Appendix A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
The Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
ENNIS BUSINESS FORMS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
ENNIS BUSINESS FORMS, INC.
1510 N. HAMPTON, SUITE 300
DESOTO, TEXAS 75115
TELEPHONE (972) 228-7801
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 2002
----------------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Ennis
Business Forms, Inc., a Texas corporation (the "Company"), will be held in The
DeSoto City Hall, 211 East Pleasant Run Road, DeSoto, Texas 75115 at 10:00 a.m.,
Central Daylight Time, on Thursday, June 20, 2002 for the following purposes:
1. To elect three directors for terms ending in 2005;
2. To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending February 28, 2003; and
3. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on April 15, 2002
are entitled to notice of, and to vote at, the meeting or any adjournment or
adjournments thereof.
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN
THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
A copy of the Company's Annual Report for the fiscal year ended February
28, 2002, which contains financial statements and other information of interest
to shareholders, is being mailed to you.
By Order of the Board of Directors,
Harve Cathey
Secretary
DeSoto, Texas
May 17, 2002
ENNIS BUSINESS FORMS, INC.
1510 N. HAMPTON, SUITE 300
DESOTO, TEXAS 75115
TELEPHONE (972) 228-7801
----------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 2002
10:00 A.M. CDT
THE DESOTO CITY HALL
211 EAST PLEASANT RUN ROAD
DESOTO, TEXAS 75115
----------------------
The holders of the Company's Common Stock of record at the close of
business on April 15, 2002 are entitled to vote at the Annual Meeting of
Shareholders, which will be held on June 20, 2002. A form of Proxy is enclosed
for use at such meeting if you are unable to attend in person. The persons named
therein as proxies were selected by the Board of Directors of the Company. The
proxy is solicited by the board of directors of the company and is revocable at
any time before it is exercised. This proxy statement is first mailed to
shareholders on May 17, 2002.
VOTING RIGHTS AND VOTES REQUIRED
At the close of business on April 15, 2002, the Company had 16,272,927
shares of Common Stock issued and outstanding. Each share of Common Stock is
entitled to one vote, except in the election of directors, shareholders may
cumulate their votes. See "Election of Directors".
The presence, in person or by proxy, of stockholders entitled to cast a
majority of all votes entitled to be cast at the Annual Meeting will constitute
a quorum. Assuming a quorum, the nominees receiving a plurality of the votes
cast at the Annual Meeting for the election of directors will be elected as
directors.
With regard to the election of directors, votes may be cast in favor or
withheld, votes that are withheld will be counted for purposes of determining
the presence or absence of a quorum but will have no other effect. Abstentions
and broker non-votes, if any, will be counted for purposes of determining the
presence or absence of a quorum but will have no effect on the outcome of the
election of directors.
VOTING OF PROXIES
If the accompanying proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the instructions specified
in the proxy. In the absence of instructions to the contrary, such shares will
be voted in favor of the nominees for election to the Board of Directors listed
in this proxy statement and named in the accompanying Proxy. The Board of
Directors does not intend to bring any other matters before the Annual Meeting
and is not aware of any matters that will come before the Annual Meeting other
than as described herein. In the absence of instructions to the contrary,
however, it is the intention of each of the persons named in the accompanying
proxy to vote all properly executed proxies on behalf of the stockholders they
represent in accordance with their discretion with respect to any such other
matters properly coming before the Annual Meeting.
REVOCATION OF PROXIES
Any stockholder may revoke such stockholder's proxy at any time prior to
the voting thereof on any matter (without, however, affecting any vote taken
prior to such revocation). A proxy may be revoked by filing with Harve Cathey,
Secretary of Ennis Business Forms, Inc., at the Annual Meeting, a written notice
of revocation or a subsequently dated, executed proxy at any time prior to the
time it has been voted at the Annual Meeting, or by attending the Annual Meeting
and voting in person (although attendance at the Annual Meeting will not in and
of itself constitute revocation of a proxy).
