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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                             Commission file number

                                   333-45235
                            ------------------------

                          PERRY JUDD'S HOLDINGS, INC.

             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                             <C>
                  DELAWARE                                       51-0365965
          (State of Incorporation)                  (IRS Employer Identification Number)

575 WEST MADISON STREET, WATERLOO, WISCONSIN                        53594
  (Address of principal executive offices)                       (Zip code)
</TABLE>

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

        Registrant's telephone number, including area code: 920-478-3551

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

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

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

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

    As of March 28, 2000, there were 860,010 shares of Registrant's Common
Stock, par value $.001 per share outstanding. There is no established public
trading market for the Registrant's Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

                                        NONE

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                                     INDEX

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                                                                            PAGE
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<S>       <C>                                                            <C>
PART I

ITEM 1.   Business....................................................             1
ITEM 2.   Properties..................................................            10
ITEM 3.   Legal Proceedings...........................................            11
ITEM 4.   Submission of Matters to a Vote of Security Holders.........            11

PART II
ITEM 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters.........................................            12
ITEM 6.   Selected Financial Data.....................................            12
ITEM 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................            13
ITEM 7A.  Quantitative and Qualitative Disclosures about Market
          Risk........................................................            17
ITEM 8.   Financial Statements and Supplementary Data.................            17
ITEM 9.   Changes in and Disagreements With Accountants on Accounting
          and Financial Disclosure....................................            17

PART III
ITEM 10.  Directors and Executive Officers of the Registrant..........            18
ITEM 11.  Executive Compensation......................................            20
ITEM 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................            24
ITEM 13.  Certain Relationships and Related Transactions..............            25

PART IV
ITEM 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K.........................................................            27

EXHIBIT INDEX.........................................................            28

SIGNATURES............................................................            29

FINANCIAL STATEMENTS..................................................   F-1 to F-20
</TABLE>
<PAGE>
    This annual report on Form 10-K includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may", "will", "expect", "intend",
"estimate", "anticipate", "believe", or "continue" or the negative thereof or
variations thereon or similar terminology. Such forward-looking statements are
based upon information currently available in which the Company's management
shares its knowledge and judgement about factors that they believe may
materially affect the Company's performance. The Company makes the
forward-looking statements in good faith and believes them to have a reasonable
basis. However, such statements are speculative, speak only as of the date made
and are subject to certain risks, uncertainties and assumptions. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results could vary materially from those
anticipated, estimated or expected. Factors that might cause actual results to
differ materially from those in such forward-looking statements include, but are
not limited to, those discussed in Item 1. "Business--Risk Factors" and Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". All subsequent written and oral statements that the Company makes
are qualified in their entirety by these Risk Factors.

    Readers are urged to carefully review and consider disclosures made in this
and other reports that the Company files with the Securities and Exchange
Commission that discuss factors germane to the Company's business.

                                     PART I

ITEM 1. BUSINESS.

GENERAL

    Unless the context otherwise provides, all references in this Annual Report
to the "Company" includes Perry Judd's Holdings, Inc., its wholly-owned
subsidiary, Perry Judd's Incorporated ("Perry Judd's") and Judd's Online, Inc.,
a wholly-owned subsidiary of Perry Judd's. All references to Perry Judd's shall
include its former consolidated subsidiaries: Judd's Incorporated ("Judd's"),
Judd & Detweiler, Inc., Mount Jackson Press, Inc., Shenandoah Valley
Press, Inc. ("Shenandoah Valley"), and Port City Press, Inc. ("Port City").

    The Company is a leading multi-regional printer of magazines, catalogs, and
other commercial products. Its printing facilities are strategically located in
the Midwest and Mid-Atlantic regions, with each plant having state-of-the-art,
integrated prepress, press, binding and distribution capabilities. The Company
services regional and national customers through sales offices in 13 cities
nationwide. Management believes the Company has established a reputation for
high quality products and superior customer service, which have resulted in
long-standing customer and supplier relationships. The Company manages the total
prepress, print, and distribution process to provide value-added solutions that
reduce customer costs or assist customers in increasing revenues.

    Effective April 28, 1995, the Company acquired certain assets and assumed
certain liabilities of Perry Printing Corporation ("Perry Printing"). Prior to
April 28, 1995, the Company had no operating activities.

    On December 16, 1997, the Company completed the acquisition of Judd's, which
is a short-to-medium run printer servicing the magazine, commercial and
technical books sectors. The financial and other information included in this
Annual Report includes the operations of Judd's since the date of the
acquisition.

    On February 1, 1999, the Company completed the acquisition of Heartland
Press, Inc. ("Heartland") which is a short-run printer servicing the magazine
sector. The financial and other information included in this Annual Report
includes the operations of Heartland since the date of the acquisition.

                                       1
<PAGE>
    The Company operates primarily in one business segment--printing services.
The following table presents the percentage of total revenue contributed by each
market sector during the past three fiscal years.

<TABLE>
<CAPTION>
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Magazines...................................................     59%        53%        45%
Catalogs....................................................     32%        32%        43%
Other.......................................................      9%        15%        12%
                                                                ---        ---        ---
  TOTAL.....................................................    100%       100%       100%
                                                                ===        ===        ===
</TABLE>

    Substantially all of the Company's sales are based upon customer
specifications. A significant amount of the Company's sales are made pursuant to
term contracts with its customers, with the remainder made on an order-by-order
basis. One of the Company's customers, Time, Inc., accounted for approximately
14% of the Company's consolidated net sales during 1999. In the opinion of
management, the loss, at substantially the same time, of all of the business
provided by this customer would have a material adverse effect on the Company.
No other customer accounted for more than 10% of the Company's consolidated net
sales for 1999.

MARKET SECTORS

    MAGAZINES.  The Company believes that it is the seventh largest printer of
magazines in the United States. The Company's principal competitors in magazines
consist of five diversified printing companies. The Company's magazine customers
include some of the largest and most established publishers in a diverse range
of market categories. The Company believes that established publications are the
most likely to have a continuing and improving market presence. Additionally,
the popularity of these magazines makes them less susceptible to cyclical
downturns in advertising spending, which the Company believes provides it with
an advantage over competitors whose customers may be more susceptible to such
downturns.

    Substantially all of the Company's magazine printing is performed under
contracts, the majority of which have remaining terms ranging from one to five
years. The Company's strong relationships with its magazine customers have
historically enabled it to extend most of its magazine contracts beyond their
initial expiration dates. The Company's relationships with its top ten magazine
customers averages more than 18 years.

    CATALOGS.  The Company believes that it is the seventh largest printer of
catalogs in the United States. The Company's key competitors in the catalog
market consist of four diversified commercial printers whose facilities enable
them to compete in the national market and smaller local and regional printers
who compete for regional business. In addition, the Company's
business-to-business catalog printing work spans a broad range of industries
including the computer, home and office furniture, office products and
industrial safety products industries. Consistent with industry practice, the
Company performs most of its catalog printing under short-term agreements with
its customers.

    OTHER COMMERCIAL PRINTING.  The Company also produces a variety of specialty
commercial products such as magazine inserts, calendars, and general advertising
products. These commercial products enable the Company to optimize capacity
utilization by supplementing its magazine and catalog business. Additionally,
the Company had produced a variety of information-intensive professional and
technical journals, reference books and business directories, through its Port
City subsidiary, which the Company sold on September 2, 1998.

    NEW MEDIA SERVICES.  In recent years, the Company has developed a variety of
multimedia, on-line and content repurposing products and services (collectively,
the "New Media Services"), and the Company

                                       2
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believes it is among the industry leaders in providing its customers with
innovative, creative applications of such technologies to add value to their
businesses.

    The New Media Services began as the Company became involved in the
development and management of Internet websites to enhance its traditional
printing capabilities and as a natural extension and expansion of its customer
relationships. The Company provides interactive web-site development, tracking,
analysis and reporting services to publishers and direct-marketers desiring to
complement ink-on-paper magazine products with on-line, brand-based products and
services and to take advantage of marketing and sales opportunities in
electronic commerce.

    In addition, the Company's experience and reputation for building effective
interactive web-sites and creative electronic commerce solutions has expanded
its customer base for its New Media Services to non-publishing customers. The
Company is a Microsoft-certified provider of website development services, and
management intends to continue to develop innovative multimedia products and
services for publishing, direct-marketing and non-publishing customers,
including current projects to develop website advertising and electronic
commerce.

PREPRESS

    In each of its facilities, the Company provides a full range of prepress
services and equipment utilizing the latest technology, answering the demand for
high quality, 24-hour preparatory services. The Company's prepress services
include conventional preparatory services, (such as color separation, production
of platemaking film, imposition, and platemaking) as well as state-of-the-art
computer-to-plate technology. The Company has made significant investments in
transforming its prepress operations from labor-intensive to equipment- and
system-intensive processes, including the introduction of electronic prepress
capabilities enabling the Company to receive, create and process pages
electronically and to utilize automated platemaking equipment.

PRESS ROOM

    The Company offers its customers state-of-the-art heatset web offset press
capabilities at each of its printing facilities. The Company has invested in
wide web press technology which represents a substantial capital commitment
matched by only a small number of well-capitalized printers. Wide web presses
generate a significant cost savings on longer press runs. Other specialized
press capabilities include short cut-off and gapless presses, which reduce paper
waste, and 5-color presses which are used to print covers. The Company's presses
can print on lower-cost paper stocks and certain presses incorporate folders to
produce tabloid- and digest-size publications. The Company has both high-speed
presses best suited for longer runs and other presses with shorter makeready
times which are better suited for short runs. Management believes its printing
operations have the consistent high quality reproduction, low paper waste,
flexibility, and dependability that is required by the Company's customers.

BINDING AND FINISHING

    The Company has invested significant capital to install high-speed,
automated binding and finishing equipment. Printed products requiring finishing
are either saddle bound (stapled) or perfect bound (square back with adhesive).
The Company's finishing services include blow-in-cards, polybagging, tipping,
and tabbing.

    The Company employs technological advances in ink-jet addressing and
geo-demographic selective binding (on both a regional and specific carrier route
basis). All of the Company's magazine and catalog binding equipment has ink-jet
capabilities and partial or fully selective systems. During the binding process,
a product's content can be modified to include or exclude certain materials
using technologies that enable a magazine publisher or catalog merchant to
customize and personalize its market by sending the same basic magazine or
catalog to all consumers while inserting different advertisements, messages,
prices

                                       3
<PAGE>
or product offerings, depending upon the geographic and demographic
characteristics of the individual customer or subscriber.

    Ink-jet personalizing is increasingly being used by many publishers and
catalogers. Ink-jet addressing eliminates the additional printing of paper
labels and improves mailing addressing efficiency, and allows both the cover and
the order form to be labeled and to contain customer coding information.
Furthermore, as magazine and catalog publishers continue to look for methods to
increase the level of personalization, the ink-jet process is being used more
frequently to add personal messages, specific inserts to frequent buyers, or
unique coding information for order entry.

DISTRIBUTION

    Distribution is a key element in the production process to effectively
manage delivery costs, and the Company provides its customers with
state-of-the-art distribution and mail list services. The distribution services
provided by the Company include multiple entry point analysis, pool shipping,
drop shipping, load planning, over-the-road and rail services,
mailing/distribution consultation, freight tracking, co-mailing analysis, mail
tracking, ink-jet formatting and ink-jet tape processing.

    The Company provides a number of mail list services which are designed to
improve deliverability and minimize shipping costs. Many mail list services are
integrated into the finishing operation, reducing the need for redundant
handling. These services include merging multiple lists and purging duplication,
formatting the tapes or optical disks which run the finishing controller,
isolating undeliverable addresses due to faulty zip codes, correcting zip codes,
creating postnet barcoding, and sorting files to support customers' mailing
strategies. Additionally, the mail list services can be used to select names to
target a specific audience for a particular publication or catalog. The Company
is also able to merge lists of names for the same customer or to co-mail
catalogs and magazines of different customers to achieve increased postal
presort discounts. Management believes smaller competitors either cannot offer
these services or can only offer them in a more limited way.

    By integrating the mail list services with its distribution services, the
Company maximizes postal discounts for its customers through achieving optimum
presort savings and automation discounts, as well as ensuring on-time delivery.
Due to its large shipping volume, the Company's plants are designated postal
distribution centers, each with full-time postal employees. The Company's volume
and strategic locations enable it to ship directly to U.S. Postal Service
sectional center facilities, thus providing postal discounts and more timely
delivery for its customers. The Company believes its distribution capabilities
and favorable distribution locations provide a competitive advantage.

COMPETITION

    The Company competes in each of its market segments on the basis of price,
quality, range of services offered, distribution capabilities, ability to
service the specialized needs of customers, availability of printing time on
appropriate equipment and use of state-of-the-art technology.

    The Company's competitors in the magazine and catalog printing market
consist of diversified printing companies who have facilities sufficient to
compete in the national market, along with various local or regional printers
with less extensive facilities who compete for local or regional business. The
Company's key competitors in these markets include R.R. Donnelley & Sons,
Quebecor World, Quad/ Graphics, Banta Corp. and Brown Printing.

RAW MATERIALS

    Paper and ink are the primary direct materials used by the Company.
Generally, direct material costs are passed on to the customer.

                                       4
<PAGE>
    The primary raw material used by the Company in its operation is paper. In
1999, the Company's customers supplied approximately two-thirds of the paper
used in the printing process, and the Company supplied approximately one-third.
The cost of paper is a principal factor in the Company's manufacturing costs and
pricing to certain customers and consequently the cost of paper and the
proportion of paper supplied by customers significantly affects the Company's
net sales and cost of sales. The Company is generally able to pass increases in
the cost of paper to its customers, while declines in paper costs generally
result in lower prices to customers. Fluctuations in paper costs result in
corresponding fluctuations in the Company's net sales, but typical fluctuations
generally have not affected volume or profits to any significant extent.
However, sharp increases in paper prices and related reduction in print
advertising programs are more likely to adversely affect volumes and profits.
The Company believes that its relationships with its paper suppliers are strong,
and that it has adequate allocations with its suppliers for its customers'
needs.

    The Company supplies all of the ink used by its customers and has strong
relationships with its suppliers. The Company believes that there are adequate
sources of supply for ink and that its relationships with its suppliers yield
improved quality, pricing and overall services to its customers. See "Certain
Relationships and Related Party Transactions".

SEASONALITY

    The Company experiences seasonal fluctuations, with generally higher sales
and working capital in the second half of the fiscal year. The Revolving Credit
Facility has an aggregate commitment of $45.0 million, all of which was
available for future working capital and other general corporate purposes as of
December 31, 1999.

REGULATORY COMPLIANCE

    The Company is subject to regulation under various federal, state, and local
laws relating to the environment and to employee health and safety. These
environmental regulations relate to the generation, storage, transportation,
handling, disposal, and emission into the environment of various substances.
Permits are required for operation of the Company's business and these permits
are subject to renewal, modification and, in certain circumstances, revocation.
The Company is also subject to regulation under various federal, state and local
laws which allow regulatory authorities to compel (or seek reimbursement for)
cleanup of environmental contamination, if any, at the Company's own sites and
at facilities where its waste is or has been disposed. The Company has internal
controls and personnel dedicated to compliance with all applicable environmental
and employee health and safety laws. The Company expects to incur ongoing
capital and operating costs and administrative expenses to maintain compliance
with applicable environmental laws. The Company cannot predict the environmental
or employee health and safety legislation or regulations that may be enacted in
the future or how existing or future laws or regulations will be administered or
interpreted. Compliance with new laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies or stricter interpretation of
existing laws, may require additional expenditures by the Company, some or all
of which may be material, however the Company is not currently aware of any
environmental or employee health or safety matter which could have a material
adverse effect upon the Company's competitive or consolidated financial
position.

TRADE NAMES AND TRADEMARKS

    The Company owns certain trade names and trademarks used in its business,
none of which it believes are material.

