ENNIS, INC.

Previous wording

Production capacity and price competition within our industry – Industry supply of paper products is subject to fluctuation as changing industry conditions influence producers to idle or permanently close individual machines or mills, and or convert them to different product lines, such as packaging to offset a decline in demand. In 2022 there was a build-up of paper mill’s customer inventory, and 2023 data showed an inventory correction in reduced spending. Paper mill shipments were down across the board through the first half of 2023 as buyers worked through elevated inventories of their products. Producers responded to the sluggish demand conditions with heavy downtime rather than permanent closures keeping prices mostly stable. While margins remain under pressure due to the resulting weak volumes, we intend to continue to focus on effectively managing and controlling our product costs through the use of forecasting, production and costing models, as well as working closely with our domestic suppliers to reduce our procurement costs, in order to minimize effects on our operational results. In addition, we will continue to look for ways to reduce and leverage our fixed costs and focus on maintaining our margins.

Current wording

Production capacity and price competition within our industry – Industry supply of paper products is subject to fluctuation as changing industry conditions have and will continue to influence producers to idle or permanently close individual machines or mills, and or convert them to different product lines, such as packaging to offset a decline in demand. Recently, there have been consolidations of paper suppliers and mill closure announcements which may cause the paper prices to fluctuate substantially in the future. The only domestic source of carbonless paper announced that it is closing its factory. We intend to build a surplus of inventory as buffer inventory until we transition to other sources. While margins remain under pressure due to the resulting weak volumes, we continue to focus on effectively managing and controlling our product costs through the use of forecasting, production and costing models, as well as working closely with our suppliers to reduce our procurement costs, in order to minimize effects on our operational results. In addition, we will continue to look for ways to reduce and leverage our fixed costs and focus on maintaining our margins.

Previous wording

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 credit losses, 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 the following accounting policies are the most critical due to their effect on our more significant estimates and judgments used in preparation of our Consolidated Financial Statements.

Current wording

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 credit losses, 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 the following accounting estimates are the most critical due to the application of significant subjective assumptions and judgments in the preparation of such estimates, which are included in our Consolidated Financial Statements.

Previous wording

As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our Pension Plan funding status and associated liability recorded. The expected rate of return on assets was 6.00% and 6.50% at February 29, 2024 and February 28, 2023, respectively.

Current wording

As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our Pension Plan funding status and associated liability recorded. The expected rate of return on assets was 5.50% and 6.00% at February 28, 2025 and February 29, 2024, respectively.

Previous wording

Similar to fluctuations in market values, a drop in the discount rate could potentially negatively impact our Pension Plan's funded status, recorded pension liability and future contribution levels with the opposite impact occurring for an increase in the discount rate. During fiscal year 2024, the discount rate used to determine the net pension obligations for purposes of our Consolidated Financial Statements increased to 5.15% from 5.00% in fiscal year 2023. The discount rate is reviewed by management annually and is adjusted to reflect movements in the average Mercer and FTSE (formerly Citigroup) pension yield curves for mature pension plans with duration of about 12-15 years. The Company estimated the duration of its pension benefit obligation (PBO) to be approximately 12-15 years. Each 10 basis point change in the discount rate impacts our computed pension liability by about $0.5 million.

Current wording

Similar to fluctuations in market values, a drop in the discount rate could potentially negatively impact our Pension Plan's funded status, recorded pension liability and future contribution levels with the opposite impact occurring for an increase in the discount rate. During fiscal years 2024 and 2025, the discount rate used to determine the net pension obligations for purposes of our Consolidated Financial Statements was 5.15%. The discount rate is reviewed by management annually and is adjusted to reflect movements in the average Mercer and FTSE (formerly Citigroup) pension yield curves for mature pension plans with duration of about 12-15 years. The Company estimated the duration of its pension benefit obligation ("PBO") to be approximately 12-15 years. Each 10-basis point change in the discount rate impacts our computed pension liability by about $0.5 million.

Previous wording

Also, continued changes in the mortality assumptions could potentially impact our Pension Plan's funded status. For the February 29, 2024 measurement, no change was made to the mortality assumption. While U.S. mortality has been higher in the last couple of years due to the COVID-19 pandemic and other related factors, the mortality assumption is used to estimate the future lifetime of plan participants. Any actual impact on the Pension Plan from the higher than expected mortality has already been recognized in the underlying participant data used to measure the pension liability. The impact on future longevity is still being studied, and there is a general expectation that the current population is a healthier cohort such that mortality rates may return to pre-pandemic levels. This assumption will continue to be monitored.

