**FORM          10-Q**

**x**

**Champion          Industries, Inc.**

| West                    Virginia                                                  |   | 55-0717455                                              |
|-----------------------------------------------------------------------------------|--------|---------------------------------------------------------|
| (State                    or other jurisdiction of incorporation or organization) |   | (I.R.S.                    Employer Identification No.) |

|  Large                      accelerated filer o |  Accelerated                      filer o   |  Non-accelerated                      filer x |
|------------------------------------------------------|------------------------------------------------------------|----------------------------------------------------|

|  Class                                                      |   |  Outstanding                    at January 31, 2007 |
|------------------------------------------------------------------|--------|----------------------------------------------------------|
|  Common                    stock, $1.00 par value per share |   |  9,956,913                    shares                |

----

**Champion        Industries, Inc.**

**INDEX**

|                                                                                                                                                                       |  **Page                  No.** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|  Part I.   Financial                Information                                                                                                        |                                |
|       Item                1.    Financial Statements                                                                     |                                |
|          Consolidated                Balance Sheets (Unaudited)                                                               |  3                             |
|          Consolidated                Statements of Income (Unaudited)                                                         |  5                             |
|          Consolidated                Statements of Cash Flows (Unaudited)                                                     |  6                             |
|          Notes                to Consolidated Financial Statements                                                            |  7                             |
|      Item                2.  Management’s Discussion and Analysis of Financial                Condition and Results of Operations | 14                                  |
|      Item                3a.  Quantitative                and Qualitative Disclosure About Market Risk                                       |  17                            |
|      Item                4. Controls                and Procedures                                                                           | 17                                  |
|  Part                II. Other                Information                                                                                                        |                                |
|                             Item 1A. Risk Factors                                                                        | 18                                  |
|      Item                  6. Exhibits                                                                                                       | 18                                  |
|  Signatures                                                                                                                                                           | 19                                  |

----

**PART        I - FINANCIAL INFORMATION**

**Item        1. Financial Statements**

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Balance Sheets**

| **ASSETS**                                                                                               |   | **January                    31,**  |   |   |   | **October                    31,** |        |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|--------|------------------------------------|--------|
|                                                                                                     |   | **2007****(Unaudited)**             |   |   |   | **2006****(Audited)**              |   |
| Current                    assets:                                                                       |   |                                |   |   |   |                               |        |
| Cash                    and cash equivalents                                                             |   | **$                    3,982,610**  |   |   |   | $                    5,486,577     |        |
| Accounts                    receivable, net of allowance of $1,511,000                    and $1,558,000 |   | **20,477,830**                      |   |   |   | 20,638,823                         |        |
| Inventories                                                                                              |   | **11,195,925**                      |   |   |   | 10,986,590                         |        |
| Other                    current assets                                                                  |   | **1,028,889**                       |   |   |   | 618,549                            |        |
| Deferred                    income tax assets                                                            |   | **1,200,037**                       |   |   |   | 1,200,037                          |        |
| Total                    current assets                                                                  |   | **37,885,291**                      |   |   |   | 38,930,576                         |        |
|                                                                                                     |   |                                |   |   |   |                               |        |
|                                                                                                     |   |                                |   |   |   |                               |        |
| Property                    and equipment, at cost:                                                      |   |                                |   |   |   |                               |        |
| Land                                                                                                     |   | **2,023,375**                       |   |   |   | 2,023,375                          |        |
| Buildings                    and improvements                                                            |   | **9,088,304**                       |   |   |   | 8,731,280                          |        |
| Machinery                    and equipment                                                               |   | **47,441,766**                      |   |   |   | 46,757,859                         |        |
| Furniture                    and fixtures                                                                |   | **3,674,343**                       |   |   |   | 3,620,783                          |        |
| Vehicles                                                                                                 |   | **3,406,382**                       |   |   |   | 3,453,415                          |   |
|                                                                                                     |   | **65,634,170**                      |   |   |   | 64,586,712                         |        |
| Less                    accumulated depreciation                                                         |   | **(46,317,081**                     | **)**  |   |   | (45,541,027                        | )      |
|                                                                                                     |   | **19,317,089**                      |   |   |   | 19,045,685                         |        |
|                                                                                                     |   |                                |   |   |   |                               |   |
| Cash                    surrender value of officers’ life insurance                                |   | **1,202,696**                       |   |   |   | 1,202,696                          |        |
| Goodwill                                                                                                 |   | **3,411,511**                       |   |   |   | 3,411,511                          |   |
| Other                    intangibles, net of accumulated amortization                                    |   | **3,038,330**                       |   |   |   | 3,125,691                          |   |
| Other                    assets                                                                          |   | **273,074**                         |   |   |   | 272,567                            |   |
|                                                                                                     |   | **7,925,611**                       |   |   |   | 8,012,465                          |   |
| Total                    assets                                                                          |   | **$                    65,127,991** |   |   |   | $                    65,988,726    |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Balance Sheets (continued)**

| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                                                                                  | **January                  31,** |                              | **October                  31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|-----------------------------------|----------------------------------|--------|
|                                                                                                                                             | **2007****(Unaudited)**          |                              | **2006****(Audited)**            |   |
| Current                  liabilities:                                                                                                            |                             |                              |                             |   |   |   |
| Accounts                  payable                                                                                                                |                             | **$                  3,833,402**  |                             |   | $                  5,763,928 |   |
| Accrued                  payroll                                                                                                                 |                             | **1,893,616**                     |                             |   | 2,169,878 |   |
| Taxes                  accrued and withheld                                                                                                      |                             | **1,397,666**                     |                             |   | 1,394,345 |   |
| Accrued                  income taxes                                                                                                            |                             | **1,155,296**                     |                             |   | 1,107,837 |   |
| Accrued                  expenses                                                                                                                |                             | **997,401**                       |                             |   | 925,070 |   |
| Current                  portion of long-term debt                                                                                               |                             | **1,376,434**                     |                                  |   | 1,614,861 |   |
| Total                  current liabilities                                                                                                       |                             | **10,653,815**                    |                             |   | 12,975,919 |   |
|                                                                                                                                             |                             |                              |                             |   |   |   |
| Long-term                  debt, net of current portion                                                                                          |                             | **4,900,218**                     |                             |   | 4,219,724 |   |
| Other                  liabilities                                                                                                               |                             | **387,752**                       |                             |   | 388,384 |   |
| Deferred                  income tax liabilities                                                                                                 |                             | **3,628,014**                     |                             |   | 3,628,014 |   |
| Total                  liabilities                                                                                                               |                             | **19,569,799**                    |                             |   | 21,212,041 |   |
| Shareholders’                  equity:                                                                                                     |                             |                              |                             |   |   |   |
| Common                  stock, $1 par value, 20,000,000 shares authorized;9,956,913                  and 9,922,913 shares issued and outstanding |                             | **9,956,913**                     |                             |   | 9,922,913 |   |
| Additional                  paid-in capital                                                                                                      |                             | **22,712,060**                    |                             |   | 22,636,620 |   |
| Retained                  earnings                                                                                                               |                             | **12,889,219**                    |                             |   | 12,217,152 |   |
| Total                  shareholders’ equity                                                                                                |                             | **45,558,192**                    |                             |   | 44,776,685 |   |
| Total                  liabilities and shareholders’ equity                                                                                |                             | **$                  65,127,991** |                             |   | $                  65,988,726 |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Statements of Income**

