Consolidated Graphics, Inc. Announces Preliminary Third Quarter Results, Consolidation of Two of Its Operations in Houston and the Acquisition of Two West Coast Companies.

HOUSTON--(BUSINESS WIRE)--Jan. 9, 1996--Consolidated Graphics, Inc. (Nasdaq/NM:COGI) today announced that sales for the third quarter ended December 31, 1995, are expected to increase 37% to $22.3 million from $16.3 million in the same period last year. Net income, before a one-time, after-tax charge of $1.0 million, or $0.18 per share, is expected to increase 36% to approximately $1.3 million, or $0.23 per share, compared with $932,000, or $0.17 per share, earned in the third quarter last year. Including the one-time charge, net income per share for the third quarter of fiscal 1996 is expected to be $0.05 per share. The one-time charge is related to costs associated with the consolidation of two of the Company's Houston subsidiaries. Final results are expected to be announced January 31, 1996.

The consolidation will combine Gulf Printing into Western Lithograph. The consolidation will result in reduced administrative costs and substantially improved utilization of printing capacity. Gulf's sheet-fed printing business will be consolidated into the Western facility. An expanded web division of Western will serve Gulf's web printing customers using a portion of Gulf's current facility as well as one of its web presses. Gulf's other web press will be sold.

Commenting on the announcement, Joe R. Davis, chairman and chief executive officer of Consolidated Graphics, said, "Although earnings for the third quarter before the one-time charge are expected to be well ahead of the third quarter of last year, the percentage increase is less than previously anticipated. The principal reason is lower earnings from Gulf Printing. Gulf has struggled to be profitable since the loss of the SBC Communications printing contract in December 1994. After careful study, this strategic realignment of our Houston operations will allow us to improve our profit margins in response to the loss of the SBC business. Our other printing operations, including the most recent acquisitions, are performing well. As evidenced by the two acquisitions we are announcing today, we are continuing an aggressive acquisition program."

The Company also announced that it has signed letters of intent to acquire Precision Litho and Emerald City Graphics, Inc., two commercial printing companies on the West Coast with combined annual sales of $24 million. Terms were not disclosed. Precision Litho has served the San Diego and Orange County markets in Southern California for 15 years. It has annual sales of $15 million. Emerald City Graphics, Inc., located near Seattle, serves the Pacific Northwest. Founded in 1981, it generates annual sales of $9 million. The owners of each of the companies will continue to manage their operations following the acquisitions.

Davis said, "The acquisitions of Precision Litho and Emerald City Graphics give us a strong presence in two new markets. Precision Litho is one of the leading commercial sheet-fed printers in Southern California, a large market with excellent growth potential. Emerald City Graphics is the premier provider in the Pacific Northwest of high quality technical and training manuals to many national computer hardware and software manufacturers and seminar operators."

Consolidated Graphics, Inc. is one of the fastest growing printing companies in the United States. Its strategy is to acquire established printing companies serving local, growing markets and provide them the financial and operational strengths available from association with a larger organization. With the completion of these two acquisitions, Consolidated Graphics, Inc. will operate in seven markets: Dallas, Denver, Houston, Phoenix, San Antonio, San Diego and Seattle.

CONTACT: Consolidated Graphics, Inc.

Mary K. Collins, Senior Vice President, 713/529-4200