##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
 ________ 
to
 Commission File Number 001-12631
 
 CONSOLIDATED GRAPHICS, INC.
  Texas
    
    76-0190827(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)5858 Westheimer Road, Suite 200Houston, Texas
    
    77057(Address of principal executive offices)
    
    (Zip Code)
 713) 787-0977
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o
  o þ




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##### 



CONSOLIDATED GRAPHICS, INC.
 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2008
 INDEX
 Part I  Financial Information
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets at December 31, 2008 and March 31, 2008
    
    
    3Condensed Consolidated Income Statements for the Three and Nine Months Ended December 31, 2008 and 2007
    
    
    4Condensed Consolidated Statement of Shareholders Equity for the Nine Months Ended December 31, 2008
    
    
    5Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2008 and 2007
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Forward-Looking Statements
    
    
    19Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20Part II  Other Information
    
    
    21Item 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3. Defaults upon Senior Securities
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    23Signatures
    
    
    24Exhibit Index
    
    
    25Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 CONSOLIDATED GRAPHICS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share data)
 (Unaudited)
 December 31,
    
    
    March 31,2008
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    19,521
    
    
    $
    15,131Accounts receivable, net
    
    
    207,515
    
    
    
    209,000Inventories
    
    
    58,956
    
    
    
    61,511Prepaid expenses
    
    
    9,979
    
    
    
    7,127Deferred income taxes
    
    
    17,857
    
    
    
    9,353Total current assets
    
    
    313,828
    
    
    
    302,122PROPERTY AND EQUIPMENT, net
    
    
    442,097
    
    
    
    421,347GOODWILL AND OTHER INTANGIBLE ASSETS, net
    
    
    75,902
    
    
    
    141,381OTHER ASSETS
    
    
    8,259
    
    
    
    7,813$
    840,086
    
    
    $
    872,663LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    27,534
    
    
    $
    23,252Accounts payable
    
    
    60,250
    
    
    
    56,948Accrued liabilities
    
    
    100,744
    
    
    
    83,488Income taxes payable
    
    
    132
    
    
    
    184Total current liabilities
    
    
    188,660
    
    
    
    163,872LONG-TERM DEBT, net of current portion
    
    
    328,003
    
    
    
    362,448OTHER LIABILITIES
    
    
    14,786
    
    
    
    13,655DEFERRED INCOME TAXES
    
    
    43,946
    
    
    
    52,895COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITYCommon stock, $.01 par value;
100,000,000 shares authorized;
11,147,250 and 11,079,011 issued and
outstanding
    
    
    111
    
    
    
    111Additional paid-in capital
    
    
    161,343
    
    
    
    153,204Retained earnings
    
    
    103,729
    
    
    
    127,376Accumulated other comprehensive loss
    
    
    (492
    )
    
    
    (898
    )Total shareholders equity
    
    
    264,691
    
    
    
    279,793$
    840,086
    
    
    $
    872,663
   3




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 CONDENSED CONSOLIDATED INCOME STATEMENTS
 (In thousands, except per share data)
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedDecember 31
    
    
    December 312008
    
    
    2007
    
    
    2008
    
    
    2007SALES
    
    $
    315,815
    
    
    $
    289,538
    
    
    $
    897,960
    
    
    $
    807,850COST OF SALES
    
    
    241,055
    
    
    
    214,140
    
    
    
    679,974
    
    
    
    598,011Gross profit
    
    
    74,760
    
    
    
    75,398
    
    
    
    217,986
    
    
    
    209,839SELLING EXPENSES
    
    
    26,153
    
    
    
    27,849
    
    
    
    81,336
    
    
    
    79,514GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    24,981
    
    
    
    20,489
    
    
    
    71,975
    
    
    
    58,885GOODWILL IMPAIRMENT CHARGE
    
    
    62,524
    
    
    
    
    
    
    
    62,524
    
    
    
    LITIGATION CHARGE
    
    
    17,000
    
    
    
    
    
    
    
    17,000
    
    
    
    OTHER (INCOME) EXPENSE, net
    
    
    (386
    )
    
    
    (329
    )
    
    
    (638
    )
    
    
    (3,909
    )Operating income (loss)
    
    
    (55,512
    )
    
    
    27,389
    
    
    
    (14,211
    )
    
    
    75,349INTEREST EXPENSE, net
    
    
    4,108
    
    
    
