##### 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, 2006
 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 þ o
 o þ




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##### 



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 TABLE OF CONTENTS
 PART I: FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets at May 31, 2006 (unaudited)
and February 28, 2006
    
    
    3Unaudited Consolidated Statements of Earnings for the three months
ended May 31, 2006 and 2005
    
    
    5Unaudited Consolidated Statements of Cash Flows for
the three months ended May 31, 2006 and 2005
    
    
    6Notes to the Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    21Item 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
    
    
    37SIGNATURES
    
    
    38Certification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive OfficerCertification of Chief Financial Officer
  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 28,2006
    
    
    2006(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    9,322
    
    
    $
    13,860Accounts receivables, net of allowance for doubtful receivables
of $2,957 at May 31, 2006 and $3,001 at February 28, 2006
    
    
    46,750
    
    
    
    41,686Prepaid expenses
    
    
    6,343
    
    
    
    4,425Inventories
    
    
    89,227
    
    
    
    89,155Other current assets
    
    
    9,330
    
    
    
    9,329Total current assets
    
    
    160,972
    
    
    
    158,455Property, plant and equipment, at costPlant, machinery and equipment
    
    
    124,682
    
    
    
    120,456Land and buildings
    
    
    39,555
    
    
    
    38,038Other
    
    
    20,478
    
    
    
    20,292Total property, pland and equipment
    
    
    184,715
    
    
    
    178,786Less accumulated depreciation
    
    
    118,856
    
    
    
    114,983Net property, plant and equipment
    
    
    65,859
    
    
    
    63,803Goodwill
    
    
    178,280
    
    
    
    178,280Trademarks, net
    
    
    61,904
    
    
    
    61,941Purchased customer lists, net
    
    
    21,222
    
    
    
    21,632Deferred finance charges, net
    
    
    1,709
    
    
    
    1,390Prepaid pension asset
    
    
    7,818
    
    
    
    8,277Other assets
    
    
    679
    
    
    
    623Total assets
    
    $
    498,443
    
    
    $
    494,401
 See accompanying notes to consolidated financial statements
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ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS  (Dollars in thousands )
 May 31,
    
    
    February 28,2006
    
    
    2006(unaudited)Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    24,485
    
    
    $
    26,589Accrued expensesEmployee compensation and benefits
    
    
    15,722
    
    
    
    17,250Taxes other than income
    
    
    1,538
    
    
    
    1,488Federal and state income taxes payable
    
    
    7,828
    
    
    
    2,490Other
    
    
    7,029
    
    
    
    4,524Current installments of long-term debt
    
    
    11,255
    
    
    
    11,620Total current liabilities
    
    
    67,857
    
    
    
    63,961Long-term debt, less current installments
    
    
    95,814
    
    
    
    102,916Deferred credits, principally income taxes
    
    
    29,971
    
    
    
    30,189Total liabilities
    
    
    193,642
    
    
    
    197,066Shareholders equitySeries A junior participating preferred stock of $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, 2006
    
    
    75,134
    
    
    
    75,134Additional paid in capital
    
    
    122,969
    
    
    
    122,922Retained earnings
    
    
    188,804
    
    
    
    181,423Accumulated other comprehensive income-Foreign currency translation
    
    
    472
    
    
    
    460387,379
    
    
    
    379,939Treasury stock:Cost of 4,572,837 shares at May 31, 2006 and
4,574,329 shares at February 28, 2006
    
    
    (82,578
    )
    
    
    (82,604
    )Total shareholders equity
    
    
    304,801
    
    
    
    297,335Total liabilities and shareholders equity
    
    $
    498,443
    
    
    $
    494,401
 See accompanying notes to consolidated financial statements.
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ENNIS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF EARNINGS
 ( Dollars in thousands except share and per share amounts )
 (Unaudited)
 Three months endedMay 31,2006
    
    
    2005Net sales
    
    $
    145,113
    
    
    $
    149,113Cost of goods sold
    
    
    107,298
    
    
    
    111,635Gross profit
    
    
    37,815
    
    
    
    37,478Selling, general and administrative
    
    
    18,078
    
    
    
    17,837Earnings from operations
    
    
    19,737
    
    
    
    19,641Other income (expense)Interest expense
    
    
    (1,792
    )
    
    
    (2,243
    )Other income, net
    
    
    38
    
    
    
    (90
    )(1,754
    )
    
    
    (2,333
    )Net income before income taxes
    
    
    17,983
    
    
    
    17,308Provision for income taxes
    
    
    6,653
    
    
    
    6,750Net earnings
    
    $
    11,330
    
    
    $
    10,558Weighted average common shares outstandingBasic
    
    
    25,479,722
    
    
    
    25,426,595Diluted
    
    
    25,790,687
    
    
    
    25,692,557Per share amountsNet earnings  basic
    
    $
    0.44
    
    
    $
    0.42Net earnings  diluted
    
    $
    0.44
    
    
    $
    0.41Cash dividends per share
    
    $
    0.155
    
    
    $
    0.155
 See accompanying notes to consolidated financial statements.
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ENNIS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 Three months endedMay 31,2006
    