                                       5
<PAGE>
RESEARCH AND DEVELOPMENT

    Suppliers of equipment and materials used by the Company perform most of the
research and development related to the printing industry. Accordingly, the
Company has not spent a material amount of resources for such purposes. The
Company does, however, dedicate significant resources to improving its operating
efficiencies and the services it provides to its customers. In an effort to
realize increased efficiencies in its printing processes, the Company has made
significant investments in state-of-the-art equipment, including new press and
binding technology, digital photography, computer-to-plate and digital
processing technology, and real-time product quality monitoring systems.

EMPLOYEES

    As of December 31, 1999, the Company had approximately 2,400 employees, of
which approximately 576 or 24% were represented by unions. All union employees
are employed at the Company's Waterloo plant. As of March 1, 2000, approximately
212 of such union employees were covered under a labor contract which expires in
June 2001, and approximately 370 of such union employees were covered under a
labor contract which expires in April 2002. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for further
discussion of the Company's union negotiations during 1999. The Company believes
that it has satisfactory employee and labor relations.

RISK FACTORS

    In addition to other information in this annual report on Form 10-K, the
following risk factors for the Company should be carefully considered. These
risks may impair the Company's results of operations and business prospects. The
risks set forth below and elsewhere in this annual report could cause actual
results to differ materially from those that the Company projects.

HIGH LEVEL OF INDEBTEDNESS

    In connection with prior transactions, the Company has incurred a
significant amount of indebtedness and is highly leveraged. In addition, subject
to the restrictions in the Company's Amended and Restated Credit Agreement with
its banks (the "Credit Agreement") and the Indenture (the "Indenture") related
to the outstanding 10 5/8% Senior Subordinated Notes (the "Senior Notes"), the
Company may incur additional senior indebtedness to finance acquisitions and
capital expenditures for other general corporate purposes.

    The level of the Company's indebtedness could have important consequences to
holders of the Senior Notes, including: (i) a substantial portion of the
Company's cash flow from operations must be dedicated to debt service and will
not be available for other purposes; (ii) the Company's future ability to obtain
additional debt financing for working capital, capital expenditures or
acquisitions may be limited; (iii) the Company's level of indebtedness could
limit its flexibility in reacting to changes in the printing industry and
economic conditions generally, which could limit its ability to withstand
competitive pressures or take advantage of business opportunities; (iv) the
Company's borrowing under the Credit Agreement will be at variable rates of
interest, which could cause the Company to be vulnerable to increases in
interest rates; and (v) all of the indebtedness incurred in connection with the
Credit Agreement will become due prior to the time the principal payments on the
Senior Notes will become due. Certain of the Company's competitors currently
operate on a less leveraged basis and are likely to have significantly greater
operating and financing flexibility than the Company.

ABILITY TO SERVICE DEBT

    The Company's ability to pay interest on the Senior Notes and to satisfy its
other debt obligations will depend upon its future operating performance, which
will be affected by prevailing economic conditions and financial, business and
other factors, certain of which are beyond its control. The Company anticipates

                                       6
<PAGE>
that its operating cash flow, together with available borrowings under the
Credit Agreement, will be sufficient to meet its operating expenses, capital
expenditure requirements and working capital needs and to service its debt
requirements as they become due. However, if the Company is unable to service
its indebtedness, it will be forced to adopt an alternative strategy that may
include actions such as reducing or delaying capital expenditures, selling
assets, restructuring or refinancing its indebtedness or seeking additional
equity capital. There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all, or that they would enable the Company
to continue to meet its debt service obligations or that they would be permitted
under the terms of the Credit Agreement or Indenture.

SUBORDINATION OF THE SENIOR NOTES AND GUARANTEES

    The Senior Notes are fully and unconditionally guaranteed, on a senior
subordinated basis, jointly and severally, by all subsidiaries of the Company
(the "Subsidiary Guarantors") pursuant to guarantees (the "Guarantees"). The
Guarantees will be subordinated in right of payment to all senior indebtedness
of the Company and the Subsidiary Guarantors. In the event of bankruptcy,
liquidation or reorganization of the Company, the assets of the Company or the
Subsidiary Guarantors will be available to pay obligations on the Senior Notes
only after all senior indebtedness of the Company or the Subsidiary Guarantors,
as the case may be, has been paid in full, and there may not be sufficient
assets remaining to pay amounts due on any or all of the Senior Notes then
outstanding. Additional senior indebtedness may be incurred by the Company and
the Subsidiary Guarantors from time to time, subject to certain restrictions.
The Indenture generally provides that a Restricted Subsidiary (as defined) may
incur indebtedness only if such Subsidiary agrees to guarantee the Senior Notes
on a senior subordinated basis. The holders of the Senior Notes have no direct
claim against the Subsidiary Guarantors other than claims created by the
Guarantees, which may themselves be subject to legal challenge in the event of
the bankruptcy or insolvency of a Subsidiary Guarantor. If such a challenge were
upheld, the Guarantees would be invalidated and unenforceable. To the extent
that the Guarantees are held to be unenforceable or have been released pursuant
to the terms of the Indenture, the rights of holders of the Senior Notes to
participate in any distribution of assets of any Subsidiary Guarantor upon
liquidation, bankruptcy or reorganization may, as in the case with other
unsecured creditors of the Company, be subject to prior claims against such
Subsidiary Guarantor.

HOLDING COMPANY STRUCTURE

    The Company is a holding company, the principal assets of which consist of
equity interests in its subsidiaries. The Senior Notes are a direct obligation
of the Company, which derives all of its revenues from the operations of its
subsidiaries. As a result, the Company will be dependent on the earnings and
cash flow of, and dividends and distributions or advances from, its subsidiaries
to provide the funds necessary to meet its debt service obligations, including
the payment of principal and interest on the Senior Notes. Accordingly, the
Company's ability to pay interest on the Senior Notes and otherwise to meet its
liquidity requirements may be limited as a result of its dependence upon the
distribution of earnings and advances of funds by its subsidiaries. The payment
of dividends from the subsidiaries to the Company and the payment of any
interest on or the repayment of any principal of any loans or advances made by
the Company to any of its subsidiaries may be subject to statutory restrictions
under corporate law limiting the payment of dividends and are contingent upon
the earnings of such subsidiaries. The Company's subsidiaries are guarantors of
the indebtedness incurred under the Credit Agreement. The Senior Notes are not
secured by liens against any of the Company's and its subsidiaries' assets,
while the indebtedness incurred under the Credit Agreement is secured by liens
against substantially all the Company's and its subsidiaries' assets.

RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS

    The indenture restricts, among other things, the Company's and its
subsidiaries' ability to incur additional indebtedness, pay dividends or make
certain other restricted payments, consummate certain

                                       7
<PAGE>
asset sales, enter into certain transactions with affiliates, incur liens, incur
indebtedness that is subordinate to Senior Indebtedness (as defined) but senior
in right of payment to the Senior Notes, impose restrictions on the ability of a
subsidiary to pay dividends or make certain payments to the Company and its
subsidiaries, merge or consolidate with any other persons or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
assets of the Company. In addition, the Credit Agreement contains other and more
restrictive covenants and prohibits the Company and its subsidiaries from
prepaying other indebtedness (including the Senior Notes). The Credit Agreement
also requires the Company to maintain specified financial ratios and satisfy
certain financial condition tests. The Company's ability to meet those tests and
ratios can be affected by events beyond its control, and there can be no
assurance that it will meet those ratios and tests. A breach of any of these
covenants could result in a default under the Credit Agreement and/or the
Indenture. Upon the occurrence of an event of default under the Credit
Agreement, the lenders could elect to declare all amounts outstanding under the
Credit Agreement, together with accrued interest, to be immediately due and
payable. If the Company were unable to repay those amounts, the lenders could
proceed against the collateral granted to them to secure that indebtedness. If
the Senior Indebtedness under the Credit Agreement were to be accelerated, there
can be no assurances that the assets of the Company would be sufficient to repay
in full the indebtedness and the other indebtedness of the Company, including
the Senior Notes. The Company's obligations under the Credit Agreement are
secured by a security interest in substantially all the assets of the Company
and its subsidiaries, including all of their cash and other tangible and
intangible assets, and all real property. In addition, the Company and Perry
Judd's pledged as security all of their shares of capital stock in each of their
subsidiaries.

COMPETITION

    The commercial printing industry in the U.S. is highly competitive in most
product categories and geographic regions. Competition is largely based on
price, quality, range of services offered, distribution capabilities, ability to
service the specialized needs of customers, availability of printing time on
appropriate equipment and use of state-of-the-art technology. The Company
competes for commercial business not only with large national printers, but also
with smaller regional printers. In certain circumstances, due primarily to
factors such as freight rates and customer preference for local services,
printers with better access to certain regions of the country may have a
competitive advantage in such regions. In addition, many of the Company's
competitors have substantially greater financial, marketing, distribution,
management and other resources than the Company, and as the industry experiences
continued consolidation, the Company's competitors may further enhance such
resources. The Company also believes that excess capacity in the industry,
especially during periods of economic downturn, would result in downward pricing
pressure and intensified competition in the printing industry. Given these
factors, there can be no assurance that the Company will be able to continue to
compete successfully against existing or new competitors, and the failure to do
so may have a material adverse effect on the Company's financial condition and
results of operations. See "Business--Competition".

TECHNOLOGICAL CHANGES

    Technology in the printing industry has evolved and continues to evolve.
Since 1995, over $100 million of purchased and leased capital expenditures have
been invested for printing facilities and production equipment. As technology
continues to evolve and as its customers' needs become more specialized and
sophisticated in the future, the Company will likely be required to invest
significant additional capital in new and improved technology in order to
maintain and enhance the quality and competitiveness of, and to expand, its
products and services. If the Company is unable to acquire new and improved
technology, facilities and equipment or to develop and introduce enhanced or new
products and services, the Company's financial condition, results of operations
and cash flows could be materially adversely affected.

                                       8
<PAGE>
RAW MATERIALS--PAPER

    The cost of paper is a principal factor in the Company's manufacturing costs
and pricing to certain customers and consequently the cost of paper
significantly affects the Company's net sales. The Company is generally able to
pass increases in the cost of paper to its customers, while declines in paper
costs generally result in lower prices to customers. Typical fluctuations in
paper costs result in corresponding fluctuations in the Company's net sales, but
typical fluctuations generally have not affected volume or profits to any
significant extent. However, sharp increases in paper prices and related
reduction in print advertising programs are more likely to adversely affect
volumes and profits. To the extent that there are future paper costs increases
and the Company is not able to pass such increases to its customers or its
customers reduce their demand for the Company's products and services, the
Company's financial condition and results of operations could be materially
adversely affected.

    Capacity in the paper industry has remained relatively stable in recent
years. Increases or decreases in demand for paper have led to corresponding
pricing changes and, in periods of high demand, to limitations on the
availability of certain grades of paper, including grades utilized by the
Company. Any loss of the sources for paper supply or any disruption in such
sources' business or failure to meet the Company's product needs on a timely
basis could cause, at a minimum, temporary shortages in needed materials which
could have a material adverse affect on the Company's results of operations.
Although the Company actively manages its paper supply and believes it has
established strong relationships with its suppliers, there can be no assurance
that the Company's sources of supply for its paper will be adequate or, in the
event that such sources are not adequate, that alternative sources can be
developed in a timely manner. If the Company is unable to secure sufficient
supplies of paper of appropriate quality, its financial condition, results of
operations and cash flows could be materially adversely affected. See
"Business--Raw Materials".

CERTAIN CUSTOMER RELATIONSHIPS

    The Company currently provides products and services to certain customers
without a written contractual arrangement. While the Company believes that its
relationship with each of these customers is good, there can be no assurance
that such customers will continue to do business with the Company at current
levels, if at all.

ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATION

    The Company is subject to regulation under various federal, state and local
laws relating to the environment and to employee health and safety. These
environmental regulations relate to the generation, storage, transportation,
handling, disposal and emission into the environment of various substances.
Permits are required for operation of the Company's business, and these permits
are subject to renewal, modification and, in certain circumstances, revocation.
The Company is also subject to regulation under various federal, state and local
laws which allow regulatory authority to compel (or seek reimbursement for)
cleanup of environmental contamination at the Company's own sites and at
facilities where its waste is or has been disposed. The Company has internal
controls and personnel dedicated to compliance with all applicable environmental
and employee health and safety laws. The Company expects to incur ongoing
capital and operating costs and administrative expenses to maintain compliance
with applicable environmental laws. The Company cannot predict the environmental
or employee health and safety legislation or regulations that may be enacted in
the future or how existing or future laws or regulations will be administered or
interpreted. Compliance with new laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies or stricter interpretation of
existing laws, may require additional expenditures by the Company, some or all
of which may be material. See "Business--Regulatory Compliance".

                                       9
<PAGE>
RELIANCE ON KEY PERSONNEL

    The Company's success will continue to depend to a significant extent on its
executive officers and other key management personnel. There can be no assurance
that the Company will be able to retain its executive officers and key personnel
or attract additional qualified management in the future. In addition, the
success of any acquisition by the Company may depend, in part, on the Company's
ability to retain management personnel of the acquired companies. There can be
no assurance that the Company will be able to retain such management personnel.

CONTROL BY PRINCIPAL STOCKHOLDERS

    Robert E. Milhous and Paul B. Milhous, the Chairman and Vice Chairman,
respectively, of the Company own together beneficially a substantial majority of
the outstanding capital stock of the Company. Accordingly, these stockholders
have the ability, acting together, to control fundamental corporate transactions
requiring stockholder approval including, without limitation, approval of merger
transactions involving the Company and sales of all or substantially all of the
Company's assets. See Item 12 "Security Ownership of Certain Beneficial Owners
and Management".

PURCHASE OF NOTES UPON CHANGE OF CONTROL

    Upon a Change of Control (as defined in the Indenture) the Company will be
required to offer to purchase all outstanding Senior Notes at 101% of the
principal amount thereof plus accrued and unpaid interest to the repurchase
date. A Change of Control will likely trigger an event of default under the
Credit Agreement which will permit the lenders thereunder to accelerate the debt
under the Credit Agreement. However, there can be no assurance that sufficient
funds will be available at the time of any Change of Control to make any
required repurchases of Senior Notes tendered, or that, if applicable,
restrictions in the Credit Agreement will allow the Company to make such
required repurchases.

ITEM 2. PROPERTIES

    Each of the Company's printing plants has a primary product expertise which
allows it to maximize the efficiency and responsiveness of its operations.
Information about the Company's facilities are set forth below:

<TABLE>
<CAPTION>
LOCATION                                          USE                 OWNED/LEASED   SQUARE FEET
--------                           ---------------------------------  ------------   -----------
<S>                                <C>                                <C>            <C>
Corporate Headquarters             Executive Offices and
Waterloo, WI.....................  Corporate Support Functions        Lease             50,200
Preproduction Facilities
Madison, WI......................  Digital Prepress Production        Lease              7,100
New Media Facilities
Winchester, VA...................  New Media Services                 Lease             14,000
Printing Plants
Waterloo, WI.....................  Long- and medium-run magazines     Lease            298,800
Strasburg, VA....................  Medium- and short-run magazines    Lease            353,400
Baraboo, WI......................  Consumer and business catalogs     Lease            614,000
Spencer, IA......................  Short-run magazines                Own              127,000
Warehouses
Waterloo, WI (3 sites)...........  Paper storage                      Lease            112,800
Mt. Jackson, VA..................  Customer supplied inserts          Lease             61,700
</TABLE>

    In addition, the Company leases several sales offices located throughout the
United States. The Company believes that none of its leases are material to its
operations and that such leases were entered into on market terms.

