CONSOLIDATED GRAPHICS INC /TX/
10-K/A, 1996-07-11
COMMERCIAL PRINTING
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================================================================================

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                  FORM 10-K/A

                                AMENDMENT NO. 1

(MARK ONE)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED MARCH 31, 1996

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD
     FROM _____________ TO ______________ .

                         COMMISSION FILE NUMBER 0-24068

                            ------------------------

                          CONSOLIDATED GRAPHICS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               TEXAS                                     76-0190827
    (STATE OR OTHER JURISDICTION               (IRS EMPLOYER IDENTIFICATION NO.)
  OF INCORPORATION OR ORGANIZATION)

       2210 WEST DALLAS STREET                              77019
           HOUSTON, TEXAS                                (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (713) 529-4200
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities Registered pursuant to Section 12(g) of the Act:
                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (TITLE OF CLASS)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]   No[ ].

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

             The aggregate market value of the voting stock held by
              nonaffiliates of the registrant as of May 31, 1996:

                  COMMON STOCK, $.01 PAR VALUE -- $111,933,718

         The number of shares outstanding of the issuer's common stock
                              as of May 31, 1996:

                   COMMON STOCK, $.01 PAR VALUE -- 5,931,360

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's Proxy Statement for the Annual Shareholders'
Meeting to be held on or about August 5, 1996, to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, are incorporated by reference into Part III of this
Report. Such Proxy Statement, except for the parts therein which have been
specifically incorporated by reference, shall not be deemed "filed" for the
purposes of this report on Form 10-K.

================================================================================
<PAGE>

     The undersigned registrant hereby amends Item 8. Financial Statements and
Supplementary Data and Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K of its Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, as originally filed.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements of Consolidated Graphics, Inc. ("the
Company"), as amended, together with the report thereon of Arthur Andersen LLP
dated June 20, 1996, including the information required by Item 302 of
Regulation S-K, are set forth on pages F-1 through F-14 hereof.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1)  FINANCIAL STATEMENTS:
        See the Index to Consolidated Financial Statements on page F-1 hereof.

(a)(2)  FINANCIAL STATEMENT SCHEDULES:
        Schedules of the Company and its subsidiaries are omitted because of the
        absence of the conditions under which they are required or because the
        required information is included in the financial statements or notes
        thereto.

(a)(3)  EXHIBITS:

 *3.1   Restated Articles of Incorporation of the Company filed with the
        Secretary of State of the State of Delaware on July 27, 1995
        (Consolidated Graphics, Inc. Form 10-Q (June 30, 1994) SEC File No.
        0-24068, Exhibit 4(a)).

 *3.2   By-Laws of the Company, dated as of May 31, 1995 (Consolidated
        Graphics, Inc. Form 10-K (March 31, 1995) SEC File No. 0-24068, Exhibit
        3.2).

 *4.1   Registration Rights Agreement by and among Consolidated Graphics, Inc.,
        James R. Cook and Herbert J. Blackinton dated as of February 15, 1996.

 *4.2   Registration Rights Agreement by and among Consolidated Graphics, Inc.
        and Dennis Rampe dated as of February 23, 1996.

*10.1   Amended and Restated Loan Agreement by and between Consolidated
        Graphics, Inc. and NationsBank of Texas N.A. dated as of November 7,
        1994 (Consolidated Graphics, Inc. Form 10-Q (September 30, 1994) SEC
        File No. 0-24068, Exhibit 10(a)).

*10.2   Revolving Promissory Note by and between Consolidated Graphics, Inc.
        and NationsBank of Texas, N.A., dated as of November 7, 1994
        (Consolidated Graphics, Inc. Form 10-Q (September 30, 1994) SEC File
        No. 0-24068, Exhibit 10(b)).

*10.3   Amended and Restated Loan Agreement by and between Consolidated
        Graphics, Inc. and NationsBank of Texas, N.A., dated as of August 23,
        1995 (Consolidated Graphics, Inc. Form 10-Q (September 30, 1995) SEC
        File No. 0-24068, Exhibit 10(a)).

*10.4   Revolving Promissory Note by and between Consolidated Graphics, Inc.
        and NationsBank of Texas, N.A. dated as of August 23, 1995
        (Consolidated Graphics, Inc. Form 10-Q (September 30, 1995) SEC File
        No. 0-24068, Exhibit 10(b)).

*10.5   Assignment and Assumption Agreement by and between Jarvis Acquisition
        Co., The Jarvis Press, Inc., Consolidated Graphics, Inc. and
        Phoenixcor, Inc. dated as of October 14, 1994 (Consolidated Graphics,
        Inc. Form 10-Q (September 30, 1994) SEC File No. 0-24068, Exhibit
        10(c)).

                                       1

*10.6   Asset Purchase Agreement dated as of October 14, 1994 by and among
        Jarvis Acquisition Co., as the Purchaser, Consolidated Graphics, Inc.,
        as the Parent, The Jarvis Press, Inc., as the Seller and Peter B.
        White, Paul Lasiter, Michael C. Regan and Dennis Sholl, as the Interest
        Holders (Consolidated Graphics, Inc. Form 8-K (October 14, 1994) SEC
        File No. 0-24068, Exhibit 1).

