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

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FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _______________ TO _______________

COMMISSION FILE NUMBER 0-24068

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

TEXAS 76-0190827
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
2210 WEST DALLAS STREET
HOUSTON, TEXAS 77019
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

Registrant's telephone number, including area code: (713) 529-4200

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 [ ]

The number of shares of Common Stock, par value $.01 per share, of the
Registrant outstanding at
October 31, 1996 was 6,133,340.
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CONSOLIDATED GRAPHICS, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
INDEX

PAGE
----

Part I -- Financial Information

Item 1 -- Financial Statements

Consolidated Balance Sheets at September 30, 1996 and
March 31, 1996 .................................................. 1

Consolidated Income Statements for each of the
three month and the six month periods ended
September 30, 1996 and 1995 ..................................... 2

Consolidated Statements of Cash Flows for the six
months ended September 30, 1996 and 1995 ........................ 3

Notes to Consolidated Financial Statements ...................... 4

Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations ........................ 6

Part II -- Other Information

Item 1 -- Legal Proceedings .......................................... 11

Item 6 -- Exhibits and Reports on Form 8-K ........................... 11

Signatures ................................................................ 12

(i)

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

SEPTEMBER 30, MARCH 31,
1996 1996
-------- --------
(UNAUDITED) (AUDITED)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents ............... $ 2,118 $ 3,086
Accounts receivable, net ................ 25,274 19,317
Inventories ............................. 7,666 8,023
Prepaid expenses ........................ 895 1,077
-------- --------
Total current assets ............... 35,953 31,503

PROPERTY AND EQUIPMENT, net .................. 72,793 50,591

GOODWILL, net ................................ 5,305 5,015

OTHER ASSETS ................................. 771 700
-------- --------
$114,822 $ 87,809
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term
debt ....................................... $ 2,055 $ 1,221
Accounts payable ............................ 5,986 5,719
Accrued liabilities ......................... 7,579 5,648
Income taxes payable ........................ 191 60
-------- --------
Total current
liabilities ......................... 15,811 12,648

LONG-TERM DEBT, net of current
portion ........................................ 34,734 20,105

DEFERRED INCOME TAXES ............................ 5,983 5,180

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Common stock, $.01 par value;
20,000,000 shares authorized,
6,117,840 and 5,927,360 issued
and outstanding,
respectively ............................... 61 59
Additional paid-in capital .................. 37,073 32,762
Retained earnings ........................... 21,160 17,055
-------- --------
Total shareholders'
equity .............................. 58,294 49,876
-------- --------
$114,822 $ 87,809
======== ========

See accompanying notes to consolidated financial statements.

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

THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
SALES............................... $ 34,451 $ 19,308 $ 62,709 $ 38,786

COST OF SALES....................... 23,864 13,689 44,030 27,679
--------- --------- --------- ---------
Gross profit................... 10,587 5,619 18,679 11,107

SELLING EXPENSES.................... 3,410 1,860 6,258 3,883

GENERAL AND ADMINISTRATIVE
EXPENSES.......................... 2,722 1,478 5,014 3,004
--------- --------- --------- ---------
Operating income............... 4,455 2,281 7,407 4,220

INTEREST EXPENSE.................... 595 206 934 358
--------- --------- --------- ---------
Income before provision for
income taxes................. 3,860 2,075 6,473 3,862

PROVISION FOR INCOME TAXES.......... 1,428 723 2,368 1,351
--------- --------- --------- ---------
NET INCOME.......................... $ 2,432 $ 1,352 $ 4,105 $ 2,511
========= ========= ========= =========
EARNINGS PER SHARE OF COMMON STOCK.. $.40 $.25 $.68 $.46
========= ========= ========= =========

See accompanying notes to consolidated financial statements.

