<PAGE>   1

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                  FORM 10-K

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

                  For the Fiscal Year Ended October 31, 2000

                                      OR

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

                         Commission File No. 0-21084

                          CHAMPION INDUSTRIES, INC.


            (Exact name of registrant as specified in its charter)

West Virginia                               55-0717455

----------------------------------------    ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

Route 2, Kyle Industrial Park
Industrial Lane, P.O. Box 2968
Huntington, West Virginia                   25728

----------------------------------------    ------------------------------------
(Address of Principal Executive Offices)    (Zip Code)

Registrant's telephone number, including area code:  (304) 528-2700

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

Securities registered pursuant to Section 12(g) of Act: Common Stock, $1.00
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

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

The aggregate market value of the voting stock of the registrant held by
non-affiliates as of January 12, 2001, was $10,947,653 of Common Stock, $1.00
par value. The outstanding common stock of the Registrant at the close of
business on January 12, 2001 consisted of 9,713,913 shares of Common Stock,
$1.00 par value.

Total number of pages including cover page - 138

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registration statement on
Form S-2/A No. 333-47585, filed on March 16, 1998, are incorporated by
reference into Part IV, Item 14. Portions of the Registrant's definitive proxy
statement dated February 16, 2001 with respect to its Annual Meeting of
Shareholders to be held on March 19, 2001 are incorporated by reference into
Part III, Items 10-13. Exhibit Index located on pages 28-33

              SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         Certain statements contained in this Annual Report or in documents
incorporated herein by reference, including without limitation statements
including the word "believes," "anticipates," "intends," "expects" or words of
similar import, constitute "forward-looking statements" within the meaning of
section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements of the Company expressed or implied by
such forward-looking statements. Such factors include, among others, general
economic and business conditions, changes in business strategy or development
plans, and other factors referenced in this Annual Report, including without
limitations under the captions "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and "Business." Given these
uncertainties, prospective investors are cautioned not to place undue reliance
on such forward-looking statements. The Company disclaims any obligation to
update any such factors or to publicly announce the results of any revisions
to any of the forward-looking statements contained herein to reflect future
events or developments.

                                      2

<PAGE>   3



PART I

ITEM 1 - BUSINESS

HISTORY

         Champion Industries, Inc. ("Champion" or the "Company") is a major
commercial printer, business forms manufacturer and office products and office
furniture supplier in regional markets east of the Mississippi River. The
Company's sales offices and production facilities are located in Huntington,
Charleston, Parkersburg, Clarksburg, and Morgantown, West Virginia; Lexington
and Owensboro, Kentucky; Baton Rouge, New Orleans and Gonzales, Louisiana;
Cincinnati and Belpre, Ohio; Jackson, Mississippi; Baltimore, Maryland;
Kingsport and Knoxville, Tennessee; Timmonsville, South Carolina; Evansville,
Indiana; Bridgeville and Altoona, Pennsylvania; and Asheville, North Carolina.
The Company's sales force of approximately 130 salespeople sells printing
services, business forms management services, office products and office
furniture.

         The Company was chartered as a West Virginia corporation on July 1,
1992. Prior to the public offering of the Company's Common Stock on January
28, 1993 (the "Offering"), the Company's business was operated by The Harrah
and Reynolds Corporation ("Harrah and Reynolds"), doing business as Chapman
Printing Company, together with its wholly-owned subsidiaries, The Chapman
Printing Company, Inc. and Stationers, Inc. Incident to the Offering, Harrah
and Reynolds and the Company entered into an Exchange Agreement, pursuant to
which, upon the closing date of the Offering: (i) Harrah and Reynolds
contributed to the Company substantially all of the operating assets of its
printing division, including all inventory and equipment (but excluding any
real estate and vehicles) and all issued and outstanding capital stock of its
subsidiaries, The Chapman Printing Company, Inc. and Stationers, Inc.; (ii)
the Company assumed certain of the liabilities relating to the operations of
the printing divisions of Harrah and Reynolds and its subsidiaries, The
Chapman Printing Company, Inc. and Stationers, Inc., excluding debts
associated with real estate, certain accounts payable to affiliates and
certain other liabilities; and (iii) Harrah and Reynolds was issued 2,000,000
shares of Common Stock of the Company.

         The Company and its predecessors have been headquartered in
Huntington since 1922. Full scale printing facilities, including web presses
for manufacturing business forms, and sales and customer service operations
are located in Huntington. The Company's Charleston division was established
in 1974 through the acquisition of the printing operations of Rose City Press.
Sales and customer service operations, as well as the Company's largest
pre-press departments, are located in Charleston. The Parkersburg division
opened in 1977 and was expanded by the acquisitions of Park Press and
McGlothlin Printing Company. In addition to sales and customer service
operations, this division houses a large full-color printing facility and a
state-of-the-art studio, with scanners, electronic color retouching equipment
and 4-, 5- and 6-color presses.

         The Lexington division commenced operations in 1983 upon the
acquisition of the Transylvania Company. This location includes a pre-press
department, computerized composition facilities, a press room and bindery
department, as well as sales and customer service operations.

                                      3

<PAGE>   4

         The Company acquired Stationers, Inc. ("Stationers"), an office
product, office furniture and retail bookstore operation located in
Huntington, in 1987 and consolidated its own office products and office
furniture operations with Stationers. On August 30, 1991, Stationers, Inc.
sold the assets, primarily inventory and fixtures, of its retail bookstore
operation. In July 1993, Stationers expanded through acquisition and began
operations in Marietta, Ohio, under the name "Garrison Brewer."

         The Bourque Printing division ("Bourque") commenced operations in
June, 1993, upon the acquisition of Bourque Printing, Inc. in Baton Rouge,
Louisiana. This location includes a pre-press department, computerized
composition facilities, a pressroom with up to 4-color presses and a bindery
department, as well as sales and customer service operations. Bourque was
expanded through the acquisition of Strother Forms/Printing in Baton Rouge in
1993 and through the acquisition of the assets of E. S. Upton Printing
Company, Inc. in New Orleans in 1996.

         The Dallas Printing division ("Dallas") commenced operations in
September, 1993, upon the acquisition of Dallas Printing Company, Inc. in
Jackson, Mississippi. This location includes a pre-press department,
computerized composition facilities, as well as sales and customer service
operations.

         On November 2, 1993, a wholly-owned subsidiary of the Company
chartered to effect such acquisition purchased selected assets of Tri-Star
Printing, Inc., a Delaware corporation doing business as "Carolina Cut Sheets"
in the manufacture and sale of business forms in Timmonsville, South Carolina.
The Company's subsidiary has changed its name to "Carolina Cut Sheets, Inc."
Carolina Cut Sheets manufactures single-part business forms for sale to
dealers and through the Company's other divisions.

         On February 25, 1994, Bourque acquired certain assets of Spectrum
Press Inc. ("Spectrum"), a commercial printer located in Baton Rouge,
Louisiana.

         On June 1, 1994, the Company acquired certain assets of Premier Data
Graphics, a distributor of business forms and data supplies located in
Clarksburg, West Virginia.

         On August 30, 1994, Dallas acquired certain assets of Premier
Printing Company, Inc. ("Premier Printing") of Jackson, Mississippi.

         On June 1, 1995, in exchange for issuance of 52,383 shares of its
Common stock, the Company acquired U.S. Tag & Ticket Company, Inc. ("U.S.
Tag"), a Baltimore, Maryland based manufacturer of tags used in the
manufacturing, shipping, postal, airline and cruise industries.

         On November 13, 1995, in exchange for $950,000 cash and the issuance
of 66,768 shares of its Common stock, the Company acquired Donihe Graphics,
Inc. ("Donihe"), a high-volume color printer based in Kingsport, Tennessee.

         On February 2, 1996, Bourque purchased various assets and assumed
certain liabilities of E.S. Upton Printing Company, Inc. ("Upton") for
approximately $750,000 in cash.

                                      4

<PAGE>   5

         On July 1, 1996, the Company acquired Smith & Butterfield Co., Inc.
("Smith & Butterfield"), an office products company located in Evansville,
Indiana and Owensboro, Kentucky. Smith & Butterfield is operated as a division
of Stationers, Inc. The Company issued 66,666 shares of common stock valued at
$1,200,000 in exchange for all of the issued and outstanding shares of common
stock of Smith & Butterfield.

         On August 21, 1996, the Company purchased the assets of The Merten
Company ("Merten"), a commercial printer headquartered in Cincinnati, Ohio,
for cash and assumption of liabilities aggregating $2,535,295.

         On December 31, 1996, the Company acquired all outstanding capital
stock of Interform Corporation ("Interform"), a business form manufacturer in
Bridgeville, Pennsylvania, for $2,500,000 in cash which was financed by a
bank.

         On May 21, 1997, the Company acquired all outstanding common shares
of Blue Ridge Printing Co., Inc. of Asheville, North Carolina and Knoxville,
Tennessee ("Blue Ridge") in exchange for 277,775 shares of the Company's
common stock. The transaction has been accounted for as a pooling of
interests.

         On February 2, 1998, the Company acquired all outstanding common
shares of Rose City Press ("Rose City") of Charleston, West Virginia, in
exchange for 75,722 shares of the Company's common stock valued at $1,250,000.

         On May 18, 1998, the Company acquired all outstanding common shares
of Capitol Business Equipment, Inc. ("Capitol"), doing business as Capitol
Business Interiors, of Charleston, West Virginia, in exchange for 72,202
shares of the Company's common stock valued at $1,000,000.

         On May 29, 1998, the Company acquired all outstanding common shares
of Thompson's of Morgantown, Inc. and Thompson's of Barbour County, Inc.
(collectively, "Thompson's") of Morgantown, West Virginia, in exchange for
45,473 shares of the Company's common stock valued at $600,000.

         Rose City, Capitol and Thompson's are operated as divisions of
Stationers.

         On June 1, 1999, the Company acquired all of the issued and
outstanding common stock of Independent Printing Service, Inc. ("IPS") of
Evansville, Indiana. IPS is operated as a division of Smith & Butterfield.
This transaction was accounted for under the purchase method.

         On July 16, 1999, the Company's Blue Ridge subsidiary acquired
certain assets and assumed certain liabilities of AIM Printing ("AIM") of
Knoxville, Tennessee. This transaction was accounted for under the purchase
method.

         On November 30, 1999, the Company acquired all of the issued and
outstanding common stock of Diez Business Machines ("Diez") of Gonzales,
Louisiana. This transaction was accounted for as a purchase. Diez is operated
as a subsidiary of Stationers.

                                      5

<PAGE>   6

         On November 6, 2000, the Company acquired certain assets of the
Huntington, West Virginia paper distribution division of the Cincinnati
Cordage Paper Company ("Cordage"). This transaction was accounted for under
the purchase method.

BUSINESS

         Champion is engaged in the commercial printing and office products
and furniture supply business in regional markets east of the Mississippi
River. The Company's sales force sells a full range of printing services,
business forms, office products and office furniture. Management views these
sales activities as complementary since frequent customer sales calls required
for one of its products or services provide opportunities to cross-sell other
products and services. The Company believes it benefits from significant
customer loyalty and customer referrals because it provides personal service,
quality products, convenience and selection with one-stop shopping.

         The Company's printing services range from the simplest to the most
complex jobs, including business cards, books, tags, brochures, posters, 4- to
6-color process printing and multi-part, continuous and snap-out business
forms. The Company's state-of-the-art equipment enables it to provide
computerized composition, art design, paste-up, stripping, film assembly and
color scanner separations. The Company also offers complete bindery and
letterpress services. The printing operations contributed $96.7 million, or
76.5% of the Company's total revenues for the fiscal year ended October 31,
2000.

         The Company provides a full range of office products and office
furniture primarily in the budget and middle price ranges, and also offers
office design services. The Company publishes a catalog of high volume,
frequently ordered items purchased directly from manufacturers. These catalog
sales account for the bulk of sales volume and afford sales personnel
flexibility in product selection and pricing. Medium to large volume customers
are offered levels of pricing discounts. In addition, the Company offers a
broad line of general office products through major wholesalers' national
catalogs. The Company has implemented an Internet e-commerce site, which
allows customers to order office products, furniture and forms online. The
e-commerce site includes the office products and office furniture catalog and
may be accessed at the Company's web page at www.champion-industries.com. The
Company believes that this site will allow customers to access data concerning
their company's purchase habits so as to better control expenditures for
office products and eliminate large in-house inventories. The Company is a
member of a major office products purchasing organization. Members benefit
from volume discounts, which permit them to offer competitive prices and
improve margins. The Company's office furniture business focuses on the budget
to middle price range lines, although upscale lines are offered as well.
Office products, office furniture and office design operations contributed
$29.7 million, or 23.5% of the Company's total revenues for the fiscal year
ended October 31, 2000.

ORGANIZATION

         Champion's two lines of business are comprised of twenty-two
operating divisions. The Huntington headquarters provides centralized
financial management and administrative services to each of its two business
segments.

                                      6

<PAGE>   7

Commercial Printing

         Eleven commercial printing divisions are located in Huntington,
Charleston and Parkersburg, West Virginia; Lexington, Kentucky; Baton Rouge
and New Orleans, Louisiana; Jackson, Mississippi; Cincinnati, Ohio; Kingsport
and Knoxville, Tennessee; and Asheville, North Carolina. Each has a sales
force, a customer service operation and a pre-press department that serve the
customers in their respective geographic areas. Although each customer's
interface is solely with its local division's personnel, its printing job may
be produced in another division using the equipment most suited to the quality
and volume requirements of the job. In this way, for example, Champion can
effectively compete for high quality process color jobs in Lexington by
selling in Lexington, printing in Cincinnati and binding in Huntington. The
full range of printing resources is available to customers in the entire
market area without Champion having to duplicate equipment in each area.

