Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): NOVEMBER 4, 2009
CONSOLIDATED GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
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TEXAS
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001-12631
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76-0190827 |
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.) |
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5858 WESTHEIMER, SUITE 200
HOUSTON, TEXAS
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77057 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (713) 787-0977
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information in this Current Report is being furnished pursuant to Item 2.02 of Form 8-K
and, according to general instruction B.2. thereunder, shall not be deemed filed with the
Securities and Exchange Commission (the SEC) for the purposes of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in
this Current Report shall not be incorporated by reference into any registration statement filed by
Consolidated Graphics, Inc. (the Company) under the Securities Act of 1933, as amended, and will
not be so incorporated by reference into any future registration statement unless specifically
identified as being incorporated by reference.
On November 4, 2009, the Company announced its fiscal 2010 second quarter results. A copy of
the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The
attached press release may contain forward-looking statements, as described in the press release.
Readers are cautioned that such statements involve known and unknown risks, uncertainties and other
factors that could cause actual results to materially differ from the results, performance or other
expectations expressed or implied by these forward-looking statements.
The Company will hold a conference call today at 10:00 a.m. Central Time/11:00 a.m. Eastern
Time to discuss the Companys financial results for the second quarter ended September 30, 2009. A
live webcast and subsequent archive of the conference call, as well as a copy of this Current
Report and attached press release, can be accessed at www.cgx.com under the Investor Relations
page. A rebroadcast of the call will be available by dialing 866-286-8010 or 617-801-6888 by
entering the Conference ID 76059411. The rebroadcast will be available from November 4 until
midnight November 11, 2009.
During todays conference call, managements discussion of the Companys financial results may
include references to certain non-GAAP financial measures. Generally, a non-GAAP financial measure
is a numerical measure of a companys performance, financial position, or cash flows that either
excludes or includes amounts that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with United States generally accepted
accounting principles (GAAP). Pursuant to the rules adopted by the SEC relating to the use of
such financial measures in filings with the SEC, other disclosures of financial information and
press releases, the Company provides the following qualitative and quantitative reconciliations
regarding the non-GAAP financial measures to which management may refer. In addition, the sum of
quarterly amounts in the accompanying tables may not equal full year amounts due to rounding
differences.
The Company defines Adjusted EBITDA as our net income before interest, income taxes,
depreciation and amortization, non-cash goodwill and other long-lived asset impairment charges,
litigation charges, share-based compensation expense, non-cash foreign currency transaction gains
and losses and net losses/gains from asset dispositions. We define Adjusted EBITDA Margin as
Adjusted EBITDA divided by sales. The Company uses Adjusted EBITDA and Adjusted EBITDA Margin both
as a liquidity and performance measure when evaluating its business and operations. We believe
Adjusted EBITDA and Adjusted EBITDA Margin may be useful to an investor in evaluating our liquidity
and/or operating performance because:
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it is widely used by investors in our industry to measure a companys operating
performance without regard to items such as interest, depreciation, non-cash
currency transactions, impairments and amortization expenses, litigation charges
and long-term non-cash share-based compensation expense, which can vary
substantially from company to company depending upon accounting policies and book
value of assets, capital structure and the method by which assets were acquired; |
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it helps investors more meaningfully evaluate and compare the results of our
operations from period to period by removing the impact of our capital structure
(primarily interest charges on our outstanding debt), asset base (primarily
depreciation and amortization expense and goodwill impairment charges), non-cash
gains/losses from foreign currency transactions, and long-term non-cash
share-based incentive plans from our operating results; and |
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it helps investors to assess compliance with financial ratios and covenants
included in our primary bank facility. |
Adjusted EBITDA should not be considered as an alternative to any measure of operating results
as promulgated under GAAP (such as operating income, net income or cash flow from operating
activities), nor should it be considered as an indicator of our overall financial performance or
our ability to satisfy current or future obligations and fund or finance future business
opportunities. Adjusted EBITDA does not fully consider the impact of investing or financing
transactions as it specifically excludes depreciation and interest expense, amortization and
impairment of intangible and other long-lived assets, including goodwill, as well as the net gain
or loss from non-cash foreign currency transactions, long-term share-based compensation expense,
litigation charges and the net loss/(gain) from asset dispositions, all of which should also be
considered in the overall evaluation of the Companys results and liquidity.
