##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 (MARK ONE)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED MARCH 31, 2009
 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
    
    (IRS EMPLOYER IDENTIFICATION NO.)OF INCORPORATION OR ORGANIZATION)5858 WESTHEIMER, SUITE 200HOUSTON, TEXAS
    
    77057(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
    
    (ZIP CODE)
 (713) 787-0977
   COMMON STOCK, PAR VALUE $.01 PER SHARE
    
    NEW YORK STOCK EXCHANGE(TITLE OF CLASS)
    
    (NAME OF EACH EXCHANGEON WHICH REGISTERED)
 NONE
 
 Yes o No þ
 Yes o No þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  COMMON STOCK, $.01 PAR VALUE$330,968,543
 COMMON STOCK, $.01 PAR VALUE11,162,667
 DOCUMENTS INCORPORATED BY REFERENCE




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##### 



CONSOLIDATED GRAPHICS, INC.
FORM 10-K
FOR THE YEAR ENDED MARCH 31, 2009
 INDEX
 Forward Looking Statements
    
    
    3PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    9Item 1B. Unresolved Staff Comments
    
    
    12Item 2. Properties
    
    
    12Item 3. Legal Proceedings
    
    
    13Item 4. Submission of Matters to a Vote of Security Holders
    
    
    13PART IIItem 5. Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
    
    
    13Item 6. Selected Consolidated Financial Data
    
    
    14Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 7A. Quantitative and Qualitative Disclosure About Market Risk
    
    
    23Item 8. Financial Statements and Supplementary Data
    
    
    24Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    46Item 9A. Controls and Procedures
    
    
    46Item 9B. Other Information
    
    
    46PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    47Item 11. Executive Compensation
    
    
    47Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
    
    
    47Item 13. Certain Relationships and Related Transactions
    
    
    47Item 14. Principal Accountant Fees and Services
    
    
    47PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    47Signatures
    
    
    50Exhibit Index
    
    
    51Exhibit 21Exhibit 23Exhibit 24Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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Forward Looking Statements
 This Annual Report on Form 10-K 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 Annual Report on Form 10-K 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 its 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 Annual Report on Form 10-K 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 Quarterly Reports on Form 10-Q 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.
 
 PART I
 
 Item 1. Business
 In this annual report, the words Consolidated Graphics, CGX, the Company, we, our
and us refer to Consolidated Graphics, Inc, including our consolidated subsidiaries, unless the
context indicates otherwise. Our fiscal year ends on March 31st.
 Company Overview
     3




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www.cgx.com
 Industry Background
       4




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Competition
   
    
    Extent and quality of customer service, including ability to meet customer
deadlines
 
    
    Quality of finished materials
 
    
    Cost structure and sales pricing strategy
 
    
    Financial strength
  Business Strategy
  Internal Sales Growth
 
    
    Aggressively pursuing new business opportunities and experienced sales
professionals to gain market share and strengthen our competitive position going
forward.
 
    
    Continuing to invest in new equipment and technology that enables us to provide
increasingly higher levels of service and a broader range of capabilities.
 
    
    Capitalizing on our national presence and wide range of capabilities, including
our technology related offerings (see Printing Operations  Print-Related Services
below) to pursue sole or preferred-source opportunities with national accounts.
 
    
    Providing information and training to our sales professionals (691 currently)
to ensure they are knowledgeable about the complete range of services and capabilities
we offer.
 Disciplined Acquisition Program
 Cost Savings 
  5




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Best Practices/Benchmarking 
 Leadership Development
 Printing Operations
  Commercial Printing Services
      6




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Print-Related Services
   
    
    StoreFrontA fully customizable online system with an array of tools that streamline the
purchase, management and distribution of the customers entire range of marketing
materials.
 
    
    CrossMedia
  
    
    Digital asset management
  
    
    Digital print solutions
    Sales and Marketing
   7




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Customers
   Suppliers
   8




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Employees
  Government Regulation and Environmental Matters
  
 Item 1A. Risk Factors
  Negative worldwide economic conditions have resulted in a decrease in demand for printing services
and hindered our ability to collect amounts owed by certain customers, therefore, adversely
impacting our business and results of operations.
   9




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Fluctuations in the costs of paper, ink, energy, postage and other raw materials may adversely
impact us .
  We may be adversely affected by a decline in the availability of raw materials.
  We may not be able to improve our operating efficiencies rapidly enough to meet market conditions.
  We may be unable to successfully integrate the operations of acquired businesses and may not
achieve the cost savings and increased revenues anticipated as a result of these acquisitions.
  We may be unable to hire and retain talented employees, including senior management.
  Costs to provide health care and certain other benefits to our employees may increase.
  Declines in general economic conditions or acts of war and terrorism may adversely impact our
business.
  The highly competitive market for our services may create adverse pricing pressures.
   10




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Decline in preference for using or receiving printed materials in lieu of alternative mediums may
adversely affect our business.
  Changes in the laws and regulations to which we are subject may increase our costs.
  Advances in technology may reduce barriers to entry and may result in increased competition.
  We rely on our information technology infrastructure and our management information systems for
many enterprise-critical functions. If our information systems fail to adequately perform these
functions or if we experience an interruption in their operation, our business and results of
operations could be adversely affected.
  We generally do not have long-term customer agreements.
  We depend on good labor relations.
   11




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We rely on the ability to borrow cash to make acquisitions, fund capital expenditures and provide
working capital to the extent such cash needs exceed our internally
generated cash flow. Our failure to
comply with financial and other covenant requirements contained in our loan agreements, could limit
our ability to borrow cash.
  A decline in expected profitability of the Company or individual reporting units of the Company
could result in the impairment of assets, including goodwill, other long-lived assets and deferred
tax assets.
  Unfavorable results of legal proceedings could materially adversely affect us.
  We are subject to risks associated with the availability and coverage of insurance.
  Our stock price continues to be volatile.
  Change in postal rates and regulations may adversely impact demand for our products and services.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   12




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Item 3. Legal Proceedings
       
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
  Fiscal 2009Quarter Ended:
    
    High
    
    
    LowJune 30, 2008
    
    
    61.61
    
    
    
    48.69September 30, 2008
    
    
    52.33
    
    
    
    28.95December 31, 2008
    
    
    30.05
    
    
    
    10.11March 31, 2009
    
    
    25.28
    
    
    
    10.33
 Fiscal 2008Quarter Ended:
    
    High
    
    
    LowJune 30, 2007
    
    
    80.58
    
    
    
    67.75September 30, 2007
    
    
    75.11
    
    
    
    48.65December 31, 2007
    
    
    71.53
    
    
    
    45.60March 31, 2008
    
    
    58.18
    
    
    
    38.49
  13




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Item 6. Selected Consolidated Financial Data
 Item 8. Financial Statements and Supplementary Data
 Year Ended March 312009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands, except per share data)Income Statement DataSales
    