    3,630
    
    
    
    12,171
    
    
    
    7,973Income (loss) before taxes
    
    
    (59,620
    )
    
    
    23,759
    
    
    
    (26,382
    )
    
    
    67,376INCOME TAXES
    
    
    (16,054
    )
    
    
    4,397
    
    
    
    (2,735
    )
    
    
    21,171Net income (loss)
    
    $
    (43,566
    )
    
    $
    19,362
    
    
    $
    (23,647
    )
    
    $
    46,205BASIC EARNINGS (LOSS) PER SHARE
    
    $
    (3.91
    )
    
    $
    1.63
    
    
    $
    (2.12
    )
    
    $
    3.58DILUTED EARNINGS (LOSS) PER SHARE
    
    $
    (3.91
    )
    
    $
    1.58
    
    
    $
    (2.12
    )
    
    $
    3.48SHARES USED TO COMPUTE EARNINGS
(LOSS) PER SHAREBasic
    
    
    11,147
    
    
    
    11,905
    
    
    
    11,135
    
    
    
    12,910Diluted
    
    
    11,147
    
    
    
    12,225
    
    
    
    11,135
    
    
    
    13,295
   4




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CONSOLIDATED GRAPHICS, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 (In thousands)
 (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    TotalBALANCE, March 31, 2008
    
    
    11,079
    
    
    $
    111
    
    
    $
    153,204
    
    
    $
    127,376
    
    
    $
    (898
    )
    
    $
    279,793Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,647
    )
    
    
    
    
    
    
    (23,647
    )Currency
translation adjustment, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406
    
    
    
    406Total
comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,241
    )Exercise of stock options,
including tax benefit
    
    
    68
    
    
    
    
    
    
    
    3,019
    
    
    
    
    
    
    
    
    
    
    
    3,019Compensation expense
    
    
    
    
    
    
    
    
    
    
    5,120
    
    
    
    
    
    
    
    
    
    
    
    5,120BALANCE, December 31, 2008
    
    
    11,147
    
    
    $
    111
    
    
    $
    161,343
    
    
    $
    103,729
    
    
    $
    (492
    )
    
    $
    264,691
   5




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Nine Months EndedDecember 312008
    
    
    2007OPERATING ACTIVITIESNet income (loss)
    
    $
    (23,647
    )
    
    $
    46,205Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization
    
    
    49,556
    
    
    
    39,631Goodwill impairment charge
    
    
    62,524
    
    
    
    Litigation charge
    
    
    17,000
    
    
    
    Deferred income taxes
    
    
    (17,724
    )
    
    
    3,413Share-based compensation expense
    
    
    5,120
    
    
    
    1,760Non-cash foreign currency (gain) loss
    
    
    518
    
    
    
    (4,887
    )Changes in assets and liabilities, net of effect of acquisitionsAccounts receivable, net
    
    
    389
    
    
    
    (7,615
    )Inventories
    
    
    1,882
    
    
    
    (6,426
    )Prepaid expenses
    
    
    (3,111
    )
    
    
    (178
    )Other assets
    
    
    (446
    )
    
    
    (293
    )Accounts payable and accrued liabilities
    
    
    (3,977
    )
    
    
    822Other liabilities
    
    
    1,131
    
    
    
    Income taxes payable
    
    
    (52
    )
    
    
    1,983Net cash provided by operating activities
    
    
    89,163
    
    
    
    74,415INVESTING ACTIVITIESAcquisitions of businesses, net of cash acquired
    
    
    (6,684
    )
    
    
    (25,983
    )Purchases of property and equipment
    
    
    (48,725
    )
    
    
    (28,566
    )Proceeds from asset dispositions
    
    
    1,284
    
    
    
    1,774Net cash used in investing activities
    
    
    (54,125
    )
    
    
    (52,775
    )FINANCING ACTIVITIESProceeds from bank credit facilities
    
    
    184,266
    
    
    
    186,066Payments on bank credit facilities
    
    
    (202,197
    )
    
    
    (78,121
    )Proceeds from issuance of term equipment notes
    
    
    1,926
    
    
    
    18,718Payments on term equipment notes and other debt
    
    
    (17,696
    )
    
    
    (11,646
    )Payments to repurchase and retire common stock
    
    
    
    
    
    
    (138,124
    )Proceeds from exercise of stock options, including excess tax benefit
    
