<PAGE>

                                   FORM 10-Q
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

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

FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1997

                                      OR

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


                     Commission File Number:  333-20759


                          COMMEMORATIVE BRANDS, INC.
            (Exact name of Registrant as specified in its charter)


               DELAWARE                                    13-3915801
     -------------------------------                    ---------------------
     (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                     Identification Number)

                    7211 CIRCLE S ROAD, AUSTIN, TEXAS 78745
             -----------------------------------------------------
             (Address of principal executive offices)   (Zip Code)

      Registrant's telephone number, including area code (512) 440-0571

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 
                                              ---     ---

<PAGE>

                                     INDEX

Item
Number                                                              Page Number

                         PART 1. FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets -
           As of November 30, 1997 (unaudited) and August 30, 1997             1

         Consolidated Income Statements -
           For the three months ended November 30, 1997 and November 30,
           1996 and for the three months ended November 30, 1996 for
           ArtCarved and November 24, 1996 for Balfour (all unaudited)         2

         Consolidated Statements of Stockholders Equity -
           As of November 30, 1997 (unaudited), August 30, 1997 
           (audited) and March 28, 1996 (unaudited)                            3

         Statement of Cash Flows -
           For the three months ended November 30, 1997 and November 30,
           1996 and for the three months ended November 30, 1996 for
           ArtCarved and November 24, 1996 for Balfour (all unaudited)         4

         Notes to Consolidated Financial Statements                       5 - 12

Item 2.  Management's Discussion and Analysis of Financial Condition 
         and Results of Operations                                       13 - 18

                          PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                    19

Item 2.  Changes in Securities                                                19

Item 3.  Defaults Upon Senior Securities                                      19

Item 4.  Submission of Matters to a Vote of Security Holders                  19

Item 6.  Exhibits and Reports on Form 8-K                                     19

SIGNATURES                                                                    20

<PAGE>

PART 1 -- FINANCIAL STATEMENTS
Item 1.  Consolidated Financial Statements and Notes
                                       

                           COMMEMORATIVE BRANDS, INC.
                          CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data )

                                                    November 30,   August 30,
                                                        1997          1997
                                                    -----------    ----------
ASSETS                                              (Unaudited)    (Audited)
Current assets:
  Cash and cash equivalents                          $  2,277       $  2,174
  Accounts receivable, net                             36,919         26,444
  Inventories                                          14,217         11,767
  Prepaid expenses and other current assets             7,012          8,522
                                                     --------       --------
    Total current assets                               60,425         48,907
                                                                 
Property, plant and equipment, net                     34,152         33,460
                                                                 
Trademarks, net                                        30,003         30,197
                                                                 
Goodwill, net                                          82,205         82,935
                                                                 
Other assets, net                                       5,823          5,370
                                                     --------       --------
                                                                 
    Total assets                                     $212,608       $200,869
                                                     --------       --------
                                                     --------       --------
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY                             
Current liabilities:                                             
  Bank overdraft                                     $  3,155       $  4,188
  Accounts payable and accrued expenses                26,275         20,893
  Current portion of long-term debt                       625            750
                                                     --------       --------
    Total current liabilities                          30,055         25,831

Long-term debt, net of current portion                131,400        124,700

Other long-term liabilities                            10,022          9,885
                                                     --------       --------
  Total liabilities                                   171,477        160,416

Commitments and contingencies

Stockholders' Equity
  Preferred Stock, $.01 par value, 750,000 shares  
   authorized
    Series A, 100,000 shares issued and outstanding         1              1
    Series B, 375,000 shares issued and outstanding         4              4
  Common Stock, $.01 par value, 750,000 shares
   authorized, 375,000 issued and outstanding               4              4
  Additional paid-in capital                           50,161         50,161
  Retained earnings (deficit)                          (9,039)        (9,717)
                                                     --------       --------
    Total stockholders' equity                         41,131         40,453
                                                     --------       --------
    Total liabilities & stockholders' equity         $212,608       $200,869
                                                     --------       --------
                                                     --------       --------

                The accompanying notes are an integral part of 
                    these consolidated financial statements.
                                       
<PAGE>

                          COMMEMORATIVE BRANDS, INC.
                        CONSOLIDATED INCOME STATEMENTS
                (In thousands, except share and per share data)
                                 (Unaudited)
<TABLE>
                                                  For the Three Months Ended *
                                    ---------------------------------------------------------
                                                                         Predecessors
                                                                  ---------------------------
                                                                   ArtCarved       Balfour
                                    November 30,   November 30,   November 30,   November 24,
                                       1997           1996           1996           1996
                                    ------------   ------------   ------------   ------------
<S>                                 <C>            <C>            <C>            <C>
Net sales                            $ 38,364         $  -          $ 21,963      $ 19,535
                                                                  
Cost of sales                          17,226            -             9,626         8,762
                                     --------         ------        --------      --------
Gross profit                           21,138            -            12,337        10,773
                                                                  
Selling, general and                                              
 administrative expenses               16,560            -             8,110        10,536
                                     --------         ------        --------      --------

Operating income                        4,578            -             4,227           237
                                                                  
Interest expense, net                   3,600            -             2,503           619
                                     --------         ------        --------      --------

  Income (loss) before provision                                    
   for income taxes                       978            -             1,724          (382)
                                                                  
Provision for income taxes                  -            -                 -            10
                                     --------         ------        --------      --------

  Net income (loss)                  $    978         $  -          $  1,724      $   (392)
                                     --------         ------        --------      --------

Preferred dividends                      (300)           -                 -             -
                                     --------         ------        --------      --------

Net income (loss) to
 common stockholders                 $    678         $  -          $  1,724      $   (392)
                                     --------         ------        --------      --------
                                     --------         ------        --------      --------

Net income (loss) per common
 and common equivalent share
 outstanding                         $   1.81         $  -
                                     --------         ------
                                     --------         ------

Common and common
 equivalent shares outstanding        375,000            -
                                     --------         ------
                                     --------         ------
</TABLE>
---------------
*Commemorative Brands, Inc. completed the acquisitions of ArtCarved and
 Balfour on December 16, 1996, and until such date, engaged in no business
 activities other than those in connection with the Acquisitions and financing
 thereof.  
                                       
               The accompanying notes are an integral part of 
                  these consolidated financial statements.