         Interform Corporation, doing business as Interform Solutions and
located in Bridgeville, Pennsylvania, manufactures business forms and related
products which it sells through a network of independent distributors
concentrated in Eastern Pennsylvania, New Jersey and metropolitan New York,
and directly through its own distributor, the Consolidated Graphic
Communications division in Pittsburgh, Pennsylvania.

         Carolina Cut Sheets, Inc., located in Timmonsville, South Carolina,
manufactures single sheet business forms which are sold to other commercial
printers and dealers and through the Company's other divisions.

         The Huntington, West Virginia division of Chapman Printing Company
manufactures single sheet and multi-part, snap-out and continuous business
forms for sale through many of the Company's commercial printing divisions.

         U.S. Tag, located in Baltimore, Maryland, manufactures and sells tags
used in the manufacturing, shipping, postal, airline and cruise industries
throughout the United States through dealers and the Company's other
divisions.

Office Products, Office Furniture and Office Design

         Stationers, located in Huntington, Clarksburg (doing business as
"Champion Clarksburg"), Morgantown (through its Champion Morgantown division),
West Virginia and Belpre, Ohio (doing business as "Garrison Brewer"), provides
office products and office furniture primarily to customers in the Company's
West Virginia, Ohio and Kentucky market areas. Products are sold by printing
division salespeople and delivered in bulk daily to each division, or shipped
directly to customers.

         Smith & Butterfield, located in Evansville, Indiana and Owensboro,
Kentucky, provides office products and office furniture primarily to customers
in the Company's Indiana and Kentucky market areas. Products are sold by Smith
& Butterfield sales personnel and delivered to customers daily.

         Diez, located in Gonzales, Louisiana, provides office products and
office furniture primarily to customers in the Company's Louisiana market
area.

                                      7

<PAGE>   8

         Stationers, through its Capitol division, offers office design
services throughout West Virginia and eastern Kentucky.

         Champion Jackson located in Jackson, Mississippi functions as both a
printing sales headquarters with full digital prepress and an office products
sales center.

PRODUCTS AND SERVICES

Printing Services

         Champion's primary business is commercial printing and business forms
manufacturing. The Company, unlike most of its regional competitors, offers
the full range of printing production processes, enabling the Company to
provide customers a one-stop, one-vendor source without the time and service
constraints of subcontracting one or more aspects of production. Major
production areas include: (i) printing of business cards, letterhead,
envelopes, and one, two, or three color brochures; (ii) process color
manufacturing of brochures, posters, advertising sheets and catalogues; (iii)
die cutting and foil stamping; (iv) bindery services, including trimming,
collating, folding and stitching the final product; (v) forms printing,
encompassing roll-to-roll computer forms, checks, invoices, purchase orders
and similar forms in single-part, multi-part, continuous and snap-out formats;
(vi) tag manufacturing; and (vii) high volume process color webprinting of
brochures and catalogs.

                                      8

<PAGE>   9


The capabilities of the Company's various printing divisions are stated below.

<TABLE>
<CAPTION>
                                                                                             High
                                      Sales &                                               Volume
                                      Customer                        Sheet       Full       Full
Division                              Service        Pre-Press      Printing      Color      Color
-------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>           <C>       <C>
Huntington                               *               *              *
-------------------------------------------------------------------------------------------------------
Charleston                               *               *
-------------------------------------------------------------------------------------------------------
Parkersburg                              *               *              *           *
-------------------------------------------------------------------------------------------------------
Lexington                                *               *              *
-------------------------------------------------------------------------------------------------------
Bourque Printing, Inc.                   *               *              *           *
-------------------------------------------------------------------------------------------------------
Dallas Printing Company, Inc.            *               *
-------------------------------------------------------------------------------------------------------
Carolina Cut Sheets, Inc.                *               *              *
-------------------------------------------------------------------------------------------------------
U.S. Tag & Ticket Company, Inc.          *               *              *
-------------------------------------------------------------------------------------------------------
Donihe Graphics, Inc.                    *               *              *           *          *
-------------------------------------------------------------------------------------------------------
Upton Printing                           *               *              *           *
-------------------------------------------------------------------------------------------------------
The Merten Company                       *               *              *           *
-------------------------------------------------------------------------------------------------------
Interform Corporation                    *               *                          *
-------------------------------------------------------------------------------------------------------
Blue Ridge Printing Co., Inc.            *               *              *           *
-------------------------------------------------------------------------------------------------------
</TABLE>

Office Products, Office Furniture and Office Design

         Champion provides its customers with a wide range of product
offerings in two major categories: supplies, such as file folders, paper
products, pens and pencils, computer paper and laser cartridges; and
furniture, including budget and middle price range desks, chairs, file
cabinets and computer furniture. Office supplies are sold primarily by Company
salespeople through the Company's own catalogs. Office furniture is primarily
sold from catalogs and supplied from in-house stock. Special orders constitute
a small portion of sales. The Capitol division of Stationers provides interior
design services to commercial customers. The design services include space
planning, purchasing and installation of office furniture, and management of
design projects.

MANUFACTURING AND DISTRIBUTION

         The Company's pre-press facilities have desktop publishing,
typesetting, laser imagesetting and scanning/retouching equipment, and
complete layout, design, stripping and plate processing operations. Sheet
printing equipment (for printing onto pre-cut, individual sheets) includes
single color duplicators, single to six color presses and envelope presses.
Rotary equipment (for printing

                                      9

<PAGE>   10

onto continuous rolls of paper) includes multi-color business form web
presses, carbon and multi-part collators, and a high-speed 5-color half-web
press.

         Binding equipment consists of hot-foil, embossing and die cutting
equipment, perforators, folders, folder-gluers, scoring machines,
collator/stitcher/ trimmers for saddle stitching, automatic and manual perfect
binders, numbering machines and mailing equipment.

         Each of the Company's offices is linked with overnight distribution
of products and on-line electronic telecommunications permitting timely
transfer of various production work from facility to facility as required.
While the Company maintains a fleet of delivery vehicles for intracompany and
customer deliveries, it utilizes the most cost effective and expeditious means
of delivery, including common carriers.

         Requirements for the Company's press runs are determined shortly
before the runs are made and, therefore, backlog is not a meaningful measure
in connection with the Company's printing business.

         The Company's inventory goal is to have approximately 85% of the
office product items the Company sells in stock. Another 12% are ordered on a
daily basis and received overnight. The remaining 3% are items that come
direct from manufacturers and may take one week from placement of order to
delivery to customer. Office furniture sales are made primarily from the
Company's in-house stock. However, special orders from manufacturers may
require up to 90 days for delivery.

CUSTOMERS

         The Company believes that its reputation for quality, service,
convenience and selection allows it to enjoy significant loyalty from its
customers. Champion's marketing strategy is to focus on manufacturers,
institutions, financial services companies and professional firms. Consistent
with customary practice in the commercial printing and office products
industries, the Company ordinarily does not have long-term contracts with its
customers, although a number of high volume customers issue yearly purchase
orders. These purchase orders, which are typically for office products but may
include printing services, are for firm prices adjustable for paper price
changes. Depending upon customer satisfaction with price and service, these
purchase orders may be renewed for another year or up to three years without
repeating the full bidding process.

         During the fiscal year ended October 31, 2000, no single customer
accounted for more than 3% of the Company's total revenues. Due to the
project-oriented nature of customers' printing requirements, sales to
particular customers may vary significantly from year to year depending upon
the number and size of their projects.

                                      10

<PAGE>   11


SUPPLIERS

         The Company has not experienced difficulties in obtaining materials
in the past and does not consider itself dependent on any particular supplier
for supplies. The Company has negotiated Company-wide paper purchasing
agreements directly with paper manufacturers and is a member of a major office
products buying group, which management believes provides the Company with a
competitive advantage.

COMPETITION

         The markets for the Company's printing services and office products
are highly competitive, with success based primarily on price, quality,
production capability, capacity for prompt delivery and personal service.

         Champion's printing competitors are numerous and range in size from
very large national companies with substantially greater resources than the
Company to many smaller local companies. In recent years, despite
consolidation within the printing industry, there has been a substantial
increase in technological advances in new equipment, resulting in excess
capacity and highly competitive pricing. The Company has remained competitive
by maintaining its printing equipment at state-of-the-art levels and
emphasizing personal attention to customers.

         Large national and regional mail order discount operations provide
significant competition in the office products and office furniture business.
The economics afforded by membership in a national purchasing association and
by purchasing directly from manufacturers, and the high level of personal
services to customers, contribute substantially to the Company's ability to
compete in the office supply and office furniture market segments.

ENVIRONMENTAL REGULATION

         The Company is subject to the environmental laws and regulations of
the United States and the states in which it operates concerning emissions
into the air, discharges into waterways and the generation, handling and
disposal of waste materials. The Company's past expenditures relating to
environmental compliance have not had a material effect on the Company and are
included in normal operating expenses. 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. Based upon information currently available,
management believes that expenditures relating to environmental compliance
will not have a material impact on the financial position of the Company.

                                      11


<PAGE>   12


GEOGRAPHIC CONCENTRATION AND ECONOMIC CONDITIONS

         The Company's operations and the majority of its customers are
located east of the Mississippi River. The Company and its profitability may
be more susceptible to the effects of unfavorable or adverse local or regional
economic factors and conditions than a company with a more geographically
diverse customer base.

SEASONALITY

         Historically, the Company has experienced a greater portion of its
annual sales and net income in the second and fourth quarters than in the
first and third quarters. The second quarter generally reflects increased
orders for printing of corporate annual reports and proxy statements. A
post-Labor Day increase in demand for printing services and office products
coincides with the Company's fourth quarter.

EMPLOYEES

         On October 31, 2000, the Company had approximately 900 employees.

         The Company's subsidiary, Interform Corporation, is party to a
collective bargaining agreement with the United Steelworkers of America,
AFL-CIO-CLC on behalf of its Local Union 8263 covering all production and
maintenance employees (totaling 88 employees at October 31, 2000) at its
Bridgeville, Pennsylvania facility. The Company believes relations with the
union and covered employees are good.

EXECUTIVE OFFICERS OF CHAMPION

<TABLE>
<CAPTION>
                                                     POSITION AND OFFICES WITH CHAMPION;
NAME                                AGE              PRINCIPAL OCCUPATION OR EMPLOYMENT LAST FIVE YEARS
----                                ---              --------------------------------------------------
<S>                                <C>              <C>
Marshall T. Reynolds                64               Chief Executive Officer and Chairman of the
                                                     Board of Directors of the Company from December
                                                     1992 to present; President of the Company
                                                     December 1992 to September 2000; President and
                                                     general manager of Harrah and Reynolds,
                                                     predecessor of the Company from 1964 (and sole
                                                     shareholder from 1972) to 1993; Chairman of the
                                                     Board of Directors of Broughton Foods Company
                                                     from November 1996 to June 1999; Director (from
                                                     1983 to November 1993) and Chairman of the
                                                     Board of Directors (from 1983 to November 1993)
                                                     of Banc One West Virginia Corp. (formerly Key
                                                     Centurion Bancshares, Inc.).

Kirby J. Taylor                     55               President and Chief Operating Officer of the
                                                     Company since September 2000; President and
                                                     Chief
</TABLE>

                                      12

<PAGE>   13

<TABLE>
<S>                                <C>              <C>
                                                     Executive Officer of Action Business Consulting
                                                     from November 1997 to September 2000
                                                     (management consulting firm); President and
                                                     Chief Executive Officer of Nexquest, Inc. from
                                                     January 1996 to November 1997; President and
                                                     Chief Operating officer of Addington Resources,
                                                     Inc. from July 1994 to January 1996 (mining and
                                                     waste management company); Vice President and
                                                     Chief Financial Officer of Outboard Marine
                                                     Corp. from April 1993 to July 1994
                                                     (manufacturer and distributor of boats and
                                                     motors); Vice President and Chief Financial
                                                     Officer of Tenneco Automotive from August 1990
                                                     to April 1993 (manufacturer of auto parts);
                                                     Senior Vice President and Chief Financial
                                                     Officer of Tenneco Minerals from August 1988 to
                                                     August 1990; Vice President and Chief Financial
                                                     Officer of Tenneco Minerals from February 1984
                                                     to August 1988; President of Tenneco
                                                     International Finance from November 1980 to
                                                     February 1984.

Michael D. McKinney                 47               Vice President and General Sales Manager of the
                                                     Company since September 1995; Vice President
                                                     and Division Manager - Huntington of the
                                                     Company from December 1992 to September 1995;
                                                     Division Manager - Huntington of Harrah and
                                                     Reynolds from October 1991 to 1992; Division
                                                     Manager - Lexington of Harrah and Reynolds from
                                                     August 1982 to October 1991.

Ronald W. Taylor                    43               Vice President and Division Manager - Lexington
                                                     division of the Company from December 1992 to
                                                     present; Division Manager - Lexington of Harrah
                                                     and Reynolds from January 1992 to December
                                                     1992; Sales Representative, Lexington Division
                                                     of Harrah and Reynolds from 1986 to January
                                                     1992.

J. Mac Aldridge                     59               Vice President and Division Manager -
                                                     Stationers since December 1992; Vice President
                                                     of Company and Division Manager - Huntington
                                                     from September 1995 to October 1997; President
                                                     and General Manager of Stationers since
                                                     November 1989; Sales Representative of
                                                     Huntington Division of Harrah and Reynolds from
                                                     July 1983 to October 1989.