Current wording

Also, continued changes in the mortality assumptions could potentially impact our Pension Plan's funded status. For the February 28, 2025 measurement, no change was made to the mortality assumption. The mortality assumption is used to estimate the future lifetime of plan participants. Any actual impact on the Pension Plan from the higher than expected mortality has already been recognized in the underlying participant data used to measure the pension liability. The impact on future longevity is still being studied, and there is a general expectation that the current population is a healthier cohort such that mortality rates may return to pre-pandemic levels. This assumption will continue to be monitored.

Previous wording

We assess goodwill for impairment annually as of December 1, or more frequently if impairment indicators are present. The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the 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 reporting unit’s business, overall financial performance of the business, and performance of the common share price of the Company. If qualitative factors are not deemed sufficient to conclude that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then a one-step quantitative approach is applied in making an evaluation. The quantitative 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, an appropriate 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 quantitative evaluation results in the fair value of the reporting unit being lower than the carrying value, an impairment charge is recorded. A goodwill impairment charge was not required for the fiscal years ended February 29, 2024 or February 28, 2023.

Current wording

We assess goodwill for impairment annually as of December 1, or more frequently if impairment indicators are present. The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of its single 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 reporting unit’s business, overall financial performance of the business, and performance of the common share price of the Company. If qualitative factors are not deemed sufficient to conclude that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then a one-step quantitative approach is applied in making an evaluation. The quantitative 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, an appropriate 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 quantitative evaluation results in the fair value of the reporting unit being lower than the carrying value, an impairment charge is recorded. A goodwill impairment charge was not required for the fiscal years ended February 28, 2025 or February 29, 2024.

Previous wording

Allowance for Excess and Obsolete Inventories – With the exception of approximately 7.0% and 6.1% of inventories valued using the lower of last-in, first-out ("LIFO") cost flow assumption for fiscal years 2024 and 2023, respectively, our inventories are valued at the lower of cost or net realizable value. We regularly review inventory values on hand, using specific aging categories, and write down inventory deemed obsolete and/or slow-moving based on historical usage and estimated future usage to its estimated net realizable value. As actual future demand or market conditions may vary from those projected by management, adjustments to inventory valuations may be required. The allowance for excess and obsolete inventory at fiscal years ended 2024 and 2023 were $1.3 million and $1.6 million, respectively.

Current wording

Allowance for Excess and Obsolete Inventories – With the exception of approximately 7.1% and 7.0% of inventories valued using the lower of last-in, first-out ("LIFO") cost flow assumption for fiscal years 2025 and 2024, respectively, our inventories are valued at the lower of cost or net realizable value as is required under U.S. GAAP when we follow the first-in-first-out cost flow assumption (“FIFO”). We regularly review inventory values on hand, using specific aging categories, and write down inventory deemed obsolete and/or slow-moving based on historical usage and estimated future usage to its estimated net realizable value. As actual future demand or market conditions may vary from those projected by management, adjustments to inventory valuations may be required. The allowance for excess and obsolete inventory at fiscal years ended 2025 and 2024 were $1.8 million and $1.7 million, respectively. The aged inventory allowance is recorded primarily to account for the decrease in market value of general stock inventory that is not manufactured to specific customer order. Inventory write offs were $0.1 million in each of the fiscal years ended 2025, 2024, and 2023.

Previous wording

Net Sales. Our net sales were $420.1 million for fiscal year 2024, compared to $431.8 million for fiscal year 2023, a decrease of $11.7 million, or 2.7%, primarily due to a $32.9 million decrease in volume demand, partially offset by an approximately $21.2 million increase in revenues generated from our recent acquisitions. The print market overall continues to be fairly soft with competitive pricing as well as some of our print partners have experienced slowness in their sales and reduced their outsourced work to us during the current fiscal year.