*10.7   Stock Purchase Agreement dated as of October 21, 1994 by and among
        Consolidated Graphics, Inc., as the Purchaser, and John Frederic
        Printing Company, as the Seller and Randall C. Frederic, as an
        accommodating party (Consolidated Graphics, Inc. Form 8-K (October 14,
        1994) SEC File No. 0-24068, Exhibit 3).

*10.8   Stock Purchase Agreement by and among Consolidated Graphics, Inc. and
        James R. Cook and Herbert J. Blackinton as the stockholders of Emerald
        City Graphics, Inc. dated as of February 15, 1996 (Consolidated
        Graphics, Inc. Form 8-K filed February 29, 1996, Exhibit 1).

*10.9   Stock Purchase Agreement by and among Consolidated Graphics, Inc.,
        Precision Litho, Melson Leasing LLC and Dennis Rampe and Jeannine
        Rampe, as the equity interest holders in Precision Litho and Melson
        Leasing LLC dated as of February 23, 1996 (Consolidated Graphics, Inc.
        Form 8-K filed February 29, 1996, Exhibit 3).

*10.10  1994 Consolidated Graphics, Inc. Long-Term Incentive Plan (Consolidated
        Graphics, Inc. Registration Statement on Form S-1 (Reg. No. 33-77468),
        Exhibit 10.14).

*10.12  Form of Indemnification Agreement together with a schedule identifying
        the directors and officers parties to such agreement (Consolidated
        Graphics, Inc. Registration Statement on Form S-1 (Reg. No. 33-77468),
        Exhibit 10.15).

**21    List of Subsidiaries.

  23    Consent of Arthur Andersen LLP.

**24    Powers of Attorney.
- ------------
 *  Incorporated by reference.

**  Included in Annual Report on Form 10-K as previously filed July 1, 1996.

(b)     REPORTS ON FORM 8-K:

        (1)  Form 8-K, filed January 9, 1996 in connection with the Company's
             third quarter earnings release and announcement of the
             consolidation of two of the Company's Houston based subsidiaries
             and the signing of letters of intent to acquire Emerald City
             Graphics, Inc. and Precision Litho, Inc.

        (2)  Form 8-K, filed February 29, 1996 (as amended by Form 8-K/A) in
             connection with the acquisition of all of the issued and
             outstanding common stock of Emerald City Graphics, Inc. on February
             15, 1996 and the acquisition of the capital stock of Precision
             Litho, Inc. on February 23, 1996, including financial statements of
             each of Emerald City Graphics, Inc. and Precision Litho, Inc., as
             well as pro forma financial statements of the Company.

        (3)  Form 8-K, filed May 24, 1996 in connection with the press release
             issued on May 23, 1996 regarding the letter of intent signed
             between Consolidated Graphics, Inc. and Garner Printing of Des
             Moines, Iowa.

        (4)  Form 8-K, filed June 20, 1996 in connection with the press release
             issued on June 19, 1996 with respect to the completion of the
             acquisition of Bridgetown Printing Co. of Portland, Oregon.

        (5)  Form 8-K, filed July 11, 1996 in connection with the press release
             issued on July 10, 1996 with respect to the completion of the
             acquisition of Garner Printing of Des Moines, Iowa.

                                       2

                                   SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.

                           CONSOLIDATED GRAPHICS, INC.
                                (REGISTRANT)

                           By:/s/ G. CHRISTOPHER COLVILLE
                                  G. CHRISTOPHER COLVILLE
                                  VICE PRESIDENT -- MERGERS AND ACQUISITIONS
                                  CHIEF FINANCIAL AND ACCOUNTING OFFICER

Date:  July 11, 1996

                                       3

                            FINANCIAL SUPPLEMENT TO
          ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1996

                          CONSOLIDATED GRAPHICS, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                        PAGE
                                        -----


Report of Independent Public
  Accountants........................    F-2

Consolidated Balance Sheets at March
  31, 1996 and 1995..................    F-3

Consolidated Income Statements for
  the Years Ended March 31, 1996,
  1995 and 1994......................    F-4

Consolidated Statements of
  Shareholders' Equity for the Years
  Ended March 31, 1996, 1995 and
  1994...............................    F-5

Consolidated Statements of Cash Flows
  for the Years Ended March 31, 1996,
  1995 and 1994......................    F-6

Notes to Consolidated Financial
  Statements.........................    F-7

                                      F-1

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
Consolidated Graphics, Inc.:

     We have audited the accompanying consolidated balance sheets of
Consolidated Graphics, Inc. (a Texas corporation) and subsidiaries as of March
31, 1996 and 1995, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended March 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Consolidated Graphics, Inc.
and subsidiaries as of March 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Houston, Texas
June 20, 1996

                                      F-2

                          CONSOLIDATED GRAPHICS, INC.
                          CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                              MARCH 31
                                       --------------------
                                         1996       1995
                                       ---------  ---------
               ASSETS

