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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2004
- -----------------------------------------------------------------
[ ]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 1-5807
-------------------------------------------
ENNIS, INC.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 75-0256410
- -----------------------------------------------------------------
(State or other Jurisdiction of (I. R. S. Employer
Incorporation or organization)
Identification No.)
2441 Presidential Pkwy, Midlothian, TX 76065
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(972) 775-9801
- -----------------------------------------------------------------
(Registrant's telephone number, including area code)
- -----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
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.
Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).
Yes X No
--- ---
The number of shares of the registrant's Common Stock, par value
$2.50, outstanding at January 7, 2005 was 25,412,999.
ENNIS, INC.
INDEX
Part I. Financial information - unaudited
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets --
November 30, 2004 and February 29, 2004 2 - 3
Condensed Consolidated Statements of
Earnings --
Three and Nine Months Ended
November 30, 2004 and 2003 4
Condensed Consolidated Statements of Cash
Flows --
Three and Nine Months Ended
November 30, 2004 and 2003 5
Notes to Condensed Consolidated Financial
Statements 6 - 12
Item 2 - Management's Discussion and
Analysis of Financial Condition
and Results of Operations 13 - 20
Item 3 - Quantitative and Qualitative
Disclosures About Market Risk 20
Item 4 - Controls and Procedures 21
Part II. Other Information
Item 6 - Exhibits 21
Signatures 22
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ENNIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
November 30, February 29,
2004 2004
---- ----
(unaudited)
Assets
------
Current assets:
Cash and cash equivalents $ 12,023 $ 15,067
Accounts receivable, net 49,487 29,800
Prepaid expenses 6,055 2,022
Inventories, net 79,831 13,721
Other current assets 2,826 2,995
------- -------
Total current assets 150,222 63,605
------- -------
Property, plant and equipment, net 71,942 46,480
Goodwill, net 230,795 34,420
Other assets 28,963 9,538
------- -------
$481,922 $154,043
======= =======
(Continued)
2
ENNIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in Thousands)
November 30, February 29,
2004 2004
---- ----
(unaudited)
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 36,843 $ 5,804
Accrued expenses:
Employee compensation and
benefits 16,725 10,237
Taxes other than income 2,502 1,427
Other 17,461 1,597
Current installments of long-
term debt 19,073 6,335
------- -------
Total current
liabilities 92,604 25,400
------- -------
Long-term debt, less current
installments 110,710 7,800
Deferred credits, principally income
taxes 9,906 10,261
Shareholders' equity:
Series A junior participating
preferred stock of $10 par value,
Authorized 1,000,000 shares;
None issued -- --
Common stock of $2.50 par value
Authorized 40,000,000 shares;
Issued 30,053,443 shares
at November 30, 2004
and 21,249,860 shares
at February 29, 2004 75,134 53,125
Additional paid in capital 123,640 126
Retained earnings 153,750 145,653
Accumulated other comprehensive
loss (11) (114)
------- -------
352,513 198,790
Treasury stock:
Cost of 4,640,744 shares
at November 30, 2004
and 4,856,626 shares at
February 29, 2004 (83,811) (88,208)
------- -------
Total shareholders'
equity 268,702 110,582
------- -------
$481,922 $154,043
======= =======
See accompanying notes to condensed consolidated financial
statements.
3
ENNIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in Thousands Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
November 30, November 30,
2004 2003 2004 2003
---- ---- ---- ----
Net sales $91,750 $66,398 $230,860 $196,275
Costs and expenses:
Cost of sales 68,876 48,824 171,574 144,644
Selling, general
and administrative 12,907 9,949 33,106 29,470
------ ------ ------- -------
81,783 58,773 204,680 174,114
------ ------ ------- -------
Earnings from
operations 9,967 7,625 26,180 22,161
------ ------ ------- -------
Other income
(expense):
Investment income 82 6 224 33
Interest expense (288) (183) (589) (662)
Other income
(expense), net 108 (115) 106 (326)
------ ------ ------- -------
(98) (292) (259) (955)
------ ------ ------- -------
Earnings before
income taxes 9,869 7,333 25,921 21,206
Provision for income
taxes 3,765 2,858 9,865 8,130
------ ------ ------- -------
Net earnings
$ 6,104 $ 4,475 $ 16,056 $ 13,076
------ ------ ------- -------
Weighted average
number of common
shares outstanding
- basic 16,959,463 16,363,391 16,599,542 16,347,768
Plus incremental
shares from
assumed exercise
of stock options 367,117 258,853 324,578 230,159
--------- ---------- ---------- ----------
Weighted average
number of common
shares outstanding
- diluted 17,326,580 16,622,244 16,924,120 16,577,927
========== ========== ========== ==========
Per share amounts:
Net earnings -
basic $.36 $.27 $.97 $.80
==== ==== ==== ====
Net earnings -
diluted $.35 $.27 $.95 $.79
==== ==== ==== ====
Cash dividends per
share $.155 $.155 $.465 $.465
===== ===== ===== =====
See accompanying notes to condensed consolidated financial
statements.
4
ENNIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
November 30,
2004 2003
---- ----
Cash flows from operating activities:
Net earnings $16,056 $13,076
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 6,655 6,975
Amortization of trademark 111 99
Gain on the sale of equipment (239) --
Bad debt expense 657 668
Changes in operating assets and
liabilities (net of the effects
of acquisitions):
Factored receivables, net (212) --
Accounts receivable, net (4,809) 1,376
Prepaid expenses (309) (12)
Inventories (3,951) (432)
Other current assets 106 628
Accounts payable and accrued
expenses 4,424 4,335
Other assets 1,383 (1,004)
------- -------
Net cash provided by
operating activities 19,872 25,709
------- -------
Cash flows from investing activities:
Capital expenditures (4,581) (3,040)
Purchase of businesses, net of cash
acquired of $4,175 (114,620) --
Proceeds from disposal of property 400 110
Other -- (28)
------- -------
Net cash used in investing
activities (118,801) (2,958)
------- -------
Cash flows from financing activities:
Proceeds from debt issued to finance
acquisitions 109,500 --
Repayment of debt related to
acquisitions (6,353) (5,538)
Dividends (7,634) (7,605)
Issuance of treasury stock, net
215,882 shares and 30,650 shares 372 343
------- -------
Net cash provided by (used
in) financing activities 95,885 (12,800)
------- -------
Net change in cash and cash equivalents (3,044) 9,951
Cash and cash equivalents at beginning
of period 15,067 13,860
------- -------
Cash and cash equivalents at end of
period $12,023 $23,811
====== ======
See accompanying notes to condensed consolidated financial
statements.