Current wording

Net Sales. Our net sales were $394.6 million for fiscal year 2025, compared to $420.1 million for fiscal year 2024, a decrease of $25.5 million, or -6.1%, primarily due to a $38.7 million decrease in volume demand, partially offset by an approximately $13.2 million increase in revenues generated from our recent acquisitions. The print market overall continues to be fairly soft with competitive pricing pressures resulting in reduced volume.

Previous wording

Cost of Goods Sold. As a result of decreased sales volume, our manufacturing costs decreased $6.0 million, or 2.0% from $300.8 million for fiscal year 2023 to $294.8 million for fiscal year 2024. Our gross profit was $125.3 million or 29.8% of sales for fiscal year 2024, compared to $131.1 million or 30.3% of sales for fiscal year 2023. The print market overall was fairly soft during fiscal year 2024 with competitive pricing from similar situated vendors as us, resulting in downward pressure on operating margin.

Current wording

Cost of Goods Sold. As a result of decreased sales volume, our manufacturing costs decreased $17.4 million, or -5.9% from $294.8 million for fiscal year 2024 to $277.3 million for fiscal year 2025. Our gross profit was $117.3 million or 29.7% of sales for fiscal year 2025, compared to $125.3 million or 29.8% of sales for fiscal year 2024.

Previous wording

Our manufacturing costs increased $15.5 million, or 5.4%, from $285.3 million for fiscal year 2022 to $300.8 million for fiscal year 2023. Our gross profit was $131.1 million or 30.3% of sales for fiscal year 2023, compared to $114.7 million or 28.7% for fiscal year 2022. Improved operational efficiencies and pricing adjustments to cover inflationary costs, primarily of paper, supplies and labor, contributed to improve our gross profit margin as a percentage of sales.

Current wording

Our manufacturing costs decreased $6.0 million, or -2.0%, from $300.8 million for fiscal year 2023 to $294.8 million for fiscal year 2024. Our gross profit was $125.3 million or 29.8% of sales for fiscal year 2024, compared to $131.1 million or 30.3% for fiscal year 2023.

Previous wording

Our SG&A expenses decreased approximately 0.9%, from $71.4 million for fiscal year 2022 to $70.8 million for fiscal year 2023. As a percentage of sales, SG&A expenses declined from 17.9% in fiscal year 2022 to 16.4% for fiscal year 2023. Our SG&A expense decreased as a result of operational efficiencies and intangible assets fully amortized in fiscal year 2022 partially offset by increased executive incentive compensation expense.

Current wording

Selling, general, and administrative expenses. For fiscal year 2025, our selling, general and administrative (“SG&A”) expenses were $65.4 million compared to $68.8 million for fiscal year 2024, a decrease of $3.5 million, or -5.0% primarily as a result of reduction in executive incentive compensation expense. Our SG&A expense also decreased as a result of operational efficiencies. As a percentage of sales, SG&A increased slightly from 16.4% in fiscal year 2024 to 16.6% in fiscal year 2025.

Previous wording

Selling, general, and administrative expenses. For fiscal year 2024, our selling, general and administrative (“SG&A”) expenses were $68.8 million compared to $70.8 million for fiscal year 2023, a decrease of $2.0 million, or 2.8% primarily as a result of reduction in executive incentive compensation expense. As a percentage of sales, SG&A expenses remained flat at 16.4% in fiscal year 2024 and 2023.

Current wording

Our SG&A expenses decreased approximately $2.0 million or -2.8%, from $70.8 million for fiscal year 2023 to $68.8 million for fiscal year 2024 primarily as a result of reduction in executive incentive compensation expense. As a percentage of sales, SG&A expenses remained flat at 16.4% in fiscal years 2024 and 2023.

Previous wording

(Gain) loss from disposal of assets. The $0.1 million loss from disposal of assets for fiscal 2024 is primarily from the sale of unused manufacturing equipment. The $5.9 million gain from disposal of assets for fiscal 2023 is primarily from the sale of an unused manufacturing facility, $5.8 million, and $0.1 million of manufacturing equipment. The $0.3 million gain from disposal of assets for fiscal year 2022 is primarily related to the sale of an unused manufacturing facility and manufacturing equipment.

