Consolidated Graphics Reports Financial Results For The Quarter Ended September 30, 2013

    Consolidated Graphics Reports Financial Results For The Quarter Ended
                              September 30, 2013

Second Quarter Highlights:

· Adjusted Operating Income increased 6.8% to $15.7 million, or 6.1% of sales

· Adjusted Diluted Earnings Per Share increased 49% to $1.25 per share

PR Newswire

HOUSTON, Nov. 6, 2013

HOUSTON, Nov. 6, 2013 /PRNewswire/ -- Consolidated Graphics, Inc. (NYSE: CGX)
today announced financial results for its second quarter ended September 30,
2013.

Revenue for the September 2013 quarter was $256.1 million, compared to $263.6
million for the same quarter last year. The 2.9% decline in revenue was
primarily caused by an expected decline in election related business. Adjusted
Operating Income was $15.7 million or 6.1% of revenue for the quarter,
compared to $14.7 million or 5.6% of revenue for the same period last year.
Adjusted Net Income increased 48% or $4.0 million and was $12.3 million for
the September quarter, compared to $8.3 million in the prior year quarter.
Adjusted Diluted Earnings Per Share for the September quarter increased 49% to
$1.25, compared to $.84 last year. Adjusted EBITDA was $32.0 million for the
quarter and Free Cash Flow was $13.7 million.

Operating income for the September 2013 quarter was $13.0 million and included
other charges of $1.8 million, primarily related to $.9 million in costs
incurred in connection with the recently announced transaction with R. R.
Donnelley & Sons Company, accretion of the discount of liability attributable
to our withdrawal from certain multi-employer pension plans and the impairment
of certain equipment. Operating income for the prior year quarter was $12.1
million and included $2.3 million in other charges, primarily related to
relocating certain production facilities and related asset impairments. Net
income for the September 2013 quarter was $10.6 million or $1.09 diluted
earnings per share, compared to net income of $6.7 million or $.68 diluted
earnings per share last year. Net income for the September 2013 quarter
included $2.2 million in benefits for tax reserve credits due to the
settlement of certain tax audits.

Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics,
commented on the reported results and the recently announced transaction: "Our
results improved again during the second quarter. Consolidated Graphics'
success this quarter and over the long-term has been due to our outstanding
employees and their ability to provide the service and responsiveness of a
local printing company while offering customers the flexible solutions and
competitive pricing available from our wide network. The recently announced
signing of a definitive agreement by which RR Donnelley will acquire
Consolidated Graphics will enable our customers and employees to benefit
significantly from RR Donnelley's broad range of printing capabilities and our
combined geographic footprint. RR Donnelley's customers will benefit from the
planned adoption of Consolidated Graphics' local service model for all of its
commercial printing group."

A reconciliation of the non-GAAP financial measures, Adjusted EBITDA, Free
Cash Flow, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net
Income and Adjusted Diluted Earnings Per Share to the most directly comparable
GAAP financial measures are included in the attached tables and in the related
Current Report on Form 8-K filed with the Securities and Exchange Commission.
The Form 8-K also includes the basis for management's use of these non-GAAP
financial measures.

The transaction with RR Donnelley is expected to close in the first calendar
quarter of 2014 and is subject to customary closing conditions, including
regulatory approval and approval of Consolidated Graphics' shareholders.

Consolidated Graphics, Inc. (CGX), headquartered in Houston, Texas, is one of
North America's leading general commercial printing companies. With 70
printing businesses strategically located across 26 states, Toronto, Prague,
and Gero, Japan, CGX offers an unmatched geographic footprint, unsurpassed
capabilities, and unparalleled levels of convenience, efficiency and service.
With locations in or near virtually every major U.S. market, CGX provides the
service and responsiveness of a local printer enhanced by the economic,
geographic and technological advantages of a large national organization.

Consolidated Graphics' vast and technologically advanced sheetfed and web
printing capabilities are complemented by the world's largest integrated
digital footprint. By coupling North America's most comprehensive printing
capabilities with strategically located fulfillment centers and
industry-leading technology, CGX delivers end-to-end print production and
management solutions that are based on the needs of our customers to improve
their results. For more information, visit www.cgx.com.

