<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                F O R M  10 - K

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

          For the fiscal year ended  MAY 31, 1997             
                                     ------------

                                     OR

[ ]       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   0-18815
                                                 -------
                              OUTLOOK GROUP CORP.
             (Exact name of registrant as specified in its charter)


              WISCONSIN                                   39-1278569       
       ------------------------           --------------------------------------
       (State of incorporation)            (I.R.S. Employer Identification No.)


1180 AMERICAN DRIVE, NEENAH, WISCONSIN                      54956
--------------------------------------                      -----
(Address of principal executive offices)                 (Zip Code)


Registrant's telephone number, including area code:  (920) 722-2333

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

Securities registered pursuant to Section 12(g) of the Act:  COMMON STOCK, $.01
PAR VALUE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

          Yes       X                               No
               ---------                                 -----------

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

As of August 22, 1997, 4,655,382 shares of Common Stock were outstanding, and
the aggregate market value of the Common Stock (based upon the $4.75 last sale
price on that date on The NASDAQ Stock Market) held by non-affiliates (excludes
a total of 533,283 shares reported as beneficially owned by directors and
executive officers -- does not constitute an admission as to affiliate status)
was approximately $19.5 million.

                      DOCUMENTS INCORPORATED BY REFERENCE


                                              PART OF FORM 10-K INTO WHICH
                 DOCUMENT                PORTIONS OF DOCUMENTS ARE INCORPORATED 
                 --------                --------------------------------------
        Proxy Statement for 1997 Annual              Part III 
        Meeting of Shareholders
              




<PAGE>   2

                                     PART I

ITEM 1.       BUSINESS.

RECENT DEVELOPMENTS

         Outlook Group Corp.  (the "Company") announced on August 29, 1997 that
it had signed a letter of intent to be acquired by an affiliate of Goldner Hawn
Johnson & Morrison Incorporated ("Goldner Hawn") of Minneapolis, Minnesota. 
The letter of intent provides for Goldner Hawn to acquire all outstanding 
shares of the Company at $8.25 in cash per share.  Goldner Hawn intends, 
following the acquisition, to maintain the Company's headquarters in Neenah, 
Wisconsin.  The transaction remains subject to further due diligence reviews by
Goldner Hawn, execution of a definitive agreement and other customary 
conditions.  The transaction is scheduled to close in the fourth calendar 
quarter of 1997, although there can be no assurance.

         In addition, the Company also announced execution of a letter of intent
relating to the disposition of its food processing operations.  See below.

GENERAL

         The Company is a graphic services company offering a variety of 
related services including specialty printing, converting and packaging, and    
distribution.  Founded as a Wisconsin corporation in 1977, the Company
initially concentrated on bulk mailing and commercial printing projects.  Over
the years, the Company's business has expanded to include printing related
services, particularly converting and packaging.  In fiscal 1993, the Company's
business expanded to include food products production and packaging, although
the Company announced in fiscal 1997 its intention to divest its food
production segment.

         In 1984, the Company began offering converting services to produce
cards for board games.  During 1986, the Company first offered packaging
services by overwrapping, in plastic, recipe cards printed by the Company.
Such services were subsequently expanded to collectible sports picture cards.
Management believes that the Company's historical success was largely
attributable to its entry into these more profitable converting and packaging
services.  These services in turn developed customer demand for higher quality
specialty printing, and at the same time reduced the Company's dependence on
commercial printing.

         During fiscal 1995, the Company's sports and collectible picture card
business was negatively affected by the unexpectedly lengthy duration of the
national baseball strike, which reduced the demand for and production of
collectible cards.  The baseball strike not only reduced demand for baseball
cards, but also negatively affected the sports card industry in general.  Since
then, such business was further negatively affected by the continuing weakness
of the sports card industry and the decision of Fleer/Skybox Corp. ("Fleer"),
then a major Company customer, to outsource primarily through another supplier.
In fiscal 1997, approximately 2% of the Company's net sales from continuing
operations related to sports picture cards, as compared to 16% and 36% in
fiscal 1996 and 1995, respectively.  The Company expects the percentage of its
business related to the collectible cards to remain low in fiscal 1998 as a
result of the above and other factors.

         In December 1992, the Company purchased certain assets of the
Oconomowoc, Wisconsin manufacturing facility of Nestle Beverage Company (with
its affiliated companies, "Nestle").  The assets that were purchased formed the
nucleus of the Company's wholly-owned subsidiary Outlook Foods, Inc. ("Foods")
and the Company's food processing segment, which currently produces dry food
products, such as malted milk powder, cocoa mix, cappuccino mix and other drink
mixes.  In 1996, the Company's contract to produce sauces and gravies for
Nestle was not renewed because of Nestle's desire to bring the work in-house.
(See "Customers and Marketing".)  In September 1996, the Company announced its
intention to divest Foods, although no agreements have yet been made, and there
can be no assurance that the Company will be able to divest Foods on acceptable
terms.  Due to the Company's announced intention to divest Foods, the Company
is now accounting for its food processing operations as a discontinued
operation.  In August 1997, the Company entered into a letter of intent to sell
the assets of Foods to S&J Food Management Corporation ("S&J").  The
transaction remains subject to further due diligence reviews, execution of a
definitive agreement and other customary conditions.




                                     -1-
<PAGE>   3


         In February 1995, the Company purchased Barrier Films Corporation
("Barrier"), a Sparks, Nevada based manufacturer of multi-layer packaging
films.  Barrier's operations were included in the "other" class of services
within the Company's graphics services segment.  In May 1997, the Company sold
Barrier, and the Company no longer produces films.

         As a result of its performance during recent fiscal years, the Company
has considered, and continues to consider, a variety of options for
restructuring its business and operations in order to position the Company for
strengthened future performance.  The Company has divested itself of its
publishing operations and Barrier, as it determined that those operations did
not complement its other continuing market lines, and announced a letter of
intent to divest Foods.  The Company is continuing to consider divestiture  
strategies to the extent that the Company believes such  actions would enhance
its ability to achieve successful operations.  In  addition, the Company will
also consider appropriate acquisitions to strengthen continuing operations. 
There can be no assurances, however, that the Company  will be able to
successfully implement such strategies or complete those  transactions.
        
         The following table sets forth the approximate amount and percentage
of net sales from continuing operations contributed by each segment and
principal class of service during the last three fiscal years, as well as net
sales from discontinued operations:

<TABLE>
<CAPTION>
                                                               FISCAL YEAR ENDED MAY 31,                     
                                           -----------------------------------------------------------------------
                                                    1997                     1996                      1995       
                                           ---------------------   -----------------------   ---------------------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                         <C>         <C>      <C>         <C>             <C>          <C>           
Graphic Services Segment
   Specialty Printing . . . . . .           $50,303      70%       $56,055       71%           $66,817       73%
   Converting and Packaging . . .             6,410       9%        10,506       13%            19,141       21%
   Other  . . . . . . . . . . . .            15,341      21%        12,744       16%             5,662        6%
                                            -------     ----      --------      ----          --------      ----
Total Graphic Services Segment  .           $72,054     100%       $79,305      100%           $91,620      100%
                                            =======     ====      ========      ====          ========      ====
Discontinued Operations/                                                                                        
  Food Processing Segment . . . .            16,804                 32,051                      29,122          
                                                                  --------                    --------          
       Total  . . . . . . . . . .           $88,858               $111,356                    $120,742          
                                            =======               ========                    ========          
</TABLE>


GRAPHIC SERVICES SEGMENT

     SPECIALTY PRINTING

         The Company offers a broad array of specialty printing and related
graphic arts services, including pre-press work, sheeting, printing and
finishing. The Company provides full-color printing and color enhancement,
application of specialized coatings, simultaneous two-sided printing, enhanced
drying and computerized control.  The Company focuses on specialty printing
projects such as picture cards, recipe cards, folding cartons, food coupons and
labels, vinyl cards, continuous forms and promotional materials rather than
traditional commercial printing of books, magazines and catalogs.  The
specialty printing operations enhance the Company's ability to cross-sell its
other graphic services.

         Outlook Graphics.  The Company's pre-press staff prepares projects for
printing to customer specifications.  These services include preparatory camera
plate-making, layout, typesetting and other related services.  Although the
Company does not generally perform design services, it assists designers in
translating a concept into a printed product.

         The Company's presses generally use off-set printing processes and can
print on a wide range of media from newsprint and coated paper to heavy
cardboard, including paperboard packaging.  The Company currently utilizes
sheet-fed full-color presses of various sizes, the most sophisticated of which
is capable of six-color printing.  Certain presses have interchangeable
printing plates which allow the Company significant flexibility in meeting





                                     -2-
<PAGE>   4

customer needs.  In 1993, the Company established sheeting capacity, whereby it
can cut paper for printing to particular job size requirements, providing an
additional service to offer customers.

         Additionally, the Company provides finishing services for printed
items (whether or not printed by the Company) such as precision trimming,
folding, die-cutting, binding, shrink-wrapping, collating and packaging
products for distribution and fulfillment.

         Outlook Label.  The Company's Outlook Label Systems, Inc. subsidiary
("Outlook Label") complements the Company's other specialty printing operations
by using different technologies and offering manufacturing capabilities not
otherwise available from the Company, enhancing the Company's ability to
cross-sell services.  Outlook Label manufactures items such as coupons,
pressure sensitive specialty labels, printed vinyl cards (such as temporary
credit cards and identification cards), continuous forms, cartons, and
sweepstakes and specialty game pieces.  Outlook Label's narrow web presses
generally utilize continuous-feed rolls of paper and flexo- or letter-press
processes.  Its most sophisticated machinery permits one-pass, ten-color
printing and lamination of various substrates using an in-line process.

         Outlook Packaging.  Packaging engages in flexographic printing and
laminating of flexible packaging films.  In these processes, Packaging takes
plastic and other flexible packaging materials (which are purchased from
others) and prints and/or laminates to customer specifications and slits the
material.  Customer orders may include some or all of Packaging's services.
Packaging specializes in printing packaging materials for the food industry and
is expanding in the industrial and consumer packaging markets.  Packaging
prints and laminates materials for pouches, bags, vacuum packages, packets,
security devices and card and food overwraps, and provides them to customers in
convenient rolls of film.  The establishment of Packaging, including the
acquisition of assets of Sunrise Packaging, Inc. ("Sunrise") in 1993, was part
of the Company's diversification strategy, and was intended to complement the
Company's other specialty printing operations by allowing the Company to offer
additional technologies, capabilities and customer services, although factors
at Outlook Packaging including pricing which has failed to yield sufficient
recovery of costs, waste and operating efficiencies have affected its
performance.

     CONVERTING AND PACKAGING

         The Company's converting and packaging services grew rapidly through
fiscal 1992, primarily due to the substantial increase in business relating to
sports picture card converting; however, sales of these services declined in
fiscal 1994, and further significantly declined in fiscal 1996 and 1997.
During fiscal 1997, approximately 2% of the Company's net sales from continuing
operations related to collectible picture cards, as compared to 16% and 36% in
fiscal 1996 and 1995, respectively.  The Company expects the percentage of its
business related to collectible cards to remain low.

         The Company maintains specialized equipment for cutting, trimming,
sorting, collating and packaging cards, some of which it has designed or
modified to accommodate customer needs, although the Company has sold certain
surplus equipment as a result of the substantial reduction in its collectible
card business and may sell additional surplus equipment in the future.

         The Company also has developed paperboard packaging capabilities to
serve its customers' needs and enhance the Company's one-stop marketing
approach.  Paperboard packaging consists of utilizing paperboard stock to print
and convert folding cartons, blister cards, pocket folders and other point of
purchase materials.  (Certain of these operations are considered by the Company
to be "specialty printing" and are included in that line of business.)

         The Company packages other types of items.  Examples have included
wrapping toys and other promotional items for insertion in cereal boxes,
overwrapping multiple packages for sale as a single unit, and packaging fabric
softener sheets for laundry room vending machines.  Custom designed feeding and
in-line overwrapping systems increase the efficiency of its packaging
operations.  The Company also maintains an environmentally controlled work






                                     -3-
<PAGE>   5

area to perform food contact packaging and to provide other packaging services
for which cleanliness and specific quality standards are required.

     OTHER

         The Company's other services include direct mailing, fulfillment and
films manufacturing.  Direct mailing involves inserting, literature
overwrapping, labeling, sorting and shipping printed items for bulk mailing.
The Company's zip code sorting allows it to minimize customer postal charges
by, in many instances, delivering items by common carrier to a post office near
the destination.  Direct mailings in fiscal 1997 included catalogs, coupon
packages and promotional materials.