    
    3,019
    
    
    
    2,619Net cash used in financing activities
    
    
    (30,682
    )
    
    
    (20,488
    )Effect of exchange rate changes on cash
    
    
    34
    
    
    
    557NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    4,390
    
    
    
    1,709CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    15,131
    
    
    
    12,043CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    19,521
    
    
    $
    13,752
   6




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In thousands, except share, per share data and percentages)
 (Unaudited)
 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates
 Revenue Recognition
 Earnings Per Share
 Inventories
 December 31,
    
    
    March 31,2008
    
    
    2008Raw materials
    
    $
    23,495
    
    
    $
    25,983Work in progress
    
    
    29,796
    
    
    
    29,447Finished goods
    
    
    5,665
    
    
    
    6,081$
    58,956
    
    
    $
    61,511
 Goodwill and Other Intangible Assets, net Business Combinations,
  7




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CONSOLIDATED GRAPHICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share, per share data and percentages)
(Unaudited)
 Goodwill and Other Intangible Assets
  Litigation
Charge
 Supplemental Cash Flow Information
 Foreign Currency
 Accumulated Other Comprehensive Loss
 2. ACQUISITIONS
   8




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CONSOLIDATED GRAPHICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share, per share data and percentages)
 3. LONG-TERM DEBT
  December 31,
    
    
    March 31,2008
    
    
    2008Bank credit facilities
    
    $
    250,214
    
    
    $
    271,868Term equipment notes
    
    
    96,741
    
    
    
    104,505Other
    
    
    8,582
    
    
    
    9,327355,537
    
    
    
    385,700Lesscurrent portion
    
    
    (27,534
    )
    
    
    (23,252
    )$
    328,003
    
    
    $
    362,448
        9




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share, per share data and percentages)
(Unaudited)
 4.
SHARE-BASED COMPENSATION
  Share-Based Payment,
   Weighted-Average ExerciseStock Options
    
    Shares
    
    
    PriceOutstanding at March 31, 2008
    
    
    1,457,477
    
    
    $
    36.93Granted
    
    
    712,500
    
    
    
    46.21Exercised
    
    
    (68,239
    )
    
    
    39.48Forfeited or expired
    
    
    (23,307
    )
    
    
    44.25Outstanding at December 31, 2008 (a)
    
    
    2,078,431Exercisable at December 31, 2008 (a)
    
    
    1,227,045
 
 (a)
    
    Stock options outstanding as of December 31, 2008 have a weighted average remaining
contractual life of
5.7 years. Based on the market value of the Companys common stock on December 31, 2008,
outstanding stock options have an aggregate intrinsic value of $5,187 and exercisable
stock options have an aggregate intrinsic value of $4,146.  Restricted Stock Unit Awards
    
    SharesOutstanding at March 31, 2008
    
    
    22,500Granted
    
    
    12,500Vested and issued
    
    
    Forfeited or expired
    
    
    Outstanding at December 31, 2008 (a)
    
    
    35,000Vested but not issued at December 31, 2008 (a)
    
    
    5,625
 
 (a)
    
    Restricted stock units outstanding as of December 31, 2008 have a weighted average
remaining contractual
term of 1.1 years and a total intrinsic value of $792. Pursuant to the terms of the
applicable restricted stock unit award agreements, restricted stock units covering 5,625
shares of Company common stock have vested but are not issuable to the participant until
March 1, 2009.  10




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CONSOLIDATED GRAPHICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share, per share data and percentages)
(Unaudited)
 5. INCOME TAXES
 Accounting for Uncertainty in
Income Taxes  an Interpretation of FASB Statement No. 109
     11




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following managements discussion and analysis of financial condition and results of
operations should be read in conjunction with our unaudited condensed consolidated financial
statements and notes to unaudited condensed consolidated financial statements in this Quarterly
Report on Form 10-Q and our audited financial statements and notes thereto included in our Annual
Report on Form 10-K as of and for the year ended March 31, 2008. This discussion contains
forward-looking statements that reflect our current views with respect to future events and
financial performance. Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors such as those referenced in the section
entitled Forward-Looking Statements below.
 Overview
 Our Organization
   Nature of Our Services
      12




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Our Strategy
  
    
    Internal Sales GrowthWe seek to use our competitive advantages to expand
market share. We continually seek to hire additional experienced sales professionals,
invest in new equipment and technology, expand our national accounts program, develop
new and expanded digital technology-based print-related services and provide sales
training and education about our breadth of capabilities and services to our sales
professionals.
 