    
    2005Cash flows from operating activities:Net earnings
    
    $
    11,330
    
    
    $
    10,558Adjustments to reconcile net earnings to net cash provided
by operating activities:Depreciation
    
    
    3,894
    
    
    
    3,908Amortization of deferred financing charges
    
    
    92
    
    
    
    242Amortization of trademarks and customer lists
    
    
    497
    
    
    
    479Loss (Gain) on the sale of equipment
    
    
    3
    
    
    
    (2
    )Bad debt expense
    
    
    
    
    
    
    369Stock based compensation
    
    
    59
    
    
    
    Changes in operating assets and liabilities, net of the
effects of acquisitions:Accounts receivables
    
    
    (4,150
    )
    
    
    976Prepaid expenses
    
    
    (2,011
    )
    
    
    (448
    )Inventories
    
    
    675
    
    
    
    4,261Other current assets
    
    
    (1
    )
    
    
    (19
    )Accounts payable and accrued expenses
    
    
    2,352
    
    
    
    (2,431
    )Prepaid pension assets
    
    
    459
    
    
    
    501Other assets
    
    
    (1,018
    )
    
    
    381Excess tax
benefits from stock-based payment arrangements
    
    
    (3
    )
    
    
    Net cash provided by operating activities
    
    
    12,178
    
    
    
    18,775Cash flows from investing activities:Capital expenditures
    
    
    (636
    )
    
    
    (4,521
    )Purchase of operating assets, net of cash acquired
    
    
    (4,627
    )
    
    
    (366
    )Proceeds from disposal of property
    
    
    3
    
    
    
    7Net cash used in investing activities
    
    
    (5,260
    )
    
    
    (4,880
    )Cash flows from financing activities:Debt issued
    
    
    
    
    
    
    5,000Repayment of debt
    
    
    (7,473
    )
    
    
    (19,035
    )Dividends
    
    
    (3,949
    )
    
    
    (3,940
    )Purchase of treasury stock
    
    
    
    
    
    
    301Proceeds from exercise of stock options
    
    
    14
    
    
    
    Excess tax
benefits from stock-based payment arrangements
    
    
    3
    
    
    
    Net cash used in financing activities
    
    
    (11,405
    )
    
    
    (17,674
    )Effect of exchange rate changes on cash
    
    
    (51
    )
    
    
    (21
    )Net change in cash and cash equivalents
    
    
    (4,538
    )
    
    
    (3,800
    )Cash and cash equivalents at beginning of year
    
    
    13,860
    
    
    
    10,694Cash and cash equivalents at end of year
    
    $
    9,322
    
    
    $
    6,894
 See accompanying notes to consolidated financial statements.
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ENNIS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE PERIOD ENDED MAY 31, 2006
 1.
    
    Basis of Presentation
 These unaudited consolidated financial statements of Ennis, Inc. and its subsidiaries
(collectively the Company or Ennis), for the quarter ended May 31, 2006 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, 2006, from which the accompanying
consolidated balance sheet at February 28, 2006 was derived. All significant intercompany
balances and transactions have been eliminated in consolidation. In the opinion of management,
all adjustments considered necessary for a fair presentation of the interim financial
information have been included. In preparing the financial statements, the Company is required
to make estimates and assumptions that affect the disclosure and reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The Company evaluates these estimates and judgments on
an ongoing basis, including those related to bad debts, inventory valuations, property, plant
and equipment, intangible assets and income taxes. The Company bases estimates and judgments
on historical experience and on various other factors that are believed to be reasonable under
the circumstances. 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 and Stock Based Compensation
 The Company has stock options granted to key executives and managerial employees and
non-employee directors. The Company has two stock option plans: the 1998 Option and
Restricted Stock Plan amended and restated as of June 17, 2004 and the 1991 Incentive Stock
Option Plan. The Company has 398,208 shares available for grant under the stock option plans
for issuance to officers and directors and supervisory employees of the Company and its
subsidiaries. The exercise price of each option granted equals the quoted market price of the
Companys common stock on the date of grant, and an options maximum term is ten years.
Options may be granted at different times during the year and vest over a period of immediate
to a five-year period. For the three-month periods ended May 31, 2006 and 2005, 37,700 and
35,000 of options, respectively, were not included in the diluted earnings per share
computation because their exercise price exceeded the average fair market value of the
Companys stock for the period. The fair value of the restricted stock awards is based upon
the market price of the underlying common stock as of the date of the grant and is amortized
over the applicable vesting period using the straight-line method. The Company currently uses
treasury stock to satisfy option exercises and restricted stock awards.
 The Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004),
Share-Based Payment (SFAS 123R), effective March 1, 2006. SFAS 123R requires the recognition
of the fair value of stock-based compensation in net earnings. The Company recognizes
stock-based compensation expense net of estimated forfeitures
(estimated at 1.1%) over the requisite service period
of the individual grants, which generally equals the vesting period. For the three months
ended May 31, 2006, in accordance with SFAS 123R, we recorded stock based compensation expense
of approximately $59,000 and related tax benefit of $3,000 related to stock options and
restricted stock units.
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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 2.
    