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

SIX MONTHS ENDED
SEPTEMBER 30,
------------------------
1996 1995
-------- --------
OPERATING ACTIVITIES:
Net income ................................ $ 4,105 $ 2,511
Adjustments to reconcile net
income to net cash provided
by operating activities --
Depreciation and
amortization ...................... 2,634 1,636
Deferred tax provision
(benefit) ......................... (164) 223
Changes in assets and
liabilities, net of
effects of acquisitions --
Accounts receivable ............... (1,754) 139
Inventories ....................... 1,289 (324)
Prepaid expenses .................. 212 (13)
Other assets ...................... (55) (131)
Accounts payable and
accrued liabilities ............. (1,427) (1,336)
Income taxes payable .............. 181 (576)
-------- --------
Net cash provided
by operating
activities ................ 5,021 2,129
-------- --------
INVESTING ACTIVITIES:
Acquisitions of businesses ................ (7,017) (6,461)
Purchases of property and
equipment ................................ (5,325) (1,323)
Proceeds from disposition of
assets ................................... 55 176
-------- --------
Net cash used in
investing
activities ................ (12,287) (7,608)
-------- --------
FINANCING ACTIVITIES:
Proceeds from revolving credit
agreement ................................ 32,200 14,725
Payments on revolving credit
agreement ................................ (24,800) (8,125)
Payments on long-term debt ................ (1,230) (770)
Proceeds from exercise of stock
options and other ........................ 128 225
-------- --------
Net cash provided
by financing
activities ................ 6,298 6,055
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ............................. (968) 576

CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD .......................... 3,086 1,707
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD ....................................... $ 2,118 $ 2,283
======== ========

See accompanying notes to consolidated financial statements.

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

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements include the
accounts of Consolidated Graphics, Inc. and its wholly owned subsidiaries (the
"Company"). All intercompany balances and transactions have been eliminated.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and the
Securities and Exchange Commission's rules and regulations for reporting interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month and six-month periods ended
September 30, 1996 are not necessarily indicative of the results that may be
expected for the year ended March 31, 1997. Balance sheet information as of
March 31, 1996 has been derived from the 1996 annual audited financial
statements of the Company. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Form 10-K
filed with the Securities and Exchange Commission in July 1996.

Earnings per share are calculated by dividing net income by the weighted
average number of shares outstanding of 6,116,307 and 5,474,342 for the three
months ended September 30, 1996 and 1995, respectively, and 6,024,367 and
5,470,468 for the six months ended September 30, 1996 and 1995, respectively.

The consolidated statements of cash flows provide information about changes
in cash and exclude the effects of noncash transactions. 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 six-month periods ended September 30,
1996 and 1995 was $502 and $364, respectively. Income tax payments during the
six-month periods ended September 30, 1996 and 1995 were $1,650 and $1,704,
respectively. Significant non-cash transactions in the six month period ended
September 30, 1996 include debt of $6,835 incurred by the Company to finance the
purchase of three printing presses and the issuance of common stock and
assumption of debt and capital leases in connection with certain of the
Company's acquisitions (see Note 3. Acquisitions).

2. LONG-TERM DEBT

The following is a summary of the Company's long-term debt:

SEPTEMBER 30, MARCH 31,
1996 1996
-------------- ---------
Revolving credit agreement........... $ 23,700 $16,300
Notes payable and capital leases..... 13,089 5,026
-------------- ---------
Total long-term debt............ 36,789 21,326
Less current portion............ (2,055) (1,221)
-------------- ---------
$ 34,734 $20,105
============== =========

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

3. ACQUISITIONS

During the six months ended September 30, 1996, the Company completed the
following acquisitions: Bridgetown Printing in Portland, Oregon (June 1996),
Garner Printing in Des Moines, Iowa (July 1996), and Eagle Press in Sacramento,
California (July 1996). Each of these transactions were accounted for using the
purchase method of accounting. In addition to cash expended of $7,017, the
Company issued 177,780 shares of common stock and assumed debt and capital
leases totaling $2,622 in connection with these transactions.

In November 1996, the Company announced that it had completed the
acquisition of Mobility, Inc. in Richmond, Virginia and signed nonbinding
letters of intent to acquire Direct Color in Long Beach, California and Theo
Davis Sons, Inc., located near Raleigh-Durham, North Carolina.