                                       10
<PAGE>
ITEM 3. LEGAL PROCEEDINGS

    On November 24, 1999, Journal Communications, Inc. and Northstar Print
Group, Inc. filed suit against the Company in the State of Wisconsin Circuit
Court for Jefferson County, Case No. 99CV373, arising out of the Company's
redemption of its Series A preferred stock held by the plaintiffs due to the
Company's outstanding indemnity claims involving breaches of warranties and
representations made by the plaintiffs on certain assets purchased from the
plaintiffs in connection with the acquisition of Perry Printing Corporation in
1995. Redemption features of the Series A preferred stock provide the Company
with the option to offset such claims as immediate redemption of the Series A
preferred stock up to a maximum redemption value of $5 million. The complaint
alleges that the Company wrongfully redeemed the preferred stock, refused to pay
dividends on other stock, and refused to pay for certain services allegedly
rendered by the plaintiff to the Company. The aggregate damages sought are
approximately $3 million and the payment of preferred stock dividends. On
January 6, 2000, the Company answered by denying the complaint's allegations and
asserting counterclaims in an aggregate amount of more than $7 million.
Discovery has recently commenced in this litigation and it is too early to form
an opinion as to its outcome. However, the Company believes that there are
substantial meritorious defenses to the claims and intends to vigorously defend
the action.

    Other claims, suits, and complaints may arise in the ordinary course of the
Company's business. The Company believes that any such pending matters are
adequately reserved for, are covered by insurance, or would not have a material
adverse effect on the consolidated financial statements of the Company, taken as
a whole, if determined adversely against the Company.

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

    None.

                                       11
<PAGE>
                                    PART II

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

MARKET INFORMATION

    There is no established public trading market for the Company's common stock
or other equity securities. As of December 31, 1999, there were 10 holders of
the common stock.

DIVIDENDS

    The Company has never paid and has no present intention of paying cash
dividends on its common stock. Any determination in the future to pay dividends
will depend on the Company's financial condition, capital requirements, results
of operations, contractual limitations and any other factors deemed relevant by
the Company's Board of Directors. In addition, the indenture governing the
Company's Notes due in 2007 imposes certain restrictions on the Company's
ability to make certain distributions and restricts the payment of dividends by
the Company in certain circumstances.

ITEM 6. SELECTED FINANCIAL DATA

    The following table sets forth selected consolidated financial data for each
of the last five fiscal years. This information is qualified by reference to,
and should be read together with, the Consolidated Financial Statements and
Notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this Annual Report on
Form 10-K. The statement of operations data for the years ended December 31,
1999, 1998 and 1997 and the balance sheet data as of December 31, 1999 and 1998
are derived from the Consolidated Financial Statements of the Company included
elsewhere in this Annual Report on Form 10-K. Information related to 1996 and
1995 is derived from financial statements not included herein.

<TABLE>
<CAPTION>
                                                                                                         PREDECESSOR
                                                                                                           (PERRY
                                                   PERRY JUDD'S HOLDINGS, INC.                            PRINTING)
                            --------------------------------------------------------------------------   -----------
                                                     (DOLLARS IN THOUSANDS)
                             YEAR ENDED     YEAR ENDED     YEAR ENDED     YEAR ENDED    248 DAYS ENDED    117 DAYS
                            DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,    DECEMBER 31,     APRIL 27,
                                1999           1998           1997           1996            1995           1995
                            ------------   ------------   ------------   ------------   --------------   -----------
<S>                         <C>            <C>            <C>            <C>            <C>              <C>
Statement of Operations
  Data:
Net Sales................     $297,586       $292,354       $153,815       $138,511        $115,647        $45,920
Operating Expenses.......      287,199        278,968        146,987        132,003         110,384         43,639
Income from Operations...       10,387         13,386          6,828          6,508           5,263          2,281
Net (Loss) Income........       (4,464)        (2,539)        (2,658)        (1,084)           (885)         1,062
EBITDA(1)................       23,920         26,020         13,866         12,906           9,267          5,330
Balance Sheet Data (end
  of period):
Working Capital..........       31,085         73,579         32,890          7,306          11,888         12,845
Total Assets.............      234,251        231,320        233,354        104,281         119,032         98,384
Long Term Debt...........      128,818        139,101        143,186         52,539          58,165             --
Minority Interests(2)....        9,340          8,267          7,138          6,975          11,610             --
Stockholders' Equity.....       19,371         23,835         26,374         15,532          16,616         68,565
</TABLE>

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

(1) "EBITDA" represents earnings before interest, income taxes, depreciation and
    amortization, and gains and losses on dispositions of assets. While EBITDA
    should not be construed as a substitute for operating income or loss or a
    better indicator of liquidity than cash flow from operating activities,
    which are determined in accordance with generally accepted accounting
    principles, it is included herein to provide additional information with
    respect to the ability of the Company to meet its future debt service,
    capital expenditure and working capital requirements. EBITDA is not
    necessarily a measure of the Company's ability to fund its cash needs, and
    items excluded from

                                       12
<PAGE>
    EBITDA (such as depreciation and amortization) are significant to an
    understanding of the Company's financial results. In addition, EBITDA as
    presented by the Company may not be directly comparable to similarly-titled
    measures presented by other companies. See the Company Consolidated
    Statements of Cash Flows and the related notes thereto included in this
    Form 10K.

(2) Includes unpaid dividends.

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

RESULTS OF OPERATIONS

    COMPARISON OF THE YEAR ENDED DECEMBER 31, 1999 WITH THE YEAR ENDED
     DECEMBER 31, 1998

    Net sales increased $5.2 million or 1.8% to $297.6 million for the year
ended December 31, 1999 from $292.4 million for the year ended December 31,
1998. The increase resulted primarily from the acquisition of Heartland on
February 1, 1999 whose net sales of $28.3 million are included in the 1999
results, offset by the sale of Port City on September 2, 1998 whose net sales of
$24.4 million were included in the prior year's results. The temporary
displacement of work by two major customers during the second quarter of 1999
(as described below) was offset by increased volumes at other facilities. Paper
costs were 25.6% of net sales for the year ended December 31, 1999 versus 27.1%
for the year ended December 31, 1998.

    Costs of production increased $5.5 million or 2.3% to $240.9 million for the
year ended December 31, 1999 from $235.4 million for the year ended
December 31, 1998, principally from the acquisition of Heartland and the sale of
Port City. Costs of production as a percentage of net sales were 80.9% for the
year ended December 31, 1999 as compared to 80.5% for the year ended
December 31, 1998, principally from the increase in operating lease expenses
associated with equipment financing and the sale and leaseback of real estate
held by Judd's on August 17, 1998.

    Selling, general and administrative expenses increased $1.9 million or 6.2%
to $32.4 million for the year ended December 31, 1999 compared to $30.5 million
for the year ended December 31, 1998. The increase resulted primarily from the
attainment of the management incentive compensation plan for the 1999 plan year
and the full year effect of staff additions hired during the past two years.
Selling, general and administrative expenses increased as a percent of net sales
to 10.9% in the 1999 period compared to 10.4% in the 1998 period.

    Depreciation expense increased $0.8 million or 7.2% to $11.9 million for the
year ended December 31, 1999 from $11.1 million for the year ended December 31,
1998 due primarily from the full year effect of purchased assets placed in
service from 1998.

    Income from operations decreased $3.0 million or 22.4% to $10.4 million for
the year ended December 31, 1999 from $13.4 million for the year ended
December 31, 1998, due to the factors discussed in the preceding paragraphs.

    Rents and operating lease expense increased $3.5 million or 26.9% to
$16.5 million for the year ended December 31, 1999 from $13.0 million for the
year ended December 31, 1998 due primarily from the full year effect of leased
assets placed in service from 1998 and the full year impact associated with the
sale and leaseback of the Virginia properties which occurred in August 1998.

    EBITDA decreased $2.1 million or 8.1% to $23.9 million for the year ended
December 31, 1999 from $26.0 million for the year ended December 31, 1998.
EBITDA decreased as a percent of net sales from 8.9% to 8.0% principally as a
result of higher rents and operating lease expense.

    Interest expense decreased $0.5 million to $14.3 million for the year ended
December 31, 1999 from $14.8 million for the year ended December 31, 1998 as a
result of reduced debt levels during the 1999 period compared to the 1998
period.

                                       13
<PAGE>
    In March 1999, two major customers of the Company, including Time, Inc.,
placed the printing and production of several weekly issues with competitors of
the Company as a result of unresolved negotiations with representatives of
Southern Wisconsin Local 577M of the Graphic Communications International Union,
representing approximately 340 binding and finishing employees at the Company's
Waterloo, Wisconsin plant (the "GCIU Employees"). These publications accounted
for approximately 10% of the Company's consolidated net sales for 1998. During
April 1999, the GCIU Employees voted to ratify the Company's final offer. All
work placed with competitors by these two major customers was placed back into
production at the Waterloo, Wisconsin plant during the second quarter of 1999.
As a result of this temporary loss of work, the Company experienced a material
adverse effect on its financial statements during the second quarter of 1999
with reductions in net sales and income from operations of approximately
$5.4 million and $3.0 million, respectively, during the second quarter.

    COMPARISON OF THE YEAR ENDED DECEMBER 31, 1998 WITH THE YEAR ENDED
     DECEMBER 31, 1997

    Net sales increased by $138.6 million or 90.1% to $292.4 million for the
year ended December 31, 1998 from $153.8 million for the year ended
December 31, 1997. Of this increase, $126.0 million resulted primarily from the
addition of sales from Judd's, which the Company acquired in December 1997, and
the remaining increase resulted from substantially higher volume of production
units from new and existing customers. Paper costs were 27.1% of net sales for
the year ended December 31, 1998 compared to 27.6% of net sales for the year
ended December 31, 1997.

    Costs of production increased by $111.3 million or 89.8% to $235.4 million
for the year ended December 31, 1998 from $124.1 million for the year ended
December 31, 1997, due primarily to the addition of costs from Judd's during
1998, and overall increased volume of production. Costs of production as a
percentage of net sales decreased to 80.5% for the year ended December 31, 1998
from 80.7% for the year ended December 31, 1997.

    Selling, general and administrative expenses increased by $14.8 million or
94.3% to $30.5 million for the year ended December 31, 1998, compared to
$15.7 million for the year ended December 31, 1997. Selling, general and
administrative expenses also increased as a percentage of net sales from 10.2%
in the 1997 period to 10.4% in the 1998 period. Selling expenses increased as a
result of higher volume while general and administrative expenses increased due
to staff additions related to acquisition activities. A majority of the
$14.8 million increase related to the Judd's operations included during the year
ended December 31, 1998.

    Depreciation expense increased by $4.3 million or 63.1% to $11.1 million for
the year ended December 31, 1998 from $6.8 million for the year ended
December 31, 1997, primarily as a result of additional fixed assets placed in
service during the year ended December 31, 1998 and the inclusion of Judd's
depreciation for the full year of 1998.

    Income from operations increased by $6.6 million or 96.0% to $13.4 million
for the year ended December 31, 1998 from $6.8 million for the year ended
December 31, 1997, due to the factors discussed above.

    Rents and operating lease expense increased $7.9 million or 154.9% to
$13.0 million from $5.1 million for the year ended December 31, 1998 versus the
year ended December 31, 1997 and was primarily attributable to the addition of
costs from Judd's during 1998, a full year impact associated with the sale and
leaseback of the Wisconsin properties and four months impact associated with the
sale and leaseback of the Judd's properties. The remaining increase resulted
from new capital equipment investments in the various operating divisions.

    EBITDA increased $12.2 million or 87.7% to $26.0 million for the year ended
December 31, 1998 from $13.9 million for the year ended December 31, 1997 as a
result of higher production volumes and the

                                       14
<PAGE>
operating benefits of new capital equipment investments. EBITDA decreased as a
percent of net sales from 9.0% to 8.9% principally as a result of higher rents
and operating lease expense.

    Interest expense increased by $8.4 million or 130.3% to $14.8 million for
the year ended December 31, 1998 from $6.4 million for the year ended
December 31, 1997 as a result of increased level of debt incurred from the
Judd's acquisition in December 1997.

LIQUIDITY AND CAPITAL RESOURCES

    Historically, the Company has funded its capital and operating requirements
with a combination of cash flow from operations, borrowings, and external
operating leases. Earnings before interest, taxes, depreciation and amortization
("EBITDA") was $23.9 million, $26.0 million and $13.9 million for the years
ended December 31, 1999, 1998 and 1997, respectively.

    Working capital was $31.1 million, $73.6 million and $32.9 million at
December 31, 1999, 1998 and 1997, respectively. The $40.7 million increase in
working capital at December 31, 1998 versus December 31, 1997 was primarily
attributable to the net proceeds received from the sale and leaseback of the
Judd's properties of $20.9 million in August 1998 and from the sale of Port City
Press of $29.4 million in September 1998, offset by capital expenditures of
$7.5 million. The $42.5 million decrease in working capital at December 31, 1999
versus December 31, 1998 was primarily attributable to the acquisition of
Heartland for $24.1 million and purchased capital expenditures of
$14.5 million.

    Capital expenditures for purchased assets and asset acquisitions funded
under the operating leases were as follows for the periods indicated (dollars in
millions):

<TABLE>
<CAPTION>
                                           YEAR ENDED     YEAR ENDED     YEAR ENDED
                                          DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
CAPITAL EXPENDITURES                          1999           1998           1997
--------------------                      ------------   ------------   ------------
<S>                                       <C>            <C>            <C>
Purchased...............................      $14.5          $ 7.5          $ 3.2
Funded under operating leases...........        8.6           13.1           11.6
                                              -----          -----          -----
Total...................................      $23.1          $20.6          $14.8
                                              =====          =====          =====
</TABLE>

    These capital expenditures reflect the purchase and lease of additional
prepress, press and bindery equipment. The purchased capital investments have
been funded by internally generated funds and by borrowings under the Existing
Credit Agreement. Generally, these capital expenditures have increased or will
increase the Company's production capacity and are part of the Company's
objective to maintain modern, efficient plants and technologically advanced
equipment.

    Since the inception of operations on April 28, 1995, the Company has funded
the majority of its needs for production equipment through operating leases. On
December 16, 1997, simultaneously with the consummation of the Judd's
acquisition, the Company completed the sale and leaseback of all its Wisconsin
real property which included two printing plants, three warehouses and the
corporate headquarters. This sale and leaseback generated net proceeds of
approximately $17.6 million, which was used to prepay term debt outstanding
under the existing credit agreement. The initial annual lease expense incurred
under the operating lease resulting from this sale and leaseback was
$1.9 million with 10.0% escalations scheduled at the start of the sixth,
eleventh and sixteenth years of the 20 year term.

    On December 16, 1997, concurrently with the consummation of the Judd's
acquisition and the issuance of the 10 5/8% senior subordinated debt, the
Company amended and restated its existing term loan and revolving credit
facility to provide a $45 million Revolving Credit Facility (based upon a
borrowing base) and a $30 million Term Loan Facility. The scheduled amortization
of the Term Loan Facility is payable in monthly installments. In addition to the
scheduled amortization under the Term Loan Facility, additional payments are
required equal to 75% of the annual excess cash flow, as defined, with payments

                                       15
<PAGE>
to be applied in inverse order for amortization purposes. The Amended and
Restated Credit Agreement has an initial term of five years with renewals
thereafter upon the mutual agreement of all parties.

    On August 17, 1998, the Company entered into a sale and leaseback
transaction for the majority of the Judd's real property, which included two
printing plants in Virginia and one in Baltimore, Maryland. This sale and
leaseback generated approximately $20.9 million in net proceeds which are
subject to certain restrictions described below. The initial annual lease
expense incurred under the operating lease was $2.3 million with 14.5%
escalations scheduled at the start of the sixth, eleventh and sixteenth years of
the 20 year term.

