<PAGE>


                                  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, 2001

                                       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)

<TABLE>
<S>                                              <C>
West Virginia                                    55-0717455
----------------------------------------         ------------------------------------
(State or other jurisdiction of                  (I.R.S. Employer Identification No.)
incorporation or organization)

2450 First Avenue
P.O. Box 2968
Huntington, West Virginia                        25728
----------------------------------------         ------------------------------------
(Address of Principal Executive Offices)                (Zip Code)
</TABLE>

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


<PAGE>


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 11, 2002, was $14,008,263 of Common Stock, $1.00
par value. The outstanding common stock of the Registrant at the close of
business on January 11, 2002 consisted of 9,713,913 shares of Common Stock,
$1.00 par value.

Total number of pages including cover page - 173

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 15, 2002 with respect to its Annual Meeting of Shareholders to be
held on March 18, 2002 are incorporated by reference into Part III, Items 10-13.
Exhibit Index located on pages 27-33.

                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>


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; Evansville, Indiana; Bridgeville and
Altoona, Pennsylvania; and Asheville, North Carolina. The Company's sales force
of approximately 120 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 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>


        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, through the
acquisition of the assets of E. S. Upton Printing Company, Inc. in New Orleans
in 1996 and through the acquisition of Transdata Systems, Inc. in Baton Rouge
and New Orleans in 2001.

        The Dallas Printing division ("Dallas" or "Champion Jackson") 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>


        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" or "Champion Morgantown") 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>


        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. On April 30, 2001, the Company entered into a strategic alliance with
Xpedx resulting in the assumption by Xpedx of the Cordage customer list and the
sale of certain inventory items.

        On October 10, 2001, the Company acquired Transdata Systems, Inc.
("Transdata") of Baton Rouge and New Orleans, Louisiana. This transaction was
accounted for under the purchase method of accounting.

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 $98.1 million, $96.7 million and $92.4
million or 78.4%, 76.5% and 74.3% of the Company's total revenues for the fiscal
years ended October 31, 2001, 2000 and 1999.

        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


                                       6
<PAGE>


contributed $27.0 million, $29.7 million and $32.0 million, or 21.6%, 23.5% and
25.7% of the Company's total revenues for the fiscal years ended October 31,
2001, 2000 and 1999.

ORGANIZATION

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

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.

        Consolidated Graphic Communications division in Pittsburgh, Pennsylvania
operates as a full line printing and printing services distributor. The division
offers complete print management, fulfillment services and B2B e-commerce
solutions.

        Carolina Cut Sheets, Inc., located in Huntington, West Virginia,
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.

        Transdata, located in Baton Rouge and New Orleans, Louisiana, operates
as a subsidiary of Bourque Printing performing sales and customer service
functions.


                                       7
<PAGE>


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.

        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>


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.                         *                   *               *             *
-------------------------------------------------------------------------------------------------------------------------------
Transdata                                             *
-------------------------------------------------------------------------------------------------------------------------------
</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


                                       9
<PAGE>


sheets) includes single color duplicators, single to six color presses and
envelope presses. Rotary equipment (for printing 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 years ended October 31, 2001, 2000 and 1999 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>


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.

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.


                                       11
<PAGE>


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, 2001, the Company had approximately 815 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, 2001) at its
Bridgeville, Pennsylvania facility. This contract expires May 31, 2006. 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                      65                  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                           56                  President and Chief Operating Officer of the Company
                                                              since September 2000; President and Chief 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
</TABLE>


                                       12
<PAGE>


<TABLE>
<S>                                       <C>                 <C>
                                                              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.

Ronald W. Taylor                          44                  Vice President of the Company since December 1992;
                                                              Division Manager Lexington division December 1992 to
                                                              June 2001; 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                           60                  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                        49                  Vice President of the Company since December 1992;
                                                              Division Manager - Merten September 1998 to April 2001;
                                                              Division Manager - Charleston December 1992 to April
                                                              2001; 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                       54                  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.
</TABLE>


                                       13
<PAGE>


<TABLE>
<S>                                       <C>                 <C>
Toney K. Adkins                           52                  Vice President-Administration of the Company since
                                                              November, 1995; President, KYOWVA Corrugated Container
                                                              Company, Inc. from 1991 to 1996.

Todd R. Fry                               36                  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                          72                  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                        47                  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                           45                  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>


                                       14
<PAGE>


ITEM 2 - PROPERTIES

        The Company conducts its operations from twenty-seven (27) different
physical locations, twenty (20) of which are leased, seven (7) of which are
owned in fee simple by Company subsidiaries, and one (1), Cordage is maintained
as an asset held for sale on the financial statements. 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
Huntington, West Virginia (1)                   Stationers                             37,025           60,000             2007

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

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

1563 Hansford Street
Charleston, West Virginia (1)                   Chapman Printing - 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
Evansville, Indiana (1)                         Smith & Butterfield                    42,375          116,640             2004

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

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

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

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

1515 Central Parkway
Cincinnati, Ohio (1)                            The Merten Company                     40,000          102,060             2006

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

7868 Anselmo Lane
Baton Rouge, Louisiana                          Transdata                              13,300           42,000             2002
</TABLE>


                                       15
<PAGE>


<TABLE>
<S>                                             <C>                                 <C>              <C>               <C>
8408 & 8416 Oak Street
New Orleans, Louisiana                          Transdata                              16,000           46,980             2004

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

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

Route 2, Kyle Industrial Park
Huntington, West Virginia                       Champion Headquarters                   9,000           78,000             2003

1733 North Airline Highway Gonzales,
Louisiana                                       Stationers-Diez                         5,800           12,000            Monthly
</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 owns a single story building of approximately 14,500 square
feet at 3254 Route 60 East, Huntington, West Virginia, which is currently held
for sale.

        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.


                                       16
<PAGE>


        The Capitol division of Stationers owns and operates from a 22,000
square foot building at 711 Indiana Avenue, Charleston, West Virginia. This
building, formerly leased, was purchased by the Company in December 2001.

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 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."

        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 2001              FISCAL YEAR 2000
                                           HIGH           LOW            HIGH           LOW
                                         -----------------------       -----------------------
               <S>                       <C>            <C>            <C>            <C>
               First quarter              $ 2.94         $ 2.03         $ 5.12         $ 3.75
               Second quarter               3.06           2.50           4.50           2.81
               Third quarter                3.51           2.70           4.38           2.38
               Fourth quarter               3.45           2.10           3.25           2.56
</TABLE>

        At the close of business on January 11, 2002, there were 481
shareholders of record of Champion common stock.