CURRENT ASSETS:
     Cash and cash equivalents.......  $   3,086  $   1,707
     Accounts receivable, net........     19,317     14,422
     Inventories.....................      8,023      7,776
     Prepaid expenses................      1,077        355
                                       ---------  ---------
           Total current assets......     31,503     24,260
PROPERTY AND EQUIPMENT, net..........     50,591     35,504
GOODWILL, net........................      5,015      -
OTHER ASSETS.........................        700        524
                                       ---------  ---------
                                       $  87,809  $  60,288
                                       =========  =========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
     Current portion of long-term
       debt..........................  $   1,221  $   1,143
     Accounts payable................      5,719      4,898
     Accrued liabilities.............      5,648      3,649
     Income taxes payable............         60        773
                                       ---------  ---------
           Total current
             liabilities.............     12,648     10,463
LONG-TERM DEBT, net of current
  portion............................     20,105      8,820
DEFERRED INCOME TAXES................      5,180      2,835
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
     Common stock, $.01 par value;
       20,000,000 shares authorized;
       5,927,360 and 5,466,552 issued
       and outstanding...............         59         55
     Additional paid-in capital......     32,762     25,045
     Retained earnings...............     17,055     13,070
                                       ---------  ---------
           Total shareholders'
             equity..................     49,876     38,170
                                       ---------  ---------
                                       $  87,809  $  60,288
                                       =========  =========

          See accompanying notes to consolidated financial statements.

                                      F-3

                          CONSOLIDATED GRAPHICS, INC.
                         CONSOLIDATED INCOME STATEMENTS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                             YEAR ENDED MARCH 31
                                       -------------------------------
                                         1996       1995       1994
                                       ---------  ---------  ---------
SALES................................  $  85,133  $  57,166  $  48,643

COST OF SALES........................     61,237     39,821     33,916
                                       ---------  ---------  ---------
     Gross profit....................     23,896     17,345     14,727

SELLING EXPENSES.....................      8,532      5,731      4,923

GENERAL AND ADMINISTRATIVE
  EXPENSES...........................      6,873      4,313      3,469

RESTRUCTURING CHARGE.................      1,500      -          -
                                       ---------  ---------  ---------
     Operating income................      6,991      7,301      6,335

INTEREST EXPENSE.....................        876        680      1,054

INTEREST INCOME......................        (16)      (253)       (36)
                                       ---------  ---------  ---------
     Income before provision for
        income taxes.................      6,131      6,874      5,317

PROVISION FOR INCOME TAXES...........      2,146      2,392      1,806
                                       ---------  ---------  ---------
NET INCOME...........................      3,985      4,482      3,511

DIVIDENDS ON REDEEMABLE PREFERRED
  STOCK..............................      -            (45)      (210)

ACCRETION IN VALUE OF REDEEMABLE
  PREFERRED STOCK AND WARRANT........      -          -           (347)
                                       ---------  ---------  ---------
NET INCOME AVAILABLE TO COMMON
  SHAREHOLDERS.......................  $   3,985  $   4,437  $   2,954
                                       =========  =========  =========
PRIMARY EARNINGS PER SHARE OF COMMON
  STOCK..............................       $.72       $.91      $1.06
                                       =========  =========  =========
FULLY DILUTED EARNINGS PER SHARE OF
  COMMON STOCK.......................       $.72       $.90       $.90
                                       =========  =========  =========

          See accompanying notes to consolidated financial statements.

                                      F-4

                          CONSOLIDATED GRAPHICS, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                   ADDITIONAL
                                        COMMON      PAID-IN      RETAINED     TREASURY
                                         STOCK      CAPITAL      EARNINGS      STOCK       TOTAL
                                        -------    ----------    ---------    --------   ---------
<S>                                      <C>        <C>           <C>          <C>       <C>
BALANCE, March 31, 1993..............    $  38      $    915      $  5,679     $ (605)   $   6,027
     Dividends on redeemable
        preferred
        stock........................     -            -              (210)      -            (210)
     Accretion in value of redeemable
        preferred stock and
        warrant......................     -            -              (347)      -            (347)
     Cancellation of treasury
        stock........................      (10)         (595)        -            605        -
     Net income......................     -            -             3,511       -           3,511
                                        -------    ----------    ---------    --------   ---------
BALANCE, March 31, 1994..............       28           320         8,633       -           8,981
     Dividends on redeemable
        preferred
        stock........................     -            -               (45)      -             (45)
     Conversion of preferred stock...        6         3,341         -           -           3,347
     Common stock offering, net......       21        21,326         -           -          21,347
     Exercise of stock options.......     -               58         -           -              58
     Net income......................     -            -             4,482       -           4,482
                                        -------    ----------    ---------    --------   ---------
BALANCE, March 31, 1995..............       55        25,045        13,070       -          38,170
     Common stock
        issuance -- acquisition......        4         7,215         -           -           7,219
     Exercise of stock options.......     -              502         -           -             502
     Net income......................     -            -             3,985       -           3,985
                                        -------    ----------    ---------    --------   ---------
BALANCE, March 31, 1996..............    $  59      $ 32,762      $ 17,055     $ -       $  49,876
                                        =======    ==========    =========    ========   =========
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      F-5

                          CONSOLIDATED GRAPHICS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)