5
ENNIS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
These unaudited condensed consolidated financial statements
of Ennis, Inc. and its subsidiaries (collectively the
"Company" or "Ennis"), for the quarter ended November 30,
2004 have been prepared in accordance with generally accepted
accounting principles for interim financial reporting.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting
principles for complete financial statements and should be
read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Form
10-K for the year ended February 29, 2004, from which the
accompanying condensed consolidated balance sheet at February
29, 2004 was derived. All significant intercompany balances
and transactions have been eliminated in consolidation. In
the opinion of management, all adjustments considered
necessary for a fair presentation of the interim financial
information have been included. In preparing the financial
statements, the Company is required to make estimates and
assumptions that affect the disclosure and reported amounts
of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. The Company evaluates these
estimates and judgments on an ongoing basis, including those
related to bad debts, inventory valuations, property, plant
and equipment, intangible assets and income taxes. The
Company bases estimates and judgments on historical
experience and on various other factors that are believed to
be reasonable under the circumstances. The results of
operations for any interim period are not necessarily
indicative of the results of operations for a full year.
2. Stock Option Plans and Stock Based Compensation
-----------------------------------------------
The Company has stock options granted to key executives and
managerial employees and non-employee directors. At November
30, 2004, the Company has two incentive stock option plans:
the 1998 Option and Restricted Stock Plan amended and
restated as of June 17, 2004 and the 1991 Incentive Stock
Option Plan. The Company has reserved 1,253,123 shares of
unissued common stock under the stock option plans for
issuance to officers and directors, and supervisory employees
of the Company and its subsidiaries. The exercise price of
each option granted equals the quoted market price of the
Company's common stock on the date of grant, and an option's
maximum term is ten years. Options may be granted at
different times during the year and vest over a five-year
period.
The Company accounts for employee and director stock-based
compensation arrangements in accordance with the provisions
of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB No. 25"), and related
interpretations, and complies with the disclosure provisions
of Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation" and SFAS No.
148, "Accounting for Stock-Based Compensation and
Disclosure."
The following table represents the effect on net earnings and
earnings per share as if the Company had applied the fair
value based method and recognition provisions of SFAS No.
123, "Accounting for Stock-Based Compensation," to stock-
based employee compensation (in thousands, except per share
amounts):
6
2. Stock Option Plans and Stock Based Compensation (Continued)
-----------------------------------------------------------
Three Months Nine Months
Ended November Ended November
30, 30,
(in thousands) 2004 2003 2004 2003
---- ---- ---- ----
Net earnings:
As reported $6,104 $4,475 $16,056 $13,076
Deduct: Stock-based
Employee compensation
expense not included
in reported income,
net of related tax 11 7 32 34
effects
----- ----- ------ ------
Pro forma $6,093 $4,468 $16,024 $13,042
===== ===== ====== ======
Net earnings per
share:
As reported - basic $.36 $.27 $.97 $.80
Pro forma - basic .36 .27 .97 .80
As reported - diluted .35 .27 .95 .79
Pro forma - diluted .35 .27 .95 .79
As required, the pro forma disclosures above include options
granted since March 1, 1996. Consequently, the effects of
applying SFAS 123 for providing pro forma disclosures may not
be representative of the effects on reported net income for
future years until all options outstanding are included in
the pro forma disclosures. For purposes of pro forma
disclosures, the estimated fair value of stock-based
compensation plans and other options is amortized to expense
over the vesting period.
In December 2002, the Financial Accounting Standards Board
("FASB") issued SFAS No. 148, "Accounting for Stock-Based
Compensation and Disclosure." SFAS No. 148 amends the
transition and disclosure provisions of SFAS No. 123. If the
Company had adopted the prospective transition method
prescribed by SFAS 148 in the first quarter of 2004,
compensation expense of $17,000 and $51,000 would have been
recorded for the three and nine months ended November 30,
2004, respectively. After related income tax effects, this
would have reduced net earnings by $11,000 and $32,000 for
the three and nine months ended November 30, 2004,
respectively. There would have been no effect to earnings
per share.
As of November 30, 2004, the Company has issued 700,325 stock
options grantedunderunder its incentive stock option plans.
For the three and nine months ended November 30, 2004, there
were no anti-dilutive stock options. For the three and nine
month periods ended November 30, 2003, there were 10,000 and
42,250 stock options not included in the diluted earnings per
share computation because their exercise price exceeded the
average fair market value of the Company's stock for the
period.
7
On December 16, 2004, the FASB issued SFAS No. 123
(revised 2004), "Share-Based Payment" ("SFAS No. 123(R)").
SFAS No. 123(R) will require companies to measure all
employee stock-based compensation awards using a fair value
method and record such expense in its consolidated financial
statements. In addition, the adoption of SFAS No. 123(R)
requires additional accounting and disclosure related to the
income tax and cash flow effects resulting from share-based
payment arrangements. SFAS No. 123(R) is effective beginning
as of the first interim or annual reporting period beginning
after June 15, 2005. The Company is in the process of
determining the impact of the requirements of SFAS No. 123(R)
which could have a material impact on its consolidated
financial statements.
