##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 For the Quarterly Period Ended May 31, 2009
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the Transition Period from to
 Commission File Number 1-5807
 ENNIS, INC.
  Texas
    
    75-0256410(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 2441 Presidential Pkwy., Midlothian, Texas
    
    76065(Address of Principal Executive Offices)
    
    (Zip code)
 (972) 775-9801
 þ o
 o o
  Large accelerated Filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2009
 TABLE OF CONTENTS
 PART I: FINANCIAL INFORMATIONItem 1. Financial Statements
    
    3Consolidated Balance Sheets at May 31, 2009 (unaudited) and February 28, 2009
    
    3Unaudited Consolidated Statements of Earnings for the three months ended May 31, 2009 and 2008
    
    5Unaudited Consolidated Statements of Cash Flows for the three months ended May 31, 2009 and 2008
    
    6Notes to the Consolidated Financial Statements
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    36Item 4. Controls and Procedures
    
    36PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    37Item 1A. Risk Factors
    
    37Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    37Item 3. Defaults Upon Senior Securities
    
    37Item 4. Submission of Matters to a Vote of Security Holders
    
    37Item 5. Other Information
    
    37Item 6. Exhibits
    
    38SIGNATURES
    
    39EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 ENNIS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands )
 May 31,
    
    
    February 28,2009
    
    
    2009(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    29,803
    
    
    $
    9,286Accounts receivable, net of allowance for doubtful receivables
of $3,593 at May 31, 2009 and $3,561 at February 28, 2009
    
    
    60,654
    
    
    
    57,467Prepaid expenses
    
    
    3,357
    
    
    
    3,780Prepaid income taxes
    
    
    1,526
    
    
    
    4,826Inventories
    
    
    88,378
    
    
    
    101,167Deferred income taxes
    
    
    5,728
    
    
    
    5,728Total current assets
    
    
    189,446
    
    
    
    182,254Property, plant and equipment, at costPlant, machinery and equipment
    
    
    133,859
    
    
    
    133,300Land and buildings
    
    
    43,335
    
    
    
    43,150Other
    
    
    22,721
    
    
    
    22,679Total property, plant and equipment
    
    
    199,915
    
    
    
    199,129Less accumulated depreciation
    
    
    146,811
    
    
    
    144,457Net property, plant and equipment
    
    
    53,104
    
    
    
    54,672Goodwill
    
    
    117,341
    
    
    
    117,341Trademarks and tradenames, net
    
    
    58,996
    
    
    
    59,030Customer lists, net
    
    
    21,443
    
    
    
    22,007Deferred finance charges, net
    
    
    374
    
    
    
    486Other assets
    
    
    594
    
    
    
    590Total assets
    
    $
    441,298
    
    
    $
    436,380
 See accompanying notes to consolidated financial statements.
 3




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ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS  (Dollars in thousands, except for share and per share amounts )
 May 31,
    
    
    February 28,2009
    
    
    2009(unaudited)Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    24,757
    
    
    $
    24,723Accrued expensesEmployee compensation and benefits
    
    
    13,907
    
    
    
    12,919Taxes other than income
    
    
    1,206
    
    
    
    1,322Other
    
    
    4,214
    
    
    
    4,706Current installments of long-term debt
    
    
    76,402
    
    
    
    210Total current liabilities
    
    
    120,486
    
    
    
    43,880Long-term debt, less current installments
    
    
    
    
    
    
    76,185Liability for pension benefits
    
    
    7,740
    
    
    
    6,988Deferred income taxes
    
    
    16,922
    
    
    
    16,250Other liabilities
    
    
    679
    
    
    
    1,071Total liabilities
    
    
    145,827
    
    
    
    144,374Commitments and contingenciesShareholders equityPreferred stock $10 par value,
authorized 1,000,000 shares; none issued
    
    
    
    
    
    
    Common stock $2.50 par value, authorized 40,000,000 shares;
issued 30,053,443 shares at May 31 and February 28, 2009
    
    
    75,134
    
    
    
    75,134Additional paid in capital
    
    
    121,946
    
    
    
    122,448Retained earnings
    
    
    189,490
    
    
    
    186,857Accumulated other comprehensive income (loss):Foreign currency translation, net of taxes
    
    
    14
    
    
    
    (1,016
    )Unrealized loss on derivative instruments, net of taxes
    
    
    (1,427
    )
    
    
    (1,387
    )Minimum pension liability, net of taxes
    
    
    (12,107
    )
    
    
    (12,107
    )(13,520
    )
    
    
    (14,510
    )373,050
    
    
    
