January 3, 2004 is hereby
          incorporated herein by reference.
| | --- | ------------------------------------------------------------------------------------------------------------------------

| | 29) | Exhibit
No. 10 (t) to Form 10-K for the year ended January 3, 2004 is hereby
          incorporated herein by reference.
| | --- | ------------------------------------------------------------------------------------------------------------------------

| | 30) | Exhibit
No. 10 (u) to Form 10-K for the year ended January 3, 2004 is hereby
          incorporated herein by reference.
| | --- | ------------------------------------------------------------------------------------------------------------------------

| | 31) | Exhibit
No. 10 (v) to Form 10-Q for the quarter ended October 2, 2004 is hereby
          incorporated herein by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------------------

| | 32) | Exhibit
No. 10.1 to Form 10-Q for the quarter ended July 3, 2004 is hereby           incorporated
herein by reference.
| | --- | ----------------------------------------------------------------------------------------------------------------------

| | 33) | Exhibit
No. 10 (w) to Form 10-K for the year ended January 1, 2005 is hereby
          incorporated by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------

| | 34) | Exhibit
No. 10 (x) to Form 10-K for the year ended January 1, 2005 is hereby
          incorporated by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------

| | 35) | Exhibit
No. 10.1 to Form 10-Q for the quarter ended July 2, 2005 is hereby           incorporated
by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------

| | 36) | Exhibit
No. 10.2 to Form 10-Q for the quarter ended July 2, 2005 is hereby           incorporated
by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------

| | 37) | Exhibit
No. 10.3 to Form 10-Q for the quarter ended July 2, 2005 is hereby           incorporated
by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------

| | 38) | Exhibit
No. 10.4 to Form 10-Q for the quarter ended July 2, 2005 is hereby           incorporated
by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------

All documents incorporated herein by
reference are filed with the Commission under File No. 1-14637.

|(b) | The
exhibits required to be filed are identified in Item 15(a) 3. above.
|--- | ------------------------------------------------------------------------

|(c) | None
|--- | ----

50

---

# SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                         | BANTA CORPORATION                                          
|------------------------ | -----------------------------------------------------------
|DATE:  February 24, 2006 | BY:  /s/ Stephanie A. Streeter                             
|                         | Stephanie A. Streeter, Chairman of the Board, President and
|                         | Chief Executive Officer                                    

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

|/s/ Stephanie A. Streeter                     | February 24, 2006
|--------------------------------------------- | -----------------
|Stephanie A. Streeter, Chairman of the Board,
|President, Chief Executive Officer,           |                  
|and Director                                 
|/s/ Geoffrey J. Hibner                        | February 24, 2006
|Geoffrey J. Hibner, Chief Financial Officer  
|(Principal Financial Officer)                
|/s/ Jameson Adkins Baxter                     | February 24, 2006
|Jameson Adkins Baxter, Director              
|/s/ John F. Bergstrom                         | February 24, 2006
|John F. Bergstrom, Director                  
|/s/ Henry T. DeNero                           | February 24, 2006
|Henry T. DeNero, Director                    
|/s/ David T. Gibbons                          | February 24, 2006
|David T. Gibbons, Director                   
|/s/ Paul C. Reyelts                           | February 24, 2006
|Paul C. Reyelts, Director                    
|/s/ Ray C. Richelsen                          | February 24, 2006
|Ray C. Richelsen, Director                   
|/s/ Michael J. Winkler                        | February 24, 2006
|Michael J. Winkler, Director                 

51

---

# Banta Corporation File
No. 1-14637Form 10-K, Year Ended December 31, 2005

EXHIBIT INDEX

_________________

Exhibit Number

|21. | List
of Subsidiaries
|--- | --------------------

|23. | Consent
of Independent Registered Public Accounting Firm
|--- | --------------------------------------------------------

|31.1 | Certification
by the Chief Executive Officer pursuant to Rule 13a-14(a).
|---- | ------------------------------------------------------------------------

|31.2 | Certification
by the Chief Financial Officer pursuant to Rule 13a-14(a).
|---- | ------------------------------------------------------------------------

|32 | Written
Statement of the Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes Oxley          Act of 2002.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------

|99 | Proxy
Statement for the 2006 Annual Meeting of Shareholders, to be filed within 120 days of
December 31, 2005. (To be filed with the Securities and Exchange Commission under
Regulation 14A within 120 days after December 31, 2005; except to the extent specifically
incorporated by reference, the Proxy Statement for the 2006 Annual Meeting of
Shareholders shall not be deemed to be filed with the Securities and Exchange Commission
as part of this Annual Report on Form 10-K)
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

52

---

# BANTA
CORPORATIONSCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS  YEARS ENDED December 31,
2005, January 1, 2005, and January 3, 2004

Allowance for
Uncollectible Accounts: (Dollars in thousands)

|    
|----
|2005
|    
|2004
|    
|2003
|    

53