Business Context and Reporting Period
Company: Ennis Business Forms, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended February 28, 2003
Industry: Manufacturing and distribution of business forms, promotional media, and financial documents.
The Company operates through three segments: Forms Solutions (business forms), Promotional Solutions (printed/electronic media, advertising specialties), and Financial Solutions (secure bank forms). Approximately 96% of products are custom or semi-custom. The Company operates 30 manufacturing locations across 12 states and employs approximately 2,298 people. It distributes primarily through independent dealers and believes it is the largest forms company serving the reseller segment of the market.
Key Financial Metrics
Note: Specific revenue, profit, cash flow, and margin figures are incorporated by reference to the 2003 Annual Report to Shareholders (Exhibit 13) and are not explicitly stated in the provided text.
- Backlog (Firm Orders): Approximately $24.56 million as of February 28, 2003, compared to $15.04 million in the prior year.
- Stock Performance: Common stock traded on the NYSE. Price range for FY 2003 was $10.34 to $14.45. Closing price on April 15, 2003, was $11.28.
- Dividends: $0.155 per share declared in each quarter of the fiscal year.
- Allowance for Doubtful Receivables: Ended the year at $1,294,000 (in thousands).
- Market Value: Aggregate market value of voting stock held by non-affiliates was approximately $180.7 million as of April 15, 2003.
Material Changes vs. Prior Period
- Backlog Growth: Total backlog increased significantly from $15.04 million in 2002 to $24.56 million in 2003.
- Promotional media backlog surged from $8.0 million to $14.85 million.
- Business forms backlog rose from $4.6 million to $6.18 million.
- Tools and machinery backlog increased from $0.83 million to $1.57 million.
- Financial forms backlog declined from $2.6 million to $1.96 million.
- Acquisitions: The Company acquired Calibrated Forms Co., Inc. (reported on Form 8-K in November 2002) and previously acquired Northstar Computer Forms, Inc. (2000).
- Accounting Change: In 2003, the Company changed its method of accounting for goodwill.
- Stock Price: The stock price range in FY 2003 ($10.34–$14.45) was higher than in FY 2002 ($7.47–$10.88).
Outlook, Risks, and Management Commentary
- Customer Concentration: The Promotional and Financial Solutions Groups depend on certain major customers; the loss of such customers could have a material adverse effect. No single customer accounts for more than 10% of consolidated net sales.
- Backlog Timing: Approximately $9.0 million of the promotional media backlog is not expected to be filled in the fiscal year ending February 29, 2004.
- Market Factors: General economic conditions are the predominant factor in quarterly volume fluctuations. The business is generally not seasonal.
- Legal Proceedings: No material pending legal proceedings other than ordinary routine litigation.
- Internal Controls: Management certified that there were no significant changes in internal controls subsequent to the evaluation date and no material weaknesses identified.
Investor Verification Checklist
- Verify specific revenue, net income, and cash flow figures in the 2003 Annual Report to Shareholders (Exhibit 13), as they are not detailed in the 10-K text.
- Review the impact of the change in accounting method for goodwill on comparative financial statements.
- Assess the risk associated with the $9.0 million portion of the promotional media backlog deferred to the next fiscal year.
- Confirm the identity and financial stability of the "certain major customers" in the Promotional and Financial Solutions segments.
- Monitor the integration and performance of the recently acquired Calibrated Forms Co., Inc.