EBF has just crossed my radar screen and after more dd may be added to portfolio.From low activity of board, i will be pleasantly surprised to see any reply's.The decent dividend and stable business is what first caught my attention.
Still on my active watch list--and very close to being next stock purchase:;o)Recent Glimpses: Dec 2001 (Qtrly Rpt) | Sep 2001 (Qtrly Rpt) | Jun 2001 (Qtrly Rpt) | Dec 2000 (Qtrly Rpt) | All filings for EBF ENNIS BUSINESS FORMS INCFiled on Dec 21 2001Management's Discussion and Analysis of CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - At November 30, 2001, the Company's financial position continues to be strong. Working capital increased from $40,355,000 at February 28, 2001 to $43,647,000 at November 30, 2001. The Company has $14,558,000 in cash and equivalents, $2,424,000 in short term investments and $16,035,000 in long-term debt, less current installments. The Company expects to generate sufficient cash flow to more than cover its operating and capital requirements for the foreseeable future. Results of Operations - Net sales for the three months ended November 30, 2001 decreased by 3.1%. Net sales for the nine months ended November 30, 2001 increased 5% from the corresponding period in the prior year. The decrease in sales for the three months ended November 30, 2001 was caused by a 2.8% decline in revenue in the Forms Solutions Group and by a 0.3% decrease in the Financial Solutions Group, Northstar Computer Forms, Inc. (Northstar) due to weak economic conditions. The Promotional Solutions Group remained relatively unchanged. The increase for the nine months resulted from Northstar, which we acquired in June 2000 and accounted for an increase of 7.6%. This was mitigated by a 2.7% decline in revenue in the Forms Solutions Group. The decline in the Forms Solution Group was a result of weakness in the general economy. The Promotional Solutions Group remained relatively unchanged. Gross profit margins decreased from 28.4% in the three months ended November 30, 2000 to 28.1% in the three months ended November 30, 2001. Gross profit margins decreased from 29.1% in the nine months ended November 30, 2000 to 28% in the nine months ended November 30, 2001. The decrease for the three months ended November 30, 2001 is the result of margin pressures in the Forms Solutions Group (approximately 0.7 percentage points of the reduction) due to weakened economic conditions, offset by an approximate 0.4% increase from the Financial Solutions Group (Northstar) resulting from no longer incurring integration inefficiencies incurred last year. The Promotional Solutions Group remained relatively unchanged. The decrease for the nine months ended November 30, 2001 is the result of margin pressures in the Forms Solutions Group (approximately 2.3 percentage points of the reduction), and in the Promotional Solutions Group (approximately 1.1 percentage points of the reduction) due to weakened economic conditions noted above, offset by an approximate 2.3% increase from the Financial Solutions Group (Northstar) resulting from no longer incurring integration inefficiencies incurred last year. Selling, general and administrative expenses decreased 7.9% for the three months ended November 30, 2001 and increased 0.4% for the nine months ended November 30, 2001when compared to the corresponding period in the prior year. The decrease for the three months ended November 30, 2001 resulted from cost reductions in the Forms Solutions Group of 2.3% and Promotional Solutions Group of 7.4% less an increase in Corporate of 1.8%. The increase for the nine months was mainly attributable to the acquisition of Northstar in June 2000 which accounted for an increase of 9.1%. This was mitigated by cost reductions in the Forms Solutions Group of 1.6%, the Promotional Solutions Group of 6.9% and in Corporate of 0.2%. Interest expense decreased from $773,000 in the three months ended November 30, 2000 to $422,000 in the three months ended November 30, 2001 as a result of repayment of debt. Interest expense increased from $1,477,000 in the nine months ended November 30, 2000 to $1,577,000 in the nine months ended November 30, 2001 as a result of the $36,500,000 debt incurred on June 6, 2000 to finance the Northstar Acquisition. Investment and other income decreased for the three months and nine months ended November 30, 2001 from the same period in the prior year. This was a result of recording a pre-tax gain of $661,000 in the quarter ended November 30, 2000 due to the sale of our Louisville, Kentucky plant facility. The effective rate of the Federal and state income tax expense was 39.00% and 38.5% for the nine months ended November 30, 2001 and November 30, 2000, respectively. The primary reason for the increase is due to non-deductible goodwill from the acquisition of Northstar. Recent Accounting Pronouncements In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141 "Business Combinations" and No. 142 "Goodwill and Other Intangible Assets." Statement 141 requires that all business combinations initiated after June 30, 2001 be accounted for under the purchase method. Statement 142, which is effective for the Company March 1, 2002, requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. The Company is currently assessing the impact of this statement on its financial statements. In June 2001, the Financial Accounting Standards Board issued Statement No. 143, "Accounting for Asset Retirement Obligations", which addresses financial accounting and reporting for obligations associated with the retirement of tangible long- lived assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) normal use of the asset. Statement No. 143 is effective for fiscal years beginning after June 15, 2002. The Company is currently assessing the impact of this statement on its financial statements. In August 2001, the Financial Accounting Standards Board issued Statement No. 144 "Accounting for the Impairment or Disposal of Long- Lived Assets". This statement supersedes Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30 "Reporting the Results of Operations- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions". Statement No. 144 retains the fundamental provisions of Statement No. 121 but eliminates the requirement to allocate goodwill to long-lived assets to be tested for impairment. This statement also requires discontinued operations to be carried at the lower of cost or fair value less costs to sell and broadens the presentation of discontinued operations to include a component of an entity rather than a segment of a business. Statement No. 144 is effective for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years, with early application encouraged. The Company does not expect the adoption of this statement to have a material impact on its results of operations or financial position. Forward looking statement - Management's result of operations contains forward-looking statements that reflect the Company's current view with respect to future revenues and earnings. These statements are subject to numerous uncertainties, including (but not limited to) the rate at which the business forms market is contracting, the application of technology to the production of business forms, demand for the Company's products in the context of a contracting market, variability in the prices of paper and other raw materials, and competitive conditions in the business forms market. Because of such uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of December 21, 2001. Recent Glimpses: Dec 2001 (Qtrly Rpt) | Sep 2001 (Qtrly Rpt) | Jun 2001 (Qtrly Rpt) | Dec 2000 (Qtrly Rpt) | All filings for EBF © Copyright 1995-2001 EDGAR Online, Inc. All rights reserved. Full Copyright & Trademark Information.
delighted,Someone from the Berk board posted this as a company to watch. Was it you? I've given it a quick once over and determined it to be somewhat undervalued even using very conservative assumptions. I do have a few concerns though. First, it is up over 40% from its recent lows. I'm not sure how much more upside there is in the short term. Second, the business seems to have deteriorated significantly over the past decade. ROE was in the high 20's to low 30's from 1991-1995, but dropped precipitously during 1996-97 and has since hovered in the mid-teens. Do you know what went wrong? Finally, net margins have been steadily degrading as well, falling steadily from the high teens to a recent annual rate of 5.8%. My concern here is that this deterioration may be a sign of deeper troubles. Has technology eroded a moat, increased competition, or made their services obsolete? Do you think they can turn it around?Otherwise I am very attracted by the dividend and what appears to be an undervaluation.PhoolishPhilip
PhoolishPhilipYes i mentioned EBF on the BRK,A board as a stock on my watch list.It appears not to be on many investors radar screen which can be good if not overdone.Basically i feel the dividend is secure,and not many new competitors will be attracted. probably within a month i will decide whether to add EBF to portfolio or maybe UST or PBI instead.regardsdelighted;o)P.S.---Insider trading seems somewhat favorablehttp://research.web.aol.com/index.adp?T1=ebf&item=11
delighted,If you like the dividend with EBF then why not NPK? The dividend is a little higher and I think FCF is right about the $30 liquidation value.Just a thought,PhoolishPhilip
PhoolishPhilipThanks for your comments on EBF and NPK. NPK has not been on my watch list to date. Is the NPK dividend stable or are they going to have to dip into cash holdings to maintain at current levels? Last portfolio addition was ALD,and of the companies high on watch list(EBF,PBI,and UST) i am leaning toward UST to be next.regardsdelighted;o)
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