                                       17
<PAGE>


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

<TABLE>
<CAPTION>
                                                FISCAL YEAR            FISCAL YEAR            FISCAL YEAR
                                                   2002                    2001                   2000
                                               ----------------       ----------------       ----------------
        <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, 2001 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>


<TABLE>
<CAPTION>
                                                                          YEAR ENDED OCTOBER 31,
                                               ----------------------------------------------------------------------------
                                                   2001            2000            1999            1998            1997
                                               -----------     -----------     -----------     -----------     -----------
                                                             (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                            <C>             <C>             <C>             <C>             <C>
OPERATING STATEMENT DATA:

REVENUES:

Printing                                       $    98,146     $    96,657     $    92,405     $    95,003     $    87,979

Office products and office furniture                26,998          29,672          31,954          28,058          20,406
                                               -----------     -----------     -----------     -----------     -----------
Total revenues                                     125,144         126,329         124,359         123,061         108,385

COST OF SALES:

Printing                                            71,816          69,376          65,021          66,699          59,850

Office products and office furniture                18,661          19,927          21,764          18,616          13,289
                                               -----------     -----------     -----------     -----------     -----------
Total cost of sales                                 90,477          89,303          86,785          85,315          73,139

GROSS PROFIT                                        34,667          37,026          37,574          37,746          35,246

Selling, general and administrative expense         31,800          32,621          31,387          29,872          28,079
Restructuring costs                                  2,052               -               -               -               -
Asset impairment costs                               3,061               -               -               -               -
                                               -----------     -----------     -----------     -----------     -----------

INCOME (LOSS) FROM OPERATIONS                       (2,246)          4,405           6,187           7,874           7,167

Interest income                                         64              71             157             245              20
Interest expense                                      (891)         (1,018)         (1,228)         (1,507)         (1,586)
Other income                                           528             114             211             241             737
                                               -----------     -----------     -----------     -----------     -----------

INCOME (LOSS) BEFORE INCOME TAXES                   (2,545)          3,572           5,327           6,853           6,338

Income tax benefit (expense)                           363          (1,463)         (2,134)         (2,702)         (2,571)
                                               -----------     -----------     -----------     -----------     -----------
Net income (loss)                              $    (2,182)    $     2,109     $     3,193     $     4,151     $     3,767
                                               ===========     ===========     ===========     ===========     ===========
EARNINGS (LOSS) PER SHARE:

Basic                                          $     (0.22)    $      0.22     $      0.33     $      0.45     $      0.45
Diluted                                              (0.22)           0.22            0.33            0.45            0.45

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

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

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


                                       19
<PAGE>


<TABLE>
<CAPTION>
                                                AT OCTOBER 31,
                             ----------------------------------------------------
                               2001       2000       1999       1998       1997
                             --------   --------   --------   --------   --------
                                                (IN THOUSANDS)
<S>                          <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:

Cash and cash equivalents    $ 5,765    $ 3,174    $ 2,464    $ 9,773    $   912

Working capital               26,041     29,070     30,333     35,108     18,935

Total assets                  63,950     71,559     73,642     74,505     60,346

Long-term debt                 4,549      8,070      9,933     13,993     15,156

Shareholders' equity          42,601     46,726     46,560     45,310     26,850
</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 fifteen printing companies, seven
office products and office furniture companies and a paper distribution division
(which was subsequently sold) 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


                                       20
<PAGE>


Company's cost of sales include the costs of paper in both printing and office
supplies, the costs of labor and other raw materials.

        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 Statements of Operations, including
certain information presented as a percentage of total revenues.

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED OCTOBER 31,
                                                                                    ($ IN THOUSANDS)
                                                   -------------------------------------------------------------------------------
                                                              2001                        2000                        1999
                                                   -----------------------    -------------------------    -----------------------
<S>                                                <C>             <C>        <C>               <C>        <C>             <C>
REVENUES:

          Printing                                 $  98,146         78.4%    $  96,657           76.5%    $  92,405         74.3%

          Office products and office furniture        26,998         21.6        29,672           23.5        31,954         25.7
                                                   ---------       -------    ---------         -------    ---------       -------
                   Total revenues                    125,144        100.0       126,329          100.0       124,359        100.0

COST OF SALES:

          Printing                                    71,816         57.4        69,376           54.9        65,021         52.3

          Office products and office furniture        18,661         14.9        19,927           15.8        21,764         17.5
                                                   ---------       -------    ---------         -------    ---------       -------
                   Total cost of sales                90,477         72.3        89,303           70.7        86,785         69.8
                                                   ---------       -------    ---------         -------    ---------       -------
GROSS PROFIT                                          34,667         27.7        37,026           29.3        37,574         30.2

Selling, general and administrative expenses          31,800         25.4        32,621           25.8        31,387         25.2

Restructuring charges                                  2,052          1.6          -               -            -             -

Asset impairment charges                               3,061          2.5          -               -            -             -
                                                   ---------       -------    ---------         -------    ---------       -------
Income (loss) from operations                         (2,246)        (1.8)        4,405            3.5         6,187          5.0

OTHER INCOME (EXPENSE):

                   Interest income                        64          0.1            71            0.1           157          0.1

                   Interest expense                     (891)        (0.7)       (1,018)          (0.8)       (1,228)        (1.0)

                   Other income                          528          0.4           114            0.1           211          0.2
                                                   ---------       -------    ---------         -------    ---------       -------
Income (loss) before income taxes                     (2,545)        (2.0)        3,572            2.9         5,327          4.3

          Income tax benefit (expense)                   363          0.3        (1,463)          (1.2)       (2,134)        (1.7)
                                                   ---------       -------    ---------         -------    ---------       -------
   Net income (loss)                               $  (2,182)        (1.7%)   $   2,109            1.7%    $   3,193          2.6%
                                                   =========       =======    =========         =======    =========       =======
</TABLE>


                                       21
<PAGE>


        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, 2001 COMPARED TO YEAR ENDED OCTOBER 31, 2000

Revenues

        Consolidated net revenues were $125.1 million for the year ended October
31, 2001 compared to $126.3 million in the prior fiscal year. This change
represents a decrease in revenues of $1.2 million or 0.9%. Printing revenues
increased by $1.5 million or 1.5% from $96.7 million in 2000 to $98.1 million in
2001. The increase in printing sales was primarily the result of acquisitions
during 2001. Office products and office furniture revenue decreased $2.7 million
or 9.0% from $29.7 million in 2000 to $27.0 million in 2001. The decrease in
revenues for the office products and office furniture segment was primarily
attributable to lower furniture sales, resulting from a challenging economic
environment during 2001. Gross margin dollars declined in both divisions with an
overall decrease of $2.4 million or 6.4%.

Cost of Sales

        Total cost of sales for the year ended October 31, 2001 totaled $90.5
million compared to $89.3 million in the previous year. This change represented
an increase of $1.2 million or 1.3% in cost of sales. Printing cost of sales
increased $2.4 million or 3.5% to $71.8 million in 2001 compared to $69.4
million in 2000. Printing cost of sales was higher due to an overall increase in
printing sales coupled with an increase in material costs as a percentage of
sales partially due to the recording of certain costs of the Company's
restructuring and profitability enhancement plan as a component of cost of goods
sold. Office products and office furniture cost of sales decreased $1.3 million
or 6.4% to $18.7 million from $19.9 million in 2000, primarily due to lower
furniture sales.

Operating Expenses and Income

        Selling, general and administrative (S,G&A) expenses decreased $822,000
to $31.8 million in 2001 from $32.6 million in 2000. S,G&A as a percentage of
net sales represented 25.4% of net sales in 2001 compared with 25.8% of net
sales in 2000. This decrease is related, in part, to decreases in corporate
overhead expenses, and lower payroll related costs partially offset by increased
health insurance costs, travel costs and bad debt expenses.

