Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Date File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~December 29, 2017,~~September 27, 2019, there were ~~25,416,890~~26,103,362 shares of the Registrant’s common stock outstanding.

	November 30,		February 28,		August 31,		February 28,
	2017		2017		2019		2019
Assets
Current assets
Cash and cash equivalents	$	92,930	$	80,466
Accounts receivable, net of allowance for doubtful receivables of $1,306 at November 30, 2017 and $1,674 at February 28, 2017		38,409		37,368
Cash					$	52,500	$	88,442
Accounts receivable, net of allowance for doubtful receivables of $937 at August 31, 2019 and $1,020 at February 28, 2019						43,689		40,357
Prepaid expenses		1,228		1,351		974		1,760
Prepaid income taxes		888		855		769		195
Inventories		27,799		27,965		39,108		35,411
Assets held for sale		1,320		1,245
Total current assets		162,574		149,250		137,040		166,165
Property, plant and equipment
Plant, machinery and equipment		135,367		136,584		155,977		146,001
Land and buildings		53,587		53,821		58,124		56,394
Other		23,556		23,644		24,050		23,838
Total property, plant and equipment		212,510		214,049		238,151		226,233
Less accumulated depreciation		166,274		164,054		177,632		173,099
Net property, plant and equipment		46,236		49,995		60,519		53,134
Operating lease right-of-use assets						20,818		—
Goodwill		70,603		70,603		82,950		81,634
Intangible assets, net		50,746		53,927		60,713		61,272
Net pension asset						580		580
Other assets		357		510		268		300
Total assets	$	330,516	$	324,285	$	362,888	$	363,085

	November 30,			February 28,			August 31,			February 28,
	2017			2017			2019			2019
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	9,988		$	14,202		$	17,908		$	13,728
Accrued expenses								15,144			17,895
Employee compensation and benefits		14,775			13,515
Taxes other than income		357			225
Other		1,880			2,026
Current portion of operating lease liabilities								5,302			—
Total current liabilities		27,000			29,968			38,354			31,623
Long-term debt		30,000			30,000			—			30,000
Liability for pension benefits		4,846			4,846
Deferred income taxes		7,408			6,953			11,746			10,898
Operating lease liabilities, net of current portion								15,246			—
Other liabilities		1,511			1,163			1,525			1,437
Total liabilities		70,765			72,930			66,871			73,958
Commitments and contingencies
Shareholders’ equity
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 November 30 and February 28, 2017		75,134			75,134
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at August 31, 2019 and February 28, 2019								75,134			75,134
Additional paid-in capital		121,010			121,525			122,359			123,065
Retained earnings		160,648			150,685			186,417			179,003
Accumulated other comprehensive loss:
Minimum pension liability, net of taxes		(14,517	)		(15,261	)		(16,248	)		(16,704	)
Total accumulated other comprehensive loss		(14,517	)		(15,261	)
Treasury stock		(82,524	)		(80,728	)		(71,645	)		(71,371	)
Total shareholders’ equity		259,751			251,355			296,017			289,127
Total liabilities and shareholders' equity	$	330,516		$	324,285		$	362,888		$	363,085

	Three months ended						Nine months ended						Three months ended						Six months ended
	November 30,						November 30,						August 31,						August 31,
	2017			2016			2017			2016			2019			2018			2019			2018
Net sales	$	93,606		$	88,660		$	283,083		$	270,316		$	108,816		$	98,591		$	216,849		$	192,010
Cost of goods sold		63,722			63,368			192,493			191,292			76,358			68,268			151,695			131,496
Gross profit margin		29,884			25,292			90,590			79,024			32,458			30,323			65,154			60,514
Selling, general and administrative		16,699			15,833			51,167			47,961			19,644			17,567			39,347			35,302
(Gain) loss from disposal of assets		(4	)		264			59			266
Gain from disposal of assets														—			(2	)		—			(6	)
Income from operations		13,189			9,195			39,364			30,797			12,814			12,758			25,807			25,218
Other income (expense)
Interest expense		(163	)		(172	)		(557	)		(405	)		(280	)		(287	)		(597	)		(548	)
Other, net		108			88			238			92			348			285			688			415
Total other expense		(55	)		(84	)		(319	)		(313	)
Earnings from continuing operations before income taxes		13,134			9,111			39,045			30,484
Total other income (expense)														68			(2	)		91			(133	)
Earnings before income taxes														12,882			12,756			25,898			25,085
Income tax expense		4,860			3,371			14,447			11,277			3,349			3,189			6,733			6,271
Earnings from continuing operations		8,274			5,740			24,598			19,207
Income from discontinued operations, net of tax		—			—			—			2,481
Loss on sale of discontinued operations, net of tax		—			—			—			(26,042	)
Loss from discontinued operations, net of tax		—			—			—			(23,561	)
Net earnings (loss)	$	8,274		$	5,740		$	24,598		$	(4,354	)
Net earnings													$	9,533		$	9,567		$	19,165		$	18,814
Weighted average common shares outstanding
Basic		25,360,452			25,673,824			25,387,389			25,802,658			26,029,359			25,671,643			26,034,122			25,510,356
Diluted		25,393,482			25,683,613			25,409,259			25,818,146			26,029,359			25,685,514			26,034,122			25,522,831
Earnings (loss) per share - basic and diluted
Continuing operations	$	0.33		$	0.22		$	0.97		$	0.74
Discontinued operations	$	—		$	—		$	—		$	(0.91	)
Net earnings (loss)	$	0.33		$	0.22		$	0.97		$	(0.17	)

Earnings per share
Basic													$	0.37		$	0.37		$	0.74		$	0.74
Diluted													$	0.37		$	0.37		$	0.74		$	0.74
Cash dividends per share	$	0.200		$	0.175		$	0.575		$	2.025		$	0.225		$	0.225		$	0.450		$	0.425

UNAUDITED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

											Accumulated																						Accumulated
					Additional						Other																Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive			Treasury Stock									Common Stock				Paid-in			Retained			Comprehensive			Treasury Stock
	Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Total			Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Total
Balance March 1, 2017		30,053,443	$	75,134	$	121,525		$	150,685		$	(15,261	)		(4,686,821	)	$	(80,728	)	$	251,355
Balance February 28, 2019																								30,053,443	$	75,134	$	123,065		$	179,003		$	(16,704	)		(4,097,099	)	$	(71,371	)	$	289,127
Net earnings		—		—		—			24,598			—			—			—			24,598			—		—		—			9,632			—			—			—			9,632
Adjustment to pension, net of deferred tax of $456		—		—		—			—			744			—			—			744
Dividends paid ($0.575 per share)		—		—		—			(14,635	)		—			—			—			(14,635	)
Adjustment to pension, net of deferred tax of $78																								—		—		—			—			234			—			—			234
Dividends paid ($0.225 per share)																								—		—		—			(5,875	)		—			—			—			(5,875	)
Stock based compensation		—		—		1,002			—			—			—			—			1,002			—		—		358			—			—			—			—			358
Exercise of stock options and restricted stock		—		—		(1,517	)		—			—			88,105			1,517			—			—		—		(1,312	)		—			—			83,095			1,312			—
Common stock repurchases		—		—		—			—			—			(191,178	)		(3,313	)		(3,313	)		—		—		—			—			—			(62,038	)		(1,212	)		(1,212	)
Balance November 30, 2017		30,053,443	$	75,134	$	121,010		$	160,648		$	(14,517	)		(4,789,894	)	$	(82,524	)	$	259,751
Balance May 31, 2019																								30,053,443	$	75,134	$	122,111		$	182,760		$	(16,470	)		(4,076,042	)	$	(71,271	)	$	292,264
Net earnings																								—		—		—			9,533			—			—			—			9,533
Adjustment to pension, net of deferred tax of $74																								—		—		—			—			222			—			—			222
Dividends paid ($0.225 per share)																								—		—		—			(5,876	)		—			—			—			(5,876	)
Stock based compensation																								—		—		307			—			—			—			—			307
Exercise of stock options and restricted stock																								—		—		(59	)		—			—			3,381			59			—
Common stock repurchases																								—		—		—			—			—			(22,013	)		(433	)		(433	)
Balance August 31, 2019																								30,053,443	$	75,134	$	122,359		$	186,417		$	(16,248	)		(4,094,674	)	$	(71,645	)	$	296,017

																																	Accumulated
																											Additional						Other
																							Common Stock				Paid-in			Retained			Comprehensive			Treasury Stock
																							Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Total
Balance February 28, 2018																								30,053,443	$	75,134	$	121,333		$	164,177		$	(16,428	)		(4,789,228	)	$	(82,512	)	$	261,704
Net earnings																								—		—		—			9,247			—			—			—			9,247
Adjustment to pension, net of deferred tax of $87																								—		—		—			—			261			—			—			261
Dividends paid ($0.20 per share)																								—		—		—			(5,083	)		—			—			—			(5,083	)
Stock based compensation																								—		—		327			—			—			—			—			327
Exercise of stock options and restricted stock																								—		—		(1,390	)		—			—			80,692			1,390			—
Common stock repurchases																								—		—		—			—			—			(37,943	)		(680	)		(680	)
Balance May 31, 2018																								30,053,443	$	75,134	$	120,270		$	168,341		$	(16,167	)		(4,746,479	)	$	(81,802	)	$	265,776
Net earnings																								—		—		—			9,567			—			—			—			9,567
Adjustment to pension, net of deferred tax of $82																								—		—		—			—			247			—			—			247
Dividends paid ($0.225 per share)																								—		—		—			(5,728	)		—			—			—			(5,728	)
Stock based compensation																								—		—		347			—			—			—			—			347
Exercise of stock options and restricted stock																								—		—		(138	)		—			—			29,447			207			69
Common stock issued for acquisition of business																								—		—		1,874			—			—			829,126			14,344			16,218
Common stock repurchases																								—		—		—			—			—			—			—			—
Balance August 31, 2018																								30,053,443	$	75,134	$	122,353		$	172,180		$	(15,920	)		(3,887,906	)	$	(67,251	)	$	286,496

	Nine months ended						Six months ended
	November 30,						August 31,
		2017			2016			2019			2018
Cash flows from operating activities:
Net earnings (loss)	$	24,598		$	(4,354	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Net earnings							$	19,165		$	18,814
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		6,016			5,944			5,046			4,308
Amortization of deferred finance charges		85			36			47			57
Amortization of intangible assets		4,566			3,494			3,830			2,920
Pre-tax loss from discontinued operations		—			36,775
Operating cash flows of discontinued operations		—			538
Loss from disposal of assets		59			266
Gain from disposal of assets								—			(6	)
Bad debt expense, net of recoveries		(231	)		118			22			196
Stock based compensation		1,002			1,019			665			674
Deferred income taxes		(1	)		—
Net pension expense								590			659
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable		(810	)		1,426			1,097			(1,708	)
Prepaid expenses and income taxes		90			(1,620	)		385			3,562
Inventories		247			722			(1,032	)		(3,081	)
Other assets		67			(593	)		36			(4	)
Accounts payable and accrued expenses		(3,418	)		(3,121	)		(1,966	)		(1,941	)
Other liabilities		348			(7	)		(167	)		(200	)
Liability for pension benefits		1,200			1,917
Net cash provided by operating activities		33,818			42,560			27,718			24,250
Cash flows from investing activities:
Capital expenditures		(2,092	)		(1,912	)		(1,531	)		(2,546	)
Purchase of businesses, net of cash acquired		(1,350	)		(907	)		(18,733	)		(27,035	)
Proceeds from sale of discontinued operations		—			107,354
Investing cash flows of discontinued operations		—			(279	)
Proceeds from disposal of plant and property		36			663			—			6
Net cash provided by (used in) investing activities		(3,406	)		104,919
Net cash used in investing activities								(20,264	)		(29,575	)
Cash flows from financing activities:
Repayment of debt		—			(10,000	)		(30,000	)		—
Dividends paid		(14,635	)		(52,724	)		(11,751	)		(10,811	)
Common stock repurchases		(3,313	)		(7,757	)		(1,645	)		(680	)
Proceeds from exercise of stock options		—			2,910			—			69
Net cash used in financing activities		(17,948	)		(67,571	)		(43,396	)		(11,422	)
Net change in cash and cash equivalents		12,464			79,908
Cash and cash equivalents at beginning of period		80,466			7,957
Cash and cash equivalents at end of period	$	92,930		$	87,865
Net change in cash								(35,942	)		(16,747	)
Cash at beginning of period								88,442			96,230
Cash at end of period							$	52,500		$	79,483

These unaudited consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended ~~November 30, 2017~~August 31, 2019 have been prepared in accordance with generally accepted accounting principles for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, ~~2017,~~2019, from which the accompanying consolidated balance sheet at February 28, ~~2017~~2019 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year.

On May 25, 2016, the Company sold Alstyle Apparel, LLC and its subsidiaries, which constituted the Company’s apparel segment (the “Apparel Segment”), to Gildan Activewear Inc. As a result of this action, the current year and prior year disclosures reflect these operations as discontinued operations.