Gary A. Blackshire                  48               Vice President of  the Company since December
                                                     1992; Division Manager - Merten since September
</TABLE>


                                      13

<PAGE>   14

<TABLE>
<S>                                <C>              <C>
                                                     1998; Division Manager - Charleston since
                                                     December 1992; Division Manager - Charleston of
                                                     Harrah and Reynolds from April 1992 to December
                                                     1992; Sales Representative of Charleston
                                                     Division of Harrah and Reynolds from 1975 until
                                                     April 1992.

R. Douglas McElwain                 53               Vice President and Division Manager - Bourque
                                                     Printing division of the Company since December
                                                     1993; General Manager of Bourque Printing from
                                                     June 1993 to December 1993; Sales
                                                     Representative of Charleston Division of Harrah
                                                     and Reynolds and Company from 1986 until June
                                                     1993.

Toney K. Adkins                     51               Vice President-Administration of the Company
                                                     since November, 1995; President, KYOWVA
                                                     Corrugated Container Company, Inc. from 1991 to
                                                     1996.

Todd R. Fry                         35               Chief Financial Officer of the Company since
                                                     November, 1999; Treasurer and Chief Financial
                                                     Officer of Broughton Foods Company from
                                                     September 1997 to June 1999; Coopers & Lybrand
                                                     L.L.P. from 1991 to September 1997.

Walter R. Sansom                    71               Secretary of the Company since December 1992;
                                                     Production Coordinator of the Company since
                                                     December 1992 and of Harrah and Reynolds from
                                                     August 1968 to December 1992.

Theodore J. Nowlen                  46               Vice President of the Company since March 1999;
                                                     President of Interform since May 1998; Vice
                                                     President of Marketing and Technology of
                                                     Interform from January 1996 to May 1998;  Vice
                                                     President of Technology of Interform from
                                                     September 1991 to January 1996; Manager of
                                                     Information Systems of Interform from April
                                                     1983 to September 1991.

James A. Rhodes                     44               Vice President of the Company since March 1999;
                                                     President of Consolidated Graphic
                                                     Communications Division of Interform since
                                                     February 1999; Vice President of Sales of
                                                     Consolidated Graphic Communications from 1996
                                                     to 1999;  General Sales Manager - East of
                                                     Consolidated Graphic Communications from 1995
                                                     to 1996.
</TABLE>

ITEM 2 - PROPERTIES

                                      14

<PAGE>   15

         The Company conducts its operations from twenty-six (26) different
physical locations, nineteen (19) of which are leased, six (6) of which are
owned in fee simple by Company subsidiaries, and one (1), Cordage, which is
operated from an owned building pursuant to a land lease under the terms
described below. The properties leased, and certain of the lease terms are set
forth below:

<TABLE>
<CAPTION>
                                             Division Occupying           Square        Annual        Expiration
               Property                           Property                 Feet         Rental          Of Term
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                               <C>          <C>            <C>
2450 1st Avenue                          Chapman Printing-
Huntington, West Virginia (1)            Huntington                       85,000      $116,400           2008

1945 5th Avenue                          Stationers                       37,025        60,000           2007
Huntington, West Virginia (1)

615-619 4th Avenue                       Stationers                       59,641        21,600           2003
Huntington, West Virginia (1)

405 Ann Street                           Chapman Printing -
Parkersburg, West Virginia (1)           Parkersburg                      36,614        57,600           2003

1563 Hansford Street                     Chapman Printing -
Charleston, West Virginia (1)            Charleston                       21,360        49,920           2003

890 Russell Cave Road                    Chapman Printing -
Lexington, Kentucky (1)                  Lexington                        20,135        57,600           2007

214 Stone Road                           Stationers -
Belpre, Ohio (1)                         Garrison Brewer                  15,146        42,000           2004

2800 Lynch Road                          Smith & Butterfield              42,375       116,640           2004
Evansville, Indiana (1)

113-117 East Third St.                   Smith & Butterfield               8,500        14,400           2002
Owensboro, Kentucky (1)

1901 Mayview Road                        Interform Corporation           120,000       316,000           2003
Bridgeville, Pennsylvania (1)

736 Carondelet Street                    Upton Printing                   15,000        62,700           2003
New Orleans, Louisiana

5600 Jefferson Highway                   Upton Printing                   11,250        47,250           2003
Harahan, Louisiana

1515 Central Parkway                     The Merten Company               40,000        97,200           2001
Cincinnati, Ohio (1)

2217 Robb Street                         U.S. Tag                         26,000        52,000           2005
Baltimore, Maryland (1)

Palmetto Industrial Park                 Carolina Cut Sheets              16,200        35,724          monthly
Timmonsville, S. Carolina

711 Indiana Avenue                       Stationers - Capitol             22,000        96,000           2003
Charleston, West Virginia (1)

Kirk and Chestnut Streets                Stationers-
Morgantown, West Virginia                Thompson's                        9,000        19,356           2003
</TABLE>




                                      15


<PAGE>   16

<TABLE>
<S>                                    <C>                               <C>          <C>            <C>
Route 2, Kyle Industrial Park            Champion Headquarters             9,000        78,000           2003
Huntington, West Virginia


1733 North Airline Highway Gonzalez,     Stationers-Diez                   5,800        12,000           2001
Louisiana

One West Industrial Park                 Cordage                            __          12,000           2002
3254 Route 60 East
Huntington, West Virginia (2)
</TABLE>

(1)      Lease is "triple net", whereby Company pays for all utilities,
insurance, taxes, repairs and maintenance, and all other costs associated with
properties.

         The Dallas Printing Division owns, and operates from, a single-story
masonry structure of approximately 19,600 square feet at 321-323 East Hamilton
Street, Jackson, Mississippi.

         The Bourque Printing Division owns, and operates from, a single-story
building of approximately 18,501 square feet at 13112 South Choctaw Drive,
Baton Rouge, Louisiana.

         Stationers' Clarksburg operation is conducted from a single-story
masonry building of approximately 20,800 square feet owned by the Company at
700 N. Fourth Street, Clarksburg, West Virginia.

         Donihe owns, and operates from, a single-story steel building of
approximately 38,500 square feet situated on roughly 14.5 acres at 766
Brookside Drive, Kingsport, Tennessee.

         Blue Ridge owns, and operates from, (i) a two-story masonry building
of approximately 9,066 square feet and a contiguous 1,692 square foot former
residential structure at 544 and 560 Haywood Road, Asheville, North Carolina,
and (ii) a two-story steel building of approximately 12,500 square feet on
approximately 3 acres at 1485 Amherst Road, Knoxville, Tennessee.

         The Company consolidated Stationers' Rose City division operations
with those of the Chapman Printing - Charleston division at its Hanford Street
location during fiscal year 1999. The former Rose City facility, consisting of
(i) two masonry buildings (2 story and 5 story) of approximately 20,900 square
feet in the aggregate, at 811-813 Virginia Street, East, and (ii) an adjacent
6 story brick warehouse of approximately 42,500 square feet, in Charleston,
West Virginia, is currently held for sale.

(2)      The Cordage division owns, and operates from, a single story building
of approximately 14,500 square feet at 3254 Route 60 East, Huntington, West
Virginia.

ITEM 3 - LEGAL PROCEEDINGS

         The Company is subject to various claims and legal actions that arise
in the ordinary course of business. In the opinion of management, after
consulting with legal counsel, the Company

                                      16

<PAGE>   17

believes that the ultimate resolution of these claims and legal actions will
not have a material effect on the consolidated financial statements of the
Company.

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

         None.


PART II

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

         Champion common stock has traded on the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") National Market
System since the Offering under the symbol "CHMP."

                                      17

<PAGE>   18


         The following table sets forth the high and low closing prices for
Champion common stock for the period indicated. The range of high and low
closing prices are based on data from NASDAQ and do not include retail
mark-up, mark-down or commission.

<TABLE>
<CAPTION>
                            FISCAL YEAR 2000              FISCAL YEAR 1999
                           HIGH            LOW         HIGH               LOW
                        ------------------------     --------------------------
<S>                     <C>             <C>          <C>               <C>
   First quarter         $ 5.12          $ 3.75       $11.13            $ 9.00
   Second quarter          4.50            2.81         9.00              6.00
   Third quarter           4.38            2.38         8.63              6.63
   Fourth quarter          3.25            2.56         6.81              4.25
</TABLE>

         At the close of business on January 12, 2001, there were 506
shareholders of record of Champion common stock.

         The following table sets forth the quarterly dividends per share
declared on Champion common stock.

<TABLE>
<CAPTION>
                         FISCAL YEAR           FISCAL YEAR           FISCAL YEAR
                            2001                  2000                   1999
                       ----------------      ----------------     ------------------
<S>                    <C>                   <C>                  <C>
   First quarter            $0.05                 $0.05                 $0.05
   Second quarter             -                    0.05                  0.05
   Third quarter              -                    0.05                  0.05
   Fourth quarter             -                    0.05                  0.05
</TABLE>



ITEM 6 - SELECTED FINANCIAL DATA

                     SELECTED CONSOLIDATED FINANCIAL DATA

         The following selected consolidated financial data for each of the
five years in the period ended October 31, 2000 have been derived from the
Audited Consolidated Financial Statements of the Company. The information set
forth below should be read in conjunction with the Audited Consolidated
Financial Statements, related notes, and the information contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations appearing elsewhere herein.

                                      18

<PAGE>   19



<TABLE>
<CAPTION>
                                                                  YEAR ENDED OCTOBER 31,
                                         -------------------------------------------------------------------------
                                              2000            1999           1998           1997          1996
                                         --------------  -------------  -------------  -------------  ------------
                                                      (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                       <C>            <C>            <C>            <C>            <C>
INCOME STATEMENT DATA:

REVENUES:

Printing                                    $   96,657    $    92,405    $    95,003    $    87,979    $   49,242


Office products and office furniture            29,672         31,954         28,058         20,406        17,115
                                         --------------  -------------  -------------  -------------  ------------
Total revenues                                 126,329        124,359        123,061        108,385        66,357

COST OF SALES:

Printing                                        69,376         65,021         66,699         59,850        33,015


Office products and office furniture            19,927         21,764         18,616         13,289        11,077
                                         --------------  -------------  -------------  -------------  ------------
Total cost of sales                             89,303         86,785         85,315         73,139        44,092

GROSS PROFIT                                    37,026         37,574         37,746         35,246        22,265

Selling, general and administrative
expense                                         32,621         31,387         29,872         28,079        16,197
                                         --------------  -------------  -------------  -------------  ------------

INCOME FROM OPERATIONS                           4,405          6,187          7,874          7,167         6,068

Interest income                                     71            157            245             20            25
Interest expense                                (1,018)        (1,228)        (1,507)        (1,586)         (693)
Other income                                       114            211            241            737           224
                                         --------------  -------------  -------------  -------------  ------------

INCOME BEFORE INCOME TAXES                       3,572          5,327          6,853          6,338         5,624

Income taxes                                    (1,463)        (2,134)        (2,702)        (2,571)       (2,252)
                                         --------------  -------------  -------------  -------------  ------------
Net income                                  $    2,109    $     3,193    $     4,151    $     3,767    $    3,372
                                         ==============  =============  =============  =============  ============

EARNINGS PER SHARE:

Basic                                       $     0.22    $      0.33    $      0.45    $      0.45    $     0.41
Diluted                                           0.22           0.33           0.45           0.45          0.40

DIVIDENDS PER SHARE                         $     0.20    $      0.20    $      0.20    $      0.19    $    0.152

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:

Basic                                        9,714,000      9,714,000      9,142,000      8,383,000     8,324,000
Diluted                                      9,714,000      9,714,000      9,172,000      8,441,000     8,356,000
</TABLE>

                                      19

<PAGE>   20

<TABLE>
<CAPTION>

                                                       AT OCTOBER 31,
                              -----------------------------------------------------------------

                                  2000          1999           1998          1997        1996
                              ------------  -----------     ---------      -------     --------
                                                      (IN THOUSANDS)
BALANCE SHEET DATA:
<S>                           <C>           <C>             <C>          <C>         <C>
Cash and cash equivalents     $      3,174  $     2,464      $  9,773     $    912   $   2,461

Working capital                     29,070       30,333        35,108       18,935      13,579

Total assets                        71,559       73,642        74,505       60,346      44,063

Long-term debt                       8,070        9,933        13,993       15,156       7,561

Shareholders' equity                46,726       46,560        45,310       26,850      24,641
</TABLE>


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

         The Company is a commercial printer, business forms manufacturer and
office products and office furniture supplier in regional markets east of the
Mississippi River. The Company has grown through strategic acquisitions and
internal growth. Through such growth, the Company has realized regional
economies of scale, operational efficiencies, and exposure of its core
products to new markets. The Company has acquired fourteen printing companies,
seven office products and office furniture companies and a paper distribution
division since its initial public offering on January 28, 1993.

         The Company's largest acquisition since the initial public offering
was the purchase of Interform on December 31, 1996. The addition of Interform
sales to the printing segment increased the printing component of the
Company's revenue mix. Through sales to independent distributors, and through
its own distributor, Consolidated Graphic Communications, Interform provides
the Company access to the large northeastern markets of Pennsylvania, New
Jersey and New York.

         The Company's net revenues consist primarily of sales of commercial
printing, business forms, tags, other printed products, office supplies,
office furniture, data products and office design services. The Company
recognizes revenues when products are shipped or services are rendered to the
customer. The Company's revenues are subject to seasonal fluctuations caused
by variations in demand for its products.