    On September 2, 1998, the Company consummated the sale of all of the
outstanding shares of capital stock of its wholly-owned subsidiary, Port City,
to Mack Printing Company. The aggregate net cash consideration received was
$29.4 million which was subject to certain restrictions described below. Net
sales and income from operations for this facility which are included in the
consolidated results of operations are as follows:

<TABLE>
<CAPTION>
                                                DECEMBER 16, 1997
                                              (DATE OF ACQUISITION)    JANUARY 1, 1998
                                                     THROUGH               THROUGH
                                                DECEMBER 31, 1997     SEPTEMBER 2, 1998
                                              ---------------------   -----------------
<S>                                           <C>                     <C>
Net sales...................................        $1.9 million        $24.4 million
Income from operations......................        $0.1 million        $ 2.6 million
</TABLE>

    The proceeds, net of income taxes payable, received for the sale and
leaseback of Judd's real property and the sale of Port City were restricted for
future acquisitions and capital expenditures under the Company's credit
agreement, subject to certain limitations for 330 days subsequent to the receipt
of proceeds. These net proceeds were included in restricted cash as of
December 31, 1998 and were utilized to acquire Heartland, fund capital
expenditures and used to prepay term debt during 1999.

    On February 1, 1999, the Company acquired all of the issued and outstanding
capital stock of Heartland for approximately $15.6 million in cash. In addition,
the Company assumed approximately $6.8 million of Heartland's indebtedness, all
of which was paid in full upon consummation of the acquisition.

    Rents and operating lease expense were approximately $16.5 million,
$13.0 million and $5.1 million for the years ended December 31, 1999, 1998 and
1997, respectively.

    At December 31, 1999, the Company has approximately $6.5 million of net
operating loss carryforwards for federal income tax purposes. The Company has
alternative minimum tax carryover credits of approximately $2.6 million as of
December 31, 1999, which do not expire and may be applied against regular tax in
the future, in the event regular tax expense exceeds alternative minimum tax.

    The Company plans to fund the majority of its major new capital expenditures
through operating leases for the foreseeable future. The Company believes that
cash generated from operations and available borrowings under the Amended and
Restated Credit Agreement will be sufficient to fund planned capital
expenditures, working capital requirements, operating leases and interest and
principal payments for the foreseeable future. The Revolving Credit Facility has
an aggregate commitment of $45.0 million, all of which was available for future
working capital and other general corporate purposes as of December 31, 1999.

YEAR 2000

    As described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, the Company developed plans to address possible exposures
related to the Year 2000. As a result of those efforts, the Company has not
experienced to date any major disruptions in its operations in connection with,
or following, the transition to the Year 2000. The Company will continue to
monitor its critical

                                       16
<PAGE>
systems over the next several months but does not anticipate any significant
effects due to Year 2000 exposures from its internal systems or from the
activities of its suppliers and customers.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company generally does not enter into any material futures, forwards,
swaps, options or other derivative financial instruments for trading or other
purposes. The primary exposure to market risk relates to fluctuations in
interest rates and the effects those changes may have on operating results due
to long-term financing arrangements. The Company manages its exposure to this
market risk by monitoring interest rates and possible alternative means of
financing. Operating results may be affected by changes in short-term interest
rates under the revolving credit and term loan facilities, pursuant to which
borrowings bear interest at a variable rate. See Notes 2 and 4 of the Notes to
Consolidated Financial Statements.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The financial statements and schedules listed in the accompanying Index to
consolidated financial statements and schedules on page F-1 are filed as a part
of this report.

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

    None.

                                       17
<PAGE>
                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND KEY MANAGEMENT EMPLOYEES

    The table below sets forth certain information regarding the directors,
senior executive officers, and certain other executive officers and key
management employees of the Company and its subsidiaries as of March 1, 2000.
All of the persons listed below are U.S. citizens.

DIRECTORS AND SENIOR EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
NAME                                          AGE                       POSITION
----                                        --------   ------------------------------------------
<S>                                         <C>        <C>
Robert E. Milhous.........................     63      Chairman of the Board of Directors
Paul B. Milhous...........................     61      Vice-Chairman of the Board of Directors
Craig A. Hutchison........................     47      Director, President and Chief Executive
                                                       Officer
Thomas V. Bressan.........................     51      Director and Secretary
David E. Glick............................     53      Director and Executive Vice President,
                                                       Operations and Online Services
Verne F. Schmidt..........................     59      Director, Senior Vice President and Chief
                                                       Financial Officer
Beth A. Lindsay...........................     45      Senior Vice President, Human Resources
</TABLE>

EXECUTIVE OFFICERS AND KEY MANAGEMENT EMPLOYEES

<TABLE>
<CAPTION>
NAME                                          AGE                       POSITION
----                                        --------   ------------------------------------------
<S>                                         <C>        <C>
Howard D. Sullivan........................     63      Senior Vice President, Publication Sales
Timothy M. Smith..........................     42      Vice President, Publications Sales
Stephen M. Sanfelippo.....................     42      Vice President, Commercial and Catalog
                                                       Sales
Bradley J. Hoffman........................     38      Vice President, Corporate Controller
Walter A. Edwards.........................     49      Vice President, Division Manager--Baraboo
                                                       Plant
Larry C. Cole.............................     56      Vice President, Division Manager--Waterloo
                                                       Plant
Allen C. Briggs...........................     51      Vice President, Division
                                                       Manager--Strasburg Plant
Daniel L. Leever..........................     51      Vice President, Division
                                                       Manager--Heartland Plant
</TABLE>

    ROBERT E. MILHOUS has been Chairman of the Board of both the Company and
Perry Judd's since December 1994. Mr. Milhous was Chairman of the Board of
Treasure Chest and its predecessor corporation from 1967 until the sale of
Treasure Chest in 1993. Mr. Milhous is also the Chairman of the Board of
Directors of Novamil Corporation ("Novamil"), which manages various
manufacturing companies owned by affiliates controlled by himself and Paul B.
Milhous. Robert E. Milhous is the brother of Paul B. Milhous.

    PAUL B. MILHOUS has been Vice Chairman of the Board of both the Company and
Perry Judd's since December 1994. Mr. Milhous was Vice Chairman of the Board of
Treasure Chest and its predecessor corporation from 1967 until the sale of
Treasure Chest in 1993. Mr. Milhous is also the Vice-Chairman of the Board of
Directors of Novamil, which manages various manufacturing companies owned by
affiliates controlled by himself and Robert E. Milhous. Paul B. Milhous is the
brother of Robert E. Milhous.

    CRAIG A. HUTCHISON has been the President of Perry Judd's since April 1995.
Prior to that Mr. Hutchison was president of Perry Printing since 1989.
Mr. Hutchison has served on the Boards of Directors of the Company and Perry
Judd's since April 1995.

                                       18
<PAGE>
    THOMAS V. BRESSAN has been Managing Director of Mergers and Acquisitions for
Novamil since 1987.

    DAVID E. GLICK joined Perry Judd's as the Executive Vice President of
Operations and Online Services and as a director of the Company in
February 1998. From 1993 to January 1998, Mr. Glick served in various capacities
at Treasure Chest Advertising, a subsidiary of Big Flower Press Holdings, Inc.,
including Senior Vice President of Operations, Senior Vice President and General
Manager of Operations and Sales and Senior Vice President of Operations and
Technology.

    VERNE F. SCHMIDT has been Senior Vice President and Chief Financial Officer
since he joined Perry Judd's in January 1997 and was elected to the Board of
Directors of the Company in February 1998. From 1974 through 1996, Mr. Schmidt
held various financial and accounting positions including Senior Vice President
and Chief Financial Officer of Ringier America and its predecessor companies.

    BETH A. LINDSAY has been Senior Vice President of Human Resources since
joining Perry Judd's in March 1996. From 1982 to 1996, Ms. Lindsay was employed
with World Color Press in various positions, including Human Resources Director,
Vice President Human Resources, Commercial Division, and Regional Vice
President, Human Resources.

    HOWARD D. SULLIVAN has been Senior Vice President, Publication Sales since
December 1997. Prior to this date, Mr. Sullivan served as Vice President of
Sales and Customer Service, Shenandoah Valley. Mr. Sullivan joined Judd &
Detweiler in 1958 and rose to the position of Executive Vice President by 1979.
He left Judd's in 1988 to serve as President and CEO of Holliday-Tyler Printing
Corporation. He returned to Shenandoah Valley as Vice President and Regional
Sales Manager in 1992.

    TIMOTHY M. SMITH has been Vice President of Publication Sales of Perry
Judd's since January 1997. Prior to assuming his current responsibilities,
Mr. Smith was Vice President of National Accounts from 1994 to 1997. Mr. Smith
served as Vice President of Eastern Sales from May 1993 to 1994 and, before
that, he was Director of Sales from 1990 to 1993.

    STEPHEN M. SANFELIPPO has been Vice President, Commercial and Catalog Sales
since January 2000. Prior to assuming his current responsibilities,
Mr. Sanfelippo served as Vice President Central Region Commercial Sales of Perry
Judd's since October 1997. Prior to that, he was Director of Central Region
Sales from 1994 to October 1997.

    BRADLEY J. HOFFMAN has been Vice President, Corporate Controller of Perry
Judd's since May 1998 and previously was Vice President, Finance of Perry
Printing from July 1994. From December 1992 to July 1994, Mr. Hoffman served as
Controller Web Division/Waterloo Plant. From September 1989 to December 1992,
Mr. Hoffman was Chief Financial Officer and Director of Operations at Putman
Publishing Company.

    WALTER A. EDWARDS has been Vice President, Division Manager of the Baraboo
Plant since joining Perry Judd's in January 1996. From 1991 to 1995,
Mr. Edwards was employed by World Color Press as Vice President and Regional
Manager. From 1974 to 1991, Mr. Edwards held a variety of positions at
R.R. Donnelley & Sons/Meredith-Burda, including Vice President, Manufacturing
and Group Manufacturing Manager.

    LARRY C. COLE has been Vice President, Division Manager of the Waterloo
Plant since March 1991. From January 1990 to March 1991, Mr. Cole served as Vice
President of Operations of Perry Printing. Mr. Cole joined Perry Printing in
1988 as Director of Material Management.

    ALLEN C. BRIGGS has been Vice President, Division Manager of the Strasburg
Plant since May 1998. From February 1994 until May 1998, he was employed at
Treasure Chest Advertising as Vice President Division Manager. From
January 1993 until February 1994, he held various positions at Ringier America,
including Vice President, Division Manager. From October 1988 to January 1993,
Mr. Briggs was employed as Vice President of Manufacturing at Shenandoah Valley.

                                       19
<PAGE>
    DANIEL L. LEEVER has been Vice President, Division Manager of the Heartland
Plant since February 1999. From January 1998 until February 1999 he was
Manufacturing Manager of the Strasburg Division. Prior to that he was Plant
Manager at Wilcox Press from 1996 to 1998.

ITEM 11. EXECUTIVE COMPENSATION

DIRECTOR COMPENSATION

    Non-employee directors are reimbursed for their out-of-pocket expenses
incurred in attending meetings of the Board of Directors of the Company and its
subsidiaries. In addition, Robert E. Milhous and Paul B. Milhous each receive
$25,000 annual compensation for their services as Chairman and Vice Chairman,
respectively, of the Board of Directors of the Company and its subsidiaries.

EXECUTIVE COMPENSATION

    The following Summary Compensation Table sets forth certain information with
respect to the compensation paid or accrued by the Company for services rendered
during the year ended December 31, 1999 by the Company's Chief Executive Officer
and each of the four other most highly compensated executive officers whose
annual salary and bonus for the year ended December 31, 1999 exceeded $100,000
(collectively, the "Named Executive Officers"):

                        1999 SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                               LONG-TERM
                                                                            COMPENSATION(2)
                                          ANNUAL COMPENSATION(1)         ---------------------
                                    ----------------------------------   SECURITIES UNDERLYING
                                                          OTHER ANNUAL       OPTIONS (# OF          ALL OTHER
NAME AND PRINCIPAL POSITION          SALARY     BONUS     COMPENSATION          SHARES)          COMPENSATION(1)
---------------------------         --------   --------   ------------   ---------------------   ---------------
<S>                                 <C>        <C>        <C>            <C>                     <C>
Craig A. Hutchison,...............  $307,275   $122,910           --                 --                     --
PRESIDENT AND CEO

David E. Glick,...................  $277,070   $ 96,975           --                 --            $ 265,343(3)
EXECUTIVE VICE PRESIDENT,
  OPERATIONS AND ONLINE SERVICES

Howard D. Sullivan,...............  $242,573   $ 74,779      $ 339(4)                --                     --
SENIOR VICE PRESIDENT,
  PUBLICATION SALES

Verne F. Schmidt,.................  $233,362   $ 82,062           --                 --            $  12,595(3)
SENIOR VICE PRESIDENT AND
  CHIEF FINANCIAL OFFICER

Beth A. Lindsay,..................  $177,846   $ 58,511           --                 --                     --
SENIOR VICE PRESIDENT,
  HUMAN RESOURCES
</TABLE>

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

(1) The compensation described in this table does not include medical, group
    life insurance or other benefits received by the Named Executive Officers
    which are available generally to all salaried employees of the Company and
    certain perquisites and other personal benefits, securities or property
    received by the Named Executive Officers which do not exceed the lesser of
    $50,000 or 10% of any such officer's salary and bonus disclosed in this
    table.

(2) The Company did not grant any restricted stock awards or stock appreciation
    rights or make any long-term incentive plan payouts to the Named Executive
    Officers during 1999.

(3) Consists of relocation expenses paid by the Company.

                                       20
<PAGE>
(4) Consists of auto lease payments paid by the Company.

OPTION GRANTS

    No stock options were granted to the Named Executive Officers during 1999.

YEAR-END OPTION TABLE

    The following table sets forth certain information concerning the number and
value of unexercised stock options held by each of the Named Executive Officers
as of December 31, 1999. No stock options were exercised by any Named Executive
Officer in 1999.

                      AGGREGATED OPTION EXERCISES IN 1999
                        AND 1999 YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                                  NUMBER OF SECURITIES
                                                                 UNDERLYING UNEXERCISED       VALUE OF UNEXERCISED IN-
                                                                       OPTIONS AT               THE-MONEY OPTIONS AT
                                                                   YEAR-END (#)(1)(3)              YEAR-END ($)(2)
                            SHARES ACQUIRED                    ---------------------------   ---------------------------
NAME                          ON EXERCISE     VALUE REALIZED   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                        ---------------   --------------   -----------   -------------   -----------   -------------
<S>                         <C>               <C>              <C>           <C>             <C>           <C>
Craig A. Hutchison,.......           --                --          8,750              --     $218,663(4)            --
PRESIDENT AND CEO

David E. Glick,...........           --                --         10,075              --     $251,774(5)            --
EXECUTIVE VICE PRESIDENT,
  OPERATIONS AND ONLINE
  SERVICES

Howard D. Sullivan,.......           --                --             --              --             --             --
SENIOR VICE PRESIDENT,
  PUBLICATION SALES

Verne F. Schmidt,.........           --                --          3,500              --     $ 87,465(6)            --
SENIOR VICE PRESIDENT AND
  CHIEF FINANCIAL OFFICER

Beth A. Lindsay,..........           --                --          3,500              --     $ 87,465(7)            --
SENIOR VICE PRESIDENT,
  HUMAN RESOURCES
</TABLE>

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

(1) No stock appreciation rights were outstanding or exercised in 1999.

(2) There was no public trading market for the common stock as of December 31,
    1999. Accordingly, these values have been calculated on the basis of the
    fair market value of the Company's Common Stock (regardless of any
    restrictions thereon) as determined by the Company's Board of Directors,
    less the applicable exercise price.

(3) All options are immediately exercisable but option shares issued are subject
    to repurchase by the Company on termination of employment at the $0.01
    exercise price until vested. Options vest (i) as to 10% on December 31 of
    each of the first five calendar years commencing with December 31 of the
    calendar year of the option grant, (ii) as to 15% on December 31 of each of
    the next two years and (iii) the remaining 20% on December 31 of the eighth
    calendar year from the issuance date subject to acceleration in the first
    five calendar years after issuance based on achievement of performance goals
    and in certain change of control transactions. The exercise price is $0.01
    per share. Vested shares are also subject to repurchase by the Company upon
    termination of employment pursuant to a formula based on Company earnings.
    See "1995 Stock Option Plan".

                                       21
<PAGE>
(4) Includes $87,465 in value relating to unvested shares that are subject to
    repurchase by the Company on termination of employment at $0.01 exercise
    price.

