**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, 2006 |
|------------------------------------------------------------------|--------|----------------------------------------------------------|
|  Common                    stock, $1.00 par value per share |   |  9,745,913                    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                  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,** |        |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|--------|------------------------------------|--------|
|                                                                                                     |   | **2006****(Unaudited)**             |   |   |   | **2005****(Audited)**              |   |
| Current                    assets:                                                                       |   |                                |   |   |   |                               |        |
| Cash                    and cash equivalents                                                             |   | **$                    4,036,696**  |   |   |   | $                    3,661,622     |        |
| Accounts                    receivable, net of allowance of $1,358,000                    and $1,410,000 |   | **20,658,112**                      |   |   |   | 19,300,453                         |        |
| Inventories                                                                                              |   | **10,709,325**                      |   |   |   | 11,079,726                         |        |
| Other                    current assets                                                                  |   | **1,133,544**                       |   |   |   | 629,381                            |        |
| Deferred                    income tax assets                                                            |   | **1,168,526**                       |   |   |   | 1,168,526                          |        |
| Total                    current assets                                                                  |   | **37,706,203**                      |   |   |   | 35,839,708                         |        |
|                                                                                                     |   |                                |   |   |   |                               |        |
|                                                                                                     |   |                                |   |   |   |                               |        |
| Property                    and equipment, at cost:                                                      |   |                                |   |   |   |                               |        |
| Land                                                                                                     |   | **2,023,375**                       |   |   |   | 2,006,375                          |        |
| Buildings                    and improvements                                                            |   | **8,418,486**                       |   |   |   | 8,368,720                          |        |
| Machinery                    and equipment                                                               |   | **44,220,645**                      |   |   |   | 43,668,900                         |        |
| Equipment                    under capital leases                                                        |   | **-**                               |   |   |   | 426,732                            |        |
| Furniture                    and fixtures                                                                |   | **3,474,334**                       |   |   |   | 3,492,535                          |        |
| Vehicles                                                                                                 |   | **3,470,740**                       |   |   |   | 3,629,268                          |   |
|                                                                                                     |   | **61,607,580**                      |   |   |   | 61,592,530                         |        |
| Less                    accumulated depreciation                                                         |   | **(43,684,812**                     | **)**  |   |   | (42,894,910                        | )      |
|                                                                                                     |   | **17,922,768**                      |   |   |   | 18,697,620                         |        |
|                                                                                                     |   |                                |   |   |   |                               |   |
| Cash                    surrender value of officers’ life insurance                                |   | **1,117,484**                       |   |   |   | 1,117,484                          |        |
| Goodwill                                                                                                 |   | **2,060,786**                       |   |   |   | 2,060,786                          |   |
| Other                    intangibles, net of accumulated amortization                                    |   | **3,607,083**                       |   |   |   | 3,697,368                          |   |
| Other                    assets                                                                          |   | **291,422**                         |   |   |   | 232,204                            |   |
|                                                                                                     |   | **7,076,775**                       |   |   |   | 7,107,842                          |   |
| Total                    assets                                                                          |   | **$                    62,705,746** |   |   |   | $                    61,645,170    |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Balance Sheets (continued)**

| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                                                                    | **January                  31,** |                              | **October                  31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|-----------------------------------|----------------------------------|--------|
|                                                                                                                               | **2006****(Unaudited)**          |                              | **2005****(Audited)**            |   |
| Current                  liabilities:                                                                                              |                             |                              |                             |   |   |   |
| Accounts                  payable                                                                                                  |                             | **$                  3,880,690**  |                             |   | $                  3,584,323 |   |
| Accrued                  payroll                                                                                                   |                             | **1,478,890**                     |                             |   | 1,714,078 |   |
| Taxes                  accrued and withheld                                                                                        |                             | **1,338,969**                     |                             |   | 1,106,910 |   |
| Accrued                  income taxes                                                                                              |                             | **896,100**                       |                             |   | 681,763 |   |
| Accrued                  expenses                                                                                                  |                             | **936,967**                       |                             |   | 987,228 |   |
| Current                  portion of long-term debt:                                                                                |                             |                              |                             |   |   |   |
| Notes                  payable                                                                                                     |                             | **1,665,843**                     |                             |   | 1,667,797 |   |
| Capital                  lease obligations                                                                                         |                             | **-**                             |                             |   | 16,483 |   |
| Total                  current liabilities                                                                                         |                             | **10,197,459**                    |                             |   | 9,758,582 |   |
|                                                                                                                               |                             |                              |                             |   |   |   |
| Long-term                  debt, net of current portion:                                                                           |                             |                              |                             |   |   |   |
| Notes                  payable, line of credit                                                                                     |                             | **2,000,000**                     |                             |   | 1,612,000 |   |
| Notes                  payable, term                                                                                               |                             | **4,723,943**                     |                             |   | 5,148,503 |   |
| Other                  liabilities                                                                                                 |                             | **388,807**                       |                             |   | 388,930 |   |
| Deferred                  income tax liabilities                                                                                   |                             | **3,984,934**                     |                             |   | 3,984,934 |   |
| Total                  liabilities                                                                                                 |                             | **21,295,143**                    |                             |   | 20,892,949 |   |
| Shareholders’                  equity:                                                                                       |                             |                              |                             |   |   |   |
| Common                  stock, $1 par value, 20,000,000 shares authorized;9,745,913                  shares issued and outstanding |                             | **9,745,913**                     |                             |   | 9,745,913 |   |
| Additional                  paid-in capital                                                                                        |                             | **22,297,670**                    |                             |   | 22,297,670 |   |
| Retained                  earnings                                                                                                 |                             | **9,367,020**                     |                             |   | 8,708,638 |   |
| Total                  shareholders’ equity                                                                                  |                             | **41,410,603**                    |                             |   | 40,752,221 |   |
| Total                  liabilities and shareholders’ equity                                                                  |                             | **$                  62,705,746** |                             |   | $                  61,645,170 |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Statements of Income**

|                                                  |   | **Three                  Months Ended January 31,** |   |
|-------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                  |   | **2006**                                            |   |   | **2005** |   |
| Revenues:                                             |   |                                                |   |   |   |   |
| Printing                                              |   | **$                  26,165,649**                   |   |   | $                    24,436,621 |   |
| Office                  products and office furniture |   | **10,126,059**                                      |   |   | 10,003,370 |   |
| Total                  revenues                       |   | **36,291,708**                                      |   |   | 34,439,991 |   |
|                                                  |   |                                                |   |   |   |   |
| Cost                  of sales:                       |   |                                                |   |   |   |   |
| Printing                                              |   | **18,550,540**                                      |   |   | 17,771,263 |   |
| Office                  products and office furniture |   | **7,143,748**                                       |   |   | 7,157,955 |   |
| Total                  cost of sales                  |   | **25,694,288**                                      |   |   | 24,929,218 |   |
|                                                  |   |                                                |   |   |   |   |
| Gross                  profit                         |   | **10,597,420**                                      |   |   | 9,510,773 |   |
|                                                  |   |                                                |   |   |   |   |

| Selling,                  general and administrative expenses      |   | **8,713,667**                    |        |   | 8,977,680                    |   |
|--------------------------------------------------------------------|--------|----------------------------------|-------------|--------|------------------------------|--------|
|                                                               |   |                             |        |   |                         |   |
| Hurricane                  and relocation costs, net of recoveries |   | (257,960                         | )           |   | -                       |   |
|                                                               |   |                             |        |   |                         |   |
| Income                  from operations                            |   | **2,141,713**                    |        |   | 533,093                      |   |
| Other                  income (expense):                           |   |                             |        |   |                         |   |
| Interest                  income                                   |   | **6,742**                        |        |   | 5,066                        |   |
| Interest                  expense                                  |   | **(171,741**                     | **)**       |   | (137,365                     | )      |
| Other                                                              |   | **(114**                         | **)**  |   | 62,673                       |   |
|                                                               |   | **(165,113**                     | **)**       |   | (69,626                      | )      |
| Income                  before income taxes                        |   | **1,976,600**                    |        |   | 463,467                      |   |
| Income                  tax expense                                |   | **(830,922**                     | **)**       |   | (200,341                     | )      |
| Net                  income                                        |   | **$                  1,145,678** |        |   | $                    263,126 |   |
|                                                               |   |                             |        |   |                         |   |
| Earnings                  per share:                               |   |                             |        |   |                         |   |
| Basic                                                              |   | **$                  0.12**      |        |   | $                  0.03      |   |
| Diluted                                                            |   | **$                  0.12**      |        |   | $                  0.03      |   |
|                                                               |   |                             |        |   |                         |   |
| Weighted                  average shares outstanding:         |   |                             |        |   |                         |   |
| Basic                                                              |   | **9,746,000**                    |        |   | 9,734,000                    |   |
| Diluted                                                            |   | **9,831,000**                    |        |   | 9,802,000                    |   |
|                                                               |   |                             |        |   |                         |   |
| Dividends                  per share                               |   | **$                  0.05**      |        |   | $                  0.05      |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Statements of Cash Flows**