                                                YEAR ENDED MARCH 31
                                       -------------------------------------
                                          1996         1995         1994
                                       -----------  -----------  -----------
OPERATING ACTIVITIES:
Net income...........................  $     3,985  $     4,482  $     3,511
Adjustments to reconcile net income
  to net cash provided by operating
  activities --
     Depreciation and amortization...        3,782        4,089        1,571
     Deferred tax provision..........        1,555          499          726
     Noncash portion of restructuring
        charge.......................        1,123       -            -
     Changes in assets and
        liabilities, net of effects
        of acquisitions --
           Accounts receivable.......         (124)         965         (155)
           Inventories...............         (469)      (3,341)         (63)
           Prepaid expenses..........         (655)         (76)         (61)
           Other assets..............           85           22          (99)
           Accounts payable and
             accrued liabilities.....       (2,136)      (3,354)        (947)
           Income taxes payable......         (713)         661         (682)
                                       -----------  -----------  -----------
                Net cash provided by
                   operating
                   activities........        6,433        3,947        3,801
                                       -----------  -----------  -----------
INVESTING ACTIVITIES:
Acquisitions of businesses...........      (10,181)     (14,492)      -
Acquisitions of property and
  equipment..........................       (6,014)      (2,423)      (3,440)
Proceeds from disposition of
  assets.............................          536           38          624
Payments from (advances to)
  significant shareholder............       -               534          (17)
                                       -----------  -----------  -----------
                Net cash used in
                   investing
                   activities........      (15,659)     (16,343)      (2,833)
                                       -----------  -----------  -----------
FINANCING ACTIVITIES:
Proceeds from revolving credit
  agreement..........................       34,420       11,050       -
Payments on revolving credit
  agreement..........................      (23,120)      (7,050)      -
Proceeds from long-term debt.........       -            -             1,323
Payments on long-term debt...........       (1,197)     (13,359)      (1,586)
Proceeds from common stock offering,
  net................................       -            21,347       -
Proceeds from exercise of stock
  options............................          502           58       -
Dividends paid on redeemable
  preferred stock....................       -               (45)        (210)
                                       -----------  -----------  -----------
                Net cash provided by
                   (used in)
                   financing
                   activities........       10,605       12,001         (473)
                                       -----------  -----------  -----------
NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS...................        1,379         (395)         495
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF YEAR..................        1,707        2,102        1,607
                                       -----------  -----------  -----------
CASH AND CASH EQUIVALENTS AT END OF
  YEAR...............................  $     3,086  $     1,707  $     2,102
                                       ===========  ===========  ===========

          See accompanying notes to consolidated financial statements.

                                      F-6

                          CONSOLIDATED GRAPHICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

1.  BUSINESS:

     Consolidated Graphics, Inc. (the "Company") is a consolidator in the highly
fragmented commercial printing industry. At March 31, 1996, the Company operated
12 printing companies in eight markets. Each acquired operation provides general
commercial printing services relating to the production of such documents as
annual reports, training manuals, product and capability brochures, catalogs,
direct mail pieces and other promotional material, all of which tend to be
recurring in nature. One of the Houston printing companies also provides
transaction-oriented financial printing services.

2.  SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION:

  ACCOUNTING POLICIES

     The accounting policies of the Company reflect industry practices and
conform to generally accepted accounting principles. The more significant of
such accounting policies are described below.

     Principles of Consolidation -- The accompanying consolidated financial
statements include the accounts of Consolidated Graphics, Inc., and its wholly
owned subsidiaries. All intercompany balances and transactions have been
eliminated.

     Use of Estimates -- The preparation of the accompanying consolidated
financial statements requires the use of certain estimates by management in
determining the Company's assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from these estimates.

     Revenue Recognition and Accounts Receivable -- The Company recognizes
revenue upon delivery of each job. Losses, if any, on jobs are recognized at the
earliest date such amount is determinable. The Company derives the majority of
its revenues from sales and services to a broad and diverse group of customers
with no individual customer accounting for more than 10% of the Company's
revenues during the years ended March 31, 1996 and 1995. During the year ended
March 31, 1994, SBC Communications Inc. and its affiliates ("SBC") accounted for
11.1% of the Company's sales. The Company maintains an allowance for doubtful
accounts based upon the expected collectibility of trade accounts receivable.
Accounts receivable in the accompanying consolidated balance sheets are
reflected net of allowance for doubtful accounts of $926 and $592 at March 31,
1996 and 1995, respectively. Accounts receivable are generally not
collateralized.

     Inventories -- Inventories are valued at the lower of cost or market
utilizing the first-in, first-out method for raw materials and the specific
identification method for work in progress and finished goods. The carrying
values of inventories are set forth below:

                                                MARCH 31
                                          --------------------
                                            1996       1995
                                          ---------  ---------

Raw materials...........................  $   4,455  $   4,858
Work in progress........................      2,954      2,814
Finished goods..........................        614        104
                                          ---------  ---------
                                          $   8,023  $   7,776
                                          =========  =========

     Goodwill -- Goodwill is amortized by the straight line method over the
estimated benefit period but, in any event, not in excess of 40 years. At March
31, 1996, accumulated amortization of goodwill totalled $20.

     Supplemental Cash Flow Information -- For purposes of the consolidated
statements of cash flows, the Company considers all highly liquid investments
purchased with original maturities of three months or less to be cash
equivalents. Interest paid during the years ended March 31, 1996, 1995 and

                                      F-7

                          CONSOLIDATED GRAPHICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

1994 was $876, $679 and $1,118. Income tax payments, net of refunds during the
years ended March 31, 1996, 1995 and 1994 were $1,700, $1,232 and $1,762.
Additionally, during fiscal 1996, the Company issued notes or assumed debt of
$1,143 and issued common stock of the Company valued at $7,219 in connection
with its acquisitions of Precision Litho, Inc. ("Precision") and Emerald City
Graphics, Inc., ("Emerald") respectively.

