þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
A. | Full title of the plan and address of the plan, if different from that of the issuer named
below: |
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Consolidated Graphics, Inc. Employee 401(k) Savings Plan. | ||
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal
executive office: Consolidated Graphics, Inc., 5858 Westheimer, Suite 200, Houston, Texas
77057. |
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1 | ||||||||
Financial Statements: |
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2 | ||||||||
3 | ||||||||
4 | ||||||||
11 | ||||||||
12 | ||||||||
13 | ||||||||
23.1 Consent of Independent Registered Public Accounting Firm |
* | Other supplemental schedules required by Section 2520-103.10 of the Department of Labors
Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 (ERISA) have been omitted because they are not applicable. |
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2007 | 2006 | |||||||
Assets: |
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Investments, at fair value (See Note 3) |
$ | 131,197,590 | $ | 127,992,788 | ||||
Participants contributions receivable |
63,964 | 351,615 | ||||||
Total assets |
131,261,554 | 128,344,403 | ||||||
Liabilities: |
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Excess contributions payable |
617,513 | 398,678 | ||||||
Total liabilities |
617,513 | 398,678 | ||||||
Net assets available for benefits at fair value |
130,644,041 | 127,945,725 | ||||||
Adjustment from fair value to contract value for interest
in common collective trust relating to fully benefit-responsive
investment contracts |
621,270 | 1,069,338 | ||||||
Net assets available for benefits |
$ | 131,265,311 | $ | 129,015,063 | ||||
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2007 | 2006 | |||||||
Additions to net assets attributed to: |
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Dividend and interest income |
$ | 1,104,361 | $ | 976,466 | ||||
Net appreciation in fair value of investments (See Note 3) |
6,966,460 | 12,803,403 | ||||||
Total investment income |
8,070,821 | 13,779,869 | ||||||
Contributions: |
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Employees |
8,483,934 | 8,528,737 | ||||||
Rollovers from other plans |
701,890 | 986,203 | ||||||
Total contributions |
9,185,824 | 9,514,940 | ||||||
Total additions |
17,256,645 | 23,294,809 | ||||||
Deductions from net assets attributed to: |
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Benefits and withdrawals |
14,977,625 | 12,955,093 | ||||||
Trustee fees |
28,772 | 57,426 | ||||||
Total deductions |
15,006,397 | 13,012,519 | ||||||
Net increase in net assets available for benefits |
2,250,248 | 10,282,290 | ||||||
Net assets available for benefits, beginning of year |
129,015,063 | 118,732,773 | ||||||
Net assets available for benefits, end of year |
$ | 131,265,311 | $ | 129,015,063 | ||||
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1. | Description of Plan |
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The following description of the Consolidated Graphics, Inc. (the Company) Employee 401(k)
Savings Plan (the Plan) provides only general information. Participants should refer to the
Plan agreement for a more complete description of the Plans provisions. |
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General |
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The Plan was established effective January 1, 1997, as a defined contribution plan. All
employees of the Company and any affiliated employer which has adopted the Plan, who have
attained the age of 19 and completed at least one (1) month of service are eligible to
participate in the Plan, except (i) union employees, unless participation in the Plan has been
negotiated by a collective bargaining unit and the Company or an affiliated employer, (ii)
non-resident aliens, (iii) leased employees, and (iv) individuals classified as independent
contractors. |
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Administration |
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The Company created and appointed the members of the Retirement Committee to manage the Plan.