COST OF SOLICITATION
The cost of preparing, assembling and mailing the Notice of Annual
Meeting, Proxy Statement and form of Proxy and the cost, which is estimated to
be nominal, of further solicitation hereinafter referred to, is to be borne by
the Company. In addition to the use of the mails, it may be necessary to conduct
some solicitation by telephone, facsimile machine or personal interview. Any
such solicitation will be done by the directors, officers and regular employees
of the Company; and, in addition, banks, brokerage houses and other custodians,
nominees or fiduciaries will be requested to forward proxy soliciting material
to their principals to obtain authorization for the execution of proxies on
their behalf. The Company will not pay such persons any compensation for
soliciting proxies, but the Company will reimburse such persons for their
out-of-pocket expenses incurred in this connection.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following persons have reported to the SEC that they own more than
five percent of the outstanding voting securities of the Company:
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT
TITLE OF CLASS BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- -------------- ---------------- ----------------------- --------
Common Stock Royce & Associates, Inc.
1414 Avenue of the Americas
New York, New York 10019 1,851,700 shares 11.4%
Cannell Capital LLC 1,378,100 shares 8.5%
150 California Street, Fifth Floor
San Francisco, CA 94111
NFJ Investment Group 849,200 shares 5.2%
2121 San Jacinto St., Suite 1840
Dallas, TX 75201
Note - This information was obtained from Schedule 13G filings by Royce &
Associates, Inc. on February 7, 2002, and Cannell Capital LLC and NFJ Investment
Group on February 14, 2002.
2
The following table lists, as of the close of business on April 15,
2002, the Company's common stock beneficially owned by each director, each of
the most highly compensated executive officers, and all directors and executive
officers as a group:
COMMON STOCK BENEFICIAL OWNERSHIP
-------------------------------------------------------
NUMBER OF SHARES
-------------------------------------------------------
OBTAINABLE PERCENT OF
NAME/GROUP DIRECTLY INDIRECTLY THROUGH STOCK OUTSTANDING
OWNED OWNED OPTION EXERCISE(4) TOTAL SHARES
-------- ---------- ------------------ --------- -------------
James B. Gardner 13,125 4,000 (2) 6,250 23,375 *
Harold W. Hartley 3,375 26,975 (1) 6,250 36,600 *
Robert L. Mitchell 59,581 6,250 65,831 *
Kenneth E. Overstreet 79,223 79,223 *
Thomas R. Price 21,500 30,000 (2) 6,250 57,750 *
Kenneth G. Pritchett 16,500 3,000 (2)&(3) 3,750 23,250 *
Ewell L. Tankersley 18,025 3,100 (2) 6,250 27,375 *
James C. Taylor 4,000 6,250 10,250 *
Keith S. Walters 7,650 140,000 147,650 *
All Directors and Executive
Officers as a group (12) 243,979 73,718 224,750 562,697 3.5%
(1) Shares held in trust of which Mr. Hartley is one of two trustees with shared
voting power.
(2) Indirect shares attributable to Mr. Gardner, Mr. Price, Mr. Pritchett and
Mr. Tankersley are held in trust for the benefit of the named Directors.
Each has voting power over the shares.
(3) Additional shares held in a Profit Sharing plan in which Mr. Pritchett has a
beneficial interest.
(4) Shares exercisable through stock option exercise represent options
exercisable within 60 days.
* Indicates less than 1%.
- -----------
ELECTION OF DIRECTORS (PROPOSAL 1)
The Board of Directors is divided into three classes which consist of
nine directors, six of whom are not, and have not been, officers or employees of
the Company. The terms of three directors currently expire at this year's Annual
Meeting, the terms of three directors currently expire at the 2003 Annual
Meeting and the terms of three directors currently expire at the 2004 Annual
Meeting. At this year's Annual Meeting, three directors will be elected for a
term expiring at the 2005 Annual Meeting.
Provided a quorum is present, a plurality of the votes cast in person or
by proxy by the holders of shares entitled to vote is required to elect
directors. With respect to the election of directors, shareholders have
cumulative voting rights, which means that each shareholder entitled to vote (a)
has the number of votes equal to the number of shares held by such shareholder
multiplied by the number of directors to be elected and (b) may cast all such
votes for one nominee or distribute such shareholder's votes among the nominees
as the shareholder chooses. The right to cumulate votes may not be exercised
until a shareholder has given written notice of the shareholder's intention to
vote cumulatively to the corporate
3
secretary on or before the day preceding the election. If any shareholder gives
such written notice, then all shareholders entitled to vote may cumulate their
votes. Upon such written notice, the persons named in the accompanying form of
Proxy may cumulate their votes if additional persons are nominated at the Annual
Meeting for the election of directors. As a result, the Board of Directors is
soliciting discretionary authority to cumulate votes.