         The fulfillment services provided by the Company consist of storing
and distributing items upon customer order.  In many cases, fulfillment items
include materials such as forms and booklets that are printed by the Company,
often under standing orders from its customers to replenish supplies.  Custom
designed data systems produce reports to assist the Company's customers in
managing their fulfillment programs.  

         Through Barrier, the Company formerly manufactured flexible plastic
film used for food, medical and electronics packaging through a process called
co-extruded blown film.  Films were produced for the Company's use in other
operations, and for outside customers.  Barrier's operations were sold in May
1997, as the Company determined they were not consistent with its long-term
direction.  The Company has entered into an agreement with the purchasers of
Barrier whereby the purchasers will supply certain of the Company's
requirements for co-extruded film in the future.

DISCONTINUED OPERATIONS/FOOD PROCESSING SEGMENT

         In September 1996, the Company announced plans to divest its food
processing segment, and is now accounting for those operations as a
discontinued operation.  In August 1997, the Company entered into a letter of
intent to sell the assets of Foods to S&J.  The transaction remains subject to
further due diligence reviews, execution of a definitive agreement and other
customary conditions.

         The food processing segment was formed in 1992 as a result of the
acquisition of assets from Nestle.  This line of business currently consists of
dry-blended food processing and packaging.  In this segment, Foods mixes and
blends various raw materials in accordance with customers' formulas.  The
resulting products (generally dry mixes or powders) are then packaged according
to customer specifications.  The Company has begun to produce products to its
own specifications and engage in the consumer marketing of these products.

         Food products produced and packaged by Foods include malted milk
powder and cocoa and other beverage mixes, and previously included powdered
sauce and gravy mixes.  Foods entered into two agreements to produce and
package certain Nestle products (specified sauces and gravy mixes and malted
milk powder) in December 1992; see "Customers and Marketing" below regarding
the termination of the agreements relating to sauces and gravies.  Sales to
Nestle, including sales in addition to those covered by the production
agreements, represented approximately 67% of this segment's net sales in fiscal
1997, as compared to 94% and 90% in fiscal 1996 and 1995, respectively.

         The Company has introduced several proprietary food products, although
these products do not represent a material part of the business, and several
products have been discontinued.








                                     -4-
<PAGE>   6



CUSTOMERS AND MARKETING

         Due to the project-oriented nature of the Company's business, sales to
particular customers may vary significantly from year to year depending upon
the number and size of their projects.  The identity of those customers also
may change.

         During fiscal 1997, sales (primarily in the discontinued operations of
the food processing segment) to Nestle accounted for 13% of the Company's total
net sales for the period.  Sales to Nestle were 26% and 22% of the Company's
total net sales in fiscal 1996 and 1995, respectively.  During fiscal 1997,
sales (all in the graphic services segment) to Kraft Foods, Inc. (and
affiliates) ("Kraft") accounted for approximately 14% of the Company's total
net sales from continuing operations for the period; sales to Kraft were 13%
and less than 10% of the Company's total net sales from continuing operations
in fiscal 1996 and 1995, respectively.

         In connection with the Company's December 1992 acquisition of certain
Nestle assets, Foods and Nestle entered into operational agreements including
(1) a five-year agreement under which Foods packages malted milk products for
Nestle; and (2) a two-year agreement by which Foods packaged certain sauces and
gravies for Nestle.  The agreements do not preclude Foods or the Company from
producing or packaging similar products for other customers, and Foods is
producing and packaging for other customers in the food service industry.  The
Company's contract to blend sauces and gravies for Nestle, as extended, expired
at the end of fiscal 1996.  That contract represented approximately 61% and 65%
of the Company's sales to Nestle in fiscal 1996 and 1995, respectively.

         Sales to Kraft represent sales to several Kraft divisions and
subsidiaries.  The Company performs various services on behalf of Kraft, such
as production of labels and fulfillment.  As with most of its customers, the
Company's sales to Kraft are pursuant to cancellable purchase orders.

         The Company expects that it will continue to experience significant
sales concentration given the relatively large size of projects undertaken for
certain customers.  Furthermore, the Company's largest customers may vary from
year to year depending on the number and size of the projects completed for
such customers.  For example, Fleer was formerly the Company's largest
customer, but work for Fleer has substantially diminished and it is no longer a
significant customer.  The loss of business of one or more principal customers
or a change in the number or character of projects for particular customers
could have a material adverse effect on the Company's sales volume and
profitability.

         Other than the Nestle agreement described above, customers generally
purchase the Company's services under cancelable purchase orders rather than
long-term contracts, although exceptions sometimes occur when the Company is
required to purchase substantial inventories or special machinery to meet
orders.  In past years, the Company rarely experienced cancellations of
purchase orders, although it recently has increasingly experienced such delays
and cancellations.  The Company believes that operating without long-term
contracts is consistent with industry practices, although it increases the
Company's vulnerability to significant period to period changes.  Because of
the project-oriented nature of the Company's business, the short-term character
of a substantial portion of its projects and the nature of the orders for the
Company's services, the Company does not believe that backlog is material or
meaningful to its business.

         The Company markets its services nationally through certain of its
executive officers and the Company's sales group which includes 40 sales and
service employees and a total of 10 manufacturer's representatives.  The sales
group is intended to centralize and coordinate sales and marketing activities
among the Company's various operations.  The Company generally does not enter
into employment contracts with its officers (other than its CEO and COO) and
employee sales personnel, although it has agreements with its outside
representatives.

RAW MATERIALS

         In the graphic services segment, raw materials necessary to the
Company include paper stocks, inks and plastic films, all of which are readily
available from numerous suppliers.  The cost of raw materials represented
approximately 48% of the Company's cost of goods sold in continuing operations
during fiscal 1997, as compared







                                     -5-
<PAGE>   7

to 49% in fiscal 1996.  In the food processing segment, raw materials include
cheese solids, milk, sugar, barley, flour and starch.  The Company has not
experienced difficulties in obtaining materials for the graphic services
segment in the past and does not consider itself dependent on any particular
supplier for raw materials, or for the Company's equipment needs.

COMPETITION

         The market for the services provided by the Company is highly
competitive, primarily on the basis of price, quality, production capability,
capacity for prompt delivery and continuing relationships.

         The Company's principal competitors, and the scope of the areas in
which the Company competes, vary based upon the services offered.  With respect
to specialty printing services, its competitors are numerous and range in size
from very large multi-national companies with substantially greater resources
than the Company to many smaller local companies.  Numerous competitors also
exist for other services.  While there are fewer competitors offering
converting and packaging services, competition is very strong.  The Company
believes that relatively few competitors offer the wide range of services
provided by the Company.  Because of the substantial capital requirements for
graphic services equipment, larger companies with greater capital resources may
have an advantage in financing state-of-the-art equipment.  See "Management's
Discussion and Analysis of Results of Operations and Financial
Condition--Liquidity and Capital Resources."  The Company does not believe
foreign competition is significant at this time.

ENVIRONMENTAL MATTERS

         The Company and the industry in which it operates are subject to
environmental laws and regulations concerning emissions into the air,
discharges into waterways and the generation, handling and disposal of waste
materials.  These laws and regulations are constantly evolving, and it is
impossible to predict accurately the effect they may have upon the capital
expenditures, earnings and competitive position of the Company in the future.
The Company's past expenditures relating to environmental compliance have not
had a material effect on the Company.  Growth in the Company's production
capacity with a resultant increase in discharges and emissions could require
significant capital expenditures for environmental control facilities in the
future.

EMPLOYEES

         At July 31, 1997, the Company had 688 employees, substantially all of
whom were employed on a full-time basis.  (Of these employees, 101 were
employed by Foods.)  The Company contracts for and/or hires temporary and
intermittent employees to increase the number of personnel in certain
operations as project commitments require; approximately 27 of the employees at
July 31, 1997 were intermittent.  Approximately 86 production and maintenance
employees of Foods are covered by two union contracts.  The Company considers
its relationship with its employees to be good.  Wages and employee benefits in
continuing operations represented approximately 29% of the Company's cost of
goods sold during each of fiscal 1997 and 1996.

ITEM 2.  PROPERTIES.

         The Company's offices and main production and distribution facilities
are located in the Town of Menasha, Wisconsin in a facility owned by the
Company.  The 345,000 square foot facility (of which approximately 25,000
square feet are used for offices) was built in stages from 1980 to 1992.  The
Company also owns approximately five acres of land adjacent to this facility to
provide for future expansion.

         The Company owns an 83,000 square foot facility in Neenah, Wisconsin
in which Outlook Label's office and production facilities are located; this
facility includes a 63,000 square foot addition completed in December 1990.
This addition provides capacity for future expansion of Outlook Label as well
as for other operations of the Company.






                                     -6-
<PAGE>   8



         The Company owns a 164,000 square foot facility in Oconomowoc,
Wisconsin in which Foods' office and production facilities are located.  The
several adjacent buildings constituting this facility were built from
approximately 1916 to 1918, with additions constructed in 1963 and 1981.  These
buildings were purchased from Nestle in 1992.  In connection with the letter of
intent to divest Foods, the Company expects to arrange a disposition of the
facility.

         The Company owns an 81,000 square foot facility in Oak Creek,
Wisconsin in which Packaging's office and production facilities are located,
and an additional 38,000 square foot facility in Wichita, Kansas in which
additional Packaging production facilities were located.  These buildings were
constructed in 1990 and 1970, respectively, and were purchased from Sunrise and
its affiliates in 1993.  The Wichita facility has been closed and is being
offered for sale by the Company.

         The Company leases an approximately 166,000 square foot facility in
Neenah, Wisconsin which is currently used for certain mailing operations and
warehouse space.  The lease for this facility expires on March 30, 2002.  The
Company must provide six months notice of its intention to vacate or the lease
shall continue on a year-to-year basis.  The Company is negotiating with the
landlord of this facility for a reduction of the space used at this facility
and/or the lease term.

         The Company also leases an approximately 37,500 square foot facility
in Neenah, Wisconsin for its sheeting operations and other warehouse space.
The Company occupied the facility in 1993.  The lease is for a ten year term,
with one five year option to renew.

         In July 1995, the Company occupied a newly-constructed 150,000 square
foot facility in Oshkosh, Wisconsin for fulfillment and distribution services.

         In addition to land and buildings, the Company maintains significant
equipment to perform its various graphic services.  The equipment includes
presses, machinery dedicated to converting and packaging, and other machinery
described above in Item 1.  Certain of the equipment is leased by the Company;
see Note G of Notes to Consolidated Financial Statements in the 1997 Annual
Report, which is incorporated herein by reference, for a description of
equipment lease transactions.

         The Company uses complex and specialized equipment in the provision of
its services, and the manufacture of its products.  Therefore, the Company is
dependent upon the functioning of such machinery and equipment, and its ability
to acquire and maintain appropriate equipment.  Among other factors, the
Company may be affected by equipment malfunctions, training and operational
needs relating to the equipment, which may delay its utilization, maintenance
requirements, and technological or mechanical obsolescence.  Because of the
substantial capital requirements for graphic services equipment in particular,
larger companies with greater capital resources may have an advantage in
financing state-of-the-art equipment.

         The Company believes that all of its facilities are in good condition
and suited for their present purpose.  The Company believes that the property
and equipment currently utilized by it is sufficient for its currently
anticipated needs but that expansion of the Company's business or offering new
services could require the Company to obtain additional equipment or
facilities.

         As a result of the diminution of certain lines of business
(particularly relating to collectible cards), the Company has sold certain
surplus equipment in recent years, and will consider further sales in the
future.  The Company also regularly evaluates facility needs, and would sell or
terminate leases to other facilities if appropriate.

         Substantially all of the Company's assets are pledged as collateral
under certain financing agreements.  See Note C of Notes to Consolidated
Financial Statements, which is incorporated herein by reference, for a
description of financing secured by mortgages on the properties and equipment
owned by the Company and its subsidiaries.








                                     -7-
<PAGE>   9



ITEM 3.  LEGAL PROCEEDINGS.

         In the opinion of management, the Company is not a party to any legal
proceedings other than routine litigation which is not material to its
business.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1997.

EXECUTIVE OFFICERS OF THE REGISTRANT.

         Certain information as to each of the executive officers of the
Company is set forth in the following table.  Officers are elected annually by
the Board of Directors.