Additional Information and Where To Find It
This press release relates to a proposed transaction between RR Donnelley and
Consolidated Graphics, which will become the subject of a registration
statement on Form S-4 and proxy statement/prospectus forming a part thereof,
to be filed with the SEC by RR Donnelley and Consolidated Graphics. This
press release is not a substitute for the registration statement and proxy
statement/prospectus that RR Donnelley and Consolidated Graphics will file
with the SEC or any other documents that RR Donnelley or Consolidated Graphics
may file with the SEC or send to shareholders of Consolidated Graphics in
connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION,
INVESTORS AND SECURITY HOLDERS OF CONSOLIDATED GRAPHICS ARE URGED TO READ THE
REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT
DOCUMENTS FILED OR THAT WILL BE FILED BY RR DONNELLEY OR CONSOLIDATED GRAPHICS
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION
AND RELATED MATTERS. Investors and security holders will be able to obtain
free copies of the registration statement, the proxy statement/prospectus
(when available) and other relevant documents filed or that will be filed by
RR Donnelley or Consolidated Graphics with the SEC through the website
maintained by the SEC at http://www.sec.gov. Copies of the registration
statement, proxy statement/prospectus and other relevant documents filed by RR
Donnelley with the SEC will be available free of charge on RR Donnelley's
internet website at http://investor.rrd.com/sec.cfmor by contacting RR
Donnelley's Investor Relations Department at (800) 742-4455. Copies of the
proxy statement/prospectus and other relevant documents filed by Consolidated
Graphics with the SEC will be available free of charge on Consolidated
Graphics' internet website at
http://investors.cgx.com/phoenix.zhtml?c=78535&p=irol-secor by contacting
Consolidated Graphics' Investor Relations Department at (713) 787-0977.

No Offer Or Solicitation
This press release does not constitute an offer to sell, or an invitation to
subscribe for, purchase or exchange, any securities or the solicitation of any
vote or approval in any jurisdiction, nor shall there be any sale, issuance,
exchange or transfer of the securities referred to in this announcement in any
jurisdiction in contravention of applicable law.

Participants in the Solicitation
RR Donnelley, Consolidated Graphics, and their respective directors and
executive officers may be considered participants in the solicitation of
proxies from shareholders of Consolidated Graphics in connection with the
proposed transaction. Information about the directors and executive officers
of Consolidated Graphics is set forth in its proxy statement for its 2013
annual meeting of shareholders, which was filed with the SEC on July9, 2013.
Information about the directors and executive officers of RR Donnelley is set
forth in its proxy statement for its 2013 annual meeting of stockholders,
which was filed with the SEC on April15, 2013. Other information regarding
the participants in the proxy solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be contained
in the proxy statement/prospectus and other relevant materials to be filed
with the SEC when they become available.

Forward-Looking Statements

This press release includes certain "forward-looking statements" within the
meaning of, and subject to the safe harbor created by, Section 21E of the
Securities Exchange Act of 1934, as amended, with respect to the business,
strategy and plans of Consolidated Graphics, its expectations relating to the
proposed transaction with RR Donnelley and its future financial condition and
performance. Statements that are not historical facts, including statements
about Consolidated Graphics' management's beliefs and expectations, are
forward-looking statements. 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 Consolidated Graphics' assumptions, expectations, beliefs and projections
depends 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 Consolidated Graphics' control,
which may limit its ability to maintain or improve its operating results or
financial condition. Consolidated Graphics gives no assurance that the
forward-looking statements will prove to be correct. Consolidated Graphics'
actual future results might differ from the forward-looking statements made in
this press release for a variety of reasons, which include, among others, the
volatility and disruption of the capital and credit markets, and adverse
changes in the economy; financial stability of its customers; the sustained
growth of its digital printing business; seasonality of election-related
business; factors that affect customer demand, including changes in postal
rates and postal regulations, changes in advertising markets, customers'
budgetary constraints and customers' changes in short-range and long-range
plans; its ability to adequately manage business 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; charges related to its withdrawal from multi-employer
pension plans; changes in tax laws or interpretations that could increase
consolidated tax liabilities; the successful completion of the proposed
transaction with RR Donnelley; the receipt of required regulatory approvals
for the proposed transaction (including the approval of antitrust authorities
necessary to complete the proposed transaction); competitive pressures in all
markets in which Consolidated Graphics operates; and such other risks and
uncertainties detailed in Consolidated Graphics' periodic public filings with
the SEC, including but not limited to those discussed under "Risk Factors" in
Consolidated Graphics' Form 10-K for the fiscal year ended March 31, 2013, in
Consolidated Graphics' subsequent filings with the SEC and in other investor
communications of Consolidated Graphics from time to time. Should one or more
of the foregoing risks or uncertainties materialize, or should Consolidated
Graphics' underlying assumptions, expectations, beliefs or projections prove
incorrect, Consolidated Graphics' 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. Consolidated Graphics does not undertake to and
specifically declines any obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect
future events or circumstances after the date of such statement or to reflect
the occurrence of anticipated or unanticipated events.

