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 NOVEMBER 30, 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 the latest practicable date.
Class Outstanding at November 30, 1996
Common stock, par value $2.50 per share 16,438,536
ENNIS BUSINESS FORMS, INC.
INDEX
Part I. Financial Information
Consolidated Condensed Balance Sheets --
November 30, 1996 and February 29, 1996 2
Consolidated Condensed Statements of Earnings --
Three and Nine Months Ended November 30,
1996 and 1995 3
Consolidated Condensed Statements of Cash
Flows --Nine Months Ended November 30,
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)
November 30, February
29,
1996 1996
Assets
Current assets
Cash and equivalents $24,686 38,606
Accounts receivable, net 18,674 16,975
Inventories 9,536 8,298
Other current assets 3,883 3,665
Total current assets 56,779 67,544
Property, plant and equipment, net 30,173 21,857
Cost of purchased businesses in excess of amounts
allocated to tangible net assets 5,993 3,861
Other assets and deferred charges 2,773 400
Total assets $95,718 93,662
Liabilities and Stockholders' Equity
Current liabilities
Current installments of long-term debt $ 80 80
Accounts payable 5,227 5,144
Accrued expenses 6,512 6,843
Federal and state income taxes payable 351 987
Total current liabilities 12,170 13,054
Long-term debt, less current installments 200 280
Deferred credits, principally Federal income taxes 1,776 2,133
Stockholders' equity
Common stock, at par value 53,125 53,125
Additional capital 1,040 1,040
Retained earnings 119,307 115,935
Cumulative foreign currency translation adjustments (81) (97)
173,391 170,003
Less:
Treasury stock 91,819 91,808
Total stockholders' equity 81,572 78,195
Total liabilities and stockholders' equity $95,718 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 Nine Months Ended
November 30, November 30,
1996 1995 1996 1995
Net sales $40,210 36,827 $115,849 107,643
Costs and expenses:
Cost of sales 27,986 23,157 78,559 68,200
Selling, general and administrative
expenses 7,488 6,182 20,867 18,200
Interest expense 15 24 61 71
35,489 29,363 99,487 86,471
Earnings from operations 4,721 7,464 16,362 21,172
Investment and other income 290 305 1,168 1,231
Earnings before income taxes 5,011 7,769 17,530 22,403
Provision for income taxes 1,894 2,929 6,596 8,432
Net earnings $3,117 4,840 $10,934 13,971
Weighted average number of common
shares outstanding 16,438,636 16,439,554 16,438,919 16,439,688
Per share amounts:
Net earnings $.19 .29 $.67 .85
Cash dividends $.155 .15 $.46 .445
See accompanying notes to consolidated condensed financial statements.
ENNIS BUSINESS FORMS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
November 30,
1996 1995
Cash flows from operating activities:
Net earnings $10,934 13,971
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,638 2,803
Changes in assets and liabilities (3,773) 411
Other (848) 195
Net cash provided by operating activities 9,951 17,380
Cash flows from investing activities:
Capital expenditures (8,887) (4,943)
Purchases of operating assets (7,342) --
Purchases of investments -- (6,064)
Maturities of investments -- 23,742
Other 11 6
Net cash provided by (used in) investing
activities (16,218) 12,741
Cash flows from financing activities:
Purchase of treasury stock (11) (6)
Dividends declared (7,562) (7,316)
Other (80) (75)
Net cash used in financing activities (7,653) (7,397)
Net changes in cash and equivalents (13,920) 22,724
Cash and equivalents at beginning of period 38,606 10,541
Cash and equivalents at end of period $24,686 33,265
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 November 30, 1996
and February 29, 1996, and the results of operations and cash
flows for the three months and nine months ended November 30,
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 November 30, 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):
November 30, February 29,
1996 1996
Raw material $5,650 5,073
Work-in-process 1,135 679
Finished goods 2,751 2,546
$9,536 8,298
5. On April 1, 1996, the Company purchased the operating assets
and operations of two privately-owned specialty printing
companies for approximately $8,000,000 in cash. The
accompanying Consolidated Condensed Statement of Earnings for
the three and nine months ended November 30, 1996 include the
results of operations of the two companies from the date of
acquisition. The cost of the acquired companies in excess of
the amounts allocated to tangible net assets is being
amortized over 25 years from the date of acquisition.
Following is condensed, proforma consolidated results of
operations for the three and nine month periods ended
November 30, 1995 which reflects inclusion of the companies
as if they had been acquired in the prior year.
Three Months Ended Nine Months Ended
November 30, 1995 November 30, 1995
Net sales $39,031 114,566
Net income $4,657 13,657
Earnings per share $ .28 .83
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At November 30, 1996, the Company's financial position
continues to be strong. Working capital decreased from
$54,490,000 at February 29, 1996 to $44,609,000 at November 30,
1996. The decrease is due to a decreased amount of cash provided
by operating activities and an increased amount of cash used in
investing activities. 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 November 30, 1996 increased
9.2% from the corresponding period in the prior year. Net sales
for the nine months ended November 30, 1996 increased 7.6% from
the corresponding period in the prior year. We are beginning to
achieve sales growth in our business forms products along with
sales increases attributable to the operations purchased in April
1996. The equipment additions under the $16,500,000 capital
investment program announced in April 1996 are just beginning to
be placed into service and are not yet contributing meaningfully
to our sales. Gross margins for the three and nine months ended
November 30, 1996 decreased 10.6% and 5.5% respectively, over the
same periods in the prior year. To achieve sales growth, we have
reduced selling prices and enhanced customer service, including
providing improved delivery schedules for our custom products.
New employees are being hired and trained to produce an
increasing volume of business and to continue implementing our
planned improvements of customer service. All of these measures
have substantially reduced gross profit margins. Selling,
general and administrative expenses for the three and nine months
ended November 30, 1996 increased 21.1% and 14.7%, 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 January 14, 1997 /s/Victor V. DiTommaso
Victor V. DiTommaso
Vice President - Finance,
Secretary & Treasurer
Principal Financial and
Accounting Officer