##### 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 August 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  (Registrants Telephone Number, Including Area Code)
 þ o
  o þ o
 o þ




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##### 



ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2006
 TABLE OF CONTENTS
 PART I: FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Consolidated Balance Sheets at August 31, 2006 (unaudited) and February 28, 2006
    
    
    3Unaudited Consolidated Statements of Earnings for the three and six months ended August 31, 2006
and 2005
    
    
    5Unaudited Consolidated Statements of Cash Flows for the six months ended August 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
    
    
    34Item 4. Controls and Procedures
    
    
    34PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    35Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 3. Defaults Upon Senior Securities
    
    
    35Item 4. Submission of Matters to a Vote of Security Holders
    
    
    35Item 5. Other Information
    
    
    35Item 6. Exhibits
    
    
    35SIGNATURES
    
    
    36Certification of CEOCertification of CFOCertification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350
  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 )
 August 31,
    
    
    February 28,2006
    
    
    2006(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    13,872
    
    
    $
    13,860Accounts receivables, net of allowance for doubtful receivables
of $3,226 at August 31, 2006 and $3,001 at February 28, 2006
    
    
    48,311
    
    
    
    41,686Prepaid expenses
    
    
    6,133
    
    
    
    4,425Inventories
    
    
    89,339
    
    
    
    89,155Other current assets
    
    
    10,909
    
    
    
    9,329Total current assets
    
    
    168,564
    
    
    
    158,455Property, plant and equipment, at costPlant, machinery and equipment
    
    
    128,241
    
    
    
    120,456Land and buildings
    
    
    43,173
    
    
    
    38,038Other
    
    
    21,009
    
    
    
    20,292Total property, plant and equipment
    
    
    192,423
    
    
    
    178,786Less accumulated depreciation
    
    
    122,392
    
    
    
    114,983Net property, plant and equipment
    
    
    70,031
    
    
    
    63,803Goodwill
    
    
    178,314
    
    
    
    178,280Trademarks, net
    
    
    61,871
    
    
    
    61,941Customer lists, net
    
    
    20,896
    
    
    
    21,632Deferred finance charges, net
    
    
    1,606
    
    
    
    1,390Prepaid pension asset
    
    
    7,357
    
    
    
    8,277Other assets
    
    
    965
    
    
    
    623Total assets
    
    $
    509,604
    
    
    $
    494,401
 See accompanying notes to consolidated financial statements.
 3




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ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS  (Dollars in thousands )
 August 31,
    
    
    February 28,2006
    
    
    2006(unaudited)Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    27,913
    
    
    $
    26,589Accrued expensesEmployee compensation and benefits
    
    
    17,487
    
    
    
    17,250Taxes other than income
    
    
    1,120
    
    
    
    1,488Federal and state income taxes payable
    
    
    1,443
    
    
    
    2,490Other
    
    
    4,985
    
    
    
    4,524Current installments of long-term debt
    
    
    5,963
    
    
    
    11,620Total current liabilities
    
    
    58,911
    
    
    
    63,961Long-term debt, less current installments
    
    
    108,181
    
    
    
    102,916Deferred credits, principally income taxes
    
    
    29,524
    
    
    
    30,189Total liabilities
    
    
    196,616
    
    
    
    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 August 31 and February 28, 2006
    
    
    75,134
    
    
    
    75,134Additional paid in capital
    
    
    122,209
    
    
    
    122,922Retained earnings
    
    
    196,488
    
    
    
    181,423Accumulated other comprehensive income-foreign currency translation
    
    
    429
    
    
    
    460394,260
    
    
    
    379,939Treasury stockCost of 4,499,069 shares at August 31,2006 and
4,574,329 shares at February 28, 2006
    
    
    (81,272
    )
    
    
    (82,604
    )Total shareholders equity
    
    
    312,988
    
    
    
    297,335Total liabilities and shareholders equity
    
    $
    509,604
    
    
    $
    494,401
 See accompanying notes to consolidated financial statements.
 4




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ENNIS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF EARNINGS
( Dollars in thousands except share and per share amounts )
(Unaudited)
 Three months ended
    
    
    Six months endedAugust 31,
    
    
    August 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    151,718
    
    
    $
    148,116
    
    
    $
    296,831
    
    
    $
    297,229Cost of goods sold
    
    
    113,477
    
    
    
    110,864
    
    
    
    220,775
    
    
    
    222,499Gross profit
    
    
    38,241
    
    
    
    37,252
    
    
    
    76,056
    
    
    
    74,730Selling, general and administrative
    
    
    18,322
    
    
    
    17,791
    
    
    
    36,400
    
    
    