     Acquisitions -- All acquisitions have been accounted for as purchases.
Operations of the companies and businesses acquired have been included in the
accompanying consolidated financial statements from their respective dates of
acquisitions. The allocation of purchase price to the assets and liabilities
acquired is based on estimates of fair market value. The allocation of purchase
price in connection with certain of the acquisitions in fiscal 1996 may be
revised when additional information concerning asset and liability valuations is
obtained.

     Recent Accounting Pronouncements -- In 1995 the Financial Accounting
Standards Board issued statements establishing accounting standards for the
impairment of long-lived assets and assets to be disposed of and stock based
compensation. Statement of Financial Accounting Standard ("SFAS") 121 requires
that long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
realizable. SFAS 123 requires companies to change disclosures about their
employee stock-based compensation plans and permits, but does not require, a
fair value based method of accounting for employee stock option plans which
results in compensation expense recognition when stock options are granted. The
Company is required to adopt these statements no later than its fiscal year
ending March 31, 1997, although earlier implementation is permitted. As of March
31, 1996, the Company has not adopted these statements; however, the Company
anticipates that application of these statements will not have a material effect
on its consolidated financial position or results of operations.

  OTHER INFORMATION

     Accrued Liabilities -- The significant components of accrued liabilities
were $1,702 of accrued wages and related expenses, $1,027 of other accrued taxes
and $2,919 of other accruals as of March 31, 1996. As of March 31, 1995, the
significant components of accrued liabilities were $1,175 of accrued wages and
related expenses, $852 of other accrued taxes and $1,622 of other accruals.

     Earnings Per Share -- Primary earnings per common share are calculated by
dividing net income available to common shareholders by the weighted average of
common equivalent shares outstanding from the date of issue of 5,534,180 shares,
4,860,371 shares and 2,798,250 shares for the years ended March 31, 1996, 1995
and 1994, respectively. On a fully diluted basis, both net income available to
common shareholders and shares outstanding are adjusted to assume the conversion
of the redeemable preferred stock and warrant (see Note 8) from the date of
issue, resulting in 4,984,567 shares and 3,498,150 shares outstanding for the
years ended March 31, 1995 and 1994, respectively.

     Related Party Transactions -- Effective April 1994, the Company entered
into a five-year equipment lease with a purchase option whereby it leased three
printing presses from a company owned by a significant shareholder for a monthly
rental of $6. On January 13, 1995, the Company exercised its option to purchase
the presses under the terms of the agreement for $520. The Company believes that
the terms of the lease and the equipment purchase were at least as favorable as
could have been obtained in arm's-length negotiations with a third party.
Additionally, the Company advanced a significant shareholder amounts which were
repaid in full by the significant shareholder in 1995 and, in connection with
the purchase of a printing company in fiscal 1996, entered into a real estate
lease agreement and purchase option with that company's former owner and current
president under terms the Company believes are comparable to market rates.

                                      F-8

                          CONSOLIDATED GRAPHICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

     SBC Settlement -- In February 1995 the Company reached an agreement with
SBC whereby SBC paid the Company $3,200 in lieu of paying the amount it would
have owed the Company in 1999 for unused printing services pursuant to contract.
The Company applied $300 of such settlement to outstanding accounts receivable
from SBC and further, in connection with the termination of the contract and
resulting excess capacity, recorded an impairment of $1,800 to equipment and
$600 to inventory, which, together with $500 in direct costs, offset the balance
of the settlement amount.

     Restructuring Charge -- In December 1995 the Company merged the operations
of two of its Houston subsidiaries. The Company recorded a restructuring charge
of $1,500 ($975 after-tax), which included $377 of direct and incremental costs
associated with the merger and certain pre-existing contractual obligations,
with the remainder recorded as an impairment of inventory.

     Credit Risk and Fair Value of Financial Instruments -- Financial
instruments which potentially subject the Company to concentrations of credit
risk are primarily cash and cash equivalents and trade receivables. It is the
Company's practice to place its cash and cash equivalents in high-quality
financial institutions. The Company's long-term debt (See Note 5) is composed
primarily of a floating rate revolving credit agreement; accordingly, the
Company believes the fair value of its liabilities is the same as the notional
value in all material respects.

     Certain reclassifications have been made to fiscal 1995 and 1994 amounts to
conform to the current year presentation.

3.  ACQUISITIONS

     The Company completed the following acquisitions in fiscal 1996:

     On August 4, 1995, the Company acquired for $871 substantially all of the
assets and assumed all of the liabilities of Clear Visions, Inc. ("Clear
Visions") in San Antonio, Texas. The Company immediately thereafter paid $1,476
to retire all of the outstanding debt of Clear Visions.

     On September 26, 1995, the Company acquired for $2,198 substantially all of
the assets and assumed all of the liabilities of Heritage Graphics, Inc.
("Heritage") in Phoenix, Arizona. The Company immediately thereafter paid $970
to retire all of the outstanding debt of Heritage.

     On February 15, 1996, the Company acquired all of the issued and
outstanding capital stock of Emerald in Seattle, Washington. The Company issued
424,658 shares of its common stock valued at $17 per share to the Emerald
shareholders as consideration in the acquisition. Pursuant to its acquisition of
Emerald, the Company is contingently obligated at certain times and under
certain circumstances, depending on the performance and operating results of
Emerald for three consecutive one-year periods beginning January 1, 1996, to
issue, for all periods in the aggregate, up to a total of 75,000 additional
shares of its common stock to the selling shareholders.