    Stock Option Plans and Stock Based Compensation-continued
 Prior to March 1, 2006, the company applied the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, (FAS 123).
In accordance with the provisions of FAS 123, the Company accounted for stock options granted
to its employees and Board of Directors using the recognition and measurement provisions of
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and its
related interpretations, (APB 25) and accordingly did not recognize compensation expense for
stock options issued to employees and board members. For disclosure purposes, the Company used
the Black-Scholes option pricing model to calculate the related compensation expense for stock
options granted, as if it had applied the fair value recognition provisions of FAS 123. The
Company has elected to utilize the modified prospective transition method for adopting SFAS
123R. Under this method, the provisions of SFAS 123R apply to all awards granted or modified
after the date of adoption. If the Company had applied the fair value recognition provisions
of SFAS 123 stock-based employee compensation for the quarter ended May 31, 2005, net earnings
and earnings per share would have been as follows (in thousands except per share amounts):
 For the threemonths endedMay 31, 2005Net earnings:As reported
    
    $
    10,558Deduct: Stock-based Employee compensation expense
not included in reported earnings, net of related tax effects $7.
    
    
    (12
    )Pro forma
    
    $
    10,546
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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 2.
    
    Stock Option Plans and Stock Based Compensation-continued
 For the threemonths endedMay 31, 2005Net earnings per share:Basic  as reported
    
    $
    0.42Basic  pro forma
    
    $
    0.41Diluted  as reported
    
    $
    0.41Diluted  pro forma
    
    $
    0.41
 Results for prior periods have not been restated and do not reflect the recognition of
stock-based compensation.
 A summary of the option activity under the plans for the
three months ended May 31, 2006 is as
follows:
 WeightedAverageNumber
    
    
    Weighted
    
    
    Remainingof
    
    
    Average
    
    
    Contractual
    
    
    AggregateShares
    
    
    Exercise
    
    
    Life
    
    
    Intrinsic Value(exact quantity)
    
    
    Price
    
    
    (in years)
    
    

(in
thousands)(a)Outstanding at February 28, 2006
    
    
    687,600
    
    
    $
    10.94Granted
    
    
    
    
    
    
    Terminated
    
    
    
    
    
    
    Exercised
    
    
    (1,500
    )
    
    
    10.25Outstanding at May 31, 2006
    
    
    686,100
    
    
    $
    10.63
    
    
    
    4.4
    
    
    $
    6,100Exercisable at May 31, 2006
    
    
    581,150
    
    
    $
    9.81
    
    
    
    3.7
    
    
    $
    5,643
  (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, 2006 ($19.52) and the
weighted average exercise price, multiplied by the number of shares
indicated. 9




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 2.
    
    Stock Option Plans and Stock Based Compensation-continued
 The Company did not grant any stock options during the three months ended May 31, 2006. The
following is a summary of the assumptions used and the weighted average grant-date fair value
of the stock options granted during the three months ended May 31, 2005:
 Three
months endedMay 31, 2005Expected volatility
    
    
    
    23.89
    %Expected term (years)
    
    
    
    5Risk free interest rate
    
    
    
    3.85
    %Dividend yield
    
    
    
    3.81
    %Weighted average grant-date fair value
    
    
    $
    2.85
  A summary of the stock options exercised during the three months ended May 31, 2006 and 2005 is
presented below (in thousands):
 Three months endedMay 31,2006
    
    2005Total Cash Received
    
    $
    15
    
    
    $
    300Income tax benefits
    
    $
    3
    
    
    $
    72Total grant-date fair value
    
    $
    2
    
    
    $
    34Intrinsic
value
    
    $
    14
    
    
    $
    40
  A summary of the status of the companys unvested stock options at May 31, 2006, and changes
during the three months ended May 31, 2006 is presented below:
 Three months May 31, 2006WeightedAverageGrant DateNo of Options
    
    
    Fair ValueUnvested at February 28, 2006
    
    
    143,700
    
    
    $
    2.28New Grants
    
    
    
    
    
    $
    Vested
    
    
    (38,750
    )
    
    $
    1.66Forfeited
    
    
    
    
    
    $
    Unvested at May 31, 2006
    
    
    104,950
    
    
    $
    2.51
  As of May 31, 2006, there was $198,000 of unrecognized
compensation cost related to nonvested share based compensation
arrangements granted under the Plan. The cost is expected to be
recognized over a weighted-average period of 2 years. The total fair
value of shares vested during the three months ended May 31, 2006 was $756,000.
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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 2.
    
    Stock Option Plans and Stock Based Compensation-continued
 A summary of restricted stock award activity under the plans
for the three months ended May 31, 2006
is as follows:
 WeightedAverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueOutstanding at February 28, 2006
    
    
    23,919
    
    
    $
    19.69Granted
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at May 31, 2006
    
    
    23,919
    
    
    $
    19.69Vested at
May 31, 2006
    
    
    
 As of May 31, 2006, the total remaining unrecognized compensation cost related to
unvested restricted stock was approximately $432,000. The weighted average remaining requisite service period of the
unvested stock options was 1.8 years.
 3.
    
