8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 2, 2006

CONSOLIDATED GRAPHICS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

TEXAS	001-12631	76-0190827
(STATE OR OTHER JURISDICTION OF INCORPORATION)	(COMMISSION FILE NUMBER)	(I.R.S. EMPLOYER IDENTIFICATION NO.)

5858 WESTHEIMER, SUITE 200
HOUSTON, TEXAS 77057
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 787-0977

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The information in this Current Report is being furnished pursuant to Item 2.02 of Form 8-K and, according to general instruction B.2. thereunder, shall not be deemed “filed” with the Securities and Exchange Commission (the “SEC”) for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement filed by Consolidated Graphics, Inc. (the “Company”) under the Securities Act of 1933, as amended, and will not be so incorporated by reference into any future registration statement unless specifically identified as being incorporated by reference.

On August 2, 2006, the Company announced its fiscal 2007 first quarter results. A copy of the press release is attached hereto as Exhibit 99.1. The attached press release may contain forward-looking information. Readers are cautioned that such information involves known and unknown risks, uncertainties and other factors that could cause actual results to materially differ from the results, performance or other expectations implied by these forward looking statements.

The Company will hold a conference call today at 10:00 a.m. Central Time/11:00 a.m. Eastern Time to discuss the Company’s financial results for the first quarter ended June 30, 2006. A live webcast and subsequent archive of the conference call, as well as a copy of this Current Report and attached press release, can be accessed at www.cgx.com under the Investor Relations page.

During today’s conference call, management’s discussion of the Company’s financial results may include references to certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with United States generally accepted accounting principles, or GAAP. Pursuant to the rules adopted by the SEC relating to the use of such financial measures in filings with the SEC, other disclosures of financial information and press releases, the Company provides the following qualitative and quantitative reconciliations regarding the non-GAAP financial measures to which management may refer. In addition, the sum of quarterly amounts in the accompanying tables may not equal full year amounts due to rounding differences.

The Company defines EBITDA as our net income plus provision for income taxes, net interest expense, share-based compensation expense, goodwill impairment charges and depreciation and amortization expense. We define EBITDA margin as EBITDA divided by sales. The Company uses EBITDA and EBITDA margin both as a liquidity and performance measure when evaluating its business and operations. We believe EBITDA and EBITDA margin may be useful to an investor in evaluating our liquidity and/or operating performance because:

• it is widely used by investors in our industry to measure a company’s operating performance without regard to items such as interest, depreciation and amortization expenses and long-term non-cash share-based compensation expense, which can vary substantially from company to company depending upon accounting policies

	and book value of assets, capital structure and the method by which assets were acquired;
•	it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest charges from our outstanding debt); asset base (primarily depreciation and amortization expense and goodwill impairment charges) and long-term non-cash share-based incentive plans from our operating results; and
•	it helps investors to assess compliance with financial ratios and covenants included in our primary bank facility.

EBITDA should not be considered as an alternative to any measure of operating results as promulgated under GAAP (such as operating income, net income or cash flow from operating activities), nor should it be considered as an indicator of our overall financial performance or our ability to satisfy current or future obligations and fund or finance future business opportunities. EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest expense, amortization and impairment of intangible assets, including goodwill, as well as long-term share-based compensation expense and the net loss from asset dispositions, which should also be considered in the overall evaluation of the Company’s results and liquidity.

	Fiscal									Fiscal 2006												Fiscal 2007
($MM)	2004			2005			2006			Q1			Q2			Q3			Q4			Q1			LTM
Sales		708.1			779.0			879.0			209.9			221.0			226.2			221.9			238.4			907.5
Net Income		19.9			32.7			38.5			8.7			9.3			9.9			10.5			13.7			43.4
Income taxes		12.8			19.0			23.2			5.3			5.7			6.0			6.3			7.3			25.3
Interest expense, net		7.2			5.1			5.5			1.4			1.4			1.4			1.3			1.4			5.5
Depreciation and amortization		33.8			37.0			41.3			10.2			10.2			10.5			10.5			10.6			41.7
Share-based compensation expense		—			—			—			—			—			—			—			1.2			1.2
Net loss from asset dispositions*		2.0			5.1			4.3			0.3			1.7			2.1			0.2			0.3			4.3
EBITDA		75.7			98.9			112.9			25.9			28.3			29.9			28.7			34.5			121.4
EBITDA Margin		10.7	%		12.7	%		12.8	%		12.3	%		12.8	%		13.2	%		12.9	%		14.5	%		13.4	%

* Included in depreciation and amortization in the Consolidated Statements of Cash Flows

The Company defines Free Cash Flow as net cash provided by operating activities less capital expenditures for property and equipment, including capital expenditures which are directly financed and those accrued as a current liability, plus proceeds from asset dispositions. The Company considers Free Cash Flow to be an important indicator of our operating flexibility and is a representative measure of our ability to satisfy current and future obligations and fund or finance future business opportunities and believes it may be similarly useful to investors.