     On February 23, 1996, the Company acquired the capital stock of Precision
in San Diego, California. The Company paid cash of $700 and, immediately
following the acquisition, retired certain of Precision's outstanding debt for
approximately $4,942. The Company also issued a note for $768 and assumed notes
totalling $375 in connection with the transaction (see Note 5). Pursuant to its
acquisition of Precision, the Company is contingently obligated, at certain
times and under certain circumstances, depending on the performance and
operating results of Precision for three consecutive one-year periods beginning
April 1, 1996, to issue, for all periods in the aggregate, up to a total of
20,000 shares of its common stock.

     On March 28, 1996, the Company acquired the capital stock of Tulsa Litho
Company in Tulsa, Oklahoma for cash consideration of $5 (including capitalized
acquisition costs). The assets, liabilities and results of operations of Tulsa
Litho Company are not material to the Company's financial position or results of
operations.

                                      F-9

                          CONSOLIDATED GRAPHICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

     During fiscal 1995 the Company acquired Gritz-Ritter Graphics, Inc.
("Gritz-Ritter"), The Jarvis Press ("Jarvis") and Frederic Printing Company
("Frederic") for a combined total of $14,500.

     The following table sets forth pro forma information assuming that for the
year ended March 31, 1996, the acquisitions in fiscal 1996 were completed on
April 1, 1995, and for the year ended March 31, 1995, each of the acquisitions
in fiscal 1995 and 1996, together with the Company's initial public offering of
its common stock in fiscal 1995 (see Note 8), occurred on April 1, 1994.

                                            YEAR ENDED MARCH 31
                                          ------------------------
                                             1996         1995
                                          -----------  -----------
Sales...................................  $   111,000  $   106,100
Net income available to common
  shareholders..........................        5,700        6,600
Earnings per share of common stock......  $       .97  $      1.12

     Assuming the fiscal 1995 acquisitions and the initial public offering of
common stock were completed on April 1, 1993, the unaudited pro forma combined
sales, net income available to common shareholders and net income per share of
common stock of the Company for the year ended March 31, 1994 would have been
$75,500, $4,700 and $.86, respectively.

     The preceding pro forma financial information does not purport to be
indicative of the Company's financial position or results of operations that
would have occurred had the transactions been completed as of or at the
beginning of the periods presented, nor do such statements purport to indicate
the Company's results of operations at any future date or for any future period.

     Subsequent to March 31, 1996, the Company has announced the completion of
the accquisition of Bridgetown Printing Co. in Portland, Oregon and the signing
of nonbinding letters of intent to accquire Eagle Press of Sacramento,
California and Garner Printing of Des Moines, Iowa.

4.  PROPERTY AND EQUIPMENT:

     Property and equipment are stated at cost. The cost of major renewals and
betterments is capitalized; repairs and maintenance costs are expensed when
incurred. Upon retirement or sale, the cost of the assets disposed of and the
related accumulated depreciation are removed from the accounts, with any
resultant gain or loss being reflected in income.

     Depreciation of property and equipment is computed using the straight-line
method over the estimated useful lives of the assets for financial reporting
purposes.

     The following is a summary of property and equipment and their estimated
useful lives.

                                              MARCH 31
                                       --------------------      ESTIMATED
             DESCRIPTION                 1996       1995       LIFE IN YEARS
- -------------------------------------  ---------  ---------    -------------
Land.................................  $   4,012  $   3,786        -
Buildings and leasehold
  improvements.......................     10,630      9,394        15-40
Printing presses and equipment.......     45,762     28,776         5-15
Furniture, fixtures and office
  equipment..........................      1,688      1,260         5-15
Other................................        258        454         5-10
                                       ---------  ---------
                                          62,350     43,670
Less accumulated depreciation and
  amortization.......................    (11,759)    (8,166)
                                       ---------  ---------
                                       $  50,591  $  35,504
                                       =========  =========

                                      F-10

                          CONSOLIDATED GRAPHICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

5.  LONG-TERM DEBT:

     Long-term debt consisted of:

                                             MARCH 31,
                                       --------------------
                                         1996       1995
                                       ---------  ---------
Revolving credit agreement...........  $  16,300  $   5,000
Term equipment note payable..........      1,629      2,030
Mortgage notes payable to an
  insurance company..................      1,838      2,059
Acquisition note payable.............        768      -
Installment notes payable............        375      -
Term real estate note payable........        365        381
Capital lease........................         51        493
                                       ---------  ---------
                                          21,326      9,963
Less current portion.................     (1,221)    (1,143)
                                       ---------  ---------
                                       $  20,105  $   8,820
                                       =========  =========

     On August 23, 1995 the Company entered into a $25,000 revolving credit
agreement (the "Agreement") with a bank, which expires on August 31, 1997, and
replaced an existing agreement which was due to expire on November 8, 1996.
Loans outstanding under the Agreement accrue interest at the London Interbank
Offered Rate plus 1%, or at the lending bank's prime rate, depending upon the
borrowing option chosen by the Company. Loans outstanding under the Agreement at
March 31, 1996 accrued interest at an effective rate of 6.8% per annum. The
covenants in the Agreement, among other things, restrict the Company's ability
to (i) merge, consolidate with or acquire other companies where the total
consideration exceeds certain levels, (ii) engage in hostile acquisitions, (iii)
change its primary business and (iv) incur other debt or pledge assets as
collateral in excess of certain levels. Further, the Company must meet certain
financial tests defined in the Agreement, including achieving specified ratios
of current assets to current liabilities, leverage and coverage of fixed
charges. The indebtedness is unsecured; however, the bank could require
inventories and receivables as collateral for the payment of indebtedness in
certain circumstances. The Company currently is in compliance with all financial
tests set forth in the Agreement.