        The Company initiated a corporate-wide restructuring and profitability
enhancement plan in the third quarter of 2001. The plan was implemented to
effectuate certain key initiatives including plant and office consolidations,
headcount reductions, asset impairment issues and a general response to a
deteriorating economic environment. The Company followed the applicable
provisions of Financial Accounting Standards Board No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, to
compute the tangible and intangible impairment portions of the restructuring
charges. As a result of the restructuring plan, the Company recorded a pre-tax
charge of $6.1 million or $4.3 million net of tax or $0.44 per share. The
charges were composed of the following components: write-down of


                                       22
<PAGE>


goodwill, facilities and equipment of $3,060,000; employee severance and
termination benefits of $55,000 and restructuring and other charges of
$2,976,000. The restructuring and other charges included charges related to
increases and related write-offs in the allowance for doubtful accounts,
inventory obsolescence reserves and inventory valuation modifications, costs
related to duplicative facility leases, computer systems related charges,
termination fees of a pension plan of an acquired company, and other general
charges to implement the above mentioned plan.

        The charges are classified on the statement of operations as components
of income from operations. Inventory obsolescence and valuation reserves are
classified as a component of cost of sales in the amount of $978,000.

Other Income (Expense)

        Interest expense decreased $127,000 to $900,000 in 2001 from $1.0
million in 2000 primarily as a result of a decrease in interest rates.

        Other income increased approximately $400,000 primarily due to a gain
resulting from the strategic alliance with Xpedx.

Income Taxes

        Income taxes as a percentage of income before taxes were a benefit of
14.3% in 2001 compared with income tax expense of 41.0% in 2000.

        The Company recorded a tax benefit in the third quarter of 2001 as a
result of restructuring and asset impairment charges. The effective income tax
rate in 2001 is reflective of certain tax attributes of non-deductible goodwill
resulting from asset impairment charges.

        The effective income tax rate in 2000 approximates the combined federal
and state, net of federal benefit, statutory income tax rate.

Net Income (Loss)

        For reasons set forth above, net income for 2001 decreased $4.3 million
to a net loss $(2.2) million, or $(0.22) per share on a basic and diluted basis,
from net income of $2.1 million for 2000, or $0.22 per share on a basic and
diluted basis.

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

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


                                       23
<PAGE>


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.

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.

LIQUIDITY AND CAPITAL RESOURCES

        As of October 31, 2001, the Company had $5.8 million of cash and cash
equivalents, an increase of $2.6 million from the prior year. Working capital as
of October 31, 2001 was $26.0 million, a decrease of $3.0 million from October
31, 2000. The decrease in working capital was


                                       24
<PAGE>


primarily the result of a decrease in current assets and an increase in current
liabilities in part due to capital expenditures, dividend payments and principal
payments on debt. 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 $3.0 million and $1.0 million.

        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,
2001, 2000 and 1999 were $11.5 million, $8.7 million and $4.2 million. Cash
flows from operating activities for the fiscal year 2001 compared to 2000
increased primarily due to positive cash flow from the reduction of accounts
receivable and inventory.

Cash Flows from Investing Activities

        Cash used in investing activities was ($2.7) million, ($3.1) million,
and ($4.9) million for the years ended October 31, 2001, 2000 and 1999. Cash
flows used in investing activities decreased in 2001 compared to 2000 due to a
decrease in the purchase of property and equipment and from proceeds from the
sale of a division. These increases in cash were partially offset by cash
expended in the purchases of businesses in 2001. 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 from Financing Activities

        Cash flows used in financing activities for the years ended October 31,
2001, 2000, and 1999 were ($6.1) million, ($4.9) million and ($6.6) million.
Cash flows used in financing activities increased in 2001 compared to 2000 due
to an increase in principal payments on long-term debt. Dividends paid in 2001,
2000 and 1999 were $1.9 million per year.

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.


                                       25
<PAGE>


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

        The Company does not have any significant exposure relating to market
risk.

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

        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,
expected to be dated February 15, 2002, with respect to the Annual Meeting of
Shareholders to be held on March 18, 2002, 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, expected to be dated February
15, 2002, with respect to the Annual Meeting of Shareholders to be held on March
18, 2002, 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, expected to be dated February 15,
2002, with respect to the Annual


                                       26
<PAGE>


Meeting of Shareholders to be held on March 18, 2002, 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, expected to be dated February 15, 2002,
with respect to the Annual Meeting of Shareholders to be held on March 18, 2002,
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) (1) and (2)

        The Consolidated Financial Statements, included in Item 8 and Schedule
        of the Company, are listed on the index on page F-1.

        All other Schedules for which provision is made in the applicable
        accounting regulation of the Securities and Exchange Commission are not
        required under the related instructions or are inapplicable and
        therefore have been omitted.


                                       27
<PAGE>


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>


<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.

                                                   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.
</TABLE>


                                       29
<PAGE>


<TABLE>
<S>           <C>                                  <C>
                                                   $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.

                                                   Company's 1993 Stock Option Plan, effective March 22, 1994,
              Executive Compensation               filed as Exhibit 10.14 to Form 10-K dated January 27, 1994,
              Plans and Arrangements               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
</TABLE>


                                       30
<PAGE>


<TABLE>
<S>           <C>                                  <C>
                                                   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.

                                                   Agreement of Lease dated September 25, 1998 between Ronald H.
                                                   Scott and Frank J. Scott dba 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.

                                                   $1,000,000 revolving line of credit between Stationers, Inc. and
                                                   First Sentry Bank dated as of October 17, 2000, filed as Exhibit
                                                   10.1 to form 10-K dated January 22, 2001, filed January 26,
                                                   2001, is incorporated herein by reference.

                                                   Lease agreement dated October 31, 2000 between Champion
                                                   Industries, Inc. dba Upton Printing and AMB Property, L.P., 5600
                                                   Jefferson Highway Harahan, Louisiana, filed as Exhibit 10.2 to
                                                   form 10-K dated January 22, 2001, filed January 26, 2001, is
                                                   incorporated herein by reference.
</TABLE>


                                       31
<PAGE>


<TABLE>
<S>           <C>                                  <C>
                                                   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, filed as Exhibit 10.3
                                                   to form 10-K dated January 22, 2001, filed January 26, 2001, is
                                                   incorporated herein by reference.

                                                   $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, filed as Exhibit 10.4 to form 10-K dated January 22,
                                                   2001, filed January 26, 2001 is incorporated herein by
                                                   reference.

                                                   $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, filed as Exhibit 10.5 to form
                                                   10-K dated January 22, 2001, filed January 26, 2001, is
                                                   incorporated herein by reference.

                                                   $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, filed
                                                   as Exhibit 10.6 to form 10-K dated January 22, 2001, filed
                                                   January 26, 2001, is incorporated herein by reference.

(10.1)                                             Agreement of Lease dated September 1, 2002 between Marion B. and
                                                   Harold A. Merten, Jr. and The Merten Company regarding 1515
                                                   Central Parkway, Cincinnati, Ohio.