State Street Bank and Trust serves as the Plan trustee/custodian. ADP Retirement Services is
the recordkeeper for the Plan. Morgan Stanley is the Plan investment advisor. Plan
administrative expenses are either paid by the Plan or the Company. |
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Contributions |
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Each year, participants may contribute from 1% to 50% of their pretax annual compensation not
to exceed the limitation set forth in Internal Revenue Code (IRC) Section 402(g) ($15,500 in
2007 and $15,000 in 2006). Participants may make catch-up contributions, pre-tax contributions
that exceed the annual elective deferral limit, during any calendar year ending on or after the
participants 50th birthday. Participants total catch-up contributions during 2007
and 2006 cannot exceed $5,000 per year. Participants may also make rollover contributions from
other qualified plans. Participants direct the investment of their contributions into various
investment options offered by the Plan. Although the Plan holds shares of Consolidated
Graphics, Inc. common stock, no participant can elect to invest additional funds in this stock
after December 31, 1999. |
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The Plan also provides for discretionary employer matching contributions not exceeding 6% of an
employees annual compensation. Additional amounts may also be contributed by the employer at
the option of the Companys board of directors. During 2007 and 2006, the Company made no
discretionary contributions to the Plan. |
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Participant Accounts |
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Each participants account is credited with the participants contributions and allocations of
(i) Plan earnings and (ii) discretionary contributions made by the Company, if any, and charged
with an allocation of administrative expenses. Allocations are based on participants
compensation or account balances, as described in the Plan. Upon the occurrence of a
distribution event, the benefit to which the participant is entitled is the benefit that can be
provided from the participants vested interest in his or her account. |
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1. | Description of Plan, continued |
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Vesting |
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Participants are immediately vested in their elective contributions, plus any earnings on such
contributions and any qualified employer matching contributions. The vesting of certain
discretionary employer contributions plus any earnings thereon is based on years of continuous
service accrued by the participant while in covered employment. A participant vests at a rate
of 20% per year until fully vested after five years of credited service. |
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Participant Loans |
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Participants may borrow from their fund accounts at a minimum of $500 up to a maximum equal to
the lesser of $50,000 or 50% of the participants vested account balance. Loan terms range
from 1 to 5 years or up to 30 years for the purchase of a primary residence. The loans are
secured by the vested balance in the participants account and bear interest at the current
Wall Street prime rate, re-determined monthly, plus 1%, with the resulting interest rate fixed
over the term of the loan. Principal and interest payments are made by means of payroll
withholdings according to the terms of the respective promissory note. |
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Payment of Benefits |
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Upon termination of employment due to death or retirement, a participant (or his or her
designated beneficiary in the event of death) may elect to receive either a lump-sum amount
equal to the value of the participants vested interest in his or her account, or to have the
account balance distributed in installments. For termination of employment due to other
reasons, the vested interest in his or her account will be distributed as a lump-sum
distribution. |
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Forfeited Accounts |
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All employer contributions, if any, credited to a participants account, but not vested, are
forfeited by the participant upon distribution of the fully vested value of his or her account
(or his or her designated beneficiary in the event of death). Forfeitures are generally used
to pay Plan expenses or to reduce employer contributions. Although the Plan allows for
discretionary matching contributions by the Company, no matching contributions have been
contributed to participants. Thus, forfeitures do not normally occur in the Plan. However,
other plans which have merged into the Plan may have forfeiture balances which are transferred
into the Plan. Forfeiture balances were $39,187 and $39,793 at December 31, 2007 and 2006,
respectively, and $2,475 and $30,517 were used to pay administrative expenses during the years
ended December 31, 2007 and 2006, respectively. |
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Plan Termination |
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Although it has not expressed any intent to do so, the Company has the right to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination, participants will
become 100% vested in any previously non-vested account balances. |
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2. | Summary of Significant Accounting Policies |
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Basis of Accounting |
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The financial statements of the Plan are prepared under the accrual method of accounting in
accordance with accounting principles generally accepted in the United States of America. |
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As described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP
94-1-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment
Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and
Welfare and Pension Plans (the FSP), investment contracts held by a defined-contribution plan
are required to be reported at fair value. However, contract value is the relevant
measurement attribute for that portion of the net assets available for benefits of a
defined-contribution plan attributable to fully benefit-responsive investment contracts
because contract value is the amount participants would receive if they were to initiate
permitted transactions under the terms of the Plan. As required by the FSP, the Statement of
Net Assets Available for Benefits presents the fair value of the investment contracts as well
as the adjustment of the fully benefit-responsive investment contracts from fair value to
contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on
a contract value basis. |
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Use of Estimates |
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The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amount of net assets available for benefits and changes therein.