(5) Includes $176,242 in value relating to unvested shares that are subject to
    repurchase by the Company on termination of employment at the $0.01 exercise
    price.

(6) Includes $52,479 in value relating to unvested shares that are subject to
    repurchase by the Company on termination of employment at the $0.01 exercise
    price.

(7) Includes $43,733 in value relating to unvested shares that are subject to
    repurchase by the Company on termination of employment at the $0.01 exercise
    price.

EMPLOYMENT AGREEMENT

    On April 28, 1995, Craig Hutchison entered into a three-year employment
agreement with Perry Judd's (the "Employment Agreement") to serve as President
and Chief Executive Officer of Perry Judd's. The employment agreement was
extended for another one year commencing April, 1999 and unless terminated by
written notice of either party, the Employment Agreement renews automatically
for up to three one-year periods. The Employment Agreement provides for a base
salary of $235,000, subject to adjustment upward at the discretion of the Board
of Directors. Mr. Hutchison's current annual base salary is $318,000. Under the
Employment Agreement, Mr. Hutchison is entitled to participate in the Incentive
Compensation Plan (as defined below), the Stock Option Plan (as defined below)
and in all other life, welfare and health plans and benefit programs made
available by the Company to the senior executive officers of the Company. The
Employment Agreement provides for severance pay in case of termination by
Mr. Hutchison for good cause, the expiration of the fifth term extension, or for
termination other than for cause, death or permanent disability. The severance
pay shall equal the aggregate salary which would be payable to Mr. Hutchison
during the period commencing on the effective date of termination and ending one
year thereafter. However, if such effective date shall be subsequent to the
expiration of a fourth term extension it shall be assumed that Mr. Hutchison
would have been entitled to salary at the rate in effect on the effective date
of termination during such one year period after such date notwithstanding the
expiration of the fifth term extension.

CHANGE IN CONTROL SEVERANCE PROGRAM

    Under the severance arrangement with Mr. Hutchison, dated April 28, 1995,
(i) if there is a change in control and (ii) if the aggregate value of stock and
stock options held by Mr. Hutchison ("equity value") is less than $2,000,000 and
(iii) if (a) Mr. Hutchison's employment is terminated as a result of the change
of control, (b) Mr. Hutchison is asked to accept lesser responsibility but
instead elects to leave the Company, or (c) Mr. Hutchison is asked to relocate
and instead leaves the Company, Mr. Hutchison's salary will be continued at a
rate of $333,000 per year for up to three years or until new employment is
commenced, whichever occurs first. Furthermore, upon death or if there is a
change in control, and the equity value realized by Mr. Hutchison is less than
$1,000,000, the Company will be obligated to pay Mr. Hutchison the amount of
such difference.

    The Company entered into two severance arrangements with two of its
executive officers, Verne F. Schmidt and David E. Glick, in December, 1996 and
January, 1998, respectively, under which each officer is entitled to certain
benefits in the event of a change in control of the Company.

    Under the severance arrangement with Verne F. Schmidt, (i) if there is a
change in control and (ii) if (a) Mr. Schmidt's employment is terminated or
(b) Mr. Schmidt does not have the opportunity to accept a comparable position
with a successor entity after a change of control, Mr. Schmidt will receive his
current salary and benefits for up to one year or until he accepts another
position, whichever occurs first.

    Under the severance arrangement with David E. Glick, (i) if there is a
change in control and (ii) if the aggregate value of stock and stock options
held by Mr. Glick ("equity value") is less than $2,000,000 and

                                       22
<PAGE>
(iii) if (a) Mr. Glick's employment is terminated as a result of the change of
control, (b) Mr. Glick is asked to accept lesser responsibility but instead
elects to leave the Company, or (c) Mr. Glick is asked to relocate and instead
leaves the Company, Mr. Glick's salary will be continued at a rate of $333,000
per year for up to three years or until new employment is commenced, whichever
occurs first. Furthermore, if there is a change in control, and the equity value
realized by Mr. Glick is less than $1,000,000, the Company will be obligated to
pay Mr. Glick the amount of such difference.

STOCKHOLDER AGREEMENTS

    Certain agreements among the stockholders of the Company, to which the
Company is also a party, provide majority stockholders proposing to sell shares
in a change of control transaction with the right to require the other
stockholders to include their shares in such sale. Conversely, minority
stockholders have the right to sell shares on a sale by majority stockholders on
a pro rata basis. In addition, the agreements provide stockholders with rights
of first refusal on proposed transfers of shares by other stockholders.

MANAGEMENT INCENTIVE COMPENSATION PLAN

    The Company's management employees, including the Named Executive Officers,
are eligible to participate in the Company's Management Incentive Compensation
Program (the "Management Incentive Program"). Under the Management Incentive
Program, management employees are eligible to receive an annual cash bonus based
on the Company's achievement of financial performance targets that are based on
the Company's annual budget as approved by the Board of Directors. During 1999,
the Company achieved certain financial performance targets and bonus payments of
approximately $1 million have been accrued under the Management Incentive
Program to be paid in 2000.

1995 STOCK OPTION PLAN

    On May 6, 1995, the Company's Board of Directors adopted and the
stockholders approved the 1995 Stock Option Plan which was subsequently amended
by the Board of Directors in September 1995 (the "Stock Option Plan"), which
provides for the grant of non-statutory stock options ("Options") for the
purchase of common stock of the Company to officers and employees of and
consultants to the Company. The maximum number of shares of common stock
issuable under the Stock Option Plan is 41,307. The Stock Option Plan is
currently administered by the Board of Directors of the Company, but can be
delegated to an authorized committee thereof.

    Options granted under the Stock Option Plan are "hybrid" performance
options. Options are immediately exercisable, but option shares issuable are
subject to repurchase by the Company on termination of employment at the $0.01
original exercise price until vested. Options vest as follows: 10% on
December 31 of each of the first five calendar years of service commencing with
December 31 of the calendar year of the option grant; 15% on December 31 of the
next two calendar years; and the remaining 20% on December 31 of the eighth
calendar year from the issuance date. Accelerated vesting of Options can occur
during the first five calendar years after issuance upon the Company's
attainment of performance milestones, determined annually by the Board of
Directors. For each year in which performance milestones are attained, 10% of
the shares under the Options shall vest on an accelerated basis, with the
installments that would vest latest under the Options being accelerated first.
Outstanding Options also accelerate upon the occurrence of a change of control
of the Company. During 1999, the Company achieved certain financial performance
targets accelerating the vesting of 10% of the shares under the Options. The
exercise price of Options under the Stock Option Plan is set at $0.01 per share,
and each Option has an 18-year term.

                                       23
<PAGE>
    In addition to the right to repurchase unvested option shares described
above, under the Stock Option Plan, the Company has a right to repurchase vested
shares at a per share price based on a multiple of the Company's EBITDA less
outstanding debt. In addition, the Company is obligated to repurchase, based on
the same formula as above, any vested option shares issued or issuable under
outstanding Options at the end of their 18-year term. The Stock Option Plan also
provides that the Company has a right of first refusal on any proposed
disposition of shares acquired under an Option by sale, transfer or in
connection with a marital dissolution, which right shall lapse upon the initial
public offering of the Company's common stock.

401(K) PLAN

    The Company's operating subsidiary, Perry Judd's, implemented a 401(k)
Retirement Savings Plan effective April 28, 1995 (the "401(k) Plan"). All
employees 21 years of age or older employed by Perry Judd's and any affiliated
company who adopts the plan are or will be eligible to participate in the 401(k)
Plan. Participants in the 401(k) Plan may not contribute more than certain
specified amounts depending upon the employee's level of compensation. Each
company participating in the 401(k) Plan makes contributions to the 401(k) Plan
equal to 3% of eligible earnings of all qualified participating employees, as
determined under the 401(k) Plan. Participating employees are 100% vested in all
contributions.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    The Company does not have a compensation committee. The following officers
and employees participated in deliberations concerning executive compensation:
Robert E. Milhous, Paul B. Milhous, Craig A. Hutchison and Beth A. Lindsay.

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

    The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of March 1, 2000 (i) by each person
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) by each director and Named Executive Officer and (iii) by
all directors and executive officers of the Company as a group. Except as
otherwise listed below, the address of each person listed is c/o Perry Judd's
Incorporated, 575 West Madison Street, Waterloo, Wisconsin 53594.

<TABLE>
<CAPTION>
                                                              SHARES BENEFICIALLY
                                                                 OWNED (1) AT
                                                                 MARCH 1, 2000
                                                              -------------------
NAME                                                           NUMBER    PERCENT
----                                                          --------   --------
<S>                                                           <C>        <C>
Ropamil Limited Partnership (2).............................  797,360      88.5
  791 Park of Commerce Drive
  Boca Raton, Florida 33487
Craig A. Hutchison (3)......................................   26,870       3.0
David E. Glick (4)..........................................   20,150       2.2
Thomas V. Bressan...........................................    7,000         *
Verne F. Schmidt (5)........................................    5,650         *
Beth A. Lindsay (6).........................................    5,650         *
All directors and executive officers as a group (13 persons)
  (7).......................................................  873,987      97.0
</TABLE>

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

*   LESS THAN 1%

(1) Includes shares of Common Stock issuable upon the exercise of stock options
    exercisable within 60 days of March 1, 2000.

                                       24
<PAGE>
(2) Robert E. Milhous, a director, and the Chairman of the Board of Directors of
    the Company and Paul B. Milhous, a director and the Vice-Chairman of the
    Board of Directors of the Company and certain affiliated entities
    beneficially own the partnership interests in this partnership.

(3) Includes 8,750 shares issuable under immediately exercisable options. Of
    such shares, 3,500 shares are unvested and, if issued on an exercise of the
    options as of March 1, 2000, would be subject to repurchase by the Company
    on termination of employment at the original $0.01 exercise price.

(4) Includes 10,075 shares issuable under immediately exercisable options. Of
    such shares, 7,053 shares are unvested and, if issued on an exercise of the
    options as of March 1, 2000, would be subject to repurchase by the Company
    on termination of employment at the original $0.01 exercise price.

(5) Includes 3,500 shares issuable under immediately exercisable options. Of
    such shares, 2,100 shares are unvested and, if issued on an exercise of the
    options as of March 1, 2000, would be subject to repurchase by the Company
    on termination of employment at the original $0.01 exercise price.

(6) Includes 3,500 shares issuable under immediately exercisable options. Of
    such shares, 1,750 shares are unvested and, if issued on an exercise of the
    options as of March 1, 2000, would be subject to repurchase by the Company
    on termination of employment at the original $0.01 exercise price.

(7) Includes an aggregate of 41,307 shares issuable under immediately
    exercisable options. Of such shares, an aggregate of 22,852 shares are
    unvested and, if issued on an exercise of the options, as of March 1, 2000,
    would be subject to repurchase by the Company on termination of employment
    at the original $0.01 exercise price.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.

    Perry Judd's and Novamil Corporation ("Novamil"), a California corporation
owned beneficially by Robert E. Milhous, Chairman of the Company and Paul B.
Milhous, Vice Chairman of the Company, were parties to a Management Agreement
dated as of April 28, 1995 which was subsequently assigned by Perry Judd's to
the Company and amended by Perry Judd's and Novamil as of December 16, 1997 (the
"Amended Management Agreement"). Pursuant to the Amended Management Agreement,
Novamil provides the Company certain management services by agents and employees
of Novamil other than Robert E. Milhous and Paul B. Milhous in connection with
business strategy, operations and finance. Under the Amended Management
Agreement, as amended, the Company pays to Novamil an annual management fee of
$750,000 payable in equal monthly installments and subject to annual adjustment
for increases in costs of living. The Amended Management Agreement has a term of
five years from December 16, 1997, subject to one-year extensions thereafter,
unless earlier terminated upon the liquidation or dissolution of the Company, or
ten days after a party has received written notice of a material breach where
such breach remains uncured after such ten-day period.

    Pursuant to a consulting agreement dated April 28, 1995 (the "Consulting
Agreement"), Robert E. Milhous and Paul B. Milhous provided consulting services
to Perry Judd's as principals of New House Capital Management Corp., a Delaware
corporation, for which Perry Judd's pays an annual consulting fee of $450,000,
payable in equal monthly installments. The Consulting Agreement has an initial
term of five years, subject to one-year extensions thereafter, unless earlier
terminated upon the liquidation or dissolution of the Company or ten days after
a party has received written notice of a material breach where such breach
remains uncured after such ten-day period. Upon consummation of the Transactions
on December 16, 1997, the Consulting Agreement was assigned by Perry Judd's to
the Company.

    Pursuant to a promissory note dated November 15, 1996, the Company loaned to
Thomas V. Bressan the principal amount of $175,000 at an interest rate of 7% per
annum. Principal and interest is payable in four annual installments of $26,100
with final payment of all principal and interest outstanding thereafter due and
payable on November 15, 2001.

                                       25
<PAGE>
    Pursuant to a consulting agreement dated as of January 10, 1997, Thomas V.
Bressan, Director of the Company, provides consulting services to Perry Judd's
regarding strategic planning, acquisition analysis and structuring, financing
and other significant corporate transactions, and other business strategies. The
agreement has a term of five years, unless earlier terminated upon the
liquidation or dissolution of the Company, or ten days after a party has
received written notice of a material breach where such breach remains uncured
after such ten-day period. The total consulting fee payable under the agreement
is $225,000, payable in five equal annual installments of $45,000.

    Since May 1995, Perry Judd's has purchased a substantial portion of its
total ink requirements from Marpax, Inc. ("Marpax"). Until July 1999, a company
owned by Robert E. Milhous and Paul B. Milhous acted as a procurement agent for
Marpax in procuring the raw materials used by Marpax in the manufacture of its
ink. In October 1999, the assets and business of Marpax were purchased by Flint
Ink. The Company also purchased ink from other vendors on terms and at prices
substantially the same as those provided by Marpax.

                                       26
<PAGE>
                                    PART IV

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

    (a) The following documents are included in this report at the page numbers
       indicated.

<TABLE>
<CAPTION>
                                                              PAGE NO.
                                                              --------
<S>                                                           <C>
Financial Statements:
  Independent Auditors' Report..............................  F-2
  Consolidated Balance Sheets as of December 31, 1999 and
    1998....................................................  F-3
  Consolidated Statements of Operations for the years ended
    December 31, 1999, 1998 and 1997........................  F-4
  Consolidated Statements of Minority Interests, Preferred
    Stock and Stockholders' Equity for the years ended
    December 31, 1999, 1998 and 1997........................  F-5
  Consolidated Statements of Cash Flows for the years ended
    December 31, 1999, 1998 and 1997........................  F-6
  Notes to Consolidated Financial Statements................  F-8
Schedules:
  Schedule II--Valuation and Qualifying Accounts............  F-20
</TABLE>

    (b) Reports on Form 8-K

        None

    (c) Exhibits

    Included at the end of this Annual Report on Form 10-K.

                                       27
<PAGE>
                                 EXHIBIT INDEX

    The following exhibits are filed as a part of this report or incorporated by
reference and will be furnished to any security holder upon request for such
exhibit and payment of any reasonable expenses incurred by the Company. Send any
such request to the Company at 575 West Madison Street, Waterloo, WI 53594.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                      DESCRIPTION
-------                     -----------
<C>                         <S>
           2.2              Stock Purchase Agreement dated as of July 31, 1998 by and
                            among Mack Printing Company, Port City Press, Inc. and Perry
                            Judd's Incorporated. Incorporated by reference to Exhibit
                            2.2 to the 8-K dated as of September 17, 1998.

           3.1              Amended and Restated Certificate of Incorporation, as
                            amended, of the Company. Incorporated by reference to
                            Exhibit 3.1 to the Company's Registration Statement on Form
                            S-4 No. 333-45235, declared effective on June 12, 1998 (the
                            "Registration Statement").

           3.2              Amended and Restated By-laws of the Company. Incorporated by
                            reference to Exhibit 3.1 to the Registration Statement.