|                                                  |   | **Three                  Months Ended January 31,** |   |
|-------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                  |   | **2007**                                            |   |   | **2006** |   |
| Revenues:                                             |   |                                                |   |   |   |   |
| Printing                                              |   | **$                  25,862,367**                   |   |   | $                    26,165,649 |   |
| Office                  products and office furniture |   | **9,076,966**                                       |   |   | 10,126,059 |   |
| Total                  revenues                       |   | **34,939,333**                                      |   |   | 36,291,708 |   |
|                                                  |   |                                                |   |   |   |   |
| Cost                  of sales:                       |   |                                                |   |   |   |   |
| Printing                                              |   | **18,238,302**                                      |   |   | 18,550,540 |   |
| Office                  products and office furniture |   | **6,350,004**                                       |   |   | 7,143,748 |   |
| Total                  cost of sales                  |   | **24,588,306**                                      |   |   | 25,694,288 |   |
|                                                  |   |                                                |   |   |   |   |
| Gross                  profit                         |   | **10,351,027**                                      |   |   | 10,597,420 |   |
|                                                  |   |                                                |   |   |   |   |

| Selling,                  general and administrative expenses      |   | **8,130,331**                    |   |   | 8,713,667                      |        |
|--------------------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|-------------|
|                                                               |   |                             |   |   |                           |        |
| Hurricane                  and relocation costs, net of recoveries |   | -                                |   |   | (257,960                       | )           |
|                                                               |   |                             |   |   |                           |        |
| Income                  from operations                            |   | **2,220,696**                    |   |   | 2,141,713                      |        |
| Other                  income (expense):                           |   |                             |   |   |                           |        |
| Interest                  income                                   |   | **5,230**                        |   |   | 6,742                          |        |
| Interest                  expense                                  |   | **(133,903**                     | **)**  |   | (171,741                       | )           |
| Other                                                              |   | **4,023**                        |   |   | (114                           | **)**  |
|                                                               |   | **(124,650**                     | **)**  |   | (165,113                       | )           |
| Income                  before income taxes                        |   | **2,096,046**                    |   |   | 1,976,600                      |        |
| Income                  tax expense                                |   | **(827,885**                     | **)**  |   | (830,922                       | )           |
| Net                  income                                        |   | **$                  1,268,161** |   |   | $                    1,145,678 |        |
|                                                               |   |                             |   |   |                           |        |
| Earnings                  per share:                               |   |                             |   |   |                           |        |
| Basic                                                              |   | **$                  0.13**      |   |   | $                  0.12        |        |
| Diluted                                                            |   | **$                  0.13**      |   |   | $                  0.12        |        |
|                                                               |   |                             |   |   |                           |        |
| Weighted                  average shares outstanding:         |   |                             |   |   |                           |        |
| Basic                                                              |   | **9,939,000**                    |   |   | 9,746,000                      |        |
| Diluted                                                            |   | **10,110,000**                   |   |   | 9,831,000                      |        |
|                                                               |   |                             |   |   |                           |        |
| Dividends                  per share                               |   | **$                  0.06**      |   |   | $                  0.05        |        |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Statements of Cash Flows**