         The Company's cost of sales primarily consists of raw materials,
including paper, ink, pre-press supplies and purchased office supplies,
furniture and data products, and manufacturing costs including direct labor,
indirect labor and overhead. Significant factors affecting the Company's cost
of sales include the costs of paper in both printing and office supplies, the
costs of labor and other raw materials.

                                      20

<PAGE>   21

         The Company's operating costs consist of selling, general and
administrative expenses. These costs include salaries, commissions and wages
for sales, customer service, accounting, administrative and executive
personnel, rent, utilities, legal, audit, information systems equipment costs,
software maintenance and depreciation.

RESULTS OF OPERATIONS

         The following table sets forth for the periods indicated information
derived from the Company's Consolidated Income Statements, including certain
information presented as a percentage of total revenues.

<TABLE>
<CAPTION>
                                                                         YEAR ENDED OCTOBER 31,
                                                                            ($ IN THOUSANDS)
                                              ----------------------------------------------------------------------------
                                                       2000                       1999                       1998
                                              ----------------------    -----------------------    -----------------------
<S>                                           <C>            <C>        <C>             <C>        <C>             <C>
REVENUES:

  Printing                                      $  96,657        76.5%     $ 92,405         74.3%    $  95,003         77.2%

  Office products and office furniture             29,672        23.5        31,954         25.7        28,058         22.8
                                                ----------     -------    ----------       ------    ----------       ------
      Total revenues                              126,329       100.0       124,359        100.0       123,061        100.0

COST OF SALES:

  Printing                                         69,376        54.9        65,021         52.3        66,699         54.2

  Office products and office furniture             19,927        15.8        21,764         17.5        18,616         15.1
                                                ----------     -------    ----------       ------    ----------       ------
      Total cost of sales                          89,303        70.7        86,785         69.8        85,315         69.3
                                                ----------     -------    ----------       ------    ----------       ------
GROSS PROFIT                                       37,026        29.3        37,574         30.2        37,746         30.7

Selling, general and administrative expenses       32,621        25.8        31,387         25.2        29,872         24.3
                                                ----------     -------    ----------       ------    ----------       ------
Income from operations                              4,405         3.5         6,187          5.0         7,874          6.4

OTHER INCOME (EXPENSE):

      Interest income                                  71         0.1           157          0.1           245          0.2

      Interest expense                             (1,018)       (0.8)       (1,228)        (1.0)       (1,507)        (1.2)

      Other income                                    114         0.1           211          0.2           241          0.2
                                                ----------     -------    ----------       ------    ----------       ------
Income before income taxes                          3,572         2.9         5,327          4.3         6,853          5.6

    Income taxes                                   (1,463)       (1.2)       (2,134)        (1.7)       (2,702)        (2.2)
                                                ----------     -------    ----------       ------    ----------       ------
  Net income                                    $   2,109         1.7%     $  3,193          2.6%    $   4,151          3.4%
                                                ==========     =======    ==========       ======    ==========       ======
</TABLE>


         The following discussion and analysis presents the significant
changes in the financial position and results of operations of the Company and
should be read in conjunction with the Audited Consolidated Financial
Statements and notes thereto included elsewhere herein.

YEAR ENDED OCTOBER 31, 2000 COMPARED TO YEAR ENDED OCTOBER 31, 1999

                                      21

<PAGE>   22

Revenues

         Consolidated net revenues were $126.3 million for the year ended
October 31, 2000 compared to $124.4 million in the prior fiscal year. This
change represents a growth in revenues of $2.0 million or 1.6%. Printing
revenues increased by $4.3 million or 4.6% from $92.4 million in 1999 to $96.7
million in 2000. Office products and office furniture revenue decreased $2.3
million or 7.1% from $32.0 million in 1999 to $29.7 million in 2000. The
decrease in revenues for the office products and office furniture segment was
primarily attributable to lower furniture sales. Gross margin dollars declined
in both divisions with an overall decrease of $548,000 or 1.5%.

Cost of Sales

         Total cost of sales for the year ended October 31, 2000 totaled $89.3
million compared to $86.8 million in the previous year. This change
represented an increase of $2.5 million or 2.9% in cost of sales. Printing
cost of sales increased $4.4 million or 6.7% to $69.4 million in 2000 compared
to $65.0 million in 1999. Printing cost of sales were higher due to an overall
increase in printing sales coupled with an increase in material costs as a
percentage of sales. Office products and office furniture cost of sales
decreased $1.8 million or 8.4% to $19.9 million from $21.8 million in 1999,
primarily due to lower furniture sales.

Operating Expenses and Income

         Selling, general and administrative (S,G&A) expenses increased $1.2
million to $32.6 million in 2000 from $31.4 million in 1999. S,G&A as a
percentage of net sales represented 25.8% of net sales in 2000 compared with
25.2% of net sales in 1999. This increase is related, in part, to increases in
corporate overhead expenses, higher information system costs, depreciation on
newly acquired equipment and increased health insurance costs and expenses
related to AIM Printing and IPS being included for a full year in 2000. In
addition, expenses for eleven months for Diez are included in 2000.

Other Income/Expense

         Interest expense decreased $211,000 to $1.0 million in 2000 from $1.2
million in 1999 as a result of a reduction in debt. Interest income decreased
$87,000 to $71,000 in 2000 from $158,000 in 1999. The additional income in
1999 was due to higher average funds invested as a result of a stock offering
in April of 1998.

                                      22

<PAGE>   23


Income Taxes

         Income taxes as a percentage of income before taxes were 41.0% in
2000 compared with 40.1% in 1999. This increase was primarily caused by a
change in the geographic profitability mix of our operations, which resulted
in higher effective tax rates at the state level.

Net income

         For reasons set forth above, net income for 2000 decreased $1.1
million to $2.1 million, or $0.22 per share on a basic and diluted basis, from
$3.2 million for 1999, or $0.33 per share on a basic and diluted basis.

YEAR ENDED OCTOBER 31, 1999 COMPARED TO YEAR ENDED OCTOBER 31, 1998

Revenues

         Consolidated net revenues were $124.4 million for the year ended
October 31, 1999 compared to $123.1 million in the prior fiscal year. This
change represents a growth in revenues of $1.3 million or 1.1%. Printing
revenues declined by $2.6 million or 2.7% from $95.0 million in 1998 to $92.4
million in 1999. Office products and office furniture revenue increased $3.9
million or 13.9% from $28.1 million in 1998 to $32.0 million in 1999. The
increase in revenues for the office products and office furniture segment was
primarily attributable to the Rose City, Capitol and Thompson acquisitions,
which contributed an additional $3.3 million in revenue in 1999 over 1998 as
these acquisitions were included for a full year in 1999 versus partial
periods in 1998. Gross margin dollars remained relatively stable with a modest
increase in office products and furniture offsetting a slight decline in
printing.

Cost of Sales

         Total cost of sales for the year ended October 31, 1999 totaled $86.8
million compared to $85.3 million in the previous year. This change
represented an increase of $1.5 million or 1.7% in cost of sales. Printing
cost of sales decreased $1.7 million or 2.5% to $65.0 million in 1999 compared
to $66.7 million in 1998. Printing cost of sales were impacted by sluggish
sales in many of the geographical areas served by the Company. Office products
and office furniture cost of sales increased $3.1 million or 16.9% to $21.8
million from $18.6 million in 1998, primarily due to acquisitions.

Operating Expenses and Income

         Selling, general and administrative (S,G&A) expenses increased $1.5
million to $31.4 million in 1999 from $29.9 million in 1998. S,G&A as a
percentage of net sales represented 25.2% of net sales in 1999 compared with
24.3% of net sales in 1998. This increase is related, in part, to increases in
corporate overhead expenses, depreciation on newly acquired equipment and
expenses of Rose City, Capitol and Thompson. The results of operations for the
year ended October 31, 1999 include Rose City, Capitol and Thompson for the
entire year while they were only included for a partial year in 1998. In
addition, expenses of a partial year for the AIM Printing and IPS acquisitions
are included in 1999.

                                      23

<PAGE>   24

Other Income/Expense

         Interest expense decreased $279,000 to $1.2 million in 1999 from $1.5
million in 1998 as a result of a reduction in debt. Interest income decreased
$87,000 to $158,000 in 1999 from $245,000 in 1998. The additional income in
1998 was due to higher average funds invested as a result of a stock offering
in April of 1998.

Income Taxes

         Income taxes as a percentage of income before taxes were 40.1% in
1999 compared with 39.4% in 1998. This increase was primarily caused by a
change in the geographic profitability mix of our operations which resulted in
higher effective tax rates at the state level.

Net income

         For reasons set forth above, net income for 1999 decreased $958,000
to $3.2 million, or $0.33 per share on a basic and diluted basis, from $4.2
million for 1998, or $0.45 per share on a basic and diluted basis.

LIQUIDITY AND CAPITAL RESOURCES

         As of October 31, 2000, the Company had $3.2 million of cash and cash
equivalents, an increase of $710,000 from the prior year. Working capital as
of October 31, 2000 was $29.1 million, a decrease of $1.3 million from October
31, 1999. The decrease in working capital was primarily the result of capital
expenditures and dividend payments. The increase in cash and cash equivalents
is primarily attributable to cash provided from operations including net cash
flow from accounts receivable and inventory reductions of $1.7 million and
$571,000.

         The Company has historically used cash generated from operating
activities and debt to finance capital expenditures and the cash portion of
the purchase price of acquisitions. Management plans to continue making
significant investments in equipment and to seek appropriate acquisition
candidates. However, to fund the Company's continued expansion of operations,
additional financing may be necessary. The Company has available a line of
credit totaling $10.0 million and a line of credit totaling $1.0 million (see
Note 3 to the Consolidated Financial Statements for additional information).
For the foreseeable future, management believes it can fund operations, meet
debt service requirements, and make the planned capital expenditures based on
the available cash and cash equivalents, cash flow from operations, and lines
of credit.

Cash Flows from Operating Activities

         Cash flows from operating activities for the years ended October 31,
2000, 1999 and 1998 were $8.7 million, $4.2 million and $4.2 million. Cash
flows from operating activities for the fiscal year 2000 compared to 1999
increased primarily due to positive cash flow from the reduction of accounts
receivable and inventory.

Cash Flows from Investing Activities

                                      24

<PAGE>   25

         Cash used in investing activities was ($3.1) million, ($4.9) million,
and ($1.5) million for the years ended October 31, 2000, 1999 and 1998. Cash
flows used in investing activities decreased in 2000 compared to 1999 due to a
decrease in the purchase of property and equipment. Cash flows used in
investing activities increased in 1999 compared to 1998 due to cash utilized
for the purchase of property and equipment including the implementation of a
new enterprise-wide resource management system, and the net effect of cash
used in the purchase of businesses in 1999 over cash received.

Cash Flows from Financing Activities

         Cash flows (used in) provided by financing activities for the years
ended October 31, 2000, 1999 and 1998 were ($4.9) million, ($6.6) million and
$6.1 million. Cash flows used in financing activities decreased in 2000
compared to 1999 due to proceeds from long-term debt. In 1998, as a result of
a stock offering, the Company received net proceeds of $14.1 million. As a
result of the offering, debt was paid down both in 1999 and in 1998 in the
amounts of $4.7 million and $5.5 million. Dividends paid in 2000, 1999 and
1998 were $1.9 million, $1.9 million and $1.8 million.

INFLATION AND ECONOMIC CONDITIONS

Management believes that the effect of inflation on the Company's operations
has not been material and will continue to be immaterial for the foreseeable
future. The Company does not have long-term contracts; therefore, to the
extent permitted by competition, it has the ability to pass through to its
customers most cost increases resulting from inflation, if any. In addition,
the Company is not particularly energy dependent; therefore, the increase in
energy costs should not have a significant impact on the Company.

SEASONALITY

         Historically, the Company has experienced a greater portion of its
annual sales and net income in the second and fourth quarters than in the
first and third quarters. The second quarter generally reflects increased
orders for printing of corporate annual reports and proxy statements. A
post-Labor Day increase in demand for printing services and office products
coincides with the Company's fourth quarter.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements and other information required by this Item
are contained in the financial statements and footnotes thereto listed in the
index on page F-1 of this report.

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

                                      25

<PAGE>   26

         None.

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information relating to the directors of the Company is contained on
pages 2 through 4 and page 13 of the Company's definitive Proxy Statement,
dated February 16, 2001, with respect to the Annual Meeting of Shareholders to
be held on March 19, 2001, which will be filed pursuant to regulation 14(a) of
the Securities Exchange Act of 1934 and which is incorporated herein by
reference.

ITEM 11 - EXECUTIVE COMPENSATION

         The information called for by this Item is contained on pages 6
through 10 of the Company's definitive Proxy Statement, dated February 16,
2001, with respect to the Annual Meeting of Shareholders to be held on March
19, 2001, which will be filed pursuant to regulation 14(a) of the Securities
Exchange Act of 1934 and which is incorporated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information called for by this Item is contained on pages 4 and 5
of the Company's definitive Proxy Statement, dated February 16, 2001, with
respect to the Annual Meeting of Shareholders to be held on March 19, 2001,
which will be filed pursuant to regulation 14(a) of the Securities Exchange
Act of 1934 and which is incorporated herein by reference.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information called for by this Item is contained on page 12 of
the Company's definitive Proxy Statement, dated February 16, 2001, with
respect to the Annual Meeting of Shareholders to be held on March 19, 2001,
which will be filed pursuant to regulation 14(a) of the Securities Exchange
Act of 1934 and which is incorporated herein by reference.