In ~~March 2017,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2017-07,~~2018-14, Compensation-Retirement ~~Benefits~~Benefits-Defined Benefit Plans-General (Topic ~~715)~~715-20): ~~Improving~~Disclosure Framework—Changes to the ~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement~~Disclosure Requirements for Defined Benefit ~~Cost~~Plans (“ASU ~~2017-07~~2018-14”)~~. The update requires~~, which removes certain disclosures that are no longer cost beneficial and also includes additional disclosures to improve the ~~service cost component of net benefit costs to be reported in the same line~~overall usefulness of the ~~income~~disclosure requirements to financial statement ~~as other compensation costs~~users. ASU 2018-14 is effective for fiscal years ending after December 15, 2020, and the other components of net benefit costs (non-service costs) to be presented separately from the service cost component, outside a subtotal of operating income. Additionally, only the service cost component of net benefit costs will be eligible for capitalization. The updateearlier adoption is ~~required to be adopted the first quarter of fiscal year 2019 and is required to be retrospectively adopted.~~permitted. The Company is currently evaluating the impact ~~the adoption~~ of ASU ~~2017-07 will have~~2018-14 on ~~its~~the consolidated financial statements.

In ~~January 2017,~~August 2018, the FASB issued ASU No. ~~2017-04,~~2018-13, ~~Intangibles-Goodwill and Other~~Fair Value Measurement (Topic ~~350): Simplifying the Test for Goodwill Impairment~~820) (“~~ASU 2017-04~~”), ~~which simplifies how an entity is required to measure goodwill impairment.~~. The amendments in ASU 2017-04 require that goodwill impairment will be measured using the difference between the carrying amount and the fair value of the reporting unit and the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments in ASU 2017-04 should be applied on a prospective basis and arestandard is effective for ~~annual or any interim goodwill impairment tests~~public business entities in ~~annual reporting periods~~fiscal years beginning after December 15, ~~2019.~~2019, and for interim periods within those fiscal years. Early adoption is permitted, including during an interim period. This new standard requires changes to disclosure requirements for fair value measurements for certain Level 3 items, and specifies that some of the changes must be applied prospectively, while others should be applied retrospectively. The Company ~~adopted ASU 2017-04 on June 1, 2017, which had no~~is evaluating the standard, but does not expect it to have a significant impact on ~~the Company’s consolidated~~its financial ~~statements at the time of adoption.~~statement disclosures.

In ~~March~~June 2016, the FASB issued ASU No. ~~2016-09,~~2016-03, ~~Compensation-Stock Compensation~~Accounting for Credit Losses (Topic ~~718)~~326) (“~~ASU 2016-09~~”), ~~which makes several modifications to~~. The standard requires a valuation allowance for credit losses be recognized for certain financial assets that reflects the ~~accounting for employee share-based payment transactions, including~~current expected credit loss over the requirement to recognize the income tax effects of awards that vest or settle as income tax expense. The amendments in ASU 2016-09 also clarify the presentation of certain components of share-based awards in the statement of cash flows. ASU 2016-09asset’s contractual life and is effective for ~~annual reporting~~fiscal years, and interim periods within those years, beginning ~~after~~with December 15, ~~2016.~~2019, with early adoption permitted. The valuation allowance considers the risk of loss, even if remote, and considers past events, current conditions and expectations of the future. The Company ~~adopted ASU 2016-09 in fiscal year 2018 beginning in March of 2017. The adoption of ASU 2016-09 did not have a material impact~~is currently evaluating the standard and its effect on the Company’s ~~consolidated~~ financial ~~statements and related disclosures.~~statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU ~~2016-02~~”2016-02”), which modifies the lease recognition requirements and requires ~~lessees~~entities to ~~put most~~recognize the assets and liabilities arising from leases on the balance sheet ~~but recognize expense~~and to disclose key qualitative and quantitative information about the entity’s leasing arrangements.

Based on the ~~income statement~~original guidance in ~~a manner similar to current accounting. For lessors,~~ ASU 2016-02, ~~also modifies the classification criteria~~lessees and ~~the accounting for sales-type~~lessors would have been required to recognize and ~~direct financing leases. The standard requires a modified retrospective approach for~~measure leases ~~that exist or are entered into after~~at the beginning of the earliest ~~comparative~~ period inpresented using a modified retrospective approach, including a number of practical expedients. In July 2018, the ~~financial statements~~FASB issued ASU No. 2018-11, Leases (“ASC 842”): Targeted Improvements, which provides entities with an option to apply the guidance prospectively, instead of retrospectively, and ~~is effective in the first quarter of fiscal year 2020. Early adoption of ASU 2016-02 is permitted.~~ allows for other classification provisions.

The Company ~~is currently evaluating~~adopted this guidance as of March 1, 2019, using the ~~impact~~optional transition method and elected the ~~adoption of ASU 2016-02 will have on its consolidated financial statements.~~option to not apply ASC 842 to comparative periods, which continue to be presented under the accounting standards in effect for those periods.

~~In January 2016,~~The Company elected the ~~FASB issued ASU No. 2016-01,~~ ~~Financial Instruments – Overall (Subtopic 825-10): Recognition~~‘package of practical expedients’ as lessee, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and ~~Measurement~~initial direct costs. Additionally, the Company elected to treat lease and non-lease components as a single lease component.

Adoption of ~~Financial Assets~~the new standard resulted in the recording of operating lease right-of-use (“ROU”) assets of $18.0 million and ~~Financial Liabilities~~ (“~~ASU 2016-01”), which institutes a number~~operating lease liabilities of ~~modifications to~~$18.2 million. The difference between the ~~reporting of financial~~leased assets and ~~liabilities. These modifications include: (i) measurement~~lease liabilities represents the existing deferred rent liabilities balance at adoption, resulting from historical straight line recognition of ~~non-equity method assets and liabilities at fair value, with changes~~operating leases, which was reclassified upon adoption to fair value recognized through net income, (ii) performance of qualitative impairment assessments of equity investments without readily determinable fair values at each reporting period, (iii) elimination ofreduce the ~~requirement to disclose methods and significant assumptions used in calculating the fair value of financial instruments measured at amortized cost, (iv)~~ measurement of the ~~fair value of financial instruments measured at amortized cost using the exit price notion consistent with Topic 820, Fair Value Measurement, (v) separate presentation in other comprehensive income~~leased assets. The adoption of the ~~portion~~standard did not have an impact on the Company’s shareholders’ equity, statement of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk, (vi) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and (vii) evaluation of the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This ASU is effective for financial statements issued with fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the impact the adoption of ASU 2016-01 will have on its consolidated financial statements.operations, or cash flows.

~~In May 2014,~~On March 1, 2018, the ~~FASB issued~~Company adopted ASU ~~No.~~ 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), using the modified retrospective method applied to those contracts which ~~requires an entity~~were not completed as of March 1, 2018. Results for reporting periods beginning after March 1, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to ~~recognize~~be reported in accordance with the Company’s historic accounting under Topic 605, and no adjustment has been recorded to beginning retained earnings due to there being no change in revenue ~~to depict~~recognition for prior periods.

The adoption did not have a significant effect on the ~~transfer~~Company’s consolidated results of ~~promised goods~~operations, financial position or ~~services to~~cash flows.

Substantially all of the Company’s revenue from contracts with customers consist of the sale of commercial printing products in the continental United States and is primarily recognized at a point in time in an amount that reflects the consideration ~~to which it~~the Company expects to be entitled to in exchange for those ~~goods~~goods. Revenue from the sale of commercial printing products, including shipping and handling fees billed to customers, is recognized upon the transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are freight on board (“FOB”) shipping point, or, ~~services. The standard will~~to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination.

In a small number of cases and upon customer request, the Company prints and stores commercial printing product for customer specified future delivery, generally within the same year as the product is manufactured. In this case, revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is passed to the customer, which for certain customers may be ~~effective~~recognized over time rather than at a point in time. As the output method for usmeasure of progress is determined to be appropriate, the Company recognizes revenue in the ~~first quarter~~amount for which it has the right to invoice for revenue that is recognized over time and for which it demonstrates that the invoiced amount corresponds directly with the value to the customer for the performance completed to date.

The Company does not disaggregate revenue and operates in one sales category consisting of ~~fiscal~~commercial printed product revenue, which is reported as net sales on the consolidated statements of operations. The Company does not have material contract assets and contract liabilities as of August 31, 2019. We

Generally, the Company’s contracts with customers are comprised of a written quote and customer purchase order or statement of work, and governed by the Company’s trade terms and conditions. In certain instances, it may be further supplemented by separate pricing agreements and customer incentive arrangements, which typically only affect the contract’s transaction price. Contracts do not contain a significant financing component as payment terms on invoiced amounts are typically between 30 to 60 days, based on the Company’s credit assessment of individual customers, as well as industry expectations. Product returns are not significant.

From time to time, the Company may offer incentives to its customers considered to be variable consideration including volume-based rebates or early payment discounts. Customer incentives considered to be variable consideration are recorded as a reduction to revenue as part of the transaction price at contract inception when there is a basis to reasonably estimate the amount of the incentive and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Customer incentives are allocated entirely to the single performance obligation of transferring printed product to the customer.

For customers with terms of FOB shipping point, the Company accounts for shipping and handling activities performed after the control of the printed product has been transferred to the customer as a fulfillment cost. The Company accrues for the costs of shipping and handling activities if revenue is recognized before contractually agreed shipping and handling activities occur.

The Company’s contracts with customers generally have a ~~project plan in place for~~duration of one year or less. Accordingly, the ~~transition to revenue recognition in accordance with Topic 606, including necessary changes to accounting processes, procedures and internal controls. Our initial evaluation is that~~Company does not disclose the value of unsatisfied performance obligations nor the timing of revenue recognition for our various revenue streams would not be materially impacted by the adoption of this standard. Thus, we do not expect the adoption of this standard to materially impact our consolidated financial statements, but we are still evaluating the impact on our financial statement disclosures. As we continue our assessment, we are reviewing selected revenue contracts in detail to validate our initial conclusions. We will adopt using the modified retrospective approach with any cumulative effect recognized in retained earnings on the date of adoption.recognition.

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all of the Company’s receivables are due from customers in the United States. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for doubtful receivables is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes assessing a default probability to customers’ receivable balances, which is influenced by several factors including (i) current market conditions, (ii) periodic review of customer creditworthiness, and (iii) review of customer receivable aging and payment trends.

The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance in the period the payment is received. ~~Credit losses from continuing operations have consistently been within management’s expectations.~~

The following table presents the activity in the Company’s allowance for doubtful receivables (in thousands):

	Three months ended						Nine months ended						Three months ended						Six months ended
	November 30,						November 30,						August 31,						August 31,
	2017			2016			2017			2016			2019			2018			2019			2018
Balance at beginning of period	$	1,318		$	1,820		$	1,674		$	2,041		$	1,041		$	1,298		$	1,020		$	1,194
Bad debt expense, net of recoveries		17			15			(231	)		118			(18	)		61			22			196
Accounts written off		(29	)		(203	)		(137	)		(527	)		(86	)		(33	)		(105	)		(64	)
Balance at end of period	$	1,306		$	1,632		$	1,306		$	1,632		$	937		$	1,326		$	937		$	1,326

The Company uses the lower of last-in, first-out (“LIFO”) cost or market to value certain of its business forms inventories and the lower of first-in, first-out (“FIFO”) cost or ~~market~~net realizable value to value its remaining forms inventories. The Company regularly reviews inventories on hand, using specific aging categories, and writes down the carrying value of its inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage. In assessing the ultimate realization of its inventories, the Company is required to make judgments as to future demand requirements. As actual future demand or market conditions may vary from those projected by the Company, adjustments to inventories may be required.

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	November 30,		February 28,		August 31,		February 28,
	2017		2017		2019		2019
Raw material	$	16,584	$	16,130	$	23,286	$	21,717
Work-in-process		3,336		3,199		4,879		4,172
Finished goods		7,879		8,636		10,943		9,522
	$	27,799	$	27,965	$	39,108	$	35,411

The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets and liabilities assumed, is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed as incurred.

