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CGX Quarterly Results Down from Previous Year, Up from Previous Quarter

November 4, 2009
HOUSTON—Nov. 4, 2009—Consolidated Graphics, Inc. (NYSE: CGX) today announced financial results for the quarter ended September 30, 2009.

Revenue for the quarter was $251.6 million, down 15% compared to the same quarter last year. The revenue decline was primarily due to a year-over-year same-store revenue decline caused by the current economic environment and lower election-related business.

Operating income for the September 2009 quarter of $6.6 million included charges of $2.6 million related to litigation and the impairment of certain production equipment. Adjusted operating income was $9.4 million or 3.7% of revenue compared to $21.1 million or 7.1% of revenue for the September 2008 quarter. Adjusted operating margin declined due to lower sales which caused certain costs, such as depreciation and various overhead expenses, to increase as a percentage of revenues.

Adjusted net income for the September 2009 quarter was $3.8 million, or $.34 diluted earnings per share compared to adjusted net income of $10.1 million, or $.88 diluted earnings per share for the prior year quarter. Net income during the quarter ended September 30, 2009 was $2.1 million or $.18 diluted earnings per share.

On a sequential basis revenue increased 11.4% compared to the first quarter of 2009 and operating income and earnings per share also improved significantly.

The company continued its strong cash flow performance in the September 2009 quarter, generating free cash flow of $55.8 million, compared to free cash flow of $29.8 million in the June 2009 quarter. Adjusted EBITDA for the September 2009 quarter was $28.7 million compared to $39.3 million for the same quarter of the prior year. As of September 30, 2009 total debt was $232.7 million, a reduction of $81.5 million, or 26%, from March 31, 2009.

Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics, commented, "During the quarter, demand remained soft across our markets, and while the economy continued to adversely impact our business and affect our profitability, we continued our focus on managing costs. In addition, we benefited from our strategic sales and from our position as the leader in digital print services, as digital print sales declined only slightly despite overall market conditions. The quarter also saw us continue to improve our balance sheet, as we utilized our strong free cash flow to further reduce our debt levels."

Davis added, "Going forward, we remain focused on building upon our leadership position in the market place, prudent management of our cost structure, and leveraging our strong financial position to invest in our business for our future. Visibility remains very limited, but based on current market conditions we expect the December quarter revenue to be in the range of $250-265 million representing a same store sales decline of 10-15%, excluding election-related business. Achieving revenues within this range should allow us to at least generate break-even Adjusted Net Income for the quarter ending in December."

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