<PAGE>

                                       
                          COMMEMORATIVE BRANDS, INC.
              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      (In thousands, except share data )
                                 (Unaudited)
<TABLE>
                                               Preferred Stock                Common Stock 
                                     ------------------------------------    ----------------
                                         Series A            Series B                          Additional     Retained 
                                     ----------------    ----------------                        Paid-in      Earnings 
                                     Shares    Amount    Shares    Amount    Shares    Amount    Capital      (Deficit)     Total
                                     ----------------    ----------------    ----------------  ----------     ---------   ---------
<S>                                  <C>       <C>       <C>       <C>       <C>       <C>     <C>            <C>         <C>
Balance, March 28, 1996                 -       $  -        -       $  -        -       $  -    $    -        $    -      $   -
 (date of inception)

Issuance of Common Stock                -          -        -          -     375,000        4       2,666          -         2,670

Issuance of Preferred Stock          100,000        1    375,000        4       -          -       47,495          -        47,500

Accrued Preferred Stock Dividends       -          -        -          -        -          -         -            (850)       (850)

Net loss                                -          -        -          -        -          -         -          (8,867)     (8,867)
                                     ----------------    ----------------    ----------------  ----------     ---------   ---------

Balance, August 30, 1997             100,000    $   1    375,000    $   4    375,000    $   4   $  50,161     $ (9,717)   $ 40,453

Accrued Preferred Stock Dividends       -          -        -          -        -          -         -            (300)       (300)

Net income                              -          -        -          -        -          -         -             978         978
                                     ----------------    ----------------    ----------------  ----------     ---------   ---------

Balance, November 30, 1997           100,000    $   1    375,000    $   4    375,000    $   4   $  50,161     $ (9,039)   $ 41,131
                                     ----------------    ----------------    ----------------  ----------     ---------   ---------
                                     ----------------    ----------------    ----------------  ----------     ---------   ---------
</TABLE>

     Commemorative Brands, Inc., completed the acquisitions of ArtCarved and
     Balfour on December 16, 1996, and until such date, engaged in no business
     activities other than those in connection with the Acquisitions and 
     financing thereof.

<PAGE>

                          COMMEMORATIVE BRANDS, INC.
                           STATEMENTS OF CASH FLOWS
                          (In thousands - unaudited)
                                       
<TABLE>
                                                                                      For the Three Months Ended *
                                                                         --------------------------------------------------------
                                                                                                             Predecesors
                                                                                                      ---------------------------
                                                                                                       ArtCarved       Balfour
                                                                         November 30,  November 30,   November 30,   November 24,
                                                                             1997          1996           1996          1996
                                                                         ------------  ------------   ------------   ------------
<S>                                                                      <C>           <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                      $     978      $   -          $  1,724       $  (392)
  Adjustments to reconcile net income (loss) to net cash provided                                                  
    by (used in) operating activities-                                                                             
      Depreciation and amortization                                          1,678          -             1,464           471 
      Provision for doubtful accounts                                          177          -               108             - 
      Changes in assets and liabilities-                                                                           
         Increase in receivables                                           (10,652)         -            (5,398)       (7,371)
         Decrease (increase) in inventories                                 (2,450)         -               104          (965)
         Decrease in prepaid expenses and other current assets               1,510          -             1,331           343 
         Increase in other assets                                             (390)         -            (1,822)          (19)
         Increase in overdraft, accounts payable and accrued expenses        4,125          -             3,572         2,728 
         Increase in deferred compensation                                       -          -                 -             8 
                                                                         ---------      -----          --------       -------
                                                                                                                   
         Net cash provided by (used in) operating activities                (5,024)         -             1,083        (5,197)
                                                                         ---------      -----          --------       -------
                                                                                                                   
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                              
     Proceeds from sale of fixed assets                                          -          -                 -           440 
     Purchases of property, plant and equipment                             (1,448)         -              (182)          (22)
                                                                         ---------      -----          --------       -------
                                                                                                                   
         Net cash provided by (used in) by investing activities             (1,448)         -              (182)          418
                                                                         ---------      -----          --------       -------

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                              
  Net change in advances                                                         -          -            18,891             -
  Proceeds from borrowings from Parent, net                                      -          -                 -         4,853
  Note borrowings (payments), net                                            6,575          -           (15,336)            -
  Payments on capital leases                                                     -          -                 -           (74)
                                                                         ---------      -----          --------       -------
                                                                                                                   
         Net cash provided by financing activities                           6,575          -             3,555         4,779
                                                                         ---------      -----          --------       -------
                                                                                                                   
NET INCREASE IN CASH AND                                                                                           
  CASH EQUIVALENTS                                                             103          -             4,456             -
                                                                                                                   
CASH AND CASH EQUIVALENTS, beginning of period                               2,174          -                 -            59
                                                                         ---------      -----          --------       -------
                                                                                                                   
CASH AND CASH EQUIVALENTS, end of period                                 $   2,277      $   -          $  4,456       $    59
                                                                         ---------      -----          --------       -------
                                                                         ---------      -----          --------       -------
                                                                                                                   
SUPPLEMENTAL DISCLOSURE                                                                                            
  Cash paid during the period for-                                                                                 
         Interest                                                        $     346      $   -          $  4,456       $     6
                                                                         ---------      -----          --------       -------
                                                                         ---------      -----          --------       -------
         Taxes                                                           $       -      $   -          $      -       $     8
                                                                         ---------      -----          --------       -------
                                                                         ---------      -----          --------       -------
                                                                                                                   
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES                                                            
    Accrued preferred stock dividends                                    $     300      $   -          $      -       $     -
                                                                         ---------      -----          --------       -------
                                                                         ---------      -----          --------       -------
</TABLE>
--------------
*Commemorative Brands, Inc., completed the acquisitions of ArtCarved and Balfour
 on December 16, 1996, and until such  date, engaged in no business activities
 other than those in connection with the Acquisitions and financing           
 thereof.                                                                     
                                       
               The accompanying notes are an integral part of 
                  these consolidated financial statements.
<PAGE>
                                       
                          COMMEMORATIVE BRANDS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


(1)  BACKGROUND AND ORGANIZATION

Commemorative Brands, Inc., a Delaware corporation (together with its 
subsidiaries, CBI or the Company), is a manufacturer and supplier of class 
rings and other graduation-related scholastic products for the high school 
and college markets and manufactures and markets recognition and affinity 
jewelry designed to commemorate significant events, achievements and 
affiliations. The Company's scholastic product line consists of high school 
and college class rings (the Company's predominate product offering) and 
graduation-related fine paper products such as announcements, name cards and 
diplomas.  The Company is a leading manufacturer of class rings in the United 
States with its corporate office and primary manufacturing facilities located 
in Austin, Texas.

CBI was initially formed in March 1996 by Castle Harlan Partners II, L.P. 
(CHP II), a Delaware limited partnership and private equity investment fund, 
for the purpose of acquiring ArtCarved and Balfour (as defined below) and, 
until December 16, 1996, engaged in no business activities other than in 
connection with the Acquisitions (as defined below) and the financing thereof.