    $
    1,145,146
    
    
    $
    1,095,388
    
    
    $
    1,006,186
    
    
    $
    879,023
    
    
    $
    779,016Cost of sales
    
    
    875,061
    
    
    
    812,401
    
    
    
    736,996
    
    
    
    661,560
    
    
    
    586,615Gross profit
    
    
    270,085
    
    
    
    282,987
    
    
    
    269,190
    
    
    
    217,463
    
    
    
    192,401Selling expenses
    
    
    105,688
    
    
    
    106,952
    
    
    
    101,649
    
    
    
    91,266
    
    
    
    81,456General and administrative expenses
    
    
    95,261
    
    
    
    78,804
    
    
    
    69,223
    
    
    
    58,993
    
    
    
    54,116Goodwill impairment charge(1)
    
    
    83,324
    
    
    
    
    
    
    
    11,533
    
    
    
    
    
    
    
    Litigation charge
    
    
    17,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income, net
    
    
    (809
    )
    
    
    (3,064
    )
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    (30,379
    )
    
    
    100,295
    
    
    
    86,785
    
    
    
    67,204
    
    
    
    56,829Interest expense, net
    
    
    14,995
    
    
    
    12,020
    
    
    
    6,702
    
    
    
    5,514
    
    
    
    5,107Income (loss) before income taxes
    
    
    (45,374
    )
    
    
    88,275
    
    
    
    80,083
    
    
    
    61,690
    
    
    
    51,722Income taxes
    
    
    (5,804
    )
    
    
    28,951
    
    
    
    29,342
    
    
    
    23,192
    
    
    
    19,000Net income (loss)
    
    $
    (39,570
    )
    
    $
    59,324
    
    
    $
    50,741
    
    
    $
    38,498
    
    
    $
    32,722~~~~~      ~~~~~~Earnings (loss) per shareBasic
    
    $
    (3.55
    )
    
    $
    4.76
    
    
    $
    3.74
    
    
    $
    2.81
    
    
    $
    2.40Diluted
    
    $
    (3.55
    )
    
    $
    4.63
    
    
    $
    3.65
    
    
    $
    2.73
    
    
    $
    2.31
  14




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March 312009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands)Balance Sheet DataWorking capital
    
    $
    109,433
    
    
    $
    138,250
    
    
    $
    100,153
    
    
    $
    67,474
    
    
    $
    64,225Property and equipment, net
    
    
    430,519
    
    
    
    421,347
    
    
    
    354,156
    
    
    
    297,308
    
    
    
    297,600Total assets
    
    
    765,208
    
    
    
    872,663
    
    
    
    723,969
    
    
    
    611,313
    
    
    
    590,229Long-term debt, net of current portion
    
    
    287,164
    
    
    
    362,448
    
    
    
    142,144
    
    
    
    90,678
    
    
    
    111,895Total shareholders equity
    
    
    250,464
    
    
    
    279,793
    
    
    
    365,536
    
    
    
    318,946
    
    
    
    283,332
 
 (1)
    
    Reflects the impairment of goodwill value as of March 31, 2009 and March 31, 2007 under
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets. 
 Item 7. 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 historical consolidated financial statements and
their notes included elsewhere in this Annual Report on Form 10-K . 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 Forward
Looking Statements.
 Overview
   
    
    Internal Sales Growth We seek to use our competitive advantages to expand
market share. We continually seek to hire additional 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.
    15




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Results of Operations
  As a Percentage of SalesYear Ended March 31
    
    
    Year Ended March 312009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007(In millions)Sales
    
    $
    1,145.2
    
    
    $
    1,095.4
    
    
    $
    1,006.2
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    875.1
    
    
    
    812.4
    
    
    
    737.0
    
    
    
    76.4
    
    
    
    74.2
    
    
    
    73.2Gross profit
    
    
    270.1
    
    
    
    283.0
    
    
    
    269.2
    
    
    
    23.6
    
    
    
    25.8
    
    
    
    26.8Selling expenses
    
    
    105.7
    
    
    
    107.0
    
    
    
    101.7
    
    
    
    9.2
    
    
    
    9.8
    
    
    
    10.1General and administrative expenses
    
    
    95.3
    
    
    
    78.8
    
    
    
    69.2
    
    
    
    8.3
    
    
    
    7.2
    
    
    
    6.9Goodwill impairment charge
    
    
    83.3
    
    
    
    
    
    
    
    11.5
    
    
    
    7.3
    
    
    
    
    
    
    
    1.2Litigation charge
    
    
    17.0
    
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    Other income, net
    
    
    (0.8
    )
    
    
    (3.1
    )
    
    
    
    
    
    
    (0.0
    )
    
    
    (0.3
    )
    
    
    Operating income (loss)
    
    
    (30.4
    )
    
    
    100.3
    
    
    
    86.8
    
    
    
    (2.7
    )
    
    
    9.1
    
    
    
    8.6Interest expense, net
    
    
    15.0
    
    
    
    12.0
    
    
    
    6.7
    
    
    
    1.3
    
    
    
    1.1
    
    
    
    0.7Income (loss) before taxes
    
    
    (45.4
    )
    
    
    88.3
    
    
    
    80.1
    
    
    
    (4.0
    )
    
    
    8.0
    
    
    
    7.9Income taxes
    
    
    (5.8
    )
    
    
    29.0
    
    
    
    29.4
    
    
    
    (0.5
    )
    
    
    2.6
    
    
    
    2.9Net income (loss)
    
    $
    (39.6
    )
    
    $
    59.3
    
    
    $
    50.7
    
    
    
    (3.5
    )%
    
    
    5.4
    %
    
    
    5.0
    %
   16




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Analysis of Consolidated Income Statements for Fiscal 2009 as Compared to Fiscal 2008
           17




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Analysis of Consolidated Income Statements for Fiscal 2008 as Compared to Fiscal 2007
          18




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Liquidity and Capital Resources
 Sources and Uses of Cash
 Item 8. Financial
Statements and Supplementary Data:
 Year Ended March 312009
    
    
    2008
    
    
    2007(In millions)Net cash provided by operating activities
    
    $
    141.1
    
    
    $
    110.2
    
    
    $
    72.8Acquisitions of businesses
    
    
    (6.7
    )
    
    
    (97.3
    )
    
    
    (67.6
    )Capital expenditures, net of proceeds from asset dispositions(1)
    
    
    (68.2
    )
    
    
    (39.4
    )
    
    
    (39.1
    )Net proceeds (payments) under bank credit facilities
    
    
    (53.1
    )
    
    
    177.4
    
    
    
    51.1Net payments on term equipment notes and other debt
    
    
    (21.6
    )
    
    
    (1.1
    )
    
    
    (3.1
    )Payments to repurchase and retire common stock
    
    
    
    
    
    
    (150.0
    )
    
    
    (24.7
    )Proceeds from exercise of stock options
    
    
    3.0
    
    
    
    2.9
    
    
    