                                                                                            Page Exhibit (10.1)-p1

(10.2)                                             $415,000 Commercial Lease Agreement by and among the company and
                                                   Firstar Equipment Finance dated as of January 12, 2001.

                                                                                            Page Exhibit (10.2)-p1
</TABLE>


                                       32
<PAGE>


<TABLE>
<S>           <C>                                  <C>
(10.3)                                             $450,000 Commercial Lease Agreement by and among the Company and
                                                   Leasing One Corporation dated as of April 19, 2001.

                                                                                            Page Exhibit (10.3)-p1

(10.4)                                             $315,665 Promissory Note by and among the company and Community
                                                   Trust Bank, N.A. as of April 27, 2001.

                                                                                            Page Exhibit (10.4)-p1

(10.5)                                             Lease Agreement dated October 15, 1999 between Forms Control Co.,
                                                   Inc. and Transdata Systems, Inc. regarding 8408 and 8416 Oak Street,
                                                   New Orleans, Louisiana.

                                                                                            Page Exhibit (10.5)-p1

(10.6)                                             Lease Agreement dated February 27, 1991 between the Alfred J. Moran
                                                   Trust and Docutec of Louisiana, Inc. regarding 7868 Anselmo Lane,
                                                   Baton Rouge, Louisiana.

                                                                                            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 August 13, 2001, filed August 13, 2001 regarding
        restructuring and profitability enhancement plan.

(c)     Exhibits - Exhibits are filed as a separate section of this report
        beginning on page 60.

(d)     Financial Statement Schedules - Filed as separate section on page F-24


                                       33
<PAGE>


                                   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 21, 2002


                                       34
<PAGE>


        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


/s/ Robert H. Beymer                               January 21, 2002
--------------------
Robert H. Beymer, Director

/s/ Philip E. Cline                                January 21, 2002
-------------------
Philip E. Cline, Director

/s/ Harley F. Mooney, Jr.                          January 21, 2002
-------------------------
Harley F. Mooney, Jr., Director

/s/ Todd L. Parchman                               January 21, 2002
--------------------
Todd L. Parchman, Director

/s/ A. Michael Perry                               January 21, 2002
--------------------
A. Michael Perry, Director

/s/ Marshall T. Reynolds                           January 21, 2002
------------------------
Marshall T. Reynolds, Director

/s/ Neal W. Scaggs                                 January 21, 2002
------------------
Neal W. Scaggs, Director

/s/ Glenn W. Wilcox, Sr.                           January 21, 2002
------------------------
Glenn W. Wilcox, Sr., Director


                                       35
<PAGE>

                            CHAMPION INDUSTRIES, INC.

             Audited Consolidated Financial Statements and Schedule

                                October 31, 2001





<TABLE>
<CAPTION>
CONTENTS
<S>                                                                                                     <C>

Report of Independent Auditors (Item 8)...................................................................F-2

Audited Consolidated Financial Statements (Item 8)

      Consolidated Balance Sheets as of October 31, 2001 and 2000.........................................F-3

      Consolidated Statements of Operations for the years ended October 31, 2001, 2000 and
           1999...........................................................................................F-5

      Consolidated Statements of Shareholders' Equity for the years ended October 31, 2001,
           2000 and 1999..................................................................................F-6

      Consolidated Statements of Cash Flows for the years ended October 31, 2001, 2000 and
           1999...........................................................................................F-7

      Notes to Consolidated Financial Statements as of October 31, 2001...................................F-8

Schedule - (Item 14a) Schedule II - Valuation and Qualifying Accounts....................................F-24
</TABLE>


                                      F-1
<PAGE>


                         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, 2001 and 2000, and the
related consolidated statements of operations, statements of shareholders'
equity, and cash flows for each of the three years in the period ended October
31, 2001. Our audits also included the financial statement schedule listed in
the index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and 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, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended October 31, 2001, 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 21, 2001


                                      F-2
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                             OCTOBER 31,
                                                                                   2001                      2000
                                                                            ------------------------------------------
<S>                                                                         <C>                         <C>
ASSETS
  Current assets:
    Cash and cash equivalents                                                  $  5,764,716              $  3,173,587
    Accounts receivable, net of allowance of
    $1,432,000 and $1,509,000                                                    19,165,773                21,986,924
    Inventories                                                                  11,764,195                13,576,479
    Income tax refund                                                               279,271                         -
    Other current assets                                                            769,034                 1,009,915
    Deferred income tax assets                                                    1,111,018                 1,103,480
                                                                            ------------------------------------------
  Total current assets                                                           38,854,007                40,850,385

Property and equipment, at cost:
  Land                                                                              825,220                 1,009,220
  Buildings and improvements                                                      5,562,762                 6,631,840
  Machinery and equipment                                                        34,421,518                34,832,461
  Equipment under capital leases                                                  2,583,407                 1,600,000
  Furniture and fixtures                                                          2,480,050                 2,278,750
  Vehicles                                                                        3,031,861                 2,870,865
                                                                            ------------------------------------------
                                                                                 48,904,818                49,223,136
Less accumulated depreciation                                                   (27,743,183)              (24,267,533)
                                                                            ------------------------------------------
                                                                                 21,161,635                24,955,603

Assets held for sale                                                              1,057,216                          -
Cash surrender value of officers' life insurance                                    885,852                 1,246,558
Goodwill, net of accumulated amortization                                         1,334,183                 3,634,439
Other assets                                                                        657,021                   872,214
                                                                            ------------------------------------------
                                                                                  3,934,272                 5,753,211
                                                                            ------------------------------------------
Total assets                                                                   $ 63,949,914              $ 71,559,199
                                                                            ==========================================
</TABLE>


See notes to consolidated financial statements.


                                      F-3
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                     Consolidated Balance Sheets (continued)

<TABLE>
<CAPTION>
                                                                        OCTOBER 31,
                                                                    2001            2000
                                                                ---------------------------
<S>                                                             <C>             <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
    Accounts payable                                            $ 4,343,291     $ 3,601,765
    Accrued payroll and commissions                               2,107,377       2,199,379
    Taxes accrued and withheld                                    1,289,560       1,197,435
    Accrued income taxes                                                  -         224,519
    Accrued expenses                                              1,218,575       1,005,744
    Current portion of long-term debt:
      Notes payable                                               3,329,627       3,210,255
      Capital lease obligations                                     524,316         341,661
                                                                ---------------------------
  Total current liabilities                                      12,812,746      11,780,758

Long-term debt, net of current portion:
  Notes payable                                                   3,994,555       7,730,531
  Capital lease obligations                                         554,514         339,653
Deferred income tax liabilities                                   3,554,169       4,173,419
Other liabilities                                                   433,044         809,080
                                                                ---------------------------
Total liabilities                                                21,349,028      24,833,441

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                                              10,644,926      14,769,798
                                                                ---------------------------
Total shareholders' equity                                       42,600,886      46,725,758
                                                                ---------------------------
Total liabilities and shareholders' equity                      $63,949,914     $71,559,199
                                                                ===========================
</TABLE>


See notes to consolidated financial statements.