CONSOLIDATED GRAPHICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSIONS CONTAIN FORWARD-LOOKING INFORMATION. READERS ARE
CAUTIONED THAT SUCH INFORMATION INVOLVES RISKS AND UNCERTAINTIES, INCLUDING
THOSE CREATED BY GENERAL MARKET CONDITIONS, COMPETITION AND THE POSSIBILITY THAT
EVENTS MAY OCCUR WHICH LIMIT THE ABILITY OF THE COMPANY TO MAINTAIN OR IMPROVE
ITS OPERATING RESULTS OR EXECUTE ITS GROWTH STRATEGY OF ACQUIRING ADDITIONAL
COMPANIES. ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE
FORWARD-LOOKING STATEMENTS ARE REASONABLE, ANY OF THE ASSUMPTIONS COULD BE
INACCURATE, AND THERE CAN THEREFORE BE NO ASSURANCE THAT THE FORWARD-LOOKING
STATEMENTS INCLUDED HEREIN WILL PROVE TO BE ACCURATE. THE INCLUSION OF SUCH
INFORMATION SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY
OTHER PERSON THAT THE OBJECTIVES AND PLANS OF THE COMPANY WILL BE ACHIEVED.

GENERAL

Consolidated Graphics, Inc. (the "Company") is one of the fastest growing
providers of general commercial printing services in the United States. Since
its formation in 1985, the Company has expanded its operations to include 16
printing companies in twelve markets: Dallas, Denver (3), Des Moines, Houston
(3), Phoenix, Portland, Richmond, Sacramento, San Antonio, San Diego, Seattle
and Tulsa.

The Company's sales are derived from the production and sale of printed
materials. The materials are sold and manufactured by each of the operating
subsidiaries, and each product is customized depending on the needs of the
customer. All of the operating subsidiaries provide general commercial printing
services relating to the production of annual reports, training manuals, product
and capability brochures, direct mail pieces, catalogs and other promotional
material, all of which tend to be recurring in nature. In addition, one of the
subsidiaries also provides transaction-oriented financial printing services,
including the printing of registration and information statements filed with the
Securities and Exchange Commission and official statements for municipal
securities. Each printing company has its own separate operations which include
sales, estimating, customer service, prepress, production and postpress
operations, and accounting. The Company's corporate office, located in Houston,
provides centralized cash management, financial reporting and certain
administrative services to all of the operating subsidiaries.

The Company's financial results in a given period may be affected by the
timing and magnitude of acquisitions. Operating income margins of acquired
companies typically are lower than those of the Company at the date of
acquisition. As a result, the Company's overall operating income margins in the
periods immediately following a significant acquisition or series of
acquisitions may be lower depending upon the timing and extent that an acquired
company is able to adapt to and implement the Company's management practices.

The Company competes in the general commercial and financial printing
sectors, which are characterized by individual orders from customers for
specific printing projects rather than long-term contracts, with continued
engagement for successive jobs dependent upon the customer's satisfaction with
the services provided. As such, the Company is unable to predict, for more than
a few weeks in advance, the number, size and profitability of printing jobs in a
given period. Consequently, the timing of projects in any quarter could have a
significant impact on financial results in that quarter.

RESULTS OF OPERATIONS

The following tables set forth the Company's historical income statements
for the periods indicated:

THREE MONTHS SIX MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
Sales............................... $ 34.5 $ 19.3 $ 62.7 $ 38.8
Cost of sales....................... 23.9 13.7 44.0 27.7
--------- --------- --------- ---------
Gross profit................... 10.6 5.6 18.7 11.1
Selling expenses.................... 3.4 1.8 6.3 3.9
General and administrative
expenses.......................... 2.7 1.5 5.0 3.0
--------- --------- --------- ---------
Operating income............... 4.5 2.3 7.4 4.2
Interest expense.................... .6 .2 .9 .3
--------- --------- --------- ---------
Income before provision for
income taxes................. 3.9 2.1 6.5 3.9
Provison for income taxes........... 1.5 .7 2.4 1.4
--------- --------- --------- ---------
Net income..................... $ 2.4 $ 1.4 $ 4.1 $ 2.5
========= ========= ========= =========