The accompanying consolidated financial statements have been prepared without 
audit pursuant to the rules and regulations of the Securities and Exchange 
Commission.  Certain information and footnote disclosures normally included 
in financial statements prepared in accordance with generally accepted 
accounting principles have been condensed or omitted pursuant to such rules 
and regulations, although the Company believes the disclosures are adequate 
to make the information presented not misleading.  In the opinion of 
management, all adjustments (consisting only of normal recurring adjustments) 
necessary for a fair presentation of the financial position and results of 
operations for the periods presented have been included.  Operating results 
for the current quarter ending November 30, 1997 are not necessarily 
indicative of the results that may be expected for the fiscal year ending 
August 29, 1998.

(2)  MERGERS AND ACQUISITIONS

On December 16, 1996, the Company completed the acquisitions (the 
Acquisitions) of substantially all of the scholastic and recognition and 
affinity product assets and businesses of the ArtCarved Class Rings 
(ArtCarved) operations of CJC Holdings, Inc. (CJC), from CJC and certain 
assets and liabilities of L. G. Balfour Company, Inc. (Balfour), from Town & 
Country Corporation (Town & Country).

In consideration for ArtCarved, CBI paid CJC, in cash, the sum of $115.1 
million and assumed certain related liabilities. In consideration for 
Balfour, CBI paid Town & Country, in cash, the sum of $45.9 million and 
assumed certain related liabilities.  In addition, CBI purchased the gold on 
consignment to Balfour, as of the closing date for a cash purchase price of 
approximately $5.4 million.

<PAGE>

The following represents the allocation of the purchase prices for ArtCarved 
and Balfour to their respective assets and liabilities based on third-party 
appraisals and management's estimate of fair values.  The allocation of the 
purchase prices (including transaction costs) for the Acquisitions is as set 
forth below (in thousands):

                                         ArtCarved      Balfour
                                         ---------      -------
Current assets                           $ 23,220       $35,497
Property, plant and equipment              17,039        15,042
Goodwill                                   64,127        17,885
Trademarks                                 17,740        13,000
Other long-term assets                      1,687           171
Accounts payable and accrued expenses      (6,066)      (22,334)
Other long-term liabilities                    --        (6,808)
                                         --------       -------
                                         $117,747       $52,453
                                         --------       -------
                                         --------       -------

The Company has closed substantially all of the former Balfour manufacturing 
and administration facilities and moved the former Balfour operations from 
Attleboro, Massachusetts, to Austin, Texas.

(3)  THE PREDECESSORS

The Company completed the Acquisitions of ArtCarved and Balfour on December 
16, 1996.  The accompanying financial statements include the predecessor 
operations of ArtCarved as a division of CJC and Balfour as a wholly owned 
subsidiary of Town & Country for historical periods prior to the acquisition 
date of December 16, 1996.

The ArtCarved predecessor financial statements present information with 
respect to the assets and businesses acquired by the Company from CJC (the 
Business). Since the Business was not operated nor accounted for as a 
separate entity for the periods presented in the accompanying financial 
statements, it was necessary for management to make allocations (carve-outs) 
for certain accounts to reflect the financial statements of the Business.   
Management considers the allocations to be reasonable and believes the 
accompanying financial statements materially represent the operations of the 
Business on a stand-alone basis.

(4)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS CONDITIONS

The results of operations of the Company for the fiscal year ended August 30, 
1997 and the three months ended November 30, 1997, were adversely impacted as 
a result of the ongoing consolidation of the Attleboro and North Attleboro, 
Massachusetts operations into the Austin, Texas facilities (the 
"Combination"). Consolidation and integration of operations related to the 
Combination required substantial time and cost due to complications arising 
from the integration of different order entry and manufacturing processes 
required for the Balfour ring product line.  The time to train new personnel 
and implement the Balfour class ring operations was extensive and has 
resulted in ring manufacturing headcount levels higher than those experienced 
in the predecessor companies.  The additional headcount is anticipated to 
remain in place at least through January 1998, to provide service levels 
comparable to those experienced in Massachusetts.  The Company anticipates 
incurring costs from inefficiencies and a higher than expected headcount 
during at least the first two quarters of fiscal 1998.  There can be no 
assurance that the operations formerly conducted by each of the Company's 
predecessors will be fully integrated or as to the amount of any cost savings 
that may result from such integration.

<PAGE>

USE OF ESTIMATES

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

SEASONALITY

The Company's scholastic product sales tend to be seasonal. Class ring sales 
are highest during October through December (which overlaps the Company's 
first and second fiscal quarters), when students have returned to school 
after the summer recess and orders are taken for delivery of class rings to 
students before the winter holiday season.  Sales of the Company's fine paper 
products are predominantly made during February through April (which overlaps 
the Company's second and third fiscal quarters) for graduation in May and 
June. ArtCarved and Balfour historically experienced operating losses during 
the period of the Company's fourth fiscal quarter, which includes the summer 
months when school is not in session.  The Company's recognition and affinity 
product line is not seasonal in any material respect, although sales 
generally are highest during the winter holiday season and in the period 
prior to Mother's Day.  As a result, the effects of seasonality of the class 
ring business on the Company are tempered by the Company's relatively broad 
product mix.  As a result of the foregoing, the Company's working capital 
requirements tend to exceed its operating cash flows from July through 
December.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1997, the Financial Accounting Standards Board issued SFAS No. 128, 
"Earnings Per Share."  SFAS No. 128 revises the standards for computing 
earnings per share currently prescribed by Accounting Principles Board (APB) 
Opinion No. 15.  SFAS No. 128 retroactively revises the presentation of 
earnings per share in the financial statements and is required to be adopted 
by the Company for the fiscal year ending August 29, 1998.  The earnings per 
share in the accompanying financial statements is computed pursuant to APB 
Opinion No. 15 and is the same that would be required for basic earnings per 
share under SFAS No. 128 which is determined using only the weighted average 
shares outstanding.  The Company also has outstanding warrants and stock 
options that are not included in the computation of diluted earnings per 
share under SFAS No. 128 because to do so would be antidilutive.

SFAS No. 129, "Disclosure of Information About Capital Structure," will 
require additional disclosure of information about an entity's capital 
structure, including information about dividend and liquidation preferences, 
voting rights, contracts to issue additional shares, conversion and exercise 
prices, etc.  The Company is required to adopt this statement for the fiscal 
year ending August 29, 1998.

SFAS No. 130, "Reporting Comprehensive Income," is required to be adopted by 
the Company for the fiscal year ending August 28, 1999, and the statement 
requires the presentation of comprehensive income in an entity's financial 
statements.  Comprehensive income represents all changes in equity of an 
entity during the reporting period, including net income and charges directly 
to equity, which are excluded from net income.  This statement is not 
anticipated to have any impact on the Company as the Company currently does 
not enter into any transactions which result in charges (or credits) directly 
to equity (such as additional minimum pension liability changes, currency 
translation adjustments, unrealized gains and losses on available-for-sale 
securities, etc.).