    17.6
 
 (1)
    
    Excludes capital expenditures of $7.3 million in fiscal 2009, $41.0 million in
fiscal 2008, and $5.1 million in fiscal 2007, which were directly financed and/or
accrued as a current liability. Item 8. Financial Statements and Supplementary Data:
 March 312009
    
    
    2008
    
    
    2007(In millions)Cash and cash equivalents
    
    $
    9.8
    
    
    $
    15.1
    
    
    $
    12.0Working capital, inclusive of cash and cash equivalents
    
    
    109.4
    
    
    
    138.3
    
    
    
    100.2Total debt
    
    
    314.2
    
    
    
    385.7
    
    
    
    154.6
     Debt Obligations
    19




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Contractual Obligations and Other Commitments
  MoreLess Than
    
    
    1  3
    
    
    3  5
    
    
    ThanTotal
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years
    
    
    OtherDebt obligations(1)
    
    $
    314.2
    
    
    $
    27.0
    
    
    $
    254.9
    
    
    $
    26.2
    
    
    $
    6.1
    
    
    
    Operating lease obligations
    
    
    88.5
    
    
    
    18.2
    
    
    
    26.8
    
    
    
    18.4
    
    
    
    25.1
    
    
    
    Unrecognized tax benefits
    
    
    14.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    14.8
 
 (1)
    
    Includes all long-term debt, net of current portion and current portion of
long-term debt on the face of the balance sheet as of March 31, 2009.  20




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Operating leases
 Letters of credit
 Insurance programs
 Critical Accounting Policies
  Revenue Recognition
 Receivables, net of valuation allowance 
 Goodwill 
  21




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Impairment of long-lived assets
 Insurance liabilities
 Accounting for income taxes Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No.109
 Accounting for acquisitions
 New Accounting Pronouncements
 Fair Value Measurement
 The Fair Value Option for Financial Assets and
Financial Liabilities,
 Business Combinations
  22




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Item 7A. Quantitative and Qualitative Disclosure About Market Risk
  EstimatedFair ValueAt March 31,2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    Total
    
    
    2009Fixed Rate Debt:Amount
    
    $
    26.5
    
    
    $
    22.7
    
    
    $
    16.9
    
    
    $
    16.0
    
    
    $
    7.1
    
    
    $
    6.2
    
    
    $
    95.4
    
    
    $
    84.5Average
interest rate
    
    
    6.20
    %
    
    
    5.68
    %
    
    
    5.81
    %
    
    
    5.66
    %
    
    
    6.0
    %
    
    
    6.0
    %
    
    
    5.89
    %Variable Rate Debt:Amount
    
    $
    0.5
    
    
    $
    0.4
    
    
    $
    214.9
    
    
    $
    3.0
    
    
    $
    
    
    
    
    
    
    
    $
    218.8
    
    
    $
    208.4Average
interest rate
    
    
    .67
    %
    
    
    .67
    %
    
    
    1.86
    %
    
    
    .67
    %
    
    
    
    %
    
    
    
    
    
    
    1.84
    %
  23




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Item 8. Financial Statements and Supplementary Data
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Managements Annual Report on Internal Control Over Financial Reporting
    
    
    25Reports of Independent Registered Public Accounting Firm
    
    
    26Consolidated Balance Sheets at March 31, 2009 and 2008
    
    
    28Consolidated Income Statements for the Years Ended March 31, 2009, 2008 and 2007
    
    
    29Consolidated Statements of Shareholders Equity for the Years Ended March 31, 2009, 2008 and 2007
    
    
    30Consolidated Statements of Cash Flows for the Years Ended March 31, 2009, 2008 and 2007
    
    
    31Notes to Consolidated Financial Statements
    
    
    32
  24




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##### Table of Contents



MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
   Internal Control Integrated Framework Internal Control  Integrated Framework,
  25




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Accounting for Uncertainty in Income Taxes
 Internal Control-Integrated Framework
  
  26




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal ControlIntegrated Framework
    Internal
ControlIntegrated Framework
   
  27




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share data)
 March 312009
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    9,762
    
    
    $
    15,131Accounts receivable, net
    
    
    173,501
    
    
    
    209,000Inventories
    
    
    52,737
    
    
    
    61,511Prepaid expenses
    
    
    17,340
    
    
    
    7,127Deferred income taxes
    
    
    18,909
    
    
    
    9,353Total current assets
    
    
    272,249
    
    
    
    302,122PROPERTY AND EQUIPMENT, net
    
    
    430,519
    
    
    
    421,347GOODWILL
    
    
    29,436
    
    
    
    102,423OTHER INTANGIBLE ASSETS, net
    
    
    24,691
    
    
    
    38,958OTHER ASSETS
    
    
    8,313
    
    
    
    7,813$
    765,208
    
    
    $
    872,663LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    27,026
    
    
    $
    23,252Accounts payable
    
    
    48,519
    
    
    
    56,948Accrued liabilities
    
    
    86,718
    
    
    
    83,488Income taxes payable
    
    
    553
    
    
    
    184Total current liabilities
    
    
    162,816
    
    
    
    163,872LONG-TERM DEBT, net of current portion
    
    
    287,164
    
    
    
    362,448OTHER LIABILITIES
    
    
    14,794
    
    
    
    13,655DEFERRED INCOME TAXES, net
    
    
    49,970
    
    
    
    52,895COMMITMENTS AND CONTINGENCIESTotal liabilities
    
    
    514,744
    
    
    
    592,870SHAREHOLDERS EQUITYCommon stock, $.01 par value;
100,000,000 shares authorized;
11,152,875 and 11,079,011 issued and
outstanding
    
    
    111
    
    
    
    111Additional paid-in capital
    
    
    163,131
    
    
    
    153,204Retained earnings
    
    
    87,806
    
    
    
    127,376Accumulated other comprehensive loss
    
    
    (584
    )
    
    
    (898
    )Total shareholders equity
    
    
    250,464
    
    
    
    279,793$
    765,208
    
    
    $
    872,663
   28




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 CONSOLIDATED INCOME STATEMENTS
 (In thousands, except per share data)
 Year Ended March 312009
    
    
    2008
    
    
    2007SALES
    
    $
    1,145,146
    
    
    $
    1,095,388
    
    
    $
    1,006,186COST OF SALES
    
    
    875,061
    
    
    
    812,401
    
    
    
    736,996Gross profit
    
    
    270,085
    
    
    
    282,987
    
    
    
    269,190SELLING EXPENSES
    
    
    105,688
    
    
    
    106,952
    
    
    
    101,649GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    95,261
    
    
    
    78,804
    
    
    
    69,223GOODWILL IMPAIRMENT CHARGE
    
    
    83,324
    
    
    
    
    
    
    
    11,533LITIGATION CHARGE
    
    
    17,000
    
    
    
    
    
    
    
    OTHER INCOME, NET
    
    
    (809
    )
    
    
    (3,064
    )
    