    369,929Treasury stockCost of 4,338,238 shares at May 31, 2009 and
4,336,557 shares at February 28, 2009
    
    
    (77,579
    )
    
    
    (77,923
    )Total shareholders equity
    
    
    295,471
    
    
    
    292,006Total liabilities and shareholders equity
    
    $
    441,298
    
    
    $
    436,380
 See accompanying notes to consolidated financial statements.
 4




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ENNIS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF EARNINGS
 ( Dollars in thousands except per share amounts )
 (Unaudited)
 Three months endedMay 31,2009
    
    
    2008Net sales
    
    $
    130,830
    
    
    $
    163,200Cost of goods sold
    
    
    99,846
    
    
    
    122,748Gross profit
    
    
    30,984
    
    
    
    40,452Selling, general and administrative
    
    
    19,459
    
    
    
    22,189Gain from disposal of assets
    
    
    (2
    )
    
    
    (54
    )Income from operations
    
    
    11,527
    
    
    
    18,317Other income (expense)Interest expense
    
    
    (695
    )
    
    
    (1,033
    )Other, net
    
    
    (300
    )
    
    
    (61
    )(995
    )
    
    
    (1,094
    )Earnings before income taxes
    
    
    10,532
    
    
    
    17,223Provision for income taxes
    
    
    3,897
    
    
    
    6,287Net earnings
    
    $
    6,635
    
    
    $
    10,936Weighted average common shares outstandingBasic
    
    
    25,821,139
    
    
    
    25,759,935Diluted
    
    
    25,836,817
    
    
    
    25,873,003Per share amountsNet earnings  basic
    
    $
    0.26
    
    
    $
    0.42Net earnings  diluted
    
    $
    0.26
    
    
    $
    0.42Cash dividends per share
    
    $
    0.155
    
    
    $
    0.155
 See accompanying notes to consolidated financial statements.
 5




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ENNIS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 Three months endedMay 31,2009
    
    
    2008Cash flows from operating activities:Net earnings
    
    $
    6,635
    
    
    $
    10,936Adjustments to reconcile net earnings to
net cash provided
by operating activities:Depreciation
    
    
    2,356
    
    
    
    2,683Amortization of deferred finance
charges
    
    
    112
    
    
    
    112Amortization of trademarks and
customer lists
    
    
    602
    
    
    
    605Gain from disposal of assets
    
    
    (2
    )
    
    
    (54
    )Bad debt expense
    
    
    539
    
    
    
    Stock based compensation
    
    
    246
    
    
    
    236Excess tax benefit of stock based
compensation
    
    
    
    
    
    
    (84
    )Deferred income taxes
    
    
    
    
    
    
    80Changes in operating assets and
liabilities:Accounts receivable
    
    
    (3,394
    )
    
    
    (9,344
    )Prepaid expenses
    
    
    3,799
    
    
    
    (1,385
    )Inventories
    
    
    13,587
    
    
    
    7,221Other assets
    
    
    (8
    )
    
    
    (7
    )Accounts payable and
accrued expenses
    
    
    338
    
    
    
    5,766Other liabilities
    
    
    (392
    )
    
    
    (446
    )Prepaid pension
asset/liability for
pension benefits
    
    
    752
    
    
    
    335Net cash
provided by
operating
activities
    
    
    25,170
    
    
    
    16,654Cash flows from investing activities:Capital expenditures
    
    
    (629
    )
    
    
    (1,865
    )Proceeds from disposal of plant and property
    
    
    5
    
    
    
    5Net cash used
in investing
activities
    
    
    (624
    )
    
    
    (1,860
    )Cash flows from financing activities:Repayment of debt
    
    
    (56
    )
    
    
    (12,084
    )Dividends
    
    
    (4,002
    )
    
    
    (3,987
    )Purchase of treasury stock
    
    
    (404
    )
    
    
    Excess tax benefit of stock based
compensation
    
    
    
    
    
    
    84Net cash used
in financing
activities
    
    
    (4,462
    )
    
    
    (15,987
    )Effect of exchange rate changes on cash
    
    
    433
    
    
    
    94Net change in cash and cash equivalents
    
    
    20,517
    
    
    
    (1,099
    )Cash and cash equivalents at beginning of period
    
    
    9,286
    
    
    
    3,393Cash and cash equivalents at end of period
    
    $
    29,803
    
    
    $
    2,294
 See accompanying notes to consolidated financial statements.
 6




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ENNIS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD ENDED MAY 31, 2009
 1. Significant Accounting Policies and General Matters
 Basis of Presentation
  Recent Accounting Pronouncements
 FAS 157 .
 FAS 141R.
 FAS 160.
 7