The following table sets forth certain information concerning each
nominee and continuing director. Except as set forth therein, none of the
nominees or continuing directors is an officer or director of any other publicly
owned corporation or entity.
THREE-YEAR TERMS EXPIRING IN 2005
YEAR IN WHICH
SERVICE AS A
NAME OF NOMINEE BACKGROUND AGE DIRECTOR BEGAN
- --------------- --------------------------------------------------------------------------- ----- --------------
Keith S. Walters, Chairman of the Board, CEO and President of the Company. 52 1997
Mr. Walters joined the Company in August 1997 as Vice
President-Commercial Printing Operations and was appointed Vice
Chairman of the Board and Chief Executive Officer in November
1997. Prior to joining the Company, Mr. Walters was with
Atlas/Soundolier, a division of American Trading and Production
Company, for 8 years, most recently as Vice President of
Manufacturing. Prior to that time, Mr. Walters was with the
Automotive Division of United Technologies Corporation for 15
years, primarily in manufacturing and operations.
James B. Gardner, Senior Managing Director of Service Asset Management 67 1970
Company (SAMCO).
Mr. Gardner has served in his present position with SAMCO, a
financial services firm, since May 1994. Mr. Gardner has also been a
director of Century Telephone Enterprises, Inc. since 1981 and serves
as a director of NAB Asset Corporation.
Kenneth E. Overstreet, Group President of the Company's Financial Solution 59 2000
and Promotional Solution Groups.
Mr. Overstreet joined the Company in June 2000 at the time of the
acquisition of Northstar Computer Forms, Inc. (NSCF). Prior to
June 2000, Mr. Overstreet was employed by NSCF since 1989,
serving as President since 1993.
4
THREE-YEAR TERMS EXPIRING IN 2003
YEAR IN WHICH
NAME OF SERVICE AS A
CONTINUING DIRECTOR BACKGROUND AGE DIRECTOR BEGAN
- ------------------- -------------------------------------------------------------------------- ----- --------------
Robert L. Mitchell, Retired President of the Company. 68 1985
Mr. Mitchell retired in December 1989. Prior to that date, he
served as President and Chief Operating Officer of the Company
from April 1985 and was continuously employed by the Company
beginning in 1969.
Thomas R. Price, Owner and President of Price Industries, Inc. 63 1989
Mr. Price has been engaged in his present occupation since 1966
and is a director of Congress Drives, Inc., Ennis, Texas since
1989.
Ewell L. Tankersley, Investments. 69 1988
Since June 1985, Mr. Tankersley has engaged in private
investing. Mr. Tankersley served as an audit partner with KPMG
LLP from 1966 until his retirement in 1985.
THREE-YEAR TERMS EXPIRING IN 2004
YEAR IN WHICH
NAME OF SERVICE AS A
CONTINUING DIRECTOR BACKGROUND AGE DIRECTOR BEGAN
- ------------------- -------------------------------------------------------------------------- ----- --------------
Harold W. Hartley, Investments. 78 1971
Mr. Hartley retired in December 1985 and since that time has
managed his private investments. From June 1984 to December
1985, he served as a consultant to Tenneco Financial Services,
Inc. From February 1981 to June 1984 Mr. Hartley served as
Executive Vice-President of Tenneco Financial Services, Inc.
Mr. Hartley serves as a director of the Conseco Fund Group.
Kenneth G. Pritchett, President of Ken Pritchett Properties, Inc. 64 1999
Ken Pritchett Properties, Inc. is a Commercial and Residential
Development Corporation in the Dallas/Ft. Worth Metropolitan area
since 1968, specializing in shopping center and exclusive residential
development. Mr. Pritchett is on the Board of Trustees and Chairman
of the Planning Committee for Charlton Methodist Hospitals. He is a
Life Director for the National Home Builders, and the Texas Home
Builders Association. He serves on the Executive Committee for the
Metropolitan Homebuilders Association.