<TABLE>
<CAPTION>
               NAME                        AGE                          POSITION(S)
               ----                        ---                          -----------
     <S>                                    <C>   <C>
     David L. Erdmann   . . . . . . .       54    Chairman of the Board and Chief Executive Officer; Director
                                                  
     Joseph J. Baksha   . . . . . . .       45    President and Chief Operating Officer
                                                  
     Jeffry H. Collier  . . . . . . .       44    Executive Vice President; Vice President and General Manager of 
                                                  Graphics Group; Director
                                                  
     Thomas C. Aschenbrenner  . . . .       44    Chief Financial Officer and Secretary
                                                  
     James W. Buhl  . . . . . . . . .       51    Vice President-Human Resources
                                                  
     John F. Hofmann  . . . . . . . .       47    Executive Vice President-Sales and Marketing
</TABLE>

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

         David L. Erdmann served as Chief Executive Officer of the Company
since its inception in 1977, and as Chairman of the Board since 1990.  Mr.
Erdmann also served as President from 1977 until December 1996.

         Joseph J. Baksha has served as President and Chief Operating Officer
since December 1996, after having served as Vice President of the Company and
President of the Company's Packaging Group since June 1996.  Previously, Mr.
Baksha served as Executive Vice President and Chief Operating Officer of
Washburn International--(a manufacturer and distributor of musical instruments)
from 1994 to 1996, and previously as Executive Vice President and Chief
Operating Officer of Alusuisse Flexible Packaging (a flexible packaging
company).  The Company's Packaging Group consists of Outlook Packaging and
Outlook Label, and prior to May 1997 included Barrier.

         Jeffry H. Collier has served as Executive Vice President of the
Company since 1994, President of the Company's Graphics Group since 1996 and a
Vice President of the Company since 1990.  Previously, Mr. Collier was employed
by the Company as its plant manager and General Manager of Outlook Label.  (The
Company's Graphics Group consists of the specialty printing, converting and
packaging, and mailing and distribution operations of Outlook Group Corp.)

         Thomas C. Aschenbrenner became the Company's Chief Financial Officer
in May 1997 and Secretary in August 1997.  Previously, Mr.  Aschenbrenner
served as Vice President and Chief Financial Officer of Xymox






                                     -8-
<PAGE>   10

Technologies, Inc. from 1993 to 1996, Treasurer of Bowthorpe Holdings US group
of companies and Vice President of Finance of Tyton Corporation (one of the
Group's subsidiaries) from 1979 to 1993, and senior auditor for Arthur Young
and Co. prior thereto.

         James W. Buhl has served as the Company's Vice President-Human 
Resources since 1992.

         John F. Hofmann has served as the Company's Executive Vice
President-Sales and Marketing since 1996.  Previously, Mr. Hofmann was Senior
Vice President-Sales and Marketing of Lefebvre Intergraphics from 1995 to 1996,
Senior Vice President and General Manager of Nationwide Retail Packaging from
1994 to 1995, and Senior Vice President-Sales and Marketing of Midwest Films
Corp. prior thereto.

                                 *  *  *  *  *

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         The discussions in this report on Form 10-K, and in the documents
incorporated herein by reference, and oral presentations made by or on behalf
of the Company contain or may contain various forward-looking statements
(particularly those referring to expectations as to potential future
transactions, future business and/or operations, in the future tense, or using 
terms such as "believe", "anticipate," "expect" or "intend") that involve risks 
and uncertainties.  The Company's actual future results could differ materially
from those discussed, due to the factors which are noted in connection with the
statements and other factors.  The factors that could cause or contribute to
such differences include, but are not limited to, those in Items 1 and 2 above
in this report and in the "Management's Discussion and Analysis" (particularly
in "Results of Operations-- Fiscal 1997 Compared to Fiscal 1996") in Item 7
hereof.  In particular, consummation of each of the various announced
transactions is subject to a number of conditions, as described above. 
Therefore, as with any transaction, completion cannot be assured.  The Company
intends to make no further announcements concerning the status of negotiations
as to definitive agreements until they either have been reached, which cannot
be assured, or negotiations have terminated.

Shareholders, potential investors and other readers are urged to consider these
factors carefully in evaluating forward-looking statements.


                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.


The company's common stock is quoted on the NASDAQ Stock Market.  The following
table sets forth high and low sales prices as reported on NASDAQ for the
indicated fiscal year.



--------------------------------------------------------------------------------
                     FISCAL 1997         High        Low
--------------------------------------------------------------------------------
                     First quarter      $5 3/4      $4
                     Second quarter      6 1/2       4
                     Third quarter       6           4
                     Fourth quarter      6 1/4       3 7/8


--------------------------------------------------------------------------------
                     Fiscal 1996
--------------------------------------------------------------------------------
                     First quarter       $9 1/2     $7 3/4
                     Second quarter       8 1/2      6 3/4
                     Third quarter        7 7/8      4 3/4
                     Fourth quarter       5 3/4      4 1/4
--------------------------------------------------------------------------------



The company has not paid any cash dividends since its inception.  The company
presently intends to employ its earnings in the continued development and
expansion of its business and does not expect to pay any cash dividends in the
foreseeable future.  For a description of contractual dividend restrictions,
see Note C to the consolidated financial statements and the discussion in
Management's Discussion and Analysis.

As of August 14, 1997, there were approximately 591 registered shareholders of
record.










                                     -9-



<PAGE>   11
ITEM 6.  SELECTED FINANCIAL DATA.


The following selected financial data of Outlook Group Corp. (the "company")
has been derived from the company's audited consolidated financial statements
and should be read in conjunction with the consolidated financial statements,
related notes and Management's Discussion and Analysis contained in this
report.  Information for years prior to 1997 has been restated to reflect the
company's subsidiary, Outlook Foods, Inc., as a discontinued operation - see
Note M to the consolidated financial statements.



<TABLE>
<CAPTION>

FISCAL YEAR ENDED MAY 31,
(in thousands, except share and per share amounts)       1997        1996     1995(1)     1994(2)        1993
-------------------------------------------------------------------------------------------------------------
<S>                                                 <C>          <C>         <C>         <C>         <C>
EARNINGS STATEMENT DATA:
Net sales                                            $ 72,054     $79,305     $91,620     $74,020     $75,969
Cost of goods sold                                     61,168      74,683      77,046      62,222      60,392
-------------------------------------------------------------------------------------------------------------
Gross profit                                           10,886       4,622      14,574      11,798      15,577
Selling, general and administrative expenses            9,904      13,347      13,303       9,087       7,756
-------------------------------------------------------------------------------------------------------------
Operating profit (loss)                                   982      (8,725)      1,271       2,711       7,821
Other income (expense):
  Interest expense                                     (2,778)     (2,506)     (1,930)       (687)       (846)
  Other income                                            746       1,609         959         991         461
  Gain on sale of subsidiary                              556          --          --          --          --
-------------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
  before income taxes                                    (494)     (9,622)        300       3,015       7,436
Income tax expense (benefit)                               58      (3,659)        118       1,002       3,208
-------------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations               (552)     (5,963)        182       2,013       4,228
Discontinued Operations:
  Earnings (loss) from discontinued
   operations before income taxes                      (1,492)        658       1,829       4,547       1,954
  Income tax expense (benefit)                           (574)        253         726       1,772         714
-------------------------------------------------------------------------------------------------------------
Earnings (loss) from discontinued operations             (918)        405       1,103       2,775       1,240
-------------------------------------------------------------------------------------------------------------
Net earnings (loss)                                  $ (1,470)    $(5,558)    $ 1,285     $ 4,788     $ 5,468
-------------------------------------------------------------------------------------------------------------
Net earnings (loss) per common share
  Continuing operations                              $   (.12)    $ (1.28)    $   .03     $   .40     $   .83
  Discontinued operations                                (.20)        .09         .23         .55         .24
-------------------------------------------------------------------------------------------------------------
  Total                                              $   (.32)    $ (1.19)    $   .26     $   .95     $  1.07
------------------------------------------------------------------------------------------------------------- 
Weighted average number of common shares
  outstanding                                       4,649,382   4,661,882   4,884,607   5,039,799   5,097,371
------------------------------------------------------------------------------------------------------------- 

BALANCE SHEET DATA (AT FISCAL YEAR END):
Working capital                                       $11,368     $23,700     $24,206     $23,109     $17,042
Total assets                                           67,620      77,853      83,373      70,582      57,270
Long-term debt, less current maturities                16,156      30,859      24,991      14,762       7,748
Shareholders' equity                                   33,471      34,941      41,386      42,574      38,875
------------------------------------------------------------------------------------------------------------- 
</TABLE>



(1)  Includes the results of operations of the company's subsidiary, Barrier
     Films Corp. ("Barrier"), from February 11, 1995.

(2)  Includes the results of operations of the company's subsidiary, Outlook
     Packaging, Inc. ("Outlook Packaging"), from October 18, 1993.



                                     -10-
<PAGE>   12
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

The following section presents a discussion and analysis of the company's
results and operations during the past three fiscal years, and its financial
condition at fiscal year end.  Statements that are not historical facts (such
as statements in future terms or using terms such as "believe", "expect" or
"anticipate") may be forward-looking statements that involve risks and
uncertainties.  The company's actual future results could materially differ
from those discussed.  Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in the following
sections, particularly under "General Factors" in "Results of Operations -
Fiscal 1997 Compared to Fiscal 1996". 

In September 1996, the company announced that it intended to divest its food
processing operations.  As a consequence, beginning in the second quarter of
fiscal 1997, the company began accounting for the food processing segment as a
discontinued operation.  Information prior to that time has been restated to
reflect this  change in accounting, unless specifically indicated otherwise.

On August 29, 1997, the company announced the execution of separate letters of 
intent providing for the acquisitions of the company and for the sale of assets
of its food processing segment.  All such transactions remain subject to 
further due diligence  reviews, execution of definitive agreements and other
customary conditions, and consummation cannot be assured.   Effects  of the
proposed transactions, if any, will be reflected in future periods.
        
RESULTS OF OPERATIONS
The following table shows, for the fiscal years indicated, certain items from
the company's consolidated statements of operations expressed as a percentage
of net sales.





                                     -11-
<PAGE>   13

<TABLE>
<CAPTION>

YEAR ENDED MAY 31,                                         Percentage of Net Sales
-------------------------------------------------------------------------------------
                                                     1997          1996          1995
-------------------------------------------------------------------------------------
<S>                                                <C>           <C>           <C>
Net sales                                           100.0%        100.0%        100.0%
Cost of goods sold                                   84.9          94.2          84.1
-------------------------------------------------------------------------------------
Gross profit                                         15.1           5.8          15.9
Selling, general and
 administrative expenses                             13.7          16.8          14.5
-------------------------------------------------------------------------------------
Operating profit (loss)                               1.4         (11.0)          1.4
Other income (expense):
 Interest expense                                    (3.9)         (3.1)         (2.1)
 Other income                                         1.0           2.0           1.0
 Gain on sale of subsidiary                            .8
-------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
 before taxes                                         (.7)        (12.1)           .3
Income tax expense (benefit)                           .1          (4.6)           .1
-------------------------------------------------------------------------------------
Earnings (loss) from continuing operations            (.8)         (7.5)           .2
Discontinued operations:
 Earnings (loss) from discontinued
 operations before income taxes                      (2.1)           .8           2.0
 Income tax expense (benefit)                         (.8)           .3            .8
-------------------------------------------------------------------------------------
Earnings (loss) from discontinued operations         (1.3)           .5           1.2
-------------------------------------------------------------------------------------
Net earnings (loss)                                  (2.0)%        (7.0)%         1.4%
-------------------------------------------------------------------------------------
</TABLE>

FISCAL 1997 COMPARED TO FISCAL 1996

Outlook Group net sales from continuing operations (graphics services segment)
were $72.1 million for fiscal 1997, a decrease of $7.3 million or 9% from
fiscal 1996 sales of $79.3 million. The major factor for this decline is the
loss of sales to the sports and collectible picture card market, which
decreased $10.0 million compared to last year. In total, sales to this market
declined to 2% of continuing operation's net sales in fiscal 1997 versus 16%
in fiscal 1996 and 36% in fiscal 1995. This is reflected in sales reductions
for the specialty printing and the converting and packaging classes of
services, and results from the factors discussed in "General Factors" below.
The company was able to offset part of the loss of this revenue resulting from
its efforts to focus on new markets for its core manufacturing competencies.
Net sales in the "Other" category in the graphic services segment increased by
$2.6 million to $15.3 million in fiscal 1997. Gains were posted primarily in
the company's mailing and fulfillment centers. In addition, in May 1997, the
company sold its Barrier Films Corp. ("Barrier") subsidiary. Barrier's net 
sales in fiscal 1997 were $6.6 million, as compared to $5.3 million in fiscal 
1996, and are included in the company's sales from continuing operations during
the year.