    35,628Income from operations
    
    
    19,919
    
    
    
    19,461
    
    
    
    39,656
    
    
    
    39,102Other income (expense)Interest expense
    
    
    (1,718
    )
    
    
    (2,323
    )
    
    
    (3,510
    )
    
    
    (4,566
    )Other income, net
    
    
    281
    
    
    
    (81
    )
    
    
    319
    
    
    
    (171
    )(1,437
    )
    
    
    (2,404
    )
    
    
    (3,191
    )
    
    
    (4,737
    )Earnings before income taxes
    
    
    18,482
    
    
    
    17,057
    
    
    
    36,465
    
    
    
    34,365Provision for income taxes
    
    
    6,839
    
    
    
    6,481
    
    
    
    13,492
    
    
    
    13,231Net earnings
    
    $
    11,643
    
    
    $
    10,576
    
    
    $
    22,973
    
    
    $
    21,134Weighted average common shares
outstandingBasic
    
    
    25,519,344
    
    
    
    25,453,566
    
    
    
    25,499,426
    
    
    
    25,440,230Diluted
    
    
    25,736,132
    
    
    
    25,756,415
    
    
    
    25,715,959
    
    
    
    25,725,127Per share amountsNet earnings  basic
    
    $
    0.46
    
    
    $
    0.42
    
    
    $
    0.90
    
    
    $
    0.83Net earnings  diluted
    
    $
    0.45
    
    
    $
    0.41
    
    
    $
    0.89
    
    
    $
    0.82Cash dividends per share
    
    $
    0.155
    
    
    $
    0.155
    
    
    $
    0.310
    
    
    $
    0.310
 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)
 Six months endedAugust 31,2006
    
    
    2005Cash flows from operating activities:Net earnings
    
    $
    22,973
    
    
    $
    21,134Adjustments to reconcile net earnings to net cash provided
by operating activities:Depreciation
    
    
    7,560
    
    
    
    7,847Amortization of deferred financing charges
    
    
    222
    
    
    
    467Amortization of trademarks and customer lists
    
    
    1,000
    
    
    
    973Gain on the sale of equipment
    
    
    (251
    )
    
    
    (178
    )Bad debt expense
    
    
    455
    
    
    
    747Stock based compensation
    
    
    125
    
    
    
    Changes in operating assets and liabilities, net of the
effects of acquisitions:Accounts receivables
    
    
    (3,690
    )
    
    
    (8,295
    )Prepaid expenses
    
    
    (1,710
    )
    
    
    (452
    )Inventories
    
    
    2,414
    
    
    
    1,606Other current assets
    
    
    (1
    )
    
    
    93Accounts payable and accrued expenses
    
    
    (3,809
    )
    
    
    (6,604
    )Prepaid pension asset
    
    
    920
    
    
    
    1,003Other assets
    
    
    (1,641
    )
    
    
    (238
    )Excess tax benefits from stock-based payment arrangements
    
    
    (54
    )
    
    
    Net cash provided by operating activities
    
    
    24,513
    
    
    
    18,103Cash flows from investing activities:Capital expenditures
    
    
    (1,811
    )
    
    
    (6,138
    )Purchase of businesses, net of cash acquired
    
    
    (17,613
    )
    
    
    Proceeds from disposal of property
    
    
    2,781
    
    
    
    196Net cash used in investing activities
    
    
    (16,643
    )
    
    
    (5,942
    )Cash flows from financing activities:Debt issued
    
    
    15,000
    
    
    
    9,000Repayment of debt
    
    
    (15,453
    )
    
    
    (22,237
    )Dividends
    
    
    (7,908
    )
    
    
    (7,885
    )Proceeds from exercise of stock options
    
    
    440
    
    
    
    333Excess tax benefits from stock-based payment arrangements
    
    
    54
    
    
    
    Net cash used in financing activities
    
    
    (7,867
    )
    
    
    (20,789
    )Effect of exchange rate changes on cash
    
    
    9
    
    
    
    Net change in cash and cash equivalents
    
    
    12
    
    
    
    (8,628
    )Cash and cash equivalents at beginning of year
    
    
    13,860
    
    
    
    10,694Cash and cash equivalents at end of year
    
    $
    13,872
    
    
    $
    2,066
 See accompanying notes to consolidated financial statements.
 6




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ENNIS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 1.
Basis of Presentation
  2. Stock Option Plans and Stock Based Compensation
    7




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 2. Stock Option Plans and Stock Based Compensation-continued
 For the three
    
