##### 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, 2008
 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
  o þ




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##### 



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED MAY 31, 2008
  
 TABLE OF CONTENTS
 PART I: FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Consolidated Balance Sheets at May 31, 2008 (unaudited) and February 29, 2008
    
    
    3Unaudited Consolidated Statements of Earnings for the three months ended May 31, 2008 and 2007
    
    
    5Unaudited Consolidated Statements of Cash Flows for the three months ended May 31, 2008 and 2007
    
    
    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
    
    
    33Item 4. Controls and Procedures
    
    
    34PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3. Defaults Upon Senior Securities
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 5. Other Information
    
    
    34Item 6. Exhibits
    
    
    35SIGNATURES
    
    
    36Certification Pursuant to Rule 13a-14(a)Certification Pursuant to Rule 13a-14(a)Section 1350 Certification of Chief Executive OfficerSection 1350 Certification 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 29,2008
    
    
    2008(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    2,294
    
    
    $
    3,393Accounts receivable, net of allowance for doubtful receivables
of $3,721 at May 31, 2008 and $3,954 at February 29, 2008
    
    
    81,594
    
    
    
    72,278Prepaid expenses
    
    
    4,906
    
    
    
    3,500Inventories
    
    
    91,265
    
    
    
    98,570Deferred income taxes
    
    
    7,870
    
    
    
    7,786Assets held for sale
    
    
    292
    
    
    
    292Total current assets
    
    
    188,221
    
    
    
    185,819Property, plant and equipment, at costPlant, machinery and equipment
    
    
    131,510
    
    
    
    130,214Land and buildings
    
    
    42,937
    
    
    
    42,793Other
    
    
    22,665
    
    
    
    22,586Total property, plant and equipment
    
    
    197,112
    
    
    
    195,593Less accumulated depreciation
    
    
    138,909
    
    
    
    136,605Net property, plant and equipment
    
    
    58,203
    
    
    
    58,988Goodwill
    
    
    178,388
    
    
    
    178,388Trademarks and tradenames, net
    
    
    63,842
    
    
    
    63,880Customer lists, net
    
    
    23,697
    
    
    
    24,260Deferred finance charges, net
    
    
    822
    
    
    
    934Prepaid pension asset
    
    
    
    
    
    
    260Other assets
    
    
    605
    
    
    
    602Total assets
    
    $
    513,778
    
    
    $
    513,131
 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 29,2008
    
    
    2008(unaudited)Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    31,287
    
    
    $
    29,658Accrued expensesEmployee compensation and benefits
    
    
    14,398
    
    
    
    14,840Taxes other than income
    
    
    1,195
    
    
    
    989Federal and state income taxes payable
    
    
    4,935
    
    
    
    501Other
    
    
    5,616
    
    
    
    5,583Current installments of long-term debt
    
    
    227
    
    
    
    255Total current liabilities
    
    
    57,658
    
    
    
    51,826Long-term debt, less current installments
    
    
    78,654
    
    
    
    90,710Liability for pension benefits
    
    
    75
    
    
    
    Deferred income taxes
    
    
    20,768
    
    
    
    20,775Other liabilities
    
    
    895
    
    
    
    1,341Total liabilities
    
    
    158,050
    
    
    
    164,652Commitments and contingenciesShareholders 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 29, 2008
    
    
    75,134
    
    
    
    75,134Additional paid in capital
    
    
    122,642
    
    
    
    122,566Retained earnings
    
    
    242,573
    
    
    
    235,624Accumulated other comprehensive income (loss):Foreign currency translation
    
    
    909
    
    
    
    929Minimum pension liability
    
    
    (6,450
    )
    
    
    (6,450
    )(5,541
    )
    
    
    (5,521
    )434,808
    
    
    
    427,803Treasury stockCost of 4,377,661 shares at May 31, 2008 and
4,391,193 shares at February 29, 2008
    
    
    (79,080
    )
    
    
    (79,324
    )Total shareholders equity
    
    
    355,728
    
    
    
    348,479Total liabilities and shareholders equity
    
    $
    513,778
    
    
    $
    513,131
 See accompanying notes to consolidated financial statements.
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ENNIS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF EARNINGS
 ( Dollars in thousands except per share amounts )
 (Unaudited)
 Three months endedMay 31,2008
    
