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Ennis Completes Acquisition of Block Graphics, Inc.

Thursday, August 10, 2006

Press release from the issuing company

MIDLOTHIAN, Texas--Aug. 9, 2006-- Ennis, Inc. a manufacturer of printed business products & apparel headquartered in Midlothian, Texas has completed the acquisition of all the outstanding stock of Block Graphics, Inc. ("Block"). Block was owned by an ESOP formed ten years ago to acquire the stock from Bill Block, the original owner. Ennis paid approximately $14.6 million in cash for the stock of Block through borrowings under its revolving credit facility. After the transaction, Ennis' outstanding borrowings under its facility were approximately $109 million. Simultaneous with the closing, Block's ESOP loan was paid off from a portion of Block's existing cash. A holdback reserve of 10% was escrowed to provide security for the representations and warranties contained in the Stock Purchase Agreement. While all locations will continue to produce products under the Block trade name, the Denver real estate was spun off to the ESOP Trust prior to closing, and the Denver operation of Block will relocate to the Adams McClure facilities in Denver. The Block operations in Denver will continue to operate under the Block Graphics trade-name in the Colorado market. In addition, the previously commenced relocation of the Block Paso Robles operation to Sparks, Nevada is expected to be completed by August 31, 2006. The acquisition provides additional short-run print products (snaps, continuous forms and cut-sheet forms) as well as the production of envelopes, a new product for Ennis. All of the Block products will continue to be sold through the indirect sales (distributorship) marketplace. The acquisition is expected to be accretive to Ennis' earnings in the first full year of operations, excluding the impact of transaction related charges. Block had sales of approximately $35 million for its most recent calendar year. The Trustees of the Block ESOP Trust voted to terminate the Block Employee Stock Ownership Plan (the "Plan") prior to the sale of the Block stock to Ennis. Approximately two years from the date of closing after receipt of any monies held in escrow and pending a favorable Internal Revenue Service Determination letter, the trust will terminate and the proceeds will be distributed to the eligible participants in the Plan. There will be no further Ennis contributions to the Block ESOP Trust during this period. Keith Walters, Chairman, President and CEO of Ennis said, "In adding Block Graphics to the ever growing list of brand names to the Ennis catalog we take another positive step forward in the continuing growth and consolidation of the forms business into Ennis. This acquisition gives us a major presence in the Pacific Northwest as well as expanding our presence in two excellent geographic locations, Colorado and California. The transaction will add to the growth in the forms business that has placed Ennis among the top players in the forms and printed products arena and continue to serve our 40,000 independent distributors and printers who comprise the largest share of the forms marketplace. It is great news for our shareholders, our customers and our employees and we are proud to have the Block employees as part of our team."




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