SFAS No. 131, "Disclosures About Segments of an Enterprise and Related 
Information," is required to be adopted by the Company for the fiscal year 
ending August 28, 1999.  SFAS No. 131 provides revised disclosure guidelines 
for segments of an enterprise based on a management approach to defining 
operating segments.  The Company currently operates in only one industry 
segment and analyzes operations on a company-wide basis; therefore, the 
statement is not expected to impact the Company.

<PAGE>

(5)  INVENTORIES

A summary of inventories is as follows (in thousands):

                     November 30,     August 30,
                         1997            1997
                     ------------     ----------

Raw materials          $10,484          $ 8,769
Work in process          2,435            1,877
Finished goods           1,298            1,121
                       -------          -------
                       $14,217          $11,767
                       -------          -------
                       -------          -------

Cost of sales includes depreciation and amortization of $522,000, $541,000 
and $145,000 for the three months ended November 30, 1997, November 30, 1996 
and November 24, 1996 for Commemorative Brands, Inc., ArtCarved and Balfour, 
respectively (see Note 1).

(6)  LONG-TERM DEBT

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

                                         November 30,     August 30,
                                             1997            1997
                                         ------------     ----------

11% senior subordinated notes due 2007     $ 90,000        $ 90,000
Term loan facility                           24,625          24,750
Bank revolver                                17,400          10,700
                                           --------        --------
  Total debt                                132,025         125,450
Less-current portion                            625             750
                                           --------        --------
  Total long-term debt                     $131,400        $124,700
                                           --------        --------
                                           --------        --------

The weighted average interest rate of debt outstanding as of November 30, 
1997 and August 30, 1997 was 10.5 percent.

11 PERCENT SENIOR SUBORDINATED NOTES

The Company's 11 percent senior subordinated notes mature on January 15, 
2007. The notes are redeemable at the option of the Company, in whole or in 
part, at any time on or after January 15, 2002, plus accrued and unpaid 
interest and liquidated damages (as defined), if any, thereon to the date of 
redemption.  In the event the Company completes one or more public equity 
offerings (as defined) on or before January 15, 2000, the Company may, in its 
discretion, use the net cash proceeds to redeem up to 33-1/3 percent of the 
original principal amount of the notes at a redemption price equal to 111 
percent of the principal amount thereof, plus accrued and unpaid interest and 
liquidated damages, if any, thereon to the date of redemption, with the net 
proceeds of one or more public equity offerings, provided that at least 
66-2/3 percent of the original principal amount of the notes remains 
outstanding immediately after each such redemption.

The 11 percent senior subordinated notes contain certain covenants that, 
among other things, limit the ability of the Company (a) to incur additional 
indebtedness and issue preferred stock, (b) to pay dividends or make certain 
other restricted payments, (c) to enter into transactions with affiliates, 
(d) to create certain liens, (e) to make certain asset 

<PAGE>

dispositions and (f) to merge or consolidate with, or transfer substantially 
all of its assets to, another person.  The Company was in compliance with all 
debt covenants as of November 30, 1997 and August 30, 1997.

REVOLVING CREDIT, TERM LOAN AND GOLD CONSIGNMENT AGREEMENT

The Company has a revolving credit, term loan and gold consignment agreement 
(the Bank Agreement) with a group of banks pursuant to which the Company 
initially borrowed $25 million under a term loan facility and may borrow up 
to $35 million under a revolving credit and gold facility.  Loans outstanding 
under the Bank Agreement bear interest at either fixed or floating rates 
based upon the interest rate option selected by the Company.

TERM LOAN FACILITY

The term loan facility (Term Loan) matures on December 16, 2003.  The Company 
may prepay the Term Loan at any time.  The Company must repay specified 
amounts of the Term Loan in 28 consecutive quarterly installments, which 
commenced March 31, 1997.

REVOLVING CREDIT AND GOLD FACILITIES

The revolving credit and gold facilities permit borrowings of up to a maximum 
aggregate principal amount of $35 million based upon availability under a 
borrowing base based on eligible receivables and eligible inventory (each as 
defined), with a sublimit of $5 million for letters of credit and $10 million 
for gold borrowing or consignment.  Management believes that it will have 
sufficient availability under these facilities to meet its working capital 
needs.

The Bank Agreement contains certain financial covenants that require the 
Company to maintain certain minimum levels of (a) senior funded debt to 
earnings before interest, taxes, depreciation and amortization (EBITDA, as 
defined), (b) consolidated EBITDA and (c) interest coverage.  The Bank 
Agreement also contains other covenants which, among other things, limit the 
ability of the Company and its subsidiaries to (a) incur additional 
indebtedness, (b) acquire and dispose of assets, (c) create liens, (d) make 
capital expenditures, (e) pay dividends on or redeem shares of the Company's 
capital stock and (f) make certain investments.  The Company was in 
compliance with all debt covenants under the Bank Agreement as of November 
30, 1997 and August 30, 1997.

CONSIGNED GOLD

Under the Company's gold consignment/loan arrangement, the Company has the 
availability to have on consignment up to 26,000 ounces of gold approximating 
$10 million.  Alternatively, upon maximizing the $25 million revolver, the 
Company would have the availability to draw in funds up to $10 million for 
the purchase of gold.  Another option, if the revolver is maximized, is a 
combination of drawing upon the consigned inventory and gold loan funds up to 
a maximum value of $10 million.  Under this arrangement, the Company is 
limited to a maximum value of $10 million in consigned inventory and/or gold 
loan funds.  For the three months ended November 30, 1997 and the fiscal year 
ended August 30, 1997 (see Note 1), the Company expensed approximately 
$78,000 and $203,000, respectively, in connection with consignment fees.  
Under the terms of the consignment arrangement, the Company does not own the 
consigned gold until it is shipped in the form of a ring to a customer.  
Accordingly, the Company does not include the value of consigned gold in 
inventory or the corresponding liability for financial statement purposes.  
As of November 30, 1997 and August 30, 1997, the Company held approximately 
16,990 ounces and 16,265 ounces, respectively, valued at $5.0 million and 
$5.3 million, respectively, of gold on consignment from one of its lenders.

The Company's management believes the carrying amount of long-term debt, 
including the current maturities, approximates fair value as of November 30, 
1997 and August 30, 1997, based upon current rates offered for debt with the 
same or similar debt terms.

<PAGE>

(7)  COMMITMENTS AND CONTINGENCIES

Certain Company facilities and equipment are leased under agreements expiring 
at various dates through 2005.

The Company is a party to certain contracts with some of its sales 
representatives whereby the representatives have purchased from their 
predecessor sales representative the right to sell the Company's products in 
a territory.  The contracts generally provide that the value of these rights 
is primarily determined by the amount of business achieved by a successor 
sales representative and is therefore not determinable in advance of 
performance by the successor sales representative.