    
    2007Net sales
    
    $
    163,200
    
    
    $
    152,774Cost of goods sold
    
    
    122,748
    
    
    
    111,416Gross profit
    
    
    40,452
    
    
    
    41,358Selling, general and administrative
    
    
    22,189
    
    
    
    22,636(Gain) loss from disposal of assets
    
    
    (54
    )
    
    
    12Income from operations
    
    
    18,317
    
    
    
    18,710Other income (expense)Interest expense
    
    
    (1,033
    )
    
    
    (1,492
    )Other expense, net
    
    
    (61
    )
    
    
    (81
    )(1,094
    )
    
    
    (1,573
    )Earnings before income taxes
    
    
    17,223
    
    
    
    17,137Provision for income taxes
    
    
    6,287
    
    
    
    6,341Net earnings
    
    $
    10,936
    
    
    $
    10,796Weighted average common shares outstandingBasic
    
    
    25,668,361
    
    
    
    25,585,449Diluted
    
    
    25,896,982
    
    
    
    25,874,789Per share amountsNet earnings  basic
    
    $
    0.43
    
    
    $
    0.42Net earnings  diluted
    
    $
    0.42
    
    
    $
    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 31,2008
    
    
    2007Cash flows from operating activities:Net earnings
    
    $
    10,936
    
    
    $
    10,796Adjustments to reconcile net earnings to net cash provided
by operating activities:Depreciation
    
    
    2,683
    
    
    
    3,301Amortization of deferred finance charges
    
    
    112
    
    
    
    112Amortization of trademarks and customer lists
    
    
    605
    
    
    
    466(Gain) loss from disposal of assets
    
    
    (54
    )
    
    
    12Bad debt expense
    
    
    
    
    
    
    373Stock based compensation
    
    
    236
    
    
    
    124Excess tax benefit of stock based compensation
    
    
    (84
    )
    
    
    Deferred income taxes
    
    
    80
    
    
    
    3Changes in operating assets and liabilities:Accounts receivable
    
    
    (9,344
    )
    
    
    (6,858
    )Prepaid expenses
    
    
    (1,385
    )
    
    
    622Inventories
    
    
    7,221
    
    
    
    (1,845
    )Other assets
    
    
    (7
    )
    
    
    21Accounts
payable and accrued expenses
    
    
    5,766
    
    
    
    2,481Other liabilities
    
    
    (446
    )
    
    
    (528
    )Prepaid pension asset/liability
for pension benefits
    
    
    335
    
    
    
    404Net cash
provided by operating activities
    
    
    16,654
    
    
    
    9,484Cash flows from investing activities:Capital expenditures
    
    
    (1,865
    )
    
    
    (1,018
    )Proceeds from disposal of plant and property
    
    
    5
    
    
    
    23Net cash
used in investing activities
    
    
    (1,860
    )
    
    
    (995
    )Cash flows from financing activities:Repayment of debt
    
    
    (12,084
    )
    
    
    (5,705
    )Dividends
    
    
    (3,987
    )
    
    
    (3,967
    )Proceeds
from exercise of stock options
    
    
    
    
    
    
    3Excess tax
benefit of stock based compensation
    
    
    84
    
    
    
    Net cash used in financing activities
    
    
    (15,987
    )
    
    
    (9,669
    )Effect of exchange rate changes on cash
    
    
    94
    
    
    
    149Net change in cash and cash equivalents
    
    
    (1,099
    )
    
    
    (1,031
    )Cash and cash equivalents at beginning of period
    
    
    3,393
    
    
    
    3,582Cash and cash equivalents at end of period
    
    $
    2,294
    
    
    $
    2,551
 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, 2008
 1. Significant Accounting Policies and General Matters
 Basis of Presentation
  Reclassifications
 Recent Accounting Pronouncements
 FAS 157 .
 FAS 157-2.
 FAS 159 .
 FAS 141R.
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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 1. Significant Accounting Policies and General Matters-continued
  FAS 160.
 FAS 161.
 FAS 162. The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles
 2. Due From Factors
    8




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 2. Due From Factors-continued
  May 31,
    
    
    February 29,2008
    
    
    2008Outstanding factored receivables without recourse
    
    $
    817
    
    
    $
    2,315Advances from factors
    
    
    (8
    )
    