|                                                                                                            |   | **Three                  Months Ended January 31,** |              |
|-----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------------|
|                                                                                                            |   | **2007**                                            |              | **2006** |   |
| **Cash                  flows from operating activities:**                                                      |   |                                                |              |   |   |
| Net                  income                                                                                     |   | **$**                                               | **1,268,161**     |   | $ | 1,145,678 |   |
| Adjustments                  to reconcile net income to cash provided                  by operating activities: |   |                                                |              |   |   |   |   |
| Depreciation                  and amortization                                                                  |   |                                                | **955,397**       |   |   | 1,050,141 |   |
| Loss on                  sale of assets                                                                    |   |                                                | **1,209**         |   |   | 6,903 |   |
| Increase                  in deferred compensation                                                              |   |                                                | **446**           |   |   | 894 |   |
| Bad                  debt expense                                                                               |   |                                                | **85,757**        |   |   | 221,845 |   |
|        Hurricane                and relocation costs, net of recoveries      |   |                                                | -                 |   |   | (257,960 | )  |
| Changes                  in assets and liabilities:                                                             |   |                                                |                   |   |   |   |   |
| Accounts                  receivable                                                                            |   |                                                | **75,236**        |   |   | (1,279,504 | ) |
| Inventories                                                                                                     |   |                                                | **(209,335**      | **)**  |   | 370,401 |   |
| Other                  current assets                                                                           |   |                                                | **(410,340**      | **)** |   | (504,163 | ) |
| Accounts                  payable                                                                               |   |                                                | **(579,801**      | **)**  |   | 254,330 |   |
| Accrued                  payroll                                                                                |   |                                                | **(276,262**      | **)** |   | (235,191 | ) |
| Taxes                  accrued and withheld                                                                     |   |                                                | **3,321**         |   |   | 232,059 |   |
| Income                  taxes                                                                                   |   |                                                | **47,459**        |   |   | 214,337 |   |
| Accrued                  expenses                                                                               |   |                                                | **72,329**        |   |   | (50,261 | ) |
| Other                  liabilities                                                                              |   |                                                | **(1,078**        | **)** |   | (1,017 | ) |
| Net                  cash provided by operating activities                                                      |   |                                                | **1,032,499**     |   |   | 1,168,492 |   |
|                                                                                                            |   |                                                |              |   |   |   |   |
| **Cash                  flows from investing activities:**                                                      |   |                                                |              |   |   |   |   |
| Purchases                  of property and equipment                                                            |   |                                                | **(1,161,218**    | **)** |   | (234,421 | ) |
| Proceeds                  from sales of property                                                                |   |                                                | **23,570**        |   |   | 45,513 |   |
| Goodwill                  and other intangible additions - paid                                                 |   |                                                | **(1,350,725**    | **)**  |   | -  |   |
| Other                  assets                                                                                   |   |                                                | **(3,506**        | **)**  |   | (62,218 | )  |
| Net                  cash used in investing activities                                                          |   |                                                | **(2,491,879**    | **)** |   | (251,126 | ) |
|                                                                                                            |   |                                                |              |   |   |   |   |
| **Cash                  flows from financing activities:**                                                      |   |                                                |              |   |   |   |   |
| Borrowings                  on line of credit                                                                   |   |                                                | **4,134,000**     |   |   | 2,808,000 |   |
| Payments                  on line of credit                                                                     |   |                                                | **(4,134,000**    | **)** |   | (2,420,000 | ) |
| Proceeds                from term debt and leases                                                               |   |                                                | **1,351,225**     |   |   | -  |   |
| Principal                  payments on long-term debt                                                           |   |                                                | **(909,158**      | **)** |   | (442,996 | ) |
| Proceeds                from exercise of stock options                                                          |   |                                                | **109,440**  |   |   | -  |   |
| Dividends                  paid                                                                                 |   |                                                | **(596,094**      | **)** |   | (487,296 | ) |
| Net                  cash used in financing activities                                                          |   |                                                | **(44,587**       | **)** |   | (542,292 | ) |
| Net                  (decrease) increase in cash and cash equivalents                                           |   |                                                | **(1,503,967**    | **)** |   | 375,074 |   |
| Cash                  and cash equivalents, beginning of period                                                 |   |                                                | **5,486,577**     |   |   | 3,661,622 |   |
| Cash                  and cash equivalents, end of period                                                       |   | **$**                                               | **3,982,610**     |   | $ | 4,036,696 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)**