Current wording

(Gain) loss from disposal of assets. The $0.1 million gain from disposal of assets for fiscal 2025 is primarily from the sale of unused manufacturing equipment. The $0.1 million loss from disposal of assets for fiscal 2024 is primarily from the sale of unused manufacturing equipment. The $5.9 million gain from disposal of assets for fiscal 2023 is primarily from the sale of an unused manufacturing facility, $5.8 million, and $0.1 million of manufacturing equipment.

Previous wording

Income from operations. Primarily due to factors described above, our income from operations for fiscal year 2024 decreased $9.7 million to $56.5 million or 13.4% of net sales from $66.2 million or 15.3% of net sales for fiscal year 2023. Income from operations for fiscal year 2023 increased 51.8% to $66.2 million, or 15.3% of net sales, from $43.6 million, or 10.9% of net sales in 2022.

Current wording

Income from operations. Primarily due to factors described above, our income from operations for fiscal year 2025 decreased $4.5 million to $52.0 million or 13.2% of net sales from $56.5 million or 13.4% of net sales for fiscal year 2024. Income from operations for fiscal year 2024 decreased $9.7 million to $56.5 million or 13.4% of net sales from $66.2 million or 15.3% of net sales for fiscal year 2023.

Previous wording

Other income (expense). Interest income for fiscal year 2024 was $4.0 million compared to $0.8 million in 2023 and $0.1 million in 2022. Our increase in interest income in 2024 was from higher interest rates in 2024 compared to 2023 and higher interest rates compared to 2002.

Current wording

Other income (expense). Interest income for fiscal year 2025 was $4.9 million compared to $4.0 million in 2024 and $0.8 million in 2023. Our increase in interest income in 2025 was due to a higher average cash and investment balances in 2025 compared to 2024 and higher interest rates compared to 2023.

Previous wording

Other expense was $2.0 million for fiscal year 2023 compared to $1.6 million for fiscal year 2022. The increase in expense was primarily from higher non-service cost components of net periodic benefit costs relating to pension expense in fiscal year 2023.

Current wording

Our interest income is offset by other expense. Other expense for fiscal year 2025 was $1.4 million compared to $1.3 million for fiscal year 2024. Our increase in expense was from higher non-service cost components of net periodic benefit costs relating to pension expense in fiscal year 2024.

Previous wording

Other expense for fiscal year 2024 was $1.3 million compared to $2.0 million for fiscal year 2023. Our decrease in expense was from lower non-service cost components of net periodic benefit costs relating to pension expense in fiscal year 2024.

Current wording

Other expense was $1.3 million for fiscal year 2024 compared to $2.0 million for fiscal year 2023. The decrease in expense was from lower non-service cost components of net periodic benefit costs relating to pension expense in fiscal year 2024.

Previous wording

Provision for income taxes. Our effective tax rates for fiscal years 2024, 2023 and 2022 were 28.0%, 27.2%, and 30.9%, respectively. The higher effective tax rate for fiscal year 2022 was primarily the result of distributions during the year from our deferred compensation plan which was terminated in fiscal year 2021.

Current wording

Provision for income taxes. Our effective tax rates for fiscal years 2025, 2024 and 2023 were 27.5%, 28.0%, and 27.2%, respectively. The change in effective tax rate for fiscal year 2025 and 2024 was primarily the result of change in state apportionment.

Previous wording

Net earnings. Net earnings were $42.6 million, or $1.64 per diluted share for fiscal year 2024 as compared to $47.3 million of $1.82 per diluted share for fiscal year 2023. Net earnings were impacted by decreased revenues in fiscal year 2024. Net earnings in fiscal year 2023 were impacted by a $5.8 million gain from disposal of assets that added $0.17 per share. Net earnings were $47.3 million, or $1.82 per diluted share for fiscal year 2023, as compared to $29.0 million, or $1.11 per diluted share for fiscal year 2022. Net earnings were impacted by increased revenues in fiscal year 2023.

Current wording

Net earnings. Net earnings were $40.2 million, or $1.54 per diluted share for fiscal year 2025 as compared to $42.6 million or $1.64 per diluted share for fiscal year 2024. Net earnings were impacted by decreased revenues in fiscal year 2025. Net earnings were $42.6 million, or $1.64 per diluted share for fiscal year 2024 as compared to $47.3 million or $1.82 per diluted share for fiscal year 2023. Net earnings were impacted by decreased revenues in fiscal year 2024. Net earnings in fiscal year 2023 were impacted by a $5.8 million gain from disposal of assets that added $0.17 per share.