5
James C. Taylor, Principal, The Anderson Group, Inc. 60 1998
The Anderson Group Inc., Bloomfield Hills, Michigan, is a private
investment firm engaged in the acquisition and management of
businesses in a variety of industries. Mr. Taylor joined The Anderson
Group Inc. in 1989 and served as the President and Chief Executive
Officer of four businesses affiliated with The Anderson Group Inc.:
Display Technologies, Inc. (January 2001 to the October 2001);
Burwood Products Company, a wall decor and clock manufacturer
(February 1995 to February 2000); The Bargeman Company, a
supplier of proprietary products to the recreational vehicle
and utility trailer industries (January 1992 to December
1994); and Advance Stamping Company, a supplier of metal
stampings to the automotive, electrical and hardware
industries (January 1989 to September 1991). Prior to 1989,
Mr. Taylor was with United Technologies Corporation for 19
years, primarily in manufacturing operations, including 7
years as a Group Vice President.
BOARD COMPENSATION
Non-employee directors receive an annual retainer of $15,000 plus $1,500
for each board meeting attended and $1,000 for each committee meeting attended
other than in conjunction with a board meeting. In addition, each committee
chairman receives an annual retainer of $4,000. The Company also reimburses
travel and accommodation expenses of directors incurred with respect to board
and committee meetings. The Company grants each outside director an option to
purchase 10,000 shares at the time of election and 5,000 shares annually while
service as a director continues. These are non-qualified options as provided
under the 1998 Option and Restricted Stock Plan. Pursuant to this policy, Mr.
Gardner, Mr. Hartley, Mr. Mitchell, Mr. Price, Mr. Pritchett, Mr. Tankersley and
Mr. Taylor were granted options of 5,000 shares each in April 2001.
MEETINGS OF BOARD AND COMMITTEES
The Company's Board held five meetings during the fiscal year ended
February 28, 2002. The Board's Executive Compensation and Stock Option,
Nominating and Executive committees each held one meeting. The Audit Committee
met four times. Each director attended at least 75% of the meetings of the Board
of Directors and the committees on which each served during the fiscal year.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE. See Audit Committee Report for a discussion of the purpose of
the Committee and the names of the directors who serve on the Committee.
EXECUTIVE COMPENSATION AND STOCK OPTION COMMITTEE. See Executive Compensation
for a discussion of the purpose of the Committee and the names of the directors
who serve on this Committee.
NOMINATING COMMITTEE. This committee considers and makes recommendations to the
Board of Directors regarding any nominee submitted for election to the Board,
whether submitted by management, by other members of the Board of Directors or
by shareholders. Although no nominee has ever been
6
submitted by shareholders, in the event any shareholder wishes to nominate a
candidate for director, the Board of Directors, through this committee, would
consider such a nomination upon receipt of a written nomination, including the
business history of the candidate, mailed to the attention of the Board of
Directors or upon an oral presentation of the candidate's qualifications to the
Board of Directors or the committee. The committee currently consists of Mr.
Taylor (Chairman), Mr. Hartley and Mr. Pritchett.
EXECUTIVE COMMITTEE. This committee advises and consults with the Chief
Executive Officer regarding the management of the business and affairs of the
Company and makes recommendations for consideration by the full Board of
Directors. The committee currently consists of Mr. Gardner (Chairman), Mr.
Walters and Mr. Tankersley.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation and Stock Option Committee of the Board of
Directors of the Company (the "Committee"), which is composed entirely of the
three non-employee directors listed below, has furnished the following report on
executive compensation. The Committee's report documents the components of the
Company's executive officer compensation programs and describes the compensation
philosophy on which 2002 compensation determinations were made by the Committee
with respect to the executive officers of the Company, including the Chief
Executive Officer and the four other executive officers that are named in the
compensation tables who are currently employed by the Company (the "Named
Executives"). The decisions of the Committee with respect to the compensation of
the executive officers are submitted to and subject to ratification by the Board
of Directors prior to implementation.
