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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 28, 2002ORo

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


Commission file number 1-5064

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Jostens, Inc.(Exact name of Registrant as specified in its charter)

Minnesota
(State or other jurisdiction of incorporation or organization)

41-0343440
(I.R.S. employer identification number)5501 Norman Center Drive,
Minneapolis, Minnesota
(Address of principal executive offices)

55437
(Zip code)




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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirement for the past
90 days. Yes ý No o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
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.
Yes o No ý

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes o No ý

The
aggregate market value of voting and non-voting stock held by nonaffiliates of the Registrant on March 20, 2003: not applicable. The number of shares outstanding
of each of the Registrant's classes of common stock on March 20, 2003, were as follows: Class A: 2,825,218; Class B: 5,300,000; Class C: 811,020; Class D: 20,000;
Class E: 0; and Undesignated: 0.

Documents
incorporated by Reference: None

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Jostens, Inc. and Subsidiaries  Annual Report on Form 10-K  For the Year Ended December 28, 2002

|                                                                         |  |                                                                                       |  | Page
|------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------- |  | ----
|PART I                                                                  
|ITEM 1.                                                                  |  | Business                                                                              |  | 1   
|ITEM 2.                                                                  |  | Properties                                                                            |  | 5   
|ITEM 3.                                                                  |  | Legal Proceedings                                                                     |  | 6   
|ITEM 4.                                                                  |  | Submission of Matters to a Vote of Security Holders                                   |  | 6   
|PART II                                                                 
|ITEM 5.                                                                  |  | Market for Registrant's Common Equity and Related Stockholder Matters                 |  | 7   
|ITEM 6.                                                                  |  | Selected Financial Data                                                               |  | 8   
|ITEM 7.                                                                  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 9   
|ITEM 7A.                                                                 |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 22  
|ITEM 8.                                                                  |  | Financial Statements and Supplementary Data                                           |  | 23  
|ITEM 9.                                                                  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 52  
|PART III                                                                
|ITEM 10.                                                                 |  | Directors and Executive Officers of the Registrant                                    |  | 52  
|ITEM 11.                                                                 |  | Executive Compensation                                                                |  | 54  
|ITEM 12.                                                                 |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 58  
|ITEM 13.                                                                 |  | Certain Relationships and Related Transactions                                        |  | 62  
|ITEM 14.                                                                 |  | Controls and Procedures                                                               |  | 63  
|PART IV                                                                 
|ITEM 15.                                                                 |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 64  
|Signatures                                                               |  | 68                                                                                   
|Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  | 69                                                                                   

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PART I

ITEM 1.    BUSINESS

We are a leading provider of school-related affinity products and services including yearbooks, class rings and graduation products in North America. We also
provide school photography services of which we have a leading market share in Canada. Our 106-year history of providing quality products and superior service has enabled us to develop
long-standing and extensive relationships with schools throughout the United States and Canada.

Jostens
is a Minnesota corporation. Unless otherwise indicated, all references to "Jostens," "we," "our" and "us" refer to Jostens, Inc. and its subsidiaries. Our principal
executive offices are located at 5501 Norman Center Drive, Minneapolis, Minnesota 55437. Our main phone number is (952) 830-3300 and our Internet address is
www.jostens.com.

We
make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. In addition, you may obtain a
copy of our filings at www.sec.gov.



We manage our business on the basis of one reportable segment: the development, manufacturing and distribution of school-related affinity products and services.
We market our products and services primarily in the United States and Canada through independent sales representatives. We also market certain of our products and services through a direct
employee-based sales organization. Our complementary products and services are sold through a single sales management organization, which is supported by a single marketing organization. All of our
products and services are offered to similar
customers, predominantly high school and college students. We offer four principal lines of products and services: printing and publishing, jewelry, graduation products and photography. In 2002, 2001
and 2000, approximately 42%, 41% and 40% of net sales were derived from our printing and publishing products, 27%, 28% and 28% from our jewelry products, 24%, 24% and 25% from our graduation products
and 7% in all three years from our photography products and services. Approximately 95% of our 2002 and 2001 net sales and 94% of our 2000 net sales were in the U.S. market. Additional information is
set forth below in ITEM 8, Note 13 of the Notes to Consolidated Financial Statements.



1

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We experience seasonality concurrent with the North American school year, with nearly one half of full-year sales and about three fourths of
full-year operating income occurring in the second quarter.



We have four primary competitors, which vary across our product lines and services. They include Herff Jones, Inc. (Herff Jones), Walsworth Publishing
Company (Walsworth), Lifetouch, Inc. (Lifetouch) and American Achievement Corporation (AAC), which is the parent corporation of Taylor Publishing Company (Taylor) and Commemorative
Brands, Inc. (CBI).

In
the sale of yearbooks, we compete primarily with Herff Jones, Taylor, Walsworth and Lifetouch. Each competes on the basis of print quality, price, product offerings and service.
Customization and personalization combined with technical assistance and customer service capabilities are important factors in yearbook production.

Customer
service and manufacturing expertise are also particularly important in the sale of class rings because of the high degree of customization and the emphasis on timely delivery.
Class rings are marketed through various channels that have different quality and price points. Our primary competitors in the sale of class rings are Herff Jones and CBI. CBI markets the Balfour and
ArtCarved brands. Herff Jones distributes its product only in schools, while CBI distributes its product through multiple distribution channels, including schools, independent and chain jewelers and
mass merchandisers.

In
the sale of graduation products, we compete primarily with Herff Jones and CBI as well as numerous local and regional competitors who offer products similar to ours. Each competes on
the basis of product offerings, product quality, price and service with particular importance given to establishing a proven track record of timely delivery of quality products.

In
the sale of photography products and services, we compete primarily with Lifetouch, Herff Jones and a variety of regional and locally owned and operated photographers.



Because of the nature of our business, all orders are generally filled within a few months from the time of placement. However, we typically obtain contracts in
the second quarter of one year for student yearbooks to be delivered in the second and third quarters of the subsequent year. Often the total revenue pertaining to a yearbook order is not established
at the time of the order because the content

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of the book is not final. Subject to the foregoing qualifications, we estimate the backlog of orders, primarily related to student yearbooks, was approximately $324.0 million,
$308.0 million and $291.0 million as of the end of 2002, 2001 and 2000, respectively. We expect most of the 2002 backlog to be confirmed and filled in 2003.



Matters pertaining to the environment are set forth below in ITEM 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, and in
ITEM 8, Note 8 of the Notes to Consolidated Financial Statements.



The principal raw materials that we purchase are gold and other precious metals, paper products, and precious, semiprecious and synthetic stones. Any material
increase in the price of gold could adversely impact our cost of sales.

We
purchase substantially all synthetic and semiprecious stones from a single supplier located in Germany who is also a supplier to almost all of the class ring manufacturers in the
United States. We believe that the loss of this supplier could adversely affect our business during the time period in which alternate sources would adapt their production capabilities to meet
increased demand.

Matters
pertaining to our market risks are set forth below in ITEM 7A, Quantitative and Qualitative Disclosures about Market Risk.



We have licenses, patents, trademarks and copyrights that, in the aggregate, are an important part of our business. However, we do not regard our business as
being materially dependent upon any single license, patent, trademark or copyright. We have patent and trademark registration applications pending and will pursue other filings and registrations as
appropriate to establish and preserve our intellectual property rights.



As of the end of February 2003, we had approximately 6,700 employees, of which approximately 300 were members of two separate unions. Because of the
seasonality of our business, the number of employees tends to vary. We have never suffered an interruption of business that has had an impact on our operations as a result of a labor dispute and
consider our relationship with our employees to be good.



Our foreign sales are derived primarily from operations in Canada. The accounts and operations of our foreign businesses, excluding Canada, are not significant.
Local taxation, import duties, fluctuation in currency exchange rates and restrictions on exportation of currencies are among risks attendant to foreign operations, but these risks are not considered
significant with respect to our business. The gross profit margin on foreign sales is approximately the same as the gross profit margin on domestic sales.

Foreign
operations financial information is set forth below in ITEM 8, Note 13 and Note 15 of the Notes to Consolidated Financial Statements.

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On December 27, 1999, we entered into a merger agreement with Saturn Acquisition Corporation, an entity organized for the sole purpose of effecting a
merger on behalf of certain affiliates of Investcorp S.A. (Investcorp) and other investors. On May 10, 2000, Saturn Acquisition Corporation merged with and into Jostens, with Jostens as the
surviving corporation. The merger was part of a recapitalization of Jostens, which resulted in affiliates of Investcorp and the other investors acquiring approximately 92% of our
post-merger common stock. The remaining 8% of our common stock was held by pre-recapitalization shareholders and certain members of senior management. As a result of the
transaction, our shares were de-listed from the New York Stock Exchange.

The
recapitalization was funded by (a) $495.0 million of borrowings under a senior credit facility with a syndicate of banks, (b) issuance of $225.0 million
in principal amount of senior subordinated notes and warrants to purchase 425,060 shares of our common stock, (c) issuance of $60.0 million in principal amount of redeemable preferred
stock and warrants to purchase 531,325 shares of our common stock and (d) $208.7 million of proceeds from the sale of shares of common stock to affiliates of Investcorp and the other
investors.

The
proceeds from these financings funded (a) the payment of $823.6 million to holders of common stock representing $25.25 per share, (b) repayment of
$67.6 million of outstanding indebtedness, (c) payment of approximately $10.0 million in consideration for cancellation of employee stock options, (d) payments of
approximately $72.0 million of fees and expenses associated with the recapitalization including $12.7 million of advisory fees paid to an affiliate of Investcorp and (e) a
pre-payment of $7.5 million for a management and consulting agreement for a five-year term with an affiliate of Investcorp.

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ITEM 2.    PROPERTIES

Our properties are summarized below:

Location

Type of Property

Owned (1) or Leased

Approximate Square FootageAnaheim, CA

Office

Leased

12,000Attleboro, MA

Manufacturing

Owned

52,000Burnsville, MN

Manufacturing

Leased

47,000Clarksville, TN

Manufacturing

Owned

105,000Clarksville, TN

Warehouse

Leased

13,000Denton, TX

Manufacturing

Owned

56,000Laurens, SC

Manufacturing

Owned

98,000Laurens, SC

Warehouse

Leased

74,000Owatonna, MN

Office

Owned

88,000Owatonna, MN

Manufacturing

Owned

30,000Owatonna, MN

Warehouse

Leased

29,000Red Wing, MN

Manufacturing

Owned

132,000Shelbyville, TN

Manufacturing

Owned

87,000State College, PA

Manufacturing

Owned

66,000State College, PA

Warehouse

Leased

6,000Staten Island, NY

Office

Leased

4,000Topeka, KS

Manufacturing

Owned

236,000Topeka, KS

Warehouse

Leased

17,000Visalia, CA

Manufacturing

Owned

96,000Visalia, CA

Warehouse

Leased

13,000Winnipeg, MAN

Manufacturing

Owned

69,000Winnipeg, MAN

Office

Leased

22,000Winnipeg, MAN

Warehouse

Leased

6,000Etobicoke, Ontario

Office

Leased

2,000Winston-Salem, NC

Manufacturing

Owned

132,000Winston-Salem, NC

Warehouse

Leased

7,000Webster, NY (2)

Manufacturing

Owned

60,000Princeton, IL (3)

Manufacturing

Owned

65,000Saddle Brook, NJ (4)

Office

Leased

6,000Bloomington, MN

Office

Owned

109,000Bloomington, MN

Office

Leased

37,000


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We
also have office space, primarily for our photography product line that we lease in 26 locations totaling 45,000 square feet.

We
believe our production facilities are suitable for their purpose and are adequate to support our businesses. The extent of utilization of individual facilities varies due to the
seasonal nature of the business.

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ITEM 3.    LEGAL PROCEEDINGS

Matters pertaining to legal proceedings are set forth below in ITEM 7 and ITEM 8, Note 8 of the Notes to Consolidated Financial Statements.

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

None

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PART II

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

As a result of the merger and recapitalization on May 10, 2000 as discussed in ITEM 1, our common shares were de-listed from the New York Stock
Exchange. Currently, there is no established public trading market for our common stock. Shares of Class A common stock have been traded on a limited and sporadic basis from time to time
over-the-counter on the so-called "pink sheets." This limited trading activity may not represent a reliable market indicator for our Class A common shares.
Shares of Class B, Class C and Class D common stock are not traded.

We
do not intend to pay dividends to any class of our common shareholders. Furthermore, our ability to pay dividends is limited by the terms of our senior secured credit facility and the
senior subordinated notes.

The
number of shareholders of record for each class of common stock at March 20, 2003 are as follows: Class A183; Class B13;
Class C1; Class D11 and Class ENone.



We have not issued nor sold securities within the past three years pursuant to offerings that were not registered under the Securities Act of 1933, as amended
(the "Securities Act"), except on May 10, 2000 as part of the merger and recapitalization, we:



The
transactions set forth above were undertaken in reliance upon exemption from the registration requirements of the Securities Act afforded by Section 4(2), Rule 144A
under the Securities Act and/or Regulation D and Regulation S promulgated hereunder, as sales not involving a public offering. In October 2000, we consummated a registered
exchange offer with respect to the 12.75% senior subordinated notes described above, pursuant to which all such privately placed securities were exchanged for registered securities.

Additional
information is set forth below in ITEM 8, Note 12 of the Notes to Consolidated Financial Statements, ITEM 11 and ITEM 12.

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ITEM 6.    SELECTED FINANCIAL DATA

The table below sets forth summary consolidated historical data relating to Jostens. The summary historical financial information for the five fiscal years in the
period ended December 28, 2002 was derived from the audited historical consolidated financial statements of Jostens.

|                                                       |  | 2002 |        | 2001 |   | 2000   |   | 1999 |        | 1998 |  
|------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | - | ---- | ------ | ---- | -
|
|Statement of Operations (1)                            |  |      |        |      |   |        |   |      |        |      |  
|Net sales                                              |  | $    | 756.0  |      | $ | 736.6  |   | $    | 724.6  |      | $
|Cost of products sold                                  |  |      | 316.0  |      |   | 311.2  |   |      | 305.1  |      |  
|Transaction costs                                      |  |      |       |      |   |       |   |      | 46.4   |      |  
|Special charges                                        |  |      |       |      |   | 2.5    |   |      | 0.2    |      |  
|Operating income                                       |  |      | 131.8  |      |   | 121.9  |   |      | 71.2   |      |  
|Net interest expense                                   |  |      | 67.3   |      |   | 76.8   |   |      | 58.9   |      |  
|Provision for income taxes                             |  |      | 36.2   |      |   | 18.6   |   |      | 16.0   |      |  
|Income (loss) from continuing operations               |  |      | 28.3   |      |   | 26.5   |   |      | (10.5  | )    |  
|Gain (loss) on discontinued operations, net of tax     |  |      | 1.6    |      |   | (22.4  | ) |      | (2.3   | )    |  
|Cumulative effect of accounting change, net of tax (2) |  |      |       |      |   |       |   |      | (5.9   | )    |  
|Net income (loss) (2) (3) (4) (5) (6)                  |  |      | 29.9   |      |   | 4.1    |   |      | (18.7  | )    |  
|                                                       |  |      |        |      |   |        |   |      |        |      |  
|Balance Sheet Data                                     |  |      |        |      |   |        |   |      |        |      |  
|Current assets                                         |  | $    | 187.1  |      | $ | 232.6  |   | $    | 236.1  |      | $
|Working capital (7)                                    |  |      | (56.0  | )    |   | (62.6  | ) |      | (20.0  | )    |  
|Property and equipment, net                            |  |      | 65.4   |      |   | 68.2   |   |      | 79.3   |      |  
|Total assets                                           |  |      | 327.5  |      |   | 374.6  |   |      | 388.3  |      |  
|Short-term borrowings                                  |  |      | 9.0    |      |   |       |   |      |       |      |  
|Long-term debt, including current maturities           |  |      | 580.4  |      |   | 647.0  |   |      | 684.8  |      |  
|Redeemable preferred stock                             |  |      | 70.8   |      |   | 59.0   |   |      | 48.8   |      |  
|Shareholders' equity (deficit)                         |  |      | (582.5 | )    |   | (599.1 | ) |      | (586.3 | )    |  
|                                                       |  |      |        |      |   |        |   |      |        |      |  
|Common Share Data (8)                                  |  |      |        |      |   |        |   |      |        |      |  
|Basic EPSincome (loss) from continuing operations     |  | $    | 1.85   |      | $ | 1.82   |   | $    | (0.92  | )    | $
|Basic EPSnet income (loss)                            |  |      | 2.03   |      |   | (0.68  | ) |      | (1.38  | )    |  
|Diluted EPSincome (loss) from continuing operations   |  |      | 1.66   |      |   | 1.65   |   |      | (0.92  | )    |  
|Diluted EPSnet income (loss)                          |  |      | 1.83   |      |   | (0.61  | ) |      | (1.38  | )    |  
|Cash dividends declared per share (9)                  |  |      |       |      |   |       |   |      | 0.22   |      |  
|Common shares outstanding at period end                |  |      | 9.0    |      |   | 9.0    |   |      | 9.0    |      |  
|                                                       |  |      |        |      |   |        |   |      |        |      |  
|Other Data (1)                                         |  |      |        |      |   |        |   |      |        |      |  
|Depreciation and amortization of continuing operations |  | $    | 26.9   |      | $ | 28.6   |   | $    | 26.8   |      | $
|Adjusted EBITDA (10) (12)                              |  |      | 160.9  |      |   | 153.0  |   |      | 144.6  |      |  
|Adjusted EBITDA margin                                 |  |      | 21.3   | %    |   | 20.8   | % |      | 20.0   | %    |  
|Free cash flow (11) (12)                               |  | $    | 32.7   |      | $ | 55.8   |   | $    | 17.3   |      | $
|Capital expenditures related to continuing operations  |  |      | 22.8   |      |   | 22.2   |   |      | 21.2   |      |  
|                                                       |  |      |        |      |   |        |   |      |        |      |  

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Our disclosure and analysis in this report may contain "forward-looking statements." Forward-looking statements give our current expectations or forecasts of
future events. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe,"
"project," or "continue," or the negative thereof or similar words. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Any
or all of our forward-looking statements in this report and in any public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or
unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual results may vary materially. Investors are cautioned not to place undue reliance on any
forward-looking statements. Investors should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of
all potential risks and uncertainties.

Any
change in the following factors may impact the achievement of results:



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The
foregoing factors are not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that would impact our business. Except to the extent required by law,
we undertake no obligation to publicly update or revise any forward-looking statements.

The
following discussion should be read in conjunction with the selected historical financial data presented in ITEM 6 and our consolidated financial statements and supplementary data
presented in ITEM 8 of this Form 10-K. In the text below, financial statement amounts have been rounded and the percentage changes are based on the financial statements.

CRITICAL ACCOUNTING POLICIES

We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial
statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we used in applying the
critical accounting policies. Within the context of these critical accounting policies, we are not currently aware of any reasonably likely event that would result in materially different amounts
being reported.



We recognize revenue when the earnings process is complete, evidenced by an agreement between Jostens and the customer, delivery and acceptance has occurred,
collectibility is probable and pricing is fixed and determinable. Provisions for warranty costs, which are primarily related to our jewelry products, are recorded based on historical information and
current trends.



We make estimates of potential future product returns related to current period product revenue. We analyze historical returns, current economic trends and
changes in customer demand and acceptance of our products when evaluating the adequacy of the allowance for sales returns. Significant management judgments and estimates must be made and used in
connection with establishing the

10

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allowance for sales returns in any accounting period. Material differences could result in the amount and timing of our revenue for any period if we made different judgments or utilized different
estimates. On a historical basis, the actual returns have not exceeded the estimates made by management.



We make estimates of potentially uncollectible customer accounts receivable and receivables arising from sales representative draws paid in excess of earned
commissions. Our reserves are based on an analysis of customer and salesperson accounts and historical write-off experience. Our analysis includes the age of the receivable, customer or
salesperson creditworthiness and general economic conditions. We believe the results could be materially different if historical trends do not reflect actual results or if economic conditions
worsened. On a historical basis, the actual uncollectible accounts have not exceeded the estimates made by management.



We adopted Statement of Financial Accounting Standards (SFAS) 142,"Goodwill and Intangible Assets"and as a
result discontinued the amortization of goodwill. Goodwill is tested for impairment annually or whenever an impairment indicator arises. If events or circumstances change, including reductions in
anticipated cash flows generated by operations, goodwill could become impaired and result in a charge to earnings.