|                                                                                                            |   | **Three                  Months Ended January 31,** |           |
|-----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|----------------|
|                                                                                                            |   | **2006**                                            |           | **2005** |   |
| **Cash                  flows from operating activities:**                                                      |   |                                                |           |   |   |
| Net                  income                                                                                     |   | **$**                                               | **1,145,678**  |   | $ | 263,126 |   |
| Adjustments                  to reconcile net income to cash provided                  by operating activities: |   |                                                |           |   |   |   |   |
| Depreciation                  and amortization                                                                  |   |                                                | **1,050,141**  |   |   | 1,152,111 |   |
| Loss (gain)                  on sale of assets                                                             |   |                                                | **6,903**      |   |   | (4,099 | ) |
| Increase                  in deferred compensation                                                              |   |                                                | **894**        |   |   | 1,787 |   |
| Bad                  debt expense                                                                               |   |                                                | **221,845**    |   |   | 114,224 |   |
|        Hurricane                and relocation costs, net of recoveries      |   |                                                | (257,960       | ) |   | -  |   |
| Changes                  in assets and liabilities:                                                             |   |                                                |                |   |   |   |   |
| Accounts                  receivable                                                                            |   |                                                | **(1,279,504** | **)** |   | 3,238,390 |   |
| Inventories                                                                                                     |   |                                                | **370,401**    |   |   | 170,716 |   |
| Other                  current assets                                                                           |   |                                                | **(504,163**   | **)** |   | (458,741 | ) |
| Accounts                  payable                                                                               |   |                                                | **254,330**    |   |   | 308,164 |   |
| Accrued                  payroll                                                                                |   |                                                | **(235,191**   | **)** |   | (403,997 | ) |
| Taxes                  accrued and withheld                                                                     |   |                                                | **232,059**    |   |   | 119,167 |   |
| Income                  taxes                                                                                   |   |                                                | **214,337**    |   |   | 175,341 |   |
| Accrued                  expenses                                                                               |   |                                                | **(50,261**    | **)** |   | 69,561 |   |
| Other                  liabilities                                                                              |   |                                                | **(1,017**     | **)** |   | (961 | ) |
| Net                  cash provided by operating activities                                                      |   |                                                | **1,168,492**  |   |   | 4,744,789 |   |
|                                                                                                            |   |                                                |           |   |   |   |   |
| **Cash                  flows from investing activities:**                                                      |   |                                                |           |   |   |   |   |
| Purchases                  of property and equipment                                                            |   |                                                | **(234,421**   | **)** |   | (855,535 | ) |
| Proceeds                  from sales of property                                                                |   |                                                | **45,513**     |   |   | 24,223 |   |
| Other                  assets                                                                                   |   |                                                | **(62,218**    | **)**  |   | 106,693 |   |
| Net                  cash used in investing activities                                                          |   |                                                | **(251,126**   | **)** |   | (724,619 | ) |
|                                                                                                            |   |                                                |           |   |   |   |   |
| **Cash                  flows from financing activities:**                                                      |   |                                                |           |   |   |   |   |
| Borrowings                  on line of credit                                                                   |   |                                                | **2,808,000**  |   |   | 993,000 |   |
| Payments                  on line of credit                                                                     |   |                                                | **(2,420,000** | **)** |   | (1,493,000 | ) |
| Principal                  payments on long-term debt                                                           |   |                                                | **(442,996**   | **)** |   | (438,890 | ) |
| Dividends                  paid                                                                                 |   |                                                | **(487,296**   | **)** |   | (486,695 | ) |
| Net                  cash used in financing activities                                                          |   |                                                | **(542,292**   | **)** |   | (1,425,585 | ) |
| Net                  increase in cash and cash equivalents                                                      |   |                                                | **375,074**    |   |   | 2,594,585 |   |
| Cash                  and cash equivalents, beginning of period                                                 |   |                                                | **3,661,622**  |   |   | 1,745,457 |   |
| Cash                  and cash equivalents, end of period                                                       |   | **$**                                               | **4,036,696**  |   | $ | 4,340,042 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