                                      F-4
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                YEAR ENDED OCTOBER 31,
                                                      2001               2000               1999
                                                 ---------------------------------------------------
<S>                                              <C>                <C>                <C>
Revenues:
  Printing                                       $  98,146,114      $  96,656,679      $  92,404,925
  Office products and office furniture              26,998,196         29,672,727         31,953,877
                                                 ---------------------------------------------------
  Total revenues                                   125,144,310        126,329,406        124,358,802

Cost of sales:
  Printing                                          71,815,872         69,376,266         65,021,151
  Office products and office furniture              18,661,472         19,927,207         21,763,787
                                                 ---------------------------------------------------
  Total cost of sales                               90,477,344         89,303,473         86,784,938

Gross profit                                        34,666,966         37,025,933         37,573,864

Selling, general and administrative expenses        31,799,557         32,621,339         31,387,527
Restructuring costs                                  2,052,692                  -                  -
Asset impairment costs                               3,060,706                  -                  -
                                                 ---------------------------------------------------
Income (loss) from operations                       (2,245,989)         4,404,594          6,186,337

Other income (expense):
  Interest income                                       63,700             71,094            157,691
  Interest expense                                    (890,787)        (1,017,618)        (1,228,157)
  Other                                                528,013            113,710            210,912
                                                 ---------------------------------------------------
                                                      (299,074)          (832,814)          (859,554)
                                                 ---------------------------------------------------
Income (loss) before income taxes                   (2,545,063)         3,571,780          5,326,783
Income tax benefit (expense)                           362,974         (1,463,109)        (2,133,872)
                                                 ---------------------------------------------------
Net income (loss)                                $  (2,182,089)     $   2,108,671      $   3,192,911
                                                 ===================================================

Earnings (loss) per share:
  Basic                                          $       (0.22)     $        0.22      $        0.33
  Diluted                                                (0.22)              0.22               0.33

Dividends paid per share                                  0.20               0.20               0.20

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


See notes to consolidated financial statements.


                                      F-5
<PAGE>


                   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, 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

   NET LOSS FOR 2001                                 -                 -               -         (2,182,089)         (2,182,089)
   DIVIDENDS ($0.20 PER SHARE)                       -                 -               -         (1,942,783)         (1,942,783)
                                       ------------------------------------------------------------------------------------------

BALANCE, OCTOBER 31, 2001                    9,713,913     $   9,713,913   $  22,242,047      $  10,644,926      $   42,600,886
                                       ==========================================================================================
</TABLE>


See notes to consolidated financial statements.


                                      F-6
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED OCTOBER 31,
                                                                           2001                  2000                 1999
                                                                    -----------------------------------------------------------
<S>                                                                  <C>                    <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                                   $ (2,182,089)         $  2,108,671         $  3,192,911
   Adjustments to reconcile net income (loss) to cash
    provided by operating activities:
      Depreciation and amortization                                       4,507,165             4,286,048            3,892,312
      Gain on sale of assets                                                (12,584)               19,147               41,004
      Gain on sale of division                                             (407,515)                    -                    -
      Deferred income taxes                                                (814,020)             (239,120)              33,436
      Deferred compensation                                                  21,446                25,020               42,000
      Bad debt expense                                                      705,742               412,420              529,747
      Restructuring, asset impairment and other charges                   6,091,298                     -                    -
      Changes in assets and liabilities:
          Accounts receivable                                             2,992,168             1,705,346           (2,971,599)
          Inventories                                                     1,049,516               571,215           (1,197,359)
          Other current assets                                              255,797              (150,376)            (347,433)
          Accounts payable                                                 (219,276)              (15,070)             (86,112)
          Accrued payroll                                                  (190,106)              431,034              205,028
          Taxes accrued and withheld                                         65,525               281,351              290,324
          Accrued income taxes                                             (503,790)             (452,600)             501,917
          Accrued expenses                                                  115,478              (201,409)             118,853
          Other liabilities                                                 (22,176)              (43,665)             (23,810)
                                                                    -----------------------------------------------------------
          Net cash provided by operating activities                      11,452,579             8,738,012            4,221,219
CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchase of property and equipment                                (1,806,122)           (2,334,255)          (4,078,328)
       Proceeds from sale of fixed assets                                   247,829               181,302              301,454
       Proceeds from sale of division                                       264,700                     -                    -
       Businesses acquired, net of cash received                         (1,588,040)             (463,477)            (788,941)
       Change in other assets                                               141,919              (478,699)            (342,755)
                                                                    -----------------------------------------------------------
        Net cash used in investing activities                            (2,739,714)           (3,095,129)          (4,908,570)
CASH FLOWS FROM FINANCING ACTIVITIES:
     Borrowings on notes payable                                          1,500,000                     -                    -
     Payments on notes payable                                           (1,500,000)                    -                    -
     Proceeds from long-term debt                                         1,192,397             1,168,720               45,613
     Principal payments on long-term debt                                (5,371,350)           (4,158,788)          (4,725,124)
     Dividends paid                                                      (1,942,783)           (1,942,782)          (1,942,777)
                                                                    -----------------------------------------------------------
     Net cash used in financing activities                               (6,121,736)           (4,932,850)          (6,622,288)
                                                                    -----------------------------------------------------------
     Net increase (decrease) in cash and cash equivalents                 2,591,129               710,033           (7,309,639)
     Cash and cash equivalents at beginning of year                       3,173,587             2,463,554            9,773,193
                                                                    -----------------------------------------------------------
     Cash and cash equivalents at end of year                          $  5,764,716          $  3,173,587         $  2,463,554
                                                                    ===========================================================
</TABLE>


See notes to consolidated financial statements.


                                      F-7
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Champion is a commercial printer, business forms manufacturer and office
products and office furniture supplier in regional markets east of the
Mississippi.

        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., Diez Business Machines and
Transdata Systems, Inc.

        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, 2001 and 2000, the Company held overnight repurchase
agreements for $1,495,000 and $1,474,000 of government securities with stated
interest rates of 1.0% and 5.20%.

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:

                Buildings and improvements                5 - 40 years
                Machinery and equipment                   3 - 10 years
                Furniture and fixtures                    5 - 10 years
                Vehicles                                  3 - 5 years


                                      F-8
<PAGE>


                   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 $4,267,000, $3,975,000, and $3,674,000
for the years ended October 31, 2001, 2000 and 1999.

        Long-lived assets, including certain identifiable intangibles and
goodwill related to those assets to be held and used, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. This evaluation includes
the review of operating performance and estimated future undiscounted cash flows
of the underlying assets or businesses. Any impairment loss is recognized in the
period when it is determined that the carrying value of the goodwill may not be
recoverable.

        The Company has two buildings classified as assets held for sale
relating to the sale of the Company's Cordage division in 2001 (See Note 8) and
in relation to the Company's implementation of restructuring and profitability
enhancement plan in 2001 (See Note 10).

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. Accumulated amortization at October 31, 2001 and 2000
approximated $479,000 and $1,495,000. Amortization expense approximated
$181,000, $242,000, and $160,000, for the years ended October 31, 2001, 2000 and
1999.

ADVERTISING COSTS

        Advertising costs are expensed as incurred. Advertising expense for the
years ended October 31, 2001, 2000 and 1999 approximated $645,000, $641,000 and
$693,000.