Pension and other postretirement benefit costs and obligations are dependent on assumptions used to develop the actuarial valuation of such amounts. These
assumptions include discount rates, expected return on plan assets, rate of compensation increases, health care cost trend rates, mortality rates and other factors. The actuarial assumptions used in
our pension and postretirement reporting are reviewed annually and compared with external benchmarks to ensure that they accurately account for our future pension obligations. While we believe that
the assumptions used are appropriate, differences in actual
experience or changes in the assumptions could materially affect our financial position or results of operations.



As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we
operate. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items such as capital assets for tax and
accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheet. We must then assess the likelihood that our deferred tax
assets will be recovered from taxable income of the appropriate character within the carryback or carryforward period and to the extent we believe that recovery is not likely, we must establish a
valuation allowance. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our
deferred tax assets. We have estimated a tax valuation allowance related to capital loss and foreign tax credit carryforwards because we believe the tax benefits are not likely to be fully realized.

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RESULTS OF OPERATIONS

The following table sets forth selected information from our Consolidated Statement of Operations, expressed as a percentage of net sales.

|                                                        |                                                          |       |      |       |      |       |      | Percentage change |      
|------------------------------------------------------- | -------------------------------------------------------- | ----- | ---- | ----- | ---- | ----- | ---- | ----------------- | -----
|
|
|
|Net sales                                               |                                                          | 100.0 | %    | 100.0 | %    | 100.0 | %    | 2.6               | %    
|Cost of products sold                                   |                                                          | 41.8  | %    | 42.3  | %    | 42.1  | %    | 1.5               | %    
|                                                        |                                                          |       |      |       |      |       |      |                   |      
|                                                        | Gross profit                                             |       | 58.2 | %     | 57.7 | %     | 57.9 | %                 | 3.5  
|Selling and administrative expenses                     |                                                          | 40.5  | %    | 40.9  | %    | 41.6  | %    | 1.8               | %    
|Loss on redemption of senior subordinated notes payable |                                                          | 0.2   | %    |      |      |      |      | NM                |      
|Transaction costs                                       |                                                          |      |      |      |      | 6.4   | %    |                  |      
|Special charges                                         |                                                          |      |      | 0.3   | %    |      |      | NM                |      
|                                                        |                                                          |       |      |       |      |       |      |                   |      
|                                                        | Operating income                                         |       | 17.4 | %     | 16.5 | %     | 9.8  | %                 | 8.1  
|Interest income                                         |                                                          | 0.1   | %    | 0.3   | %    | 0.2   | %    | (51.1             | %)   
|Interest expense                                        |                                                          | 9.1   | %    | 10.7  | %    | 8.3   | %    | (13.4             | %)   
|Equity losses and write-down of investments             |                                                          |      |      |      |      | 0.9   | %    |                  |      
|                                                        |                                                          |       |      |       |      |       |      |                   |      
|                                                        | Income from continuing operations before income taxes    |       | 8.5  | %     | 6.1  | %     | 0.8  | %                 | 42.9 
|Provision for income taxes                              |                                                          | 4.8   | %    | 2.5   | %    | 2.2   | %    | 95.0              | %    
|                                                        |                                                          |       |      |       |      |       |      |                   |      
|Income (loss) from continuing operations                |                                                          | 3.7   | %    | 3.6   | %    | (1.4  | %)   | 6.5               | %    
|                                                        |                                                          |       |      |       |      |       |      |                   |      
|Discontinued operations:                                |                                                          |       |      |       |      |       |      |                   |      
|                                                        | Loss from operations of discontinued Recognition segment |       |     |       | (0.8 | %)    | (0.3 | %)                | NM   
|                                                        | Gain (loss) on disposal of Recognition segment           |       | 0.2  | %     | (2.3 | %)    |     |                   | NM   
|                                                        |                                                          |       |      |       |      |       |      |                   |      
|Gain (loss) on discontinued operations, net of tax      |                                                          | 0.2   | %    | (3.0  | %)   | (0.3  | %)   | NM                |      
|Cumulative effect of accounting change, net of tax      |                                                          |      |      |      |      | (0.8  | %)   |                  |      
|                                                        |                                                          |       |      |       |      |       |      |                   |      
|                                                        | Net income (loss)                                        |       | 4.0  | %     | 0.6  | %     | (2.6 | %)                | 629.4
|Dividends and accretion on redeemable preferred shares  |                                                          | (1.6  | %)   | (1.4  | %)   | (0.8  | %)   | (15.1             | %)   
|                                                        |                                                          |       |      |       |      |       |      |                   |      
|                                                        | Net income (loss) available to common shareholders       |       | 2.4  | %     | (0.8 | %)    | (3.4 | %)                | 397.6
|                                                        |                                                          |       |      |       |      |       |      |                   |      

---

Percentages
in this table may reflect rounding adjustments.
NM = percentage not meaningful

Year Ended December 28, 2002 Compared to the Year Ended December 29, 2001



Net sales increased $19.4 million, or 2.6%, to $756.0 million for 2002 from $736.6 million for 2001. The increase in net sales resulted from
price increases across all product lines averaging approximately

12

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2.2% and slight volume/mix increases. Specific factors contributing to the increase in net sales from 2001 to 2002 include:



These
increases were partially offset by the following:



Gross profit increased $14.7 million, or 3.5%, to $440.0 million for 2002 from $425.3 million for 2001. As a percentage of net sales, gross
profit margin increased 50 basis points to 58.2% in 2002 from 57.7% in 2001. The increase in gross profit margin is attributed to:



These
profit improvements were partially offset by an increase in the price of gold compared to 2001, higher employee benefit costs and a general shift in consumer spending toward
lower-priced products with lower profit margins in some of our product lines.



Selling and administrative expenses increased $5.5 million, or 1.8%, to $306.4 million for 2002 from $300.9 million for 2001. As a percentage
of net sales, selling and administrative expenses decreased 40 basis points to 40.5% for 2002 compared to 40.9% for 2001. The $5.5 million increase is primarily due to:



These
increases were partially offset by reduced spending for outside legal counsel in connection with the resolution of a specific legal matter pending in 2001.

13

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As a result of redeeming $7.5 million principal amount of our 12.75% senior subordinated notes due May 2010, we recognized a loss of
$1.8 million in 2002 consisting of a $0.8 million write-off of unamortized original issuance discount and deferred financing costs and a $1.0 million premium paid on
redemption of the notes.



Net interest expense decreased $9.4 million, or 12.3%, to $67.3 million for 2002 as compared to $76.8 million for 2001. The decrease was due
to a lower average outstanding debt balance and a lower average interest rate as a result of refinancing a portion of our senior secured credit facility combined with the effects of general market
conditions.



Our effective tax rate for continuing operations was 56.2% for 2002 compared to 41.2% for 2001. The increase was due primarily to the effect of additional federal
and state income taxes attributable to earnings repatriated from our Canadian subsidiary. We anticipate a 2003 effective tax rate between 41% and 42%.



Income from continuing operations increased $1.7 million, or 6.5%, to $28.3 million for 2002 from $26.5 million for 2001 as a result of
increased net sales, improved gross profit margin and lower net interest expense offset by an increase in our provision for income taxes.

Year Ended December 29, 2001 Compared to the Year Ended December 30, 2000



Net sales increased $12.0 million, or 1.7%, to $736.6 million for 2001 from $724.6 million for 2000. The increase in net sales resulted from
price increases in most of our product lines averaging approximately 3.0% offset partially by volume/mix decreases of 1.3%. Specific factors contributing to the increase in net sales from 2000 to 2001
include:



These
increases were partially offset by the following:



14

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Gross profit increased $5.8 million, or 1.4%, to $425.3 million for 2001 from $419.5 million for 2000. As a percentage of net sales, gross
profit margin decreased slightly to 57.7% in 2001 from 57.9% in 2000. The slight decrease was primarily the result of unfavorable manufacturing variances associated with lower volumes for jewelry and
graduation products in the high school market combined with unfavorable foreign exchange variances for Canadian manufacturing costs. This decrease was partially offset by our continued emphasis on
manufacturing efficiencies including the implementation of lean manufacturing principles.



Selling and administrative expenses decreased $0.8 million, or 0.3%, to $300.9 million for 2001 from $301.7 million for 2000. As a percentage
of net sales, selling and administrative expenses decreased 70 basis points to 40.9% for 2001 compared to 41.6% for 2000. The decrease reflects lower spending on information systems and lower
commission expenses primarily due to volume decreases in jewelry and graduation announcements in the high school market combined with changes in the commission program for Canadian sales. These
decreases were offset by:





During 2001, we recorded special charges totaling $2.5 million. We incurred costs of $2.1 million for severance and related separation benefits in
connection with the departure of a senior executive and two other management personnel. In addition, we elected to terminate our joint venture operations in Mexico City, Mexico and took a charge of
$0.4 million, primarily to write off the net investment. We utilized $2.3 million of the aggregate special charge in 2001 and less than $0.1 million in 2002. The remaining
liability of $0.2 million is classified in "other current liabilities" in our Consolidated Balance Sheet as it primarily consists of separation benefits that will continue to be paid out over
the next six months as specified under the separation agreement.



Net interest expense increased $17.9 million, or 30.3%, to $76.8 million for 2001 as compared to $58.9 million for 2000. The increase is due
to the full year impact of our recapitalization financing, which occurred on May 10, 2000, offset by a declining outstanding debt balance and a lower average interest rate.



Our effective tax rate for continuing operations was 41.2% for 2001 compared to 289.2% for 2000, which reflected the 2000 impact of non-deductible
transaction costs of approximately $27.0 million.

15

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Income from continuing operations increased $37.0 million to $26.5 million for 2001 from a loss of $10.5 million for 2000 largely as a result
of transaction costs of $46.4 million incurred in 2000 associated with the merger and recapitalization on May 10, 2000.

DISCONTINUED OPERATIONS

In December 2001, our board of directors approved a plan to exit our former Recognition business in order to focus our resources on our core School
Products business. The results of the Recognition business are reflected as discontinued operations in our Consolidated Statement of Operations for all periods presented. The following table sets
forth revenue and loss from discontinued operations.

2002

2001

2000In thousandsRevenue from external customers

$


$
55,913

$
80,450Pre-tax loss from operations of discontinued operations before measurement date





(9,036
)

(3,372
)Pre-tax gain (loss) on disposal


2,708


(27,449
)

Income tax (expense) benefit


(1,071
)

14,045


1,075Gain (loss) on discontinued operations

$
1,637

$
(22,440
)
$
(2,297
)


As
a result of problems encountered with a system implementation that took place in 1999, revenue from the discontinued business continued to decline in 2001. Furthermore, in 2001, the
pre-tax loss from the results of discontinued operations included costs to hire, train and support a new sales force following the loss of seasoned sales representatives in 1999 and 2000.

During 2001, the results of discontinued operations encompassed the period through the December 3, 2001 measurement date. The $27.4 million pre-tax loss on
disposal of the discontinued business consisted of a non-cash charge of $11.1 million to write off certain net assets of the Recognition business plus a $16.3 million charge
for accrued costs related to exiting the Recognition business.

During
2002, we reversed $2.3 million of the accrued charges based on our revised estimates for employee separation costs and phase-out costs. Of the total adjustment,
$0.5 million resulted from modifying our anticipated workforce reduction from 150 to 130 full-time positions and $1.8 million resulted from lower information systems,
customer service and internal support costs and lower receivable write-offs than originally anticipated. In addition, we reversed $0.4 million in other liabilities for a total
pre-tax gain on discontinued operations of $2.7 million ($1.6 million net of tax). Components of the accrued disposal costs, which are included in "current liabilities of
discontinued operations" in our Consolidated Balance Sheet are as follows:

|                                                        |  | Initial
charge |        | Prior
accrual |   | Net
adjustments
in 2002 |  | Utilization
2002 |        | Balance
2002
|------------------------------------------------------- |  | -------------- | ------ | ------------- | - | ----------------------- |  | ---------------- | ------ | ------------
|
|Employee separation benefits and other related costs    |  | $              | 6,164  |               | $ |                        |  | $                | (523   | )           
|Phase-out costs of exiting the Recognition business     |  |                | 4,255  |               |   |                        |  |                  | (1,365 | )           
|Salesperson transition benefits                         |  |                | 2,855  |               |   | 1,236                   |  |                  | (191   | )           
|Other costs related to exiting the Recognition business |  |                | 3,018  |               |   | 1,434                   |  |                  | (228   | )           
|                                                        |  |                |        |               |   |                         |  |                  |        |             
|                                                        |  | $              | 16,292 |               | $ | 2,670                   |  | $                | (2,307 | )           
|                                                        |  |                |        |               |   |                         |  |                  |        |             

16

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Separation
benefits will continue to be paid out in 2003 over the benefit period as specified under our severance plan and transition benefits will continue to be paid through 2004.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash needs are for debt service obligations, capital expenditures, working capital and general corporate purposes. At the end of 2002, we had cash and
cash equivalents of $10.9 million. Our free cash flow for 2002 was $32.7 million compared to $55.8 million and $17.3 million for 2001 and 2000, respectively. Free cash flow
excludes the effects of cash flow from financing activities.



Operating activities generated cash of $55.5 million in 2002 compared with $71.6 million in 2001 and $35.5 million in 2000. The following
items contributed to the decline in operating cash flow in 2002:



Partially
offsetting the above items, operating cash flow was favorably impacted in 2002 by an increase in net income mainly as a result of the $22.4 million loss on discontinued
operations incurred in 2001, but also as a result of a $9.2 million increase in operating income, exclusive of special charges and the loss on redemption of our senior subordinated notes
payable, and a $9.4 million decrease in net interest expense compared to 2001. The increase in net income was offset, however, by a $17.6 million increase in our provision for income
taxes from continuing operations due to higher taxable income plus additional federal and state income taxes attributable to earnings repatriated from our Canadian subsidiary.

During
2002, we agreed to certain adjustments proposed by the Internal Revenue Service in connection with its audit of our federal income tax returns filed for years 1996 through 1998.
As a result of the audit, we agreed to pay additional federal taxes of $11.3 million. Combined with additional state taxes and interest charges, the liability related to these adjustments,
which had previously been accrued, was approximately $17 million. In addition, we have filed an appeal with the Internal Revenue Service concerning a further proposed adjustment of
approximately $8 million. While the appeal process may take up to two years to complete, we believe the outcome of this matter will not have a material impact on our results of operations.

The
$36.1 million increase in operating cash flow in 2001 over 2000 was primarily due to higher net income mainly as a result of transaction costs incurred in 2000 of
$46.4 million related to the merger and recapitalization, but also as a result of a $6.6 million increase in operating income exclusive of special charges and the transaction costs. The
increase in net income was partially offset by a $20.1 million increase in loss on discontinued operations and a $17.8 million increase in net interest expense compared to 2000. In
addition, cash was favorably impacted by reduced inventories and the timing of customer deposits. Also in 2000, we recorded a non-cash charge of $6.7 million for equity losses and a
write-down to zero against our investment in two privately held Internet companies and a non-cash charge of $5.9 million for the net of tax cumulative effect of our
change in method of accounting for certain sales transactions as set forth below in ITEM 8, Note 1 of the Notes to Consolidated Financial Statements.

17

---



Capital expenditures in 2002, 2001 and 2000 were $22.8 million, $22.7 million and $22.2 million, respectively, reflecting comparable spending
on technology, expansion of our color printing capacity and replacement projects in all three years.

In
2001, investing activities included proceeds of $4.0 million from the sale of our distribution facility in Memphis, Tennessee and proceeds of $2.5 million from the sale
of certain assets of our Recognition business. These items are included in discontinued operations in our Consolidated Statement of Operations. In 2000, we sold our minority equity position in a
privately held Internet company for $5.0 million, which resulted in no gain or loss.



Net cash used for financing activities in 2002, 2001 and 2000 was $64.8 million, $39.3 million and $29.3 million, respectively. Substantially
all of the net cash used for financing activities in 2002 and 2001 related to principal payments on our long-term debt. During 2002 and 2001, we made scheduled principal payments of
$20.9 million and $14.9 million, respectively, and voluntarily prepaid an additional $40.0 million and $24.0 million, respectively, of principal on our senior secured
credit facility. Also during 2002, we voluntarily redeemed $7.5 million principal amount of our 12.75% senior subordinated notes due May 2010 (the "notes") for $8.5 million.

During
2002, we reacquired 79,015 warrants to purchase 149,272 actual equivalent shares of common stock for total consideration paid of $2.7 million. The detachable warrants were
issued with the notes. We may, from time to time, purchase outstanding debt and equity securities for cash in private transactions, in the market or otherwise, subject to compliance with our debt and
preferred stock commitments.

Net
cash used for financing activities in 2000 consisted of proceeds from the new senior secured credit facility, issuance of the notes, issuance of redeemable preferred stock and
issuance of common stock tendered in the transaction, the pay-off of credit facilities existing prior to the transaction and a $16.0 million voluntary principal payment on our
senior secured credit facility.

Future
mandatory principal payment obligations under Term Loan A are $7.2 million due June 30, 2003 and $7.9 million due December 31, 2003. Thereafter,
semi-annual principal payments increase $0.7 million per semi-annual period through December 2005, with a final payment of $5.3 million due in
May 2006. On July 31, 2002, we amended and restated our senior secured credit facility to provide for the replacement of Term Loan B with a new Term Loan C in the amount of
$330.0 million. Future mandatory principal
payment obligations under Term Loan C are $1.0 million per semi-annual period through June 30, 2008 followed by three semi-annual installments of
$103.3 million though December 31, 2009. The $217.5 million in notes come due May 2010. In addition, mandatory interest obligations on the notes are $13.9 million
semi-annually through May 2010.

We
experience seasonality that corresponds to the North American school year. To help manage the seasonal nature of our cash flow, we have a $150.0 million revolving credit
facility that expires on May 31, 2006. The term loans and borrowings under the revolving credit facility collectively are referred to as the "senior secured credit facility". Our second amended
and restated senior secured credit facility dated December 13, 2002 adds our Canadian subsidiary as a borrower under the revolving credit facility for an amount not to exceed
$20.0 million. In connection with the amendment and restatement, we have guaranteed the revolving credit facility of our Canadian subsidiary upon the occurrence of any event of default under
any credit document. At the end of 2002, there was $9.0 million outstanding in the form of short-term borrowings at our Canadian subsidiary and an additional $9.9 million
outstanding in the form of letters of credit, leaving $131.1 million available under this facility. We also have a precious metals consignment arrangement with a major financial

18

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institution whereby we have the ability to obtain up to $30.0 million in consigned inventory. At the end of 2002, we had $12.6 million available under this facility.

The
notes are not collateralized and are subordinate in right of payment to the senior secured credit facility, which is collateralized by substantially all the assets of our operations
and all of our capital stock (limited to 65% in the case of foreign subsidiaries). The senior secured credit facility requires that we meet certain financial covenants, ratios and tests, including a
maximum leverage ratio and a minimum interest coverage ratio. In addition, we are required to pay certain fees in connection with the senior secured credit facility, including letter of credit fees,
agency fees and commitment fees. The senior secured credit facility and the notes contain certain cross-default provisions whereby a violation of a covenant under one debt obligation would,
consequently, violate covenants under the other debt obligation. At the end of 2002, we were in compliance with all covenants.

The
redeemable, payment-in-kind, preferred shares have an initial liquidation preference of $60.0 million and are entitled to receive dividends at 14.0%
per annum, compounded quarterly, and are payable either in cash or in additional shares of the same series of preferred stock. We plan to pay dividends in additional shares of preferred stock for the
foreseeable future. The redeemable preferred shares are subject to mandatory redemption by Jostens in May 2011.

Our
ability to make scheduled principal payments on existing indebtedness or to refinance our indebtedness, including the notes, will depend on our future financial and operating
performance, which to a certain extent is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on the current anticipated
level of operations, we believe that cash flows from operations and available cash, together with available borrowings under the senior secured credit facility will be adequate to meet our anticipated
future requirements for working capital, budgeted capital expenditures and scheduled payments of principal and interest on our indebtedness for the next twelve months. We may, however, need to
refinance all or a portion of the
principal of the notes on or prior to maturity. There can be no assurance that our business will generate sufficient cash flows from operations or that future borrowings will be available under the
senior secured credit facility in an amount sufficient to enable us to service our indebtedness, including the notes. In addition, there can be no assurance that we will be able to effect any
refinancing on commercially reasonable terms, or at all.