    
    Operating income (loss)
    
    
    (30,379
    )
    
    
    100,295
    
    
    
    86,785INTEREST EXPENSE
    
    
    15,260
    
    
    
    12,366
    
    
    
    7,011INTEREST INCOME
    
    
    (265
    )
    
    
    (346
    )
    
    
    (309
    )Income (loss) before taxes
    
    
    (45,374
    )
    
    
    88,275
    
    
    
    80,083INCOME TAX EXPENSE (BENEFIT)
    
    
    (5,804
    )
    
    
    28,951
    
    
    
    29,342Net income (loss)
    
    $
    (39,570
    )
    
    $
    59,324
    
    
    $
    50,741BASIC EARNINGS (LOSS) PER SHARE
    
    $
    (3.55
    )
    
    $
    4.76
    
    
    $
    3.74DILUTED EARNINGS (LOSS) PER SHARE
    
    $
    (3.55
    )
    
    $
    4.63
    
    
    $
    3.65SHARES USED TO COMPUTE EARNINGS (LOSS) PER SHAREBasic
    
    
    11,138
    
    
    
    12,463
    
    
    
    13,580Diluted
    
    
    11,138
    
    
    
    12,822
    
    
    
    13,905
   29




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (In thousands)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBALANCE, March 31, 2006
    
    
    13,714
    
    
    $
    138
    
    
    $
    170,581
    
    
    $
    148,227
    
    
    $
    
    
    
    $
    318,946Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,741
    
    
    
    
    
    
    
    50,741Other comprehensive income  currency
translation adjustment, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188
    
    
    
    188Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,929Exercise of stock options, including
tax benefit
    
    
    445
    
    
    
    3
    
    
    
    17,619
    
    
    
    
    
    
    
    
    
    
    
    17,622Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    2,695
    
    
    
    
    
    
    
    
    
    
    
    2,695Repurchase and retire common stock
    
    
    (465
    )
    
    
    (4
    )
    
    
    (5,797
    )
    
    
    (18,855
    )
    
    
    
    
    
    
    (24,656
    )BALANCE, March 31, 2007
    
    
    13,694
    
    
    
    137
    
    
    
    185,098
    
    
    
    180,113
    
    
    
    188
    
    
    
    365,536Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,324
    
    
    
    
    
    
    
    59,324Other comprehensive income  currency
translation adjustment, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,086
    )
    
    
    (1,086
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,238Exercise of stock options, including
tax benefit
    
    
    67
    
    
    
    1
    
    
    
    2,869
    
    
    
    
    
    
    
    
    
    
    
    2,870Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    2,057
    
    
    
    
    
    
    
    
    
    
    
    2,057Repurchase and retire common stock
    
    
    (2,682
    )
    
    
    (27
    )
    
    
    (36,820
    )
    
    
    (113,250
    )
    
    
    
    
    
    
    (150,097
    )Cumulative effect of adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,189
    
    
    
    
    
    
    
    1,189BALANCE, March 31, 2008
    
    
    11,079
    
    
    
    111
    
    
    
    153,204
    
    
    
    127,376
    
    
    
    (898
    )
    
    
    279,793Net income loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,570
    )
    
    
    
    
    
    
    (39,570
    )Other comprehensive income  currency
translation adjustment, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    314
    
    
    
    314Total comprehensive income loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,256
    )Exercise of stock options, including
tax benefit
    
    
    74
    
    
    
    
    
    
    
    3,019
    
    
    
    
    
    
    
    
    
    
    
    3,019Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    6,908
    
    
    
    
    
    
    
    
    
    
    
    6,908BALANCE, March 31, 2009
    
    
    11,153
    
    
    $
    111
    
    
    $
    163,131
    
    
    $
    87,806
    
    
    $
    (584
    )
    
    $
    250,464
   30




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Year Ended March 312009
    
    
    2008
    
    
    2007OPERATING ACTIVITIESNet income (loss)
    
    $
    (39,570
    )
    
    $
    59,324
    
    
    $
    50,741Adjustments to reconcile net income (loss) to net cash provided by
operating activitiesDepreciation
    
    
    63,349
    
    
    
    51,460
    
    
    
    43,662Amortization
    
    
    4,128
    
    
    
    2,426
    
    
    
    1,608Bad debt expense
    
    
    4,116
    
    
    
    1,203
    
    
    
    1,777Goodwill impairment charge
    
    
    83,324
    
    
    
    
    
    
    
    11,533Litigation charge
    
    
    17,000
    
    
    
    
    
    
    
    Currency (gain) loss
    
    
    559
    
    
    
    (3,807
    )
    
    
    Deferred income taxes
    
    
    (12,922
    )
    
    
    6,029
    
    
    
    (6,554
    )Share-based compensation expense
    
    
    6,908
    
    
    
    2,057
    
    
    
    2,695Changes in assets and liabilities, net of effects of acquisitionsAccounts receivable, net
    
    
    30,302
    
    
    
    216
    
    
    
    (26,504
    )Inventories
    
    
    8,022
    
    
    
    (32
    )
    
    
    (4,434
    )Prepaid expenses
    
    
    (10,482
    )
    
    
    1,232
    
    
    
    (394
    )Other assets
    
    
    (503
    )
    
    
    (258
    )
    
    
    (146
    )Accounts payable and accrued liabilities
    
    
    (14,692
    )
    
    
    (3,902
    )
    
    
    2,129Other liabilities
    
    
    1,139
    
    
    
    (5,812
    )
    
    
    Income taxes payable
    
    
    374
    
    
    
    46
    
    
    
    (3,339
    )Net cash provided by operating activities
    
    
    141,052
    
    
    
    110,182
    
    
    
    72,774INVESTING ACTIVITIESAcquisitions of businesses, net of cash acquired
    
    
    (6,684
    )
    
    
    (97,258
    )
    
    
    (67,555
    )Purchases of property and equipment
    
    
    (69,600
    )
    
    
    (41,394
    )
    
    
    (43,217
    )Proceeds from asset dispositions
    
    
    1,447
    
    
    
    2,019
    
    
    
    4,095Net cash used in investing activities
    
    
    (74,837
    )
    
    
    (136,633
    )
    
    
    (106,677
    )FINANCING ACTIVITIESProceeds from bank credit facilities
    
    
    200,276
    
    
    
    289,377
    
    
    
    230,867Payments on bank credit facilities
    
    
    (253,339
    )
    
    
    (111,972
    )
    
    
    (179,773
    )Proceeds from issuance of term equipment notes
    
    
    1,926
    
    
    
    15,558
    
    
    
    8,154Payments on term equipment notes and other debt
    
    
    (23,530
    )
    
    
    (16,645
    )
    
    
    (11,290
    )Payments to repurchase and retire common stock
    
    
    
    
    
    
    (150,097
    )
    
    
    (24,656
    )Proceeds from exercise of stock options, including excess tax benefit
    
    
    3,019
    
    
    