    Employee Benefit Plans
 The Company and certain subsidiaries have a noncontributory defined benefit retirement plan
covering approximately 15% of their employees. Benefits are based on years of service and the
employees average compensation for the highest five compensation years preceding retirement or
termination. The Companys funding policy is to contribute annually an amount in accordance
with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA).
 Pension expense is composed of the following components included in our consolidated statement
of earnings for the three months ended (in thousands):
 Three months endedMay 31,2006
    
    
    2005Components of net periodic benefit costService cost
    
    $
    360
    
    
    $
    356Interest cost
    
    
    610
    
    
    
    611Expected return on plan assets
    
    
    (712
    )
    
    
    (693
    )Amortization of:Prior service cost
    
    
    (36
    )
    
    
    (36
    )Unrecognized net loss
    
    
    239
    
    
    
    264Net periodic benefit cost
    
    $
    461
    
    
    $
    502
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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 3.
    
    Employee Benefit Plans (continued)
 The Company is required to make contributions to its defined benefit pension plan. These
contributions are required under the minimum funding requirements of the Employee Retirement
Pension Plan Income Security Act (ERISA). For the current fiscal year ending February 28,
2007, there is not a minimum contribution requirement and no pension payments have been made;
however, the Company expects to contribute from $2.0 million to $3.0 million in the fourth
quarter of fiscal year 2007. The Company contributed $2,000,000 to its pension plan during
fiscal year 2006.
 4.
    
    Due From FactorsPursuant to terms of an agreement between the Company and various factors, the Company sells a
majority of the trade accounts receivable of the Apparel Segment to the factors on a
non-recourse basis. The price at which the accounts are sold is the invoice amount reduced by
the factor commission of between 0.25% and 1.50%. Additionally, some trade accounts receivable
are sold to the factors on a recourse basis.Trade accounts receivable not sold to the factor remain in the custody and control of the
Company and the Company maintains all credit risk on those accounts as well as accounts which
are sold to the factor with recourse. The Company accounts for receivables sold to the factors
with recourse as accrued borrowings.The Company may request payment from the factor in advance of the collection date or maturity.
Any such advance payments are assessed in interest charges through the collection date or
maturity at the JP Morgan Chase Prime Rate. The Companys obligations with respect to advances
from the factor are limited to the interest charges thereon. Advance payments are limited to a
maximum of 90% (ninety percent) of eligible accounts receivable.The following table represents amounts due from factors included in accounts receivable for the
periods ended (in thousands):
 May 31
    
    
    February 28,2006
    
    
    2006Outstanding factored receivablesWithout recourse
    
    $
    22,470
    
    
    $
    19,762With recourse
    
    
    1,611
    
    
    
    1,099Advances from factors
    
    
    (19,228
    )
    
    
    (17,772
    )Due from factors
    
    $
    4,853
    
    
    $
    3,089
 5.
    
    Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable are reduced by an allowance for an estimate of amounts that are
uncollectible. Approximately 99% of the Companys receivables are due from customers in North
America. The Company extends credit to its customers based upon its evaluation of the
following factors: (i) the
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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 5.
    
    Accounts Receivable and Allowance for Doubtful Accounts-continued
 customers financial condition, (ii) the amount of credit the customer requests and (iii)
the customers actual payment history (which includes disputed invoice resolution). The
Company does not typically require its customers to post a deposit or supply collateral. The Companys
allowance for doubtful accounts reserve is based on an analysis that estimates the amount of
its total customer receivable balance that is not collectible. This analysis includes
assessing a default probability to customers receivable balance, which is influenced by
several factors including (i) current market conditions, (ii) periodic review of customer
credit worthiness, and (iii) review of customer receivable aging and payment trends. The
Company writes-off accounts receivable when they become uncollectible, and payments
subsequently received on such receivables are credited to bad debt expense in the period the
payment is received. Credit losses from continuing operations have consistently been within
managements expectations.The following table represents the activity in the Companys allowance for doubtful accounts
for the three months ended (in thousands):
 Three months endedMay 312006
    
    
    2005Balance at beginning of period
    
    $
    3,001
    
    
    $
    3,567Bad debt expense
    
    
    
    
    
    
    369Recoveries
    
    
    91
    
    
    
    25Accounts written off
    
    
    (135
    )
    
    
    (444
    )Balance at end of period
    
    $
    2,957
    
    
    $
    3,517
 6.
    