    
    Disciplined Acquisition ProgramWe selectively pursue opportunities to acquire
additional printing businesses at reasonable prices. Some of these acquisitions may
include smaller and/or distressed printing businesses for consolidation into one of our
existing businesses.
 
    
    Cost SavingsBecause of our size and extensive geographic footprint, we
leverage our economies of scale to purchase supplies and equipment at preferential
prices, and centralize various administrative services to generate cost savings.
 
    
    Best Practices/BenchmarkingWe provide a forum for our printing businesses to
share their knowledge of technical processes and their best practices with one another,
as well as benchmark financial and operational data to help our printing businesses
identify and respond to changes in operating trends.
 
    
    Leadership DevelopmentThrough our unique Leadership Development Program, we
develop talent for future sales and management positions at our printing businesses.
 Results of Operations
  Three Months Ended
    
    
    Nine Months EndedDecember 31
    
    
    December 312008
    
    
    2007
    
    
    2008
    
    
    2007(In millions)
    
    
    (In millions)Sales
    
    $
    315.8
    
    
    $
    289.5
    
    
    $
    898.0
    
    
    $
    807.9Cost of sales
    
    
    241.0
    
    
    
    214.1
    
    
    
    680.0
    
    
    
    598.0Gross profit
    
    
    74.8
    
    
    
    75.4
    
    
    
    218.0
    
    
    
    209.9Selling expenses
    
    
    26.2
    
    
    
    27.8
    
    
    
    81.3
    
    
    
    79.5General and administrative expenses
    
    
    25.0
    
    
    
    20.5
    
    
    
    72.0
    
    
    
    58.9Goodwill impairment charge
    
    
    62.5
    
    
    
    
    
    
    
    62.5
    
    
    
    Litigation charge
    
    
    17.0
    
    
    
    
    
    
    
    17.0
    
    
    
    Other (income) expense, net
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (0.6
    )
    
    
    (3.9
    )Operating income (loss)
    
    
    (55.5
    )
    
    
    27.4
    
    
    
    (14.2
    )
    
    
    75.4Interest expense, net
    
    
    4.1
    
    
    
    3.6
    
    
    
    12.2
    
    
    
    8.0Income (loss) before taxes
    
    
    (59.6
    )
    
    
    23.8
    
    
    
    (26.4
    )
    
    
    67.4Income taxes
    
    
    (16.0
    )
    
    
    4.4
    
    
    
    (2.7
    )
    
    
    21.2Net Income (loss)
    
    $
    (43.6
    )
    
    $
    19.4
    
    
    $
    (23.7
    )
    
    $
    46.2
  13




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As a Percentage
    
    
    As a Percentageof Sales
    
    
    of SalesThree Months Ended
    
    
    Nine Months EndedDecember 31
    
    
    December 312008
    
    
    2007
    
    
    2008
    
    
    2007Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    76.3
    
    
    
    74.0
    
    
    
    75.7
    
    
    
    74.0Gross profit
    
    
    23.7
    
    
    
    26.0
    
    
    
    24.3
    
    
    
    26.0Selling expenses
    
    
    8.3
    
    
    
    9.6
    
    
    
    9.1
    
    
    
    9.8General and administrative expenses
    
    
    7.9
    
    
    
    7.0
    
    
    
    8.0
    
    
    
    7.3Goodwill impairment charge
    
    
    19.8
    
    
    
    
    
    
    
    7.0
    
    
    
    Litigation charge
    
    
    5.4
    
    
    
    
    
    
    
    1.9
    
    
    
    Other (income) expense, net
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.4
    )Operating income (loss)
    
    
    (17.6
    )
    
    
    9.5
    
    
    
    (1.6
    )
    
    
    9.3Interest expense, net
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.0Income (loss) before taxes
    
    
    (18.9
    )
    
    
    8.2
    
    
    
    (2.9
    )
    
    
    8.3Income taxes
    
    
    (5.1
    )
    
    
    1.5
    
    
    
    (0.3
    )
    
    
    2.6Net Income (loss)
    
    
    (13.8
    )%
    
    
    6.7
    %
    
    
    (2.6
    )%
    
    
    5.7
    %
   Three Months Ended
    
    
    Nine Months EndedDecember 31, 2008
    
    
    December 31, 2008$
    
    
    %
    
    
    $
    
    
    %(In millions)
    