    2,869
    
    
    
    17,622Net cash provided by (used in) financing activities
    
    
    (71,648
    )
    
    
    29,090
    
    
    
    40,924Effect of exchange rate changes on cash and cash equivalents
    
    
    64
    
    
    
    449
    
    
    
    29NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (5,369
    )
    
    
    3,088
    
    
    
    7,050CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    15,131
    
    
    
    12,043
    
    
    
    4,993CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    9,762
    
    
    $
    15,131
    
    
    $
    12,043
   31




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (In thousands, except share and per share data and percentages)
 1. BUSINESS
     2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
 Accounting Policies
  Principles of Consolidation
 Use of Estimates
 Reclassification
 Cash and Cash Equivalents
  32




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
 Revenue Recognition and Accounts Receivable
 Inventories
 March 312009
    
    
    2008Raw materials
    
    $
    22,587
    
    
    $
    25,983Work in progress
    
    
    24,896
    
    
    
    29,447Finished goods
    
    
    5,254
    
    
    
    6,081$
    52,737
    
    
    $
    61,511
 Long-Lived Assets Goodwill and Other Intangible Assets, Accounting for the Impairment or Disposal of Long-Lived
Assets.
    33




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
      2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014Amortization expense
    
    $
    3,403
    
    
    $
    3,353
    
    
    $
    3,353
    
    
    $
    3,353
    
    
    $
    3,020
 Accrued Liabilities
 March 312009
    
    
    2008Compensation and benefits
    
    $
    29,634
    
    
    $
    35,473Litigation reserve
    
    
    17,000
    
    
    
    Advances from customers
    
    
    14,290
    
    
    
    12,101Other(1)
    
    
    12,468
    
    
    
    20,642Manufacturing materials and services
    
    
    8,127
    
    
    
    9,809Sales, property and other taxes
    
    
    5,199
    
    
    
    5,463$
    86,718
    
    
    $
    83,488
 
 (1)
    
    Other accrued liabilities are principally comprised of contingent
transaction consideration associated with
certain of the Companys acquisitions and accrued self-insurance claims for certain
insurance programs. None
of the individual items in other accrued liabilities at March 31, 2009 and 2008 were
individually greater than
5% of total current liabilities in those years.  34




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
 Litigation Charge 
 Income Taxes 
 Supplemental Cash Flow Information
 Recent Accounting Pronouncements 
 Fair Value Measurement
 The Fair Value Option for Financial Assets and
Financial Liabilities,
 Business Combinations
  35




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
 Other Information
 Earnings Per Share .
 Year Ended March 312009
    
    
    2008
    
    
    2007Numerator:Net income (loss)
    
    $
    (39,570
    )
    
    $
    59,324
    
    
    $
    50,741Denominator:Weighted average number of common shares outstanding
    
    
    11,138,141
    
    
    
    12,462,617
    
    
    
    13,580,207Dilutive options and awards
    
    
    
    
    
    
    359,393
    
    
    
    324,516Diluted weighted average number of common shares outstanding
    
    
    11,138,141
    
    
    
    12,822,010
    
    
    
    13,904,722Net earnings (loss) per shareBasic
    
    $
    (3.55
    )
    
    $
    4.76
    
    
    $
    3.74Diluted
    
    $
    (3.55
    )
    
    $
    4.63
    
    
    $
    3.65
  Related Party Transactions
 Fair Value of Financial Instruments
 Concentrations of Credit Risk
 Stock-Based Compensation  Share-Based Payment
  36




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
 Foreign Currency 
 Other Comprehensive Income 
 Geographic Information 
 3. ACQUISITIONS
     4. PROPERTY AND EQUIPMENT
   37




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
  EstimatedMarch 31
    
    
    LifeDescription
    
    2009
    
    
    2008
    
    
    in YearsLand
    
    $
    14,887
    
    
    $
    15,137
    
    
    
    Buildings and leasehold improvements
    
    
    114,679
    
    
    
    111,710
    
    
    
    5-30Machinery and equipment
    
    
    579,620
    
    
    
    535,227
    
    
    
    5-20Computer equipment and software
    
    
    37,022
    
    
    
    29,884
    
    
    
    2-5Furniture, fixtures and other
    
    
    19,427
    
    
    
    10,818
    
    
    
    2-7765,635
    
    
    
    702,776Lessaccumulated depreciation
    
    
    (335,116
    )
    
    
    (281,429
    )$
    430,519
    
    
    $
    421,347
  5. LONG-TERM DEBT
  March 312009
    
    
    2008Bank credit facilities
    
    $
    214,701
    
    
    $
    271,868Term equipment notes
    
    
    90,980
    
    
    
    104,505Other
    
    
    8,509
    
    
    
    9,327314,190
    
    
    
    385,700Lesscurrent portion
    
    
    (27,026
    )
    
    
    (23,252
    )$
    287,164
    
    
    $
    362,448
     38




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
     2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterDebt obligations
    
    $
    27,026
    
    
    $
    23,120
    
    
    $
    231,778
    
    
    $
    18,993
    
    
    $
    7,147
    
    
    $
    6,126
 6. INCOME TAXES
  Year Ended March 312009
    
    
    2008
    
    
    2007Domestic
    
    $
    (53,099
    )
    
    $
    78,330
    
    
    $
    78,590Foreign
    
    
    7,725
    
    
    
    9,945
    
    
    
    1,493Income before taxes
    
    $
    (45,374
    )
    
    $
    88,275
    
    
    $
    80,083
  39




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
  Year Ended March 312009
    
    
    2008
    
    
    2007CurrentFederal
    
    $
    3,259
    
    
    $
    17,927
    
    
    $
    32,519State
    
    
    1,974
    
    
    
    3,001
    
    
    
    2,751Foreign
    
    
    1,620
    
    
    
    1,994
    
    
    
    626Current income taxes
    
    
    6,853
    
    
    
    22,922
    
    
    
    35,896DeferredFederal
    
    
    (9,688
    )
    
    
    4,506
    
    
    
    (3,866
    )State
    
    
    (3,318
    )
    
    
    460
    
    
    
    (2,688
    )Foreign
    
    
    349
    
    
    
    1,063
    
    
    
    Deferred income taxes
    
    
    (12,657
    )
    
    
    6,029
    
    
    
    (6,554
    )Income tax expense (benefit)
    
    $
    (5,804
    )
    
    $
    28,951
    
    
    $
    29,342
  Year Ended March 312009
    
    
    2008
    
    
    2007Provision at the federal statutory rate
    
    $
    (15,881
    )
    
    $
    30,896
    
    
    $
    28,029Impairment of goodwill
    
    
    11,390
    
    
    
    
    
    
    
    672Non-deductible expenses
    
    
    1,259
    
    
    
    1,569
    
    
    
    1,347Adjustment to contingency reserve
    
    
    170
    
    
    
    (4,748
    )
    
    
    State income taxes, net of federal income tax benefit
    
    
    (2,271
    )
    