           4.1              Indenture dated as of December 16, 1997 between the Company
                            and U.S. Trust Company of California, N.A., as Trustee,
                            including forms of Senior Notes. Incorporated by reference
                            to Exhibit 4.1 to the Registration Statement.

           4.1(a)           First Supplemental Indenture dated as of June 10, 1998 among
                            the Company, the Subsidiary Guarantors named therein, the
                            Additional Subsidiary Guarantor named therein and U.S. Trust
                            Company of California N.A. as Trustee. Incorporated by
                            reference to Exhibit 4.1(a) to the Registration Statement.

           4.2              Registration Rights Agreement dated as of December 16, 1997
                            between the Company and BT Alex. Brown as Initial Purchaser.
                            Incorporated by reference to Perry Judd's Incorporated by
                            reference to Exhibit 4.2 to the Registration Statement.

          10.2              Amended and Restated Credit Agreement dated as of December
                            16, 1997, among Perry Graphic Communications, Inc.,
                            Shenandoah Valley Press, Inc., and Port City Press, Inc., as
                            Borrowers, the Lenders (as defined therein) and BT
                            Commercial. Incorporated by reference to Exhibit 10.2 to the
                            Registration Statement.

          10.3              1995 Stock Option Plan, as amended. Incorporated by
                            reference to Exhibit 10.3 to the Registration Statement.

          10.4              Employment Agreement by and between the Company and Craig A.
                            Hutchison dated April 28, 1995. Incorporated by reference to
                            Exhibit 10.4 to the Registration Statement.

          10.4(a)           Employment Offer Letter from the Company to David E. Glick
                            dated January 16, 1998.

          10.4(b)           Employment Offer Letter from the Company to Verne F. Schmidt
                            dated December 26, 1996.

          10.5              Stockholders Agreement by and among the stockholders of the
                            Company named therein dated as of July 1, 1996. Incorporated
                            by reference to Exhibit 10.5 to the Registration Statement.

          10.6              Amended and Restated Co-Sale Agreement by and among the
                            stockholders of the Company named therein dated as of
                            December 30, 1996. Incorporated by reference to Exhibit 10.6
                            to the Registration Statement.

          21.0*             Subsidiary Listing

          27.1*             Financial Data Schedule
</TABLE>

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

*   Filed herewith

                                       28
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 29th day of
March, 2000.

<TABLE>
<S>                                                    <C>  <C>
                                                       PERRY JUDD'S HOLDINGS, INC.

                                                       By:            /s/ CRAIG A. HUTCHISON
                                                            -----------------------------------------
                                                                        Craig A. Hutchison
                                                                     CHIEF EXECUTIVE OFFICER
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                   SIGNATURE                                   TITLE                      DATE
                   ---------                                   -----                      ----
<C>                                               <S>                              <C>
             /s/ CRAIG A. HUTCHISON
     --------------------------------------       President, Chief Executive         March 29, 2000
               Craig A. Hutchison                   Officer, and Director

               /s/ DAVID E. GLICK                 Executive Vice President,
     --------------------------------------         Operations and Online            March 29, 2000
                 David E. Glick                     Services, and Director

              /s/ VERNE F. SCHMIDT                Senior Vice President, Chief
     --------------------------------------         Financial Officer, and           March 29, 2000
                Verne F. Schmidt                    Director

             /s/ THOMAS V. BRESSAN
     --------------------------------------       Director and Secretary             March 29, 2000
               Thomas V. Bressan

             /s/ ROBERT E. MILHOUS
     --------------------------------------       Director                           March 29, 2000
               Robert E. Milhous

              /s/ PAUL B. MILHOUS
     --------------------------------------       Director and Secretary             March 29, 2000
                Paul B. Milhous
</TABLE>

                                       29
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

<TABLE>
<CAPTION>
                                                              PAGE NUMBERS
                                                              ------------
<S>                                                           <C>
Financial Statements:

  Independent Auditors' Report..............................  F-2

  Consolidated Balance Sheets as of December 31, 1999 and
    1998....................................................  F-3

  Consolidated Statements of Operations for the years ended
    December 31, 1999, 1998 and 1997........................  F-4

  Consolidated Statements of Minority Interests, Preferred
    Stock and Stockholders' Equity for the years ended
    December 31, 1999, 1998 and 1997........................  F-5

  Consolidated Statements of Cash Flows for the years ended
    December 31, 1999, 1998 and 1997........................  F-6

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

Schedules:

  For the years ended December 31, 1999, 1998 and 1997:

  II    Valuation and Qualifying Accounts...................  F-20
</TABLE>

    All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or notes
thereto.

                                      F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Perry Judd's Holdings, Inc.:

    We have audited the accompanying consolidated balance sheets of Perry Judd's
Holdings, Inc. and subsidiaries as of December 31, 1999 and 1998 and the related
consolidated statements of operations, minority interests, preferred stock and
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. Our audits also included the consolidated financial
statement schedule listed at Item 14(a). These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

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

    In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Perry Judd's Holdings, Inc. and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

    As discussed in Note 11 of the consolidated financial statements, the
Company has filed indemnity claims against the former owner of the business
acquired from Perry Printing Corporation and the former owner has filed a
complaint against the Company. The Company answered by denying the former
owner's allegations and asserted counterclaims. The Company's Asset Purchase
Agreement allows immediate redemption of the Series A redeemable preferred stock
up to the maximum redemption value for these claims. Accordingly, the carrying
value of the Series A redeemable preferred stock has been reduced to zero as of
December 31, 1996.

DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin
March 6, 2000

                                      F-2
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

                          CONSOLIDATED BALANCE SHEETS

                    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents (including $40,767 in restricted
    balances at December 31, 1998; see note 1)..............  $  3,932   $ 42,444
  Accounts receivable.......................................    66,774     54,234
  Inventories...............................................    18,806     14,576
  Prepaid expenses..........................................     1,867      1,690
  Deferred income taxes.....................................       823        685
                                                              --------   --------
    Total current assets....................................    92,202    113,629
                                                              --------   --------
PROPERTY, PLANT AND EQUIPMENT:
  Machinery and equipment...................................   111,253     95,846
  Office furniture, equipment and vehicles..................    10,136      5,107
  Buildings and improvements................................     3,463        207
  Land and land improvements................................       607        350
  Projects in progress......................................     4,973      5,016
                                                              --------   --------
                                                               130,432    106,526
  Less accumulated depreciation and amortization............    27,562     22,550
                                                              --------   --------
    Property, plant and equipment, net......................   102,870     83,976
                                                              --------   --------
INTANGIBLE ASSETS:
  Goodwill, net.............................................    29,900     22,096
  Deferred financing costs, net.............................     6,089      7,339
  Acquisition costs, net....................................     3,117      3,987
  Covenant not to compete, net..............................        73        293
                                                              --------   --------
    Intangible assets, net..................................    39,179     33,715
                                                              --------   --------
      TOTAL.................................................  $234,251   $231,320
                                                              ========   ========
            LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable..........................................  $ 27,463   $ 17,049
  Accrued expenses..........................................    17,356     14,906
  Accrued interest and dividends............................       687      1,967
  Income taxes payable......................................       188      2,044
  Current portion of long-term debt.........................     6,083      4,084
  Redeemable preferred stock (aggregate liquidation value of
    $9,340).................................................     9,340         --
                                                              --------   --------
    Total current liabilities...............................    61,117     40,050
                                                              --------   --------
LONG-TERM DEBT (less current portion).......................   128,818    139,101
                                                              --------   --------
DEFERRED INCOME TAXES.......................................    14,820     12,508
                                                              --------   --------
OTHER NONCURRENT OBLIGATIONS................................    10,125      8,729
                                                              --------   --------
MINORITY INTERESTS, Redeemable Preferred Stock (less current
  portion) Series B and D with stated redemption value of
  $100 per share, aggregate liquidation value of $8,267.....        --      7,097
                                                              --------   --------
STOCKHOLDERS' EQUITY:
  Preferred stock-par value $0.001 per share, 775,000 shares
    authorized, 128,366 and 110,790 shares issued and
    outstanding, respectively...............................    12,837     11,079
  Common stock-par value $0.001 per share, 1,000,000 shares
    authorized, 860,010 issued and outstanding..............         1          1
  Additional paid-in capital................................    21,500     21,500
  Accumulated deficit.......................................   (14,967)    (8,745)
                                                              --------   --------
    Total stockholders' equity..............................    19,371     23,835
                                                              --------   --------
      TOTAL.................................................  $234,251   $231,320
                                                              ========   ========
</TABLE>

                See notes to consolidated financial statements.

                                      F-3
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
NET SALES...................................................  $297,586   $292,354   $153,815
                                                              --------   --------   --------
OPERATING EXPENSES:
  Costs of production.......................................   240,878    235,441    124,071
  Selling, general and administrative.......................    32,407     30,458     15,678
  Depreciation..............................................    11,863     11,138      6,828
  Amortization of intangibles...............................     2,051      1,931        410
                                                              --------   --------   --------
                                                               287,199    278,968    146,987
                                                              --------   --------   --------
INCOME FROM OPERATIONS......................................    10,387     13,386      6,828
                                                              --------   --------   --------
OTHER (INCOME) EXPENSES:
  Interest expense..........................................    14,293     14,813      6,431
  Interest income...........................................      (980)    (1,390)        --
  Amortization of deferred financing costs..................     1,173      1,172        904
  Loss on disposition of assets, net........................       136         --        906
  Other, net................................................       381        436        200
                                                              --------   --------   --------
    Total other expenses....................................    15,003     15,031      8,441
                                                              --------   --------   --------
LOSS BEFORE INCOME TAXES....................................    (4,616)    (1,645)    (1,613)
(BENEFIT) PROVISION FOR INCOME TAXES........................    (1,226)      (155)        20
                                                              --------   --------   --------
LOSS BEFORE DIVIDENDS ON REDEEMABLE PREFERRED STOCK.........    (3,390)    (1,490)    (1,633)
                                                              --------   --------   --------
DIVIDENDS ON REDEEMABLE PREFERRED STOCK.....................     1,074      1,049      1,025
                                                              --------   --------   --------
NET LOSS....................................................  $ (4,464)  $ (2,539)  $ (2,658)
                                                              ========   ========   ========
</TABLE>

                See notes to consolidated financial statements.

                                      F-4
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

                 CONSOLIDATED STATEMENTS OF MINORITY INTERESTS,

                    PREFERRED STOCK AND STOCKHOLDERS' EQUITY

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                       MINORITY INTERESTS      PREFERRED STOCK        COMMON STOCK
                                       -------------------   -------------------   -------------------
                                                  CARRYING              CARRYING              CARRYING   ACCUMULATED
                                        SHARES     VALUE      SHARES     VALUE      SHARES     VALUE       DEFICIT
                                       --------   --------   --------   --------   --------   --------   -----------
<S>                                    <C>        <C>        <C>        <C>        <C>        <C>        <C>
December 31, 1996....................   67,723     $6,772         --    $    --    700,010    $17,501      $ (1,969)
  Net loss...........................       --         --         --         --         --         --        (2,658)
  Stock issuance.....................       --         --     95,000      9,500    160,000      4,000            --
  Stock dividends....................    1,625        163        620         62         --         --           (62)
                                        ------     ------    -------    -------    -------    -------      --------
December 31, 1997....................   69,348      6,935     95,620      9,562    860,010     21,501        (4,689)
  Net loss...........................       --         --         --         --         --         --        (2,539)
  Stock dividends....................    1,625        162     15,170      1,517         --         --        (1,517)
                                        ------     ------    -------    -------    -------    -------      --------
December 31, 1998....................   70,973      7,097    110,790     11,079    860,010     21,501        (8,745)
  Net loss...........................       --         --         --         --         --         --        (4,464)
  Stock dividends....................    1,625        163     17,576      1,758         --         --        (1,758)
                                        ------     ------    -------    -------    -------    -------      --------
December 31, 1999....................   72,598     $7,260    128,366    $12,837    860,010    $21,501      $(14,967)
                                        ======     ======    =======    =======    =======    =======      ========
</TABLE>

                See notes to consolidated financial statements.

                                      F-5
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................................  $(4,464)   $ (2,539)  $ (2,658)
Adjustments to reconcile net loss to net cash provided
  (used) by operating activities:
  Depreciation and amortization.............................   13,914      13,069      7,238
  Amortization of deferred financing costs..................    1,173       1,172        904
  Deferred income taxes.....................................   (1,226)       (155)      (800)
  Loss on sale of fixed assets..............................      136          --        906
  Changes in assets and liabilities excluding effect of
    businesses acquired or disposed:
    Receivables.............................................   (9,383)    (15,213)    (5,645)
    Inventories.............................................   (3,127)      1,838       (301)
    Prepaid expenses........................................     (177)       (115)       304
    Accounts payable........................................    8,789         458     (3,499)
    Accrued expenses........................................    1,196       1,244      1,795
    Accrued interest and dividends..........................    1,010       1,084     (1,245)
    Income taxes, net.......................................     (800)     (6,642)       582
    Intangible assets.......................................       --        (215)    (3,255)
    Other liabilities.......................................    1,314         678      4,386
                                                              -------    --------   --------
      Net cash provided (used) by operating activities......    8,355      (5,336)    (1,288)
                                                              -------    --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of businesses, net of cash acquired.........  (24,118)        649   (101,992)
    Proceeds from sale of fixed assets......................        3      23,842     18,713
    Proceeds from sale of business..........................       --      29,374         --
    Capital expenditures....................................  (23,117)    (20,626)   (14,867)
    Capital projects converted to operating leases..........    8,649      13,145     11,635
                                                              -------    --------   --------
      Net cash (used) provided by investing activities......  (38,583)     46,384    (86,511)
                                                              -------    --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from long-term debt..........................       --          --    145,000
      Financing costs incurred..............................       --        (298)    (6,665)
      Decrease in revolver debt.............................       --          --    (16,476)
      Repayment of term debt................................   (8,284)     (2,085)   (36,464)
      Sale of common stock..................................       --          --      4,000
                                                              -------    --------   --------
        Net cash (used) provided by financing activities....   (8,284)     (2,383)    89,395
                                                              -------    --------   --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........  (38,512)     38,665      1,596
Balance at beginning of period..............................   42,444       3,779      2,183
                                                              -------    --------   --------
Balance at end of period....................................  $ 3,932    $ 42,444   $  3,779
                                                              =======    ========   ========
</TABLE>

                                      F-6
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                             (DOLLARS IN THOUSANDS)

SUPPLEMENTAL CASH FLOW INFORMATION:

    Cash paid during the period (in thousands):

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                                    ------------------------------
                                                      1999       1998       1997
                                                    --------   --------   --------
<S>                                                 <C>        <C>        <C>
Interest..........................................  $14,642    $15,487     $4,977
                                                    -------    -------     ------
Income Taxes......................................  $   768    $ 6,280     $   --
                                                    =======    =======     ======
</TABLE>

NON-CASH TRANSACTIONS:

    Stock dividends issued to minority interests approximated $163,000, $162,000
and $163,000 based on their value at the time of issuance for the years ended
December 31, 1999, 1998 and 1997, respectively.

    Cash dividends accrued on Series D redeemable preferred stock were
approximately $99,000, $74,000 and $49,000 during the years ended December 31,
1999, 1998, and 1997. Such amounts are cumulative and payable on November 1,
2000.

    On December 16, 1997, the Company issued 95,000 shares of Series A preferred
stock to the majority stockholders in exchange for a note payable plus accrued
and unpaid interest. Stock dividends issued on this stock approximated
$1,758,000 $1,517,000 and $62,000 for the years ended December 31, 1999, 1998
and 1997, respectively. See Note 9.

                See notes to consolidated financial statements.

                                      F-7
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

    PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of Perry Judd's Holdings, Inc., its wholly-owned subsidiary, Perry
Judd's Incorporated, and Judd's Online, Inc., a wholly-owned subsidiary of Perry
Judd's Incorporated (collectively hereafter referred to as the "Company"). All
significant intercompany balances and transactions have been eliminated.