The Company is not party to any pending legal proceedings other than ordinary 
routine litigation incidental to the business.  In management's opinion, 
adverse decisions on those legal proceedings, in the aggregate, would not 
have a materially adverse impact on the Company's results of operations or 
financial position.

(8)  INCOME TAXES

For the three months ended November 30, 1997, no current or deferred 
provision or benefit exists due to the net operating losses and loss 
carry-forwards incurred by the Company.

(9)  STOCKHOLDERS' EQUITY

The Company is authorized to issue 750,000 shares of preferred stock, par 
value $.01 per share, and 750,000 shares of Common Stock, par value $.01 per 
share. The Company currently has issued and outstanding 100,000 shares of 
Series A Preferred, 375,000 shares of Series B Preferred and 375,000 shares 
of Common Stock.

SERIES A PREFERRED STOCK (SERIES A PREFERRED)

The holders of shares of Series A Preferred are not entitled to voting 
rights. Dividends on the Series A Preferred are payable in cash, when, as and 
if declared by the board of directors of the Company, out of funds legally 
available therefor, on a quarterly basis, commencing on January 31, 1997. 
Dividends on the Series A Preferred accrue at a rate of 12 percent per annum, 
whether or not such dividends have been declared and whether or not there 
shall be funds legally available for the payment thereof.  Any dividends 
which are declared shall be paid pro rata to the holders.  No dividends or 
interest shall accrue on any accrued and unpaid dividends.  The Company's 11 
percent senior subordinated notes and bank debt restrict the Company's 
ability to pay dividends on the Series A Preferred.

The Series A Preferred is not subject to mandatory redemption.  The Series A 
Preferred is redeemable at any time at the option of the Company; however, 
the Company's 11 percent senior subordinated notes and bank debt restrict the 
Company's ability to redeem the Series A Preferred.  In the event of any 
liquidation, dissolution or winding up of the Company, the holders of the 
Series A Preferred shall receive payment of the liquidation value of $100 per 
share plus all accrued and unpaid dividends prior to the payment of any 
distributions to the holders of the Series B Preferred or the holders of the 
common stock of the Company (Common Stock).  So long as shares of the Series 
A Preferred remain outstanding, the Company may not declare, pay or set aside 
for payment dividends on, or redeem or otherwise repurchase any shares of, 
the Series B Preferred or Common Stock.

<PAGE>

SERIES B PREFERRED STOCK (SERIES B PREFERRED)

The holders of shares of Series B Preferred are entitled to one vote per 
share, voting together with the holders of the Common Stock as one class on 
all matters presented to the shareholders generally.  No dividends accrue on 
the Series B Preferred.

Dividends may be paid on the Series B Preferred if and when declared by the 
board of directors of the Company out of funds legally available therefor.  
The Series B Preferred is nonredeemable.  In the event of any liquidation, 
dissolution or winding up of the Company, the holders of the Series B 
Preferred shall receive payment of the liquidation value of $100 per share 
plus any accrued and unpaid dividends prior to the payment of any 
distributions to the holders of the Common Stock of the Company.  So long as 
shares of the Series B Preferred remain outstanding, the Company may not 
declare, pay or set aside for payment any dividends on the Common Stock.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of 
record on all matters submitted to a vote of shareholders, including the 
election of directors, and vote together as one class with the holders of the 
Series B Preferred.

Dividends may be paid on the Common Stock if and when declared by the board 
of directors of the Company out of funds legally available therefor.  The 
Company does not expect to pay dividends on the Common Stock in the 
foreseeable future.

COMMON STOCK PURCHASE WARRANTS

The Company has issued warrants, exercisable to purchase an aggregate of 
21,405 shares of Common Stock (or an aggregate of approximately 5.4 percent 
of the outstanding shares of Common Stock on a fully diluted basis), at an 
initial exercise price of $6.67 per share, at any time on or after December 
16, 1997, and on or before January 31, 2008.

In accordance with a subscription agreement entered into by the Company and 
CHP II and certain of its affiliates (the Castle Harlan Group), the Company 
granted the Castle Harlan Group certain registration rights with respect to 
the shares of capital stock owned by them pursuant to which the Company 
agreed, among other things, to effect the registration of such shares under 
the Securities Act of 1933 at any time at the request of the Castle Harlan 
Group.  The Company also granted to the Castle Harlan Group unlimited 
piggyback registration rights on certain registrations of shares of capital 
stock by the Company.

STOCK-BASED COMPENSATION PLAN

The Company has one stock option plan (the 1997 Stock Option Plan), effective 
as of July 29, 1997, for which a total of 69,954 shares of Common Stock have 
been reserved for issuance; 35,484 of those shares were available for grant 
to directors and employees of the Company as of November 30, 1997.  The 1997 
Stock Option Plan provides for the granting of both incentive and 
nonqualified stock options.  Options granted under the 1997 Stock Option Plan 
have a maximum term of 10 years and are exercisable under the terms of the 
respective option agreements at fair market value of the Common Stock at the 
date of grant. Payment of the exercise price must be made in cash or in whole 
or in part by delivery of shares of the Company's Common Stock.  All Common 
Stock issued pursuant to the 1997 Stock Option Plan is subject to a voting 
trust agreement.

<PAGE>

(10) RELATED - PARTY TRANSACTIONS

The Company entered into a management agreement dated December 16, 1996 (the 
Management Agreement), with Castle Harlan, Inc. (the Manager), pursuant to 
which the Manager agreed to provide business and organizational strategy, 
financial and investment management and merchant and investment banking 
services to the Company upon the terms and conditions set forth therein.  As 
compensation for such services, the Company agreed to pay the Manager $1.5 
million per year, which amount has been paid in advance for the first year 
and is payable quarterly in arrears thereafter.  The agreement is for a term 
of 10 years, renewable automatically from year to year thereafter unless the 
Castle Harlan Group then owns less than 5 percent of the then outstanding 
capital stock of the Company.  The Company has agreed to indemnify the 
Manager against liabilities, costs, charges and expenses relating to the 
Manager's performance of its duties, other than such of the foregoing 
resulting from the Manager's gross negligence or willful misconduct.  The 
indenture dated as of December 16, 1996, between the Company and Marine 
Midland Bank, as trustee, related to the 11 percent senior subordinated notes 
and in the Company's Bank Agreement prohibits payment of the management fee 
in the event of a default by the Company.

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

   In the following discussions, unless the context otherwise requires (i) 
the term "CBI" refers to Commemorative Brands, Inc. prior to the consummation 
of the acquisition of ArtCarved and Balfour (the "Acquisitions"), (ii) the 
term "ArtCarved" refers to the predecessor class ring assets, businesses, and 
operations of CJC Holdings, Inc. acquired by CBI, (iii) the term "Balfour" 
refers to the predecessor class rings assets, businesses and operations of 
L. G. Balfour Company, Inc. acquired by CBI, and (iv) the term "the Company"
refers to CBI consolidated with its subsidiaries as combined with ArtCarved 
and Balfour after giving effect to the Acquisitions.