The following table shows due dates and amounts of our contractual obligations:

|                                   |  |   |         | Payments Due by Period
|---------------------------------- |  | - | ------- | ----------------------
|
|
|Long-term debt excluding discount  |  | $ | 596,771 |                       
|Revolving credit facility (1)      |  |   | 8,960   |                       
|Operating leases                   |  |   | 5,110   |                       
|Gold forward contracts             |  |   | 20,493  |                       
|Redeemable preferred stock (2)     |  |   | 272,630 |                       
|                                   |  |   |         |                       
|Total contractual cash obligations |  | $ | 903,964 |                       
|                                   |  |   |         |                       

---

19

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COMMITMENTS AND CONTINGENCIES



As part of our environmental management program, we are involved in various environmental remediation activities. As sites are identified and assessed in this
program, we determine potential environmental liabilities. Factors considered in assessing liability include, but are not limited to: whether we have been designated as a potentially responsible
party, the number of other potentially responsible parties designated at the site, the stage of the proceedings and available environmental technology.

In
1996, we assessed the likelihood as probable that a loss had been incurred at one of our sites based on findings included in remediation reports and from discussions with legal
counsel. As of the end of 2002, we had made payments totaling $7.1 million for remediation at this site and our Consolidated Balance Sheet included $1.1 million in "other accrued
liabilities" related to this site. During 2001, we received reimbursement from our insurance carrier in the amount of $2.7 million, net of legal costs. While we may have an additional right of
contribution or reimbursement under insurance policies, amounts recoverable from other entities with respect to a particular site are not considered until recoveries are deemed probable. No assets for
potential recoveries were established as of the end of 2002. We believe the effect on our consolidated results of operations, cash flows and financial position, if any, for the disposition of this
matter will not be material.



A federal antitrust action was served on Jostens on October 23, 1998. The complainant, Epicenter Recognition, Inc. (Epicenter), alleges that Jostens
has attempted to monopolize the market of high school graduation products in the state of California. Epicenter is a successor to a corporation formed by four of our former independent sales
representatives. The plaintiff claimed damages of approximately $3 million to $10 million under various theories and differing sized relevant markets. Epicenter waived its right to a
jury, so the case was tried before a judge in U.S. District Court in Orange County, California. On June 18, 2002, the Court found, among other things, that while Jostens' use of rebates,
contributions and value-added programs are legitimate business practices widely
practiced in the industry and do not violate antitrust laws, our use of multi-year Total Service Program contracts violated Section 2 of the Sherman Act because these agreements
could "exclude competition by making it difficult for a new vendor to compete against Jostens."

On
July 12, 2002, the Court entered an initial order providing, among other things, that Epicenter be awarded damages of $1.00, trebled pursuant to Section 15 of the
Clayton Act, and that in the state of California, Jostens was enjoined for a period of ten years from utilizing any contract, including those for Total Service Programs, for a period which extends for
more than one year (the "Initial Order"). The Initial Order also provided for payment to Epicenter of reasonable attorneys fees and costs. Jostens made a motion to set aside the Initial Order. On
August 23, 2002, the Court entered its ruling on the motion, and granted, in part, Jostens' motion for relief from judgment, changing the Initial Order and enjoining Jostens for only five
years, and allowing Jostens to enter into multi-year agreements in the following specific circumstances: (1) when a school requests a multi-year agreement, in writing
and on its own accord, or (2) in response to a competitor's offer to enter into a multi-year agreement. On August 23, 2002, the Court entered an additional order granting
Epicenter's motion for attorneys' fees in the amount of $1.6 million plus $0.1 million in out-of-pocket expenses for a total award of $1.7 million. On
September 12, 2002, Jostens filed a Notice of Appeal to the Ninth Circuit of the United States Court of Appeals. Payment of attorney fees and costs are stayed pending appeal. In
November 2002, Jostens issued a letter of credit in the amount of $2.0 million to secure the judgment on attorney fees and costs. Jostens continues to vigorously appeal this matter based
upon substantive and procedural grounds. Our brief on appeal was filed with the Court on February 13, 2003.

20

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We
are a party to other litigation arising in the normal course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the
eventual disposition of these matters. We believe the effect on our consolidated results of operations, cash flows and financial position, if any, for the disposition of these matters, including the
Epicenter matter discussed above, will not be material.

NEW ACCOUNTING STANDARDS



In June 2001, the FASB issued SFAS 143, which addresses financial accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. We will implement this statement on December 29, 2002, the beginning of our fiscal
year. The impact of such adoption is not anticipated to have a material effect on our financial statements.



In April 2002, the FASB issued SFAS 145, which rescinds SFAS 4,"Reporting Gains and Losses from Extinguishments of
Debt,"SFAS 44,"Accounting for Intangible Assets of Motor Carriers"and SFAS 64,"Extinguishments of
Debt Made to Satisfy Sinking-Fund Requirements"and amends SFAS 13,"Accounting for Leases."During 2002, we
adopted the provisions of SFAS 145. Accordingly, for 2002 the $1.8 million loss on redemption of our 12.75% senior subordinated notes due May 2010 has been classified as an
operating expense as it does not meet the criteria to be classified as an extraordinary loss.



In June 2002, the FASB issued SFAS 146, which clarifies the accounting for costs associated with exit or disposal activities. We will implement this
statement for all activities occurring subsequent to December 28, 2002. The impact of such adoption is not anticipated to have a material effect on our financial statements.



In December 2002, the FASB issued SFAS 148, which amends SFAS 123"Accounting for Stock-Based
Compensation."This statement provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee
compensation. This statement also amends the disclosure requirements of SFAS 123 and APB 28,"Interim Financial Reporting,"to require prominent
disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. We will continue
to account for stock-based compensation in accordance with APB 25. As such, we do not expect SFAS 148 to have a material effect on our financial statements. We have adopted the
disclosure-only provisions of SFAS 148 as of December 28, 2002.



In November 2002, the FASB issued Interpretation (FIN) 45, which requires a guarantor to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee. FIN 45 also expands the disclosures required by a guarantor about its obligations

21

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under certain guarantees that it has issued. Initial recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31,
2002. We do not expect FIN 45 to have a material effect on our financial statements.

RECENTLY PASSED LEGISLATION

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the "Act"), which immediately impacts Securities and Exchange Commission
registrants, public accounting firms, lawyers and securities analysts. This legislation is the most comprehensive since the passage of the Securities Acts of 1933 and 1934. It has far reaching effects
on the standards of integrity for corporate management, boards of directors and executive management. We do not expect any material adverse effect as a result of the passage of this legislation;
however, the full scope of the Act has not been determined. We have formed a disclosure committee, which has assessed our disclosure controls and internal controls. While it is not yet clear whether
all sections of the Act will apply to us, we intend to follow best practices with respect to the Act. We are in the process of updating our Code of Ethics and Business Conduct, have assessed our
anonymous reporting procedures including our internal hotline and have conducted educational sessions on requirements of the Act for our board of directors and executive management.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



We are subject to market risk associated with changes in interest rates, foreign currency exchange rates and commodity prices. To reduce any one of these risks,
we may at times use financial instruments. All hedging transactions are authorized and executed under clearly defined policies and procedures, which prohibit the use of financial instruments for
trading purposes.



We are subject to market risk associated with changes in the London Interbank Offered Rate (LIBOR) in connection with our senior secured credit facility. We
periodically prepare a sensitivity analysis to estimate our exposure to market risk on our floating rate debt. If short-term interest rates or the LIBOR averaged 10% more or less in 2002
and 2001, our interest expense would have changed by $2.4 million and $3.2 million, respectively.



From time to time, we may enter into foreign currency contracts to hedge purchases of inventory denominated in foreign currency. The purpose of these hedging
activities is to protect us from the risk that inventory purchases denominated in foreign currencies will be adversely affected by changes in foreign currency rates. Our principal currency exposures
relate to the Canadian dollar and the euro. We consider our market risk in such activities to be immaterial. Our foreign operations are primarily in Canada, and substantially all transactions are
denominated in the local currency.



We are subject to market risk associated with changes in the price of gold. To mitigate our commodity price risk, we enter into gold forward contracts based upon
the estimated ounces needed to satisfy projected customer requirements. We periodically prepare a sensitivity analysis to estimate our exposure to market risk on our open gold forward purchase
contracts. The market risk associated with these contracts was $0.2 million and $0.7 million as of the end of 2002 and 2001, respectively, and was estimated as the potential loss in fair
value resulting from a hypothetical 10% adverse change in fair value and giving effect to the increase in fair value over our aggregate forward contract commitment.

22

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Accountants

To the Shareholders and Directors of Jostens, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in shareholders' equity (deficit)
and comprehensive income (loss) and of cash flows present fairly, in all material respects, the consolidated financial position of Jostens, Inc. and its subsidiaries at December 28, 2002
and December 29, 2001, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended December 28, 2002, in conformity with
accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Jostens, Inc.'s management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of
America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As
discussed in Note 5 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets," on December 30, 2001.

PRICEWATERHOUSECOOPERS LLPMinneapolis, Minnesota
February 12, 2003

23

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JOSTENS, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                             |                                                                                                               | 2002 |         | 2001    |   | 2000    |        
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ---- | ------- | ------- | - | ------- | -------
|
|Net sales                                                    |                                                                                                               | $    | 755,984 |         | $ | 736,560 |        
|Cost of products sold                                        |                                                                                                               |      | 315,961 |         |   | 311,212 |        
|                                                             |                                                                                                               |      |         |         |   |         |        
|                                                             | Gross profit                                                                                                  |      |         | 440,023 |   |         | 425,348
|Selling and administrative expenses                          |                                                                                                               |      | 306,449 |         |   | 300,927 |        
|Loss on redemption of senior subordinated notes payable      |                                                                                                               |      | 1,765   |         |   |        |        
|Transaction costs                                            |                                                                                                               |      |        |         |   |        |        
|Special charges                                              |                                                                                                               |      |        |         |   | 2,540   |        
|                                                             |                                                                                                               |      |         |         |   |         |        
|                                                             | Operating income                                                                                              |      |         | 131,809 |   |         | 121,881
|Interest income                                              |                                                                                                               |      | 1,109   |         |   | 2,269   |        
|Interest expense                                             |                                                                                                               |      | 68,435  |         |   | 79,035  |        
|Equity losses and write-down of investments                  |                                                                                                               |      |        |         |   |        |        
|                                                             |                                                                                                               |      |         |         |   |         |        
|                                                             | Income from continuing operations before income taxes                                                         |      |         | 64,483  |   |         | 45,115 
|Provision for income taxes                                   |                                                                                                               |      | 36,214  |         |   | 18,575  |        
|                                                             |                                                                                                               |      |         |         |   |         |        
|Income (loss) from continuing operations                     |                                                                                                               |      | 28,269  |         |   | 26,540  |        
|                                                             |                                                                                                               |      |         |         |   |         |        
|Discontinued operations (Note 14):                           |                                                                                                               |      |         |         |   |         |        
|                                                             | Loss from operations (net of income tax benefit of $3,422 and $1,075, respectively)                           |      |         |        |   |         | (5,614 
|                                                             | Gain (loss) on disposal (net of income tax expense of $1,071 and income tax benefit of $10,623, respectively) |      |         | 1,637   |   |         | (16,826
|                                                             |                                                                                                               |      |         |         |   |         |        
|Gain (loss) on discontinued operations                       |                                                                                                               |      | 1,637   |         |   | (22,440 | )      
|Cumulative effect of accounting change, net of tax (Note 1)  |                                                                                                               |      |        |         |   |        |        
|                                                             |                                                                                                               |      |         |         |   |         |        
|                                                             | Net income (loss)                                                                                             |      |         | 29,906  |   |         | 4,100  
|Dividends and accretion on redeemable preferred shares       |                                                                                                               |      | (11,747 | )       |   | (10,202 | )      
|                                                             |                                                                                                               |      |         |         |   |         |        
|                                                             | Net income (loss) available to common shareholders                                                            |      | $       | 18,159  |   | $       | (6,102 
|                                                             |                                                                                                               |      |         |         |   |         |        
|Basic net income (loss) per common share                     |                                                                                                               |      |         |         |   |         |        
|                                                             | Income (loss) from continuing operations                                                                      |      | $       | 1.85    |   | $       | 1.82   
|                                                             | Gain (loss) on discontinued operations                                                                        |      |         | 0.18    |   |         | (2.50  
|                                                             | Cumulative effect of accounting change                                                                        |      |         |        |   |         |       
|                                                             |                                                                                                               |      |         |         |   |         |        
|                                                             |                                                                                                               | $    | 2.03    |         | $ | (0.68   | )      
|                                                             |                                                                                                               |      |         |         |   |         |        
|Diluted net income (loss) per common share                   |                                                                                                               |      |         |         |   |         |        
|                                                             | Income (loss) from continuing operations                                                                      |      | $       | 1.66    |   | $       | 1.65   
|                                                             | Gain (loss) on discontinued operations                                                                        |      |         | 0.17    |   |         | (2.26  
|                                                             | Cumulative effect of accounting change                                                                        |      |         |        |   |         |       
|                                                             |                                                                                                               |      |         |         |   |         |        
|                                                             |                                                                                                               | $    | 1.83    |         | $ | (0.61   | )      
|                                                             |                                                                                                               |      |         |         |   |         |        
|Weighted average common shares outstanding                   |                                                                                                               |      | 8,959   |         |   | 8,980   |        
|                                                             | Dilutive effect of warrants and stock options                                                                 |      |         | 941     |   |         | 957    
|                                                             |                                                                                                               |      |         |         |   |         |        
|Weighted average common shares outstanding assuming dilution |                                                                                                               |      | 9,900   |         |   | 9,937   |        
|                                                             |                                                                                                               |      |         |         |   |         |        

The accompanying notes are an integral part of the consolidated financial statements.

24

---



JOSTENS, INC. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS    December 28, 2002 and December 29, 2001

|                                                                                                                                                                                                                                |                           | 2002 |          | 2001    |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ---- | -------- | ------- | -
|
|ASSETS                                                                                                                                                                                                                          |                           |      |          |         |  
|Current assets                                                                                                                                                                                                                  |                           |      |          |         |  
|Cash and cash equivalents                                                                                                                                                                                                       |                           | $    | 10,938   |         | $
|Accounts receivable, net (Note 4)                                                                                                                                                                                               |                           |      | 59,027   |         |  
|Inventories, net (Note 4)                                                                                                                                                                                                       |                           |      | 69,348   |         |  
|Deferred income taxes                                                                                                                                                                                                           |                           |      | 13,631   |         |  
|Salespersons overdrafts, net of allowance of $8,034 and $6,897, respectively                                                                                                                                                    |                           |      | 25,585   |         |  
|Prepaid expenses and other current assets                                                                                                                                                                                       |                           |      | 8,614    |         |  
|Current assets of discontinued operations                                                                                                                                                                                       |                           |      |         |         |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|                                                                                                                                                                                                                                | Total current assets      |      |          | 187,143 |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|Noncurrent assets                                                                                                                                                                                                               |                           |      |          |         |  
|Goodwill and other intangibles, net                                                                                                                                                                                             |                           |      | 14,929   |         |  
|Deferred financing costs, net                                                                                                                                                                                                   |                           |      | 22,665   |         |  
|Other                                                                                                                                                                                                                           |                           |      | 37,336   |         |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|                                                                                                                                                                                                                                | Total other assets        |      |          | 74,930  |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|Property and equipment, net                                                                                                                                                                                                     |                           |      | 65,448   |         |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|                                                                                                                                                                                                                                |                           | $    | 327,521  |         | $
|                                                                                                                                                                                                                                |                           |      |          |         |  
|LIABILITIES AND SHAREHOLDERS' DEFICIT                                                                                                                                                                                           |                           |      |          |         |  
|Current liabilities                                                                                                                                                                                                             |                           |      |          |         |  
|Short-term borrowings                                                                                                                                                                                                           |                           | $    | 8,960    |         | $
|Accounts payable                                                                                                                                                                                                                |                           |      | 13,893   |         |  
|Accrued employee compensation and related taxes                                                                                                                                                                                 |                           |      | 31,354   |         |  
|Commissions payable                                                                                                                                                                                                             |                           |      | 15,694   |         |  
|Customer deposits                                                                                                                                                                                                               |                           |      | 133,840  |         |  
|Income taxes payable                                                                                                                                                                                                            |                           |      | 7,316    |         |  
|Interest payable                                                                                                                                                                                                                |                           |      | 10,789   |         |  
|Current portion of long-term debt                                                                                                                                                                                               |                           |      | 17,094   |         |  
|Other accrued liabilities                                                                                                                                                                                                       |                           |      | 14,968   |         |  
|Current liabilities of discontinued operations                                                                                                                                                                                  |                           |      | 4,323    |         |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|                                                                                                                                                                                                                                | Total current liabilities |      |          | 258,231 |  
|Noncurrent liabilities                                                                                                                                                                                                          |                           |      |          |         |  
|Long-term debtless current maturities, net of unamortized original issue discount of
$16,343 and $18,143, respectively                                                                                                         |                           |      | 563,334  |         |  
|Other noncurrent liabilities including deferred tax liabilities of
$9,668 and $3,472, respectively                                                                                                                              |                           |      | 17,646   |         |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|                                                                                                                                                                                                                                | Total liabilities         |      |          | 839,211 |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|Commitments and contingencies                                                                                                                                                                                                   |                           |      |          |         |  
|Redeemable preferred shares$.01 par value, liquidation preference: $84,350; authorized: 308 shares; issued and outstanding: December 28, 200284; December 29, 200174                                                          |                           |      | 70,790   |         |  
|Preferred shares $.01 par value, authorized: 4,000 shares; issued and outstanding in the form of redeemable preferred shares listed above: December 28, 200284; December 29, 200174; undesignated at December 28,
2002: 3,916 |                           |      |         |         |  
|Shareholders' deficit                                                                                                                                                                                                           |                           |      |          |         |  
|Common shares (Note 11)                                                                                                                                                                                                         |                           |      | 1,003    |         |  
|Additional paid-in-capitalwarrants                                                                                                                                                                                             |                           |      | 20,964   |         |  
|Officer notes receivable                                                                                                                                                                                                        |                           |      | (1,625   | )       |  
|Accumulated deficit                                                                                                                                                                                                             |                           |      | (592,005 | )       |  
|Accumulated other comprehensive loss                                                                                                                                                                                            |                           |      | (10,817  | )       |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|Total shareholders' deficit                                                                                                                                                                                                     |                           |      | (582,480 | )       |  
|                                                                                                                                                                                                                                |                           |      |          |         |  
|                                                                                                                                                                                                                                |                           | $    | 327,521  |         | $
|                                                                                                                                                                                                                                |                           |      |          |         |  

The accompanying notes are an integral part of the consolidated financial statements.