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 1. Significant Accounting Policies and General Matters-continued
 FAS 161.
 FAS 162.
 FAS 165.
 FSP EITF 03-6-1
 FSP FAS 157-4.
 FSP FAS 107-1 and APB 28-1.
 8




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 1. Significant Accounting Policies and General Matters-continued
 
 FSP FAS 132R-1.
 2. Accounts Receivable and Allowance for Doubtful Receivables
    Three months endedMay 31,2009
    
    
    2008Balance at beginning of period
    
    $
    3,561
    
    
    $
    3,954Bad debt expense
    
    
    539
    
    
    
    Recoveries
    
    
    12
    
    
    
    4Accounts written off
    
    
    (547
    )
    
    
    (237
    )Foreign currency translation
    
    
    28
    
    
    
    Balance at end of period
    
    $
    3,593
    
    
    $
    3,721
 9




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 3. Inventories
   May 31,
    
    
    February 28,2009
    
    
    2009Raw material
    
    $
    13,511
    
    
    $
    13,357Work-in-process
    
    
    11,161
    
    
    
    13,090Finished goods
    
    
    63,706
    
    
    
    74,720$
    88,378
    
    
    $
    101,167
 4. Goodwill and Other Intangible Assets
    GrossCarrying
    
    
    AccumulatedAs of May 31, 2009
    
    Amount
    
    
    Amortization
    
    
    NetAmortized intangible assets (in thousands)Tradenames
    
    $
    1,234
    
    
    $
    776
    
    
    $
    458Customer lists
    
    
    29,908
    
    
    
    8,465
    
    
    
    21,443Noncompete
    
    
    500
    
    
    
    471
    
    
    
    29$
    31,642
    
    
    $
    9,712
    
    
    $
    21,930
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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 4. Goodwill and Other Intangible Assets-continued
 GrossCarrying
    
    
    AccumulatedAs of February 28, 2009
    
    Amount
    
    
    Amortization
    
    
    NetAmortized intangible assets (in thousands)Tradenames
    
    $
    1,234
    
    
    $
    742
    
    
    $
    492Customer lists
    
    
    29,908
    
    
    
    7,901
    
    
    
    22,007Noncompete
    
    
    500
    
    
    
    467
    
    
    
    33$
    31,642
    
    
    $
    9,110
    
    
    $
    22,532
 May 31,
    
    
    February 28,2009
    
    
    2009Non-amortizing intangible assets (in thousands)Trademarks
    
    $
    58,538
    
    
    $
    58,538
   2010
    
    $
    2,403,0002011
    
    
    2,397,0002012
    
    
    2,391,0002013
    
    
    2,347,0002014
    
    
    2,254,0002015
    
    
    2,136,000
  Print
    
    
    ApparelSegment
    
    
    SegmentTotal
    
    
    Total
    
    
    TotalBalance as of March 1, 2008
    
    $
    40,688
    
    
    $
    137,700
    
    
    $
    178,388Goodwill acquired
    
    
    2,104
    
    
    
    
    
    
    
    2,104Goodwill impairment
    
    
    
    
    
    
    (63,151
    )
    
    
    (63,151
    )Balance as of March 1, 2009
    
    
    42,792
    
    
    
    74,549
    
    
    
    117,341Goodwill acquired
    
    
    
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    Balance as of May 31, 2009
    
    $
    42,792
    
    
    $
    74,549
    
    
    $
    117,341
  11




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 5. Other Accrued Expenses
  May 31,
    
    
    February 28,2009
    
    
    2009Accrued taxes
    
    $
    353
    
    
    $
    332Accrued legal and professional fees
    
    
    169
    
    
    
    430Accrued interest
    
    
    136
    
    
    
    129Accrued utilities
    
    
    1,353
    
    
    
    1,499Accrued repairs and maintenance
    
    
    445
    
    
    
    410Other accrued expenses
    
    
    1,758
    
    
    
    1,906$
    4,214
    
    
    $
    4,706
 6. Derivative Instruments and Hedging Activities
   7. Fair Value Financial Instruments
   Level 1 
    
    Inputs utilize quoted prices (unadjusted) in active markets for identical
assets or liabilities that the Company has the ability to access.Level 2 
    
    Inputs utilize data points that are observable such as quoted prices,
interest rates and yield curves.Level 3 
    
    Inputs are unobservable data points for the asset or liability, and
include situations where there is little, if any, market activity for the asset or
liability.
  12




