þ | Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 (No Fee Required) |
o | Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 (No Fee Required) |
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Supplemental Schedule |
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12 |
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2
2009 | 2008 | |||||||
Assets: |
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Investments at fair value: |
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Investments held by Trustee |
$ | 44,395,996 | $ | 37,399,620 | ||||
Participant loans |
2,265,026 | 2,295,238 | ||||||
Net assets available for benefits, at fair value |
$ | 46,661,022 | $ | 39,694,858 | ||||
Adjustment from fair value to contract value for
fully benefit responsive investment contracts |
102,824 | (358,553 | ) | |||||
Net assets available for benefits, at contract value |
$ | 46,763,846 | $ | 39,336,305 | ||||
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2009 | ||||
Additions to net assets attributed to: |
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Employee contributions |
$ | 2,496,242 | ||
Employer matching contributions |
318,539 | |||
Employer discretionary contributions |
345,000 | |||
Employee rollover contributions |
126,498 | |||
Total contributions |
3,286,279 | |||
Gain on investments: |
||||
Interest and dividends |
954,783 | |||
Net appreciation in fair value of investments |
6,877,507 | |||
Total gain on investments |
7,832,290 | |||
Total additions to net assets |
11,118,569 | |||
Deductions: |
||||
Administrative expenses |
(21,875 | ) | ||
Benefits paid and withdrawals |
(3,669,153 | ) | ||
Total deductions |
(3,691,028 | ) | ||
Net increase |
7,427,541 | |||
Net assets available for benefits at beginning of year |
39,336,305 | |||
Net assets available for benefits at end of year |
$ | 46,763,846 | ||
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1. | Description of the Plan | |
The following description of the Ennis, Inc. (the Company) 401(k) Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plans provisions. |
(a) | General | ||
The Plan was formed February 1, 1994, and is a defined contribution plan covering substantially all employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, (ERISA) and the Internal Revenue Code (IRC). In addition, the financial statements have been prepared in compliance with ERISA. | |||
(b) | Eligibility | ||
Employees age 18 and older of the Company are eligible to participate in the Plan after completing 60 days of service, as defined by the Plan. | |||
(c) | Contributions | ||
Participants may make voluntary contributions to the Plan ranging from 1% to 100% of eligible pay subject to the Internal Revenue Service (IRS) annual limitations. The Plan allows rollovers of distributions from other qualified plans. The Plan provides for up to 50% employer matching contributions, not to exceed $1,500 or 3% of the employees salary, or discretionary employer contributions for certain employees not enrolled in the Pension Plan for employees of the Company. Eligibility for employer contributions depends on the participants employment location. | |||
As of January 1, 2006, the Plan was amended in order to automatically enroll all new participants into the Plan at a 2% deferral rate. | |||
During 2009, the Company declared a profit sharing contribution of $306,000 on behalf of the former employees of Northstar Computer Forms, Inc. in accordance with its original plan. The Northstar Computer Forms, Inc. 401(k) Profit Sharing Plan was merged into the Plan on February 1, 2001. | |||
(d) | Participant Accounts | ||
Each participants account is credited with the participants contribution, any employer contributions, and the allocation of the Plan earnings or losses. Allocations are based on participant earnings or account balances, as defined in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participants interest in his or her account. | |||
(e) | Vesting | ||
Participants are immediately vested in their contributions plus actual earnings thereon. Qualified employer-matching and profit sharing contributions vest over a period ranging from zero to five years. |
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1. | Description of the Plan Continued |
(f) | Loans | ||