    
    (1,467
    )Due from factors
    
    $
    809
    
    
    $
    848
 3. Accounts Receivable and Allowance for Doubtful Receivables
    Three months endedMay 31,2008
    
    
    2007Balance at beginning of period
    
    $
    3,954
    
    
    $
    2,698Bad debt expense
    
    
    
    
    
    
    373Recoveries
    
    
    4
    
    
    
    1Accounts written off
    
    
    (237
    )
    
    
    (99
    )Balance at end of period
    
    $
    3,721
    
    
    $
    2,973
 4. Inventories
  9




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 4. Inventories-continued
  May 31,
    
    
    February 29,2008
    
    
    2008Raw material
    
    $
    14,933
    
    
    $
    14,711Work-in-process
    
    
    17,254
    
    
    
    15,467Finished goods
    
    
    59,078
    
    
    
    68,392$
    91,265
    
    
    $
    98,570
 5. Acquisitions
   Accounts receivable
    
    $
    2,713Inventories
    
    
    1,711Other assets
    
    
    66Property, plant & equipment
    
    
    2,662Customer lists
    
    
    5,084Trademarks
    
    
    671Noncompete
    
    
    18Accounts payable and accrued liabilities
    
    
    (443
    )$
    12,482
   Accounts receivable
    
    $
    974Inventories
    
    
    346Property, plant & equipment
    
    
    419Customer lists
    
    
    767Trademarks
    
    
    306Noncompete
    
    
    15Accounts payable and accrued liabilities
    
    
    (171
    )$
    2,656
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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 5. Acquisitions-continued
  Three months endedMay 31,2007Pro forma net sales
    
    $
    161,900Pro forma net earnings
    
    
    10,962Pro forma earnings per share  diluted
    
    
    0.42
  6. Goodwill and Other Intangible Assets
    GrossCarrying
    
    
    AccumulatedAs of May 31, 2008
    
    Amount
    
    
    Amortization
    
    
    NetAmortized intangible assets (in thousands)Tradenames
    
    $
    1,234
    
    
    $
    630
    
    
    $
    604Customer lists
    
    
    29,908
    
    
    
    6,211
    
    
    
    23,697Noncompete
    
    
    500
    
    
    
    455
    
    
    
    45$
    31,642
    
    
    $
    7,296
    
    
    $
    24,346
 11




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 6. Goodwill and Other Intangible Assets-continued
 GrossCarrying
    
    
    AccumulatedAs of February 29, 2008
    
    Amount
    
    
    Amortization
    
    
    NetAmortized intangible assets (in thousands)Tradenames
    
    $
    1,234
    
    
    $
    592
    
    
    $
    642Customer lists
    
    
    29,908
    
    
    
    5,648
    
    
    
    24,260Noncompete
    
    
    500
    
    
    
    451
    
    
    
    49$
    31,642
    
    
    $
    6,691
    
    
    $
    24,951
 May 31,
    
    
    February 29,2008
    
    
    2008Non-amortizing intangible assets (in thousands)Trademarks
    
    $
    63,238
    
    
    $
    63,238
   2009
    
    $
    2,419,0002010
    
    
    2,403,0002011
    
    
    2,397,0002012
    
    
    2,391,0002013
    
    
    2,347,0002014
    
    
    2,254,000
  Print
    
    
    ApparelSegment
    
    
    SegmentTotal
    
    
    Total
    
    
    TotalBalance as of March 1, 2007
    
    $
    40,614
    
    
    $
    137,700
    
    
    $
    178,314Goodwill
    
    
    74
    
    
    
    
    
    
    
    74Balance as of March 1, 2008
    
    
    40,688
    
    
    
    137,700
    
    
    
    178,388Goodwill
    
    
    
    
    
    
    
    
    
    
    Balance as of May 31, 2008
    
    $
    40,688
    
    
    $
    137,700
    
    
    $
    178,388
  12




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 7. Other Accrued Expenses
  May 31, 2008
    
    
    February 29, 2008Accrued interest
    
    $
    359
    
    
    $
    604Accrued taxes
    
    
    413
    
    
    
    405Accrued legal and professional fees
    
    
    131
    
    
    
    244Accrued utilities
    
    
    1,548
    
    
    