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 7. Fair Value Financial Instruments-continued
  Fair Value Measurements UsingQuotedPricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantIdentical
    
    
    Observable
    
    
    UnobservableMay 31,
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Derivative liability
    
    $
    (2,248
    )
    
    $
    
    
    
    $
    (2,248
    )
    
    $
    $
    (2,248
    )
    
    $
    
    
    
    $
    (2,248
    )
    
    $
    
 8. Long-Term Debt
  May 31,
    
    
    February 28,2009
    
    
    2009Revolving credit facility
    
    $
    74,000
    
    
    $
    74,000Interest rate swap
    
    
    2,248
    
    
    
    2,185Capital lease obligation
    
    
    154
    
    
    
    21076,402
    
    
    
    76,395Less current installments
    
    
    76,402
    
    
    
    210Long-term debt
    
    $
    
    
    
    $
    76,185
    13




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 9. Shareholders Equity
  Three months endedMay 31,2009
    
    
    2008Net earnings
    
    $
    6,635
    
    
    $
    10,936Foreign currency translation adjustment,
net of deferred taxes
    
    
    1,030
    
    
    
    (20
    )Unrealized loss on derivative instruments,
net of deferred taxes
    
    
    (40
    )
    
    
    Comprehensive income
    
    $
    7,625
    
    
    $
    10,916
  AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury StockShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Shares
    
    
    Amount
    
    
    TotalBalance February 28,
    
    
    30,053,443
    
    
    $
    75,134
    
    
    $
    122,448
    
    
    $
    186,857
    
    
    $
    (14,510
    )
    
    
    (4,336,557
    )
    
    $
    (77,923
    )
    
    $
    292,006Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,635
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,635Foreign currency translation,
net of
deferred
tax of $605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,030
    
    
    
    
    
    
    
    
    
    
    
    1,030Unrealized loss on
derivative instruments, net
of deferred tax benefit of $23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    
    
    
    
    
    
    
    
    (40
    )Comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,625Dividends declared
($.155 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,002
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,002
    )Stock based
compensation
    
    
    
    
    
    
    
    
    
    
    246
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    246Exercise of stock
options
and restricted stock grants
    
    
    
    
    
    
    
    
    
    
    (748
    )
    
    
    
    
    
    
    
    
    
    
    41,619
    
    
    
    748
    
    
    
    0Stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,300
    )
    
    
    (404
    )
    
    
    (404
    )Balance May 31, 2009
    
    
    30,053,443
    
    
    $
    75,134
    
    
    $
    121,946
    
    
    $
    189,490
    
    
    $
    (13,520)
    
    
    
    (4,338,238)
    
    
    
    $(77,579)
    
    
    
    $295,471
  10. Stock Option Plans and Stock Based Compensation
   14




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 10. Stock Option Plans and Stock Based Compensation-continued
    WeightedNumber
    
    Weighted
    
    Average
    
    Aggregateof
    
    Average
    
    Remaining
    
    IntrinsicShares
    
    Exercise
    
    Contractual
    
    Value(a)(exact quantity)
    
    Price
    
    Life(in years)
    
    (in thousands)Outstanding at February 28, 2009
    
    
    318,563
    
    
    $
    10.98
    
    
    
    2.4
    
    
    $
    75Granted
    
    
    105,000
    
    
    
    8.94Terminated
    
    
    (115,000
    )
    
    
    8.69Exercised
    
    
    
    
    
    
    Outstanding at May 31, 2009
    
    
    308,563
    
    
    $
    11.14
    
    
    
    5.7
    
    
    $
    519Exercisable at May 31, 2009
    
    
    195,138
    
    
    $
    12.10
    
    
    
    3.4
    
    
    $
    323
 
 (a)
    
    Value is calculated on the basis of the difference between the market value of the Companys
Common Stock as reported on the New York Stock Exchange on May 31, 2009 ($10.80) and the
weighted average exercise price, multiplied by the number of shares indicated.
  Expected volatility
    
    
    32.35
    %Expected term (years)
    
    
    4Risk free interest rate
    
    
    2.01
    %Dividend yield
    
    
    4.74
    %Weighted average grant-date fair value
    
    $
    1.583
  Three months endedMay 31,2009
    
    2008Total cash received
    
    $
    
    
    
    $
    Income tax benefits
    
    
    
    
    
    
    84Total grant-date fair value
    
    
    
    
    
    
    Intrinsic value
    
    
    
    
    
    
    
 15




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 10. Stock Option Plans and Stock Based Compensation-continued
  WeightedAverageNumber
    