    
    For the sixmonths ended
    
    
    months endedAugust 31,
    
    
    August 31,2005
    
    
    2005Net earningsAs reported
    
    $
    10,576
    
    
    $
    21,134Deduct: Stock-based employee compensation expense not included in
reported earnings, net of related tax effect of $7 and $15, respectively
    
    
    (12
    )
    
    
    (23
    )Pro forma earnings
    
    $
    10,564
    
    
    $
    21,111Net earnings per shareBasic  as reported
    
    $
    0.42
    
    
    $
    0.83Basic  pro forma
    
    $
    0.42
    
    
    $
    0.83Diluted  as reported
    
    $
    0.41
    
    
    $
    0.82Diluted  pro forma
    
    $
    0.41
    
    
    $
    0.82
  WeightedAverageNumber
    
    
    Weighted
    
    
    Remaining
    
    
    Aggregateof
    
    
    Average
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Exercise
    
    
    Life
    
    
    Value(a)(exact quantity)
    
    
    Price
    
    
    (in years)
    
    
    (in thousands)Outstanding at February 28, 2006
    
    
    687,600
    
    
    $
    10.63Granted
    
    
    
    
    
    
    Terminated
    
    
    (17,500
    )
    
    
    11.06Exercised
    
    
    (88,637
    )
    
    
    8.00Outstanding at August 31, 2006
    
    
    581,463
    
    
    $
    11.02
    
    
    
    4.3
    
    
    $
    5,599Exercisable at August 31, 2006
    
    
    482,438
    
    
    $
    10.16
    
    
    
    3.2
    
    
    $
    5,061
 
 (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 August 31, 2006 ($20.65) and the
weighted average exercise price, multiplied by the number of shares indicated. 8




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 2. Stock Option Plans and Stock Based Compensation-continued
  Expected volatility
    
    
    23.89
    %Expected term (years)
    
    
    5Risk free interest rate
    
    
    3.85
    %Dividend yield
    
    
    3.81
    %Weighted average grant-date fair value
    
    $
    2.85
  Three months ended
    
    Six months endedAugust 31,
    
    August 31,2006
    
    2005
    
    2006
    
    2005Total cash received
    
    $
    425
    
    
    $
    33
    
    
    $
    440
    
    
    $
    333Income tax benefits
    
    $
    51
    
    
    $
    6
    
    
    $
    54
    
    
    $
    78Total grant-date fair value
    
    $
    76
    
    
    $
    4
    
    
    $
    78
    
    
    $
    38Intrinsic value
    
    $
    1,013
    
    
    $
    177
    
    
    $
    1,027
    
    
    $
    217
  WeightedAverageNumber
    
    
    Grant Dateof Options
    
    
    Fair ValueUnvested at February 28, 2006
    
    
    143,700
    
    
    $
    2.28New grants
    
    
    
    
    
    $
    Vested
    
    
    (44,675
    )
    
    $
    1.76Forfeited
    
    
    
    
    
    $
    Unvested at August 31, 2006
    
    
    99,025
    
    
    $
    2.52
  9




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 2. Stock Option Plans and Stock Based Compensation-continued
  WeightedAverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueOutstanding at February 28, 2006
    
    
    23,919
    
    
    $
    19.69Granted
    
    
    16,000
    
    
    
    19.64Forfeited
    
    
    
    
    
    
    Outstanding at August 31, 2006
    
    
    39,919
    
    
    $
    19.67Vested at August 31, 2006
    
    
    
  3. Employee Benefit Plans
    Three months ended
    
    
    Six months endedAugust 31,
    
    
    August 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Components of net periodic benefit costService cost
    
    $
    358
    
    
    $
    355
    
    
    $
    718
    
    
    $
    711Interest cost
    
    
    610
    
    
    
    611
    
    
    
    1,220
    
    
    
    1,222Expected return on plan assets
    
    
    (712
    )
    
    
    (693
    )
    
    
    (1,424
    )
    
    
    (1,386
    )Amortization of:Prior service cost
    
    
    (36
    )
    
    
    (36
    )
    
    
    (72
    )
    
    
    (72
    )Unrecognized net loss
    
    
    239
    
    
    
    264
    
    
    
    478
    
    
    
    528Net periodic benefit cost
    
    $
    459
    
    
    $
    501
    
    
    $
    920
    
    
    $
    1,003
  10




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 4. Due From Factors
     August 31
    
    
    February 28,2006
    
    
    2006Outstanding factored receivablesWithout recourse
    
    $
    20,333
    
    
    $
    19,762With recourse
    
    
    444
    
    
    
    1,099Advances from factors
    
    
    (17,475
    )
    