On July ~~7, 2017,~~15, 2019, the Company acquired all the ~~assets~~outstanding stock of The Flesh Company (“Flesh”) and its wholly owned subsidiary, Impressions Direct, Inc. for approximately $9.9 million (which includes a ~~tag operation located in Ohio, for $1.4 million in cash~~potential earn-out consideration of up to $500,000) plus the assumption of trade payables, subject to final working capital and certain ~~accrued liabilities. Management considers this~~other adjustments. The earn-out consideration is capped at $500,000 and is paid over the next four years if certain minimum operating income levels are achieved. The goodwill recognized as a part of the acquisition ~~immaterial.~~

~~On January 27, 2017,~~is not deductible for tax purposes. The Company recorded intangible assets with definite lives of approximately $1.5 million in connection with the transaction. During the six months ended August 31, 2019, the Company ~~completed~~incurred approximately $175,000 of costs (including legal and accounting fees) related to the acquisition. Flesh and its subsidiary Impressions Direct, is a printing company with two locations. The St. Louis, Missouri location contains their corporate office and the direct mail operations of Impressions Direct, and their Parsons, Kansas location has their main manufacturing facility and warehouse. The acquisition of ~~Independent Printing Company, Inc. and its related entities (collectively “Independent~~”) for $17.7 million in cash consideration, in a stock purchase transaction. Independent has 4 locations in Wisconsin, with its main facility located in DePere, Wisconsin. The business produces presentation folders, checks, wide format and commercial printing. Independent,Flesh, which generated approximately ~~$37.0~~$31.0 million in ~~unaudited~~ sales ~~during calendar~~for its fiscal year ~~2016, will continue to operate under its respective brand names. Independent sells mainly through distributors~~ended September 30, 2018, expands the Company’s operations for business forms, checks, direct mail services, integrated products and ~~resellers. The Company will now have 4 folder facilities in Michigan, Kansas, California and Wisconsin, as well as wide format capabilities in Colorado and Wisconsin.~~labels.

The following is a summary of the ~~final~~preliminary purchase price allocation for ~~Independent~~Flesh (in thousands):

Accounts receivable	$	4,252		$	2,480
Inventories		1,539			1,343
Other assets		575			152
Right-of-use asset					715
Property, plant & equipment		5,526			7,072
Customer lists		3,390			434
Trademarks		2,408			1,000
Non-compete					20
Goodwill		6,066			423
Accounts payable and accrued liabilities		(6,079	)		(2,351	)
Operating lease liability					(700	)
Deferred income taxes					(714	)
	$	17,677		$	9,874

On March 16, 2019, the Company, through one of its subsidiaries, acquired the assets of Integrated Print & Graphics (“Integrated”) for $8.9 million in cash plus the assumption of trade payables, subject to certain adjustments. Integrated is located in South Elgin, Illinois. During the six months ended August 31, 2019, the Company incurred approximately $29,000 of costs (including legal and accounting fees) related to the acquisition. Goodwill of $893,000 recognized as a part of the acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $1.8 million in connection with the transaction. The acquisition of Integrated, which generated approximately $20.0 million in sales for its fiscal year ended December 31, 2018, created additional capabilities within the Company’s high color commercial print product line.

The following is a summary of the preliminary purchase price allocation for Integrated (in thousands):

On July 31, 2018, the Company issued an aggregate of 829,126 shares of common stock to the former stockholders of Wright Business Forms, Inc., d/b/a Wright Business Graphics (“Wright”), as partial consideration for the acquisition by the Company of all of the outstanding equity interests of Wright pursuant to the Agreement and Plan of Merger, dated July 16, 2018 (the “Merger Agreement”). The Company shares issued to the former stockholders of Wright represented aggregate consideration under the Merger Agreement of approximately $16.2 million at the time of issuance. An additional $19.7 million was paid in cash to the stockholders of Wright, subject to a final working capital adjustment, and $2.6 million was paid to pay-off Wright’s outstanding debt. Since the acquisition, the Company has incurred approximately $0.2 million of costs (including legal and accounting fees) related to the acquisition. These costs were recorded in selling, general and administrative expenses. The goodwill recognized as a part of this merger is not deductible for tax purposes. Wright is a printing company which produces forms, pressure seal, packaging, direct mail, checks, statement processing and commercial printing and sells mainly through distributors and resellers. Wright is headquartered in Portland, Oregon and has additional locations in Washington and California. Wright, which generated approximately $58.0 million in sales for its fiscal year ended March 31, 2018, continues to operate under its brand names.

The following is a summary of the preliminary purchase price allocation for Wright (in thousands):

The results of operations for ~~Independent~~Wright, Integrated and Flesh are included in the Company’s consolidated financial statements from the ~~date~~respective dates of acquisition. The following table ~~represents~~sets forth certain operating information on a pro forma basis as though all ~~Independent~~Wright, Integrated and Flesh operations had been acquired as of March 1, ~~2016,~~2018, after the estimated impact of adjustments such as amortization of intangible assets, depreciation expense and interest expense ~~interest income,~~ and related tax effects (in thousands, except per share amounts):.

					Three months ended				Six months ended
	Three months ended		Nine months ended		August 31,				August 31,
	November 30, 2016		November 30, 2016		2019		2018		2019		2018
Pro forma net sales	$	97,803	$	297,745	$	112,142	$	120,542	$	228,278	$	240,597
Pro forma net earnings		5,990		19,957		8,684		10,096		18,252		20,001
Pro forma earnings per share - diluted		0.23		0.77		0.33		0.39		0.70		0.78

The pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the ~~periods~~period presented.

On April 30, 2018, the Company acquired the assets of Allen-Bailey Tag & Label, a tag and label operation located in New York, for $4.7 million in cash plus the assumption of trade payables, subject to a working capital adjustment. In addition, contingent consideration of up to $500,000 is payable to the sellers if certain sales levels are maintained over the next three years. Management considers this acquisition to be immaterial.

The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company.

Operating lease expense is recognized on a straight-line basis over the lease term, and variable lease payments are expensed as incurred. The Company had no variable lease costs for the six months ended August 31, 2019.

The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the information available at lease commencement date as rates are not implicitly stated in most leases.

Components of lease expense for the three and six months ended August 31, 2019 were as follows (in thousands):

~~On May 25, 2016 the Company sold its Apparel Segment to Gildan Activewear Inc.~~Future minimum lease commitments under non-cancelable operating leases for ~~an all-cash purchase price of $110.0 million, subject to a working capital adjustment, customary indemnification arrangements, and the other terms~~each of the ~~Unit Purchase Agreement dated May 4, 2016.~~

~~The operating results of these discontinued operations only reflect revenues and expenses that~~fiscal years ending are directly attributable to the Apparel Segment and that have been eliminated from continuing operations. The following tables show the key components on the sale and discontinued operations related to the Apparel Segment that was completed on May 25, 2016as follows (in thousands):

~~Beginning March 1, 2017, given~~Goodwill represents the ~~general declining trend line~~excess of ~~print sales, and its expected continuance into~~ the ~~foreseeable future,~~purchase price over the ~~Company elected to treat the recorded~~fair value of ~~trademarks/trade names as no longer being an indefinite-lived asset. As such,~~net assets of acquired businesses and is not amortized. Goodwill and other intangible assets are tested for impairment at a reporting unit level. The annual impairment test of goodwill and intangible assets is performed as of ~~March 1, 2017,~~November 30 of each fiscal year.

The Company considers qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the ~~Company began amortizing~~fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors considered in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the business, overall financial performance of the business, and performance of the share price of the Company.

If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an evaluation. The evaluation utilizes multiple valuation methodologies, including a market approach (market price multiples of comparable companies) and an income approach (discounted cash flow analysis). The computations require management to make significant estimates and assumptions, including, among other things, selection of comparable publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions. A discounted cash flow analysis requires management to make various assumptions about future sales, operating margins, capital expenditures, working capital, and growth rates. If the evaluation results in the fair value of the goodwill for the reporting unit being lower than the carrying value, ~~of these assets over their estimated remaining useful life, approximately 17 - 19 years. The amortization expense associated with this election~~an impairment charge is ~~expected to increase the Company’s selling, general and administrative expense line by approximately $830,000 during fiscal year 2018.~~recorded.

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

Weighted

Average

Remaining

Gross

Life

Carrying

Accumulated

As of November 30, 2017

(in years)

Amount

Amortization

Net

Amortized intangible assets

Trademarks and trade names

16.2

$
19,625

$
2,109

$
17,516

Customer lists

8.3

58,040

24,884

33,156

Noncompete

0.1

175

130

45

Patent

0.3

783

754

29

Total

11.0

$
78,623

$
27,877

$
50,746

As of February 28, 2017

Amortized intangible assets

Trademarks and trade names

8.0

$
3,642

$
1,234

$
2,408

Customer lists

8.9

57,347

21,336

36,011

Noncompete

0.8

175

86

89

Patent

1.0

783

655

128

Total

8.8

$
61,947

$
23,311

$
38,636

	November 30,		February 28,		Weighted
	2017		2017		Average
Non-amortizing intangible assets
					Remaining		Gross
					Life		Carrying		Accumulated
As of August 31, 2019					(in years)		Amount		Amortization		Net
Amortized intangible assets
Trademarks and trade names	$	—	$	15,291		12.6	$	26,281	$	4,795	$	21,486
Customer lists						7.8		73,199		34,336		38,863
Non-compete						2.2		767		403		364
Patent						—		783		783		—
Total						9.5	$	101,030	$	40,317	$	60,713

As of February 28, 2019
Amortized intangible assets
Trademarks and trade names						13.8	$	24,385	$	3,906	$	20,479
Customer lists						8.2		71,869		31,498		40,371
Non-compete						2.5		722		300		422
Patent						—		783		783		—
Total						10.0	$	97,759	$	36,487	$	61,272

Aggregate amortization expense for the ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 and ~~November 30, 2016~~August 31, 2018 was ~~$4.6~~$3.8 million and ~~$3.5~~$2.9 million, respectively.

The Company’s estimated amortization expense for the current and next four fiscal years ~~ending in February of the stated fiscal year~~ is as follows (in thousands):

2018	$	5,992
2019		5,558
2020		5,476	$	7,692
2021		5,406		7,637
2022		5,363		7,463
2023				6,614
2024				6,576

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

During the ~~fiscal year~~six months ended ~~February 28, 2017, $6.1~~August 31, 2019, $1.3 million was added to goodwill related to the ~~acquisition~~acquisitions of ~~Independent.~~Integrated and Flesh.

The following table summarizes the components of ~~other~~ accrued expenses as of the dates indicated (in thousands):

	November 30,		February 28,		August 31,		February 28,
		2017		2017		2019		2019
Accrued taxes	$	140	$	329
Employee compensation and benefits					$	12,271	$	15,950
Taxes other than income						1,568		583
Accrued legal and professional fees		438		414		223		203
Accrued interest		134		98		60		188
Accrued utilities		111		90		90		90
Accrued acquisition related obligations		759		789		318		214
Accrued credit card fees		127		119		146		146
Other accrued expenses		171		187		468		521
	$	1,880	$	2,026	$	15,144	$	17,895

Long-term debt consisted of the following as of the dates indicated (in thousands):

The Company ~~has entered into~~is party to a Second Amended and Restated Credit Agreement, ~~which has been~~as amended, restated, supplemented or modified from time to time, pursuant to which a credit facility has been extended to the Company until August 11, 2020 (the “Credit Facility”) ~~until August 11, 2020 that~~. The Credit Facility provides the Company and its subsidiaries with up to $100.0 million in revolving credit, as well as a $20.0 million sublimit for the issuance of letters of credit and a $15.0 million sublimit for swing-line loans. ~~Under the Credit Facility, the~~The Company or any of its subsidiaries also can request up to three increases in the aggregate commitments in an aggregate amount not to exceed $50.0 million. Under the Credit Facility: (i) the Company’s consolidated net leverage ratio may not exceed 3.00:1.00, (ii) the Company’s consolidated fixed charge coverage ratio may not be less than 1.25:1.00, and (iii) the Company may make dividends or distributions to shareholders so long as (a) no event of default has occurred and is continuing and (b) the Company’s net leverage ratio both before and after giving effect to any such dividend or distribution is equal to or less than 2.50:1.00. All calculations are made based on GAAP existing at the time the Credit Facility was entered into. As of ~~November 30, 2017,~~August 31, 2019, the Company was in compliance with all terms and conditions of the Credit Facility.

The Credit Facility bears interest at the LIBOR rate plus a spread ranging from 1.0% to 2.0%, which rate was ~~2.5%~~3.6% (3 ~~month LIBOR + 1.0%) at November 30, 2017 and 1.86% (2~~ month LIBOR + 1.0%) at February 28, ~~2017.~~2019. The Company had no outstanding long-term debt under the revolving credit line as of August 31, 2019. The rate is determined by ~~our~~the Company’s fixed charge coverage ratio of total funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”). As of ~~November 30, 2017, we~~August 31, 2019, the Company had ~~$30.0 million of borrowings under the revolving credit line and $1.2~~$0.7 million outstanding under standby letters of credit arrangements, leaving approximately ~~$68.8~~$99.3 million available in borrowing capacity. The Credit Facility is secured by substantially all of ~~our~~the Company’s assets (other than real property), as well as all capital securities of each of ~~our~~the Company’s subsidiaries.

