-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J7PJjYHnH+sw7jM73ZkY7E5ACUoP0igLvkX/wXVxz4mhIa0YE9a0GI8dtSL8xtvK vEEosGGF/I99amD1eFrGvQ== 0000033002-99-000017.txt : 19990927 0000033002-99-000017.hdr.sgml : 19990927 ACCESSION NUMBER: 0000033002-99-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990831 FILED AS OF DATE: 19990924 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENNIS BUSINESS FORMS INC CENTRAL INDEX KEY: 0000033002 STANDARD INDUSTRIAL CLASSIFICATION: MANIFOLD BUSINESS FORMS [2761] IRS NUMBER: 750256410 STATE OF INCORPORATION: TX FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05807 FILM NUMBER: 99716127 BUSINESS ADDRESS: STREET 1: 107 N SHERMAN ST CITY: ENNIS STATE: TX ZIP: 75119 BUSINESS PHONE: 9728723100 MAIL ADDRESS: STREET 1: 107 NORTH SHERMAN STREET CITY: ENNIS STATE: TX ZIP: 75119 FORMER COMPANY: FORMER CONFORMED NAME: ENNIS TAG & SALESBOOK CO DATE OF NAME CHANGE: 19700805 10-Q 1 19 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, 1999 --------------------------------------------------------- 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.) 1510 N. Hampton, Suite 300, DeSoto, TX 75115 - -------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (972) 228-7801 --------------- (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 reports), 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, 1999 - --------------------------------------- ------------------------------ Common stock, par value $2.50 per share 16,253,410 ENNIS BUSINESS FORMS, INC. INDEX Part I. Financial Information - unaudited Condensed Consolidated Balance Sheets -- August 31, 1999 and February 28, 1999 2 Condensed Consolidated Statements of Earnings -- Three and Six Months Ended August 31,1999 and 1998 3 Condensed Consolidated Statements of Cash Flows --Six Months Ended August 31, 1999 and 1998 4 Notes to Condensed Consolidated Financial Statements 5 - 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 8 Part II. Other Information 9 PART I. FINANCIAL INFORMATION ENNIS BUSINESS FORMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited) August 31, February 28, 1999 1999 ---------- ----------- Assets Current assets: Cash and equivalents $ 28,485 20,691 Accounts receivable, net 21,930 18,720 Inventories 6,799 8,533 Other current assets 3,175 4,732 -------- ------- Total current assets 60,389 52,676 -------- ------- Property, plant and equipment, net 32,051 33,911 Cost of purchased businesses in excess of amounts allocated to tangible net assets 5,266 5,731 Other assets and deferred charges 832 2,017 -------- ------- Total assets $ 98,538 94,335 ======== ======= Liabilities and Shareholders' Equity Current liabilities: Current installments of long-term debt $ 273 199 Accounts payable 3,441 4,107 Accrued expenses 6,426 4,061 -------- -------- Total current liabilities 10,140 8,367 -------- -------- Long-term debt, less current installments 217 7 Deferred credits, principally Federal income taxes 2,583 2,462 Shareholders' equity: Common stock, at par value 53,125 53,125 Additional capital 1,040 1,040 Retained earnings 124,407 122,307 -------- ------- 178,572 176,472 Less: Treasury stock 92,974 92,973 -------- ------- Total shareholders' equity 85,598 83,499 -------- ------- Total liabilities and shareholders' equity $ 98,538 94,335 ======== ======= See accompanying notes to condensed consolidated financial statements. ENNIS BUSINESS FORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in Thousands Except Per Share Amounts) (Unaudited) Three Months Ended Six Months Ended August 31, August 31, ------------------- ----------------- 1999 1998 1999 1998 ---- ---- ---- ---- Net sales $38,160 36,904 $77,823 73,238 ------- ------ ------- ------ Costs and expenses: Cost of sales 25,752 25,109 53,427 49,921 Selling, general and Administrative expenses 7,703 6,846 14,725 13,587 ------ ------ ------- ------ 33,455 31,955 68,152 63,508 ------- ------ ------- ------ Earnings from operations 4,705 4,949 9,671 9,730 Investment and other income 1,420 350 1,629 675 ------- ------ ------- ------ Earnings before income taxes 6,125 5,299 11,300 10,405 Provision for income taxes 2,220 1,948 4,161 3,822 ------- ------ ------- ------ Net earnings $ 3,905 3,351 $ 7,139 6,583 ======= ====== ======= ====== Weighted average number of common shares outstanding 16,253,436 16,362,685 16,253,447 16,394,828 ========== ========== ========== ========== Per share amounts: Net earnings per basic and diluted share of common stock $ .24 .20 $.44 .40 ===== === ==== === Cash dividends $.155 .155 $.31 .31 ===== ==== ==== === See accompanying notes to condensed consolidated financial statements. ENNIS BUSINESS FORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Six Months Ended August 31, 1999 1998 ---- ---- Cash flows from operating activities: Net earnings $ 7,139 6,583 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,384 2,672 (Gain) loss on the sale of property, plant and equipment (1,195) (19) Loss on impairment of long-lived assets 611 -- Changes in operating assets and liabilities 1,207 3,037 Other 850 747 ------- ------ Net cash provided by operating activities 11,996 13,020 ------- ------ Cash flows from investing activities: Capital expenditures (1,441) (2,012) Proceeds from disposal of property 1,962 661 ------- ------- Net cash (used in) provided by investing activities 521 (1,351) ------- ------ - - Cash