    
    3,103
    
    
    
    41Foreign income taxed at other rates
    
    
    (734
    )
    
    
    (423
    )
    
    
    Benefit of domestic production deduction
    
    
    (348
    )
    
    
    (1,446
    )
    
    
    (798
    )Other
    
    
    611
    
    
    
    
    
    
    
    51Income tax expense (benefit)
    
    $
    (5,804
    )
    
    $
    28,951
    
    
    $
    29,342
     40




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
  March 312009
    
    
    2008Deferred income tax assetsGoodwill and intangibles(1)
    
    $
    25,317
    
    
    $
    9,031Litigation reserve
    
    
    6,630
    
    
    
    Compensation and benefit accruals
    
    
    5,185
    
    
    
    4,735Stock based compensation
    
    
    3,736
    
    
    
    1,475Other liabilities(1)
    
    
    3,693
    
    
    
    3,291Net operating losses and credits
    
    
    2,855
    
    
    
    2,433Accounts receivable and inventories
    
    
    2,038
    
    
    
    1,031Accrued liabilities
    
    
    
    
    
    
    444Other
    
    
    259
    
    
    
    689Total deferred income tax assets
    
    
    49,713
    
    
    
    23,129Valuation allowance
    
    
    (1,732
    )
    
    
    (1,454
    )Net deferred income tax assets
    
    $
    47,981
    
    
    $
    21,675Deferred income tax liabilitiesProperty and equipment
    
    $
    77,222
    
    
    $
    62,505Prepaid expenses
    
    
    1,577
    
    
    
    1,476Other
    
    
    243
    
    
    
    1,236Total deferred income tax liabilities
    
    $
    79,042
    
    
    $
    65,217
 
 (1)
    
    These deferred income tax assets are long-term in nature and therefore are
netted against total deferred income tax liabilities for presentation in the
accompanying consolidated balance sheets. Accounting for Income Taxes
      41




---



##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
  March 312009
    
    
    2008Unrecognized tax benefit at beginning of year
    
    $
    13,655
    
    
    $
    19,334Additions for tax positions in prior periods
    
    
    474
    
    
    
    278Decreases for tax positions in prior periods
    
    
    
    
    
    
    (317
    )Additions for tax positions in current periods
    
    
    2,665
    
    
    
    2,911Settlement/audits
    
    
    
    
    
    
    (336
    )Lapse of statute of limitations
    
    
    (2,001
    )
    
    
    (8,215
    )Unrecognized tax benefit at end of year
    
    $
    14,793
    
    
    
    13,655
 7. COMMITMENTS AND CONTINGENCIES
 Operating Leases
  2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterOperating lease obligations
    
    $
    18,248
    
    
    $
    14,259
    
    
    $
    12,545
    
    
    $
    10,503
    
    
    $
    7,812
    
    
    $
    25,041
 Letters of Credit
 Insurance Programs 
 Multi-Employer Pension Plans 
 Legal Matters
   42




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##### Table of Contents



CONSOLDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
     Tax Matters
 8. SHARE-BASED COMPENSATION
   43




---



##### Table of Contents



CONSOLDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
  For the Years Ended March 312009
    
    
    2008
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at April 1
    
    
    1,479,977
    
    
    $
    36.93
    
    
    
    1,546,734
    
    
    $
    36.66
    
    
    
    1,974,459
    
    
    $
    33.88Granted
    
    
    730,000
    
    
    
    46.02
    
    
    
    73,112
    
    
    
    45.35
    
    
    
    48,588
    
    
    
    52.62Exercised
    
    
    (73,864
    )
    
    
    39.48
    
    
    
    (69,480
    )
    
    
    29.25
    
    
    
    (445,221
    )
    
    
    27.32Forfeited or expired
    
    
    (306,962
    )
    
    
    52.24
    
    
    
    (70,389
    )
    
    
    45.58
    
    
    
    (31,092
    )
    
    
    40.10Outstanding at March 31
    
    
    1,829,151
    
    
    
    37.85
    
    
    
    1,479,977
    
    
    
    36.93
    
    
    
    1,546,734
    
    
    
    36.66Exercisable at March 31
    
    
    962,630
    
    
    
    31.10
    
    
    
    1,215,282
    
    
    
    35.61
    
    
    
    1,164,234
    
    
    
    35.21
    Year Ended March 312009
    
    
    2008
    
    
    2007Weighted average fair value per share
of option grants during the year
    
    $
    20.46
    
    
    $
    19.42
    
    
    $
    19.94Assumptions:Expected option life in years
    
    
    6.5
    
    
    
    6.1
    
    
    
    4.3Risk-free interest rate
    
    
    2.7
    %
    
    
    3.7
    %
    
    
    5.0
    %Expected volatility
    
    
    40.4
    %
    
    
    38.8
    %
    
    
    37.9
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
   44




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##### Table of Contents



CONSOLDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
  Outstanding
    
    
    ExercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    Remaining
    
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    
    Price
    
    
    Years
    
    
    Shares
    
    
    PriceStock Options$7.40  $20.00
    
    
    635,000
    
    
    $
    14.43
    
    
    
    4.3
    
    
    
    440,000
    
    
    $
    13.22$20.01  $30.00
    
    
    52,500
    
    
    
    23.05
    
    
    
    4.4
    
    
    
    52,500
    
    
    
    23.05$30.01  $40.00
    
    
    68,849
    
    
    
    38.14
    
    
    
    5.7
    
    
    
    21,849
    
    
    
    38.18$40.01  $50.00
    
    
    159,701
    
    
    
    42.37
    
    
    
    5.3
    
    
    
    90,119
    
    
    
    42.23$50.01  $60.00
    
    
    870,883
    
    
    
    54.57
    
    
    
    8.2
    
    
    
    354,483
    
    
    
    50.90$60.01  $66.00
    
    
    12,843
    
    
    
    64.19
    
    
    
    3.6
    
    
    
    3,679
    
    
    
    63.511,799,776
    
    
    
    37.85
    
    
    
    6.3
    
    
    
    962,630
    
    
    
    31.10Restricted stock unit awards
    
    
    29,375
    
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    Outstanding at March 31,
2009
    
    
    1,829,151
    
    
    
    
    
    
    
    6.3
    
    
    
    962,630
    
    
    
    
 Share-Based Payment,
    9. SUPPLEMENTAL SELECTED UNAUDITED QUARTERLY FINANCIAL DATA
   45




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##### Table of Contents



CONSOLIDATED GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data and percentages)
 1st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterFiscal 2009:Sales
    
    $
    285,194
    
    
    $
    296,951
    
    
    $
    315,815
    
    
    $
    247,186Gross profit
    
    
    70,640
    
    
    
    72,586
    
    
    
    74,760
    
    
    
    52,099Net income (loss)
    
    
    9,616
    
    
    
    10,303
    
    
    
    (43,566
    )(1)
    