	Fiscal						Fiscal 2006								Fiscal 2007
($MM)	2004		2005		2006		Q1		Q2		Q3		Q4		Q1		LTM
Net cash provided by operating activities		79.2		75.2		79.2		16.2		15.1		28.9		19.1		22.4		85.5
Capital expenditures*		19.8		28.8		32.9		3.9		9.1		4.2		15.6		8.4		37.3
Proceeds from asset dispositions		2.3		1.8		2.5		0.8		0.4		0.7		0.5		1.2		2.8
Free Cash Flow		61.7		48.2		48.9		13.1		6.4		25.4		4.0		15.2		51.0

* Capital expenditures for property, plant and equipment, including capital expenditures which are directly financed and those accrued as a current liability

The Company defines Adjusted Operating Margin as Adjusted Operating Income divided by Sales. We define Adjusted Operating Income as Operating Income plus share-based compensation expense and amortization and impairment of intangible assets including goodwill. Adjusted Operating Income is an important performance measure used by the Company to analyze and compare post-acquisition financial trends and results of its various operations. The Company believes this non-GAAP financial measure may help investors better understand our operating results by removing the impact of intangible asset amortization/impairment from the portion of our asset base resulting solely from our acquisition transactions and long-term non-cash share-based compensation expense pursuant to the Company’s long-term incentive plans.

	Fiscal									Fiscal 2006												Fiscal 2007
($MM)	2004			2005			2006			Q1			Q2			Q3			Q4			Q1			LTM
Sales		708.1			779.0			879.0			209.9			221.0			226.2			221.9			238.4			907.5
Operating income		39.9			56.8			67.2			15.4			16.4			17.3			18.0			22.4			74.2
Share-based compensation expense		—			—			—			—			—			—			—			1.2			1.2
Goodwill impairment /other intangible asset amortization		—			—			1.3			0.2			0.3			0.3			0.5			0.4			1.5
Adjusted Operating Income		39.9			56.8			68.5			15.6			16.7			17.6			18.5			24.1			76.9
Adjusted Operating Margin		5.6	%		7.3	%		7.8	%		7.4	%		7.6	%		7.8	%		8.3	%		10.1	%		8.5	%

ITEM — 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(c) EXHIBITS

The following exhibit is filed herewith:

99.1 Press release of the Company dated August 2, 2006, related to the announcement of the Company’s fiscal 2007 first quarter results.

SIGNATURE

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED HEREUNTO DULY AUTHORIZED.

CONSOLIDATED GRAPHICS, INC. (Registrant)
By:	G. Christopher Colville
	G. Christopher Colville
	Executive Vice President, Chief Financial and Accounting Officer And Secretary

Date: August 2, 2006

EXHIBIT INDEX

Exhibit
No.	Description
99.1	Press release of the Company dated August 2, 2006, related to the announcement of the Company’s fiscal 2007 first quarter results.

EX-99.1

Exhibit 99.1

	FOR:	Consolidated Graphics, Inc.
	CONTACT:	G. Christopher Colville Executive Vice President/ Chief Financial Officer Consolidated Graphics, Inc. (713) 787-0977
For Immediate Release
		Christine Mohrmann/Eric Boyriven Financial Dynamics (212) 850-5600

CONSOLIDATED GRAPHICS REPORTS RECORD FIRST QUARTER 2007 FINANCIAL RESULTS
— Record Revenue of $238 Million vs. $210 Million in Prior Year —
— Record Diluted Earnings Per Share of $.97 vs. $.61 in Prior Year —

HOUSTON, TEXAS — August 2, 2006 — Consolidated Graphics, Inc. (NYSE: CGX) today announced financial results for its first quarter ended June 30, 2006.

Revenue for the June quarter was $238.4 million, up 14% compared to $209.9 million a year ago. Net income for the June quarter was $13.7 million, or $.97 per diluted share, representing increases of 57% and 59% compared to net income of $8.7 million and diluted earnings per share of $.61 a year ago. Revenues, net income and diluted earnings per share this quarter were at record quarterly levels for Consolidated Graphics. The June quarter results included share-based compensation expense of $.8 million after tax, or $.06 per diluted share, resulting from the adoption of SFAS No. 123R effective April 1, 2006, and also a one-time reduction of income tax expense of $.7 million, or $.05 per diluted share, reflecting the cumulative benefit of a net reduction in state income tax rates.