     The term equipment note payable outstanding at March 31, 1996 is payable to
a financial institution and was assumed in connection with a fiscal 1995
acquisition. The note is payable in equal monthly installments, bears interest
at 8.45% and matures on March 10, 1999.

     The mortgage notes payable to an insurance company mature in 2002 and 2003,
respectively, and bear interest at 2.55% over the 30-day commercial paper rate.
Amounts due at March 31, 1996 are subject to interest at an effective rate of
6.95% per annum.

     The acquisition note payable was issued in connection with the acquisition
of Precision and bears interest at 6.0%. Principal and interest payments are due
monthly and the note matures in 1999.

     The installment notes payable were assumed in connection with the
acquisition of Precision and bear interest at 6.0%. Principal and interest
payments are due monthly and the notes mature in 1999.

     The term real estate note is payable monthly to an individual based on a
15-year amortization with the balance due in 2009. The note bears interest at
prime (8.25% at March 31, 1996).

     The principal payment requirements under the debt agreements are $1,221 in
1997, $17,480 in 1998, $1,150 in 1999, $287 in 2000, $312 in 2001 and $876
thereafter.

                                      F-11

                          CONSOLIDATED GRAPHICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

     Three of the Company's operating facilities are pledged as collateral under
the mortgages and the term real estate note and substantially all of the assets
of one of the Company's subsidiaries are pledged as collateral under the term
equipment note outstanding at March 31, 1996.

     In addition to the covenants under the Agreement, the Company's other debt
agreements contain certain covenants, the most significant of which places
certain restrictions on future borrowings and acquisitions above specified
levels. The Company is also required to maintain certain financial ratios,
minimum equity balances and keyman life insurance on the majority shareholder.

6.  INCOME TAXES:

     Provision for income taxes is composed of the following:

                                             YEAR ENDED MARCH 31
                                       -------------------------------
                                         1996       1995       1994
                                       ---------  ---------  ---------

Current..............................  $     591  $   1,893  $   1,080
Deferred.............................      1,555        499        726
                                       ---------  ---------  ---------
                                       $   2,146  $   2,392  $   1,806
                                       =========  =========  =========

     A reconciliation of the statutory federal income tax rate to the effective
tax rate follows:

                                             YEAR ENDED MARCH 31
                                       -------------------------------
                                         1996       1995       1994
                                       ---------  ---------  ---------

Federal income tax, statutory rate...       34.0%      34.0%      34.0%
State and other......................        1.0         .8      -
                                       ---------  ---------  ---------
Income tax, effective rate...........       35.0       34.8%      34.0%
                                       =========  =========  =========

     Deferred income taxes reflect the impact of temporary differences between
the amount of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws and regulations. The components of the net
deferred income tax liability are as follows:

                                                  MARCH 31
                                       -------------------------------
                                         1996       1995       1994
                                       ---------  ---------  ---------

Property and equipment...............      6,421      3,402      2,587
Other................................     (1,241)      (567)      (251)
                                       ---------  ---------  ---------
Net deferred income tax liability....  $   5,180  $   2,835  $   2,336
                                       =========  =========  =========

7.  COMMITMENTS AND CONTINGENCIES:

     Operating lease commitments for facilities and equipment require minimum
annual payments of $907 for 1997, $724 for 1998, $369 for 1999, $297 for 2000,
$252 for 2001 and $3 thereafter. Total rent expense was $414, $222 and $155 for
the years ended March 31, 1996, 1995 and 1994, respectively.

     On March 22, 1994, the Company indemnified and released SBC from, among
other matters, all obligations other than certain employment matters and a
printing services contract under the purchase and sale agreement with respect to
the Company's acquisition of a commercial printing operation from SBC in
February, 1993. To ensure payment of the Company's performance under this
arrangement, the Company has established a $3.5 million letter of credit for the
benefit of SBC, which will be maintained until September 1997, or until the
expiration of the applicable federal law regarding limitations of actions,
whichever is longer.

                                      F-12

                          CONSOLIDATED GRAPHICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

     The Company is contingently obligated at certain times and under certain
circumstances to issue, for all periods in the aggregate, up to a total of
95,000 shares of its common stock pursuant to its acquisitions of Emerald and
Precision.

     The Company is subject to legal proceedings and claims that arise in the
ordinary course of its business. Management believes, based on discussions with
its legal counsel, that the outcome of these legal actions will not have a
material adverse effect upon the consolidated financial position and results of
operations of the Company.

8.  CAPITAL STOCK AND STOCK OPTIONS:

INITIAL PUBLIC OFFERING

     In June 1994 the Company completed an initial public offering of 1,920,000
shares of common stock for proceeds of $19,600, net of expenses, and upon the
exercise of the underwriters' overallotment option in July 1994, issued an
additional 183,652 shares of common stock for proceeds of $1,700, net of
expenses (collectively, the Offering). The Company used $9,700 of such proceeds
to retire two term notes scheduled to mature in 1998 and used the remaining
$11,600 for general corporate purposes, including working capital and
acquisitions in the printing industry.