**January              31, 2007**

**1.        Basis of Presentation and Business Operations**

**2.        Earnings per Share**

**3.        Inventories**

|                                                  |   | **January                  31,** |           | **October                  31,** |   |
|-------------------------------------------------------|--------|----------------------------------|----------------|----------------------------------|--------|
|                                                  |   | **2007**                         |           | **2006**                         |   |
| Printing:                                             |   |                             |           |                             |   |
| Raw                  materials                        |   | **$**                            | **2,141,402**  |                             | $      | 2,121,843 |   |
| Work                  in process                      |   |                             | **1,817,114**  |                             |   | 1,800,517 |   |
| Finished                  goods                       |   |                             | **4,444,760**  |                             |   | 4,404,162 |   |
| Office                  products and office furniture |   |                             | **2,792,649**  |                             |   | 2,660,068 |   |
|                                                  |   | **$**                            | **11,195,925** |                             | $      | 10,986,590 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

**4.        Long-Term Debt**

|                                                                                           |   | **January                  31,** |                                        | **October                  31,** |    |
|------------------------------------------------------------------------------------------------|--------|----------------------------------|---------------------------------------------|----------------------------------|---------|
|                                                                                           |   | **2007**                         |                                        | **2006**                         |    |
|      Secured                term note                payable          |   | **$**                            | **                    1,208,470** |                             |  $ | 452,386 |   |
|                          Installment notes payable to banks |   |                             | **5,068,182**                               |                             |    | 5,382,199 |   |
|                                                                                           |   |                             | **6,276,652**                               |                             |    | 5,834,585 |   |
| Less                  current portion                                                          |   |                             | **1,376,434**                               |                             |    | 1,614,861 |   |
| Long-term                  debt, net of current portion                                        |   | **$**                            | **4,900,218**                               |                             | $       | 4,219,724 |   |

**5.        Shareholders’ Equity**

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

**6.          **
**Commitments          and Contingencies**

|                                             |   | **Payments                  Due by Fiscal Year** |      |
|--------------------------------------------------|--------|--------------------------------------------------|-----------|
| **Contractual                  Obligations**     |   | **2007**                                         |      | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **Residual** |   | **Total** |   |
|                                             |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-cancelable                  operating leases |   | $                                                | 821,156   |   | $ | 894,247 |   | $ | 517,666 |   | $ | 255,056 |   | $ | 157,042 |   | $ | - |   | $ | 2,645,167 |   |
|                                             |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equipment                  purchase obligations  |   |                                             | 1,565,000 |   |   | -  |   |   | -  |   |   | -  |   |   | -  |   |   | -  |   |   | 1,565,000 |   |
|                                             |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Term                  debt                       |   |                                             | 1,034,901 |   |   | 1,348,795 |   |   | 1,217,336 |   |   | 2,033,550 |   |   | 642,070 |   |   | -  |   |   | 6,276,652 |   |
|                                             |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $                                                | 3,421,057 |   | $ | 2,243,042 |   | $ | 1,735,002 |   | $ | 2,288,606 |   | $ | 799,112 |   | $ | - |   | $ | 10,486,819 |   |

**7.        **
**Accounting        for Stock-Based Compensation**

*Share-Based          Payment*
*Accounting          for Stock-Based Compensation*

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

**8.        Acquisitions**

**9.        Accounting for Costs Associated with        Exit or Disposal Activities and Impact of Hurricane        Katrina**

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

| Personnel                                                        |   | $      | 88,423    |   |
|------------------------------------------------------------------|--------|--------|-----------|--------|
| Plant                                                            |   |   | 745,035   |   |
| Allowance                      for doubtful accounts             |   |   | 208,310   |   |
| Moving                      and relocation costs                 |   |   | 255,215   |   |
|                                                             |   |   |           |   |
| Total                      pre-tax hurricane expense             |   |   | 1,296,983 |   |
|                                                             |   |   |      |   |
| Lease                      settlement recovery              |   |   | 75,583    |   |
| Insurance                    recoveries                     |   |   | 577,677   |   |
|                                                             |   |   |           |   |
| Total                      recoveries                            |   |   | 653,260   |   |
|                                                             |   |   |           |   |
| Cumulative                      impact of Hurricane Katrina, net |   | $      | 643,723   |   |