Actual results could differ from those estimates. |
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Recent Accounting Pronouncements |
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In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines
fair value, establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. SFAS 157 applies to reporting periods beginning after November 15,
2007. Based on current assets held by the Plan, the Plans management does not expect the
adoption of SFAS 157 to have a material impact on the Plans financial statements. |
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Risks and Uncertainties |
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The Plan provides for various investment options. These investment options are exposed to
market risk, which generally means the risk of loss in the value of certain investment
securities due to changes in interest rates, security and commodity prices and general market
conditions. Due to the level of risk associated with certain investment securities and the
level of uncertainty related to changes in the value of investment securities, it is reasonably
possible that changes in risks in the near term could materially affect participants account
balances and the amounts reported in the statement of net assets available for benefits and the
statement of changes in net assets available for benefits. |
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2. | Summary of Significant Accounting Policies, continued |
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Investment Valuation |
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The Plans investments are stated at fair value. Shares of registered investment companies
are valued at quoted market prices which represent the net asset value of shares held by the
Plan at year end, and the Plans interest in the common collective trust is valued based on
information reported by the investment advisor using the audited financial statements of the
collective trust at year-end. The Companys common stock is valued at its quoted market
price. Participant loans are valued at cost which approximates fair value. Purchases and
sales of securities are recorded on a trade-date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date. |
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Net Appreciation in Fair Value of Investments |
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The Plan presents in the statement of changes in net assets available for benefits the net
appreciation in the fair value of its investments which consists of the realized gains or
losses on sale of investments and unrealized appreciation or depreciation on those investments. |
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Benefit Payments |
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Benefits are recorded when paid. |
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Reclassifications |
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Certain items in the 2006 financial statements have been reclassified to conform to the 2007
financial statement presentation. Such reclassifications had no effect on net assets or the
change in net assets. |
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3. | Investments |
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The following investments each represent five percent or more of the Plans net assets at
December 31, 2007 and 2006: |
2007 | 2006 | |||||||
Davis Opportunity (formerly Davis Growth Opportunity) Fund |
$ | ** | $ | 6,455,628 | ||||
Davis New York Venture Fund |
9,618,948 | 9,509,018 | ||||||
Franklin Balance Sheet Investment Fund |
** | 7,072,348 | ||||||
Franklin Small Mid-Cap Growth Fund |
6,563,761 | ** | ||||||
ING International Value Fund |
11,317,674 | 10,026,598 | ||||||
Morgan Stanley Focus Growth (formerly MS American
Opportunities) Fund |
9,408,817 | 7,956,788 | ||||||
Morgan Stanley Stable Value Fund |
15,914,417 | 17,351,582 | ||||||
Morgan
Stanley S&P 500 Index Fund |
12,258,507 | 12,325,743 | ||||||
Oppenheimer Global Fund |
11,733,544 | 11,486,701 | ||||||
Van Kampen Strategic Growth (formerly Van Kampen Emerging
Growth) Fund |
7,868,366 | 7,611,768 | ||||||
Investments less than 5% of the Plans net assets |
46,513,556 | 38,196,614 | ||||||
Total investments |
$ | 131,197,590 | $ | 127,992,788 | ||||
** | Less than 5% of plan assets in the period indicated. |
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3. | Investments, continued |
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During the years ended December 31, 2007 and 2006, the Plans investments (including gains and
losses on investments bought and sold, as well as held during the year) appreciated in value as
follows: |
2007 | 2006 | |||||||
Registered investment companies (mutual funds) |
$ | 7,585,044 | $ | 11,711,590 | ||||
Consolidated Graphics, Inc. common stock |
(618,584 | ) | 1,091,813 | |||||
Net appreciation in fair value of investments |
$ | 6,966,460 | $ | 12,803,403 | ||||
4. | Party-in-Interest Transactions |
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The Plan invests in participant loans and in mutual funds and a common collective trust
established and operated by Morgan Stanley, the Plans investment advisor, and has investments
in the Companys common stock. These transactions qualify as party-in-interest transactions,
as defined by ERISA. Such transactions are permitted under the provisions of the Plan and are
exempt from the prohibition of party-in-interest transactions under ERISA. |
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Fees paid by the Company, on behalf of the Plan, were $22,746 and $1,790 for the years ended
December 31, 2007 and 2006, respectively. |