    Grant Dateof Options
    
    Fair ValueUnvested at February 28, 2009
    
    
    18,425
    
    
    $
    2.85New grants
    
    
    105,000
    
    
    
    1.58Vested
    
    
    (10,000
    )
    
    
    2.84Forfeited
    
    
    
    
    
    
    Unvested at May 31, 2009
    
    
    113,425
    
    
    $
    1.68
   WeightedAverageNumber of
    
    Grant DateShares
    
    Fair ValueOutstanding at February 28, 2009
    
    
    103,091
    
    
    $
    19.33Granted
    
    
    44,800
    
    
    
    8.94Terminated
    
    
    
    
    
    
    Exercised
    
    
    (41,619
    )
    
    
    16.67Outstanding at May 31, 2009
    
    
    106,272
    
    
    $
    15.99Exercisable at May 31, 2009
    
    
    
    
    
    $
    
  11. Employee Benefit Plans
   16




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 11. Employee Benefit Plans-continued
 Three months endedMay 31,2009
    
    
    2008Components of net periodic benefit costService cost
    
    $
    285
    
    
    $
    335Interest cost
    
    
    685
    
    
    
    656Expected return on plan assets
    
    
    (606
    )
    
    
    (812
    )Amortization of:Prior service cost
    
    
    (36
    )
    
    
    (36
    )Unrecognized net loss
    
    
    424
    
    
    
    192Net periodic benefit cost
    
    $
    752
    
    
    $
    335
  12. Earnings per share
   Three months endedMay 31,2009
    
    
    2008Basic weighted average common shares outstanding
    
    
    25,821,139
    
    
    
    25,759,935Effect of dilutive options
    
    
    15,678
    
    
    
    113,068Diluted weighted average common shares outstanding
    
    
    25,836,817
    
    
    
    25,873,003Per share amounts:Net earnings  basic
    
    $
    0.26
    
    
    $
    0.42Net earnings  diluted
    
    $
    0.26
    
    
    $
    0.42Cash dividends
    
    $
    0.155
    
    
    $
    0.155
  17




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 13. Segment Information and Geographic Information
   SM SM SM SM SM SM SM SM SM SM
     Print
    
    Apparel
    
    
    
    
    
    ConsolidatedSegment
    
    Segment
    
    Corporate
    
    TotalsThree months ended May 31, 2009:Net sales
    
    $
    71,710
    
    
    $
    59,120
    
    
    $
    
    
    
    $
    130,830Depreciation
    
    
    1,554
    
    
    
    584
    
    
    
    218
    
    
    
    2,356Amortization of identifiable intangibles
    
    
    235
    
    
    
    367
    
    
    
    
    
    
    
    602Segment earnings (loss) before
income tax
    
    
    10,810
    
    
    
    3,399
    
    
    
    (3,677
    )
    
    
    10,532Segment assets
    
    
    146,276
    
    
    
    261,756
    
    
    
    33,266
    
    
    
    441,298Capital expenditures
    
    
    207
    
    
    
    353
    
    
    
    69
    
    
    
    629
 18




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2009
 13. Segment Information and Geographic Information-continued
 Print
    
    Apparel
    
    
    
    
    
    ConsolidatedSegment
    
    Segment
    
    Corporate
    
    TotalsThree months ended May 31, 2008:Net sales
    
    $
    85,297
    
    
    $
    77,903
    
    
    $
    
    
    
    $
    163,200Depreciation
    
    
    1,822
    
    
    
    630
    
    
    
    231
    
    
    
    2,683Amortization of identifiable intangibles
    
    
    238
    
    
    
    367
    
    
    
    
    
    
    
    605Segment earnings (loss) before
income tax
    
    
    14,447
    
    
    
    6,793
    
    
    
    (4,017
    )
    
    
    17,223Segment assets
    
    
    158,317
    
    
    
    349,131
    
    
    
    6,330
    
    
    
    513,778Capital expenditures
    
    
    1,834
    
    
    
    12
    
    
    
    19
    
    
    
    1,865
  United States
    
    
    Canada
    
    
    Mexico
    
    
    TotalThree months ended May 31, 2009:Net sales to unaffiliated customersPrint Segment
    
    $
    71,710
    
    
    $
    
    
    
    $
    
    
    
    $
    71,710Apparel Segment
    
    
    54,699
    
    
    
    3,395
    
    
    
    1,026
    
    
    
    59,120$
    126,409
    
    
    $
    3,395
    
    
    $
    1,026
    
    
    $
    130,830Identifiable long-lived assetsPrint Segment
    
    $
    40,923
    
    
    $
    
    
    