    
    (15,923
    )(2)Basic earnings (loss) per share
    
    
    .87
    
    
    
    .92
    
    
    
    (3.91
    )
    
    
    (1.43
    )Diluted earnings (loss) per share
    
    
    .84
    
    
    
    .90
    
    
    
    (3.91
    )
    
    
    (1.43
    )Fiscal 2008:Sales
    
    $
    258,646
    
    
    $
    259,666
    
    
    $
    289,538
    
    
    $
    287,538Gross profit
    
    
    68,177
    
    
    
    66,264
    
    
    
    75,398
    
    
    
    73,148Net income
    
    
    13,557
    
    
    
    13,286
    
    
    
    19,362
    
    
    
    13,119Basic earnings per share
    
    
    .99
    
    
    
    1.01
    
    
    
    1.63
    
    
    
    1.18Diluted earnings per share
    
    
    .96
    
    
    
    .98
    
    
    
    1.58
    
    
    
    1.15
 
 (1)
    
    Includes $46,058 goodwill impairment charge and $10,370 litigation charge, each
net of taxes.(2)
    
    Includes $17,211 goodwill impairment charge, net of taxes.  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Managements Annual Report on Internal Control Over Financial Reporting
  Changes in Internal Controls Over Financial Reporting
  
 Item 9B. Other Information
 None.
  46




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##### Table of Contents



PART III
 
  
 PART IV
 
 Item 15 . Exhibits and Financial Statement Schedules
 (a)
    
    Index to Financial Statements(a)(1)
    
    Financial Statements:The index to the Financial Statements is included in Item 8 of this
Annual Report on Form 10-K and is incorporated herein by reference.(a)(2)
    
    Financial Statement Schedules:Schedule IIValuation and Qualifying Accounts.Report of Independent Registered Public Accounting Firm with
respect to Schedule II  Valuation and Qualifying Accounts is
included in Item 15 of this Annual Report on Form 10-K.
  (a)(3)
    
    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 May 25, 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
    
    
    
    
    Consolidated Graphics, Inc. Amended and Restated Long-Term Incentive Plan (Consolidated Graphics,
Inc. Form 10-Q (June 30, 2008), Exhibit 10.5).+*
    
    
    10.2
    
    
    
    
    Amended and Restated Employment Agreement executed on December 29, 2008, but effective as of May
22, 2008, between the Company and Joe R. Davis (Consolidated Graphics, Inc. Form 8-K (December 29,
2008), Exhibit 10.1).+*
    
    
    10.3
    
    
    
    
    Amended and Restated Employment Agreement executed on December 29, 2008, but effective as of May
22, 2008, between the Company and Jon C. Biro (Consolidated Graphics, Inc. Form 8-K (December 29,
2008), Exhibit 10.2).+
  47




---



##### Table of Contents



*
    
    
    10.4
    
    
    
    
    Amended and Restated Change in Control Agreement, executed on December 29, 2008, but effective as
of January 14, 2009, between the Company and Jon C. Biro (Consolidated Graphics, Inc. Form 8-K
(December 29, 2008), Exhibit 10.3).+*
    
    
    10.5
    
    
    
    
    Form of Indemnification Agreement for directors and officers (Consolidated Graphics, Inc. Form
10-Q (June 30, 2004), Exhibit 10.1).*
    
    
    10.6
    
    
    
    
    Form of First Amendment to Indemnification Agreement for directors and officers (Consolidated
Graphics, Inc. Form 10-Q (December 31, 2008), Exhibit 10.4).*
    
    
    10.7
    
    
    
    
    Amended Schedule identifying the directors and officers parties to Indemnification Agreements with
the Company. (Consolidated Graphics, Inc. Form 10-K (March 31, 2008), Exhibit 10.8).*
    
    
    10.8
    
    
    
    
    Credit Agreement among the Company and JPMorgan Chase Bank, N.A., as Administrative Agent, Wells
Fargo Bank, National Association, as Syndication Agent, dated as of October 6, 2006 (Consolidated
Graphics, Inc. Form 8-K (October 6, 2006), Exhibit 10.1).*
    
    
    10.9
    
    
    
    
    First Amendment to the Credit Agreement among the Company and JPMorgan Chase Bank, N.A., as
Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, dated as of
January 2, 2007 (Consolidated Graphics, Inc. Form 8-K (January 2, 2007), Exhibit 99.1).*
    
    
    10.10
    
    
    
    
    Second Amendment to the Credit Agreement among the Company and JPMorgan Chase Bank, N.A., as
Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, dated as of
November 9, 2007 (Consolidated Graphics, Inc. Form 8-K (November 14, 2007), Exhibit 10.1).*
    
    
    10.11
    
    
    
    
    Third Amendment to the Credit Agreement among the Company and JP Morgan Chase Bank, N.A., as
Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, dated as of
March 13, 2008 (Consolidated Graphics, Inc. Form 8-K (March 13, 2008), Exhibit 10.1).*
    
    
    10.12
    
    
    
    
    Fourth Amendment to the Credit Agreement among the Company and JP Morgan Chase Bank, N.A., as
Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, dated as of
August 4, 2008 (Consolidated Graphics, Inc. Form 8-K (August 8, 2008), Exhibit 10.1).*
    
    
    10.13
    
    
    
    
    Form of Non-Employee Director Non-Statutory Stock Option Agreement (Consolidated Graphics, Inc.
Form 10-K (March 31, 2008), Exhibit 10.13).+*
    
    
    10.14
    
    
    
    
    Form of Employee Incentive Stock Option Agreement (Consolidated Graphics, Inc. Form 10-K (March
31, 2008), Exhibit 10.14).+*
    
    
    10.15
    
    
    
    
    Form of Employee Non- Statutory Stock Option Agreement (Consolidated Graphics, Inc. Form 10-K
(March 31, 2008), Exhibit 10.15).+*
    
    
    10.16
    
    
    
    
    Form of Restricted Stock Unit Agreement (Consolidated Graphics, Inc. Form 8-K (June 14, 2007),
Exhibit 10.1).+*
    
    
    10.17
    
    
    
    
    Consolidated Graphics, Inc. Annual Incentive Compensation Plan, dated effective as of April 1,
2008 (Consolidated Graphics, Inc. Form 8-K (May 29, 2008), Exhibit 10.2).+*
    
    
    10.18
    
    
    
    
    Form of Annual Incentive Award Agreement for Executives (Consolidated Graphics, Inc. Form 8-K (May
29, 2008), Exhibit 10.3).+21
    
    
    
    
    List of Subsidiaries.23
    
    
    
    
    Consent of KPMG LLP.24
    
    
    
    
    Powers of Attorney.31.1
    
    
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference.+
    
    Compensatory plan or arrangement under which executive officers or directors of the Company
may participate.  48