    1,358Accrued repairs and maintenance
    
    
    308
    
    
    
    274Accrued contract labor
    
    
    427
    
    
    
    280Factored receivables with recourse
    
    
    320
    
    
    
    539Other accrued expenses
    
    
    2,110
    
    
    
    1,879$
    5,616
    
    
    $
    5,583
 8. Long-Term Debt
  May 31, 2008
    
    
    February 29, 2008Revolving credit facility
    
    $
    78,500
    
    
    $
    90,500Capital lease obligations
    
    
    381
    
    
    
    452Other
    
    
    
    
    
    
    1378,881
    
    
    
    90,965Less current installments
    
    
    227
    
    
    
    255Long-term debt
    
    $
    78,654
    
    
    $
    90,710
    13




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 9. Shareholders Equity
  Three months ended May 31,2008
    
    
    2007Net earnings
    
    $
    10,936
    
    
    $
    10,796Foreign currency translation adjustment,
net of deferred taxes
    
    
    (20
    )
    
    
    434Comprehensive income
    
    $
    10,916
    
    
    $
    11,230
  AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury StockShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Shares
    
    
    Amount
    
    
    TotalBalance February 29, 2008
    
    
    30,053,443
    
    
    $
    75,134
    
    
    $
    122,566
    
    
    $
    235,624
    
    
    $
    (5,521
    )
    
    
    (4,391,193
    )
    
    $
    (79,324
    )
    
    $
    348,479Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,936
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,936Foreign currency translation,
net of deferred tax of $32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    (20
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,916Dividends declared
($.155 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,987
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,987
    )Excess tax benefit of stock
option exercises and restricted
stock grants
    
    
    
    
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84Stock based compensation
    
    
    
    
    
    
    
    
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236Exercise of stock options
and restricted stock grants
    
    
    
    
    
    
    
    
    
    
    (244
    )
    
    
    
    
    
    
    
    
    
    
    13,532
    
    
    
    244
    
    
    
    Balance May 31, 2008
    
    
    30,053,443
    
    
    $
    75,134
    
    
    $
    122,642
    
    
    $
    242,573
    
    
    $
    (5,541
    )
    
    
    (4,377,661
    )
    
    $
    (79,080
    )
    
    $
    355,728
 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, 2008
 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 29, 2008
    
    
    469,513
    
    
    $
    10.97
    
    
    
    2.9Granted
    
    
    
    
    
    
    Terminated
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Outstanding at May 31, 2008
    
    
    469,513
    
    
    $
    10.97
    
    
    
    2.7
    
    
    $
    3,751Exercisable at May 31, 2008
    
    
    441,413
    
    
    $
    10.64
    
    
    
    2.4
    
    
    $
    3,671
 
 (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, 2008 ($18.89) and the
weighted average exercise price, multiplied by the number of shares indicated.  Three months ended May 31,2008
    
    2007Total cash received
    
    $
    
    
    
    $
    3Income tax benefits
    
    
    84
    
    
    
    Total grant-date fair value
    
    
    
    
    
    
    Intrinsic value
    
    
    
    
    
    
    4
  WeightedAverageNumber
    
    Grant Dateof Options
    
    Fair ValueUnvested at February 29, 2008
    
    
    45,600
    
    
    $
    2.64New grants
    
    
    
    
    
    
    Vested
    
    
    (17,500
    )
    
    
    2.45Forfeited
    
    
    
    
    
    
    Unvested at May 31, 2008
    
    
    28,100
    
    
    
    2.75
  15




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 10. Stock Option Plans and Stock Based Compensation-continued
  WeightedAverageNumber of
    
    Grant DateShares
    
    Fair ValueOutstanding at February 29, 2008
    
    
    73,916
    
    
    $
    25.12Granted
    
    
    56,680
    
    
    
    15.49Terminated
    
    
    
    
    
    
    Exercised
    
    
    (13,532
    )
    
    
    27.71Outstanding at May 31, 2008
    
    
    117,064
    
    
    $
    20.16Exercisable at May 31, 2008
    
    
    
    
    
    $
    
  11. Employee Benefit Plans
   Three months endedMay 31,2008
    
    
    2007Components of net periodic benefit costService cost
    
    $
    335
    
    
    $
    358Interest cost
    
    
    656
    
    
    