Gross profit as a percentage of net sales improved to 15.1% in fiscal 1997 from
5.8% in fiscal 1996. Gross profit of $10.9 million improved $6.3 million over
1996. Of the improvement, approximately $5.0 million resulted from more
efficient utilization of material, personnel reductions, the closing of a
redundant production facility and two underutilized warehouses, and other
overhead reductions. Reduced material costs resulted from programs developed at
the company's Outlook Label and Outlook Packaging subsidiaries to more
effectively utilize material and reduce scrap. Personnel reductions were made
throughout the company, but primarily at the company's Outlook Graphics
operation which is where the largest decline in sales occurred. Surplus
equipment that had previously been utilized primarily for the sports and
collectible picture card market was sold. Lease agreements were renegotiated
resulting in 



                                     -12-
<PAGE>   14



significant savings to the company. Further contributions to
improve gross margin were the closing of an Outlook Packaging production
facility and two Outlook Graphic's warehouses. Inventory write offs were
reduced to $500,000 in fiscal 1997, which was a $1.3 million improvement from
$1.8 million in fiscal 1996. Management has developed a program to further
reduce inventory but does not currently believe that such inventory dispositions
will have a material effect on continuing operations. However, actual results
will be determined by the ability to attract buyers or use materials in the
normal course of business.

Selling, general and administrative expenses decreased to 13.7% of net sales
for fiscal 1997 compared to 16.8% in the prior year, or $3.4 million. Of this
amount, $2.5 million results from reduction of the provision for doubtful
accounts to $500,000 from the unusually high provision in fiscal 1996.
Approximately $900,000 of additional savings was generated by personnel
reductions, primarily at Outlook Graphics and Outlook Packaging.

Interest expense as a percent of net sales increased to 3.9% in fiscal 1997
versus 3.1% in fiscal 1996. Although total debt at fiscal 1997 year end was
lower than fiscal 1996 year end, interest expense increased $300,000 primarily
due to a higher cost of funds.

Other income decreased $900,000 to 1.0% of net sales versus 2.0% in the prior
year. Fiscal 1997 other income reflects sales of non-strategic equipment, most
of which was previously utilized for the production of sports and collectible
picture cards. In addition, fiscal 1997 includes a $600,000 gain realized on
the sale of the company's former Barrier subsidiary, which was partially
financed by the company.

The above factors resulted in a $9.1 million improvement in pretax earnings
from continuing operations compared to fiscal 1996. Losses from continuing
operations were reduced to 0.7% of sales in fiscal 1997 from 12.1% in fiscal
1996. As a result, the company recorded an income tax expense equal to only
0.1% of net sales. The tax provision for fiscal 1997 includes a valuation
allowance to reserve for the possible limitation of the company realizing
various state tax benefits.

The food processing segment, now accounted for as a discontinued operation,
posted net sales of  $16.8 million, a decrease of $15.2 million, or 48% under
prior year levels. In total, 67% of fiscal 1997 sales in this segment were to
Nestle Beverage Company and its affiliates ("Nestle"), as compared to 94% in
fiscal 1996. As previously disclosed and further described below under "General
Factors", the company's contract to blend sauces and gravies for Nestle expired
in fiscal 1996.

The $900,000 loss from discontinued operations is $1.3 million below fiscal
1996's performance of earnings of $405,000. The loss is primarily due to the
food processing segment's loss in net sales described above.

In summary, fiscal 1997 yielded a net loss of $1,470,000, comprised of $0.12
per share from continuing operations and $0.20 per share from discontinued
operations. Fiscal 1996 generated a net loss of $5,558,000, comprised of  $1.28
per share from continuing operations and a gain of $0.09 per share from
discontinued operations.


           General Factors

Because of the project-oriented nature of the company's business, the company's
largest customers have historically tended to vary from year to year depending
on the number and size 





                                     -13-
<PAGE>   15

of the projects completed for these customers: However, during previous fiscal
years, the company substantially depended upon sales to Fleer and Nestle.  As
indicated below, both of those customers have taken actions which reduced the
project volume in fiscal 1996 and 1997 and which are expected to affect fiscal
1998 and beyond.  In fiscal 1997, sales to Kraft Foods and affiliates
represented 14% of net sales from continuing operations compared to 13% in
fiscal 1996.

The company has experienced a significant decline in net sales relating to the
sports and other picture card business. In fiscal 1997, sales relating to the
sports and collectible cards were 2% of net sales from continuing operations
as compared to 16% in fiscal 1996 and 36% in fiscal 1995. During fiscal
1996, Fleer Corp., the company's former largest customer in the sports and
collectible card market, selected a vendor other than the company for its
outsourced work. The company has also experienced the continuing effects of the
downward trend in overall demand in the sports and collectible picture card
market, strong competition for collectible card projects and competitive
pricing pressures. These factors have affected both the volume and pricing of
the company's services relating to collectible cards. The company expects
the percentage of its business related to collectible cards to remain low in
fiscal 1998 as a result of these factors.

As previously disclosed, Outlook Foods, which the company is seeking to divest,
had a contract to blend sauces and gravies for Nestle which expired in December
1995.  The contract was not renewed because of Nestle's desire to bring the
work in-house in order to utilize its excess capacity.  The company was able to
extend this contract through the end of fiscal 1996.  In total, sauces and
gravies yielded $18.5 million in sales in fiscal 1996 and no business in fiscal
1997.  This represented 61% of sales to Nestle in fiscal 1996 and 65% in fiscal
1995.  The company continues to manufacture malted milk products for Nestle
under a separate contract which expires in December 1997. In addition, Nestle
purchases other products on a non-contractual basis. Discussions have also been
held with Nestle regarding potential new contractual business in the future.
However, there can be no assurances and the announced divestiture of Outlook
Foods could adversely affect the operations of the food segment, as could a
decision by Nestle not to renew the malted milk contract.

Changes in the company's project mix and timing of projects make predictability
of the company's future results very difficult. Other than under Nestle's
agreement, customers generally purchase the company's services under    
cancelable purchase orders rather than long-term contracts, although exceptions
sometimes occur when the company is required to purchase substantial
inventories or special machinery to meet orders.  The company believes that
operating without long-term contracts is consistent with industry practices,
although it increases the company's vulnerability to losses of business and
significant period-to-period changes.

The company uses complex and specialized equipment to provide its services.
Therefore, the company is dependent upon the functioning of such machinery, 
and its ability to acquire and maintain appropriate equipment.

FISCAL 1996 COMPARED TO FISCAL 1995

Outlook Group net sales from continuing operations for fiscal 1996 were $79.3 
million, a decrease of $12.3 million, or 13.4% from fiscal 1995 sales of $91.6
million.  The major factor 





                                     -14-
<PAGE>   16



in this decline was a $20.1 million reduction in sales to the sports and
collectible picture card market.  The reduction resulted from the factors
described above, and was experienced primarily in the third and fourth fiscal
quarters of fiscal 1996.  In total, sales to this market declined to 16%
of Outlook Group net sales versus 36% in 1995.

     Net sales in the "Other" category in the graphic services segment
increased by $7.0 million to $12.7 million in fiscal 1996.  Gains were posted
in the company's mailing and fulfillment centers.  In addition, the company
reflected the first full year of sales activity at Barrier which was acquired
in February 1995.  Outlook Publishing, sold in the first month of fiscal 1996,
had posted sales of $0.7 million in fiscal 1995.

     Gross profit as a percent of net sales declined to 5.8% in fiscal 1996
from 15.9% in fiscal 1995.  Several factors contributed to this decline,
including significantly lower sales volumes at Outlook Graphics; numerous
operating issues at Outlook Packaging including pricing, waste and operating
inefficiencies; high development costs at Barrier; and fourth quarter
provisions totaling $1.8 million for inventory obsolescence.

     Selling, general and administrative expenses increased to 16.8% of net
sales for fiscal 1996 as compared to 14.5% in the prior year.  Significant
savings were achieved through administrative staffing reductions and the sale
of Outlook Publishing.  However, increases in expenses were generated primarily
by $3.0 million in accounts receivable write-offs and reserves of which $2.5
million related to one customer in the trading card market.  Generally, lower
sales levels also contributed to the increased percentage.

     Interest expense as a percent of sales increased to 3.1% in fiscal 1996
versus 2.1% in fiscal 1995.  The increase primarily resulted from increased
borrowings.

     Other income increased to 2.0% of net sales versus 1.0% in the prior year.
Additional income was generated by the gains on the sale of Outlook Publishing
as well as sales of certain non-strategic equipment.

     The above mentioned factors combined to generate a pre-tax loss from
continuing operations of 12.1% of net sales.  As a result, the company recorded
an income tax benefit equal to 4.6% of net sales. This will generate a tax
refund as nearly half of the tax losses are carried back.  The balance will be
carried forward.

     The food processing segment, now accounted for as a discontinued
operation, posted sales of $32.1 million, an increase of $3.0 million, or 10.3%
over prior year levels.  In total, 94% of fiscal 1996 sales in this segment
were to Nestle, as compared to 90% in fiscal 1995.

     As previously disclosed and further described above under "General
Factors", the company's contract to blend sauces and gravies for Nestle expired
in fiscal 1996.  The $405,000 earnings from discontinued operations was
$698,000 below fiscal 1995's earnings of $1.1 million.  The loss is primarily
due to reduced margins on the Nestle gravies and sauces contract.

     In summary, fiscal 1996 yielded a net loss of $5,558,000, comprised of a
loss of  $1.28 per share from continuing operations and a gain of $0.09 per
share from discontinued operations.  This included fourth quarter adjustments
totaling $0.63 per share, primarily relating to the write-offs and reserves for
accounts receivable and inventory.  Fiscal 1995 results produced net income of
$1,285,000, comprised of  $0.03 per share from continuing operations and $0.23
per share from discontinued operations.  Average shares outstanding declined
due to stock repurchases of 250,000 in fiscal 1995 and an additional 100,000
shares 




                                     -15-
<PAGE>   17



in fiscal 1996.

Liquidity and Capital Resources

As shown on the Consolidated Statements of Cash Flows, fiscal 1997 cash
provided from operating activities, net of the effect of the disposition of
Barrier, was $6.9 million as compared to cash used in operating activities of
$1.9 million in fiscal 1996. The company's cash position was further enhanced
by an additional $1.2 million being generated by investing activities. The cash
generated from these sources was used to pay down the company's debt by a net
$8.5 million.

In addition to cash generated as a result of improved operations, the company's
operating cash benefited by $2.0 million as a result of reduced trade
receivables and inventories. The company reduced these balances in response to
declining sales and its continuing evaluation of inventory usage and the credit
worthiness of its customers. During fiscal 1997, the company provided $1.1
million for additional reserves and write-downs of receivables and inventory as
compared to $4.8 million in fiscal 1996. The company believes that a portion of
its inventories remain in excess of current requirements. Management has
developed a program to reduce inventories to desired levels over the near term
but does not currently believe that such inventory dispositions will have a
material effect on continuing operations.  At May 31, 1997, 28% of the accounts
receivable balance pertain to Kraft and Nestle, the company's two largest
customers, both of which maintain current balances. No other customer accounted
for 10% or more of the company's accounts receivable balance. The net
deferred income tax liability increased by $321,000 over fiscal 1996. The
biggest components of this change were a decreased deferred tax liability
resulting from the sale of various assets, an increased deferred tax liability
from refinancing various leased assets, and a reduced deferred tax asset from
realizing tax benefits from the disposal of obsolete inventories. During the
year, the company benefited from tax refunds that resulted from tax loss
carrybacks to prior years. Reduced cash from accrued liabilities primarily
reflects the impact of personnel reductions and less interest accrued for
reduced loan balances. Cash used for "Other" assets includes investment in art
and engraving and changes in other receivables.

Cash from investing activities recognizes the benefit of $5.5 million from
sales of various assets partially offset by $4.3 million of current year
investments in plant and equipment. The sale of the company's Barrier Films
subsidiary was the largest asset transaction of the year. Other significant
assets that were sold this year were previously utilized for the production of
product for the sports and collectible picture card market.

Net cash used in financing activities was $8.5 million, which represents the
company's net reduction of debt. The company was able to reduce its debt as a
result of cash available from various asset sales described above, and improved
management of operations and working capital.

The company entered into a new bank credit facility in November 1996. The
facility provides for a maximum revolving credit commitment of $25.0 million
less $5.6 million to be used for standby letters of credit. A term loan in the
amount of $4.9 was also obtained. Interest on the debt varies with the
company's selection to have the debt be based upon margins over the bank
determined reference rate or a LIBOR rate. The company's actual rate is
dependent upon the company's performance against a specific ratio as measured
against a predetermined performance chart. In 





                                     -16-
<PAGE>   18



addition to the new bank facility, the company continued a previously existing 
$11 million term note which extends through the year 2004.