The ~~Board~~Company’s board of directors has authorized the repurchase ~~of up to an aggregate of $40.0 million~~ of the Company’s outstanding common stock through a stock repurchase ~~program.~~program, which authorized amount is currently up to $40.0 million. Under the repurchase program, share purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During the nine months ended November 30, 2017 the Company, under the program, repurchased 191,033 shares of common stock at an average price of $17.33 per share. Since the program’s inception in October 2008, there have been 1,442,236 common shares repurchased at an average price of $14.99 per share. As of November 30, 2017 there was $18.4 million available to repurchase shares of the Company’s common stock under the program. Unrelated to the stock repurchase program, the Company purchased 145 shares of its common stock during the nine months ended November 30, 2017.

~~10.~~ During the six months ended August 31, 2019 the Company, under the program, repurchased 84,051 shares of common stock at an average price of $19.58 per share. Since the program’s inception in October 2008, there have been 1,774,075 common shares repurchased at an average price of $15.83 per share. As of August 31, 2019, $11.9 million was available to repurchase shares of the Company’s common stock under the program.

The Company grants stock options and restricted stock to key executives, ~~and~~ managerial employees and non-employee directors. At ~~November 30, 2017,~~August 31, 2019, the Company had one stock option plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of June 30, 2011 ~~formerly the 1998 Option and Restricted Stock Plan amended and restated as of May 14, 2008~~ (the “Plan”). The Company has ~~529,408~~520,104 shares of unissued common stock reserved under the Plan for issuance as of ~~November 30, 2017.~~August 31, 2019. The exercise price of each stock option granted under the Plan equals a referenced price of the Company’s common stock as reported on the New York Stock Exchange on the date of grant, and an option’s maximum term is ten years. Stock options and restricted stock may be granted at different times during the year and vest ratably over various periods, from grant date up to five years. The Company uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense for stock options and restricted stock grants on a straight-line basis over the requisite service period. For the three months ended ~~November 30, 2017~~August 31, 2019 and ~~November 30, 2016,~~August 31, 2018, the Company included compensation expense related to share-based compensation of $0.3 million ~~($0.2~~and $0.4 million, ~~net of tax), and $0.3 million ($0.2 million net of tax),~~ respectively, in selling general, and administrative expenses. For the ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 and ~~November 30, 2016,~~August 31, 2018, the Company included compensation expense related to share-based compensation of ~~$1.0~~$0.7 million ~~($0.6~~and $0.7 million, ~~net of tax), and $1.0 million ($0.6 million net of tax),~~ respectively, in selling, general, and administrative expenses.

As of August 31, 2019, the Company had no outstanding vested or unvested stock options. The Company had the following stock option activity for the ~~nine~~six months ended ~~November 30, 2017:~~August 31, 2019:

					Weighted									Weighted
			Weighted		Average		Aggregate					Weighted		Average		Aggregate
	Number		Average		Remaining		Intrinsic		Number			Average		Remaining		Intrinsic
	of Shares		Exercise		Contractual		Value(a)		of Shares			Exercise		Contractual		Value(a)
	(exact quantity)		Price		Life (in years)		(in thousands)		(exact quantity)			Price		Life (in years)		(in thousands)
Outstanding at March 1, 2017		172,496	$	15.95		4.2	$	223
Outstanding at March 1, 2019										61,590		$	15.88		1.8	$	327
Granted		—		—						—			—
Terminated		—		—						—			—
Exercised		—		—						(61,590	)	$	15.88
Outstanding at November 30, 2017		172,496	$	15.95		3.5	$	896
Exercisable at November 30, 2017		170,880	$	15.97		3.4	$	884
Outstanding at August 31, 2019										—			—		—		—
Exercisable at August 31, 2019										—			—		—		—

No stock options were granted during the ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 and ~~November 30, 2016.~~August 31, 2018.

A summary of the stock options exercised and tax benefits realized from stock based compensation is presented below (in thousands):

	Three months ended				Nine months ended				Three months ended				Six months ended
	November 30,				November 30,				August 31,				August 31,
	2017		2016		2017		2016		2019		2018		2019		2018
Total cash received	$	—	$	—	$	—	$	2,910	$	—	$	69	$	—		69
Income tax benefits		—		—		—		—		—		—		—		—
Total grant-date fair value		—		—		—		532		—		345		201		345
Intrinsic value		—		—		—		969		—		534		267		534

~~A summary of the Company’s~~The Company had no unvested stock options outstanding at ~~November 30, 2017 and the changes~~any time during the ~~nine~~six months ended ~~November 30, 2017 are presented below:~~August 31, 2019.

As of November 30, 2017, there was approximately $0.8 million of unrecognized compensation cost related to unvested stock options granted under the Plan. The weighted average remaining requisite service period of the unvested stock options was 0.4 years.

The Company had the following restricted stock ~~grant~~ activity for the ~~nine~~six months ended ~~November 30, 2017:~~August 31, 2019:

				Weighted					Weighted
				Average					Average
	Number of			Grant Date		Number of			Grant Date
	Shares			Fair Value		Shares			Fair Value
Outstanding at March 1, 2017		166,546		$	16.35
Outstanding at March 1, 2019							155,105		$	19.03
Granted		74,900			16.30		66,669			20.41
Terminated		—			—		(3,920	)		17.02
Vested		(88,105	)		15.91		(73,261	)		18.94
Outstanding at November 30, 2017		153,341		$	16.58
Outstanding at August 31, 2019							144,593		$	19.77

As of ~~November 30, 2017,~~August 31, 2019, the total remaining unrecognized compensation cost related to unvested restricted stock granted under the Plan was approximately ~~$1.8~~$2.4 million. The weighted average remaining requisite service period of the unvested restricted stock awards was ~~1.7~~2.0 years.

The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the “Pension Plan”), covering approximately ~~20%~~16% of the Company’s aggregate employees. Benefits are based on years of service and the employee’s average compensation for the highest five compensation years preceding retirement or termination.

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						Nine months ended						Three months ended						Six months ended
	November 30,						November 30,						August 31,						August 31,
	2017			2016			2017			2016			2019			2018			2019			2018
Components of net periodic benefit cost
Service cost	$	271		$	292		$	812		$	875		$	272		$	276		$	544		$	553
Interest cost		567			593			1,702			1,779			563			569			1,127			1,137
Expected return on plan assets		(948	)		(917	)		(2,845	)		(2,749	)		(1,049	)		(1,027	)		(2,099	)		(2,054	)
Amortization of:
Unrecognized net loss		510			671			1,531			2,012			509			512			1,018			1,023
Net periodic benefit cost	$	400		$	639		$	1,200		$	1,917		$	295		$	330		$	590		$	659

The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of ~~ERISA.~~the Employee Retirement Income Security Act of 1974 (“ERISA”). Due to the enactment of the Highway and Transportation Funding Act (HATFA) in August 2014, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a 25-year average of interest rates plus or minus a corridor. The Company’s minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February ~~28, 2018. However,~~29, 2020. Assuming a stable funding status, the Company ~~made~~would expect to make a cash contribution to the Pension Plan of ~~$3.0~~between $1.3 million ~~on December 28, 2017 for~~and $1.5 million during fiscal year ~~2018.~~2020. The Company contributed $3.0 million to the Pension Plan during fiscal year ~~2017.~~2019.

Basic earnings ~~(loss)~~ per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the applicable period. Diluted earnings ~~(loss)~~ per share reflect the potential dilution that could occur if stock options or other contracts to issue common shares were exercised or converted into common stock.

As of August 31, 2019, no options were outstanding. For the three and six months ended ~~November 30, 2017,~~August 31, 2018, all options were included in the diluted earnings per share computation because the average fair market value of the Company’s stock exceeded the exercise price of the options. For the nine months ended November 30, 2017, 42,500 shares related to stock options were not included in the diluted earnings per share computation because the exercise price exceeded the average fair market value of the Company’s stock. For the three and nine months ended November 30, 2016, 95,692 and 42,500 shares related to stock options were not included in the diluted earnings per share computation because the exercise price exceeded the average fair market value of the Company’s stock. The following table sets forth the computation for basic and diluted earnings (loss) per share for the periods indicated:

Three months ended

Nine months ended

November 30,

November 30,

2017

2016

2017

2016

Basic weighted average common shares outstanding

25,360,452

25,673,824

25,387,389

25,802,658

Effect of dilutive options

33,030

9,789

21,870

15,488

Diluted weighted average common shares outstanding

25,393,482

25,683,613

25,409,259

25,818,146

Earnings (loss) per share - basic and diluted

Earnings per share on continuing operations

$
0.33

$
0.22

$
0.97

$
0.74

Earnings per share on discontinued operations

—

—

—

0.10

Loss per share on sale of discontinued operations

—

—

—

(1.01
)
Loss on discontinued operations

—

—

—

(0.91
)
Net earnings (loss)

$
0.33

$
0.22

$
0.97

$
(0.17
)
Cash dividends

$
0.200

$
0.175

$
0.575

$
2.025

	Three months ended				Six months ended
	August 31,				August 31,
	2019		2018		2019		2018
Basic weighted average common shares outstanding		26,029,359		25,671,643		26,034,122		25,510,356
Effect of dilutive options		—		13,871		—		12,475
Diluted weighted average common shares outstanding		26,029,359		25,685,514		26,034,122		25,522,831
Earnings per share
Net earnings - basic	$	0.37	$	0.37	$	0.74	$	0.74
Net earnings - diluted	$	0.37	$	0.37	$	0.74	$	0.74
Cash dividends	$	0.225	$	0.225	$	0.450	$	0.425

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and trade receivables. Cash is placed with high-credit quality financial institutions. The Company believes its credit risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the ~~Consolidated Balance Sheets,~~consolidated balance sheets, the Company maintains an allowance for doubtful receivables to cover the Company’s estimate of credit losses associated with accounts receivable.

The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. While other sources may be available to the Company to purchase these products, they may not be available at the cost or at the quality the Company has come to expect.

For the purposes of the ~~Consolidated Statements~~consolidated statements of ~~Cash Flows,~~cash flows, the Company considers cash to include cash on hand and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At ~~November 30, 2017,~~August 31, 2019, cash balances included ~~$92.0~~$50.2 million that was not federally insured because it represented amounts in individual accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a daily basis. While management does not believe there is significant risk with respect to such deposits, ~~we cannot~~no assurance can be ~~assured~~made that wethe Company will not experience losses on ~~our~~the Company’s deposits.

On ~~December 21, 2017,~~September 20, 2019, the ~~Board~~Company’s board of directors declared a quarterly ~~cash~~ dividend on the Company’s common stock of 2022.5 cents per share, which will be paid on ~~February 9, 2018~~November 8, 2019 to ~~the~~ shareholders of record ~~on January 12, 2018.~~

~~The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017 and is effective for tax years beginning after December 31, 2017. The Company is currently evaluating the impact~~as of the Act on the consolidated financial statements. Management expects the Company’s effective tax rate and net deferred tax liabilities to decrease as a result of the reduction of the corporate tax rate from 35% to 21%, which will be partially offset by the elimination or reduction of certain tax deductions.

In conjunction with the signing of the Act, the Ennis Board of Directors approved a special one-time bonus to more than 2,200 non-management employees in the amount of $500 each. This payment will take place with the first payroll period in January 2018.

In addition, in response to the Act, the Board of Directors declared a special one-time cash dividend of 10 cents per share of our common stock. The dividend will be paid on February 9, 2018 to the shareholders of record on January 12, 2018.October 11, 2019.

Ennis, Inc. (formerly Ennis Business Forms, Inc.) (“we~~” or~~(collectively with its subsidiaries, the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) was organized under the laws of Texas in 1909. The Company and its subsidiaries print and manufacture a broad line of business forms and other business products. We distribute business products and forms throughout the United States primarily through independent dealers. This distributor channel encompasses independent print distributors, commercial printers, direct mail, fulfillment companies, payroll and accounts payable software companies, and advertising agencies, among others. We also sell products to many of our competitors to satisfy their customers’ needs.

On ~~January 27, 2017, we completed~~July 15, 2019, the Company acquired all the outstanding stock of The Flesh Company (“Flesh”) and its wholly owned subsidiary, Impressions Direct, Inc. for approximately $9.9 million (which includes a potential earn-out consideration of up to $500,000) plus the assumption of trade payables, subject to final working capital and certain other adjustments. The earn-out consideration is capped at $500,000 and is payable over the next four years if certain minimum operating income levels are achieved. The goodwill recognized as a part of the acquisition is not deductible for tax purposes. The Company recorded intangible assets with definite lives of ~~Independent Printing~~approximately $1.5 million in connection with the transaction. During the six months ended August 31, 2019, the Company ~~Inc.~~incurred approximately $175,000 of costs (including legal and accounting fees) related to the acquisition. Flesh and its ~~related entities (collectively “~~subsidiary Impressions Direct, is a printing company with two locations. The St. Louis, Missouri location contains their corporate office and the direct mail operations of Impressions Direct, and their Parsons, Kansas location has their main manufacturing facility and warehouse. The acquisition of Flesh, which generated approximately $31.0 million in sales for its fiscal year ended September 30, 2018, expands the Company’s operations for business forms, checks, direct mail services, integrated products and labels.