3. Employee Benefit Plans
----------------------
The following table provides the components of net periodic
benefit cost for the three and nine months ended November 30,
2004 and 2003 (in thousands):
Three Months Nine Months
Ended November Ended November
30, 30,
2004 2003 2004 2003
---- ---- ---- ----
Components of net
periodic benefit
cost
Service cost $367 $334 $1,101 $1,002
Interest cost 604 589 1,812 1,767
Expected return
on assets (666) (548) (1,998) (1,644)
Amortization of:
Prior service
cost (36) (36) (108) (108)
Unrecognized net
loss 267 262 801 786
----- ----- ----- -----
Net periodic
benefit cost $536 $601 $1,608 $1,803
===== ===== ====== ======
For the current fiscal year ending February 28, 2005, there
is not a minimum contribution requirement and no pension
payments have been made; however, the Company expects to
contribute $2,500,000.
4. Inventories
-----------
The Company uses the Last-In, First-Out ("LIFO") method of
pricing the raw material content of most of its business
forms inventories, and the First-In, First-Out ("FIFO")
method is used to value the remainder. The following table
summarizes the components of inventories at the different
stages of production (in thousands of dollars):
November February
30, 29,
2004 2004
---- ----
Raw material $ 36,887 $ 6,911
Work-in-process 11,140 1,393
Finished goods 31,804 5,417
------ -----
$79,831 $13,721
====== ======
8
5. Accumulated other comprehensive income
--------------------------------------
Accumulated other comprehensive income consists of the
unrealized portion of changes in the fair value of the
Company's cash flow hedge. Comprehensive income was
approximately $16,158,000 for the nine months ended November
30, 2004 and $13,202,000 for the nine months ended November
30, 2003. Amounts charged directly to Shareholders' Equity
related to the Company's interest rate swap are included in
"other comprehensive income."
6. Acquisitions
------------
Ennis completed its merger with Alstyle Apparel, Inc.
("Alstyle") November 19, 2004. Alstyle shareholders received
8,803,583 shares valued at approximately $145,523,000 and
$2,889,000 cash. Debt of approximately $97,891,000 was
assumed. Alstyle produces and sells activewear apparel with 6
facilities in California and Mexico and 7 distribution
centers located throughout the U.S. and Canada. Alstyle was
acquired to supplement and broaden the scope of products
offered by Ennis. The purchase price has been allocated to
assets acquired and liabilities assumed based on fair market
value at the date of acquisition. The Company has
temporarily recorded the excess purchase price as goodwill as
ongoing efforts are completed to determine the allocation to
the identifiable intangible assets, if any. Alstyle operates
as a separate segment. The purchase price of Alstyle is
calculated as follows (in thousands of dollars):
Ennis common stock
issued 8,803,583 shares $145,523
Cash 2,889
Alstyle debt assumed 97,891
-------
Purchase price of Alstyle $246,303
=======
On November 1, 2004, the Company acquired 100% of the stock
of Royal Business Forms, Inc., ("Royal") a privately held
company headquartered in Arlington, Texas for $3,700,000 in
Ennis treasury stock (approximately 178,000 shares). Royal
has been in existence and operating in Arlington, Texas since
1959 and has customers throughout the United States. The
acquisition of Royal continues the Ennis strategy of growth
through related manufactured products for Ennis' existing
customer base. The acquisition will add additional short-run
print products and solutions and financial documents sold
through the indirect sales (distributorship) marketplace.
The Company has temporarily recorded the excess purchase
price as goodwill as ongoing efforts are completed to
determine the allocation to the identifiable intangible
assets, if any.
Effective June 30, 2004, the Company completed its
acquisition of all of the outstanding stock of Crabar/GBF for
approximately $18,000,000 with consideration in the form of
debt assumed and cash million in cash less debt assumed. The
primary reason for the acquisition was to increase Ennis'
market share. However, Crabar/GBF will add high-quality long
and medium run print production, along with pressure
sensitive label and form-label combinations to Ennis' current
line of medium and short run print products and solutions.
The transaction was financed with $11,000,000 in in bank
loansd with the balance being provided by internal cash
resources. The Company has temporarily recorded the excess
purchase price as goodwill as ongoing efforts are completed
to determine the allocation to the identifiable intangible
assets, if any.
9
The results of operations for Alstyle, Royal and Crabar/GBF
are included in the Company's condensed consolidated
financial statements from the dates of acquisition. The
following table represents certain operating information on a
pro forma basis as though all three companies had been
acquired as of March 1, 2003, after the estimated impact of
adjustments such as amortization of intangible assets,
interest expense, interest income and related tax effects (in
thousands except per share amounts):
For the Three Months Ended
November 30, 2003 2004
---- ----
Pro forma net sales $136,038 $138,325
Pro forma net earnings 5,191 7,265
Pro forma earnings per share -
diluted .21 .28
For the Nine Months Ended
November 30, 2003 2004
---- ----
Pro forma net sales $412,027 $433,207
Pro forma net earnings 19,295 24,776
Pro forma earnings per share -
diluted .77 .97
The pro forma results are not necessarily indicative of what
would have occurred if the acquisitions had been in effect
for the period presented.