Regulation G Reconciliation

This press release also contains references to the non-GAAP financial measures
of Adjusted EBITDA, which we define as earnings, or net income, before
interest, income taxes, depreciation and amortization, goodwill impairment
charges, other charges and accretion of pension liability, share-based
compensation expense, non-cash foreign currency transaction gains and losses
and net losses/gains from asset dispositions, Free Cash Flow, which we define
as net cash provided by operating activities less capital expenditures plus
proceeds from assets dispositions, Adjusted Operating Income, which we define
as operating income before goodwill impairment charges, other charges and
accretion of pension liability, share-based compensation expense, and non-cash
foreign currency transaction net gains and losses, Adjusted Operating Margin,
which we define as Adjusted Operating Income divided by sales, Adjusted Net
Income, which we define as net income before goodwill impairment charges,
other charges and accretion of pension liability, share-based compensation
expense, non-cash foreign currency transaction net gain and losses, all net
of tax, and Adjusted Diluted Earnings Per Share, which we define as Adjusted
Net Income divided by diluted weighted average number of common shares
outstanding. Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are provided in the tables below.
Management's opinion regarding the usefulness of these non-GAAP financial
measures to investors and a description of the ways in which management used
such measures can be found in the related Current Report on Form 8-K we filed
with the Securities and Exchange Commission.



(Tables to follow)
CONSOLIDATED GRAPHICS, INC.

Condensed Consolidated Income Statements

(In thousands, except per share amounts, and unaudited)
                                  Three Months Ended                  Six Months Ended
                                  September 30,                       September 30,
                                  2013      2012      Change          2013      2012      Change
                                                      $        %                          $         %
Sales                             $256,089  $263,633  (7,544)  (3)    $492,759  $501,943  (9,184)   (2)
Cost of Sales                     194,026   202,706   (8,680)  (4)    375,395   390,674   (15,279)  (4)
        Gross Profit              62,063    60,927    1,136    2      117,364   111,269   6,095     5
Selling Expenses                  22,480    22,292    188      1      45,930    46,091    (161)     nm
General and Administrative        24,483    24,430    53       nm  48,311    48,933    (622)     (1)
Expenses
Other Charges                     1,824     2,293     (469)    (20)   2,957     3,962     (1,005)   (25)
Other Expense (Income)            300       (150)     450      nm  274       (273)     547       nm
        Operating Income          12,976    12,062    914      8      19,892    12,556    7,336     58
Interest Expense                  444       1,335     (891)    (67)   1,524     2,835     (1,311)   (46)
        Income before Taxes      12,532    10,727    1,805    17     18,368    9,721     8,647     89
Income Tax Expense                1,902     4,018     (2,116)  (53)   4,138     3,460     678       20
        Net Income                $10,630   $6,709    3,921    58     $14,230   $6,261    7,969     127
Earnings Per Share
        Basic                     $1.10     $.68                      1.47      $.62
        Diluted                   $1.09     $.68                      1.46      $.62
Weighted Average Shares
Outstanding
        Basic                     9,679     9,863                     9,658     10,018
        Diluted                   9,784     9,899                     9,731     10,075
Effective Income Tax Rate         15.2%     37.5%                     22.5%     35.6%
^________________________________
nm- not meaningful



