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, 1997
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, 1997
Common stock, par value $2.50 per share 16,437,998
ENNIS BUSINESS FORMS, INC.
INDEX
Part I. Financial Information
Consolidated Condensed Balance Sheets --
August 31, 1997 and February 28, 1997 2
Consolidated Condensed Statements of Earnings --
Three and Six Months Ended August 31,1997
and 1996 3
Consolidated Condensed Statements of Cash
Flows --Six Months Ended August 31, 1997
and 1996 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 28,
1997 1997
Assets
Current assets
Cash and equivalents $ 20,083 18,494
Accounts receivable, net 18,226 18,600
Inventories 8,196 10,500
Other current assets 4,220 5,033
Total current assets 50,725 52,627
Property, plant and equipment, net 37,886 33,560
Cost of purchased businesses in excess of amounts
allocated to tangible net assets 6,002 5,942
Other assets and deferred charges 2,533 2,828
Total assets $ 97,146 94,957
Liabilities and Shareholders' Equity
Current liabilities
Current installments of long-term debt $ 180 85
Accounts payable 4,517 5,234
Accrued expenses 7,173 4,988
Federal and state income taxes payable 4 --
Total current liabilities 11,874 10,307
Long-term debt, less current installments 349 195
Deferred credits, principally Federal income taxes 3,456 2,869
Shareholders' equity
Common stock, at par value 53,125 53,125
Additional capital 1,040 1,040
Retained earnings 119,211 119,318
Cumulative foreign currency translation adjustments (85) (76)
173,291 173,407
Less:
Treasury stock 91,824 91,821
Total shareholders' equity 81,467 81,586
Total liabilities and shareholders' equity $ 97,146 94,957
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,
1997 1996 1997 1996
Net sales $38,309 38,715 $76,205 75,639
Costs and expenses:
Cost of sales 26,562 26,422 53,582 50,573
Selling, general and administrative
expenses 7,797 6,917 15,211 13,379
Interest expense 19 23 37 46
34,378 33,362 68,830 63,998
Earnings from operations 3,931 5,353 7,375 11,641
Investment and other income 265 395 551 878
Earnings before income taxes 4,196 5,748 7,926 12,519
Provision for income taxes 1,546 2,153 2,937 4,702
Net earnings $ 2,650 3,595 $ 4,989 7,817
Weighted average number of common
shares outstanding 16,438,126 16,438,890 16,438,199 16,439,055
Per share amounts:
Net earnings $ .16 .22 $ .30 .48
Cash dividends $.155 .155 $ .31 .305
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,
1997 1996
Cash flows from operating activities:
Net earnings $ 4,989 7,817
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,112 2,395
Changes in assets and liabilities 4,853 (4,101)
Other 812 (1,181)
Net cash provided by operating activities 13,766 4,930
Cash flows from investing activities:
Capital expenditures (7,347) (6,211)
Purchases of operating assets -- (7,342)
Other 21 9
Net cash provided by (used in) investing
activities (7,326) (13,544)
Cash flows from financing activities:
Dividends declared (5,096) (5,014)
Proceeds from capital lease financing 288 --
Other (43) (9)
Net cash used in financing activities (4,851) (5,023)
Net change in cash and equivalents 1,589 (13,637)
Cash and equivalents at beginning of period 18,494 38,606
Cash and equivalents at end of period $ 20,083 24,969
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, 1997 and February 28, 1997, and the results of operations
and cash flows for the three months and six months ended August 31,
1997 and 1996.
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, 1997, 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 28,
1997 1997
Raw material $ 4,850 6,394
Work-in-process 981 1,127
Finished goods 2,365 2,979
$ 8,196 10,500
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At August 31, 1997, the Company's financial position continues to be
strong. Working capital decreased from $42,320,000 at February 28, 1997 to
$38,851,000 at August 31, 1997. The decrease is primarily due to capital
expenditures. 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, 1997 decreased 1.0% from
the corresponding period in the prior year. Net sales for the six months
ended August 31, 1997 increased .7% from the corresponding period in the
prior year. The sales decline in the second quarter is attributable to
declines in cotton tag sales and sales from the two commercial printing
operations acquired last year. Cotton tag sales declined $700,000 in the
second quarter as compared to the same period in the prior year. From a
record high in 1992, cotton tag sales have steadily declined as a result of
changing industry practices, new technologies and competitive pressures.
The gross margins for the three and six month periods ended August 31, 1997
decreased 4.4% and 9.7%, respectively, compared to the same periods in the
prior year. The decline in gross profits is because of price discounting
and the cost of providing improved service to customers. The gross profit
decline for the three months ended August 31, 1997 compared to the
corresponding three months ended August 31, 1996 is not as substantial as
the gross profit margin decline between the six month periods. This is
because there was less discounting of prices in the second quarter of 1997
compared to the first quarter of 1997. Selling, general and administrative
expenses for the three and six month periods ended August 31, 1997
increased 12.7% and 13.7%, respectively, compared to the corresponding
periods in the prior year. The increases are primarily due to higher
marketing and promotion costs, increased customer telephone call activity,
increased personnel costs and expanded information and communications
systems, all associated with the ongoing efforts to grow sales. Investment
and other income decreased in the current year from the prior year due to
decreased amounts of funds available for investments. Funds available for
investment have decreased because of capital expenditures and lower
earnings. The effective Federal and state income tax rate is substantially
the same each 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 9, 1997 /s/Victor V. DiTommaso
Victor V. DiTommaso
Vice President - Finance, Secretary & Treasurer
Principal Financial and Accounting Officer
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 9, 1997
Victor V. DiTommaso
Vice President - Finance, Secretary & Treasurer
Principal Financial and Accounting Officer
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