    
    
    
    
    
    (In millions)Acquisitions(1)
    
    $
    37.2
    
    
    
    12.8
    %
    
    $
    103.8
    
    
    
    12.8
    %Election-related
    
    
    16.4
    
    
    
    5.7
    
    
    
    27.9
    
    
    
    3.5Internal
    
    
    (27.3
    )
    
    
    (9.4
    )
    
    
    (41.6
    )
    
    
    (5.1
    )Total
    
    $
    26.3
    
    
    
    9.1
    %
    
    $
    90.1
    
    
    
    11.2
    %
 
 (1)
    
    Includes the acquisitions of PBM Graphics, Inc. and The Cyril-Scott Company. Comparative Analysis of Consolidated Income Statements for the Three Months Ended December 31, 2008
and 2007
     14




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##### Table of Contents



Goodwill and Other Intangible Assets ,
      Comparative Analysis of Consolidated Income Statements for the Nine Months Ended December 31, 2008
and 2007
      15




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##### Table of Contents



Liquidity and Capital Resources
 Sources and Uses of Cash
 Item 1. Financial Statements:
 Nine Months EndedDecember 312008
    
    
    2007(In millions)Net cash provided by operating activities
    
    $
    89.2
    
    
    $
    74.4Acquisitions of businesses
    
    
    (6.7
    )
    
    
    (26.0
    )Capital expenditures, net of proceeds from asset dispositions
    
    
    (47.4
    )
    
    
    (26.8
    )Net proceeds (payments) under bank credit facilities
    
    
    (17.9
    )
    
    
    107.9Net proceeds (payments) on term equipment notes and other debt
    
    
    (15.8
    )
    
    
    7.1Payments to repurchase and retire common stock
    
    
    
    
    
    
    (138.1
    )Proceeds from exercise of stock options
    
    
    3.0
    
    
    
    2.6
 Item 1. Financial Statements:
 December 31,
    
    
    March 31,2008
    
    
    2008(In millions)Cash and cash equivalents
    
    $
    19.5
    
    
    $
    15.1Working capital, inclusive of cash and cash equivalents
    
    
    125.2
    
    
    
    138.3Total debt obligations
    
    
    355.5
    
    
    
    385.7
    16




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Debt Obligations
         17




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Commitment and Contingencies
 Operating leases
 Letters of credit
 Insurance programs
 Critical Accounting Policies
  Revenue Recognition 
 Receivables, net of valuation allowance 
 Goodwill and other intangible assets 
 Impairment of long-lived assets
 Insurance liabilities 
  18




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Accounting for income taxes
 Accounting for acquisitions 
 New Accounting Pronouncements
 Fair Value Measurement
 The Fair Value Option for Financial Assets and
Financial Liabilities,
 FAS No. 141 Business Combinations
 Noncontrolling Interest in Consolidated Financial
Statements
 
 Forward-Looking Statements
 This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, in which the Company discusses factors it believes may affect its
performance or results in the future. Forward-looking statements are all statements other than
historical facts, such as statements regarding assumptions, expectations, beliefs and projections
about future events or conditions. You can generally identify forward-looking statements by the
appearance in such a statement of words like anticipate, believe, continue, could,
estimate, expect, intend, may, might, plan, potential, predict, forecast,
project, should or will or other comparable words or the negative of such words. The accuracy
of the Companys assumptions, expectations, beliefs and projections depend on events or conditions
that change over time and are thus susceptible to change based on actual experience, new
developments and known and unknown risks, including those created by general market conditions,
competition and the possibility that events may occur beyond the Companys control, which may limit
its ability to maintain or improve its operating results or financial condition or acquire
additional printing businesses. The Company gives no assurance that the forward-looking statements
will prove to be correct and does not undertake any duty to update them. The Companys actual
future results might differ from the forward-looking statements made in this Quarterly Report on
Form 10-Q for a variety of reasons, which include, continuing weakness in the economy, the growth
of its digital printing business, seasonality of election related business, its ability to
adequately manage expenses, including labor costs, the unfavorable outcome of legal proceedings,
the lack of or adequacy of insurance coverage for our operations, the continued availability of raw
materials at affordable prices, retention of its key management and operating personnel,
satisfactory labor relations, the potential for additional goodwill impairment charges, its
ability to identify new acquisition opportunities, negotiate and finance such acquisitions on
acceptable terms and successfully absorb and manage such acquisitions in a timely and efficient
manner, as well as other risks described under the heading Risk Factors of this Quarterly Report
on Form 10-Q and the risk factors and cautionary statements described in the other documents the
Company files or furnishes from time to time with the Securities and Exchange Commission, including
its most recently filed Annual Report on Form 10-K and Current Reports on Form 8-K . Should one or
more of the foregoing risks or uncertainties materialize, or should the Companys underlying
assumptions, expectations, beliefs or projections prove
incorrect, the Companys actual results may vary materially from those anticipated in its
forward-looking statements, and its business, financial condition and results of operations could
be materially and adversely affected.
  19