    $
    
    
    
    
    40,923Apparel Segment
    
    
    5,648
    
    
    
    41
    
    
    
    1,308
    
    
    
    6,997Corporate
    
    
    5,184
    
    
    
    
    
    
    
    
    
    
    
    5,184$
    51,755
    
    
    $
    41
    
    
    $
    1,308
    
    
    $
    53,104Three months ended May 31, 2008:Net sales to unaffiliated customersPrint Segment
    
    $
    85,297
    
    
    $
    
    
    
    $
    
    
    
    $
    85,297Apparel Segment
    
    
    72,600
    
    
    
    4,908
    
    
    
    395
    
    
    
    77,903$
    157,897
    
    
    $
    4,908
    
    
    $
    395
    
    
    $
    163,200Identifiable long-lived assetsPrint Segment
    
    $
    42,945
    
    
    $
    
    
    
    $
    
    
    
    
    42,945Apparel Segment
    
    
    7,232
    
    
    
    64
    
    
    
    2,013
    
    
    
    9,309Corporate
    
    
    5,949
    
    
    
    
    
    
    
    
    
    
    
    5,949$
    56,126
    
    
    $
    64
    
    
    $
    2,013
    
    
    $
    58,203
 14. Supplemental Cash Flow Information
  Three months endedMay 31,2009
    
    2008Interest paid
    
    $
    688
    
    
    $
    1,278Income taxes paid
    
    $
    467
    
    
    $
    1,841
 19




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
 
 Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
  Business Segment Overview
  Print Segment
  SM SM SM SM SM SM SM SM SM SM
   20




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
      Apparel Segment
        21




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
     Risk Factors
  Our results and financial condition are affected by global and local market conditions, which can
adversely affect our sales, margins, and net income.
  
    
    Our ability to manage upward pressure on commodity prices and the impact of
government actions to manage national economic conditions such as consumer spending,
inflation rates and unemployment levels, particularly given the current volatility in
the global financial markets;
    
    The impact on our margins of labor costs given our labor-intensive business model,
the trend toward higher wages in both mature and developing markets and the potential
impact of union organizing efforts on day-to-day operations of our manufacturing
facilities.
 22




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
 Declining economic conditions could negatively impact our business.
   The terms and conditions of our credit facility impose certain restrictions on our operations. We
may not be able to raise additional capital, if needed for proposed expansion projects, etc.
 In fiscal 2009 we were required to write down
goodwill and other intangible assets and we may have similar charges in the future, which could
cause our financial condition and results of operations to be negatively affected in the future
  Declining financial market conditions could adversely impact the funding status of our pension
plan.
  In fiscal 2009 we were required to write down goodwill and other intangible assets and we may have
similar charges in the future, which could cause our financial condition and results of operations
to be negatively affected in the future.
  23




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
  Printed business forms may be superceded over time by paperless business forms or otherwise
affected by technological obsolescence and changing customer preferences, which could reduce our
sales and profits.
  Our distributors face increased competition from various sources, such as office supply
superstores. Increased competition may require us to reduce prices or to offer other incentives in
order to enable our distributors to attract new customers and retain existing customers.
  Technological improvements may reduce our competitive advantage over some of our competitors, which
could reduce our profits.
  We could experience labor disputes that could disrupt our business in the future.
  We obtain our raw materials from a limited number of suppliers and any disruption in our
relationships with these suppliers, or any substantial increase in the price of raw materials,
material shortages, or an increase in transportation costs, could have a material adverse effect on
us.
  24




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
     We face intense competition to gain market share, which may lead some competitors to sell
substantial amounts of goods at prices against which we cannot profitably compete.
  The apparel industry is heavily influenced by general economic cycles.
  Our apparel foreign operations could be subject to unexpected changes in regulatory requirements,
tariffs and other market barriers and political and economic instability in the countries where it
operates, which could negatively impact our operating results.
  25




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
 Our apparel products are subject to foreign competition, which in the past have been faced with
significant U.S. government import restrictions.
      Environmental regulations may impact our future operating results.
  Our planned expansion of facilities is subject to multiple approvals and uncertainties that could
affect our ability to complete the project on schedule or at budgeted cost.
  26




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
  We are exposed to the risk of financial non-performance by our customers on a significant amount of
our sales.
  Our business incurs significant freight and transportation costs.
  The price of energy is prone to significant fluctuations and volatility.
  We rely on independent contract production for a portion of our apparel production.
  We depend upon the talents and contributions of a limited number of individuals, many of whom would
be difficult to replace.
  Cautionary Statements
  27