The following tables set forth the components of income expressed as a
percentage of sales for the periods indicated:

THREE MONTHS SIX MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------- --------------------
1996 1995 1996 1995
--------- ------------- --------- ---------

Sales................................ 100.0% 100.0% 100.0% 100.0%
Cost of sales........................ 69.3 70.9 70.2 71.4
--------- ------------- --------- ---------
Gross profit.................... 30.7 29.1 29.8 28.6
Selling expenses..................... 9.9 9.6 10.0 10.0
General and administrative
expenses........................... 7.9 7.7 8.0 7.7
--------- ------------- --------- ---------
Operating income................ 12.9 11.8 11.8 10.9
Interest expense..................... 1.7 1.1 1.5 .9
--------- ------------- --------- ---------
Income before provision for
income
taxes......................... 11.2 10.7 10.3 10.0
Provision for income taxes........... 4.1 3.7 3.8 3.5
--------- ------------- --------- ---------
Net income...................... 7.1% 7.0% 6.5% 6.5%
========= ============= ========= =========

Acquisitions in fiscal 1996 and fiscal 1997 are the primary causes of the
absolute increases in revenues and expenses since the three-month and six-month
periods ended September 30, 1995. In fiscal 1996, the Company acquired Clear
Visions in August, 1995, Heritage Graphics in September, 1995, Emerald City
Graphics and Precision Litho in February, 1996 and Tulsa Litho Company in March,
1996 (collectively, the "1996 Acquisitions"). In the first six months of
fiscal 1997, the Company acquired Bridgetown Printing Co. ("Bridgetown") in
June, 1996 and Garner Printing ("Garner") and Eagle Press ("Eagle") in July,
1996 (collectively, the "1997 Acquisitions"). Each of the 1996 Acquisitions
and the 1997 Acquisitions (together, the "Acquired Companies") were accounted
for under the purchase method of accounting; accordingly, the Company's
consolidated income statements reflect their revenues and expenses only for the
post acquisition periods.

Additionally, operating results for the three-month and six-month periods
ended September 30, 1996, as compared to the same periods in 1995, were affected
by the merger in late fiscal 1996 of the operations of two of the Company's
Houston-based subsidiaries, which has had the effect of reducing sales,
primarily lower-margin web printing sales, and improving profit margins through
reduced administrative costs and improved utilization of printing capacity.

For more information regarding the 1996 Acquisitions and the consolidation
of certain of the Company's Houston operations in fiscal 1996, refer to
"Management's Discussion and Analysis of

Financial Condition and Results of Operations" included in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996.

THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 1995

Sales increased 78.4% from $19.3 million for the three months ended
September 30, 1995 to $34.5 million for the three months ended September 30,
1996. The increase primarily resulted from sales contributed by the Acquired
Companies, net of a decrease in web printing sales pursuant to the consolidation
of certain operations as discussed above. A net increase in sales at the
Company's other operating subsidiaries also contributed to the increase in sales
for the current period.

Gross profit increased 88.4% from $5.6 million for the three months ended
September 30, 1995 to $10.6 million for the three months ended September 30,
1996 primarily due to the addition of the Acquired Companies. Gross profit as a
percentage of sales increased from 29.1% for the three months ended September
30, 1995 to 30.7% for the three months ended September 30, 1996, reflecting
generally the effect of operating efficiencies the Company is gaining through
economies of scale and its master purchasing arrangements and a reduction in
lower-margin web printing sales.

Selling expenses increased 83.3% from $1.8 million for the three months
ended September 30, 1995 to $3.4 million for the three months ended September
30, 1996 due to increased sales levels as discussed above. Selling expenses as a
percentage of sales increased from 9.6% for the three months ended September 30,
1995 to 9.9% for the three months ended September 30, 1996, reflecting a higher
percentage of non-commissioned sales as a percentage of total sales in the three
months ended September 30, 1995.