----

**10.        Industry Segment Information**

|                                                 |   |  **Office                  Products** |       |
|------------------------------------------------------|--------|--------------------------------------------|------------|
| **2007                  Quarter 1**                  |   | **Printing**                               |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |
| Revenues                                             |   | $                                          | 28,999,524 |   | $ | 11,229,940 |   | $ | 40,229,464 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Elimination                  of intersegment revenue |   |                                       | (3,137,157 | ) |   | (2,152,974 | ) |   | (5,290,131 | ) |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Consolidated                  revenues               |   | $                                          | 25,862,367 |   | $ | 9,076,966 |   | $ | 34,939,333 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 1,739,649  |   |   | 481,047 |   |   | 2,220,696 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Depreciation                  & amortization     |   |                                       | 904,263    |   |   | 51,134 |   |   | 955,397 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Capital                  expenditures                |   |                                       | 1,131,915  |   |   | 29,303 |   |   | 1,161,218 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Identifiable                  assets                 |   |                                       | 54,752,575 |   |   | 10,375,416 |   |   | 65,127,991 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Goodwill                                             |   |                                       | 2,226,837  |   |   | 1,184,674 |   |   | 3,411,511 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
|                                                 |   |  **Office                  Products** |       |
| **2006                  Quarter 1**                  |   |  **Printing**                         |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Revenues                                             |   | $                                          | 29,688,029 |   | $ | 12,462,284 |   | $ | 42,150,313 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Elimination                  of intersegment revenue |   |                                       | (3,522,380 | ) |   | (2,336,225 | ) |   | (5,858,605 | ) |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Consolidated                  revenues               |   | $                                          | 26,165,649 |   | $ | 10,126,059 |   | $ | 36,291,708 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 1,447,748  |   |   | 693,965 |   |   | 2,141,713 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Depreciation                  & amortization     |   |                                       | 1,015,098  |   |   | 35,043 |   |   | 1,050,141 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Capital                  expenditures                |   |                                       | 212,243    |   |   | 22,178 |   |   | 234,421 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Identifiable                  assets                 |   |                                       | 51,323,390 |   |   | 11,382,356 |   |   | 62,705,746 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Goodwill                                             |   |                                       | 1,774,344  |   |   | 286,442 |   |   | 2,060,786 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

|                                                     |   | **Three                  Months Ended January 31,** |           |
|----------------------------------------------------------|--------|-----------------------------------------------------|----------------|
|                                                     |   | **2007**                                            |           | **2006** |   |
| Revenues:                                                |   |                                                |           |   |   |
| Total                  segment revenues                  |   | **$**                                               | **40,229,464** |   | $ | 42,150,313 |   |
| Elimination                  of intersegment revenue     |   |                                                | **(5,290,131** | **)** |   | (5,858,605 | ) |
|                                                     |   |                                                |           |   |   |   |   |
| Consolidated                  revenue                    |   | **$**                                               | **34,939,333** |   | $ | 36,291,708 |   |
|                                                     |   |                                                |           |   |   |   |   |
| Operating                  income:                       |   |                                                |           |   |   |   |   |
| Total                  segment operating income          |   | **$**                                               | **2,220,696**  |   | $ | 2,141,713 |   |
|                                                     |   |                                                |           |   |   |   |   |
| ** **Interest                  income               |   |                                                | **5,230**      |   |   | 6,742 |   |
|                                                     |   |                                                |           |   |   |   |   |
| Interest                  expense                        |   |                                                | **(133,903**   | **)** |   | (171,741 | ) |
|                                                     |   |                                                |           |   |   |   |   |
| Other                  (expense) income                  |   |                                                | **4,023**      |   |   | (114 | )  |
|                                                     |   |                                                |           |   |   |   |   |
| Consolidated                  income before income taxes |   | **$**                                               | **2,096,046**  |   | $ | 1,976,600 |   |
|                                                     |   |                                                |           |   |   |   |   |
| Identifiable                  assets:                    |   |                                                |           |   |   |   |   |
| Total                  segment identifiable assets       |   | **$**                                               | **65,127,991** |   | $ | 62,705,746 |   |
| Elimination                  of intersegment assets      |   |                                                | **—**    |   |   | — |   |
|                                                     |   |                                                |           |   |   |   |   |
| Total                  consolidated assets               |   | **$**                                               | **65,127,991** |   | $ | 62,705,746 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