On March 16, 2019, the Company, through one of its subsidiaries, acquired the assets of Integrated Print & Graphics (“~~Independent~~Integrated”) for ~~$17.7~~$8.9 million in cash plus the assumption of trade payables, subject to certain adjustments. Goodwill of $893,000 recognized as a part of the acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $1.8 million in connection with the transaction. Integrated is located in South Elgin, Illinois and generated approximately $20.0 million in sales for its fiscal year ended December 31, 2018. The acquisition created additional capabilities within the Company’s high color commercial print product line.

On July 31, 2018, the Company issued an aggregate of 829,126 shares of common stock of the Company, par value $2.50 per share, to the former stockholders of Wright Business Forms, Inc., d/b/a Wright Business Graphics (“Wright”), as partial consideration for the acquisition by the Company of all of the outstanding equity interests of Wright pursuant to the Agreement and Plan of Merger, dated July 16, 2018 (the “Merger Agreement”). The Company shares issued to the former stockholders of Wright represented aggregate consideration under the Merger Agreement of approximately $16.2 million at the time of issuance. An additional $19.7 million was paid in cash to the stockholders of Wright, subject to a ~~stock purchase transaction. Independent~~final working capital adjustment, and $2.6 million was paid to pay-off outstanding debt. The goodwill recognized as a part of this merger is not deductible for tax purposes. Wright is a printing company that produces forms, pressure seal, packaging, direct mail, checks, statement processing and commercial printing and sells mainly through distributors and resellers. Wright is headquartered in Portland, Oregon and has 4additional locations in ~~Wisconsin, with its main facility located in DePere, Wisconsin. The business produces presentation folders, checks, wide format~~Washington and ~~commercial printing. Independent,~~California. Wright, which generated approximately ~~$37.0~~$58.0 million in ~~unaudited~~ sales ~~during calendar~~for its fiscal year ~~2016, will continue~~ended March 31, 2018, continues to operate under its brand names. ~~Independent sells mainly through distributors~~

On April 30, 2018, we acquired the assets of Allen-Bailey Tag & Label (“ABTL”), a tag and ~~resellers. With this acquisition, we now have 4 folder facilities~~label operation located in ~~Michigan, Kansas, California and Wisconsin, as well as wide format capabilities~~New York, for $4.7 million in ~~Colorado and Wisconsin.~~

~~On May 25, 2016~~cash plus the ~~Company sold its apparel operations conducted by Alstyle Apparel, LLC and its subsidiaries (the “Apparel Segment”) to Gildan Activewear Inc. for an all-cash purchase price~~assumption of ~~$110.0 million,~~trade payables, subject to a working capital ~~adjustment, customary indemnification arrangements, and the other terms~~adjustment. In addition, contingent consideration of ~~the Unit Purchase Agreement dated May 4, 2016.~~

~~During the fourth quarter of fiscal year 2016, we moved our folder operations from Omaha, Nebraska~~up to ~~Columbus, Kansas, due~~$500,000 is payable to the ~~landlord’s desire to sell the facility. The move and inefficiencies associated with starting-up and training new employees had a negative impact on revenues and operational margins~~sellers if certain sales levels are maintained over the first half of fiscal year 2017. However, during the second half of fiscal year 2017 we saw a turnaround and the operations were marginally profitable. We have continued to see this momentum carry over into this fiscal year. In addition, our medical claims during fiscal year 2017 exceeded historical levels, which resulted in us incurring an additional $4.3next three years. ABTL generated approximately $12.0 million in ~~increased medical charges that had a negative impact on our earnings. To mitigate further medical charges, we implemented a new cost reimbursement program, as well as other changes~~sales for the twelve months ended December 31, 2017. Management considers this acquisition to our health plan, as of the start of the calendar year 2017. Initial indications through the current fiscal year have been positive. While we are still in the early stages of this program and actual cost savings may vary from anticipated levels, we continue to believe that our future medical claims expenses will trend more in line with historical levels.be immaterial.

Our management believes we are the largest provider of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders to independent distributors in the United States.

We are in the business of manufacturing, designing, and selling business forms and other printed business products primarily to distributors located in the United States. We operate 5963 manufacturing plants throughout the United States in 21 strategically located states. Approximately 95% of the business products ~~manufactured~~we manufacture are custom and semi-custom products, 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 Business Forms®, Block Graphics®, Specialized Printed Forms®, 360º Custom Labels^SM, ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad Concepts^SM, FormSource Limited^SM, Star Award Ribbon Company®, Witt Printing®, B&D Litho®, Genforms®, ~~PrintGraphics~~^SMPrintGraphics®, Calibrated Forms®, ~~PrintXcel~~^SMPrintXcel®, Printegra®~~, Curtis Business Forms~~^SM, Falcon Business Forms^SM, Forms Manufacturers^SM, Mutual ~~Graphics~~^SMGraphics®, TRI-C Business Forms^SM, Major Business Systems^SM, Independent Printing^SM, ~~and~~ Hoosier Data Forms®, Hayes Graphics®, Wright Business Graphics^SM, Wright 360^SM, Integrated Print & Graphics^SM, and the Flesh Company^SM. We also sell 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®, Folder Express®, and Independent Folders® brands (which provide presentation folders and document folders); Ennis Tag & Label^SM (which provides custom printed, high performance labels and custom and stock tags); Allen-Bailey Tag & Label^SM, Atlas Tag & Label®, Kay Toledo Tag®, and Special Service Partners® (SSP) (which provides custom and stock tags and labels); Trade Envelopes®, Block Graphics®, Wisco®, and National Imprint Corporation® (which provide custom and imprinted envelopes) and Northstar® and General Financial Supply® (which provide financial and security documents).

We sell predominantly through private printers and independent distributors, as well as to many of our competitors. Northstar Computer Forms, Inc., a wholly-owned subsidiary, also sells direct to a small number of customers, generally large banking organizations (where a distributor is not acceptable or available to the end-user). Adams McClure, LP, a wholly-owned subsidiary, also sells direct to a small number of customers, where sales are generally through advertising agencies.

The printing industry generally sells its products either ~~through sales made predominantly~~directly to end users, a market dominated by a few large manufacturers, such as R.R. Donnelley and Sons, Staples, Inc., Standard Register Co. (a subsidiary of Taylor Corporation), and Cenveo, Inc., or, like the Company, through a variety of independent distributors and distributor groups. While it is not possible, because of the lack of adequate public statistical information, to determine the Company’s share of the total business products market, management believes the Company is the largest producer of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders in the United States distributing primarily through independent dealers.

There are a number of competitors that operate in this segment, ranging in size from single employee-owned operations to multi-plant organizations. We believe our strategic locations and buying power permit us to compete on a favorable basis within the distributor market on competitive factors, such as service, quality, and price.

Distribution of business forms and other business products throughout the United States is primarily done through independent dealers, including business forms distributors, resellers, direct mail, commercial printers, payroll and accounts payable software companies, and advertising agencies.

Raw materials principally consist of a wide variety of weights, widths, colors, sizes, and qualities of paper for business products purchased primarily from ~~generally~~ one major supplier at favorable prices based on the volume of business.

Business products usage in the printing industry is generally not seasonal. General economic conditions and contraction of the traditional business forms industry are the predominant factors in quarterly volume fluctuations.

We are engaged in an industry ~~undergoing significant changes, including~~experiencing consolidation of some of our traditional channels, product obsolescence, paper supplier capacity adjustments, and ~~expansion of commodity materials to our competition, as well as cheaper material imports~~increased pricing and potential supply allocations due to ~~the strong dollar.~~demand/supply curve imbalance. Technology advances have made electronic distribution of documents, internet hosting, digital printing and print-on-demand valid, cost-effective alternatives to traditional custom-printed documents and customer communications. Improved equipment has become more accessible to our competitors due to the continued low interest rate environment. We face highly competitive conditions throughout the supply chain in an already over-supplied, price-competitive print industry. The challenges of our business include the following:

Transformation of our portfolio of products –While traditional business documents are essential in order to conduct business, many are being replaced through the use of cheaper paper grades or imported paper, or devalued with advances in digital technologies, causing steady declines in demand for a portion of our current product line. Transforming our product offerings in order to continue to provide innovative, valuable solutions through lower labor and fixed charges to our customers on a proactive basis will require us to make investments in new and existing technology and to develop key strategic business relationships, such as print-on-demand services and product offerings that assist customers in their transition to digital business environments. In addition, we will continue to look for new market opportunities and niches through acquisitions, such as the addition of our envelope offerings, tag offerings, folder offerings, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document solutions, innovative in-mold label offerings and long-run integrated products with high color web printing, which provide us with an opportunity for growth and differentiate us from our competition.

Production capacity and price competition within our industry – ~~Due to~~For fiscal year 2019, the ~~number~~weakening of ~~paper mills worldwide, some paper pricing has been and is expected to remain fairly weak. The strong~~the U.S. dollar during the latter portion of fiscal year 2018 and first half of fiscal year 2019 resulted in the year attracted cheaper material into the United States notwithstanding the trade tariffs imposed, which has impaired the price advantage larger suppliers have held over smaller competitors and helped to maintain pricing. However, with the subsequent weakeningdissipation of the ~~dollar, the price~~pricing advantage ofthat foreign imports ~~has for the most part dissipated and resulted~~had over domestic suppliers, which in turn led to lower volumes of imported ~~paper. This,~~paper and an increase in domestic exports. During this same period, significant capacity left the market, whether planned (i.e., switching of products to alternative paper products) or unplanned (i.e., bankruptcy). Consequently, even with shrinking demand, a supply/demand imbalance resulted during fiscal year 2019, with most mills running in excess of 90% of capacity across all grades. Given these levels, consistent with historical practice, suppliers raised prices multiple times during fiscal year 2019 across all facets of the manufacturing process, from raw materials to supplies. Additionally, some paper grades during fiscal year 2019 were placed on allocations given the tight supply environment. Given our long-term relationship with our major paper supplier, our financial strength and our size, we were able to avoid material disruptions in our supply chain during fiscal year 2019.

For fiscal year 2020, with the ~~shrinking~~strengthening of ~~some~~the U.S. dollar, imports are flowing back into the domestic ~~mill capacity, has allowed domestic producers to announce price increases across all paper grades. Even~~marketplace. This development, along with ~~the shrinking~~continued slowing of domestic ~~capacity and lower imports, most reports still indicate there to be an imbalance~~demand, has resulted in renewed marketing of certain paper grades that previously had been placed on allocation. Historically, this would result in the ~~domestic marketplace for most grades due~~normalization of pricing and costs, which is beginning to ~~lower demand. Therefore, it is too early~~appear to ~~tell whether or not these announced price increases will truly stick and have to be passed on to~~some degree in the marketplace. ~~In the past, the Company has been fairly successful in passing increases through~~However, regardless of these factors, many of which are cyclical, we intend to ~~the marketplace over time. We will~~ continue to focus ~~our efforts~~ on effectively managing and controlling our product costs, ~~to minimize these effects on our operational results, primarily~~ through the use of forecasting, production and costing models, as well as working

closely with our domestic suppliers to reduce our procurement ~~costs. We~~costs, in order to minimize effects on our operational results. In addition, we will continue to look for ways to reduce ~~as well as~~and leverage our fixed costs. ~~As always, some of these negative factors are cyclical and we will continue to focus on maintaining our margins when these negative factors swing the other way.~~

Continued consolidation of our customers – Our customers ~~who~~ are distributors, many of which are consolidating or are being acquired by competitors. ~~As such, they~~Some customers may demand better pricing and services, ~~or they are required~~and other customers may be forced to relocate their business to their new parent company’s manufacturing facilities. ~~While we~~We continue to maintain a majority of ~~this~~the historical business of these customers, but it is possible that these consolidations and acquisitions, which we expect to continue in the future, ultimately will impact our margins and ~~our~~ sales.

You should read this discussion and analysis in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this ~~Report.~~report. All of the statements in this ~~Report,~~report, other than historical facts, are forward-looking statements, including, without limitation, the statements made in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” particularly under the caption “Overview.” As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations, and beliefs relating to matters that are not historical in nature. The words “could,” “should,” “feel,” “anticipate,” “aim,” “preliminary,” “expect,” “believe,” “estimate,” “intend,” “intent,” “plan,” “will,” “foresee,” “project,” “ forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to its operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements.

These statements reflect the current views and assumptions of management with respect to future events. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

We believe these forward-looking statements are based upon reasonable assumptions. All such statements involve risks and uncertainties, and as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and unknown risks, including but not limited ~~to,~~to: general economic, business and labor conditions and the potential impact on our operations; our ability to implement our strategic initiatives and control our operational costs; dependence on a limited number of key suppliers; our ability to recover the rising cost of raw materials and other costs (i.e., energy, freight, labor, benefit costs, etc.) in markets that are highly price competitive and volatile; our ability to timely or adequately respond to technological changes in the industry; the impact of the Internet and other electronic media on the demand for forms and printed materials; the impact of foreign competition; changes in economic conditions; customer credit risk; competitors’ pricing strategies; a decline in business volume and profitability could result in an impairment in our reported goodwill negatively impacting our operational results; our ability to retain key management personnel; our ability to identify, manage or integrate acquisitions; our ability to protect our information systems from cybercrime or other disruptions; and changes in government regulations. In addition to the factors indicated above, you should carefully consider the risks described in and incorporated by reference herein and in the risk factors in our Annual Report on Form 10-K for the fiscal year ended February 28, ~~2017~~2019 before making an investment in our common stock.