Under provisions of the Plan, participants may borrow up to 50% of their total vested account balance up to a maximum of $50,000. Loan repayments are made in equal installments through payroll deductions generally over a term not to exceed five years. All loans are considered a directed investment from the participants Plan account with all payments of principal and interest credited to the participants account. A maximum number of two outstanding loans are allowed per individual. The minimum loan is $1,000 and there is a $100 set-up fee payable for each loan. The interest rate is determined based on the prime rate as determined by the Plans trustee plus 1%. |
2. | Summary of Significant Accounting Policies |
(a) | Basis of Accounting | ||
The accompanying financial statements have been prepared on the modified cash basis of accounting and present the net assets available for benefits and changes in those net assets. Consequently, certain additions and the related assets are recognized when received rather than when earned and certain deductions are recognized when paid rather than when the obligation is incurred. The modified cash basis of accounting is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. | |||
(b) | New Accounting Pronouncements | ||
As of December 31, 2009, the Plan adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification) which became the single source of authoritative non-governmental accounting principles generally accepted in the United States of America (GAAP), superseding various existing authoritative accounting pronouncements. The Codification establishes one level of authoritative GAAP. All other literature is considered non-authoritative. There were no changes to the Plans financial statements due to the implementation of the Codification other than changes in reference to various authoritative accounting pronouncements in the financial statements. | |||
In January 2010, the FASB issued updated guidance to improve disclosures regarding fair value measurements. This update requires entities to (i) disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers and (ii) present separately (i.e., on a gross basis rather than as one net number), information about purchases, sales, issuances, and settlements in the roll forward of changes in Level 3 fair value measurements. The update requires fair value disclosures by class of assets and liabilities rather than by major category or line item in the statement of financial position. Disclosures regarding the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for assets and liabilities in both Level 2 and Level 3 are also required. For all portions of the update except the gross presentation of activity in the Level 3 roll forward, this standard is effective for interim and annual reporting periods beginning after December 15, 2009. For the gross presentation of activity in the Level 3 roll forward, this guidance is effective for fiscal years beginning after December 15, 2010. As this guidance is only disclosure-related, it will not have a material impact on the Plans financial statements. |
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2. | Summary of Significant Accounting Policies Continued |
(c) | Use of Estimates | ||
The preparation of financial statements in conformity with the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions to net assets available for benefits during the reporting period. Actual results could differ from those estimates. See Note 5 for discussion of significant estimates used to measure fair value of investments. | |||
(d) | Investments Valuation and Income Recognition | ||
There were no changes in the Plans valuation methodologies for its investments during the years ended December 31, 2009 and 2008. The valuation methods described below may produce a fair value measurement that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plans management believes the valuation methods are appropriate and consistent with other market participants, the use of differing methodologies or assumptions to determine the fair values of the Plans investments could result in different fair value measurements at the reporting dates. | |||