    
    (17,772
    )Due from factors
    
    $
    3,302
    
    
    $
    3,089
 5. Accounts Receivable and Allowance for Doubtful Receivables
  11




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 5. Accounts Receivable and Allowance for Doubtful Receivables-continued
   Three months ended
    
    
    Six months endedAugust 31
    
    
    August 312006
    
    
    2005
    
    
    2006
    
    
    2005Balance at beginning of period
    
    $
    2,957
    
    
    $
    3,517
    
    
    $
    3,001
    
    
    $
    3,567Bad debt expense
    
    
    455
    
    
    
    378
    
    
    
    455
    
    
    
    747Recoveries
    
    
    8
    
    
    
    13
    
    
    
    99
    
    
    
    38Accounts written off
    
    
    (194
    )
    
    
    (69
    )
    
    
    (329
    )
    
    
    (513
    )Balance at end of period
    
    $
    3,226
    
    
    $
    3,839
    
    
    $
    3,226
    
    
    $
    3,839
 6. Inventories
   August 31,
    
    
    February 28,2006
    
    
    2006Raw material
    
    $
    12,669
    
    
    $
    12,694Work-in-process
    
    
    13,249
    
    
    
    16,886Finished goods
    
    
    63,421
    
    
    
    59,575$
    89,339
    
    
    $
    89,155
 7. Acquisitions
  12




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 7. Acquisitions-continued
  Accounts receivable, net
    
    $
    2,492Inventories
    
    
    1,864Property, plant & equipment
    
    
    8,552Other assets
    
    
    100Deferred tax asset
    
    
    2,166Customer lists and
noncompete
    
    
    266Accounts payable and accrued liabilities
    
    
    (2,421
    )$
    13,019
   Accounts receivable
    
    $
    826Inventories
    
    
    579Property, plant & equipment
    
    
    3,643Other assets
    
    
    5Deferred tax asset
    
    
    1,753Noncompete
    
    
    25Accounts payable and accrued liabilities
    
    
    (2,245
    )$
    4,586
   13




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 7. Acquisitions-continued
 Three months ended
    
    Six months endedAugust 31,
    
    August 31,2006
    
    2005
    
    2006
    
    2005Pro forma net sales
    
    $
    158,468
    
    
    $
    160,582
    
    
    $
    314,503
    
    
    $
    321,978Pro forma net earnings
    
    
    11,539
    
    
    
    10,600
    
    
    
    22,786
    
    
    
    21,135Pro forma earnings per share  diluted
    
    
    0.45
    
    
    
    0.41
    
    
    
    0.88
    
    
    
    0.82
  8. Goodwill and Other Intangible Assets
    GrossCarrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    NetAs of August 31, 2006Amortized intangible assets (in thousands)Trademarks
    
    $
    1,239
    
    
    $
    368
    
    
    $
    871Customer lists
    
    
    23,845
    
    
    
    2,949
    
    
    
    20,896$
    25,084
    
    
    $
    3,317
    
    
    $
    21,767As of February 28, 2006Amortized intangible assets (in thousands)Trademarks
    
    $
    1,234
    
    
    $
    293
    
    
    $
    941Customer lists
    
    
    23,760
    
    
    
    2,128
    
    
    
    21,632$
    24,994
    
    
    $
    2,421
    
    
    $
    22,573Unamortized intangible assets, as of August 31, 2006 and February 28, 2006:Trademarks (in thousands)
    
    
    
    
    
    
    
    
    
    $
    61,000
 14




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ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 8.
    
    Goodwill and Other Intangible Assets-continuedIncluded in other assets are non compete agreements with a net book value of $263,000 at August
31, 2006 and $165,000 at February 28, 2006. Amortization expense for these agreements was
$104,000 for the six months ended August 31, 2006.Aggregate amortization expense for the six months ended August 31, 2006 and August 31, 2005 was
$1,000,000 and $973,000, respectively.The Companys estimated amortization expense for the next five years is as follows:
 2007
    
    $
    1,957,0002008
    
    
    1,818,0002009
    
    
    1,792,0002010
    
    
    1,776,0002011
    
    
    1,775,000
 Changes in the net carrying amount of goodwill are as follow (in thousands):
 August 31,
    
    
    February 28,2006
    
    
    2006Balance as of the beginning of the period
    
    $
    178,280
    
    
    $
    178,472Goodwill adjusted during year
    
    
    34
    
    
    
    (192
    )Balance as of the end of the period
    
    $
    178,314
    
    
    $
    178,280
 9.
    