    626Expected return on plan assets
    
    
    (812
    )
    
    
    (770
    )Amortization of:Prior service cost
    
    
    (36
    )
    
    
    (36
    )Unrecognized net loss
    
    
    192
    
    
    
    226Net periodic benefit cost
    
    $
    335
    
    
    $
    404
  16




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 12. Earnings per share
  Three months ended May 31,2008
    
    
    2007Basic weighted average common shares outstanding
    
    
    25,668,361
    
    
    
    25,585,449Effect of dilutive options
    
    
    228,621
    
    
    
    289,340Diluted weighted average common shares outstanding
    
    
    25,896,982
    
    
    
    25,874,789Per share amounts:Net earnings  basic
    
    $
    0.43
    
    
    $
    0.42Net earnings  diluted
    
    $
    0.42
    
    
    $
    0.42Cash dividends
    
    $
    0.155
    
    
    $
    0.155
 13. Segment Information and Geographic Information
   ® TM TM TM TM ®
   17




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 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
    
    
    
    1,865Three months ended May 31, 2007:Net sales
    
    $
    85,135
    
    
    $
    67,639
    
    
    $
    
    
    
    $
    152,774Depreciation
    
    
    2,069
    
    
    
    1,008
    
    
    
    224
    
    
    
    3,301Amortization of identifiable
intangibles
    
    
    99
    
    
    
    367
    
    
    
    
    
    
    
    466Segment earnings (loss) before
income tax
    
    
    13,037
    
    
    
    8,385
    
    
    
    (4,285
    )
    
    
    17,137Segment assets
    
    
    148,027
    
    
    
    324,197
    
    
    
    10,526
    
    
    
    482,750Capital expenditures
    
    
    602
    
    
    
    409
    
    
    
    7
    
    
    
    1,018
  United States
    
    
    Canada
    
    
    Mexico
    
    
    TotalThree 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
 18




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2008
 13. Segment Information and Geographic Information-continued
 United States
    
    
    Canada
    
    
    Mexico
    
    
    TotalThree months ended May 31, 2007:Net sales to unaffiliated customersPrint Segment
    
    $
    85,135
    
    
    $
    
    
    
    $
    
    
    
    $
    85,135Apparel Segment
    
    
    63,017
    
    
    
    4,622
    
    
    
    
    
    
    
    67,639$
    148,152
    
    
    $
    4,622
    
    
    $
    
    
    
    $
    152,774Identifiable long-lived assetsPrint Segment
    
    $
    42,789
    
    
    $
    
    
    
    $
    
    
    
    
    42,789Apparel Segment
    
    
    8,612
    
    
    
    101
    
    
    
    2,572
    
    
    
    11,285Corporate
    
    
    6,725
    
    
    
    
    
    
    
    
    
    
    
    6,725$
    58,126
    
    
    $
    101
    
    
    $
    2,572
    
    
    $
    60,799
 14. Supplemental Cash Flow Information
  Three months ended May 31,2008
    
    2007Interest paid
    
    $
    1,278
    
    
    $
    1,594Income taxes paid
    
    $
    1,841
    
    
    $
    1,315
 15. Assets Held for Sale
  16. Subsequent Events
   19




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
 
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
    Business Segment Overview
  Print Segment
  ® TM TM
 20




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008


TM TM ®
       Apparel Segment
 ® ® ® ® ® ®
   21




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008


Risk Factors
  22




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008


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.
 .
 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.
  23




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008


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.
      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.
  24




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008


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.
  Our apparel products are subject to foreign competition, which in the past have been faced with
significant U.S. government import restrictions.
      25




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008


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
   26




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
 Result of Operations
 Three Months EndedConsolidated
    
    May 31,Statements of Earnings - Data
    
    2008
    
    2007Net sales
    
    $
    163,200
    
    
    
    100.0
    %
    
    $
    152,774
    
    
    
    100.0
    %Cost of goods sold
    
    
    122,748
    
    
    
    75.2
    
    
    
    111,416
    
    
    
    72.9Gross profit
    
    
    40,452
    
    
    
    24.8
    
    
    
    41,358
    
    
    
    27.1Selling, general and administrative
    
    
    22,189
    
    
    
    13.6
    
    
    