7. Segment Data
-------------
The Company operates in four business segments. The segment
Forms Solutions Group is primarily in the business of
manufacturing and selling business forms and other printed
business products primarily to distributors located in the
United States. The segment Promotional Solutions Group is
primarily engaged in the business of design, manufacturing
and distribution of printed and electronic media,
presentation products, flexoraphic printing, advertising
specialties and Post-it (registered trademark) Notes. The
segment Financial Solutions Group designs, manufactures and
markets printed forms and specializes in internal bank forms,
secure and negotiable documents and custom products. The
segment Alstyle Apparel Group, which consists of the newly
acquired Alstyle, is primarily engaged in the production and
sales of activewear including t-shirts, fleece goods, and
other wearables. Corporate information is included to
reconcile segment data to the consolidated financial
statements and includes assets and expenses related to the
Company's corporate headquarters and other administrative
costs. Segment data for the three and nine months ended
November 30, 2004 and 2003 were as follows (in thousands):
10
Forms Promotional Financial Alstyle
Solutions Solutions Solutions Apparel Consolidated
Group Group Group Group Corporate Totals
----- ----- ----- ----- --------- ------
Three months ended
November 30, 2004:
Net
sales $50,361 $24,161 $12,892 $4,336 $ -- $91,750
Depre-
ciation 854 618 450 236 139 2,297
Amorti-
zation
of
trade-
mark 33 -- -- -- -- 33
Segment
earnings
(loss)
before
income
tax 5,986 3,515 2,654 258 (2,544) 9,869
Segment
assets 100,002 42,662 33,408 297,694 8,156 481,922
Capital
expendi-
tures 256 129 228 -- 387 1,000
Three months ended
November 30, 2003:
Net
sales $35,440 $17,339 $13,619 $ -- $ -- $66,398
Depre-
ciation 799 587 739 -- 141 2,266
Amorti-
zation
of
trade-
mark 33 -- -- -- -- 33
Segment
earnings
(loss)
before
income
tax 5,057 2,190 2,099 -- (2,013) 7,333
Segment
assets 78,364 35,923 36,887 -- 4,863 156,037
Capital
expendi-
tures 223 36 176 -- 203 638
Nine months ended
November 30, 2004:
Net
sales $128,150 $62,805 $35,569 $4,336 $ -- $230,860
Depre-
ciation 2,463 1,858 1,718 236 380 6,655
Amorti-
zation
of
trade-
mark 111 -- -- -- -- 111
Segment
earnings
(loss)
before
income
tax 17,899 8,401 5,648 258 (6,285) 25,921
Segment
assets 100,002 42,662 33,408 297,694 8,156 481,922
Capital
expendi-
tures 871 841 382 -- 2,487 4,581
Nine months ended
November 30, 2003:
Net
sales $107,133 $51,406 $37,736 $ -- $ -- $196,275
Depre-
ciation 2,478 1,761 2,238 -- 498 6,975
Amorti-
zation
of
trade-
mark 99 -- -- -- -- 99
Segment
earnings
(loss)
before
income
tax 15,917 5,995 4,838 -- (5,544) 21,206
Segment
assets 78,364 35,923 36,887 -- 4,863 156,037
Capital
expendi- 1,221 471 897 -- 451 3,040
tures
11
9.Derivative Financial Instruments and Hedging Activities
-------------------------------------------------------
The Company's interest rate swaps are held for purposes other
than trading. The Company utilized swap agreements related to
its term and revolving loans to effectively fix the interest
rate for a specified principal amount of the loans. Amounts
receivable or payable under interest rate swap agreements are
recorded as adjustments to interest expense. Currently, the
one outstanding swap has been designated as a cash flow hedge
and the after-tax effect of the mark-to-market valuation that
relates to the effective amount of derivative financial
instrument is recorded as an adjustment to accumulated other
comprehensive income with the offset included in accrued
expenses.
The Company utilized a swap agreement related to the term loan
and revolving credit facility to effectively fix the interest
rate at 3.2% for a pre-set principal amount of the loans. The
pre-set principal amount of the loan covered by the current
swap agreement declines quarterly in connection with expected
principal reductions and totaled $7,500,000 at November 30,
2004. The fair value of the swap at November 30, 2004 was
approximately ($19,000) and the change in the fair value of
the loss from March 1, 2004, net of tax, has been added to
accumulated other comprehensive income.
12
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
- --------
Ennis, Inc. was organized under the laws of Texas in 1909. Ennis,
Inc. and its subsidiaries (collectively "Ennis" or the "Company")
is primarily engaged in the production of and sale of a broad
line of business forms, promotional products, including
activewear apparel, and other business products. Distribution of
business forms and other business products throughout the United
States is primarily through independent dealers. The other
business products include business forms distributors,
stationers, printers, computer software developers and
advertising agencies, among others. Distribution of activewear
apparel is conducted through distribution centers located
throughout the U.S. and Canada.
Ennis completed its merger with Alstyle Apparel, Inc. ("Alstyle")
November 19, 2004. Alstyle shareholders received 8,803,583
shares valued at approximately $145,523,000 and $2,889,000 cash.
Debt of approximately $110,572,000 was assumed. Alstyle produces
and sells activewear apparel with 6 facilities in California and
Mexico and 7 distribution centers located throughout the U.S. and
Canada. Alstyle was acquired to supplement and broaden the scope
of products offered by Ennis.
On November 1, 2004, Ennis acquired all of the outstanding stock
of Royal Business Forms, Inc. ("Royal") located in Arlington
Texas for $3,700,000 in Ennis Stock. Royal is principally
engaged in the design, manufacture and marketing of printed
business forms within the wholesale business forms marketplace.
Royal was acquired to help strengthen the Company in the
wholesale business forms marketplace.
On June 30, 2004, the Company completed the acquisition of the
outstanding stock of Dayton, Ohio based Crabar/GBF for
approximately $18,000,000, with consideration in the form of debt
assumed and cash in cash less debt assumed. The purchase was
financed with $11,000,000 in bank loans with the balance being
provided by internal cash resources. Crabar/GBF produces high-
quality long and medium run printing, pressure sensitive labels
and form-label combinations in facilities located in Cerritos,
California; Bellville, Texas; Princeton, Illinois; Medfield
Massachusetts; Edison, New Jersey; El Dorado, Missouri; and
Leipsic, Ohio. Crabar/GBF also has an administrative center in
Dayton, Ohio. Crabar was acquired to help strengthen the
Company in the wholesale business forms marketplace. The
Carbar/GBF facilities, except the Cerritos, California location,
became part of the Forms Solution Group. The Cerritos,
California operation became part of the Promotional Solutions
Group.
The Company operates in four business segments. The segment
Forms Solutions Group is primarily in the business of
manufacturing and selling business forms and other printed
business products primarily to distributors located in the United
States. The segment Promotional Solutions Group is primarily
engaged in the business of design, manufacturing and distribution
of printed and electronic media, presentation products,
flexoraphic printing, advertising specialties and Post-it
(registered trademark) Notes. The segment Financial Solutions
Group designs, manufactures and markets printed forms and
specializes in internal bank forms, secure and negotiable
documents and custom products. The segment Alstyle Apparel is
primarily engaged in the production and sales of activewear
including t-shirts, fleece goods, and other wearables.
