Exhibit 99.2
Press Release
2441 Presidential Parkway (bullet) Midlothian, Texas 76065
(bullet) Phone 972.775.9801 (bullet) Fax 800.579.4271 (bullet)
www.ennis.com
FOR IMMEDIATE RELEASE FOR ADDITIONAL INFORMATION
CONTACT: Keith S. Walters,
Chairman, President & CEO
(800) 752-5386
Midlothian, Texas, June 28, 2004
ENNIS AND ALSTYLE APPAREL AGREE TO MERGE
Keith Walters to lead combined entity & Roger Brown will continue
as President of Alstyle
Accretive Combination Will Create Premier Full-Service Supplier
to Forms & Promotional Product Distributors in North America With
Over $525 million in Annual Revenues
Los Angeles, Midlothian, TX - June 25th, 2004 - Ennis, Inc.
(formerly Ennis Business Forms, Inc.) (NYSE: EBF), a manufacturer
of printed business products headquartered in Midlothian, Texas,
and Alstyle Apparel, a privately held manufacturer of t-shirts
and fleece goods based in Anaheim, California, announced today
that they have signed a definitive agreement to merge in a tax
free exchange of stock which would create a full-service provider
of printed business products and promotional apparel (t-shirts &
fleece goods) with over $525 million in annual revenues, and
approximately 7,000 employees in North America. This merger,
along with the separately announced acquisition of Crabar/GBF,
continues the Ennis strategy of growth through related
manufactured products (the Crabar/GBF acquisition) or acquiring
growing product lines (promotional apparel) for our existing
customer base. Ennis' customers are independent forms brokers or
printers who have grown their businesses through the sale of
promotional products to businesses in North America. The profile
of a current Ennis customer today indicates that less than half
of their sales revenues constitute forms sales with the remainder
comprised of commercial printing and promotional product sales.
The combination of these two companies will provide both the
Alstyle and the Ennis combined customer bases with a broad array
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of high-quality, long-, medium- and short-run print products and
solutions, financial documents, print fulfillment, labels,
collateral materials, POP commercial printing, forms and
logistics services, promotional products (both apparel and non-
apparel goods) through their respective sales channels. The
Boards of Directors of both companies have unanimously approved
the agreement.
The combined company will retain the Ennis name and will be
headquartered in Midlothian, Texas. Upon closing of the
transaction, Roger Brown, President of Alstyle Apparel, will stay
on for 18 months in his current capacity reporting to Keith
Walters, Chairman, President and CEO of Ennis. Mr. Brown will
fill the first available director position of Ennis after the
transaction closes in the fall of this year.
Under the terms of the transaction, Alstyle Apparel
shareholders will receive Ennis shares based upon a $242 million
valuation of Alstyle less debt outstanding as of the day of
merger (assumed to be between $104 million and $108 million).
The resulting value will be divided by the average trading price
of Ennis over the previous 30-day trading period, estimated to be
about $15.60 per share. This should approximate between 8.6
million and 8.9 million shares of newly issued Ennis stock.
Ennis will assume approximately $104 to $108 million in Alstyle
Apparel debt. While the Alstyle transaction is essentially a
stock transaction there will be debt assumed of approximately
$104 million to $108 million. The debt to equity ratio will
continue to be less than .5 to 1 and the Company has entered into
a committed line of credit from LaSalle Bank for $100 million in
Revolver credit facilities and up to $50 million in Term credit
facilities if needed (although it is anticipated that the Term
facility will be in the $20 to $30 million range).
The combined company will be traded on the NYSE under the
ticker symbol EBF. Upon completion of the transaction, Ennis
shareholders will own 16.6 million shares or approximately 65% of
the total outstanding shares and Alstyle shareholders will own
8.9 million shares or approximately 35% of the combined
outstanding shares of 25.5 million shares. Ennis is expected to
maintain its annual dividend of $0.62 per share.