COMPENSATION PHILOSOPHY
The executive compensation program of the Company is reviewed annually
by the Committee and it is the philosophy of the Company that executive
compensation is directly linked to continuous improvements in corporate
performance. Specifically, the following objectives have been adopted by the
Committee as guidelines for compensation decisions:
o Provide a competitive total executive compensation package that
enables the Company to attract and retain key executives and
maintain a competitive position in the executive marketplace with
employers of comparable size and in similar lines of business.
o Enhance the compensation potential of executives by integrating pay
programs with the Company's annual and long-term business objectives
and strategy, and focus executives on the fulfillment of these
objectives.
o Provide variable compensation opportunities that are linked with the
performance of the Company, emphasizing net earnings, return on
capital and revenue growth.
7
The Committee periodically engages recognized independent compensation
consultants to undertake a third-party evaluation of current compensation
arrangements in light of competitive market conditions.
CASH COMPENSATION
Cash compensation includes base salary and the Company's annual
incentive plan awards. The base salary of each of the Company's executive
officers is determined by an evaluation of the responsibilities of that position
and by comparison to the range of salaries paid in the competitive market in
which the Company competes for comparable executive ability and experience. The
performance of each Named Executive officer is reviewed annually by the
Committee and the Chief Executive Officer in the case of the other executive
officers, taking into account the Company's operating and financial results for
that year, the contribution of each executive officer to such results, the
achievement of goals established for each such executive officer at the
beginning of each year, and competitive salary levels for persons in those
positions in the markets in which the Company competes. To assist in its
deliberations, the Committee accesses comparable salary and incentive
compensation information for a number of representative companies in the
industry for comparison purposes. Following its review of the performance of the
Company's Named Executive officers, the Committee reports its recommendations
for salary increases and incentive awards to the Board of Directors. In fiscal
year 2002, annual base salary increases and incentive compensation awards were
approved by the Committee and reported to the Board of Directors for all of the
Named Executives, and incentive compensation awards were approved by the
Committee for all of the executives (other than the Named Executives). The
Committee believes the recommended salary increases and incentive awards were
warranted, are properly aligned to the Board's compensation philosophy, and
consistent with the performance of such executives during fiscal year 2002 based
on the Committee's evaluation of each individual's overall contribution to
accomplishing the Company's fiscal year 2002 corporate goals and of each
individual's achievement of individual goals during the year.
STOCK OPTIONS
The Committee believes that it is essential to align the interests of
the Company executives and other management personnel responsible for the growth
of the Company with the interests of the Company's stockholders. The Committee
believes the long-term alignment of its executives to shareholders is best
accomplished through the provision of stock option grants. Therefore, pursuant
to the recommendation of the members of the Committee, the Company's Board of
Directors and stockholders approved the 1998 Option and Restricted Stock Plan at
the June 18, 1998 Shareholders Meeting that provides for granting stock options
and restricted stock awards. The purpose of this Plan is to foster and promote
the long-term financial success of the Company by providing a means through
which the Company and its subsidiaries can attract and retain key executive and
managerial employees, consultants and non-employee directors who can contribute
materially to that success. The Committee will continue to review long-term
incentives and make recommendations, where appropriate, to the Company's Board
of Directors, from time to time, to assure the Company's executive officers and
other key employees are appropriately motivated and rewarded based on the
long-term financial progress of the Company.
COMPENSATION OF CEO
In determining the compensation of Mr. Keith Walters, the Chairman and
Chief Executive Officer, the Committee (with Mr. Walters not participating)
reviewed the Company's operating and financial
8
results for fiscal year, evaluated his individual performance and contribution
to those results, and considered the compensation range for other chief
executive officers of companies in the industry. Based on that review and
assessment, the Committee recommended and the Company's Board of Directors
ratified that his base annual salary was adjusted to $400,000 (midpoint for his
position in the Company's salary administration system) in April 2001. A
performance bonus of $160,154 was approved for Mr. Walters based on
predetermined performance criteria on revenue growth, return on capital employed
and net income for the fiscal year ended February 2002. In addition, Mr. Walters
was granted a discretionary bonus of $35,000 (bringing the cash bonus to a total
of $195,154).
SUMMARY
As demonstrated in each of the plans above, compensation in all its
forms is linked directly to objective performance criteria of the Company,
business units where applicable, and the individual executive's performance. By
doing so, the Committee has created an environment which encourages long-term
decisions which will benefit the Company, its shareholders, customers, and
employees and at the same time allows the executives, managers, and key
contributors within the Company to share in the success of those decisions and
actions. Furthermore, the Committee believes that the total compensation program
for executive officers of the Company will be competitive with the compensation
programs provided by other corporations with which the Company competes.