25

---



JOSTENS, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                         |                                                             | 2002 |                                                 | 2001   |                                           | 2000    |       
|---------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ---- | ----------------------------------------------- | ------ | ----------------------------------------- | ------- | ------
|
|Operating activities                                                                     |                                                             |      |                                                 |        |                                           |         |       
|Net income (loss)                                                                        |                                                             | $    | 29,906                                          |        | $                                         | 4,100   |       
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                                             |      |                                                 |        |                                           |         |       
|                                                                                         | Depreciation                                                |      |                                                 | 24,645 |                                           |         | 25,910
|                                                                                         | Amortization of debt discount and deferred financing costs  |      |                                                 | 7,422  |                                           |         | 6,960 
|                                                                                         | Other amortization                                          |      |                                                 | 2,252  |                                           |         | 2,708 
|                                                                                         | Depreciation and amortization of discontinued operations    |      |                                                 |       |                                           |         | 1,202 
|                                                                                         | Deferred income taxes                                       |      |                                                 | 11,805 |                                           |         | (2,237
|                                                                                         | (Gain) loss on sale/disposal of property and equipment, net |      |                                                 | (615   | )                                         |         | 3,038 
|                                                                                         | Loss on redemption of senior subordinated notes payable     |      |                                                 | 1,765  |                                           |         |      
|                                                                                         | Equity losses and write-down of investments                 |      |                                                 |       |                                           |         |      
|                                                                                         | Cumulative effect of accounting change, net of tax          |      |                                                 |       |                                           |         |      
|                                                                                         | Other                                                       |      |                                                 | (344   | )                                         |         |      
|                                                                                         | Changes in assets and liabilities:                          |      |                                                 |        |                                           |         |       
|                                                                                         |                                                             |      | Accounts receivable                             |        |                                           | (2,789  | )     
|                                                                                         |                                                             |      | Inventories                                     |        |                                           | 1,166   |       
|                                                                                         |                                                             |      | Salespersons overdrafts                         |        |                                           | 2,452   |       
|                                                                                         |                                                             |      | Prepaid expenses and other current assets       |        |                                           | (891    | )     
|                                                                                         |                                                             |      | Net pension assets                              |        |                                           | (5,983  | )     
|                                                                                         |                                                             |      | Accounts payable                                |        |                                           | (4,828  | )     
|                                                                                         |                                                             |      | Accrued employee compensation and related taxes |        |                                           | 3,962   |       
|                                                                                         |                                                             |      | Commissions payable                             |        |                                           | (2,945  | )     
|                                                                                         |                                                             |      | Customer deposits                               |        |                                           | 7,440   |       
|                                                                                         |                                                             |      | Income taxes payable                            |        |                                           | (9,624  | )     
|                                                                                         |                                                             |      | Interest payable                                |        |                                           | 222     |       
|                                                                                         |                                                             |      | Net liabilities of discontinued operations      |        |                                           | (5,159  | )     
|                                                                                         |                                                             |      | Other                                           |        |                                           | (4,387  | )     
|                                                                                         |                                                             |      |                                                 |        |                                           |         |       
|                                                                                         |                                                             |      |                                                 |        | Net cash provided by operating activities |         |       
|                                                                                         |                                                             |      |                                                 |        |                                           |         |       
|Investing activities                                                                     |                                                             |      |                                                 |        |                                           |         |       
|Purchases of property and equipment                                                      |                                                             |      | (22,843                                         | )      |                                           | (22,205 | )     
|Purchases of property and equipment related to discontinued operations                   |                                                             |      |                                                |        |                                           | (496    | )     
|Proceeds from sale of property and equipment                                             |                                                             |      | 1,256                                           |        |                                           | 4,204   |       
|Proceeds from sale of business                                                           |                                                             |      |                                                |        |                                           | 2,500   |       
|Proceeds from sale of equity investments                                                 |                                                             |      |                                                |        |                                           |        |       
|Purchase of equity investments                                                           |                                                             |      |                                                |        |                                           |        |       
|Other investing activities, net                                                          |                                                             |      | (1,225                                          | )      |                                           | 168     |       
|                                                                                         |                                                             |      |                                                 |        |                                           |         |       
|                                                                                         |                                                             |      |                                                 |        | Net cash used for investing activities    |         |       
|                                                                                         |                                                             |      |                                                 |        |                                           |         |       
|Financing activities                                                                     |                                                             |      |                                                 |        |                                           |         |       
|Net short-term borrowings (repayments)                                                   |                                                             |      | 8,960                                           |        |                                           |        |       
|Principal payments on long-term debt                                                     |                                                             |      | (60,855                                         | )      |                                           | (38,874 | )     
|Redemption of senior subordinated notes payable at face value of $7.5 million            |                                                             |      | (8,456                                          | )      |                                           |        |       
|Reacquisition of warrants to purchase common stock                                       |                                                             |      | (2,706                                          | )      |                                           |        |       
|Repurchases of common stock                                                              |                                                             |      | (145                                            | )      |                                           | (396    | )     
|Proceeds from issuance of long-term debt                                                 |                                                             |      |                                                |        |                                           |        |       
|Proceeds from issuance of common shares                                                  |                                                             |      |                                                |        |                                           |        |       
|Net proceeds from issuance of preferred stock                                            |                                                             |      |                                                |        |                                           |        |       
|Proceeds from issuance of warrants to purchase common shares                             |                                                             |      |                                                |        |                                           |        |       
|Debt financing costs                                                                     |                                                             |      | (1,620                                          | )      |                                           |        |       
|Dividends paid to common shareholders                                                    |                                                             |      |                                                |        |                                           |        |       
|Other financing activities, net                                                          |                                                             |      |                                                |        |                                           |        |       
|                                                                                         |                                                             |      |                                                 |        |                                           |         |       
|                                                                                         |                                                             |      |                                                 |        | Net cash used for financing activities    |         |       
|                                                                                         |                                                             |      |                                                 |        |                                           |         |       
|Change in cash and cash equivalents                                                      |                                                             |      | (32,162                                         | )      |                                           | 16,548  |       
|Cash and cash equivalents, beginning of period                                           |                                                             |      | 43,100                                          |        |                                           | 26,552  |       
|                                                                                         |                                                             |      |                                                 |        |                                           |         |       
|Cash and cash equivalents, end of period                                                 |                                                             | $    | 10,938                                          |        | $                                         | 43,100  |       
|                                                                                         |                                                             |      |                                                 |        |                                           |         |       
|Supplemental information                                                                 |                                                             |      |                                                 |        |                                           |         |       
|Income taxes paid                                                                        |                                                             | $    | 31,492                                          |        | $                                         | 5,004   |       
|Interest paid                                                                            |                                                             | $    | 61,542                                          |        | $                                         | 71,604  |       

The accompanying notes are an integral part of the consolidated financial statements.

26

---



JOSTENS, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) AND  COMPREHENSIVE INCOME (LOSS)

|                                                                             |         |         |       |   |         |     |   |        |   |   |          |         |   | Accumu-
lated
other
compre-
hensive
loss |        |   |          |   |  
|---------------------------------------------------------------------------- | ------- | ------- | ----- | - | ------- | --- | - | ------ | - | - | -------- | ------- | - | ---------------------------------------- | ------ | - | -------- | - | -
|
|
|
|
|
|BalanceJanuary 1, 2000                                                      |         | 33,324  |       | $ | 11,108  |     | $ |       |   | $ |         |         | $ |                                         |        | $ | 31,072   |   | $
|Exercise of stock options and restricted stock,net                           |         | 23      |       |   | 8       |     |   |        |   |   | 1,520    |         |   |                                          |        |   |          |   |  
|Cash dividends declared to common shareholders of $0.22 per share            |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | (7,331   | ) |  
|Issuance of common shares                                                    |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|                                                                             | Class A |         | 2,134 |   |         | 711 |   |        |   |   |          | 53,176  |   |                                          | (2,050 | ) |          |   |  
|                                                                             | Class B |         | 5,300 |   |         | 53  |   |        |   |   |          | 133,772 |   |                                          |        |   |          |   |  
|                                                                             | Class C |         | 811   |   |         | 8   |   |        |   |   |          | 20,470  |   |                                          |        |   |          |   |  
|                                                                             | Class D |         | 20    |   |         |    |   |        |   |   |          | 505     |   |                                          |        |   |          |   |  
|Repurchases of common stock                                                  |         | (32,619 | )     |   | (10,873 | )   |   |        |   |   | (209,443 | )       |   |                                          |        |   | (603,343 | ) |  
|Issuance of warrants to purchase common shares                               |         |         |       |   |         |     |   | 24,733 |   |   |          |         |   |                                          |        |   |          |   |  
|Payment on officer note receivable                                           |         |         |       |   |         |     |   |        |   |   |          |         |   | 275                                      |        |   |          |   |  
|Preferred stock dividends                                                    |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | (5,551   | ) |  
|Preferred stock accretion                                                    |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | (290     | ) |  
|Net loss                                                                     |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | (18,659  | ) |  
|Change in cumulative translation adjustment                                  |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Adjustment in minimum pension liability, net of $51 tax                      |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|                                                                             |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Comprehensive loss                                                           |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|                                                                             |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|BalanceDecember 30, 2000                                                    |         | 8,993   |       | $ | 1,015   |     | $ | 24,733 |   | $ |         |         | $ | (1,775                                   | )      | $ | (604,102 | ) | $
|Preferred stock dividends                                                    |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | (9,670   | ) |  
|Preferred stock accretion                                                    |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | (532     | ) |  
|Repurchases of common stock                                                  |         | (28     | )     |   | (9      | )   |   |        |   |   |          |         |   | 368                                      |        |   | (755     | ) |  
|Net income                                                                   |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | 4,100    |   |  
|Change in cumulative translation adjustment                                  |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Transition adjustment relating to the adoption of FAS 133, net of $1,194 tax |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Change in fair value of interest rate swap agreement, net of $1,021 tax      |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Adjustment in minimum pension liability, net of $931 tax                     |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|                                                                             |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Comprehensive loss                                                           |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|                                                                             |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|BalanceDecember 29, 2001                                                    |         | 8,965   |       | $ | 1,006   |     | $ | 24,733 |   | $ |         |         | $ | (1,407                                   | )      | $ | (610,959 | ) | $
|Preferred stock dividends                                                    |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | (11,097  | ) |  
|Preferred stock accretion                                                    |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | (650     | ) |  
|Repurchases of common stock                                                  |         | (9      | )     |   | (3      | )   |   |        |   |   |          |         |   | 126                                      |        |   | (268     | ) |  
|Reacquisition of warrants to purchase common shares                          |         |         |       |   |         |     |   | (3,769 | ) |   |          |         |   |                                          |        |   | 1,063    |   |  
|Interest accrued on officer notes receivable                                 |         |         |       |   |         |     |   |        |   |   |          |         |   | (344                                     | )      |   |          |   |  
|Net income                                                                   |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   | 29,906   |   |  
|Change in cumulative translation adjustment                                  |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Change in fair value of interest rate swap agreement, net of $1,351 tax      |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Adjustment in minimum pension liability, net of $627 tax                     |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|                                                                             |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|Comprehensive income                                                         |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|                                                                             |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  
|BalanceDecember 28, 2002                                                    |         | 8,956   |       | $ | 1,003   |     | $ | 20,964 |   | $ |         |         | $ | (1,625                                   | )      | $ | (592,005 | ) | $
|                                                                             |         |         |       |   |         |     |   |        |   |   |          |         |   |                                          |        |   |          |   |  

The accompanying notes are an integral part of the consolidated financial statements.

27

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JOSTENS, INC. AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Summary of Significant Accounting Policies



We are a leading provider of school-related affinity products and services including yearbooks, class rings and graduation products in North America. We also
provide school photography services of which we have a leading market share in Canada.



Our consolidated financial statements include the accounts of our company and our wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. Certain amounts have been reclassified to conform to the 2002 presentation.



We utilize a fifty-two, fifty-three week fiscal year ending on the Saturday nearest December 31. Fiscal years 2002, 2001 and 2000 ended on
December 28, 2002, December 29, 2001 and December 30, 2000, respectively, and each consisted of fifty-two weeks.



The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Cash and cash equivalents include cash on hand, time deposits and commercial paper all having a maturity of three months or less when purchased.



Salespersons overdrafts represent a receivable for sales representative draws paid in excess of earned commissions. A corresponding allowance for uncollectible
amounts is established based on historical information and current trends.



Inventories are stated at the lower of cost or market value. Cost is determined by using standard costing which approximates the first-in,
first-out (FIFO) method for all inventories except gold and certain other precious metals, which are determined using the last-in, first-out (LIFO) method. Cost
includes direct materials, direct labor and applicable overhead. LIFO inventories were $0.1 million at
the end of 2002 and 2001 and approximated replacement cost. Obsolescence reserves are provided as necessary in order to approximate inventories at market value.

28

---



Goodwill, which represents the excess of purchase price over fair value of net assets acquired, was being amortized on the straight-line basis over
periods of fifteen to forty years. On December 30, 2001, the beginning of our 2002 fiscal year, we adopted Statement of Financial Accounting Standards (SFAS) 142, "Goodwill and Other Intangible Assets."As a result, we discontinued the amortization of goodwill at that date. Goodwill was tested for impairment upon
adoption of SFAS 142 and is tested annually or whenever an impairment indicator arises. An impairment charge is recognized only when the calculated fair value of a reporting unit is less than
its carrying amount.



Intangible assets, which consist primarily of customer relationships, are stated at historical cost. Amortization expense is determined on the
straight-line basis over periods ranging from three to five years.



Property and equipment are stated at historical cost. Maintenance and repairs are charged to operations as incurred. Major renewals and betterments are
capitalized. Depreciation is determined for financial reporting purposes by using the straight-line method over the following estimated useful lives:

YearsBuildings

15 to 40Machinery and equipment

3 to 10Capitalized software

2 to 5




We capitalize costs of software developed or obtained for internal use once the preliminary project stage has been completed, management commits to funding the
project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of
materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote
time to the internal-use software project and (3) interest costs incurred, when material, while developing internal-use software. Capitalization of costs ceases when the
project is substantially complete and ready for its intended use.



We review our long-lived assets for impairment annually or more frequently if changes in circumstances or the occurrence of events suggest the
remaining value may not be recoverable. An impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset.

29

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Amounts received from customers in the form of cash down payments to purchase goods are recorded as a liability until the goods are delivered.



Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. Income tax expense represents the taxes payable for the year and the change in deferred taxes during the year. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.



In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) 101, which among other guidance clarified the Staff's view
on various revenue recognition and reporting matters. As a result, we changed our method of accounting for certain sales transactions. Under our previous policy, we recognized revenue upon shipment of
the product from our production facility. Under the new accounting method, adopted retroactive to January 1, 2000, we now recognize revenue when the earnings process is complete, evidenced by
an agreement between Jostens and the customer, delivery and acceptance has occurred, collectibility is probable and pricing is fixed and determinable. Provisions for warranty costs related to our
jewelry products, sales returns and uncollectible amounts are recorded based on historical information and current trends.

The
cumulative effect of the accounting change resulted in a non-cash charge to net income of $5.9 million (including an income tax benefit of $4.0 million) for
the first quarter in 2000. Unaudited

30

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proforma amounts assuming the accounting change had been in effect since the beginning of 2000 are as follows:

2000In thousandsNet loss available to common shareholdersAs reported

$
(24,500
)Cumulative effect of accounting change, net of tax


5,894Adjusted net loss available to common shareholders

$
(18,606
)Basic net loss per shareAs reported

$
(1.38
)Cumulative effect of accounting change, net of tax


0.33Adjusted basic net loss per share

$
(1.05
)Diluted net loss per shareAs reported

$
(1.38
)Cumulative effect of accounting change, net of tax


0.33Adjusted diluted net loss per share

$
(1.05
)




Net sales include amounts billed to customers for shipping and handling costs. Costs incurred for shipping and handling are recorded in cost of products sold.



Assets and liabilities denominated in foreign currency are translated at the current exchange rate as of the balance sheet date, and income statement amounts are
translated at the average monthly exchange rate. Translation adjustments resulting from fluctuations in exchange rates are recorded in comprehensive income (loss) in shareholders' equity (deficit).



We purchase substantially all synthetic and semiprecious stones from a single supplier located in Germany, who is also the supplier to substantially all of the
class ring manufacturers in the United States. Our jewelry product line, which is primarily class rings, represented 27%, 28% and 28% of net sales in 2002, 2001 and 2000, respectively.



From time to time, we may use derivative financial instruments to manage market risks and reduce our exposure resulting from fluctuations in interest rates and
foreign currency. All hedging transactions are authorized and executed under clearly defined policies and procedures, which prohibit the use of financial instruments for trading purposes. On
December 31, 2000, the beginning of our 2001 fiscal year, we adopted SFAS 133,"Accounting for Derivative Instruments and Hedging
Activities",as amended. SFAS 133 requires that we recognize all derivatives on the balance sheet at fair value and establish

31

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criteria for designation and effectiveness of hedging relationships. At the time of adoption of SFAS 133 on December 31, 2000, we recognized a $1.8 million,
net-of-tax cumulative effect adjustment in "accumulated other comprehensive loss" (AOCL).

Interest Rate Risk Management:We have designated our interest rate swap as a cash flow hedge. The fair value of the interest
rate swap is recorded in our Consolidated Balance Sheet in "other accrued liabilities" or "other noncurrent liabilities", as applicable. The effective portion of the changes in fair value for this
contract is reported in AOCL and reclassified into earnings in the same financial statement line item and in the same period or periods during which the hedged transaction affects earnings. We have
structured our interest rate swap agreement to be 100% effective. As a result, there is no current impact to earnings resulting from hedge ineffectiveness.

Foreign Currency Management:The fair value of foreign currency related derivatives are generally included in our
Consolidated Balance Sheet in "other current assets" and "other accrued liabilities", as applicable. The effective portion of the changes in fair value for these contracts, which have been designated
as cash flow hedges, is reported in AOCL and reclassified into earnings in the same financial statement line item and in the same period or periods during which the hedged transaction affects
earnings. Any ineffective portion of the change in fair value of these instruments is immediately recognized in earnings.



Basic earnings (loss) per share are computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common
shares. Diluted earnings per share are computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares and common share equivalents.
Common share equivalents include the dilutive effects of warrants and options.

For
2000, 0.7 million shares of common stock equivalents were excluded in the computation of diluted net earnings per share since they were antidilutive due to the net loss
incurred in the period. For 2002, options to purchase 44,750 shares of common stock were outstanding, but were excluded from the computation of common share equivalents because they were antidilutive.



We apply the intrinsic value method prescribed by Accounting Principles Board Opinion (APB) 25,"Accounting for Stock Issued to
Employees,"and related interpretations in accounting for stock options granted to employees and non-employee directors. Accordingly, no compensation cost has been
reflected in net income for these plans since all options are granted at or above fair value. The following table illustrates the effect on net income and earnings per share if we had applied the fair

32

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value recognition provisions of SFAS 148,"Accounting for Stock-Based CompensationTransition and Disclosure."

|                                                                                                                                                    |  | 2002 |        | 2001 |   | 2000   |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | -
|
|Net income (loss) available to common shareholders                                                                                                  |  |      |        |      |   |        |  
|As reported                                                                                                                                         |  | $    | 18,159 |      | $ | (6,102 | )
|Add stock-based employee compensation expense included in reported net income (loss) available to common shareholders, net of tax effects (Note 12) |  |      |       |      |   |       |  
|Deduct total stock-based employee compensation expense determined under fair value based method for all awards, net of tax effects                  |  |      | (483   | )    |   | (375   | )
|                                                                                                                                                    |  |      |        |      |   |        |  
|Proforma net income (loss) available to common shareholders                                                                                         |  | $    | 17,676 |      | $ | (6,477 | )
|                                                                                                                                                    |  |      |        |      |   |        |  
|Net income (loss) per share                                                                                                                         |  |      |        |      |   |        |  
|Basicas reported                                                                                                                                   |  | $    | 2.03   |      | $ | (0.68  | )
|Basicpro forma                                                                                                                                     |  | $    | 1.97   |      | $ | (0.72  | )
|Dilutedas reported                                                                                                                                 |  | $    | 1.83   |      | $ | (0.61  | )
|Dilutedproforma                                                                                                                                    |  | $    | 1.79   |      | $ | (0.65  | )



In June 2001, the FASB issued SFAS 143, which addresses financial accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. We will implement this statement on December 29, 2002, the beginning of our fiscal year. The impact of such
adoption is not anticipated to have a material effect on our financial statements.



In April 2002, the FASB issued SFAS 145, which rescinds SFAS 4,"Reporting Gains and Losses from Extinguishments of
Debt,"SFAS 44,"Accounting for Intangible Assets of Motor Carriers"and SFAS 64,"Extinguishments of
Debt Made to Satisfy Sinking-Fund Requirements"and amends SFAS 13,"Accounting for Leases."During 2002, we
adopted the provisions of SFAS 145. Accordingly, for 2002 the $1.8 million loss on redemption of our 12.75% senior subordinated notes due May 2010 has been classified as an
operating expense as it does not meet the criteria to be classified as an extraordinary loss.



In June 2002, the FASB issued SFAS 146, which clarifies the accounting for costs associated with exit or disposal activities. We will implement this
statement for all activities occurring subsequent to December 28, 2002. The impact of such adoption is not anticipated to have a material effect on our financial statements.

33

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In December 2002, the FASB issued SFAS 148, which amends SFAS 123"Accounting for Stock-Based
Compensation."This statement provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee
compensation. This statement also amends the disclosure requirements of SFAS 123 and APB 28,"Interim Financial Reporting,"to require prominent
disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. We will continue
to account for stock-based compensation in accordance with APB 25. As such, we do not expect SFAS 148 to have a material effect on our financial statements. We have adopted the
disclosure-only provisions of SFAS 148 as of December 28, 2002.



In November 2002, the FASB issued Interpretation (FIN) 45, which requires a guarantor to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee. FIN 45 also expands the disclosures required by a guarantor about its obligations under certain guarantees that it has issued. Initial
recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. We do not expect FIN 45 to have a material
effect on our financial statements.