Previous wording

We rely on our cash flows generated from operations 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, compensation and benefits for employees and the payment of dividends to our shareholders. We believe that our current cash balance of $81.6 million at February 29, 2024, short-term investments of $29.3 million and cash flows from operations are expected to be similar to prior years which should be adequate to cover the next twelve months and beyond of our operating and capital requirements. Our annual capital requirements are expected to be within our historical levels of between $3.0 million and $6.0 million.

Current wording

We rely on our cash flows generated from operations 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, compensation and benefits for employees and the payment of dividends to our shareholders. We believe that our current cash balance of $67.0 million at February 28, 2025, short-term investments of $5.5 million and cash flows from operations are expected to be similar to prior years which should be adequate to cover the next twelve months and beyond of our operating and capital requirements. Our annual capital requirements to maintain our manufacturing property are expected to be within our historical levels of between $4.0 million and $7.0 million.

Previous wording

Working Capital. Our working capital increased by approximately $12.2 million, or 7.9%, from $155.4 million at February 28, 2023 to $167.6 million at February 29, 2024. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.8 to 1.0 for fiscal year 2023 to 6.0 to 1.0 for fiscal year 2024. Our increase in working capital primarily reflects the increase in cash and short-term investments, $17.0 million, offset by the decrease in accounts receivable, $6.3 million, and inventory, $6.8 million, and the decrease in our accounts payable and accrued expense, $7.0 million. We strategically reduced inventory levels to improve cash flow and the decrease in receivables is primarily a result of accelerating the timing of collections relative to fiscal year end.

Current wording

Our working capital increased by approximately $12.2 million, or 7.9%, from $155.4 million at February 28, 2023 to $167.6 million at February 29, 2024. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.8 to 1.0 for fiscal year 2023 to 6.0 to 1.0 for fiscal year 2024. Our increase in working capital primarily reflects the increase in cash and short-term investments, $17.0 million, offset by the decrease in accounts receivable, $6.3 million, and inventory, $6.8 million, and the decrease in our accounts payable and accrued expense $7.0 million. We strategically reduced inventory levels to improve cash flow and the decrease in receivables is primarily a result of accelerating the timing of collections relative to fiscal year end.

Previous wording

Cash flows from operating activities. Cash provided by operating activities was $69.1 million for fiscal year 2024 (an increase of $22.3 million compared to fiscal year 2023), $46.8 million for fiscal year 2023 (a decrease of $3.9 million compared to fiscal year 2022) and $50.7 million for fiscal year 2022.

Current wording

Cash flows from operating activities. Cash provided by operating activities was $65.9 million for fiscal year 2025 (a decrease of $3.2 million compared to fiscal year 2024), $69.1 million for fiscal year 2024 (an increase of $22.3 million compared to fiscal year 2023) and $46.7 million for fiscal year 2023.

Previous wording

Our decreased operational cash flows in fiscal year 2023 compared to fiscal year 2022 was primarily the result of a $3.4 million decrease from inventories, $8.2 million decrease from our accounts receivable, $5.9 million gain from disposal of assets and a $5.0 million decrease from deferred tax liability offset by $18.3 million in increased earnings.

Current wording

Our decreased operational cash flows in fiscal year 2025 compared to fiscal year 2024 was primarily the result of

Previous wording

Cash flows from financing activities. Cash used in financing activities was $26.4 million in fiscal year 2024 compared to $27.0 million in fiscal year 2023 and $30.2 million used in fiscal year 2022.

Current wording

Cash flows from financing activities. We used $67.2 million more cash in financing activities during fiscal year 2025 compared to fiscal year 2024. The increase in cash used during fiscal year 2025 resulted from a one-time special dividend of $2.50 per share or $65.0 million and a $1.8 million common stock repurchase under our stock repurchase program. Cash used in financing activities was $93.7 million in fiscal year 2025 compared to $26.4 million in fiscal year 2024 and $27.0 million used in fiscal year 2023.