The Committee believes the actions taken regarding executive
compensation were appropriate in view of individual and corporate performance.
Ewell L. Tankersley - Chairman James B. Gardner James C. Taylor
SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") disallows a corporation's deduction for remuneration paid to its chief
executive officer and its named executive officers in excess of $1 million per
person. Performance-based compensation and certain other compensation, as
defined, is not subject to the deduction limitation of this regulation.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into employment agreements with the executive
officers of the Company. The agreements provide that for a continuing three-year
employment period plus two 1-year extensions. Each of such employment agreements
provides that if the officer terminates his employment for good reason or during
the two-year period following a change of control of the Company, the Company
will (a) make a lump sum payment to him of salary earned through the date of
termination, (b) make a lump sum severance payment to him of the amount
determined by multiplying his base amount times a multiple per his agreement,
(c) accelerate vesting of all long-term incentives, to include but not limited
to stock options, restricted stock, any other long-term incentive grants, and
(d) continue to provide certain welfare plan and other benefits for a period of
one year or as long as such plan or benefits allow or until the executive is
employed under the benefit plans of another company.
9
For purposes of the employment agreements, "good reason" includes (i) a
change in the officer's position, authority, duties or responsibilities, (ii)
changes in the office or location at which he is based without his consent (such
consent not to be unreasonably withheld), (iii) certain breaches of the
agreement and (iv) a reduction in base annual salary.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of the members of the Executive Compensation and Stock Option
Committee are non-employee directors of the Company and are not former officers
of the Company. During fiscal year 2002, no executive officer of the Company
served as a member of the Board of Directors or on the compensation committee of
a corporation where one of whose executive officers served on the Executive
Compensation and Stock Option Committee or on the Board of Directors of the
Company.
10
SUMMARY COMPENSATION TABLE *
NAME AND PRINCIPAL POSITION (A) NUMBER OF
SECURITIES
UNDERLYING
OPTIONS
ANNUAL COMPENSATION (B) LONG-TERM
------------------------------------------ COMPENSATION
YEAR SALARY BONUS OTHER AWARDS
---- -------- ------- ----- ------
Keith S. Walters 2002 $392,308 195,154 25,000
Chairman of the Board, 2001 $345,192 30,000 100,000
President and Chief 2000 $315,384 238,362 100,000
Executive Officer
Ronald M. Graham 2002 $133,000 40,000 5,000
Vice President - 2001 $121,039 7,500 15,000
Administration 2000 $115,115 49,306 15,000
Robert M. Halowec 2002 $150,000 39,318 --
Vice President - Finance 2001 $146,154 5,358 15,000
and CFO 2000 $128,654 63,118 15,000
Harve Cathey 2002 $100,000 20,000 --
Secretary and Treasurer 2001 $99,039 1,786 15,000
2000 $95,000 25,917
Kenneth E. Overstreet 2002 $210,576 35,000 52,392 (c) --
Group President 2001 $150,000 52,392 (c) --
- -----------
* There were no Restricted Stock Awards, SARs or LTIP Payouts during the three
most recent fiscal years.
(a) This table includes the Chief Executive Officer and all other executive
officers whose compensation exceeded $100,000 for the most recent fiscal year.
(b) All amounts are for fiscal years ended February 28 or 29.
(c) Mr. Overstreet was paid a "Transaction Complete Bonus" in conjunction with
the contract to acquire Northstar Computer Forms, Inc. which is payable in three
annual installments beginning in June 2000.
11
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED PRICE APPRECIATION
SECURITIES OPTIONS/SARS EXERCISE OR FOR OPTION TERM
UNDERLYING SARS GRANTED FOR BASE PRICE ---------------
GRANTED (1) (2) FISCAL YEAR PER SHARE EXPIRATION 5% 10%
------- ----------- --------- ---------- -- ---
Keith S. Walters 25,000 83.3% $7.90 04/19/11 $109,000 $268,250
Ronald M. Graham 5,000 16.7% $7.90 04/19/11 21,800 53,550
(1) Total number of options granted to employees during fiscal 2002 was 30,000.
(2) Options become exercisable in increments of 25% per year (cumulative)
beginning April 19, 2003.
