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Consolidated Graphics Reports Flat Q4 Sales, Net Income Up 13%

Press release from the issuing company

HOUSTON, April 28 -- Consolidated Graphics, Inc. today announced results for its fourth quarter and year-ended March 31, 2004. Sales for the March quarter were $183.4 million, compared to $184.2 million in the December quarter and $166.1 million a year ago. Net income for the March quarter was $6.2 million, or $.44 per diluted share, an increase of 13%, compared to net income of $5.5 million, or $.39 per diluted share, in the December quarter. A year ago, the Company reported a net loss in the March quarter of $29.1 million, or $2.13 per diluted share which included a pre-tax impairment of goodwill of $38.0 million ($31.2 million after-tax, or $2.28 per diluted share). For the year-ended March 31, 2004, total sales were $708.1 million, compared to $710.3 million for the previous year. Net income for the year was $20.0 million, or $1.44 per diluted share, compared to a net loss of $87.3 million, or $6.47 per diluted share, a year ago. Included in the 2003 results are the March quarter's goodwill impairment and the effect of a transitional goodwill impairment of $74.4 million, after-tax, which was recorded in the June quarter. Together, these items impacted 2003 results by $105.6 million, or $7.82 per diluted share. "We are pleased to report results for the fourth quarter that significantly exceeded our expectations," commented Joe R. Davis, Chairman and Chief Executive Officer. "Sales in the March quarter were $8.1 million, or 4.6% higher than our forecast, reflecting our ability to capitalize on a strengthening economy and stabilizing industry conditions. Operating margins in the March quarter increased to 6.3%, our fourth consecutive quarter of margin improvement and equaling the margins we had delivered in the first three quarters of fiscal 2003 prior to the Iraq war. In addition, net income and earnings per share showed significant growth over the previous quarter and the prior year period. This top-line and bottom-line expansion resulted in the generation of $24.4 million in operating cash flow, a 52% increase over the December quarter, and reflects our continued ability to leverage our industry-leading position to drive meaningful growth throughout our business." Mr. Davis continued, "Fiscal 2004 was an important year for Consolidated Graphics, as we used the strength of our business model to benefit from improving economic conditions and a modest recovery in the commercial printing marketplace. We continued to generate significant cash flow, which enabled a total debt reduction for the year of $52.3 million, or 32%, while also investing $31.2 million in acquisitions and capital expenditures. In the March quarter, our acquisition of Eastwood Printing, a premier full-service web and sheet-fed printing company, expanded our market share and added important new capabilities to our operations in the Denver area. Additionally, our recently announced agreement with Xerox Corporation provides Consolidated Graphics with the most advanced digital color technology in the industry as well as the resources to assist in marketing this technology to current and prospective customers. Each of these developments, in conjunction with our continued efforts to grow and fortify our national accounts program, will provide significant positive momentum as we enter fiscal 2005." Mr. Davis concluded, "We are hopeful the positive trends reflected in our fourth quarter results, as well as the apparent improvement in economic and printing industry conditions, will continue into fiscal 2005. For the June quarter, we would be pleased with year over year sales growth comparable to the year over year sales growth that we achieved in the March quarter. This would result in sequentially flat sales on which we would expect to maintain operating margins at 6.3% and report diluted earnings per share of $.44."