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosure About Market Risk
  
 ITEM 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
 Rules 13a-15(f)
  20




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 PART II  OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
        
 ITEM 1A. Risk Factors
   21




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##### Table of Contents



Unfavorable results of legal proceedings could materially adversely affect the Company.
  The Company is subject to risks associated with the availability and coverage of insurance.
  The Companys stock price continues to be volatile.
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 ITEM 3. Defaults upon Senior Securities
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  
 ITEM 5. Other Information
 .
  22




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##### Table of Contents



ITEM 6. Exhibits
 *3.1
    
    
    Restated Articles of Incorporation of the Company filed with the Secretary of State of the State of
Texas on July 27, 1994 (Consolidated Graphics, Inc. Form 10-Q (June 30, 1994), Exhibit 4(a)).*3.2
    
    
    Articles of Amendment to the Restated Articles of Incorporation of the Company dated as of July 29,
1998 (Consolidated Graphics, Inc. Form 10-Q (June 30, 1998), Exhibit 3.1).*3.3
    
    
    Second Amended and Restated By-Laws of the Company adopted as of June 30, 2004 (Consolidated
Graphics, Inc. Form 10-Q (June 30, 2004), Exhibit 3.3).*3.4
    
    
    Amendment to the Second Amended and Restated By-Laws of the Company adopted as of December 21, 2007
(Consolidated Graphics, Inc. Form 8-K (December 26, 2007), Exhibit 1).*4.1
    
    
    Specimen Common Stock Certificate (Consolidated Graphics, Inc. Form 10-K (March 31, 1998), Exhibit 4.1).*4.2
    
    
    Rights Agreement dated as of December 15, 1999 between Consolidated Graphics, Inc. and American Stock
Transfer and Trust Company, as Rights Agent, which includes as Exhibit A the Certificate of
Designations of Series A Preferred Stock, as Exhibit B the form of Rights Certificate and as Exhibit C
the form of summary of Rights to Purchase Shares (Consolidated Graphics, Inc. Form 8-K (December 15,
1999), Exhibit 4.1).*4.3
    
    
    Amendment to Rights Agreement dated as of July 10, 2006 between Consolidated Graphics, Inc. and
American Stock Transfer and Trust Company and the related Summary of Rights to Purchase Stock, as
amended (Consolidated Graphics, Inc. Form 8-A/A (July 13, 2006), Exhibits 2 and 3).*4.4
    
    
    Second Amendment to Rights Agreement dated as of September 25, 2007 between Consolidated Graphics, Inc.
and American Stock Transfer and Trust Company and the related Summary of Rights to Purchase Stock, as
amended (Consolidated Graphics, Inc. Form 8-A/A (September 28, 2007), Exhibits 3 and 4).*10.1
    
    
    Amended and Restated Employment Agreement, executed on December 29, 2008, but effective as of May 22,
2008, between Joe R. Davis and the Company (Consolidated Graphics, Inc. Form 8-K (December 29, 2008),
Exhibit 10.1).*10.2
    
    
    Amended and Restated Employment Agreement, executed on December 29, 2008, but effective as of May 22,
2008, between Jon C. Biro and the Company (Consolidated Graphics, Inc. Form 8-K (December 29, 2008),
Exhibit 10.2).*10.3
    
    
    Amended and Restated Change in Control Agreement, executed on December 29, 2008, but effective as of
January 14, 2008, between Jon C. Biro and the Company (Consolidated Graphics, Inc. Form 8-K (December
29, 2008), Exhibit 10.3).10.4
    
    
    Form of First Amendment to Indemnification Agreement for directors and officers.31.1
    
    
    Certification of Joe R. Davis, principal executive officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Jon C. Biro, principal financial and accounting officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Joe R. Davis, principal executive officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Jon C. Biro, principal financial and accounting officer, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.99.1
    
    
    Acknowledgement and Waiver Agreement entered into effective as of November 3, 2008 by and between Joe
R. Davis, principal Executive Officer, and Consolidated Graphics, Inc.
 