In preparing our consolidated financial statements, we are required to make estimates and assumptions that affect the disclosures and reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and judgments on an ongoing basis, including those related to allowance for doubtful receivables, inventory valuations, property, plant and equipment, intangible assets, pension plan obligations, accrued liabilities and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We believe our accounting policies related to the aforementioned items are the most critical due to their effect on our more significant estimates and judgments used in preparation of our consolidated financial statements. For additional information, reference is made to the Critical Accounting Policies and Estimates section of our Annual Report on Form 10-K for the fiscal year ended February 28, ~~2017.~~2019.

The discussion that follows provides information which we believe is relevant to an understanding of our results of operations and financial condition. The discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto, which are incorporated herein by reference. Unless otherwise indicated, this financial overview is for the continuing operations of the Company, which are comprised of the production and sales of business forms and other business products, and exclude the discontinued operations of the Apparel Segment. The operating results of the Company for the three and ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 and the comparative ~~periods~~period for ~~2016~~2018 are set forth in the unaudited consolidated financial information included in the tables below.

Unaudited Consolidated Statements of

Three Months Ended November 30,

Nine Months Ended November 30,

Operations - Data (Dollars in thousands, except per share amounts)

2017

2016

2017

2016

Net sales

$
93,606

100.0
%

$
88,660

100.0
%

$
283,083

100.0
%

$
270,316

100.0
%
Cost of goods sold

63,722

68.1

63,368

71.5

192,493

68.0

191,292

70.8

Gross profit margin

29,884

31.9

25,292

28.5

90,590

32.0

79,024

29.2

Selling, general and administrative

16,699

17.8

15,833

17.8

51,167

18.1

47,961

17.7

(Gain) loss from disposal of assets

(4
)

—

264

0.3

59

—

266

0.1

Income from operations

13,189

14.1

9,195

10.4

39,364

13.9

30,797

11.4

Other expense, net

(55
)

(0.1
)

(84
)

(0.1
)

(319
)

(0.1
)

(313
)

(0.1
)
Earnings from continuing operations
   before income taxes

13,134

14.0

9,111

10.3

39,045

13.8

30,484

11.3

Provision for income taxes

4,860

5.2

3,371

3.8

14,447

5.1

11,277

4.2

Earnings from continuing operations

8,274

8.8
%

5,740

6.5
%

24,598

8.7
%

19,207

7.1
%
Income from discontinued operations, net
   of tax

—

—

—

—

—

—

2,481

0.9

Loss on sale of discontinued operations,
   net of tax

—

—

—

—

—

—

(26,042
)

(9.6
)
Earnings (loss) from discontinued
   operations, net of tax

—

—

—

—

—

—

(23,561
)

(8.7
)
Net earnings (loss)

$
8,274

8.8
%

$
5,740

6.5
%

$
24,598

8.7
%

$
(4,354
)

-1.6
%

Earnings (loss) per share - diluted

Continuing operations

$
0.33

$
0.22

$
0.97

$
0.74

Discontinued operations

—

—

—

0.10

0.33

0.22

0.97

0.84

Sale of discontinued operations

—

—

—

(1.01
)

Net earnings (loss)

$
0.33

$
0.22

$
0.97

$
(0.17
)

Unaudited Consolidated Statements of	Three Months Ended August 31,									Six Months Ended August 31,
Operations - Data (in thousands)	2019				2018					2019				2018
Net sales	$	108,816	100.0	%	$	98,591		100.0	%	$	216,849	100.0	%	$	192,010		100.0	%
Cost of goods sold		76,358	70.2			68,268		69.2			151,695	70.0			131,496		68.5
Gross profit margin		32,458	29.8			30,323		30.8			65,154	30.0			60,514		31.5
Selling, general and administrative		19,644	18.1			17,567		17.9			39,347	18.1			35,302		18.4
Gain from disposal of assets		—	—			(2	)	—			—	—			(6	)	—
Income from operations		12,814	11.7			12,758		12.9			25,807	11.9			25,218		13.1
Other income (expense)		68	0.1			(2	)	—			91	—			(133	)	—
Earnings before income taxes		12,882	11.8			12,756		12.9			25,898	11.9			25,085		13.1
Provision for income taxes		3,349	3.0			3,189		3.2			6,733	3.1			6,271		3.3
Net earnings	$	9,533	8.8	%	$	9,567		9.7	%	$	19,165	8.8	%	$	18,814		9.8	%

~~Three months ended November 30, 2017 compared to three months ended November 30, 2016~~

~~Net Sales.~~ Our net sales were $93.6 million for the quarter ended November 30, 2017, compared to $88.7 million for the same quarter last year, or an increase of $4.9 million, or 5.5%. The market continues to be fairly soft with competitive pricing pressures. However, the current reversal of some of the dollar’s strength has made domestic paper production more attractive. This factor, along with the shrinking of some domestic mill capacity, has resulted in the announcement of some recent paper price increases. It is still too early to tell whether or not these will stick and be passed through to the marketplace. If so, this may offset some of the normal industry sales attrition expected in the marketplace. The acquisition of Independent, which was completed in January 2017 and which is an integral part of our strategy to offset normal industry revenue declines due to print attrition and other changes, contributed $9.8 million in net sales during the three months ended November 30, 2017.

Three months ended August 31, 2019 compared to three months ended August 31, 2018

Net Sales. Our net sales were $108.8 million for the quarter ended August 31, 2019, compared to $98.6 million for the same quarter in the prior year, or an increase of $10.2 million, or 10.3%. Recent increases in foreign imports, due to the strengthening of the U.S. dollar, unseasonal weather conditions in parts of the country and current domestic pricings levels, continues to provide the elements for a challenging marketplace. The acquisitions of Wright (completed in July 2018), Integrated (completed in March 2019) and Flesh (completed in July 2019) are integral parts of our strategy to offset on going technological disruption and other changes. Our acquisitions impacted our net sales by approximately $16.6 million during the three months ended August 31, 2019.

Cost of Goods Sold. Our cost of goods sold increased $8.1 million from $68.3 million for the three months ended August 31, 2018 to $76.4 million for the three months ended August 31, 2019, or 11.9%. Our gross profit margin (“margin”) was $32.5 million for the quarter, or 29.8% of net sales, compared to $30.3 million, or 30.8% of net sales, for the same quarter in the prior year. Our margins continue to be primarily impacted by the dilutive impact of the acquisitions completed in the last year. Without the impact of these acquisitions, the margin of our organic plants continues to be above 31.5%, which is comparable to historical levels. Once we have the opportunity to fully integrate these acquisitions into our business cost structure and implement our costs systems, we believe margins will improve to normal levels. In addition, on a comparative quarter basis, our medical expenses impacted our margin by approximately $1.3 million.

Selling, general, and administrative expense. For the three months ended August 31, 2019, our selling, general, and administrative (“SG&A”) expenses were $19.6 million compared to $17.6 million for the three months ended August 31, 2018, an increase of $2.0 million, or 11.4%. As a percentage of net sales, SG&A expenses were 18.1% and 17.9% for the three months ended August 31, 2019 and August 31, 2018, respectively. The increase to SG&A expenses relates to the acquisitions completed during the prior twelve months, which impacted such expenses by approximately $2.3 million, and the Company’s payment of interest on a settlement awarded in connection with the sale of the Company’s former apparel operations, which impacted such expenses by approximately $325,000.

Gain from disposal of assets. The $2,000 net gain from disposal of assets during the prior year’s quarter is primarily attributed to the sale of manufacturing equipment.

Income from operations. Our income from operations for the three months ended August 31, 2019 was $12.8 million, or 11.7% of net sales, as compared to $12.8 million, or 12.9% of net sales, for the three months ended August 31, 2018. Our acquisitions impacted our operational income by $1.1 million during the quarter.

Other income (expense). Other income was $68,000 for the three months ended August 31, 2019 compared to $2,000 expense for the three months ended August 31, 2018. During the current quarter, due to our cash balance, our interest income was higher than our interest expense.

Provision for income taxes. Our effective tax rate was 26.0% for the three months ended August 31, 2019 as compared to 25.0% for the three months ended August 31, 2018. The slight increase in our overall tax rate this year as compared to last is due to an increase in our overall expected state tax rate due to changes in state apportionment.

Net earnings. Net earnings, due to the factors above, were $9.5 million for the three months ended August 31, 2019 as compared to $9.6 million for the comparable quarter in the prior year, a slight decrease of 1.0%. Net earnings per diluted share for the three months ended August 31, 2019 was $0.37, compared to $0.37 for the same quarter in the prior year. The additional medical and interest expenses negatively impacted net earnings in the current quarter by $1.35 million, or $0.05 per diluted share.

Net Sales. Our net sales were $216.8 million for the six month period ended August 31, 2019, compared to $192.0 million for same period last year, or an increase of 12.9%. Recent increases in foreign imports, due to the strengthening of the U.S. dollar, unseasonal weather conditions in parts of the country and current domestic pricings levels, continues to provide the elements for a challenging marketplace. Our acquisitions impacted our net sales by approximately $35.4 million during the six months ended August 31, 2019.

Cost of Goods Sold. Our cost of goods sold ~~increased slightly by $0.3 million from $63.4~~was $151.7 million for the ~~three~~six months ended ~~November 30, 2016 to $63.7 million for the three months ended November 30, 2017, or 0.5%. Our gross profit margin (“margin”) was $29.9 million for the quarter, or 31.9% of net sales,~~August 31, 2019, compared to $25.3 million, or 28.5% of net sales, for the same quarter last year. During the third quarter of fiscal 2017 our margin was negatively impacted by increased medical expenses of approximately $1.4 million.

~~Selling, general, and administrative expense.~~ ~~For the three months ended November 30, 2017, our selling, general, and administrative (“SG&A~~”) expenses were $16.7 million compared to $15.8 million for the three months ended November 30, 2016, or an increase of 5.7%. As a percentage of net sales, the SG&A expenses were 17.8% and 17.8% for the three months ended November 30, 2017 and November 30, 2016, respectively. The acquisition of Independent added $2.0 million in SG&A expenses during the quarter, or 20.2% of its respective net sales. As we continue to integrate this acquisition into our culture and systems, we will continue to look for ways to reduce these expenses to be more in line with our historical SG&A percentage. In addition to the foregoing, the Company changed its accounting practice for handling its trademarks/trade names from an indefinite life to a finite life method. This change in accounting method added approximately $0.2 million to SG&A expense during the current quarter.

~~(Gain) loss from disposal of assets.~~ The $4,000 net gain from disposal of assets during the quarter related primarily to the sale of manufacturing equipment. The $0.3 million net loss during the same quarter last year related primarily to the $0.5 million loss on the sale of an unused manufacturing facility and its associated property offset by a $0.2 million gain on the sale a second unused manufacturing facility and equipment.

~~Income from operations.~~ As a result of the above factors, our income from operations for the three months ended November 30, 2017 was $13.2 million, or 14.1% of net sales, as compared to $9.2 million, or 10.4% of net sales, for the three months ended November 30, 2016. The acquisition of Independent contributed approximately $1.3 million of income during the third quarter of this fiscal year.

~~Other expense.~~ ~~Other expense was $0.1 million for the three months ended November 30, 2017 and November 30, 2016.~~

~~Provision for income taxes.~~ ~~Our effective tax rate for operations was 37.0% for the three months ended November 30, 2017 and November 30, 2016.~~

~~Net earnings.~~ Earnings from operations were $8.3 million for the three months ended November 30, 2017 as compared to $5.7 million for the comparable quarter last year, an increase of 45.6%. Earnings from operations per diluted share for the three months ended November 30, 2017 was $0.33, compared to $0.22 for the same quarter last year. There were no discontinued operations during the three months ended November 30, 2017 and November 30, 2016.

~~Nine months ended November 30, 2017 compared to nine months ended November 30, 2016~~

~~Net Sales.~~ Our net sales were $283.1 million for the nine month period ended November 30, 2017, compared to $270.3 million for same period last year, or an increase of 4.7%. The market continues to be fairly soft with competitive pricing pressures which intensified with the influx of cheaper off-shore paper coming into the United States during the first half of the year. However, the current reversal of some of the dollar’s strength has made domestic paper production more attractive. This, with the shrinking of some domestic mill capacity, has resulted in the announcement of some recent paper price increases. It is still too early to tell whether or not these announced increases will stick and be passed through to the marketplace. If so, this may offset some of the normal industry sales attrition expected in the marketplace. The acquisition of Independent in January of 2017, which is an integral part of our strategy to offset normal industry revenue declines, contributed $29.9 million in net sales during the nine months ended November 30, 2017.