**Results        of Operations**

|                                                                         |   |   |   |  Three                              Months Ended January 31,                                                                                                                          |                                          |
|------------------------------------------------------------------------------|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|
|                                                                         |   |   |   | **                                                    2007**  |                                          |                     2006 |   |
|                                                                         |   |   |   |                                                                                                                                                                                       | ($                              in thousands) |   |   |   |
| Revenues:                                                                    |   |        |   |                                                                                                                                                                                            |                                               |  |
| Printing                                                                     |   |   |   |                                                                                                                                                                                       | **$**                                         | **25,862** |   |   | **74.0** | **%** |   | $ | 26,166 |   |   |  72.1 | % |
| Office                              products and office furniture            |   |   |   |                                                                                                                                                                                       |                                          | **9,077** |   |   | **26.0** |   |   |   | 10,126 |   |   |  27.9 |   |
| Total                              revenues                                  |   |   |   |                                                                                                                                                                                       |                                          | **34,939** |   |   | **100.0** |   |   |   | 36,292 |   |   | 100.00 |   |
|                                                                         |   |   |   |                                                                                                                                                                                       |                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                              of sales:                                  |   |   |   |                                                                                                                                                                                       |                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Printing                                                                     |   |   |   |                                                                                                                                                                                       |                                          | **18,238** |   |   | **52.2** |   |   |   | 18,550 |   |   |  51.1 |   |
| Office                              products and office furniture            |   |   |   |                                                                                                                                                                                       |                                          | **6,350** |   |   | **18.2** |   |   |   | 7,144 |   |   |  19.7 |   |
| Total                              cost of sales                             |   |   |   |                                                                                                                                                                                       |                                          | **24,588** |   |   | **70.4** |   |   |   | 25,694 |   |   | 70.8 |   |
| Gross                              profit                                    |   |   |   |                                                                                                                                                                                       |                                          | **10,351** |   |   | **29.6** |   |   |   | 10,598 |   |   |  29.2 |   |
| Selling,                              general and administrative expenses    |   |   |   |                                                                                                                                                                                       |                                          | **8,130** |   |   | **23.2** |   |   |   | 8,714 |   |   |  24.0 |   |
| Hurricane                            and relocation costs, net of recoveries |   |   |   |                                                                                                                                                                                       |                                          | - |   |   | (0.0 | )  |   |   |  (258 | )  |   |                                        (0.7 | )  |
| Income                              from operations                          |   |   |   |                                                                                                                                                                                       |                                          | **2,221** |   |   | **6.4** |   |   |   | 2,142 |   |   |  5.9 |   |
| Interest                              income                                 |   |   |   |                                                                                                                                                                                       |                                          | **5** |   |   | **0.0** |   |   |   | 7 |   |   |  0.1 |   |
| Interest                              expense                                |   |   |   |                                                                                                                                                                                       |                                          | **(134** | **)** |   | **(0.4** | **)** |   |   | (172 | ) |   |  (0.5 | ) |
| Other                              income                                    |   |   |   |                                                                                                                                                                                       |                                          | **4** |   |   | **0.0** |   |   |   | - |   |   |  0.0 |   |
| Income                              before taxes                             |   |   |   |                                                                                                                                                                                       |                                          | **2,096** |   |   | **6.0** |   |   |   | 1,977 |   |   |  5.5 |   |
| Income                              taxes                                    |   |   |   |                                                                                                                                                                                       |                                          | **(828** | **)** |   | **(2.4** | **)** |   |   | (831 | ) |   |  (2.3 | ) |
| Net                              income                                      |   |   |   |                                                                                                                                                                                       | **$**                                         | **1,268** |   |   | **3.6** | **%** |   | $ | 1,146 |   |   | 3.2 | % |