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Fiscal |
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Fiscal 2009 |
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Fiscal 2010 |
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($MM) |
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2008 |
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2009 |
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Q1 |
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Q2 |
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YTD |
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Sales |
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1,095.3 |
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1,145.2 |
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285.2 |
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297.0 |
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315.8 |
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247.2 |
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225.9 |
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251.6 |
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477.5 |
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Net Income/(Loss) |
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59.3 |
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(39.6 |
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9.6 |
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10.3 |
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(43.6 |
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(15.9 |
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(0.3 |
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2.1 |
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1.8 |
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Income taxes |
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29.0 |
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(5.9 |
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6.1 |
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7.2 |
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(16.1 |
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(3.1 |
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(1.3 |
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2.2 |
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0.9 |
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Interest expense, net |
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12.0 |
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15.0 |
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4.2 |
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3.9 |
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4.1 |
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2.8 |
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2.5 |
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2.3 |
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4.8 |
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Depreciation and amortization |
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52.3 |
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66.6 |
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15.8 |
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16.2 |
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16.7 |
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17.9 |
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17.6 |
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17.8 |
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35.4 |
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Goodwill impairment charge |
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83.3 |
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62.5 |
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20.8 |
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Litigation and other charges |
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17.3 |
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17.0 |
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0.3 |
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2.6 |
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2.6 |
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Non-Cash foreign currency transaction net (gain)/loss |
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(3.1 |
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(0.8 |
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(0.3 |
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(0.4 |
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(0.1 |
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0.2 |
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0.2 |
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Share-based compensation expense |
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2.1 |
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6.9 |
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1.6 |
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1.8 |
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1.7 |
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1.8 |
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1.5 |
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1.2 |
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2.7 |
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Net loss (gain) from asset dispositions* |
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1.6 |
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0.6 |
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0.3 |
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0.3 |
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0.2 |
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(0.1 |
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0.1 |
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0.3 |
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0.4 |
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Adjusted EBITDA |
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153.2 |
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143.4 |
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37.6 |
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39.4 |
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42.1 |
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24.4 |
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20.1 |
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28.7 |
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48.8 |
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Adjusted EBITDA Margin |
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14.0 |
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12.5 |
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13.2 |
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13.3 |
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13.3 |
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9.9 |
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8.9 |
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11.4 |
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10.2 |
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Included in depreciation and amortization in the Companys Consolidated Statements of Cash Flows |
The Company defines Free Cash Flow as net cash provided by operating activities less capital
expenditures plus proceeds from asset dispositions. The Company considers Free Cash Flow to be an
important indicator of our operating flexibility and is a representative measure of our ability to
satisfy current and future obligations and fund or finance future business opportunities and
believes it may be similarly useful to investors.
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Fiscal |
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Fiscal 2009 |
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Fiscal 2010 |
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($MM) |
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2008 |
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2009 |
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Q1 |
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Q2 |
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YTD |
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Net cash provided by operating activities |
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110.2 |
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141.1 |
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36.6 |
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7.7 |
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44.9 |
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51.9 |
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33.9 |
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62.5 |
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96.4 |
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Capital expenditures* |
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(82.4 |
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(76.9 |
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(8.0 |
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(26.5 |
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(21.5 |
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(20.9 |
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(4.5 |
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(6.9 |
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(11.4 |
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Proceeds from asset dispositions |
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2.0 |
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1.4 |
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0.9 |
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0.2 |
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0.1 |
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0.2 |
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0.4 |
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0.2 |
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0.6 |
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Free Cash Flow |
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29.8 |
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65.6 |
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29.5 |
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(18.6 |
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23.5 |
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31.2 |
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29.8 |
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55.8 |
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85.6 |
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* |
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Capital expenditures include all expenditures for property, plant and equipment, including those that are directly financed. |
The Company defines Adjusted Operating Income as Operating Income less goodwill impairment
charges, long-lived asset impairment charges, litigation charges and non-cash foreign currency
transactions. The Company defines Adjusted Operating Margin as Adjusted Operating Income divided
by Sales. Adjusted Operating Income is an important performance measure used by the Company to
analyze and compare post-acquisition financial trends and results of its various operations. The
Company believes this non-GAAP financial measure may help investors better understand our operating
results by eliminating goodwill impairment charges, long-lived asset impairment charges, litigation
charges and non-cash net gain from foreign currency transactions pursuant to the revaluation of
certain transactions denominated in currencies other than of the Companys functional currency.