~~Cost of Goods Sold.~~ ~~Our cost of goods sold was $192.5 million for the nine months ended November 30, 2017, compared to $191.3~~$131.5 million for the same period last year, ~~a slight~~an increase of ~~$1.2~~$20.2 million, or ~~0.6%~~15.4%. Our margin was ~~$90.6~~$65.2 million for the ~~nine~~six month period ended ~~November 30, 2017,~~August 31, 2019, or ~~32.0% of net sales, compared~~30.0%. This compares to ~~$79.0 million, or 29.2% of net sales,~~31.5% for the same ~~nine~~six month period last year. ~~For~~Our margin during the ~~same nine month~~ period continues to be impacted for the most part by the dilutive impact of the acquisitions completed in the last year ~~our margin was negatively~~and to a lesser extent to the numerous raw material price increases taken last year. During the last year, tight supply conditions allowed for multiple price increases on raw materials, as well as other items in the manufacturing process. Historical price increases were less frequent, which allowed manufacturers the ability to pass the required pricing adjustments through to the marketplace in a timely manner. However, the size and number of increases have impacted bymanufacturers’ abilities to timely pass these price adjustments to the end-users. These price increases will continue to have a negative impact on margins until they are able to be passed through to the marketplace, or costs ~~associated~~decline. Recently, due to current pricing levels and the strengthening of the U.S. dollar, the environment has once again been attractive for imports and they have more than filled any vacuum in the supply chain. This historically has led to some normalization/stability in the marketplace. However, with the ~~move~~recent ownership change in several larger domestic mills, this historical pendulum swing in pricing may not occur. As mentioned earlier, the acquisitions completed during the past year have had a dilutive impact on our margins. Without the impact of these acquisitions, the margins from our ~~folder operations in Nebraska~~organic plants continued to ~~Kansas. The start-up training process~~be above 31.5% during the period, comparable to historical levels. Once we have the opportunity to fully analyze the business cost structure and implement our costs systems, we believe margins at the recently acquired plants will improve to normal levels. Our margins were also impacted for the ~~labor force decreased efficiencies, thereby decreasing~~six months by our ~~sales and negatively impacting our margins for the nine months ended November 30, 2016 by an estimated $3.0 million for the period. In addition, we incurred additional~~comparatively high medical expenses ~~due to our medical claims exceeding our historical levels~~ during ~~our~~the second ~~and third quarters; this impacted our margin for the nine months ended November 30, 2016 by approximately $2.9 million.~~quarter.

Selling, general, and administrative expense. Our SG&A expenses were ~~$51.2~~$39.3 million for the ~~nine~~six months ended ~~November 30, 2017,~~August 31, 2019, compared to ~~$48.0~~$35.3 million for the same period last year, or an increase of ~~6.7%~~11.3%. As a percentage of ~~net~~ sales, the SG&A expenses were 18.1% and ~~17.7%~~18.4% for the ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 and ~~November 30, 2016,~~August 31, 2018, respectively. The ~~acquisition~~acquisitions of ~~Independent added $6.3 million in~~Wright, Integrated and Flesh impacted our SG&A expenses by $4.7 million during the ~~nine~~six month period ended November 30, 2017, or 21.2% of its respective net sales. As we continue to integrate this acquisition into our culture and systems, we will continue to look for ways to reduce these expenses to be more in line with our historical SG&A percentage. In addition to the foregoing, the Company changed its accounting practice for handling its trademarks/trade names from an indefinite life to a finite life method. This change in accounting method added approximately $0.6 million to SG&A expense during the nine month period ended November 30, 2017.August 31, 2019.

~~Loss~~Gain from disposal of assets. The ~~$59,000~~$6,000 net ~~loss~~gain from disposal of assets during the ~~nine~~six months ended ~~November 30, 2017 related~~August 31, 2018 is primarily attributed to the sale of manufacturing equipment. The $0.3 million net loss from disposal of assets during the nine months ended November 30, 2016 resulted primarily from the $0.5 million loss on the sale of an unused manufacturing facility and its associated property offset by a $0.2 million gain from the sale of a second unused manufacturing facility and equipment.

Income from operations. Our income from continuing operations for the ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 was ~~$39.4~~$25.8 million, or ~~13.9%~~11.9% of ~~net~~ sales, as compared to ~~$30.8~~$25.2 million, or ~~11.4%~~13.1% of ~~net~~ sales, for the ~~nine~~six months ended ~~November 30, 2016.~~August 31, 2018. The ~~acquisition of Independent contributed approximately $4.2 million of income~~acquisitions, during the ~~current nine month period.~~period impacted our operating income by approximately $2.7 million.

Other ~~expense.~~income (expense). Other ~~expense was $0.3 million~~income for the ~~nine~~six months ended ~~November 30, 2017 and November 30, 2016.~~August 31, 2019 was $0.1 million as compared to $0.1 million expense for the six months ended August 31, 2018. During the current quarter, due to our cash balance, our interest income was higher than our interest expense.

Provision for income taxes. Our effective tax rate was 26.0% for ~~continuing operations was 37.0% for both~~ the ~~nine~~six months ended ~~November 30, 2017 and~~August 31, 2019 as compared to 25.0% for the ~~nine~~six months ended ~~November 30, 2016.~~August 31, 2019. The slight increase in our overall tax rate this year as compared to last is due to an increase in our overall expected state tax rate due to changes in state apportionment.

Net earnings. Net earnings ~~(loss).~~ ~~Earnings from continuing operations~~ were ~~$24.6~~$19.2 million for the ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 as compared to ~~$19.2~~$18.8 million for the comparable period last year, an increase of ~~$5.4~~$0.4 million. ~~Earnings from continuing operations~~Net earnings per diluted share for the ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 was ~~$0.97,~~$0.74, compared to $0.74 for the same ~~nine~~six month period last year. ~~There were no discontinued operations during~~The additional medical and interest expenses negatively impacted net earnings in the ~~nine months ended November 30, 2017, compared to a net loss from discontinued operations of ($0.91)~~current period by $1.35 million, or $0.05 per diluted share in the same nine month period last year. Overall, the Company realized a net profit of $0.97 per diluted share for the nine months ended November 30, 2017 compared to a net loss of ($0.17) per diluted share for the nine months ended November 30, 2016.share.

We rely on our cash flows generated from operations and the borrowing capacity under our credit facility extended pursuant to our Second Amended and Restated Credit Agreement, as amended from time to time (the “Credit Facility”), to meet cash requirements of our business. The primary cash requirements of our business are payments to vendors in the normal course of business, capital expenditures, debt repayments and related interest payments, contributions to our ~~pension~~noncontributory defined benefit retirement plan, which covers approximately 16% of our aggregate employees (the “Pension Plan”), and the payment of dividends to our shareholders. We expect to generate sufficient cash flows from operations supplemented by our Credit Facility as required to cover our operating and capital requirements for the foreseeable future.

Working Capital. Our working capital ~~increased $16.3~~decreased $35.9 million or ~~13.7%~~26.7%, from ~~$119.3~~$134.5 million at February 28, ~~2017~~2019 to ~~$135.6~~$98.7 million at November 30, 2017. Our working capital was impacted primarily by an increase in our cash of $12.5 million, an increase in our receivables of $1.0 million and a reduction of our current liabilities of approximately $3.0 million.August 31, 2019. Our current ratio, calculated by dividing our current assets by our current liabilities, ~~increased~~decreased from ~~5.0~~5.3 to 1.0 at February 28, ~~2017~~2019 to ~~6.0~~3.6 to 1.0 at ~~November 30, 2017.~~August 31, 2019. Our working capital and current ratio were negatively impacted by the repayment of long-term debt of $30.0 million, an increase in our accounts payable of $4.2 million and the adoption of accounting pronouncement ASC 842 which increased our current liabilities by $5.3 million.

	Nine months ended November 30,						Six months ended August 31,
(Dollars in thousands)	2017			2016			2019			2018
Net cash provided by operating activities	$	33,818		$	42,560		$	27,718		$	24,250
Net cash provided by (used in) investing activities	$	(3,406	)	$	104,919
Net cash used in investing activities							$	(20,264	)	$	(29,575	)
Net cash used in financing activities	$	(17,948	)	$	(67,571	)	$	(43,396	)	$	(11,422	)

Cash flows from operating activities. Cash provided by operating activities ~~decreased~~increased by ~~$8.7~~$3.5 million from ~~$42.6~~$24.3 million for the ~~nine~~six months ended ~~November 30, 2016~~August 31, 2018 to ~~$33.8~~$27.7 million for the ~~nine~~six months ended ~~November 30, 2017.~~August 31, 2019. Our ~~decreased~~increased operational cash flows in comparison to the comparable period ~~last~~in the prior year was primarily the result of ~~four~~two factors: ~~(i)~~i) a $2.8 million decrease in ~~operating~~our accounts receivable, and ii) a $2.1 million decrease in our inventories. These increases in our cash ~~flows from the recognition of~~were offset by a ~~pre-tax loss of $36.8~~$3.2 million ~~of our former Apparel Segment that was sold in the first quarter of last fiscal year, (ii) increased earnings of $29.0 million, (iii) an~~ increase ~~of $1.7 million~~ in our prepaid expenses and income ~~taxes, and (iv) a decrease in our receivables by $2.2 million.~~taxes.

Cash flows from investing activities. Cash ~~provided by (used in)~~used in investing activities decreased ~~$108.3~~$9.3 million from ~~$104.9~~29.6 million ~~provided~~ to ~~$3.4~~$20.3 million used for the ~~nine~~six months ended ~~November 30, 2016~~August 31, 2018 and ~~November 30, 2017,~~August 31, 2019, respectively. This was primarily due to ~~the net proceeds of $107.4~~$1.0 million ~~from the sale of the Apparel Segment which took place on May 25, 2016, offset by $0.4 million more in cash~~less used for ~~the acquisition of businesses. In addition, during the nine months ended November 30, 2017 we used $2.1 million in cash on~~ capital expenditures ~~compared~~as well as $8.3 million less used in our acquisitions of Integrated and Flesh in the current period in comparison to ~~$1.9 million during~~the acquisitions of ABTL and Wright in the same period last fiscal year.

Cash flows from financing activities. We used ~~$49.6~~$32.0 million ~~less~~more in cash from financing activities ~~this period than~~ during the six months ended August 31, 2019 compared to the same period in the prior year. We used $30.0 million to pay long-term debt in the current period, but paid no long-term debt in the comparable period last year. We used $10.0 million in cash during the comparable period last year to pay down our debt, compared to no repayment of debt in this period. We used $52.7 million last year to pay dividends which included a special one-time dividend of $1.50 per share that was paid as a result of the sale of the Apparel Segment, whereas we used $14.6 million to pay dividends this year. We used $3.3$1.6 million to repurchase our common stock under our stock repurchase program during the ~~nine~~six months ended ~~November 30, 2017,~~August 31, 2019, whereas we used ~~$7.8~~$0.7 million to repurchase shares of our common stock during the ~~nine~~six months ended ~~November 30, 2016.~~August 31, 2018. In addition, ~~we received $2.9~~$0.9 million ~~from~~more was used to pay dividends during the ~~exercise of stock options in~~six months ended August 31, 2019 as compared to the ~~comparable period last year, whereas in this period no stock options were exercised.~~six months ended August 31, 2018.

Credit Facility. The Company’s Credit Facility, ~~extended to the Company until~~with a scheduled maturity date of August 11, 2020, provides the Company and its subsidiaries with up to $100.0 million in revolving credit, as well as a $20.0 million sublimit for the issuance of letters of credit and a $15.0 million sublimit for swing-line loans. Under the Credit Facility, the Company or any of its subsidiaries ~~also~~ can request up to three increases in the aggregate commitments in an aggregate amount not to exceed $50.0 million. The terms and conditions of the Credit Facility impose certain restrictions on our ability to incur additional debt, make capital expenditures, acquisitions and asset dispositions, as well as impose other customary covenants, such as requiring that our fixed charge coverage ratio not be less than 1.25:1.00 and our total leverage ratio not exceed 3.00:1.00. The Company may make dividends or distributions to shareholders so long as (a) no event of default has occurred and is continuing and (b) the Company’s net leverage ratio both before and after giving effect to any such dividend or distribution is equal to or less than 2.50:1.00. All calculations are made based on GAAP existing at the time the Credit Facility was entered into. As of August 31, 2019, the Company was in compliance with all terms and conditions of the Credit Facility.