    22,636
    
    
    
    14.8(Gain) loss from disposal of assets
    
    
    (54
    )
    
    
    0.0
    
    
    
    12
    
    
    
    0.0Income from operations
    
    
    18,317
    
    
    
    11.2
    
    
    
    18,710
    
    
    
    12.3Other expense
    
    
    (1,094
    )
    
    
    (0.6
    )
    
    
    (1,573
    )
    
    
    (1.0
    )Earnings before income taxes
    
    
    17,223
    
    
    
    10.6
    
    
    
    17,137
    
    
    
    11.3Provision for income taxes
    
    
    6,287
    
    
    
    3.9
    
    
    
    6,341
    
    
    
    4.2Net earnings
    
    $
    10,936
    
    
    
    6.7
    %
    
    $
    10,796
    
    
    
    7.1
    %
 Critical Accounting Policies and Judgments
      27




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
       Results of Operations  Consolidated
 Net Sales.  
 Gross profit.  
 Selling, general and administrative expense.
 28




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
 Gain from disposal of assets.
 Income from operations.
 Other income and expense.
 Provision for income taxes.
 Net earnings.
 Results of Operations  Segments
 Three months endedMay 31,Net Sales by Segment (in thousands)
    
    2008
    
    
    2007Print
    
    $
    85,297
    
    
    $
    85,135Apparel
    
    
    77,903
    
    
    
    67,639Total
    
    $
    163,200
    
    
    $
    152,774
 Print Segment
 Apparel Segment
 29




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
 May 31,Gross Profit by Segment (in thousands)
    
    2008
    
    
    2007Print
    
    $
    23,732
    
    
    $
    22,529Apparel
    
    
    16,720
    
    
    
    18,829Total
    
    $
    40,452
    
    
    $
    41,358
 Print Segment
 Apparel Segment
 Three months endedMay 31,Profit by Segment (in thousands)
    
    2008
    
    
    2007Print
    
    $
    14,447
    
    
    $
    13,037Apparel
    
    
    6,793
    
    
    
    8,385Total
    
    
    21,240
    
    
    
    21,422Less corporate expenses
    
    
    4,017
    
    
    
    4,285Earnings before income taxes
    
    $
    17,223
    
    
    $
    17,137
 Print Segment
 Apparel Segment
 Liquidity and Capital Resources
 May 31,
    
    
    February 29,(Dollars in thousands)
    
    2008
    
    
    2008
    
    
    ChangeWorking Capital
    
    $
    130,563
    
    
    $
    133,993
    
    
    
    -2.6
    %Cash and cash equivalents
    
    $
    2,294
    
    
    $
    3,393
    
    
    
    -32.4
    %
 30




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
 Working Capital.
 Cash and cash equivalent.
 Three months ended May 31,(Dollars in thousands)
    
    2008
    
    2007
    
    ChangeNet Cash
provided by operating activities
    
    $
    16,654
    
    
    $
    9,484
    
    
    
    75.6
    %Net Cash used in investing activities
    
    $
    (1,860
    )
    
    $
    (995
    )
    
    
    86.9
    %Net Cash used in financing activities
    
    $
    (15,987
    )
    
    $
    (9,669
    )
    
    
    65.3
    %
 Cash flows from operating activities.
 Cash flows from investing activities.
 Cash flows from financing activities.
 Credit
Facility 
   31




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
  Pension 
 Inventories 
 Capital Expenditures 
 Contractual Obligations & Off-Balance Sheet Arrangements 
 Recent Accounting Pronouncements
 FAS 157 .
 FAS 157-2.
 FAS 159 .
 FAS 141R.
 32




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
  FAS 160.
 FAS 161.
 FAS 162. The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risk
 Interest Rates
  Foreign Exchange
  33




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
   
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures.
  
 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
  34




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
 
 Item 6. Exhibits
  Exhibit 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 35




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
 
   ENNIS, INC.Date: June 30, 2008
    /s/ Keith S. WaltersKeith S. WaltersChairman, Chief Executive Officer
and PresidentDate: June 30, 2008
    /s/ Richard L. Travis, Jr.Richard L. Travis, Jr.V.P.  Finance and CFO, Secretary and
Principal Financial and Accounting Officer 36




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED MAY 31, 2008
  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 37