Previous wording

Stock Repurchase –The Board has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $60.0 million in the aggregate. Under the repurchase program, 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. Repurchases may be commenced or suspended at any time or from time to time without prior notice, provided that any purchases must be made in accordance with applicable insider trading rules and securities laws and regulations. Since the program’s inception in October 2008, we have repurchased 2,242,461 common shares under the program at an average price of $16.34 per share. During our fiscal year 2024, we repurchased 29,350 shares of common stock at an average price of $19.96 per share. As of February 29, 2024, $23.4 million remained available to repurchase shares of the Company’s common stock under the program. The Company expects to continue to repurchase its shares under the repurchase program during fiscal year 2025 provided that the Board determines such repurchases to be in the best interests of the Company and its shareholders.

Current wording

Stock Repurchase –The Board has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $60.0 million in the aggregate. Under the repurchase program, 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. Repurchases may be commenced or suspended at any time or from time to time without prior notice, provided that any purchases must be made in accordance with applicable insider trading rules and securities laws and regulations. Since the program’s inception in October 2008, we have repurchased 2,334,344 common shares under the program at an average price of $16.47 per share. During our fiscal year 2025, we repurchased 91,883 shares of common stock at an average price of $19.79 per share. As of February 28, 2025, $21.5 million remained available to repurchase shares of the Company’s common stock under the program. The Company expects to continue to repurchase its shares under the repurchase program during fiscal year 2026 provided that the Board determines such repurchases to be in the best interests of the Company and its shareholders.

Previous wording

Pension Plan –The funded status of our Pension Plan is dependent on many factors, including returns on invested assets, the level of market interest rates and the level of funding. The assumptions used to calculate the pension funding deficit are different from the assumption used to determine the net pension obligations for purposes of our Consolidated Financial Statements. The funding of our Pension Plan is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and the Internal Revenue Code and is also subject to the Moving Ahead for Progress in the 21 st Century Act, the Highway and Transportation Funding Act of 2014, the Bipartisan Budget Act of 2015, and the American Rescue Plan Act of 2021. Under these regulations, the liabilities are discounted using 25-year average corporate bond rates within a specified corridor. For the period ended February 29, 2024, the specified corridor around the 25-year average was 5%. We made a contribution of $1.2 million to our Pension Plan in fiscal year 2024, $2.0 million in fiscal year 2023 and $1.0 million in fiscal year 2022. Given our funding status as of February 29, 2024, and absent any significant negative event, we anticipate that our future contributions will be between $1.0 million and $3.0 million per year, depending on our Pension Plan’s funding.

Current wording

Pension Plan –The funded status of our Pension Plan is dependent on many factors, including returns on invested assets, the level of market interest rates and the level of funding. The assumptions used to calculate the pension funding deficit are different from the assumption used to determine the net pension obligations for purposes of our Consolidated Financial Statements. The funding of our Pension Plan is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and the Internal Revenue Code and is also subject to the Moving Ahead for Progress in the 21st Century Act, the Highway and Transportation Funding Act of 2014, the Bipartisan Budget Act of 2015, and the American Rescue Plan Act of 2021. Under these regulations, the liabilities are discounted using 24-month average corporate bond rates within a specified corridor around the 25-year average. For the remainder of 2025, the effective discount rate is expected to be between 5.30% and 5.40%. We made a contribution of $1.2 million to our Pension Plan in fiscal years 2025 and 2024, and a $2.0 million contribution in fiscal year 2023. Given our funding status as of February 28, 2025, and absent any significant negative event, we anticipate that our future contributions will be between $1.0 million and $1.2 million per year, depending on our Pension Plan’s funding.

Previous wording

Inventories–We believe our current 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.

Current wording

Inventories–We believe our current 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. The only domestic source of carbonless paper announced that it is closing its factory. We intend to build a surplus of inventory as buffer inventory until we transition to other sources.

Previous wording

Capital Expenditures–We expect our capital expenditure requirements for fiscal year 2024, exclusive of capital required for possible acquisitions, will be in line with our historical levels of between $3.0 million and $5.0 million. We expect to fund these expenditures through existing cash flows. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future.

Current wording

Capital Expenditures–We expect our capital expenditure requirements for fiscal year 2025, exclusive of capital required for possible acquisitions, will be in line with our historical levels of between $4.0 million and $7.0 million. We expect to fund these expenditures through existing cash flows. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future. We evaluate acquisitions and consider cash flow availability in executing our growth strategy.