General and administrative expenses increased 84.2% from $1.5 million for
the three months ended September 30, 1995 to $2.7 million for the three months
ended September 30, 1996. In addition to the increase in general and
administrative expenses attributable to the Acquired Companies, an increase in
the Company's corporate staffing was a contributing factor. The staffing
increase reflects primarily the effort by the Company to focus the resources
necessary on quickly implementing the benefits of its master purchasing
arrangements and other operating efficiencies into its acquired companies.
Accordingly, general and administrative expenses as a percentage of sales
increased slightly from 7.7% in the three months ended September 30, 1995 to
7.9% for the three months ended September 30, 1996.

Interest expense increased from $.2 million for the three months ended
September 30, 1995 to $.6 million for the three months ended September 30, 1996.
The increase is primarily due to additional borrowings under the Company's
revolving credit facility to finance the cash portions of the purchase price of
the Acquired Companies and borrowings to finance certain printing press
purchases. See "Liquidity and Capital Resources" below.

Effective income tax rates increased from 34.8% for the three months ended
September 30, 1995 to 37.0% for the three months ended September 30, 1996, due
primarily to the Company's further expansion into states with higher income tax
rates than those in the State of Texas.

SIX MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH SIX MONTHS ENDED SEPTEMBER 30,
1995.

Sales increased 61.7% from $38.8 million for the six months ended September
30, 1995 to $62.7 million for the six months ended September 30, 1996. The
increase primarily resulted from sales contributed by the Acquired Companies,
net of a decrease in web printing sales pursuant to the consolidation of certain
operations as discussed above. A net increase in sales at the Company's other
operating subsdiaries also contributed to the increase in sales for the current
period.

Gross profit increased 68.2% from $11.1 million for the six months ended
September 30, 1995 to $18.7 million for the six months ended September 30, 1996,
primarily due to the profit contribution from the Acquired Companies. Gross
profit increased as a percentage of sales from 28.6% for the six months ended
September 30, 1995 to 29.8% for the six months ended September 30, 1996. This
increase was attributable to operating efficiencies the Company is gaining
through economies of scale and its master purchasing arrangements and a
reduction in lower-margin web printing sales.

Selling expenses increased 61.2% from $3.9 million for the six months ended
September 30, 1995 to $6.3 million for the six months ended September 30, 1996
due to increased sales levels as discussed above.

Selling expenses as a percentage of sales remained constant at 10.0% for the six
months ended September 30, 1996.

General and administrative expenses increased 66.9% from $3.0 million for
the six months ended September 30, 1995 to $5.0 million for the six months ended
September 30, 1996, primarily due to general and administrative expenses
attributable to the Acquired Companies and the aforementioned increase in the
Company's corporate staffing. As a percentage of sales, general and
administrative expenses increased slightly from 7.7% for the six months ended
September 30, 1995 to 8.0% for the six months ended September 30, 1996.

Interest expense increased from $.3 million for the six months ended
September 30, 1995 to $.9 million for the six months ended September 30, 1996,
due to additional borrowings under the Company's revolving credit facility to
finance the cash portions of the purchase price of the Acquired Companies and
borrowings to finance certain printing press purchases. See "Liquidity and
Capital Resources" below.

Effective income tax rates reflect an increase to 36.6% for the six months
ended September 30, 1996 as compared to 35.0% during the same period in the
prior year due to the Company's further expansion into states with higher income
tax rates than those in the State of Texas.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary capital requirements are for working capital, capital
expenditures and acquisitions. The Company has generated cash from operations
(net income plus depreciation and amortization expense and deferred tax
provision) since its inception. Cash generated from operations, as defined, was
$6.6 million for the six months ended September 30, 1996, while cash expended on
purchases of property and equipment was $5.3 million. The net increase in the
Company's debt since March 31, 1996 reflects (1) an increase of $7.4 million
outstanding under the Company's revolving credit facility with a bank which was
used to finance $7.0 million expended in connection with the acquisitions of
Bridgetown and Eagle, (2) debt of $6.8 million attributable to the purchase of
three printing presses from Komori America Corporation ("Komori"), (3)
assumption of debt totalling $2.6 million in connection with the acquisition of
Garner and (4) debt retirements of $1.2 million.