The Plan provides for investments in a guaranteed investment contract (GIC) and pooled-separate accounts (including a company stock fund). The Plans investments are stated at fair value (see Note 5). The GIC investment is fully benefit-responsive and is also stated at contract value, which is equal to principal plus accrued interest. An investment contract is generally valued at contract value, rather than at fair value, to the extent it is fully benefit-responsive (see Note 4). The Company Stock Fund is an employer stock fund. The fund consists of Ennis Inc. common stock and a short term cash component, which provides liquidity for daily trading. The Ennis, Inc. common stock is valued at the quoted price from a national securities exchange and the short term cash investments are valued at cost, which approximates fair value. The estimated fair values of the other pooled-separate accounts are based on quoted redemption values, as determined by the Trustee, on the last business day of the Plan year. Pooled separate accounts are established by the Trustee solely for the purpose of investing the assets for one or more Plans. Participant loans are valued at their outstanding balances, which approximates fair value. | |||
Purchases and sales of securities are recorded on a trade-date basis. | |||
(e) | Benefits paid to Participants | ||
Benefits paid to participants are recorded as a reduction of net assets available for benefits when paid. For all employees who have terminated with an account balance between $1,000 and $5,000, the Plan Administrator has the right to automatically rollover the balance to an individual retirement plan designated by the Administrator, at the expense of the Plan. | |||
(f) | Forfeitures | ||
Forfeitures may be used to reduce future employer contributions or to pay administrative expenses. There were unallocated forfeitures of $148,083 and $129,956 at December 31, 2009 and 2008, respectively. |
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3. | Investments | |
Participants may direct the allocation of amounts deferred to the available investment options. Provisions of the Plan allow participant contributions in 5% increments to be vested in any of the available options. | ||
The Plans investments, at fair value, at December 31, 2009 and 2008 were comprised of the following: |
2009 | 2008 | |||||||
ING Fixed Account |
$ | 10,481,188 | * | $ | 10,777,371 | |||
Fidelity VIP Contrafund Port-I |
5,051,025 | * | 3,885,129 | |||||
ING PIMCO Total Return Port. (Init) |
4,477,430 | * | 3,793,050 | |||||
ING VP Index Plus Mid-Cap Port (I) |
3,706,450 | * | 2,985,365 | |||||
The Growth Fund of America (R3) |
3,267,314 | * | 2,435,439 | |||||
Templeton Growth Fund |
2,840,160 | * | 2,174,606 | |||||
VVIF-Diversified Value Portfolio |
2,733,301 | * | 2,220,472 | |||||
Participant loans |
2,265,026 | 2,295,238 | ||||||
The Income Fund of America (R3) |
1,972,312 | 1,714,701 | ||||||
ING Solution 2035 Port-Adv |
1,911,506 | 1,469,121 | ||||||
Lord Abbett Sm-Cap Value Fund (A) |
1,533,035 | 1,182,039 | ||||||
ING Solution 2025 Port-Adv |
1,349,487 | 1,014,262 | ||||||
Ennis, Inc. Common Stock Fund |
1,293,712 | 1,281,037 | ||||||
UBS US Small Cap Growth Fund (A) |
975,434 | 745,079 | ||||||
T. Rowe Price Mid-Cap Val Fd (R) |
890,932 | 543,399 | ||||||
ING Solution 2015 Port-Adv |
534,554 | 483,881 | ||||||
American Balanced Fund (R3) |
512,411 | 450,077 | ||||||
ING Index Sol 2015-CI |
444,679 | | ||||||
ING Solution 2045 Port-Adv |
248,544 | 218,908 | ||||||
ING Index Sol 2035-CI |
51,680 | | ||||||
ING Index Sol 2025-CI |
47,477 | | ||||||
ING Solution Income Port Adv |
38,603 | 25,684 | ||||||
American Funds Cap Wld G&I (R3) |
21,971 | | ||||||
ING Baron Small Cap Gr Portfolio |
9,877 | | ||||||
ING Index Sol 2045-CI |
2,914 | | ||||||
Total investments |
$ | 46,661,022 | $ | 39,694,858 | ||||
* | Represents 5% or more of the net assets available for benefits. |
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4. | Investments in Insurance Contracts | |
The Plan maintains one GIC related investment option, the ING Fixed Account. The contract underlying this investment option is considered to be fully benefit-responsive as described in FASB accounting guidance regarding Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans. As of December 31, 2009 and 2008, the contract value of the investment in the ING Fixed Account is $10,584,012 and $10,418,818, respectively. | ||
The average yields for the contract for the years ended December 31, 2009 and 2008, were 3.5% and 3.6%, respectively. The crediting interest rates for the contract as of December 31, 2009 and 2008 were 3.5% and 3.15% respectively. The minimum crediting interest rates for the contract for the years ended December 31, 2009 and 2008 were 3.15% and 3.8%, respectively. | ||