    Effective April 28, 1995, the Company acquired certain assets and assumed
certain liabilities of Perry Printing Corporation ("Perry Printing"). Prior to
April 28, 1995, the Company had no operating activities.

    Effective December 16, 1997, the Company acquired all of the outstanding
capital stock of Judd's, Incorporated ("Judd's") for approximately
$102.0 million less outstanding indebtedness of Judd's. The acquisition was
accounted for under the purchase method of accounting and accordingly the
results of operations are included in the accompanying financial statements
since the acquisition date. The final allocation of the purchase price was based
upon the estimated fair value of the assets acquired and liabilities assumed as
follows (in thousands):

<TABLE>
<S>                                                           <C>
Fair value of assets acquired...............................  $108,269
Goodwill....................................................    27,923
Fair value of liabilities assumed...........................   (72,333)
Amounts paid to creditors and preferred stockholders........    37,484
                                                              --------
Cash paid for net assets acquired...........................  $101,343
                                                              ========
</TABLE>

    Effective February 1, 1999, the Company acquired all of the outstanding
capital stock of Heartland Press, Inc. ("Heartland") for approximately
$17.5 million, including acquisition costs. Heartland was subsequently merged
with and into Perry Judd's Incorporated. In addition, the Company assumed
approximately $6.6 million of Heartland's indebtedness, all of which was paid in
full upon consummation of the acquisition. The acquisition was accounted for
under the purchase method of accounting and accordingly the results of
operations are included in the accompanying financial statements since the
acquisition date. The preliminary allocation of the purchase price is based upon
the estimated fair value of the assets acquired and liabilities assumed as
follows (in thousands):

<TABLE>
<S>                                                           <C>
Fair value of assets acquired...............................  $ 21,420
Goodwill....................................................     8,697
Fair value of liabilities assumed...........................   (12,642)
Amounts paid to creditors...................................     6,643
                                                              --------
Cash paid for net assets acquired...........................  $ 24,118
                                                              ========
</TABLE>

    Effective July 9, 1998, Judd and Detweiler, Inc., a wholly-owned subsidiary
of Judd's merged with and into Judd's Incorporated.

    Effective July 16, 1998, the Company and its subsidiaries completed the
following transactions:

    a)  The Company changed its name from Perry-Judd's Incorporated to Perry
       Judd's Holdings, Inc.

    b)  Mount Jackson Press, Inc. and Shenandoah Valley Press, Inc.,
       wholly-owned subsidiaries of Judd's, merged with and into Judd's
       Incorporated.

                                      F-8
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. GENERAL INFORMATION (CONTINUED)
    c)  Judd's Incorporated merged with and into another wholly-owned subsidiary
       of the Company, Perry Graphic Communications, Inc. The surviving company,
       Perry Graphic Communications, Inc., changed its name to Perry Judd's
       Incorporated, ("Perry Judd's"), which continues to be a wholly-owned
       subsidiary of the Company.

    ASSET DISPOSITIONS

    a)  On July 6, 1998, a subsidiary of Perry Judd's, Judd and
       Detweiler, Inc., consummated the sale of a corporate office building
       located in Washington, D.C. The aggregate net cash consideration received
       by Perry Judd's in the transaction totaled approximately $2,550,000.

    b)  On August 17, 1998, Perry Judd's consummated an Agreement of Purchase
       and Sale relating to the sale and leaseback by Perry Judd's of three
       parcels of real property and industrial buildings located in Pikesville,
       Maryland, Strasburg, Virginia and Mt. Jackson, Virginia. As part of these
       sale and leaseback transactions the Company and Perry Judd's entered into
       long-term leases as lessees, with the buyer as lessor, for the
       properties. The Company and Perry Judd's then subleased the Pikesville,
       Maryland property to Port City, a then wholly-owned subsidiary, under
       substantially the same economic terms as those contained in the lease.

       Perry Judd's received net cash consideration from the buyer for the
       properties of approximately $20,938,000. The terms of the Leases include
       a twenty year term with an initial annual lease payment of $2,258,667 and
       14.5% escalations scheduled at the start of the sixth, eleventh and
       sixteenth years.

       The initial annual rents by location are as follows:

<TABLE>
<S>                                                       <C>
Pikesville, Maryland....................................  $  977,412
Strasburg, Virginia.....................................   1,029,676
Mt. Jackson, Virginia...................................     251,579
                                                          ----------
                                                          $2,258,667
                                                          ==========
</TABLE>

    c)  On September 2, 1998, Perry Judd's consummated the sale of all of the
       outstanding shares of capital stock of its wholly-owned subsidiary, Port
       City Press, Inc. ("Port City"), to Mack Printing Company. The aggregate
       net cash consideration received by Perry Judd's in the transaction
       totaled approximately $29,374,000.

       The proceeds, net of income taxes payable, aggregating $40,767,000,
       received for the sale of the corporate office building, the sale of Port
       City, and the sale and leaseback of real property were restricted for
       future acquisitions and capital expenditures under the Company's Credit
       Agreement, subject to certain limitations for 330 days subsequent to the
       receipt of proceeds. These proceeds were used to acquire Heartland, fund
       capital expenditures and prepay term debt of $4.2 million.

    NATURE OF BUSINESS--The Company is a full service heatset web offset printer
of magazines, catalogs, and other commercial products. The Company serves a
national domestic market in the printing of weekly and monthly consumer, special
interest and trade magazines, business-to-business and consumer catalogs, and a
variety of other direct advertising products. The Company operates principally
in one business segment, printing services.

                                      F-9
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    CASH AND CASH EQUIVALENTS--The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.

    CREDIT RISK CONSIDERATIONS--The Company has one customer which consists of
six publication titles comprising approximately 14%, 14% and 21% of total net
sales volume for the years ended December 31, 1999, 1998 and 1997, respectively.
The various titles for this customer are under contracts expiring between
December 31, 2002 and December 31, 2003.

    The Company has recorded an allowance for doubtful accounts to estimate the
difference between recorded receivables and ultimate collections. The allowance
and provision for bad debts are adjusted periodically based upon the Company's
evaluation of historical collection experience, industry trends and other
relevant factors. The allowance for doubtful accounts was $1,020,000 and
$799,000 at December 31, 1999 and 1998, respectively.

    INVENTORY VALUATION--Inventories are stated at the lower of cost (first-in,
first-out method) or market and are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            -------------------
                                                              1999       1998
                                                            --------   --------
<S>                                                         <C>        <C>
Raw materials.............................................  $ 9,578    $ 8,402
Work in process...........................................    6,535      3,791
Production supplies.......................................      753        675
Repair and maintenance parts..............................    2,572      2,309
Allowance for obsolete and excess inventories.............     (632)      (601)
                                                            -------    -------
                                                            $18,806    $14,576
                                                            =======    =======
</TABLE>

    PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at
cost. Assets are depreciated on the straight-line basis over estimated useful
lives which range from three to forty years.

<TABLE>
<CAPTION>
                                                             ESTIMATED USEFUL LIFE
                                                                  (IN YEARS)
                                                             ---------------------
<S>                                                          <C>
Machinery and equipment....................................           3-15
Buildings and improvements.................................           7-40
Office furniture and equipment.............................           3-10
Land improvements..........................................          25-40
</TABLE>

    INTANGIBLE ASSETS--Cost in excess of net assets of business acquired
("goodwill") is amortized and charged against operations on a straight-line
method over 35 years. Accumulated amortization on these costs was $1,635,000 and
$742,000 at December 31, 1999 and 1998, respectively. Deferred financing costs
are being amortized over the lives of the applicable debt agreements.
Accumulated amortization on these costs was $3,874,000 and $2,624,000 at
December 31, 1999 and 1998, respectively. Direct and external costs related to
the acquisitions of Perry Printing and Judd's Incorporated (See Note 1) are
being amortized over five to fifteen years. Accumulated amortization on these
costs was $2,182,000 and $1,312,000 at December 31, 1999 and 1998, respectively.
The Company received a covenant not to compete from the former owner of Perry
Printing which is being amortized over the life of the covenant of five years.

                                      F-10
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accumulated amortization on these costs was $1,326,000 and $1,106,000 at
December 31, 1999 and 1998, respectively.

    LONG-LIVED ASSETS--The Company periodically evaluates the carrying value of
property, plant and equipment and intangible assets in accordance with statement
of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
Long-Lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of an asset, a loss is recognized for the difference between the fair
value and carrying value of the asset.

    REVENUE RECOGNITION--Revenue is recognized when complete orders are shipped.

    INCOME TAXES--Deferred income taxes are determined utilizing an asset and
liability approach. This method gives consideration to the future tax
consequences associated with differences between financial accounting and tax
bases of assets and liabilities. This method gives immediate effect to changes
in income tax laws upon enactment.

    ESTIMATES--The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities as of the balance sheet date and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.

    FAIR VALUE OF FINANCIAL INSTRUMENTS--The Company believes that the carrying
amount of its cash and cash equivalents, accounts receivable, accounts payable
and borrowings under its term loan facility approximate fair value due to the
short maturity of these instruments. The estimated fair value of the Company's
publicly traded debt (senior subordinated notes), based on quoted market prices,
was approximately $100,625,000 and $121,000,000 as of December 31, 1999 and
1998, respectively.

    ACCOUNTING STANDARD TO BE ADOPTED--In 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." The Company is currently evaluating the impact of this
statement, as amended by SFAS No. 137, on the consolidated financial statements.
This statement is required to be adopted no later than January 1, 2001.

                                      F-11
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACCRUED EXPENSES

    Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            -------------------
                                                              1999       1998
                                                            --------   --------
<S>                                                         <C>        <C>
Employee related expenses.................................  $ 8,484    $ 7,123
Accrued paper costs.......................................    1,789      2,612
Taxes other than income...................................    1,127        436
Other accrued expenses....................................    5,956      4,735
                                                            -------    -------
                                                            $17,356    $14,906
                                                            =======    =======
</TABLE>

4. LONG-TERM DEBT

    Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                          -------------------
                                                            1999       1998
                                                          --------   --------
<S>                                                       <C>        <C>
Revolving credit facility...............................  $     --   $     --
Term loan facility......................................    19,800     28,000
Capital lease obligations...............................       101        185
Senior subordinated notes...............................   115,000    115,000
                                                          --------   --------
Total debt..............................................   134,901    143,185
Less current portion....................................    (6,083)    (4,084)
                                                          --------   --------
Long-term debt..........................................  $128,818   $139,101
                                                          ========   ========
</TABLE>

    On April 28, 1995, the Company entered into a five year Credit Agreement
with a commercial bank consortium that provides a revolving and term loan
facility. These loans are collateralized by substantially all assets of the
Company. Concurrent with the acquisition of Judd's, the Company entered into an
Amended and Restated Credit Agreement extending the maturity to December 15,
2002. The Credit Agreement requires the Company to maintain and meet certain
minimum operating ratios and limits expenditures for property and equipment,
dividends, investments, other indebtedness, commitments, guarantees and
contingent liabilities.

    REVOLVING CREDIT FACILITY--The Company has the ability to borrow, subject to
certain terms and conditions, up to $45.0 million until December 15, 2002, at
which time any outstanding borrowings become due and payable unless otherwise
extended based upon mutual agreement of the Company and lenders. Borrowings
against the line are either at a Eurodollar rate plus 2.25%, fixed for periods
up to 180 days, or at the prime rate plus 0.75%. The weighted average interest
rate on the outstanding borrowings approximated 8.82% and 9.06% for the years
ended December 31, 1999 and 1998, respectively.

    TERM LOAN FACILITY--The term loan facility is due in installment amounts at
the last day of each month until December 15, 2002, at which time any
outstanding borrowings become due and payable. Repayments may not be reborrowed.
Borrowings are either at a Eurodollar rate plus 2.50%, fixed for periods of up
to 180 days, or at the prime rate plus 1.00%. The weighted average interest rate
on the outstanding borrowings approximated 7.72% and 8.07% for the years ended
December 31, 1999 and 1998, respectively.

                                      F-12
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. LONG-TERM DEBT (CONTINUED)
    SENIOR SUBORDINATED NOTES--The Company issued $115,000,000 aggregate
principal amount of its 10 5/8% senior subordinated notes due December 15, 2007
in connection with its acquisition of Judd's. Interest on the Notes accrues from
the date of original issuance and is payable semi-annually in arrears on
June 15 and December 15 of each year. The Notes are redeemable, in whole or in
part, at the option of the Company on or after December 15, 2002 at specified
redemption prices plus accrued interest to the date of redemption. In addition,
at any time on or prior to December 15, 2000, the Company, at its option, may
redeem up to 35% of the aggregate principal amount of the Notes originally
issued with the net cash proceeds of one or more public equity offerings, at the
redemption price equal to 110.625% of the principal amount thereof, plus accrued
interest to the date of redemption.

    Future minimum principal payments required under the terms of the agreements
are as follows as of December 31, 1999 (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING
-----------
<S>                                                           <C>
2000........................................................  $  6,083
2001........................................................     6,018
2002........................................................     7,800
2003........................................................        --
2004........................................................        --
Thereafter..................................................   115,000
                                                              --------
    Total...................................................  $134,901
                                                              ========
</TABLE>

5. MINORITY INTERESTS

    REDEEMABLE PREFERRED STOCK A--At April 28, 1995, Series A redeemable
preferred stock issued in the amount of $5.0 million reflects an original issue
discount of $2.5 million which is the difference between the net present value
at the time of issuance and the April 28, 2005 redemption value. The difference
was accreted by charging operations until redemption. Each share of redeemable
Series A, $0.001 par value, $100 redemption value, nonconvertible, non-voting
preferred stock entitles its holder to receive an annual cash dividend
equivalent to carrying value times 90% of the prime interest rate. At
December 31, 1995, 50,000 shares were authorized and 47,350 shares were issued
and outstanding. During 1996, the carrying value of the Series A redeemable
preferred stock was written down to $-0- to offset certain purchase accounting
adjustments and no accretion was made. (See Note 11.)

    REDEEMABLE PREFERRED STOCK B--Each share of Series B, $0.001 par value, $100
redemption value, nonconvertible, non-voting preferred stock entitles its holder
to receive cash dividends of 12.5% of carrying value and stock dividends of 2.5%
of carrying value (issued in Redeemable Preferred Stock D). At December 31, 1999
and 1998, 65,000 shares were authorized, issued and outstanding and are
mandatorily redeemable on November 1, 2000. Accrued and unpaid dividends were
approximately $1.8 million and $1.0 million at December 31, 1999 and 1998,
respectively.

    REDEEMABLE PREFERRED STOCK D--Each share of Series D, $0.001 par value, $100
redemption value, nonconvertible, non-voting preferred stock entitles its holder
to receive cash dividends equivalent to 15% of carrying value. At December 31,
1999 and 1998, 100,000 shares were authorized with 7,598, and 5,973 shares
issued and outstanding, respectively. Series D preferred shares are mandatorily
redeemable on

                                      F-13
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. MINORITY INTERESTS (CONTINUED)
November 1, 2000. Accrued and unpaid dividends were approximately $0.3 million
and $0.2 million at December 31, 1999 and 1998, respectively.

6. STOCK OPTION PLAN

    In 1995, stockholders of the Company approved the adoption of a stock option
plan (the "Stock Option Plan"). Under the terms of the Stock Option Plan,
options may be granted to officers and key employees. Options have terms of
eighteen years and an exercise price of $.01 per share. Options are immediately
exercisable, but option shares issuable are subject to repurchase by the Company
on termination of employment at the original exercise price until vested. Option
shares vest in gradual increments over an eight year period.

