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Ennis Inc. Reports Operating Results (10-Q)

December 23, 2009 | About:
10qk

10qk

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Ennis Inc. (EBF) filed Quarterly Report for the period ended 2009-11-30.

Ennis, Inc. is one of the largest private-label printed business product suppliers in the United States. Ennis offers an extensive product line from simple to complex forms, laser cut-sheets, negotiable documents, internal bank forms, tags, labels, presentation folders, commercial printing, advertising specialties, screen printed products, and point-of-purchase display advertising that can be custom designed to customer needs. Ennis Inc. has a market cap of $394.8 million; its shares were traded at around $15.29 with a P/E ratio of 12.3 and P/S ratio of 0.7. The dividend yield of Ennis Inc. stocks is 4.1%. Ennis Inc. had an annual average earning growth of 10.1% over the past 10 years. GuruFocus rated Ennis Inc. the business predictability rank of 4.5-star.

Highlight of Business Operations:

When we acquire a business, a portion of the purchase price of the acquisition may be allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill and other intangible assets is the excess of the purchase price over the net identifiable tangible assets acquired. The annual impairment test is based on several factors requiring judgment. A decline in market conditions may indicate potential impairment of goodwill. In fiscal year 2009, we recorded a non-cash impairment charge of $63.2 million and $4.7 million to goodwill and trademarks, respectively. At November 30, 2009, our goodwill and other intangible assets were approximately $117.3 million and $79.3 million, respectively.

We exercise judgment in evaluating our long-lived assets for impairment. We assess the impairment of long-lived assets that include other intangible assets, goodwill, and property, plant, and equipment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In performing tests of impairment, we must make assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets in assessing the recoverability of our long lived assets. If these estimates or the related assumptions change, we may be required to record impairment charges for these assets in the future. Actual results could differ from assumptions made by management. In fiscal year 2009, we recorded a non-cash impairment charge of $63.2 million and $4.7 million of goodwill and trademarks, respectively. At November 30, 2009, our goodwill and other intangible assets were approximately $117.3 million and $79.3 million, respectively. We believe our businesses will generate sufficient undiscounted cash flow to more than recover the investments we have made in property, plant and equipment, as well as the goodwill and other intangibles recorded as a result of our acquisitions. However, we cannot predict the occurrence of future impairment triggering events nor the impact such events might have on our reported asset values.

Revenue is generally recognized upon shipment of products. Net sales consist of gross sales invoiced to customers, less certain related charges, including discounts, returns and other allowances. Returns, discounts and other allowances have historically been insignificant. In some cases and upon customer request, we print and store custom print product for customer specified future delivery, generally within twelve months. In this case, risk of loss from obsolescence passes to the customer, the customer is invoiced under normal credit terms, and revenue is recognized when manufacturing is complete. Approximately $3.1 million and $9.9 million of revenue were recognized under these agreements during the three and nine months ended November 30, 2009, respectively, as compared to $3.9 million and $13.2 million during the three and nine months ended November 30, 2008, respectively.

Read the The complete ReportEBF is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES, Arnold Van Den Berg of Century Management, Bruce Kovner of Caxton Associates.

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10qk
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