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


                                      F-9
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


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 0, 400 and 500 for the years ended October 31, 2001, 2000 and
1999.

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.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

        As of November 1, 2000, the Company adopted Financial Accounting
Standards Board Statement No.133, Accounting for Derivative Instruments and
Hedging Activities, as amended. The Company does not use derivatives, therefore,
the adoption of this statement has not had an effect on earnings or the
financial position of the Company.

ACCOUNTING FOR WEB SITE DEVELOPMENT COSTS

        Certain external costs and internal payroll and payroll-related costs
have been capitalized during the application, development, and implementation
stages of the Company's web site. The costs regarding the ongoing operation and
maintenance are expensed in the period incurred. Internet sales represent less
than 1% of the Company's sales for the years ended October 31, 2001, 2000 and
1999.

REVENUE RECOGNITION

        Revenues are recognized when products are shipped or services are
rendered to customers. The Company acts as a principal party in sales
transactions, assumes title to products and assumes the risks and rewards of
ownership including risk of loss for collection, delivery, or returns.
Therefore, the Company records sales on a gross basis. Shipping and handling
costs are recorded as a component of cost of sales.

        In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements. SAB 101 provides additional guidance in applying GAAP to revenue
recognition in financial statements. The revenue recognition criteria prescribed
by SAB 101 became effective for the Company as of November 1, 2000. The adoption
of SAB 101 did not have a material impact on the Company's financial position or
results of operations.

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

        In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. The Company intends to adopt these standards with its fiscal
year beginning November 1, 2001 in accordance with the provisions of the
standards. Under the new rules, goodwill (and intangible assets deemed to have
indefinite lives) will no longer be amortized but will be


                                      F-10
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


subject to annual impairment tests in accordance with the Statements. Other
intangible assets will continue to be amortized over their useful lives.

        The Company intends to adopt new rules on accounting for goodwill and
other intangible assets beginning in the first quarter of 2002. Application of
the nonamortization provisions of the Statement is expected to result in an
increase in net income of $50,000 or approximately $0.01 per share per year.
During 2002, when the Statements are adopted, the Company will perform the first
of the required impairment tests of goodwill and indefinite lived intangible
assets as of November 1, 2001. The Company has not yet determined what the
effect of these tests will be on the earnings and financial position of the
Company.

        In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (FAS 144), which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of, and the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations for a
disposal of a segment of a business. FAS 144 is effective for fiscal years
beginning after December 15, 2001, with earlier application encouraged. The
Company expects to adopt FAS 144 as of November 1, 2001 and it does not expect
that the adoption of the Statement will have a significant impact on the
Company's financial position and results of operations.

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,
                                                                 2001                  2000
                                                        ------------------------------------------
<S>                                                     <C>                     <C>
Printing:
   Raw materials                                             $  2,460,218          $  3,034,390
   Work in process                                              1,698,374             2,041,255
   Finished goods                                               3,923,549             4,144,178
Office products and office furniture                            3,682,054             4,356,656
                                                        ------------------------------------------
                                                             $ 11,764,195          $ 13,576,479
                                                        ==========================================
</TABLE>


                                      F-11
<PAGE>


                   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,
                                                                                        2001                 2000
                                                                                --------------------------------------
<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                                     $   4,464,449        $   6,250,000
Installment notes payable to banks, due in monthly installments
   totaling $117,282 plus interest rates approximating the bank's
   prime rate and the last note maturing October 2006,
   collateralized by equipment, vehicles, inventory and accounts
   receivable                                                                          2,859,733            3,201,659
Unsecured installment notes payable to a bank, due in monthly
   installments of $82,921, plus interest at a fixed rate with an
   original maturity in May 2002                                                               -            1,489,127
Capital lease obligations, due in monthly installments totaling
   $46,451 including interest at the bank's prime rate through
   October 2005                                                                        1,078,830              681,314
                                                                                --------------------------------------
                                                                                       8,403,012           11,622,100
Less current portion                                                                   3,853,943            3,551,916
                                                                                --------------------------------------
Long-term debt, net of current portion                                             $   4,549,069        $   8,070,184
                                                                                ======================================
</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>
2002                             $ 3,329,627           $   524,316             $ 3,853,943
2003                               2,777,069               194,549               2,971,618
2004                               1,112,083               209,505               1,321,588
2005                                  73,832               150,460                 224,292
2006                                  31,571                     -                  31,571
THEREAFTER                                 -                     -                       -
                            ---------------------------------------------------------------
                                 $ 7,324,182           $ 1,078,830             $ 8,403,012
                            ===============================================================
</TABLE>


                                      F-12
<PAGE>

                   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, 2001.

        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, 2001.

        The prime rate, the base interest rate on the above loans, approximated
5.5% and 9.5% at October 31, 2001 and 2000. Interest paid during the years ended
October 31, 2001, 2000 and 1999 approximated $872,000, $1,018,000 and
$1,230,000.

        The Company's non-cash activities for 2001, 2000, and 1999 included
equipment purchases of approximately $792,000, $756,000 and $589,000, 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 $369,000, $375,000 and $369,000 for the years ended October
31, 2001, 2000 and 1999.

        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, 2001 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 years.


                                      F-13
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

<TABLE>
<CAPTION>
                                                           WEIGHTED                    WEIGHTED                         WEIGHTED
                                                           AVERAGE                     AVERAGE                          AVERAGE
                                                           EXERCISE                    EXERCISE                         EXERCISE
                                               2001         PRICE          2000         PRICE             1999            PRICE
                                          -----------------------------------------------------------------------------------------
<S>                                       <C>             <C>          <C>            <C>             <C>              <C>
Outstanding-beginning of year                 176,317     $   11.44       180,862      $  13.94           158,424       $  15.89
Granted                                             -             -        50,000          4.25            43,000           6.88
Exercised                                           -             -             -             -                 -              -
Forfeited or expired                          (46,317)        13.72       (54,545)        13.13           (20,562)         13.07
                                          --------------               -------------                  --------------
Outstanding-end of year                       130,000         10.63       176,317         11.44           180,862          13.94
                                          ==============               =============                  ==============
Weighted average fair value of options
   granted during the year                  $       -                   $    1.14                        $   1.83
                                          ==============               =============                  ==============
</TABLE>

A summary of stock options outstanding and exercisable at October 31, 2001,
follows:

<TABLE>
<CAPTION>
                 EXERCISE            NUMBER                  REMAINING
                  PRICE            OUTSTANDING                  LIFE
        --------------------------------------------------------------------
        <S>                     <C>                     <C>
                  17.90              25,000                     0.13
                  18.50              28,000                     1.12
                   6.88              34,000                     2.63
                   4.25              43,000                     3.14
</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 and 1999, respectively: risk-free interest rates of 6.00%;
dividend yields of 4.71% and 2.91%; volatility factors of the expected market
price of the Company's common stock of 39.9% and 32.5%; 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


                                      F-14
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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.