    A summary of option activity under the Stock Option Plan is as follows:

<TABLE>
<CAPTION>
                                                              NUMBER OF SHARES
                                                              ----------------
<S>                                                           <C>
Outstanding at December 31, 1996............................       22,125
Granted.....................................................        3,500
                                                                   ------
Outstanding at December 31, 1997............................       25,625
Granted.....................................................       13,434
                                                                   ------
Outstanding at December 31, 1998............................       39,059
                                                                   ------
Granted.....................................................        2,248
                                                                   ------
Outstanding at December 31, 1999............................       41,307
                                                                   ======
</TABLE>

    The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretation in accounting for its
employee stock option plan. Accordingly, compensation expense is recorded to the
extent the estimated fair value of each share exceeds the option exercise price
at the date of grant. If the Company had elected to report compensation expense
based on the estimated fair value of the options at the grant date consistent
with the fair value method outlined in SFAS No. 123, "Accounting for Stock-Based
Compensation," the impact on the Company's net loss for any period or
stockholders' equity as of any date would not have been material since the
inception of the Stock Option Plan.

    The following table summarizes information concerning outstanding and
exercisable options and vested option shares at December 31, 1999:

<TABLE>
<S>                                                           <C>
Outstanding and exercisable options.........................  41,307
Weighted Average Remaining Contractual Life of Outstanding
  Options...................................................  14.5 years
Vested option shares issuable...............................  18,455
Weighted Average Remaining Contractual Life of Exercisable
  Options...................................................  15.8 years
</TABLE>

7. OPERATING LEASES

    The Company leases certain equipment and office space under non-cancelable
operating lease agreements. Lease expense under such agreements was
approximately $16.5 million, $13.0 million, and $5.1 million for the years ended
December 31, 1999, 1998 and 1997 respectively.

                                      F-14
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. OPERATING LEASES (CONTINUED)
    Concurrent with the acquisition of Judd's, the Company entered into a sale
and leaseback transaction whereby the Wisconsin printing plants and warehouse
facilities, and the Company's corporate headquarters were sold to a third party
for the aggregate purchase price (exclusive of fees and costs) of
$18.25 million and immediately leased back to the Company. The sale and
leaseback of the real property resulted in a deferred gain of $2.8 million net
of taxes and is being amortized over the initial term of the lease. The lease
has an initial term of 20 years, with an economic abandonment buyout for one
property selected by the company after five years, and may be extended for three
additional five-year terms at the Company's option. Initial annual rent under
the lease is approximately $1.9 million payable quarterly in advance with 10%
escalations scheduled at the start of the sixth, eleventh and sixteenth years of
the 20 year term (and a corresponding 10% increase at the beginning of any
option term). For the first ten years of the lease, the Company has a right of
first refusal on any proposed sale of all of the leased properties by the lessor
to a third party, exercisable within 30 days of receipt of the proposed sale
contract.

    On August 17, 1998, the Company entered into a sale and leaseback
transaction for the majority of the Judd's real property. See Note 1.

    Future minimum annual lease payments required under the operating lease
agreements are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S>                                                           <C>
2000........................................................  $ 17,323
2001........................................................    16,809
2002........................................................    14,267
2003........................................................    12,108
2004........................................................    11,558
Thereafter..................................................    60,331
                                                              --------
Total minimum lease payments................................  $132,396
                                                              ========
</TABLE>

                                      F-15
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES

    The (benefit) provision for income taxes consists of the following
components (in thousands):

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Current
  Federal...................................................  $    --     $  --      $ 800
  State.....................................................       --        --         20
                                                              -------     -----      -----
                                                                   --        --        820

Deferred
  Federal...................................................   (1,034)     (142)      (800)
  State.....................................................     (192)      (13)        --
                                                              -------     -----      -----
                                                               (1,226)     (155)      (800)
                                                              -------     -----      -----
(Benefit) provision for income taxes........................  $(1,226)    $(155)     $  20
                                                              =======     =====      =====
</TABLE>

    Following is a reconciliation of the U.S. statutory federal income tax rate
to the effective rate (in thousands):

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Tax benefit at federal statutory rate (35%).................  $(1,616)    $(576)     $(565)
State income taxes (benefit) net of federal income tax
  benefit...................................................     (197)     (102)        20
Goodwill amortization.......................................      357       297         --
Other permanent differences.................................      230       226        565
                                                              -------     -----      -----
(Benefit) provision for income taxes........................  $(1,226)    $(155)     $  20
                                                              =======     =====      =====
</TABLE>

                                      F-16
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES (CONTINUED)
    Significant components of deferred tax assets and deferred tax liabilities
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                          -------------------
                                                            1999       1998
                                                          --------   --------
<S>                                                       <C>        <C>
Deferred Tax Assets:
  Accounts receivable items.............................  $    326   $    278
  Inventory items.......................................       299        257
  Accrued vacation and other benefits...................       670        652
  Accrued pension benefits..............................       123        291
  Other accrued expenses................................       733        691
  Sale and leaseback....................................     1,682      1,775
  Tax loss carryforwards................................     3,040        525
  Tax credit carryforwards..............................     3,081      3,517
  Other items...........................................        --        196
                                                          --------   --------
                                                             9,954      8,182

Deferred Tax Liabilities:
  Prepaid items.........................................      (472)      (563)
  Non current assets....................................   (23,266)   (19,286)
  Other.................................................      (213)      (156)
                                                          --------   --------
                                                           (23,951)   (20,005)
                                                          --------   --------
Net deferred income taxes...............................  $(13,997)  $(11,823)
                                                          ========   ========
</TABLE>

    The net deferred tax liability is classified in the balance sheets as
follows (in thousands):

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                          -------------------
                                                            1999       1998
                                                          --------   --------
<S>                                                       <C>        <C>
Current deferred income taxes...........................  $    823   $    685
Non-current deferred income taxes.......................   (14,820)   (12,508)
                                                          --------   --------
                                                          $(13,997)  $(11,823)
                                                          ========   ========
</TABLE>

    Included in tax assets at December 31, 1999 are net operating loss
carryforwards of approximately $6.5 million and $13.6 million for federal and
state income tax purposes, respectively, which begin to expire in 2010,
alternative minimum tax credits of approximately $2.6 million and state tax
credits of $700,000 which can be used to offset future regular tax and have no
expiration date.

9. RELATED PARTY TRANSACTIONS

    On April 28, 1995, the Company entered into management agreements (the
"Agreements") with two companies owned beneficially by the majority stockholders
of the Company. The Agreements, as well as subsequent revisions, provide for
certain management and consulting services in connection with business strategy,
operations and finance. The Agreements have initial terms of five years, subject
to one-year extensions thereafter and require the Company to currently pay
annual management fees totaling

                                      F-17
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. RELATED PARTY TRANSACTIONS (CONTINUED)
$1,200,000 per year plus reimbursement of certain expenses. Management fees and
expense reimbursements paid in conjunction with the Agreements approximated
$1,469,000 $1,354,000 and $832,000 for the years ended December 31, 1999, 1998
and 1997, respectively.

    A California corporation owned beneficially by the majority stockholders,
loaned $6.5 million to the Company in connection with the acquisition of Perry
Printing. The loan was evidenced by a senior note bearing interest at 15% per
annum. Interest was payable quarterly in arrears at the end of each calendar
quarter on the unpaid principal amount. In connection with obtaining this
financing, the Company paid a one-time fee of $650,000. This amount has been
capitalized as deferred financing costs in the consolidated financial statements
and was being amortized over the life of the note. The unamortized portion of
this fee was written off on December 16, 1997. Concurrent with the acquisition
of Judd's, the Company converted the note and $3.0 million of accrued and unpaid
interest into 95,000 shares of preferred stock. The conversion was effected by
exchanging one share of preferred stock for every $100 of outstanding principal
and interest under the Senior Note.

    Since May 1995, the Company has purchased a substantial portion of its total
ink requirements from a company affiliated with the majority stockholders.
During 1999, the majority stockholders sold their interests in this company. Net
purchases for years ended December 31, 1999, 1998 and 1997, amounted to
$13.9 million, $13.3 million, and $7.2 million, respectively. Net outstanding
indebtedness to this supplier was $-0- and $0.7 million as of December 31, 1999
and 1998, respectively.

    Concurrent with the acquisition of Judd's on December 16, 1997, a one-time
fee of $2.0 million was paid to a company owned beneficially by the majority
stockholders of the Company for acquisition services related to the transaction
and the majority stockholders purchased an additional 160,000 shares of common
stock for $4.0 million.

    Concurrent with the sale of Port City on September 2, 1998, a one-time fee
of $1.0 million was paid to a company owned beneficially by the majority
stockholders of the Company for divestiture services related to the disposition.

10. RETIREMENT PLANS

    The Company has a defined contribution retirement plan (the "Plan") covering
substantially all employees who have attained 21 years of age and are credited
with twelve months of service on their enrollment date. The Company contributed
approximately $1,651,000, $1,648,000, and $875,000 for the years ended
December 31, 1999, 1998 and 1997, respectively, to the Plan representing 3% of
eligible employee wages.

    Effective December 31, 1997, benefits payable under a Judd's defined benefit
pension plan existing at the time of the Company's December 16, 1997 acquisition
of Judd's were frozen. The Company intends to terminate the plan through lump
sum payments and the purchase of annuity contracts. As of December 31, 1999, the
estimated termination liability approximated the assets in the plan. Plan
assets, consisting primarily of United States Treasury obligations, approximated
$7,393,000 as of December 31, 1999. There have been no contributions to the plan
since the acquisition. Pension expense for the year ended December 31, 1997
approximated $40,000. There was no pension expense recognized for the years
ended December 31, 1999 and 1998.

                                      F-18
<PAGE>
                          PERRY JUDD'S HOLDINGS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES

    PURCHASE COMMITMENTS--At December 31, 1999, the Company has commitments to
purchase or lease approximately $8.6 million of operating assets.

    INDEMNIFICATION--In connection with the acquisition of Perry Printing, the
Company issued 50,000 and 65,000 shares of Series A and B redeemable preferred
stock, respectively, to the former owner of Perry Printing. During 1996, the
Company made two indemnity claims against the former owner of Perry Printing
principally involving breaches of warranties and representations made on certain
assets under its Asset Purchase Agreement. Redemption features of the Series A
redeemable preferred stock provided the Company with the option to offset such
claims as immediate redemption of the Series A redeemable preferred stock up to
the maximum redemption value of $5 million. Accordingly, the carrying value of
the Series A redeemable preferred stock was reduced to $-0- in the financial
statements at December 31, 1996. Additionally, the Company has asserted a claim
against the former owner of Perry Printing for an approximate $1.8 million
employee benefit obligation incurred prior to April 28, 1995, which is now an
obligation of the Company to its employees covered by collective bargaining
agreements. This amount has been reflected as an increase to both assets and
liabilities pending resolution with the former owner of Perry Printing. The
former owner of Perry Printing objected to these claims.

    On November 24, 1999, the former owner of Perry Printing filed a complaint
against the Company seeking damages of approximately $3,000,000 and the payment
of certain preferred stock dividends. On January 6, 2000, the Company answered
by denying the former owner's allegations and asserted counterclaims in an
aggregate amount of approximately $7,000,000. The case is presently in
discovery. The Company intends to vigorously defend the action and strongly
contends that no amounts are due the former owner of Perry Printing and the
Company's position with respect to the two indemnity claims will be upheld.

    OTHER CONTINGENCIES--The Company is involved in various claims and
litigation incidental to its operations. In the opinion of management, the
ultimate resolution of these actions will not have a material effect on the
Company's consolidated financial statements.

                                      F-19
<PAGE>
                                                                     SCHEDULE II

                          PERRY JUDD'S HOLDINGS, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        ADDITIONS                     OTHER
                                             BALANCE    CHARGED TO                  ADDITIONS     BALANCE
                                            BEGINNING   COSTS AND    DEDUCTIONS-   (DEDUCTIONS)     END
                                             OF YEAR     EXPENSES     DESCRIBE       DESCRIBE     OF YEAR
                                            ---------   ----------   -----------   ------------   --------
<S>                                         <C>         <C>          <C>           <C>            <C>
ALLOWANCE FOR UNCOLLECTIBLE
  ACCOUNTS RECEIVABLE
  Year Ended December 31
    1999..................................   $  799        $440          $419(1)       $ 200 (3)   $1,020
    1998..................................   $1,266        $521          $930(1)       $ (58)(2)   $  799
    1997..................................   $  320        $321          $257(1)       $ 882 (3)   $1,266

OBSOLETE AND EXCESS
  INVENTORIES
  Year Ended December 31
    1999..................................   $  601        $ 56          $ 25(4)          --       $  632
    1998..................................   $  857        $ 57          $ 66(4)       $(247)(2)   $  601
    1997..................................   $  645        $190          $293(4)       $ 315 (3)   $  857
</TABLE>

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

(1) Write-offs of receivables, net of recoveries.

(2) Balance of sold division at disposition date.

(3) Balance of acquired companies at acquisition date.

(4) Disposal of obsolete inventory, net of recoveries.

                                      F-20
<PAGE>
                                 EXHIBIT INDEX

    The following exhibits are filed as a part of this report or incorporated by
reference and will be furnished to any security holder upon request for such
exhibit and payment of any reasonable expenses incurred by the Company. Send any
such request to the Company at 575 West Madison Street, Waterloo, WI 53594.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     DESCRIPTION
-------                    -----------
<C>                        <S>
           2.2             Stock Purchase Agreement dated as of July 31, 1998 by and
                           among Mack Printing Company, Port City Press, Inc. and Perry
                           Judd's Incorporated. Incorporated by reference to Exhibit
                           2.2 to the 8-K dated as of September 17, 1998.

           3.1             Amended and Restated Certificate of Incorporation, as
                           amended, of the Company. Incorporated by reference to
                           Exhibit 3.1 to the Company's Registration Statement on Form
                           S-4 No. 333-45235, declared effective on June 12, 1998 (the
                           "Registration Statement").

           3.2             Amended and Restated By-laws of the Company. Incorporated by
                           reference to Exhibit 3.1 to the Registration Statement.

           4.1             Indenture dated as of December 16, 1997 between the Company
                           and U.S. Trust Company of California, N.A., as Trustee,
                           including forms of Senior Notes. Incorporated by reference
                           to Exhibit 4.1 to the Registration Statement.

           4.1(a)          First Supplemental Indenture dated as of June 10, 1998 among
                           the Company, the Subsidiary Guarantors named therein, the
                           Additional Subsidiary Guarantor named therein and U.S. Trust
                           Company of California N.A. as Trustee. Incorporated by
                           reference to Exhibit 4.1(a) to the Registration Statement.

           4.2             Registration Rights Agreement dated as of December 16, 1997
                           between the Company and BT Alex. Brown as Initial Purchaser.
                           Incorporated by reference to Perry Judd's Incorporated by
                           reference to Exhibit 4.2 to the Registration Statement.

          10.2             Amended and Restated Credit Agreement dated as of December
                           16, 1997, among Perry Graphic Communications, Inc.,
                           Shenandoah Valley Press, Inc., and Port City Press, Inc., as
                           Borrowers, the Lenders (as defined therein) and BT
                           Commercial. Incorporated by reference to Exhibit 10.2 to the
                           Registration Statement.

          10.3             1995 Stock Option Plan, as amended. Incorporated by
                           reference to Exhibit 10.3 to the Registration Statement.

          10.4             Employment Agreement by and between the Company and Craig A.
                           Hutchison dated April 28, 1995. Incorporated by reference to
                           Exhibit 10.4 to the Registration Statement.

          10.4(a)          Employment Offer Letter from the Company to David E. Glick
                           dated January 16, 1998.

          10.4(b)          Employment Offer Letter from the Company to Verne F. Schmidt
                           dated December 26, 1996.

          10.5             Stockholders Agreement by and among the stockholders of the
                           Company named therein dated as of July 1, 1996. Incorporated
                           by reference to Exhibit 10.5 to the Registration Statement.

          10.6             Amended and Restated Co-Sale Agreement by and among the
                           stockholders of the Company named therein dated as of
                           December 30, 1996. Incorporated by reference to Exhibit 10.6
                           to the Registration Statement.

          21.0*            Subsidiary Listing

          27.1*            Financial Data Schedule
</TABLE>

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*   Filed herewith