13
Economic pressure and the contraction of the traditional business
forms industry continue to impact each segment of the Company.
As a result, the Company continues to concentrate on reducing
other costs where sales are declining. The installation of the
Company's Enterprise Resource Planning Software ("ERP") System
has decreased the waste in materials and improved labor
utilization in the plants which have the system. The Company is
continuing to install the ERP System throughout the organization.
The Company is also focusing on increasing sales where the market
is expanding. In addition, the Company will continue to search
for acquisition opportunities that will expand our mix of
products away from traditional forms, as well as strategic
acquisitions within the traditional forms industry.
Liquidity and Capital Resources
- -------------------------------
Cash Flow
Cash provided by operating activities for the nine months ended
November 30, 2004 was approximately $19,872,000 and represented a
decrease of $5,837,000 from the $25,709,000 provided in the
comparable period last year. This decrease in cash provided by
operating activities was due to the payments of outstanding
accounts payable of Crabar/GBF after acquisition. Cash flows
used in investing activities for the nine months ended November
30, 2004 was $118,801,000 and represented an increased use of
$115,843,000 from the $2,958,000 used in the comparable period
last year. This increase in cash used was primarily the result
of the acquisition of Crabar/GBF. Cash flowsCash flows provided
by financing activities for the nine months ended November 30,
2004 was $95,885,000 and represented an increase of $108,685,000
from the $12,800,000 used in the comparable period last year.
The increase in financing activities was primarily the result of
the debt issued to finance the acquisition of Alstyle and
Crabar/GBF.
Working Capital
The Company maintains a stable financial position with working
capital at November 30, 2004, of $57,618,000. The current ratio
decreased to 1.6 to 1 at the current period compared to the
current ratio at the beginning of the year at 2.5 to 1. The
decline is primarily the result of debt assumed with the Alstyle
acquisition. The Company has $12,023,000 in cash and cash
equivalents.
Credit Facility
The Company has approximately $129,783,000 in total long-term
debt. The Company entered into a $150,000,000 term/revolver
facility on November 19, 2004 with the acquisition of Alstyle and
immediately borrowed $108,800,000 to finance the acquisition and
refinance existing debt. The agreement, which matures in
November 2009, provides for a five-year commitment. The credit
facility incurs interest at a floating rate of the London
Interbank Offered Rate ("LIBOR") plus a spread dependent upon the
Company's total funded debt level to cash flows as defined. The
secured credit facility contains financial covenants which were
in compliance.
Common Stock
Shares outstanding were increased at November 30, 2004 to
25,412,999 from 16,393,234 at the beginning of the year. In
November 2004, the company issued 8,803,583 shares to Alstyle
shareholders and 177,458 shares to Royal shareholders.
14
Pension
The Company is required to make contributions to its defined
benefit pension plan. These contributions are required under the
minimum funding requirements of the Employee Retirement Pension
Plan Income Security Act ("ERISA"). For the current fiscal year
ending February 28, 2005, there is not a minimum contribution
requirement and no pension payments have been made; however, the
Company anticipates it will pay $2,500,000 in the fourth quarter
of fiscal year 2005.
Inventories
The Company believes current inventory levels are sufficient to
satisfy customer demand and anticipates having adequate sources
of supply of raw materials to meet future business requirements.
Capital Expenditures
Capital expenditures for the three and nine months totaled
$2,442,000 and $4,581,000, respectively. For the full fiscal
year, capital expenditures are expected to be between $5,000,000
and $6,000,000, which are expected to be financed through
internally generated funds. The Company expects to generate
sufficient cash flow from its operating activities to more than
cover its operating and capital requirements for the foreseeable
future.
Commitments
There have been no material changes in our contractual
obligations since fiscal year-end 2004 outside the normal course
of business.
Accounting Standards
- --------------------
On May 19, 2004, the FASB issued an FSP regarding SFAS No. 106.
FSP 106-2, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003" discusses the effect of the Act. FSP 162-2 considers the
effect of the two new features introduced in the Act in
determining APBO and net periodic postretirement benefit cost.
The adoption of FSP 106-2 is not expected to have a material
impact on the Company's financial position or results of
operations.
In December 2002, the FASB issued Statements of Financial
Accounting Standards No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an Amendment to FASB
Statement No. 123" ("SFAS 148"). SFAS 148 provides alternate
methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation.
15
In addition, SFAS 148 amends the disclosure requirements of
"Accounting for Stock-Based Compensation" ("SFAS 123") to require
prominent disclosures in both annual and interim financial
statements about the method of accounting used in reporting
results. To date, the Company has not adopted SFAS 123 utilizing
any of the transition methods of SFAS 148 but does apply the
disclosure requirements. On December 16, 2004, the FASB issued
SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS No.
123(R)"). SFAS No. 123(R) will require companies to measure all
employee stock-based compensation awards using a fair value
method and record such expense in its consolidated financial
statements. In addition, the adoption of SFAS No. 123(R)
requires additional accounting and disclosure related to the
income tax and cash flow effects resulting from share-based
payment arrangements. SFAS No. 123(R) is effective beginning as
of the first interim or annual reporting period beginning after
June 15, 2005. The Company is in the process of determining the
impact of the requirements of SFAS No. 123(R) which could have a
material impact on its consolidated financial statements.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs"
("SFAS 151"). This Statement amends the guidance in ARB No. 43,
Chapter 4, "Inventory Pricing," to clarify the accounting for
abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). SFAS 151 requires that
those items be recognized as current-period charges. In addition,
this Statement requires that allocation of fixed production
overheads to the costs of conversion be based on the normal
capacity of the production facilities. The provisions of SFAS 151
are effective for inventory costs incurred in fiscal years
beginning after June 15, 2005. As such, the company is required
to adopt these provisions at the beginning of fiscal year 2007.
The company is currently evaluating the impact of SFAS 151 on its
consolidated financial statements.