During fiscal 1997, the company did not satisfy  several debt covenants for
which it obtained waivers from its lenders. These covenants have been
renegotiated with the lenders for fiscal 1998 and beyond.

At July 31, 1997, the company had drawn $3.8 million under its revolving credit
facility, as compared to $4.9 million at May 31, 1997 and $12.0 million at May
31, 1996. These amounts are in addition to $12.0, $12.3, and $13.7 million of 
term debt at those dates.

The company anticipates capital expenditures of approximately $2.5 million in
fiscal 1998. The company intends to finance these expenditures through funds
obtained from operations plus its credit facilities and possible leasing
opportunities.

The company regularly reassesses how its various operations complement the
company as a whole and considers strategic decisions to acquire new operations
or expand, terminate or sell certain assets or existing operations.

RECENTLY ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTS
During 1997, the Financial Accounting Standards Board issued the following
statements: (1) Statement No. 128, "Earnings Per Share," which simplifies the
standards for computing earnings per share.  This Statement is effective for
the company's fiscal 1998 third and fourth quarter interim and annual financial
statements.  The company does not believe that this Statement will have a
significant impact on the company's earnings per share calculation.  (2)
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which establishes standards for the way companies report
information about operating segments in annual and interim financial
statements.  It also establishes standards for related disclosures about
products and services, geographic areas and major customers.  This Statement is
effective for the company's fiscal 1999 financial statements.  The company is
evaluating the extent to which its segment reporting may be affected by this
Statement.

OTHER
In general, the company believes that the effects of inflation on the company
have not been material in recent years.

PRINCIPAL CLASSES OF SERVICES
The following table sets forth the approximate amount and percentage of net
sales (excluding the net sales of discontinued operations) contributed by each
class of the company's graphic services segment during the last three fiscal
years:




<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                    Net Sales by Class
                                          1997                                 1996                          1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>                    <C>             <C>          <C>           <C>

Graphic services
   Specialty printing                  $ 50,303       70%                     $ 56,055        71%          $  66,817     73%
   Converting and packaging               6,410        9%                       10,506        13%             19,141     21%
   Other                                 15,341       21%                       12,744        16%              5,662      6%
------------------------------------------------------------------------------------------------------------------------------------
Total                                   $72,054      100%                      $79,305       100%          $  91,620    100%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>




                                     -17-
<PAGE>   19
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

         Not required of the Company at this time.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The financial statements (including the notes thereto and the
accountants' report thereon) required by this item are set forth on pages F-1
through F-17 of this Report, and are incorporated herein by reference.  See
also "Index to Financial Statements and Financial Statement Schedules"
following Item 14 herein.  Supplementary data is not required to be presented,
as the Company does not meet the criteria for mandatory filing.



                                     -18-
<PAGE>   20



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         Not applicable.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         Information in response to this item is incorporated herein by
reference to "Election of Directors" and to "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's Proxy Statement to be filed pursuant to
Regulation 14A for its Annual Meeting of Shareholders to be held on or about
October 16, 1997 ("1997 Annual Meeting Proxy Statement") and "Executive
Officers of the Registrant" in Part I hereof.

ITEM 11. EXECUTIVE COMPENSATION.

         Incorporated by reference to "Election of Directors -- Directors'
Fees" and "Executive Compensation" in the 1997 Annual Meeting Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
         MANAGEMENT.

         Information in response to this item is incorporated herein by
reference to "Security Ownership of Certain Beneficial Owners and Management"
in the 1997 Annual Meeting Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Information in response to this item is incorporated by reference to
"Certain Transactions" in the 1997 Annual Meeting Proxy Statement.






                                     -19-
<PAGE>   21


                                    PART IV

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

         (a)     DOCUMENTS FILED:

                 1 and 2.  Financial Statements and Financial Statement
                           Schedules.  See the following "Index to Financial
                           Statements and Financial Statement Schedules," which
                           is incorporated herein by reference.

                       3.  Exhibits.  See Exhibit Index included as last part of
                           this report, which is incorporated herein by
                           reference. 

         (b)     REPORTS ON FORM 8-K:

                 No reports on Form 8-K were filed during the last quarter of
                 the period covered by this report.







                                     -20-
<PAGE>   22

        INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

         The following consolidated financial statements of the Company and
subsidiaries are included in this Form 10-K Annual Report:


<TABLE>
<CAPTION>
                                                                                          PAGE NUMBER IN 1996
                                                                                             ANNUAL REPORT    
                                                                                         ---------------------
         <S>                                                                                     <C>
         Consolidated Balance Sheets as of May 31, 1997 and 1996  . . . . . . . . .               F-1

         Consolidated Statements of Operations for the years ended May 31, 1997, 1996
                 and 1995   . . . . . . . . . . . . . . . . . . . . . . . . . . . .               F-2

         Consolidated Statements of Shareholders' Equity for the years ended
                 May 31, 1997, 1996 and 1995  . . . . . . . . . . . . . . . . . . .               F-3

         Consolidated Statements of Cash Flows for the years ended May 31, 1997,
                 1996 and 1995  . . . . . . . . . . . . . . . . . . . . . . . . . .               F-4

         Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . .               F-5

         Report of Independent Certified Public Accountants . . . . . . . . . . . .              F-15
</TABLE>


         The following financial statement schedule of the Company, and the
accountants' report thereon, appear on the indicated pages in this Form 10-K
Annual Report:


<TABLE>
<CAPTION>
                                                                                          PAGE NUMBER IN 10-K
                                                                                          -------------------
         <S>                                                                                     <C>
         Report of Independent Certified Public Accountants on
                 Financial Statement Schedule . . . . . . . . . . . . . . . . . . .              F-16

         Schedule II -- Valuation and Qualifying Accounts . . . . . . . . . . . . .              F-17
</TABLE>









                                     -21-
<PAGE>   23
---CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MAY 31,
(in thousands except share and per share amounts)                                                    1997            1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                   <C>              <C>
ASSETS
Current Assets
  Cash and cash equivalents                                                                            $     --         $     298
  Accounts receivable, less allowance for doubtful accounts of
      $1,124 and $896, respectively                                                                      12,640            14,785
  Inventories                                                                                             9,857            12,127
  Deferred income taxes                                                                                     708             1,181
  Income taxes refundable                                                                                   725             1,964
  Other                                                                                                   2,120             1,935
------------------------------------------------------------------------------------------------------------------------------------
     Total current assets                                                                                26,050            32,290

Property, plant and equipment
  Land                                                                                                    1,051             1,051
  Buildings and improvements                                                                             15,128            15,196
  Machinery and equipment                                                                                43,759            46,418
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         59,938            62,665
  Less accumulated depreciation                                                                          23,326            19,882
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         36,612            42,783
Other assets                                                                                              4,958             2,780
------------------------------------------------------------------------------------------------------------------------------------
  Total assets                                                                                         $ 67,620         $  77,853
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Current maturities of long-term debt                                                                 $  6,674         $   1,532
  Accounts payable                                                                                        4,081             4,147
  Cash overdraft liability                                                                                1,605                --
  Accrued liabilities
     Salaries and wages                                                                                   1,482             1,737
     Other                                                                                                  840             1,174
------------------------------------------------------------------------------------------------------------------------------------
         Total current liabilities                                                                       14,682             8,590
Long-term debt, less current maturities                                                                  16,156            30,859
Deferred income taxes                                                                                     3,311             3,463
Shareholders' equity
  Cumulative preferred stock, $.01 par value -- authorized
     1,000,000 shares; none issued                                                                           --                --
  Common stock, $.01 par value -- authorized 15,000,000 shares;
     5,099,382 shares issued and outstanding                                                                 51                51
  Additional paid-in capital                                                                             18,415            18,415
  Retained earnings                                                                                      19,454            20,924
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         37,920            39,390
  Less 450,000 shares of treasury
     stock at cost, both years                                                                            4,449             4,449
------------------------------------------------------------------------------------------------------------------------------------
  Total shareholders' equity                                                                             33,471            34,941
------------------------------------------------------------------------------------------------------------------------------------
  Total liabilities and shareholders' equity                                                           $ 67,620         $  77,853
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-1


The accompanying notes are an integral part of these financial statements.



<PAGE>   24


---
CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

YEAR ENDED MAY 31,
------------------
(in thousands except share and per share amounts)                    1997         1996         1995
---------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>          <C>
Net sales                                                      $   72,054   $   79,305   $   91,620
Cost of goods sold                                                 61,168       74,683       77,046
---------------------------------------------------------------------------------------------------
Gross profit                                                       10,886        4,622       14,574
Selling, general and administrative expenses                        9,904       13,347       13,303
---------------------------------------------------------------------------------------------------
Operating profit (loss)                                               982       (8,725)       1,271
Other income (expense):
 Interest expense                                                  (2,778)      (2,506)      (1,930)
 Other income                                                         746        1,609          959
 Gain on sale of subsidiary                                           556           --           --
---------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
 before income taxes                                                 (494)      (9,622)         300
---------------------------------------------------------------------------------------------------
Income tax expense (benefit)                                           58       (3,659)         118
Earnings (loss) from continuing operations                           (552)      (5,963)         182
Discontinued operations:
 Earnings (loss) from discontinued
  operations before income taxes                                   (1,492)         658        1,829
 Income tax expense (benefit)                                        (574)         253          726
---------------------------------------------------------------------------------------------------
Earnings (loss) from discontinued operations                         (918)         405        1,103
---------------------------------------------------------------------------------------------------
Net earnings (loss)                                            $   (1,470)  $   (5,558)  $    1,285
---------------------------------------------------------------------------------------------------
Net earnings (loss) per common share
 Continuing operations                                         $     (.12)  $    (1.28)  $      .03
 Discontinued operations                                             (.20)         .09          .23
---------------------------------------------------------------------------------------------------
Total                                                          $     (.32)  $    (1.19)        $.26
---------------------------------------------------------------------------------------------------
Weighted average number of common shares
  outstanding                                                   4,649,382    4,661,882    4,884,607
---------------------------------------------------------------------------------------------------
</TABLE>



The accompanying notes are an integral part of these financial statements.

                                      F-2

<PAGE>   25


---
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                                                                

<TABLE>
                                                      
                                        Common Stock   Additional                 Treasury Stock
                                        ------------    paid-in    Retained   ----------------------
(in thousands except share amounts)     Shares  Amount  capital    earnings      Shares      Amount    Total
----------------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>  <C>         <C>           <C>         <C>        <C>      
Balance at May 31, 1994              5,099,382     $51  $18,415     $25,197       100,000     $(1,089)   $42,574 
  Acquisition of treasury stock             --      --       --          --       250,000      (2,473)    (2,473)
  Net earnings for 1995                     --      --       --       1,285            --          --      1,285 
----------------------------------------------------------------------------------------------------------------
                                                                                                               
Balance at May 31, 1995              5,099,382      51   18,415      26,482       350,000      (3,562)    41,386 
  Acquisition of treasury stock             --      --       --          --       100,000        (887)      (887)
  Net loss for 1996                         --      --       --      (5,558)           --          --     (5,558)
----------------------------------------------------------------------------------------------------------------
Balance at May 31, 1996              5,099,382      51   18,415      20,924       450,000      (4,449)    34,941 
  Net loss for 1997                         --      --       --      (1,470)           --          --     (1,470) 
----------------------------------------------------------------------------------------------------------------
                                                                                                               
Balance at May 31, 1997              5,099,382     $51  $18,415     $19,454       450,000     $(4,449)   $33,471 
----------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      F-3
<PAGE>   26


---CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>

YEAR ENDED MAY 31,
-------------------------------------
(in thousands)                                          1997     1996     1995
--------------------------------------------------------------------------------
<S>                                                <C>       <C>      <C> 
 Cash flows from operating activities:
   Net earnings (loss)                              $ (1,470) $(5,558) $  1,285


 Adjustments to reconcile net earnings (loss) to net
   cash provided by (used in) operating activities:
   Depreciation and amortization                       5,952    5,655     4,413
   Provision for doubtful accounts                       639    3,030     2,491
   Gain on sale of assets                               (407)    (948)       --
   Gain on sale of subsidiary                           (556)
   Deferred income taxes                                 321   (1,626)     (147)
   Changes in assets and liabilities, net of effects
    of acquisitions and disposals of businesses:
     Accounts receivable                                 991     (346)   (4,257)
     Inventories                                       1,048    2,807    (2,647)
     Income taxes refundable                           1,239   (1,964)       --
     Accounts payable                                    575   (2,810)    2,237
     Accrued liabilities                                (420)    (328)      205
     Other                                              (966)     194      (606)
--------------------------------------------------------------------------------
      Net cash provided by (used in) operating
        activities                                     6,946   (1,894)    2,974
--------------------------------------------------------------------------------

Cash flows from investing activities:
 Acquisition of property, plant and equipment         (4,275)  (4,942)  (12,586)
 Decrease in equipment acquisition trust fund             --      401       701
 Proceeds from sale of assets                          2,604    1,755       773
 Purchase of business                                     --       --    (1,368)
 Proceeds from sale of subsidiary                      2,888       --        --
 Other                                                    --      (89)     (503)
--------------------------------------------------------------------------------
 Net cash provided by (used in) investing activities   1,217   (2,875)  (12,983)
--------------------------------------------------------------------------------

Cash flows from financing activities:
 Increase (decrease) in revolving credit arrangement
   borrowings                                         (7,084)   7,400    (7,050)
 Increase in cash overdraft                            1,605       --        --
 Proceeds from long-term borrowings                    4,870       --    19,350
 Payments on long-term borrowings                     (7,347)  (1,528)   (2,361)
 Acquisition of treasury stock                            --     (887)   (2,473)
 Debt financing costs                                   (505)      --        --
--------------------------------------------------------------------------------
 Net cash(used in)provided by financing activities    (8,461)   4,985     7,466
--------------------------------------------------------------------------------
Net increase (decrease) in cash                         (298)     216    (2,543)
Cash and cash equivalents at beginning of year           298       82     2,625
--------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR            $     --  $   298  $     82
--------------------------------------------------------------------------------
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                     F-4


<PAGE>   27
---
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -- SUMMARY OF ACCOUNTING POLICIES
A summary of the company's significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial statements
follows.