|                                                           |   | Three                          Months Ended January 31, |
|----------------------------------------------------------------|--------|---------------------------------------------------------|
|                                                           |   |                                                    | 2007 |   |   | 2006 |   |
| Net                          income                            |   | $                                                       | 1,268,000 |   | $ | 1,146,000 |   |
| Insurance                          recoveries, net of expenses |   |                                                    | - |   |   | 150,000 |   |
| Core                          net income                       |   | $                                                       | 1,268,000 |   | $ | 996,000 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Management’s              Discussion and Analysis of Financial Condition **

**and              Results of Operations (continued)**

**Three          Months Ended January 31, 2007 Compared to Three Months Ended January 31,          2006**

*Revenues*

*Cost        of Sales*

*Operating        Expenses*

----

**Champion              Industries, Inc. and Subsidiaries**

**Management’s              Discussion and Analysis of Financial Condition **

**and              Results of Operations (continued)**

*Income            from Operations and Other Income and Expenses*

*Income            Taxes*

*Net          Income*

**Inflation          and Economic Conditions**

**Seasonality**

**Liquidity        and Capital Resources**

----

**Champion              Industries, Inc. and Subsidiaries**

**Management’s              Discussion and Analysis of Financial Condition **

**and              Results of Operations (continued)**

**Environmental          Regulation**

**Special        Note Regarding Forward-Looking Statements**

**ITEM        3a. Quantitative and Qualitative Disclosure About Market        Risk**

**ITEM        4. Controls and Procedures**

----

**PART        II - OTHER INFORMATION**

**Item          1A. Risk Factors**

**Item          6. Exhibits **

|   | a) | Exhibits: |
|--------|----|-----------|

|   |   |   |
|--------|--------|--------|

|  (31.1)  | Principal                  Executive Officer Certification Pursuant to Section 302 of the                  Sarbanes-Oxley act of 2002 - Marshall T. Reynolds                                                                                      | Exhibit                    31.1 Page Exhibit 31.1-p1 |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|
|  (31.2)       | Principal                  Financial Officer Certification Pursuant to Section 302 of the                  Sarbanes-Oxley act of 2002 - Todd R. Fry                                                                                               | Exhibit                  31.2 Page Exhibit 31.2-p1   |
|  (31.3)       | Principal                  Operating Officer Certification Pursuant to Section 302 of the                  Sarbanes-Oxley act of 2002 - Toney K. Adkins                                                                                           | Exhibit                  31.3 Page Exhibit 31.3-p1   |
|  (32)         | Marshall                  T. Reynolds, Todd R. Fry and Toney K. Adkins Certification Pursuant                  to 18                  U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the                  Sarbanes-Oxley act of 2002   | Exhibit                  32 Page Exhibit 32-p1       |

----

**SIGNATURES**

| Date:                  March 7,                  2007 | /s/                  Marshall T. Reynolds                                           |
|-------------------------------------------------------|-------------------------------------------------------------------------------------|
|                                                  | Marshall                  T. Reynolds                                               |
|                                                  | Chief                  Executive Officer                                            |
|                                                  |                                                                                |
|                                                  |                                                                                |
| Date:                  March 7,                  2007 | /s/                  Toney K. Adkins                                                |
|                                                  | Toney                  K. Adkins                                                    |
|                                                  | President                  and Chief Operating Officer                              |
|                                                  |                                                                                |
|                                                  |                                                                                |
| Date:                  March 7,                  2007 | /s/                  Todd R. Fry                                                    |
|                                                  | Todd                  R. Fry                                                        |
|                                                  | Senior                  Vice President and Chief Financial                  Officer |