    Inventories
 The Company uses the lower of last-in, first-out (LIFO) cost or market to value certain of its
business forms inventory and the lower of first-in, first-out (FIFO) cost or market to value
its remaining and apparel inventories. The Company regularly reviews inventory values on hand,
using specific aging categories, and writes down the carrying value of its inventory for excess
and potentially obsolete inventories based on historical usage and estimated future usage. In
assessing the ultimate realization of its inventory, the company is required to make judgments
as to future demand requirements. As actual future demand or market conditions may vary from
those projected by the Company, adjustments to inventories may be required.
 The following table summarizes the components of inventories at the different stages of
production as of the dates indicated (in thousands):
 May 31,
    
    
    February 28,2006
    
    
    2006Raw material
    
    $
    7,571
    
    
    $
    12,694Work-in-process
    
    
    18,471
    
    
    
    16,886Finished goods
    
    
    63,185
    
    
    
    59,575$
    89,227
    
    
    $
    89,155
 13




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 7.
    
    AcquisitionsThe Company purchased all of the outstanding stock of Specialized Printed Forms, Inc., (SPF)
a privately held company headquartered in Caledonia, New York and the associated land and
buildings for $4.6 million in cash on March 31, 2006. SPF had sales of $9.2 million for the
twelve month period ended July 31, 2005. The acquisition of SPF continues the Ennis strategy
of growth through related manufactured products to further service our existing customer base.
The acquisition added additional short-run print products, long-run (jumbo rolls) products and
solutions as well as integrated labels and form/label combinations sold through the indirect
sales (distributorship) marketplace.The following is a summary of the purchase price allocation (in thousands).
 Accounts receivable, net
    
    $
    826Inventories
    
    
    579Property, plant & equipment
    
    
    5,444Accounts payable and accrued liabilities
    
    
    (2,222
    )$
    4,627
 The Companys results of operations for the three month period ended May 31, 2006 included from
SPF sales in the amount of $1.3 million and net income before income taxes of $52,000 from its
acquisition date of March 31, 2006. Pro-forma information has not been presented as it was not
material to the previously reported revenue, net income or earnings per share of the Company.8.
    
    Goodwill and Other Intangible AssetsGoodwill represents the excess of the purchase price over the fair value of net assets of
acquired businesses and is not amortized. Goodwill and indefinite-lived intangibles are
evaluated for impairment on an annual basis, or more frequently if impairment indicators arise,
using a fair-value-based test that compares the fair value of the asset to its carrying value.
Fair values of reporting units are typically calculated using a factor of expected earnings
before interest, taxes, depreciation, and amortization. Based on this evaluation, no impairment
was recorded. The Company must make assumptions regarding estimated future cash flows and other
factors to determine the fair value of the respective assets in assessing the recoverability of
its goodwill and other intangibles. If these estimates or the related assumptions change, the
Company may be required to record impairment charges for these assets in the future.Intangible assets with determinable lives are amortized on a straight-line basis over the
estimated useful life. The cost of trademarks is based on fair values at the date of
acquisition. Trade names with determinable lives and a net book value of $904,000 at May 31,
2006 are amortized on a straight-line basis over the estimated useful life (between 1 and 10
years). Trademarks with indefinite-lived lives with a net book value of $61,000,000 at May 31,
2006 are evaluated for impairment on an annual basis.
 14




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 8.
    
    Goodwill and Other Intangible Assets-continuedThe cost of purchased trade names is based on fair values at the date of acquisition and is
amortized on a straight-line basis over the estimated useful life (between 10 and 15 years) of
such trade names. The Company assesses the recoverability of its definite-lived intangible
assets primarily based on its current and anticipated future undiscounted cash flows.
 GrossCarrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    NetAs of
May 31, 2006Amortized intangible assets (in thousands)Trademarks
    
    $
    1,234
    
    
    $
    330
    
    
    $
    904Purchased customer lists
    
    
    23,760
    
    
    
    2,538
    
    
    
    21,222$
    24,994
    
    
    $
    2,868
    
    
    $
    22,126As of
February 28, 2006Amortized intangible assets (in thousands)Trademarks
    
    $
    1,234
    
    
    $
    293
    
    
    $
    941Purchased customer lists
    
    
    23,760
    
    
    
    2,128
    
    
    
    21,632$
    24,994
    
    
    $
    2,421
    
    
    $
    22,573Unamortized
intangible assets (trademarks), as of
May 31, 2006 and 2005 (in thousands):
    
    
    
    
    
    
    
    
    
    $
    61,000
 Aggregate amortization expense for three months ended May 31, 2006 and May 31, 2005 was
$497,000 and $479,000 respectively.
 The Companys estimated amortization expense for the
next five years is as follows (in thousands):
 2007
    
    $
    1,9442008
    
    
    1,8052009
    
    
    1,7922010
    
    
    1,7762011
    
    
    1,775
 Changes in the net carrying amount of goodwill are as follows:
 May 31,
    
    
    February 28,2006
    
    
    2006Balance as of the beginning of the period
    
    $
    178,280
    
    
    $
    178,472Goodwill adjusted during year
    
    
    
    
    
    
    (192
    )Balance as of the end of the period
    
    $
    178,280
    
    
    $
    178,280
 15




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 9.
    