PART IV

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

(a)      Documents filed for this part of the report are filed as a separate
         section following the signature page. Reference is made to the
         Audited Consolidated Financial Statements and Schedule II Table of
         Contents on Page F-1.

         (1)      See Page No. F-1.

                                      26

<PAGE>   27

(2)      Schedules, other than Schedule II listed on page F-1, are omitted
         because of the absence of conditions under which they are required.


                                      27


<PAGE>   28


3.       EXHIBITS

<TABLE>
<CAPTION>

NUMBER           DESCRIPTION                     REFERENCE
------           -----------                     ---------
<S>              <C>                             <C>
(3)  3.1         Articles of Incorporation       Filed as Exhibit 3.1 to Form 10-Q dated June 16,
                                                 1997, filed on June 16, 1997, incorporated herein
                                                 by reference.

     3.2         Bylaws                          Filed as Exhibit 3.2 to Registration Statement on
                                                 Form S-1, File No. 33-54454, filed on November 10,
                                                 1992, incorporated herein by reference.

(4)              Instruments defining the        See Exhibit 3.1 above.
                 rights of security holders,
                 including debentures.

(10)             Material Contracts              Realty Lease dated January 28, 1993 between ADJ
                                                 Corp. and Company regarding 2450 1st Avenue,
                                                 Huntington, West Virginia, filed as Exhibit 10.1 to
                                                 Form 10-K dated January 27, 1994, filed January 31,
                                                 1994, is incorporated herein by reference.

                                                 Realty Lease dated January 28, 1993 between The
                                                 Harrah and Reynolds Corporation and Company
                                                 regarding 615 4th Avenue, Huntington, West
                                                 Virginia, filed as Exhibit 10.2 to Form 10-K dated
                                                 January 27, 1994, filed January 31, 1994, is
                                                 incorporated herein by reference.

                                                 Realty Lease dated January 28, 1993 between ADJ
                                                 Corp. and Company regarding 617-619 4th Avenue,
                                                 Huntington, West Virginia, filed as Exhibit 10.3 to
                                                 Form 10-K dated January 27, 1994, filed January 31,
                                                 1994, is incorporated herein by reference.

                                                 Realty Lease dated January 28, 1993 between The
                                                 Harrah and Reynolds Corporation and Company
                                                 regarding 1945 5th Avenue, Huntington, West
                                                 Virginia, filed as Exhibit 10.4 to Form 10-K dated
                                                 January 27, 1994, filed January 31, 1994, is
                                                 incorporated herein by reference.
</TABLE>

                                      28

<PAGE>   29

<TABLE>
<S>              <C>                             <C>
                                                 Realty Lease dated January 28, 1993 between
                                                 Printing Property Corp. and Company regarding 405
                                                 Ann Street, Parkersburg, West Virginia, filed as
                                                 Exhibit 10.5 to Form 10-K dated January 27, 1994,
                                                 filed January 31, 1994, is incorporated herein by
                                                 reference.

                                                 Realty Lease dated January 28, 1993 between
                                                 Printing Property Corp. and Company regarding 890
                                                 Russell Cave Road, Lexington, Kentucky, filed as
                                                 Exhibit 10.6 to Form 10-K dated January 27, 1994,
                                                 filed January 31, 1994, is incorporated herein by
                                                 reference.

                                                 Realty Lease dated January 28, 1993 between BCM
                                                 Company, Ltd. and Company regarding 1563 Hansford
                                                 Street, Charleston, West Virginia, filed as Exhibit
                                                 10.7 to Form 10-K dated January 27, 1994, filed
                                                 January 31, 1994, is incorporated herein by
                                                 reference.

                                                 Lease dated April 11, 1994 between Terry and Anis
                                                 Wyatt and Stationers Inc. regarding 214 Stone Road,
                                                 Belpre, Ohio, filed as Exhibit 10.1 to Form 10-K
                                                 dated January 26, 1995, filed January 27, 1995, is
                                                 incorporated herein by reference.

                                                 Form of Indemnification Agreement between Company
                                                 and all directors and executive officers, filed as
                                                 Exhibit 10.4 to Registration Statement on Form S-1,
                                                 File No. 33-54454, filed on November 10, 1992, is
                                                 incorporated herein by reference.

                                                 Lease Agreement dated June 1, 1995 between Owl
                                                 Investors Joint Venture and U.S. Tag & Ticket
                                                 Company, Inc. regarding 2217 Robb Street,
                                                 Baltimore, Maryland filed as Exhibit 10.1 to Form
                                                 10-K dated January 26, 1996, filed January 26,
                                                 1996, is incorporated herein by reference.
</TABLE>

                                      29

<PAGE>   30

<TABLE>
<S>              <C>                             <C>
                                                 Lease Agreement dated June 1, 1972 between Earl H.
                                                 and Elaine D. Seibert and Smith & Butterfield Co.,
                                                 Inc. regarding 113-117 East Third Street,
                                                 Owensboro, Kentucky, filed as Exhibit 10.3 to Form
                                                 10-K dated January 28, 1997, filed January 28,
                                                 1997, is incorporated herein by reference.

                                                 Agreement of Lease dated August 21, 1996 between
                                                 Marion B. and Harold A. Merten, Jr. and CM
                                                 Acquisition Corp. (now The Merten Company)
                                                 regarding 1515 Central Parkway, Cincinnati, Ohio,
                                                 filed as Exhibit 10.4 to Form 10-K dated January
                                                 28, 1997, filed January 28, 1997, is incorporated
                                                 herein by reference.

                                                 $12,500,000 Term Loan Credit Agreement by and among
                                                 Champion Industries, Inc. and the Banks Party
                                                 thereto and PNC Bank, National Association, as
                                                 Agent, dated as of March 31, 1997, as amended by
                                                 Amendment No. 1 to Credit Agreement dated August 1,
                                                 1997, filed as Exhibit 10.1 to Form 10-K dated
                                                 January 29, 1998, filed January 29, 1998, is
                                                 incorporated herein by reference.

                                                 $5,600,000 Term Loan Credit Agreement by and among
                                                 the Company and its subsidiaries and PNC Bank,
                                                 National Association, dated as of March 13, 1998,
                                                 together with promissory note and representative
                                                 security agreement attendant thereto, filed as
                                                 Exhibit 10.1 to Form 10-K dated January 25, 1999 is
                                                 incorporated herein by reference.

                                                 Agreement of Lease between The Tilson Group and
                                                 Capitol Business Equipment, Inc. dated May 18,
                                                 1998, regarding 711 Indiana Avenue, Charleston,
                                                 West Virginia, filed as Exhibit 10.2 to Form 10-K
                                                 dated January 25, 1999, is incorporated herein by
                                                 reference.

                                                 Agreement of Lease between Mildred Thompson and
                                                 Thompson's of Morgantown, Inc. dated May 28, 1998,
                                                 regarding Kirk and Chestnut Streets, Morgantown,
                                                 West Virginia, filed as Exhibit 10.3 to Form 10-K
                                                 dated January 25, 1999, is incorporated herein by
                                                 reference.
</TABLE>

                                      30

<PAGE>   31

<TABLE>
<S>              <C>                             <C>
                  Executive Compensation                Company's 1993 Stock Option Plan, effective
                  Plans and Arrangements         March 22, 1994, filed as Exhibit 10.14 to Form 10-K
                                                 dated January 27, 1994, filed January 31, 1994, is
                                                 incorporated herein by reference.

                                                        Deferred Compensation Agreement dated July
                                                 1, 1993 between Blue Ridge Printing Co., Inc. and
                                                 Glenn W. Wilcox, Sr., filed as Exhibit 10.4 to Form
                                                 10-K dated January 29, 1998, filed January 29,
                                                 1998, is incorporated herein by reference.

                                                        Split Dollar Life Insurance Agreement dated
                                                 July 1, 1993 between Blue Ridge Printing Co., Inc.
                                                 and Glenn W. Wilcox, Sr., filed as Exhibit 10.5 to
                                                 Form 10-K dated January 29, 1998, filed January 29,
                                                 1998, is incorporated herein by reference.

                                                 Agreement of Lease between ADJ Corp and Champion
                                                 Industries, Inc. dated January 1, 1999, regarding
                                                 Industrial Lane in Kyle Industrial Park, filed as
                                                 Exhibit 10.1 to Form 10-K dated January 25, 2000,
                                                 filed January 28, 2000, is incorporated herein by
                                                 reference.

                                                 $10,000,000 revolving credit agreement by and among
                                                 the Company and its subsidiaries and National City
                                                 Bank dated as of April 1, 1999, filed as Exhibit
                                                 10.2 to Form 10-K dated January 25, 2000, filed
                                                 January 28, 2000, is incorporated herein by
                                                 reference.

                                                 Lease Agreement dated November 1, 1999 between
                                                 Randall M. Schulz, successor trustee of The
                                                 Butterfield Family Trust No. 2 and Smith &
                                                 Butterfield Co., Inc. regarding 2800 Lynch Road,
                                                 Evansville, Indiana, filed as Exhibit 10.3 to Form
                                                 10-K dated January 25, 2000, filed January 28,
                                                 2000, is incorporated herein by reference.
</TABLE>

                                      31

<PAGE>   32

<TABLE>
<S>              <C>                             <C>
                                                 Agreement of Lease dated September 25, 1998 between
                                                 Ronald H. Scott and Frank J. Scott t/d/b/a St.
                                                 Clair Leasing Co. and Interform Corporation,
                                                 regarding 1901 Mayview Road, Bridgeville,
                                                 Pennsylvania, filed as Exhibit 10.4 to Form 10-K
                                                 dated January 25, 2000, filed January 28, 2000, is
                                                 incorporated herein by reference.

(10.1)                                           $1,000,000 revolving line of credit between
                                                 Stationers, Inc. and First Sentry Bank dated as of
                                                 October 17, 2000.

                                                                             Page Exhibit (10.1)-p1
                                                                             ----------------------

(10.2)                                           Lease agreement dated October 31, 2000 between
                                                 Champion Industries, Inc. dba Upton Printing and
                                                 AMB Property, L.P., 5600 Jefferson Highway Harahan,
                                                 Louisiana.

                                                                             Page Exhibit (10.2)-p1
                                                                             ----------------------

(10.3)                                           Lease agreement dated September 27, 2000 between M.
                                                 Field Gomila Et. Al. and Bourque Printing DBA Upton
                                                 Printing for 736 Carondelet Street New Orleans,
                                                 Louisiana.

                                                                             Page Exhibit (10.3)-p1
                                                                             ----------------------

(10.4)                                           $2,690,938 Business Loan agreement by and among the
                                                 Company and One Valley Bank National Association
                                                 (BB&T), dated as of May 6, 1999, together with
                                                 Promissory Note and Commercial Security Agreement.

                                                                             Page Exhibit (10.4)-p1
                                                                             ----------------------

(10.5)                                           $618,720 Promissory Note by and among the Company
                                                 and Bank One, West Virginia, N.A. dated as of June
                                                 6, 2000 together with commercial security
                                                 agreement.

                                                                             Page Exhibit (10.5)-p1
                                                                             ----------------------
</TABLE>

                                      32

<PAGE>   33

<TABLE>
<S>            <C>                               <C>
(10.6)                                           $550,000 Promissory Note by and among the Company
                                                 and Bank One, West Virginia, N.A. dated as of
                                                 August 4, 2000 together with Commercial Security
                                                 Agreement and Letter of Understanding.

                                                                             Page Exhibit (10.6)-p1
                                                                             ----------------------

(21)           Subsidiaries of the Registrant    Exhibit 21                      Page Exhibit 21-p1
                                                                             ----------------------

(23)           Consent of Ernst & Young LLP      Exhibit 23                      Page Exhibit 23-p1
                                                                             ----------------------
</TABLE>

(b)      Champion filed the following reports on Form 8-K during the last
         quarter of the period covered by this report:

         Form 8-K dated September 5, 2000, filed September 14, 2000 regarding
appointment of Kirby J. Taylor as President and Chief Operating Officer.

                                      33

<PAGE>   34

                                  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.

                                  CHAMPION INDUSTRIES, INC.

                                  By /s/ Marshall T. Reynolds
                                    ------------------------------------------
                                  Marshall T. Reynolds
                                  Chief Executive Officer


                                  By /s/ Kirby J. Taylor
                                    ------------------------------------------
                                  Kirby J. Taylor
                                  President and Chief Operating Officer


                                  By /s/ Todd R. Fry
                                    ------------------------------------------
                                  Todd R. Fry
                                  Vice President and Chief Financial Officer



                                  Date: January 22, 2001


                                      34

<PAGE>   35


         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 and on the dates indicated.

  SIGNATURE AND TITLE                           DATE


                                                January 22, 2001
  ------------------------------------
  Robert H. Beymer, Director

  /s/ Philip E. Cline                           January 22, 2001
  ------------------------------------
  Philip E. Cline, Director

  /s/ Harley F. Mooney, Jr.                     January 22, 2001
  ------------------------------------
  Harley F. Mooney, Jr., Director

  /s/ Todd L. Parchman                          January 22, 2001
  ------------------------------------
  Todd L. Parchman, Director

  /s/ A. Michael Perry                          January 22, 2001
  ------------------------------------
  A. Michael Perry, Director

  /s/ Marshall T. Reynolds                      January 22, 2001
  ------------------------------------
  Marshall T. Reynolds, Director

  /s/ Neal W. Scaggs                            January 22, 2001
  ------------------------------------
  Neal W. Scaggs, Director

  /s/ Glenn W. Wilcox, Sr.                      January 22, 2001
  ------------------------------------
  Glenn W. Wilcox, Sr., Director

                                      35

<PAGE>   36

                          CHAMPION INDUSTRIES, INC.

