Attached files
| file | filename |
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| EX-99.1 - EX-99.1 - ENNIS, INC. | d204174dex991.htm |
| 8-K - FORM 8-K - ENNIS, INC. | d204174d8k.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Effective as of May 25, 2016, Ennis, Inc. (“Ennis,” “we” or “our”) completed its previously announced sale of Alstyle Apparel, LLC and its subsidiaries, which constitute the Company’s apparel division (the “Apparel Division”), to Gildan Activewear Inc. (“Gildan”) for an all-cash purchase price of $109,354,066 (after giving effect to an adjustment for estimated working capital as of April 30, 2016 and which is subject to closing date calculation and post-closing confirmation), subject to customary indemnification arrangements and the other terms of such agreement (the “Alstyle Transaction”).
Following the closing of the Alstyle Transaction, Ennis does not own any equity interest in Alstyle and Ennis will no longer consolidate Alstyle within its financial results. The following Unaudited Pro Forma Consolidated Financial Statements of Ennis reflect the impact of the Alstyle Transaction.
The Unaudited Pro Forma Consolidated Statements of Operations for the fiscal year ended February 29, 2016 is presented as if the Alstyle Transaction occurred on March 1, 2015 and excludes results from discontinued operations. The Unaudited Pro Forma Consolidated Balance Sheet of Ennis as of February 29, 2016 is presented as if the Alstyle Transaction occurred on February 29, 2016.
The Unaudited Pro Forma Consolidated Financial Statements are presented for illustrative purposes only and are not intended to represent or be indicative of our consolidated results of operations or financial position that would have been reported had the Alstyle Transaction been completed as of the dates presented, and should not be taken as representation of our future consolidated results of operations or financial condition. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable under the circumstances; however, actual amounts could differ.
The Unaudited Pro Forma Consolidated Financial Statements are based upon, and should be read in conjunction with, our historical Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended February 29, 2016 filed on May 11, 2016.
The Unaudited Pro Forma Consolidated Financial Statements have been prepared to remove Alstyle’s assets, liabilities and results of operations. In connection with the Alstyle Transaction, Ennis received net proceeds of approximately $106.4 million, after payment of $3.0 million termination fee to Alstyle Operations, LLC. The sale of this asset allows us to fully focus on our core business segment and to be able to utilize the cash from the sale of Alstyle Apparel to further expand this business segment through strategic acquisitions. In addition, given our current leverage position, our Board may also consider other uses of these funds such as, paying down debt, additional share repurchases of our Company stock, and the return of capital to our stockholders in the form of a one-time special dividend. None of foregoing possible uses of the net proceeds from the sale are reflected in these Unaudited Pro Forma Consolidated Financial Statements. A full description of all pro forma adjustments is included herein.
ENNIS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except share and per share amounts)
| Fiscal Year Ended February 29, 2016 | ||||||||||||
| Historical | Pro Forma | Pro Forma | ||||||||||
| Ennis, Inc. | Adjustments (a) | Ennis, Inc. | ||||||||||
| Net sales |
$ | 568,973 | $ | 183,027 | $ | 385,946 | ||||||
| Cost of goods sold |
416,234 | 146,598 | 269,636 | |||||||||
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| Gross profit margin |
152,739 | 36,429 | 116,310 | |||||||||
| Selling, general and administrative |
92,792 | 27,050 | (b) | 65,742 | ||||||||
| Impairment of goodwill and trademarks |
4,130 | 4,130 | (c) | — | ||||||||
| Gain from disposal of assets |
(479 | ) | — | (479 | ) | |||||||
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| Income from operations |
56,296 | 5,249 | 51,047 | |||||||||
| Other income (expense) |
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| Interest expense |
(1,358 | ) | (1,347 | ) (d) | (11 | ) | ||||||
| Other, net |
1,634 | 1,642 | (e) | (8 | ) | |||||||
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| 276 | 295 | (19 | ) | |||||||||
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| Earnings before income taxes |
56,572 | 5,544 | 51,028 | |||||||||
| Provision for income taxes |
20,818 | 2,040 | 18,778 | |||||||||
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| Net earnings |
$ | 35,754 | $ | 3,504 | $ | 32,250 | ||||||
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| Weighted average common shares outstanding |
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| Basic |
25,688,273 | 25,688,273 | 25,688,273 | |||||||||
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| Diluted |
25,722,367 | 25,722,367 | 25,722,367 | |||||||||
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| Per share amounts |
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| Net earnings - basic |
$ | 1.39 | $ | 0.14 | $ | 1.25 | ||||||
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| Net earnings - diluted |
$ | 1.39 | $ | 0.14 | $ | 1.25 | ||||||
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| Cash dividends per share |
$ | 0.70 | $ | — | $ | 0.70 | ||||||
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See Accompanying Notes to the Unaudited Pro Forma Consolidated Financial Statements.