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##### Table of Contents



SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
 UtilizationBalance at
    
    
    Amount
    
    
    of Reserve
    
    
    BalanceBeginning
    
    
    Charged
    
    
    (Net of
    
    
    at EndDescription
    
    of Year
    
    
    to Expense
    
    
    Recoveries)
    
    
    of YearAllowance for Doubtful AccountsYear Ended March 31, 2009
    
    $
    3,575
    
    
    $
    4,116
    
    
    $
    (1,135
    )
    
    $
    6,556Year Ended March 31, 2008
    
    
    3,080
    
    
    
    1,203
    
    
    
    (708
    )
    
    
    3,575Year Ended March 31, 2007
    
    
    2,514
    
    
    
    1,777
    
    
    
    (1,211
    )
    
    
    3,080
 Report of Independent Registered Public Accounting Firm
 
   Accounting for Uncertainty in Income
Taxes,
 
  49




---



##### Table of Contents



SIGNATURES
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunder duly authorized, in the City of Houston, State of Texas on the 27 day of May, 2009.
 CONSOLIDATED GRAPHICS, INC.By:
    /s/ Joe R. DavisJoe R. DavisChief Executive Officer and
Chairman of the Board of Directors Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
 Signature
    
    Title
    
    Date/s/ Joe R. Davis

Joe R. Davis
    
    Chief Executive Officer
and Director
(Principal Executive Officer)
    
    May 27, 2009/s/ Jon C. Biro

Jon C. Biro
    
    Executive Vice President, 
Chief Financial and Accounting Officer and Secretary
(Principal Financial and Accounting Officer)
    
    May 27, 2009/s/ LARRY J. ALEXANDER*

Larry J. Alexander
    
    Director/s/ BRADY F. CARRUTH*

Brady F. Carruth
    
    Director/s/ GARY L. FORBES*

Gary L. Forbes
    
    Director/s/ JAMES H. LIMMER*

James H. Limmer
    
    Director/s/ HUGH N. WEST*

Hugh N. West
    
    Director
 
 *By:
    
    /s/ Joe R. Davis

Joe R. Davis 
Attorney-in-Fact
    
    
    
    May 27, 2009
  50




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##### Table of Contents



Exhibit Index
 (a)(3)
    
    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 May 25, 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
    
    
    
    
    Consolidated Graphics, Inc. Amended and Restated Long-Term Incentive Plan (Consolidated Graphics,
Inc. Form 10-Q (June 30, 2008), Exhibit 10.5).+*
    
    
    10.2
    
    
    
    
    Amended and Restated Employment Agreement executed on December 29, 2008, but effective as of May
22, 2008, between the Company and Joe R. Davis (Consolidated Graphics, Inc. Form 8-K (December 29,
2008), Exhibit 10.1).+*
    
    
    10.3
    
    
    
    
    Amended and Restated Employment Agreement executed on December 29, 2008, but effective as of May
22, 2008, between the Company and Jon C. Biro (Consolidated Graphics, Inc. Form 8-K (December 29,
2008), Exhibit 10.2).+*
    
    
    10.4
    
    
    
    
    Amended and Restated Change in Control Agreement, executed on December 29, 2008, but effective as
of January 14, 2009, between the Company and Jon C. Biro (Consolidated Graphics, Inc. Form 8-K
(December 29, 2008), Exhibit 10.3).+*
    
    
    10.5
    
    
    
    
    Form of Indemnification Agreement for directors and officers (Consolidated Graphics, Inc. Form
10-Q (June 30, 2004), Exhibit 10.1).*
    
    
    10.6
    
    
    
    
    Form of First Amendment to Indemnification Agreement for directors and officers (Consolidated
Graphics, Inc. Form 10-Q (December 31, 2008), Exhibit 10.4).*
    
    
    10.7
    
    
    
    
    Amended Schedule identifying the directors and officers parties to Indemnification Agreements with
the Company. (Consolidated Graphics, Inc. Form 10-K (March 31, 2008), Exhibit 10.8).*
    
    
    10.8
    
    
    
    
    Credit Agreement among the Company and JPMorgan Chase Bank, N.A., as Administrative Agent, Wells
Fargo Bank, National Association, as Syndication Agent, dated as of October 6, 2006 (Consolidated
Graphics, Inc. Form 8-K (October 6, 2006), Exhibit 10.1).*
    
    
    10.9
    
    
    
    
    First Amendment to the Credit Agreement among the Company and JPMorgan Chase Bank, N.A., as
Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, dated as of
January 2, 2007 (Consolidated Graphics, Inc. Form 8-K (January 2, 2007), Exhibit 99.1).*
    
    
    10.10
    
    
    
    
    Second Amendment to the Credit Agreement among the Company and JPMorgan Chase Bank, N.A., as
Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, dated as of
November 9, 2007 (Consolidated Graphics, Inc. Form 8-K (November 14, 2007), Exhibit 10.1).*
    
    
    10.11
    
    
    
    
    Third Amendment to the Credit Agreement among the Company and JP Morgan Chase Bank, N.A., as
Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, dated as of
March 13, 2008 (Consolidated Graphics, Inc. Form 8-K (March 13, 2008), Exhibit 10.1).*
    
    
    10.12
    
    
    
    
    Fourth Amendment to the Credit Agreement among the Company and JP Morgan Chase Bank, N.A., as
Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, dated as of
August 4, 2008 (Consolidated Graphics, Inc. Form 8-K (August 8, 2008), Exhibit 10.1).*
    
    
    10.13
    
    
    
    
    Form of Non-Employee Director Non-Statutory Stock Option Agreement (Consolidated Graphics, Inc.
Form 10-K (March 31, 2009), Exhibit 10.13).+*
    
    
    10.14
    
    
    
    
    Form of Employee Incentive Stock Option Agreement (Consolidated Graphics, Inc. Form 10-K (March
31, 2009), Exhibit 10.14).+
  51




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##### Table of Contents



*
    
    
    10.15
    
    
    
    
    Form of Employee Non- Statutory Stock Option Agreement (Consolidated Graphics, Inc. Form 10-K
(March 31, 2009), Exhibit 10.15).+*
    
    
    10.16
    
    
    
    
    Form of Restricted Stock Unit Agreement (Consolidated Graphics, Inc. Form 8-K (June 14, 2007),
Exhibit 10.1).+*
    
    
    10.17
    
    
    
    
    Consolidated Graphics, Inc. Annual Incentive Compensation Plan, dated effective as of April 1,
2008 (Consolidated Graphics, Inc. Form 8-K (May 29, 2008), Exhibit 10.2).+*
    
    
    10.18
    
    
    
    
    Form of Annual Incentive Award Agreement for Executives (Consolidated Graphics, Inc. Form 8-K (May
29, 2008), Exhibit 10.3).+21
    
    
    
    
    List of Subsidiaries.23
    
    
    
    
    Consent of KPMG LLP.24
    
    
    
    
    Powers of Attorney.31.1
    
    
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference.+
    
    Compensatory plan or arrangement under which executive officers or directors of the Company
may participate.  52