flows from financing activities: Purchase of treasury shares (1) (3,300) Dividends declared (5,039) (5,096) Other 317 (49) ------- ------ Net cash used in financing activities (4,723) (8,445) ------- ------- Net change in cash and equivalents 7,794 3,224 Cash and equivalents at beginning of period 20,691 22,700 ------- ------ Cash and equivalents at end of period $28,485 25,924 ======= ====== See accompanying notes to condensed consolidated financial statements. ENNIS BUSINESS FORMS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation --------------------- These unaudited condensed consolidated financial statements of Ennis Business Forms, Inc. and its subsidiaries (collectively the "Company"), for the quarter ended August 31, 1999 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 28, 1999, from which the accompanying condensed consolidated balance sheet at February 28, 1999 was derived. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. 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 ------------------ As of August 31, 1999, the Company has reserved 1,122,712 shares of common stock under incentive stock option plans. 3. 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 inventory at the different stages of production (in thousands of dollars): August 31, February 28, 1999 1999 Raw material $3,882 4,734 Work-in-process 773 951 Finished goods 2,144 2,848 ------ ----- $6,799 8,533 ====== ===== 4. Comprehensive Income -------------------- The Company adopted the provisions of Statement of Financial Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive Income, in the first quarter of fiscal 1999, which requires companies to disclose comprehensive income separate from net income from operations. Comprehensive income is defined as the change in equity during a period from transactions and other events and circumstances from non-ownership sources. It includes all changes in equity during a period, except those resulting from investments by owners and distributions to owners. The adoption of this statement had no significant effect on the Company for the three months and six months ended August 31, 1999 or 1998. Comprehensive income and net income are substantially the same. 5. Segment Data ------------ Segment data for the three months and six months ended August 31, 1999 and 1998 were as follows (in thousands): Business Forms & Printed Consolidated Products Tool & Die Totals -------- ---------- ------ Three months ended August 31, 1999: Net Sales $36,999 $1,161 $38,160 Depreciation and amortization 1,945 52 1,997 Segment earnings before income tax 6,078 47 6,125 Segment Assets 91,973 6,565 98,538 Capital Expenditures 893 47 940 Three months ended August 31, 1998: Net Sales $35,458 $1,446 $36,904 Depreciation and amortization 1,251 65 1,316 Segment earnings before income tax 10,144 261 10,405 Segment Assets 88,145 4,880 93,025 Capital Expenditures 1,399 42 1,441 Six months ended August 31, 1999: Net Sales $75,089 $2,734 $77,823 Depreciation and amortization 3,274 110 3,384 Segment earnings before income tax 11,513 (213) 11,300 Segment Assets 91,973 6,565 98,538 Capital Expenditures 1,394 47 1,441 Six months ended August 31, 1998: Net Sales $70,655 $2,583 $73,238 Depreciation and amortization 2,536 136 2,672 Segment earnings before income tax 10,193 212 10,405 Segment Assets 88,145 4,880 93,025 Capital Expenditures 1,849 163 2,012 The Company is principally in the business of manufacturing and selling business forms and other printed products to customers located in the United States. The Company previously reported its smaller operating segment and corporate and financing activities on a combined basis. For the three months and six months ended August 31, 1999 and 1998, the Company has reported its smaller operating segment separately. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - ------------------------------- At August 31, 1999, the Company's financial position continues to be strong. Working capital increased from $44,309,000 at February 28, 1999 to $50,249,000 at August 31,1999. The increase is due to cash provided by operating activities and the sale of a facility in Boulder City, Nevada. The Company has $28,485,000 in cash and equivalents and $217,000, in long- term debt, less current installments. Results of Operations - --------------------- Net sales for the three months and six months ended August 31, 1999 increased 3.4% and 6.3% respectively form the corresponding periods in the prior year. The sales increase for the three months and six months is attributable to overall growth mainly in the Company's business forms and printed products segment. Gross profit margins increased from 32.0% in the three months August 31, 1998 to 32.5% in the three months ended August 31, 1999. Gross profit margin decreased from 31.8% in the six months ended August 31, 1998 to 31.3% in the six months ended August 31, 1999. The tool and die segment experienced a negative gross margin for the first quarter ended May 31, 1999. Selling, general and administrative expenses for the three and six months ended August 31, 1999 increased 12.5% and 8.4% respectively compared to the corresponding period in the prior year. This increase was attributable to the acquisition of the Houston, Texas business forms operating unit in November, 1998 and to a pre-tax charge of $611,000 resulting from the impairment