    Long-Term DebtLong-term debt consisted of the following as of the dates indicated (in thousands):
 August 31,
    
    
    February 28,2006
    
    
    2006Revolving credit facility
    
    $
    108,000
    
    
    $
    62,500Term credit facility
    
    
    
    
    
    
    40,000Capital lease obligations
    
    
    427
    
    
    
    736Notes payable to finance companies
    
    
    660
    
    
    
    1,300Notes payable former Alstyle Shareholders
    
    
    5,000
    
    
    
    10,000Other
    
    
    57
    
    
    
    114,144
    
    
    
    114,536Less current installments
    
    
    5,963
    
    
    
    11,620Long-term debt
    
    $
    108,181
    
    
    $
    102,916
 On March 31, 2006, the Company entered into an amended and restated credit agreement with a
group of lenders led by LaSalle Bank N.A. (the Facility). The Facility provides the Company
access to $150 million in
revolving credit and matures on March 31, 2010. The facility bears interest at the London
Interbank Offered Rate (LIBOR) plus a spread ranging from .50% to 1.50% (currently LIBOR +
        .75%  6.15625%), depending on our total funded debt to EBITDA ratio, as defined. The Facility
is secured by substantially all of our personal and
investment property. The Facility contains financial covenants, restrictions on capital
expenditures, acquisitions, asset dispositions, and additional debt, as well as other customary
covenants.
 15




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 9.
    
    Long-Term Debt-continuedNotes payable to finance companies bear interest ranging from at 6.86% to 9.46%, and require
monthly payments of principal and interest. The notes mature at dates ranging from September
2006 through November 2007 and are collateralized by certain equipment.Notes payable-former Alstyle Shareholders were obligations of Alstyle Apparel. These notes were
assumed by the Company in connection with its acquisition of Alstyle Apparel in November 2004.
These loans are to individuals with annual payments bearing interest at rates of 4.0% and
maturing in November 2007. Payments on these notes are subject to set-off arbitration procedures
relating to subsequently discovered pre-acquisition liabilities that were either undisclosed at
the time of closing or inappropriately accrued for in the books and records, and other terms and
provisions. The Company made a $5.0 million principal payment on June 5, 2006 relating to these
notes and $5.0 million outstanding at August 31, 2006 remains subject to set-off arbitration
procedures.10.
    
    Shareholders EquityComprehensive 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 ended
    
    
    Six months endedAugust 31,
    
    
    August 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net earnings from continuing operations
    
    $
    11,643
    
    
    $
    10,576
    
    
    $
    22,973
    
    
    $
    21,134Interest rate hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Foreign currency translation adjustment
    
    
    (43
    )
    
    
    38
    
    
    
    (31
    )
    
    
    18Comprehensive income
    
    $
    11,600
    
    
    $
    10,614
    
    
    $
    22,942
    
    
    $
    21,150
 Changes in our shareholders equity accounts for the six months ended August 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
    
    
    
    
    
    
    
    
    
    
    22,973
    
    
    
    
    
    
    
    
    
    
    
    22,973Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    
    
    
    
    (31
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,942Dividends declared ($.31 per
share)
    
    
    
    
    
    
    
    
    
    
    (7,908
    )
    
    
    
    
    
    
    
    
    
    
    (7,908
    )Proceeds from stock options
exercised
    
    
    
    
    
    
    (892
    )
    
    
    
    
    
    
    
    
    
    
    1,332
    
    
    
    440Tax benefit from exercise of
stock options
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54Expense related to stock-based
compensation
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125Balance at August 31, 2006
    
    $
    75,134
    
    
    $
    122,209
    
    
    $
    196,488
    
    
    $
    429
    
    
    $
    (81,272
    )
    
    $
    312,988
 16




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 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. At August 31, 2006, 37,700 of options 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 following table sets
forth the computation for basic and diluted earnings per share for the periods indicated:
 Three months ended
    
    
    Six months endedAugust 31,
    
    
    August 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Basic weighted average common shares outstanding
    
    
    25,519,344
    
    
    
    25,453,566
    
    
    
    25,499,426
    
    
    
    25,440,230Effect of dilutive options
    
    
    216,788
    
    
    
    302,849
    
    
    
    216,533
    
    
    
    284,897Diluted weighted average common shares outstanding
    
    
    25,736,132
    
    
    
    25,756,415
    
    
    
    25,715,959
    
    
    
    25,725,127Per share amounts:Net earnings  basic
    
    $
    0.46
    
    
    $
    0.42
    
    
    $
    0.90
    
    
    $
    0.83Net earnings  diluted
    
    $
    0.45
    
    
    $
    0.41
    
    
    $
    0.89
    
    
    $
    0.82Cash dividends
    
    $
    0.155
    
    
    $
    0.155
    
    
    $
    0.310
    
    
    $
    0.310
 12.
    