ENNIS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except for par value and share amounts)
| Fiscal Year Ended February 29, 2016 | ||||||||||||
| Historical | Pro Forma | Pro Forma | ||||||||||
| Ennis, Inc. | Adjustments (f) | Ennis, Inc. | ||||||||||
| ASSETS |
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| Current Assets |
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| Cash |
$ | 10,425 | $ | 65,546 | (g) | $ | 75,971 | |||||
| Accounts receivable, net of allowance for doubtful receivables ($3.6 million-historical and $2.0 million-pro forma) |
54,871 | (18,325 | ) | 36,546 | ||||||||
| Prepaid expenses |
6,620 | (3,859 | ) | 2,761 | ||||||||
| Inventories |
100,310 | (72,691 | ) | 27,619 | ||||||||
| Other current assets |
6,749 | (3,151 | ) | 3,598 | ||||||||
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| Total Current Assets |
178,975 | (32,480 | ) | 146,495 | ||||||||
| Property, Plant and Equipment, Net |
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| Plant, machinery and equipment |
168,918 | (37,572 | ) | 131,346 | ||||||||
| Land and buildings |
78,912 | (23,927 | ) | 54,985 | ||||||||
| Other |
23,810 | (1,124 | ) | 22,686 | ||||||||
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| Total property, plant and equipment |
271,640 | (62,623 | ) | 209,017 | ||||||||
| Less accumulated depreciation |
190,306 | (32,080 | ) | 158,226 | ||||||||
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| Net property, plant and equipment |
81,334 | (30,543 | ) | 50,791 | ||||||||
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| Goodwill |
64,537 | — | 64,537 | |||||||||
| Trademarks and trade names |
24,461 | (9,170 | ) | 15,291 | ||||||||
| Other intangible assets, net |
42,472 | (5,499 | ) | 36,973 | ||||||||
| Other assets |
409 | (135 | ) | 274 | ||||||||
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| Total Assets |
$ | 392,188 | $ | (77,827 | ) | $ | 314,361 | |||||
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See Accompanying Notes to the Unaudited Pro Forma Consolidated Financial Statements.
ENNIS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except for par value and share amounts)
| Fiscal Year Ended February 29, 2016 | ||||||||||||
| Historical | Pro Forma | Pro Forma | ||||||||||
| Ennis, Inc. | Adjustments (f) | Ennis, Inc. | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current Liabilities |
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| Accounts payable |
$ | 21,788 | $ | (8,050 | ) | $ | 13,738 | |||||
| Accrued expenses |
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| Employee compensation and benefits |
15,863 | (4,065 | ) | 11,798 | ||||||||
| Other current liabilities |
2,749 | (380 | ) | 2,369 | ||||||||
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| Total Current Liabilities |
40,400 | (12,495 | ) | 27,905 | ||||||||
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| Long-term debt |
40,000 | (40,000 | ) (h) | — | ||||||||
| Liability for pension benefits |
8,696 | — | 8,696 | |||||||||
| Other long-term liabilities |
4,546 | 989 | 5,535 | |||||||||
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| Total Liabilities |
93,642 | (51,506 | ) | 42,136 | ||||||||
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| Commitments and contingencies |
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| Shareholders’ Equity |
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| Preferred stock $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 February 29, 2016 |
75,134 | — | 75,134 | |||||||||
| Additional paid-in capital |
121,597 | — | 121,597 | |||||||||
| Retained earnings |
206,105 | (36,261 | ) (i) | 169,844 | ||||||||
| Accumulated other comprehensive loss |
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| Foreign currency translation, net of taxes |
(9,940 | ) | 9,940 | (i) | — | |||||||
| Minimum pension liability, net of taxes |
(17,345 | ) | — | (17,345 | ) | |||||||
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| Total accumulated other comprehensive loss |
(27,285 | ) | 9,940 | (17,345 | ) | |||||||
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| Treasury stock |
(77,005 | ) | — | (77,005 | ) | |||||||
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| Total shareholders’ equity |
298,546 | (26,321 | ) (i) | 272,225 | ||||||||
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| Total liabilities and shareholders’ equity |
$ | 392,188 | $ | (77,827 | ) | $ | 314,361 | |||||
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See Accompanying Notes to the Unaudited Pro Forma Consolidated Financial Statements.
ENNIS, INC.
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Adjustments
| (a) | This adjustment reflects the elimination of revenues and expenses of the Apparel Segment. |
| (b) | This adjustment reflects the elimination of operating and administrative expenses directly related to the Apparel Segment. Not included in the pro forma results are any anticipated savings that may ultimately be reduced or eliminated. |
| (c) | This adjustment represents the adjustment to interest expense assuming the proceeds were used to pay-off the outstanding long-term debt. |
| (d) | This adjustment represents the elimination of the impairment charge associated with the Apparel Segment’s intangible assets taken during fiscal year ending February 29, 2016. |
| (e) | This adjustment represents the elimination of principally the foreign currency gain and interest income associated with the Apparel Segment. |
| (f) | This adjustment reflects the elimination of assets and liabilities attributable to the Apparel Segment. |
| (g) | This adjustment includes the receipt of $106.4 million cash consideration at the closing of the transaction ($2.0 million of which is held in escrow), plus $1.7 million of Alstyle cash retained by the Seller, less $40.0 million used to pay-off outstanding debt. |
| (h) | This adjustment represents the assumed pay-off of the outstanding long-term debt. |
| (i) | This adjustment reflects the loss of approximately $26.3 million arising from the transaction of May 25, 2016. This estimated loss has not been reflected in the pro forma consolidated statement of operations as it is considered to be nonrecurring in nature. |