of intangible assets relating to the Company's InstaColor product line. Excluding the pre-tax charge related to the impairment of the InstaColor product line, selling, general and administrative expenses for the three and six months ended August 31, 1999 increased 3.6% and 3.9% respectively compared to the corresponding periods in the prior year. Investment and other income increased in the three and six months ended August 31, 1999 for the same periods in the prior year. The increase in other income is primarily the result of a pre-tax gain of $1,182,000 from the sale of rental property in Boulder City, Nevada. Earnings before income taxes for the three and six months ended August 31, 1999 increased 15.6% and 8.6% respectively from the corresponding periods in the prior year. The increase in net earnings resulted from increased sales and the gain recognized for the sales of property netted with the charge from impairment of intangible assets relating to the InstaColor product line. Basic and diluted earnings per share increased $0.04 for both the three and six month periods ended August 31, 1999 from the corresponding periods in the prior year. The per share earnings were based upon three months and six months weighted average shares outstanding of 16,253,436 and 16,253,447 respectively at August 31, 1999 and 16,362,685 and 16,394,828 weighted average shares outstanding at August 31, 1998. The effective rate of the Federal and state income tax expense was 36.2% and 36.8% for the three months ended August 31, 1999 and August 31, 1998, respectively, and 36.8% and 36.7% for six months ended August 31, 1999 and August 31, 1998. Accounting Standards - -------------------- Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative and Hedging Activities, was issued in June 1998. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. This statement will be effective for the company beginning March 1, 2001. It is not expected to have a material impact on our financial statements. Year 2000 issues - ---------------- The Year 2000 may have a broad impact on the business environment in which the Company operates due to the possibility that many computerized systems across all industry lines will be unable to process information containing dates beginning in the Year 2000. In 1995, for reasons unrelated to preparations for the Year 2000, the Company invested approximately $3,000,000 in a project to replace substantially all of its existing computer hardware and software. One of the benefits of this project was to bring a major portion of the Company's technology assets into Year 2000 readiness. Subsequent to the project mentioned above, the Company has invested approximately $700,000 over the past three years in technological hardware and software, all of which is Year 2000 ready. In addition to the investment described above, the Company has surveyed all major suppliers of goods and services to determine their readiness for Year 2000. Also, the operating units have surveyed the ancillary equipment used in their respective operations to ascertain the equipment'' readiness for Year 2000. The cost of performing these survey's has been nominal. No problems have been discovered at this time. The Company believes that substantially all of its internal technology systems are prepared for Year 2000 at this time. Any adverse consequences to the Company as a result of lack of preparations for Year 2000 are expected to occur as a result of external forces. To the extent that it is possible to determine if any of the Company's suppliers of goods and services are unprepared for Year 2000, changes in suppliers will be made where possible. The Company does not expect material disruptions as a result of any controllable factors relating to preparations for Year 2000. 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 September 23, 1999. PART II. OTHER INFORMATION Item 5. Other Information - --------------------------- In order for proposals of shareholders to be considered for inclusion in the proxy statement and form of Proxy for the 2000 Annual Meeting of Shareholders, such proposals must be received by the Secretary of the Company not less than 120 days in advance of May 21, 2000. The Company intends to exercise discretionary voting authority granted under any proxy that is executed and returned to the Company on any matter which may properly come before the 2000 Annual Meeting of Shareholders, unless written notice of the matter is delivered to the Company at its principal executive offices in DeSoto, Texas, addressed to the Secretary of the Company, not later than April 4, 2000. Item 6. Exhibits and Reports on Form 8-K - ------------------------------------------ (a) Exhibit Exhibit No. (27) Financial Data Schedule (b) Reports on Form 8-K None 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 September 23, 1999 /s/Robert M. Halowec ------------------ -------------------- Robert M. Halowec Vice President Finance and Chief Financial Officer Date September 23, 1999 /s/Harve Cathey ------------------ --------------- Harve Cathey Secretary and Treasurer Principal Accounting Officer EX-27 2
5 1000 6-MOS FEB-29-2000 AUG-31-1999 28485 0 23061 1131 6799 60389 92264 60213 98538 10140 217 0 0 53125 178572 98538 77823 77823 53427 53427 14725 0 25 11300 4161 7139 0 0 0 7139 .44 .44
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