**January              31, 2006**

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

**2.        Earnings per Share**

**3.        Inventories**

|                                                  |   | **January                  31,** |           | **October                  31,** |   |
|-------------------------------------------------------|--------|----------------------------------|----------------|----------------------------------|--------|
|                                                  |   | **2006**                         |           | **2005**                         |   |
| Printing:                                             |   |                             |           |                             |   |
| Raw                  materials                        |   | **$**                            | **2,176,640**  |                             | $      | 2,198,882 |   |
| Work                  in process                      |   |                             | **1,748,990**  |                             |   | 1,766,862 |   |
| Finished                  goods                       |   |                             | **3,972,447**  |                             |   | 4,013,041 |   |
| Office                  products and office furniture |   |                             | **2,811,248**  |                             |   | 3,100,941 |   |
|                                                  |   | **$**                            | **10,709,325** |                             | $      | 11,079,726 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

**4.        Long-Term Debt**

|                                                                                           |   | **January                  31,** |                | **October                  31,** |    |
|------------------------------------------------------------------------------------------------|--------|----------------------------------|---------------------|----------------------------------|---------|
|                                                                                           |   | **2006**                         |                | **2005**                         |    |
|      Secured                term note                payable          |   |  **$**                      | **2,797,120**  |                             |  $ | 3,024,861  |   |
|                          Installment notes payable to banks |   |                             | **3,592,666**       |                             |    | 3,791,439 |   |
| Capital                  lease obligations                                                     |   |                             | **-**               |                             |    | 16,483 |   |
|                                                                                           |   |                             | **6,389,786**       |                             |    | 6,832,783 |   |
| Less                  current portion                                                          |   |                             | **1,665,843**       |                             |    | 1,684,280 |   |
| Long-term                  debt, net of current portion                                        |   | **$**                            | **4,723,943**       |                             | $       | 5,148,503 |   |

**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**     |   | **2006**                                         |      | **2007** |   | **2008** |   | **2009** |   | **2010** |   | **Residual** |   | **Total** |   |
|                                             |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-cancelable                  operating leases |   | $                                                | 780,948   |   | $ | 869,883 |   | $ | 679,224 |   | $ | 295,340 |   | $ | 42,000 |   | $ | - |   | $ | 2,667,395 |   |
|                                             |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revolving                  line of credit        |   |                                             | -         |   |   | - |   |   | 2,000,000 |   |   | -  |   |   | - |   |   | - |   |   | 2,000,000 |   |
|                                             |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Term                  debt                       |   |                                             | 1,403,369 |   |   | 1,776,988 |   |   | 1,714,825 |   |   | 469,954 |   |   | 1,024,650 |   |   | -  |   |   | 6,389,786 |   |
|                                             |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $                                                | 2,184,317 |   | $ | 2,646,871 |   | $ | 4,394,049 |   | $ | 765,294 |   | $ | 1,066,650 |   | $ | - |   | $ | 11,057,181 |   |

**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                                                            |   |   | 545,077   |   |
| Allowance                      for doubtful accounts             |   |   | 208,310   |   |
| Moving                      and relocation costs                 |   |   | 221,229   |   |
|                                                             |   |   |           |   |
| Total                      pre-tax hurricane expense             |   |   | 1,063,039 |   |
|                                                             |   |   |           |   |
| Insurance                      recoveries                        |   |   | 300,000   |   |
|                                                             |   |   |           |   |
| Cumulative                      impact of Hurricane Katrina, net |   | $      | 763,039   |   |