Basis of Presentation
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.

Principles of Consolidation
The consolidated financial statements include all the accounts of Outlook Group
Corp. and its wholly-owned subsidiaries:  Outlook Label Systems, Inc. ("Outlook
Label"); Outlook Foods, Inc. ("Outlook Foods") - see Note M; Outlook Packaging,
Inc. ("Packaging"); and Barrier Films Corporation ("Barrier") through its
disposal in May 1997 -- see Note J.
     All intercompany accounts and transactions have been eliminated in the
preparation of the consolidated financial statements.

Revenue Recognition
Revenue is recognized when services have been completed and the product has
been shipped.

Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, demand deposits and short-term investments with maturities of three
months or less at time of purchase.

Accounts Receivable
As of May 31, 1997 and 1996, 28% and 18%, respectively, of the accounts
receivable balance relates to two customers.
     Approximately 2%, 16%, and 36% of the company's sales from continuing
operations for the years ended May 31, 1997, 1996 and 1995, respectively,
relate to the production of sports and other collectible picture cards.  In
addition, 2% and 14% of the company's receivables as of May 31, 1997 and 1996,
respectively, were concentrated in this market.  Provisions for doubtful
accounts were $639,000, $3,030,000 and $2,491,000 for the years ended May 31,
1997, 1996 and 1995, respectively.
     At May 31, 1997, the company has recorded an allowance for doubtful
accounts of $1,124,000.  The company has estimated this amount based on
information currently available. Due to uncertainties inherent in the
estimation process it is reasonably possible that this estimate will change in
the near term.

Inventories
Inventories are stated at the lower of cost or market.  Cost is determined
using the first-in, first-out method.

                                     F-5

<PAGE>   28

Property, Plant and Equipment
Property, plant and equipment is recorded at cost.  Depreciation is recorded
using the straight-line method over the estimated useful lives of the assets as
follows:


                    Buildings and improvements  10-40 years
                    Machinery and equipment      5-10 years


Depreciation expense was $5,598,000, $5,280,000 and $4,022,000 for the years
ended May 31, 1997, 1996 and 1995, respectively.  Significant additions or
improvements extending the useful lives of assets are capitalized. Repairs and
maintenance are charged to earnings as incurred.  Upon retirement or disposal
of assets, the applicable costs and accumulated depreciation are eliminated
from the accounts and the resulting gain or loss is included in income.

Stock-Based Compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," encourages, but does not require companies to record compensation
cost for stock-based employee compensation plans at fair value. The company has
chosen to continue to account for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations.
Accordingly, compensation cost is measured as the excess, if any, of the quoted
market price of the company's stock at the date of grant over the exercise
price. See Note F.

Income Taxes
Deferred tax assets, net of any applicable valuation allowance, and
liabilities are established for the future tax effects of temporary differences
between the bases of assets and liabilities for financial and income tax
reporting purposes, as measured by applying current tax laws.

Earnings Per Share
Net earnings per share is computed based on the weighted average number of
shares of common stock outstanding during each year.  The effect of common 
stock equivalents on earnings per share is not material.

During 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share," which simplifies the standards for computing earnings per
share.  This Statement is effective for financial statements for the company's
fiscal 1998 third and fourth quarter interim and annual financial statements.
The company does not believe that this Statement will have a significant impact
on the company's earnings per share calculations.

Reclassifications
Certain reclassifications have been made in the prior years' financial
statements to conform to the current year's presentation.

                                     F-6
<PAGE>   29

NOTE B -- INVENTORIES
Inventories consist of the following at May 31:

                                                                               
                                                                               

<TABLE>
<CAPTION>
(in thousands)
--------------------------------------------------------------------------------
                                                   1997         1996
--------------------------------------------------------------------------------
<S>                                             <C>          <C>
Raw materials                                    $ 4,523      $ 7,543
Work-in-process                                    1,666        1,658
Finished goods                                     3,668        2,926
--------------------------------------------------------------------------------
                                                 $ 9,857      $12,127
--------------------------------------------------------------------------------


NOTE C - LONG-TERM DEBT
Long-term debt consists of the following at May 31:
--------------------------------------------------------------------------------
                                                    1997        1996
----------------------------------------------------------------------
<S>                                             <C>          <C>
                                                   (in thousands)

Revolving credit arrangement (described below)   $ 4,917      $   --
Term note payable, due in quarterly principal
 installments ranging from $183,334 to
 $433,834 from September 16, 1997 through
 June 16, 2004, plus interest at a weighted
 average interest rate of 9.15%                   10,587       11,000
Industrial development bond, due in annual
 principal installments ranging from
 $100,000 to $1,600,000 from August 1,
 1999 through August 1, 2004, plus
 interest at a floating rate determined by a
 remarketing agent (5.28% at May 31, 1997)         4,000        4,000
Term notes payable, due in monthly installments
 through November 1, 1999 (described below)        1,726           --
Industrial development bond, due in annual
 principal installments of $400,000 through
 September 1, 2000, plus interest at a
 floating rate determined by a remarketing
 agent (5.40% at May 31, 1997)                     1,600        2,000
Revolving credit arrangement, paid during 1997        --       12,000
Note payable, paid during 1997                        --        2,719
Industrial development bond, paid during 1997         --          672
--------------------------------------------------------------------------------
                                                  22,830       32,391
Less current maturities                            6,674        1,532
--------------------------------------------------------------------------------
                                                 $16,156      $30,859
--------------------------------------------------------------------------------
</TABLE>


     On November 5, 1996, the company and its subsidiaries entered into a Loan
and Security Agreement (the "Agreement") with a bank, which provided revised
credit facilities.  The Agreement provides for a term loan to the company and
its subsidiaries in the aggregate amount of $4,870,000 and a revolving
credit arrangement (the "Revolver") for maximum borrowings of $25,000,000,
including an irrevocable stanby letter of credit in the aggregate amount of
$5,600,000.  The Revolver matures on November 5, 1999. Due to subjective
acceleration clauses and a lockbox provision contained in the Agreement, the 

                                      F-7
<PAGE>   30
Company has classified the outstanding balance on the Revolver as a current 
liability as of May 31, 1997.  Borrowings under the Revolver bear interest, at
the Company's option, at a bank determined reference rate or a LIBOR based
rate.  The weighted average interest rate for this debt was 9.1% at May 31,
1997.  The amount available under the Revolver as of May 31, 1997 was
$19,400,000 and is based on either the lesser of $25,000,000 less the amount
available under the letters of credit, or the sum of 80% of eligible accounts
receivable and 60% of eligible raw materials and finished goods inventories.  A
commitment fee of 3/8 of 1% per annum on the unused portion of the Revolver is
paid monthly.  The term notes under the Agreement require monthly installment
payments of $50,000 with a final installment due on November 1, 1999.  The term
notes bear interest, at the company's option, at a bank determined reference
rate or a LIBOR based rate.  The weighted average interest rate for the term
notes was 9.5% at May 31, 1997.
        
     Proceeds from the sale of industrial development bonds were held by a bank
under a trust agreement until used to purchase new machinery and equipment.
These funds were depleted during the year ended May 31, 1996.

     Substantially all the company's assets have been pledged as collateral 
under the various debt agreements.  The creditors party to the term notes and
revolving credit arrangement have a priority security interest over the
remaining creditors.  The term notes, revolving credit arrangements, and
industrial development bond obligations are subject to the terms of certain
agreements which contain provisions setting forth, among other things, fixed
charges restrictions, net worth and debt-to-equity requirements, and
restrictions on property and equipment additions, loans, investments, other
borrowings, and acquisitions and redemptions of the company's stock or the
issuance of stock except for cash.  Additionally, the company may not pay cash
dividends without the prior consent of certain of its lenders.  During the
year the company did not satisfy the covenants relating to its fixed charge
ratio and tangible net worth requirement.  The company has obtained waivers for
these covenants from the lenders and has renegotiated certain covenants with
the lenders for fiscal 1998 and beyond.

     The carrying amounts of the company's long-term debt approximates its fair
value based on rates currently available to the company for long-term
borrowings with similar terms and remaining maturities.


     At May 31, 1997, future maturities of long-term debt, excluding the
revolving credit arrangement, are as follows:


<TABLE>
(in thousands)
--------------------------------------------------------------------------------
<S>                                     <C>
1998                                     $1,757
1999                                      2,382
2000                                      2,686
2001                                      2,510
2002                                      2,211
Thereafter                                6,367
--------------------------------------------------------------------------------
                                        $17,913
--------------------------------------------------------------------------------
</TABLE>

NOTE D -- EMPLOYEE BENEFIT PLANS
The company offers a 401(k) savings plan for all employees that meet certain
eligibility requirements.  Employee contributions to the plan are made through
payroll deductions.  In addition, the company matches 40-50% of the first 6% of
each employee's contribution. 

                                     F-8
<PAGE>   31



Employer matching contributions under the 401(k)
plan for the years ended May 31, 1997, 1996 and 1995 were $238,000, $308,000
and $261,000, respectively.
     The company is not obligated to provide any postretirement medical or life
insurance benefits or any postemployment benefits to its employees.

NOTE E -- INCOME TAXES
The provision (benefit) for income taxes from continuing operations consist of
the following:

<TABLE>
<CAPTION>
(in thousands)
-------------------------------------------------------------------------------------------------------------------------
                                                          1997      1996        1995
-------------------------------------------------------------------------------------------------------------------------
 <S>                                                      <C>       <C>         <C>

 Currently payable (refundable):
  Federal                                                 $(539)     $(1,957)    $295
  State                                                     (31)          (1)      46
-------------------------------------------------------------------------------------------------------------------------
                                                           (570)      (1,958)     341
-------------------------------------------------------------------------------------------------------------------------
 Deferred:
  Federal                                                   371       (1,133)    (183)
  State                                                     257         (568)     (40)
-------------------------------------------------------------------------------------------------------------------------
                                                            628       (1,701)    (223)
-------------------------------------------------------------------------------------------------------------------------
                                                          $  58      $(3,659)    $118
-------------------------------------------------------------------------------------------------------------------------
</TABLE>



     The reconciliation of income tax from continuing operations computed at
the statutory federal income tax rate to the company's effective income tax
rate, expressed as a percentage of pre-tax earnings (loss), is as follows:



<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                          1997         1996        1995
----------------------------------------------------------------------------------------------------------------
 <S>                                                      <C>          <C>         <C>
 Statutory federal income tax rate                         (34.0)%      (34.0)%    34.0%
 State income taxes, net                                     3.6         (4.1)      3.7
 Increase in valuation allowance                            41.9           --        --
 Other                                                       0.2           .1       1.6
----------------------------------------------------------------------------------------------------------------
                                                            11.7%       (38.0)%    39.3%
----------------------------------------------------------------------------------------------------------------
</TABLE>



     The components of the net deferred income tax liability as of May 31, 1997
and 1996 are as follows :

<TABLE>
<CAPTION>
(in thousands)
--------------------------------------------------------------------------------------------------
                                                          1997         1996
--------------------------------------------------------------------------------------------------
 <S>                                                      <C>          <C>
 Deferred tax assets:
  Employee benefits                                        $  204       $  201
  Inventories                                                 221          507
  Accounts receivable                                         432          421
  Tax carryforwards                                         2,299        2,259
  Other                                                        63           82
--------------------------------------------------------------------------------------------------
                                                            3,219        3,470
 Less valuation allowance                                    (207)          --

                                                            3,012        3,470
--------------------------------------------------------------------------------------------------
 Deferred tax liabilities:
  Property, plant and equipment                             5,236        5,595
  Other                                                       379          157
--------------------------------------------------------------------------------------------------
                                                            5,615        5,752
--------------------------------------------------------------------------------------------------
 Net deferred income tax liability                         $2,603       $2,282
--------------------------------------------------------------------------------------------------
</TABLE>

                                      F-9

<PAGE>   32



     As of May 31, 1997, the company has $1,778,000 of alternative minimum tax
credit carryforwards, which are available to reduce future regular federal
income tax liabilities.  The company also has certain loss and tax credit
carryforwards for state income tax purposes which, net of related federal
taxes, approximate $521,000.  These state carryforwards expire in varying
amounts through 2012.