On August 23, 1995, the Company entered into a $25 million revolving credit
agreement (the "Agreement") with a bank which was scheduled to expire on
August 31, 1997. In October 1996 the Agreement was renewed through October 31,
1998 and the available line of credit was increased by $10 million to $35
million. Loans outstanding under the renewed Agreement accrue interest at the
London Interbank Offered Rate (LIBOR) plus .625% to 1.75% based on the Company's
Funded Debt to EBITDA ratio as defined in the Agreement, generally redetermined
quarterly. Additionally, a commitment fee of .10% to .50% accrues on any unused
portion of the available line of credit. On September 30, 1996, loans
outstanding under the Agreement were $23.7 million and were subject to an
interest rate of 6.50% per annum. On October 31, 1996, loans outstanding under
the Agreement were $22.0 million and were subject to an interest rate of 6.76%
per annum. Certain of the Company's operating subsidiaries have guaranteed the
Company's indebtedness under the Agreement. 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 paid is above
certain levels, (ii) engage in hostile acquisitions, (iii) change its primary
business, (iv) pay dividends and (v) incur other borrowed debt or pledge assets
as collateral in excess of certain levels. Although there can be no assurances
made, the Company believes that the covenants in the Agreement pertaining to
restrictions on acquisitions of other companies do not adversely affect its
acquisition strategy and that, if necessary, the Company would likely be able to
obtain the appropriate waivers. The Company must also meet certain financial
tests defined by the Agreement, including achieving specific ratios of Funded
Debt to EBITDA, net worth 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 the event of default. The Company
is in compliance with all financial tests and other covenants set forth in the
Agreement.

Pursuant to an agreement between the Company and Komori (the "Komori
Agreement"), the Company installed three new printing presses in the second
quarter of fiscal 1996. The Komori Agreement requires that the Company take
delivery of at least one additional press, resulting in a total capital

commitment of approximately $10 million for the purchase of the four presses.
The Komori Agreement further provides certain volume purchase incentives and
financing options under which the Company may, but is not obligated to, purchase
up to $50 million of printing presses over its term. The Company has exercised
the financing option in connection with the purchase of the first three presses,
resulting in a long-term obligation of $6.8 million at September 30, 1996. The
terms of the financing provide for monthly principal and interest payments
through 2006 at a fixed interest rate of 8.25%. Payment of the Company's
obligations will be secured by the purchased presses. The Company will not be
subject to any significant financial covenants or restrictions in connection
with these obligations.

The Company's remaining debt obligations generally consist of mortgages,
capital leases and promissory notes, some of which contain financial covenants
and restrictions. The most significant of these place certain restrictions on
future borrowings and acquisitions above specified levels. The Company believes
these restrictions do not adversely affect its acquisition strategy.

Significant immediate and future uses of cash by the Company are expected
to consist of additional acquisitions of businesses and purchases of property
and equipment.

Subsequent to September 30, 1996, the Company completed the acquisition of
Mobility Inc, ("Mobility") in Richmond, Virginia, and announced that it has
signed nonbinding letters of intent to acquire Direct Color in Long Beach,
California and Theo Davis Sons near Raleigh-Durham, North Carolina. Borrowings
under the Agreement were used to finance the Mobility acquisition and are
expected to be used to finance the two pending acquisitions. The Company expects
to make additional acquisitions in the remainder of fiscal 1997 and to be able
to finance them with borrowings under the Agreement, but currently has no other
understandings, arrangements or agreements in place. In addition to one or more
printing press purchases under the Komori Agreement (which the Company expects
to finance thereunder), the Company will make other purchases of property and
equipment in the remainder of fiscal 1997 and expects to use primarily cash flow
from operations as financing.