Results of Operations 2004
- --------------------------
Net sales for the three months ended November 30, 2004 increased
38.2% from the corresponding period in the prior year. The
Company's recent acquisitions: Alstyle Apparel, Inc. ("Alstyle")
acquired November 19, 2004, Royal Business Forms, Inc. ("Royal")
acquired November 1, 2004 and Crabar/GBF, Inc. ("Crabar")
acquired June 30, 2004 accounted for 33.7% of this increase. The
remaining increase resulted from the Promotional Solutions Group
sales increase of 6.2%, offset by decreases in the remaining
Forms Solutions Group 0.6% and the Financial Solutions Group
1.1%. The Promotional Solutions Group added new customers
resulting in increased sales volume. The Forms Solutions Group
and the Financial Solutions Group continue to be impacted by the
general economy and industry decline. The declines are primarily
caused by decreased volume.
For the nine months ended November 30, 2004, net sales increased
17.6% from the corresponding period in the prior year. The
Company's recent acquisitions accounted for 16.5% of the
increase. The remaining increase resulted from the Promotional
Solutions Group sales increased of 3.2%, offset by decreases in
the remaining Forms Solutions Group 1.0% and the Financial
Solutions Group 1.1%. The Promotional Solutions Group added new
customers resulting in increased sales volume. The Forms
Solutions Group and the Financial Solutions Group continue to be
impacted by the general economy and industry decline. The
declines are primarily caused by decreased volume.
16
Forms Promotional Financial Alstyle Consoli-
Solutions Solutions Solutions Apparel dated
Group Group Group Group Totals
----- ----- ----- ----- ------
Three months ended November 30, 2004:
Net sales
excluding
acquisitions $34,555 $21,927 $12,892 $ -- $69,375
Net sales from
acquisitions 15,806 2,234 -- 4,336 22,375
------- ------- ------- ------ --------
Total net sales $50,361 $24,161 $12,892 $4,336 $ 91,750
======= ======= ======= ====== ========
Three months ended November 30, 2003:
Total net sales $35,440 $17,339 $13,619 $ -- $ 66,398
======= ======= ======= ====== ========
Nine months ended November 30, 2004:
Net sales
excluding
acquisitions $103,593 $59,260 $35,569 $ -- $198,422
Net sales from
acquisitions 24,557 3,545 -- 4,336 32,438
------- ------- ------- ------ --------
Total net sales $128,150 $62,805 $35,569 $4,336 $230,860
======= ======= ======= ====== ========
Nine months ended November 30, 2003:
Total net sales $107,133 $51,406 $37,736 $ -- $196,275
======= ======= ======= ====== ========
Gross profit margins decreased from 26.5% in the three months
ended November 30, 2003 to 24.9% in the three months ended
November 30, 2004 and decreased from 26.3% in the nine months
ended November 30, 2003 to 25.7% in the nine months ended
November 30, 2004. The decrease in the three months and nine
months ended November 30, 2004 is primarily the result of
recently acquired companies which yield lower profit margins.
The Forms Solutions Group and Financial Solutions Group,
excluding recent corporate acquisitions, experienced increases in
gross profit margin for the three months and nine months ended
when compared to the same period in the prior year. While the
general weakness in the economy and the decline in the forms
industry contributed to decreased volume, profits were able to be
increased by controlling variable costs and maintaining efficient
fixed cost absorption. The Promotional Solutions Group had
relatively consistent gross profit margins for the three months
and nine months ended November 30, 2004 when compared to the same
period in the prior year.
Selling, general and administrative expenses increased 29.7% for
the three months ended November 30, 2004 and 12.3% for the nine
months ended November 30, 2004 when compared to the corresponding
periods in the prior year. The Company's recent corporate
acquisitions accounted for increases in administrative personnel
in the Forms Solutions Group and Alstyle Apparel Group.
Interest expense increased from $183,000 in the three months
ended November 30, 2003 to $288,000 in the three months ended
November 30, 2004 primarily as a result of increased debt
resulting from the corporate acquisitions. Interest expensed
decreased from $662,000 for the nine months ended November 30,
2003 to $589,000 for the nine months ended November 30, 2004
primarily as a result of the reduction of long-term financial
debt, prior to the corporate acquisitions.
17
The Company's effective federal and state income tax rate
remained relatively constant at approximately 38% for the nine
months ended November 30, 2004 and November 30, 2003.
Critical Accounting Policies and Judgments
- ------------------------------------------
In preparing our financial statements, we are required to make
estimates and assumptions that affect the disclosures and
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. We evaluate our estimates
and judgments on an ongoing basis, including those related to bad
debts, inventory valuations, property, plant and equipment,
intangible assets and income taxes. We base our estimates and
judgments on historical experience and on various other factors
that we believe to be reasonable under the circumstances. Actual
results may differ from these estimates under different
assumptions or conditions. The Company believes the following
accounting policies are the most critical due to their affect on
the Company's more significant estimates and judgments used in
preparation of its consolidated financial statements.
The Company maintains a defined-benefit pension plan for
employees. Included in our financial results are pension costs
which are measured using actuarial valuations. The actuarial
assumptions used may differ from actual results.
The Company's accounts receivable are primarily due from
distributors of the Company's business forms and other printed
business products. Credit is extended based on evaluation of
each customer's financial condition. Accounts receivable are
generally due within 30 days and are stated net of an allowance
for doubtful accounts. Accounts outstanding longer than
contractual payment terms are considered past due. The Company
records an allowance on a specific basis by considering a number
of factors, including the length of time trade accounts are past
due, the Company's previous loss history, the credit-worthiness
of individual customers, economic conditions affecting specific
customer industries and economic conditions in general. The
Company writes-off accounts receivable when they become
uncollectible and payments subsequently received on such
receivables are credited against write-offs in the period the
payment is received.
The Company values the raw material content of most of its
business forms inventories at the lower of last-in, first-out
("LIFO") cost or market. At fiscal years ended 2004 and 2003,
approximately 75% of business forms inventories are valued at
LIFO with the remainder of inventories valued at the lower of
first-in, first-out ("FIFO") cost or market. The Company
provides reserves for excess and obsolete inventory based upon
analysis of quantities on hand, recent sales volumes and
reference to market prices.