            Audited Consolidated Financial Statements and Schedule

                               October 31, 2000




CONTENTS

<TABLE>
<S>                                                                       <C>
Report of Independent Auditors (Item 8).......................................F-2

Audited Consolidated Financial Statements and Schedule (Item 8)

     Consolidated Balance Sheets..............................................F-3

     Consolidated Income Statements...........................................F-5

     Consolidated Statements of Shareholders' Equity..........................F-6

     Consolidated Statements of Cash Flows....................................F-7

     Notes to Consolidated Financial Statements...............................F-8

     Schedule II--Valuation and Qualifying Accounts (Item 14a)...............F-22
</TABLE>

                                     F-1

<PAGE>   37

                        REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Champion Industries, Inc.

We have audited the accompanying consolidated balance sheets of Champion
Industries, Inc. and Subsidiaries as of October 31, 2000 and 1999, and the
related consolidated income statements, statements of shareholders' equity,
and cash flows for each of the three years in the period ended October 31,
2000. Our audits also included the financial statement schedule listed in the
index at Item 14(a). These financial statements and the schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and the schedule based upon our
audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Champion Industries, Inc. and Subsidiaries at October 31, 2000 and 1999,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended October 31, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.


                                                          /s/ Ernst & Young LLP

Charleston, West Virginia
December 22, 2000

                                     F-2

<PAGE>   38


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                         Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                OCTOBER 31,
                                                                        2000                    1999
                                                             ---------------------------------------------
<S>                                                          <C>                         <C>
ASSETS
   Current assets:
      Cash and cash equivalents                               $          3,173,587          $   2,463,554
      Accounts receivable, net of allowance
      of $1,509,000 and $1,448,000                                      21,986,924             23,962,380
      Inventories                                                       13,576,479             14,072,694
      Other current assets                                               1,009,915                828,189
      Deferred income tax assets                                         1,103,480              1,009,512
                                                             ---------------------------------------------
   Total current assets                                                 40,850,385             42,336,329

   Property and equipment, at cost:
      Land                                                               1,009,220                984,889
      Buildings and improvements                                         6,631,840              6,308,530
      Machinery and equipment                                           34,832,461             32,861,577
      Equipment under capital leases                                     1,600,000              1,600,000
      Furniture and fixtures                                             2,278,750              2,353,191
      Vehicles                                                           2,870,865              2,621,696
                                                             ---------------------------------------------
                                                                        49,223,136             46,729,883
   Less accumulated depreciation                                       (24,267,533)           (20,667,666)
                                                             ---------------------------------------------
                                                                        24,955,603             26,062,217

   Cash surrender value of officers' life insurance                      1,246,558                956,769
   Goodwill, net of accumulated amortization                             3,634,439              3,558,346
   Other assets
                                                                           872,214                728,833
                                                             ---------------------------------------------
                                                                         5,753,211              5,243,948
                                                             ---------------------------------------------
   Total assets                                               $         71,559,199          $  73,642,494
                                                             =============================================

</TABLE>

See notes to consolidated financial statements.

                                     F-3

<PAGE>   39


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                   Consolidated Balance Sheets (continued)

<TABLE>
<CAPTION>
                                                                                 OCTOBER 31,
                                                                           2000                1999
                                                                  ------------------------------------------
<S>                                                               <C>                   <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
   Current liabilities:
      Accounts payable                                             $        3,601,765    $       3,521,282
      Accrued payroll and commissions                                       2,199,379            1,768,345
      Taxes accrued and withheld                                            1,197,435              905,854
      Accrued income taxes                                                    224,519              677,119
      Accrued expenses                                                      1,005,744            1,207,153
      Current portion of long-term debt:
         Notes payable                                                      3,210,255            3,607,354
         Capital lease obligations                                            341,661              316,598
                                                                  ------------------------------------------
   Total current liabilities                                               11,780,758           12,003,705

   Long-term debt, net of current portion:
      Notes payable                                                         7,730,531            9,222,191
      Capital lease obligations                                               339,653              710,433
   Deferred income tax liabilities                                          4,173,419            4,318,571
   Other liabilities                                                          809,080              827,725
                                                                  ------------------------------------------
   Total liabilities                                                       24,833,441           27,082,625

   Commitments and contingencies

   Shareholders' equity:
      Common stock, $1 par value, 20,000,000 shares authorized;
      9,713,913 shares issued and outstanding                               9,713,913            9,713,913
      Additional paid-in capital                                           22,242,047           22,242,047
      Retained earnings                                                    14,769,798           14,603,909
                                                                  ------------------------------------------
   Total shareholders' equity                                              46,725,758           46,559,869
                                                                  ------------------------------------------
   Total liabilities and shareholders' equity                      $       71,559,199    $      73,642,494
                                                                  ==========================================
</TABLE>

See notes to consolidated financial statements.

                                     F-4

<PAGE>   40


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                        Consolidated Income Statements

<TABLE>
<CAPTION>
                                                                     YEAR ENDED OCTOBER 31,
                                                           2000                1999               1998
                                                   ------------------------------------------------------------
<S>                                                <C>                  <C>                <C>
   Revenues:
      Printing                                      $       96,656,679   $    92,404,925    $   95,002,726
      Office products and office furniture                  29,672,727        31,953,877        28,058,762
                                                   ------------------------------------------------------------
      Total revenues                                       126,329,406       124,358,802       123,061,488

   Cost of sales:
      Printing                                              69,376,266        65,021,151        66,699,561
      Office products and office furniture                  19,927,207        21,763,787        18,615,734
                                                   ------------------------------------------------------------
      Total cost of sales                                   89,303,473        86,784,938        85,315,295

   Gross Profit                                             37,025,933        37,573,864        37,746,193

   Selling, general and administrative expenses             32,621,339        31,387,527        29,871,573
                                                   ------------------------------------------------------------
   Income from operations                                    4,404,594         6,186,337         7,874,620

   Other income (expense):
      Interest income                                           71,094           157,691           244,753
      Interest expense                                      (1,017,618)       (1,228,157)       (1,507,387)
      Other                                                    113,710           210,912           241,392
                                                   ------------------------------------------------------------
                                                              (832,814)         (859,554)       (1,021,242)
                                                   ------------------------------------------------------------
   Income before income taxes                                3,571,780         5,326,783         6,853,378
   Income taxes                                             (1,463,109)       (2,133,872)       (2,702,274)
                                                   ------------------------------------------------------------
   Net income                                       $        2,108,671   $     3,192,911    $    4,151,104
                                                   ============================================================

   Earnings per share:
      Basic                                         $             0.22   $          0.33    $         0.45
      Diluted                                                     0.22              0.33              0.45

   Dividends paid per share                                       0.20              0.20              0.20

   Weighted average shares outstanding:
      Basic                                                  9,714,000         9,714,000         9,142,000
      Diluted                                                9,714,000         9,714,000         9,172,000
</TABLE>

See notes to consolidated financial statements.

                                     F-5


<PAGE>   41


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

               Consolidated Statements of Shareholders' Equity


<TABLE>
<CAPTION>

                                                    COMMON STOCK            ADDITIONAL
                                            ------------------------------   PAID-IN        RETAINED
                                                SHARES         AMOUNT        CAPITAL        EARNINGS          TOTAL
                                            -----------------------------------------------------------------------------
<S>                                         <C>             <C>           <C>            <C>              <C>
Balance, October 31, 1997                       8,384,930   $   8,384,930 $   7,450,328  $   11,014,514   $   26,849,772

   Net income for 1998                                  -               -             -       4,151,104        4,151,104
   Dividends ($0.20 per share)                          -               -             -      (1,811,843)      (1,811,843)
   Stock issued in acquisitions                   193,397         193,397     1,564,894               -        1,758,291
   Stock options exercised                         43,593          43,593       184,274               -          227,867
   Stock offering, net of issuance
     expenses                                   1,091,993       1,091,993    13,042,551               -       14,134,544
                                            -----------------------------------------------------------------------------

Balance, October 31, 1998                       9,713,913       9,713,913    22,242,047      13,353,775       45,309,735

   Net income for 1999                                  -               -             -       3,192,911        3,192,911
   Dividends ($0.20 per share)                          -               -             -      (1,942,777)      (1,942,777)
                                            -----------------------------------------------------------------------------

Balance, October 31, 1999                       9,713,913       9,713,913    22,242,047      14,603,909       46,559,869

   NET INCOME FOR 2000                                  -               -             -       2,108,671        2,108,671
   DIVIDENDS ($0.20 PER SHARE)                          -               -             -      (1,942,782)      (1,942,782)
                                            -----------------------------------------------------------------------------

BALANCE, OCTOBER 31, 2000                       9,713,913   $   9,713,913 $  22,242,047  $   14,769,798   $   46,725,758
                                            =============================================================================
</TABLE>

See notes to consolidated financial statements.

                                     F-6

<PAGE>   42

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                    Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED OCTOBER 31,
                                                                          2000              1999             1998
                                                                   ------------------------------------------------------
<S>                                                               <C>                   <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                          $  2,108,671      $  3,192,911      $  4,151,104
     Adjustments to reconcile net income to cash provided by
   operating activities:
     Depreciation and amortization                                        4,286,048         3,892,312         3,620,925
     Loss (gain) on sale of assets                                           19,147            41,004           (52,914)
     Deferred income taxes                                                 (239,120)           33,436           616,334
     Deferred compensation                                                   25,020            42,000            53,000
     Bad debt expense                                                       412,420           529,747           274,191
     Changes in assets and liabilities:
       Accounts receivable                                                1,705,346        (2,971,599)         (646,319)
       Inventories                                                          571,215        (1,197,359)         (489,321)
       Other current assets                                                (150,376)         (347,433)         (164,028)
       Accounts payable                                                     (15,070)          (86,112)       (1,038,947)
       Accrued payroll                                                      431,034           205,028          (628,118)
       Taxes accrued and withheld                                           281,351           290,324           (58,872)
       Accrued income taxes                                                (452,600)          501,917          (264,549)
       Deferred revenue                                                           -                 -        (1,059,975)
       Accrued expenses                                                    (201,409)          118,853          (108,610)
       Other liabilities                                                    (43,665)          (23,810)            3,894
                                                                   ------------------------------------------------------
   Net cash provided by operating activities                              8,738,012         4,221,219         4,207,795
     Cash flows from investing activities:
         Purchase of property and equipment                              (2,334,255)       (4,078,328)       (3,195,260)
         Proceeds from sales of assets                                      181,302           301,454           513,282
         Businesses acquired, net of cash received                         (463,477)         (788,941)        1,159,356
         Change in other assets                                            (478,699)         (342,755)           33,798
                                                                   ------------------------------------------------------
         Net cash used in investing activities                           (3,095,129)       (4,908,570)       (1,488,824)
     Cash flows from financing activities:
         Net payments on notes payable                                            -                 -        (2,758,757)
         Proceeds from long-term debt                                     1,168,720            45,613         1,815,465
         Principal payments on long-term debt                            (4,158,788)       (4,725,124)       (5,465,344)
         Dividends paid                                                  (1,942,782)       (1,942,777)       (1,811,843)
         Proceeds from stock offering, net of issuance expenses                   -                 -        14,134,544
         Proceeds for exercise of stock options                                   -                 -           227,867
                                                                   ------------------------------------------------------
         Net cash (used in) provided by financing activities             (4,932,850)       (6,622,288)        6,141,932
                                                                   ------------------------------------------------------
         Net increase (decrease) in cash                                    710,033        (7,309,639)        8,860,903
         Cash and cash equivalents at beginning of year                   2,463,554         9,773,193           912,290
                                                                   ------------------------------------------------------
         Cash and cash equivalents at end of year                      $  3,173,587      $  2,463,554      $  9,773,193
                                                                   ======================================================
</TABLE>

See notes to consolidated financial statements.

                                     F-7

<PAGE>   43

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The accounting and reporting policies of Champion conform to
accounting principles generally accepted in the United States. The preparation
of the financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates. The following is a summary
of the more significant accounting and reporting policies.

PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements of Champion
Industries, Inc. and Subsidiaries (the "Company") include the accounts of The
Chapman Printing Company, Inc., Bourque Printing, Inc., Dallas Printing
Company, Inc., Stationers, Inc., Carolina Cut Sheets, Inc., U.S. Tag & Ticket
Company, Inc., Donihe Graphics, Inc., Smith and Butterfield Co., Inc., The
Merten Company, Interform Corporation, Blue Ridge Printing Co., Inc., CHMP
Leasing, Inc., Rose City Press, Capitol Business Equipment, Inc., Thompson's
of Morgantown, Inc., Independent Printing Service, Inc. and Diez Business
Machines.

         Significant intercompany transactions have been eliminated in
consolidation.

CASH EQUIVALENTS

         Cash and cash equivalents consist principally of cash on deposit with
banks, repurchase agreements for government securities, and a money market
account, all highly liquid investments with an original maturity of three
months or less. At October 31, 2000 and 1999, the Company held overnight
repurchase agreements for $1,474,000 and $2,228,000 of government securities
with stated interest rates of 5.20% and 3.85%.

INVENTORIES

         Inventories are principally stated at the lower of first-in,
first-out cost or market. Manufactured finished goods and work-in-process
inventories include material, direct labor and overhead based on standard
costs, which approximate actual costs.