CONSOLIDATED GRAPHICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts, and unaudited)
                                                     September 30,  March 31,
                                                     2013           2013
ASSETS
CURRENT ASSETS
Cash and cash equivalents                            $     16,043   $ 12,217
Accounts receivable, net                             169,161        164,647
Inventories                                          62,992         55,389
Prepaid expenses                                     13,000         15,877
Deferred income taxes                                11,737         10,215
Total current assets                                 272,933        258,345
PROPERTY AND EQUIPMENT, net                          322,280        343,832
GOODWILL                                             23,776         23,870
OTHER INTANGIBLE ASSETS, net                         10,254         11,936
OTHER ASSETS                                         5,048          6,660
                                                     $   634,291    $ 644,643
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt                    $   14,459     $ 20,550
Accounts payable                                     86,857         83,578
Accrued liabilities                                  70,457         71,974
Income taxes payable                             2,158          0
Total current liabilities                            173,931        176,102
LONG-TERM DEBT, net of current portion               83,085         103,134
OTHER LIABILITIES                                    41,655         44,255
DEFERRED INCOME TAXES, net                           39,208         42,778
 Total liabilities                         337,879        366,269
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 100,000,000 shares
                                                     97             96
 authorized; 9,637,642 and 9,633,475 issued and
outstanding
Additional paid-in capital                           157,777        154,657
Retained earnings                                    138,369        124,139
Accumulated other comprehensive income (loss)        169            (518)
Total shareholders' equity                           296,412        278,374
                                                     $   634,291    $ 644,643
Total debt                                           $   97,544     $ 123,684
Debt-to-total capitalization                             25%          31%



CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

(In thousands, except per share amounts, and unaudited)
                                     Three Months Ended    Six Months Ended
                                     September 30,         September 30,
                                     2013        2012      2013       2012
Net income                          $ 10,630    $ 6,709   $ 14,230   $ 6,261
Income tax expense                   1,902       4,018     4,138      3,460
Interest expense, net                444         1,335     1,524      2,835
Depreciation and amortization        16,336      18,417    32,972     36,923
Other charges                        1,824       2,293     2,957      3,962
Share-based compensation expense     644         476       1,386      1,183
Non-cash foreign currency            233         (146)     167        (213)
transaction (gain) loss
Net (gain) loss from asset           (42)        (26)      (377)      68
dispositions
Adjusted EBITDA                      $  31,971   $ 33,076  $  56,997  $ 54,479
Net cash provided by operating       $  19,877   $ 19,763  $  37,022  $ 41,800
activities
Capital expenditures                 (6,256)     (11,919)  (11,864)   (27,197)
Proceeds from asset dispositions     101         577       2,991      782
Free Cash Flow                       $  13,722   $ 8,421   $  28,149  $ 15,385
Operating income                     $  12,976   $ 12,062  $  19,892  $ 12,556
Other charges                        1,824       2,293     2,957      3,962
Share-based compensation expense     644         476       1,386      1,183
Non-cash foreign currency            233         (146)     167        (213)
transaction (gain) loss
Adjusted Operating Income            $  15,677   $ 14,685  $  24,402  $ 17,488
Adjusted Operating Margin            6.1%        5.6%      5.0%       3.5%
Net income                           $   10,630  $ 6,709   $  14,230  $ 6,261
Other charges                        1,824       2,293     2,957      3,962
Tax benefit of other charges         (711)       (894)     (1,153)    (1,545)
Share-based compensation expense,    393         290       846        721
net of taxes
Non-cash foreign currency
transaction (gain) loss, net of      142         (89)      102        (130)

 taxes
Adjusted Net Income                  $   12,278  $ 8,309   $  16,982  $ 9,269



CONSOLIDATED GRAPHICS, INC.

Reconciliations of Non-GAAP Financial Measures

(In thousands, except per share amounts, and unaudited)
                                          Three Months Ended  Six Months Ended
                                          September 30,       September 30,
                                          2013         2012   2013      2012
Diluted earnings (loss) per share         $  1.09      .68    $  1.46   $ .62
Other charges                             .19          .23    .30       .39
Tax benefit of other charges              (.07)        (.09)  (.12)     (.15)
Share-based compensation expense, net of  .04          .03    .09       .07
taxes
Non-cash foreign currency transaction    -            (.01)  .01       (.01)
(gain) loss, net of taxes
Adjusted Diluted Earnings Per Share       $    1.25    $ .84  $   1.75  $  .92





SOURCE Consolidated Graphics, Inc.

Website: http://www.cgx.com
Contact: Jon C. Biro, Executive Vice President/Chief Financial Officer,
Consolidated Graphics, Inc., (713) 787-0977; or Matt Steinberg/Katie Pyra, FTI
Consulting, Inc., (212) 850-5600
 
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