INCENTIVE PLAN

     In March 1994 the Company approved the adoption of the Consolidated
Graphics, Inc., Long-Term Incentive Plan (Incentive Plan). Pursuant to the
Incentive Plan, employees of the Company and directors who are not serving on
the Compensation Committee are eligible to receive awards consisting of stock
options, stock appreciation rights, restricted or nonrestricted stock, cash or
any combination of the foregoing. Stock options granted pursuant to the
Incentive Plan may either be incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, or non-qualified
stock options. At March 31, 1996, an aggregate of 367,500 shares of Common Stock
are reserved for issuance pursuant to the Incentive Plan.

     In connection with the Offering, the Company granted options under the
Incentive Plan to certain of its directors and employees to purchase a total of
150,000 shares of Common Stock at the offering price of $11.50 per share.
Options covering 20,000 shares were granted to directors, of which 40% are
currently exercisable, and an additional 20% of which will become exercisable on
each successive anniversary of the date of grant. The options expire in June
1999. The remaining options covering 130,000 shares were granted to employees,
are currently exercisable and expire on June 9, 2004. All of the options issued
to the directors remained outstanding at March 31, 1996. Of the 130,000 options
granted to employees, 5,000 were exercised in fiscal 1995 and 12,900 were
exercised or forfeited in fiscal 1996, resulting in 112,100 options outstanding
at March 31, 1996.

     In December 1994 the Company granted options to purchase 100 shares of
Common Stock at the market price per share on the date of grant ($11.25), under
the terms of the Incentive Plan, to each of its 671 employees. The options
became exercisable in June, 1995 and expire on December 30, 1999. Of the 67,100
options granted to employees, 7,200 were forfeited in fiscal 1995 and 26,500
were exercised or forfeited in fiscal 1996, resulting in 33,400 options
outstanding at March 31, 1996.

     In May 1995 the Company granted options to certain employees under the
Incentive Plan to purchase a total of 104,750 shares of Common Stock at the
market price per share on the date of grant ($12.00), of which 40% of the
options are currently exercisable and an additional 20% of the options will
become exercisable on each successive anniversary date of the grant. The options
expire on May 1, 2000. A total of 4,450 options were exercised or forfeited in
fiscal 1996, resulting in 100,300 options outstanding at March 31, 1996.

                                      F-13

                          CONSOLIDATED GRAPHICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

REDEEMABLE PREFERRED STOCK AND WARRANT

     The Company is authorized by its Articles of Incorporation to issue up to
5,000,000 shares of $1.00 par value preferred stock. On January 29, 1993, the
Company sold 3,000,000 shares of Series A $1.00 par value preferred stock with a
liquidation preference of $3,000. Each share of Series A preferred stock
entitled its holder to receive quarterly, cumulative, preferential cash
dividends at the annual rate of $.07 per share subject to certain conditions;
convert it into common stock at any time, at a conversion price of $5.36 per
common share; and receive $1.00 per share plus all accrued and unpaid dividends
on each share in the event of voluntary or involuntary liquidation.

     On January 29, 1993, the Company also sold, for a nominal amount, a warrant
to purchase shares of common stock from January 29, 1999, through January 31,
2003, provided that certain cumulative results of operations are not achieved.

     The Series A preferred stock was converted into 559,650 shares of common
stock and the warrant was canceled immediately prior to the initial closing of
the Offering and substantially all obligations, other than certain registration
rights with respect to securities of the Company, were eliminated. Following the
conversion of the Series A preferred stock into common stock, the Company
eliminated the Series A preferred stock from its Articles of Incorporation.
Accordingly, the Company currently has authorized and available for issuance
5,000,000 shares of $1.00 par value preferred stock.

9.  UNAUDITED QUARTERLY FINANCIAL DATA:

     The following table contains selected quarterly financial data from the
consolidated income statements for each quarter of fiscal 1996 and 1995. The
Company believes this information reflects all normal recurring adjustments
necessary for a fair presentation of the information for the periods presented.
The operating results for any quarter are not necessarily indicative of results
for any future period.

                                         4TH        3RD        2ND        1ST
                                       QUARTER    QUARTER    QUARTER    QUARTER
                                      ---------  ---------  ---------  ---------
                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL 1996:
Sales...............................  $  24,092  $  22,255  $  19,308  $  19,478
Gross profit........................      6,651      6,138      5,619      5,488
Net income..........................      1,180        294      1,352      1,159
Fully diluted earnings per common
  share.............................  $     .21  $     .05  $     .25  $     .21
FISCAL 1995:
Sales...............................  $  18,518  $  16,333  $  10,789  $  11,526
Gross profit........................      5,707      4,425      3,489      3,724
Net income..........................      1,415        932      1,063      1,072
Fully diluted earnings per common
  share.............................  $     .26  $     .17  $     .20  $     .30

     Earnings per share are computed independently for each of the quarters
presented. Therefore the sum of the quarterly earnings per share may not equal
the annual earnings per share.

                                      F-14



                                                                      EXHIBIT 23

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

     As independent public accountants, we hereby consent to the incorporation
of our report, included in this Form 10-K/A, into the Company's previously filed
Registration Statement File No. 33-87192 and 333-06097.

ARTHUR ANDERSEN LLP

Houston, Texas
July 11, 1996



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