“We are very pleased to report these record results,” commented Joe R. Davis, Chairman and Chief Executive Officer. “Our sales growth is being driven by strong contributions from multiple strategies, including national accounts, CGXSolutions, investment in new technology and acquisitions. This sales growth plus our ongoing focus on purchasing advantages and operating efficiencies has enabled continued strong improvement in operating margins, which rose to 9.4% in the June quarter from 7.3% a year ago, and translated into an accelerated rate of net income and diluted earnings per share growth.”

Mr. Davis added, “We continue to use our strong balance sheet and cash flow to leverage and expand our strategic advantages and for the benefit of enhanced shareholder return. In the June quarter, we made net capital expenditures of $7.2 million and spent $7.4 million to repurchase 147,500 shares of our common stock, while also paying down our outstanding debt by $1.5 million. Our acquisition efforts are reflected in an expanding pipeline of opportunities in addition to the previously announced letter of intent to acquire Global Group Inc. located in Fort Worth, Texas.”

- MORE -

CONSOLIDATED GRAPHICS REPORTS RECORD FIRST QUARTER 2007 FINANCIAL RESULTS PAGE -2-

Mr. Davis concluded, “For the September quarter, we expect to achieve continued strong revenue and profit growth over the prior year. We project quarterly revenues to increase 10% from the prior year to $244 million, with diluted earnings per share increasing 48% to $.98. These projected results do not include any contribution from prospective acquisitions.”

Consolidated Graphics will host a conference call today, August 2, 2006, at 11:00 a.m. Eastern Time, to discuss its first quarter ended June 30, 2006 results. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the live Web cast at the Company’s homepage, www.cgx.com.

Consolidated Graphics, Inc. is the nation’s leading commercial sheetfed, web and digital printing company with a coast-to-coast presence spanning 26 states. Consolidated Graphics produces high-quality customized printed materials for a broad customer base that includes many of the most recognized companies in the country. Consolidated Graphics also offers an extensive and growing range of digital and Internet-based services and solutions marketed through CGXSolutions. Consolidated Graphics is focused on adding value to its operating companies by providing financial and operational strengths, management support and technological advantages associated with a national organization. For more information, visit the Company’s Web site at http://www.cgx.com.

This press release contains forward-looking statements, which involve known and unknown risks, uncertainties or other factors that could cause actual results to materially differ from the results, performance or other expectations implied by these forward-looking statements. Consolidated Graphics’ expectations regarding future sales and profitability assume, among other things, stability in the economy and reasonable growth in the demand for its products, the continued availability of raw materials at affordable prices, retention of its key management and operating personnel, as well as other factors detailed in Consolidated Graphics’ filings with the Securities and Exchange Commission. The forward-looking statements, assumptions and factors stated or referred to in this press release are based on information available to Consolidated Graphics today. Consolidated Graphics expressly disclaims any duty to provide updates to these forward-looking statements, assumptions and other factors after the day of this release to reflect the occurrence of events or circumstances or changes in expectations.

(Table to follow)

CONSOLIDATED GRAPHICS REPORTS RECORD FIRST QUARTER 2007 FINANCIAL RESULTS PAGE -3-

CONSOLIDATED GRAPHICS, INC.
Consolidated Income Statements
(In thousands, except per share data)
(unaudited)

	Three Months Ended
	June 30
	2006				2005
Sales	$	238,425	100.0	%	$	209,915	100.0	%
Cost of Sales		174,420	73.2			158,112	75.3
Gross Profit		64,005	26.8			51,803	24.7
Selling Expenses		24,357	10.2			22,030	10.5
General and Administrative Expenses		17,215	7.2			14,359	6.9
Operating Income		22,433	9.4			15,414	7.3
Interest Expense, net		1,385	0.6			1,364	0.6
Income before Taxes		21,048	8.8			14,050	6.7
Income Taxes		7,318	3.0			5,321	2.5
Net Income	$	13,730	5.8	%	$	8,729	4.2	%
Earnings Per Share
Basic	$	1.00			$	.63
Diluted	$	.97			$	.61
Weighted Average Shares Outstanding
Basic		13,705				13,767
Diluted		14,188				14,273

# # #