GENERAL

   The Company is a manufacturer and supplier of class rings and 
graduation-related scholastic products for the high school and college 
markets and also manufactures and markets recognition and affinity jewelry 
designed to commemorate significant events, achievements and affiliations.

   CBI was initially formed in March 1996 by Castle Harlan Partners II, L.P., 
a Delaware limited partnership and private equity investment fund ("CHP II") 
for the purpose of acquiring ArtCarved and Balfour. On December 16, 1996, CBI 
completed the Acquisitions.  Until December 16, 1996, CBI engaged in no 
business activities other than in connection with the Acquisitions and the 
financing thereof.   The Company has a 52/53-week fiscal year ending on the 
last Saturday of August.

RESULTS OF OPERATIONS

   The financial statements of the Company for the three months ended 
November 30, 1997, reflect operations for the three months ended November 30, 
1997.  The financial statements are presented for the predecessors, ArtCarved 
and Balfour, for the three months ended November 30, 1996 and November 24, 
1996, respectively.

   The results of operations of the Company for the three months ended 
November 30, 1997 were adversely impacted as a result of the ongoing 
consolidation of the Attleboro and North Attleboro, Massachusetts operations 
into the Austin, Texas facilities (the "Combination").  Consolidation and 
integration of operations related to the Combination required substantial 
time and cost due to complications arising from the integration of different 
order entry and manufacturing processes required for the Balfour ring product 
line.  The time to train new personnel and implement the Balfour class ring 
operations was extensive and has resulted in ring manufacturing headcount 
levels higher than those experienced in the predecessor companies.  The 
additional headcount is anticipated to remain in place at least through 
January 1998, to provide service levels comparable to those experienced in 
Massachusetts.  The Company anticipates incurring costs from inefficiencies 
and a higher than expected headcount during at least the first two quarters 
of fiscal 1998.  There can be no assurance that the operations formerly 
conducted by each of the Company's predecessors will be fully integrated or 
as to the amount of any cost savings that may result from such integration.

COST SAVINGS

   ELIMINATION OF OCCUPANCY AND FIXED OVERHEAD COSTS - Two of the three 
Balfour facilities were closed during fiscal 1997 and the occupancy and 
overhead costs including duplicative facilities-related personnel associated 
with these two facilities (the Attleboro, Massachusetts ring manufacturing 
plant and the North Attleboro, Massachusetts administrative facility) were 
eliminated.  These permanent cost savings amount to approximately $1.5 
million on an annual basis and during fiscal 1997, approximately $400,000 of 
cost savings were realized. The third Balfour facility, the North Attleboro 
insignia plant, was not closed. This facility contains not only the insignia 
plant, but also the Balfour ring tooling operation.

   MANUFACTURING INTEGRATION - The move of the Balfour ring manufacturing 
operation was substantially completed in June, 1997.  Expanded manufacturing 
capacity in Austin was adequate to absorb the additional production of the 

<PAGE>

Balfour rings.  However, difficulties were encountered in the efficient 
manufacture of the Balfour rings.  Certain of the cost savings achieved by 
the Company by the reduction of duplicative personnel were offset by 
additional labor and overhead incurred to manufacture Balfour rings.  
Manufacturing inefficiencies were primarily caused by:

  -  People - The specific Balfour product knowledge that was "lost" due to
     Massachusetts employees electing not to relocate to Texas resulted in
     higher than normal training expenses and additional costs to temporarily
     place former Balfour employees (managers and supervisors) in the Texas
     plant.

  -  Tooling - Because Balfour ring tooling is older and more complicated to
     use than the ArtCarved ring tooling, the Company experienced higher than
     normal training costs and lower levels of efficiencies than the wax mold
     operations at the Balfour Attleboro ring plant.

  -  Systems - The Balfour computer system is heavily dependent on manual
     processing and human interaction.  Difficulties were experienced in the
     transfer of user knowledge and system documentation.  Therefore, labor
     costs in excess of those anticipated by management were incurred to enter,
     schedule, track and ship the Balfour rings.

COMMEMORATIVE BRANDS, INC.

   THREE MONTHS ENDED NOVEMBER 30, 1997 AS COMPARED TO THREE MONTHS ENDED 
NOVEMBER 30, 1996 (ARTCARVED) AND THREE MONTHS ENDED NOVEMBER 24, 1996 
(BALFOUR)

   NET SALES - Net sales decreased $3.1 million, or 7.6%, to $38.4 million 
for the three months ended November 30, 1997 from $22.0 million for the three 
months ended November 30, 1996 for ArtCarved and $19.5 million for the three 
months ended November 24, 1996 for Balfour.  The decrease in sales resulted 
from a decline in the sales of recognition and affinity products of 
approximately $2.2 million and a delay of shipments of class rings due to the 
transition of the Balfour operations from Massachusetts to Texas. 
Substantially, all of the backlogged class rings were shipped in December.

   GROSS PROFIT - Gross profit decreased $2.0 million, or 8.5%, to $21.1 
million for the three months ended November 30, 1997 from $12.3 million for 
the three months ended November 30,1996 for ArtCarved and $10.8 million for 
the three months ended November 24, 1996 for Balfour.  As a percentage of net 
sales, gross profit was 55.1% for the three months ended November 30, 1997 
compared to $12.3 million, or 56.2% for the three months ended November 30, 
1996 for ArtCarved and $10.8 million, or 55.1%, for the three months ended 
November 24, 1996 for Balfour.  Gross profit for the three months ended 
November 30, 1997 was adversely affected by the additional costs incurred in 
connection with the Combination.

   SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and 
administrative expenses decreased $2.1 million, or 11.2%, to $18.6 million 
for the three months ended November 30, 1997 from $8.1 million for the three 
months ended November 30, 1996 for ArtCarved and $10.5 million for the three 
months ended November 24, 1996 for Balfour.  As a percentage of net sales, 
selling, general and administrative expenses decreased to 43.2% for the three 
months ended November 30, 1997 from 44.9% for the three months ended November 
30, 1996 for ArtCarved and for the three months ended November 24, 1996 for 
Balfour. The decrease was a result of decreased selling and marketing 
expenses primarily related to the recognition and affinity products offset by 
an increase in general and administrative expenses as a percentage of net 
sales as a result of the Combination.

   OPERATING INCOME - As a result of the foregoing, operating income 
increased $0.2 million, or 2.5%, to $4.6 million for the three months ended 
November 30, 1997 from $4.2 million for the three months ended November 30, 
1996 for ArtCarved and $0.2 million for the three months ended November 24, 
1996 for Balfour.  As a percentage of net sales, 

<PAGE>

operating income increased to 11.9% for the three months ended November 30, 
1997 from 10.8% for the three months ended November 30, 1996 for ArtCarved 
and three months ended November 24, 1996 for Balfour.