    Segment Information and Geographic InformationThe Company operates in two segments  the Print Segment and the Apparel Segment.The Print Segment, which represented 54% of the Companys consolidated sales for the three and
six months ended August 31, 2006, is in the business of manufacturing, design and selling of
business forms and other printed business products primarily to distributors located in the
United States.The Print Segment operates 40 manufacturing locations throughout the United States in 16
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,
envelopes, integrated products, jumbo rolls and pressure sensitive products in short, medium and
long runs under the following labels: Ennis, Royal, Block, 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 provide 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.
 17




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 12.
    
    Segment Information and Geographic Information-continuedThe second segment, the Apparel Segment, which represented 46% of the Companys consolidated
sales for the three and six months ended August 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 highestCorporate 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.Segment data for the three and six months ended August 31, 2006 and 2005 were as follows (in
thousands):
 Print
    
    Apparel
    
    
    
    
    
    ConsolidatedSegment
    
    Segment
    
    Corporate
    
    TotalsThree months ended August 31, 2006:Net sales
    
    $
    82,255
    
    
    $
    69,463
    
    
    $
    
    
    
    $
    151,718Depreciation
    
    
    2,041
    
    
    
    1,475
    
    
    
    150
    
    
    
    3,666Amortization of trademarks and customer lists
    
    
    99
    
    
    
    404
    
    
    
    
    
    
    
    503Segment earnings (loss) before
income tax
    
    
    11,384
    
    
    
    10,288
    
    
    
    (3,190
    )
    
    
    18,482Segment assets
    
    
    169,573
    
    
    
    323,260
    
    
    
    16,771
    
    
    
    509,604Capital expenditures
    
    
    640
    
    
    
    465
    
    
    
    70
    
    
    
    1,175Three months ended August 31, 2005:Net sales
    
    $
    83,898
    
    
    $
    64,218
    
    
    $
    
    
    
    $
    148,116Depreciation
    
    
    1,805
    
    
    
    1,974
    
    
    
    160
    
    
    
    3,939Amortization of trademarks and customer lists
    
    
    89
    
    
    
    405
    
    
    
    
    
    
    
    494Segment earnings (loss) before
income tax
    
    
    10,909
    
    
    
    8,085
    
    
    
    (1,937
    )
    
    
    17,057Segment assets
    
    
    167,015
    
    
    
    314,037
    
    
    
    8,449
    
    
    
    489,501Capital expenditures
    
    
    1,359
    
    
    
    205
    
    
    
    53
    
    
    
    1,617Six months ended August 31, 2006:Net sales
    
    $
    159,351
    
    
    $
    137,480
    
    
    $
    
    
    
    $
    296,831Depreciation
    
    
    4,065
    
    
    
    3,194
    
    
    
    301
    
    
    
    7,560Amortization of trademarks and customer lists
    
    
    192
    
    
    
    808
    
    
    
    
    
    
    
    1,000Segment earnings (loss) before
income tax
    
    
    22,655
    
    
    
    20,330
    
    
    
    (6,520
    )
    
    
    36,465Segment assets
    
    
    169,573
    
    
    
    323,260
    
    
    
    16,771
    
    
    
    509,604Capital expenditures
    
    
    1,011
    
    
    
    652
    
    
    
    148
    
    
    
    1,811Six months ended August 31, 2005:Net sales
    
    $
    164,622
    
    
    $
    132,607
    
    
    $
    
    
    
    $
    297,229Depreciation
    
    
    3,644
    
    
    
    3,883
    
    
    
    320
    
    
    
    7,847Amortization of trademarks and customer lists
    
    
    179
    
    
    
    794
    
    
    
    
    
    
    
    973Segment earnings (loss) before
income tax
    
    
    22,000
    
    
    
    16,452
    
    
    
    (4,087
    )
    
    
    34,365Segment assets
    
    
    167,015
    
    
    
    314,037
    
    
    
    8,449
    
    
    
    489,501Capital expenditures
    
    
    1,688
    
    
    
    4,073
    
    
    
    377
    
    
    
    6,138
 18




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 12.
    