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5. | Tax Status |
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The Plan is based on a non-standardized prototype plan. The prototype plan received an opinion
letter from the Internal Revenue Service dated May 3, 2002. The Plan trustee and administrator
believe that the Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC of 1986, as amended, and accordingly, that the trust
maintained in connection with the Plan is tax-exempt. |
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6. | Excess Contributions Payable |
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The Plan did not satisfy the nondiscrimination test under IRC Section 401(k)(3) for the 2007
and 2006 Plan years. To comply with such nondiscrimination test, the Plan made required
distributions of excess contributions of $617,513 and $398,678, including any income
attributable thereto, to highly compensated employees by March 15, 2008 and 2007, respectively. |
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7. | Reconciliation of Plan Financial Statements to Form 5500 |
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The following is a reconciliation of the net assets available for benefits per the financial
statements to the Form 5500 as of December 31, 2007 and 2006: |
2007 | 2006 | |||||||
Net assets available for benefits per the financial statements |
$ | 131,265,311 | $ | 129,015,063 | ||||
Excess contributions payable from current year |
617,513 | 398,678 | ||||||
Contributions receivable from current year |
(63,964 | ) | (351,615 | ) | ||||
Net assets available for benefits per Form 5500 |
$ | 131,818,860 | $ | 129,062,126 | ||||
2007 | 2006 | |||||||
Net increase in net assets available for benefits per
the financial statements |
$ | 2,250,248 | $ | 10,282,290 | ||||
Excess contributions payable from current year |
617,513 | 398,678 | ||||||
Contributions receivable from prior year |
351,615 | 306,627 | ||||||
Contributions receivable from current year |
(63,964 | ) | (351,615 | ) | ||||
Excess contributions payable from prior year |
(398,678 | ) | (203,551 | ) | ||||
Net increase in net assets available for plan benefits
per Form 5500 |
$ | 2,756,734 | $ | 10,432,429 | ||||
8. | Prohibited Transactions |
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During the 2007 Plan year, all participant 401(k) contributions were forwarded to the trustee
of the Plan in accordance with DOL regulations. |
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On one occasion during the 2006 Plan year, participant 401(k) contributions totaling $3,379
were not forwarded to the trustee of the Plan in accordance with DOL regulations. In this
case, such contributions were subsequently contributed to the trust for the Plan. Earnings of
$203 were deposited into the trust prior to December 31, 2006. |
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(b) Identity of Issue, | (c) Description of Investment, Including | |||||||
Borrower, Lessor or | Maturity Date, Rate of Interest, | (e) Market | ||||||
(a) | Similar Party | Collateral, Par or Maturity Value | Value* | |||||
** |
Consolidated Graphics, Inc. | Common Stock Consolidated Graphics, Inc. | $ | 3,147,705 | ||||
** |
Morgan Stanley | Common Collective Trust Stable Value Fund | 15,914,417 | *** | ||||
** |
Morgan Stanley | Mutual Fund S&P 500 Index Fund | 12,258,507 | *** | ||||
Oppenheimer | Mutual Fund Global Fund | 11,733,544 | *** | |||||
ING | Mutual Fund International Value Fund | 11,317,674 | *** | |||||
Davis | Mutual Fund New York Venture Fund | 9,618,948 | *** | |||||
** |
Morgan Stanley | Mutual Fund Focus Growth (formerly MS American Opportunities) Fund | 9,408,817 | *** | ||||
Van Kampen | Mutual Fund Strategic Growth (formerly Van Kampen Emerging Growth) Fund | 7,868,366 | *** | |||||
Franklin | Mutual Fund Small-Mid Cap Growth Fund | 6,563,761 | *** | |||||
Franklin | Mutual Fund Balance Sheet Investment Fund | 6,420,364 | ||||||
Davis | Mutual Fund Opportunity (formerly Davis Growth Opportunity) Fund | 5,645,551 | ||||||
Van Kampen | Mutual Fund Equity & Income Fund | 5,136,558 | ||||||
Van Kampen | Mutual Fund Growth & Income (formerly Van Kampen Growth) Fund | 4,944,292 | ||||||
Calvert | Mutual Fund Income Fund | 4,793,762 | ||||||
Van Kampen | Mutual Fund Mid Cap Growth (formerly Van Kampen Growth & Income) Fund | 4,016,811 | ||||||
** |
Morgan Stanley | Mutual Fund U.S. Government Securities Trust | 3,926,735 | |||||
Phoenix | Mutual Fund Mid Cap Value Fund | 2,255,322 | ||||||
** |
Morgan Stanley | Mutual Fund Strategist Fund | 1,387,491 | |||||
Pioneer | Mutual Fund Oak Ridge Small Cap Growth Fund | 1,067,164 | ||||||
Franklin | Mutual Fund Rising Dividends Fund | 279,817 | ||||||
** |
Morgan Stanley | Mutual Fund Special Value-I | 218,026 | |||||
Alger | Mutual Fund Small Cap Growth Institutional I | 163,613 | ||||||
Calvert | Mutual Fund New Vision Small Cap Fund | 79,896 | ||||||
** |
Participant Loans | Loans bearing interest at rates ranging from 5.0% to 10.5% per year | 3,030,449 | |||||
$ | 131,197,590 | |||||||
* | Cost information is not presented because all investments are participant directed. |
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** | Represents party-in-interest transactions. |
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*** | Represents investments comprising at least 5% of net assets available for benefits. |
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Consolidated Graphics, Inc. Employee 401(k) Savings Plan |
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By: | /s/ Jon C. Biro | |||
Jon C. Biro | ||||
Member of the Consolidated Graphics, Inc.
Employee 401(k) Savings Plan Retirement Committee |
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