ING Life Insurance and Annuity Companys (ILIAC) determination of credited interest rates reflects a number of factors, including mortality and expense risks, interest rate guarantees, the investment income earned on invested assets and the amortization of any capital gains and/or losses realized on the sale of invested assets. A market value adjustment may apply to amounts withdrawn at the request of the contractholder. | ||
The underlying contract has no restrictions on the use of Plan assets and there are no valuation reserves recorded to adjust contract amounts. | ||
Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (i) amendments to the Plan documents (including complete or partial Plan termination or merger with another plan) (ii) changes to the Plans prohibition on competing investment options or deletion of equity wash provisions; or (iii) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan Administrator does not believe that the occurrence of any such value event, which would limit the Plans ability to transact at contract value with participants, is probable. | ||
The ING Fixed Account does not permit ILIAC to terminate the agreement prior to the scheduled maturity date. | ||
5. | Fair Value Measurements | |
Effective January 1, 2008, the Plan adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands required disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal, or in the absence of a principal market, the most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. | ||
The standard describes three levels of inputs which prioritize the inputs used in measuring fair value: | ||
Level 1: Quoted prices in active markets for identical assets or liabilities. | ||
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quotes prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
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5. | Fair Value Measurements Continued | |
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liabilities | ||
An asset or liabilitys classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. | ||
Fair value estimates are made at a specific point in time, based on available market information and judgments about the financial asset, including estimates of timing, amount of expected future cash flows, and the credit standing of the issuer. In some cases, the fair value estimates cannot be substantiated by comparison to independent markets. The disclosed fair value may not be realized in the immediate settlement of the financial asset. In addition, the disclosed fair values do not reflect any premium or discount that could result from offering for sale at one time an entire holding of a particular financial asset. Potential taxes and other expenses that would be incurred in an actual sale or settlement are not reflected in amounts disclosed. | ||
The following tables present the Plans fair value hierarchy for those assets measured at fair value as of December 31, 2009 and 2008. At December 31, 2009 and 2008, Level 3 assets comprised approximately 4.9% and 5.8% of the Plans total investment portfolio fair value, respectively. |
Fair Value Measurements at 12/31/09 Using | ||||||||||||||||
Quoted | ||||||||||||||||
Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Assets | Markets for | Other | Significant | |||||||||||||
Measured at | Identical | Observable | Unobservable | |||||||||||||
Fair Value at | Assets | Inputs | Inputs | |||||||||||||
Description | 12/31/09 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Pooled separate accounts |
$ | 33,914,808 | $ | | $ | 33,914,808 | $ | | ||||||||
Guaranteed investment contract |
10,481,188 | | 10,481,188 | | ||||||||||||
Participant loans receivable |
2,265,026 | | | 2,265,026 | ||||||||||||
$ | 46,661,022 | $ | | $ | 44,395,996 | $ | 2,265,026 | |||||||||
Fair Value Measurements at 12/31/08 Using | ||||||||||||||||
Quoted | ||||||||||||||||
Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Assets | Markets for | Other | Significant | |||||||||||||
Measured at | Identical | Observable | Unobservable | |||||||||||||
Fair Value at | Assets | Inputs | Inputs | |||||||||||||
Description | 12/31/08 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Pooled separate accounts |
$ | 26,622,249 | $ | | $ | 26,622,249 | $ | | ||||||||
Guaranteed investment contract |
10,777,371 | | 10,777,371 | | ||||||||||||
Participant loans receivable |
2,295,238 | | | 2,295,238 | ||||||||||||
$ | 39,694,858 | $ | | $ | 37,399,620 | $ | 2,295,238 | |||||||||
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5. | Fair Value Measurements Continued | |