----

**10.        Industry Segment Information**

|                                                 |   |  **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 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
|                                                 |   |  **Office                  Products** |       |
| **2005                  Quarter 1**                  |   |  **Printing**                         |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Revenues                                             |   | $                                          | 28,085,977 |   | $ | 11,528,769 |   | $ | 39,614,746 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Elimination                  of intersegment revenue |   |                                       | (3,649,356 | ) |   | (1,525,399 | ) |   | (5,174,755 | ) |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Consolidated                  revenues               |   | $                                          | 24,436,621 |   | $ | 10,003,370 |   | $ | 34,439,991 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 271,729    |   |   | 261,364 |   |   | 533,093 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Depreciation                  & amortization     |   |                                       | 1,072,454  |   |   | 79,657 |   |   | 1,152,111 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Capital                  expenditures                |   |                                       | 782,748    |   |   | 72,787 |   |   | 855,535 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Identifiable                  assets                 |   |                                       | 53,108,233 |   |   | 10,148,254 |   |   | 63,256,487 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| 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,** |           |
|----------------------------------------------------------|--------|-----------------------------------------------------|----------------|
|                                                     |   | **2006**                                            |           | **2005** |   |
| Revenues:                                                |   |                                                |           |   |   |
| Total                  segment revenues                  |   | **$**                                               | **42,150,313** |   | $ | 39,614,746 |   |
| Elimination                  of intersegment revenue     |   |                                                | **(5,858,605** | **)** |   | (5,174,755 | ) |
|                                                     |   |                                                |           |   |   |   |   |
| Consolidated                  revenue                    |   | **$**                                               | **36,291,708** |   | $ | 34,439,991 |   |
|                                                     |   |                                                |           |   |   |   |   |
| Operating                  income:                       |   |                                                |           |   |   |   |   |
| Total                  segment operating income          |   | **$**                                               | **2,141,713**  |   | $ | 533,093 |   |
|                                                     |   |                                                |           |   |   |   |   |
| ** **Interest                  income               |   |                                                | **6,742**      |   |   | 5,066 |   |
|                                                     |   |                                                |           |   |   |   |   |
| Interest                  expense                        |   |                                                | **(171,741**   | **)** |   | (137,365 | ) |
|                                                     |   |                                                |           |   |   |   |   |
| Other                  (expense) income                  |   |                                                | **(114**       | **)**  |   | 62,673 |   |
|                                                     |   |                                                |           |   |   |   |   |
| Consolidated                  income before income taxes |   | **$**                                               | **1,976,600**  |   | $ | 463,467 |   |
|                                                     |   |                                                |           |   |   |   |   |
| Identifiable                  assets:                    |   |                                                |           |   |   |   |   |
| Total                  segment identifiable assets       |   | **$**                                               | **62,705,746** |   | $ | 63,256,487 |   |
| Elimination                  of intersegment assets      |   |                                                | **—**    |   |   | — |   |
|                                                     |   |                                                |           |   |   |   |   |
| Total                  consolidated assets               |   | **$**                                               | **62,705,746** |   | $ | 63,256,487 |   |