    Long-Term Debt
 Long-term debt consisted of the following as of the dates indicated (in thousands):
 May 31,
    
    
    February 28,2006
    
    
    2006Revolving credit facility
    
    $
    95,500
    
    
    $
    62,500Term credit facility
    
    
    
    
    
    
    40,000Capital lease obligations
    
    
    583
    
    
    
    736Notes payable to finance companies
    
    
    982
    
    
    
    1,300Other
    
    
    10,004
    
    
    
    10,000107,069
    
    
    
    114,536Less current installments
    
    
    11,255
    
    
    
    11,620Long-term debt
    
    $
    95,814
    
    
    $
    102,916
    10.
    
    Shareholders Equity
 Comprehensive income is defined as all changes in equity during a period, except for those
resulting from investments by owners and distributions to owners. The components of
comprehensive income were as follows (in thousands):
 Three months endedMay 31,2006
    
    
    2005Net earnings from continuing operations
    
    $
    11,330
    
    
    $
    10,558Interest rate hedge
    
    
    
    
    
    
    (2
    )Foreign currency translation adjustment
    
    
    12
    
    
    
    (22
    )Comprehensive income
    
    $
    11,342
    
    
    $
    10,534
 16




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 10.
    
    Shareholders Equity (continued)Changes in our shareholders equity accounts for the three months ended May 31, 2006 are as follows (in
thousands):
 AccumulatedAdditional
    
    
    
    
    
    OtherCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryStock ($)
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Stock ($)
    
    
    TotalBalance at February 28, 2006
    
    $
    75,134
    
    
    $
    122,922
    
    
    $
    181,423
    
    
    $
    460
    
    
    $
    (82,604
    )
    
    $
    297,335Net earnings
    
    
    
    
    
    
    
    
    
    
    11,330
    
    
    
    
    
    
    
    
    
    
    
    11,330Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,342Dividends declared ($.155 per share)
    
    
    
    
    
    
    
    
    
    
    (3,949
    )
    
    
    
    
    
    
    
    
    
    
    (3,949
    )Exercise of stock options
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    14Charge related to stock-based compensation
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59Balance at May 31, 2006
    
    $
    75,134
    
    
    $
    122,969
    
    
    $
    188,804
    
    
    $
    472
    
    
    $
    (82,578
    )
    
    $
    304,801 11.
    
    Earnings per shareBasic earnings per share have been computed by dividing net earnings by the weighted average
number of common shares outstanding during the applicable period. Diluted earnings per share
reflect the potential dilution that could occur if options or other contracts to issue common shares were exercised or converted into common stock. The following table sets forth the
computation for basic and diluted earnings per share for the periods indicated.
 Three months endedMay 31,2006
    
    
    2005Basic weighted average common shares outstanding
    
    
    25,479,722
    
    
    
    25,426,595Effect of dilutive options
    
    
    310,965
    
    
    
    265,962Diluted weighted average common shares outstanding
    
    
    25,790,687
    
    
    
    25,692,557Per share amounts:Net earnings  basic
    
    $
    0.44
    
    
    $
    0.42Net earnings  diluted
    
    $
    0.44
    
    
    $
    0.41Cash 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, 2006
 12.
    
    Segment Information and Geographic InformationThe Company operates in two segments  the Print Segment and the Apparel Segment.The Print Segment, which represented 53% of the Companys consolidated sales for the three
months ended May 31, 2006, is in the business of manufacturing, design and selling business
forms and other printed business products primarily to distributors located in the United
States.The Print Segment operates 33 manufacturing locations throughout the United States in 15
strategically located domestic states. Approximately 98% of the business products manufactured
by the Print Segment are custom and semi-custom, constructed in a wide variety of sizes,
colors, number of parts and quantities on an individual job basis depending upon the customers
specifications.The products sold include snap sets, continuous forms, laser cut sheets, tags, labels,
integrated products, jumbo rolls and pressure sensitive products in short, medium and long runs
under the following labels: Ennis, Royal, TBF/Avant-Garde, 360o Custom Labels, Witt Printing
and Calibrated Forms. The Print Segment also sells: the Adams-McClure brand (which provides
Point of Purchase advertising for large franchise and fast food chains as well as kitting and
fulfillment); the Admore brand (which provides presentation folders and document folders);
Ennis Tag & Label (which provides tags and labels, promotional products and advertising concept
products), GenForms (which provides short-run and long-run label production) and Northstar and
GFS (which provides financial and security documents).The Print Segment sells predominantly through private printers and independent distributors.
Northstar and GFS also sell directly to a small number of direct customers. Northstar has
continued its focus with large banking organizations on a direct basis (where a distributor is
not acceptable or available to the end-user) and has acquired several of the top 100 banks in
the United States as customers and is actively working on other large banks within the top 100
tier of banks in the United States. Adams-McClure sales are generally provided through
advertising agencies.The second segment, the Apparel Segment, which represented 47% of the Companys consolidated
sales for the three months ended May 31, 2006, consists of Alstyle Apparel, which is primarily
engaged in the production and sale of active-wear including t-shirts, fleece goods and other
wearables. Alstyle sales are seasonal, with sales in the first and second quarters generally
being the highest. Corporate information is included to reconcile segment data to the
consolidated financial statements and includes assets and expenses related to the Companys
corporate headquarters and other administrative costs.
 18




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 12.
    