The Credit Facility bears interest at the LIBOR rate plus a spread ranging from 1.0% to 2.0%, which rate was ~~2.5%~~3.6% (3 ~~month LIBOR + 1.0%) at November 30, 2017 and 1.86% (2~~ month LIBOR + 1.0%) at February 28, ~~2017.~~2019. The rate is determined by our fixed charge coverage ratio of total funded debt to EBITDA. As of ~~November 30, 2017, we~~August 31, 2019, the Company had ~~$30.0 million of borrowings under~~no outstanding debt, and the ~~revolving credit line and $1.2~~Company had $0.7 million outstanding under standby letters of credit arrangements, leaving approximately ~~$68.8~~$99.3 million available in borrowing ~~capacity.~~capacity under the Credit Facility. The Credit Facility is secured by substantially all of our assets (other than real property), as well as all capital securities of each of our subsidiaries.

It is anticipated that availability under the ~~available line of credit~~Credit Facility is sufficient to cover the Company’s working capital requirements for the foreseeable future, should it be required.

Pension Plan – We are required to make contributions to our Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”). Due to the enactment of the Highway and Transportation Funding Act (HATFA) in August 2014, which effectively raises the discount rates mandated for determining the value of a plan’s benefit liability and annual cost of accruals, our minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February ~~28, 2018. However,~~29, 2020. Assuming a stable funding status, we ~~made a cash contribution~~would expect that our future contributions will be in line with our service costs, which are expected to ~~the Pension Plan of $3.0~~be between $1.3 million ~~on December 28, 2017 for fiscal year 2018.~~and $1.5 million per year. We made contributions totaling $3.0 million to our Pension Plan during fiscal ~~2017.~~year 2019. As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status, associated liabilities recorded and future required minimum contributions. At ~~November 30, 2017,~~August 31, 2019, we had ~~an unfunded~~a net pension ~~liability~~asset recorded on our balance sheet of ~~$4.8~~$0.6 million.

Inventories – We believe our inventory levels are sufficient to satisfy our customer demands and we anticipate having adequate sources of raw materials to meet future business requirements. We have long-term contracts in effect with paper suppliers that govern prices, but do not require minimum purchase commitments. Certain of our rebate programs do, however, require minimum purchase volumes. Management anticipates meeting the required volumes.

Capital Expenditures – We expect our capital requirements for our current fiscal year, exclusive of capital required for possible acquisitions, will be within our historical levels of between $3.0 million and $5.0 million. To date we have spent approximately ~~$2.1~~$1.5 million on capital expenditures. We expect to fund these expenditures through existing cash flows.

Contractual Obligations & Off-Balance Sheet Arrangements – There have been no significant changes in our contractual obligations since February 28, ~~2017~~2019 that have, or are reasonably likely to have, a material impact on our results of operations or financial condition. We had no off-balance sheet arrangements in place as of ~~November 30, 2017.~~August 31, 2019.

Item 3. QUANTITATIVE AND ~~QUALITATIVE~~QUALITATIVE DISCLOSURES ABOUT MARKET RISK

WeFrom time to time, we are exposed to interest rate risk on short-term and long-term financial instruments carrying variable interest rates. We may from time to time utilize interest rate swaps to manage overall borrowing costs and reduce exposure to adverse fluctuations in interest rates. We do not use derivative instruments for trading purposes. ~~Our~~While we had no variable rate financial instruments ~~consisting of the~~ outstanding ~~loans~~at August 31, 2019 given no outstanding debt under the Credit Facility, ~~totaled $30.0 million at November 30, 2017. The annual impact on our results of operations of a one-point~~we will be exposed to interest rate ~~change on~~risk if we borrow under the ~~outstanding balance of~~Credit Facility in the ~~variable rate financial instruments as of November 30, 2017 would be approximately $0.3 million.~~future.

This market risk discussion contains forward-looking statements. Actual results may differ materially from this discussion based upon general market conditions and changes in domestic and global financial markets.

Evaluation of Disclosure Controls and Procedures. A review and evaluation were carried out under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q, pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that review and evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures as of ~~November 30, 2017~~August 31, 2019 are effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and financial officers as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations of control systems, not all misstatements may be detected. Those inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls could be circumvented by the individual acts of some persons or by collusion of two or more people. Our controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.

There ~~were~~have been no changes in our internal control over financial reporting ~~identified~~(as defined in ~~connection with~~Rule 13a–15(f) or Rule 15d–15(f) of the ~~evaluation required by paragraph (d) of~~ Exchange ~~Act Rule 13a-15~~Act) that occurred during ~~our fiscal quarter~~the six months ended ~~November 30, 2017~~August 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There are no material pending proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject.

There have been no material changes in our Risk Factors as previously discussed in our Annual Report on Form 10-K for the year ended February 28, ~~2017.~~2019.

In the 2016 calendar year, the ~~Board~~Company’s board of directors authorized the repurchase of up to an aggregate of $40.0 million of the Company’s stock through the Company’s stock repurchase program. Under the repurchase program, share purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During the ~~nine~~three months ended ~~November 30, 2017,~~August 31, 2019, the Company, under the program, repurchased ~~191,033~~22,013 shares of common stock at an average price of ~~$17.33 per share. Since the program’s inception in October 2008, there have been 1,442,236 common shares repurchased at an average price of $14.99~~$19.68 per share. As of ~~November 30, 2017 there~~August 31, 2019, $11.9 million was ~~$18.4 million~~ available to repurchase shares of the Company’s common stock under the program. ~~Unrelated to the stock repurchase program, the Company purchased 145 shares of its common stock during the nine months ended November 30, 2017.~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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)

Large accelerated filer	☐		Accelerated filer	☒

Non-accelerated filer	☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐

			Emerging growth company	☐

PART I: FINANCIAL INFORMATION

	Item 1. Financial Statements	3

	Unaudited Consolidated Balance Sheets at ~~November 30, 2017~~August 31, 2019 and February 28, ~~2017~~2019	3

	Unaudited Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 and ~~November 30, 2016~~ August 31, 2018	5

	Unaudited Consolidated Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~November 30, 2017~~ August 31, 2019 and ~~November 30, 2016~~August 31, 2018	6

	Unaudited Consolidated ~~Statement~~Statements of Changes in Shareholders’ Equity for the ~~nine~~three and six months ended ~~November 30, 2017~~August 31, 2019 and August 31, 2018	7

	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~November 30, 2017~~August 31, 2019 and ~~November 30, 2016~~August 31, 2018	8

	Notes to Unaudited Consolidated Financial Statements	9

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1921

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	2629

	Item 4. Controls and Procedures	2629

PART II: OTHER INFORMATION

	Item 1. Legal Proceedings	2729

	Item 1A. Risk Factors	2729

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2729

	Item 3. Defaults Upon Senior Securities	2730

	Item 4. Mine Safety Disclosures	2730

	Item 5. Other Information	2730

	Item 6. Exhibits	2830

SIGNATURES		2931

Ennis shares of common stock	$	16,218
Cash		22,653
Purchase price of Wright Business Graphics	$	38,871

	Three months ended		Six months ended
	August 31, 2019
Operating lease cost	$	1,622	$	3,199

Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,617	$	3,186

Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	3,246	$	3,579

Accounts receivable	$	1,971
Inventories		1,322
Other assets		72
Property, plant & equipment		3,828
Right-of-use asset		2,041
Customer lists		896
Trademarks		896
Non-compete		25
Goodwill		893
Accounts payable and accrued liabilities		(1,044	)
Operating lease liability		(2,041	)
	$	8,859

Accounts receivable	$	5,220
Prepaid expenses		427
Inventories		4,365
Other assets		88
Property, plant & equipment		10,331
Non-compete		447
Customer lists		12,900
Trade names		3,830
Goodwill		11,031
Accounts payable and accrued liabilities		(4,226	)
Deferred income taxes		(5,542	)
	$	38,871

Weighted Average Remaining Lease Terms
Operating leases	4 Years

Weighted Average Discount Rate
Operating leases		4.47	%

Sales price	$	110,000
Carrying value of disposed		(130,174	)
Expenses related to sales (1)		(4,365	)
Loss on sale before write-off of foreign currency translation adjustment		(24,539	)
Write-off of foreign currency translation adjustments
recorded in other comprehensive income		(16,109	)
Loss on sale of sale of discontinued operations	$	(40,648	)

	Operating
	Lease
	Commitments
2020 (remaining 6 months)	$	3,170
2021		5,490
2022		4,641
2023		3,845
2024		2,935
2025		2,154
Thereafter		1,498
Total lease payments	$	23,733
Less imputed interest		2,840
Total lease payments	$	20,893

Balance as of March 1, 2016	$	64,537
Goodwill acquired		6,066
Goodwill impairment		—
Balance as of February 28, 2017		70,603
Goodwill acquired		—
Goodwill impairment		—
Balance as of November 30, 2017	$	70,603

Balance as of March 1, 2018	$	70,603
Goodwill acquired		11,031
Balance as of February 28, 2019		81,634
Goodwill acquired		1,316
Balance as of August 31, 2019	$	82,950

Unaudited Consolidated Statements of	Three Months Ended November 30,											Nine Months Ended November 30,
Operations - Data (Dollars in thousands, except per share amounts)	2017						2016					2017					2016
Net sales	$	93,606			100.0	%	$	88,660		100.0	%	$	283,083		100.0	%	$	270,316		100.0	%
Cost of goods sold		63,722			68.1			63,368		71.5			192,493		68.0			191,292		70.8
Gross profit margin		29,884			31.9			25,292		28.5			90,590		32.0			79,024		29.2
Selling, general and administrative		16,699			17.8			15,833		17.8			51,167		18.1			47,961		17.7
(Gain) loss from disposal of assets		(4	)	—				264		0.3			59		—			266		0.1
Income from operations		13,189			14.1			9,195		10.4			39,364		13.9			30,797		11.4
Other expense, net		(55	)		(0.1	)		(84	)	(0.1	)		(319	)	(0.1	)		(313	)	(0.1	)
Earnings from continuing operations before income taxes		13,134			14.0			9,111		10.3			39,045		13.8			30,484		11.3
Provision for income taxes		4,860			5.2			3,371		3.8			14,447		5.1			11,277		4.2
Earnings from continuing operations		8,274			8.8	%		5,740		6.5	%		24,598		8.7	%		19,207		7.1	%
Income from discontinued operations, net of tax		—			—			—		—			—		—			2,481		0.9
Loss on sale of discontinued operations, net of tax		—			—			—		—			—		—			(26,042	)	(9.6	)
Earnings (loss) from discontinued operations, net of tax		—			—			—		—			—		—			(23,561	)	(8.7	)
Net earnings (loss)	$	8,274			8.8	%	$	5,740		6.5	%	$	24,598		8.7	%	$	(4,354	)	-1.6	%

Earnings (loss) per share - diluted
Continuing operations	$	0.33					$	0.22				$	0.97				$	0.74
Discontinued operations		—					—						—					0.10
		0.33						0.22					0.97					0.84
Sale of discontinued operations		—						—					—					(1.01	)
Net earnings (loss)	$	0.33					$	0.22				$	0.97				$	(0.17	)

					Total Number
	Total				of Shares		Maximum Amount
	Number		Average		Purchased as		that May Yet Be Used
	of Shares		Price Paid		Part of Publicly		to Purchase Shares
Period	Purchased		per Share		Announced Programs		Under the Program
September 1, 2017 - September 30, 2017		—	$	—		—	$	18,377,146
October 1, 2017 - October 31, 2017		145	$	20.30		—	$	18,377,146
November 1, 2017 - November 30, 2017		—	$	—		—	$	18,377,146
Total		145	$	20.30		—	$	18,377,146

Exhibit Number		Description

Exhibit 3.1(a)		Restated Articles of Incorporation, as amended through June 23, 1983 with attached amendments dated June 20, 1985, July 31, 1985, June 16, 1988 and November 4, 1998, incorporated herein by reference to Exhibit 3.1(a) to the Registrant’s Form 10-Q filed on October 6, 2017 (File No. 001-05807).

Exhibit 3.1(b)		Amendment to Articles of Incorporation, dated June 17, 2004, incorporated herein by reference to Exhibit 3.1(b) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended February 28, 2007 filed on May 9, 2007 (File No. 001-05807).

Exhibit 3.2		Fourth Amended and Restated Bylaws of Ennis, Inc., dated July 10, 2017, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on July 10, 2017 (File No. 001-05807).

Exhibit 31.1		Certification Pursuant to Rule 13a-14(a) of Chief Executive Officer.*

Exhibit 31.2		Certification Pursuant to Rule 13a-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.**

Exhibit 101		The following information from Ennis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~November 30, 2017,~~August 31, 2019, filed on ~~January 5, 2018,~~October 2, 2019, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.*

		ENNIS, INC.

Date: ~~January 5, 2018~~October 2, 2019		/s/ Keith S. Walters
		Keith S. Walters
		Chairman, Chief Executive Officer and President

Date: ~~January 5, 2018~~October 2, 2019		/s/ Richard L. Travis, Jr.
		Richard L. Travis, Jr.
		Vice President — Finance and CFO, Treasurer and
		Principal Financial and Accounting Officer