   INTEREST EXPENSE - Interest expense, net was $3.6 million for the three 
months ended November 30, 1997.  The majority of the interest expense was 
related to the Bank Credit Facility of $25.3 million at rates ranging from 
9% - 10% and interest on the $90.0 million of Notes, at a rate of 11%.

   PROVISION FOR INCOME TAXES - Since the Company does not have a history of 
generating income from operations, no tax benefit on operating losses has 
been accrued.

   NET INCOME - As a result of the foregoing, the Company had net income of 
$1.0 million, or 2.5% of net sales, for the three months ended November 30, 
1997 as compared to the net income of $1.3 million for the three months ended 
November 30, 1996 for ArtCarved and three months ended November 24, 1996 for 
Balfour.

SEASONALITY

   The Company's scholastic product sales tend to be seasonal. Class ring 
sales are highest during October through December (which overlaps the 
Company's first and second fiscal quarters), when students have returned to 
school after the summer recess and orders are taken for delivery of class 
rings to students before the winter holiday season.  Sales of the Company's 
fine paper products are predominantly made during February through April 
(which overlaps the Company's second and third fiscal quarters) for 
graduation in May and June. ArtCarved and Balfour historically experienced 
operating losses during the period of the Company's fourth fiscal quarter, 
which includes the summer months when school is not in session.  The 
Company's recognition and affinity product line is not seasonal in any 
material respect, although sales generally are highest during the winter 
holiday season and in the period prior to Mother's Day.  As a result, the 
effects of seasonality of the class ring business on the Company are tempered 
by the Company's relatively broad product mix.  As a result of the foregoing, 
the Company's working capital requirements tend to exceed its operating cash 
flows from July through December.

LIQUIDITY AND CAPITAL RESOURCES

   As of November 30, 1997, the Company had a $35.0 million Revolving Credit 
Facility (as defined below) with a borrowing base limitation of $27.9 million 
and had $5.5 million available for future borrowings under its Bank Credit 
Facility, as defined below.  As of December 15, 1997 the Company had a 
borrowing base limitation of $34.2 million and had $11.8 million available 
for future borrowings.  The Borrowing base limitation is recalculated 
monthly. Management believes that cash flows generated by existing operations 
and its available Bank Credit Facility will be sufficient to fund its ongoing 
operations.  The Company's liquidity needs arise primarily from debt service 
on the Bank Credit Facility and the Notes, defined below, payments required 
under a Management Agreement with Castle Harlan, Inc. and working capital and 
capital expenditure requirements.

   The Company's cash used in operating activities for the three months ended 
November 30, 1997, were primarily the net result of the Company's 
seasonality. There were increased accounts receivable and increased 
inventories, which were greater than the decrease in other assets and 
increase in overdraft, accounts payable and accrued expenses. The majority of 
the decrease in prepaid expenses and other current assets relates to the 
prepaid management fee and prepaid advertising being lower at this time of 
year.

   Also affecting cash are the one-time costs associated with the closing of 
the Attleboro facilities, moving expenses and set-up expenses in Austin.  The 
Company has established a $12.1 million reserve for these expenses.  As of 
November 30, 1997, $9.7 million of the costs have been incurred.  The 
remaining balance of $2.4 million represents reserves for remaining severance 
expenses payable to Balfour employees and the moving expenses associated with 
the metal stamping and tooling operations currently operating in Attleboro.  
The Company projected capital expenditures for the fiscal year 1998 are $3.7 
million.  For the three months ended November 30, 1997, the Company incurred 
$1.5 million in capital expenditures for manufacturing equipment, tools and 
dies and software development.

<PAGE>

   The following summarizes certain provisions of the bank credit agreement 
governing the Revolving Credit, Term Loan and Gold Consignment Agreement (the 
"Bank Credit Facility"), which was entered into as of December 16, 1996, by 
and among the Company, as borrower, The First National Bank of Boston 
("FNBB") and Rhode Island Hospital Trust National Bank ("RIHT", and together 
with FNBB, as agent, the "Agents") and the financial institutions party 
thereto.

   The Bank Credit Facility consists of a senior secured credit facility of 
up to $60,000,000, including (i) a $25,000,000 term loan facility (the "Term 
Loan Facility"), (ii) a $25,000,000 revolving credit facility (with a letter 
of credit sublimit of $5,000,000) (the "Revolving Credit Facility") and (iii) 
a $10,000,000 gold consignment and revolving credit facility (the "Gold 
Facility", and together with the Revolving Credit Facility, the "Revolving 
Credit and Gold Facilities").

   The Term Loan Facility matures on December 16, 2003.  The Company may 
prepay the Term Loan Facility at any time, except that any repayment of any 
portion of the Term Loan Facility bearing interest at the Eurodollar Rate may 
only be repaid on the last day of the Interest Period relating thereto.  The 
Company must repay the Term Loan Facility in 28 consecutive quarterly 
installments, which commenced March 31, 1997.  The final installment of 
principal of the Term Loan Facility is due and payable on December 16, 2003.  
In addition, subject to certain exceptions set forth in the Bank Credit 
Agreement, the Company must make mandatory prepayments of the Term Loan 
Facility from certain asset sales, equity issuances, and 50% of Consolidated 
Excess Cash Flow (as defined).

   Availability under the Revolving Credit Facility and the Gold Facility is 
subject to a borrowing base limitation (the "Borrowing Base") based on the 
aggregate of certain percentages of Eligible Receivables (as defined) and 
Eligible Inventory (as defined) of the Company.  The borrowing base 
limitation is recalculated each month.  If the aggregate amount of loans and 
other extensions of credit under the Revolving Credit Facility and the Gold 
Facility exceeds the Borrowing Base, the Company must immediately prepay or 
cash collateralize its obligations under the Revolving Credit Facility to the 
extent of such excess.

   The Gold Facility consists of (a) a purchase and consignment facility, 
pursuant to which RIHT, as gold agent, on behalf of the lenders under the 
Gold Facility, will purchase amounts of gold inventory for the Company and 
consign such amounts to the Company, (b) a consignment facility, pursuant to 
which the gold agent, on behalf of the lenders under the Gold Facility, will 
obtain and consign amounts of gold to the Company and (c) a revolving loan 
facility.

   Loans outstanding under the Bank Credit Facility bear interest at either 
fixed or floating rates based upon the interest rate option selected by the 
Company.  The weighted average interest rate of debt outstanding as of 
November 30, 1997 and August 30, 1997 was 10.5 percent.

   The Revolving Credit and Gold Facilities may be borrowed, repaid and 
reborrowed from time to time until December 16, 2001, subject to certain 
conditions on the date of any such borrowing.  Amounts of principal repaid on 
the Term Loan Facility may not be reborrowed.