18
We exercise judgment in evaluating our long-lived assets for
impairment. The Company assesses the impairment of long-lived
assets, which include other intangible assets, goodwill and plant
and equipment, whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. The
Company assesses the impairment of goodwill annually. In
performing tests of impairment, the Company estimates future cash
flows that are expected to result from the operating segments.
Actual results could differ from assumptions made by management.
We believe our businesses will generate sufficient undiscounted
cash flow to more than recover the investments we have made in
property, plant and equipment, as well as the goodwill and other
intangibles recorded as a result of our acquisitions. The
Company cannot predict the occurrence of future impairment
triggering events nor the impact such events might have on its
reported asset values.
Revenue is recognized upon shipment for all printed products.
Derivative instruments are recognized on the balance sheet at
fair value. Changes in fair values of derivatives are accounted
for based upon their intended use and designation. The Company's
interest rate swaps are held for purposes other than trading.
The Company utilized swap agreements related to its term and
revolving loans to effectively fix the interest rate for a
specified principal amount of the loans. Amounts receivable or
payable under interest rate swap agreements are recorded as
adjustments to interest expense. This swap has been designated
as a cash flow hedge and the after tax effect of the mark-to-
market valuation that relates to the effective amount of
derivative financial instrument is recorded as an adjustment to
accumulated other comprehensive income with the offset included
in accrued expenses.
As part of the process of preparing our consolidated financial
statements, we are required to estimate our income taxes in each
jurisdiction in which we operate that imposes a tax on income.
This process involves estimating our actual current tax exposure
together with assessing temporary differences resulting from
different treatment of items for tax and accounting purposes.
These differences result in deferred tax assets and liabilities,
which are included in our consolidated balance sheet. We must
then assess the likelihood that our deferred tax assets will be
recovered from future taxable income and to the extent we believe
that recovery is more likely than not, we must establish a
valuation allowance. To the extent we establish a valuation
allowance, we must include an expense within the tax provision in
the consolidated statements of income. In the event that actual
results differ from these estimates, our provision for income
taxes could be materially impacted.
Certain Factors That mMay Affect Future Results
- ----------------------------------------------
The Forms Solutions Group sells a mature product line of business
forms and other printed business products. The demand for this
product line may decrease with increasing electronic and
paperless forms and filings.
The Promotional and Financial Solutions Groups are dependent upon
certain major customers. The loss of such customers may affect
the revenue and earnings of the Groups.
The Company has various contracts with suppliers that are subject
to change upon renewal and may not provide the same cost ratios
for future periods.
19
Forward looking statement
- -------------------------
Management's result of operations contains forward-looking
statements that reflect the Company's current view with respect
to future revenues and earnings. These statements are subject to
numerous uncertainties, including (but not limited to) the rate
at which the business forms market is contracting, the
application of technology to the production of business forms,
demand for the Company's products in the context of a contracting
market, variability in the prices of paper and other raw
materials, and competitive conditions in the business forms
market. Because of such uncertainties, readers are cautioned not
to place undue reliance on such forward-looking statements, which
speak only as of January 7, 2005.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Market Risk
- -----------
The Company is exposed to market risk from changes in interest
rates on debt. A discussion of the Company's accounting policies
for derivative instruments is included in the Notes to the
Consolidated Financial Statements for the period ended November
30, 2004.
The Company's net exposure to interest rate risk consists of a
floating rate debt instrument that is benchmarked to U.S. and
European short-term interest rates. The Company may from time to
time utilize interest rate swaps to manage overall borrowing
costs and reduce exposure to adverse fluctuations in interest
rates. The Company does not use derivative instruments for
trading purposes. The Company is exposed to interest rate risk
on short-term and long-term financial instruments carrying
variable interest rates. The Company's variable rate financial
instruments, including the outstanding credit facilities, totaled
$108,000,000 at November 30, 2004. The impact on the Company's
statement of earnings of a one-point interest rate change on the
outstanding balance of the variable rate financial instruments as
of November 30, 2004 would be immaterial. This market risk
discussion contains forward-looking statements. Actual results
may differ materially from this discussion based upon general
market conditions and changes in domestic and global financial
markets.
Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. Our Chief
Executive Officer and our Chief Financial Officer, after
evaluating the effectiveness of the Company's "disclosure
controls and procedures" (as defined in the Securities Exchange
Act of 1934 ("Exchange Act") Rules 13a-15(e) or 15d-15(e)) as of
the end of the period covered by this quarterly report, have
concluded that our disclosure controls and procedures are
effective based on their evaluation of these controls and
procedures required by paragraph (b) of Exchange Act Rules 13a-15
or 15d-15.
(b) Changes in Internal Control Over Financial Reporting. During
the quarter ended November 30, 2004, the Company implemented
certain controls in conjunction with its project related to
reporting on internal controls in compliance with The Sarbanes-
Oxley Act of 2002. The Company is continuing to integrate the
operations of the newly acquired operations of Alstyle into its
current internal control environment and procedures that are
currently in place at the Company. It is expected this
integration will be completed by the end of the Company's fiscal
year and will result in changes to virtually all areas of the
Company's internal controls in order to provide effective
monitoring and control of the newly integrated operations.
20
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 5, 2004, the Company held a special meeting of its
shareholders to approve the issuance of shares of the Company's
common stock to holders of all of the capital stock of Centrum
Acquisition, Inc. in connection with the merger of Centrum with
and into a subsidiary of the Company pursuant to the terms of the
Agreement and Plan of Merger dated as of June 25, 2004 among
Company, Centrum and Midlothian Holdings LLC, a subsidiary of the
Company. The issuance was approved at the special meeting with
11,578,636 shares cast "for" the issuance, 433,907 shares cast
"against" the issuance and 58,666 shares withheld.
Item 6. EXHIBITS
Exhibits
The exhibits as listed on the accompanying index to
exhibits on page 23 are filed as part of this Form 10-Q.
21
SIGNATURES
Pursuant to the requirements 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.