The transaction is expected to be accretive to Ennis's
earnings in the first full year of operations. In addition to
significantly enhanced revenue opportunities, the company hopes
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to cross sell products through the two separate channels to
increase sales and profits even more than are already
anticipated. There does not appear to be much customer overlap
between the two companies. The combined company is also expected
to generate substantial cash flow in the first year of
consolidated operations. Based upon trailing twelve months the
combined company (including the Crabar/GBF acquisition) would
have approximately $525 million in annual sales, combined EBITDA
of $65 to $70 million, and free cash flow of approximately $45 to
$50 million (all of which is based on the audited fiscal year
ended December 31, 2003 information for Alstyle Apparel and
Crabar/GBF and the audited fiscal year ended February 28th, 2004
information for Ennis). Alstyle's estimate of EBITDA for the
2004 calendar year is in the $35 - $40 million range.
Keith Walters, Chairman, President and CEO of Ennis, said,
"Today's announcement is a tremendously positive step forward in
the continued evolution and development of Ennis. It is our goal
to continue to offer our customers a representative offering of
the most profitable products in the industry. The transaction
will place Ennis among the top players in the Forms and
Promotional Products arena serving the more than 40,000
independent distributors and printers who comprise the
marketplace served by Ennis. Public companies in the activewear
market, like Gildan and Delta Apparel, trade at multiples of
EBITDA that are higher than reflected in the enterprise value
placed on this transaction. But since this is a merger, rather
than an acquisition, we were able to bring the two companies
together for a more reasonable enterprise valuation on a combined
basis due to the exchange of stock. It is great news for our
customers, our employees and our shareholders. I am especially
pleased that Roger Brown will continue in his role as President
of Alstyle Apparel and look forward to a smooth transition."
Roger Brown, President of Alstyle Apparel, said, "This
transaction is strategically and financially compelling, bringing
together the industry's most established trade supplier of forms
and printed products with an established and growing manufacturer
of t-shirts and fleece goods supported by an international
network of sales representatives and distribution centers located
throughout North America. The combination will enable Ennis to
offer North America's larger distributorships a comprehensive
suite of print and related products and promotional apparel
solutions that will meet the demands of their growing customer
base. Through this combination, Ennis plans to expand into the
apparel side of promotional products and solutions beyond merely
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t-shirts and fleece goods by accessing the Pacific Rim and
reselling through the existing sales channel of Alstyle."
Mr. Walters continued, "With a broad base of highly
profitable businesses and a strategic approach to managing our
capital, Ennis will generate substantial cash flow after
servicing the dividend and making disciplined capital
expenditures."
The transaction is subject to approval by Ennis stockholders
and is expected to close in the fall. The transaction is intended
to qualify as a tax-free reorganization for U.S. federal income
tax purposes.
Please note that the Company has issued a separate press release
on the acquisition of Crabar/GBF, a $69 million forms company.
This release is also dated June 25th, 2004 and is available on
the Company's web site.
About Ennis
- -----------
Ennis (www.ennis.com), Inc. is primarily engaged in the
production of and sale of business forms and other business
products. The Company, together with its subsidiaries, operates
in three business segments: the Forms Solutions Group, the
Promotional Solutions Group and the Financial Solutions Group.
The Forms Solutions Group is primarily engaged in the business of
manufacturing and selling business forms and other printed
business products through distributors. The Promotional Solutions
Group is primarily engaged in the business of design, production
and distribution of printed and electronic media, presentation
products, flexographic printing, advertising specialties and Post-
it Notes. The Financial Solutions Group designs, manufactures and
markets printed forms and specializes in internal bank forms,
secure and negotiable documents and custom products.