    Segment Information and Geographic Information-continuedIdentifiable 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 and six months ended is as follow
(in thousands):
 UnitedStates
    
    
    Canada
    
    
    Mexico
    
    
    TotalThree months ended August 31, 2006Net sales to unaffiliated customersPrint Segment
    
    $
    82,255
    
    
    $
    
    
    
    $
    
    
    
    $
    82,255Apparel Segment
    
    
    64,327
    
    
    
    5,136
    
    
    
    
    
    
    
    69,463$
    146,582
    
    
    $
    5,136
    
    
    $
    
    
    
    $
    151,718Identifiable long-lived assetsPrint Segment
    
    $
    49,909
    
    
    $
    
    
    
    $
    
    
    
    $
    49,909Apparel Segment
    
    
    10,697
    
    
    
    120
    
    
    
    3,189
    
    
    
    14,006Corporate
    
    
    6,116
    
    
    
    
    
    
    
    
    
    
    
    6,116$
    66,722
    
    
    $
    120
    
    
    $
    3,189
    
    
    $
    70,031Three months ended August 31, 2005Net sales to unaffiliated customersPrint Segment
    
    $
    83,898
    
    
    $
    
    
    
    $
    
    
    
    $
    83,898Apparel Segment
    
    
    59,254
    
    
    
    4,964
    
    
    
    
    
    
    
    64,218$
    143,152
    
    
    $
    4,964
    
    
    $
    
    
    
    $
    148,116Identifiable long-lived assetsPrint Segment
    
    $
    43,765
    
    
    $
    
    
    
    $
    
    
    
    $
    43,765Apparel Segment
    
    
    15,411
    
    
    
    113
    
    
    
    4,073
    
    
    
    19,597Corporate
    
    
    6,966
    
    
    
    
    
    
    
    
    
    
    
    6,966$
    66,142
    
    
    $
    113
    
    
    $
    4,073
    
    
    $
    70,328Six months ended August 31, 2006Net sales to unaffiliated customersPrint Segment
    
    $
    159,351
    
    
    $
    
    
    
    $
    
    
    
    $
    159,351Apparel Segment
    
    
    126,592
    
    
    
    10,888
    
    
    
    
    
    
    
    137,480$
    285,943
    
    
    $
    10,888
    
    
    $
    
    
    
    $
    296,831Identifiable long-lived assetsPrint Segment
    
    $
    49,909
    
    
    $
    
    
    
    $
    
    
    
    $
    49,909Apparel Segment
    
    
    10,697
    
    
    
    120
    
    
    
    3,189
    
    
    
    14,006Corporate
    
    
    6,116
    
    
    
    
    
    
    
    
    
    
    
    6,116$
    66,722
    
    
    $
    120
    
    
    $
    3,189
    
    
    $
    70,031
 19




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2006
 12.
    
    Segment Information and Geographic Information-continued
 UnitedStates
    
    
    Canada
    
    
    Mexico
    
    
    TotalSix
months ended August 31, 2005Net sales to unaffiliated customersPrint Segment
    
    $
    164,622
    
    
    $
    
    
    
    $
    
    
    
    $
    164,622Apparel Segment
    
    
    123,179
    
    
    
    9,428
    
    
    
    
    
    
    
    132,607$
    287,801
    
    
    $
    9,428
    
    
    $
    
    
    
    $
    297,229Identifiable long-lived assetsPrint Segment
    
    $
    43,765
    
    
    $
    
    
    
    $
    
    
    
    $
    43,765Apparel Segment
    
    
    15,411
    
    
    
    113
    
    
    
    4,073
    
    
    
    19,597Corporate
    
    
    6,966
    
    
    
    
    
    
    
    
    
    
    
    6,966$
    66,142
    
    
    $
    113
    
    
    $
    4,073
    
    
    $
    70,328
 13.
    
    Supplemental Cash Flow InformationNet cash flows from operating activities reflects cash payments for interest and income taxes as
follows (in thousands):
 Three months ended
    
    Six months endedAugust 31,
    
    August 31,2006
    
    2005
    
    2006
    
    2005Interest paid
    
    $
    1,867
    
    
    $
    2,323
    
    
    $
    3,167
    
    
    $
    4,551Income taxes paid
    
    $
    13,158
    
    
    $
    12,130
    
    
    $
    14,599
    
    
    $
    13,140
 14.
    
    Recent Accounting PronouncementsAccounting for IncomeTaxes: In June 2006, the Financial Accounting Standards Board issued
Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an interpretation
of FASB Statement No. 109, (FIN 48). FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprises financial statements in accordance with FASB Statement No.
109, Accounting for Income Taxes.The provisions of FIN 48 prescribe a recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. In addition, the provisions of FIN 48 provide
guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure, and transition. The provisions of FIN 48 are effective for fiscal years beginning
after December 15, 2006. We are currently evaluating the effects of adopting FIN 48 on our
consolidated financial position, results of operations and cash flows.
 20




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##### Table of Contents



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




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 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
 .
 23




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 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.
  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.
  24




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
   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.
  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 AUGUST 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
  26