2.    Derivative Financial Instruments



We use a floating-to-fixed cash flow interest rate swap to modify risk from interest rate fluctuations for a portion of our underlying
debt. Our senior secured credit facility bears a variable interest rate predominantly linked to LIBOR. The interest rate provided by the swap agreement is fixed at approximately 7.0% as opposed to
LIBOR. Notional amounts outstanding at the end of 2002 and 2001 were $70.0 million and $100.0 million, respectively, and will mature in 2003. We expect that pre-tax costs
totaling $2.2 million, which are recorded in AOCL at the end of 2002, and represent the difference between the fixed rate of the swap agreement and variable interest of the term note, will be
recognized in 2003 as part of interest expense. The fair value of the interest rate swap is based on current settlement values and was a liability of $2.2 million ($1.3 million net of
tax) and $5.6 million ($3.4 million net of tax) at the end of 2002 and 2001, respectively.



The purpose of our foreign currency hedging activities is to protect us from the risk that inventory purchases denominated in foreign currency will be adversely
affected by changes in foreign currency rates. From time to time, we may enter into forward exchange contracts to hedge forecasted cash flows denominated in foreign currencies (principally euros). At
the end of 2002 and 2001, there were no foreign currency foward contracts outstanding.

34

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3.    Accumulated Other Comprehensive Income (Loss)

The following amounts were included in AOCL:

|                                                       |  | Foreign
currency
translation |        | Minimum
pension
liability |   | Fair value
of interest
rate swap
agreement |   | Accumulated
other
comprehensive
income (loss) |       
|------------------------------------------------------ |  | ---------------------------- | ------ | ------------------------- | - | ------------------------------------------ | - | --------------------------------------------- | ------
|
|Balance at January 1, 2000                             |  | $                            | (4,644 | )                         | $ | (1,026                                     | ) | $                                             |      
|Current period change                                  |  |                              | (599   | )                         |   | 78                                         |   |                                               |      
|                                                       |  |                              |        |                           |   |                                            |   |                                               |       
|Balance at December 30, 2000                           |  |                              | (5,243 | )                         |   | (948                                       | ) |                                               |      
|Transition adjustment relating to adoption of SFAS 133 |  |                              |       |                           |   |                                           |   |                                               | (1,821
|Current period change                                  |  |                              | (1,502 | )                         |   | (1,423                                     | ) |                                               | (1,566
|                                                       |  |                              |        |                           |   |                                            |   |                                               |       
|Balance at December 29, 2001                           |  |                              | (6,745 | )                         |   | (2,371                                     | ) |                                               | (3,387
|Current period change                                  |  |                              | 579    |                           |   | (958                                       | ) |                                               | 2,065 
|                                                       |  |                              |        |                           |   |                                            |   |                                               |       
|Balance at December 28, 2002                           |  | $                            | (6,166 | )                         | $ | (3,329                                     | ) | $                                             | (1,322
|                                                       |  |                              |        |                           |   |                                            |   |                                               |       

4.    Accounts Receivable and Inventories

As of the end of 2002 and 2001, net accounts receivable were comprised of the following:

2002

2001In thousandsTrade receivables

$
67,181

$
65,622Allowance for doubtful accounts


(2,557
)

(3,657
)Allowance for sales returns


(5,597
)

(5,727
)Total accounts receivable, net

$
59,027

$
56,238


As
of the end of 2002 and 2001, net inventories were comprised of the following:

2002

2001In thousandsRaw materials and supplies

$
10,810

$
10,683Work-in-process


27,347


28,447Finished goods


32,850


33,473Reserve for obsolescence


(1,659
)

(2,089
)Total inventories, net

$
69,348

$
70,514




We have a precious metals consignment arrangement with a major financial institution whereby we have the ability to obtain up to $30.0 million in consigned
inventory. We expensed consignment fees related to this facility of $0.3 million, $0.5 million and $0.3 million in 2002, 2001 and 2000, respectively. Under the terms of the
consignment arrangement, we do not own the consigned inventory until it is shipped in the form of a product to our customer. Accordingly, we do not include the value of consigned inventory nor the
corresponding liability in our financial statements. The value of our consigned inventory as of the end of 2002 and 2001 was $17.4 million and $15.8 million, respectively.

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5.    Goodwill and Other Intangible Assets

On December 30, 2001, the beginning of our fiscal year, we adopted SFAS 142"Goodwill and Other Intangible
Assets."As a result, we discontinued the amortization of goodwill. Other than goodwill, we have no intangible assets with indefinite useful lives. As required by
SFAS 142, we continue to amortize intangible assets with finite lives.

A
reconciliation of reported net income (loss) available to common shareholders and the related per share data adjusted to reflect the adoption of SFAS 142 is provided below:

2002

2001In thousandsNet income (loss) available to common shareholders:As reported

$
18,159

$
(6,102
)Goodwill amortization, net of tax





968Adjusted net income (loss) available to common shareholders

$
18,159

$
(5,134
)Basic net income (loss) per share:As reported

$
2.03

$
(0.68
)Goodwill amortization, net of tax





0.11Adjusted basic net income (loss) per share

$
2.03

$
(0.57
)Diluted net income (loss) per share:As reported

$
1.83

$
(0.61
)Goodwill amortization, net of tax





0.09Adjusted diluted net income (loss) per share

$
1.83

$
(0.52
)


A
reconciliation of reported income from continuing operations and the related per share data adjusted to reflect the adoption of SFAS 142 is provided below:

2002

2001In thousandsIncome from continuing operations:As reported

$
28,269

$
26,540Goodwill amortization, net of tax





523Adjusted income from continuing operations

$
28,269

$
27,063Basic income per share from continuing operations:As reported

$
1.85

$
1.82Goodwill amortization, net of tax





0.06Adjusted basic income per share from continuing operations

$
1.85

$
1.88Diluted income per share from continuing operationsAs reported

$
1.66

$
1.65Goodwill amortization, net of tax





0.05Adjusted diluted income per share from continuing operations

$
1.66

$
1.70


36

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The
changes in the net carrying amount of goodwill for fiscal 2002 were as follows:

In thousandsBalance at December 29, 2001

$
13,759Goodwill acquired during the period


678Currency translation


13Balance at December 28, 2002

$
14,450


Net
amortizable intangible assets at the end of 2002 were $0.5 million. There were no amortizable intangible assets at the end of 2001. Useful lives for amortizable intangible
assets range from three to five years.

Total
amortization expense for intangible assets related to continuing operations was $0.1 million in 2002 and $0.5 million in 2001 and 2000. The amounts in 2001 and 2000
consisted entirely of goodwill amortization. Estimated amortization expense for the five succeeding fiscal years based on intangible assets at the end of 2002 is expected to be $0.1 million
annually.

6.    Property and Equipment

As of the end of 2002 and 2001, net property and equipment consisted of:

|                                               |  | 2002 |         | 2001
|---------------------------------------------- |  | ---- | ------- | ----
|
|Land                                           |  | $    | 2,795   |     
|Buildings                                      |  |      | 36,332  |     
|Machinery and equipment                        |  |      | 201,421 |     
|Capitalized software                           |  |      | 40,242  |     
|                                               |  |      |         |     
|Total property and equipment                   |  |      | 280,790 |     
|Less accumulated depreciation and amortization |  |      | 215,342 |     
|                                               |  |      |         |     
|Property and equipment, net                    |  | $    | 65,448  |     
|                                               |  |      |         |     

Depreciation
expense related to continuing operations was $24.6 million, $25.9 million and $25.3 million in 2002, 2001 and 2000, respectively. Amortization related
to capitalized software is included in depreciation expense and totaled $6.9 million, $6.6 million and $6.5 million in 2002, 2001 and 2000, respectively.

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7.    Financing Arrangements

As of the end of 2002 and 2001, long-term debt consists of the following:

|                                                                                                                                                                                                                                            |                                                                                                                                                                        | 2002 |         | 2001   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------- | -------
|
|Borrowings under senior secured credit facility:                                                                                                                                                                                            |                                                                                                                                                                        |      |         |        
|                                                                                                                                                                                                                                            | Term Loan A, variable rate, 3.65 percent at December 28, 2002 and 4.63 percent at December 29, 2001, with semi-annual principal and interest payments through May 2006 |      | $       | 58,602 
|                                                                                                                                                                                                                                            | Term Loan B, variable rate, 5.38 percent at December 29, 2001                                                                                                          |      |         |       
|                                                                                                                                                                                                                                            | Term Loan C, variable rate, 4.15 percent at December 28, 2002, with semi-annual principal and interest payments through December 2009                                  |      |         | 320,669
|Senior subordinated notes, 12.75 percent fixed rate, net of discounts of $16,343 at December 28, 2002 and $18,143 at December 29, 2001, with semi-annual interest payments of $13.9 million, principal due and
payable at maturityMay 2010 |                                                                                                                                                                        |      | 201,157 |        
|                                                                                                                                                                                                                                            |                                                                                                                                                                        |      |         |        
|                                                                                                                                                                                                                                            |                                                                                                                                                                        |      | 580,428 |        
|Less current portion                                                                                                                                                                                                                        |                                                                                                                                                                        |      | 17,094  |        
|                                                                                                                                                                                                                                            |                                                                                                                                                                        |      |         |        
|                                                                                                                                                                                                                                            |                                                                                                                                                                        | $    | 563,334 |        
|                                                                                                                                                                                                                                            |                                                                                                                                                                        |      |         |        

Maturities
of long-term debt, excluding $16.3 million of discount, as of the end of 2002 are as follows:

In thousands2003

$
17,0942004


19,7272005


22,3612006


7,2172007


1,949Thereafter


528,423$
596,771




We have a $150.0 million revolving credit facility that expires on May 31, 2006. We may borrow funds and elect to pay interest under the
"alternative base rate" or "eurodollar" interest rate provisions as defined in the agreement. The eurodollar rate is based upon the London Interbank Offered Rate (LIBOR) and the alternative base rate
is based upon the prime rate. Our second amended and restated senior secured credit facility dated December 13, 2002 adds our Canadian subsidiary as a borrower under the revolving credit
facility for an amount not to exceed $20.0 million. In connection with the amendment and restatement, we have guaranteed the revolving credit facility of our Canadian subsidiary upon the
occurrence of any event of default under any credit document. Fees of $0.2 million related directly to the amendment have been capitalized and will be amortized through the expiration of the
revolving credit facility. At the end of 2002, there was $9.0 million outstanding in the form of short-term borrowings at our Canadian subsidiary at a weighted average interest rate
of 6.75% and an

38

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additional $9.9 million outstanding in the form of letters of credit, leaving $131.1 million available under the facility.

On
July 31, 2002, we amended and restated our senior secured credit facility to provide for the replacement of Term Loan B with a new Term Loan C in the amount of
$330.0 million. The initial interest margin on Term Loan C is 75 basis points less than Term Loan B resulting in an estimated $2.5 million reduction of annual interest expense on a
pre-tax basis. Capitalized loan fees related to Term Loan B will continue to be amortized over the life of Term Loan C. Fees of $1.4 million related
directly to the amendment have been capitalized and will also be amortized over the life of Term Loan C.

In
2002, 2001 and 2000, we voluntarily paid down $40.0 million, $24.0 million and $16.0 million, respectively, of our term loans. Deferred financing fees related to
these voluntary prepayments, which are included in interest expense, totaled $1.2 million, $0.8 million and $0.6 million in 2002, 2001 and 2000, respectively. Future mandatory
principal payment obligations under Term Loan A are $7.2 million due June 30, 2003 and $7.9 million due December 31, 2003. Thereafter, semi-annual principal
payments increase $0.7 million per semi-annual period through December 2005, with a final payment of $5.3 million due in May 2006. Future mandatory principal
payment obligations under Term Loan C are $1.0 million due semi-annually through June 30, 2008 followed by three semi-annual installments of $103.3 million
through December 31, 2009.

The
term loans and borrowings under the revolving credit facility (collectively the "senior secured credit facility") are collateralized by substantially all the assets of our operations
and all of our capital stock (limited to 65% in the case of foreign subsidiaries). The senior secured credit facility requires that we meet certain financial covenants, ratios and tests, including a
maximum leverage ratio and a minimum interest coverage ratio. In addition, we are required to pay certain fees in connection with the senior secured credit facility, including letter of credit fees,
agency fees and commitment fees. Commitment fees are payable quarterly, currently at a rate per annum of 0.375% on the average daily unused portion of the revolving credit facility. The senior secured
credit facility and the senior subordinated notes contain certain cross-default provisions whereby a violation of a covenant under one debt obligation would, consequently, violate covenants under the
other debt obligation. At the end of 2002, we were in compliance with all covenants.



The 12.75% senior subordinated notes (the "notes"), due May 2010 are not collateralized and are subordinate in right of payment to the senior secured
credit facility. The notes were issued with detachable warrants and an original issuance discount, resulting in total discounts of $19.7 million. The detachable warrants were valued at
$10.7 million and are exercisable through 2010. The value of the warrants has been included as a component of shareholders' deficit in our consolidated financial statements. During 2002, we
reacquired 79,015 warrants to purchase 149,272 actual equivalent shares of common stock for total consideration paid of $2.7 million. The warrants were issued at an aggregate price of
$3.8 million. If all the remaining warrants were to be exercised, the holders would acquire shares (at a price of $0.01 per share) of our Class E common stock representing approximately
3.0% of the total number of shares of our common equity on a fully diluted basis. The entire discount is being amortized to interest expense through 2010 and, during 2002, 2001 and 2000, the amount of
interest expense related to the amortization of debt discount was $1.2 million, $1.1 million and $0.6 million, respectively.

39

---

During
2002, we voluntarily redeemed $7.5 million principal amount of the notes. As a result of redeeming the senior subordinated notes, we recognized a loss of
$1.8 million consisting of a $0.8 million write-off of unamortized original issuance discount and deferred financing costs and a $1.0 million premium paid on
redemption of the notes.

As
of the end of 2002 and 2001, the fair value of our debt, excluding the notes, approximated its carrying value and is estimated based on quoted market prices for comparable
instruments. The fair value of the notes as of the end of 2002 and 2001 was $242.2 million and $247.5 million, respectively, and was estimated based on the quoted market price of $1,114
and $1,100 per unit, respectively.



In connection with the merger and recapitalization in May 2000 (Note 16), we issued redeemable, payment-in-kind, preferred
shares, which have an initial liquidation preference of $60.0 million and are entitled to receive dividends at 14.0% per annum, compounded quarterly and payable either in cash or in additional
shares of the same series of preferred stock. The redeemable preferred shares are subject to mandatory redemption by Jostens in May 2011. In connection with the redeemable preferred shares, we
ascribed $14.0 million of the proceeds to detachable warrants to purchase 531,325 shares of our Class E common stock (at an exercise price of $0.01 per share), which is reflected as a
component of shareholders' deficit in our consolidated financial statements. In addition, $3.0 million of issuance costs were netted against the initial proceeds and are reflected as a
reduction to the carrying amount of the preferred stock. The carrying value of the preferred stock is being accreted to full liquidation preference value, plus unpaid preferred stock dividends, over
the eleven-year period of the redeemable preferred stock through charges to retained earnings (accumulated deficit). Preferred stock dividends totaling $11.1 million,
$9.7 million and $5.6 million were distributed in additional shares of preferred stock in 2002, 2001 and 2000, respectively. Related accretion totaled $0.7 million,
$0.5 million and $0.3 million for 2002, 2001 and 2000, respectively.

8.    Commitments and Contingencies



We lease buildings, equipment and vehicles under operating leases. Future minimum rental commitments under noncancellable operating leases are
$3.0 million, $1.8 million, $0.3 million and
$0.1 million in 2003, 2004, 2005 and 2006, respectively. Rent expense was $4.0 million, $3.5 million and $3.4 million in 2002, 2001 and 2000, respectively.



We are subject to market risk associated with changes in the price of gold. To mitigate our commodity price risk, we enter into gold forward contracts to purchase
gold based upon the estimated ounces needed to satisfy projected customer requirements. Our purchase commitment at the end of 2002 was $20.5 million with delivery dates occurring throughout
2003. These forward purchase contracts are considered normal purchases and therefore not subject to the requirements of SFAS 133. The fair market value of our open gold forward contracts at the
end of 2002 was $22.5 million and was calculated by valuing each contract at quoted futures prices.

Gains
or losses on forward contracts used to purchase inventory for which we have firm purchase commitments qualify as accounting hedges and are therefore deferred and recognized in
income when the inventory is sold. Counter parties expose us to loss in the event of nonperformance as measured by

40

---

the unrealized gains on the contracts. Exposure on our open gold forward contracts at the end of 2002 was $2.0 million.



As part of our environmental management program, we are involved in various environmental remediation activities. As sites are identified and assessed in this
program, we determine potential environmental liabilities. Factors considered in assessing liability include, but are not limited to: whether we have been designated as a potentially responsible
party, the number of other potentially responsible parties designated at the site, the stage of the proceedings and available environmental technology.

In
1996, we assessed the likelihood as probable that a loss had been incurred at one of our sites based on findings included in remediation reports and from discussions with legal
counsel. As of the end of 2002, we had made payments totaling $7.1 million for remediation at this site and our Consolidated Balance Sheet included $1.1 million in "other accrued
liabilities" related to this site. During 2001, we received reimbursement from our insurance carrier in the amount of $2.7 million, net of legal costs. While we may have an additional right of
contribution or reimbursement under insurance policies, amounts recoverable from other entities with respect to a particular site are not considered until recoveries are deemed probable. No assets for
potential recoveries were established as of the end of
2002. We believe the effect on our consolidated results of operations, cash flows and financial position, if any, for the disposition of this matter will not be material.



A federal antitrust action was served on Jostens on October 23, 1998. The complainant, Epicenter Recognition, Inc. (Epicenter), alleges that Jostens
has attempted to monopolize the market of high school graduation products in the state of California. Epicenter is a successor to a corporation formed by four of our former independent sales
representatives. The plaintiff claimed damages of approximately $3 million to $10 million under various theories and differing sized relevant markets. Epicenter waived its right to a
jury, so the case was tried before a judge in U.S. District Court in Orange County, California. On June 18, 2002, the Court found, among other things, that while Jostens' use of rebates,
contributions and value-added programs are legitimate business practices widely practiced in the industry and do not violate antitrust laws, our use of multi-year Total Service Program
contracts violated Section 2 of the Sherman Act because these agreements could "exclude competition by making it difficult for a new vendor to compete against Jostens."

On
July 12, 2002, the Court entered an initial order providing, among other things, that Epicenter be awarded damages of $1.00, trebled pursuant to Section 15 of the
Clayton Act, and that in the state of California, Jostens was enjoined for a period of ten years from utilizing any contract, including those for Total Service Programs, for a period which extends for
more than one year (the "Initial Order"). The Initial Order also provided for payment to Epicenter of reasonable attorneys fees and costs. Jostens made a motion to set aside the Initial Order. On
August 23, 2002, the Court entered its ruling on the motion, and granted, in part, Jostens' motion for relief from judgment, changing the Initial Order and enjoining Jostens for only five
years, and allowing Jostens to enter into multi-year agreements in the following specific circumstances: (1) when a school requests a multi-year agreement, in writing
and on its own accord, or (2) in response to a competitor's offer to enter into a multi-year agreement. On August 23, 2002, the Court entered an additional order granting
Epicenter's motion for attorneys' fees in the amount of $1.6 million plus $0.1 million in out-of-pocket expenses for a total

41

---

award of $1.7 million. On September 12, 2002, Jostens filed a Notice of Appeal to the Ninth Circuit of the United States Court of Appeals. Payment of attorney fees and costs are stayed
pending appeal. In November 2002, Jostens issued a letter of credit in the amount of $2.0 million to secure the judgment on attorney fees and costs. Jostens continues to vigorously
appeal this matter based upon substantive and procedural grounds. Our brief on appeal was filed with the Court on February 13, 2003.

We
are a party to other litigation arising in the normal course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the
eventual disposition of these matters. We believe the effect on our consolidated results of operations, cash flows and financial position, if any, for the disposition of these matters, including the
Epicenter matter discussed above, will not be material.