     The company has recorded a valuation allowance during 1997 to reflect the
estimated amount of state deferred tax assets which may not be realized due to
the possible limitation on the future use of certain state tax loss and credit
carryforwards.

NOTE F -- STOCK OPTIONS
In 1990, the shareholders approved the 1990 Stock Option Plan which provides
for the granting of stock options as an incentive to officers and
certain key salaried employees.  The 1990 Plan provides for the issuance of up
to 200,000 shares of common stock at an exercise price which may not be less
than the market price of the common stock on the date of the grant.  Options
granted prior to 1996 became exercisable six months  after the date of grant. 
Options granted during 1996 and 1997 become exercisable one year after the date
of grant. 

     Transactions and weighted average exercise prices under the 1990 Plan and 
predecessor plans during the years ended May 31, 1997, 1996 and 1995, are 
summarized as follows:




<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                                Shares        Price
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>           <C>
Options outstanding at May 31, 1994                                              142,750       $11.38
Granted                                                                           10,000       $ 9.75
Expired                                                                          (82,500)      $11.38 
--------------------------------------------------------------------------------------------------------------------------------
Options outstanding at May 31, 1995                                               70,250       $11.16          
Granted                                                                           77,500       $ 4.44                        
Expired                                                                          (60,250)      $11.38         
--------------------------------------------------------------------------------------------------------------------------------
Options outstanding at May 31, 1996                                               87,500       $ 5.02 
Granted                                                                           82,750       $ 5.00
Expired                                                                          (19,500)      $ 4.45  
--------------------------------------------------------------------------------------------------------------------------------
Options outstanding at May 31, 1997                                              150,750       $ 5.16 
================================================================================================================================
</TABLE>


     The outstanding stock options at May 31, 1997 have a range of exercise
prices between $4.38 and $5.75 per share, a weighted average contractual life
of approximately 6.1 years, and a maximum term of 10 years from the date of
grant.  At May 31, 1997, 94,750 options are exercisable at a weighted average
exercise price of $5.14.  The weighted average fair value at date of grant for
options granted during 1997 and 1996 was $1.48 and $1.19, respectively.  The
fair value of options at date of grant was estimated using the Black-Scholes
option pricing model with the following assumptions:

---------------------------------------------------------
                                1997        1996
---------------------------------------------------------
Expected life (years)            2            2
Risk-free interest rate         6.1%         5.9%
Expected volatility            62.4%        52.6%
Expected dividend yield          --           --
---------------------------------------------------------

     The company applies Accounting Principles Board Opinion No. 25, under
which no compensation cost has been recognized in the statement of operations.
Had compensation cost been determined under an alternative method suggested by
Statement of Financial Accounting 


                                      F-10
<PAGE>   33



Standards No. 123, "Accounting for Stock-Based Compensation," the effect on the
1997 and 1996 net earnings(loss) and earnings(loss) per share would not have
been significant.

NOTE G -- COMMITMENTS AND CONTINGENCIES
The company has a number of operating lease agreements primarily involving
manufacturing equipment and warehouse space.  These leases are noncancelable
and expire on various dates through 2002.

     The following is a schedule, by fiscal year, of the rental payments due
under noncancelable operating leases, as of May 31, 1997:


(in thousands)
---------------------------------------------------------
1998                        $2,235
1999                         2,235
2000                         2,103
2001                         2,260
2002                         3,055
Thereafter                   2,204
---------------------------------------------------------
Total                      $14,092


     Rent expense for the years ended May 31, 1997, 1996 and 1995 was
$2,838,000, $4,219,000 and $4,402,000, respectively.

NOTE H -- BUSINESS SEGMENTS AND MAJOR CUSTOMERS
The company conducts its operations primarily in one industry segment - graphic
services.  This segment offers an array of related services including specialty
printing, converting and packaging, and distribution.  Outlook Foods Inc.,
previously reported as the food processing segment of the company, was
classified during fiscal 1997 as a discontinued operation - see Note M.

                                     F-11

<PAGE>   34
--------------------------------------------------------------------------------
     During the years ended May 31, 1997, 1996 and 1995, the company had sales
to certain customers that accounted for more than 10% of the company's net
sales from continuing operations, as follows:
--------------------------------------------------------------------------------


-----------------------------------------------------------
                             1997       1996       1995
-----------------------------------------------------------
 Kraft Foods, Inc.            14%        13%         *
 Fleer Corp.                   *          *         15%
-----------------------------------------------------------
  *Less than 10%

     During 1997, the Financial Accounting Standards Board issued Statement No.
131, "Disclosures About Segments of an Enterprise and Related Information,"
which establishes standards for the way companies report information about
operating segments in annual and interim financial statements.  It also
establishes standards for related disclosures about products and services,
geographic areas and major customers.  This Statement is effective for the
company's fiscal 1999 financial statements.  The company is evaluating the
extent to which its segment reporting may be affected by this Statement.

NOTE I -- SUPPLEMENTAL CASH FLOW INFORMATION
In fiscal 1997, the company sold its wholly owned subsidiary, Barrier Films,
and accepted a note and deferred consideration recorded at $2,469,000 in
partial consideration for the sale. See Note J.

     In fiscal 1996, the company sold certain assets related to its publishing
division and accepted a note for $1,000,000 in partial consideration for the
sale. The company also sold certain equipment in fiscal 1996, with $395,000 of
the sales proceeds included in other current assets at May 31, 1996.

     Cash paid during the year:

(in thousands)
----------------------------------------------------------
                       1997         1996       1995
----------------------------------------------------------
Interest               $2,571       $2,493     $1,712
Income taxes           $   76       $  150     $1,615
----------------------------------------------------------

NOTE J -- BARRIER FILMS
In February 1995, the company purchased 100% of the issued and outstanding
capital stock of Barrier Films Corporation ("Barrier") for approximately $1.4
million.  The acquisition was accounted for using the purchase method of
accounting; therefore the results of operations are included only from the
acquisition date.  Pro forma results of operations for fiscal 1995, assuming
this acquisition had been made at the beginning of the fiscal year, would not
have been materially different from the results reported.

     The company sold Barrier on May 9, 1997.  Net proceeds from the sale
included $2,888,000 in cash and a note receivable and deferred consideration of
$2,469,000.  The gain on the sale was $556,000 before income tax effect.  Net
sales and operating losses related to Barier through the date of sale included
in the company's consolidated statements of operations were $6,662,000 and
$(902,000), respectively, for the year ended May 31, 1997.


NOTE K -- RELATED PARTY TRANSACTIONS
At May 31, 1997, 1996 and 1995, the company held an 18% equity interest in one
of its 


                                     F-12

<PAGE>   35



customers.  This equity interest is reported under the cost method, with
no carrying value reflected in the balance sheet. There were no sales to this
customer during the year ended May 31, 1997.  During the years ended May 31,
1996 and 1995, sales to this customer were approximately $2,765,000 and
$7,500,000, respectively.  During 1996, the company wrote off $2,500,000 of
accounts receivable from this customer, based on management's estimate of
potential losses on recovery. Balances due from this customer were $810,000 and
$1,121,000 at May 31, 1997 and 1996, respectively.  The company earned fees
from the customer for consultation services of $145,000 and $1,094,000 during 
the years ended May 31, 1996 and 1995, respectively.  Interest income of
$153,000 and $59,000 on accounts receivable was recognized during the years
ended May 31, 1996 and 1995, respectively.  The company did not earn any fees
from consultation services or recognize any interest income relating to this
customer for the year ended May 31, 1997.
     During the first quarter of 1996 the company sold certain assets of its
Outlook Publishing division to a company partially owned by an officer of
Outlook Group Corp.  The assets were sold for $1,100,000 with $100,000 payable
at closing and $1,000,000 in periodic payments through May 2000.  In addition,
the company agreed to provide the purchaser with a revolving line of credit
through July 14, 1996.  At May 31, 1996, the line of credit balance was
$657,000, which was subsequently paid off in June 1996.

NOTE L -- FOURTH QUARTER RESULTS
Fourth quarter write offs related to receivables and inventories decreased the
fiscal 1997 fourth quarter gain before income tax benefit by approximately
$360,000.

NOTE M  DISCONTINUED OPERATIONS
During the second quarter of fiscal 1997, the company adopted a formal plan to
dispose of Outlook Foods, Inc. ("Foods"), a wholly-owned subsidiary located in
Oconomowoc, Wisconsin.  Foods is a food processing operation, involved
primarily in dry-blended food processing and packaging.  Foods incurred an
operating loss of $840,000 from the date the plan was approved through the year
ended May 31, 1997.  Disposal of this subsidiary is expected to be in the form
of a sale to be completed during fiscal 1998. Although the ultimate outcome
is uncertain, at this time, management does not believe that it will incur a
material loss on the eventual disposal of Foods. Results of operations have been
restated to reflect the reclassification of Foods as a discontinued operation. 
Net sales generated from Foods were $16,804,000, $32,051,000, and $29,122,000
for the years ended May 31, 1997, 1996 and 1995, respectively.  Sales to Nestle
Beverage Company accounted for 67%, 94%, and 90% of Foods net sales for the
years ended May 31, 1997, 1996 and 1995, respectively.

     The components of net assets of Foods included in the consolidated balance
sheet at May 31, 1997 and 1996, are as follows:


(in thousands)                          1997                  1996
--------------------------------------------------------------------------------
Accounts receivable, net               $2,579                $1,683
Inventories                             2,903                 1,723
Deferred income taxes                     175                    72
Other current assets                       75                     5
                                      -------------------  -------------------
 Total current assets                   5,732                 3,483

Property, plant, and equipment, net     4,052                 4,292
Other assets, noncurrent                   43                    --
                                      -------------------  -------------------
 Total assets                           9,827                 7,775
                                      -------------------  -------------------
Accounts payable                        1,134                   627
Accrued liabilities and other             656                 1,358
                                      -------------------  -------------------
 Total current liabilities              1,790                 1,985
  
Deferred income taxes                     167                   360
                                      -------------------  -------------------
 Total liabilities                      1,957                 2,345
                                      -------------------  -------------------

 Net assets                            $7,870                $5,430
                                      -------------------  -------------------

                                     F-13

<PAGE>   36

STATEMENT OF MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS

The consolidated financial statements and accompanying information were
prepared by and are the responsibility of management.  The statements were
prepared in conformity with generally accepted accounting principles and, as
such, include amounts that are based on management's best estimates and
judgments.
     The internal control systems are designed to provide reliable financial
information for the preparation of financial statements, to safeguard assets
against loss or unauthorized use and to ensure that transactions are executed
consistent with company policies and procedures. Management believes that
existing internal accounting control systems are achieving their objectives and
that they provide reasonable assurance concerning the accuracy of the financial
statements.
     Oversight of management's financial reporting and internal accounting
control responsibilities is exercised by the Board of Directors, through an
Audit Committee which consists solely of outside directors.  The committee
meets periodically with financial management to ensure that it is meeting its
responsibilities and to discuss matters concerning auditing, internal
accounting control and financial reporting.  The independent accountants have
free access to meet with the Audit Committee without management's presence.