The following table presents a reconciliation of Level 3 assets measured at fair value for the period January 1, 2009 to December 31, 2009: |
Level 3 | ||||
Assets | ||||
Beginning balance as of January 1, 2009 |
$ | 2,295,238 | ||
Principal repayments |
(888,596 | ) | ||
Loan withdrawals |
1,135,758 | |||
Loans deemed distributed |
(277,374 | ) | ||
Ending balance as of December 31, 2009 |
$ | 2,265,026 |
6. | Plan Termination | |
Although the Company has not expressed any intent to do so, it has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. | ||
7. | Tax Status of Plan | |
The Plan has obtained its latest determination letter dated November 7, 2001, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. Amendments have subsequently been made to the Plan; however, the Plans administrator and management believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plans financial statements. | ||
8. | Risks and Uncertainties | |
The Plan provides for investments in pooled separate accounts (including a Company common stock fund) and a guaranteed investment contract, each with different investment strategies. These investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to the changes in the value of these investments, it is at least reasonably possible that changes in risks in the near term would materially affect participants account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits. | ||
9. | Parties in Interest | |
Certain plan investments are investments managed by ILIAC. ILIAC is the trustee, custodian and recordkeeper as defined by the Plan, and therefore, these transactions qualify as party-in-interest transactions. The Plan also invests in a Company common stock fund and allows participants to receive loans, therefore, these transactions qualify as party-in-interest transactions. |
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(c) Description of investments | ||||||||
(b) Identity of issuer, borrower, | including maturity date, rate of interest | (e) | ||||||
(a) | lessor or similar party | collateral, par, or maturity value | Current value | |||||
* |
Ennis, Inc | Ennis, Inc Common Stock Fund | $ | 1,293,712 | ||||
American Funds | American Funds Cap Wld G&I (R3) | 21,971 | ||||||
American Funds | The Growth Fund of America (R3) | 3,267,314 | ||||||
American Funds | American Balanced Fund (R3) | 512,411 | ||||||
American Funds | The Income Fund of America (R3) | 1,972,312 | ||||||
Fidelity Funds | Fidelity VIP Contrafund Port | 5,051,025 | ||||||
Franklin Templeton Funds | Templeton Growth Fund | 2,840,160 | ||||||
* |
ING Life Insurance and Annuity Company | ING Baron Small Cap Gr Portfolio | 9,877 | |||||
* |
ING Life Insurance and Annuity Company | ING VP Index Plus Mid-Cap Port (I) | 3,706,450 | |||||
* |
ING Life Insurance and Annuity Company | ING Solution 2015 Port-Adv | 534,554 | |||||
* |
ING Life Insurance and Annuity Company | ING Solution 2025 Port-Adv | 1,349,487 | |||||
* |
ING Life Insurance and Annuity Company | ING Solution 2035 Port-Adv | 1,911,506 | |||||
* |
ING Life Insurance and Annuity Company | ING Solution 2045 Port-Adv | 248,544 | |||||
* |
ING Life Insurance and Annuity Company | ING Solution Income Port-Adv | 38,603 | |||||
* |
ING Life Insurance and Annuity Company | ING Index Sol 2015 - CI | 444,679 | |||||
* |
ING Life Insurance and Annuity Company | ING Index Sol 2025 - CI | 47,477 | |||||
* |
ING Life Insurance and Annuity Company | ING Index Sol 2035 - CI | 51,680 | |||||
* |
ING Life Insurance and Annuity Company | ING Index Sol 2045 - CI | 2,914 | |||||
* |
ING Life Insurance and Annuity Company | ING PIMCO Total Return Port. (Init) | 4,477,430 | |||||
* |
ING Life Insurance and Annuity Company | ING Fixed Account | 10,481,188 | |||||
Lord Abbett Funds | Lord Abbett Sm-Cap Value Fund | 1,533,035 | ||||||
T. Rowe Price Funds | T. Rowe Price Mid-Cap Val Fd | 890,932 | ||||||
UBS Funds | UBS US Small Cap Growth Fund | 975,434 | ||||||
Vanguard Funds | VVIF-Diversified Value Portfolio | 2,733,301 | ||||||
* |
Participant loans | Loans with interest rates ranging from 4.25% to 10.25% | 2,265,026 | |||||
Total investments | $ | 46,661,022 | ||||||
* | Indicates party-in-interest to the Plan. |
12
ENNIS, INC. 401(k) PLAN |
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Date: June 28, 2010 | /s/ Richard L. Travis, Jr. | |||
Richard L. Travis, Jr. | ||||
Vice President - Finance and CFO, |
||||
Secretary, Principal Financial and
Accounting Officer Ennis, Inc. |
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