   The Bank Credit Facility is secured by a first priority lien on 
substantially all assets of the Company, including all accounts receivable, 
inventory, equipment, general intangibles, real estate, buildings and 
improvements and the outstanding stock of its subsidiaries.  The Company's 
U.S. subsidiary, CBI North America, Inc., has guaranteed the Company's 
obligations and granted a similar security interest.

   The Bank Credit Facility contains certain customary affirmative and 
negative covenants, including, among other things, requirements that the 
Company (i) periodically deliver certain financial information (including 
monthly borrowing base, consigned metal and receivables aging reports), (ii) 
not merge or make certain asset sales, (iii) not permit certain liens to 
exist on its assets, (iv) not incur additional debt or liabilities except as 
may be permitted under the terms of the Bank Credit Facility (v) not make 
capital expenditures in excess of limits set forth in the Bank Credit 
Facility (vi) not declare or make certain dividend payments, (vii) not make 
certain investments or consummate certain acquisitions, (viii) not enter into 
any consignment transactions as consignee (except for deliveries of 
diamonds), (ix) 

<PAGE>

not create a new subsidiary, (x) not establish any new bank account, and (xi) 
establish concentration accounts with FNBB and direct all of its depositary 
banks to transfer all amounts deposited (on a daily basis) to such 
concentration accounts (for application in accordance with the Bank Credit 
Facility).  In addition, the Company must comply with certain financial 
covenants, including maintaining a specified minimum interest coverage ratio 
of Consolidated EBITDA to Consolidated Interest Expense, maximum Consolidated 
Senior Funded Debt to Consolidated EBITDA and minimum Consolidated EBITDA (as 
those terms are defined in the Bank Credit Agreement) in amounts set forth in 
the Bank Credit Facility. Most of the covenants apply to the Company and its 
subsidiaries, and the Company was in compliance with all of its covenants 
under the Bank Credit Facility as of November 30, 1997 and August 30, 1997.

   The Bank Credit Facility contains certain customary events of default, 
including nonpayment, misrepresentation, breach of covenant, bankruptcy, 
ERISA, judgments, change of control and cross defaults.  In addition, the 
Bank Credit Facility provides that it shall be an Event of Default if the 
Company or any of its subsidiaries (other than its Mexican subsidiary) shall 
be enjoined or restrained from conducting any material part of its business 
for more than 30 days.

   The Company's $90,000,000 aggregate principal amount of 11% Senior 
Subordinated Notes mature on January 15, 2007 ("Notes").  The Notes are 
redeemable at the option of the Company, in whole or in part, at any time on 
or after January 15, 2002, plus accrued and unpaid interest and Liquidated 
Damages (as defined), if any, thereon to the date of redemption.  In the 
event the Company completes one or more Public Equity Offerings (as defined) 
on or before January 15, 2000, the Company may, in its discretion, use the 
net cash proceeds to redeem up to 33 1/3% of the original principal amount of 
the Notes at a redemption price equal to 111% of the principal amount 
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, 
thereon to the date of redemption, with the net proceeds of one or more 
Public Equity Offerings, provided that at least 66-2/3% of the original 
principal amount of the Notes remains outstanding immediately after each such 
redemption.

   In the event of a Change of Control (as defined), each holder of the Notes 
will have the right to require the Company to purchase all or any part of 
such holder's Notes at a purchase price in cash equal to 101% of the 
aggregate principal amount thereof, plus accrued and unpaid interest and 
Liquidated Damages, if any, thereon to the date of purchase.  The Bank Credit 
Facility prohibits the Company from purchasing any Notes upon a Change of 
Control, and certain Change of Control events with respect to the Company 
would constitute a default thereunder.

   In the event of an Asset Sale (as defined), the Company is required to 
apply any Net Proceeds (as defined) to permanently reduce senior 
indebtedness, to acquire another business or long-term assets or to make 
capital expenditures. To the extent such amounts are not so applied within 
thirty days and the amount not applied exceeds $5.0 million, the Company is 
required to make an offer to all holders of the Notes to purchase an 
aggregate principal amount of Notes equal to such excess amount at a purchase 
price in cash equal to 100% of the principal amount thereof, plus accrued and 
unpaid interest and Liquidated Damages, if any, thereon to the date of 
purchase.

   The Indenture dated as of December 16, 1996, between the Company and 
Marine Midland Bank, as trustee (the "Indenture") pursuant to which the Notes 
were issued contains certain covenants that, among other things, limit the 
ability of the Company and its subsidiaries to (a) incur additional 
indebtedness and issue preferred stock, (b) pay dividends or make certain 
other restricted payments, (c) enter into transactions with affiliates, (d) 
create certain liens, (e) make certain asset dispositions, and (f) merge or 
consolidate with, or transfer substantially all of its assets to, another 
person.  The Company was in compliance with all debt covenants as of November 
30, 1997 and August 30, 1997.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

   This report includes forward-looking statements within the meaning of 
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the 
Securities Exchange Act of 1934, as amended.  Although management believes 
that the expectations reflected in such forward looking statements are based 
upon reasonable assumptions, the Company can give no assurance that these 
expectations will be achieved.  Important factors that could cause actual 
results to differ materially from the Company's expectations include general, 
economic, business and market conditions, the volatility 

<PAGE>

of the price of gold, competition, development and operating costs and the 
factors that are disclosed in conjunction with the forward looking statements 
included herein (collectively the "Cautionary Disclosures").  Subsequent 
written and oral forward looking statements attributable to the Company or 
persons acting on its behalf are expressly qualified in their entirety by the 
Cautionary Disclosures.

<PAGE>

PART II - OTHER

Item 1.   Legal Proceedings

   There are no material pending legal proceedings to which the Company is a 
party to or which any of its property is subject.  The Company monitors all 
claims, and the Company accrues for those, if any, which management believes 
are probable of payment.  The Company has no pending administrative 
proceedings related to environmental matters involving governmental 
authorities.

Item 2.   Changes in Securities

None.

Item 3.   Defaults Upon Senior Securities

None.

Item 4.   Submission of Matters to a Vote of Security Holders

None.

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits:

     27 Financial Data Schedule for the period ended November 30, 1997.

(b)  The Company did not file any reports on Form 8-K during the three months 
     ended November 30, 1997.

<PAGE>

                          COMMEMORATIVE BRANDS, INC.
                                       
                                       
SIGNATURES

Commemorative Brands, Inc. has duly caused this report to be signed on its 
behalf by the undersigned thereunto duly authorized.


                                        COMMEMORATIVE BRANDS, INC.



DATE: January 14, 1998                  BY: /s/ Richard H. Fritsche
                                            ---------------------------------
                                            Richard H. Fritsche
                                            Chief Financial Officer

<PAGE>
                                       
                                 EXHIBIT INDEX

Exhibit
Number      Description
-------     -----------
 27         Financial Data Schedule for the period ended November 30, 1997