9.    Income Taxes

The following summarizes the differences between income taxes computed at the federal statutory rate and income taxes from continuing operations for financial
reporting purposes:

2002

2001

2000In thousandsFederal statutory income tax rate


35
%

35
%

35
%Federal tax at statutory rate

$
22,569

$
15,790

$
1,936State income taxes, net of federal tax benefit


2,394


1,655


1,331Foreign earnings repatriation, net


9,278





Capital loss resulting from IRS audit


(10,573
)




Foreign tax credits generated, net


(16,240
)




Non deductible transaction costs








9,473Increase in deferred tax valuation allowance


26,813





2,355Other differences, net


1,973


1,130


905Provision for income taxes from continuing operations

$
36,214

$
18,575

$
16,000


42

---

The U.S. and foreign components of income from continuing operations before income taxes and the provision for income taxes attributable to earnings from continuing operations were as
follows:

2002

2001

2000In thousandsIncome (loss) from continuing operations before income taxesDomestic

$
57,436

$
38,172

$
(2,563
)Foreign


7,047


6,943


8,095Income from continuing operations before income taxes

$
64,483

$
45,115

$
5,532Provision for income taxes from continuing operationsFederal

$
20,029

$
8,144

$
8,604State


2,289


1,592


1,735Foreign


3,162


3,300


3,547Total current income taxes


25,480


13,036


13,886Deferred


10,734


5,539


2,114Provision for income taxes from continuing operations

$
36,214

$
18,575

$
16,000


Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. The net deferred tax asset represents management's best estimate of the tax benefits that will more likely than not be realized in future years at each reporting date.
Significant components of the deferred income tax liabilities and assets as of the end of 2002 and 2001 consisted of:

2002

2001In thousandsDeferred tax liabilitiesTax depreciation in excess of book

$
(4,471
)
$
(2,591
)Capitalized software development costs


(3,947
)

(3,920
)Tax on unremitted nonU.S. earnings


(768
)

Pension benefits


(17,129
)

(13,881
)Other


(532
)

(383
)Deferred tax liabilities


(26,847
)

(20,775
)Deferred tax assetsReserves for accounts receivable and salespersons overdrafts


5,828


7,263Reserves for employee benefits


15,424


16,585Other reserves not recognized for tax purposes


3,326


6,113Foreign tax credit carryforwards


16,425


185Capital loss carryforwards


13,234


Reserves for investments





2,661Other


6,232


7,306Deferred tax assets


60,469


40,113Valuation allowance


(29,659
)

(2,846
)Deferred tax assets, net


30,810


37,267Net deferred tax asset

$
3,963

$
16,492


42

---

During
2002, we agreed to certain adjustments proposed by the Internal Revenue Service (IRS) in connection with its audit of our federal income tax returns filed for years 1996 through
1998. As a result of the audit, we agreed to pay additional federal taxes of $11.3 million. Combined with additional state taxes and interest charges, the liability related to these
adjustments, which had previously been accrued, was approximately $17 million. In addition, we have filed an appeal with the IRS concerning a further proposed adjustment of approximately
$8 million. While the appeal process may take up to two years to complete, we believe the outcome of this matter will not have a material impact on our results of operations.

In
connection with our recent audit, the IRS recharacterized as a capital loss approximately $27 million of notes that were written off in 1998. The notes were received in
connection with the 1995 sale of a subsidiary. Since capital losses may only be used to offset future capital gains, we have increased the
valuation allowance for the related deferred tax asset to $13.2 million because the tax benefit related to our capital losses may not be realized. At the end of 2002, we have capital loss
carryforwards totaling approximately $33 million of which $27 million expire in 2004, $4 million expire in 2006 and $2 million expire in 2007.

During
2002, we repatriated $32.1 million of earnings from our Canadian subsidiary. We were unable to fully utilize all foreign tax credits generated in connection with the
distribution. At the end of 2002, we have foreign tax credit carryforwards of $16.4 million that expire in 2007. We have increased the valuation allowance for the related deferred tax asset to
$16.4 million because the tax benefit may not be realized. During 2002, we provided deferred income taxes of $0.8 million on approximately $4 million of unremitted Canadian
earnings that are no longer considered permanently invested.

10.  Benefit Plans



We have noncontributory defined-benefit pension plans that cover nearly all employees. The benefits provided under the plans are based on years of service and/or
compensation levels. We also provide health care insurance benefits for nearly all retirees. Generally, the health care plans require contributions from retirees. The measurement date for our plans is
September 30 for each year.

The
assumptions used in determining expenses and benefit obligations for these plans consisted of:

|                                                                                   |  | Pension benefits |   | Retiree health benefits |  
|---------------------------------------------------------------------------------- |  | ---------------- | - | ----------------------- | -
|
|Discount rate used to determine present value of benefit obligation at end of year |  | 6.75             | % | 7.25                    | %
|Expected long-term rate of return on plan assets at beginning of year (1)          |  | 10.00            | % | 10.00                   | %
|Rate of compensation increase                                                      |  | 6.30             | % | 6.30                    | %
|Initial health care cost trend rate (2)                                            |  |                 |   |                        |  

---

43

---

Net
periodic benefit (income) or expense for 2002, 2001 and 2000 included the following components:

|                                        |  | Pension benefits |         | Retiree health benefits |  
|--------------------------------------- |  | ---------------- | ------- | ----------------------- | -
|
|
|Service cost                            |  | $                | 4,944   |                         | $
|Interest cost                           |  |                  | 11,705  |                         |  
|Expected return on plan assets          |  |                  | (21,569 | )                       |  
|Amortization of prior year service cost |  |                  | 1,837   |                         |  
|Amortization of transition amount       |  |                  | (714    | )                       |  
|Amortization of net actuarial gains     |  |                  | (1,626  | )                       |  
|                                        |  |                  |         |                         |  
|Net periodic benefit (income) expense   |  | $                | (5,423  | )                       | $
|                                        |  |                  |         |                         |  

The
following tables present a reconciliation of the benefit obligation of the plans, plan assets and funded status of the plans for our qualified and non-qualified plans in
aggregate.

Pension benefits

Retiree health benefits2002

2001

2002

2001In thousandsChange in benefit obligationBenefit obligation beginning of year

$
165,676

$
144,580

$
6,392

$
5,114Service cost


4,944


4,690


89


66Interest cost


11,705


10,900


438


372Plan amendments


477





(129
)

Actuarial loss


11,282


13,742


2,997


2,388Benefits paid


(8,696
)

(8,236
)

(845
)

(1,548
)Benefit obligation end of year

$
185,388

$
165,676

$
8,942

$
6,392Change in plan assetsFair value of plan assets beginning of year

$
189,823

$
237,256

$


$
Actual return on plan assets


(17,011
)

(40,969
)




Company contributions


1,813


1,772


845


1,548Benefits paid


(8,696
)

(8,236
)

(845
)

(1,548
)Fair value of plan assets end of year

$
165,929

$
189,823

$


$
Funded statusFunded (unfunded) status end of year

$
(19,459
)
$
24,147

$
(8,943
)
$
(6,392
)Unrecognized cost:Net actuarial loss (gain)


47,449


(4,040
)

5,709


2,898Transition amount


(830
)

(1,544
)




Prior service cost


3,319


4,680


(157
)

(35
)Prepaid (accrued) benefit cost

$
30,479

$
23,243

$
(3,391
)
$
(3,529
)


Plan
assets consist primarily of corporate equity instruments as well as corporate and U.S. government debt and real estate.

44

---

The
components in our Consolidated Balance Sheet consist of:

Pension benefits

Retiree health benefits2002

2001

2002

2001In thousandsPrepaid benefit cost

$
47,239

$
39,438

$


$
Accrued benefit liability


(22,549
)

(20,559
)

(3,391
)

(3,529
)Intangible asset


341


501





Minimum pension liability


5,448


3,863





Net amount recognized

$
30,479

$
23,243

$
(3,391
)
$
(3,529
)


Amounts
reflecting the minimum pension liability are included in "accumulated other comprehensive loss" while the remaining amounts are included in "other noncurrent assets" in our
Consolidated Balance Sheet.

At
the end of 2002, the projected benefit obligation of the qualified plans was $161.3 million and the fair value of plan assets related to such plans was $165.9 million or 103% of the
projected benefit obligation. One qualified plan had obligations in excess of plan assets as follows:

2002In thousandsProjected benefit obligation

$
88,143Accumulated benefit obligation


78,439Fair value of plan assets


87,312


Non-qualified
pension plans with obligations in excess of plan assets were as follows:

2002

2001In thousandsProjected benefit obligation

$
24,127

$
21,632Accumulated benefit obligation


22,549


20,559Fair value of plan assets








A
one-percent change in the assumed health care cost trend rate would have the following effects:

1%
Increase

1%
DecreaseIn thousandsEffect on total of service and interest cost components for 2002

$
24

$
21Effect on postretirement benefit obligation at the end of 2002

$
479

$
436




We have retirement savings plans (401k plans), which cover nearly all employees. We provide a matching contribution on amounts contributed by employees, limited
to a specific amount of compensation that varies among the plans. Our contribution was $4.4 million, $4.3 million, and $3.2 million in 2002, 2001 and 2000, respectively, which
represents 50% of eligible employee contributions.

45

---

11.  Shareholders' Deficit

Our common stock consists of Class A through Class E common stock as well as undesignated common stock. Holders of Class A common stock are
entitled to one vote per share, whereas holders of Class D common stock are entitled to 306.55 votes per share. Holders of Class B common stock, Class C common stock and
Class E common stock have no voting rights.

The
par value and number of authorized, issued and outstanding shares for each class of common stock is set forth below:

Issued and Outstanding SharesPar
Value

Authorized
Shares2002

2001In thousands, except par value dataClass A

$
.33
1/3
4,200

2,825

2,834Class B

$
.01

5,300

5,300

5,300Class C

$
.01

2,500

811

811Class D

$
.01

20

20

20Class E

$
.01

1,900



Undesignated

$
.01

12,020



25,940

8,956

8,965


12.  Stock Plans



During 2000, as a result of the merger and recapitalization in May 2000, outstanding options to purchase approximately 3.0 million shares of our
previously existing common stock were cancelled and holders of those outstanding stock options were paid cash of $25.25 per underlying share, less the applicable option exercise price, resulting in an
aggregate payment of approximately $10.0 million. Stock options with an exercise price equal to or in excess of $25.25 per share were cancelled as part of the merger for no consideration.

In
connection with the merger and recapitalization, we adopted a new employee stock option plan to purchase shares of Class A common stock. The number of shares available to be
awarded under the new stock option plan is 676,908. The stock option plan is administered by the Compensation Committee of the Board of Directors, which designates the amount, timing and other terms
and conditions applicable to the option awards. Under the stock option plan, prior to a public offering, an optionee has certain rights to put to us, and we have certain rights to call from the
optionee vested stock options. All options granted prior to 2002 have an exercise price of $25.25 while all options granted in 2002 have an exercise price of $28.50, both prices representing the
Board's estimated fair value of our common stock at the time of the grant. Options granted in 2001 and 2002 vest over three years on the anniversary of the grant date. Options granted in 2000 vest
upon the seventh anniversary of the grant with the possibility of accelerated vesting in one-fifth increments upon Jostens meeting or exceeding performance targets for each of the five
calendar years from the date of grant. The stock option plan also provides for vesting of certain percentages of the options in the event of an initial public offering or approved sale as defined in
the stock option plan. Options issued pursuant to the plan expire on the thirtieth day following the seventh anniversary of the grant date.

46

---

The
weighted average fair value of options granted in 2002, 2001 and 2000 was $8.03, $7.66 and $9.04 per option, respectively. We estimated the fair values using the Black-Scholes
option-pricing model, modified for dividends and using the following assumptions:

2002

2001

2000Risk-free rate

2.7
%
4.8
%
4.9
%Dividend yield

0.0
%
0.0
%
0.0
%Volatility factor of the expected market price of
Jostens' common stock

20
%
20
%
20
%Expected life of the award (years)

7.0

7.0

7.0


The
following table summarizes stock option activity:

Shares

Weighted-
average
exercise priceShares in thousandsOutstanding at January 1, 2000

3,170

$
22.44Exercised

(23
)

19.10Cancelled

(141
)

31.63Settled for cash in the merger and recapitalization

(3,006
)

21.95Granted

531


25.25Outstanding at December 30, 2000

531


25.25Granted

73


25.25Cancelled

(52
)

25.25Outstanding at December 29, 2001

552


25.25Granted

45


28.50Cancelled

(41
)

25.29Outstanding at December 28, 2002

556

$
25.51


The
weighted average remaining contractual life of the options at the end of 2002 was approximately 4.7 years. At the end of 2002, outstanding options had a weighted average
exercise price of $25.51 and 111,570 options were exercisable. At the end of 2001, outstanding options had a weighted average exercise price of $25.25 and 95,939 options were exercisable.

In
connection with the merger and recapitalization in May 2000, we further provided that, in the event of either a sale of Jostens or a public offering of our securities, we may
grant to certain executives options to purchase 1% of our common stock on a fully diluted basis. The ultimate terms of these options will be dependent upon certain facts and circumstances at the date
of grant.



Prior to the merger and recapitalization in May 2000, we had a stock incentive plan under which eligible employees were awarded restricted shares of our
common stock. Awards would generally vest from three to five years, subject to continuous employment and certain other conditions. The awards were recorded at market value on the date of the grant as
unearned compensation and amortized over the vesting period. In connection with the merger and recapitalization, the restricted stock awards that were outstanding became fully vested and, as a result,
we incurred a compensation charge of $1.0 million, which is included in "transaction costs" in our Consolidated Statement of Operations.

47

---



In connection with the merger and recapitalization in May 2000, we adopted a new stock loan program to loan a total of $2.0 million to certain
members of senior management in individual amounts to refinance up to 100% of their outstanding loans existing at the time of the transaction. The proceeds of the loans were used to purchase shares of
our common stock. Loans made under the stock loan program accumulate interest at the cost of funds under our revolving credit facility and are recourse loans. The loans are payable through
May 10, 2005 with interest rates set annually. The loans are collateralized by the shares of stock owned by such individuals, and each individual has entered into a pledge agreement and has
executed a secured promissory note. Two of the loans have been repaid in connection with the departure of two members of senior management. At the end of 2002 and 2001, the outstanding balance of
these loans was $1.6 million and $1.4 million, respectively, including accumulated interest. The outstanding balance of these loans is classified as a reduction in shareholders' equity
(deficit) in our Consolidated Balance Sheet.

13.  Business Segments

We manage our business on the basis of one reportable segment: the development, manufacturing and distribution of school-related affinity products.

Revenues
are reported in the geographic area where the final sales to customers are made, rather than where the transaction originates. No single customer accounted for more than 10% of
revenue in 2002, 2001 or 2000.

The
following tables present net sales by class of similar products and certain geographic information:

2002

2001

2000In thousandsNet Sales by Classes of Similar Products or ServicesPrinting and publishing, primarily yearbooks

$
318,451

$
299,856

$
288,255Jewelry, primarily class rings


204,148


204,243


204,787Graduation products


179,713


181,885


183,592Photography


53,672


50,576


47,729Other








234Consolidated

$
755,984

$
736,560

$
724,597Net Sales by Geographic AreaUnited States

$
716,110

$
697,484

$
684,222Other, primarily Canada


39,874


39,076


40,375Consolidated

$
755,984

$
736,560

$
724,597Net Property and Equipment and Intangibles by Geographic AreaUnited States

$
77,217

$
78,394

$
92,324Other, primarily Canada


3,160


3,556


3,795Consolidated

$
80,377

$
81,950

$
96,119


14.  Discontinued Operations

In December 2001, our board of directors approved a plan to exit our former Recognition business in order to focus our resources on our core School
Products business. Prior to the end of 2001 and in

48

---

connection with our exit, we sold certain assets of the Recognition business and leased our production facility to a supplier who manufactures awards and trophies. We received cash proceeds in the
amount of $2.5 million and non-cash proceeds of $0.8 million in the form of a promissory note that was paid in 2002. The results of the Recognition business are reflected as
discontinued operations in our Consolidated Statement of Operations for all periods presented.

The
following are additional discontinued operations disclosures not included elsewhere in these notes to the consolidated financial statements.

Revenue
and loss from discontinued operations were as follows:

2002

2001

2000In thousandsRevenue from external customers

$


$
55,913

$
80,450Pre-tax loss from operations of discontinued operations before measurement date





(9,036
)

(3,372
)Pre-tax gain (loss) on disposal


2,708


(27,449
)

Income tax (expense) benefit


(1,071
)

14,045


1,075Gain (loss) on discontinued operations

$
1,637

$
(22,440
)
$
(2,297
)


During
2001, the results of discontinued operations encompassed the period through the December 3, 2001 measurement date. The $27.4 million pre-tax loss on
disposal of the discontinued business consisted of a non-cash charge of $11.1 million to write off certain net assets of the Recognition business plus a $16.3 million charge
for accrued costs related to exiting the Recognition business.

During
2002, we reversed $2.3 million of the accrued charges based on our revised estimates for employee separation costs and phase-out costs. Of the total adjustment,
$0.5 million resulted from modifying our anticipated workforce reduction from 150 to 130 full-time positions and $1.8 million resulted from lower information systems,
customer service and internal support costs and lower receivable write-offs than originally anticipated. In addition, we reversed $0.4 million in other liabilities for a total
pre-tax gain on discontinued operations of $2.7 million ($1.6 million net of tax). Components of the accrued disposal costs, which are included in "current liabilities of
discontinued operations" in our Consolidated Balance Sheet are as follows:

Initial
charge

Prior
accrual

Net
adjustments
in 2002

Utilization
2002

Balance
2002In thousandsEmployee separation benefits and other related costs

$
6,164

$


$
(523
)
$
(5,109
)
$
532Phase-out costs of exiting the Recognition business


4,255





(1,365
)

(2,591
)

299Salesperson transition benefits


2,855


1,236


(191
)

(767
)

3,133Other costs related to exiting the Recognition business


3,018


1,434


(228
)

(4,224
)

$
16,292

$
2,670

$
(2,307
)
$
(12,691
)
$
3,964


Separation
benefits will continue to be paid out in 2003 over the benefit period as specified under our severance plan and transition benefits will continue to be paid through 2004.

49

---

15.  Special Charges

During 2001, we recorded special charges totaling $2.5 million. We incurred costs of $2.1 million for severance and related separation benefits in
connection with the departure of a senior executive and two other management personnel. In addition, we elected to terminate our joint venture operations in Mexico City, Mexico and took a charge of
$0.4 million, primarily to write off the net investment. We utilized $2.3 million of the aggregate special charge in 2001 and less than $0.1 million in 2002. The remaining
liability of $0.2 million is classified in "other current liabilities" in our Consolidated Balance Sheet as it primarily consists of separation benefits that will continue to be paid out over
the next six months as specified under the separation agreement.

16.  Merger and Recapitalization

On December 27, 1999, we entered into a merger agreement with Saturn Acquisition Corporation, an entity organized for the sole purpose of effecting a
merger on behalf of certain affiliates of Investcorp S.A. (Investcorp) and other investors. On May 10, 2000, Saturn Acquisition Corporation merged with and into Jostens, with Jostens as the
surviving corporation. The merger was part of a recapitalization of Jostens, which resulted in affiliates of Investcorp and other investors acquiring approximately 92% of our post-merger
common stock. The remaining 8% of our common stock was retained by pre-recapitalization shareholders and certain members of senior management and was redesignated as shares of
Class A common stock. As a result of the transaction, our shares were de-listed from the New York Stock Exchange.

The
recapitalization was funded by (a) $495.0 million of borrowings under a senior credit facility with a syndicate of banks, (b) issuance of $225.0 million
in principal amount of senior subordinated notes and warrants to purchase 425,060 shares of Class E common stock, (c) issuance of $60.0 million in principal amount of redeemable
preferred stock and warrants to purchase 531,325 shares of Class E common stock and (d) $208.7 million of proceeds from the sale of shares of common stock to affiliates of
Investcorp and the other investors.

The
proceeds from these financings funded (a) the payment of $823.6 million to holders of common stock representing $25.25 per share, (b) repayment of
$67.6 million of outstanding indebtedness, (c) payment of approximately $10.0 million in consideration for cancellation of employee stock options, (d) payments of
approximately $72.0 million of fees and expenses associated with the recapitalization, including $12.7 million of advisory fees paid to an affiliate of Investcorp and (e) a
pre-payment of $7.5 million for a management and consulting services agreement for a five-year term with an affiliate of Investcorp. This pre-payment is
being amortized on a straight-line basis over the term of the agreement.

The
transaction was accounted for as a recapitalization and, as such, the historical basis of our assets and liabilities was not affected. Recapitalization related costs of
$46.4 million consisting of investment banking fees, transaction fees, legal and accounting fees, transition bonuses, stock option payments and other miscellaneous costs were expensed in fiscal
2000. Additionally, $3.0 million of recapitalization
costs incurred related to the issuance of shares of redeemable preferred stock were netted against the proceeds of $60.0 million. Finally, $36.5 million associated with the debt
financing was capitalized and is being amortized as interest expense over the applicable lives of the debt for up to a maximum of ten years.