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
   Result of Operations
 Three Months Ended May 31,2009
    
    
    2008Net sales
    
    $
    130,830
    
    
    
    100.0
    %
    
    $
    163,200
    
    
    
    100.0
    %Cost of goods sold
    
    
    99,846
    
    
    
    76.3
    
    
    
    122,748
    
    
    
    75.2Gross profit
    
    
    30,984
    
    
    
    23.7
    
    
    
    40,452
    
    
    
    24.8Selling, general and administrative
    
    
    19,459
    
    
    
    14.9
    
    
    
    22,189
    
    
    
    13.6Gain from disposal of assets
    
    
    (2
    )
    
    
    0.0
    
    
    
    (54
    )
    
    
    0.0Income from operations
    
    
    11,527
    
    
    
    8.8
    
    
    
    18,317
    
    
    
    11.2Other expense
    
    
    (995
    )
    
    
    (0.7
    )
    
    
    (1,094
    )
    
    
    (0.6
    )Earnings before income taxes
    
    
    10,532
    
    
    
    8.1
    
    
    
    17,223
    
    
    
    10.6Provision for income taxes
    
    
    3,897
    
    
    
    3.0
    
    
    
    6,287
    
    
    
    3.9Net earnings
    
    $
    6,635
    
    
    
    5.1
    %
    
    $
    10,936
    
    
    
    6.7
    %
 Critical Accounting Policies and Judgments
     28




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ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
        29




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
 Results of Operations  Consolidated
 Overview.
 Net Sales.
 Cost of Goods Sold.
 Selling, general and administrative expense.
 Gain from disposal of assets.
 Income from operations.
 Other income and expense.
 Provision for income taxes.
 Net earnings.
 30




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
 Results of Operations  Segments
 Three months endedMay 31,Net Sales by Segment (in thousands)
    
    2009
    
    
    2008Print
    
    $
    71,710
    
    
    $
    85,297Apparel
    
    
    59,120
    
    
    
    77,903Total
    
    $
    130,830
    
    
    $
    163,200
 Print Segment
 Apparel Segment
  Three months endedMay 31,Gross Profit by Segment (in thousands)
    
    2009
    
    
    2008Print
    
    $
    18,901
    
    
    $
    23,732Apparel
    
    
    12,083
    
    
    
    16,720Total
    
    $
    30,984
    
    
    $
    40,452
 Print Segment
 Apparel Segment
 31




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
  Three months endedMay 31,Profit by Segment (in thousands)
    
    2009
    
    
    2008Print
    
    $
    10,810
    
    
    $
    14,447Apparel
    
    
    3,399
    
    
    
    6,793Total
    
    
    14,209
    
    
    
    21,240Less corporate expenses
    
    
    3,677
    
    
    
    4,017Earnings before income taxes
    
    $
    10,532
    
    
    $
    17,223
 Print Segment
 Apparel Segment
 Liquidity and Capital Resources
 May 31,
    
    February 28,(Dollars in thousands)
    
    2009
    
    2009
    
    ChangeWorking Capital
    
    $
    68,960
    
    
    $
    138,374
    
    
    
    -50.2
    %Cash and cash equivalents
    
    $
    29,803
    
    
    $
    9,286
    
    
    
    220.9
    %
 Working Capital.
 Cash and cash equivalents.
 Three months ended May 31,(Dollars in thousands)
    
    2009
    
    2008
    
    ChangeNet Cash provided by operating activities
    
    $
    25,170
    
    
    $
    16,654
    
    
    
    51.1
    %Net Cash used in investing activities
    
    $
    (624
    )
    
    $
    (1,860
    )
    
    
    -66.5
    %Net Cash used in financing activities
    
    $
    (4,462
    )
    
    $
    (15,987
    )
    
    
    -72.1
    %
 Cash flows from operating activities.
 32




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
 Cash flows from investing activities.
 Cash flows from financing activities.
 Credit Facility 
    Pension 
 Inventories 
 Capital Expenditures 
 33




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
  Contractual Obligations & Off-Balance Sheet Arrangements 
 Recent Accounting Pronouncements
 FAS 157 .
 FAS 141R.
 FAS 160.
 FAS 161.
 FAS 162.
 34




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
  FAS 165.
 FSP EITF 03-6-1
 FSP FAS 157-4.
 FSP FAS 107-1 and APB 28-1.
 FSP FAS 132R-1.
 35




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
  
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risk
 Cash and Cash Equivalents
  Interest Rates
  Foreign Exchange
   
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures.
 36




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
   
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total NumberTotal
    
    
    