There can be no assurances that the Company will be able to acquire
additional companies on acceptable terms in the future. In addition, there can
be no assurance that the Company will be able to establish, maintain or increase
profitability of an entity once it has been acquired, or that the diversion of
its management and financial resources away from existing operations will not
have a material adverse impact on the Company or its ability to meet its
existing obligations and commitments.

Further, there can be no assurances that additional financing to make
acquisitions, purchase property and equipment or meet operating requirements
will be obtained if needed, or that the proposed terms of such financing, in the
opinion of management, will be acceptable.

CONSOLIDATED GRAPHICS, INC.

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. The Company
maintains insurance coverage against potential claims in an amount which it
believes to be adequate. In 1996, the Company received a summary judgment in its
favor from the presiding court in a case styled ALEJANDRO ROBLES V. CONSOLIDATED
GRAPHICS, INC. ET AL. involving a material claim by the plaintiff pertaining to
a sales commission contract. The plaintiff appealed the ruling. The Company
believes the decision of the presiding court should be upheld; however, there
can be no assurance that the appellate court will rule in favor of the Company.
All other litigation in which the Company is currently involved is not believed
by management to be significant to the Company's financial position or results
of operations. While the outcome of lawsuits or other proceedings against the
Company cannot be predicted with certainty, the Company does not believe the
ultimate outcome of any of these matters will have a material adverse effect on
its business or financial position.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:

10.1 Amended and Restated Loan Agreement by and between
Consolidated Graphics, Inc. and NationsBank of Texas N.A.
dated as of October 21, 1996.

10.2 Revolving Promissory Note by and between Consolidated
Graphics, Inc. and NationsBank of Texas N.A. dated as of
October 21, 1996.

10.3 Amended and Restated Loan Agreement by and between
Consolidated Graphics, Inc. and NationsBank of Texas N.A.
dated as of October 29, 1996.

(b) Reports on Form 8-K:

(1) Form 8-K, filed July 10, 1996 in connection with the press
release issued on July 10, 1996 regarding the completion of
the acquisition of Garner Printing.

(2) Form 8-K, filed July 18, 1996 in connection with the
acquisition of Garner Printing on July 3, 1996.

(3) Form 8-K, filed July 24, 1996 in connection with the
acquisition of Eagle Press of Sacramento, California on July
12, 1996, the press release issued on July 18, 1996 regarding
the completion of the acquisition of Eagle Press, the press
release issued on July 24, 1996 regarding the announcement of
the Company's first quarter results, and a press purchase
incentive agreement entered into between the Company and
Komori America Corporation.

(4) Form 8-K/A, filed August 13, 1996 containing pro forma
financial statements of the Company and the financial
statements of Garner Printing.

(5) Form 8-K/A, filed August 14, 1996 containing pro forma
financial statements of the Company and the financial
statements of Eagle Press.

(6) Form 8-K, filed September 13, 1996 in connection with the
press release issued on September 6, 1996 regarding the letter
of intent to acquire Mobility, Inc. ("Mobility") of Richmond,
Virginia.

(7) Form 8-K, filed October 31, 1996 in connection with the press
release issued on October 30, 1996 regarding the announcement
of the Company's first quarter results.

(8) Form 8-K, filed November 4, 1996 in connection with the press
release issued on November 4, 1996 regarding the completion of
the acquisition of Mobility.

(9) Form 8-K, filed November 6, 1996 in connection with the press
release issued on November 6, 1996 regarding the letter of
intent to acquire Direct Color of Long Beach, California and
Theo Davis Sons near Raleigh-Durham, North Carolina.

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT, CONSOLIDATED GRAPHICS, INC., HAS DULY CAUSED THIS REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

CONSOLIDATED GRAPHICS, INC.

(Registrant)

Dated: November 13, 1996 By: G. CHRISTOPHER COLVILLE
G. CHRISTOPHER COLVILLE
VICE PRESIDENT -- MERGERS AND
ACQUISITIONS, CHIEF FINANCIAL AND
ACCOUNTING OFFICER