17.  Equity Losses and Write-down of Investments

In 2000, we recorded equity losses and a write-down to zero against our investment in two Internet companies resulting in a $6.7 million
non-cash charge.

50

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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

Executive officers and directors of Jostens as of March 1, 2003 are as follows:

|Name                 |  | Age |  | Title                                                  
|-------------------- |  | --- |  | -------------------------------------------------------
|Robert C. Buhrmaster |  | 55  |  | Chairman of the Board and Chief Executive Officer      
|Carl H. Blowers      |  | 63  |  | Vice ChairmanOperations and Technology                
|Michael L. Bailey    |  | 47  |  | President                                              
|John A. Feenan       |  | 42  |  | Senior Vice President and Chief Financial Officer      
|Andrew W. Black      |  | 40  |  | Vice President and Chief Information Officer           
|Steven A. Tighe      |  | 51  |  | Vice PresidentHuman Resources                         
|Paula R. Johnson     |  | 55  |  | Vice President, General Counsel and Corporate Secretary
|John L. Larsen       |  | 45  |  | Treasurer                                              
|James O. Egan        |  | 54  |  | Director                                               
|Charles K. Marquis   |  | 60  |  | Director                                               
|Steven G. Puccinelli |  | 44  |  | Director                                               
|Robert G. Sharp      |  | 37  |  | Director                                               
|David A. Tayeh       |  | 36  |  | Director                                               

Robert C. Buhrmasterjoined Jostens in December 1992 as Executive Vice President and Chief Staff Officer. He was named President
and Chief Operating Officer in June 1993; was named Chief Executive Officer in March 1994; and was named Chairman in February 1998. Prior to joining Jostens,
Mr. Buhrmaster worked for Corning, Inc. for 18 years, most recently as Senior Vice President. He is also a director of The Toro Company.

Carl H. Blowersjoined Jostens in May 1996 as an independent consultant serving as Division Vice
PresidentManufacturing & Engineering and was hired as an employee in 1997. He was appointed to Senior Vice PresidentManufacturing in February 1998, and
appointed to his current position in February 2003. Prior to joining Jostens, Mr. Blowers worked for Corning, Inc. for 27 years, most recently as Vice President and General
Manager of Corning's Advanced Materials and Process Technologies Division.

Michael L. Baileyjoined Jostens in 1978. He has held a variety of leadership positions, including director of marketing, planning manager
for manpower and sales, national product sales director, division manager for Printing and Publishing, printing operations manager and Senior Vice PresidentJostens School Solutions. He
was appointed to his current position in February 2003.

John A. Feenanjoined Jostens in November 2001 in his current position. Prior to joining Jostens, Mr. Feenan was Vice
President and Chief Financial Officer of Mannington Mills. Prior to that, Mr. Feenan was Executive Vice President and Chief Financial Officer of Foamex International from June 1998 to
August 1999. From January 1995 to June 1998, Mr. Feenan was a Divisional Chief Financial Officer, and then the Chief Financial Officer of U.S. Operations for Laporte plc.

Andrew W. Blackjoined Jostens in September 2000 in his current position. Prior to joining Jostens, Mr. Black spent six
years with Target Corporation where his most recent position was Information Systems Director.

52

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Steven A. Tighejoined Jostens in September 2000 in his current position. From January to September 2000, Mr. Tighe
was Vice President of Human Resources at RealNetworks. From June 1997 to January 2000, Mr. Tighe was Senior Vice President of Human Resources, Communications & Corporate
Services at Fortis Health.

Paula R. Johnsonjoined Jostens in September 2001 in her current position. Prior to joining Jostens, Ms. Johnson spent
20 years with Honeywell Inc. in a variety of positions of increasing responsibility. Ms. Johnson was named a Vice President of Honeywell in 1994, and most recently was Vice
President and Associate General CounselHome Building Control.

John L. Larsenjoined Jostens in January 1998 as Director of Corporate Development. He was named to his current position in
July 2001. From June 1994 to December 1997, Mr. Larsen was a director in the Corporate Finance group with Arthur Andersen LLP in Minneapolis.

James O. Eganbecame one of our directors upon consummation of the recapitalization, which occurred in May 2000. Mr. Egan
has been an executive of Investcorp or one or more of its wholly owned subsidiaries since January 1999. Prior to joining Investcorp, Mr. Egan was a partner in the accounting firm of KPMG
from October 1997 to December 1998. From May 1996 to September 1997, Mr. Egan was a Senior Vice President and Chief Financial Officer of Riverwood International, a
paperboard, packaging and machinery company. Prior to that, Mr. Egan was a partner in the accounting firm of Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers LLP). Mr. Egan is
a director of CSK Auto Corporation, Harborside Healthcare Corporation and Werner Holding Co. (DE), Inc.

Charles K. Marquisbecame one of our directors upon consummation of the recapitalization, which occurred in May 2000.
Mr. Marquis has been a senior advisor to Investcorp or one or more of its wholly owned subsidiaries since January 1999. Prior to joining Investcorp, Mr. Marquis was a partner in
the law firm of Gibson, Dunn & Crutcher LLP. Mr. Marquis is a director of CSK Auto Corporation, Tiffany & Co. and Werner Holding Co. (DE), Inc.

Steven G. Puccinellibecame one of our directors in July 2000. Mr. Puccinelli has been an executive of Investcorp or one or
more of its wholly owned subsidiaries since July 2000. Prior to joining Investcorp, Mr. Puccinelli was a Managing Director at Donaldson, Lufkin & Jenrette.

Robert G. Sharpbecame one of our directors upon consummation of the recapitalization, which occurred in May 2000. Mr. Sharp
is a Managing Director of MidOcean US Advisor LLC, which is an affiliate of the general partner of MidOcean Capital Investors, L.P. (formerly DB Capital Investors, L.P.). Previously, since
October 1999, Mr. Sharp was a Managing Director at DB Capital Partners, Inc., the general partner of DB Capital Investors L.P. Prior to joining DB Capital Partners,
Mr. Sharp was an executive at Investcorp or one or more of its wholly owned subsidiaries. Mr. Sharp is a director of Stratus Computer Systems International S.A. and Jenny
Craig, Inc.

David A. Tayehbecame one of our directors upon consummation of the recapitalization, which occurred in May 2000. Mr. Tayeh
has been an executive of Investcorp or one or more of its wholly owned subsidiaries since February 1999. Prior to joining Investcorp, Mr. Tayeh was a Vice President in investment banking
at Donaldson, Lufkin & Jenrette.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Officers and directors of Jostens are not subject to Section 16(a) reporting requirements.

53

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ITEM 11. EXECUTIVE COMPENSATION



The following table sets forth the cash and non-cash compensation for 2002, 2001 and 2000 awarded to or earned by the Chief Executive Officer, five
other most highly compensated executive officers and one former executive officer of Jostens.

|                                                                                     |  |                |  |   |                         |  |   | Long-term Compensation  |  |                  
|------------------------------------------------------------------------------------ |  | -------------- |  | - | ----------------------- |  | - | ----------------------- |  | -----------------
|
|
|
|
|Robert C. Buhrmaster,
Chairman of the Board
and Chief Executive Officer              |  | 2002
2001
2000 |  | $ | 611,711
593,654
561,808 |  | $ | 381,542
264,040
785,752 |  | 

290,103      
|Carl H. Blowers,
Vice Chairman
Operations and Technology                            |  | 2002
2001
2000 |  | $ | 345,998
332,448
308,617 |  | $ | 191,636
126,031
574,813 |  | 

48,351       
|Michael L. Bailey,
President                                                         |  | 2002
2001
2000 |  | $ | 283,346
277,633
260,385 |  | $ | 159,787
100,828
624,200 |  | 

77,361       
|John A. Feenan,
Senior Vice President and
Chief Financial Officer (4)                |  | 2002
2001
2000 |  | $ | 252,091
35,577
        |  | $ | 141,608
25,000
        |  | 3,500
10,000
   
|Steven A. Tighe,
Vice President
Human Resources (5)                                 |  | 2002
2001
2000 |  | $ | 209,002
204,039
50,000  |  | $ | 86,192
53,559
25,000    |  | 5,000
6,000
2,700
|Andrew W. Black,
Vice President and
Chief Information Officer (6)                    |  | 2002
2001
2000 |  | $ | 209,002
204,039
50,000  |  | $ | 86,044
53,559
80,610    |  | 5,000
6,000
2,700
|Gregory S. Lea,
Vice President and General Manager
Photography and International (7) |  | 2002
2001
2000 |  | $ | 58,971
217,030
203,798  |  | $ | 
74,633
405,959        |  | 

36,680       

---

54

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Option Grants in the Last Fiscal Year

In connection with the merger and recapitalization in May 2000, we adopted a new employee stock option plan to purchase shares of Class A common
stock. The number of shares available to be awarded under the new stock option plan is 676,908. The stock option plan is administered by the Compensation Committee of the Board of Directors, which
designates the amount, timing and other terms and conditions applicable to the option awards. Under the stock option plan, prior to a public offering, an optionee has certain rights to put to us, and
we have certain rights to call from the optionee vested stock options. At the time of the transaction, options to purchase 502,846 shares of our Class A common stock were granted to certain
members of senior management.

The
following table sets forth stock options granted to three members of senior management in 2002.

|                |  | Individual Grants |  |     
|--------------- |  | ----------------- |  | ----
|
|John A. Feenan  |  | 3,500             |  | 7.7 
|Steven A. Tighe |  | 5,000             |  | 11.0
|Andrew W. Black |  | 5,000             |  | 11.0

---

55

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The following table sets forth information concerning the aggregate number of exercisable and unexercisable options held as of the end of 2002. No options were
exercised in 2002 by the named executive officers.

|                     |  | Number of securities
underlying unexercised options
at fiscal year end 2002 |  | Value of unexercised
in-the-money options at
fiscal year end 2002 (1)
|-------------------- |  | --------------------------------------------------------------------------- |  | ---------------------------------------------------------------------
|
|
|Robert C. Buhrmaster |  | 58,021                                                                      |  | 232,082                                                              
|Carl H. Blowers      |  | 9,670                                                                       |  | 38,681                                                               
|Michael L. Bailey    |  | 15,472                                                                      |  | 61,889                                                               
|John A. Feenan       |  | 3,333                                                                       |  | 10,167                                                               
|Steven A. Tighe      |  | 2,540                                                                       |  | 11,160                                                               
|Andrew W. Black      |  | 2,540                                                                       |  | 11,160                                                               

---

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Buhrmaster, Egan, Marquis and Puccinelli were members of the Compensation Committee in 2002. Only Mr. Buhrmaster served as an officer of
Jostens during 2002.

EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS



In connection with the merger and recapitalization in May 2000, we established a Management Shareholder Bonus Plan providing for an annual bonus to be paid
to the named executive officers based upon achievements of specific EBITDA targets. Mr. Buhrmaster is entitled to a standard bonus as determined by the Compensation Committee. No bonus shall be
paid to Mr. Buhrmaster if Jostens fails to achieve specified performance levels. Messrs. Blowers, Bailey, Feenan, Tighe and Black are entitled to a standard bonus as determined by the
Chief Executive Officer and approved by the Board of Directors. Similarly, no bonus shall be paid to them if Jostens fails to achieve specified minimum performance levels.

In
connection with the merger, we further provided that, in the event of either a sale of Jostens or a public offering of our securities, we will grant to Messrs. Buhrmaster,
Blowers and Bailey options to purchase 1% of our common stock on a fully diluted basis, without taking into account any shares issued following the merger, other than any shares issued upon exercise
of the options granted under our stock option plan, and without taking into account any shares issued upon exercise of warrants issued to purchasers of the redeemable preferred stock. The ultimate
terms of these options will be dependent upon certain facts and circumstances at the date of grant. In the event of a sale of Jostens,
the options would be immediately exercisable. In the event of a public offering of our securities, the options would be exercisable for a period of two years beginning one year after the date of the
public offering. In either case, the options will be exercisable only if Investcorp realizes a specified rate of return in such transaction on its investment in Jostens. In either case, we will
allocate such options among Messrs. Buhrmaster, Blowers and Bailey provided that each is still employed by us at the time of such sale or offering, based upon the recommendation of our Chief
Executive Officer, subject to the approval of our Board of Directors.

56

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In 1999, we implemented the Jostens' Executive Change in Control Severance Pay Plan (the "Plan"). The primary purpose of the Plan is to provide severance benefits
for our Chief Executive Officer and other members of management or highly compensated employees that are selected by our Chief Executive Officer, whose employment is terminated during the
24 month period following a change in control (as defined in the Plan). Plan participants are eligible to receive severance benefits if their employment is terminated either voluntarily with
"good reason" (as defined in the Plan) or involuntarily for any reason other than death or for "cause" (as defined in the Plan). The amount of severance benefits received by a particular employee is
based upon the employee's position in Jostens and the employee's base salary plus the higher of the target of the current year's annual incentive or the three year average of actual payments of annual
incentives. The range of severance benefits is from 15 months to 36 months of salary and would be paid in a lump sum upon termination. Plan participants are also eligible to receive an
additional cash payment from us to the extent the total payments received from this Plan or any other benefit plan is treated as an "excess parachute payment" within the meaning of
Section 280(G) of the Internal Revenue Code of 1986, as amended.



In April 2002, we entered into a separation agreement with Gregory S. Lea. The terms of the agreement provided Mr. Lea with a lump sum severance
payment of $818,122.

JOSTENS' RETIREMENT PLANS

We maintain a non-contributory pension plan, Pension Plan D (Plan D), which provides benefits for substantially all salaried employees. Retirement
income benefits are based upon a participant's highest average annual cash compensation (base salary plus annual bonus, if any) during any five consecutive
calendar years, years of credited service (to a maximum of 35 years) and the Social Security-covered compensation table in effect at termination.

We
also maintain an unfunded supplemental retirement plan that gives additional credit under Plan D for years of service as a Jostens' sales representative to those salespersons who were
hired as employees of Jostens prior to October 1, 1991. In addition, benefits specified in Plan D may exceed the level of benefits that may be paid from a tax-qualified plan under
the Internal Revenue Code of 1986, as amended. The benefits up to IRS limits are paid from Plan D and benefits in excess, to the extent they could have been earned in Plan D, are paid from the
unfunded supplemental plan.

The
executive officers participate in pension plans maintained by us for certain employees. The following table shows estimated annual retirement benefits payable for life at age 65 for
various levels

57

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of compensation and service under these plans. The table does not take into account transition rule provisions of the plan for employees who were participants on June 30, 1988.

Years of service at retirement (1)Average final compensation15

20

25

30

35$
150,000

$
26,700

$
35,500

$
44,400

$
53,300

$
62,200200,000


37,900


50,500


63,200


75,800


88,400300,000


60,400


80,500


100,700


120,800


140,900400,000


82,900


110,500


138,200


165,800


193,400500,000


105,400


140,500


175,700


210,800


245,900600,000


127,900


170,500


213,200


255,800


298,400700,000


150,400


200,500


250,700


300,800


350,900800,000


172,900


230,500


288,200


345,800


403,400900,000


195,400


260,500


325,700


390,800


455,9001,000,000


217,900


290,500


363,200


435,800


508,4001,050,000


229,200


305,500


381,900


458,300


534,700


---

We
also maintain a non-contributory supplemental pension plan for corporate vice presidents. Under the plan, vice presidents who retire after age 55 with at least seven full
calendar years of service as a corporate vice president are eligible for a benefit equal to 1% of final base salary for each full calendar year of service, up to a maximum of 30%. Only service after
age 30 is recognized in the plan. The calculation of benefits is frozen at the levels reached at age 60. If they continue in their current positions at their current levels of compensation and retire
at age 60, the estimated total annual pension amounts from this plan for Messrs. Buhrmaster, Bailey, Feenan, Tighe and Black would be $91,598, $50,679, $48,836, $23,369 and $48,312,
respectively. Mr. Blowers waived his eligibility in this plan.

Under
the terms of his separation agreement, Mr. Lea will be paid an aggregate annual benefit of $46,991 commencing in the year in which he attains age 65, of which $21,293 shall
be paid from Plan D and the balance shall be paid by Jostens pursuant to the supplemental pension plan.

DIRECTORS FEES

We do not pay any remuneration to our directors for serving as directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

We are authorized to issue shares of six classes of common stock, each with a par value of $0.01 per share except for the Class A common stock which has a
par value of $0.331/3 per share. The classes of common stock consist of Class A common stock, Class B common stock, Class C common stock, Class D common
stock, Class E common stock and undesignated common stock. Class A common stock, Class D common stock and undesignated common stock are the only classes of common stock that have
a right to vote. Holders of Class B common stock, Class C common stock and Class E common stock do not have any voting rights, except that the holders of such classes of common
stock have the right to vote as a class to the extent required under the laws of the State of Minnesota. Furthermore, each issued and outstanding share of Class E common stock will be
convertible at the

58

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option of the holder thereof into one share of Class A common stock at any time commencing 30 days after the original date of issuance of such share of Class E common stock.
Holders of Class A common stock and undesignated common stock of the Company are entitled to one vote per share, and holders of Class D common stock are entitled to 306.55 votes per
share, in each case on all matters as to which shareholders may be entitled to vote pursuant to the Minnesota Business Corporation Act.

Investcorp
and its co-investors, other than MidOcean Capital Investors, L.P. (formerly DB Capital Investors, L.P.) and First Union Leveraged Capital, beneficially own all of
the outstanding Class D common stock, constituting approximately 68% of our voting power. MidOcean Capital Investors, L.P., First Union Leveraged Capital, Northwestern Mutual Life Insurance
Company and our pre-merger shareholders, including certain members of management, beneficially own all of the outstanding Class A common stock, constituting the remainder of our
voting power. In addition, Investcorp and its co-investors, other than MidOcean Capital Investors, L.P. and First Union Leveraged Capital, own 5,300,000 shares of Class B common
stock and 811,020 shares of Class C common stock.

The
following table sets forth certain information regarding the beneficial ownership of our voting stock as of March 1, 2003. The table sets forth, as of that date:



None
of our directors or executive officers own shares of our Class D common stock. Unless otherwise indicated, we believe each of the shareholders shown in the table below has
sole voting and

59

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investment power with respect to the shares beneficially owned. Except as set forth in the table, none of our executive officers beneficially owns shares of our common stock.

|Name and address of beneficial owner                                                                       |  | Common stock
beneficially
owned (1) |  | Percentage
of class
outstanding (2) |  
|---------------------------------------------------------------------------------------------------------- |  | ----------------------------------- |  | ----------------------------------- | -
|CLASS A COMMON STOCK
(approximately 32% of Voting Power)                                                   | 
|MidOcean Capital Investors, L.P. (3)                                                                       |  | 2,003,679                           |  | 70.9                                | %
|First Union Leveraged Capital (4)                                                                          |  | 198,019                             |  | 7.0                                 | %
|Northwestern Mutual Life Insurance Company (4)                                                             |  | 463,682                             |  | 16.4                                | %
|Robert C. Buhrmaster (4)                                                                                   |  | 151,226                             |  | 5.4                                 | %
|Carl H. Blowers (4)                                                                                        |  | 60,528                              |  | 2.1                                 | %
|Michael L. Bailey (4)                                                                                      |  | 31,385                              |  | 1.1                                 | %
|John A. Feenan (4)                                                                                         |  | 4,500                               |  |                                    |  
|Steven A. Tighe (4)                                                                                        |  | 4,207                               |  |                                    |  
|Andrew W. Black (4)                                                                                        |  | 4,207                               |  |                                    |  
|Charles K. Marquis (4)                                                                                     |  | 11,830                              |  |                                    |  
|All directors and executive officers as a group, including certain of the persons named above (13 persons) |  | 272,256                             |  | 9.6                                 | %
|CLASS D COMMON STOCK
(approximately 68% of Voting Power)                                                   | 
|INVESTCORP S.A. (5) (6)                                                                                    |  | 20,000                              |  | 100.0                               | %
|SIPCO Limited (6)                                                                                          |  | 20,000                              |  | 100.0                               | %
|CIP Limited (6)                                                                                            |  | 18,400                              |  | 92.0                                | %
|Ballet Limited (6)                                                                                         |  | 1,840                               |  | 9.2                                 | %
|Denary Limited (6)                                                                                         |  | 1,840                               |  | 9.2                                 | %
|Gleam Limited (6)                                                                                          |  | 1,840                               |  | 9.2                                 | %
|Highlands Limited (6)                                                                                      |  | 1,840                               |  | 9.2                                 | %
|Noble Limited (6)                                                                                          |  | 1,840                               |  | 9.2                                 | %
|Outrigger Limited (6)                                                                                      |  | 1,840                               |  | 9.2                                 | %
|Quill Limited (6)                                                                                          |  | 1,840                               |  | 9.2                                 | %
|Radial Limited (6)                                                                                         |  | 1,840                               |  | 9.2                                 | %
|Shoreline Limited (6)                                                                                      |  | 1,840                               |  | 9.2                                 | %
|Zinnia Limited (6)                                                                                         |  | 1,840                               |  | 9.2                                 | %
|Investcorp Investment Equity Limited (6)                                                                   |  | 1,600                               |  | 8.0                                 | %

---

60

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61

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Equity Compensation Plan Information

The following table sets forth information about our equity compensation plans as of the end of 2002:

|Plan Category                                              |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights |  | Weighted-average exercise price of outstanding options, warrants and rights |       | Number of securities remaining available for future issuance under equity compensation plans
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | ----- | --------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders     |  | N/A                                                                                         |  |                                                                             | N/A   |                                                                                             
|Equity compensation plans not approved by security holders |  | 555,865                                                                                     |  | $                                                                           | 25.51 |                                                                                             

Additional
information regarding our equity compensation plan is set forth above in ITEM 8, Note 12 of the Notes to Consolidated Financial Statements and ITEM 11.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Immediately prior to consummation of the recapitalization in May 2000, we received approximately $208.7 million of equity capital provided by
Investcorp and its co-investors. In connection with obtaining the financing for the recapitalization, we paid Investcorp International, Inc., an affiliate of Investcorp, advisory
fees of approximately $12.7 million. In addition, we entered into an agreement with Investcorp International for management advisory and consulting services for a five-year term
pursuant to which we prepaid Investcorp International $7.5 million at the closing of the merger.