ENNIS, INC.
Date January 7, 2005 /s/Harve Cathey
------------------- -------------------------------
Harve Cathey
Vice President - Finance and
CFO, Secretary and Principal
Financial and Accounting Officer
22
INDEX TO EXHIBITS
Exhibit 2.1 Agreement and Plan of Merger dated as of
June 25, 2004 by and among Ennis, Inc.,
Midlothian Holdings LLC, and Centrum
Acquisition, Inc., incorporated herein by
reference to Exhibit 2.1 to the
Registrant's Form S-4 filed on September
3, 2004.
Exhibit 2.2 First Amendment to Agreement and Plan of
Merger dated as of August 23, 2004 by and
among Ennis, Inc., Midlothian Holdings
LLC, and Centrum Acquisition, Inc.,
incorporated herein by reference to
Exhibit 2.2 to the Registrant's Form S-4
filed on September 3, 2004.
Exhibit 3.1 Restated Articles of Incorporation as
amended through June 23, 1983 with
attached amendments dated June 20, 1985,
July 31, 1985 and June 16, 1988
incorporated herein by reference to
Exhibit 5 to the Registrant's Form 10-K
Annual Report for the fiscal year ended
February 28, 1993.
Exhibit 3.2 Bylaws of the Registrant as amended
through October 15, 1997 incorporated
herein by reference to Exhibit 3(ii) to
the registrant's Form 10-Q Quarterly
Report for the quarter ended November 30,
1997.
Exhibit 3.3 Articles of Amendment to the Articles of
Incorporation of Ennis Business Forms,
Inc. filed on June 17, 2004.
Exhibit 10.1 Employee Agreement between Ennis, Inc.
and Keith S. Walters dated May 1, 2003
incorporated herein by reference to
Exhibit 10.1 to the Registrant's Form 10-
K Annual Report for the fiscal year ended
February 29, 2004.
Exhibit 10.2 Employee Agreement between Ennis, Inc.
and Ronald M. Graham dated May 1, 2003
incorporated herein by reference to
Exhibit 10.2 to the Registrant's Form 10-
K Annual Report for the fiscal year ended
February 29, 2004.
Exhibit 10.3 Employee Agreement between Ennis, Inc.
and Michael D. Magill dated October 7,
2003 incorporated herein by reference to
Exhibit 10.3 to the Registrant's Form 10-
K Annual Report for the fiscal year ended
February 29, 2004.
Exhibit 10.4 2004 Long-Term Incentive Plan
incorporated herein by reference to
Exhibit 4.1 of the Registrant's Form S-8
filed on January 5, 2005.
Exhibit 10.5 Stock Purchase Agreement dated as of June
25, 2004, among Crabar/GBF, Inc. the
shareholders of Crabar/GBF, Inc. and
Ennis, Inc. incorporated herein by
reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K
filed on July 15, 2004.
Exhibit 10.6 First Amendment Agreement dated as of
June 25, 2004, by and among Amin Amdani,
Rauf Gajiani, Centrum Acquisition, Inc.,
Ennis, Inc. and Midlothian Holdings LLC
incorporated herein by reference to
Exhibit 10.6 to the Registrant's Form S-4
filed on September 3, 2004.
23
Exhibit 10.7 Indemnity Agreement dated as of June 25,
2004, by and among Laurence Ashkin, Roger
Brown, John McLinden, Arthur Slaven,
Ennis, Inc. and Midlothian Holdings LLC
incorporated herein by reference to
Exhibit 10.7 to the Registrant's Form S-4
filed on September 3, 2004.
Exhibit 10.8 Indemnity Agreement dated as of June 25,
2004, by and among Laurence Ashkin, Roger
Brown, John McLinden, Arthur Slaven,
Ennis, Inc. and Midlothian Holdings LLC
incorporated herein by reference to
Exhibit 10.8 to the Registrant's Form S-4
filed on September 3, 2004.
Exhibit 10.9 UPS Ground, Air Hundredweight and
Sonicair Incentive Program Carrier
Agreement incorporated herein by
reference to Exhibit 10 to the
Registrant's Form 10-K Annual Report for
the fiscal year ended February 29, 2003.
Exhibit 10.10 Addendum to UPS Ground, Air and Sonicair
Incentive Program Carrier Agreement dated
as of August 9, 2004, between Ennis, Inc.
and United Parcel Service, Inc.
incorporated herein by reference to
Exhibit 10.10 to the Registrant's Form S-
4 filed on September 3, 2004.*
Exhibit 10.11 Carbonless Paper Agreement dated as of
July 13, 2004 between Ennis, Inc &
MeadWestvaco Corporation incorporated
herein by reference to Exhibit 10.11 to
the Registrant's Form S-4 filed on
September 3, 2004.*
Exhibit 10.12 Fourth Amendment to Credit Agreement
dated as of June 25, 2004, between Ennis,
Inc. and Bank One, NA incorporated herein
by reference to Exhibit 10.12 to the
Registrant's Form S-4 filed on September
3, 2004.
Exhibit 10.13 Assignment Agreement dated as of June 30,
2004, between U.S. Bank National
Association and Compass Bank incorporated
herein by reference to Exhibit 10.13 to
the Registrant's Form S-4 filed on
September 3, 2004.
Exhibit 31.1 Certification Pursuant to Rule 13a-
14(a)/15d-14(a) (Chief Executive Officer)
Exhibit 31.2 Certification Pursuant to Rule 13a-
14(a)/15d-14(a) (Chief Financial Officer)
Exhibit 32 Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
Exhibit 99 Charter of the Audit Committee of The
Board of Directors of Ennis Business
Forms, Inc. as amended June 21, 2001
incorporated herein by reference to
Exhibit 99 to the Registrant's Form 10-Q
Quarterly Report for the quarter ended
May 31, 2001.
* Portions of Exhibit have been omitted pursuant to a request
for confidential treatment filed with the Securities and
Exchange Commission.
24
* Portions of Exhibit have been omitted pursuant to a request
for confidential treatment filed with the Securities and
Exchange Commission.