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
   Liquidity and Capital Resources
 August 31,
    
    February 28,(Dollars in thousands)
    
    2006
    
    2006
    
    ChangeWorking Capital
    
    $
    109,653
    
    
    $
    94,494
    
    
    
    16.0
    %Cash and cash equivalents
    
    $
    13,872
    
    
    $
    13,860
    
    
    
    0.1
    %
 Working Capital.
 Cash and cash equivalents.
 Six months ended August 31,(Dollars in thousands)
    
    2006
    
    2005
    
    ChangeCash provided by operating activities
    
    $
    24,513
    
    
    $
    18,103
    
    
    
    35.4
    %Cash used for investing activities
    
    $
    (16,643
    )
    
    $
    (5,942
    )
    
    
    180.1
    %Cash used for financing activities
    
    $
    (7,867
    )
    
    $
    (20,789
    )
    
    
    -62.2
    %
 Cash flows from operating activities.
 Cash flows from investing activities.
 Cash flows from financing activities.
 27




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
 Credit Facility 
   Pension 
 Inventories 
 Capital Expenditures 
 Contractual Obligations & Off-Balance Sheet Arrangements 
 Results of Operations  Consolidated
 Three Months ended August 31, 2006 compared to Three Months ended August 31, 2005
 Net Sales.
 Gross profit.
 28




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
 Selling, general and administrative expenses.
 Earnings from operations.
 Other income and expense.
 Provision for income taxes.
 Net earnings.
 Six Months ended August 31, 2006 compared to Six Months ended August 31, 2005.
 Net Sales.
 Gross profit.
 Selling, general and administrative expenses.
 Earnings from operations.
 29




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
 Other income and expense.
 Provision for income taxes.
 Net earnings.
 Results of Operations  Segments
 Three months ended
    
    
    Six months endedAugust 31,
    
    
    August 31,Net Sales by Segment (in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Print
    
    $
    82,255
    
    
    $
    83,898
    
    
    $
    159,351
    
    
    $
    164,622Apparel
    
    
    69,463
    
    
    
    64,218
    
    
    
    137,480
    
    
    
    132,607Total
    
    $
    151,718
    
    
    $
    148,116
    
    
    $
    296,831
    
    
    $
    297,229
 Print Segment
 Apparel Segment
 30




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
 Three months ended
    
    
    Six months endedAugust 31,
    
    
    August 31,Gross Profit by Segment (in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Print
    
    $
    20,446
    
    
    $
    20,554
    
    
    $
    39,812
    
    
    $
    41,357Apparel
    
    
    17,795
    
    
    
    16,698
    
    
    
    36,244
    
    
    
    33,373Total
    
    $
    38,241
    
    
    $
    37,252
    
    
    $
    76,056
    
    
    $
    74,730
 Print Segment
 Apparel Segment
 Three months ended
    
    
    Six months endedAugust 31,
    
    
    August 31,Profit by Segment (in thousands)
    
    2006
    
    

    2005
    
    
    2006
    
    
    2005Print
    
    $
    11,384
    
    
    $
    10,909
    
    
    $
    22,655
    
    
    $
    22,000Apparel
    
    
    10,288
    
    
    
    8,085
    
    
    
    20,330
    
    
    
    16,452Total
    
    
    21,672
    
    
    
    18,994
    
    
    
    42,985
    
    
    
    38,452Less corporate expenses
    
    
    3,190
    
    
    
    1,937
    
    
    
    6,520
    
    
    
    4,087Earnings before income taxes
    
    $
    18,482
    
    
    $
    17,057
    
    
    $
    36,465
    
    
    $
    34,365
 Print Segment
 Apparel Segment
 31




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
 Critical Accounting Policies and Judgments
        32




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
    New Accounting Standards
 Accounting for Income Accounting for Income Taxes.
 33




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risk
    
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures.
  34




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 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
    Nominees for Director
    
    Vote Cast for
    
    Votes WithheldGodfrey M. Long, Jr.
    
    
    23,074,007
    
    
    
    204,363Thomas R. Price
    
    
    21,907,122
    
    
    
    1,371,248Alejandro Quiroz
    
    
    23,059,345
    
    
    
    219,025
 
 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 35




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##### Table of Contents



ENNIS, INC. AND SUBSIDIARIES
FORM 10Q
FOR THE PERIOD ENDED AUGUST 31, 2006
 
   ENNIS, INC.Date: September 29, 2006
    
    /s/ Keith S. Walters

Keith S. WaltersChairman, Chief Executive Officer and
PresidentDate: September 29, 2006
    
    /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 AUGUST 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 37