    Segment Information and Geographic Information-continuedSegment data for the three months ended May 31, 2006 and 2005 were as follows (in
thousands):
 Print
    
    Apparel
    
    
    
    
    
    ConsolidatedSegment
    
    Segment
    
    Corporate
    
    TotalsThree
months ended May 31, 2006Net sales
    
    $
    77,096
    
    
    $
    68,017
    
    
    $
    
    
    
    $
    145,113Depreciation
    
    
    2,024
    
    
    
    1,719
    
    
    
    151
    
    
    
    3,894Amortization of trademark
    
    
    93
    
    
    
    404
    
    
    
    
    
    
    
    497Segment earnings (loss) before
income tax
    
    
    11,271
    
    
    
    10,042
    
    
    
    (3,330
    )
    
    
    17,983Segment assets
    
    
    159,106
    
    
    
    320,754
    
    
    
    18,583
    
    
    
    498,443Capital expenditures
    
    
    371
    
    
    
    187
    
    
    
    78
    
    
    
    636Three
months ended May 31, 2005Net sales
    
    $
    80,724
    
    
    $
    68,389
    
    
    $
    
    
    
    $
    149,113Depreciation
    
    
    1,839
    
    
    
    1,909
    
    
    
    160
    
    
    
    3,908Amortization of trademark
    
    
    90
    
    
    
    389
    
    
    
    
    
    
    
    479Segment earnings (loss) before
income tax
    
    
    11,448
    
    
    
    8,367
    
    
    
    (2,507
    )
    
    
    17,308Segment assets
    
    
    161,259
    
    
    
    311,801
    
    
    
    13,968
    
    
    
    487,028Capital expenditures
    
    
    329
    
    
    
    3,868
    
    
    
    324
    
    
    
    4,521
 Identifiable long-lived assets by country includes property, plant and equipment net of
accumulated depreciation. The Company attributes revenues from external customers to
individual geographic areas based on the country where the sale originated. Information about
the Companys operations in different geographic areas of and for the three months ended is as
follow (in thousands):
 UnitedStates
    
    
    Canada
    
    
    Mexico
    
    
    TotalThrough
May 31, 2006Net sales to unaffiliated customersPrint Segment
    
    $
    77,096
    
    
    $
    
    
    
    $
    
    
    
    $
    77,096Apparel Segment
    
    
    62,265
    
    
    
    5,752
    
    
    
    
    
    
    
    68,017$
    139,361
    
    
    $
    5,752
    
    
    $
    
    
    
    $
    145,113Identifiable long-lived assetsPrint Segment
    
    $
    44,683
    
    
    $
    
    
    
    $
    
    
    
    $
    44,683Apparel Segment
    
    
    11,509
    
    
    
    97
    
    
    
    3,376
    
    
    
    14,982Corporate
    
    
    6,194
    
    
    
    
    
    
    
    
    
    
    
    6,194$
    62,386
    
    
    $
    97
    
    
    $
    3,376
    
    
    $
    65,859
 19




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2006
 12.
    
    Segment Information and Geographic Information-continued
 UnitedStates
    
    
    Canada
    
    
    Mexico
    
    
    TotalThrough
May 31, 2005Net sales to unaffiliated customersPrint Segment
    
    $
    80,724
    
    
    $
    
    
    
    $
    
    
    
    $
    80,724Apparel Segment
    
    
    66,239
    
    
    
    2,150
    
    
    
    
    
    
    
    68,389$
    146,963
    
    
    $
    2,150
    
    
    $
    
    
    
    $
    149,113Identifiable long-lived assetsPrint Segment
    
    $
    44,231
    
    
    $
    
    
    
    $
    
    
    
    $
    44,231Apparel Segment
    
    
    16,880
    
    
    
    131
    
    
    
    4,313
    
    
    
    21,324Corporate
    
    
    7,072
    
    
    
    
    
    
    
    
    
    
    
    7,072$
    68,183
    
    
    $
    131
    
    
    $
    4,313
    
    
    $
    72,627
 13.
    
    Supplemental Cash Flow InformationNet cash flows from operating activities reflects cash payments for interest and income taxes
as follows (in thousands):
 Three months endedMay 31,2006
    
    2005Interest paid
    
    $
    1,300
    
    
    $
    2,228Income taxes paid
    
    $
    1,264
    
    
    $
    829
 14.
    
    Assets Held for SaleIncluded in other assets is land and building with an approximate value of $2.4 million at May
31, 2006 and February 28, 2006 which is being held for sale. The Company closed on the sale of
this property on June 28, 2006 for approximately $2.5 million.15.
    