PROPERTY AND EQUIPMENT

         Depreciation of property and equipment and amortization of leasehold
improvements and equipment under capital leases are recognized primarily on
the straight-line and declining-balance methods in amounts adequate to
amortize costs over the estimated useful lives of the assets as follows:

<TABLE>
<S>                                                   <C>
                  Buildings and improvements           5 - 40 years
                  Machinery and equipment              5 - 10 years
                  Furniture and fixtures               5 - 10 years
                  Vehicles                             3 - 5 years
</TABLE>

                                     F-8

<PAGE>   44


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The Company leases certain equipment under financing agreements that
are classified as capital leases. These leases are for a term of five years
and contain purchase options at the end of the original lease term.
Amortization of assets recorded under capital lease agreements is included in
depreciation expense.

         Major renewals, betterments, and replacements are capitalized while
maintenance and repair costs are charged to operations as incurred. Upon the
sale or disposition of assets, the cost and related accumulated depreciation
are removed from the accounts with the resulting gains or losses reflected in
income. Depreciation expense approximated $3,975,000, $3,674,000, and
$3,432,000 for the years ended October 31, 2000, 1999 and 1998.

GOODWILL

         The excess cost over fair value of net assets of acquired businesses,
goodwill, is being amortized by the straight-line method over periods ranging
from 15 to 25 years. The carrying value of goodwill is evaluated periodically
for impairment. This evaluation includes the review of operating performance
and estimated future undiscounted cash flows of the underlying businesses. Any
impairment loss is recognized in the period when it is determined that the
carrying value of the goodwill may not be recoverable. Accumulated
amortization at October 31, 2000 and 1999 approximated $1,495,000 and
$1,253,000. Amortization expense approximated $242,000, $160,000 and $137,000,
for the years ended October 31, 2000, 1999 and 1998.

ADVERTISING COSTS

         Advertising costs are expensed as incurred. Advertising expense for
the years ended October 31, 2000, 1999 and 1998 approximated $641,000,
$693,000 and $650,000.

INCOME TAXES

         Provisions for income taxes currently payable and deferred income
taxes are based on the liability method. Under this method, deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.

EARNINGS PER SHARE

         Basic earnings per share is computed by dividing net income by the
weighted average shares of common stock outstanding for the period and
excludes any dilutive effects of stock options. Diluted earnings per share is
computed by dividing net income by the weighted average shares of common stock
outstanding for the period plus the shares that would be outstanding assuming
the exercise of dilutive stock options. The effect of dilutive stock options
increased weighted average shares outstanding by 400, 500 and 30,000 for the
years ended October 31, 2000, 1999 and 1998.

REVENUE RECOGNITION

         Revenues are recognized when products are shipped or services are
rendered to customers.

                                     F-9

<PAGE>   45

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Shipping and handling costs are recorded as a component of cost of sales.

SEGMENT INFORMATION

         The Company designates the internal organization that is used by
management for making operating decisions and assessing performance as the
source of the Company's reportable segments.

COST OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE

         Certain external costs and internal payroll and payroll-related costs
have been capitalized during the application, development and implementation
stages of software development projects and are being amortized over the
software's useful life. Training and research and development costs are
expensed as incurred.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

         In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended, which is required to be adopted in years beginning
after June 15, 2000. Because of the Company's minimal use of derivatives, the
adoption of the new Statement will not have a significant effect on earnings
or the financial position of the Company.

RECLASSIFICATIONS

         Certain prior-year amounts have been reclassified to conform to the
current-year Financial Statement presentation.

2. INVENTORIES

         Inventories consisted of the following:

<TABLE>
<CAPTION>
                                                               OCTOBER 31,
                                                         2000              1999
                                                  --------------------------------------
<S>                                               <C>                   <C>
Printing:
   Raw materials                                       $  3,034,390      $  3,267,880
   Work in process                                        2,041,255         2,357,856
   Finished goods                                         4,144,178         4,205,061
Office products and office furniture                      4,356,656         4,241,897
                                                  --------------------------------------
                                                       $ 13,576,479      $ 14,072,694
                                                  ======================================
</TABLE>

                                     F-10

<PAGE>   46

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. LONG-TERM DEBT

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
                                                                                            OCTOBER 31,
                                                                                      2000              1999
                                                                                ------------------------------------
<S>                                                                             <C>                 <C>
Unsecured term notes payable to a bank, due
   in monthly principal installments of $148,810
   plus interest at the prime rate with the last
   note maturing April 2004                                                         $   6,250,000    $   8,035,714

Installment notes payable to banks, due in monthly
   installments totaling $102,259 with interest
   rates approximating or plus the bank's prime
   rate and the last note maturing October 2005,
   collateralized by equipment, vehicles, inventory
   and accounts receivable                                                              3,201,659        2,444,181

Unsecured installment notes payable to a bank, due
   in monthly installments of $82,921, plus interest
   at a fixed rate with the note maturing May 2002,
   collateralized by real estate                                                        1,489,127        2,349,650

Capital lease obligations, due in monthly
   installments totaling $32,017 including interest
   at the bank's prime rate through October 2002                                          681,314        1,027,031
                                                                                ------------------------------------
                                                                                       11,622,100       13,856,576
Less current portion                                                                    3,551,916        3,923,952
                                                                                ------------------------------------
Long-term debt, net of current portion                                              $   8,070,184    $   9,932,624
                                                                                ====================================
</TABLE>

The unsecured term note agreements contain restrictive financial covenants
requiring the Company to maintain certain financial ratios.


Maturities of long-term debt for each of the next five years follow:

<TABLE>
<CAPTION>
                  NOTES               CAPITAL
                 PAYABLE              LEASES           TOTAL
               -------------------------------------------------
<S>           <C>                  <C>             <C>
2001           $ 3,210,255          $ 341,661       $  3,551,916
2002             4,098,459            339,653          4,438,112
2003             2,330,079                 -           2,330,079
2004             1,163,678                 -           1,163,678
2005               138,315                 -             138,315
THEREAFTER              -                  -                  -
               -------------------------------------------------
               $10,940,786          $ 681,314       $ 11,622,100
               =================================================
</TABLE>

                                     F-11

<PAGE>   47


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The Company has an unsecured revolving line of credit with a bank for
borrowings to a maximum of $10,000,000 with interest payable monthly at
interest rates at LIBOR plus 1% to 1.5%. The line of credit expires in April
2002 and contains certain restrictive financial covenants. There were no
borrowings outstanding under this facility at October 31, 2000.

         The Company has an unsecured revolving line of credit with a bank for
borrowings to a maximum of $1,000,000 with interest payable monthly at the
Wall Street Journal prime rate. The line of credit expires in December 2001
and contains certain financial covenants. There were no borrowings outstanding
under this facility at October 31, 2000.

         The prime rate, the base interest rate on the above loans,
approximated 9.5% and 8.25% at October 31, 2000 and 1999. Interest paid during
the years ended October 31, 2000, 1999 and 1998 approximated $1,018,000,
$1,230,000 and $1,588,000.

         The Company's non-cash activities for 2000, 1999 and 1998 included
equipment purchases of approximately $756,000, $589,000 and $579,000, which
were financed by a bank.

4. EMPLOYEE BENEFIT PLANS

         The Company had a Profit Sharing Plan that covered all eligible
employees and qualified as a Savings Plan under Section 401(k) of the Internal
Revenue Code. Effective January 1, 1998, the Profit Sharing Plan was merged
into The Champion Industries, Inc. 401(k) Plan (the "Plan"). The Plan covers
all eligible employees who satisfy the age and service requirements. Each
participant may elect to contribute up to 15% of annual compensation, and the
Company is obligated to contribute 100% of the participant's contribution not
to exceed 2% of the participant's annual compensation. The Company may make
discretionary contributions to the Plan. The Company's expense under these
Plans was approximately $375,000, $369,000 and $311,000 for the years ended
October 31, 2000, 1999 and 1998.

         The Company's 1993 Stock Option Plan provides for the granting of
both incentive and non-qualified stock options to management personnel for up
to 762,939 shares of the Company's common stock. The option price per share
for incentive stock options shall not be lower than the fair market value of
the common stock at the date of grant. The option price per share for
non-qualified stock options shall be at such price as the Compensation
Committee of the Board of Directors may determine at its sole discretion. All
options to date are incentive stock options. Exercise prices for options
outstanding as of October 31, 2000 ranged from $4.25 to $18.50. Options vest
immediately and may be exercised within five years from the date of grant. The
weighted average remaining contractual life of those options is 2.42 years.

         A summary of the Company's stock option activity and related
information for the years ended October 31 follows:

                                     F-12

<PAGE>   48

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                     WEIGHTED                   WEIGHTED                    WEIGHTED
                                                     AVERAGE                     AVERAGE                    AVERAGE
                                                     EXERCISE                   EXERCISE                    EXERCISE
                                         2000         PRICE         1999          PRICE         1998         PRICE
                                     ---------------------------------------------------------------------------------
<S>                                 <C>             <C>        <C>             <C>         <C>            <C>
Outstanding-beginning of year            180,862     $  13.94       158,424     $  15.89        179,532     $  12.52
Granted                                   50,000         4.25        43,000         6.88         42,000        18.50
Exercised                                      -         -                -         -           (43,593)        6.30
Forfeited or expired                     (54,545)       13.13       (20,562)       13.07        (19,515)       11.88
                                     --------------             --------------              --------------
Outstanding-end of year                  176,317        11.44       180,862        13.94        158,424        15.89
                                     ==============             ==============              ==============
Weighted average fair value of
   options granted during the year      $   1.14                   $   1.83                    $   4.51
                                     ==============             ==============              ==============
</TABLE>

A summary of stock options outstanding and exercisable at October 31, 2000,
follows:

<TABLE>
<CAPTION>
         EXERCISE         NUMBER         REMAINING
          PRICE        OUTSTANDING          LIFE
        ---------------------------------------------
<S>                   <C>               <C>
        $   15.04       32,817             0.13
            17.90       27,500             1.13
            18.50       31,000             2.12
             6.88       37,000             3.63
             4.25       48,000             4.14
</TABLE>

         The Company has elected to follow the intrinsic value method in
accounting for its employee stock options. Accordingly, because the exercise
price of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

         The fair value of these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 2000, 1999 and 1998, respectively: risk-free interest rates of
6.00%; dividend yields of 4.71%, 2.91% and 1.08%; volatility factors of the
expected market price of the Company's common stock of 39.9%, 32.5% and 21.2%;
and a weighted-average expected life of the option of 4 years.

         The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options. Accordingly, the following pro forma disclosures are not likely to be
representative of the effects on reported net income for future years.

                                     F-13

<PAGE>   49

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The following pro forma information has been determined as if the
Company had accounted for its employee stock options under the fair value
method. For purposes of pro forma disclosures, the estimated fair value of the
options is expensed in the year granted since the options vest immediately.
The Company's pro forma information for the years ended October 31 follows:

<TABLE>
<CAPTION>
                                                          2000              1999             1998
                                                    -----------------------------------------------------
<S>                                                 <C>                  <C>              <C>
   Pro forma net income                                 $  2,075,000     $  3,114,000     $   3,962,000
                                                    =====================================================

   Pro forma basic and diluted earnings per share       $       0.21     $       0.32     $        0.43
                                                    =====================================================
</TABLE>

         The Company has deferred compensation agreements with two employees
of Blue Ridge Printing Co., Inc. providing for payments totaling approximately
$1,000,000 over a ten year period after retirement. The Company had accrued
approximately $676,000 and $651,000 at October 31, 2000 and 1999 relating to
these agreements. The amount expensed for these agreements for the years ended
October 31, 2000, 1999 and 1998 approximated $25,000, $42,000 and $53,000. To
assist in funding the deferred compensation agreements, the Company has
invested in life insurance policies which had cash surrender values of
$604,000 and $500,000 at October 31, 2000 and 1999.

5. INCOME TAXES

Income taxes consisted of the following:

<TABLE>
<CAPTION>
                                                   YEAR ENDED OCTOBER 31,
                                          2000              1999             1998
                                    -----------------------------------------------------
<S>                                 <C>                 <C>                <C>
   Current expense:
      Federal                          $   1,332,515    $   1,655,446      $  1,662,406
      State                                  369,714          444,990           423,534
   Deferred (benefit) expense               (239,120)          33,436           616,334
                                    -----------------------------------------------------
                                       $   1,463,109    $   2,133,872      $  2,702,274
                                    =====================================================
</TABLE>

                                     F-14

<PAGE>   50

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                                                     OCTOBER 31,
                                                                               2000              1999
                                                                         ------------------------------------
<S>                                                                      <C>                <C>
   Assets:
      Allowance for doubtful accounts                                      $      603,414   $      579,214
      Deferred compensation                                                       270,220          260,212
      Net operating loss carryforward of acquired companies                       115,127           81,334
      Accrued vacation                                                            184,359          187,042
      Other accrued liabilities                                                   314,153          260,748
                                                                         ------------------------------------
   Gross deferred tax assets                                                    1,487,273        1,368,550

   Liabilities:
      Property and equipment                                                    4,504,926        4,633,174
      Other assets                                                                 52,286           44,435
                                                                         ------------------------------------
      Gross deferred liability                                                  4,557,212        4,677,609
                                                                         ------------------------------------
   Net deferred tax liabilities                                             $   3,069,939    $   3,309,059
                                                                         ====================================
</TABLE>

         A reconciliation of the statutory federal income tax rate to the
Company's effective income tax rate is as follows:

<TABLE>
<CAPTION>
                                                                             YEAR ENDED OCTOBER 31,
                                                                         2000         1999         1998
                                                                     ----------------------------------------
<S>                                                                  <C>              <C>         <C>
   Statutory federal income tax rate                                       34.0%        34.0%        34.0%
   State taxes, net of federal benefit                                      6.8          5.5          4.1
   Other                                                                    0.2          0.6          1.3
                                                                     ----------------------------------------
   Effective tax rate                                                      41.0%        40.1%        39.4%
                                                                     ========================================
</TABLE>

         Income taxes paid during the years ended October 31, 2000, 1999 and
1998 approximated $2,144,000, $1,755,000 and $2,393,000.