----

**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,                                                                                                                          |                                          |
|------------------------------------------------------------------------------|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|
|                                                                         |   |   |   | **                                                    2006**  |                                          |                     2005 |   |
|                                                                         |   |   |   |                                                                                                                                                                                       | ($                              in thousands) |   |   |   |
| Revenues:                                                                    |   |        |   |                                                                                                                                                                                            |                                               |  |
| Printing                                                                     |   |   |   |                                                                                                                                                                                       | **$**                                         | **26,166** |   |   | **72.1** | **%** |   | $ | 24,437 |   |   |  71.0 | % |
| Office                              products and office furniture            |   |   |   |                                                                                                                                                                                       |                                          | **10,126** |   |   | **27.9** |   |   |   | 10,003 |   |   |  29.0 |   |
| Total                              revenues                                  |   |   |   |                                                                                                                                                                                       |                                          | **36,292** |   |   | **100.0** |   |   |   | 34,440 |   |   | 100.00 |   |
|                                                                         |   |   |   |                                                                                                                                                                                       |                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                              of sales:                                  |   |   |   |                                                                                                                                                                                       |                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Printing                                                                     |   |   |   |                                                                                                                                                                                       |                                          | **18,550** |   |   | **51.1** |   |   |   | 17,771 |   |   |  51.6 |   |
| Office                              products and office furniture            |   |   |   |                                                                                                                                                                                       |                                          | **7,144** |   |   | **19.7** |   |   |   | 7,158 |   |   |  20.7 |   |
| Total                              cost of sales                             |   |   |   |                                                                                                                                                                                       |                                          | **25,694** |   |   | **70.8** |   |   |   | 24,929 |   |   | 72.3 |   |
| Gross                              profit                                    |   |   |   |                                                                                                                                                                                       |                                          | **10,598** |   |   | **29.2** |   |   |   | 9,511 |   |   |  27.7 |   |
| Selling,                              general and administrative expenses    |   |   |   |                                                                                                                                                                                       |                                          | **8,714** |   |   | **24.0** |   |   |   | 8,978 |   |   |  26.1 |   |
| Hurricane                            and relocation costs, net of recoveries |   |   |   |                                                                                                                                                                                       |                                          | (258 | ) |   | (0.7 | )  |   |   | -  |   |   |   |   |
| Income                              from operations                          |   |   |   |                                                                                                                                                                                       |                                          | **2,142** |   |   | **5.9** |   |   |   | 533 |   |   |  1.6 |   |
| Interest                              income                                 |   |   |   |                                                                                                                                                                                       |                                          | **7** |   |   | **0.1** |   |   |   | 5 |   |   |  0.0 |   |
| Interest                              expense                                |   |   |   |                                                                                                                                                                                       |                                          | **(172** | **)** |   | **(0.5** | **)** |   |   | (137 | ) |   |  (0.4 | ) |
| Other                              income                                    |   |   |   |                                                                                                                                                                                       |                                          | **-** |   |   | **0.0** |   |   |   | 62 |   |   |  0.2 |   |
| Income                              before taxes                             |   |   |   |                                                                                                                                                                                       |                                          | **1,977** |   |   | **5.5** |   |   |   | 463 |   |   |  1.4 |   |
| Income                              taxes                                    |   |   |   |                                                                                                                                                                                       |                                          | **(831** | **)** |   | **(2.3** | **)** |   |   | (200 | ) |   |  (0.6 | ) |
| Net                              income                                      |   |   |   |                                                                                                                                                                                       | **$**                                         | **1,146** |   |   | **3.2** | **%** |   | $ | 263 |   |   | 0.8 | % |

|                                                           |   | Three                          Months Ended January 31, |
|----------------------------------------------------------------|--------|---------------------------------------------------------|
|                                                           |   |                                                    | 2006 |   |   | 2005 |   |
| Net                          income                            |   | $                                                       | 1,146,000 |   | $ | 263,000 |   |
| Insurance                          recoveries, net of expenses |   |                                                    | 150,000 |   |   | - |   |
| Core                          net income                       |   | $                                                       | 996,000 |   | $ | 263,000 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

**and              Results of Operations (continued)**

**Three          Months Ended January 31, 2006 Compared to Three Months Ended January 31,          2005**

*Revenues*

*Cost        of Sales*

*Operating        Expenses*

*Income        from Operations and Other Income and Expenses*

----

**Champion              Industries, Inc. and Subsidiaries**

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

**and              Results of Operations (continued)**

*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        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 8,                  2006 | /s/                  Marshall T. Reynolds                                           |
|-------------------------------------------------------|-------------------------------------------------------------------------------------|
|                                                  | Marshall                  T. Reynolds                                               |
|                                                  | Chief                  Executive Officer                                            |
|                                                  |                                                                                |
|                                                  |                                                                                |
| Date:                  March 8,                  2006 | /s/                  Toney K. Adkins                                                |
|                                                  | Toney                  K. Adkins                                                    |
|                                                  | President                  and Chief Operating Officer                              |
|                                                  |                                                                                |
|                                                  |                                                                                |
| Date:                  March 8,                  2006 | /s/                  Todd R. Fry                                                    |
|                                                  | Todd                  R. Fry                                                        |
|                                                  | Senior                  Vice President and Chief Financial                  Officer |