    Subsequent EventsOn June 30, 2006, the Company declared a quarterly cash dividend of 15 1/2 cents a share on its
common stock. The dividend is payable August 1, 2006 to shareholders of record on July 14,
2006.On June 7, 2006, the Company entered into a Letter of Intent to acquire all the stock of Block
Graphics, Inc. (Block) for approximately $14.5 million in cash. Block had sales of
approximately $35 million for the year ended December 31,
2005. The acquisition will add additional short-run print products
(snaps, continuous forms and cut-sheet forms) as well as the
production of envelopes, a new product for the Company.
 20




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 Overview
   Business Segment Overview
  Print Segment
   21




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
       Apparel Segment
  22




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
         23




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
    Risk Factors
  We may be required to write down goodwill and other intangible assets in the future, which could
cause our financial condition and results of operations to be negatively affected in the future.
 .
 24




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 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.
  25




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 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,
could have a material adverse effect on us.
    Alstyle faces 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.
  Apparel business is subject to cyclical trends.
  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.
  26




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
  Our apparel products are subject to foreign competition, which in the past has been faced with
significant U.S. government import restrictions.
      27




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 Environmental regulations may impact our future operating results.
  We depend upon the talents and contributions of a limited number of individuals, many of whom would
be difficult to replace.
  Cautionary Statements
   28




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 Liquidity and Capital Resources
 (Dollars in thousands)
    
    May 31,2006
    
    February 28,2006
    
    ChangeWorking Capital
    
    $
    93,115
    
    
    $
    94,494
    
    
    
    -1.5
    %Cash and cash equivalents
    
    $
    9,322
    
    
    $
    13,860
    
    
    
    -32.7
    %
 Working Capital.
 Cash and cash equivalents.
 Three months ended May 31,(Dollars in thousands)
    
    2006
    
    2005
    
    ChangeCash provided by operating activities
    
    $
    12,178
    
    
    $
    18,775
    
    
    
    -35.1
    %Cash used for investing activities
    
    $
    (5,260
    )
    
    $
    (4,880
    )
    
    
    7.8
    %Cash used for financing activities
    
    $
    (11,405
    )
    
    $
    (17,674
    )
    
    
    -35.5
    %
 Cash flows from operating activities.
 Cash flows
from investing activities.
 Cash flows from financing activities.
 Credit Facility 
 29




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
    Pension 
 Inventories 
 Capital
Expenditures 
 Contractual
Obligations & Off-Balance Sheet Arrangements 
 30




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 Results of Operations  Consolidated
 Net Sales.
 Gross profit.
 Selling, general and administrative expenses.
 Earnings from operations.
 Other income and expense.
 Provision for income taxes.
 31




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 Net earnings.
 Results of Operations  Segments
 May 31,Revenue by Segment (in thousands)
    
    2006
    
    
    2005Print
    
    $
    77,096
    
    
    $
    80,724Apparel
    
    
    68,017
    
    
    
    68,389Total
    
    $
    145,113
    
    
    $
    149,113
 Print Segment
 Apparel Segment
 May 31,Gross Profit by Segment (in thousands)
    
    2006
    
    
    2005Print
    
    $
    19,366
    
    
    $
    20,803Apparel
    
    
    18,449
    
    
    
    16,675Total
    
    $
    37,815
    
    
    $
    37,478
 Print Segment
 32




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
  Apparel Segment
 May 31,Profit by Segment (in thousands)
    
    2006
    
    
    2005Print
    
    $
    11,271
    
    
    $
    11,448Apparel
    
    
    10,042
    
    
    
    8,367Total
    
    
    21,313
    
    
    
    19,815Less corporate
expenses
    
    
    3,330
    
    
    
    2,507Earnings before income
taxes
    
    $
    17,983
    
    
    $
    17,308
 Print Segment
 Apparel Segment
 Critical Accounting Policies and Judgments
  33




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ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
       34




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ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
    35




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ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risk
    
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures.
  36




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Items 2, 3 and 5 are not applicable and have been omitted
 
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 6. Exhibits
  Exhibit 3.1
    
    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 3.2
    
    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 3.3
    
    Articles of Amendment to the Articles of Incorporation of
Ennis Business Forms, Inc. filed on June 17, 2004
incorporated herein by reference to Exhibit 3.3 to the
registrants Form 10-Q Quarterly Report for the quarter ended
November 30, 2004.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 37




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 
   ENNIS, INC.Date: July 10, 2006
    /s/ Keith S. WaltersKeith S. WaltersChairman, Chief Executive Officer and
PresidentDate: July 10, 2006
    /s/ Richard L. Travis, Jr.Richard L. Travis, Jr.V.P.  Finance and CFO, Secretary and
Principal Financial and Accounting Officer 38




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2006
 
 INDEX TO EXHIBITS
 Exhibit Number
    
    DescriptionExhibit 3.1
    
    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 3.2
    
    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 3.3
    
    Articles of Amendment to the Articles of Incorporation of
Ennis Business Forms, Inc. filed on June 17, 2004
incorporated herein by reference to Exhibit 3.3 to the
registrants Form 10-Q Quarterly Report for the quarter
ended November 30, 2004.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 39