         The Company has available for income tax purposes net operating loss
carryforwards from acquired companies of approximately $1,484,000, of which
$487,000 expires in 2011, $899,000 in 2012 and $98,000 in 2013. The Company
has available for state income tax purposes net operating loss carryforwards
from acquired companies of approximately $1,892,000 of which $21,000 expires
in 2010, $47,000 expires in 2011, $545,000 expires in 2012, $253,000 expires
in 2013 and $1,026,000 expires in 2014. The Company established valuation
allowances against certain net operating loss carryforwards and to the extent
that the amounts are subsequently recognized, they will be recorded in the
period used as a reduction of goodwill.


                                     F-15

<PAGE>   51

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. RELATED PARTY TRANSACTIONS AND OPERATING LEASE COMMITMENTS

         The Company leases operating facilities from entities controlled by
its Chief Executive Officer, his family and affiliates. The terms of these
leases, which are accounted for as operating leases, range from five to
fifteen years.

A summary of significant related party transactions follows:

<TABLE>
<CAPTION>
                                                                            YEAR ENDED OCTOBER 31,
                                                                      2000           1999           1998
                                                                -----------------------------------------------
<S>                                                             <C>                 <C>           <C>
     Rent expense paid to affiliated entities for
        operating facilities                                        $  458,000      $  428,000    $   363,000
     Sales of office products, office furniture and printing
        services to affiliated entities                                892,000         667,000        447,000
</TABLE>

         Historically, the Company either purchased a new vehicle or entered
into a new vehicle lease with unrelated entities. These leases are on a
month-to-month basis. Other vehicle rent expense to unrelated entities totaled
$119,000, $168,000 and $231,000 for the years ended October 31, 2000, 1999 and
1998.

         In addition, the Company leases property and equipment from unrelated
entities under operating leases. Rent expense amounted to $690,000, $742,000
and $779,000 for the years ended October 31, 2000, 1999 and 1998.

         Under the terms and conditions of the above-mentioned leases, the
Company pays all taxes, assessments, maintenance, repairs or replacements,
utilities and insurance.

         Future minimum rental commitments for all noncancelable operating
leases with initial terms of one year or more consisted of the following at
October 31, 2000:

<TABLE>
<S>                        <C>
       2001                       $ 1,032,000
       2002                           807,000
       2003                           669,000
       2004                           469,000
       2005                           219,000
       Thereafter                     327,000
                             ------------------
                                  $ 3,523,000
                             ==================
</TABLE>


         In order to minimize premium costs, the Company participates in a
self-insurance program for employee health care benefits with affiliates
controlled by its Chief Executive Officer. The Company is allocated costs
based on its proportionate share to provide such benefits to its employees.
The Company's expense related to this program for the years ended October 31,
2000, 1999 and 1998 was approximately $2,614,000, $1,961,000 and $2,049,000.

                                     F-16

<PAGE>   52

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


7. COMMITMENTS AND CONTINGENCIES

         The Company is subject to the environmental laws and regulations of
the United States and the states in which it operates concerning emissions
into the air, discharges into the waterways and the generation, handling and
disposal of waste materials. The Company's past expenditures relating to
environmental compliance have not had a material effect on the Company and are
included in normal operating expenses. 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. Based upon information currently
available, management believes that expenditures relating to environmental
compliance will not have a material impact on the financial position of the
Company.

         The Company is subject to various claims and legal actions that arise
in the ordinary course of business. In the opinion of management, after
consulting with legal counsel, the Company believes that the ultimate
resolution of these claims and legal actions will not have a material effect
on the consolidated financial statements of the Company.

8. ACQUISITIONS

         On November 6, 2000, the Company acquired certain assets of the
Huntington, West Virginia paper distribution division of The Cincinnati
Cordage Paper Company ("Cordage") pursuant to an auction held by the U.S.
Bankruptcy Court for the Southern District of Ohio. This transaction was
accounted for under the purchase method of accounting.

         On November 30, 1999, the Company acquired all of the issued and
outstanding common stock of Diez Business Machines, Inc. of Gonzales,
Louisiana.  This transaction was accounted for under the purchase method of
accounting.

         On July 16, 1999, the Company acquired certain assets and assumed
certain liabilities of AIM Printing of Knoxville, Tennessee. On June 1, 1999,
the Company acquired all of the issued and outstanding common stock of
Independent Printing Service, Inc. of Evansville, Indiana. These transactions
were accounted for under the purchase method of accounting.

         On May 29, 1998, the Company acquired all of the outstanding common
stock of Thompson's of Morgantown, Inc. and Thompson's of Barbour County, Inc.
(collectively referred to as "Thompson"), both companies doing business as
Thompson's Office Furniture and Supplies of Morgantown and Philippi, West
Virginia, in exchange for 45,473 shares of its common stock with a market
value at the time of acquisition of $600,000.

         On May 18, 1998, the Company acquired all of the outstanding common
shares of Capitol Business Equipment, Inc. (Capitol), doing business as
Capitol Business Interiors of Charleston, West Virginia, in exchange for
72,202 shares of its common stock with a market value at the time of
acquisition of $1,000,000.

                                     F-17

<PAGE>   53


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The Capitol and Thompson transactions were accounted for under the
pooling of interests method. However, prior period financial statements were
not restated due to the immaterial effect on Champion's consolidated financial
statements. Accordingly, Capitol's and Thompson's operations are included in
these consolidated financial statements since their acquisition date.

         On February 2, 1998, the Company acquired all of the outstanding
common stock of Rose City Press (Rose City) of Charleston, West Virginia, an
office products company, in exchange for 75,722 shares of its common stock
with a market value at the time of acquisition of $1,250,000. The transaction
was accounted for under the purchase method and Rose City's operations are
included in these consolidated financial statements since the acquisition
date.

         Pro forma financial information related to these acquisitions has not
been presented because such information would not be materially different from
amounts reported herein.


9. INDUSTRY SEGMENT INFORMATION

         The Company operates principally in two industry segments organized
on the basis of product lines: the production, printing and sale, principally
to commercial customers, of printed materials (including brochures, pamphlets,
reports, tags, continuous and other forms); and the sale of office products
and office furniture including interior design services. The Company employs
approximately 900 people, of whom 88 are covered by a collective bargaining
agreement which expires on May 31, 2001. The Company believes its relations
with employees is satisfactory.

                                     F-18

<PAGE>   54


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The table below presents information about reported segments for the years
ending October 31:

<TABLE>
<CAPTION>
                                                                              OFFICE
                                                                             PRODUCTS
      2000                                             PRINTING            & FURNITURE                TOTAL
      ----                                      ----------------------------------------------------------------
<S>                                             <C>                     <C>                   <C>
      REVENUES                                    $       105,895,778     $     33,137,917      $    139,033,695
      ELIMINATION OF INTERSEGMENT REVENUE                  (9,239,099)          (3,465,190)          (12,704,289)
                                                ----------------------------------------------------------------
      CONSOLIDATED REVENUES                       $        96,656,679     $     29,672,727      $    126,329,406
                                                ================================================================
      OPERATING INCOME                                      3,032,018            1,372,576             4,404,594
      DEPRECIATION & AMORTIZATION                           4,019,769              266,279             4,286,048
      CAPITAL EXPENDITURES                                  2,191,569              142,686             2,334,255
      IDENTIFIABLE ASSETS                                  58,395,906           13,163,293            71,559,199
</TABLE>

<TABLE>
<CAPTION>

                                                                              OFFICE
                                                                             PRODUCTS
      1999                                             PRINTING            & FURNITURE                TOTAL
      ----                                      ---------------------------------------------------------------
<S>                                             <C>                     <C>                    <C>
      Revenues                                    $       101,162,938    $     34,033,078      $    135,196,016
      Elimination of intersegment revenue                 (8,758,013)          (2,079,201)          (10,837,214)
                                                ---------------------------------------------------------------
      Consolidated revenues                       $        92,404,925    $     31,953,877      $    124,358,802
                                                ===============================================================
      Operating income                                      4,451,565           1,734,772             6,186,337
      Depreciation & amortization                           3,648,497             243,815             3,892,312
      Capital expenditures                                  3,884,818             193,510             4,078,328
      Identifiable assets                                  58,155,475          15,487,019            73,642,494
</TABLE>

<TABLE>
<CAPTION>

                                                                              OFFICE
                                                                             PRODUCTS
      1998                                             PRINTING            & FURNITURE                TOTAL
      ----                                      ---------------------------------------------------------------
<S>                                             <C>                     <C>                   <C>
      Revenues                                    $       101,634,492    $     31,620,682      $    133,255,174
      Elimination of intersegment revenue                  (6,631,766)         (3,561,920)          (10,193,686)
                                                ---------------------------------------------------------------
      Consolidated revenues                       $        95,002,726    $     28,058,762      $    123,061,488
                                                ===============================================================
      Operating income                                      5,947,416           1,927,204             7,874,620
      Depreciation & amortization                           3,306,724             314,201             3,620,925
      Capital expenditures                                  3,048,842             146,418             3,195,260
      Identifiable assets                                  61,904,800          12,600,528            74,505,328
</TABLE>

                                     F-19

<PAGE>   55


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         A reconciliation of total segment revenue, assets and operating
income to consolidated income before income taxes for the years ending October
31, 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                          2000                  1999                      1998
                                                 ------------------------------------------------------------------
<S>                                              <C>                        <C>                   <C>
Revenues:
  Total segment revenues                              $   139,033,695       $   135,196,016       $   133,255,174
  Elimination of intersegment revenue                     (12,704,289)          (10,837,214)          (10,193,686)
                                                 ------------------------------------------------------------------
  Consolidated revenue                                $   126,329,406       $   124,358,802       $   123,061,488
                                                 ==================================================================

Operating Income:
  Total segment operating income                      $     4,404,594       $     6,186,337       $     7,874,620
  Interest income                                              71,094               157,691               244,753
  Interest expense                                         (1,017,618)           (1,228,157)           (1,507,387)
  Other income                                                113,710               210,912               241,392
                                                 ------------------------------------------------------------------
Consolidated income before income taxes               $     3,571,780       $     5,326,783       $     6,853,378
                                                 ==================================================================
Identifiable assets:
  Total segment identifiable assets                   $    71,559,199       $    73,642,494       $    74,505,328
  Elimination of intersegment assets                                -                     -                     -
                                                 ------------------------------------------------------------------
  Total consolidated assets                           $    71,559,199       $    73,642,494       $    74,505,328
                                                 ==================================================================
</TABLE>

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amount reported in the balance sheet for cash and cash
equivalents approximates its fair value. The fair value of revolving credit
agreements and long-term debt was estimated using discounted cash flows and it
approximates their carrying value.

                                     F-20

<PAGE>   56


                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

         The following is a summary of the quarterly results of operations for
the years ended October 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                         FIRST             SECOND             THIRD             FOURTH
                                        QUARTER            QUARTER           QUARTER            QUARTER
                                   ---------------------------------------------------------------------------
<S>                                <C>                   <C>               <C>                <C>
    REVENUES
       2000                         $     31,633,000     $  32,034,000      $  30,415,000      $ 32,248,000
       1999                               29,230,000        30,874,000         30,037,000        34,217,000

    GROSS PROFIT
       2000                         $      8,633,000     $   9,980,000      $   9,267,000      $  9,145,000
       1999                                8,621,000         9,807,000          8,915,000        10,230,000

    NET INCOME
       2000                         $        252,000     $     940,000      $     452,000      $    465,000
       1999                                  855,000         1,136,000            256,000           945,000

    EARNINGS PER SHARE
    Basic
       2000                         $           0.03     $       0.10       $        0.05      $      0.05
       1999                                     0.09             0.12                0.03             0.10

    Diluted
       2000                         $           0.03     $       0.10       $        0.05      $      0.05
       1999                                     0.09             0.12                0.03             0.10

    WEIGHTED AVERAGE SHARES
       OUTSTANDING
    Basic
       2000                                9,714,000         9,714,000          9,714,000         9,714,000
       1999                                9,714,000         9,714,000          9,714,000         9,714,000

    Diluted
       2000                                9,716,000         9,714,000          9,714,000         9,714,000
       1999                                9,714,000         9,714,000          9,716,000         9,714,000
</TABLE>

                                     F-21

<PAGE>   57

                  CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

            Notes to Consolidated Financial Statements (continued)

                                 Schedule II

                      Valuation and Qualifying Accounts

                 Years Ended October 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                                         ADDITIONS
                                         BALANCE AT     BALANCES OF      CHARGED TO                          BALANCE
                                         BEGINNING        ACQUIRED       COSTS AND                            AT END
         DESCRIPTION                     OF PERIOD       COMPANIES        EXPENSES      DEDUCTIONS (1)      OF PERIOD
--------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>               <C>            <C>                 <C>
2000
----

Allowance for doubtful accounts            $ 1,448,034      $   7,500      $  412,420       ($  359,418)     $  1,508,536

1999
----

Allowance for doubtful accounts            $ 1,329,027      $  19,236      $  529,747       ($  429,976)     $  1,448,034

1998
----

Allowance for doubtful accounts            $ 1,139,985      $  59,515      $  274,191       ($  144,664)     $  1,329,027
</TABLE>

(1) Uncollectable accounts written off, net of recoveries


                                     F-22