Aug. 1 2007-- Consolidated Graphics, Inc. today announced financial results for its first quarter ended June 30, 2007.
Revenue for the June quarter was $258.6 million, up 8% compared to $238.4 million a year ago. Net income for the June quarter was $13.6 million, down 1% compared to $13.7 million a year ago, largely as a result of a substantially higher effective income tax rate that went into effect during the quarter. As a result of the higher effective tax rate and other factors, diluted earnings per share was $.96 compared to $.97 in the first quarter last year. Had last year's first quarter effective tax rate been in effect for the current quarter, diluted earnings per share would have been higher by approximately 10 cents. See further discussion below regarding the change in the Company's effective tax rate.

Commenting on the results, Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics stated, "Overall, we are pleased with the results of the quarter. While our sales were slightly lower than we had projected for the quarter, we believe that sales will accelerate throughout the remainder of the year."
EBITDA for the June quarter was $35.9 million, up 4% from a year ago. Free cash flow for the quarter was $24.5 million compared to $15.2 million in the previous year.
Mr. Davis added, "As we continue to target larger retail and health care customers with significant summer and fall printing budgets through our national sales efforts, and as election related printing ramps up, I expect that our sales in subsequent quarters will grow at an even faster rate than they did in the first quarter. I am confident that we will continue to successfully execute on our strategy, expand our industry leading position and further leverage our competitive advantages for continued growth."
Included in operating income for the June quarter was a foreign currency transaction net gain of $2.3 million, which is primarily the result of certain transactions at our Canadian subsidiary which are denominated in U.S. dollars. Partially offsetting this gain during the quarter, and also included in operating income, was a non-cash charge of $.9 million related to restricted stock unit awards granted during the quarter and approximately $.7 million related to charges for relocating and retiring underutilized equipment and certain costs related to terminated letters of intent.
Net income for the quarter was impacted by a higher effective tax rate (40.8% compared to 34.8% a year ago) that was largely the result of the Company's adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), which became effective for the Company in the first quarter. Also, for the quarter ended June 30 a year ago, the Company realized some one-time income tax benefits as a result of changes to certain state income tax laws. The Company expects that its second quarter effective tax rate will remain at approximately 40.8% and should be significantly lower in the third and fourth quarters.
Mr. Davis concluded, "For the September quarter, we expect solid revenue and profit growth over the prior year. We project quarterly revenues of $267-$275 million and diluted earnings per share of $1.01 to $1.07, inclusive of the increase in the effective tax rate from the prior year. These projected results do not include any contribution from prospective acquisitions."
A reconciliation and basis for management's use of the non-GAAP financial results referred to above was included in a filing made today by the Company with the Securities and Exchange Commission.