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Fiscal |
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Fiscal 2009 |
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Fiscal 2010 |
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($MM) |
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2008 |
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2009 |
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Q1 |
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Q2 |
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YTD |
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Sales |
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1,095.3 |
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1,145.2 |
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285.2 |
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297.0 |
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315.8 |
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247.2 |
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225.9 |
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251.6 |
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477.5 |
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Operating income/(loss) |
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100.3 |
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(30.3 |
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20.0 |
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21.4 |
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(55.5 |
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(16.2 |
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0.9 |
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6.6 |
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7.5 |
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Goodwill impairment charge |
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83.3 |
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62.5 |
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20.8 |
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Litigation and other charges |
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17.3 |
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17.0 |
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0.3 |
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2.6 |
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2.6 |
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Non-Cash foreign currency transaction net (gain)/loss |
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(3.1 |
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(0.8 |
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(0.3 |
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(0.4 |
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(0.1 |
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(0.1 |
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0.2 |
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0.1 |
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Adjusted Operating Income |
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97.2 |
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69.5 |
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20.0 |
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21.1 |
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23.6 |
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4.8 |
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0.8 |
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9.4 |
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10.2 |
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Adjusted Operating Margin |
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8.9 |
% |
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6.1 |
% |
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7.0 |
% |
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7.1 |
% |
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7.5 |
% |
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1.9 |
% |
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0.4 |
% |
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3.7 |
% |
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2.1 |
% |
The Company defines Adjusted Net Income as Net Income less goodwill impairment charges,
long-lived asset impairment charges, litigation charges and non-cash foreign currency transactions
all net of taxes. The Company believes this non-GAAP financial measure may help investors better
understand our ongoing operating results by eliminating goodwill impairment, long-lived asset
impairment charges, and litigation charges and the non-recurring non-cash net gain and loss from
foreign currency transactions.
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Fiscal |
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Fiscal 2009 |
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Fiscal 2010 |
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($MM) |
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2008 |
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2009 |
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Q1 |
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Q2 |
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YTD |
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Net Income/(Loss) |
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59.3 |
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(39.6 |
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9.6 |
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10.3 |
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(43.6 |
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(15.9 |
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(0.3 |
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2.1 |
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1.8 |
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Goodwill impairment charge |
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83.3 |
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62.5 |
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20.8 |
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Tax benefit of goodwill impairment charge |
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(20.1 |
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(16.5 |
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(3.6 |
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Litigation and other charges |
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17.3 |
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17.0 |
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0.3 |
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2.6 |
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2.6 |
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Tax benefit of litigation and other charges |
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(6.7 |
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(6.6 |
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(0.1 |
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(1.0 |
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(1.0 |
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Non-Cash foreign currency transaction net (gain)/loss, net of tax |
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(1.9 |
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(0.5 |
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(0.2 |
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(0.2 |
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(0.1 |
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0.1 |
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0.1 |
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Adjusted Net Income |
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57.4 |
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33.7 |
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9.6 |
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10.1 |
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12.6 |
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1.4 |
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(0.3 |
) |
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3.8 |
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3.5 |
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The Company defines Adjusted Diluted Earnings per Share as Diluted Earnings/Loss per Share,
less goodwill impairment charges, long-lived asset impairment charges, litigation charges and
non-cash foreign currency gains and losses all net of taxes.
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Fiscal |
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Fiscal 2009 |
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Fiscal 2010 |
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($MM) |
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2008 |
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2009 |
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Q1 |
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Q2 |
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YTD |
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Diluted earnings per share (loss per share) |
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4.63 |
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(3.55 |
) |
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0.84 |
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0.90 |
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(3.91 |
) |
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(1.43 |
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(0.03 |
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0.18 |
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0.2 |
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Goodwill impairment charge |
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7.27 |
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5.51 |
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1.83 |
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Tax benefit of goodwill impairment charge |
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(1.75 |
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(1.45 |
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(0.32 |
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Litigation and other charges |
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1.51 |
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1.50 |
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0.03 |
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0.23 |
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0.23 |
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Tax benefit of litigation and other charges |
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(0.59 |
) |
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(0.59 |
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(0.01 |
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(0.09 |
) |
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(0.09 |
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Non-Cash foreign currency transaction net (gain)/loss, net of tax |
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(0.15 |
) |
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(0.04 |
) |
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(0.02 |
) |
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(0.02 |
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(0.01 |
) |
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0.02 |
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0.02 |
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Adjustment for diluted shares outstanding |
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0.10 |
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0.06 |
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0.03 |
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Adusted Diluted Earnings per Share (Loss per Share) |
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4.48 |
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2.95 |
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0.84 |
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0.88 |
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1.10 |
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0.12 |
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(0.03 |
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0.34 |
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0.31 |
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
The following exhibit is filed herewith:
|
99.1 |
|
Press release of the Company dated November 4, 2009, announcing the
Companys fiscal 2010 second quarter results. |
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY
CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED HEREUNTO DULY AUTHORIZED.
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CONSOLIDATED GRAPHICS, INC.
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(Registrant)
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By: |
/s/ Jon C. Biro
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Jon C. Biro |
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Executive Vice President and
Chief Financial and Accounting Officer |
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Date: November 4, 2009
Exhibit Index
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Exhibit |
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Number |
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Description |
99.1
|
|
Press release of the Company dated November 4, 2009,
announcing the Companys fiscal 2010 second quarter
results. |