About Alstyle Apparel
- ---------------------
Alstyle Apparel and Activewear is a vertically integrated
manufacturer and distributor of t-shirts and various fleece goods
throughout the U.S., Mexico and Canada. Alstyle began business
in 1976 in Chicago as a small importer of T-shirts for local
screen printers and quickly grew to become the largest
distributor of Fruit of the Loom and Hanes products. In 1990,
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Alstyle started producing its own line of high-quality T-shirts
under the Murina label, soon expanding with the introduction of
the AAA, Gaziani, as well as many other labels. Today, Alstyle
Apparel has production facilities throughout the U.S. and Mexico
producing the highest quality products at the most competitive
prices possible. Alstyle Apparel operates with a "quick-turn-
around" philosophy with convenient distribution centers located
in California, Chicago, Atlanta, Texas, Philadelphia, Canada and
Europe. All of the Alstyle garments are made from U.S. yarn
grown, spun, knitted, and dyed in the USA, then cut and sewn
either in the US, Mexico, or the Caribbean Basin. As well as
producing their own label garments, Alstyle Apparel also has an
extensive private label and re-label program, flexible and
competitive to meet the needs of their customers.
This news release contains statements relating to future results
of the combined company including statements (i) that the
transaction will be accretive to the combined company's earnings
in the first year of operations, (ii) that Alstyle's estimate of
EBITDA for the calendar year 2004 is $35-$40 million, (iii) that
the combined company will generate substantial cash flow in the
first year of consolidated operations, (iii) and that the company
will generate substantial cash flow after servicing the dividend,
(iv) that the debt ratio will be less than .5 to 1, (v) that the
range of Ennis shares issued will be between 8.6 and 8.9 million
shares, and (vi) as to the expected maintenance of the annual
dividend, as well as other anticipated, believed, planned,
forecasted, expected, targeted and estimated results and the
combined company's outlook concerning future results, that are
"forward-looking statements" as defined in the U.S. Private
Securities Litigation Reform Act of 1995. Readers are cautioned
not to place undue reliance on these forward-looking statements
and any such forward-looking statements are qualified in their
entirety by reference to the following cautionary statements. All
forward-looking statements speak only as of the date hereof and
are based on current expectations and involve a number of
assumptions, risks and uncertainties that could cause the actual
results to differ materially from such forward-looking
statements.
Factors relating to the completion of the transaction and the
integration of the businesses that could cause material
differences in the expected results of the combined company
include, without limitation, the following: the development and
execution of comprehensive plans for asset rationalization, the
ability to eliminate duplicative overhead without excessive cost
or adversely affecting the business, the potential loss of
customers and employees as a result of the transaction, the
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ability to achieve procurement savings by leveraging total
spending across the organization, the success of the organization
in leveraging its comprehensive product offering to the combined
customer base as well as the ability of the organization to
complete the integration of the combined companies without losing
focus on the business. In addition, the ability of the combined
company to achieve the expected revenues, accretion and synergy
savings will also be affected by the effects of competition (in
particular the response to the transaction in the marketplace),
the effects of paper and other raw materials and fuel price
fluctuations and shortages of supply, the rate of migration from
paper-based forms to digital formats, the impact of currency
fluctuations in the countries in which Ennis and Alstyle Apparel
operate, general economic and other factors beyond the combined
company's control, and other risks and uncertainties described
from time to time in Ennis's and Alstyle Apparel's periodic
filings with United States securities authorities, as applicable.
This communication is not a solicitation of a proxy from any
security holder of Ennis. Ennis intends to file a Registration
Statement (S-4) and Proxy Statement regarding the proposed
transaction with the U.S. Securities and Exchange Commission
(SEC). WE URGE INVESTORS IN ENNIS TO CAREFULLY READ THE PROXY
STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION ABOUT ENNIS, ALSTYLE APPAREL AND THE
PROPOSED TRANSACTION. Investors will be able to obtain the
document free of charge at the SEC's website, www.sec.gov.
Documents filed with the SEC by Ennis will be available free of
charge from Investor Relations, Ennis, 2441 Presidential Parkway,
Midlothian, Texas 76065. Ennis, Alstyle Apparel and their
executive officers and directors may be deemed to be participants
in the solicitation of proxies from Ennis in favor of the
proposed transaction. Information regarding the security
ownership and other interests of Ennis's and Alstyle Apparel's
executive officers and directors will be included in the
Registration Statement and Proxy Statement.
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