    
    
    of Shares
    
    Maximum AmountNumber
    
    Average
    
    Purchased as
    
    that May Yet Be Usedof Shares
    
    Price Paid
    
    Part of Publicly
    
    to Purchase SharesPeriod
    
    Purchased
    
    per Share
    
    Announced Programs
    
    Under the ProgramMarch 1, 2009  March 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    4,401,239April 1, 2009  April 30, 2009
    
    
    28,000
    
    
    $
    9.32
    
    
    
    28,000
    
    
    $
    4,140,293May 1, 2009  May 31, 2009
    
    
    15,300
    
    
    $
    9.36
    
    
    
    15,300
    
    
    $
    3,997,084Total
    
    
    43,300
    
    
    $
    9.33
    
    
    
    43,300
    
    
    $
    3,997,084
  
 Items 3 and 5 are not applicable and have been omitted
 
 Item 4. Submission of Matters to a Vote of Security Holders
  37




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
 
 Item 6. Exhibits
  Exhibit Number
    
    DescriptionExhibit 3.1(a)
    
    Restated Articles of Incorporation as amended through June 23, 1983 with
attached amendments dated June 20, 1985, July 31, 1985 and June 16, 1988
incorporated herein by reference to Exhibit 5 to the Registrants Form 10-K
Annual Report for the fiscal year ended February 28, 1993.Exhibit 3.1(b)
    
    Amendment to Articles of Incorporation dated June 17, 2004 incorporated herein
by reference to Exhibit 3.1(b) to the Registrants Form 10-K Annual Report for
the fiscal year ended February 28, 2007.Exhibit 3.2(a)
    
    Bylaws of the Registrant as amended through October 15, 1997 incorporated
herein by reference to Exhibit 3(ii) to the registrants Form 10-Q Quarterly
Report for the quarter ended November 30, 1997.Exhibit 3.2(b)
    
    First amendment to Bylaws of the Registrant dated December 20, 2007
incorporated herein by reference to Exhibit 3.1 to the Registrants Form 8-K
Current Report filed on December 20, 2007.Exhibit 31.1
    
    Certification Pursuant to Rule 13a-14(a)/15d-14(a) of Chief Executive Officer.*Exhibit 31.2
    
    Certification Pursuant to Rule 13a-14(a)/15d-14(a) of Chief Financial Officer.*Exhibit 32.1
    
    Section 1350 Certification of Chief Executive Officer.**Exhibit 32.2
    
    Section 1350 Certification of Chief Financial Officer.**
 
 *
    
    Filed herewith**
    
    Furnished herewith 38




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2009
 
   ENNIS, INC.Date: June 26, 2009
    
    /s/ Keith S. Walters

Keith S. WaltersChairman, Chief Executive Officer and
PresidentDate: June 26, 2009
    
    /s/ Richard L. Travis, Jr.Richard L. Travis, Jr.V.P.  Finance and CFO, Secretary andPrincipal Financial and Accounting Officer
 39




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit Number
    
    DescriptionExhibit 3.1(a)
    
    Restated Articles of Incorporation as amended through June 23, 1983 with
attached amendments dated June 20, 1985, July 31, 1985 and June 16, 1988
incorporated herein by reference to Exhibit 5 to the Registrants Form 10-K
Annual Report for the fiscal year ended February 28, 1993.Exhibit 3.1(b)
    
    Amendment to Articles of Incorporation dated June 17, 2004 incorporated herein
by reference to Exhibit 3.1(b) to the Registrants Form 10-K Annual Report for
the fiscal year ended February 28, 2007.Exhibit 3.2(a)
    
    Bylaws of the Registrant as amended through October 15, 1997 incorporated
herein by reference to Exhibit 3(ii) to the registrants Form 10-Q Quarterly
Report for the quarter ended November 30, 1997.Exhibit 3.2(b)
    
    First amendment to Bylaws of the Registrant dated December 20, 2007
incorporated herein by reference to Exhibit 3.1 to the Registrants Form 8-K
Current Report filed on December 20, 2007.Exhibit 31.1
    
    Certification Pursuant to Rule 13a-14(a)/15d-14(a) of Chief Executive Officer.*Exhibit 31.2
    
    Certification Pursuant to Rule 13a-14(a)/15d-14(a) of Chief Financial Officer.*Exhibit 32.1
    
    Section 1350 Certification of Chief Executive Officer.**Exhibit 32.2
    
    Section 1350 Certification of Chief Financial Officer.**
 
 *
    
    Filed herewith**
    
    Furnished herewith