TABLE 3: AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
BY FISCAL YEAR-END OPTION/SAR VALUES
Number of
Securities Value of
underlying unexercised
unexercised in-the-money
options/SARs options/SARs
Shares at fiscal at fiscal
acquired year end year end
on Value ----------------------------- -----------------------------
Name exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
Keith S. Walters 90,000 255,000 $ 75,438 $ 594,063
Robert M. Halowec 11,750 34,250 $ 7,209 $ 82,050
Ronald M. Graham 11,750 39,250 $ 7,209 $ 88,391
Harve Cathey 20,500 17,500 $ 900 $ 55,013
PENSION PLAN TABLE (1)
YEARS OF SERVICE
------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -- -- -- -- --
$125,000 $19,392 $25,856 $32,321 $38,785 $45,249
150,000 24,080 32,106 40,133 48,160 56,186
175,000 28,767 38,356 47,946 57,535 67,124
200,000 33,455 44,606 55,758 66,910 78,061
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(1) The Company has a noncontributory retirement plan that covers substantially
all of the employees of the Company and certain of its subsidiaries. The plan
provides for retirement benefits on a formula
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based on the average pay of the highest five consecutive compensation years
during active employment, integration of certain Social Security benefits,
length of service and a normal retirement age of sixty-five. All forms of
remuneration, including overtime, shift differentials and bonuses, are covered
by the plan. However, due to restrictions imposed by the Revenue Reconciliation
Act of 1993, effective March 1, 1997, the maximum annual compensation covered by
the plan is limited to $160,000. Future years' maximum can be increased for
inflation. The tables above sets forth approximate annual retirement benefits
that would be received under the plan, computed on the basis of the specified
average annual earnings and years of service. The table presents annual benefit
amounts for remuneration above the current $160,000 since (a) the $160,000
maximum can increase with inflation and (b) prior to 1994 the maximum annual
compensation limitation was more than $160,000.
The number of full years of continuous service in the plan as of
February 28, 2002 for Mr. Walters, Graham, Halowec and Cathey were 4, 3, 2 and
32, respectively. Mr. Overstreet is not covered by the plan.
AUDIT COMMITTEE REPORT
The Audit Committee is responsible for monitoring and assuring the
integrity of the Company's financial reporting process. It accomplishes this
function by assessing the internal accounting and auditing practices of the
Company, and the independent auditor's fulfillment of its role in the financial
reporting process. The Board of Directors adopted a written charter for the
Audit Committee in June 2000 further describing the role of the Committee.
During the fiscal year ended in February 2002, the Audit Committee
reviewed interim quarterly financial statements with management and the
independent auditors. This review was conducted prior to filing of the Company's
10-Q reports containing the respective interim quarterly financial statements.
In addition, the Committee reviewed and discussed the 2002 year-end audited
financial statements with executive management, including the Chief Financial
Officer, and the independent auditors. This review took place prior to
publication of the audited financial statements in the 10-K filing and annual
report to shareholders. Each review was conducted with the understanding that
management is responsible for preparing the Company's financial statements and
the independent auditors are responsible for reviewing the interim quarterly
financial statements and auditing the annual financial statements.
In further discharge of its responsibilities, the Audit Committee met
with the independent auditors, both in the presence of management and privately.
The Committee and independent auditors discussed those matters described in
Statement of Auditing Standards No. 61, "Communications with Audit Committee."
These discussions included review of the scope of the audit performed with
respect to the Company's financial statements.
The Audit Committee received the independent auditor's written statement
required by Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees." This written statement described any
relationships between the independent auditors and the company that may
reasonably be thought to bear on independence. Following receipt of this written
statement and discussions of the matters described in it, the Committee was
satisfied as to the auditor's independence.
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Based upon the foregoing, the Audit Committee recommended to Board of
Directors that audited financial statements be included in the Company's annual
report on form 10-K, for the fiscal year ended February 28, 2002.
AUDIT FEES
AUDIT FEES - The aggregate fees billed by the Company's independent auditors for
professional services rendered in connection with the audit of the consolidated
financial statements included in the Company's Annual Report on Form 10-K for
fiscal 2002, were $130,000.