        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>
                                                                       2001                2000                1999
                                                                   -----------------------------------------------------
<S>                                                                <C>                  <C>                <C>
Pro forma net income (loss)                                        $ (2,182,000)        $ 2,075,000         $ 3,114,000
                                                                   =====================================================

Pro forma basic and diluted earnings (loss) per share              $       (.22)        $      0.21         $      0.32
                                                                   =====================================================
</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. During fiscal 2001, one of
these employees was paid out. The Company had accrued approximately $322,000 and
$676,000 at October 31, 2001 and 2000 relating to these agreements. The amount
expensed for these agreements for the years ended October 31, 2001, 2000 and
1999 approximated $21,000, $25,000 and $42,000. To assist in funding the
deferred compensation agreements, the Company has invested in life insurance
policies, which had cash surrender values of $322,000 and $604,000 at October
31, 2001 and 2000.


5. INCOME TAXES

Income taxes consisted of the following:

<TABLE>
<CAPTION>
                                                      YEAR ENDED OCTOBER 31,
                                           2001                2000                 1999
                                     --------------------------------------------------------
<S>                                  <S>                <C>                  <C>
Current expense:
   Federal                            $    325,728       $   1,332,515        $   1,655,446
   State                                   125,318             369,714              444,990
Deferred (benefit) expense                (814,020)           (239,120)              33,436
                                     --------------------------------------------------------
                                      $   (362,974)      $   1,463,109        $   2,133,872
                                     ========================================================
</TABLE>


                                      F-15
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


Deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                                                OCTOBER 31,
                                                                         2001                 2000
                                                                  ----------------------------------------
<S>                                                               <C>                   <C>
Assets:
   Allowance for doubtful accounts                                  $      572,922       $      603,414
   Deferred compensation                                                   128,676              270,220
   Net operating loss carryforward of acquired companies                   120,334              115,127
   Accrued vacation                                                        205,249              184,359
   Other accrued liabilities                                               409,043              314,153
   Other assets                                                            213,670                    -
                                                                  ----------------------------------------
Gross deferred tax assets                                                1,649,894            1,487,273

Liabilities:
   Other assets                                                                  -               52,286
   Property and equipment                                                4,093,044            4,504,926
                                                                  ----------------------------------------
   Gross deferred liability                                              4,093,044            4,557,212
                                                                  ----------------------------------------
Net deferred tax liabilities                                         $   2,443,150        $   3,069,939
                                                                  ========================================
</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,
                                                              2001            2000          1999
                                                      -----------------------------------------------
<S>                                                   <C>                <C>             <C>
Statutory federal income tax rate                           (34.0%)           34.0%         34.0%
State taxes, net of federal benefit                          (1.1)             6.8           5.5
Restructuring permanent differences                          22.1                  -             -
Other                                                        (1.4)             0.2           0.6
                                                      -----------------------------------------------
Effective tax rate                                          (14.4%)           41.0%         40.1%
                                                      ===============================================
</TABLE>

        Income taxes paid during the years ended October 31, 2001, 2000 and 1999
approximated $959,000, $2,144,000 and $1,755,000.

        The Company has available for income tax purposes net operating loss
carryforwards from acquired companies of approximately $1,349,000, of which
$352,000 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 $2,650,000 of which $20,000 expires in 2010,
$317,000 expires in 2012, $108,000 expires in 2013, $699,000 expires in 2014,
$1,011,000 expires in 2015 and $495,000 expires in 2016. 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-16
<PAGE>

                   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,
                                                                          2001              2000              1999
                                                                 -------------------------------------------------------
      <S>                                                        <C>                   <C>               <C>
      Rent expense paid to affiliated entities for
         operating facilities                                          $  441,000        $  458,000        $  428,000
      Sales of office products, office furniture and
         printing services to affiliated entities                         673,000           892,000           667,000
</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
$0, $119,000 and $168,000 for the years ended October 31, 2001, 2000 and 1999.

        In addition, the Company leases property and equipment from unrelated
entities under operating leases. Rent expense amounted to $898,000, $1,007,000
and $1,064,000 for the years ended October 31, 2001, 2000 and 1999.

        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,
2001:

<TABLE>
               <S>                             <C>
                2001                              $     942,081
                2002                                    771,231
                2003                                    571,810
                2004                                    321,270
                2005                                    261,450
                Thereafter                              160,500
                                               --------------------
                                                   $  3,028,342
                                               ====================
</TABLE>


        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 primarily related to the reinsurance premiums 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, 2001,
2000 and 1999 was approximately $2,842,000, $2,614,000 and $1,961,000.


                                      F-17
<PAGE>

                   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 October 10, 2001, the Company acquired Transdata Systems, Inc.
("Transdata") of Baton Rouge and New Orleans, Louisiana. This transaction was
accounted for under the purchase method of accounting.

        On November 6, 2000, the Company acquired certain assets of the
Huntington, West Virginia paper distribution division of The Cincinnati Cordage
Paper Company ("Cordage") for $1.2 million, 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 April 30, 2001, the
Company entered into a strategic alliance with Xpedx resulting in the assumption
by Xpedx of the Cordage customer list and certain inventory items. This
strategic alliance has been accounted for as a sale of a division with a gain
recognized of approximately $400,000.

        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.

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


                                      F-18
<PAGE>

                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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 815 people, of whom 88 are covered by a collective bargaining
agreement, which expires on May 31, 2006. The Company believes its relations
with employees are satisfactory.


                                      F-19
<PAGE>

                   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
       2001                                                    PRINTING                & FURNITURE                  TOTAL
       ----                                               ---------------------------------------------------------------------
       <S>                                                <C>                        <C>                       <C>
       REVENUES                                             $ 107,599,525             $ 29,932,697             $ 137,532,222

       ELIMINATION OF INTERSEGMENT REVENUE                     (9,453,411)              (2,934,501)              (12,387,912)
                                                          ---------------------------------------------------------------------

       CONSOLIDATED REVENUES                                $  98,146,114             $ 26,998,196             $ 125,144,310
                                                          =====================================================================

       OPERATING LOSS                                            (257,098)              (1,988,891)               (2,245,989)

       DEPRECIATION & AMORTIZATION                              4,260,419                  246,746                 4,507,165

       CAPITAL EXPENDITURES                                     2,305,369                  293,122                 2,598,491

       IDENTIFIABLE ASSETS                                     55,210,611                8,739,303                63,949,914

                                                                                     OFFICE PRODUCTS
       2000                                                    PRINTING                & FURNITURE                  TOTAL
       ----                                               ---------------------------------------------------------------------

       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                                     2,947,161                  142,686                 3,089,847

       Identifiable assets                                     57,265,350               14,293,849                71,559,199

                                                                                     OFFICE PRODUCTS
       1999                                                    PRINTING                & FURNITURE                  TOTAL
       ----                                               ---------------------------------------------------------------------

       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                                     4,473,359                  193,510                 4,666,869

       Identifiable assets                                     56,999,278               16,643,216                73,642,494
</TABLE>


                                      F-20
<PAGE>

                   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,
2001, 2000 and 1999 is as follows:

<TABLE>
<CAPTION>
                                                                 2001                      2000                      1999
                                                         ----------------------------------------------------------------------
<S>                                                      <C>                       <C>                      <C>
Revenues:
  Total segment revenues                                    $ 137,532,222             $ 139,033,695             $ 135,196,016
  Elimination of intersegment revenue                         (12,387,912)              (12,704,289)              (10,837,214)
                                                         ----------------------------------------------------------------------
  Consolidated revenue                                      $ 125,144,310             $ 126,329,406             $ 124,358,802
                                                         ======================================================================

Operating Income (loss):
  Total segment operating income (loss)                     $  (2,245,989)            $   4,404,594             $   6,186,337
  Interest income                                                  63,700                    71,094                   157,691
  Interest expense                                               (890,787)               (1,017,618)               (1,228,157)
  Other income                                                    528,013                   113,710                   210,912
                                                         ----------------------------------------------------------------------
Consolidated income (loss) before income taxes               $ (2,545,063)            $   3,571,780             $   5,326,783
                                                         ======================================================================

Identifiable assets:
  Total segment identifiable assets                          $ 63,949,914             $  71,559,199             $  73,642,494
  Elimination of intersegment assets                                    -                         -                         -
                                                         ----------------------------------------------------------------------
  Total consolidated assets                                  $ 63,949,914             $  71,559,199             $  73,642,494
                                                         ======================================================================
</TABLE>

10.  RESTRUCTURING CHARGE, ASSET IMPAIRMENT CHARGE AND OTHER CHARGES

In the third quarter of 2001, the Company recorded charges related to a
restructuring and profitability enhancement plan. This plan was implemented to
effectuate certain key initiatives including plant and office consolidations,
headcount reductions, asset impairment issues and a general response to a
deteriorating economic environment. The pre-tax charge resulting from these
actions was $6.1 million ($4.3 million after-tax or $0.44 per share on a basic
and diluted basis.) The charge related to approximately $3.1 million from asset
impairments including goodwill, facility and equipment write-downs. The Company
recorded charges for restructuring and other special charges of $3.0 million
comprised primarily of severance payments, charge-offs related to duplicative
facility leases, increases in allowance for doubtful accounts and inventory
obsolescence and valuation reserves, costs related to the impairment of the
Company's information systems hardware and software, charges related to
termination and related fees of a pension plan of an acquired Company, and other
charges and expenses related to plant consolidations and restructuring.

As a result of the Company's restructuring plan, approximately 35 employees were
terminated from the Company primarily as a result of plant and office
consolidations at the Company's Carolina Cut Sheets operation, Chapman Printing
Lexington location and the Garrison Brewer division of Stationers. In addition,
the Company anticipates the


                                      F-21
<PAGE>

                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


elimination of additional positions resulting from retirements and normal
attrition within the next twelve to eighteen months. As of October 31, 2001 35
employees were notified of their termination and one retired position was
eliminated.

The cash and non-cash elements of the Company's restructuring charge, asset
impairment charge, and other unusual charges approximated $1.5 million in cash
and $4.6 million non-cash. The charges are classified on the statement of
operations as components of operating income. Inventory obsolescence and
valuation reserves are classified as a component of cost of sales. The printing
segment charges approximated $3.5 million consisting of goodwill write-downs of
$779,000, facilities and equipment write-downs of $235,000, severance costs of
$51,000, inventory obsolescence and valuation reserves of $988,000 and
restructuring and other charges of $1,457,000. The office products and furniture
segment charges approximated $2.6 million consisting of goodwill write-downs of
$1,611,000, facilities write-downs of $436,000, severance costs of $4,000 and
restructuring and other charges of $541,000. Details of the approximated charges
are as follows as of October 31, 2001:


<TABLE>
<CAPTION>
                                                                                Utilized
                                                                                --------
                                                     Original                                                 Balance at
                                                      Accrual               Cash             Noncash        October 31, 2001
                                                      -------               ----             -------        ----------------
<S>                                              <C>                  <C>               <C>                 <C>
Write-down of goodwill, facilities
and equipment                                    $  3,060,000          $      --        $  3,060,000           $          --

Employee severance and termination
benefits                                               55,000             25,000                  --                  30,000

Inventory obsolescence and valuation
reserves                                              978,000                 --             978,000                      --

Restructuring and other charges                     1,998,000            485,000             509,000               1,004,000
                                                 ---------------------------------------------------------------------------

Total                                            $  6,091,000          $ 510,000        $  4,547,000           $   1,034,000
                                                 ===========================================================================
</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 long-term debt was
estimated using discounted cash flows and it approximates their carrying value.


                                      F-22
<PAGE>


                   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, 2001 and 2000.

<TABLE>
<CAPTION>
                                                   FIRST               SECOND                THIRD                 FOURTH
                                                  QUARTER             QUARTER             QUARTER (1)             QUARTER
                                          -------------------------------------------------------------------------------------
    <S>                                     <C>                   <C>                 <C>                    <C>
    REVENUES
       2001                                    $ 31,921,000         $ 30,772,000         $ 30,237,000          $ 32,214,000
       2000                                    $ 31,633,000         $ 32,034,000         $ 30,415,000          $ 32,248,000

    GROSS PROFIT
       2001                                    $  8,730,000         $  9,219,000         $  7,573,000          $  9,145,000
       2000                                    $  8,633,000         $  9,980,000         $  9,267,000          $  9,145,000

    NET INCOME (LOSS)
       2001                                    $    279,000         $    938,000         $ (4,246,000)         $    847,000
       2000                                    $    252,000         $    940,000         $    452,000          $    465,000

    EARNINGS (LOSS) PER SHARE
    Basic
       2001                                    $       0.03         $       0.10         $      (0.44)         $       0.09
       2000                                    $       0.03         $       0.10         $       0.05          $       0.05

    Diluted
       2001                                    $       0.03         $       0.10         $      (0.44)         $       0.09
       2000                                    $       0.03         $       0.10         $       0.05          $       0.05

    WEIGHTED AVERAGE
       SHARES OUTSTANDING
    Basic
       2001                                       9,714,000            9,714,000            9,714,000             9,714,000
       2000                                       9,714,000            9,714,000            9,714,000             9,714,000

    Diluted
       2001                                       9,714,000            9,714,000            9,714,000             9,714,000
       2000                                       9,716,000            9,714,000            9,714,000             9,714,000
</TABLE>

(1) Includes the third quarter 2001 restructuring, asset impairment and other
charges (See Note 10)


                                      F-23
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES


                                   Schedule II

                        Valuation and Qualifying Accounts

                   Years Ended October 31, 2001, 2000 and 1999


<TABLE>
<CAPTION>
                                                                           ADDITIONS
                                         BALANCE AT       BALANCES OF       CHARGED TO                              BALANCE
                                          BEGINNING         ACQUIRED        COSTS AND                               AT END
           DESCRIPTION                    OF PERIOD        COMPANIES       EXPENSES (2)      DEDUCTIONS (1)        OF PERIOD
--------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>              <C>              <C>               <C>                 <C>
2001
----

Allowance for doubtful accounts          $ 1,508,536      $  65,000        $ 1,214,784       $ (1,356,016)       $  1,432,304

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
</TABLE>


(1) Uncollectable accounts written off, net of recoveries

(2) In 2001, $509,042 was charged to expense relating to the Company's
    restructuring and profitability enhancement plan.


                                      F-24