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
For Quarter Ended AUGUST 31, 1996
Commission File Number 1-5807
ENNIS BUSINESS FORMS, 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.)
107 N. Sherman Street, Ennis, TX 75119
(Address of principal executive offices) (Zip Code)
(972) 872-3100
(Registrant's telephone number, including area code)
No Change
(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 prior that the
registrant was required to file such report), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at August 31, 1996
Common stock, par value $2.50 per share 16,438,740
ENNIS BUSINESS FORMS, INC.
INDEX
Part I. Financial Information
Consolidated Condensed Balance Sheets --
August 31, 1996 and February 29, 1996 2
Consolidated Condensed Statements of Earnings --
Three and Six Months Ended August 31,1996
and 1995 3
Consolidated Condensed Statements of Cash
Flows --Six Months Ended August 31, 1996
and 1995 4
Notes to Consolidated Condensed Financial
Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
Part II. Other Information 7
PART I. FINANCIAL INFORMATION
ENNIS BUSINESS FORMS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
August 31, February 29,
1996 1996
Assets
Current assets
Cash and equivalents $24,969 38,606
Accounts receivable, net 19,808 16,975
Inventories 9,684 8,298
Other current assets 3,922 3,665
Total current assets 58,383 67,544
Property, plant and equipment, net 28,603 21,857
Cost of purchased businesses in excess of amounts
allocated to tangible net assets 6,043 3,861
Other assets and deferred charges 3,238 400
Total assets $96,267 93,662
Liabilities and Stockholders' Equity
Current liabilities
Current installments of long-term debt $ 80 80
Accounts payable 5,070 5,144
Accrued expenses 7,388 6,843
Federal and state income taxes payable 582 987
Total current liabilities 13,120 13,054
Long-term debt, less current installments 280 280
Deferred credits, principally Federal income taxes 1,878 2,133
Stockholders' equity
Common stock, at par value 53,125 53,125
Additional capital 1,040 1,040
Retained earnings 118,738 115,935
Cumulative foreign currency translation adjustments (97) (97)
172,806 170,003
Less:
Treasury stock 91,817 91,808
Total stockholders' equity 80,989 78,195
Total liabilities and stockholders' equity $96,267 93,662
See accompanying notes to consolidated condensed financial statements.
ENNIS BUSINESS FORMS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
1996 1995 1996 1995
Net sales $38,715 35,707 $75,639 70,816
Costs and expenses:
Cost of sales 26,422 22,768 50,573 45,043
Selling, general and administrative
expenses 6,917 5,952 13,379 12,008
Interest expense 23 23 46 47
33,362 28,743 63,998 57,098
Earnings from operations 5,353 6,964 11,641 13,718
Investment and other income 395 471 878 916
Earnings before income taxes 5,748 7,435 12,519 14,634
Provision for income taxes 2,153 2,794 4,702 5,503
Net earnings $3,595 4,641 $7,817 9,131
Weighted average number of common
shares outstanding 16,438,890 16,439,660 16,439,055 16,439,746
Per share amounts:
Net earnings $.22 .29 $.48 .56
Cash dividends $.155 .15 $.305 .295
See accompanying notes to consolidated condensed financial statements.
ENNIS BUSINESS FORMS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six Months Ended
August 31,
1996 1995
Cash flows from operating activities:
Net earnings $7,817 9,131
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,395 1,855
Changes in assets and liabilities (4,101) (1,308)
Other (1,181) (29)
Net cash provided by operating activities 4,930 9,649
Cash flows from investing activities:
Capital expenditures (6,211) (2,833)
Purchases of operating assets (7,342) --
Purchase of investments -- (6,064)
Maturities of investments -- 11,602
Other 9 1
Net cash provided by (used in)
investing activities (13,544) 2,706
Cash flows from financing activities:
Dividends declared (5,014) (4,850)
Other (9) (6)
Net cash used in financing activities (5,023) (4,856)
Net change in cash and equivalents (13,637) 7,499
Cash and equivalents at beginning of period 38,606 10,541
Cash and equivalents at end of period $24,969 18,040
See accompanying notes to consolidated condensed financial statements.
ENNIS BUSINESS FORMS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The information included herein reflects all adjustments (none of which
were other than normal recurring accruals) which, in the opinion of the
Company, are necessary to a fair statement of the financial position as
of August 31, 1996 and February 29, 1996, and the results of operations
and cash flows for the three months and six months ended August 31,
1996 and 1995.
2. Earnings per common share amounts are based on the weighted average
number of shares outstanding during the period. Common stock
equivalents (options see Note 3) have not been included in determining
earnings per common share amounts because their inclusion, either for
purposes of computing primary or fully diluted earnings per share,
would not produce sufficient incremental shares (using the treasury
stock method) to reduce the per share amounts shown.
3. As of August 31, 1996, the Company has reserved 378,958 shares of
common stock under incentive stock options plans.
4. 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 inventory at the different
stages of production (in thousands of dollars):
August 31, February 29,
1996 1996
Raw material $6,120 5,073
Work-in-process 378 679
Finished goods 3,186 2,546
$9,684 8,298
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At August 31, 1996, the Company's financial position continues to be
strong. Working capital decreased from $54,490,000 at February 29, 1996 to
$45,263,000 at August 31, 1996. The decrease is primarily due to the April
1, 1996 purchase of the operating assets of two businesses including non-
compete agreements with principals of the selling companies and capital
additions. The Company's cash flow from operations continues to be
adequate to sustain operations, meet debt repayment requirements and fund
capital additions. No liquidity problems are anticipated.
Results of Operations
Net sales for the quarter ended August 31, 1996 increased 8.4% from
the corresponding period in the prior year. Net sales for the six months
ended August 31, 1996 increased 6.8% from the corresponding period in the
prior year. In both periods the sales increase is primarily attributable
to acquisitions early in the first quarter. Gross margins for the three
and six months ended August 31, 1996 decreased 5.0% and 2.7%, respectively,
over the same periods in the prior year. In an attempt to achieve revenue
growth in a competitive environment, the Company has begun to adjust prices
to more competitive levels. In anticipation of increased sales volume the
Company is currently hiring and training additional people. Both of these
factors contribute to the decrease in gross margins. Selling, general and
administrative expenses for the three and six months ended August 31, 1996
increased 16.2% and 11.4%, respectively, compared to the corresponding
periods in the prior year. The increases are due to the operating expenses
of two new businesses and costs associated with implementing a new
management information system. Investment and other income decreased in
the current year from the prior year due to decreased amounts of funds
available for investments. The decline in funds available for investment
is due to the two April 1, 1996 acquisitions and an increased level of
investment in new equipment. The effective rate of Federal and state
income tax expense is substantially unchanged from year to year.
PART II. OTHER INFORMATION
Item 6. Exhibits
Exhibit:
(27) Financial Data Schedule
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 BUSINESS FORMS, INC.
Date October 8, 1996 /s/Victor V. DiTommaso
Victor V. DiTommaso
Vice President - Finance,
Secretary & Treasurer
Principal Financial and Accounting Officer