Pursuant
to the merger agreement, for six years after the closing date of the merger in May 2000, we agreed to indemnify and hold harmless our present and former officers and
directors for acts or omissions occurring before the completion of the merger to the extent provided under our articles of incorporation and by-laws in effect on the date of the merger
agreement. In addition, all indemnification agreements with any current or former directors, officers and employees of Jostens or any subsidiary will survive the merger and terminate as provided in
such agreements. For six years after the completion of the merger, Jostens will provide officers' and directors' or fiduciary liability insurance for acts or omissions occurring before the completion
of the merger covering each such person currently covered by our officers' and directors' or fiduciary liability insurance policy on terms with respect to coverage and amount no less favorable than
those in effect on the date of the merger agreement, provided that the cost of such insurance does not exceed 200% of the most recent annual premium paid by us.

Pursuant
to the merger agreement, Messrs. Buhrmaster, Blowers, and Bailey retained shares of our common stock as follows:

Name

Number of SharesRobert C. Buhrmaster

93,205Carl H. Blowers

41,858Michael L. Bailey

15,913Total

150,976


In
addition, Mr. Lea retained 9,522 shares of our common stock at the time of the merger. All of Mr. Lea's shares were repurchased by Jostens at the time of
Mr. Lea's termination of employment.

62

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These
shares were redesignated as Class A common stock as of the effective time of the merger, the same designation as the shares of common stock retained by other existing
Jostens shareholders. All other shares held by Messrs. Buhrmaster, Blowers and Bailey were exchanged in the merger for $25.25 in cash.

We
have entered into management shareholder agreements with each of Messrs. Buhrmaster, Blowers and Bailey. Each agreement allows us to repurchase shares of our common stock from
the executive in the event the executive ceases to be employed by us at any time prior to a public offering of our common stock. In addition, in the event of termination of employment under specified
circumstances, the executive has the right to require an affiliate of Investcorp to repurchase his shares of common stock. The management shareholder agreements grant to the executives piggyback
registration rights in connection with a registration statement filed by us with respect to our common equity securities following an initial public offering of our common stock. The agreements also
impose restrictions on each executive's ability to sell shares in connection with or following an initial public offering.



In connection with the merger and recapitalization in May 2000, we adopted a new stock loan program to loan a total of $2.0 million to certain
members of senior management in individual amounts to refinance up to 100% of their outstanding loans existing at the time of the transaction. The proceeds of the loans were used to purchase shares of
our common stock. Loans made under the stock loan program bear interest at our cost of funds under our revolving credit facility and are recourse loans. The loans are payable through May 10,
2005 with interest rates set annually. The loans are collateralized by the shares of stock owned by such individuals, and each individual has entered into a pledge agreement and has executed a secured
promissory note. At December 29, 2002, there was $1.3 million principal amount of these loans outstanding as follows: Mr. Buhrmaster $1,010,025 and Mr. Bailey $291,158.
Mr. Blowers does not have a loan outstanding. Mr. Lea's loan was paid in full in connection with the repurchase of his shares.

ITEM 14. CONTROLS AND PROCEDURES

Within 90 days prior to the date of filing this report, management, under the supervision of our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of our disclosure controls and procedures that are designed to ensure that information that is required to be disclosed in our annual report is
recorded, processed and summarized within time periods specified in the Securities and Exchange Commission's rules and regulations and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective, in all material respects, in timely alerting them to material information relating to Jostens
required to be included in our periodic reports filed under the Securities Exchange Act of 1934, as amended.

There
have been no significant changes in our internal controls or in other factors subsequent to the date of the evaluation that could significantly affect these controls.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K





2.1

Agreement and Plan of Merger, dated as of December 27, 1999, by and between Jostens, Inc. and Saturn Acquisition Corporation. Incorporated by reference to Appendix A to the Proxy Statement/Prospectus which
is a part of Jostens' registration statement on Form S-4 filed April 7, 2000.2.2

First Amendment to the Agreement and Plan of Merger, dated as of March 31, 2000, by and between Jostens, Inc. and Saturn Acquisition Corporation. Incorporated by reference to Appendix A to the Proxy Statement/Prospectus which is a part
of Jostens' registration statement on Form S-4 filed April 7, 2000.3.1

Form of Amended and Restated Articles of Incorporation of Jostens, Inc. Incorporated by reference to Appendix D to the Proxy Statement/ Prospectus which is a part of Jostens' registration statement on Form S-4 filed April 7,
2000.3.2

Certificate of Designation, effective May 10, 2000, of the Powers, Preferences and Rights of the 14% Senior Redeemable Payment-In-Kind Preferred Stock, and Qualifications, Limitations and Restrictions Thereof. Incorporated by reference to
Exhibit 4.3 to Jostens' Form 8-K filed on May 25, 2000.3.3

Bylaws of Jostens, Inc. Incorporated by reference to Exhibit 3.2 contained in Jostens' Report on Form 10-Q for the quarterly period ended July 3, 1999.4.1

Indenture, dated as of May 10, 2000, including therein the form of Note, between Jostens, Inc. and The Bank of New York, as Trustee, providing for 12.75% Senior Subordinated Notes due 2010. Incorporated by reference to Exhibit 4.1 to
Jostens' Form 8-K filed on May 25, 2000.


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4.2

Registration Rights Agreement, dated as of May 10, 2000, between Jostens, Inc. and American Yearbook Company, Inc. as Issuers, and Deutsche Bank Securities Inc., UBS Warburg LLC and Goldman, Sachs & Co. as Initial
Purchasers. Incorporated by reference to Exhibit 4.2 to Jostens' Form 8-K filed on May 25, 2000.4.3

Purchase Agreement dated May 5, 2000, for 225,000 Units Consisting of $225,000,000 12.75% Senior Subordinated Notes due 2010 and Warrants to Purchase 425,060 Shares of Class E Common Stock, between Jostens, Inc., and American Yearbook
Company, and Deutsche Bank Securities Inc., UBS Warburg LLC and Goldman, Sachs & Co. Incorporated by reference to Exhibit 4.12 to Jostens' Form 8-K filed on May 25, 2000.4.4

Form of Exchange Note. Incorporated by reference to Exhibit 4.4 contained in Jostens' registration statement on Form S-4 filed April 7, 2000.5.1

Opinion of William J. George, Esq., regarding the legality of the exchange notes issued by Jostens. Incorporated by reference to Exhibit 5.1 contained in Jostens' registration statement on Form S-4 filed April 7, 2000.10.1

Warrant Agreement, dated May 10, 2000, including therein the form of Warrant, between Jostens, Inc. and The Bank of New York, as Warrant Agent. Incorporated by reference to Exhibit 10.2 contained in Jostens' registration statement on
Form S-4 filed April 7, 2000.10.2

Warrant Registration Rights Agreement, dated May 10, 2000, between Jostens, Inc. and Deutsche Bank Securities Inc., UBS Warburg LLC and Goldman, Sachs & Co. Incorporated by reference to Exhibit 4.5 to Jostens'
Form 8-K filed on May 25, 2000.10.3

Purchase Agreement, dated May 10, 2000, for 14% Senior Redeemable Payment-In-Kind Preferred Stock with Warrants to Purchase Shares of Class E Common Stock, between Jostens, Inc. and DB Capital Investors, L.P. Incorporated by reference
to Exhibit 4.6 to Jostens' Form 8-K filed on May 25, 2000.10.4

Warrant Agreement, dated May 10, 2000, including therein the form of Warrant, between Jostens, Inc. and The Bank of New York, as Warrant Agent. Incorporated by reference to Exhibit 10.5 contained in Jostens' registration statement on
Form S-4 filed April 7, 2000.10.5

Preferred Stock Registration Rights Agreement, dated May 10, 2000, between Jostens, Inc. and DB Capital Investors, L.P. Incorporated by reference to Exhibit 4.8 to Jostens' Form 8-K filed on May 25, 2000.10.6

Shareholder Agreement, dated May 10, 2000, between Jostens, Inc. and DB Capital Investors, L.P. and Certain Other Holders of Stock of Jostens, Inc. Incorporated by reference to Exhibit 4.9 to Jostens' Form 8-K filed on
May 25, 2000.10.7

Shareholder Agreement, dated May 10, 2000, between Jostens, Inc. and First Union Leveraged Capital, LLC and Certain Other Holders of Stock of Jostens, Inc. Incorporated by reference to Exhibit 4.10 to Jostens' Form 8-K filed
on May 25, 2000.


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10.8

Common Equity Registration Rights Agreement, dated May 10, 2000, between Jostens, Inc., and Certain Holders as Defined Therein. Incorporated by reference to Exhibit 4.11 to Jostens' Form 8-K filed on May 25, 2000.10.9

Management Shareholder Agreement, dated as of May 10, 2000, between Jostens, Inc., and Robert Buhrmaster. Incorporated by reference to Exhibit 10.10 contained in Jostens' registration statement on From S-4 filed April 7,
2000.10.10

Management Shareholder Agreement, dated as of May 10, 2000, between Jostens, Inc., and Carl Blowers. Incorporated by reference to Exhibit 10.12 contained in Jostens' registration statement on From S-4 filed April 7,
2000.10.11

Management Shareholder Agreement, dated as of May 10, 2000, between Jostens, Inc., and Michael Bailey. Incorporated by reference to Exhibit 10.13 contained in Jostens' registration statement on From S-4 filed April 7,
2000.10.12

Management Shareholder Agreement, dated as of May 10, 2000, between Jostens, Inc., and Gregory Lea. Incorporated by reference to Exhibit 10.14 contained in Jostens' registration statement on From S-4 filed April 7,
2000.10.13

Stock Option Agreement, dated as of May 10, 2000, between Jostens, Inc. and Carl Blowers. Incorporated by reference to Exhibit 10.16 contained in Jostens' registration statement on Form S-4 filed April 7, 2000*10.14

Stock Option Agreement, dated as of May 10, 2000, between Jostens, Inc. and Michael Bailey. Incorporated by reference to Exhibit 10.17 contained in Jostens' registration statement on Form S-4 filed April 7, 2000*10.15

Stock Option Agreement, dated as of May 10, 2000, between Jostens, Inc. and Gregory Lea. Incorporated by reference to Exhibit 10.18 contained in Jostens' registration statement on Form S-4 filed April 7, 2000*10.16

Stock Option Agreement, dated as of May 10, 2000, between Jostens, Inc. and Robert Buhrmaster. Incorporated by reference to Exhibit 10.19 contained in Jostens' registration statement on Form S-4 filed April 7,
2000*10.17

Loan and Pledge Agreement, dated as of May 10, 2000, between Jostens, Inc. and Robert Buhrmaster. Incorporated by reference to Exhibit 10.20 contained in Jostens' registration statement Form S-4 filed April 7,
2000.10.18

Loan and Pledge Agreement, dated as of May 10, 2000, between Jostens, Inc. and Michael Bailey. Incorporated by reference to Exhibit 10.22 contained in Jostens' registration statement Form S-4 filed April 7, 2000.10.19

Loan and Pledge Agreement, dated as of May 10, 2000, between Jostens, Inc. and Gregory Lea. Incorporated by reference to Exhibit 10.23 contained in Jostens' registration statement Form S-4 filed April 7, 2000.10.20

Management Stock Incentive Plan established by Jostens, Inc. dated as of May 10, 2000. Incorporated by reference to Exhibit 10.24 contained in Jostens' registration statement on Form S-4 filed April 7, 2000.*10.21

Jostens, Inc. 2000 Stock Loan Plan. Incorporated by reference to Exhibit 10.25 contained in Jostens' registration statement on Form S-4 filed April 7, 2000.


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10.22

Management Shareholder Bonus Plan established by Credit Agreement. Incorporated by reference to Exhibit 10.26 contained in Jostens' registration statement on Form S-4 filed April 7, 2000.*10.23

Credit Agreement, dated as of May 10, 2000, between Jostens, Inc. and Chase Securities Inc., Deutsche Bank Securities Inc., and Goldman Sachs Credit Partners L.P., as Co-Lead Arrangers, Bankers Trust Company, as Syndication Agent,
Goldman Sachs Credit Partners L.P., as Documentation Agent, and The Chase Manhattan Bank, as Administrative Agent. Incorporated by reference to Exhibit 10.27 contained in Jostens' registration statement on Form S-4 filed April 7,
2000.10.24

Jostens, Inc. Executive Change in Control Severance Pay Plan effective January 1, 1999. Incorporated by reference to Exhibit 10.8 contained in the Annual Report on From 10-K for 1998.*10.25

Jostens, Inc. Executive Change in Control Severance Pay Plan First Declaration of Amendment, effective August 1, 1999. Incorporated by reference to Exhibit 10.10 contained in Jostens' Report on Form 10-Q for the quarterly period
ended October 2, 1999.*10.26

Form of Contract entered into with respect to Executive Supplemental Retirement Plan. Incorporated by reference to Jostens' registration statement on Form 8 dated May 2, 1991.*10.27

Separation Agreement, dated as of April 1, 2002, between Jostens, Inc. and Mr. Gregory Lea. Incorporated by reference to Exhibit 10.1 contained in Jostens' Report on Form 10-Q for the quarterly period ended June 29,
2002.*10.28

Amended and Restated Credit Agreement, dated as of July 31, 2002, among Jostens, Inc., the several lenders from time to time parties thereto, Deutsche Bank Securities Inc., as syndication agent, JPMorgan Chase Bank, as administrative
agent and Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., as Co-Lead Arrangers and Co-Bookrunners. Incorporated by reference to Exhibit 10.1 to Jostens' Form 8-K filed on August 8, 2002.10.29

Second Amended and Restated Credit Agreement, dated as of December 13, 2002, among Jostens, Inc., the several lenders from time to time parties thereto, Deutsche Bank Securities Inc., as syndication agent, JPMorgan Chase Bank, as
administrative agent and Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., as Co-Lead Arrangers and Co-Bookrunners.12

Computation of Ratio of Earnings to Fixed Charges21

List of Jostens' subsidiaries.






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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                     |  | JOSTENS, INC.
|-------------------- |  | -------------
|Date: March 26, 2003 |  | By           

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on March 26, 2003 on behalf of the registrant in
the capacities indicated.

|Signature                                   |  | Title                                                                       
|------------------------------------------- |  | ----------------------------------------------------------------------------
|                                            |  |                                                                             
|/s/ROBERT C. BUHRMASTERRobert C. Buhrmaster |  | Chairman of the Board and Chief Executive Officer                           
|/s/JOHN A. FEENANJohn A.
Feenan             |  | Senior Vice President and Chief Financial Officer (Chief Accounting Officer)
|/s/JAMES O. EGANJames O.
Egan               |  | Director                                                                    
|/s/CHARLES K. MARQUISCharles
K. Marquis     |  | Director                                                                    
|/s/STEVEN G. PUCCINELLISteven
G. Puccinelli |  | Director                                                                    
|/s/ROBERT G. SHARPRobert G.
Sharp           |  | Director                                                                    
|/s/DAVID A. TAYEHDavid A.
Tayeh             |  | Director                                                                    

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CERTIFICATIONS

I,
Robert C. Buhrmaster, Chairman of the Board and Chief Executive Officer of Jostens, Inc., certify that:





|Date: March 26, 2003 |  | /s/ROBERT C. BUHRMASTERRobert C. Buhrmaster Chairman of the Board
and Chief Executive Officer
|-------------------- |  | ---------------------------------------------------------------------------------------------

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CERTIFICATIONS

I,
John A. Feenan, Sr. Vice President and Chief Financial Officer of Jostens, Inc., certify that:





|Date: March 26, 2003 |  | /s/JOHN A. FEENANJohn A. Feenan Sr. Vice President
and Chief Financial Officer
|-------------------- |  | ------------------------------------------------------------------------------

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FINANCIAL STATEMENT SCHEDULES

Report of Independent Accountants on Financial Statement Schedule

To the Board of Directors of Jostens, Inc.:

Our audits of the consolidated financial statements as of December 28, 2002 and December 29, 2001, and for each of the three fiscal years in the
period ended December 28, 2002, referred to in our report dated February 12, 2003 appearing in the 2002 Annual Report on Form 10-K also included an audit as of
December 28, 2002 and December 29, 2001, and for each of the three fiscal years in the period ended December 28, 2002, of the financial statement schedule listed in Item 15(a)(2)
of this Form 10-K. In our opinion, this financial statement schedule presents fairly in all material respects, the information set forth therein as of December 28, 2002 and
December 29, 2001, and for each of the three fiscal years in the period ended December 28, 2002, when read in conjunction with the related consolidated financial statements.

PRICEWATERHOUSECOOPERS LLP Minneapolis, Minnesota
February 12, 2003

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Schedule IIValuation and Qualifying Accounts  Jostens, Inc. and subsidiaries

|                                                      |                                        | Balance
beginning
of period |                              | Charged to
costs and
expenses |   | Charged to
other
accounts |  | Deductions |        | Balance
end of
period
|----------------------------------------------------- | -------------------------------------- | --------------------------- | ---------------------------- | ----------------------------- | - | ------------------------- |  | ---------- | ------ | ---------------------
|
|Reserves and allowances deducted from asset accounts:
|                                                      | Allowances for uncollectible accounts: |                             |                              |                               |   |                           |  |            |        |                      
|                                                      |                                        |                             | Year ended December 28, 2002 |                               | $ | 3,657                     |  | $          | 869    |                      
|                                                      |                                        |                             | Year ended December 29, 2001 |                               |   | 4,361                     |  |            | 1,677  |                      
|                                                      |                                        |                             | Year ended December 30, 2000 |                               |   | 5,775                     |  |            | 2,712  |                      
|                                                      | Allowances for sales returns:          |                             |                              |                               |   |                           |  |            |        |                      
|                                                      |                                        |                             | Year ended December 28, 2002 |                               |   | 5,727                     |  |            | 18,337 |                      
|                                                      |                                        |                             | Year ended December 29, 2001 |                               |   | 6,360                     |  |            | 17,832 |                      
|                                                      |                                        |                             | Year ended December 30, 2000 |                               |   | 7,130                     |  |            | 18,203 |                      
|                                                      | Sales person overdraft reserves:       |                             |                              |                               |   |                           |  |            |        |                      
|                                                      |                                        |                             | Year ended December 28, 2002 |                               |   | 6,897                     |  |            | 3,603  |                      
|                                                      |                                        |                             | Year ended December 29, 2001 |                               |   | 5,568                     |  |            | 3,046  |                      
|                                                      |                                        |                             | Year ended December 30, 2000 |                               |   | 6,332                     |  |            | 1,116  |                      

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