As reported in a Form 8-K filed on January 29, 2002, the Company dismissed KPMG
LLP as the Company's principal accountant to audit its financial statement. The
dismissal was not the result of any disagreements on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure during the Company's two most recent fiscal years (2000 and 2001) and
any subsequent interim period preceding the dismissal. At that time, the Company
engaged Ernst & Young LLP as principal accountant to audit its financial
statements for fiscal year 2002. Due to the timing of this change there were no
other fees paid to Ernst & Young LLP for any type of services during fiscal year
2002.
The Audit Committee believes that the foregoing expenditures are compatible with
maintaining the auditor's independence.
The Audit Committee:
Robert L. Mitchell (Chairman)
Thomas R. Price
Ewell L. Tankersley
The foregoing Audit Committee Report shall not be deemed to be incorporated by
reference into any of Ennis Business Forms' previous or future filings with the
Securities and Exchange Commission except as otherwise explicitly specified by
Ennis Business Forms in any such filing.
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FIVE-YEAR PERFORMANCE COMPARISON (1)
The graph below provides an indicator of cumulative total shareholder
returns for the Company compared with the S&P 500 Stock Index and a Peer Group
(2).
[PERFORMANCE GRAPH]
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2/28/97 2/28/98 2/28/99 2/29/00 2/28/01 2/28/02
- ------------------------------------------------------------------------------------------
S&P 500 100 135.00 161.65 180.61 165.80 150.03
Ennis Business Forms, Inc. 100 102.79 91.66 81.91 102.77 138.51
Peer Group 100 105.23 78.24 41.61 49.92 71.20
Assumes $100 invested on February 28, 1997 in Ennis Business Forms, Inc.
Common Stock, the S&P 500 Index and Peer Group common stock.
Total shareholder returns assume reinvestment of dividends.
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(1) The data to prepare this performance comparison was obtained from Standard
& Poor's Compustat Services, Inc.
(2) The Peer Group consists of the following publicly-held business forms
manufacturers: Moore Corporation Ltd., The Standard Register Company, Wallace
Computer Services, Inc., New England Business Services, Inc., Mail-Well, Inc.
and Ennis Business Forms, Inc.
SELECTION OF AUDITORS (PROPOSAL 2)
The selection of independent auditors is to be ratified at the meeting and
it is intended that persons named in the accompanying form of Proxy will vote
for Ernst & Young LLP, Certified Public Accountants. The members of the Audit
Committee of the Board of Directors, Messrs. Mitchell, Price and Tankersley,
join with the remaining members of the Board of Directors in recommending the
ratification of the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending February 28, 2003. Representatives of the
firm will be present at the Annual Meeting of shareholders to answer questions
and to make any statements they wish to make regarding the Company's financial
statements. Ratification of the selection of auditors requires the affirmative
vote of the holders of a majority of the shares voting at the Annual Meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and persons who own more than 10% of the
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors and greater than 10% beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of the forms furnished to the
Company, the Company believes that during the fiscal year ended February 28,
2001, all Section 16(a) filing requirements applicable to its officers and
directors were made.
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MISCELLANEOUS
Management is not aware of any other matters that may be presented for
action at the meeting. If any other matters should be presented at the meeting
for which a vote may properly be taken, then the enclosed form of Proxy will be
voted in such manner as the persons named in the Proxy shall in their discretion
determine.
The Company will upon written request furnish to any shareholder,
without charge, a copy of its Annual Report on Form 10-K for the fiscal year
ended February 28, 2002 filed with the Securities and Exchange Commission. Such
written request should be directed to Harve Cathey, Secretary, Ennis Business
Forms, Inc., 1510 N. Hampton, Suite 300, DeSoto, Texas 75115.
If you do not expect to attend the meeting, please date, sign and return
the Proxy at your earliest convenience. No postage is required for mailing in
the United States. A prompt return of your Proxy will be appreciated, as it will
save the expense of further mailing.
SHAREHOLDER PROPOSALS
In order for proposals of shareholders to be considered for inclusion in
the proxy statement and form of Proxy for the 2003 Annual Meeting of
Shareholders, the Secretary of the Company must receive such proposals not less
than 120 days in advance of May 20, 2002.
By Order of the Board of Directors
Harve Cathey
Secretary
DeSoto, Texas
May 17, 2002
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