 *
    
    Incorporated by reference  23




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##### Table of Contents



SIGNATURES
 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant,
Consolidated Graphics, Inc., has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 CONSOLIDATED GRAPHICS, INC.Dated:  February 9, 2009
    By:
    /s/ Jon C. BiroJon C. BiroExecutive Vice President andChief Financial and Accounting Officer  24




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##### Table of Contents



Exhibit Index
 *3.1
    
    
    Restated Articles of Incorporation of the Company filed with the Secretary of State of the State of
Texas on July 27, 1994 (Consolidated Graphics, Inc. Form 10-Q (June 30, 1994), Exhibit 4(a)).*3.2
    
    
    Articles of Amendment to the Restated Articles of Incorporation of the Company dated as of July 29,
1998 (Consolidated Graphics, Inc. Form 10-Q (June 30, 1998), Exhibit 3.1).*3.3
    
    
    Second Amended and Restated By-Laws of the Company adopted as of June 30, 2004 (Consolidated
Graphics, Inc. Form 10-Q (June 30, 2004), Exhibit 3.3).*3.4
    
    
    Amendment to the Second Amended and Restated By-Laws of the Company adopted as of December 21, 2007
(Consolidated Graphics, Inc. Form 8-K (December 26, 2007), Exhibit 1).*4.1
    
    
    Specimen Common Stock Certificate (Consolidated Graphics, Inc. Form 10-K (March 31, 1998), Exhibit 4.1).*4.2
    
    
    Rights Agreement dated as of December 15, 1999 between Consolidated Graphics, Inc. and American Stock
Transfer and Trust Company, as Rights Agent, which includes as Exhibit A the Certificate of
Designations of Series A Preferred Stock, as Exhibit B the form of Rights Certificate and as Exhibit C
the form of summary of Rights to Purchase Shares (Consolidated Graphics, Inc. Form 8-K (December 15,
1999), Exhibit 4.1).*4.3
    
    
    Amendment to Rights Agreement dated as of July 10, 2006 between Consolidated Graphics, Inc. and
American Stock Transfer and Trust Company and the related Summary of Rights to Purchase Stock, as
amended (Consolidated Graphics, Inc. Form 8-A/A (July 13, 2006), Exhibits 2 and 3).*4.4
    
    
    Second Amendment to Rights Agreement dated as of September 25, 2007 between Consolidated Graphics, Inc.
and American Stock Transfer and Trust Company and the related Summary of Rights to Purchase Stock, as
amended (Consolidated Graphics, Inc. Form 8-A/A (September 28, 2007), Exhibits 3 and 4).*10.1
    
    
    Amended and Restated Employment Agreement, executed on December 29, 2008, but effective as of May 22,
2008, between Joe R. Davis and the Company (Consolidated Graphics, Inc. Form 8-K (December 29, 2008),
Exhibit 10.1).*10.2
    
    
    Amended and Restated Employment Agreement, executed on December 29, 2008, but effective as of May 22,
2008, between Jon C. Biro and the Company (Consolidated Graphics, Inc. Form 8-K (December 29, 2008),
Exhibit 10.2).*10.3
    
    
    Amended and Restated Change in Control Agreement, executed on December 29, 2008, but effective as of
January 14, 2008, between Jon C. Biro and the Company (Consolidated Graphics, Inc. Form 8-K (December
29, 2008), Exhibit 10.3).10.4
    
    
    Form of First Amendment to Indemnification Agreement for directors and officers.31.1
    
    
    Certification of Joe R. Davis, principal executive officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Jon C. Biro, principal financial and accounting officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Joe R. Davis, principal executive officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Jon C. Biro, principal financial and accounting officer, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.99.1
    
    
    Acknowledgement and Waiver Agreement entered into effective as of November 3, 2008 by and between Joe
R. Davis, principal Executive Officer, and Consolidated Graphics, Inc.
 
 *
    
    Incorporated by reference  25