/s/ David L. Erdmann                       /s/ Thomas C. Aschenbrenner
David L. Erdmann                           Thomas C. Aschenbrenner
Chairman and CEO                           Chief Financial Officer

<PAGE>   37

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

BOARD OF DIRECTORS AND SHAREHOLDERS
OUTLOOK GROUP CORP. AND SUBSIDIARIES

We have audited the accompanying consolidated balance sheets of Outlook Group
Corp. and Subsidiaries as of May 31, 1997 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended May 31, 1997.  These financial
statements are the responsibility of the company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.
     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a tests basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.
     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Outlook Group Corp. and Subsidiaries as of May 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended May 31, 1997, in conformity with generally
accepted accounting principles.

                                        /s/ Coopers & Lybrand L.L.P.
                                        Coopers & Lybrand L.L.P.

Milwaukee, Wisconsin
July 9, 1997, except for certain information in Note C, for which
the date is August 24, 1997.

                                     F-15
<PAGE>   38

                        [COOPERS & LYBRAND LETTERHEAD]

REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Shareholders
Outlook Group Corp. and Subsidiaries

Our report on the consolidated financial statements of Outlook Group Corp. and  
Subsidiaries has been incorporated by reference in this Form 10-K from page 20
of the 1997 Annual Report to Shareholders of Outlook Group Corp.  In connection
with our audits of such financial statements, we have also audited the related
consolidated financial statement schedule listed in the index on page 13 of
this Form 10-K.

In our opinion, the consolidated financial statement schedule referred to 
above, when considered in relation to the basic consolidated financial 
statements taken as a whole, presents fairly, in all material respects, the 
information required to be included therein.

                                  
                                                  /S/ COOPERS & LYBRAND L.L.P. 
                                                  ----------------------------
                                                  COOPERS & LYBRAND L.L.P.     



Milwaukee, Wisconsin

July 9, 1997


                                     F-16




<PAGE>   39

OUTLOOK GROUP CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)


<TABLE>
<CAPTION>   

                                                  Additions
                                     Balance      Charged to
                                   Beginning of   costs and                   Balance
Year Ended May 31, 1997               Year         expenses   Deductions    End of Year 
-----------------------            -----------    ----------  ----------    -----------
<S>                                  <C>           <C>         <C>           <C>
Allowance for doubtful accounts      $   896       $   639     $   411       $   1,124

Accumulated amortization 
 of goodwill                             265            61           7             319

Accumulated amortization 
 of deferred financing costs             569           200           -             769


Year Ended May 31, 1996
-----------------------

Allowance for doubtful accounts          725         3,030       2,859             896

Accumulated amortization of goodwill     210            55           -             265

Accumulated amortization of deferred
 financing costs                         428           141           -             569


Year Ended May 31, 1995
-----------------------

Allowance for doubtful accounts          676         2,491       2,442             725

Accumulated amortization of goodwill     161            49           -             210

Accumulated amortization of deferred
 financing costs                         311           117           -             428

</TABLE>


                                     F-17


<PAGE>   40

                                   SIGNATURES

         PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.


OUTLOOK GROUP CORP.


By  /s/ David L. Erdmann
    ---------------------------
David L. Erdmann, Chairman                                     September 3, 1997


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

                               POWER OF ATTORNEY



         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David L. Erdmann, Joseph J.  Baksha and

Thomas C. Aschenbrenner, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this report, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.

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

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES INDICATED, AS OF SEPTEMBER 3, 1997.

<TABLE>
<CAPTION>
                                 SIGNATURE AND TITLE                                         SIGNATURE AND TITLE
                                 -------------------                                         -------------------
                       <S>                                                              <C>
                                /s/ David L. Erdmann                                       /s/ Richard C. Fischer               
                 ---------------------------------------------------         ---------------------------------------------------
                       David L. Erdmann, Chairman, Chief Executive                      Richard C. Fischer, Director
                                Officer and Director

                             /s/ Thomas C. Aschenbrenner                                       /s/ Pat Richter                  
                 ---------------------------------------------------         ---------------------------------------------------
                                 Thomas C. Aschenbrenner                                    Pat Richter, Director
                               Chief Financial Officer
                           (and principal accounting officer)

                                /s/ Harold J. Bergman                                     /s/ Charles E. Thompson               
                 ---------------------------------------------------         ---------------------------------------------------
                             Harold J. Bergman, Director                                Charles E. Thompson, Director

                                /s/ Jeffry H. Collier                                      /s/ A. John Wiley, Jr.               
                 ---------------------------------------------------         ---------------------------------------------------
                             Jeffry H. Collier, Director                                A. John Wiley, Jr., Director

                                 /s/ James L. Dillon                
                  --------------------------------------------------
                              James L. Dillon, Director

</TABLE>




<PAGE>   41

                              OUTLOOK GROUP CORP.
                                (THE "COMPANY")

                                 EXHIBIT INDEX
                                       TO
                   ANNUAL REPORT ON FORM 10-K FOR FISCAL 1997

<TABLE>
<CAPTION>
                                                                   INCORPORATED HEREIN                    FILED
EXHIBIT NO.                     EXHIBIT                              BY REFERENCE TO                      HEREWITH
-----------                     -------                            -------------------                    --------
   <S>              <C>                                              <C>                                  <C>
   3(i)             Restated Articles of Incorporation of the        Exhibit 3(i) to the
                    Company (effective August 3, 1990), as           Company's Annual Report
                    amended through November 1, 1994                 on Form 10-K for the
                                                                     fiscal year ended May 31,
                                                                     1995 ("1995 10-K")
   
   3(ii)            Bylaws of the Company (as amended and            Exhibit 3.2 to the
                    restated July 5, 1990)                           Company's Registration
                                                                     Statement on Form S-1
                                                                     (No. 33-36641), as
                                                                     amended by Amendment No.
                                                                     1 thereto ("S-1")
   
   4.1              Articles III, IV and VI of the Restated          Contained in Exhibit 3.1
                    Articles of Incorporation of the Company         hereto
   
   4.2(a)           Amended and Restated Note Purchase               Exhibit 4.1 to the
                    Agreement dated November 5, 1996 between         Company's Quarterly
                    the Company and State of Wisconsin               Report on Form 10-Q for
                    Investment Board*                                the quarter ended
                                                                     November 29, 1996 ("11/96
                                                                     10-Q")
   
   4.2(b)           Waiver and Amendment thereto dated August                                               X
                    21, 1997
   
   4.3(a)           Loan and Security Agreement dated November       Exhibit 4.2 to 11/96 10-Q
                    5, 1996 among the Company and its
                    subsidiaries and Bank America Business
                    Credit, Inc.*
   
   4.3(b)           Waiver and Amendment thereto dated                                                      X
                    August 20, 1997
   
   4.4(a)           Reimbursement Agreement dated August 1,          Exhibit 4.4(a) to the
                    1994 between Outlook Packaging, Inc.             Company's Annual Report
                    ("Packaging") and Firstar Bank, relating         on Form 10-K for the
                    to $4,000,000 City of Oak Creek Industrial       fiscal year ended May 31,
                    Revenue Bonds*                                   1994 ("1994 10-K")
</TABLE>





                                      EI-1

<PAGE>   42

<TABLE>
<CAPTION>
                                                                      INCORPORATED HEREIN           FILED
EXHIBIT NO.                        EXHIBIT                              BY REFERENCE TO           HEREWITH
-----------                        -------                            -------------------         --------
<S>              <C>                                              <C>                                 <C>
4.4(b)           Related Corporate Guarantee Agreement            Exhibit 4.4(b) to the
                 dated August 1, 1994 by the Company*             1994 10-K

4.5              Loan Agreement dated as of September 1,          Exhibit 4.6 to S-1
                 1990 by and between City of Neenah,
                 Wisconsin and Olympic Label Systems, Inc.
                 (n/k/a Outlook Label Systems, Inc.)
                 ("Outlook Label"), relating to $4,000,000
                 Industrial Development Revenue Bonds

10.1             1990 Stock Option Plan**                         Exhibit 10.1 to S-1

10.2             Management Incentive Plan**                      Exhibit 10.2(a) to 1994
                                                                  10-K

10.3(a)          Employment Agreement dated June 1, 1994          Exhibit 10.4 to 1994 10-K
                 between David L. Erdmann and the Company
                 (superseded)**

10.3(b)          Employment Agreement dated June 1, 1997                                              X
                 between David L. Erdmann and the Company**

10.4(a)          Lease Agreement dated November 7, 1990           Exhibit 10.10(b) to S-1
                 between the Company and a joint venture
                 relating to the lease of City of Neenah
                 property*

10.4(b)          Lease Amendment #1 thereto dated March 31,       Exhibit 10.7(b)(ii) to
                 1992                                             the Company's Annual
                                                                  Report on Form 10-K for
                                                                  the fiscal year ended May
                                                                  31, 1992 ("1992 10-K")

10.5             401(k) Savings Plan (as amended and              Exhibit 10.11 to S-1
                 restated effective as of January 1, 1989)
                 including the Defined Contribution
                 Regional Prototype Plan and Trust Document
                 and the Adoption Agreement thereto**

10.6             Master Lease Agreement dated March 13,                                               X
                 1997 between the Company and General
                 Electric Corporation*

10.7             Letter of Credit Agreements No. One and                                              X
                 No. Two dated March 13, 1997 between
                 Outlook Group Corp. and General Electric
                 Corporation
</TABLE>





                                      EI-2

<PAGE>   43

<TABLE>
<CAPTION>
                                                                      INCORPORATED HEREIN           FILED
EXHIBIT NO.                        EXHIBIT                              BY REFERENCE TO           HEREWITH
-----------                        -------                            -------------------         --------
<S>              <C>                                              <C>                                 <C>
10.8(a)          Master Lease Purchase Agreement and              Exhibit 10.14 to S-1
                 Amendment No. 1 thereto, all dated March
                 20, 1991 by and between Metlife Capital
                 Corporation and the Company (terminated)

10.8(b)          Lease Purchase Addendum No. 2 dated March        Exhibit 19.1(a) to the
                 26, 1993, and related Cross                      Company's Quarterly
                 Collateralization Agreement (terminated)         Report on Form 10-Q for
                                                                  the Quarter Ended
                                                                  February 28, 1993

10.9             Contract Manufacturing Agreement dated           Exhibit 10.1 to the
                 December 30, 1992, by and between Nestle         Company's Current Report
                 Beverage Company ("NBC") and Outlook             on Form 8-K dated
                 Foods, Inc. ("Foods") (f/k/a Oconomowoc          December 30, 1992
                 Packaging, Inc.)*                                ("12/30/92 8-K")

10.10            Employment Agreement dated as of June 1,                                             X
                 1997 between the Company and Joseph J.
                 Baksha**

10.11            Assignment and Assumption dated as of            Exhibit 10.3 to the
                 October 15, 1993 among Packaging, Sunrise        Company's Current Report
                 and Fleet Credit Corporation, and related        on Form 8-K dated
                 Company guaranty (terminated)                    October 18, 1993

10.12            Master Lease Agreement dated December 13,        Exhibit 10 to the
                 1993 between the Company and Firstar             Company's Quarterly
                 Leasing Services Corporation and related         Report on Form 10-Q for
                 lease schedule (terminated)                      the quarter ended
                                                                  November 30, 1993

10.13(a)         Purchase and Sale Agreement dated as of          Exhibit 10.15 to 1995
                 July 14, 1995 between the Company and            10-K
                 Willcree Press, LLC ("Willcree")*

     (b)         Replacement Promissory Note of Willcree          Exhibit 10.15(b) to 1996
                 dated May 31, 1996                               10-K

10.14(a)         Stock Purchase Agreement dated May 12,                                               X
                 1997 between the Company and Barrier Films
                 Ltd.--New York ("Barrier-NY")*

     (b)         Rebate and Supply Agreement dated May 12,                                            X
                 1997 among the Company, Barrier-NY,
                 Barrier and World Class Films Corp.

21.1             List of subsidiaries of the Company                                                  X
</TABLE>





                                      EI-3

<PAGE>   44

<TABLE>
<CAPTION>
                                                                      INCORPORATED HEREIN           FILED
EXHIBIT NO.                        EXHIBIT                              BY REFERENCE TO           HEREWITH
-----------                        -------                            -------------------         --------
<S>              <C>                                                  <C>                       <C>
23.1             Consent of Coopers & Lybrand L.L.P.                                                  X

24.1             Powers of Attorney                                                             Signature Page
                                                                                                to this Report

27               Financial Data Schedule                                                              X
</TABLE>

-----------------
*        Excluding exhibits and/or schedules which are identified in the
         document.  The Company agrees to furnish supplementally a copy of any
         omitted exhibit or schedule to the Commission upon request.

**       Designates compensatory plans and agreements for executive officers.




                                      EI-4